HL Deb 03 August 1925 vol 62 cc687-702

Order of the Day for the Second Reading read.

THE CHANCELLOR OF THE DUCHY OF LANCASTER (VISCOUNT CECIL OF CHELWOOD)

My Lords, I have to move the Second Reading of this Bill, which is a Bill that excited some controversy in another place, though it is, I think, essentially a simple administrative measure. It is designed to remove certain administrative difficulties. It is a Bill of five clauses. Perhaps the chief administrative difficulty that it has to meet is this one. By the Act passed by the late Government in 1924, as part of their policy of making what was then called uncovenanted benefits into what is now called extended benefit, certain conditions were laid down applying not only to that benefit but to all benefit—one was that no persons should be entitled to receive a benefits under the employment scheme unless they had paid 30 contributions and that was, as it were, the test of their being really entitled to conic in under the unemployment scheme.

The difficulty arose in the present very serious condition of employment that there might be many people whom all of us would desire to assist, genuine working people who were out of employment but who yet had been unable to make the 30 contributions which were necessary, and accordingly, as part of the scheme of the late Government's Act, it was provided that the Minister might waive that condition in proper cases. But it was also provided that he should not he allowed to do so indefinitely, and that the period when his power of waiving that condition should come to an end should expire on October 1 next. If nothing were done it would be impossible for the Ministry of Labour to waive that condition as from October 1 and the result would be, as I am told, that some 200,000 to 250,000 persons, who are at present in receipt of unemployed benefit, would be thrown out of benefit suddenly, without any gradation at all, and that that would produce a state of things which, I think, nobody on either side of this House or of the other House could contemplate with equanimity. Accordingly, by Clause 2 of this Bill, it is proposed that the period shall be extended until June 30 next, the date of June 30 being fixed because on that date the present system of unemployment comes to an end and, whatever else happens, some new reconsideration of the scheme must take place before that date arrives.

That is the first administrative difficulty which is dealt with, and it is dealt with in that way. It is obvious that to do that means throwing upon the Insurance Fund a very considerable liability which it would not be under otherwise. I am told that if nothing were done there would be a diminution of liability to the extent of some £10,000,000. That may be said to have been foreseen, but quite apart from that, as your Lordships are no doubt aware, the Unemployment Fund is losing at present at the rate of £8,000,000 a year —that is to say, that the expenditure on unemployment benefit is £8,000,000 larger than the receipts which flow into the Fund from contributions from employers, employed and the State. I think everybody in this House will agree that that is a situation that cannot be allowed to persist indefinitely. It is obviously a thoroughly unsatisfactory state of things, and some remedy must be applied.

So far as I am aware, there are only two possible remedies when you find that your expenditure is exceeding yours income. One is to diminish expenditure, and the other is to increase yours income. The only way in which the income of this Fund can be increased is either by increasing the contributions of the employers or employed or by increasing the amount paid by the taxpayers towards this Fund, the so-called State contribution. I do not think that your Lordships would welcome that as a solution of the difficulty. We are aware of the very grave position in which industry is placed. We all know the immense burdens which at present are being placed upon industry. We note that the Govern- ment, justifiably as I think, have decided under their pensions scheme in some respects to increase their burdens, and we know that those burdens on the industry of the country, whether by taxes or by contributions or however they are imposed, are undoubtedly and admittedly one of the great causes of the difficulties of our industry, one of the great reasons why we are unable to supply goods sufficiently cheaply to enable our customers to buy them, and consequently one of the great causes of unemployment, with which this Bill is designed to deal. Therefore merely to do nothing more than to increase, or to attempt to increase, the income would, I think, be a very unwise way of dealing with this matter. On the contrary, so far from adding to the burdens of industry, it ought to be and I trust it will be one of the first cares of the Government of the day, the present. Government as it happens, to reduce those burdens. Therefore it was not possible to deal with this difficulty by increasing the income.

Was it possible to deal with it by decreasing the expenditure? No one wishes to cut down the amount awarded to unemployed workmen in the normal case. The amount, as we are all deeply conscious, is a very small one and barely sufficient to enable the recipient to avoid very terrible hardship. But there are two cases in which it seemed to the Government that it would he quite legitimate to diminish expenditure without causing undue, or indeed any, hardship. The first of those is the increase of what is called the waiting period from three days to six days. The waiting period, as your Lordships are aware, is that period which intervenes between the cessation of employment and the receipt of unemployment benefit. Under no scheme that has ever been submitted to Parliament has it been proposed that for every casual day's unemployment the unemployed workman should be entitled to receive unemployment benefit. It has always been assumed that there must be some period intervening to make it clear that it was a real period of unemployment and nut merely just an accidental interval between one employments and another.

Originally it was a period of six days that is to say, a week. That persisted until the Bill of the late Government, who indeed, did not propose to make any change. As they introduced it, the Bill maintained the period of six days, but in the course of the discussions in another place very considerable pressure was brought to bear on the Government of the day. As has happened, I am afraid, to other Governments, they yielded and reduced the period from six to three days. It is proposed to reverse that decision, and to increase the period from three days to six days. It is thought that this will not inflict any serious hardship. It means waiting only an additional three days after a period of employment, when the recipient of the unemployment benefit may be supposed to be in a relatively favourable financial position, and on the whole it is thought that it will not inflict any serious or intolerable hardship upon him. I ought, perhaps, to explain, though probably your Lordships are familiar with the point, that that does not necessarily mean that he will have to wait six continuous days. If he is unemployed for three days and then has work, and then he has another period of three days' unemployment, he will be entitled to add those days together in order to make the six days. This is, I understand, what is called the continuity rule, and it has been designed to relieve any possible hardship in the operation of the provision. So limited and so guarded—if we are deal with this matter at all—it is the method by which the least hardship will be inflicted upon those who benefit under this scheme.

The other proposal is a different one. Your Lordships are aware that there are two kinds of benefit which are granted under the unemployment insurance scheme. There is what is called the standard benefit, which is that amount of benefit to which, by contributions paid, the insured workman is entitled as a matter of business, so to speak, on a sound financial calculation; the benefit he would receive is this was a scheme of ordinary insurance worked without the credit of the State at its back. As the present very serious condition of unemployment became prolonged, it became evident that something more than that must be done and that a workman must be given what was called uncovenanted benefit; that is to say, benefit beyond that to which he would be strictly financially entitled by reason of his contributions; benefit granted to him, as it were, in anticipation of his future contributions and which was of a much more extensive character.

A different standard has always been observed until last year with regard to these two benefits. With regard to standard benefit that is a matter of right, so to speak. With regard to un-covenanted benefit, that was a concession made in order to avoid and mitigate intolerable hardship, and it was always guarded, until last year, by this condition—that a discretion was left in the Minister of Labour to say whether in each particular case it was one in which it was reasonable that extended or un-covenanted benefit should be granted. That very wholesome provision was changed by the late Government in their Act, and it was provided, in principle, that an insured person should be entitled as a right to this extended benefit, and that, in principle, there should be no discretion on the part of the Minister as to whether it should be granted or not. It is quite time that certain conditions were added which the insured person would have to fulfil in order to be entitled to the extended benefit., but the principle remained; instead of it being a discretionary matter it became a matter of right.

When the proposal reached your Lordships last year you took the view that it was a very undesirable and unwise proposal, and the noble and learned Discount now on the Woolsack asked your Lordships not to adhere to that view. After a long debate it was decided by a considerable majority that this provision in the Labour Government's Bill should be struck out, and the Bill was accordingly returned to the other House in that conditions. If it is proper for me to do so I should express my regret that that alteration was not considered on its merits in the other House at all, but dealt with as a matter of privilege. It was never debated at all, and came back to your Lordships having been rejected merely on the ground—shall I say the rather strained ground?—of privilege, which was thought to apply to it. The result was that your Lordships' protest and suggestion were never really considered in the other House at all. They adhered, automatically as it were, to the decision to which they had come in the first instance.

It is proposed by this Bill that this discretion should be restored, and that extended or uncovenanted benefit should only be granted subject to the discretionary right of the Minister to consider it. It is not, of course, proposed that that discretion should be exercised harshly, but it is felt that as a matter of principle and as a matter of good administration this discretion should lie with the Minister.

I believe every one of your Lordships would admit that there are cases that are technically within the principles of the Unemployment Insurance Act but which really ought not to be the subject of extended benefit. There is the case, for instance, of the young unmarried man living in his parents' house. It really does not seem right that the other members of the society, in such a case as that, should be required to pay unemployment benefit to a man in that position. Again, consider the case of an unemployed man or woman married to an employed person who is in good work and quite able to maintain the other and who will do so, if possible; that unemployed man or woman, unless some discretion of this kind is granted, will be entitled to benefit. Then there are the cases of aliens. I am not at all an alien hunter, but there are undoubtedly cases of aliens who might, if they really are unable to get work in this country, return to their own countries and whom it really seems quite unjust that our taxpayers and our industrial workers and employers should be asked to maintain when their compatriots are really the persons on whom the burden ought to fall. In those cases them Government feel that it is for the relations in the first case that I put, and for their compatriots in the second case that. I put, to hear the burden which would otherwise fall not on this abstract entity, the State, but upon the taxpayers and workers of this country.

Those are the substantive provisions of the Bill. Let me say a word to your Lordships—I hope I may be very short—about its finance. This, as your Lordships will see, is the only complicated part of the Bill. Taking it on the basis of 1,300,000 unemployed on the register, the first proposal that the Government makes is that the contribution of employers should be reduced by twopence in the case of the employer of men and by one penny in the case of the employer of women, hoys or girls. Similarly the contribution of the employed will be reduced by twopence in the case of men and by a penny in the other cases. That, of course, is part of, and must be considered in connection with, the policy of pensions. The Government have thought right—and I warmly approve—to institute a system of pensions for widows, orphans and old persons, and in order to do so they have had increase the contributions from employers and employed under the ordinary insurance schemes. In order to provide some alleviation of the burden it is proposed to make reductions in the unemployment insurance contributions, which are rendered possible by the other provisions of this Bill.

The reduction in the rates of unemployment contributions means, I understand, a loss of £6,800,000 to the annual income of the Unemployment Fund. Against that must be set the gains which are made by the economies that I have described to your Lordships, and which are set out in Clauses 1 and 3 of the Bill—economies achieve by reason of the lengthening of the waiting period and the restoration of the Minister's discretion. It is estimated that these economies will amount to about £6,500,000 a year. Even so, there is a balance against the Fund on those two transactions alone of £300,000, and this sum, added to the present annual deficiency of the Fund, means that the Fund would be to the bad to the extent of £8,300,000.

In order to meet that deficiency the Exchequer has agreed to increase the contributions of the taxpayer in any case by the sum of £2,200,000, and so long as the debt of the Fund is no less than it will be in December of this year then so long is the contribution to amount to £3,900,000. By these means the annual loss on the Fund, assuming that the present lamentable condition of unemployment continues, will be reduced to £4,400,000 a year. If, on the other hand, as we earnestly hope may happen, the unemployment register goes down to the figure of 1,200,000 then you would have an approximate balance. There would be no increase in the deficiency of the Fund, and if the register went down still further to 1,100,000 then it is anticipated that the Fund would begin to gain materially. I think that the estimate is about £2,000,000 a year. I noticed that something was said during the debates on the Pensions Bill about the withholding of unemployed benefit from persons over 65 years of age. That does not affect the finance of this scheme at all, because, as I understand it, any saving on that head will be set off by the reduction of the Exchequer grant as from the beginning of 1928.

That is the Bill and I do not think that it would be at all desirable for me to deal in detail with the criticisms that have been made upon it. It is, as the Minister who introduced it very frankly and truly said, a stop-gap measure to provide for the difficulties in which we find ourselves until June 30 of next year. It is not, and does not pretend to be, a settlement of the difficulties that we are in. So little is it thought to be a settlement that it is part of the Government's policy in this matter to appoint a Committee to inquire into the principles of unemployment insurance, into the finance of the scheme and into its administration, and to see whether there is, as some people allege, great abuse of unemployed benefit, or on the contrary an arbitrary and harsh administration of its provisions. Meanwhile, I venture to press upon your Lordships, though I do not think that there is anybody in this House who would contest it for a moment, that the unemployment insurance scheme is essentially a contributory scheme. That is vital to its whole conception. I could, if it were at all necessary, give your Lordships very many reasons for maintaining the contributory character of the unemployment scheme. One reason which, I think, applies to this and to all other insurance schemes in which the State takes a part is that it is quite inevitable. There is no way in which you can arrange it other than by means of a contributory scheme. It has to be contributory, either directly or indirectly, for the contributions from the taxpayer, however you arrange them, will ultimately fall upon the industry of the country, and contributions even from the taxes will be contributions from those who benefit under this scheme.

As it seems to me, and I venture to press this view of the case upon your Lordships, in this matter the real controversy is whether you are going to have direct contribution or indirect contribution through the taxes. That is the really vital point. Personally I have always been one of those who have seen great merits in indirect taxation. I admit it most fully, but it must be real indirect taxation. You do not get indirect taxation by taxing one person for the benefit of another. On the contrary, direct taxation of the few is indirect taxation of the many and a very bad form of it, because, although the many are paying, they do not know in what way they are paying. It is the worst and most pernicious form of indirect taxation you can have. I venture to press strongly upon your Lordships that it is vital particularly where you are paying out of public funds direct cash assistance to any class of the community, that they should realise that the more they get in that way the more they will have to pay, either by themselves or their fellows, in taxation or direct contribution, and it is far better, and indeed vital in my view, that you should keep before the people who are benefiting by taxation that central truth that there is no means by which they can get money from the. State except by paying money into the State.

For that reason I earnestly hope that, whatever Government may be in power, nothing will be done to weaken the contributory character of the unemployment insurance scheme, because that would be to introduce an entire misconception into the minds of the people who benefit. It would be to persuade them that there is some way in which they can get money from the State without contributing to the State. It would be the worst and wickedest thing that any Government could do. It would be to deceive those who are ignorant and too trusting to perceive the deception. For that reason I hope your Lordships will give this Bill a Second Reading.

Moved, That the Bill be now read 2a.—(Viscount Cecil of Chelwood.)

EARL DE LA WARR

My Lords, I do not propose to follow the noble Viscount, the Chancellor of the Duchy of Lancaster, in the discussion either of the contributory principle, which has already been discussed by this House, or into a general discussion of the financial provisions of the Bill. Apart from anything else I do not think I could. His whole speech has been such a vast contradiction that I would need to read it very carefully to see what he really did mean. He began and ended by praising the contributory principle of this particular Bill. He said it was vital to the scheme; but the middle of his speech was given up to lauding the generous Government for decreasing the contribution by 2d. Surely he cannot at one and the same time and in the same speech give such strong approval to that contributory principle and then take away from that approval by lauding the reduction of the contributory principle.

I think I should make it quite clear at the beginning that if this Bill had been a one-clause Bill and contained only Clause 2, there would have been no opposition to it from these Benches. My right hon. friend Mr. Shaw made it quite clear in another place, and the present Minister for Labour also made it clear, that he recognised that. The only reason this particular provision was made of a temporary character was that we all realised that unemployment at its present height is to a large extent a temporary problem and it was therefore felt to be unwise to enact too permanent a measure to deal with what was hoped would not he a permanent problem.

Your Lordships may, perhaps, wonder why it is that I do not say that we would have approved a two-clause Bill—namely, Clause 2 and Clause 4, which reduces the contribution. We on these Benches most certainly approve of a reduction of the contribution, but we do not approve of its insertion in this Bill. That reduction has got nothing whatsoever to do with this Bill. That reduction is put in because the Chancellor of the Exchequer and the Minister of Health in another place made the great blunder of attempting to harness industry with an ill-conceived contributory pensions scheme. In order somewhat to mitigate that blunder it has been found necessary to insert that clause here, and we ask ourselves: Could not the Government have the decent political honesty of admitting that their contributory pensions scheme was not practicable, and that they must divide their contributions by half in order to make it work at all and get their own side even to accept it? Let us admit that a certain concession has been made in the direction in which we would have liked it to be made, but who is to pay for this concession? Is it the Government? I do not think so. The Government are making a grant towards it, but the men who really have to pay for this concession are the unemployed. I want to make that point very strongly. No matter what, the exponents of this Bill may say, or how they may try to skate over the, essential points, they cannot get over the fact that from the unemployed is to be taken the enormous sum of £6,500,000.

How are they going to get that six and a half million pounds? They are going to get it, as the noble Viscount has already told you, by increasing the waiting period and by restoring the power of discretion of the Minister for removing certain classes of the unemployed from the right to benefit. In another place the Minister said that in his opinion, admitting that a reduction of benefit had to he made, it would be less cruel to make this reduction at the beginning of the period of unemployment rather than at the end or at any other period. In our opinion that remark shows a complete misunderstanding, and a complete ignorance of the situation with which he had to deal. It assumed what might perhaps have been assumed four or five years ago, that the average thrifty workmen might be supposed to have at least something put by for a rainy day. But that is not the case to-day. These men whom we have been discussing have been unemployed for four or five years, off and on. Their miserable savings wasted away years ago, and there-lore we say it is absurd to try to soften the blow by telling them: "Oh, we will put it at the beginning of your period of unemployment, when, of course, you can live on your savings." These men have not got sufficient savings to keep them even for three days, much less the extended period of six.

The noble Viscount went on to discuss the discretion of the Minister. He pointed out quite truly that it is an old power, a power that has been in existence nearly as long as unemployment insurance legislation has been in existence, with the exception of a brief period when Mr. Shaw altered it. That is perfectly true, but Mr. Shaw altered it for a reason. The power, as has already been said, is a power of discretion to remove certain presumably undeserving people, recipients of benefit, from the list of those who may obtain benefit. In the opinion of Mr. Shaw and in the opinion of the Labour Party this power is far too great to be allowed to a single individual without reference to Parliament. Let me make our position quite clear. I take it that there is nobody in this country, certainly not the Labour Party, who wishes undeserving people to receive any benefit from this or any other Act. But we are discussing new, not who shall obtain benefit, but who shall decide who is to obtain benefit, Parliament or the Minister? There are already, as he said, certain very stringent conditions to protect the Fund from abuse, and even now it is safe to say that the Fund cannot be abused unless through the inefficiency of a Minister's own Department, which administers the labour exchanges. But if in the opinion of the noble Viscount, or the Minister for whom he speaks, there are certain undeserving classes receiving benefit to-day it is perfectly possible for him to go to Parliament with a Bill and state his case, and, if he proves that case, I do not know of any one in Parliament who is likely to oppose it. But that is a very different matter from giving this power of life and death to a single Minister over whom we have no control, and from whose record we gather very little hope or confidence.

Why is this economy necessary? We have been told that it is to preserve the solvency of the Funds because of the enactment of Clause 2. First, let me make perfectly clear that in our opinion there is something very much more important at stake than the mere solvency of the Fund. We regard the preservation of the lives and the self-respect of these men as being a first charge on the State, coming long before the, solvency of the Fund. But, to go back, is it even true to say that it is this Clause 2 which is endangering the solvency of the Fund? We are inclined to doubt it. The noble Discount in his speech was very careful to leave out the fact that since his Government has been in office the, unemployed entitled to benefit have increased by a quarter of a million, or nearly twenty-five per cent. Is the noble Discount quite sure that it is not to meet this increase that the unemployed are being asked to give up benefit?

There is only one real economy possible, and that is by the provision of work, the assistance of trade and industry by the pursuit of a sane financial, monetary and foreign policy. And what do we find when we look to the Government in this regard? What is their record'? We have been told this afternoon by the noble Viscount: that industry cannot stand another burden, and yet what is this contributory pensions scheme but a direct per capita burden on industry, a tax per man unemployed? We have read a good deal lately of the effects of the reimposition of the gold standard and the consequent loss of export trade due to the over-valuation of our currency. And what do we find in the Government's record of foreign policy that is going to help our trade? Nothing but the re-starting of a general race of armaments and the throwing over of the Disarmament Conference that we arranged for last midsummer. Is it for this that the unemployed have to pay? We venture to think it is. And there is only one mitigation. What is that? That they may go on the rates, with the consequent sacrifice of all their moral self-respect. They are to become paupers. It is rather a poor alternative

I think it should hardly be necessary to argue with your Lordships the undesirability of turning some of our most skilled workers to-day into paupers, and I am not going to attempt to do so. Nor do I think that it should be very necessary to argue with some of your Lordships at any rate, with regard to the undesirability of increasing the burden upon the rates. I listened with some interest to the intense desire expressed by some noble Lords the other day to protect the ratepayers when we were dealing with the Public Health Bill. If their desire was great then I venture to suggest that it ought to be a good deal greater now, because there is a very much stronger case. After all, noble Lords, during those discussions, were pressing to defend the ratepayer against his own local authority which he himself had elected. I am suggesting to noble Lords to-day that they should defend the ratepayer against burdens imposed on him by an outside body, which seems to us to care extraordinarily little either for the rates or for the unemployed. In our opinion this Bill comes at a singularly appropriate moment. It has arrived just in time to set the seal of brutality upon nine months of futility and complete failure—complete failure—to deal with the unemployment problem.

VISCOUNT CECIL OF CHELWOOD

My Lords, I do not desire to detain your Lordships for more than a moment. I confess that I admired immensely the command of countenance of the noble Earl who has just sat down when he denounced the futility of the present Government for failing to solve the question of unemployment, which, I think, his Government never even attempted to solve during the whole time of their existence.

EARL DE LA WARR

I do not think our figures ever reached the height they have reached under this Government.

DISCOUNT CECIL OF CHELWOOD

No; but they were progressing rapidly towards it. The noble Earl's Government had not, perhaps, quite time enough to catch up to the figures at present reached. Nor am I going to follow the noble Earl in his general denunciation of the Pensions Bill, the gold standard, and the foreign policy of the present Government. I will only very mildly suggest to him that, whatever may be said about those proceedings, he does not seriously maintain that this Bill would have been denounced in this House had the Government been a different one.

EARL DE LA WARR

I suggest it.

VISCOUNT CECIL OF CHELWOOD

I do not think that any one else would imagine that would make a serious difference to the case for the Bill. The only observation I did desire to make about the noble Earl's speech was this. He said in a rhetorical passage that he valued the lives and self-respect of the uninsured men more than the solvency of the Unemployment Insurance Fund. That is the kind of observation which, I confess, fills me with profound depression. Here is a noble Earl of great charm of personality, great attainments and great ability who, even in your Lordships' House, let alone what he may be going to say on the platform, really thinks it worth while to make an observation of that kind. These things ate the same and you cannot divide them in that kind of way. If your administration is bad and extravagant, whether in connection with the Unemployment Fund or in any other way, you will, as the noble Earl himself sees in his saner moments, increase the unemployed. It is not an antithesis between the self-respect of the unemployed and the solvency of the Fund. That is a wholly false antithesis. Unless your Fund is solvent your unemployed will increase, as they will increase as a consequence of any other piece of maladministration.

The truth is, as noble Lords must realise—and I am sure they do in their hearts—that there is not any power of dealing with any of these matters except by the contributions of the taxpayer and the other portions of the population of this country. That is the only way in which you can deal with it. It does not in the least matter from the broad financial point of view whether you increase the taxes or increase the contribution, the drain on the general financial position of the country is the same, and will ultimately react upon industry. The only difference is that if you draw the money from the taxes you conceal the fact front the unemployed themselves that the money is being spent out of their pockets. If it conies out of their pockets and the pockets of their fellows, there is some ground for hoping that they will under stand that you cannot in this world get anything for nothing. It is, therefore, of the utmost importance that this, as all other portions of the administration of the country, should be carried on with a proper regard for economy and efficiency.

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

THE MARQUESS OFF SALISBURY

My Lords, I should like to consult the noble and learned Viscount as to whether he would object to the Committee stage of this Bill being taken to-morrow?

VISCOUNT HALDANE

I think not.

THE MARQUESS OF SALISBURY

Then we will take it to-morrow.

[From Minutes of July 31.]