HC Deb 21 December 1972 vol 848 cc1753-62

12.31 a.m.

Mr. J. Bruce-Gardyne (South Angus)

I am grateful for the opportunity of raising the subject of supplementary benefits in industrial disputes, although at this late hour I apologise to my hon. Friend the Under-Secretary for keeping him back at this fag end of the Session. I have sought for some time to introduce this matter on the Adjournment, but I apologise to my hon. Friend that it has come at this late stage.

Nevertheless, this is a matter which has been, and is, causing growing concern to hundreds of thousands, perhaps millions, of constituents up and down the country in recent years. There is very good reason for this. Until five or six years ago the sum total of benefit paid to those involved in industrial disputes and their dependants barely exceeded £1 million over a period of 10 years. There were only three years prior to and including 1966 when the total of benefit paid in industrial disputes in a single year exceeded £100,000.

Since 1966, however, the whole situation has changed fundamentally. In 1967 the total paid out by the Supplementary Benefits Commission in industrial disputes amounted to £380,000. In 1968 it amounted to £335,000, in 1969 to £750,000, in 1970 to £1½ million, and in 1971 to E4.7 million. The figure so far this year is in excess of £8 million.

We must bear in mind that these payments arise only in the case of the more long-drawn-out industrial disputes, lasting, broadly, 12 days and more. By their definition these are the sort of disputes which cause most inconvenience to those not directly involved in them. They are the disputes which often do most damage to our reputation as suppliers to overseas customers, and to our reputation as a magnet for international investment. In consequence, they are the disputes which jeopardise so often the long-term prospects for employment of not only those involved in the disputes but many others who are not directly involved.

Nevertheless, it was not unreasonable to expect the mass of the public who are not involved in such disputes to accept an obligation to finance payments to strikers' dependants in cases of genuine need at a time when those payments were running at a rate of, perhaps, £100,000 a year or less. But the situation today is totally different. As my right hon. Friend the Secretary of State for Social Services told my hon. Friend the Member for Norfolk, North (Mr. Ralph Howell) in the summer, the present position in this country is without parallel in any other advanced industrial country. No other country provides taxpayer-financed benefits for the sustaining of industrial disputes to anything approaching the level which we do.

The normal practice is that unions should be expected to finance strikes which they call. These were the considerations, or some of the considerations, which led my right hon. Friend the Secretary of State for Social Services to introduce the Social Security Act 1971. It had two main provisions: to reduce the disregards—the normal sums, the principal strike payments and the tax refunds —which were disregarded in calculating a family's entitlement to benefit from £4.35p to £ 1 a week, and, secondly, to provide that the tide-over payments after return to work should be recoverable, rather than being a direct outlay by the taxpayer.

My hon. Friend, in introducing the legislation, told us in column 59 on 26th April 1971 that he was unable to say what the reductions in the outlay of supplementary benefit would be as a result of the legislation but that if the Bill, now the 1971 Act, had been law during 1970 it would have saved £1,250,000. As the total bill was only £1,500,000, the calculation meant that the bill would have been reduced by five-sixths, but we find that, far from being reduced by five-sixths, it has virtually doubled this year since the passage of the Act.

Why? There are two aspects. It is clear that arrangement for the recovery of tide-over payments after the resumption of work has functioned reasonably effectively but that the arrangement for reducing the disregards has had almost totally a reverse effect. This is because the reducing of the disregards, unaccompanied, as it was, by any change in the rules about entitlement to supplementary benefit, has had the effect of encouraging unions which could well afford to pay strike pay not to do so.

In the case of the National Union of Mineworkers' strike earlier this year we had a remarkable example. It declined to pay strike pay and also managed to prevent refund of taxation until after the strike so that that would not fall to be disregarded either. In consequence, the drain on union funds which used to be an encouragement to an early settlement has disappeared and the situation is worse than it was before the passage of the 1971 Act.

However, my right hon. Friend indicated in the course of Second Reading that he would keep the matter under review. He said: This is not to say that the Government may not decide at some stage to make some changes".—[OFFICIAL REPORT, 26th April 1971; Vol. 816, c. 53.] That is, further changes in the position.

Following the experience of the miners' strike, my right hon. Friend said that the Department was instituting a review of the 1971 Act. We have waited. We have had statements virtually at three-weekly intervals from my right hon. Friend and his hon. Friend to the effect that the review is progressing. Nine months have passed and the bills have piled up. We are still awaiting the outcome.

Recently my hon. Friend the Chief Secretary, in a speech in London, seemed to imply that the Government felt that this was not the suitable moment for action on this front. I was relieved this morning to receive from my right hon. Friend a letter in which he assured me that the Chief Secretary's statement was not to be seen in any sense as a formal statement on Government policy. … I assure you that no decisions have yet been taken. … We have not yet completed our review. The review is not a screen behind which we are hiding a decision already taken to do nothing. I hope that is so. Frankly, I do not think we would be at all well advised to be deterred from taking action by the fear that this might in some way incommode Mr. Vic Feather or his colleagues in the TUC and discourage them from participating in further tripartite discussions. I do not believe there is a prospect of Mr. Hugh Scanlon or Mr. Jack Jones signing a piece of paper with any validity on the subject of income control, any more than I believe in fairies. However, this is not the moment to discuss that issue.

If this is not regarded as the time to take a decision, I think we are entitled to ask my hon. Friend what will be the right moment. It seems improbable that the desire for some form of tripartite negotiation will not be with us for some time to come. We should recognise that the argument that we sometimes hear from the benches opposite that the escalation of industrial dispute subsidies is a consequence of the Industrial Relations Act is utter nonsense. Any examination of the figures shows that the escalation began long before the passage of that Act and long before the arrival in office of the present Government. Between 1962 and 1967 the average number of stoppages of more than 12 days' duration was 65 per annum. In 1968 the number was 104, in 1969 it was 417 and in 1970 555. The escalation had occurred long before the present Government took office. The same applies to the number of days lost by stoppages where supplementary benefits were a factor.

It is clear that the escalation started with the passage of the 1966 Act. It started at that point for a very clear and specific reason, that prior to the passage of the 1966 Social Security Act the onus was on the individual striker to establish the need of his family for supplementary benefit, but in Section 10 of the Social Security Act 1966 supplementary benefit was laid down as a right. The consequence was that from then onwards the onus has been on the Supplementary Benefits Commission to prove that supplementary benefit should not be paid.

My proposal, therefore, has for some time been that we should, in the first place, recognise, as does every other advanced industrial country, that the fundamental obligation in an industrial dispute to finance the families of those involved rests fairly and squarely on the union. Secondly, supplementary benefit should be payable only where individual need is established by the striker, as was the position before the passage of the 1966 Act.

Of course, I do not suggest that such changes would usher in a new era of industrial peace, but I believe that they would do far more to combat the pressures of inflation than a thousand and one nights of tripartite talks. They would help at the margin to encourage employers to resist what they regarded as intolerably inflationary claims, whereas today they do not feel that they have a chance with the dice loaded so heavily against them. They would encourage what is often the majority of those involved in a potential industrial dispute, who do not wish to come out, to resist the pressures from a minority of extremists. They have precious little incentive to do that at present.

Such changes would also encourage greater public willingness to resist the pressures of a highly inflationary claim backed by a national industrial dispute. It is pointless to call upon the public to stand up to blackmail, as my right hon. Friends have from time to time, when the public are being required by law to subsidise the blackmailers on a massive scale.

Finally, and in some ways perhaps almost as important as the rest of my points put together, my right hon. Friends should not under-estimate the unease in the country about the scale of abuse of the supplementary benefits system in industrial disputes. Unless we are prepared to deal with it as a matter of urgency, there is a danger that we shall bring the entire supplementary benefits system into disrepute. That would do far greater damage to many others who are much more demanding claimants on the system than are those who are striking today, in most cases for their own material gain.

12.48 a.m.

The Under-Secretary of State for Health and Social Security (Mr. Paul Dean)

My hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) has expressed concern which is widespread throughout the country. The Government are aware of it and take it seriously.

We are not talking tonight about strikes as such, about their prevalence, the damage they cause, their cost to those who work and observe their contracts or the price paid by innocent people, including pensioners who are badly affected by inflation. We are dealing with a part of this wider problem, namely the response of the social security system to a strike. This raises complex issues of both social policy and industrial relations. In this context the Government's aim is to find the right balance between providing reasonable financial support for wives and children against hardship during a strike and not giving the militants a financial base to resort to strike action regardless of the consequences.

My hon. Friend has said that supplementary benefit was justified where there is genuine need. It is a matter of great concern that some elements in the claimants' unions and some political extremists have seen fit to describe supplementary benefit as the greatest strike fund of all and to encourage employees involved in some disputes deliberately to rely on supplementary benefit instead of looking to their union or other alternative sources of finance. In doing this these disruptive elements have not stopped short of trying to involve the staff of local social security offices in confrontations over what they describe as their rights.

My right hon. Friend the Secretary of State for Social Services has made it clear how greatly we deplore activities of this kind, as, we believe, do most people, not least the moderate trade unionists who accept that social security benefits are not a proper method of financing strikes. Although I know my hon. Friend is not under any misapprehension on this score, there is widespread misunderstanding outside the House about what exactly is and is not available by way of supplementary benefit to people involved in strikes during the dispute and after the resumption of work.

I shall put the facts on record, and I refer to the Ministry of Social Security Act 1966 and the Social Security Act 1971. A striker's personal requirements are to be disregarded for the duration of the stoppage so that benefit is normally only payable for the requirements of any dependants and for reasonable housing costs. The most common resource available to a striker's family—family allowance—counts in full as income against his supplementary benefit requirements and any PAYE refunds and trade union dispute benefit available to a striker's family counts as income, subject only to a disregard of £1 of the total amount. Payments under Section 13 of the 1966 Act may be made entirely at the discretion of the Supplementary Benefits Commission to single strikers who are in urgent need. In deciding whether to make any such payments the commission is not bound by any of the normal rules in determining a claimant's requirements and resources.

Since 3rd April this year any payment for supplementary benefit made in the fortnight following a return to work is recoverable, normally by means of a deduction from pay by the employer. Further, supplementary benefit will not normally be paid in the first fortnight of a dispute when employees have their first week's wages and a week's "wages in hand" available to them. Nor is benefit paid to meet commitments incurred before a strike began, such as hire-purchase instalments, rent arrears or outstanding gas or electricity bills.

Because we were concerned about the exploitation of supplementary benefit the Government immediately set about reviewing the existing supplementary benefit provisions when we came into office. We quickly introduced two important modifications in the Social Security Act 1971. We decided first that the practice which had grown up over the years of disregarding, on a discretionary basis, a striker's personal income up to the level of his own requirements—then £4.35 a week and now £5.45—must be ended because it negated the provisions of the 1966 Act that a striker's requirements are to be ignored. The position was therefore regularised by giving a statutory disregard of £1 in the 1971 Act.

Secondly, any payment of supplementary benefit made following the resumption of work after a trade dispute was made recoverable by the employer from wages so that it is no longer advantageous for an ex-striker to get non-repayable supplementary benefit on return to work instead of a "sub" or an advance of wages from his employer which he must then repay.

The precise effect of these two changes made in the 1971 Act is difficult to establish. Clearly a reduction in the disregard will have resulted in less supplementary benefit being paid to claimants who had PAYE refunds and dispute benefit available to them. But the extent of the saving is not known. Some commentators have suggested that the result has been to discourage unions from giving strike pay, but this has not yet been shown to be generally true, nor can the motive always be ascribed to the social security provisions.

As to the recovery of post-dispute payments, the position is that between the beginning of April this year, when this provision became effective, and the end of November £242,000 has been paid. Since recovery of payments is normally spread over 10 weeks, the full amount has not yet been recovered, but there is no reason why most of it should not be eventually recovered.

My hon. Friend claimed that the 1966 Act started the rot, but he also said that the problem was deeper than that. It is true that the 1966 Act emphasised the concept of entitlement to supplementary benefit as opposed to a grant of assistance, and supplementary benefit scales have risen annually and quite substantially in the meantime. Obviously these improvements in our social security arrangements made it more attractive for strikers' families to rely on supplementary benefit when they had insufficient other resources, but it is no less true now than it was before 1966 that any resources are taken into account in accordance with the normal rules. Indeed in one respect the position now is less favourable for strikers as the 1971 Act reduced to £1 the striker's disregard—that is, the amount disregarded from his personal resources.

My hon. Friend will know that the Government are engaged in a thoroughgoing and extensive review of all aspects of supplementary benefit for strikers. He has referred to reports of a speech by my hon. Friend the Chief Secretary and the letter which my right hon. Friend the Secretary of State wrote to him. My right hon. Friend made clear in that letter that what my hon. Friend the Chief Secretary said was in no sense a formal statement of Government policy but was merely an attempt to indicate to those at the conference he was addressing some of the conflicting considerations that Ministers must bear in mind in deciding what policy is appropriate.

The Government's review has not been limited only to the operation of the changes introduced by the 1971 Act. It has embraced all aspects of supple- mentary benefit payments during disputes. I ask my hon. Friend to accept that a review of this kind involves complex considerations of social policy and industrial relations which cannot be settled quickly. There is no self-evidently right and generally acceptable new policy, and the Government are, therefore, right in such circumstances to take what they regard as sufficient time to ensure that, if a change is to be proposed to Parliament, any alternative arrangements provide a firm base for the future.

I therefore ask for my hon. Friend's forbearance. The review is not yet complete, but I give him an unqualified assurance that an appropriate statement will be made when the Government come to a decision.

Question put and agreed to.

Adjourned accordingly at two minutes to One o'clock.