HC Deb 24 July 1972 vol 841 cc1407-32


'A person who has lost employment in an employed contributors' employment by reason of a stoppage of work which was due to a trade dispute at his place of employment shall not be disqualified from receiving unemployment benefit so long as the stoppage of work continues unless that person is participating in the dispute or is directly interested in it and except in a case where, during the stoppage of work, he has become bona fide employed elsewhere in the occupation which he usually follows or has become regularly engaged in some other occupation'.—[Mr. O'Malley.]

Brought up, and read the First time.

Mr. O'Malley

I beg to move, That the Clause be read a Second time.

This is the first occasion during the debates on the Bill, at any rate since the Second Reading, on which the Secretary of State has been present. I was not present during the Second Reading debate, and the right hon. Gentleman was not a member of the Committee. The right hon. Gentleman is present on a timely occasion to debate an appropriate new Clause because we last discussed the subject which the Clause raises on the Report stage of the Social Security Act, 1971.

If I may say so in no unkindly way to the right hon. Gentleman, on that occasion he was in considerable difficulty on two grounds: first, because there were no good rational arguments why he could oppose the proposals which are now put forward in the Clause. One could infer from what was said and what was not said by Government spokesmen that they accepted the recommendations of Donovan to do away with the grading or class provisions. Secondly, the right hon. Gentleman was in difficulty with his back-benchers, some of whom after listening to the debate for only a short time realised that something very wrong and disturbing was happening.

At the end of the debate, when the Labour Opposition voted, the right hon. Gentleman, having been driven into a corner by both the Opposition and his own back-benchers, made it clear that he had given a commitment, albeit a limited one. to discuss with my right hon. Friend the Secretary of State for Employment at a later stage whether the industrial climate of the time justifies the Government in considering at a suitable legislative opportunity an extension of the Donovan recommendations. The right hon. Gentleman was at pains to point out that it was not his fault that that had not been done. He said: I am not the Minister who will have to make the main decision."—[Official Report, 8th July, 1971; Vol. 820, c. 1630–4.] But the right hon. Gentleman is the Minister who is to reply to the debate, and I ask him to bear in mind his com- mitment to discuss this matter with the Secretary of State for Employment.

It is timely and appropriate not only that the Secretary of State is present for this debate but that we should be discussing this Clause today, because it seeks to remove a blatant injustice in one aspect of the law which impinges upon industrial relations. We are debating the Clause at a time when industrial relations are being poisoned by the Government. The chaos which their policies have produced and the disruption which they will continue to create can be brought to an end only by changing the policy.

We have seen the Government change their policies in other areas. One could hardly expect them not to be prepared to do so. No one who has heard the Secretary of State for Trade and Industry could suggest for a moment that the Government will not respond to events. We know all about the lame duck policy. The Secretary of State for Social Services is alleged to believe in the free play of market forces—precisely the principle which the Secretary of State for Trade and Industry was putting forward only a short time ago. The Government changed their mind about that, and therefore we can expect them having brought the country to the brink of chaos, to start looking for changes in policy in order to restore industrial relations to some degree of sanity.

It would be inappropriate to say to the right hon. Gentleman that the first thing the Government can do to improve industrial relations is to scrap the Industrial Relations Act. We are not discussing that Measure. But if the Government are not prepared to do that they can a least make a useful start by accepting the Clause and thus accepting the recommendations of the Donovan Commission which they implied they accepted but were a little frightened to implement.

It has generally been accepted since the introduction of unemployment benefit in national insurance legislation dating back to the early years of this century that there are three elements in the insurance scheme. First, to provide benefit for those out of work because of industrial changes and economic fluctuations; secondly, that workers on strike are not entitled to unemployment benefit, and, thirdly, that nevertheless, where there are circumstances in which workers are put out of work through strikes, they should in some circumstances remain entitled to unemployment benefit.

The circumstances briefly are these. If the strike is not at the worker's place of employment his entitlement to unemployment benefit is not affected. I do not wish to discuss the phrase "place of employment" this evening, because it is not relevant to the Clause, although it raises its own problems. Second, entitlement to unemployment benefit is not affected if the individual worker is not participating in, financing or directly interested in the dispute. The phrase "financing" is not in the Clause and I shall deal with that later. Third, the worker put out of work as a result of the strike is still entitled to unemployment benefit if, in addition to not participating in, financing or being directly interested in a dispute he also does not belong to a grade or class of workers, some members of whom were participating in the dispute, financing it or directly interested in it. That is the existing legal situation. I shall briefly explain what the Clause proposes to do to that situation.

Mr. James Dempsey (Coatbridge and Airdrie)

Will my hon. Friend develop that argument? Has he experience of the situation where if a worker belongs to a trade union which is involved in strike action, although he is not directly connected with it nevertheless he can be accused of being connected and denied his unemployment benefit?

Mr. O'Malley

I am grateful to my hon. Friend for raising that point, which I shall deal with. In the Clause we are seeking to implement proposals recommended by Donovan and implicitly accepted by the Government. We have omitted the word "financing" precisely to meet the point raised by my hon. Friend. What does financing mean? Quite clearly, if a man is unemployed he is in no position to be making large payments to some of his fellow workers who are on strike. The term "financing" has acquired a significance over the years to mean that a worker who belongs to the same union as the men in dispute is regarded as financing that dispute and therefore has been debarred from receiving unemployment benefit.

The Donovan Commission rejected that existing legal understanding and interpretation of the law on pages 253–255 of its report, which I shall not spell out in detail because we have discussed it many times. Briefly, the ground on which Donovan rejected the financing provision has been, first, that it involves an interpretation of the relationship between the individual and his trade union, which is difficult if not impossible to sustain, and second that it might be argued that it would lead to encouraging unofficial strike action rather than official action through the union. The third ground was that if a union so wished it could avoid the financing provision by an amendment to its rules to enable members to leave the union in the period of a strike in order to get unemployment benefit. That would lead to chaos in labour relations, and that is not something I would think the Government would wish to encourage.

Donovan pointed out that in practice the financing provision could lead to substantial and serious injustices. It is on the grounds proposed by Donovan and explained in pages 253℃255 that the Clause seeks to change the law by leaving out the financing provision. The Clause seeks to remove the grade or class provision. There is no need for me to explain it in any detail because it has been debated a number of times in recent years. It was touched upon in the debate on the Social Security Bill by the Secretary of State, as I mentioned earlier. It is perfectly clear and it has been accepted on both sides that the grade or class provision has led in the past to substantial injustice. It is interesting to quote some of the comments of the Donovan Report on this provision. On page 251 paragraph 975 it says: The capricious results which the provision can and does produce are themselves some indication of the invalidity of the assumption which underlies it. Donovan gives examples of how badly the system works and says that often the term "grade" or "class" is not defined in the Act. On page 252 paragraph 978 the report says: The grade or class provision has an administrative advantage, that once the grade or class is identified, and once it is established that any member of it is participating in, financing, or is directly interested in the dispute, detailed inquiries into the position of other members can be avoided. They are disqualified forthwith. And then Administrative convenience however is not much of a commendation for a provision which is also capable of considerable injustice. I am moving the Second Reading of the Clause under the impression that there is little serious and informed opinion which would wholeheartedly oppose the recommendations of the Donovan Report on these aspects of the law.

The country this evening could be on the brink of prolonged industrial chaos. The subject we are discussing touches upon the question of industrial relations, of the attitudes of men on the shop floor and of the attitudes of men all over the country, not only in the docks. As a result of the Government's policies, they are today angry men.

If the Government wish to establish a dialogue with the Trade Union Congress and with the individual trade unions they must give an indication that they are prepased to listen, that they are prepared to move and to act in a rational manner, even if only minimally. The proposals in our Clause were in the process of being drafted into legislative form by the last Labour Government. Last year, which is an age ago in terms of industrial relations, the Secretary of State said he was not responsible for the matter and he wanted to discuss it with his right hon. Friend the Secretary of State for Employment. What has happened to that discussion? Does the right hon. Gentleman not agree that this is an appropriate time, indeed, one of the most appropriate times, for him to accept and to implement the Clause, containing as it does the proposals of the Donovan Commission?

Mr. Stanley Orme (Salford, West)

Does my hon. Friend recall that when he and I and the Secretary of State were on the Standing Committe considering the Social Security Bill last year the Secretary of State said that he believed in the principle but that it was not the opportune moment? He meant that it was not politically the opportune moment. Does not my hon. Friend agree that now would be an opportune political moment to implement the Clause?

Mr. O'Malley

I am grateful to my hon. Friend. Anyone who takes a contrary view must be in political terms almost incredibly dense, because this is precisely the time when a realistic dialogue must be established between the trade unions and the Government. For that reason it is a very appropriate time for the Government to accept the Clause. They would be accepting not merely the proposals of a Labour Opposition but the proposals of a weighty and informed Royal Commission. They would be accepting and implementing proposals which they have already implicitly accepted in previous Sessions. I hope that the Secretary of State will say that an attempt on the long road to establishing reasonable relations with the trade unions has begun, and that therefore he will accept the Clause.

Mr. Bruce Millan (Glasgow, Craigton)

I fully support everything that my hon. Friend the Member for Rotherham (Mr. O'Malley) said. The present arrangements give rise to injustice.

I want to raise a specific case in my constituency. I have written to the Secretary of State for Employment about it, and I understand that the office of the Secretary of State for Social Services is also informed about it. Several months ago at the Rolls-Royce factory in Hillington, Glasgow, the management and shop stewards represented on the work committee entered into a new wages agreement involving job evaluation and measured day work. I understand that both management and men looked upon it as a considerable step forward in industrial relations in the factory. A short time ago 120 polishers put in a claim for regrading under the agreement. The management took the view that the claim was not justified. The significant point is that the works committee of shop stewards also took the view that it was not justified, and therefore refused to support it. It is a works committee with a considerable reputation for militancy, yet it said that the claim would upset the balance of the agreement that had been rather painfully reached.

The 120 polishers concerned went on strike on 9th June. A number of polishers in another grade not involved in the dispute stayed at work, and the whole factory stayed at work. There were strenuous. attempts by all concerned to get the polishers to go back to work. The local officials of the General and Municipal Workers Union, the union involved, told the men that they were willing to support their claim on its merits. Incidentally, I take no sides as to the merits of the claim. But those officials said that they would support the men only if they called off their unofficial strike and went back to work. The national officers of the union were involved only after the direct intervention of a national officer from London, who came up to Glasgow to a special meeting. The men were persuaded to go back to work, and did so on 3rd July.

It was obviously a situation in which everybody behaved with a considerable sense of responsibility. But before the men went back to work on 3rd July the management found it necessary to lay off, for just over a week, 1,100 other workers, because of the dispute. Those workers had not supported the strikers. Most of them were not even members of the same trade union as the strikers. They had supported their works committee in repudiating the claim of the 120 men who went on strike. Yet, because of the provisions of the 1965 Act, which I understand was a consolidating Act, taking in provisions which pre-dated it considerably, the 1,100 men laid off were disqualified from unemployment benefit. It is an absolutely absurd and damaging situation in the context of industrial relations.

The case is going to a tribunal, and it may be that the tribunal will reverse the insurance officer's decision. From my inquiries I understand that the kind of situation I have described is not uncommon. It arises time and time again because of the operation of the grade or class provisions of the present rule. It is intolerable that the present statutory situation should be allowed to continue.

In the factory in question, which has had more than its fair share of troubles because of the general situation of Rolls-Royce since the bankruptcy at the beginning of last year, the new agreement represented a big step forward. But among the men concerned there is now a considerable sense of disillusionment. They had abided by the agreement and supported their works committee. The works committee had supported the management. The management have supported the 1,100 men who were laid off in their claim before the insurance officer. It is as disturbed about the situation as are the men. I have spoken to a representative of the management again this afternoon. Yet despite the support of the management before the insurance officer, the claim went against the 1,100 men who were laid off.

I am not sufficiently expert in this matter to know exactly what is required to put the law right, but I am willing to be guided by my hon. Friend the Member for Rotherham and others who have put down the new Clause, who are far more expert than I am. What I say is that in the light of the experience I have described, which is not uncommon, there is an incontrovertible case for making the change that the Clause would make. It would be only political cowardice and a complete disregard of the justice of the situation if the Secretary of State rejected the Clause. I hope very much that he will accept it.

The Secretary of State for Social Services (Sir Keith Joseph)

I hope that my participation for the first time after Second Reading in the debates on the Bill will not be taken in any way as impugning my hon. Friend the Undersecretary, in whom I have total confidence, but I thought that the right hon. Member for Blackburn (Mrs. Castle) and her hon. Friends would have a legitimate cause for grievance if I, having made some comments on this important question a year ago, did not stand up to cross-examination on it this evening.

Of course, if the hon. Member for Glasgow, Craigton (Mr. Millan) were to be believed, this could be taken as a matter on which all the arguments were on one side. But, as he very well knows, very few political arguments are like that.

8.30 p.m.

There are some complicated arguments at stake, and I am responsible for some aspects of those arguments. It is a responsibility which I share with my right hon. Friend the Secretary of State for Employment, who is more involved than I am in the decision which has to be made. It is true, as the hon. Member for Rotherham (Mr. O'Malley) said, that last year I made the commitment of undertaking to consult my right hon. Friend the then Secretary of State for Employment about the possible timeliness of reconsidering the Government's view on this aspect of the Donovan Commission's Report. That was the extent of my commitment.

I carried out that commitment about six months after I had made it. I consulted my right hon. Friend and he and I came to the conclusion that it was not then timely to reconsider the Government's view on this aspect of the Donovan Commission's recommendations. I so informed the Trades Union Congress, which had been in touch with me, and I also informed the House by Answer. I carried out my commitment, but the conclusion did not go the way that hon. Member opposite wished. However, the Donovan Commission came to a conclusion on a set of arguments which had been put before it. Of course, its conclusions had to be taken seriously. There are social security implications in the decision as well as industrial relations implications.

Regarding social security, it is true that the Department and successive Ministers have despaired over the years of finding a perfectly just solution to the problem. If one course is taken, there is no doubt that in some cases contributors to the national insurance fund will be inadvertently contributing towards and supporting people who in one form or another are either indirectly involved in, or likely to benefit from, a strike. Of course, that is not the object which successive Governments have sought. They have sought to retain a precise neutrality regarding lock-outs or strikes.

The attempt to enable insurance officers who carry out quasi-judicial functions to decide quickly and, as near as possible fairly, who is entitled and who is not entitled to unemployment benefit or supplementary benefit poses severe difficulties. With all the criticism which has been levelled at the present position of the law, it has been found broadly possible for insurance officers to make their decisions relatively quickly. That is not the end of the story but it is a factor to be taken into account.

It would not be right for me to pretend in my present position to be an expert on industrial relations. I can only lean on things which experts say. The experts have said that it is conceivably possible as the law now stands for colleagues of those on strike who do not approve of the strike to exercise more of a restraining influence as to the taking of strike action or the length of a strike if they do not automatically receive unemployment benefit during any lay-off due to a strike than if they do receive benefit. That is an opinion which has been widely expressed and was put strongly to the Donovan Commission by the Department of which I am now the head during the time when the Department had a Labour Minister.

It is true that the Donovan Commission, having considered that advice, came to a conclusion against it. It is also true that my predecessor, the right hon. Member for Coventry, East (Mr. Crossman), disowned his Department's advice, as any Minister is entitled to do. Nevertheless, the fact is that a Labour departmental Minister authorised the giving of advice to the Donovan Commission which laid great emphasis upon the perhaps slender restraining influence of the present state of the law.

Mr. Harold Walker (Doncaster)

The right hon. Gentleman referred to unnamed experts, described the industrial relations effect of not implementing the Donovan recommendations, and invoked in aid an official of his own Department who submitted evidence to the Royal Commission. If this is an industrial relations issue, the officials of the Department of Health and Security, no matter how expert they may be on other subjects, are not the best people to invoke in self-descriptions of expertise.

Does the right hon. Gentleman recognise that all those experts, whether from his own Department or elsewhere, had the opportunity to submit evidence to the Royal Commission? Many of them did so, and the Royal Commission unanimously turned them down. Are not the members of the Royal Commission the experts to whom we should be turning and recognising as such? The Government, during the passage of the Industrial Relations Act last year, repeatedly recited the Royal Commission Report in spite of our doubts as to the accuracy of that relationship. Will they not now acknowledge the reliability, authenticity and strength of the powerful arguments used by the Royal Commission in refuting the so-called experts whom the right hon. Gentleman invokes in his arguments?

Sir K. Joseph

The hon. Gentleman has sufficient experience of Government to know that no Department would lightly enter upon another Department's domain without the agreement of that Department. This was Government evidence, approved no doubt by both Ministers concerned. I have no knowledge of whether they did approve because previous papers are closed to an incoming Government, but it would be odd if evidence to a most important Royal Commission were given by officials without the approbation of their respective Ministers. I think that I can ask the hon. Gentleman to accept that evidence given to the Royal Commission, as it happened, by officials of my Department, was approved by both respective Ministers.

The evidence was overruled by the Royal Commission. I went so far as to say in 1971 that I thought that no Government could afford to ignore the views of the Commission and that the Government would have to take them seriously into account. I did not go further than that. I added—and my comments are still very relevant—that in the tide of strikes that were then engulfing the country it would be temerarious, unduly risky, to seek at this stage to consider changing the law, since there was not only the question of the slender perhaps, restraint that the present law may in some circumstances bring to those either about to embark on a strike or on strike, but another matter, on which I want lightly to touch—lightly, because who can tell whether it may be true, but it is a possibility.

It was said in evidence to the Royal Commission that it might be possible if the law were changed for a small group of key workers to bring all work to a standstill in the knowledge that other members of the union not directly interested in the dispute would qualify for unemployment benefit. That is something the Government have to take into account. I am not the Secretary of State for Employment. I know that this is an argument that would have to be taken into account before making any informed judgment on the Donovan recommendations, and I know that when I consulted my right hon. Friend, as I undertook to do, he, for a whole range of reasons which it is not my responsibility to know, understand or pass on to the House, gave for his part of the conclusion that the time was not ripe.

Mr. Millan

Why is it not the right hon. Gentleman's responsibility? He has made great play about the fact that the evidence given under the Labour Government must have been approved by the then Minister of Labour. Why does he not have responsibility for the advice now being passed on?

Sir K. Joseph

I have the responsibility of advising the House on whether to adopt the new Clause. I carried out my commitment to consult my right hon. Friend the Secretary of State for Employment. I communicated the Government's decision after that consultation. I am explaining now because I made a commitment to consult him, and I am seeking to explain that I fulfilled that commitment. I am further explaining some of the factors which must enter into the Government's mind in making the decision that the time is not yet ripe to advise the House that reconsideration of this aspect of the law in the light of the Donovan recommendations should be recommended.

Mrs. Barbara Castle (Blackburn)

We are getting a curious amendment of the doctrine of collective responsibility. We have had the rather disarming manner of the right hon. Gentleman, who is an expert in that form of disarmament, at any rate, in saying that he has fulfilled his commitment because he made certain representations to the Secretary of State for Employment. The right hon. Gentleman is reporting a decision as though it had nothing to do with him as though he therefore did not have to give reasons for it. I have been a member of a Cabinet and I have had to answer for all sorts of subjects which overlap between two Departments. Would be please give us the reasons why he thinks that this proposal should not be accepted?

Sir K. Joseph

Certainly. As I said at the time in 1971—and it is so now—it is my view as a member of the Government that, in view of the present industrial situation, it is not yet timely to reconsider the Government's attitude to this recommendation by the Donovan Commission. That is a clear acceptance of responsibility in that I undertook particularly to consult my right hon. Friend, because just before the last debate on this subject I had had discussions with the Trades Union Congress, which had asked me, as the House had asked me, to have those consultations. I took part in a joint decision and that is the responsibility which I am meeting this evening.

I accept that there is, certainly in the passages from which the hon. Member for Rotherham quoted, a case for the Government at the right time seriously to consider the pros and cons of a change in the law. I cannot commit the Government to what their decision in due course at the right time will be. All I can say is that the position has not changed enough since we last debated the issue for me to advise my hon. Friends or the House that the new Clause should be accepted.

Mr. Alec Jones

Would the right hon. Gentleman give us some idea of when he thinks the right time is likely to occur?

Sir K. Joseph

The Government must watch the industrial position before deciding when the time is right, must they not?

All I am asked to do this evening is to come to a conclusion for the Government on the new Clause, and that I have done. But there may be some clinching evidence that hon. Gentlemen will be able to adduce to show why the time is imminent when a reconsideration would make sense. All I can say at the moment is that neither of the speeches so far has gone near to showing that to be in the balance of public interest against the dangers that I have mentioned. The dangers of an unintended use of the National Insurance Fund, the danger of removing however small a restraint on strikes that some of those concerned do not wish to occur, the dangers of removing some restraint on the promulgation of strikes, the dangers of the manipulation of the National In- surance Fund, have not been discounted by hon. Members, and unless they can argue so powerfully as to remove a possibility of risk to the national interest, I must advise my hon. Friends that this is a Clause that the House would not be wise to accept.

Mr. James Dempsey (Coatbridge and Airdrie)

When my hon. Friend the Member for Rotherham (Mr. O'Malley) was speaking, I interjected to draw his attention to the experience of some of us North of the Border. I thought that the right hon. Gentleman would be in his usual concise and logical form, but tonight he won first prize for waffling and he spoke all round the subject. He made no effort to get to the grass roots of the problem.

It was unfair of him to quote some small sect which differed from an enormous trade union and to condemn it for depriving men of work by its malicious activities. If I had put such a question to him at Question time, he would have said that it was hypothetical and would not have answered it. Tonight he gave us a hypothetical question and a hypothetical reply.

8.45 p.m.

That is not good enough. It is of no assistance to decent men and women who are genuinely out of work because of a strike to which they have in no way contributed. That is the important qualification that I ask the Minister to examine. I have had experience in my constituency of part of the productive effort coming into conflict with the employers and causing an industrial dispute which has deprived other employees of work although they have in no way been involved, directly or indirectly, in bringing about the dispute. Upon going to the employment exchange these people have found that benefit was disallowed, on the ground that they were members of a trade union part of whose membership was in dispute with the employers. Because their trade union was looking after the interests of a portion of workers who were in dispute with the employers, the other members of that union were denied benefit.

If a person did not belong to a trade union—if he refused to join and to pay his 10p a week—he could draw benefit from the employment exchange. Is that the impression that the Government wish to give to workers? Are we to induce them not to belong to trade unions—to discourage them from joining their own union organisation? That seems to be the logic of the right hon. Gentleman's reply.

Does the Minister honestly and sincerely think that the men and women I have in mind, who are neither directly nor indirectly involved in a dispute but are merely its innocent victims, should not be entitled to unemployment benefit? Or is the Minister merely carrying out the diktat of the Cabinet? He should state where he stands, now that the chips are down.

The new Clause tries to remove this injustice—and it is a tremendous injustice, especially for the working man who is dependent on his wages from week to week to maintain his wife and family. It is essential that he should receive the benefit to which he is entitled. After having contributed every week to the fund he should be entitled to draw from it in time of need. Would the Minister pay insurance to any authority if he thought that it would not give him his entitlement when he needed it? He would never insure himself or his car if he thought that he would not get benefit when it was due. Why should he expect the worker to pay insurance contributions only to find, when the need arises for him to apply to the fund, that his claim is totally rejected, for no logical or sound reason?

That is what the Donovan Commission recognised. They were experts. They examined the Government's evidence, they examined the trade unions' evidence, and they examined miscellaneous evidence, before arriving at the conclusion that this was a downright injustice. After that collective expression of expert opinion the Minister should have the decency to say, "We will accept this. We are satisfied that the present situation is unfair. We are convinced that it is unsound, and we believe that it is indefensible. Therefore, the Government should decide to accept the recommendation and, as a result, to agree to the new Clause".

That would be reasonable. It would be quite fair. This is not a question of scoring party points; this is a question of the rights of working people who invest their lives in industry not only for their own benefit but for the benefit of the nation. The acceptance of the Clause would be an indication that at long last the Government believe that the time is ripe for these people to have the benefit of their insurance contributions when the occasion arises. I do not know what the Minister means when he says that the moment is not appropriate. We were told before the war that it was inappropriate, during the war that it was the wrong time and after the war that it was premature. When is the time? Under which circumstances will the Government act?

Have we to reach some stage in our society when there is no industrial unrest—no strikes—no dissatisfaction in industry—when we reach Utopia? Is the right hon. Gentleman waiting for the millenium before we have this reform? In our democratic society there will always be instances, no matter how exceptional, of disputes between employers and employees. If we have to wait until all of those have been eliminated and we are sailing smoothly in a sea of economic development then I would guess that I shall have gone from Parliament and the Minister will have gone, too, before the reform is introduced.

Surely the basic consideration must be the economic well-being of the employed worker and his family. Surely that must be the fundamental consideration in the minds of the Government. I ask the right hon. Gentleman to reconsider his attitude, to have further thoughts on the matter and to play fair with the working people of this country, to ensure that the working man who insures himself against unemployment has an inalienable right to receive unemployment benefit when he becomes unemployed. He should have this right particularly if he is laid off as a result of some industrial dispute over which he has no control and to which he has neither contributed directly nor indirectly.

The Government should realise that the economic situation is difficult enough, that industrial relations are sufficiently poisoned without adding petrol to the flames. A fine gesture in the direction of conciliation would be for the Minister to get up and to accept this Clause which wipes out a long-standing injustice.

Sir B. Rhys Williams

Anyone who has heard this debate must say that the arguments on both sides are extremely finely balanced. I compliment the hon. Member for Coatbridge and Airdrie (Mr. Dempsey). His impromptu remarks bore such marks of sincerity and know ledge that it would be true to say it was his contribution which most convincingly made the case from the benches opposite. I noted one of his remarks. He said it was a downright injustice and that it should go. If I could offer him a thought in exchange it is that our entire national insurance system is a downright injustice and should go because it is so riddled with anomalies and loopholes and false thinking. From the very start it has been based on shoddy arithmetic and now the finest thing which this Government could do would be—

Mr. Alec Jones

To resign.

Sir B. Rhys Williams

The hon. Gentleman is putting words into my mouth. The finest thing the Government could do would be to end national insurance and to replace it by a new system based on honour, generosity and comprehensibility. That is something to which we must all earnestly look forward.

We have touched on deep issues tonight. It is not out of place to examine the basis of entitlement to social benefit. Does a man have a claim against the community for payments in cash on the ground of need, of citizenship or of his contributions? There is no grudging the payment of supplementary benefit in cases of real need and when it is important to relieve hardship, particularly on families. Therefore, it is not because of the dire needs of people affected indirectly by strikes that we are in dispute in respect of the Clause.

On the question of entitlement based on citizenship, the obvious entitlements of a man, which continue whether he is affected by a strike or not, are the family allowances; his claim for tax rebates under the negative allowances which are drawn through the tax system, and under the controversial Bill which I hope we shall complete this week a man will be entitled to a housing rebate or allowance, which may be a considerable sum and must not be neglected in this context; or, as we hope we shall soon see under the Green Paper promised by the Government, a man will be entitled to positive tax credit. Therefore, the entitlement to benefits based on citizenship will be fairly substantial in the foreseeable future.

But what we are discussing specifically in considering this poignant situation is the basis of entitlement arising from contributions. What precisely is the nature of the contract into which a man enters with the community when he agrees to his card being stamped or deductions being made from his earnings in respect of the national insurance contract? The taxpayer make a substantial contribution to national insurance and without it the system would not be viable. In reply to a remark which I made in the previous debate, the hon. Member for Rotherham (Mr. O'Malley) drew attention to the taxpayer's contribution—the Exchequer contribution, as he called it. Those who put money in are entitled to make a claim in respect of the way in which it is disbursed.

We must not forget also that the employers are making substantial contributions to national insurance. They, too, may be entitled to a say about the way in which the money is disbursed. Hon. Members opposite may think that this is a very unsatisfactory state of affairs, and I am prepared to agree, but, when recommending that money should go out of the system, we must see whose money it is and the basis of the way in which it was put in.

One of my favourite remarks—and I shall use it again because it is particularly apposite today—is that there is only one side in industry and that we are all on it. If men withdraw their labour in pursuit of personal advantage, there is a fine calculation to be made, not simply in the short run, but in the long run for the future of their industry and colleagues and the profitability of their industry and its ability to survive.

I believe in the concept of the new social contract. It is vitally important that people should recognise that when they go to work they are working not only for themselves but for society as a whole. In the taxes they pay and the contributions they make to national insurance they are acknowledging themselves to be lonk to a much larger society than is represented by their union, works or industry. Equally, when they make claims against society, those claims should be based on an absolutely clear understanding of the nature of their entitlement. We must recall—and at this time of industrial unrest it is, I think, more than ever important that we should—that we in this country belong to a club and that the wealth we produce is produced not only for ourselves but on behalf of the community as well. So if people withdraw their labour in pursuit of their own personal advantage they must take account of the consequences.

It is not reasonable that they should require the community to bear the double burden—first, the negative burden of the loss of production, and secondly, the positive burden of paying earnings related contributions for many times as many people, as it may be in some circumstances, who are affected by their decision. When taking a decision to strike they must take the social consequences into account.

9.0 p.m.

Therefore, I think that my right hon. Friend is entitled at this time to resist this interesting new Clause, but I hope that we shall soon see the sweeping away of this whole rotten national insurance system which allows us to have these anxious disputes. I hope that it will be replaced by a new contract which is so comprehensible and so transparently honest and fair that disputes of this kind may never need to arise again.

Mr. O'Malley

The hon. Gentleman the Member for Kensington, South (Sir B. Rhys Williams) made an interesting speech on a matter which he has considered deeply, and the House realises that it was entirely relevant to considerations of this kind. I am with him in one important aspect of what he said, in that I should like to see a much improved and much changed State system of what I would call national insurance. Of course, that was precisely what the previous Labour Government were trying to do when people like the hon. Gentleman the Member for Kensington, South did their best to prevent us from bringing in that eminently fair and logical and much more just kind of system. However, I should be out of order if I were to carry on along those lines.

The Secretary of State did not give us a coherent reply to the propositions which are inherent in this new Clause. He gave a passable imitation of a man who comes into the Chamber and begins to think about the Clause only a few moments before speaking to it. The Under-Secretary of State is expressing his dismay at my saying that, but he was not here. The best reply to the debate is to point out what the right hon. Gentleman said, to postulate briefly the propositions which he put forward, and to treat those propositions on their merits and fairly, as I always treat propositions put by the Government.

First of all, the right hon. Gentleman pointed out that there were complicated considerations to be taken into account in considering this Clause. He need not have told us that. That was why the subject was put to Donovan. Although the Donovan Committee wondered at first whether it was strictly within that Committes' remit, at the request of Miss Herbison, it considered these detailed and complicated considerations and so the work was done for us. That is precisely why this subject was put to Donovan—because the considerations were complicated. Presumably, it is for that reason that the right hon. Gentleman really did not attempt to answer the Donovan case.

To recall briefly what he said, he said, "I made a commitment, albeit a limited commitment, 12 months ago, and I have kept my promise. About six months ago I consulted the Secretary of State for Employment and we came to the conclusion at that time that to accept and to introduce the Donovan recommendations was not timely". But that was six months ago. The right hon. Gentleman must begin to realise what is happening on the shop floor and in industrial relations as a result of the Government's policy.

The right hon. Gentleman said that there had been no discussions within the Government on the Clause, and that it had not been raised specifically on this occasion with the Secretary of State for Employment but had merely had departmental consideration. He said that the Government thought about it six months ago, turned it down and have not been prepared to look at it again. He also said that there were social security implications. Of course there are, and there is one of which the hon. Gentleman took no account. For month after month the Secretary of State and the Under-Secretary of State have been replying to Questions put down by hon. Members on the Government benches complaining about the cost of strike benefit. One way to reduce that cost would be to adopt the course which Donovan recommended, to remove the necessity for applying for supplementary benefit and give entitlement to unemployment benefit of which those people are being unfairly deprived.

The right hon. Gentleman referred to social security reasons, for not being able to accept the proposals. He said that they might cause marginally more strikes. The Government's judgment of what causes strikes is hardly a matter which should influence the decision of the House. My impression is that their judgment was that the Industrial Relations Act would deal with strikes. Instead that Act has produced chaos throughout the country. The right hon. Gentleman said nothing about financing. He made no attempt to deal with the arguments put forward by Donovan, but merely said that the Department of Health and Social Security under the Labour Government has put forward views on the grade or class provision which the Donovan Commission did not accept. It is interesting to see what the Donovan Commission had to say about the views of the DHHS, in paragraph 975 on page 251: In our view the reason thus said to underlie the grade or class provision is fallacious.

So the experts on the Donovan Commission turned it down completely. The right hon. Gentleman says that this is not the time, but when major injustices occur week in week out on the evidence of a Royal Commission, is not this the time to remove those injustices?

The right hon. Gentleman said that there could be collusion and misuse of the National Insurance Fund if he accepted the Clause. Why did he then say that he was prepared to consider it at a different time? Presumably he meant when there are not so many strikes.

If there are academic and rational arguments to refute the recommendations of the Donovan Commission, the right hon. Gentleman did not use them. In their place he used a ragbag of observations improperly put together which in no way answered the contributions from the Opposition and made no attempt to deal with the considered views of the Donovan Commission. The workers are right to continue to believe that the Government are deeply and permanently hostile to the trade union movement.

For that reason I recommend my hon. Friends to divide on the Clause.

Question put, That the Clause be read a Second time: —

The House divided: Ayes 145, Noes 168.

Division No. 312.] AYES [9.10 p.m.
Albu, Austen Cunningham, Dr. J. A. (Whitehaven) Hughes, Robert (Aberdeen, N.)
Allaun, Frank (Salford, E.) Dalyell, Tam Johnson, Carol (Lewisham, S.)
Archer, Peter (Rowley Regis) Davies, Ifor (Gower) Johnson, James (K'ston-on-Hull, W.)
Armstrong, Ernest Davis, Terry (Bromsgrove) Johnson, Walter (Derby, S.)
Ashton, Joe Deakins, Eric Jones, Barry (Flint, E.)
Atkinson, Norman Dempsey, James Jones, Dan (Burnley)
Barnett, Guy (Greenwich) Doig, Peter Jones, Gwynoro (Carmarthen)
Baxter, William Douglas, Dick (Stirlingshire, E.) Jones, T. Alec (Rhondda, W.)
Benn, Rt. Hn. Anthony Wedgwood Driberg, Tom Judd, Frank
Bidwell, Sydney Eadie, Alex Kaufman, Gerald
Bishop, E. S. Edelman, Maurice Latham, Arthur
Blenkinsop, Arthur Edwards, Robert (Bilston) Lawson, George
Booth, Albert Evans, Fred Lee, Rt. Hn. Frederick
Broughton, Sir Alfred Fletcher, Ted (Darlington) Lewis, Ron (Carlisle)
Brown, Hugh D. (G'gow, Provan) Foot, Michael Lomas, Kenneth
Buchan, Norman Ford, Ben Loughlin, Charles
Buchanan, Richard (G'gow, Sp'burn) Galpern, Sir Myer Mabon, Dr. J. Dickson
Buchanan-Smith, Alick(Angus,N&M) Gilbert, Dr. John McCartney, Hugh
Carmichael, Neil Ginsburg, David (Dewsbury) McElhone, Frank
Carter, Ray (Birmingh'm, Northfield) Golding, John Maclennan, Robert
Carter-Jones, Lewis (Eccles) Grant, George (Morpeth) McMillan, Tom (Glasgow, C.)
Castle, Rt. Hn. Barbara Grant, John D. (Islington, E.) McNamara, J. Kevin
Clark, David (Colne Valley) Hamling, William Marks, Kenneth
Cocks, Michael (Bristol, S.) Hannan, William (G'gow, Maryhill) Marsden, F.
Coleman, Donald Hardy, Peter Marshall, Dr. Edmund
Concannon, J. D. Harper, Joseph Mason, Rt. Hn. Roy
Conlan, Bernard Harrison, Walter (Wakefield) Meacher, Michael
Cox, Thomas (Wandsworth, C.) Hooson, Emlyn Mellish, Rt. Hn. Robert
Crawshaw, Richard Horam, John Mikardo, Ian
Cunningham, G. (Islington, S.W.) Hughes, Mark (Durham) Millan, Bruce
Morgan, Elystan (Cardiganshire) Price, J. T. (Westhoughton) Thorpe, Rt. Hn. Jeremy
Morris, Alfred (Wythenshawe) Probert, Arthur Tinn, James
Morris, Rt. Hn. John (Aberavon) Reed, D. (Sedgefield) Torney, Tom
Moyle, Roland Roberts, Albert (Normanton) Urwin, T. W.
Mulley, Rt. Hn. Frederick Roper, John Wainwright, Edwin
Ogden, Eric Rose, Paul B. Walker, Harold (Doncaster)
O'Halloran, Michael Short,Rt.Hn. Edward (N'c'tle-u-Tyne) Wallace, George
O'Malley, Brian Sillars, James Watkins, David
Orme, Stanley Silverman, Julius Weitzman, David
Oswald, Thomas Skinner, Dennis Wells, William (Walsall, N.)
Pannell, Rt. Hn. Charles Smith, John (Lanarkshire, N.) Whitehead, Phillip
Pardoe, John Spearing, Nigel Willey, Rt. Hn. Frederick
Parker, John (Dagenham) Spriggs, Leslie Williams, Mrs. Shirley (Hitchin)
Parry, Robert (Liverpool, Exchange) Stallard, A. W. Wilson, Rt. Hn. Harold (Huyton)
Pavitt, Laurie Stewart, Donald (Western Isles) Wilson, William (Coventry, S.)
Peart, Rt. Hn. Fred Stewart, Rt. Hn. Michael (Fulham) Woof, Robert
Pendry, Tom Strang, Gavin
Pentland, Norman Summerskill, Hn. Dr. Shirley TELLERS FOR THE AYES:
Perry, Ernest G Taverne, Dick Mr. James Hamilton and
Prescott, John Thomas,Rt.Hn.George (Cardiff,W.) Mr. James A. Dunn
Astor, John Hamilton, William (Fife, W.) Owen, Idris (Stockport, N.)
Atkins, Humphrey Haselhurst, Alan Page, Rt. Hn. Graham (Crosby)
Beamish, Col. Sir Tufton Havers, Michael Page, John (Harrow, W.)
Bennett, Sir Frederic (Torquay) Hayhoe, Barney Parkinson, Cecil
Benyon, W. Heseltine, Michael Powell, Rt. Hn. J. Enoch
Blaker, Peter Hiley, Joseph Price, David (Eastleigh)
Boardman, Tom (Leicester, S.W.) Hill, James (Southampton, Test) Prior, Rt. Hn. J. M. L.
Body, Richard Holt, Miss Mary Pym, Rt. Hn. Francis
Boscawen, Robert Hornsby-Smith,Rt.Hn.Dame Patricia Ramsden, Rt. Hn. James
Bossom, Sir Clive Howell, Ralph (Norfolk, N.) Rawlinson, Rt. Hn. Sir Peter
Bowden, Andrew Hutchison, Michael Clark Redmond, Robert
Braine, Sir Bernard Iremonger, T. L. Reed, Laurance (Bolton, E.)
Brocklebank-Fowler, Christopher James, David Rhys Williams, Sir Brandon
Bullus, Sir Eric Jenkin, Patrick (Woodford) Roberts, Michael (Cardiff, N.)
Butler, Adam (Bosworth) Jennings, J. C. (Burton) Rossi, Hugh (Hornsey)
Campbell, Rt.Hn.G.(Moray & Nairn) Jessel, Toby Scott-Hopkins, James
Carlisle, Mark Jopling, Michael Sharples, Sir Richard
Chapman, Sydney Joseph, Rt. Hn. Sir Keith Shelton, William (Clapham)
Chataway, Rt. Hn. Christopher Kellett-Bowman, Mrs. Elaine Smith, Dudley (W'wick & L'mington)
Churchill, W. S. Kershaw, Anthony Speed, Keith
Clarke, Kenneth (Rushcliffe) Kilfedder, James Spence, John
Clegg, Walter King, Evelyn (Dorset, S.) Sproat, Iain
Cockeram, Eric King, Tom (Bridgwater) Stainton, Keith
Cooke, Robert Kinsey, J. R. Stanbrook, Ivor
Cordle, John Kitson, Timothy Stewart-Smith, Geoffrey (Belper)
Cormack, Patrick Knight, Mrs. Jill Stoddart-Scott, Col. Sir M.
Costain, A. P. Knox, David Stuttaford, Dr. Tom
Crouch, David Lamont, Norman Sutcliffe, John
Crowder, F. P. Legge-Bourke, Sir Harry Taylor,Edward M.(G'gow,Cathcart)
Dean, Paul Le Marchant, Spencer Taylor, Frank (Moss Side)
Deedes, Rt. Hn. W. F Lloyd, Ian (P'tsm'th, Langstone) Tebbit, Norman
Digby, Simon Wingfield Loveridge, John Temple, John M.
Dixon, Piers Luce, R. N. Thatcher, Rt. Hn. Mrs. Margaret
Drayson, G. B. MacArthur, Ian Thomas, John Stradling (Mon mouth)
Dykes, Hugh McCrindle, R. A. Trew, Peter
Edwards, Nicholas (Pembroke) McLaren, Martin Tugendhat, Christopher
Elliott, R. W. (N'c'tle-upon-Tyne, N.) Madel, David Turton, Rt. Hn. Sir John
Emery, Peter Maginnis, John E. Vickers, Dame Joan
Eyre, Reginald Marten, Neil Waddington, David
Farr, John Mather, Carol Walder, David (Clitheroe)
Fell, Anthony Mawby, Ray Wall, Patrick
Fisher, Nigel (Surbiton) Maxwell-Hyslop, R. J. Ward, Dame Irene
Fletcher-Cooke, Charles Meyer, Sir Anthony Warren, Kenneth
Fortescue, Tim Mills, Peter (Torrington) Wells, John (Maidstone)
Fowler, Norman Mitchell, Lt.-Col. C.(Aberdeenshire,W) White, Roger (Gravesend)
Fox, Marcus Mitchell, David (Basingstoke) Wiggin, Jerry
Fry, Peter Moate, Roger Wilkinson, John
Gardner, Edward Money, Ernle Winterton, Nicholas
Gibson-Watt, David Monks, Mrs. Connie Woodhouse, Hn. Christopher
Goodhart, Philip Montgomery, Fergus Woodnutt, Mark
Gower, Raymond More, Jasper Worsley, Marcus
Grant, Anthony (Harrow, C.) Morgan, Geraint (Denbigh) Wylie, Rt. Hn. N. R.
Gray, Hamish Morgan-Giles, Rear-Adm. Younger, Hn. George
Green, Alan Mudd, David
Griffiths, Eldon (Bury St. Edmunds) Murton, Oscar TELLERS FOR THE NOES:
Gunter, Rt. Hn. R. J. Neave, Airey Mr. Bernard Weatherill and
Gurden, Harold Oppenheim, Mrs. Sally Mr. Victor Goodhew
Hall-Davis, A. G F.

Question accordingly negatived.

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