UNEMPLOYMENT BENEFIT (Hansard, 17 July 1972)

§ Mr. Frank McElhone (Glasgow, Gorbals)
This is perhaps not the most appropriate time to begin an Adjournment debate, but I appreciate the important business that has gone before and pay tribute to the right hon. and hon. Members who have stayed the course for so long.
The subject of my debate is Section 1(2) of the Social Security Act, 1971. I pay tribute to the local social security managers in my area and in no way criticise them for their handling of the cases I shall mention. The managers are Mr. Tonner, Mr. Seaple, Mr. Batty and Mr. McIntosh. Within the scope of the legislation with which they have to work, they are most generous and humane persons and I have nothing but the highest praise for them.
The Social Security Act, 1971, causes a great deal of misery and hardship within my area. It affects people who 357 have been disqualified from benefit because they have left their job for no good reason, and other unfortunate people who have been charged with industrial misconduct. Industrial misconduct is hard to define but the unfortunate people who are charged with it find it extremely difficult to survive on the payments they receive under Section 1(2) of the Act. They now receive 40 per cent. less than do the people who are on supplementary benefit. Under the previous legislation there was a discount of 75p, but perhaps that amount was not considered by this Government to be a sufficient deterrent to people leaving their jobs. The application of a 40 per cent. reduction in the allowance given to these persons who have been refused unemployment benefit causes a great deal of hardship and misery.
I will confine myself to three specific cases, each different in character. The first one relates to a married man who worked for 25 years with the same firm before it was taken over. Then, because he left his job without just cause, he was disqualified from receiving any unemployment benefit. Subsequently, because his wife was working, he received no benefit from the supplementary benefits office.
This is a real hardship to the gentleman concerned. It is certainly very degrading for this person to have his wife keeping him for six weeks. The letter from the insurance officer indicates that this man had been disqualified because he voluntarily left his employment without just cause.
I shall not go into all the reasons why a person gives up a certain job. But with the present level of the high unemployment that is raging in Scotland and the North of England, no one gives up a job without just cause.
Another example of the hardship caused by this Act is that of a young man of 18, John Hamilton. He is the victim of a broken family. He suffered the accusation of industrial misconduct because of a dispute with a foreman of his employers. Therefore, he was allowed no benefit from the employment exchange. Subsequently, he was allowed only £3.50 from the supplementary benefits office. Anyone who takes an interest 358 in this sort of matter or who takes in boarders will know that no one can be kept for a full week on £3.50. If it had not been for the kindness and consideration of a Mr. Forsyth, an active member of my local tennis association, in looking after this young man, he would have found himself on the street.
It is absolutely monstrous that the Act should work in this fashion. Assurances were given during the passage of the Bill—I shall quote a few—that hardship would be mitigated. But the letter from the insurance officer says that while Mr. Hamilton would normally be allowed £4.05 plus the non-householder addition for rent of 65p, a total of £4.70, because of Section 1(2) of the Social Security Act, 1971, this has been reduced to £3.10. I mentioned the sum of £3.50 earlier, but in fact it is £3.10. I think that the Minister would agree that for a person to exist on £3.10 in 1972 is a grievous hardship.
The third and last case I wish to mention is that of a Mr. Richard McKissack. The Minister has had notice of this case. I have not chosen cases of ne'er do wells or those liable to the accusations that tend to come from the Government side of the House. Mr. McKissack is an engineering worker who now finds himself unemployed for only the second time in 35 years. He was working in a non-union engineering shop where the workers had not received a rise over the previous 16 months. I am informed by the local trade union official that during that period there was an average rise of £4 per week in the Glasgow area. But this gentleman did not receive such a rise from the firm for which he worked. He was working four machines—not, I hasten to add, at the same time. He felt that he had been unjustly dealt with by his employer and after a few words left the job.
This man found himself without unemployment benefit and went to the social security office. It was through no fault of the manager or the office, because he has to apply the regulations as laid down by Parliament, that this man received only £3.45 a week for six weeks. When one considers that an old-age pensioner gets a minimum of £6 plus rent and rates and this man was asked to live on £3.45 a week with the present very high cost of living, I must say that I do not think the Act was intended to be as savage as that.
359 I hasten to add that if the Under-secretary reads the Committee proceedings, as I did earlier today, he will see that the Ministers present on that occasion, his right hon. Friend in particular, were warned by trade union Members from this side of the House of the hardship that would come by imposing a 40 per cent. reduction on the benefit that a person could get from social security. Here we have a very bad example of a person being asked to live on £3.45 a week.
It was quite fortuitous that this man had a sister and he could live with her, but if he had not had his sister to live with he would get no rent or rates allowance and he would find himself in a desperate position. Any legislation that allows a situation like that to exist in 1972 certainly needs to be re-examined.
I should like to quote what the Secretary of State said in Committee concerning the criteria and the implications of the Bill. The right hon. Gentleman said: What we are all interested in is ensuring that this deduction"— that is, the 40 per cent.— which is not dramatic but which is enough to inconvenience a household—and is intended to be enough to make a marginal difference to the motivation of people at one end of the spectrum—is not imposed before a proper investigation as to the absence of fault. I would say that obviously no proper investigation can have been made when a man is asked to live on £3.45 a week.
When this matter was raised time and time again by Opposition Members, former trade union officers who are familiar with this procedure when it was operated under previous legislation, they received an assurance from the Secretary of State, who said: What I would like to do is to undertake that we shall consider writing in a reference to the Supplementary Benefits Commission's undoubted powers to meet exceptional need."—[Official Report, Standing Committee F, 11th May, 1971; c. 46, 79.] I raised the case of Mr. McKissack with the manager of the social security office. The manager hastened to tell me that Mr. McKissack would have a right of appeal. Unfortunately, however, because of the heavy backlog of cases in the Glasgow area—and my feeling is that many unscrupulous employers are using the opportunity they have with 360 high unemployment to make things difficult for some workers—the appeal did not take place for 10 weeks. In my opinion that is hardly fair and is not the way the Act was intended to work.
As a result of much protestation by Opposition Members, on Report stage of the Bill the Under-Secretary of State in charge of the Bill on that occasion gave this assurance: I here state categorically on behalf of my right hon. Friend, and it will be on the record, that the Supplementary Benefits Commission will be asked to review its rules to meet the new situation arising out of the Bill in which the level of penalty is to rise to this explicit 40 per cent. The Minister was getting very concerned about the representations. He continued in the same vein: We will specifically ask the Commission to review its rules and to exercise its discretion under that provision of the 1966 Act in the light of the new figure which will be written into the Bill."—[Official Report, 8th July, 1971; Vol. 820, c. 1591–92.] The "new figure" is the iniquitous 40 per cent.
Has that review taken place? If the Minister cannot say tonight that something will be done about these cases in particular and about all the cases in general who will continue to suffer under the 40 per cent. rule, I should like to hear from him that the whole question is being reviewed by the Supplementary Benefits Commission.
It is no secret to Scottish Members that the situation is serious, even for skilled workers. Compared with the situation in Great Britain as a whole, there are 28 skilled workers chasing every vacant job in Scotland. The figure for precision fitters is even higher: whereas the average for the country as a whole is eight, the figure for Scotland is 56. As for labourers, compared with the average in Great Britain there are 200 men chasing every job in Scotland.
What does the Minister intend to do about it? The great failure with Tory legislation is that the Tories do not always follow through the social consequences of their actions. I hope not to be accused of being petulant, but the Government must realise that if a man is given £3.45a week to live on for six weeks his dignity is damaged and he is rendered a disservice. I cannot imagine 361 the damage which would be done to a married man and his family. Changes will have to be made in the Act. I hope that the Minister will give an answer which will give some reassurance to those about whom I have spoken and all the others who may suffer under this legislation.

§ The Under-Secretary of State for Health and Social Security (Mr. Paul Dean)
The hon. Member for Glasgow, Gorbals (Mr. McElhone) has sat through the night to raise this matter on the Adjournment. In the short time available to me I shall be glad to comment on what the hon. Gentleman has said and to try to put the legislation into perspective.
I am grateful to the hon. Gentleman for the generous tribute he has paid to the staff in our social security offices in his area. I will see that the hon. Gentleman's tribute is passed on to the staff.
I am sure that the hon. Gentleman will not expect me to comment on two of the cases he has raised, of which I have not had notice. If he would like me to look into those cases, and if he will let me have details, I will gladly examine the cases individually and ask the Commission to do so.
The legislation which governs this situation is primarily the National Insurance Act, 1965, which governs the unemployment benefit position, namely, that if a person is unemployed because of his own actions he is disqualified under Section 22(2) from receiving unemployment benefit for up to six weeks. The circumstances where such disqualification is applicable are defined in the Act and include misconduct—that is, misconduct in the industrial sense—voluntarily leaving employment without just cause; refusal without good cause to accept suitable employment offered by the employment exchange or an employer; and refusal without good cause to accept a reasonable opportunity of receiving an approved course of training.
The decision whether a person is disqualified in these circumstances is taken by the independent statutory authorities appointed under the 1965 Act. They are the insurance officer and, on appeal, the local appeal tribunal and the National 362 Insurance Comissioner. There is a large body of case law by which each of these adjudicating authorities is guided. The two important points here are that it must be unemployment caused by the person's own action, and of course this stipulation is there in fairness to the other contributors to the National Insurance scheme to try to ensure fairness as between one contributor and another. The other important point is that the disqualification is limited to six weeks. That is the maximum period for which this can operate. That is the position with regard to unemployment benefit.
It would be useless to try to protect the National Insurance Fund in this way from unreasonable claims for unemployment benefit if a person could immediately claim supplementary benefit as a substitute for the unemployment benefit which had been allowed. Accordingly, the Supplementary Benefits Commission, using its discretionary powers, decided that if such a person applied for supplementary benefit, any benefit payable should be reduced by 75p per week for up to six weeks.
However, it became clear that this relatively small deduction was largely a matter of indifference to the claimants and, therefore, the previous Labour Administration introduced a change to make this both a statutory deduction and at a higher level than the previous discretionary arrangements under the Supplementary Benefits Commission. The Bill containing that proposal by the previous Administration fell at the General Election, so it did not become law, but I make this point to illustrate that this is not a party political matter. This was regarded generally as necessary to give statutory backing to it and not leave it entirely to the discretion of the Supplementary Benefits Commission.
As the hon. Gentleman said, the deduction which is now in operation under the 1971 Act came into force on 5th November, 1971, and is limited to a 40 per cent. reduction of the single householders supplementary benefit scale rate. It is important to emphasise that it is applied to the single householder rate. This means that in most cases, including married couples, the maximum reduction at present is £2.30.
363 The hon. Gentleman asked whether this was being reviewed. I can assure him that the operation of this part of our social security arrangements, as indeed all others, is kept under review. But there are provisions—this is an important feature in answering the hon. Gentleman's points—for discretionary power which the Supplementary Benefits Commission can exercise to avoid hardship. This provision does not impair the discretionary power of the Commission to meet urgent needs. Most cases where unemployment benefit is disallowed arise immediately after a period of employment, and most claimants should be able to bear without hardship a reduction of up to £2.30 in their supplementary benefit for six weeks.
However, some cases of hardship will arise and the Commission will use its discretionary powers as may be appropriate to the circumstances. Local offices have been instructed to be on the alert for possible hardship cases where a deduction has been applied.
The main factors which are likely to come into the hardship category, for which officers will be looking out, are the following: that the most recent employment was brief—in other words, that the man concerned did not really have a chance to be in employment for a long time and therefore could not build up any resources against a rainy day; that the recent earnings were low in relation to outgoings; that there is an unmet rent or mortgage capital repayment or a hire-purchase commitment not covered by disregarding income or capital; that there is sickness, or very young children, in the family; that the claimant's wife is pregnant; or that the family faces any unusual difficulty, whether temporary or not.
When the normal reduction is not made, a deduction of 75p will usually operate. Thus, although there is provision in the Act, there are these discretionary arrangements in cases of hardship which cover quite a wide variety of circumstances.
If disqualification for unemployment benefit is subsequently removed on appeal, a payment of supplementary benefit is made in arrears to meet the claimant's full normal requirements.
364 The hon. Member mentioned the case of Mr. McKissack, of which he had given me notice. In this case, unemployment benefit was disallowed. Mr. McKissack appealed against the disallowance to the independent tribunal and was unsuccessful. So far, he has not appealed to the national insurance commissioner. As regards the supplementary benefit side of things, the local officer considered that there were not grounds for mitigating the deduction under any of the headings which I have just mentioned.
The hon. Gentleman will appreciate that the present position of Mr. McKissack is that, as from 10th June this year, he became entitled to unemployment benefit of £6 and earnings related supplement of £6.35, a total of £12.35 a week. Supplementary benefit is, therefore, no longer payable.
I hope that, in the short time available to me, I have conveyed to the hon. Gentleman that although there is legislalation, which was passed, I think, pretty well on a non-party basis inasmuch as both main parties recognised the need to legislate in this respect, there is a substantial discretion in the Supplementary Benefits Commission should there appear to be hardship in operating the law as it stands.

§ Mr. McElhone
The Minister will understand that I am not satisfied with that answer. I already have in my letter a copy of the categories which he outlined. Mr. McKissack was divorced from his wife some years ago, and he has been contributing to her upkeep and that of one child. Out of the low wages which he received from the firm, he had to pay his sister something and meet his travelling expenses. He just did not have the money to sustain himself over a period of six weeks. We cannot ask anyone to exist on £3.45 for six weeks.
Most of these people do not have money in the bank or funds to sustain themselves. Six weeks is a long time. I accept that he has had some earnings related benefit, but there is a dangerous principle here. In the case of a young person and a married man, to disallow benefit to the level of 40 per cent. is dangerous.

§ Mr. Dean
I think that the hon. Gentleman may not have appreciated that the wife was receiving supplementary benefit for herself and her son. That is another aspect of the case which he did not mention.
366 I shall gladly look at the two cases which the hon. Gentleman mentioned if he cares to let me have details of them.