§ Order of the Day for the Second Reading read.
§ THE LORD CHANCELLOR (VISCOUNT HALDANE)
My Lords, the reason why this Bill is an urgent one is the fact which is staring us in the face that unless it is passed there will be no provision for giving insurance benefit after the 16th of this month to from 100,000 to 150,000 unemployed persons who would, thereafter, be thrown upon the rates. Moreover, if this Bill is not passed, another 100,000 will come in the same way on the rates a fortnight later. Therefore, the Bill is a genuinely urgent one, and it is for that reason that we asked your Lordships to meet this morning to consider it. I am glad to say that although the money required is from £2,000,000 to £2,500,000—a large sum—it is not a sum which comes from the public funds. It is already provided for, and more than provided for, by the accumulations of the Unemployment Insurance Fund in circumstances to which I will direct your Lordships' attention in a moment. Last year the late Government had to introduce a similar Bill which made an even greater extension of the period of insurance than is contemplated under this Bill.
In order to make the Bill intelligible it is, perhaps, desirable that I should, in a few sentences, remind your Lordships of what the insurance system is, and of what is the meaning of the mysterious phrase "uncovenanted benefit." The idea of insurance against unemployment is far from being a new one. It is as old as 1911, when what is called the National Insurance Act was passed by Parliament. That Act was subsequently amended by other Acts of Parliament, and in the year 1920 Parliament took the matter in hand, and 258 put the whole subject upon a more scientific and exhaustive basis than had been the case before. They passed that Act in 1920, amended it in 1922, and again made some further amendments in 1923.
I will tell your Lordships quite briefly the nature of unemployment insurance. The idea was to keep the unemployed off the rates where they were a serious burden, and the way in which this was proposed to be done was by making every workman and every employer contribute compulsorily to an insurance against unemployment. The workman contributes so much, the employer so much, and the State contributes less, but still a substantial proportion of the whole. It was contemplated that the scheme of the Unemployment Insurance Fund which was proposed to be set up, would require a large sum of money to start it and the power was taken from the Treasury to advance a sum of no less than £30,000,000. I am happy to say that that £30,000,000 was not all required. The utmost that had to be borrowed was a sum of £17,000,000, but that £17,000,000 was not a gift from the Treasury. It was an investment by the Treasury, on which the Treasury has been getting 4¾ per cent. interest. That interest has been punctually paid, and, indeed, so successful has been the scheme that there has always been a large surplus. Last April, that is a year ago, the amount lent by the Treasury was £16,000,000. To-day, it is £10,000,000, and since the beginning of the year about £2,500,000 has been paid off. There is every prospect that the remainder will be paid off very soon. No doubt, the £2,500,000 which this Bill will require will slow down the rate of repayment, but it will not slow it down in any disturbing fashion because the surplus is still large.
The principle on which the Fund operates is this, and it accounts for the fact of there being a surplus. Under the principle of unemployment insurance, as embodied in the Statutes to which I have referred, the insurance is not for a whole year, but for a period of twenty-six weeks of unemployment. It is calculated, and calculated rightly, that, although people will be out of employment for a time, they will not be all out of employment at the same time and that the 26 weeks is enough to cover the risk. It has been found in practice to be more than sufficient to cover the risk, and it is satisfactory to 259 know that at the present time unemployment is decreasing, although somewhat slowly. We have got down from 1,250,000 unemployed to 1,000,000 to-day, and there is a prospect that we are in sight of a diminution to the figure of 800,000. If that is so, repayment to the Treasury will be accelerated. Meanwhile, the Treasury is getting its interest regularly and is in no way disturbed.
The difficulty about the 26 weeks is that in periods of intense unemployment, such as we have had, it does not cover every case. What the workman does is to pay his contribution, the employer his contribution and the State its contribution, and under the terms of the Statute the workman has covenanted benefit, that is, he is entitled to 26 weeks' unemployment benefit. But it was found that there were others who were in difficulty and could not keep up their contributions because they were unemployed and for whom some provision had to be made, although it was not covered by the terms of the covenant. These people, who had already contributed largely to the Insurance Fund, were still out of insurance because they had not been able to keep up their payments. This class, who were getting something outside that for which they had covenanted, received the uncovenanted benefit; but what they were receiving was not in the nature of a dole. The money came out of the surplus profits of the Unemployment Insurance Fund, which was adequate to provide for them. To use a somewhat cumbrous phrase it was an uncovenanted mercy which came to them, and it came out of the surplus of the Fund to which they had contributed. That is why they are called uncovenanted. It does not mean that they get a dole, or that they go on the rates. They are people who are getting money out of a Fund to which they have contributed and which has produced such a good surplus that it is possible to make this contribution.
The difficulty in that scheme was that the power to pay out of the Unemployment Insurance Fund was limited to 26 weeks. A provision was inserted which enabled spasmodic payments to be made in cases of real necessity, and these were very strictly supervised. The difficulty was that the Acts introduced certain gaps, nobody was allowed to get anything for 260 a period of three weeks between the date at which he had been receiving, and the date at which he would receive, payments from the Unemployment Insurance Fund. The late Government found it necessary, and I entirely agree with them, to pass an Act last year extending the number of weeks to 44 weeks. This time we propose to extend it only to 41 weeks. The reason is this. Another Bill has been introduced in the House of Commons, which cannot be passed without careful examination, a general Bill, which will put these things right, and as the Fund is in a position of solvency it will be able to provide for assistance which will not have these gaps and enable those responsible for the management of the Unemployed Insurance Fund to pay those unemployed throughout the year. A year means a period from October to October, and the new Bill proceeds on the footing of an annual contribution. The new Bill will provide in such a way as to render it unnecessary for supplementary Bills to be introduced from time to time, because it will put the whole thing on such a footing that the Unemployment Insurance Fund will be abe to provide for any calls which experience shows are likely to be made, and at the same time go on repaying the money to the Treasury. It is contemplated that the Treasury will be paid off in a comparatively short time.
The substance of the present Bill is to get rid of the gaps. They only arise in connection with the uncovenanted, those who have had their benefits and are yet short of what is required to keep them off the streets. The provision is entirely met out of the surplus funds of the Unemployment Insurance Fund, and unless we pass this Bill we shall have a large number of people out of benefit in about six weeks and another large number a fortnight later. I have put before your Lordships the nature of the unemployment insurance system and the distinction between covenanted and uncovenanted benefit. I am sure I have not been able to do it in a very intelligent fashion, but I shall be quite ready to answer any question from any noble Lord and give what assistance I can to any noble Lord who is interested in the subject. It has meant digging up and reading successive Statutes by which alone the system can be understood.
§ Moved, That the Bill be now read 2a.—(The Lord Chancellor.)261
§ VISCOUNT CAVE
My Lords, I think that, after what my noble and learned friend has said, the House will not be unwilling to give this Bill a, Second Heading, and to pass it through all its stages. I myself had occasion last year, or a little earlier, to go through the process which the Lord Chancellor has described, and, having carefully studied both the Acts and the figures, I came to the conclusion that where there was real unemployment it was far better for the country that the matter should be dealt with under the machinery of the Insurance Acts than that a large body of men who were genuinely out of work should be thrown upon the streets or become a burden upon the rates. But there are a few observations which I should like to make, repeating, to some extent, the warning which I ventured to give in the debate on the Second Heading of what is known as the "gap" Bill. There are two points in particular which I think one ought to bear in mind.
First, there is the indebtedness of the Fund. It is quite true, as the noble and learned Viscount has said, that the debt to the Treasury has been reduced during the last eight or nine months by a substantial sum, and I understand that it does not now exceed some £10,000,000, bearing interest at a reasonable rate. That reduction is, of course, satisfactory, but I think it very desirable that it should not in any way be brought to an end. I am not sure that we do not run some risk of putting too great a strain upon the Fund. The additional burden thrown upon the Fund by the "gap" Bill to which I have referred was put at £500,000—indeed, I think somebody put it at a little more—and then there have been certain administrative changes of which we have heard, and of which the yearly cost was said to be from £2,000,000 to £4,000,000—a very substantial sum. Then comes this Bill, which is estimated to cost an additional sum of from £2,950,000 to £2,500,000 this year. These sums are mounting up and becoming a very substantial addition to the charges upon the Unemployment Fund.
I am getting rather concerned about it, because I am anxious, as I think all noble Lords are anxious, that the insurance system should be a success, and if, by having too great a burden thrown upon it, that Fund in any way broke down, 262 I think the injury would be greater than the mere loss of money, and that the result would be to discredit the whole system of insurance, to which many of us attach very great importance. That is the first point which I want to make—namely, that the reduction of the debt should not be further interfered with.
There is one other point to which I should like to refer, and which arises out of the remarks of the noble and learned Viscount. This uncovenanted benefit is not, it is quite true, a gift from the public as a whole, but it is, in substance, a gift from the employed men and the employers.
§ VISCOUNT CAVE
And, in a lesser degree, from the State; I agree. That arises in this way. But for the uncovenanted benefit, it would be possible to reduce' the weekly premium paid by employers and men, and contributed to by the State, below the present figure, which is very high. The first premium, I think, was quite small—something like 2½d.—but it has risen now, and though I do not know the exact amount to-day—perhaps we shall be told—I think it is something like 1s. 7d. a week. That is really very heavy, and there ought to be some prospect of reducing it in a short time, unless the charges upon the Fund are unduly increased. If unemployment diminishes it will then be possible to reduce the premium, and I hope that sight will not be lost of this prospect. I think we ought to aim at getting the premium reduced within reasonable limits as soon as we possibly can, and it is for that reason also that I view with some anxiety the continued inroads upon this Fund. I think they ought to be watched. I am sure that noble Lords opposite will expect that, when the other Bill comes up, it will be carefully scrutinised and that criticisms will be made upon it; but having said that, I am satisfied, so far as I am concerned, that this Bill should pass through all its stages in your Lordships' House.
§ EARL BEAUCHAMP
My Lords, as I have the honour to represent in your Lordships' House the Party which first introduced the systems of health insurance and unemployment insurance, 263 I shall venture to make a few remarks—not, indeed, long remarks, because one advantage of meeting at twelve o'clock always seems to me to be that the pangs of hunger tend to make the oratory of your Lordships' House on these occasions dry up at an early period. I am anxious, on behalf of those noble Lords for whom I speak, to express our approval of this particular measure, although we might associate ourselves with some of the criticisms expressed by the noble Viscount who has just sat down. But it is naturally a matter of the very greatest satisfaction to all of us to realise that this system of insurance has now become very closely interwoven with our social life, and will always remain one of the most important parts of it. It is true that the matter is complicated. The fact that this is a No. 3 Bill in the present short Session of Parliament is sufficient to prove how complicated the matter is. We now have the No. 3 Bill before us, and we shall have the No. 2 Bill, which is, I think, a more important measure, before us at a later stage of the Session, when perhaps it will be desirable that we should comment at greater length upon the provisions which it contains.
May I make one comment upon the question of uncovenanted benefits? It is true, of course, as the noble and learned Viscount on the Woolsack said, that this is in no sense a dole, but is it not equally true to say that in a great many cases these uncovenanted benefits are not paid for by the men who enjoy the advantage of them, but by other workmen who contribute to the Fund at a later period? Take the present moment of uncovenanted benefit. A certain amount of it goes to elderly men who are unable to do the full amount of work, and are unemployed for that reason. They draw their uncovenanted benefit—as it is quite right that they should—but the money which they draw from the Fund is paid back at a later period by other people who are at work, and consequently it is to that extent not unfair to say that, in a great many cases, the uncovenanted benefit is paid for by other people than those who draw the benefit at the present moment. The noble and learned Viscount on the Woolsack was, if he will allow me to say so, extraordinary clear in his exposition of the matter on this occasion. For 264 myself, I only wish that I were always as well able to understand the arguments which he addresses to your Lordships' House. He possesses, if he will allow me to say so, the invaluable gift of making himself most intelligible when he wishes, and equally unintelligible when he does not wish, your Lordships to understand the matters which we are discussing.
It is evident that, when we come to discuss this matter in its larger aspect, we shall probably have two suggestions put before us. One of them has been adumbrated by the noble and learned Viscount who has just sat down, and concerns the reduction in the premiums. We shall also hear suggestions, as the noble and learned Viscount knows, that the benefits should be very widely extended, and be made to include a number of other matters which at the present moment do not come within the ambit of our insurance, but which a great many people are anxious to see covered in that way. Whether or not that should be done is, of course, a matter upon which it would be foolish to express an opinion now. It is not improbable that there may be a combination of the two things. The contributions may be somewhat reduced and a great addition may be made to the benefits that people may derive.
There is only one other observation that I desire to make, and that is to repeat a comment which has been made by noble Lords on the Front Bench and also, I think, upon this Bench. I hope His Majesty's Government, in bringing forward these Unemployment Insurance Bills, of which we heartily approve, will not forget the really urgent need there is of giving to these unfortunately unemployed people work as well as opportunities of drawing unemployed rates of pay. We wholly agree with what has been said frequently by members of the Government, that what these men really want is work, and therefore we hope that before very long these large schemes of which we have heard a great deal in the past will be introduced with the approval of both Houses.
§ LORD BANBURY OF SOUTHAM
My Lords, may I say that I hope the suggestion of my noble and learned friend, Viscount Cave, with regard to the amount of the loan, will be carried out? The Lord Chancellor has told us that the 265 loan from the State has been reduced from £17,000,000 to £10,000,000, and now, like a spendthrift who has a large number of bills unpaid, and who proceeds to pay off a certain proportion of them, and then incurs further liabilities, the State, under this Bill, because the amount of the loan is reduced from £17,000,000 to £10,000,000, is going to borrow more money and to incur larger liabilities, I remember being told, when the project was first mooted to borrow money from the State, that it would be only a temporary matter and that the money would be paid off in a short time. I ventured to disagree with that, and by some extraordinary coincidence my disagreement has proved to be correct. I will only ask one question of the Government, and it is this: The noble and learned Viscount on the Woolsack has given us a very clear exposition of what the uncovenanted benefit is. Is not this the explanation? A man having agreed to receive a certain benefit on payment of a certain premium has paid that premium and received that benefit, and now, although he is not to pay a premium, he is going to receive something for which he has not paid.
§ THE LORD CHANCELLOR
My Lords, I will endeavour to answer the questions which have been addressed to me. First of all, I would say, in answer to Earl Beauchamp, that the Government are fully alive to the fact that unemployment insurance is only a poor substitute for employment. A number of schemes, to which I cannot now refer, are being pushed on with considerable rapidity, and ought to make a great difference in that matter. My noble friend will hear of them very shortly.
Then I come to questions which have been addressed to me by my noble and learned friend Viscount Cave, and by my noble friend who has just sat down as to the solvency of the Fund. I wish to tell the House this as regards the prospect of the Treasury being repaid. The present Chancellor of the Exchequer is a very careful man and would not proceed in this matter until he had had the matter thoroughly investigated by the Government actuaries, who, as your Lordships are aware, are very capable men. The Government actuaries reported that the Bill is quite satisfactory. Of course, it will delay the date by which the re-payment will be completed, but repayments 266 have been made so fast that the Treasury is in no danger, and as it is getting more money by way of interest than it pays for borrowing the Treasury is in a happy position. Your Lordships may take it that the points which have been alluded to have been carefully considered. The larger Bill which is to be introduced will deal with the subject in its entirety, and there will be in that Bill a provision such as that to which Earl Beauchamp alluded. There is, however, no prospect of that Bill being passed before the. end of the Session, and the provision which we have will be sufficient to carry us over the interval.
As regards the question whether it is right that uncovenanted benefit should be paid for, the covenanted themselves get a good deal out of this provision, because they become uncovenanted in the eye of the law as time goes on. They draw, no doubt, in excess of what they contracted to get, but in a fashion that is very satisfactory to the workmen themselves and also to the employers. These people would come on the Poor Law if it were not for the uncovenanted benefit, and I think the majority of the workmen and employers alike think it is a good thing to make the scheme so elastic. It is no doubt true that if it were not for this uncovenanted benefit you could charge a somewhat smaller premium to the workmen, but the workmen are prepared to pay a larger contribution in order to get benefit for themselves. I think I have answered the questions which were put to me in a way which is sufficient to make my meaning clear. If I have not done so I shall be glad, if requested, to supplement anything I have said.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.