§ LORD HENEAGE rose to ask His Majesty's Government the following Questions with reference to the National Insurance Act, 1911——
- 1. Whether it is the intention of the Insurance Commissioners to consider the applications of the small rural societies on their own merits respectively, apart from any other larger societies, and, if so, when they may expect some reply to their applications to become approved societies as independent units?
- 2. Whether it is not unnecessary for clerks, governesses and domestic servants to obtain cards before 15th of July who are paid their wages quarterly, and whose first contribution after the Act comes into operation cannot be before October next unless they leave their present service previously?
- 3. Whether the Government will consider the advisability of supplying stamps representing monthly and quarterly contributions?
- 4. Whether the Government will take the opinion of the Law Officers of the Crown as to the legality of deducting from wages the cost of the stamps which constitute the contribution of workmen or domestic servants against their wishes, having due regard to the Master and Servants Act?
- 5. What is the position of a domestic servant or workman whose employer continues to pay his or her wages and to look after him or her during temporary illness? Does he or she forfeit sick benefits under the Act?
- 6. Are employers expected to pay for persons employed by them who are themselves exempt because they have a private source of income in addition to their wages or are above sixty-live years of age; and, if so, are employers also to pay for employees over seventy years of age who are in receipt of a pension but desire to continue to work half-time or occasionally each week?
§
The noble Lord said: My Lords, before putting the Questions which stand in my name on the Paper I should like to refer for a minute or two to the notorious leaflet about which we had a discussion last week. Your Lordships will recollect that the noble and learned Viscount on the Woolsack described that discussion as a very useful conversation, although the leaflet itself was unanimously condemned on all sides of the House. The noble Earl who represents the Treasury in your Lordships' House promised that there should be issued a new and amended leaflet, and if I recollect rightly he read the substance of that leaflet to the House. But, my Lords, another voice has spoken since then, and I should like to ask whether this new leaflet has been issued or is going to be issued. The Secretary to the Treasury, who is also one of the Commissioners and Chairman of the Joint Committee, was asked in the House of Commons on Monday last the following Question by the Member for Salisbury—
Whether he would publish a correction of the 'N.H.' Leaflet issued by the Insurance Commissioners which states that it is of the greatest importance to every employed person that he should join an approved society without delay, and so avoid becoming a deposit contributor.
That is precisely the same Question as I put in your Lordships' House last week. But Mr. Masterman did not reply to the Question as the noble Earl did to me, in a courteous manner. On the contrary, he said—
The advice given in the 'N.H.' Leaflet to which the hon. Member refers is entirely justified.
And he went on to justify it in his own way, I do not think doing any practical good to his side of the question. Now, my Lords this is the very question we discussed last Wednesday. What I want to know is whether we are to take the answer that was given us by the noble Earl, Lord Liverpool, or whether we are to take the voice that spoke in the House of Commons. We are told in your Lordships' House that our conversation was extremely useful, notwithstanding the colossal difficulties which have been caused by bringing the Act into operation on July 15. The Commission are not to blame for any change of opinion amongst those who are responsible for these answers. There is only one person to blame, and he says that we cannot get at him. Mr. Lloyd George is alone to blame for
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the unworkable character of the Act, and alone to blame for the colossal difficulties which have arisen in consequence of the Act being brought into operation on July 15.
§ But that is not the only question to which I should like to call attention. The Secretary to the Treasury, in his capacity as Chairman of the Joint Committee, wrote a very able letter to the Press last week, and I for one desire to congratulate him on the clear and straightforward way in which he put the whole question of domestic servants—until he came to the last paragraph. I do consider that the last paragraph was one of the meanest paragraphs I have ever read. What was the meaning of that paragraph? It meant that rich people, in order to save themselves trouble and in order to save being tax gatherers, should pay both the servant's contribution and their own, and thus leave those who are poorer than themselves and could not do this to be called mean. I do not think that is a statement which ought to be made by the Secretary to the Treasury, but I have for a long time been suspicious that that was the object of the Government in all this hustle and hurry, and now the cat is out of the bag. What would be the effect if the advice given by the Secretary to the Treasury was taken by what Mr. Lloyd George has called the "idle rich" and if poorer mistresses and masters were to follow their example. Why, the servants would not be taught thrift as we were told was the object of bringing in this Bill. But they would be told at the next election, "Look at your benefactor Mr. Lloyd George, who has got pensions for you for the future without one single farthing expense to you, but entirely at the expense of your masters." That is no doubt the object of this hustling and the object of this advice, but I must leave it to your Lordships, having brought it to your notice, to form your own opinions about it.
§ With regard to the Questions standing in my name on the Paper, I think the noble and learned Viscount on the Woolsack was hardly accurate when he said that a number of small societies had been already approved. I think if he will inquire, as I have taken the trouble to do, at Buckingham Gate, he will find that very few have been approved up to the present 349 time. Out of 100 that have applied in Lincolnshire only three have been approved. But that is not the fault of the Commissioners. The Commissioners have great difficulty in approving societies owing to the provisions of the Act. Most of these societies for rural labourers and domestic servants want sonic alternative benefits, but the difficulty is to give them the alternative benefits within the four corners of the Act. What is wanted is an Amending Act, a simple Act to amend Section 13, where alternative benefits are allowed for persons who do not wish to take the sick benefits of the Act. My second Question is a simple one and stands on its own merits, and the third Question is a matter of convenience. The fourth Question has already been asked twice before, but I should like to point out that the real point is not whether under the insurance Act employers can recover the cost of the stamps from the servants, but whether they can deduct them from their wages under the Master amid Servants Act. The fifth Question is a very important one. There is a strong feeling throughout the country, I am informed, that if the employer continues to pay the domestic servant or workman his or her wages and to look after him or her during temporary illness he or she will not be allowed to have the benefits under the Act. It is difficult to understand the meaning of the pamphlet, and I should very much like, not so Much for my own benefit but for the benefit of the great number of others who are in perplexity on the point, that we should have a clear and definite answer to this Question. The sixth Question arises out of the misleading leaflet, and I desire that there should be some clear information on this point. I now ask the six Questions which stand in my name, and I hope the noble Earl will be able to give the answers in such a clear light that I may not have to refer to them again.
LORD ORANMORE AND BROWNEMy Lords, I rise to ask a few supplementary Questions of which I have given the noble Earl private notice. In the first place, wish to ask what insurance premium is payable (1) by employers, and (2) by employees where the latter are employed partly in Great Britain and partly in Ireland? Secondly, what insurance premium is payable by the employer and employed where the latter resides permanently in Ireland, but, being a 350 Scotsman or Englishman, is a member of a friendly society in Great Britain which has become an approved society under the Act? My third Question is somewhat of a corollary to Lord Heneage's sixth Question. It is this. In the event of employers being expected to pay the contribution of an employee who has above £26 a year of his own, what becomes of the contribution paid by him and also the contribution made by the State in such a case?
THE EARL OF LIVERPOOLMy Lords, in returning to this rather thorny subject I should like to thank noble Lords for their courtesy in putting their points so clearly, and I in my turn will do my best to answer their Questions as clearly as I can. Before coming to the actual Questions I should like, as 'regards the promise which I gave that another leaflet would be issued to say that that leaflet is going to be issued very shortly.
§ LORD ASHBOURNEBefore July 15?
THE EARL OF LIVERPOOLI cannot give any pledge as to the exact date. In his first Question Lord Heneage asks whether it is the intention of the Insurance Commissioners to consider the applications of the small rural societies on their own merits respectively, apart from any other larger societies, and, if so, when they may expect some reply to their applications to become approved societies as independent units. Last week I was taken to task by noble Lords opposite in connection with a remark I made about tire smaller societies. It was said that the larger societies were going to swallow up the smaller societies, and I explained that such was not the case. I. now wish to say, in reply to the noble Lord's Question, that the Commissioners give equal consideration to all applications for approval from societies great or small. They have approved a society with as few as thirty-five members. Lord Heneage raised the question that some of the applications of these societies to become approved societies had not been replied to. I have been very carefully into the matter, and as far as I can see an answer has been in every case returned to the societies which have made application. The Commissioners attach special importance to the preservation of rural societies, believing that under the Act they can continue and extend their usefulness as centres of village life.
351 The Commissioners wanted to get into touch with as many of these rural societies as possible. But they found that these societies had great difficulty in grasping the intentions of the Act and taking the necessary steps to become approved, especially in preparing rules. The Commissioners therefore decided to use the co-operation of county organisations which were being started all over the country, and to approach the rural societies where possible through them; and also to simplify the rules and procedure for becoming approved. This has led to some delay, but has had these advantages. It has secured voluntary helpers throughout the country. Lord Heneage, for instance, has expressed his appreciation of the work being done in Lincolnshire by the Rural Workers Association, to whom small societies in Lincolnshire are being referred for advice by the Commissioners. Lord Fortescue started a similar society in Devon. Both these societies are now approved, and between them they already embrace over fifty village clubs, whose independence and tradition will remain untouched. In East Sussex it is hoped to approve thirty societies in a few days, and as many or more in Bedfordshire. It has also led to co-operation between the small societies themselves, which will strengthen them when they come to work the Act. It has resulted in societies whose existence was not even known to the Commissioners coining forward at the invitation of the county organisation to take their share in the working of the Act.
To remove any apprehension as to the ill consequences of delay the Commissioners have sent Circular 45 to every society which has been in correspondence with them. This circular has also been published in the Press and sent to every Member of Parliament. The Commissioners have prepared a much simpler form of rules, which can be sent to any one who is interested. They have sent out Circular 45 to the societies and an attached covering letter to all county organisations. The fact that approval is sometimes delayed is regretted by the Commissioners, but it is often due to causes over which they have no control. It has frequently happened that a society has failed to pass the proper resolution to become approved, or that wrong rules are sent in, or that the rules require much amendment. In such cases a fresh meeting of the society 352 often has to be summoned to put matters right, and time is then lost. In any case the examination of rules by the staff of the Commission is a lengthy process, because the existing rules, often very old and complicated, have to be studied to make sure that the government of the society is in order, and as far as possible cases must be taken ill order. But I can assure the noble Lord that everything is being done to expedite the approval of these small societies.
In his second Question the noble Lord asks whether it is not unnecessary for clerks, governesses and domestic servants to obtain cards before July 15 who are paid their wages quarterly, and whose first contribution after the Act comes into operation cannot be before September next unless they leave their present service previously. The answer to that Question is both Yes and No. The general position is as follows. A contribution accrues from the first moment of employment after July 14, and the fact that it is not necessarily made payable until some later date should not be allowed to obscure the fact that the employee is an insured person from that moment, and should therefore have a card, which he may require at any time, as a token of his insurance. The "N.H." Leaflet in stating that a contribution card must be obtained before July 15 was framed in consideration of the vast number of cases in which it will be in fact necessary that the card should be so obtained. It is true that in certain instances—for example, where the employed person's wages are on a quarterly basis and he will not be receiving wages until September 30—no harm will, except as I shall state in a moment, be done if the card is not in fact obtained until the payment is made, and I am glad to make this plain to your Lordships.
But I still think that the leaflet was wisely phrased, for the following reasons. It must be noted that these cases of quarterly payment are few as compared with the many million cases to which the leaflet was necessarily addressed, and the special exceptional cases in question could not have been effectively explained in the leaflet without causing wide misapprehension as to the general necessity. Even in these cases of quarterly wages it is certainly safer that the card should be obtained from July 15, for various reasons. 353 For instance, the employed person might unexpectedly need to apply for sanatorium benefit, in which case the production of the card would be necessary, and such person would have a right to complain at having been misled if the leaflet had stated, as I understand is suggested, that in some instances no card need be obtained until September 29. It would, in fact, be necessary to have the card from July 15 in every case where, even on quarterly wages, the individual had other employment at the same time under a different employer. This point again it would have been impossible to set out precisely in the leaflet. It would have been wrong also for the compilers of the leaflet to overlook the possibility of unexpected dismissal in the case of any employed person. In these circumstances the possession of the card is necessary. I think, therefore, your Lordships will see that the leaflet was wisely worded, and that widespread misapprehension would have been created if any attempt had been made to set out in the leaflet these few special cases in which the obtaining of the card might conceivably have been postponed without any detriment necessarily arising.
The noble Lord's third Question is whether the Government will consider the advisability of supplying stamps representing monthly and quarterly contributions. Employed persons, at whatever intervals their wages are paid, may at any time after July 15 require their cards for production to an employer—e.g., if they change their employer or take employment under a second employer. It is necessary, therefore, for them to obtain their cards at the commencement of the Act, and the regulations provide accordingly. There are serious objections to placing high value stamps representing monthly and quarterly contributions on sale at Post Offices generally. The Post Office would take strong objection to increasing the already very large number of varieties of health and unemployment stamps which they are required to sell, and this especially applies to stamps of high value. To limit the public sale to head offices would be of no great advantage to employers generally. Further, the issue of high value stamps generally would probably lead to the stamping of cards at the end of the quarter without the prepayment of the contributions which the Act requires, 354 and this would mean a loss of interest to the Fund or a. great increase in the amount of inspection necessary to prevent irregularities of this nature from becoming general. Moreover, the general issue of high value stamps over periods other than thirteen weeks would create very serious accounting complications for the societies, because it is necessary to know the actual weeks for which contributions have been paid. But for large employers who have been granted facilities for quarterly stamping on prepayment, and undertake to fulfil the necessary conditions, high value stamps will be available. I may add that the Insurance Commissioners would be prepared to consider the question of supplying thirteen-week stamps to any employer on application to them if there were any evidence that the supply of such stamps upon special application to them would be of general convenience. No such evidence is, however, at present available.
The noble and learned Lord opposite, Lord Ashbourne, the other day asked the same point as that contained in Lord Heneage's fourth Question, which is whether the Government will take the opinion of the Law Officers of the Crown as to the legality of deducting from wages the cost of the stamps which constitute the contribution of workmen or domestic servants against, their wishes, having due regard to the Master and Servants Act. The answer is that Section 3 of the Third Schedule of the National Insurance Act authorises the employer to deduct from wages paid by him the workman's part of the contributions payable under Part I of the Act, notwithstanding the provisions of any contract to the contrary. This provision would definitely override the provisions of any previous Act with which it might be in conflict. The Commissioners have, however, taken further legal advice, and are informed that the question admits of no doubt whatever. It would be unfair to add to the present burden of work of the Law Officers of the Crown by referring it to them.
Lord Heneage asks in his fifth Question, What is the position of a domestic servant or workman whose employer continues to pay his or her wages and to look after him or her during temporary illness? Does he or she forfeit sick benefits under the Act? The answer is that if the 355 employer guarantees to pay full remuneration during the first six weeks of illness, then under Section 47 the contribution is reduced—for a female servant by 1½d., the employer paying 2½d. and the servant 2d. (instead of 3d. each); and for a male servant by 2d., the employer paying 2d. and the man 3d. (instead of 3d. and 4d.). In this case no sick pay is given while wages are continued for these six weeks. The servant is, however, entitled to the other benefits, including medical benefit, from the first, and to sick pay from the end of the six weeks. If adequate provision is made for the sickness of the servants by their employers it will be possible to commute sickness benefit for other benefits—e.g., pensions. The Commissioners will within a few days issue tables showing what other benefits can be so provided. Employers whose servants would benefit by coming under a scheme of this kind would do well to remember, before they adopt a scheme for lower contributions under Section 47, that the payment of contributions at this lower rate would necessarily penalise their servants in respect of their substituted benefits—e.g., pensions, &c. If neither contributions are reduced under Section 47, nor a scheme of substituted benefits accepted under Section 13, then sickness benefit would be payable at the ordinary rate, whether or not the employer paid wages during illness.
§ LORD HENEAGEAm I to understand that they do forfeit the sick benefits under the Act, but that they have alternative benefits?
THE EARL OF LIVERPOOLIn the case put by the noble Lord in his Question it is suggested that there should be an alternative benefit instead of sick benefit. If that alternative benefit does not come into force, then the domestic servant or workman can have the sickness benefit. I now come to the noble Lord's sixth and final Question. In the first part of that Question he asks, Are employers expected to pay for persons employed by them who are themselves exempt because they have a private source of income in addition to their wages or are above sixty-five years of age? Under Section 4 (4) of the Act employers are required to pay their contributions in respect of persons who have either (a) obtained a certificate of exemption nailer Section 2 (1) as being in receipt of 356 £26 per annum or more, or being ordinarily and mainly dependent on some other person, or (b) not being previously insured become employed for the first time after sixty-five, and are therefore not insured. Such contributions are required under the Act in order to prevent discrimination by employers, in engaging their workmen, against persons who are compulsorily insured. The contributions are to be dealt with in accordance with Regulations, which may provide for applying them for the benefit of the employees in respect of whom they have been paid in the event of their subsequently becoming employed contributors. Many persons who enjoy an allowance which now entitles them to exemption will doubtless lose that allowance and require to be insured in future years, and many others, such as married women, who are now mainly dependent on their husbands, will become widows and also require to be insured. Unless some money were available to help these people to re-enter insurance they would necessarily have at later ages in life (if more than a year after the commencement of the Act) to suffer reduced benefits or pay higher contributions. Contributions for exempted persons are therefore required for the double reason of preventing unfair discrimination in the engagement of workpeople, and also to help a class of persons many of whom will in future years be greatly in need of assistance. I should like to say a word on the question of people of sixty-five years of age. In brief, if a man or woman is sixty-five on July 15 and is or becomes employed he or she is insured and comes under the full conditions of insurance; but he or she does not get any reserve value, and only gets such benefits as the society can then give. But if a man or woman is under sixty-five on July 15 and does not become employed until he is over sixty-five, then he is not insured and the employer would pay on him as on an exempt person. In the second part of his last Question the noble Lord asks whether employers are also to pay for employees over seventy years of age who are in receipt of a pension but desire to continue to work half-time or occasionally each week. No, they are not insured. No contributions are paid in respect of people of and over seventy years of age.
§ LORD HENEAGEBoth as regards employer and employed?
§ LORD FABERI should like to ask the noble Earl whether the approval of a small society will carry with it any guarantee that it is solvent; otherwise some of us might advise our servants to join an approved society which might turn out to be insolvent. What is to happen in that case to the contributions of the employer and employed? Will there be an examination from time to time to see that the financial position of small societies is sound?
LORD KINNAIRDDo the Government guarantee these approved societies? Is there any guarantee that they are solvent?
THE EARL OF LIVERPOOLI understand that not only the rules but the funds of the societies will be inquired into; but I would like to have notice of these Questions.
§ EARL FORTESCUEDo I understand that employers have to pay their contributions for people employed by them who are between the ages of sixty-five and seventy, and that after the age of seventy they do not?
§ EARL FORTESCUEThen an employee between sixty-five and seventy years of age will be in a worse position than an employee below sixty-five or above seventy, because he will have to pay contributions.
THE EARL OF LIVERPOOLNot in every case. There are certain cases in which he does and certain cases in which he does not. If an employee is sixty-five on July 15 next and is or becomes employed he is insured, but does not get any reserve value and only such benefits as his society could give him for the contributions. But if he is under sixty-five on July 15 and does not become employed until over the age of sixty-five then he is exempt, but the employer pays the contribution.
§ THE EARL OF DARTMOUTHI understood the noble Earl to say that a certain number of the higher price stamps would be supplied at certain Post Offices and would be distributed on application provided general convenience was proved. Am I correct in that?
THE EARL OF LIVERPOOLYes. I also added that at the present time there is no evidence that it would be of general convenience.
§ THE EARL OF DARTMOUTHWho is to be the judge as to the general convenience?
THE EARL OF LIVERPOOLThe Post Office are very unwilling to have a large number of these high value stamps issued.
§ THE EARL OF DARTMOUTHI can quite understand that there is an objection to it, but the noble Earl said it would be done if necessary to meet the general convenience. Who is to judge as to this There may be different opinions.
THE EARL OF LIVERPOOLAs regards that point, I may say that there have been very few applications up to now.
§ THE EARL OF DARTMOUTHWe have hardly got going yet.
THE EARL OF LIVERPOOLI added that if there were a great number of these applications the Insurance Commissioners would consider them on their merits.
§ THE EARL OF DARTMOUTHThat meets my point.
§ LORD AMPTHILLIn to Lord Heneage's first Question the noble Earl opposite went out of his way to refer to a remark which was made by myself on the last occasion, when I asked him the meaning of a phrase which he used himself to the effect that it was hoped to reach the smaller societies through the larger societies. When I desired the noble Earl to explain that phrase he asked for further notice. As he has reverted to the subject to-day I hope he can now explain the meaning of that phrase. What is the exact process? How do you reach the small society through the large society? Have the large societies any regular means of correspondence or communication with the small societies? What is their locus standi in the matter? What right has a larger society to act as an intermediary in correspondence between the Commissioners and the smaller society?
THE EARL OF LIVERPOOLI am afraid I have nothing further to add to what I have said on this point. I have already given a full explanation.
§ LORD ASHBOURNEI understand from the noble Earl that the Government will keep their eye on the approved societies, and if they find it necessary to do so will, I suppose, withdraw their approval. I take it they will look into the status and financial position of approved societies with a view to considering whether they should remain approved. Supposing the investigation shows that a society should not remain approved. What then will be the position of the people who have joined that society on practically the invitation of the Government?
THE EARL OF LIVERPOOLThe noble and learned Lord has raised a question similar to that put by Lord Faber just now, and I then asked to have notice of it. As regards the point put to me by Lord Oranmore and Browne with regard to servants who ply between England and Ireland, the contributions and benefits under the Act are the same in England, Scotland and Wales, but in Ireland the contributions are—For men, 5½d. (employer 2½d., worker 3d.) instead of 7d. in England; for women, 4½d. (employer 2½d., worker 2d.) instead of 6d. in England; and there is no medical benefit in Ireland. Contributions and benefits vary with residence, but would be the same whether the servant belongs to an English or an Irish society. If she is permanently resident in Ireland she would naturally belong to an Irish society or to the Irish branch of an English society. If she moves about between England and Ireland the position is as follows. While she is actually in England, for however short a time, she pays English contributions and receives full benefits, including medical benefit. While she is actually in Ireland she pays Irish contributions and receives no medical benefit. If her journeys from England to Ireland and vice versa are for such a long period each time as to involve a change of residence, it is desirable that she should belong to a society which has both English and Irish branches, as her membership would then remain constant. If her residence, however, is usually in England and she accompanies her employer to Ireland merely for short holidays, then no change of residence is involved; she retains her membership of the English 360 society, and no particular object is served by joining a society which has an Irish branch. On the whole, however, if questions as to change of residence are likely to arise, it would seem desirable for a person who moves about from one country to another frequently to become a member of a society with branches in both countries, so as to avoid unnecessary changes of society. As to the other Question put to me by Lord Oranmore and Browne, I would ask the noble Lord to give me notice of it.
LORD ORANMORE AND BROWNEMay I ask whether societies exist which have branches in England and Ireland? I do not see how servants going over to Ireland for three or four months can be forced when in Ireland to pay more than the contribution which is obligatory in Ireland, nor how an employer can be forced to give a larger contribution. As to the answer given to Lord Heneage's sixth Question, I wish to know whether I clearly understood it. In the case of a servant having over £26 a year, is it quite clear that the employer has to pay the 3d. or 2d. a week for him, and that if the servant has a pension or something of that kind he never can get any benefit, and that therefore the employer is paying into a general fund for the benefit of other individuals who are in less fortunate circumstances?
THE EARL OF LIVERPOOLThe receipt of the £26 may not go on indefinitely, and it is to meet the case of its not doing so that this Regulation was brought into force.
LORD ORANMORE AND BROWNECan the noble Earl answer the question whether there are any societies with branches in Ireland and England?
THE EARL OF LIVERPOOLI cannot answer off-hand; I fancy the Oddfellows is one. Then there is the question as to the issue of cards through employers, about which I received a letter from Lord Heneage. No doubt the noble Lord will remember it.
LORD HENE AGEIt was the case of a large employer who applied for 600 cards and was told that, according to the rules laid down he could only have ten per cent., and sixty cards only were sent to him.
THE EARL OF LIVERPOOLIn the case of employees who belong to approved societies the Commissioners are most anxious to give time for the actual societies themselves to issue cards direct to their members.
THE EARL OF CAMPERDOWNI happen to know of a case in Edinburgh where an application was made by an employer for cards for all his employees. He was informed by the Post Office that they could not give him the cards but that his employees, 400 in number, must all go for the cards themselves.
THE EARL OF LIVERPOOLTo assist the bringing of the Act into operation special arrangements have been made under which employers may obtain and issue cards for those of their employees who fail to obtain cards from their societies or from the Post Office at the proper time. It is only within the last week or so that societies have been ready to issue cards in large numbers to their members, and, as I have said, the Commissioners desire to give them every opportunity of providing their members with their cards, which, they are exceedingly anxious to do before the commencement of the Act. The Commissioners hope, therefore, that the number of employees who fail to obtain cards through the ordinary channels by July 15 will be comparatively small, and for the present the supply of cards to employers is limited, as a rule, to ten per cent. of the number of employees. If, however, by next week any employers find that there are still large numbers of their employees who are without cards, the Commissioners will be prepared to supply emloyers with as many cards as are necessary to secure that every employee shall have a card on July 15.
§ LORD AMPTHILLThe noble Earl who has replied on behalf of His Majesty's Government told us, in answer to Lord Heneage, that it was not proposed to add to the present burden of work on the Law Officers of the Crown by asking for their opinion on the point contained in the fourth Question. It seems to me an extraordinary answer that the Law Officers of the Crown are not to be bothered on such an important matter. What are the Law Officers of the Crown for except to clear up doubtful points of law? If the noble Earl had said that the Government 362 did not think it necessary to make the reference because the Act is perfectly clear that would have been an intelligible answer, but the answer that was given is one of the most extraordinary that has ever been vouchsafed in this House.
THE EARL OF LIVERPOOLI said there was no doubt upon the point. I made the other observation as supplementary.
§ LORD ASHBOURNEI do not know whether the noble and learned Viscount on the Woolsack can inform the House what would be the position of the contributors of an approved society which, on further investigation, was found to be no longer worthy of being approved and the Government withdraw their approva from it.
§ THE LORD CHANCELLOR (VISCOUNT HALDANE)I think there is a little misapprehension in the minds of noble Lords as to the financial arrangements of the Act. It is not contemplated that an existing society should be allowed to mix up the new insurance with its old funds. On the contrary, the Act contains a code under which it will be obligatory upon every approved society to separate its insurance business from business which docs not fall within the purposes of the Act and which has been done before the Act came into operation. The society will have to invest the money it receives under the Act, whether from employee, employer, or the State, in a manner which is carefully provided for. It will have to give security for its handling of the money or else invest it in approved securities. Therefore it can hardly go wrong unless there is some very gross breach of trust. There will be careful supervision of the societies from time to time, and though the State does not guarantee their solvency it prescribes means under which it is made certain, as far as ingenuity can make that possible, that nothing can go wrong.
§ LORD ASHBOURNEThe point I wished to have made clear was this. Suppose, as the result of the supervision which the Government will exercise, a society which has been approved is found to be a society no longer worthy of being approved and the Government withdraw their approval, what will be the position of the contributors?
§ THE LORD CHANCELLORIn the case of insolvency on the part of a society due to defalcation the same rules would apply as apply now in the case of a benefit society in which there is a deficiency—the members will have to contribute in order to make up that deficiency. It is conceivable that the whole thing might be wound up, but that is not in the least probable, because the machinery which requires the keeping of the funds separate is such as to make it as far as possible certain that the funds will always be forthcoming. If there were any difficulty it would be from some act for which the other members of the society were liable. It is to see that there is no insolvency and no danger of insolvency that the inspections to which reference has been made take place.
The answer to the Question put by Lord Ampthill as to why the opinion of the Law Officers had not been taken in this case is that the point was so plain and simple that it was not necessary to do so. When provision is laid down in an Act of Parliament that deductions are not to be made from the wages of persons employed, and following upon that there is a special Act of Parliament directed to a special case which directs that in that special case deductions shall he made, then the subsequent Statute prevails. If the noble Lord refers to the Schedule of the Insurance Act he will find that there is a specific direction as to deductions; that, of course, overrules the direction in the general Act. The point was so simple that the Commissioners did not think it necessary to refer the matter to the Law Officers. It is quite true that the Law Officers are available to answer such questions, but their duties are very heavy, and it is not a service to the State for a Department to add unnecessarily to the burdens of the Law Officers.
§ LORD FABERI understand the noble and learned Viscount to say that these small societies, when they take up the insurance business, will have to keep it quite separate from their ordinary business, and that the Government will frame rules as to what they are to do with the funds which they receive under this insurance scheme. [The LORD CHANCELLOR nodded assent.] Then I suppose the Government mean to tell these societies to invest their funds in Consols? I will take that case. 364 They invest their money in Consols, a call is made on the society to pay money to insured persons, they sell Consols, for which they had to pay seventy-six, at seventy-two—and we know what has been going on in Consols during the last six months—and a state of insolvency is set up at once.
§ THE LORD CHANCELLORThe societies are not restricted to investment in Consols or in any other particular security. The obligation put on them is to see that the securities are either Government or trustee securities.
§ LORD FABERThey are all under the same banner. If Consols fall they all fall.
§ THE LORD CHANCELLORAt the present time, if in the case of a registered benefit society the funds are insufficient to meet a claim, there is a levy. The same thing would apply in this case. The rules laid down are directed to making sure that the funds of the society shall be administered in such a fashion that these deficiencies shall not take place. As a rule they have arisen not at all from investment in Consols, but through investment in a very different class of securities.
§ THE MARQUESS OF LANSDOWNEAre we to understand that the conditions under which these small societies will obtain approval will be of so strict a kind as to make it in the opinion of His Majesty's Government almost out of the question that they should hereafter become insolvent?
§ THE LORD CHANCELLORYes. After the closest consideration we could give to the subject we think the result of the provisions made will be as nearly as possible absolutely to secure solvency.
§ LORD FABERAs regards the Post Office Savings Bank, whether there is a deficiency or not it does not matter, because the State comes in. But, as I understand, in regard to this insurance the State does not come in in this way.
§ THE LORD CHANCELLORWhat the Government have done is to work the insurance system through voluntary societies, and the step taken to secure the soundness of these societies is to lay down a code of rules which the Government consider will render it as nearly as possible certain that there should not be a deficiency.
THE EARL OF CAMPERDOWNI wish to ask what steps the Insurance Commissioners are taking at the present time towards constituting the Insurance Committees under Section 59 of the Act, Your Lordships will remember that under this section Insurance Committees were to be appointed under certain regulations, and that these bodies were to be local bodies to administer the Act. These committees were not appointed because of the hurry in which the Act was brought into force, and it was found necessary by the Commissioners to establish bodies of their own to start the Act. These bodies, of which no mention is made either in Section 59 or indeed anywhere else in the Act, are purely temporary bodies appointed for temporary purposes, and, as we were told, to be superseded very shortly. In fact in Scotland the Commissioners, in appointing these provisional committees, said that the Insurance Committees themselves were to be appointed very soon, perhaps before July 15. I do not know whether anything has been done towards appointing these Insurance Committees, but I would point out that, so far at all events as I can see, the Insurance Committees alone have the power of making binding agreements, and anything which is done in the meantime has no legal force. The provisional Insurance Committees can no doubt make suggestions and recommendations, but they cannot go further than that, and unless these Insurance Committees are appointed and are in operation it cannot be said that the Act is actually in working. I wish to ask whether any progress has been made with regard to, these Insurance Committees.
THE EARL OF LIVERPOOLAt present no steps are being taken as regards the permanent Insurance Committees. The Act provides that the representatives of the insured persons shall be appointed in such manner as may be prescribed by the regulations of the Insurance Commissioners, so as to secure representation of the insured persons resident in the county or county borough who are members of societies and who are deposit contributors in proportion as nearly as may be to their respective numbers. Since no person will be insured before July 15, when the Act comes into operation, and since it is necessary that Insurance Committees should be constituted before the Act comes into 366 operation, the Commissioners had to use the powers conferred on them by Section 78 of the Act and make arrangements for setting up committees which will hold office until committees can be regularly constituted in accordance with the provisions of the Act. The general composition of the committees as prescribed by the Act has been carefully preserved in forming these provisional committees—that is to say, three-fifths of the members of each committee will represent insured persons, one-fifth will be appointed by the county or county borough council, and the proportion of the other members will also be in accordance with the provisions of the Act.
THE EARL OF CAMPERDOWNThen it appears from the noble Earl's answer that Section 59 was so drawn that it was absolutely impossible to appoint the Insurance Committees before the Act came into force. I do not think a stronger condemnation could be pronounced of the way in which the Act was drafted. I now wish to call attention to the hardship of requiring employers to advance the contributions of their employees, and to ask whether the Commissioners will, acting under Section 78 of the Act, direct that when an employee presents his card to his employer he shall have placed upon it a stamp equal in value to the contribution for which he is liable. Your Lordships must be aware that at the present time a point which is causing perhaps the greatest dissatisfaction and concern throughout the United Kingdom with regard to every kind of employer is that he is obliged, as he chooses to phrase it, to collect taxes for the Government. I cannot suppose that the Government wish to create any unnecessary friction. One sees that many meetings are held at which persons say they will not obey the Act, and so on, in which, if I might express an opinion, I think they are not very wise; but at the same time there is no doubt that enormous discontent is excited throughout the country—you find it wherever you go—with regard to this particular provision. It seems to me that it is really unnecessary, and I would make this suggestion—that when an employee presents his card to the employer he should simply have to place upon it a stamp equal in value to the amount for which he is liable. This is not an idea of my own. I took it from a letter written 367 to the Scottish newspapers by the chairman of an indignation meeting in Scotland on this matter. He pointed cut that all this friction was quite unnecessary and might be avoided in that way. I do not know what the Government will say, but there is one answer which I hope they will not give. I hope they will not say that it is contrary to the principle of the Act. The Chancellor of the Exchequer last Saturday, in a speech which some of your Lordships may have read, said that there were three principles in the Act—one was the principle of contribution, the second was the principle of compulsion, and the third was the principle of working through voluntary societies. This proposal does not offend against any one of those three principles, and unless the Government want to create friction without necessity I cannot see why they should not accept it. It is not sufficient to say to me that this is going against the words of the Act, because the Commissioners have, under Section 78, overridden the Act in every sort of way; and there is no reason that I can see why in this case they should not exercise their powers under that section and adopt this plan, which certainly would facilitate the working of the Act and make things easier for everybody.
THE EARL OF LIVERPOOLI am afraid the answer I have to give to the noble Earl will not be, from his point of view, a very satisfactory one. No system under which a workman would himself be responsible for affixing a stamp representing his own share of the contribution is possible under the Act. Section 4 (2) explicitly provides that "the employer shall, in the first instance, pay both the contributions payable by himself (in this Act referred to as the employer's contributions) and also on behalf of the employed contributor the contributions payable by such contributor." Under this section and the Third Schedule he is entitled to recover the workman's share of the contributions by deduction from wages, if wages are paid, but not otherwise. The Commissioners have no power to require or allow the employee to pay his contribution during employment in any other way.
THE EARL OF CAMPERDOWNIt appears to me that the powers of the Commissioners vary very much according 368 to their convenience. Section 59 stated in the most positive way that Insurance Committees were to be appointed who were to work the Act. The Commissioners found not the slightest difficulty in overriding that section altogether and appointing a different body according to their own liking. Why they could not do that in this case, too, I confess I cannot understand.
§ THE LORD CHANCELLORIt is a fundamental principle of the Act that the employer shall deduct the workman's contribution and add his own contribution. That is the system under every scheme of national insurance of which I am aware. It is the system in Germany. The proposal of the noble Earl would strike at the very foundations of the Act and at the very means by which it is hoped to make the insurance system a universal system, working completely.
THE EARL OF CAMPERDOWNI think the noble and learned Viscount will find that the result of this in the country will be by no means pleasant to the Government.
LORD MONK BRETTONI should like to know, with reference to these provisional committees, whether there is any obligation on anybody to serve as clerk to the provisional committee, whether there is any fund out of which these clerks can be paid, and whether there is any obligation on anybody to issue an agenda or minutes to the members of the provisional committees.
THE EARL OF LIVERPOOLThat Question hardly arises out of those put by Lord Camperdown. If the noble Lord will give me notice of it, I will give him a reply on a future occasion.
LORD ST. LEVANIs there any other way by which the employee can contribute his quota otherwise than by having it deducted from his wages by his employer?
§ House adjourned at ten minutes past Six o'clock, till To-morrow, half-past Ten o'clock.