§ 10.18 p.m.
§ Mr. Barney Hayhoe (Brentford and Isleworth)I beg to move Amendment No. 1, in page 2, line 12, at end insert:
'(4) An order under subsection 1 above which would have the effect of reducing the amount of rebate shall be made only when there is an accumulated excess of liabilities over receipts in the Redundancy Fund'.The amendment is designed to prevent the Government abusing their position of trust as administrators of the Redundancy Fund by using it as a back-door and rather sneaky way of imposing additional taxation on industry.The amount involved in what the Government have said is their intention if the Bill becomes law is not much—about £15 million a year is involved—but it is right that the House should be concerned about the matter because important principles are involved.
We see the Government's avowed intention as being to use the mechanism of the Redundancy Fund not for raising money by a general levy upon industry in order to pay part of the redundancy payment to those who are made redundant, but to raise money for their own purposes and to reduce their borrowing requirement.
Although they can use the money by lending it to themselves they cannot spend it on any project, because the Fund is self-contained. The only money that can go into it is a levy raised upon industry and the only money that can be paid out are payments to firms to rebate part of the cost of redundancy payments to individuals.
178 The amendment will not in any way prevent the proper use by the Government of the power to vary the rebate by order and, as a result of amendments carried in Committee, by order that requires affirmative procedure to be followed. But the amendment will prevent the Government from using that power for purposes other than those directly concerned with redundancy.
The Government would still be able to reduce rebates to make certain that the Fund remained in surplus. If, as a result of payments in and out, it began to run into deficit, the amendment would give the Government power to vary the rebate to get it back into surplus. Under other powers, it could do this in other ways. We are somewhat limited because of the narrowness of the Bill before us, which deals only with variations in the rebate in dealing with matters such as variations in the levy and the amount of redundancy payment made, all of which affect the question whether the Fund is in surplus or deficit.
In our amendment we are trying to give the Government a warning that they should not try to fiddle the Fund—if I may use that expression—for their own economic needs. It should not be used for any purposes other than redundancy. It is absolutely wrong that the Government should be able to use the power that the Bill would give them to act in such a way.
Let us look at the present state of the Fund. In the whole of the current year it has been running into considerable surplus. When the original announcement was made that the Government wished to vary the rebate—which I believe was in July last year—on the available evidence the fund was running into deficit. However, this was because there were some mistakes in the accounting which were put right by a substantial payment into the fund on 31st December 1976. From that moment onwards the Fund has been in surplus. It had a surplus of £5 million last December, £6 million in January, nearly million in February and well over £7 million in March, and the latest figures show that it now has a surplus of more than £10 million.
The whole trend, now that we have the knowledge of what has been going on since the correction was made last 179 December, is that the Fund is moving into substantial surplus. In these circumstances it would be absolutely wrong for the Government to use the power that the Bill would give them to vary the amount of rebate so as to increase the surplus, unless they accompanied such a move by a reduction in the levy on employers.
If we were prepared to reduce the general burden on industry right across the board, one could see at least some argument for reducing the size of the rebate, but it would be totally wrong for the Government to leave the levy at the present level, which has the Fund moving into a growing surplus, and then reduce the amount of rebate so that it moved even more sharply into surplus.
It may well be that we have not got the nice legalities of wording correct, but I think that the Minister will wholly understand what we are putting forward. I hope that both sides of the House will share our view that the Redundancy Fund mechanism should be used only for the purpose of raising money by a general levy on industry in order to make rebates on the redundancy payments given to individuals.
It would be an improper use of the Fund—and certainly a use that Parliament did not have in mind when the Redundancy Payments Act was passed some years ago—that the Government should use this mechanism for purposes totally unconnected with redundancy and redundancy payments.
The amendment would make that quite clear, at least in principle. If the wording is in some way defective, it can without doubt be put right in another place. I hope that the Minister will accept our view and that the matter can be dealt with either by the amendment or by an undertaking from him. If he is not prepared to do that, I shall certainly urge my right hon. and hon. Friends to divide on the issue.
§ The Minister of State, Department of Employment (Mr. Harold Walker)If I reply briefly, it is neither to be discourteous nor to suggest that the amendment does not deserve serious consideration. I think that the hon. Member for Brentford and Isleworth (Mr. Hayhoe) will agree that much of the ground that he covered is ground that we 180 have covered in previous debates. I am not sure that I entirely followed his argument but, in so far as I did, I doubt that his amendment would have the effect which he suggests.
It might be helpful if I tell the House that as at 29th April this year the Fund was in surplus to the tune of about £10.35 million. As the hon. Gentleman said, the surplus has steadily grown since December last.
As the amendment would have the effect of preventing the rebate from being reduced while the Fund was in surplus, if it were adopted it would defeat the immediate purpose of the Bill. We should not find it possible to reduce the rebate to 41 per cent., as we have made clear we propose to do.
Both on Second Reading and in Committee, I pointed out that the Bill would not of itself reduce the rebate. It is essentially an enabling measure. I recall also that, being honest with the House, we have made abundantly clear our intention to introduce an order to reduce the rebate to 41 per cent. as soon as possible after the Bill receives the Royal Assent.
From the point of view of the Opposition, I suppose that the amendment might make sense. The hon. Gentleman will point out that it provides employers with a safeguard against rebate reduction when the Fund is in surplus, and no doubt attempts will be made to show that this is fully consistent with statements made in the House in 1965, which the hon. Gentleman has quoted on previous occasions. But even if such arguments are accepted as having some force, it does not follow that prudent management of the Fund should always involve delaying the reduction of rebate until a state of deficit has occurred. Given a clear trend of expenditure from the Fund, where demands exceed receipts, it might be advisable to reduce the rebate while it was in surplus merely to spread the load. As a matter of judgment, one could envisage circumstances in which it might be sensible to look at the rebate levels before such a deficit occurred.
In the light of statements that we have made on earlier occasions, I think it right to remind the House that circumstances can change. Parliament is entitled to modify its view. We did that in respect 181 of the insolvency provisions of the Employment Protection Act. Since no objections were raised to that at the time, I think it fair to assume that both sides of the House regarded that change as a sensible use of the Fund.
I think that the present economic situation equally represents a change of circumstances, which calls for a different approach and exceptional measures to ensure a return to economic health and stability. The relatively small saving in public expenditure which will result from the reduction in rebate which we propose will, I think, make a useful contribution towards that economic health. Against that background, it does not seem unreasonable for us to use the Fund in this way and to seek the approval of Parliament to do so.
§ 10.30 p.m.
§ Mr. James Prior (Lowestoft)I do not think that the Minister proved at all convincing. In effect, he said that the Redundancy Fund is now to be used by the Government in order to save borrowing from other sources—in other words, to reduce the Government's borrowing requirement. The plain understanding is that when the Fund is in surplus—as it is now—it will be used by the Government to reduce the amount of borrowing that
§ they are required to make from other sources. That is what the Minister said.
§ The Redundancy Fund should not be used for that purpose. It is not the purpose for which it was set up. It was clearly stated that it was an integral fund in its own right and that it should be used only for the purposes of redundancy.
§ The Fund is in surplus to the tune of £10.3 million. There is no question of its suddenly going into deficit. If the Minister had said that we were right but that there would be circumstances in which the Government should act before it went into deficit, we should have accepted that. But the Minister said that he will lay an order to increase the employer's contribution at a time when the Fund is in surplus. To most reasonable hon. Members that seems to be a misuse of the Fund. It is not consistent with what has been said over a number of years about its purposes.
§ My right hon. and hon. Friends will wish to show their displeasure of the Government's attitude towards the Fund by voting in favour of the amendment.
§ Question put, That the amendment be made:—
§ The House divided: Ayes 226, Noes 244.
185| Division No. 118] | AYES | [10.32 p.m. |
| Alison, Michael | Cockcroft, John | Gow, Ian (Eastbourne) |
| Arnold, Tom | Cope, John | Gower, Sir Raymond (Barry) |
| Atkins, Rt Hon H. (Spelthorne) | Cormack, Patrick | Grant, Anthony (Harrow C) |
| Awdry, Daniel | Costain, A. P. | Grieve, Percy |
| Bain, Mrs Margaret | Crawford, Douglas | Griffiths, Eldon |
| Baker, Kenneth | Crouch, David | Grimond, Rt Hon J. |
| Banks, Robert | Davies, Rt Hon J. (Knutsford) | Grist, Ian |
| Beith, A. J. | Dean, Paul (N Somerset) | Grylls, Michael |
| Bennett, Sir Frederic (Torbay) | Dodsworth, Geoffrey | Hamilton, Michael (Salisbury) |
| Bennett, Dr Reginald (Fareham) | Drayson, Burnaby | Hampson, Dr Keith |
| Benyon, W. | Durant, Tony | Hannam, John |
| Berry, Hon Anthony | Dykes, Hugh | Hastings, Stephen |
| Bitten, John | Eden, Rt Hon Sir John | Havers, Sir Michael |
| Biggs-Davison, John | Edwards, Nicholas (Pembroke) | Hayhoe, Barney |
| Body, Richard | Emery, Peter | Hicks, Robert |
| Boscawen, Hon Robert | Ewing, Mrs Winifred (Moray) | Higgins, Terence L. |
| Bottomley, Peter | Fairgrieve, Russell | Hodgson, Robin |
| Bowden, A. (Brighton, Kemptown) | Farr, John | Holland, Philip |
| Braine, Sir Bernard | Fell, Anthony | Hordern, Peter |
| Brittan, Leon | Finsberg, Geoffrey | Howe, Rt Hon Sir Geoffrey |
| Brocklebank-Fowler, C. | Fisher, Sir Nigel | Howell, David (Guildford) |
| Brooke, Peter | Fletcher, Alex (Edinburgh N) | Howell, Ralph (North Norfolk) |
| Brotherton, Michael | Fletcher-Cooke, Charles | Howells, Geraint (Cardigan) |
| Brown, Sir Edward (Bath) | Forman, Nigel | Hunt, David (Wirral) |
| Buck, Antony | Fowler, Norman (Sutton C'f'd) | Hunt, John (Bromley) |
| Bulmer, Esmond | Fox, Marcus | Hurd, Douglas |
| Burden, F. A. | Freud, Clement | Hutchison, Michael Clark |
| Butler, Adam (Bosworth) | Fry, Peter | James, David |
| Carlisle, Mark | Galbraith, Hon T. G. D. | Jenkin, Rt Hon P. (Wanst'd & W'df'd) |
| Chalker, Mrs Lynda | Gardiner, George (Reigate) | Jessel, Toby |
| Channon, Paul | Gardner, Edward (S Fylde) | Johnson Smith, G. (E Grinstead) |
| Churchill, W. S. | Glyn, Dr Alan | Johnston, Russell (Inverness) |
| Clark, Alan (Plymouth, Sutton) | Godber, Rt Hon Joseph | Jones, Arthur (Daventry) |
| Clark, William (Croydon S) | Goodhew, Victor | Jopling, Michael |
| Clarke, Kenneth (Rushclifte) | Goodlad, Alastair | Joseph, Rt Hon Sir Keith |
| Clegg, Walter | Gorst, John | Kellett-Bowman, Mrs Elaine |
| Kilfedder, James | Newton, Tony | Sims, Roger |
| King, Evelyn (South Dorset) | Normanton, Tom | Sinclair, Sir George |
| King, Tom (Bridgwater) | Nott, John | Skeet, T. H. H. |
| Knight, Mrs Jill | Onslow, Cranley | Smith, Dudley (Warwick) |
| Knox, David | Oppenheim, Mrs Sally | Smith, Timothy John (Ashfield) |
| Lamont, Norman | Osborn, John | Speed, Keith |
| Latham, Michael (Melton) | Page, John (Harrow West) | Spicer, Jim (W Dorset) |
| Lawson, Nigel | Page, Rt Hon R. Graham (Crosby) | Spicer, Michael (S Worcester) |
| Le Marchant, Spencer | Page, Richard (Workington) | Stanbrook, Ivor |
| Lester, Jim (Beeston) | Pardoe, John | Stanley, John |
| Lewis, Kenneth (Rutland) | Parkinson, Cecil | Steen, Anthony (Wavertree) |
| Luce, Richard | Pattie, Geoffrey | Stewart, Rt Hon Donald |
| MacCormick, Iain | Penhaligon, David | Stewart, Ian (Hitchin) |
| McCrindle, Robert | Percival, Ian | Stradling Thomas, J. |
| Macfarlane, Neil | Pink, R. Bonner | Tapsell, Peter |
| MacGregor, John | Price, David (Eastleigh) | Temple-Morris, Peter |
| Mackay, Andrew James | Prior, Rt Hon James | Thatcher, Rt Hon Margaret |
| McNair-Wilson, M. (Newbury) | Pym, Rt Hon Francis | Thomas, Rt Hon P. (Hendon S) |
| McNair-Wilson, P. (New Forest) | Raison, Timothy | Thompson, George |
| Madel, David | Rathbone, Tim | Thorpe, Rt Hon Jeremy (N Devon) |
| Marshall, Michael (Arundel) | Rawlinson, Rt Hon Sir Peter | Townsend, Cyril D. |
| Marten, Neil | Rees, Peter (Dover & Deal) | Trotter, Neville |
| Mates, Michael | Rees-Davies, W. R. | van Straubenzee, W. R. |
| Maudling, Rt Hon Reginald | Renton, Rt Hon Sir D. (Hunts) | Vaughan, Dr Gerard |
| Mawby, Ray | Renton, Tim (Mid-Sussex) | Wakeham, John |
| Maxwell-Hyslop, Robin | Rhodes James, R. | Walder, David (Clitheroe) |
| Mayhew, Patrick | Rhys Williams, Sir Brandon | Walker, Rt Hon P. (Worcester) |
| Meyer, Sir Anthony | Ridley, Hon Nicholas | Wall, Patrick |
| Miller, Hal (Bromsgrove) | Ridsdale, Julian | Warren, Kenneth |
| Mills, Peter | Roberts, Michael (Cardiff NW) | Watt, Hamish |
| Mitchell, David (Basingstoke) | Roberts, Wyn (Conway) | Weatherill, Bernard |
| Moate, Roger | Ross, Stephen (Isle of Wight) | Wells, John |
| Montgomery, Fergus | Rossi, Hugh (Hornsey) | Whitelaw, Rt Hon William |
| Moore, John (Croydon C) | Royle, Sir Anthony | Wiggin, Jerry |
| More, Jasper (Ludlow) | Sainsbury, Tim | Winterton, Nicholas |
| Morris, Michael (Northampton S) | Scott, Nicholas | Young, Sir G. (Ealing, Acton) |
| Morrison, Charles (Devizes) | Shaw, Giles (Pudsey) | |
| Mudd, David | Shelton, William (Streatham) | TELLERS FOR THE AYES: |
| Neave, Airey | Shepherd, Colin | Mr. Peter Morrison and |
| Nelson, Anthony | Shersby, Michael | Mr. Carol Mather |
| Neubert, Michael | Silvester, Fred | |
| NOES | ||
| Abse, Leo | Cryer, Bob | Grant, George (Morpeth) |
| Allaun, Frank | Cunningham, G. (Islington S) | Grant, John (Islington C) |
| Anderson, Donald | Cunningham, Dr J. (Whiteh) | Grocott, Bruce |
| Archer, Peter | Davidson, Arthur | Hamilton, James (Bothwell) |
| Armstrong, Ernest | Davies, Bryan (Enfield N) | Hardy, Peter |
| Ashton, Joe | Davies, Denzil (Llanelli) | Harper, Joseph |
| Atkins, Ronald (Preston N) | Davies, Ifor (Gower) | Harrison, Walter (Wakefield) |
| Atkinson, Norman | Davis, Clinton (Hackney C) | Hart, Rt Hon Judith |
| Bagier, Gordon A. T. | Deakins, Eric | Hatton, Frank |
| Barnett, Guy (Greenwich) | Dean, Joseph (Leeds West) | Hayman, Mrs Helene |
| Barnett, Rt Hon Joel (Heywood) | de Freitas, Rt Hon Sir Geoffre) | Healey, Rt Hon Denis |
| Bates, Alt | Dell, Rt Hon Edmund | Heffer, Eric S. |
| Bean, R. E. | Doig, Peter | Hooley, Frank |
| Benn, Rt Hon Anthony Wedgwood | Dormand, J. D. | Horam, John |
| Bennett, Andrew (Stockport N) | Douglas-Mann, Bruce | Hoyle, Doug (Nelson) |
| Bishop, E. S. | Dunnett, Jack | Huckfield, Les |
| Blenkinsop, Arthur | Dunwoody, Mrs Gwyneth | Hughes, Rt Hon C. (Anglesey) |
| Boardman, H. | Eadie, Alex | Hughes, Mark (Durham) |
| Booth, Rt Hon Albert | Edge, Geoff | Hughes, Roy (Newport) |
| Boothroyd, Miss Betty | Ellis, John (Brigg & Scun) | Irvine, Rt Hon Sir A. (Edge Hill) |
| Bradley, Tom | Ellis, Tom (Wrexham) | Irving, Rt Hon S. (Dartford) |
| Brown, Hugh D. (Provan) | English, Michael | Jackson, Colin (Brighouse) |
| Blown, Robert C. (Newcastle W) | Ennals, David | Jackson, Miss Margaret (Lincoln) |
| Brown, Ronald (Hackney S) | Evans, Ioan (Aberdare) | Janner, Greville |
| Butler, Mrs Joyce (Wood Green) | Evans, John (Newton) | Jay, Rt Hon Douglas |
| Callaghan, Jim (Middleton & P) | Ewing, Harry (Stirling) | Jenkins, Hugh (Putney) |
| Cant, R. B. | Faulds, Andrew | John, Brynmor |
| Carter, Ray | Fitch, Alan (Wigan) | Johnson, James (Hull West) |
| Carter-Jones, Lewis | Fitt, Gerard (Belfast W) | Johnson, Walter (Derby S) |
| Cartwright, John | Flannery, Martin | Jones, Alec (Rhondda) |
| Castle, Rt Hon Barbara | Fletcher, Ted (Darlington) | Jones, Barry (East Flint) |
| Clemitson, Ivor | Foot, Rt Hon Michael | Jones, Dan (Burnley) |
| Cocks, Rt Hon Michael | Forrester, John | Kaufman, Gerald |
| Cohen, Stanley | Fowler, Gerald (The Wrekin) | Kelley, Richard |
| Coleman, Donald | Fraser, John (Lambeth, N'w'd) | Kilroy-Silk, Robert |
| Conlan, Bernard | Freeson, Reginald | Kinnock, Neil |
| Cook, Robin F. (Edin C) | Garrett, John (Norwich S) | Lamborn, Harry |
| Corbett, Robin | George, Bruce | Lamond, James |
| Cowans, Harry | Gilbert, Dr John | Latham, Arthur (Paddington) |
| Craigen, Jim (Maryhill) | Golding, John | Leadbitter, Ted |
| Crawshaw, Richard | Gould, Bryan | Lestor, Miss Joan (Eton and Slough) |
| Crowther, Stan (Rotherham) | Graham, Ted | Lever, Rt Hon Harold |
| Lewis, Ron (Carlisle) | Ovenden, John | Strang, Gavin |
| Lomas, Kenneth | Palmer, Arthur | Strauss, Rt Hon G. R. |
| Loyden, Eddie | Park, George | Summerskill, Hon Dr Shirley |
| Luard, Evan | Parker, John | Swain, Thomas |
| Lyon, Alexander (York) | Parry, Robert | Taylor, Mrs Ann (Bolton W) |
| McCartney, Hugh | Pavitt, Laurie | Thomas, Jeffrey (Abertillery) |
| McDonald, Dr Oonagh | Phipps, Dr Colin | Thomas, Mike (Newcastle E) |
| McElhone, Frank | Prescott, John | Thomas, Ron (Bristol NW) |
| MacFarquhar, Roderick | Price, C. (Lewisham W) | Thorne, Stan (Preston South) |
| McGuire, Michael (Ince) | Price, William (Rugby) | Tierney, Sydney |
| MacKenzie, Gregor | Radice, Giles | Tinn, James |
| McNamara, Kevin | Rees, Rt Hon Merlyn (Leeds S) | Tuck, Raphael |
| Madden, Max | Richardson, Miss Jo | Urwin, T. W. |
| Magee, Bryan | Roberts, Gwilym (Cannock) | Varley, Rt Hon Eric G. |
| Maguire, Frank (Fermanagh) | Robinson, Geoffrey | Wainwright, Edwin (Dearne V) |
| Mahon, Simon | Roderick, Caerwyn | Walden, Brian (B'ham, L'dyw'd) |
| Mallalieu, J. P. W. | Rodgers, George (Chorley) | Walker, Harold (Doncaster) |
| Marks, Kenneth | Rodgers, Rt Hon William (Stockton) | Walker, Terry (Kingswood) |
| Marshall, Dr Edmund (Goole) | Rooker, J. W. | Ward, Michael |
| Marshall, Jim (Leicester S) | Roper John | Watkins, David |
| Maynard, Miss Joan | Rose, Paul B. | Watkinson, John |
| Meacher, Michael | Ross, Rt Hon W. (Kilmarnock) | Weetch, Ken |
| Mendelson, John | Rowlands, Ted | Wellbeloved, James |
| Mikardo, Ian | Ryman, John | White, Frank R. (Bury) |
| Millan, Rt Hon Bruce | Sandelson, Neville | Whitehead, Phillip |
| Miller, Dr M. S. (E Kilbride) | Sedgemore, Brian | Whitlock, William |
| Mitchell, Austin Vernon (Grimsby) | Shaw, Arnold (Ilford South) | Williams, Rt Hon Alan (Swansea W) |
| Mitchell, R. C. (Solon, Itchen) | Sheldon, Rt Hon Robert | Williams, Rt Hon Shirley (Hertford) |
| Molloy, William | Shore, Rt Hon Peter | Williams, Sir Thomas (Warrington) |
| Moonman, Eric | Short, Mrs Renée (Wolv NE) | Wilson, Alexander (Hamilton) |
| Morris, Alfred (Wythenshawe) | Silkin, Rt Hon John (Deptford) | Wilson, William (Coventry SE) |
| Morris, Charles R. (Openshaw) | Silkin, Rt Hon S. C. (Dulwich) | Wise, Mrs Audrey |
| Morris, Rt Hon J. (Aberavon) | Silverman, Julius | Woodall, Alec |
| Moyle, Roland | Skinner, Dennis | Woof, Robert |
| Mulley, Rt Hon Frederick | Smith, John (N Lanarkshire) | Wrigglesworth, Ian |
| Newens, Stanley | Snaps, Peter | Young, David (Bolton E) |
| Noble, Mike | Spearing, Nigel | |
| Oakes, Gordon | Spriggs, Leslie | TELLERS FOR THE NOES |
| Ogden, Eric | Stallard, A. W. | Mr. Thomas Cox and |
| O'Halloran, Michael | Stewart, Rt Hon M. (Fulham) | Mr. David Stoddart |
| Orme, Rt Hon Stanley | Stott, Roger |
§ Question accordingly negatived.
§ Bill read the Third time and passed.