UNEMPLOYMENT INSURANCE BILL.

HL Deb 23 July 1920 vol 41 cc471-9

Order of the Day for the Second Reading read.

THE PARLIAMENTARY SECRETARY OF THE MINISTRY OF HEALTH (VISCOUNT ASTOR)

My Lords, I have never, hitherto, been satisfied with any reply I could make to the socialists or others who attack our existing order of society which made it possible for thousands of healthy, willing, and industrious workers to be thrown out of work and deprived of the means of maintaining themselves and their families through no fault of their own. I have felt that those who desire to maintain and continue the existing order and organisation of society must have some reply to make to these critics. To the operative who is overwhelmed with a sense of insecurity, who feels that any moment he may not be in a position to maintain his family, it is no use talking of the law of supply and demand. He is faced with the human consequences of having no earnings, no income, with which to maintain his family, and, not unnaturally, he is very apt to blame the existing order of society.

The Bill which is now before your Lordships is an endeavour to meet this grievance and remedy what I believe most people would agree is an admitted weakness. This is obviously the time in which to deal with a measure of unemployment insurance. Trade is good, there is prosperity, and, because of that, there is not the suspicion, unrest, and distrust so frequently prevalent when times are bad. Although we are now going through a period of prosperity, however, there are signs of a coming check—temporary we hope—and obviously, if that is the case, it is necessary at this moment to make such preparations as will enable us to deal with unemployment if it should come in the near future.

Your Lordships will remember that in 1911 an Unemployment Insurance Act was passed. It was at the time an admitted experiment. It affected only some two and a half millions of our population, and was only concerned with special industries, such as engineering and shipbuilding. It affected men mainly; some 9,000 women only being included. I need not remind your Lordships that it was a compulsory Act. In 1914 an amending Act was passed dealing for the most part with minor points. Then, in 1916, it was obvious to those who were responsible for industry, and for looking ahead, that after the war, during the period of transition from war to peace, there would be considerable unemployment for men and workers engaged in what were then called war industries. It was decided to have a temporary extension of the principle of unemploment insurance to trades then engaged on war work—metal and chemical trades, munition works. This extension brought into insurance about a million and a half more workers, of whom half a million were women. But not only were women brought, practically for the first time, under unemployment insurance, but, owing to the war, the number of women in the trades which were insured by the 1911 Act had been considerably increased, with the result that at the present moment, out of a total of from three and three-quarter to four million persons covered by schemes of insurance, roughly a million are women. The last previous Act touching on the subject was the Act of 1919, which increased benefits from 7s. to 11s.

The Bill which is before our Lordships to-day is based on the s[...]me principle as the Act of 1911. It is contributory, but is a far more extensive measure. It is intended to cover practically the whole industrial population. At its inception only two big industries are excluded—namely, agriculture and domestic service. Apart from these we expect to cover the whole of the industrial population, roughly 12,000,000 workers. The contribution will be in the case of men 4d. from the worker. 4d. from the employer, and 2d. from the State. The contribution in respect of women will be 3½d. by the employer, 3d. by the woman worker, and 1⅔. by the State. The contributions for boys and girls are lower. The benefits, which in 1911 were 7s., and since 1919, 11s., are increased to 15s. per week for men, and 12s. for women, with half these sums for boys and girls, respectively. The other big change as regards benefit is that the waiting period is reduced from six to three days; that is to say, the unemployment benefit becomes available on the fourth, instead of the seventh, day.

Our scheme broadly is a national scheme. There is one fund. All contributions are put into one central fund and all benefits are taken out of the common pool; but there is a measure of elasticity which I shall explain to your Lordships. Industries are enabled, subject to certain conditions and the approval of the Minister, to contract out, but, generally speaking, I think everybody will agree that it is the essence of insurance that there must be a pooling of contributions, risks and benefits. There must be one general scheme. We re-enact with slight modifications the clause which was in the previous Act, whereby a trade union may act as agent in the paying out of benefits. We want to encourage that but we attach certain conditions, the chief being that if a trade union desires to act as agent for the Government for the paying out of benefits, that union must pay a sum of at least 5s. in addition out of its own funds. That means that we do not require very strict supervision, since it is to the union's interest to be economical and not extravagant. This clause is a re-enactment of the previous clause, but it is modified so as to enable friendly societies to be brought within the scope of the Bill, and also to act as agents in the same way as trade unions have acted hitherto.

I said just now that we made it possible under the Bill for a separate trade union to contract out of the general scheme and arrange its own scheme of insurance. That is set out in Clause 18. I think I should make it quite clear that the finances of the Bill will act as an inducement—there will be an incentive—to members of trade unions to remain within the scope of the general scheme, unless their rate of unemployment is considerably below the average. I think the Actuary estimates that the average rate of unemployment must be 15 per cent. below the genera average before it would be worth while for that union to contract out of the general scheme. The estimated average unemployment for trades not contracted out is estimated to be 5.32 per cent., or 17 days, per year. There are certain trades which suffer from under employment rather than unemployment, and we contemplate that these trades will contract out and run special schemes enabling them to deal with the problem of under employment on approved lines.

Special schemes have to be approved by the Ministry. In certain cases it may be the duty of the Minister himself to devise special schemes; but we expect the initiative to come from the industry itself, that the request for the formation of a special scheme, and the initiative for contracting out, will come from the Joint Industrial Council or from any proper association of employers and employed. When an industry contracts out the State will contribute three-tenths of the benefit which it would normally pay per head. The State will pay 2d. weekly for each employed person. Where an industry contracts out that industry will only get three-tenths of the 2d. for each individual. We estimate, so far as we are able to do so at the present time, that three and three-quarter million persons will be covered by special schemes. Then, in addition, by Clause 20 we make it possible for supplementary schemes to be set up; that is to say, industries which do not contract out may want to have benefit additional to the ordinary unemployment benefit of 15s. after the third day of unemployment. There again the initiative should come from the Joint Council in the industry, or an association of employers and employees. After a supplementary scheme has been approved by the Minister of Labour it will then have a statutory effect and be compulsory on the industry. There will be no State contribution to supplementary schemes.

I said just now that we expected the whole of the industrial population to be covered by this scheme. There are certain exceptions. I have named the two big exceptions, agriculture and domestic service. In addition, non-manual workers with an income of more than £250 will be outside, and permanent employees in special employments, such as railways, police, and employees of local authorities, will also be outside the scope of the Act; also teachers and various other miscellaneous and smaller groups. Then, as regards the conditions governing applications for unemployment benefit, the applicant must give evidence that he is unemployed. He must not refuse a reasonable offer of work. He must not have left his employment without adequate reason. He must not have been dismissed for bad conduct. He must not be unemployed through a trade dispute. In cases of doubt, or of dispute, as to whether a man is entitled to unemployment benefit, provision is made for the point to be referred to an insurance officer with an appeal to a local Court of Referees, and, in special cases, to an Umpire appointed by the Crown.

THE MARQUESS OF SALISBURY

Who will dispute it?

VISCOUNT ASTOR

In case of doubt as to whether a person is entitled?

THE MARQUESS OF SALISBURY

How will the doubt arise? Between the claimant and what other party?

VISCOUNT ASTOR

It might be the Labour Exchange. There might be doubt as to whether they ought to pay out the benefit. I had made available some few days ago a White Paper which sets out the finances of the scheme. If your Lordships will turn to page 6 you will find the balance sheet. We contemplate that the receipts from employers will amount to a little over £6,000,000. Contributions from employees will be £5,871,000. The contributions from the Exchequer—and I would draw your Lordships' attention to the total that I am going to quote—will amount to £3,832,000. That is made up of the £3,046,000 contributions from the Exchequer—the 2d. paid for each individual —and the contributions of £313,000 and £78,000 which the State will pay to cover members of His Majesty's Forces. In addition to that, there is a sum of £395,000, which is the estimated total contribution from the Treasury towards special schemes. The total sum provided by the Exchequer will therefore amount to £3,832,000. We expect the normal total expenditure to be £16,198,000, leaving a surplus of, approximately, £250,000.

Some provisions contained in a previous Act are now abolished, but the only one to which I need draw your Lordships' attention is the provision whereby, under the 1911 Act, employers received a refund of 3s. per head where a man had been employed for a prolonged period. It has been found by experience over a considerable number of years that this is expensive to the State and is really not necessary. It means that a certain number of employers get a grant of 3s. from the State which they do not really deserve, the inducement of 3s. not being sufficient to cause an employer to keep on a large number of men if he might otherwise dismisss them. I think it is generally agreed that that proposal may now be dropped. As regards new features in this Bill, over and above those which I have already explained, we provide by Clause 41 that men in His Majesty's Forces, when they leave those Forces and go into industry, should be credited with contributions equivalent to ninety weeks—that is to say they will be entitled, as soon as they leave His Majesty's Forces, if they go into industry, to draw fifteen weeks' benefit.

This Bill will be brought into operation in November next. It is quite obvious that unless special provision were made a large number of people who are first brought under insurance would not be entitled to benefit this year. We therefore propose that in the first year anybody who has paid in four weekly contributions will be entitled to draw benefit in the first year to the extent of a maximum of eight weeks. There are one or two minor points to which I might draw your Lordships' attention. If, for instance, a person be out of insurance for more than a year, he cannot get unemployment benefit till he has paid twelve additional contributions. If a person be out of insurance for five years he must begin anew, if he goes into industry again. Those are, I think, the only other points to which I need refer.

I have explained to your Lordships the general principle on which this Bill is drawn up. We intend it to cover the whole industrial population except the cases which I have already mentioned. We base it upon the establishment of a general central fund, but we enable industries to contract out and run their own schemes. We make it possible for approved organisations to act as our agents in the distribution of benefits. We try and allow as much elasticity as is compatible with a sound scheme. I do not think that I need urge upon your Lordships the necessity of a scheme such as this. You appreciate fully, I have no doubt, the haunting fear which hangs at the present moment over so many industrial workers. That fear is the cause of unrest, of suspicion and of mistrust. Thousands of men and women have before them constantly the fear that they may have no income whatever, through no fault of their own, wherewith they may support their families or themselves, and consequently it is not surprising that many of them are tempted to restrict their output, and to try and make a job last as long as possible. They have a feeling that if they do so they are providing employment for themselves for a longer time, and that if, on the other hand, they were to accelerate their work too much, they would be depriving either themselves or somebody else of work.

I believe that the psychological effect of this Bill will be of enormous advantage. I believe that it will do a great deal to remove that haunting fear and suspicion which affects so many at present. Unemployment, we all realise, is wasteful for the whole community. It is demoralising to the individual, and it is extravagant to the community, which has to maintain the unemployed. Industry is the life blood of the State, and it should be one of our main considerations to do what we can to stimulate industry and to increase the welfare and contentment of all employed in industry. I believe that this Bill will materially assist in diminishing the anxiety of those in industry, and of increasing their production, and I commend it to your Lordships because it emphasises the joint responsibility of the producers and the consumers in the welfare of industry.

Moved—That the Bill be now read 2^a.— (Viscount Astor).

THE MARQUESS OF SALISBURY

My Lords, I do not rise to criticise the Bill which has been laid before your Lordships in the lucid speech of the noble Viscount. I should be very loth to enter into the details of it on the present occasion. With everything that the noble Viscount has said in his closing remarks as to the vital importance of removing from the workers the sense of peril which the anticipation of possible unemployment gives them, I am sure all of your Lordships will heartily agree. The noble Viscount was fully justified in saying that the dread of unemployment is the parent of a great deaf of the unrest with which we are, unhappily, confronted. All that is perfectly true.

The details of the Bill are complicated and require very careful consideration. Perhaps it is because I was not able to hear the opening observations of the noble Viscount, but I do not quite know whether he told your Lordships what was the estimated total additional charge which would be thrown upon the public by the operation of the Bill. I should be very much surprised if he tells us that it is not a consider able sum. That is really what brings us up against the main difficulty of the present situation in legislation of this kind. The charges upon the public are now so heavy, the burden is so very onerous, that all of us who have had our attention directed to this part of public policy are doing all we can to induce economy. One of the main difficulties, though I will not say the only difficulty, is that projects are continually laid before Parliament for which there is a great deal to be said—very valuable proposals; but proposals which, in every case, tend to increase the burden upon the taxpayer. There must evidently be a limit to that process. It cannot go on for ever; and it is not sufficient to prove that a particular measure is, in itself, a valuable one.

The Government now must also go on to prove that the country can afford it. I am not, of course, pronouncing any defiinte opinion in that respect upon the Bill which is upon your Lordships' Table at this moment; but I think that, if he has not already stated it to the House, the noble Viscount would confer a benefit upon your Lordships if he would state, before the Second Reading is agreed to, what is the estimated total extra charge which the Bill will throw upon the public. As regards the rest, no doubt when we get into Committee many of your Lordships may have suggestions to make and observations to offer. I shall not, on the present occasion, anticipate them.

VISCOUNT ASTOR

I explained to your Lordships that the estimated total cost to the State of the present scheme—

THE MARQUESS OF SALISBURY

Of this scheme.

VISCOUNT ASTOR

Yes.

THE MARQUESS OF SALISBURY

Additional?

VISCOUNT ASTOR

No. The total estimated cost would be, roughly, £3,800,000. The Treasury is now spending, roughly, £1,250,000 on unemployment insurance. Therefore, the additional burden to the tax-payer will be, roughly, £2,500,000. I would suggest to your Lordships that this sum is cheap, if it will remove suspicion and alleviate unrest, compared with the cost of industrial strife, of a strike, or even of the cost of maintaining a large number of unemployed. We know the cost of maintaining unemployed people where they make no contributions. I cannot contemplate that if, during the period of transition, any large number of war-workers or of demobilised men were thrown out of work, the State would not have to make a material contribution to their maintenance. I believe that the amount which the State will be called upon to pay under this contributory scheme, whereby the workers and their employers contribute the bulk of the funds, will be comparatively small as far as the general tax-payer and the Treasury are concerned.

On Question, Bill read 2^a and committed to a Committee of the Whole House.