HL Deb 29 June 1921 vol 45 cc858-68

Standing Order No. XXXIX having been suspended, Order of the Day for the Second Reading read.

THE EARL OF CLARENDON

My Lords, the Bill, the Second Reading of which I have to move this afternoon, is necessitated by the continued, heavy, and indeed increasing unemployment of the last few months. Your Lordships will recollect that several different measures have been passed during the last year to deal with this question of unemployment insurance, and to make and extend the provision for the large numbers unemployed as a result of the post-war dislocation of our industry and commerce, and of existing trade conditions. The first Act of 1920, which came into operation on November 8, and which brought 8,000,000 more workpeople into compulsory insurance against unemployment, and increased the rates of benefit from 11s. a week to 15s. a week in the case of men and to 12s. in the case of women, provided also that eight weeks' special benefit should be obtainable after four weeks of employment and contributions. Owing to the prevailing trade conditions at that time, however, even that qualification proved too difficult for large numbers, who could obtain no employment at all.

By the Act of last December, therefore, a much easier qualification was introduced, and many additional persons were able to obtain the eight weeks' benefit. Towards the end of February not only did the eight weeks' benefit, if drawn continuously, begin to run out, but the fourth extension scheme of out-of-work donation for ex-Service men was also nearing its close. By that time, on the other hand, nearly 800,000 men and 300,000 women were registered as unemployed, and a further 650,000 men and women were registered as working under short-time arrangement; in other words, for not more than three days a week. A further scheme was therefore brought forward, and embodied in the Act of March 3 of this year. That Act increased the rates of benefit to 20s. per week for men and 16s. per week for women. It also made provision for two "emergency" periods— the one from March to October of this year, and the other from November to July of next year. In each of these periods benefit could be drawn, up to a maximum of sixteen weeks, by those who satisfied the conditions laid down.

I hope your Lordships will pardon me if I now go somewhat fully into the financial considerations underlying the March Act and the present Bill respectively. As those financial considerations are of the first importance, and indeed to a large extent are the immediate cause of the proposals now under consideration, I think your Lordships will desire that I should deal with them in detail. The calculations upon which the March scheme was based took account of a possible average, week by week, of about 1,000,000 insured workers unemployed, over the whole period from March, 1921, to July, 1922. For the whole period, that could hardly in March have been called a narrow estimate. On that basis it represented an attempt to provide, on reasonable conditions, a satisfactory provision for an emergency situation, looking forward over a period of sixteen months. The scheme provided for increased contributions, but these did not come into force until July 4. It was only made possible by drawing upon the Unemployment Insurance Fund, which had accumulated as a result of the comparatively small amount of unemployment during the war, and the State's shouldering of a large part of the burden in the form of out-of-work donation after the war. The Fund stood at £22,500,000 at the beginning of March of this year, and with the average of unemployment to which I have referred, it would, with the contributions from employers, employed and the State, have just seen the scheme through to July, 1922, the end of the second of the emergency periods.

In the last four months unemployment, more severe in all directions as a result of the coal dispute, has been so high as already to invalidate the calculations that I have endeavoured to outline. There were at the beginning of this month some 2.000,000 men and women registered as unemployed, excluding the miners, and there were more than another 1,000,000 on short time, working not more than three days per week. All save about 60,000 of these 3,000,000 persons were receiving some assistance in unemployment pay. That is, I think, a very striking comparison, and indicates a scheme of unemployment insurance in a time of emergency, more comprehensive than has ever before been attained, and of incalculable value in lessening the hardships of unemployment during the most critical time through which we are passing.

Nevertheless, this result carries with it two very important difficulties, with both of which this Bill endeavours to deal. The first is that the Unemployment Fund, instead of lasting until July of next year, has been rapidly and unexpectedly exhausted. Benefit is now being paid at the rate of £2,000,000 per week, as against £800,000 per week last March. The fund is no longer £22,500,000 in credit, but only about £3,250,000, and will barely outlast the present month. Exceptional and drastic changes in the structure of the scheme have therefore been dictated. The present Bill proposes, in Clause 1, to reduce the benefits to the level which obtained prior to last March—namely, 15s. per week for men and 12s. a week for women, with, as usual, half-rates for boys and girls. It proposes also, in Clause 2, to increase the contributions. Those are, at present, 4d. per week from men and 4d. from their employers, with 3d. per week from women and 3½ d. from their employers.

Under the March Act those contributions would, in any case, have become, from, July 4, 5d. per week from men and 6d. per week from their employers, with 4d. a week from women and 5d. a week from their employers. Under Clause 2, and the Schedule of this Bill, there will be substituted for these rates, from July 4, the following:—From men, 7d. a week, and from their employers, 8d.; from women, 6d. a week, and from their employers, 7d., with the usual half-rates for boys and girls under 18 years of age; the State, as before, adding a quarter to the joint contributions of employer and employed. Under Clause 3 of the Bill it is proposed to increase the "waiting period" from three days to six days, so that unemployment benefit will become payable after the six days of unemployment instead of after the first three days.

Even with these changes, however, the Fund will not be able, for some time to come, to meet, as they occur, the liabilities with regard to the payment of benefit, and therefore it will be necessary to increase the borrowing power. Under the Act of last March that was fixed at £10,000,000, and has not yet been drawn upon. Clause 4 of this Bill proposes to increase that figure to £20,000,000. In other words, it seeks to increase the borrowing powers of the Minister in respect of an additional £10,000,000. On the basis of an average of 1,250,000 persons unemployed week by week it is estimated that the maximum debt of the Fund would reach about £16,000,000, and would probably occur during the early months of next year. It would be reduced to about £13,800,000 by July, 1922. With the rate of unemployment thereafter materially reduced, it is expected that the debt would be repaid, and the Fund once more solvent, shortly after the month of July, 1923.

I turn now to the second main result of the widespread unemployment, and particularly of its continuous character, unfortunately unbroken for very many of these unemployed by any spells of work. The maximum of sixteen weeks' benefit, granted by the March Act, in the period from March to November next, is now being exhausted in a large number of cases where it has been drawn continuously or almost continuously. The situation is so serious that even at a time, as I have shown, of serious financial difficulty, when benefits are having to be reduced and contributions raised, it has been considered necessary to make some further provision. The Bill, therefore, proposes in Clause 3 (1) to give power to grant a six weeks' extension after the sixteen weeks in the first of the special periods of the March Act, making twenty-two weeks in all. It also proposes to give power to make a similar extension, if it proves to be necessary, in the second of the special periods, that is to say, from November of this year to July of next year.

Clause 5 is a provision of some importance. If proposes to suspend the power of the Minister to approve special schemes for industries, under Section 18 of the Act of 1920, until the Fund is solvent again. The effect is to retain in the General Fund industries which, whilst having a lower risk of unemployment than the average, might otherwise have contracted out of the Fund under special schemes for their own industries. It is thought reasonable that such contracting out should not be allowed until the deficiency of the General Fund has been made good. Exception is, however, made in the proviso to this clause in the ease of any industry where actual notice of a proposal to make a Special Order approving a scheme had been published prior to June 8 of this year. These are the main lines of the Bill. I do not propose, as it would take some little time longer, to deal with any of the other clauses contained in it. If your Lordships, however, desire any information upon them, I shall be very happy to give all that I possibly can during the later stages, which will be conducted to-morrow or at a later date.

I ask, in conclusion, for a sympathetic consideration for this Bill, and in connection with the point that my noble friend. Lord Crawford, made when he rose to explain the Motion for the suspension of the Standing Order, I should like to give your Lordships the reasons why it is so important that all the stages of this Bill should be taken to-day and to-morrow. The two main reasons are as follows. First, the provisions of the Bill relating to increased contributions from employers and work-people take effect as from Monday next, July 4, the first day of a new insurance year. That is to say, on Monday next it will be incumbent upon employers and work-people, under the new Act, to stamp their unemployment insurance cards with stamps of the new denominations. Before this can be done, of course, the new stamps have to be distributed to Post Offices all over the country, the announcements of the changes have to be issued, and the necessary administrative arrangements made. Even if we got the Royal Assent to-morrow this would still present a task of extraordinary difficulty.

The second reason is that the unemployment benefit under the Bill becomes payable at the reduced rates of 15s. a week for men (as compared with 20s. now) and 12s. a week for women (as compared with 16s. now) as from to-morrow, which is the first day of an insurance pay-week—Thursday to Wednesday inclusive. Unless the reduced benefit does, in fact, come into operation from that date, the Un employment Fund will have to pay out, in respect of this first week, at least. £500,000 more in benefit than it would have to pay under the proposals in the Bill.

It cannot be denied that the reduction of benefit is regrettable. It is not unemployment benefit, I think, but the hardships of unemployment which are demoralising. In regard to the administration of the benefits which will be conferred under this Bill I should like to say that every care is taken to ensure that the benefit is paid in proper cases only, in spite of the difficulty of testing a man's willingness to work in all cases when vacancies are so few. This was dealt with by the Minister of Labour in another place on the Second Reading of the Bill. There is one point which the Minister of Labour desires that I should bring out this afternoon, and I think I can best do so by reading from the OFFICIAL REPORT of the proceedings on the Third Reading of this Bill in the House of Commons.

This is what Dr. Macnamara said— In the Second Reading Debate I made an appeal which I now wish to repeat with emphasis. To be entitled to the benefit, a person, among other things, must prove that he is genuinely seeking work and is unable to obtain suitable employment. The only way in which that test can be applied is for me to be in a position to say, Here is a vacancy which appears suitable for you. If you do not take it, I am bound tee suspend your benefit and submit your case tee the referee.' There is only one field, of course, in which there are vacancies to any large extent at the present time, and that is the field of domestic service for women. When you come to the men, broadly speaking, as a result of the position of industry to-day, I have no large number of vacancies available. This is the appeal I desire to make. When things begin to pick up, as we hope they soon will do, I appeal to employers of labour to send their vacancies to the employment exchanges. If I get those vacancies, I can really make my scheme function as I would like to see it. The proper function of the scheme is in every way to assist men in their endeavour tee find work, and if a man cannot find it, then he is provided with the unemployment benefit. That is how I conceive this scheme should work, but unless I have vacancies I cannot carry out that as it should work.

I beg leave now to move that this Bill he read a second time.

Moved. That the Bill be now read 2ª—(The Earl of Clarendon.)

LORD JOICEY

My Lords, I listened to the speech of the noble Earl with very great interest, and I think your Lordships must be astonished at the sums which have- been mentioned as being paid for unemployment benefit. I have a good deal to do with employment, and I confess that nothing touches my sympathy more than to a see a man with a family unable to get employment in order to provide for himself and his family. I have no doubt your Lordships share that feeling. We all sympathise deeply with any honest, industrious working man who is thrown out of work and is unable to get employment, and I should be the last to say one word to prevent a reasonable sum being given in such a case. But. when one thinks of the enormous amount of money which has been paid in respect of unemployment, notwithstanding what has been said by the noble Earl that the greatest care is taken, I cannot help thinking that there is a good deal of negligence, or want of care, in distributing it.

We all hear of cases where doles have been given when they should not have been given. Doles are always injurious to the people who receive them, and there is no question that the best type of working man is more anxious for employment than for doles. Those who are familiar with the administration of trade union funds for unemployment know how carefully the money is distributed and the precautions that are taken by the members of an organisation to see that no man who can get work is given a dole. The money for these doles does not come out of the pocket of the employer or the workman, but necessarily out of the consumer's pocket, and when you consider how many consumers are poor, even wretchedly poor, and cannot contribute by paying higher prices so that these doles may be paid, I think it is the duty of the Government to see that every care is used in distributing the money.

I am very glad that certain alterations are being made in the Bill; for instance, that payment is to be made only when unemployment lasts for a week. That is a very necessary amendment. The other day a deputation waited upon a colliery manager who was able to work his mine for four days a week only. They asked that he should work it three days a week only and they did not hesitate to give the reason for their request. They said: "If you will only work the mine three days a week it will enable us to get unemployment pay for the other three days." Surely, such a thing as that ought to be prevented. It is net a very great hardship for a man who has been earning good wages and finds himself out of employment, to wait a week. He has his trade union funds and his savings in the co-operative society to help him to go on for a week.

I feel very anxious about the future, because I fear that there will be more unemployment than we have seen hitherto. No doubt the strike has caused unemployment. I do not know whether unemployment pay has always been paid in such cases. But when I look at the competition which faces us in different parts of the world I have no doubt that many of our industries will be unable to compete successfully abroad unless some means are found of reducing the cost of production. This may not appear to be very relevant to the matter before your Lordships, but in my judgment it has a very important bearing on the question of unemployment. If unemployment increases I feel sure that this is not the last demand that will be made for unemployment pay. And in view of the probability of an increased demand, it is more important still that the Government should overhaul all these distributing authorities and see whether more care cannot be taken in the distribution.

The noble Earl said that whenever employers have a vacancy they should send immediate notice of it to the Employment Exchange. So far as my experience goes of the large industry with which I am concerned, I find the Exchanges are not of the slightest use. Men who want employment will not go to them; they prefer to go straight to the employer. Neither are we anxious to go to the Exchanges. If we have vacancies we find that men come and apply, and we are only too glad to give them work. In every case in which we engage a man we have to send particulars to the Exchange, and it is counted by the Exchange people as employment found by them. I think there is a great deal of that sort of thing and the figures of those who pass through the Exchanges convey in consequence a very different idea to the real one as to the employment that these Exchanges give.

I hope the few words I have said will impress upon His Majesty's Government the necessity of overhauling these distributing authorities with a view, if possible, of seeing that the doles are not given in cases where they are not justified. There are some cases where they are necessary, of course, and I should not advocate for one moment that they should not be given where it can be proved that they are necessary. But considering the enormous expenditure which is going on in the country, I object very strongly to the giving of a dole where it is not absolutely necessary that it should be given. I hope His Majesty's Government will take serious thought in the matter, because I believe, not only from my own experience but from what I hear from other people, that there has been a great deal of laxity, and sometimes negligence, in dealing with these sums of money.

LORD CLIFFORD OF CHUDLEIGH

My Lords, having once embarked on an unemployment scheme, I realise how hard it is for His Majesty's Government to drop it entirely, but I wish to call attention to the fact that the present amount of unemployment is only a drop in the bucket. It is most probable that in the course of the next four or five years we shall have five million persons or more unemployed in England, and unemployable for a long time. Statistics show that you can employ and keep employed only that portion of your population in respect, of which you have previously sunk and invested as capital £3,000 for every £100 paid in wages, and, with all these doles and artificial means of employment, you are doing away with the capital fund which will have to maintain your population in the future.

The serious part of this question is that all these doles and payments, whether they bee necessary Government expenditure or not, if they do not produce a corresponding increase in the necessities of life, must be met in the future by an increased death roll. If we continue this extravagant system of giving doles without having an equivalent increase in production we shall require a black plague or some such curse to wipe out the superfluous millions of our population. Taking the period from 1870 to 1910, I ascertained that if in any ten years there was a drop in production of 5 per cent. it was followed, twenty years later, by a decrease in the population of one person in every 1,150. You can only keep your population in the proportion that you increase your capital. We have had machinery and inventions and extra means of transport which have led to our production being increased in the last century by three times; but we have not altered our distribution of wages. We have trebled our population in a century, and rather more than trebled our wealth, and people can now get more accommodation in hospitals, etc., and there are more public enterprises. People have the advantage of better communication by rail and tram, and all this has been made possible by the amount by which capital has increased being greater in proportion than the increase of the population.

So far as I am able to estimate, in the last coal strike we have condemned over 200,000 people to death in the next ten or fifteen years, this being a consequence of the stoppage of employment. These are grave considerations, and too great care cannot, therefore, be exercised in seeing that a dole of this kind is properly administered. We do not want a nation of loafers and paupers, but a nation like that which we had a century or half a century ago, a nation which boasted that it could work hard, fight hard, and hold its own against the rest of the world.

LORD ASKWITH

My Lords, I rise to say a few words only upon two points. The first is to endorse the remarks made by the noble Lord, Lord Joicey, with regard to the importance of administration of this unemployment grant. I could wish the Minister had put into this Bill some further provisions by which the giving of these grants might have been more carefully looked after. Most of your Lordships know that there are complaints in many parts of the country as to the kind of people who are receiving them. Doles are being made to some people who are practically living in idleness and showing a very bad example to the district in which they reside. It is like a sore in a district to have some loafer, or some woman who ought to be in domestic service, drawing payment from the State, and showing such a bad example to other people in the neighbourhood. It is very important that this matter should be looked after, not only for the sake of economy but also for the sake of keeping up the morale of the people. The importance of a proper method of administering these doles is one that can scarcely be over-estimated, and I hope the Government will take note of the serious words which Lord Joicey has uttered, based upon his practical experiences as an employer.

The second point to which I desire to draw attention is this. I am not sure, if in Committee there is an opportunity of doing so, that I should not propose that Clause 5 be omitted. This clause proposes that special schemes shall not be exercised during the deficiency period. One of the provisions put in the previous Act permitted of the adoption of special schemes under which employers and employed in an industry could insure themselves. Just as Part I of the Agriculture Act goes in six months, so is an Act which came into force in November, now, in June, to be radically altered if not scrapped. It. is a very serious matter that this policy of allowing special schemes should be hung up, except in the case of those schemes that are promulgated before June 8, and that cold water should be thrown upon ideas which it might be very desirable to carry out. I suggest that the policy of each industry looking after its own unemployed is far more important than the policy of this Bill of holding up such schemes during the period of deficiency, and it would be well if Clause 5 were omitted. I am not going to oppose the Second Reading, because this is a Bill which, unfortunately, is necessary at the present moment. At the same time, it is a Bill that ought to be administered with the very greatest care. We ought not, by a Bill of this kind, to put a stop to ideas that may be of very great importance in the future.

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

House adjourned at half-past five o'clock.