HL Deb 08 June 1926 vol 64 cc308-14

LORD SANDHURST had given Notice to ask His Majesty's Government whether they are aware that under Section 22, subsection (3), of the Unemployment Act, 1920, not more than twelve months' arrears are recoverable from an employer upon his conviction of failure to pay contributions; and whether they will introduce legislation to remedy this, or will make such regulations as will lead to inquiry into all cases where unemployment books are not punctually returned after ceasing to be current.

The noble Lord said: My Lords, in submitting the Question which I have put on the Paper, it may be convenient if I state shortly the facts of the case which called my attention to the matter. An individual who carried on the business of a butcher retired from business in November, 1925 He then returned to the unemployment bureau the insurance cards which he had, and which took him down to July, 1923—the twelve months from July, 1922 to July, 1923. From that time until November, 1925—two and a quarter years—he had deducted from his employees their proper insurance contributions, but he had not stamped any cards. When he returned those cards, which were due in July, 1923, inquiries were made, and consequently he was prosecuted for not complying with the requirements of the Act. It was then stated that upon conviction not more than twelve months' arrears could be recovered before the magistrates. That statement appears to be correct, inasmuch as Section 22, subsection (3), of the Act only provides that evidence may be given upon conviction for non-payment of any sum, of nonpayment of arrears for one year preceding the laying of information.

It was also stated that it was not part of the duty of the unemployment bureau, or those in charge of it, to inquire as to the whereabouts of cards which were not duly returned at the expiration of currency, and I understand that the maximum currency is twelve months. The result is that in that proceeding, although more than three years' arrears were due, only one year's arrears were recoverable. I ought to point out, what I have since ascertained, that under Section 24 of the Act a workman whose unemployment payments are in arrear can recover arrears as a civil debt, which I presume means that he can bring an action in the County Court for them; but apart from the fact that very few workmen can be aware of their right to do so, it is also extremely inconvenient that two proceedings should have to Be taken to recover one class of arrears. In my Question I have suggested two remedies: one, that the magistrates before whom the matter is brought should have power to direct payment to the unemployment bureau of all arrears due, and the other that clear instructions should be given to the unemployment bureau to inquire as to any cards which are not duly returned at the expiration of currency. I have no doubt that that is what the Act contemplated—namely, that at the expiration of twelve months inquiry should be made for the cards, and that if they are not forthcoming, or payments have not been made, then a summons should be issued, and there would then not be move than twelve months' arrears to collect. In the circumstances I have pointed out it is plain that you may have very considerable arrears which are not recoverable, at all events before magistrates.


My Lords, my noble friend raises, I think, two points in his Question. He first asks whether we are aware that under Section 22, subsection (3), of the Unemployment Insurance Act, 1920, not more than 12 months' arrears are recoverable from an employer upon his conviction of failure to pay contributions. That is quite true, under that section, which is a section imposing a penalty and is a criminal section. The provision is as follows: Where an employer has boon convicted under the foregoing provisions of this section of the offence of failing or neglecting to pay any contribution under this Act, he shall be liable to pay to the unemployment fund a sum equal to the amount which he has so failed or neglected to pay, and on such a conviction if notice of the intention to do so has been served with the summons or warrant, evidence may be given of the failure or neglect on the part of the employer to pay other contributions in respect of the same person during the year preceding the date when the information was so laid, and on proof of such failure or neglect the employer shall be liable to pay to the unemployment fund a sum equal to the total of all the contributions which he is so proved to have failed or neglected to pay. That is to say, for one year. That is quite true and that is part of the criminal proceedings.

In addition to that, under subsection (6) of that same section it is provided that:— Nothing in this section shall be construed as preventing the Minister from recovering any sums due to the unemployment fund by means of civil proceedings, and all such sums shall be recoverable as debts due to the Crown, and without prejudice to any other remedy may be recovered by the Minister summarily as a civil debt. So that there are really two remedies. There is the criminal remedy, under which the delinquent can be fined and one year's contributions can be recovered in criminal proceedings; and, in addition to that, the whole of the arrears can be recovered by the Minister in civil proceedings under the later section. As I am informed, the practice is, after the criminal proceedings have taken place, if necessary to proceed with the civil proceedings to recover the remainder of the arrears.

My noble friend asks with a great deal of logic: Why should the criminal proceedings be limited to one year; why, if you may recover one year's arrears by criminal proceedings, may not you recover more than one year? I have not been able to satisfy myself that there is logically any answer to the noble Lord. The only thing that can be said is that as a general principle, criminal proceedings ought not to be used for the purpose of recovering debts. You may have, as you have in this case, an exception made in order to facilitate the recovery for a short period of a statutory debt which has not been paid owing to a failure of a statutory duty. But it is held by those who watch over the purity of our legislation and our administration that it is improper to use criminal proceedings for the purpose of recovering civil debts as a normal state of things. Therefore you have this somewhat cumbrous procedure existing in the Statute.

I understand that it is the same in the other insurance legislation, except that in the recent Act by which pensions were granted to widows you can recover two years' arrears, and I certainly think that when the opportunity serves it is a matter which ought to be considered, whether you ought not to bring the unemployment legislation into line with the other insurance legislation, as far as the two years at any rate are concerned. I admit that I have a certain sympathy with the noble Lord, who wishes, I understand, to go further than that, and say that all arrears should be recoverable, but the matter is evidently one that requires a little consideration, because it is quite true that it would never do to utilise the criminal procedure of this county as a purely debt-collecting procedure. It would be introducing a number of evils if that became an accepted part of our procedure in this country.

There is no doubt that this particular case was a bad case. The employer had not only failed to pay the contributions, but, while failing to pay them into the unemployment fund, had, in fact, deducted those contributions from the employee—a procedure which came very near dishonesty, if not worse, and it was quite right to proceed against such a case. It is such cases that are proceeded against criminally. That being so, there is a great deal to be said for the view that you must make a great distinction between what is really a civil debt and a criminal offence. That is all that I can say to my noble friend in answer to the first part of his Question.

In regard to his suggestion that inquiries ought to be made always when the unemployment books are not returned, the difficulty is purely one of organisation and expense. There are 11,000,000 of these books, I am told, and if it was to be made a rule that every one had to be inquired after you would enormously increase the expense of the administration of the Act. The Department have not thought it right to incur that expense for what they believe to be, on the whole, an evil of very small extent. What they have done is this. They have taken particular districts and inquired into them. I believe it was last year that they inquired into the Liverpool district. They followed the fortunes of each of the books, and they found that a certain number were not returned, because death had intervened or a man had left the country or had abandoned his insurable employment for an uninsurable employment; and, allowing for that, the proportion of books which were improperly not returned was exceedingly small. I was not able to get the exact figures, but I was assured that the percentage was a very, very small one.

Further experiments are being made in another district, I think in the North-Midland district. I understand that they are still in progress, and it is hoped that further information will be gleaned from these experiments and further measures may possibly come to light for diminishing the improper non-return of these books. I think my noble friend will agree that since, as far as we can find out, the evil is not really an extensive or serious one from that point of view, it would not be justifiable at this time, in the present state of our finances especially, to set on foot such a very elaborate and costly machine as an inquiry into the case of every one of the 11,000,000 books, which would be necessary in order to carry out the desire which he has expressed in his Question. I hope that I have been able to throw some light on the subject that he has raised. We are most anxious to do everything we can to diminish these frauds—because they are nothing less than frauds—which occur from time to time.


I am much obliged to the noble Viscount for the answer he has given. Perhaps I may say that I did not intend to suggest that an inquiry should be made in every case, but only in cases in which books were not returned, and if, as my noble friend says, the number of these books which are not returned is very small, it would seem to follow that the expense of the inquiry would not be very great.


I will note that point.

[From Minutes of June 7.]