REDUNDANCY PAYMENTS (Hansard, 1 February 1972)

§ The Minister of State, Department of Employment (Mr. Paul Bryan)
I beg to move, That the Redundancy Fund (Advances out of the National Loans Fund) Order, 1972, a draft of which was laid before this House on 17th January, be approved. The order will empower my right hon. Friend to obtain temporary loans for the Redundancy Fund to a maximum of £20 million from 28th February. The purpose of the fund is to assist employers declaring redundancies by making rapid payments of 50 per cent. of the statutory redundancy payments to which their employees are entitled. It also makes guarantee payments to the employees of firms which, because of insolvency or for other reasons, cannot themselves pay.
The fund is normally financed by contributions from employers generally, which are collected from the National Insurance contribution and which at present are 6.3p for men and 2.9p for women. Under Section 35 of the Redundancy Payments Act there is provision for loans up to £8 million from the National Loans Fund. The total borrowing limit may be increased to a maximum of £20 million if both Houses approve orders authorising the additional amounts.
The state of the fund has fluctuated considerably since the introduction of the Redundancy Payments Scheme in December, 1965. Expenditure from the fund is necessarily linked with the incidence of redundancies, so the fund is especially vulnerable in times of rising unemployment, but expenditure is also affected by the ages, length of service and rates of pay of the workers who become redundant.
Through a combination of these various factors, a trend to deficit appeared in the latter part of 1966. It proved necessary then to increase the borrowing limit to £12 million from August, 1967, and, notwithstanding increases in the contribution, to £15 million from April, 1968, and to £20 million from August of that year. By March, 1969, the deficit was over £17 million. The Redundancy Rebates Act which came into operation in that month 382 decreased the rate of outgoings from the fund by reducing the employer's rebate to 50 per cent. of the payment due to the employee.
In 1969 and 1970 the number of redundant workers qualifying for payment remained relatively stable. These factors together enabled the loan to be fully repaid from the fund by the autumn of 1970. By the end of that year the fund carried a surplus of £2¾ milion. However, during 1971 redundancies increased sharply. The number of payments from the fund in that year, provisionally 369,000, was one-third greater than in the previous year. The average payment in 1971 exceeded the 1970 figure by 15 per cent., higher wage levels being a big and important contributory factor. As a result the surplus in the fund, which had been £3¼ million in the middle of April, began to disappear and by the middle of July the fund was once more in deficit. Since then the deficit has been increasing at various rates, apart from two short periods at the beginning of October and after Christmas.
At the end of the year the deficit had reached £4¾ million and at the end of last week it was £5,897,000. If it continues to rise at anything like the rate it has done in recent months, the £8 million limit which can be borrowed from the National Loans Fund will be reached within a matter of a month or so. It is not possible to predict the exact date when this position will be reached or how the fund will behave beyond this point. Much will depend on what happens to the levels of unemployment and earnings. There are encouraging signs of a reduction in the rate at which wage rates are increasing and we are confident that the massive measures we have taken to stimulate the economy will be increasingly successful, although they will take time to work their way through to employment.
But experience throughout the life of the fund has shown how difficult it is to forecast what its future position will be. There is no hard and fast link between outgoings from the fund and the level of unemployment. I have already referred to the fact that expenditure is affected by age, length of service, rates of pay and so on, of those who become redundant, and the causes of redundancy are complex. Even in periods when new 383 employment opportunities are being created, other jobs may disappear through changes in the pattern of demand or in the organisation of industry or methods of production. For example, the mechanisation of the handling of goods and materials has done away with many unskilled portering jobs but has created fresh opportunities for skilled labour, such as forklift truck driving.
Although our predecessors recognised the difficulty in the way of forecasting the future of the fund, this did not deter them from making various proposals for increasing the borrowing limits to figures short of £20 million, which they apparently hoped would be sufficient. As a result, no fewer than three borrowing orders had to be introduced within a period of 12 months. This does not seem to us to be a sensible precedent to follow. Given the difficulties of forecasting, we think the right thing to do is to increase the amount which the fund can borrow to the maximum figure of £20 million for the next two years. This does not mean that we think this figure will necessarily be reached or approached, but it will give us a reasonable degree of flexibility in administering the fund.
For the time being we intend to rely on the proposed increase in borrowing power. We shall, however, continue to keep a close watch on the state of the fund with a view to putting forward proposals, should they be necessary, to bring the income and expenditure of the fund into balance by adjusting contributions.
In conclusion, I should say something about the Redundancy Payments Scheme itself. As the House is aware, my right hon. Friend the Secretary of State has been carrying out a review of the scheme. Before any decisions are reached about what changes, if any, should be made in the scheme, the Government consider it desirable that there should be full public discussion of the various issues involved. For this purpose my right hon. Friend proposes to issue a consultative document. This will examine how the scheme has operated in the light of experience, how far it has achieved its original objectives and whether changes are now required either in its objectives or in the means by which they are secured.

§ Mr. Harold Walker (Doncaster)
From this side of the House tonight we shall not oppose the order, nor shall I level much criticism at it, although there are several questions which we must put to the Minister of State to which we shall expect answers before the House approves the order.
Before proceeding to those questions, may I say that I deeply deplore the failure of the Government to produce any account whatever of the Redundancy Fund since they took office. The most recently published account was that of November, 1970, relating to the financial year 1969–70. We have no statement either of the current state of the fund or of the income and expenditure for the year 1970–71 apart from that which we have heard briefly delivered orally this evening. This is a most regrettable state of affairs. It is tantamount to the hon. Gentleman coming to the House and seeking a blank cheque.

§ The Under-Secretary of State for Employment (Mr. Dudley Smith)
No.

§ Mr. Walker
The Under-Secretary denies that, but it is a bit much when the Minister of State asks us to approve the loan of £20 million to meet the requirements of a fund, details of which are not laid before the House and we have not had an opportunity to study them. I deplore and most strongly condemn the circumstances which make this order necessary.
I agreed with the Minister of State when he said that there were a number of factors which influenced outgoings from the fund, such as age and pay levels and length of qualifying service, but there is not the slightest doubt that the overriding factor is the number of claims made on the fund, which means the number of persons made jobless. Another factor may be the demands made on the fund during periods of relatively stable employment. I am sure that no hon. Member can say that the order is not before us because of the sharp and almost unprecedented level of unemployment since the present Government took office.

§ Mr. David Mitchell (Basingstoke)
And before.

§ Mr. Walker
Does the hon. Member for Basingstoke (Mr. David Mitchell) wish to interrupt?

§ Mr. Mitchell
I was rather taken aback by what the hon. Member for Doncaster (Mr. Harold Walker) said and, therefore, I intervened from a sedentary position, for which I apologise, Mr. Deputy Speaker. Perhaps I shall be able to reply to him when I seek to catch your eye later in the debate.

§ Mr. Walker
That was a quick ride away. I await with interest the observations of the hon. Member if he catches your eye, Mr. Deputy Speaker. It is not good enough for the Minister of State to try to suggest that the level of unemployment is not the significant factor operating here when during the lifetime of the previous Government, every time the then Minister brought a similar order before the House, his hon. Friends made precisely the same charge as I am levelling now. The hon. Gentleman cannot get away with this volte-face.
For example, on 23rd July, 1968, when we had a similar order before the House—I readily acknowledge that—the hon. Member for Paddington, South (Mr. Scott) said: The very fact that the total level of unemployment is rising means almost certainly that the numbers who are making claims upon the fund will rise; so there must be some link somewhere. I should be surprised if the high and, indeed, rising level of unemployment was not having a significant impact on the present state of the fund. One thing that they both have in common is that the accuracy of the forecasts by right hon. and hon. Members opposite have been miserably inadequate. I do not want to stray out of order, but forecasts have been made about the state of the fund and about the level of unemployment. Both have been proved wrong. I believe that there is a link between the two. The present Secretary of State for Employment, in winding up that debate for the Opposition, said: The hon. Gentleman cannot get away with the suggestion that the increases in redundancy payments have nothing to do with the unemployment figure. This must have something to do with it because, by definition—although, of course, the linkage is indirect—there must be some linkage between rising unemployment and, therefore, people losing their jobs, and the payments from this fund." —[OFFICIAL REPORT, 23rd July, 1968; Vol. 769, c. 363–4, 395–6.] Contrasted with the present level of unemployment which has risen as it has 386 during the last 18 months, the level of employment at the time of that debate was relatively static. Therefore, the right hon. Gentleman on that occasion was speaking in an entirely different situation from the present dramatically changed situation. To try to pretend that the arguments then used by the Conservatives have no relevance today is a little too much to stand.
The Minister of State went into some of the historical background of the fund. Every time the accounts of the fund have been discussed there has been ready acknowledgment of the difficulty of forecasting. I quite understand the hon. Gentleman's readiness to refer to the difficulties when we remember that his right hon. Friend the Chancellor of the Exchequer some eight months or so ago was prophesying that his measures would take approximately two months to work through the economy and to start to have an effect on the level of unemployment. We all know that month by month there has been yet another dramatic increase in the unemployment figures until we now have the catastrophic level of more than 1 million unemployed.
I acknowledge the difficulty of forecasting, but surely experience over a period of time must provide some kind of yardstick. The pioneering years of the scheme which led to substantial revisions in 1968 and 1969 in respect of both contributions and rebates must have taught us something. In those days unemployment was running higher than the pattern in preceding years. I acknowledge that it was higher than when the original contribution and rebate level were established. But the adjustment that followed in 1968–69 seemed then to be certain to put the fund into substantial and continuing surplus for at least some years, even though we felt that the level of unemployment which then persisted was too high.
It is important to point out that a Written Answer to a Question by my hon. Friend the Member for Manchester, Blackley (Mr. Rose) in col. 85 on 17th January, 1972, may be rather misleading, although I am sure not intentionally so. The answer then given by the Under-Secretary was that for the year 1970 there was a surplus in the fund of £2,754,000. I think that was the figure given by the Minister of State in his 387 speech this evening, but the statement of account of the fund for the year ending 31st March, 1970, shows an excess of income over expenditure of about £14.1 million. It may be that this apparent discrepancy arises from the use of different accounting periods being based on the usual financial year whereas the Under-Secretary's reply may well have related to the calendar year. The answer does not make the position clear.
We have not been able to check the figures because, as I said earlier, the latest accounts have not been published and we are entirely dependent on the figures which were given a little earlier by the Minister. I should like the hon. Gentleman to qualify the situation. If he has adopted different periods for accounting purposes, perhaps in future he will feel it advisable to harmonise the accounting periods used by the political and accounting sections of the Department so that the answers to Questions are not, as in this case, completely devoid of meaning.
I should like the Minister to shed a little light on the reference to the deficit for 1968 in the answer to which I have referred. We ought to know the precise period over which that deficit was incurred. Was it a deficit for that particular financial year or a cumulative deficit which carried forward the deficit from the previous year or years? Before approving the order, the House is entitled to have a clear picture of the administration and accounts of the fund placed before it. Despite the Questions which I have put to the Department, and having scrutinised such accounts as are available and listened to the hon. Gentleman tonight, such a picture seems as elusive as the pursuit of the Holy Grail.

§ Mr. Bryan
Nonsense.

§ Mr. Walker
The Minister says "Nonsense". I hope that later he will give me the clear picture which I am seeking. I shall readily acknowledge my error if he is right.
By the absence of statements of account for the last financial year the Minister is offering the House a pig in a poke. Not only is there the difficulty of reconciling the Minister's answers to Written Questions on such accounts as have been published, but there are irreconcilable in- 388 compatibilities between the answers given by the Minister over a very short period.
On 17th January, in answer to a Written Question, the Minister gave a table showing the numbers of persons who had received payments under the scheme each year since its inception. Yesterday, in answer to a further Written Question, he gave me a table of payments made each year to men and women. For the years 1967, 1968, 1969 and 1970 the number of persons receiving payments was substantially in excess of the number of men and women combined. Presumably the difference between these figures was accounted for by persons under the age of 21 who, by definition, are excluded from the tables for men and women but are still eligible for redundancy payments if they qualify.
For the period from 6th December, 1965, to 31st December, 1966, we see the very opposite. The number of men and women combined is more than 1,500 in excess of the number of persons receiving payments. Will the Minister tell me who these non-persons were? There may have been an error. If so, it calls into question the reliability of the figures with which we have been presented.
Again, contrary to the pattern which I described in the four years 1967 to 1970, the number of men and women who qualified for payments in 1971 exceeded by nearly 4,000 the number of persons given in the earlier reply of 17th January which the Minister of State has repeated tonight. But again tonight, as then, the hon. Gentleman said that the figure was provisional.
The important point about this matter is that if the pattern of those previous years persists, a more realistic figure for the number of claimants during 1971 is not 369,000, which the Minister gave tonight, or the larger figure of 372,725 being the number of men and women together, which was given in the hon. Gentleman's Written Answer yesterday, but probably about 380,000, which is by far the highest number of people receiving redundancy payments in a year since the scheme started. It is a staggering increase on the preceding year and a 60 per cent. increase over the average for the duration of the scheme under the Labour Government.
389 This is a very sad and sorry indicator of the grief, misery and hardship that is being endured throughout the land as a result of the unemployment which stems directly from the Government's policies.

§ Mr. David Mitchell
Shame.

§ Mr. Walker
The hon. Gentleman says "shame". He ought to talk to the 10 per cent. of the male workers in my constituency who are looking for jobs but cannot find them. He should talk to some of the 1 million-plus who are unemployed about whether they are suffering grief, misery and hardship and whether they believe, as I do and as all our people believe, that it is the direct consequence of policies pursued by the Government. It is the Government's failure to rectify the causes of unemployment which is directly responsible for this misery and suffering. It ill becomes the hon. Gentleman or anyone on his side of the House to say "Shame" when they are presented with what are the hard, stark facts.

§ Mr. Robert Redmond (Bolton, West)
Is the hon. Gentleman suggesting that the Government have set out to create unemployment or that we on this side of the House are any less concerned than he is about the unemployment figures? The figures are not the result of the present Government's policies; they are rooted in the credit squeeze which began in July, 1966.

§ Mr. Walker
I suggest that the hon. Gentleman looks at the figures for the time when we left office and the trend of the figures since 1966.

§ Mr. Redmond
Double.

§ Mr. Walker
If the figures were plotted on a graph, the hon. Gentleman would see a remarkable and accentuatingly sharp upsurge in a curve resulting in the disastrously high level of today. I wonder where the hon. Gentleman has been when we have debated unemployment in the past few weeks, when it has been made clear beyond doubt—

§ Mr. Redmond
I have been here.

§ Mr. Walker
—that every reputable economist, every newspaper commentator and everyone on this side of the House believes that the causes of unemployment are the policies pursued by the Govern- 390 ment. [HoN. MEMBERS: "No."] I can only tell hon. Gentlemen on the Government side that they are in a tiny minority and they ought to try to sell their argument to the unemployed. The reasons have been pointed out and I should be only too happy to reiterate them: the withdrawal of investment grants, the lame duck philosophy pursued by the Government, which has completely destroyed business confidence—

§ Mr. Redmond
Have a go on S.E.T., too.

§ Mr. Walker
—and the cuts in public expenditure. The hon. Member for Morecambe and Lonsdale (Mr. Hall-Davis) thinks that this is funny, but I have never thought that unemployment was a laughing matter.
It may well be that redundancy payments and wage-related unemployment benefits have cushioned people who lose their jobs against the kind of hardship I saw and experienced at first hand in the 1930s, but I must tell the hon. Gentleman that the loss of a job is still the most grievous misfortune that can befall a working man and his family. Not only is financial hardship involved; the destruction of a man's morale and the blow to his spirit are desperately important matters. It ill behoves any hon. Member either to laugh at this or to treat the unemployed as a political football. When I say that I believe that the policies pursued by right hon. and hon. Gentlemen opposite have caused this unemployment, I believe that to be so. I also indict them for their failure to have the necessary policies to put the economy back in a direction in which unemployment would be reduced.
I have referred to investment grants and the loss of business confidence. I was also referring to the cuts in public expenditure. Hon. Gentlemen opposite do not seem to realise that for every £1 of Government expenditure that is cut, £1 is taken out of someone's wage packet. If one chops off sufficient pounds and if one chops off sufficient wage packets, one is chopping jobs. The man who loses his job does not have enough money to buy goods at the shop—

§ Mr. Bryan
Oh, no—

§ Mr. Walker
The Minister of State may not like it but I was led into this 391 argument by his hon. Friends who sought to repudiate my argument. By cutting expenditure we cut the jobs or people whose wages and salaries are represented by public expenditure.
I pointed out to the Secretary of State as long ago as July that to bring about a short-term reduction in unemployment he should embark on a massive programme of public works, encourage local authorities and nationalised industries to bring forward their spending programmes and encourage nationalised industries and Government Departments to bring forward their capital programmes. Belatedly and in small measure the Government are doing this, months after it was urged upon them.
It has been repeatedly argued on the Government side of the House that one factor leading to unemployment is the worsening of our competitive position because of increasing labour costs brought about by inflationary wage and salary settlements. I am an unrepentant believer in the need for a prices and incomes policy, but certainly not of the kind practised by the present Government and not necessarily of the kind practised by the Labour Government. We made mistakes, and I hope we shall learn from them. We grappled with the problem, but every time we tried to do something we were opposed almost without exception by right hon. and hon. Gentlemen opposite.
If the Government want to put increased purchasing power into the economy without adding to wage and salary costs, let them give increases to those in greatest need who, because they are not in employment, would not add to wage and salary costs—the retirement pensioners and the chronic sick and disabled—instead of giving them supplementary benefit. Those people would spend every penny of it, unlike those who are in receipt of the surtax giveaways which the Chancellor of the Exchequer introduced last year. That would have a direct effect on purchasing power.
I apologise, Mr. Deputy Speaker, but I was compelled to pursue that argument by the interventions, sometimes from a sedentary position, of hon. Gentlemen opposite.

§ Mr. Bryan
Possibly also because of the lack of support from the hon. Gentleman's side of the House.

§ Mr. Walker
I am not sure what that remark is intended to mean. My hon. Friends probably realise that I do not need support when I take on the hon. Gentlemen and his hon. Friends.
To return to the issue before us, the Minister said that there was to be yet another consultative document from his Department on the future of the scheme. That answers the widespread Press speculation that the Government are contemplating changes in the scheme. Because of repeated allegations made by right hon. and hon. Gentlemen opposite when they occupied the Opposition benches, the Labour Government instituted a survey of the scheme. That survey was published in November, 1971. The Times pinpointed the essential features of the report on it on 17th November in a review of the Survey of the Effects of the Redundancy Payments Act, carried out for the Department of Employment and published by the Stationery Office.
The Times said: The basic findings of the survey are that the Act has had a beneficial effect on industrial relations and has broadly achieved its objectives. It has led to increased flexibility and mobility of labour … On a social level it has more or less correctly related payments to hardships …The report finds that the criteria used to determine the size of the lump sum payment are generally appropriate….The report appears to vindicate the philosophy behind the Act. While the scheme is not faultless, and there are anomalies that need to be rectified, it is wrong to look at the scheme itself for the difficulties that the fund is in and which give rise to the need for the order. Perhaps we should examine the fund's in-built tendency towards deficit, arising from contributions and payments being based on different principles. But neither that nor the need for a consultative document has anything to do with the need for the order. That arises entirely from the inept and maladroit policies that have produced over 1 million unemployed.

§ Mr. John Page (Harrow, West)
When the hon. Member for Doncaster (Mr. Harold Walker) started his speech I hoped that we should have a game of Parliamentary ping-pong tonight, but he 393 was induced by my hon. Friend the Member for Basingstoke (Mr. David Mitchell) to go in for rougher fighting, which is not appreciated in the House at present. We always admire the hon. Gentleman's speeches, because of the steadfastness with which he has always supported his right hon. Friends through thick and thin.

§ Mr. James Johnson (Kingston-upon-Hull, West)
That is loyalty.

§ Mr. Page
I will not be controversial and be led on by the hon. Gentleman to discuss the loyalty of Labour Members towards their former Secretary of State for Employment and Productivity at certain times during the "In Place of Strife" debate.
The hon. Member for Doncaster tried to pull the legs of my hon. Friends on the Front Bench. He said that they were adopting a different posture tonight from that which they had adopted on previous occasions. Having read with enormous entertainment, interest and admiration my own speeches on the two similar orders under the previous Government, I am happy to say that I shall be quite prepared to read them out from this side in the same way as I did then but with a difference, to which I shall come shortly.
There have been three increases in the employers' contributions to the Redundancy Fund during the past six years. In 1969–70 the total figure was £51 million. I wonder what it is today. Perhaps it is £60 million; it might be more. The hon. Gentleman's chiding of the Government for not producing figures earlier comes ill from a former Under-Secretary at the Department concerned. He must have known when he left office that the figures would not be available until November of last year, in the traditional way in which the figures are produced. It is strange that the hon. Gentleman should complain at the beginning of February of the following year about the slowness with which the figures are produced.

§ Mr. Walker
The hon. Gentleman has said that I am complaining because figures which are normally produced in November are not available at the beginning of February of the following year. I think that that is a just cause for complaint.

§ Mr. Page
I shall not go on with this argument. But it must have been clear to the hon. Gentleman when he was in office that the figures would not be produced before a certain date, and I do not see that he has grounds for complaining that they have not been produced in accordance with the schedule to which his right hon. Friend the Member for Blackburn (Mrs. Castle) was committed at the time.
1 am sorry that the hon. Gentleman did not quote from my last speech on this subject when I said that the industrial milch cow might be becoming a bit dry because of the constant milking by the icy-fingered milkmaid from St. James's Square. We now have a milkman, but the fingers are just as icy and industry has as much cause to complain now about the amount being taken from it for employers' contributions to the Redundancy Fund as it had before.
The welcome difference in the speech from the Treasury Bench tonight, in stark contradistinction to that which we heard when the previous Administration were in office, is that my hon. Friend has offered the country the hone of a complete restructuring of the Redundancy Payments Scheme.
The hon. Member for Doncaster said jeeringly that there would be another consultative document. The new system of producing consultative documents in the case of value-added tax, training, and the Code of Industrial Practice has shown how extremely valuable these documents are. Had there been a consultative document on S.E.T. instead of an absurd bulldozer procedure, many of the idiocies which occurred could never have happened. I am grateful to my right hon. and hon. Friends not only for suggesting consultation but for suggesting genuine consultation.
I feel that the order is inevitable, but we look forward with some avidity, keeping my hon. Friend on the graticules of our binoculars, to seeing the new scheme produced within a reasonable time.

§ Mr. A. G. F. Hall-Davis (Morecambe and Lonsdale)
This is a remarkable occasion. The hon. Member for Doncaster (Mr. Harold Walker) said that unemployment was a desperately important matter. I should not have drawn 395 that conclusion from looking at the empty benches on his side of the House. Not one Opposition Member has felt that a discussion of the operation of the Redundancy Payments Act warrants his being present to support the lonely figure of the hon. Member for Doncaster.
Twice during the past seven days the Opposition have debated unemployment and attempted to censure the Government. When it comes to making party points the benches opposite are full but when there is an opportunity to come forward with constructive suggestions on a matter bearing on assisting affected persons no one other than the Opposition Front Bench spokesman who has been detailed to speak thinks it worth while to attend. I hope that this is borne in mind when some of the hollow phrases echo from those benches in future.
The Redundancy Payments Act has been an effective Measure even though it is somewhat crude and rough. It is a perfect example of commonsense and general sentiment triumphing over the finer points of logic. It is also a fine example of a Government, and I give full credit to the party opposite for this, setting a trend, pointing a path, and the theme being taken up by industry, then refined, developed and shaped in the light of experience. My hon. Friend the Minister says that he will be issuing a consultative document. I hope that the Government will look at what industry has done to adjust and refine the protection of the redundancy payment provisions.
Firms combine provision for age and length of service. The hon. Member for Doncaster said he thought the balance was right but I have never thought this and I do not feel it today. More emphasis should be placed on the difficulties of redundancy at a later age and if necessary, to achieve the right balance, there should be less emphasis on compensation for those made redundant in the prime of life when they have the best prospects of obtaining new employment. Many firms have introduced a special age supplement in addition to the statutory protection for those becoming redundant at or about the age of 60. I hope that the Government will look first at the possibility of being more generous in the provisions for those who, while they may 396 obtain further employment, are unlikely to be able to obtain it in occupations where they can sustain the level of earnings they had in firms where they had many years of service.
I turn now to the rebate. The last Government placed enough impositions on industry and when they relieved the industry generally of the need to increase the redundancy levy this did not perhaps attract a great deal of comment. The thinking behind it was suspect. There are two situations in which firms declare employees redundant. The first, and we have seen a great deal of this in the last 12 months, is where a firm is still vigorous and prospering but is in the middle of a restructuring operation involving the closure of out-of-date plant or plant no longer situated in the most economic place for future operation. Those firms probably account for a substantial proportion of the redundancy payments but other firms declare employees redundant because they are facing a difficult time and reduced demand. I hope that if there are to be enhanced redundancy terms the payment will not fall on the firms directly concerned but will be met entirely from the general fund, because there is a case for looking with some suspicion at a reduction in rebate.
I mention this for another reason. We are constantly searching for policies to assist the regions. A great deal of redundancy has taken place in the regions in the older industries which face substantial problems of employment and renewal. If the redundancy payments were carried generally by industry, that would have two effects. It would mean a modest measure of help to the regions and would encourage firms to make more generous provision in redundancy cases and would encourage them to an extent which should not be under-estimated.
One final point. The £40 maximum for payments taken into account in applying the formula has remained unchanged since the inception of the scheme. Either it was too high then or is too low now. I have not looked up the figures but I suspect that average industrial earnings over this period have increased by one-half. The maximum when the Act was introduced was probably about double the average industrial earnings. It is no more than 33⅓ per cent. above average 397 earnings today. There must be a case for looking at this figure.
I wish to refer briefly to the more general strictures of the hon. Member for Doncaster concerning the causes of unemployment. He made some indirect suggestions. May I suggest that at the conclusion of the debate he beats his solitary retreat from the Chamber and looks at a letter in The Times today by Professor Nicholas Kaldor, who says that there is no need to look for mysterious reasons why suddenly unemployment has grown. Professor Kaldor says that this is due to the absence of demand which is responsible for the unemployment levels of today.
We do not have to look far for that absence of demand. It is attributable to two factors. First, it is the direct responsibility of the previous Government, which increased taxation to such a high peace-time level-taxation which the present Government have largely removed. Secondly, it was the explosion of industrial costs which have pushed up prices, engineered by the Labour Government in the mistaken belief that it would lead them to win the General Election. If any hon. Member wishes to learn the lesson in front of him, it is that overtaxation and cost inflation are the prime contributors to unemployment.

§ Mr. David Mitchell (Basingstoke)
I listened with considerable care to the hon. Member for Doncaster (Mr. Harold Walker), who has been an assiduous attender at debates on this subject and who is now in the unhappy position of finding himself lacking the support he might reasonably have expected from the benches behind him. We join with him in his sense of difficulty in the position in which he finds himself.
I listened with considerable pleasure to my hon. Friend the Minister of State in opening the debate, because before coming in for the debate I had some hesitation in supporting the Government in this matter in view of the things we said when we were in opposition and because of the Amendments we then moved to the legislation which is now in operation. I am delighted that my hon. Friend was able to announce this evening that there has been some rethinking and that there will be a consultative 398 document, which no doubt it will be possible for the House to discuss.
Two things must be borne in mind. The first is that payments out of the fund are in no way related to the loss incurred by the individual who makes a claim. He may be able to cross the road to a better job and collect a payment at the same time. Equally he may suffer severe loss and still receive the same payment. This does not seem an equitable basis on which to proceed with a scheme like this.
I can give one example concerning a factory which was sold. A number of the employees were asked to travel 10 miles on a difficult journey to work at another factory owned by the same company. They agreed to do so. They continued to work for the same employer and did not have any call upon the fund. The rest of the employees remained working in the same job, in the same plant as before, but were now working for a new employer. They were therefore eligible for a payment. This is yet another example of the misuse of public money.
We are entitled to ask for an assessment of how the scheme could operate in terms of the best value for money. It has many aspects which the Government are quite right to re-examine. The sort of scheme that was outlined yesterday in which money will be spent on retraining is a far better investment for the country than some of the ways in which money will be spent out of the additional funds that we are asked to vote this evening.
I must respond to the invitation by the hon. Member for Doncaster when he spoke about unemployment and the 10 per cent. of his constituents who are unemployed. He suggested that it was a direct consequence of the Government's actions. I hope he will, to quote his own phrase, "look at the trends". I hope he will look at the direct relationship between the growth in the underlying productive potential of the country—something like 3 per cent. per annum —and the growth in demand which was achieved while his Government were in office. In 1968 there was a 5.6 per cent. growth in demand against a 3 per cent. increase in the underlying productive potential. In 1969 the growth in demand had sunk to 2.6 per cent. and in 1970 to 399 1 per cent., and in 1971 it has risen to 1.5 per cent.
There is a clear trend back to 1968, when the Labour Government were in office, of a far lower level of demand than the increase in the productive ability of industry. With figures of this sort it was inevitable that there should be a growing level of unemployment. It is a deep-seated problem and to use cheap catcalls about its being the responsibility of the Government is beneath the normal stature of debate of the hon. Member for Doncaster and I am surprised to hear him do it.

§ Mr. Bryan
With permission, I should like to reply to the points made by the hon. Member for Doncaster (Mr. Harold Walker), the one Member of the Opposition who has shown enough concern about redundancy to stay up to the late hour of ten o'clock to discuss what he has presumed to tell us is an important point—and he no volunteer, he a conscript. He is not in a strong position to lecture hon. Members on this side who have bothered to come here—I am the only conscript on this side, but I would be a volunteer anyway—about whether we are concerned about unemployment or redundancy.

§ Mr. John Prescott (Kingston upon Hull, East)
Then where was the Minister during the industrial relations debates?

§ Mr. Bryan
I realise that the hon. Member is present but, having seen the subject for the Adjournment debate, I know why he is here.
In answer to the hon. Member for Doncaster, I too thought, when I was preparing for this debate, that the accounts had been late in coming forward, so I looked up what had happened in the past. In 1966–67 they appeared on 27th February, the next year on 27th January and in 1968–69 on 4th February. When we came to office in 1969–70, they appeared on 24th November. This year we are somewhat behind but we are no later than the previous Government. I will see whether they can be produced earlier in the future.

§ Mr. Harold Walker
Could the Minister give the House an example of our 400 Asking approval of a further loan without having previously made the figures available to the House?

§ Mr. Bryan
I cannot produce that answer off the cuff.

§ Mr. Walker
Perhaps the hon. Gentleman will look into that one.

§ Mr. Bryan
Certainly, but I do not feel in a weak position about this.
The hon. Gentleman asked me whether the deficits were cumulative or every year. He was referring to the Question of the hon. Member for Manchester, Blackley (Mr. Rose). The figures in that answer, which are listed for the years 1966 to 1971, one after another, are the current deficits, on 31st December, of those respective years. The hon. Gentleman then showed discrepancies between figures. He seemed to be comparing provisional with final figures, but as there were so many I will go through them and put them on paper for the hon. Gentleman.

§ Mr. Walker
Is the Minister suggesting that the figures which I quoted for 1965–66 were provisional?

§ Mr. Bryan
No, I am not claiming that, but in toto that is the general explanation of the point made by the hon. Gentleman. But these are not vital points.
The hon. Gentleman suggested that the general increase in these figures was due to unemployment. Unemployment has of course increased in every year since the scheme was first introduced in 1964. But, as the hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) discovered in the past, there is no exact mathematical relationship between unemployment and the Redundancy Payments Scheme. That was what the hon. Member discovered in 1968, when he asked the House for what we are asking for tonight: borrowing powers up to £20 million.
With all the steps we have taken to try to bring down the unemployment figures, we are expecting a downturn in the coming months. Even then, however, it is sensible to say that one could have better unemployment figures and still have rising redundancy figures. As we have heard in the debates over the 401 past weeks, there are two kinds of unemployment—unemployment due to lack of demand and structural unemployment. There could be more activity, more employment and less short-time working together with, because of structural unemployment, an increase in actual redundancy at the time. Therefore, one's figure can go wrong—as well as policy, as the hon. Member's colleagues found when they were in power.
Apart from all this, machinery and other factors come into the redundancy picture, which, as we have said before, led to the hon. Member for Sparkbrook coming to the House three times in 12 months asking for further borrowing powers. Each time he was more confident than the last that it was all he would require, except for the third time when he was rather less confident. He explained that there were too many variables to get an accurate figure. We were told not only that earnings went up but that age, length of service, the numbers of unemployed and structural changes all had an effect. Obviously we have learned from the experience of the Labour Government, and we have decided to get within ourselves and to have some room for manoeuvre.
The hon. Gentleman rather sneered at the idea of a consultative document but we believe that the device or machinery, or whatever one calls it, of a consultative document is an extremely good one. We had a consultative document on the Code of Industrial Practice which we consider to be a great success, and that is what we shall say tomorrow. It produced a lot of advice and suggestions from all over the country and from all interests, except the party opposite, which did not care to take part. We believe that it is a great success.

§ Mr. Walker
The hon. Gentleman must not say things which are not true. He says that my party chose not to take part in the consultative processes leading up to the Code of Industrial Practice, but my party was invited to do so only by a debate in this House, in which we obviously took a full part. If the hon. Gentleman would take the trouble to look at my speech—it was a very good one—on that occasion, he would see that it was a catalogue of suggestions to his right hon. Friend, many of which, I am 402 delighted to say, are in the code of practice that his right hon. Friend has now adopted.

§ Mr. Bryan
I remember the hon. Gentleman's very long speech.

§ Mr. Walker
It was precisely the same length as the Minister's—exactly 30 minutes.

§ Mr. Bryan
I do not think this is important. On this point, however, the trade unions decided not to take part in the consultative process. That is without doubt true, and as a large number of hon. Members who are interested on the Opposition benches are trade unionists, I do not think the hon. Gentleman can say that they took a full part.
That is not what we are discussing, but to continue regarding the device of a consultative document we have today published a document on training which I believe will be a milestone in the history of training. We are shortly to get the consultative document on the Redundancy Payments Scheme and I believe that it will serve its purpose.
Without doubt, the Redundancy Payments Scheme has its virtues but equally without doubt it is not perfect and can be improved. We have had valuable suggestions from my hon. Friends the Members for Harrow, West (Mr. John Page), Morecambe and Lonsdale (Mr. Hall-Davis) and Basingstoke (Mr. David Mitchell), but not from the Opposition benches.
When the consultative document comes out, it will open up the whole subject and we will have plenty to contribute, and I hope that there will be more than one hon. Member of the Opposition present to make a contribution.