UNEMPLOYMENT INSURANCE BILL. (Hansard, 21 March 1923)

THE EARL OF SHAFTESBURY
My Lords, the subject matter of the Bill that I am asking your Lordships to read a second time this afternoon is of such a nature that the Bill will, I am sure, enlist ready sympathy from every part of your Lordships' House. Your Lordships, I know, will be the first to admit that there is no more pitiable object in this land of ours to-day than the man or woman who is anxious and willing to work but through no fault of their own cannot obtain suitable employment wherewith to earn a livelihood. If I may put it in that way, these poor unfortunate brothers and sisters of ours claim an attention and a sympathy peculiarly their own, and I know that your Lordships will be only too willing to accord it to them. It was the noble Viscount who leads noble Lords on the opposite side of the House (Viscount Grey of Fallodon) who said in his speech upon the Address, with all that eloquence that is so much at his command, that all that is possible must be done to palliate this crisis caused by unemployment. I am sure that whatever measures the Government put forward for that purpose will receive the most sympathetic consideration of Parliament.
This Bill seeks to continue, and I believe very greatly to improve, the measures that have been embodied in various Acts of Parliament. There have been four Acts, I think, passed in the last three years which were intended for the alleviation of that distress which is always inseparable from a state of unemployment. But unemployment insurance, by virtue of many Acts of Parliament which have been passed, embodying various changes in the law, has become of rather a complex and complicated nature, and in order that this Bill may become the more intelligible to your Lordships, and its provisions the better understood, I desire, with the indulgence of the House, to go back for a moment to the point at which an insurance scheme was first promoted.
I would like your Lordships to take a retrospect of the various stages that have led up to the necessity for another measure to deal with the situation as we find it to-day. At this late hour I will do that as cursorily as possible. As 513 far back as 1911 the necessity for some unemployment insurance scheme was realised, arid in Part II of the National Insurance Act of that year—an Act that put national health insurance and unemployment insurance together—a selection of certain trades, such as shipbuilding, engineering and building, was made, the provision being that those who were employed in those trades could insure against the day of enforced idleness. Subsequent legislation has separated national health from unemployment insurance, and each has been treated as a subject for distinct and separate treatment. The 1911 Act carried us on through the war with certain modifications. Then, after the Armistice, with the assistance of an out of work donation scheme, which was a scheme set up to deal with the emergency which arose when our men were being demobilised and with the civil workers who were forced to leave their employment as the result of the cessation of hostilities, we were carried on until 1990, and it was in 1920 that the Government of the day first initiated the policy of unemployment insurance upon its present and extended scale, and it has been the framework of all subsequent building.
But early in the year it became evident that the boom in which this country had been rejoicing, the boom in trade since the war, was very likely to expend itself, and that riot only was the boom going to expend itself but that a period of great depression in trade was about to set in; a period, probably, of marked contraction. The Government of the day, therefore, set to work to meet that contingency as it should arise, and it initiated a broad based scheme of unemployment insurance which was embodied in the Unemployment insurance Act of 1920, which has been referred to in all subsequent legislation as the principal Act. That Act came into force in the autumn of that year. It included practically all manual workers and a certain number of non-manual workers, with certain exceptions. Agricultural labourers were left out of the scheme, as were also domestic servants, and so far as non-manual workers were concerned exceptions were made in favour of permanent civil servants, pensionable school teachers, the permanent staffs of railway companies and also of local authorities. The effect of it was to add yet another 8,000,000 to 514 the 4,000,000 that were already insured under the Act of 1911, making a total of 12,000,000 insurable people in this country.
In order to have a full comprehension of the working of unemployed insurance it is necessary that what is meant by the terms "covenanted" and "uncvenanted" benefit should be rightly understood. Under the Act of 1920 only one well was provided in the oasis created in the desert of unemployment—the well of covenanted benefit; and it was necessary to provide another well in the shape of uncovenanted benefit. Let me take covenanted benefit first. Broadly speaking, the basis of covenanted benefit was that benefit was only payable in respect of contributions made by the applicant for benefit and under certain conditions. A man or woman could claim one week's benefit for six contributions. It is generally known as the "one-in-six rule," with a limited number of weeks' benefit to be granted in one particular year. But the vital condition really was that, no person could claim any benefit until twelve contributions had been paid. There was a further condition tinder Section 7 of the Act of 1920 which embodied what is called and known as the "waiting week," and that rule was that no benefit was payable for the first, six days of unemployment; a provision to which I shall have to revert for a moment when I am dealing with the continuity rule under Clause 5 of the Bill.
This provision of covenanted benefit was very soon to prove insufficient, and whilst it was obvious that in ordinary circumstances covenanted benefit was the only kind of benefit that could be provided under a contributory scheme, and that no contributory scheme could under normal conditions make any rule for discretionary grants, yet it became evident that, owing to the great cloud of trade depression which had settled down on the country and which has maintained the industrial world in its grip ever since, something more was needed to meet this abnormal situation. The position was as follows. None of these 8,000,000 new entrants into insurance could hope to obtain any benefit under the Act of 1920, which had just come into operation, for a very long time. They could not qualify for benefit until they had paid twelve contributions, and 515 thereafter they could only get one week's benefit for six weeks' contributions paid. The well of covenanted benefit had practically become inaccessible to them, and under these rules it was quite evident that these conditions would be a complete bar to the receipt of benefit. Something had to be done. Another well had to be sunk in the shape and form of uncovenanted benefit, and this was done under Section 3 of the Act of 1921.
Uncovenanted benefit is benefit in advance of contributions and in good faith of contributions to be paid in the future. I need not weary your Lordships by taking you into every detail which governs this uncovenanted benefit embodied in the various Acts of Parliament, but I can tell you roughly what were the methods employed for setting it up. Broadly speaking, the method adopted was to specify what is called a "special period"—from six to eight months—and give the Minister power at his discretion during that special period to grant, up to a specified maximum number of weeks, uncovenanted benefit during that time to those who, though not entitled to covenanted benefit, were at the same time normally employed in an insured trade and genuinely seeking whole time employment but unable to obtain it. The Act of last year set up the third and fourth of what we are accustomed to call "special periods."
I need not go into the third special period, because it is finished and done with, but I must for one moment enter into the question of the fourth period, because that is the period in which we now find ourselves. It began in the autumn of last year, and is dealt with in Clause 1. The fourth special period began on November 2 of last year, and terminates on July 1 of this year. During this period uncovenanted benefit may be drawn for a maximum of twenty-two weeks. Under Section 4 of the Act twelve weeks' benefit might be claimed without any contribution having been paid whatsoever, but further uncovenanted benefit beyond those twelve weeks was dependent upon whether contributions had been made or not, and in the case of contributions having been made it would be given in two separate periods of five weeks, making ten weeks in all.
The present position is that there are still more than 1,300,000 persons regis- 516 tered at the employment exchanges as unemployed. A number of these, whose desire to obtain employment is, of course, beyond question, have been in receipt of benefit since the fourth special period began in November last. Others have unfortunately exhausted the benefit payable to them under the existing Acts. Certain of these people, owing to their having paid no contributions, were not entitled to more than twelve weeks' benefit during the period which commenced last November, and consequently they exhausted their benefit so far back as January 24 last, and, as the Act stands at present, they could not receive any further benefit until next July in the absence of further legislation. The number of persons who exhausted their benefit as early as January 24 last was about. 11,500—only a small proportion, your Lordships will say, of the 1,300,000 persons registered as unemployed. But since that time the number has naturally increased, and on March 5 last it had reached the figure of over 53,000.
The maximum amount of benefit payable during the fourth special period, namely, twenty-two weeks, can be exhausted on April 4, and a considerable number of persons will exhaust their benefit on and shortly after that date. It is difficult to form a precise estimate of the numbers that will exhaust benefit in the future, but it, is anticipated from the information obtainable that the total number who will have reached the end of their benefit by the middle or the end of April will be at least 300,000 or 400,000 persons. In the face of these facts the Government came to the conclusion that some further provision was immediately necessary to meet the needs of these persons.
This brings me to the Bill which is now before your Lordships' House. It can be divided into five parts. The first part. deals with the extension of the fourth special period and a further grant of uncovenanted benefit. The second part makes provision for a benefit year, which I can explain further in detail when I come to Clauses 2 and 3. The third part makes permanent the grants to dependents, of which also I shall have something more to say. The fourth part is an amendment of the present continuity rule, which Clause 5 seeks to improve; and the fifth part raises the question of 517 relationships with local authorities with a view to carrying out the recommendations made by the Inquiry on Juvenile Employment over which Lord Chelmsford, whom I see in his place this afternoon, presided in 1921.
The Bill makes two main provisions for future benefit. It provides first of all, in Clause 1, that the fourth special period shall be extended from July until October 17 next, the period containing fifty weeks, during which forty-four weeks' uncovenanted benefit can be paid. I think your Lordships will agree that this is not an ungenerous measure of benefit. The other main proposal is that from the middle of October this year, when the fourth special period ends, the Government have made provision to look a little further ahead than has been customary in the last two Acts that have dealt with Unemployment Insurance, and I think your Lordships will agree that if that is a fault it is a fault on the right side. The Bill will make provision for a benefit year up till October 24, and even further than that if it, is found necessary.
Clause 1, therefore, deals with the maximum benefit of forty-four weeks during the calendar period of fifty weeks, and provides that when benefit amounting in the aggregate to twenty-two weeks has been drawn, there shall be a gap of two weeks before benefit is resumed. It is also provided that the maximum amount of covenanted benefit shall be for twenty-six weeks, and I may remind your Lordships that there is no change in this respect, for twenty-six weeks of covenanted benefit is all that can be drawn in the calendar year under the permanent provisions of the Act.
Clause 2 lays down that the maximum amount of benefit which may be drawn during the benefit year (which is definedin Clause 3) shall be twenty-six weeks either covenanted or uncovenanted benefit, and that when uncovenanted benefit has been drawn for twelve weeks during the first benefit year there shall he a gap of three weeks, instead of two, before the receipt of benefit can be resumed. If there are no contributions or only a very few contributions to a claimant's credit, from October, 1923, your Lordships will readily understand that the greater part of the benefit will be on the uncovenanted basis.
I pass on to Clause 3, which, as I have said, defines the first and the subsequent 518 benefit years. Hitherto there has been only one year of insurance, running from midsummer to the following midsummer, from July till July. That was the insurance year, and during this period the unemployment books to which contribution stamps are affixed remained current. It is not proposed to alter that insurance year for contribution purposes, but it is proposed that the year during which the maximum period of twenty-six weeks' benefit will run, which is now termed the benefit year, shall be in the future from October to October. There are two reasons for that. One is that from the administrative point of view it is a convenience to have an interval between the end of the insurance year, when the contribution books are collected, and the commencement of the benefit year, for which the maximum benefits are payable. But really the most important reason for the change is that unemployment naturally begins in the autumn of the year, and it has a tendency to reach its height in the winter, and to fall off during the spring and early summer. So much for Clause 3.
Clause 4 makes provision for the continuation of the grants of benefit in respect of dependent, wives and children. Your Lordships will remember that 158. per week is payable to a man and 12s, to a woman, and half rates to juveniles under eighteen. Under the Dependents Act of 1921, in addition to this 15s. and 12s. respectively, 5s. a week is payable to a, man whose wife is dependent upon him, or to a woman with a disabled husband, and, in addition, 1s. per week is payable for each child in the family. Normally, under present legislation, this dependents' benefit would cease at the end of the deficiency period, the deficiency period coming to an end when the fund once more becomes solvent. It was thought advisable, and in the interests of those insured, that this dependents benefit should be continued even after the end of the deficiency period, and so Clause 4 provides for that. Subsection (2) provides that the present. rates of contribution may continue in force after the end of the deficiency period until such date as the Minister may by Order prescribe, but not being a date later than the first day of the insurance year commencing next after the end of the deficiency period, 519 and then, after the deficiency period, that the rates payable by contribution from employed persons and their employers shall be at reduced rates to be prescribed by regulations, but not in any case exceeding the rates set out in the First Schedule to the Bill.
I think I may now pass on to Clause 5, which deals with the continuity rule. Your Lordships will remember that I said that one of the rules for the payment of benefit was that there should first of all be a waiting week in which no benefit was payable for the first six days of unemployment. In the ordinary meaning of this term that would convey that benefit was payable from the time when a person was out of work until he obtained further employment. This, however, would have had the effect of making unemployed persons chary of taking jobs of one day's or two days' duration. Instead of wearying your Lordships with the present rule of two days on and two days off, I think it will be sufficient if I inform your Lordships, with regard, to the present Bill, that the Clause proposes that, taking any period of six consecutive days, unemployment benefit will be payable if the worker is unemployed for fifty per cent. or more of his time—that is, three whole days or more. It is thought that this will meet the majority of cases in which the present law is found to operate unfairly. I am, of course, prepared to give more detailed explanation of the provisions if it is desired, but I trust that the explanation which I am giving will enable noble Lords to gather the substance and meaning of this particular provision.
Now I come to Clause 6. It lays down the terms upon which local education authorities may administer unemployment insurance in respect of persons under eighteen. The position briefly is as follows. Under the Labour Exchanges Act of 1909, juvenile employment was put into the hands of the labour exchanges, and they carried on the work through juvenile employment committees. In some places, and notably, I think, in London, some of these After-Care Committees were set up by the local education authorities. They were all voluntary bodies, and excellent bodies, composed of parents and head teachers, and anybody interested in the child, and they took on very largely the work of finding employment for the child after he or she 520 left school. This went on as voluntary work for some time, but it was legalised under Section 107 of the Education Act of 1921, I think, with the result that in a great many places the work was being carried on under a dual system. The local education authority was carrying on the work of finding juvenile employment, as were also the labour exchanges through their committees.
This worked very harmoniously in London. The Ministry of Education and the Ministry of Labour came to a very harmonious agreement on the, subject, but we do not find quite the same harmony when we come to consider how it worked in the provinces. At any rate, a situation arose in which the Government found it necessary to set up an Inquiry as to the working of this dual system. The Inquiry was conducted by Lord Chelmsford in 1921, and the noble Lord reported in that year, and made certain suggestions. The suggestions made in that Report were that the dual system should cease, and that the local education authority should be given the option of carrying on this work and taking it over from the labour exchanges under two conditions. Before I tell your Lordships what those conditions were, I ought to remind you that besides this employment work for juveniles there was added the question of unemployment insurance for children between the ages of sixteen and eighteen.
The suggestions laid down in the Report were (1) that the local education authority should take over the work and undertake to carry it on for a term of five years in order to save any chopping and changing about; and (2) that if they took over the question of finding employment they should also make themselves responsible for the insurance scheme and for unemployment insurance for these children. The Government embodied those suggestions in the present Bill. Clause 6 provides for the repayment to the authorities of every shilling of benefit which is paid to those juveniles, and also for the payment of the additional administrative expenses to which the authorities are put. The clause recognises also that it may be necessary to apply different scales to different classes of authorities, and this, it is hoped, will meet all the legitimate claims by the authorities concerned.
521 With regard to the remaining clauses of the Bill they are really only concerned with minor details. I would, however, draw your Lordships' attention to Clause 7, providing that the Act shall come into operation on April 12 of this year. A number of unemployed persons ran out of their benefit on January 24, others have exhausted their benefit between that. date and now, and larger numbers will exhaust their benefits on and after April 4. It is essential, therefore, that the Bill should be passed through all its stages before Parliament rises for the. Easter Recess. I therefore find it necessary to ask your Lordships to expedite this measure through all its stages. I beg to move.

§ EARL BUXTON
My Lords, I regret that this Bill has come on so late this evening, because I think 'a good many noble Lords would have been interested in it and have desired to take, part, in the discussion. I ask your Lordships' indulgence on the ground that I was the President of the Board of Trade who had the responsibility for drafting, introducing, and passing the original Insurance Act of 1911. That Act formed part of the insurance legislation of the then Government. Two quite distinct Acts were passed. The first Act, dealing with health insurance, was in the hands of my right. hon. friend the late Prime Minister, then Chancellor of the Exchequer, and the other one was in my hands. I think had a much easier task than he had there was much less limelight on unemployment insurance than upon health insurance, and I think I was able to get, it through without difficulty. The Board of Trade, which drew it up, and the Grand Committee which dealt with it, may, I think, take some pardonable pride in the fact that the principle and the details of that Act have lasted without any radical alteration ever since the measure was introduced first, and upon the fact that ii, was founded on such a sound financial basis in 1911 that when the slump came, with its difficulties of unemployment, there was at the Government's disposal a fund of no less than £22,000,000 in respect of contributions which had been received and had not been paid out. That would have been amply sufficient to carry over the particular industries 522 included in the Act during those bad times, hut the Government, quite rightly, absorbed that capital in order to apply it to other purposes under the extension of that Act, and to that extent the money has been applied in a different way from what was intended.
This Bill seems to me to have two great advantages over the five Unemployment Insurance Acts which have been passed since 1920. Those were very provisional Acts, only carrying the matter over comparatively few months, whereas this Bill will at all events cover a period of from eighteen months to two years, during which, as I understand, the responsible Department consider that the Unemployment Fund will be brought hack to a sound financial basis. They will then have a surplus and be able to return 1.o the old and proper system on which this legislation was founded. There are also one or two respects in which this Bill is a great improvement on the Acts passed since 1920. One of the best of them is that which modifies what is called continuous payment of benefit, and especially for the advantage of the casual labourer, and more particularly the docker, with whom we have all the greatest sympathy, because he is a man who has often been prevented from receiving unemployment benefit, through being employed irregularly by a great many employers, instead of regularly by one employer. Up till now it has been very difficult to help him when he has been unemployed. I do not think the Bill goes very far in that respect, but the step that is taken is an excellent one. I agree with the noble Earl also that the step taken in regard to children between the ages of fourteen and eighteen, on the recommendation of Lord Chelmsford, is of great value, because in future there will be no overlapping, and the body responsible for finding them suitable employment can new, if it chooses, become responsible for the payment of expenses. That, I think, will be greatly to the benefit of these children.
The Government now have a period of eighteen months or two years in which they will be able to consider various matters which are in question in regard to unemployment. They will have a sort of breathing time which hitherto, under the provisional Acts, they have not enjoyed. I think it would be a great 523 advantage if the noble Earl could assure the House that during that period the whole question of unemployment will be reconsidered. There is also the question of insurance by industries, in which a good deal of interest has been taken. It is a very difficult subject, and there is a good deal to be said on both sides, but that also is a matter which ought to be well considered. Further, there is the question of joint councils and the extent to which they should be able to contract out of the scheme, if better terms are given to those interested. Another question is that of dependents. At present that is in a rather vague position, and it is difficult to know what will be the position of dependents in the future.
There is also a very important point in connection with the old Acts. Under the original Act of 1911 and the subsequent Acts, in the event of a strike none of those directly concerned in the strike—and quite rightly—are to receive unemployed benefit; otherwise, of course, it would be a bounty in their favour against their employers. But there are cases, and they are becoming more and more frequent now that these trade unions are larger and more complicated, in which a number of men in a particular trade who have no liability whatever for the strike, but are employed in the same factory or workshop or have something to do with the work that is being done, are prevented by the fact of there being a strike in their works, although, as I say, they have nothing to do with that strike, from receiving unemployment benefit. It is a very difficult question, as I know very well from recollection and experience, to find words to cover such persons: but I believe that everybody, the employers included, would wish that these men should be included when they are not in any sense responsible for the strike and yet, under present conditions, are deprived of unemployment benefit.
I have already referred to the question of continuous payment, as to which I think something more might be done in the direction of assisting those in irregular employment to obtain unemployment benefit when they are bone fide doing their best to obtain work or have keen in work. I do not desire to detain your Lordships any longer in regard to this matter, but I would ask that the attention of the noble Earl and the Department he 524 represents might be given to these matters, so that during the time this Act is in force the whole thing, which has never yet been reconsidered properly since 1911, shall he carefully considered with the object of improving that which the noble Earl very properly regards as an enormous advantage to those out of work, which has done such a vast amount to reduce distress among these people, and which I believe during the very difficult years through which we have passed since the war has done a great deal towards preserving pew in the country, and enabling those difficult times to be got through with less distress and disturbance than would otherwise have been the case.

THE EARL OF SHAFTESBURY
My Lords, I can assure the noble Earl that every attention will be given to the points he has raised. It is very helpful for us to have the benefit of criticism from the noble Earl, who was so much interested in the early stages of this unemployment insurance and in these labour questions in earlier days. I can, however, assure him that this Bill cannot be taken to be in any sense an exhaustive measure. The matter will have to be continuously considered, and, as the noble Earl has pointed out, there will be plenty of time during the ensuing year while the new scheme is coming into operation, to consider all these various details. I can assure him that they will have very sympathetic consideration.