ECONOMY (MISCELLANEOUS PROVISIONS) BILL.

HL Deb 11 May 1926 vol 64 cc124-82

Order of the Day for the House to be put into Committee read.

Moved, That the House do now resolve itself into Committee.—(Viscount Peel.)

On Question, Motion agreed to.

House in Committee accordingly:

[The EARL OF DONOUGHMORE in the Chair.]

Clause 1:

Amendment as to proportion of contributions payable respectively by insured persons and employers and by the Treasury.

1.—(1) Section four of the National Health Insurance Act, 1924 (in this Part of this Act referred to as "the principal Act"), (which provides for contributions by insured per- sons, employers and the Treasury), shall be deemed as from the first day of January, nineteen hundred and twenty-six, to have had effect as if for the words from "as to seven-ninths thereof'' to the end of the section their were substituted the words "in the case of men as to six-sevenths thereof, and in the ease of women as to four-fifths thereof, from contributions made by or in respect of the contributors by themselves or their employers and as to the ba1ance thereof from moneys provided by Parliament," and for the purpose of determining the amen tit to be derived from moneys provided by Parliament in respect of the cost of additional benefits administered by a society, other than additional benefits consisting of increases of sickness, disablement or maternity benefit, the amount of that cost shall be apportioned between men and women in such manner as may be prescribed by regulations made by the Minister of Health (in this Part of this Act referred to as "the Minister') with the consent of the Treasury.

(2) Nothing in this section shall affect the amount. of the sums which are to be credited to societies out of moneys provided by Parliament under the proviso to subsection (3) of section one of the National Health Insurance Act, 1922, (which makes provision as to the cost of medical benefit and administration expenses).

LORD ARNOLD moved, at the beginning of the clause, to insert "As from the appointed day." The noble Lord said: In moving this Amendment I desire to state certain objections against this clause, which is the main operative clause of the Bill. I have other Amendments upon the Paper, but I shall deal with those very briefly; indeed, in one or two cases I shall have pleasure in giving way to other noble Lords, reserving such brief observations as I have to make until after they have spoken. It is on this Amendment that it is my duty to put forward some intricate and complicated points. It must be emphasised that this is a very important Bill. It intimately affects the lives of fifteen million people and, though the subject is highly technical and difficult, I feel that your Lordships will not grudge the time which is necessary in order to get at the facts.

The effect of my Amendment, if carried, would be to postpone, I hope indefinitely, the operation of the Bill. On the Second Reading I stated that this clause is a breach of faith. I repeat that now and I will at some length prove it. On the Second Reading I cited in that connection certain words used by the Minister of Health last year in another he, when he described any idea of raiding the surpluses as a breach of faith. What was the reply of the noble Viscount opposite to me? He said that my remarks were irrelevant. In fact, he went further and said that they were wholly irrelevant. I have not been very long a member of your Lordships' House, but I have been a member long enough to learn that when the Government has a particularly awkward point to meet they fall back upon the old device of dubbing it irrelevant. I feel bound to say that I do not think that is a very high form of debating such as I expected to find in your Lordships' House. So far from the point being irrelevant it is, as a matter of fact, at the very heart and kernel of the controversy. I would respectfully say before I go further that I think in discussing such a highly technical subject as this in your Lordships' House we are entitled, in the replies that we get from the Government Benches, to rather more argument and rather less assertion.

The position of the Government in regard to this clause comes to this. They say that the Bill does not affect the surpluses, but only cuts clown the Government contribution to the societies. My first reply to that is a categorical denial. The question is what will be the effect of the Bill; not what does it say in words, but what will it do in fact; and I say that the surpluses, both present and future, will be affected by cutting down the Government contribution. Let me put this point Plainly so that there may be no misunderstanding. I will pick my words very carefully. I say that many societies will be unable to meet the new charge for medical benefit in Clause 2 and at the same time sustain the reduction in the State contribution proposed by this clause without using their accrued surpluses and, in some cases, their undisposable surpluses. Therefore, the surpluses will inevitably be drawn upon as a direct consequence of the provisions of this Bill. Thus, the position is that, even if it be technically the case that there are no actual words in the Bill which specifically take away a capital sum of, say, £10,000,000 or £20,000,000 from the surpluses of £65,000,000—because that is the estimated amount—yet the effect of the Bill will be definitely to take away some portion of the surpluses. Therefore it simply is not true to say that the surpluses are not touched and that it is only the State contribution which is reduced.

The position is that the effect of that reduction will be to take away some portion of the existing surpluses and to slow down the accumulation of future surpluses.

Let me look at it in another way. While, as I have said, it may be technically true that there is no actual clause in the Bill which specifically takes away £10,000,000 or £20,000,000 of the surpluses of £65,000,000, yet the effect of the Bill is, in point of fact, adversely to affect the finances of the societies to a larger capital sum than £65,000,000. This Bill reduces the Government contribution by £2,800,000 per annum. To take away an annuity of £2,800,000 from funds earning about 4 per cent., which is the correct figure, is equal to a capital reduction of no less than £70,000,000. It is, then, idle to say that the surpluses are not affected. The finances of the societies hang together as a whole just as the finances of a company do. Your Lordships will be aware that some companies, very prosperous ones, have in their balance sheets three or four different, kinds of reserve funds. There may be a general reserve fund, a contingency fund, a dividend equalisation fund and so forth. Very well. If, in those circumstances, there is a proposal for taking, let us say, £100,000 away from the general reserve fund, it is really not correct, looking at the finances of the company as a whole (and that is the point), to speak as if this operation has no effect upon the reserves as a whole. Of course it has, because it means that you have depleted the total reserves of the company by £100,000, and for practical purposes, looking at the problem as a whole, it really does not matter from which particular reserve fund that £100,000 is taken. In a sense it is merely book-keeping. The company as a whole is £100,000 worse off; and that is the point. Therefore, when you are looking at the problem as a whole, and that of course is what we ought to do in considering this Bill, then even if it is the case that the surpluses of £65,000,000 are not actually in so many words touched by a clause in the Bill, that contention, which is the contention of the noble Viscount opposite, has no real meaning or application in relation to the problem as a whole, because the total finance is inextricably inter-related, interdependent and intertwined, and this Bill actually worsens the finances of the societies to a greater extent than £65,000,000.

I will put the argument in another way, with a very simple illustration. If I have a big bowl of water and a cup and I take a. cupful of water away from the water on the left-hand side of the bowl it is no argument to say that that operation does not touch the water on the right-hand side of the bowl because it is taken away from the left-hand side. The point is, and there really is no reply to this, that the total volume of the water in the bowl has been reduced by a cupful and for practical purposes it does not matter a scrap from which particular part of the bowl the cupful of water is taken. So, looking at the whole of the finances of the approved societies, it is really a quibble to say that the surpluses of £65,000,000 are not affected by the Bill. I do not use the word "quibble" in any offensive way and certainly not in any personal way; the noble Viscount, I am sure, will understand that. The surpluses are affected as a matter of fact. Taking a comprehensive view of the whole situation it may be argued that they are, in effect, wiped out altogether. You cannot affect them more than that! Let me put the point in this way to the noble Viscount. It would indeed be better for the societies if the Government, instead of reducing the contribution as provided in this clause, would take away the surpluses of £65,000,000 altogether and leave the contribution at what it is now; that is, at two-ninths.

The more this matter is examined the more evident it becomes that the contention of the Government will not bear looking at for a moment. It was never suggested by Sir Robert Horne, and it was in reply to him last year that the Minister of health made the remarks which I quoted on the Second Reading of this Bill, and so far as I know, it has never been suggested by anybody that the Government should come along and specifically take a capital sum of, say, £10,000,000 or £20,000,000 or more out of the accumulated surpluses of the societies, out of the £65,000,000. That has never been suggested so far as I am aware. The phrase "raiding the surpluses" was a form of words used to indicate a policy of relieving burdens at the expense of the approved societies. That mast have been so, because what Sir Robert Home urged was a reduction in the contributions of the employers and employed. He did not suggest direct relief to the State and if he had clone so he would never have put forward the proposition of taking a capital sum of £10,000,000 or £20,000,000. That is not what the State really wants in its finances. His idea was to give some annual relief and so far as the State is concerned it is annual relief that the Chancellor of the Exchequer mostly wants. Hence this Bill and the reduction in the State contribution.

Last year the Minister of Health did not merely condemn what is called raiding the surpluses, for he was also on the same Occasion very severe in his language about the reduction in contribution, which is what this Bill effects, and Sir Robert Horne twitted him with this in the debate this year, and not unnaturally, because last year the. Minister of Health used strong language about a proposal to reduce contributions. He said such a proposal would be a retrograde step and that he would view it with very great lam and concern. He also said: if you reduce the contributions you must add to the number of societies that will be deficient and decrease the number of societies that have surpluses. How then can the noble Viscount contend, when under this Bill the contribution is to be reduced by £2,800,000 per annum, that the surpluses are not affected? The Minister of Health himself, the representative of this Government, speaking in another place as I have just said last year, stated that the effect of reducing the contributions would be to decrease the number of societies that have surpluses. This Bill does reduce contributions; hence it will affect surpluses, and it will affect both present and future surpluses.

It must never be forgotten that this is a compulsory scheme which brings in three parties to the insurance, the State, the employers arid the employed, and for the State alone, without the consent of and without even consulting the two other parties, to cut down its own contribution is a definite violation of an agreement. The Government has no kind of right to default in this way and to cry off part of its bargain. I feel confident that is a point which must appeal to your Lordships. It is grossly unfair to the whole scheme. Last week the noble Viscount, if I may say so, entirely failed to realise the situation. He said that in 1920 the proportion of the State's contribution had been altered and therefore there could be no breach in doing the same thing now. But I pointed out to him that in 1920 the alteration was made by mutual consent, and as a matter of fact I may say that what was done in 1920 actually increased the State's total contribution and did not reduce it as this Bill does.

Leaving that, however, let me call attention to the very strange argument of the noble Viscount last week. He said that it did not matter that the change in 1920 was made by mutual consent and contended that, because a change had been made then, that was a breach just as much as this Bill is a breach of agreement. This is an astounding theory. If an agreement is altered by the mutual consent of the parties thereto there can be no breach. There may be an alteration, but there is no breach. Surely I am right when I say that breach means that one of the parties breaks an agreement without the consent of the other. That is what breach means and that is what this Bill does. Therefore there is a vital difference between this Bill and what was done in 1920.

I have already, in passing, referred to it, but I wish to mention that not only is there a breach of agreement but the societies were not even informed in advance of what the Government contemplated. Every previous change in the Insurance Acts—I quite admit there have been many—has been a matter of mutual agreement after long consultations and conferences between the Government and the societies. On this occasion, when this great blow fell upon the societies, no such conferences had been held. The Government had not even the common courtesy to acquaint the societies with what was going to be done until the very morning when the Bill was introduced.

I will take a further point. In the Government Actuary's Report on the original Bill in 1911 the following passage appears:— This margin in the contributions will represent a corresponding increase in the present value of future benefits, including allowances for cost of administration, since, on the assumption that the cost of these will work out at the anticipated figure, the societies will accumulate surpluses which will be employed to increase the benefits according to the provisions in the Bill. This Bill is a direct violation of those words because the margin in the contributions which was to accumulate surpluses to increase benefits is to be cut down. I wish to give one other quotation. It is on page 13 of a copy of the Government Memorandum explanatory of the original Bill of 1911 as passed by the House of Commons, and there appear there these words: But it is necessary to put every society on exactly the same footing: first, for the purpose of the State valuation; secondly, as regards its financial position if it takes the older lives into insurance. This has been effected in the following way. Inasmuch as the State has convenanted to pay two-ninths of the benefit for men every society will necessarily be in a solvent condition. Your Lordships will notice that it is here specifically stated that the State is covenanting to pay two-ninths and it is that covenant which is broken by the reduction of this two-ninths' contribution. The word "covenant" means to contract, to enter into a formal agreement, to bind oneself by contract. The State in this Bill is breaking its covenant. Therefore I say you have in what I have quoted full proof, as clearly as the words of the English language can establish anything, to demonstrate that this Bill is a breach of pledge or contract.

I must next emphasise this, that the word "surplus," with which much la has been made in all this controversy, is really a misnomer. The use of the word "surplus" is unfortunate. It really is a wrong term to use in describing the accumulated funds of the societies. It gives the impression that surplus means something additional to the scheme, but none of the so-called surplus could be so described, because the intention of the original Act of 1911 was this. It was not only to give cash benefits, but to give extended and treatment benefits, more commonly known as additional benefits. It would be more accurate to use, instead of the word "surplus, "the term" balances to provide schedule benefits." In the Schedule of the original Act there were fourteen addi- tional benefits. By subsequent legislation those fourteen additional benefits have been increased to nineteen, but even in the best societies the most that have been fully given by societies are fourteen benefits and, in the case of no society can there be a real surplus until the whole of the nineteen additional benefits have been fully given. So far from that having been done, the position is that some societies have not yet been able to give a single additional benefit out of the nineteen, and it is a tragic circumstance that this Bill makes it quite certain that they will never be able to give one additional benefit. That is a very serious matter.

These additional benefits deal largely with the preventive side of National Health Insurance and the preventive side is clearly expressed in the Government Memorandum explanatory of the original Bill in 1911. Dealing with the objects of the Bill that Memorandum said— The Bill is intended to effect as wide an insurance as possible of the industrial population against sickness and breakdown; it is also intended to be as far as possible a preventive measure operating to reduce the amount of sickness. The intention to make the preventive side, as soon as the funds permitted it, a major part of the operations of the scheme, is not only implicit, but it is expressed in the original title of the Act: "To provide for insurance against loss of health and for the prevention and cure of sickness," etc. Yet it is that part of the national health insurance funds, which would be available for these preventive or treatment benefits, which the Government propose to take for the relief of the taxpayer.

I must next point out, and this is very important, that there is a substantial case for doubting whether the actuarial basis of the Bill is sound. The Bill is based upon the Departmental Actuarial Committee's Report to the Royal Commission, but unfortunately there is ground for fearing that the whole basis of the Bill may be upset. That is a very important point. Under clause 1 of the Bill the State contribution is, as I have said, to be reduced by £2,800,000 per annum. In addition to this the approved societies will be charged with a further yearly payment of £1,900,000 for medical benefit. Those two items, making together £4,700,000 per annum, are virtually equivalent to the total annual surplus which is being earned and may indeed, with the way things are going, be more than the total annual surplus.

The Minister of Health himself, last year, when he was resisting the speech of Sir Robert Home for a reduction in the State contribution, warned the House that in future surpluses will probably decline. He said this:— Is it certain that we can count upon the repetition of the surpluses which were accumulating down to the end of 1923? I beg the House not to take this as by any means certain. I beg them to understand that there are some rather disquieting features on which we have information which render it very unlikely that in future quinquennials the surpluses will be anything like what they were. Those are his words, that in future quinquennials the surpluses will probably be nothing like what they were. This is further borne out by the reply given to the Royal Commission by the Deputy Government Actuary. What is the position? Since 1922 what I may call the sickness line has been getting worse. 1924 was worse than 1923 and 1925 was worse than 1924. Those are the replies by the Deputy Government Actuary himself, and I may say, in respect of certain societies representing several million of insured persons, that the sickness experience of 1926 is worse than the corresponding period of 1925.

My next point, which I can put very briefly, is this, that the effect of this Bill upon the surpluses is a breach of the understanding on which redemption by the sinking fund was extended in 1918. This is a very complicated matter, and I do not intend to weary your Lordships with it. It is sufficient to say that in 1918 a compromise was arrived at and an agreement made with regard to the reduction of the sinking fund for the redemption of reserve values. This understanding was set forth in paragraph 27 of the Ryan Committee Report, which said: The effect of this reduction in the income of the sinking fund would be to extend the redemption period. We are aware that objections may be entertained to this proposal on the ground that the present generation of insured persons have formed the expectation of an extension of benefits in 1932, but we consider that this disadvantage is more than met by the following facts. Then, among other advantages that will accrue, the Ryan Committee says: The scheme offers a substantial prospect to many societies of the provision of increased additional benefits at a date considerably in advance of 1932. The position, then, is made quite clear. There was a definite understanding that if the approved societies agreed to reduction in the sinking fund there was given a quid pro quo which was that additional benefits to a larger extent would come much earlier than would otherwise have been the case. Those were the expectations held out and now that the surpluses have accrued and the additional benefits have accrued, this Bill is going to deprive those concerned of a large part of the advantages which they were promised.

Before I leave this—I should like the attention of the noble Viscount to this point because it is a very important point which, as far as I am aware, has not been made previously—I should emphasise that no small proportion of the surplus of £65,000,000 is due to the diversion of the sinking fund made in 1918. I do not say what proportion, but the amount is probably in excess of £20,000,000. This large sum, whatever the figure may be, would, but for the 1918 agreement, have been applied to the redemption of reserve values and thus would have hastened the day when, under Section 11 of the Act of 1924, there could be a general extension of benefit.

I must just say a word about the Report of the Royal Commission in connection with this matter because reference has frequently been made to the Report of the Royal Commission on National Health Insurance. The Government has sought to justify in some measure what it is doing by certain quotations from that Report. As a matter of fact, it is quite impossible to substantiate any contention of this sort. On the contrary, it is made plain more than once that the Royal Commission did not contemplate any reduction in the Government contribution nor any diversion of any of the resources of the approved societies. This can be proved in a sentence or two. For instance, in paragraph 153 of their Report the Royal Commission say:— We consider also that the scheme should be self-supporting, subject to the payment by the Exchequer of its present proportionate share of the cost of benefits, and so forth. There is nothing there that justifies reducing the Government contribution of two-ninths.

The Royal Commission, in the same paragraph, make it quite clear that they would not be party to any action that would modify the proportion of two-ninths. What do they say about that? While we have felt hound here to explain the situation in which this result arises, we do not desire what we have stated to be regarded as qualifying the recommendations which we make in later chapters of our Report in regard to the application of any margin in the existing scheme. That margin was based on estimates formed on the assumption that the Government would continue to pay two-ninths of the cost of benefits. The position of the Royal Commission—I can put it in a very few words—was really this: They were much impressed by the fact that existing money benefits are insufficient. The benefits, however, could only be increased by larger contributions and that they were not willing to recommend. They therefore, apart from that, sought to do everything that was possible in the interest of the insured persons by recommending extended benefits. They recommended four such benefits. The first one, I am la to think, can still be given, but the second, which would have been possible but for this Bill, will not now be possible.

VISCOUNT PEEL

Which do you call the second?

LORD ARNOLD

That was the valuable provision of a small allowance to dependents of sick members of approved societies. That benefit will not now materialise. There is no economy here. This will only mean that in many cases people will be driven on the rates. You may relieve the taxes, but you will be making the rates higher. That appears to be the consistent and persistent policy of the Government. There is no real economy looking at the country as a whole.

Before I sit down I must say a word or two on the question of the hospitals. In the Third Reading debate the Parliamentary Secretary of the Ministry of Health, Sir Kingsley Wood, referred to a number of letters he had received from hospitals, in which it was stated that the passage of the Economy Bill would mean a big slice off their income. Commenting upon this matter, he said this:— It is a very unfortunate apprehension, and anyone who has put forward that statement is under a very wrong impression as to the position. He went on to say that during the next few years approved societies could increase their grant to hospitals should they so desire. That statement is most misleading as it stands, for it can only apply until the surplus as disclosed by the second valuation is exhausted. It cannot seriously be argued that the surpluses can remain the same if the funds of the societies are deprived of £4,700,000 per annum—that is, £2,800,000 owing to the decrease in the Government grant and £1,900,000 due to the increased cost of medical benefit. Where, then, is this money coming from? Obviously out of the funds of the societies. Consequently there will be less surplus, and in such societies—and I commend this to the noble Viscount [Viscount Knutsford] opposite—as are fortunate enough to have any surplus their members will have to determine to what it will be applied. Grants to hospitals will most certainly be reduced, and there is little doubt that in many instances they will cease altogether. This is all the more true in view of the fact that this Bill will drive a number of societies into deficiency and, as regards others, it will so reduce surpluses that it is safe to assume that; grants to hosptals, if there be any grants will be of the slenderest dimensions.

I want in conclusion to put two short points to the noble Viscount. The first is this last week I said that in the case of certain insured persons Parliament was by this Bill definitely putting them in a worse position as regards benefits. I referred to the case of widowers and unmarried men between the ages of 65 and 70, and said that in some societies these men would be worse off owing to this Bill, if they became ill for a long time. Therefore Parliament is in this Bill definitely breaking to their disadvantage the contract which these men have made under the ægis of the State, and I maintained then, and I maintain now, that such a proceeding ought to be condemned in the strongest language that the limits of Parliamentary expression permit. What did the noble Viscount-say in reply to me? In the first place he quite misunderstood the point, and then, when I put him right about that, his argument came to this, that it really did not matter because, after all, Parliament was breaking the contracts of only a small percentage of the men and not of all the men—

VISCOUNT PEEL

I did not say that.

LORD ARNOLD

That was the implication.

VISCOUNT PEEL

That is a very different thing. I said nothing that could be interpreted possibly in any such way, and the noble Lord is only trespassing upon the House because he knows that there is no OFFICIAL REPORT published.

LORD ARNOLD

I think that the noble Viscount's remark is quite uncalled for. There will be an OFFICIAL REPORT. I definitely stated in my speech upon the Second Reading—and the point was perfectly clear—that, in the case of some men, and I named widowers and unmarried men between the ages of sixty-five and seventy, their position was worsened, or at any rate might be worsened in the case of long sickness, by this Bill, and that, under the provisions of the Pensions Bill of last year, it might work out in some of these cases that they would not be in such a good position as they would have been in if this Bill had not been passed. What did the noble Viscount say? He tried to suggest that I had made that remark about all insured persons between the ages of sixty-five and seventy, though I had not said anything of the sort. In order to make it quite clear, I have myself referred to the notes, and find that I referred only to the case of certain unmarried men and widowers. When I corrected the noble Viscount he said that it applied to only some of the men. I say that the implication of that is that it does not matter if it applies only to some of the men. I think it is perfectly clear that this was the implication, and surely this is a most amazing position for a Conservative Minister to take up.

The noble Viscount seems to be unable to appreciate that there is a great principle at stake here, and from that point of view it does not matter whether the contract is broken in the case of a million men or of one man. It is the principle that is at stake, and that is the real point. I should like the noble Viscount to deal with that point specifically, if he will, in reply, and I hope that he will not evade the issue by an attack upon the Labour Party similar to that made by a certain noble Earl last week. I will not go into that matter now, but if the suggestion that trade unionists have broken their contracts were properly thrashed out it would be found to bear a very different interpretation from that which it has been sought to put upon it. But that has nothing whatever to do with this Bill, and I hope that we may keep to the issue that is before your Lordships' House.

I come to my last point. I made a quotation from the Chancellor of the Exchequer to the effect that, despite this Bill, the societies were far better off than they expected to be, chiefly owing to the rate of interest having gone up. I disputed that the societies, or rather their members—for that was what was meant—were far better off than they expected to be. As a matter of fact, they are worse off, because the rise in the rate of interest is more than neutralised by the rise in the cost of living. But even if it were the case that these men are better off, I pointed out what a dangerous theory it was for the Government to propound—namely, that, because people who have made an agreement with the Government are better off than they expected to be then the Government is at liberty to alter that agreement. I do not think that I am misrepresenting the argument. That is what it comes to, if it comes to anything.

I cited as an analogy the case of the 5 per cent. War Stock holders, who are far better off than they expected to be owing to the fall in prices and I asked the noble Viscount to tell me, and to tell your Lordships, what would be the abjection in principle to applying this new doctrine of the Conservative Party to the case of War Loan interest. If it is argued that because the health societies are better off than they expected to be that is a reason for altering an agree- ment, why should not the same reasoning be applied in the lease of War Loan interest? On what grounds of logic—I put it to the noble Viscount—could the Conservative Party, having argued one way on this Bill, argue another way if a proposal were made—I do not say that it will be—for the compulsory reduction of War Loan interest on the ground that War Loan holders, owing to the fall in prices, are better off than they expected to be? The noble Viscount said last week that the points to which he did not reply then would be replied to by him this week. I put this point to him specifically. It is a perfectly fair point, and I hope that he will deal with it in his reply today.

Amendment moved— Page 1, line 8, at the beginning insert ("As from the appointed day").—(Lord Arnold.)

THE FIRST COMMISSIONER OF WORKS (VISCOUNT PEEL)

May I call your Lordships' attention, first of all, to the terms of this Amendment, because I noticed that in the course of a detailed speech the noble Lord did not refer to the Amendment at all. I should like to point out that the Amendment as it stands upon the Paper means nothing, and accordingly, if your Lordships were to vote for it, you would be putting yourselves in the position of voting for something that, I am afraid, has no significance whatever. The noble Lord has merely put upon the paper the words, "As from the appointed day." The friends of the noble Lord who put this Amendment down in another place were, if I may say so, a little more businesslike and tidy than the noble Lord, because they did insert a date to which they wished the Bill, or rather the action of this particular clause, to be postponed. The noble Lord, however, did not take the trouble to put down any such date upon your Lordships' Paper and he says that the effect of his Amendment will be to postpone the clause altogether. I may say, incidentally, that such will not be the effect of the Amendment, for it will have no effect at all. I suppose that the object of the noble Lord really is to reject the whole clause and therefore to throw upon the finances of the country an extra charge of £2,800,000.

I must, if I may, congratulate the noble Lord on having appended to so slender an Amendment so substantial a speech in point of length. I congratulate him also on having restated quite correctly very nearly the whole of the speech that he made to your Lordships on the Second Reading. I dealt with most of these points, I am afraid at rather inordinate length, on the Second Reading and accordingly, with your Lordships' permission, I shall deal with them very rapidly this evening. His first charge was that I had been guilty of some very terrible Parliamentary error in accusing the noble Lord, in reading some statement, of being irrelevant. That is to say, there was a statement, which I think he said had been made by the Minister of Health, about raiding the surpluses. I am sorry to say that I have to repeat what I said, because his charge is that the Government are raiding the surpluses under this Bill, and it is difficult to answer such a statement except by saying that they are not. That is the fact. I pointed out again and again, on the Second Reading, that there is no attack on the accumulated surpluses of £65,000,000.

The noble Lord, to-day, rather shifted his ground. I think he slid away from the £65,000,000 rather rapidly, and then proceeded to suggest that the Government are raiding the surpluses in the future, because if the reduction of the Government contribution was made, surpluses would not be so quickly accumulated in the future as they have been in the past. As regards the £2,800,000, I suppose that is pretty obvious. I never pretended that the societies would not be better off if they got that sum than if they did not get it. The argument, therefore, of the noble Lord opposite comes to this, that you are, as it were, constructively, if I may use the expression, raiding the surpluses; that if the Government went on granting the contribution which they do not consider necessary to produce the benefits, the surpluses would be larger because of that extra contribution. Of course that is so, but that is a very different thing, and the societies know it is a very different thing, from raiding the surpluses which they have accumulated. I think that is the whole extent of the noble Lord's argument.

I should like to point, out, too, that really you must snake some deduction from the £2,800,000, because under the Bill £600,000 a year is released from the amounts that are added to the sinking fund, and the fractions taken away from the contributions of the employers and men in order to build up the sinking fund. In that way £600,000 is released and if the societies are for the future worse off in respect of Government contribution to the extent of £2,800,000, anyhow they are covered to the extent of £600,000 by the release from benefits. Therefore, when you are talking about £2,800,000, you ought more strictly to talk about £2,200,000, because that is one of the results from this Bill. I do not know whether your Lordships will thank me if I go into the rather long argument which I put forward last Thursday about the alleged breach of faith. I think the noble Lord rather modified that expression, but I think I have said before that the contribution of two-ninths was stated to be a contribution which would secure that those who entered into insurance at any age, whether sixteen, thirty, forty or whatever it was, would secure more than the full value of the benefits to be obtained from the contributions of employers and employed. That is so and that two-ninths was merely the expression in words, or writing if you like, of the way in which that promise was to be kept. That promise is still kept, because under the reduced contribution there is no question at all, if you look at the Report of the Government Actuaries, that the benefits and advantages to be derived by persons who enter into insurance will be greater than their contributions.

Again, the noble Lord has paid no attention to what has been done by the Government entirely outside their contribution of two-ninths, or one-seventh, as the case may be. He has not alluded to the fact that the income of societies is very largely increased by the extra interest on money. He used some argument about those people who get five per cent. instead of the three per cent. which was paid on borrowed money before the War. That argument does not affect the matter, because the Government borrowed money at the price of the day, but it is a definite advantage which the societies have got. Again, you have also the fact that £24,000,000 has been contributed by the Government to the societies wholly outside any sort of bargain, covenant, contract or agreement, or whatever may be the sort of phrase used by the noble Lord, and if you are going to construe this as a strict agreement, or strict bargain, the State would have a perfect right to say: Before we go on paying two-ninths give us back the £24,000,000 which we granted to assist the funds of the societies, as regards medical benefit and in many other ways

I do not know whether the noble Lord wants me to go into the small points which he made, but I would further point out the immense advantages accruing to the societies from the Widows, Orphans and Old Age Pensions Act, which takes away from the societies the whole burden of paying benefits to persons between 65 and 70 years of age, which is the period when the heaviest charges are laid upon the societies. I think he said that that was an unfair thing to do, because these people got less advantage under that Government Bill than they got under the Insurance Act. Then the noble Lord said: "Oh, but they did in certain cases," and I replied: "Ah, but that is a very different thing." When I said that, the noble Lord drew from my remark the extraordinarily unfair inference that I was approving of sonic breach of contract. I was only drawing attention to the fact that he had made a correction—a very grave and I think very wise correction—of the general statement which he had made as to the disadvantages under which people between 65 and 70 years of age were placed if they shifted from the insurance scheme to the scheme under the Widows, Orphans and Old Age Pensions Act. I pointed out at that time that the. advantages which they got were more than three times the advantages which they got under the Insurance Act.

Of all that the noble Lord tells you nothing at all. He omits the tremendous advantages given by the Government outside of any agreement, and the tremendous relief given to the societies by this Old Age Pensions Act, the capital value of such relief being put at £37,000,000. He entirely omits the advantages they get from the increase in the average price of their investments, and he settles down on this one point: that the societies, in spite of these immense advantages, are going, according to him, to be ruined because, on the carefully formed opinion of the actuaries, the Government contribution is to be reduced from two-ninths to one-seventh. That really is the general defence of the whole clause, but there were one or two further points made by the noble Lord. He said that, when the Bill passed, the subscriptions, as he called them, to hospitals will cease.

LORD ARNOLD

I did not say so.

VISCOUNT PEEL

Did you not say they would be diminished?

LORD ARNOLD

If the noble Viscount wishes I will read it all to him, but it is rather long. I did not say, however, that the subscriptions would cease.

VISCOUNT PEET

So far from ceasing or being diminished—and if they do not cease or are not diminished I think there was no point in the noble Lord's statement—from 1926 to 1931 the grants to hospitals would be more than doubled, and there is no reason to think that after 1931 those grants would be materially reduced. That, I think, answers the point of the noble Lord, whatever the exact point may have been, about the hospitals.

Broadly speaking, the whole effect of this provision is that the advantage to the societies is now reduced by £2,200,000; but, against that, you have to set the enormous advantages they have received from the action of the Government itself, and, as all the people who are insured at any age under this Act will be secured in getting benefits greater than they have contracted for, as it were—more, that is to say, than the value of their contributions—surely it is a fair thing for the State to say: "We have in the other way so immensely improved the position of those particular classes to whom this Act applies that we are justified, when we are not depriving them of any benefit, in slightly reducing the Government contribution as some quid pro quo, as sonic set-off, against the great additional advantages that will be conferred on those societies by the action of the Government itself."

LORD ARNOLD

Before we pass on to further Amendments, I should like to say a few words in reply to the noble Viscount. He began his remarks with certain criticisms of the form of the Amendment. That really is a very minor matter. As he knows, the Amendment was put down in order that a general discussion on the clause could take place, and the Amendment was in the same words as those put down in another place. But it really does not matter what the particular form of the words was; the object was to raise a discussion. The noble Viscount said it gave me an opportunity of repeating almost entirely my Second Reading speech. I have laced hastily through my notes, and a statistical estimate shows me that, so far from that being the case, I only used today—and that in a different form—about one-eighth of the arguments that I used upon the Second Reading. About seven-eighths of my speech was absolutely new, and I think it is a rather strange thing for the noble Viscount to say that I repeated my Second Reading speech. And, as regards the one-eighth, there were two points which I wanted the noble Viscount to deal with, which he said he would do, but which, as a matter of fact, he has not done, at any rate as regards one point. I particularly wanted him to reply to the point about War Loan interest. He has again disregarded it, and we can only conclude that the Government lets that go by default.

The other point which I brought up today, and which was referred to last week, has, in a sense, been dealt with by the noble Viscount. That was the point about the effect of this Bill upon certain widowers and unmarried men between the ages of sixty-five and seventy. Even here the noble Viscount has not appreciated the position. Once again he said precisely what he said last week. I never at any time said, or implied, that the whole position of persons between sixty-five and seventy was worsened by this Bill. The point I made is one, I think, which would appeal to the noble Lord, Lord Banbury of Southam. It was that if you had a certain number of people, however small, who were definitely put in a worse position owing to this Bill, in a contract which they had made with Parliament, that was not a right thing for Parliament to do.

Let me go into detail on that, because the noble Viscount did not give the figures. Under the Pensions Act a widower or unmarried man will get 10s. a week from sixty-five to seventy, but if such a man became unwell, say when he was sixty-six, as many do—became what is called permanently disabled—for the first six months in the case of a good society he will. get, not 10s. but 20s. a week; and after that he will get 10s. a week. I wonder what the noble Lord opposite would say if some such proposal as that now made were made by a Labour Government in regard to contracts. I think he would agree that it was not a right thing to do. The noble Viscount has not really touched that point. He now says that the general mass of the people get more under the Pensions Bill than they do tinder this Bill. I am not denying that. I am dealing with this specific case, and I think it is a point which is worth your Lordships' attention. The noble Viscount also says that the societies are relieved of the whole charge of persons between sixty-five and seventy. I think that is incorrect. I think he will find that they are relieved of cash benefits, but are not relieved of additional benefits.

The main controversy, of course, turns round the question of surpluses. I went over it again and again, and I am not going to repeat what I have already said. But the noble Viscount did not appear to appreciate what I said twice or three times—certainly twice—that the effect of this reduction in the Government contribution will be not only to slow down the accumulation of future surpluses, but will be in some cases to affect existing surpluses. That is the position. It really is no use, therefore, for the noble Viscount to say that existing surpluses are not touched. I will tell him in detail how the position might work out. It may be that if the actuarial assumptions of this Bill are justified—they may be, though I doubt it very much—that the total present accrued surpluses of societies in the aggregate will not be decreased. But that result will only be attained by reason of some societies having spent or entrenched upon their existing surpluses—that is the word I should like to stress—such spending being balanced in the aggregate by surpluses yet to be made in the case of other societies. So the point I wished to make is mathematically correct. In certain cases the surpluses of existing societies will be affected.

On the question of the hospitals, which the noble Viscount referred to, I did not say that contributions would immediately cease. On the contrary, what I said was that the Parliamentary Secretary's statement that the hospitals would receive their money could only apply until the surpluses disclosed by the second valuation are exhausted. I then pointed out that, after that, in some cases the subscriptions would cease altogether, and that probably in all cases, in view of the way in which surpluses will be cut down, the future subscriptions would be of the slenderest dimensions.

The noble Viscount referred to the advantage which the societies have in the increased rate of interest. It really is an extraordinary thing to my mind that the Government keep bringing up that point again and again apart from its corollary, which is that so far as the members Of the societies are concerned—and that is all that matters—any advantage which comes from an increased rate of interest is neutralised, and more than neutralised, by the increased cost of living. So that for practical purposes there is nothing whatever in the point. We have other important Amendments to come, and I particularly wish to hear the remarks of my noble friend Lord Buxton on the unemployment insurance provision, so I will not speak longer now, and I will reserve any other observations I have to make until a subsequent speech.

LORD ERNLE

I should like to say a few words upon this subject, yet when an agriculturist begins to talk finance I think one naturally asks for his credentials. When this Act was passed I started a federation of rural villages which is now a very important body, and I think I am expressing the view s of a federation which numbers several thousands of villages and hundreds of thousands of assured members. I followed the noble Lord's speeches with considerable interest because on the practical working of those societies I do not think, if he will allow me to say so, that he understood the last point that he was making.

The whole structure of the finance of the Act was based on a 3 per cent. return for money. Therefore, now that the societies can get practically 5 per cent. the gain is very large, so large that it would probably almost allow the Govern- ment to reduce its subscription from two-ninths to one-seventh in the case of men and one-fifth in the case of women. Besides that, there are certain margins of safety which were left when that Act was brought in, which are so wide that even after the Government has reduced its grant you will be able to carry out the scheduled time-table of the original Act; that is, the promised time-table. What you will not be able to do is to provide the accelerated service which might have been carried out had the Government continued the grant at the rate at which it was originally made. But the question of promise comes in there. If you carry out the scheduled time-table, that is the promise and the Government will be able to do that.

I dislike this Bill as cordially as the noble Lord who has opposed it so strongly. I believe the societies could make better use of the money. But to say that it is raiding the surpluses, that it will ruin the approved societies, or will materially prejudice what I think is the roost useful and beneficial measure that I remember as being passed in my lifetime, I do not think is correct. Were it, as the noble Lord stated it to be, an attack upon the approved societies, I think we should have heard a great deal more about it from those large friendly societies, which are bodies of enormous importance, both in numbers and in wealth. I do not think you will find that they like the Bill. No one can like the Bill. It is a disappointing Bill to both sides of the House. It is disappointing in the paltry amount of the economies secured and in the sources from which those savings are effected. For all that, to say that it will destroy the approved societies of this country or in any way seriously prejudice the punctual fulfilment of the promises contained in the original Act, I believe would be a great mistake.

On Question, Amendment negatived.

Clause 1 agreed to.

Clause 2:

Amendment of s. 83 of principal Act.

2.—(1) Subject to the provisions of Section eighty-three of the principal Act there may, out of the funds out of which benefits are payable under the principal Act, be applied for the purpose of meeting the cost of medical benefit, the administration expenses of insurance committees and any expenses incurred by the Minister in connec- tion with the administration of benefits a sum at such yearly rate as may be prescribed, but not exceeding thirteen shillings per year in respect of each of the total number (calculated in the prescribed manner) of the persons who are entitled to medical benefit as being or having been members of an approved society, and there shall be paid for each year to insurance committees on account of the cost of medical benefit and their administration expenses, and to the Minister on account of expenses incurred by him in respect of the administration of benefits, sums not exceeding in the aggregate the sum applicable as aforesaid, and not exceeding as respects the administration expenses of insurance committees the sum of sixpence, and as respects the expenses of the Minister the sum of threepence, in respect of each of the total number aforesaid: Provided that if the aggregate sum paid for any year to insurance committees and the Minister under this section in respect of each of the total number aforesaid is less than the sum applicable as aforesaid in respect of each of the said total number, the balance shall be carried forward and be treated as being applicable as aforesaid in any subsequent year.

LORD ARNOLD moved to omit from subsection (1) the words "and any expanses incurred by the Minister in connection with the administration of benefits." The noble Lord said: In moving this Amendment I shall speak only for one minute. I have already made a considerable draught upon your Lordships' time and there are, as I have said, other Amendments which deal with quite other matters. This clause increases the charge upon the societies by a very large amount; in fact, as I have said in my previous speech, by £1,900,000. It increases the amount to be paid by the approved societies for medical benefit by 3s per member. I know the noble Viscount may say that the societies agreed to this and in a sense that is true. But they never agreed to it if at the same time the Government was going to cut down its contribution of two-ninths and reduce their income by £2,800,000 a year. It does not require very much knowledge of finance to see that if at the same time your income is to be reduced by £2,800,000 and your expenditure increased by £1,900,000, it is a serious matter, and this will be a serious matter for the societies. I will not go into detail as to how far the Government has been in order in its various dealings with the doctors before, but will content myself with what I have said. I beg to move.

Amendment moved— Page 2, line 26, leave out from ("committees") to ("a") in line 28.—(Lord Arnold.)

VISCOUNT PEEL

The particular clause which the noble Lord opposite desires to amend provides for placing on the funds of the approved societies as from January 1, 1927, the balance of the cost of medical benefit up to a maximum of 13s. per insured person per annum. I stated on the Second Reading of the Bill that this extra charge of 3s. had, of course, to fall upon the funds of the societies because a particular fund, the Suspense Fund, on which this extra charge had been laid, had been practically exhausted. There was, therefore, so fund from which this money could be drawn, and it had to fall upon the funds of the societies. The societies, indeed, were very fortunate in that for several years this charge did not fall upon their funds but upon the Suspense Fund. The proposal in the Bill is in accordance with the recommendations of the Royal Commission on National Health Insurance, and, as the noble Lord said, has been accepted by the Consultative Committee representing the approved societies of all types. The only point made in answer to that by the noble Lord was that had they known about other charges they would not have agreed to it. All I can say is that the approved societies have not breathed a word upon that point since the introduction of the Finance Bill. They have very justly and very properly abided entirely by the agreement and assent they then made.

What would happen if this Amendment was carried? The effect would be that from January 1, 1927, a residual liability of about £2,000,000 for the cost of medical benefit would be left and there would be no provision for finding the money with which to pay that £2,000,000 from any source. I have no doubt the noble Lord does not really intend to press this Amendment because it would leave £2,000,000 in the air with no fund, no charge, no account from which it could be paid It obviously has to be paid, and I ask your Lordships to adhere to the clause as it stands in the Bill.

On Question, Amendment negatived.

Clause 2 agreed to.

Clause 3 agreed to.

Clause 4:

Amendment of s. 68 of principal Act.

4.—(1) As from the first day of January, nineteen hundred and twenty-seven, such part of any sums falling to be dealt with under subsection (2) of Section sixty-eight of the principal Act as represents interest shall, instead of being so dealt with, be applied from time to time in defraying the amount, as estimated by the Treasury, of such part of the cost incurred by Government Departments in connection with the provision of insurance stamps and cards and the sale of insurance stamps as may be attributable to national health insurance.

(2) Such part of the sums which under the said subsection (2) are to be carried to the Central Fund as may be required for the purposes specified in this subsection, instead of being carried to that Fund, shall, after deducting therefrom the sums applied under the preceding subsection, be applied for those purposes as follows:— (c) In the third place, in the event of the interest mentioned in subsection (1) of this section being insufficient to meet the costs to be defrayed therefrom in accordance with the provisions of that subsection, the said sums shall be applied in payment of the deficiency.

VISCOUNT PEEL moved to leave out subsection (1). The noble Viscount said: The Amendments standing in my name on this clause run together. I do not think there is any opposition to the proposal. I suggested that I would move such an Amendment during the course of the Second Reading. All it means is that among the charges that are to fall upon the Stamp Fund the Government claim is to be the last claim instead of the first claim. The other accounts that have a call upon this particular fund, like the account for persons who fall out of insurance through unemployment, and the Drug Fund, are to have precedence. I do not think there is any opposition and I beg to move.

Amendment moved— Page 5, lines 3 to 13, leave out subsection (1).—(Viscount Peel.)

On Question, Amendment agreed to.

Amendments moved—

Page 5, line 14, leave out ("the said")

Page 5, line 15, after ("(2)") insert (" of Section 68 of the principal Act")

Page 5, lines 18 and 19, leave out ("after deducting therefrom the sums supplied under the preceding subsection")

Page 6, line 1, leave out from ("place") to ("the") in line 5

Page 6, line 6, leave out ("in payment of the deficiency") and insert ("from time to time in defraying the amount as estimated by the Treasury of such part of the cost incurred by Government Departments in connection with the provision of insurance stamps and cards and the sale of insurance stamps as may be attributable to national health insurance").—(Viscount Peel.)

On Question, Amendments agreed to.

Clause 4, as amended, agreed to.

Clause 5:—

Transfer from Navy, Army and Air Force Insurance Fund to Exchequer.

5.—(1) There shall, in accordance with directions of the Treasury, be transferred to the Exchequer from the Navy, Army and Air Force Insurance Fund constituted under the principal Act the sum of one million one hundred thousand pounds.

LORD ARNOLD moved to leave out subsection (1). The noble Lord said: The noble Earl, Lord Oxford and Asquith, has an Amendment down on this clause, and I was hoping that he would have been here, in which case I should have had great pleasure in giving way to him. As your Lordships will agree, he made a very powerful appeal to the Government in regard to this matter last week. For my part I am going to say very little about it, though not because I am not taking strong exception to it. I am very wishful not to repeat anything which I said last week. As I have already observed as regards my previous speech it was all practically different from what was said last week. The points about this matter are very simple. I think it is in some ways the worst clause in the Bill. There is in this Reserve Fund of the Army, Navy and Air Forces an accumulated surplus of £1,500,000 and the Government come along and say: "We will leave you £400,000 and take to ourselves £1,100,000." I think the noble Earl, last week, seemed to think the total of this amount came in owing to the casualties of the War. Part of it has come in that. way, but, in the Government Paper that has been issued, it will be seen that there are other sources from which this money has accumlated—five or six sources in all. But wherever it has come from, there it is, and there was a very strong feeling in another place that, although many of the original men under this scheme were now dead, it was, so far as their part of the money was concerned, a clear case for applying the doctrine of cy-près.

There are so many equivalent purposes to which the money could be put. The noble Lord last week spoke of that, but I do not recollect whether he specifically mentioned the consumptives. There are many men, unhappily, who have been discharged from the Army who are now suffering from consumption and whose consumption is not directly traceable to the War. Consequently they are not getting an adequate War pension. The position of these people is extremely sad and I cannot help thinking that it would have been a gracious act on the part of the Government if they had used some of this money to help these men. There were, on the Government side in another place, members who got up and supported that that should be done, but the Government refused to yield on the point. This is all the more surprising, because this is one isolated act. This is not going to bring the Government £1,100,000 every year; it simply gives them that sum now. It is, in fact, a capital sum. As the noble Lord said last week in a most powerful appeal, is it worth while in these days, even for the sum of £1,100,000, to create all the bad feeling which this has done and necessarily will do?

There is a further feature which was not put last week. I think this ought to appeal to your Lordships. So far as the men still in this Fund are concerned, Army discipline prevents them making any protest or any representation. As far as I understand it that is so, and I think they are put at a very great disadvantage in regard to it. There is no doubt whatever that the Government would never have come along and done this if they had not been hard up, but the fact that the Government are hard up does not really justify what is proposed. I beg to move.

Amendment moved— Page 6, lines 7 to 11, leave out subsection (1).—(Lord Arnold.)

LORD BANBURY OF SOUTHAM

As far as I understand the noble Lord who has just sat down, he has not in any way stated that there is any legal pledge or liability on the Government which would prevent their doing that which they are going now to do. I also understood from the speech of the noble Earl, Lord Oxford and Asquith, the other day, that there was no legal liability upon the Government and that there was no charge of breaking any contract or doing anything illegal that could be made against the Government. I may have been mistaken, but that is how I understood it. I now understand the noble Lord to say that it is only a small amount and that the people for whom he is speaking would like to get it and, therefore, as it is only a small amount, it is a mistake to take it away. The noble Lord also says that it was because the Government were hard up that this is being done. I would point out to the noble Lord that the country is now poorer than it has been for very many years and that economy must be practised. Economy always must be unpleasant to certain people. As long as you do not break any contract or commit any illegal thing, it does not matter how small the amount is, that amount should be taken and economy should be exercised.

THE UNDER-SECRETARY OF STATE FOR WAR (THE EARL OF ONSLOW)

I should like to make one explanation with regard to this. I do not think the matter seems to have been quite understood, judging from the debate that took place on the Second Reading. In the Bill of 1911 it was recognised, in clause 59 I think, that there might be a certain number of people discharged from the Army or Navy—there was no Air Force in 1911, but it is now included—who would not be in a position to join approved societies on account of the state of their health, and to meet those cases a fund was established to provide ordinary benefit for them. I say ordinary benefit advisedly, because—and this is a very important matter—it was specifically laid down in the, Act that such men would not be entitled to any additional benefit. There is another point which, I think, is somewhat misunderstood. The obligation to keep the fund solvent—and it is a statutory obligation—lay wholly upon the Government. Before the year 1919 there was an arrangement whereby a reduction was made in pay, but since 1919 the whole of the contribution—that is to say, the contribution of employer and employed—has fallen upon the Government entirely.

Now before the War this fund was practically working level. It was just keeping itself solvent. But during the War it increased very rapidly indeed and now, as the noble Lord has stated quite accurately, there is in the fund a sum of £1,500,000. The reasons for that are several, as he has said. One of them I think is stated in the White Paper laid on the Table of your Lordships' House. That reason was that a greater rate of interest was earned by the fund than was anticipated in 1911 and the cost of administration was very much below the original estimate. There is another reason and that is that the contributions to this War fund accrue entirely to the principal fund. In the case of contributions to approved societies—and this fund is not in the least on a par with the funds of approved societies—a certain margin is carried to a contingency fund. In this case there is no contingency fund and all the Government contributions, which are the only contributions, accrue to the main fund.

There is another point which, of course, was never contemplated in the 1911 Act and I think it is really the main cause of the surplus. Vast numbers of men who joined the Army at the outset of the War and during the War were not in insurable occupations at all, but automatically Government contributions were paid for those people and so, of course, the fund rose very considerably. Those men were not in insurable occupations when they joined the Army and when they came out of the Army they did not go into insurable occupations. Such an enlistment, of course, was never contemplated in 1911. Contributions in respect of those men went automatically into the fund. Then, the result of casualties in the War has to be taken into consideration. The reserve accruing therefrom has also gone into the fund. That is how the fund was built up and something has got to be done with it.

At present there is no legal power whatever to deal with this fund except to keep it solvent and to relieve the Government of contributions. That is the only method in which the fund can be used now. Therefore we propose under this Bill to use part of the surplus to bring the position of the 23,000 men now on the fund up to the position of their comrades who are able to join approved societies.

At the present moment no soldier, or sailor or airman can obtain additional benefit when he leaves the Army until he has been for five years a member of an approved society. Therefore, in another part of the Bill, we make provision to allow a man's Army service to count so that in the vast majority of cases he will be entitled to additional benefits immediately he joins an approved society on leaving the Army. It is estimated that 400 men a year go out of the Forces and on the fund and in order to enable them to enjoy additional benefits immediately on leaving the Army it is calculated that a sum of £100,000 is necessary. £100,000 is taken from the surplus for that purpose.

In addition to that, we propose to provide a man on the fund with additional benefits at once up to the average conferred by the approved societies. That will involve a charge of some £300,000. By that means we deal with £400,000 of the £1,500,000. Now I come to the problem of dealing with the remaining £1,100,000. It has been stated that this money is in the same position as the fund of an approved society, but I venture to hope that when I have given your Lordships a few words of explanation you will see that that is entirely a misapprehension. In an approved society there is no guarantee as to benefits. The benefits depend upon the finances of the society. In the fund, as I have explained, the ordinary benefit is guaranteed and now by the changes we are making we guarantee additional benefits bringing those men who are on the fund up to the same position as members of an average approved society. This is an important point. If we have made a mistake in thinking that the £300,000 provided will cover this, and it is found that more money is required, the State will have to pay the extra money, for the whole of the contributions in respect of soldiers are paid from Government funds.

It has been said that this surplus, morally if not legally—I think the legal position is admitted—belongs to the men who are members of the fund. That, again, I think is a misapprehension. It is not these men who have contributed this £1,100,000. That money comes from the State and it comes largely and mainly from contributions in respect of those who were not in insurable occupations who passed into the Army and out again, and as the result of War casualties, as well as for other reasons. The noble Lord, in his speech in moving the Amendment, said that these 23,000 men are in very hard case because they have no other source to which they can look for assistance. I think every member of your Lordships' House will agree that this would be a very distressing fact if it were so, but examination shows that it is really not the case. Examination shows that from 5 to 10 per cent. of these 23,000 men are in receipt of the full 100 per cent. War pension and the vast majority of them are receiving disability pensions of one kind or another. It is admitted that those on the fund are suffering from some disability or other, which makes them unable to join an approved society, and it is in this way that their disability should be provided for and not through this particular £1,100,000.

if we were to utilise this £1,100,000 in the manner suggested, that is to say, entirely for additional benefits for these particular 23,000 men, we should be giving them additional benefits nearly 400 per cent. greater than the average of any member of an approved society. I say emphatically that everybody in your Lordships' House has the greatest possible sympathy with these 23,000 men who are unable to join approved societies and we should like to do everything possible to help them. The proper method of relief, however, is not by taking this particular £1,100,000 and giving it to these particular 23,000 men, but by a considered scheme of pensions whereby each case is dealt with on its merits.

I would like to add this—I do not think the point has been made before in your Lordships' House; at least I have not heard it—that these 23,000 men are a very small proportion of those men who were on the fund, as it is called, five years ago. There were then 200,000 men; that is to say, 177,000 more than are on the fund now. It is largely from the contributions of those men that the surplus has arisen. These 23,000 men remain in insurable occupations and they are paying contributions, but the other 177,000, for some reason or other have passed out of insurance, are not on the fund, and it is impossible to say exactly what has be- come of them. I think your Lordships will agree that it may fairly be lamed that these 177,000 men have some right to benefit under any scheme for disposing of this wartime surplus, which was so largely created by them. If that should be your Lordships' opinion—as I think it must be—there is only one way in which they can benefit, and that is by receiving the same relief in taxation as ordinary members of the community; and that is done by taking this £1,100,000 for the purposes contemplated in the Bill.

LORD HORNE

As an old soldier and one who has been connected With the Army all my life, and, in recent, years, with the organisation which your Lordships all know so welt, the British Legion, may I appeal to His Majesty's Government to administer this fund, or rather the balance of it, as liberally as they possibly can? Although, as the noble Earl has said, a proportion of the 23,000 men are in receipt of full pensions, or at any rate of some pension, I can assure him that there are a large number of men who have no pension at all, though they are really suffering from disability due to the War. They have failed, in some cases for good reasons and in other cases for bad reasons, to make good their lam to a pension. I should be the last person in the world to say a sword against the administration of the Ministry of Pensions. I think that it has been most liberal, and that they have dealt with the cases before them with the greatest sympathy and in the most practical manner possible. But there are a number of cases in which a man's disability has not perhaps matured for some years after the War, has advanced gradually and is still advancing, and it is on behalf of those men in particular that I would appeal to His Majesty's Government to act with the greatest liberality.

Let me give an illustration of the class of men to which I refer. I am thinking at the moment of a man who was a regular soldier, was discharged and joined again at the outbreak of the War and rose to the rank of officer. He came back to civil employment and was employed in the police, but gradually his health began to give way. I knew of him well because he had been in my family for years. There had been no signs of tuberculosis or of anything of that sort in his family, but he gradually became unfit for his employment and he is now going down hill every day. I took the greatest trouble to try and trace out for him the source of this disability. He admitted to me that he had been gassed and, like many a good fellow, he took no notice of it at the time and there was no record in his documents. The result was that one was unable to make good any claim for attention. I do not put this particular case before your Lordships as one that requires immediate attention or with any charitable intention, because I am happy to say that the man is in good employment and in no immediate want, but he is an illustration of a type of man which has suffered in many cases, is suffering and will suffer more every day. I know that the Government are in great difficulties at present in raising money to make two ends meet, but I would ask them and your Lordships to remember that the same stringency applies in the case of these men who have hardly been able make two ends meet during the last few years and for whom the possible increase in the cost of living makes things very much more difficult.

I would also ask if it might not be possible for His Majesty's Government to make it plain exactly why it is that, they are making this use of the fund. Speaking for ex-soldiers and, I am sure, for ex-sailors as well, I can say how difficult it is to make them understand exactly how it is that this money, which they are rather inclined to look upon as a fund to which they have contributed to a very large extent, can in equity be taken away from them. Regimental officers have always been very careful, in administering funds over which they have had control, to devote them entirely to regimental purposes. I would ask His Majesty's Government in allocating this fund, to do so with the greatest possible sympathy for these men, who did their best for their country and have suffered in consequence.

EARL BEAUCHAMP

I must confess that I should not have intervened in this discussion on any ordinary or trivial Amendment. Our thoughts are elsewhere and we are anxious to do nothing that can in any way embarrass His Majesty's Government. I do feel, however, that a very strong case is to be made out for this Amendment. I, for my own part, would not care to put it on any lega basis. I would be perfectly ready on an occasion of this kind to make an appeal ad misericordiam and to say that., if for no other reason, it is because of the hardships which certain soldiers are without doubt suffering at the present time that the whole of this money should not be dealt with in the way that His Majesty's Government propose. The existence of the fund is admitted. What I should very much have preferred to see would be that His Majesty's Government should devote it to some analogous purpose, some purpose resembling as closely as possible the purpose for which the fund was originally intended.

Your Lordships cannot have heard without emotion the speech that has just been made by the noble and gallant Lord from personal knowledge of the want in which so many of these soldiers are at the present moment. I would go further and say that there is no one of your Lordships with any acquaintance amongst soldiers, and especially those who have left the Army, who does not know that there are plenty of hard cases that are not covered by the Pensions Act—pray do not let it be thought that I am attacking the administration of the Pensions Ministry any more than the noble and gallant Lord who has just spoken—and I will add that there are cases which could not be covered by any Pensions Act. But I should very much have liked to see these large sums of money set by as a fund from which donations might have been made from reasons of clemency to those hard cases which we know exist all over the country and are not at present covered. I shall not follow the example of the noble and gallant Lord by quoting examples from the county with which I am more particularly acquainted, but I do venture to say that in regard to this fund, which is partly, if not wholly, due to the savings of these people, if there are not heirs at law there are at any rate heirs in equity to be found, and it is to them that I would venture to direct your Lordships' attention.

I am afraid that it is too late to make any appeal to His Majesty's Government, but I would only say that it does seem to me to be a misfortune that nothing should have been done in this direction, that no attempt should have been made, with the money which was at their command and which was originally in- tended for the benefit of this particular class, to assist similar people who are in difficulties to-day. A new fund of that kind might, I think, have been instituted by the Government, and might, indeed, have done a very great deal of good in a great many hard cases. Unfortunately, the exigencies of the public service and the needs of the Treasury have conquered those other tendencies, but I am afraid I cannot advise the noble Lord who moved the Amendment to proceed to a Division. I am afraid that a Division would not be representative of the feeling in this House. So many of my political friends have been prevented from attending this afternoon by the political friends of noble Lords who sit on the Front Opposition Bench that a Division would not be representative of the House, and therefore I cannot advise the noble and gallant Lord to divide the House.

VISCOUNT PEEL

I listened, of course, as I am sure all your Lordships did, with great sympathy to the observations made by the noble and gallant Lord on the Cross Benches, and of course nobody is more fully entitled in this House than he is to speak with knowledge of the conditions of the soldiers and those who served in the War. I was not perfectly clear as to the case he cited—whether it was the case of a man in insurable employment or not. The case which I think he raised was as to the difficulty of men who had been really injured in the War by being gassed, or otherwise, and who found themselves later on suffering in health, of attaching their illness to some injury received in the War. Many of them are fine men who did not like to make any fuss or trouble about being gassed, or so on, and suffer through their own unwillingness in a difficult time to make much of their own illness. That, I think, was the case more or less which the noble and gallant Lord cited. I was wondering myself whether it was a case for possibly some amendment of the Pensions Act, which might cover cases of that kind, because I was not at all sure whether such cases fell within the four corners of this particular clause, which deals with men in insurable occupations.

Turning to what was said by the noble Earl, he suggested, I think, that this particular fund which had so accumulated should be set aside as a fund out of which grants might be made. I think there is some objection to dealing in this way with a fund which has been accumulated for some specific and special purpose, because your Lordships will see that this fund stands in a peculiar position. As my noble friend has said, it has nothing whatever to do with approved societies. Where there are approved societies, if they have losses they have either to reduce their benefits or increase their contributions. This is not in the ordinary sense an approved society, but simply an undertaking by the Government to grant certain advantages and benefits to those soldiers who, when they pass out of their required service, cannot join approved societies. They rely on this fund, and the only arrangement that was made was that they should get the ordinary benefits.

Now it was considered very carefully what should be done with this money. I do not wish to rely on strict legal argument, but I think it can be easily said that the claim of these men now on the fund should not be extended to the accumulated fund, but the Government had decided to extend the benefits of these men, and, in addition to the benefits secured by the agreement under which the fund was set up, the Government agreed to extend those benefits to the average additional benefits enjoyed by persons who would be in approved societies. That is to say they really put these men in the same position as if, during their time in the Army, they had been members of approved societies. Your Lordships must remember that the whole of the contribution is now paid, and for some years has been paid, by the Government. It is only a matter of calculation how much the Government should contribute in order to make the fund secure and solvent for its purposes. If the Government are wrong in their calculation, they will have to pay extra to make up the fund. Really it is very largely a matter of book-keeping.

What the Government might quite well do is to say: We have been contributing to the fund more than sufficient to secure the benefits, and we will reduce our contribution. The Government have only said: Because this is a hard financial time for the country, instead of reducing our contribution for the next eight or ten years we will, as it were, take this £1,100,000. That is the whole business and I do suggest to the noble Lord and to the whole House, which is extremely sympathetic in such cases, that it is rather better not to deal in this way with a fund collected for one specific purpose, but to find other ways of assisting these soldiers, possibly, as I have suggested, by some amendment of the Pensions Act. I hope the noble Lord will not press his Amendment.

LORD DANESFORT

I had no intention of intervening until I heard the speech of the noble Viscount. We all feel, as he said, the utmost sympathy with cases such as that to which the noble and gallant Lord referred—namely, the case of the man who fought for us and who has suffered, and who, under the existing Pensions Act, is unable to obtain a pension. If the Government will give us, I will not say an undertaking, but some sort of assurance, that an endeavour will be made to meet the eases of such men by some amendment of the Pensions Act, I think it will give great satisfaction to many members of this House. I quite see the difficulty of paying these men out of the fund now under discussion, but for the moment I cannot see any real difficulty, or objection, to so amending the Pensions Act as to meet these cases of really great hardship. I am hopeful that the Government, without giving a strict undertaking, will be able to give an assurance of some sort.

THE LORD PRIVY SEAL (THE MARQUESS OF SALISBUSY)

I need not assure your Lordships that the speech delivered by the noble and gallant Lord on the Cross Benches appealed to all of us, and I am sure not less to me than to anybody else. I am sure we are delighted to do anything we can for these gallant soldiers—we know how deeply they are to be commiserated with—but the matter is surrounded with difficulty. My noble friend Lord Danesfort has just asked whether the Government will promise to look into the question from the point of view of the Pensions Act. I must not pretend to be familiar with the details of that Act, but I will engage to have the mutter looked into, in case it may be possible for anything to be done to meet these serious cases; but I hope my noble friend will not press me to go any further than that. On this particular Amendment I feel, for the reasons stated by the noble Viscount in charge of the Bill, that the House would be unwise to carry the Amendment.

LORD ARNOLD

In view of the very telling speech of the noble and gallant Lord on the Cross Benches, and of the comprehensive statement of the noble Earl on my right, I did not desire to say anything more on this measure. But I must add, because I wish to remove a possible misunderstanding about something which the noble Viscount said, that when I referred to this amount as capital that was not in any way to excuse the Government in what they are doing; it was rather to increase the enormity of their offence, as I previously pointed out. The noble Marquess. I am sure, will carry out his undertaking to have this matter looked into, and if something comes of that it will be a great satisfaction to your Lordships, because one of the reasons why there has been such strong pressure to use this money for this very special case was that again and again representations were made to the Government to deal with this matter. I hope now that something will come of it.

On Question, Amendment negatived.

Clause 5 agreed to.

Clauses 6 and 7 agreed to.

Clause 8:

Amendment of s. 4 of Unemployment Insurance Act, 1925, 15 & 16 Geo. 5 s. 69.

8.—(1) As from and after the fifth day of April, nineteen hundred and twenty-six, until the expiration of the extended period as denned in Section four of the Unemployment Insurance Act, 1925, the contribution payable under the Unemployment Insurance Acts, 1920 to 1925, out of moneys provided by Parliament shall be a contribution of such an amount as may be determined by the Treasury to be approximately equivalent, having regard to the estimated proportions in which contributions are payable in respect of men, women, boys and girls, to the sum which would be produced by weekly contributions paid in respect of insured persons and exempt persons at the respective rates set out in the Second Schedule to this Act.

(2) Paragraph (c) of subsection (1) of the said Section four (except in so far as it relates to the meaning of the expression "the 1925 debt") is hereby repealed as from the first day of January, nineteen hundred and twenty-six.

(3) This Part of this Act shall not apply to Northern Ireland.

LORD ARNOLD had an Amendment on the Paper to leave out subsection (1). The noble Lord said: I do not propose to move this Amendment, but desire to give way to the noble Earl, Lord Buxton. He is a very great authority upon this unemployment insurance scheme, and he has really a paternal relationship to it, and I am sure your Lordships will desire to give him a very full opportunity to speak.

VISCOUNT PEEL

I beg to move the next Amendment, which is purely drafting.

Amendment moved—

Page 7, line 43, at end insert as a new subsection:— ("(4) This Part of this Act and the Unemployment Insurance Acts, 1920 to 1925, may be cited together as the Unemployment Insurance Acts, 1920 to 1926.").—(Viscount Peel.)

On Question, Amendment agreed to.

EARL BUXTON moved to leave out Clause 8. The noble Earl said: I am much obliged to my noble friend for allowing me to move my Amendment instead of bringing forward his own. He made one little error: I am not going to make a full statement on the matter. But this is an important Amendment, and noble Lords will remember that the House of Commons did not take any Amendments on the Committee stage, in order, I think, to avoid a Report stage. They left your Lordships to make such Amendments as you thought fit, and I notice that the Government themselves have put down a very substantial number of Amendments—so many, indeed, that they require three Ministers to put them on the Paper and carry them through. Therefore I hope they will be willing to accept some comparatively small Amendment from this side of the House.

Your Lordships are aware that Clause 8 proposes to take away, from the funds at present available for the carrying out of the Unemployment Insurance Acts, money to the extent of £5,000,000 a year. Only nine months ago the Government themselves made a totally different proposal. At that time, last July, they pro- posed, in order to bring the Fund at an earlier stage to solvency, to add £2,500,000 to its funds. Now they are proposing to deduct £5,000,000; apparently without any rhyme or reason they have now altered their views. The only argument that has been used by the Government justifying the action they have taken is that, thanks to the improvement in trade, unemployment has fallen considerably in the last few months, and that the official figures of 1,300,000 unemployed last July had by this March fallen to 1,100,000. Even on those figures I am afraid it is very doubtful whether an improvement is really indicated, for this reason. The figures show that last September, just before the coal mines subsidy came into being, there were nearly 300,000 miners out of work and on the Unemployment Fund; whereas, this February (I have not got the analysis for March) the numbers had fallen to something like 120,000. Nearly 200,000 miners, therefore, who were unemployed last September, thanks to the subsidy have obtained employment since. The total unemployment figure for last September, compared with February of this year, shows a difference of the same number. Therefore it is clear that the whole of the decrease was due to the fact that 200,000 miners were re-absorbed into the industry. And let me point out the enormous expense of this to the State, which has been paying £750,000 a week in order to absorb these miners.

But since the Bill was introduced the other day a much more serious position has arisen, and. as we are aware, we are in the middle of a strike of far-reaching extent which is likely to last for some considerable time. When this matter was discussed in another place the Chancellor of the Exchequer, who is the responsible person for these proposals, for it is he who has raided these various funds, said— We may have a great struggle, a great lock-out, a great stoppage, whatever it may be.… None, of the proposals. … in the Bill will have the slightest reference to that; altogether different proposals will be required. … if such a contingency arises; but on the assumption that this danger does not arise we have every reason to believe that a live register of 1,050,000 will carry us through the year. Unfortunately, since the Bill was in another place that contingency has arisen, and I think I might ask the Government how, in these circumstances, in view of what was said by the Chancellor of the Exchequer, they can at the present moment proceed with this clause, taking this money away from the uninsured. Because, after all, though there has been a good deal of discomfort of various sorts to the individual and to the mass of people in consequence of the strike, that is not really the serious part of the strike itself. What is going to happen—and nobody can foresee how far it will go—is that it will paralyse trade, many great manufactories will have to shut up, and trade will be so dislocated that not only will there be an immediate increase of unemployment, but in the future it is quite certain that the number of those on the Unemployment Fund will be very considerably increased for a long time to come.

I would therefore ask the Government, knowing as they do that for every 10,000 additional persons who come on the Unemployment Fund it costs £380,000 for the year, how they can justify at the present moment taking away this £5,000,000, seeing that they know perfectly well that a great deal more than £5,000,000 will be required through the present dislocation of trade. The noble Lord, Lord Banbury of Southam, said that everybody has got to suffer when you have economy and curtailment. That is quite true, but surely in this case it would be uneconomical folly to take away this £5,000,000 now and have to repay a very much larger sum within a comparatively short time.

I should like to say a word or two on the merits of this proposal. The Unemployment Insurance Act was founded on a tripartite agreement between the employer, the employed and the State, the employer and the employee making certain contributions and the State adding to those contributions a sum of its own. When it was carried out it was estimated on a very conservative basis in the hope and belief that as trade improved and unemployment fell a large surplus would accumulate. The object of that surplus was, in the first place, to form a reserve fund for a rainy day, for a falling off in trade at any future time, and secondly, and after that was sufficiently obtained, to provide that the surplus should be applied to one of two things or to both of them—either to improve the benefit for the employee or, in the alternative, to reduce the contributions from both parties under the Unemployment Insurance Act.

The original Act created a surplus very soon. Unfortunately, the War came and upset all calculations, with the result that the Fund became more or less insolvent and had to borrow from the Treasury. In July last the Government, as I think very wisely, came to the conclusion that it was both important and essential that the deficiency period, the period during which the Fund might be insolvent, should be reduced, and they proposed themselves to add about £2,500,000 to the annual amount of the contribution of the State to the Unemployment Fund so as to bring that deficiency period to an earlier conclusion. And now, only nine months later, they are proposing an entirely different policy. They are proposing now not to add to the Fund but to take away £5,000,000 from it, which, apart from any question of the strike, will mean that its insolvency will continue much longer, that a far longer time will elapse before benefits can be increased or contributions reduced. To that extent the Fund is put to great disadvantage. I have not been able to appreciate the change the Government have made at the instigation of the Chancellor of the Exchequer. I am not surprised that the Chancellor of the Exchequer should change his mind because he is a past master in changing his Party and his views from time to time. But that. I think, has not weighed with noble Lords opposite. I have not been able to discover what has caused this' great change, except the fact that the Chancellor of the Exchequer wanted to balance his Budget. In my opinion this raid is not fair to the employers and to the workmen who have contributed to the Fund.

We were told that the solvency of the Fund would not be affected, that there would be no increase in the contributions, that there would be no reduction in the benefits, and that no one would be worse off in any respect. Those, I think, were the words that were used. But that is an altogether misleading statement because, as I showed just now, the Fund was founded on a conservative estimate, and when unemployment diminished and trade improved the result was to go, not to the benefit of the State solely, but to the benefit of the three partners. That is to say, the men probably would have improved benefits, the employers and employees would be called upon for reduced contributions, and at the same time the State might be called upon for a smaller subsidy to the Unemployment Fund. I do not want to use strong language at all because I think the State is entitled, if it chooses, to do that sort of thing, but I do not think it is fair to employers or employed that the State, the third partner, should suddenly get the whole of the benefit which has accrued from the conservative estimate and the good management of the Fund, and this, if I may say so, entirely without consultation with the other partners concerned.

There is one very flagrant case of hardship which will arise from the action of the Government. As I pointed out just now, the basis of contribution under the original Act of 1911 was that of equal contributions from employer and employed and a proportionate amount from the State itself. That continued until 1921. In that year, in consequence of the enormous increase in unemployment and the uncovenanted benefits given, the Fund was in a somewhat parlous condition and an additional penny was put on the employers to enable the Fund to become gradually solvent. But it was put on with the understanding that as trade improved and unemployment diminished and as the Fund became more solvent the first result of those advantages would be the taking of this penny off the employers. Not only so, but the Act passed last year by the present Government actually gives a statutory undertaking regarding this proposal because it is stated in the Act itself—I am not quoting the legal wording—that as the Fund improved in solvency, as debt was paid off, the first use to be made of that improved position would be to take off this penny.

Now the Chancellor of the Exchequer and the Government have come along and taken away this £5,000,000 a year, which means, as they have admitted themselves, that for some considerable and indefinite time this additional penny will remain a burden on the employers. Although I speak of the employers I think that in these matters there is really no distinction between employer and employed. The penny is not on the employer; it is a burden on trade, and though the Unemployment Insurance Act has had very beneficent results—that is admitted and I do not think it is too much to say that it has helped by alleviating distress and saving homes and health when combined with the Health Act, and has done a great deal to enable us to come securely, safely and peacefully through our industrial difficulties after the War—no one can deny that the contributions under this Act, especially if combined with the contributions under the Health Insurance Act, constitute a very heavy burden indeed on the industries of the country. Anything that alleviates that burden would be of advantage both to the trade and the general conditions of the country.

Under the original Act the contribution was 4d. from the employer and 4d. from the employee. Speaking under correction and taking into account the 2d. added last year for social service, as one might call it, I think the burden of contribution on the employer is now 11d. and on the employee 10d. That represents £5 per annum on every man employed in a particular industry. Obviously, that is a very great burden, though a right and proper one, on trade itself, and I am sure that not only ought the employer to be relieved of this additional 1d but by allowing the Fund to become gradually more and more solvent, it will be possible before very long to relieve both employers and employed—that is, the burden on trade—from some of these contributions which now exist. I am sure it would be a greater advantage to this country from the point of view of employment, of trade and of industry generally, that these contributions should be directly reduced by 1d. or 2d. than that £5,000,000 should go into the pocket of the Chancellor of the Exchequer to be re-distributed—or perhaps not to be re-distributed—to the taxpayers as a whole whose relief cannot be anything like the same advantage to trade as a direct reduction in the contributions of employer and employed.

I trust that the noble Viscount representing the Government will consider two things. First, on this question of the burden, the millions would be much better left in the Fund and greater relief would thereby be given to trade as a whole than if they were taken out. Secondly, after the statement of the Chancellor of the Exchequer, I cannot see how, in present circumstances, the Government can justify their action, which may or may not have been justified some days ago. It has clearly now lost its force. I appeal to them in those circumstances to leave the Fund alone. As my noble friend said, I have a parental interest in it, and I ask the Government not in any way to hamper it, but to leave it as it is now. Undoubtedly, if you pass Clause 8 now, in a few weeks the Government will have to come to the House of Commons and ask for a larger contribution to the Unemployment Fund. I beg to move.

Amendment moved— Leave out Clause 8.—(Earl Buxton.)

VISCOUNT PEEL

The noble Earl has put before your Lordships very fully his reasons for urging upon you the acceptance of his Amendment to leave out this particular clause. If I may, before dealing with the specific points he raised, I should like to bring to his notice the fact, of which I have no doubt he is aware, that leaving out this clause would lay upon the Exchequer an additional burden of some millions. I only make that suggestion because the noble Earl is fully aware of the provisions of the Parliament Act, and of the powers of this House as regards finance. I only say that in passing.

I will deal also with the general argument of the noble Earl. He said: Why are you proposing to reduce the State contribution from 6¾d to 6d. at the very time when you are in the middle of a strike, and when, as the result of that strike, you may have an unusually large number of people cast upon the Unemployment Fund? I feel as strongly as the noble Earl the full force of that argument. In face of a condition of things of that kind, which obviously your Lordships will appreciate better than I do, the only reason why I ask you to proceed to pass the Bill in its present form is this, that it is wholly impossible to forecast at the present moment what the results of the strike may be, how long it is going to last, what fresh burdens may have to be cast on industry, how industry will suffer, how many people will be unemployed. All these things are utterly beyond our range of estimating now. If they were not I might be more favourable to the noble Earl's suggestion, but, as it is, I think we can only proceed upon the basis of the present Bill. When this terrible business is cleared up, when it is possible to estimate the losses—I was going to say the gains, for I hope there may be some—then, I think, it will be necessary for this very intricate matter to be looked into, and it may or may not be necessary to introduce fresh legislation.

EARL BUXTON

I do not think the noble Viscount quite represents my point. He says it will make fresh legislation necessary.

VISCOUNT PEEL

I said "may be necessary."

EARL BUXTON

With this strike having gone on for ten days, and being likely to continue, it will lead to a considerable amount of unemployment. The reason for this reduction was that unemployment was going to be less, but now that it is likely to be more, additional money will be required instead of less.

VISCOUNT PEEL

I am much obliged to the noble Earl, but I fully appreciated the argument he was making, and I think my argument was proceeding on the basis of what he stated. It is obvious that no human being can at this moment estimate what may be the effect upon the Unemployment Fund. In those circumstances I say it is better to leave the matter as it is, and not to alter the Bill at the present moment before we know what the obligations that we shall have to face amount to. That is the simple point I put before your Lordships.

One or two other matters were put by the noble Earl with which I should like to deal. He said—and I think it was the only place where he made errors in fact—that this was a tripartite arrangement, and that it was not right that one party should get all the benefits even though that party is the State. He said: You reduce the State contribution from 6¾d. to 6d. and you make no other reductions in the contribution of the other parties. He added: You ought really to make a reduction of 1d. in the employer's contribution before you consider the question of the pari passu reduction in the contribution of one of the other parties. I do not think that is quite the correct way of putting the matter. May I remind him that only eight months ago there was a reduction of 4d.—2d. each in the contributions of the employers and the employed. Not only is it not true that the State gets all the advantage but what is true is that before the State got any advantage 2d. was taken off the contributions of each of the other parties. At that time the argument was very much the other way. The State might; then have said: "It is rather hard, as this is a tripartite agreement, that you should get 2d. off, but we get nothing." I think the whole thing must be taken together, and the noble Earl will realise, the advantage having been entirely on the side of the other parties nine months ago, that it is only fair the State should now have some reduction. This is a smaller reduction than the 2d., it is only ¾d. against the 2d.

As regards the other point made by the noble Earl, I think an argument may be fairly sustained that the employers had a claim to the extra 1d. before this reduction was made by the State. That may fairly be argued. All I can say to that is that the levying of a charge on trade and the levying of general taxation still remains. Though the claim of the employers may be postponed, undoubtedly, if there were any further reduction in contributions, the employers have a first claim to the first penny of reduction. I do not know whether, in view of the general argument used by the noble Earl, it is much worth while my dealing with the earlier part of his argument, because he says the whole situation is going to be changed now, and what is the good of referring to the past. I will therefore, only say one sentence about that. He referred to the rapid change in the views of the Chancellor of the Exchequer. I do not know that I need refer to some general reflections that the noble Earl made on the rapidity of the change in the general views of the Chancellor of the Exchequer. I will confine myself to the particular one made last July.

At that time the situation was entirely different and there was a much more gloomy anticipation of the number of persons who would come upon the Fund than has turned out to be the case. The noble Earl says that is all due to the coal subsidy and that if it had not been for the large numbers of miners who were kept in employment through the action of the subsidy there would not have been a further falling off in the number of unemployed. I am rather interested to hear the admission that the subsidy was of some value. One has generally been criticised on the ground that the subsidy was of no value. But I do not think that covers the whole case. Those who were familiar with the situation a few months ago know that in many other trades there were distinct signs of development which, no doubt, have been heavily injured by the present unfortunate General Strike. On the whole point I do urge upon noble Lords that, though they may see difficulties and though there may have to be changes in some months to come, it is better to leave this clause in the Bill instead of speculating what will have to be done when we come to estimate the injury the country may have received.

LORD ARNOLD

I should like to support the noble Earl who moved the Amendment. The noble Viscount went to some extent into past history, but only to a very limited extent. His argument seems to be that the employers have had 2d. off and the employees 2d. off and it is hard if the State is not to have something off. But the 2d. was taken off because other sums were put on for other social services. That is a point the noble Viscount did not mention. All he said was known last year when it was decided that the State was not to get the first reduction: the employers were to get it.

VISCOUNT PEEL

I admitted it.

LORD ARNOLD

The Chancellor of the Exchequer has admitted it and the Minister of Health has admitted it. The Government is intercepting money which really ought to go to the employers. It is no justification to say that when the Bill passed in another place it was not possible to know what would have happened if it had not been for the strike. It is true, of course, that owing to the strike we do not know what commitments may be involved but before the strike came it was extremely doubtful if this particular clause in the Bill was justified. There was every reason to suppose that after the withdrawal of the subsidy, strike or no strike, the funds would not stand what is being done in this Bill. It is quite certain now that this clause ought not to come in any scheme of sound finance. Before the strike it was doubtful if the thing was actuarially sound. The strike has made it perfectly clear that it was not actuarially sound. I entirely agree with what the noble Earl said on that matter. On any kind of sound finance or businesslike method the Government ought to accept this Amendment and delete the clause.

On Question, Amendment negatived.

Clause 8, as amended, agreed to.

Clause 9:

Substitution of one register a year for two and reduction of qualifying period.

9.—(1) One register only of electors shall be made in each year and the qualifying period shall be reduced from six months to three months.

(2) For the purpose of giving effect to the foregoing provision, the Representation of the People Acts, 1918 to 1922, shall have effect subject to the following modifications, that is to say:— (b) The provisions mentioned in the first column of Part I of the Third Schedule to this Act shall be amended in the manner shown in the second column of the said Part I; and to such other modifications as may be necessary for the purposes aforesaid.

LORD DESBOROUGH moved, in subsection (2), paragraph (6), to leave out "Part 1 of". The noble Lord said: This is an omnibus Bill and as I happen to represent a Department which is affected by the registration of voters I have to propose the Amendments which are down in my name. Clause 9 proposes to make one register for the whole of the country and by doing so, and by shortening the period required for qualification, £250,000 will be saved to the country. To carry out this very laudable design I beg to move the Amendments which are down in my name. They are drafting Amendments and I am sure, in view of the great economy I am now proposing, no objection will be taken.

Amendment moved— Page 8, line 19, leave out ("Part 1 of"). —(Lord Desborough.)

On Question, Amendment agreed to.

Amendment moved— Page 8, line 21, leave out ("Part 1") and insert Schedule.—(Lord Desborough.)

On Question, Amendment agreed to.

Clause 9, as amended, agreed to.

Clause 10:

Amendment of Ballot Act, 1872, as to division of register at polling station.

10.—(1) At any election to which the Ballot Act, 1872, applies the returning officer may direct that the register or the part of the register containing the names of electors allotted to vote at a polling station shall be divided for the purpose of making separate issues of ballot papers to the electors:

Provided that the returning officer before giving any such direction shall be satisfied that if any such division of the register is made the proper conduct of the election will not be prejudiced.

(2) Each part of a polling station at which any such division of the register is used shall be deemed to be a separate polling station for the purpose of the appointment of polling agents by the candidates.

LORD DESBOROUGH moved to leave out Clause 10. The noble Lord said: At this late period in the evening I do not propose to go into the provisions of the clause. It is my duty to ask you Lordships to delete it.

Amendment moved— Leave out Clause 10.—(Lord Desborough.)

LORD ARNOLD

I do not propose to discuss this clause, but I do propose to tell your Lordships a little of the history of why this is being done. Many members of your Lordships' House may not be aware of what the position is. This clause should really have been deleted in another place. It deals with matters affecting the representation of the people and it is their province to deal with that. The Government, both in respect of this clause and I think another clause, put down an Amendment for deletion, but as I explained to your Lordships on Second Reading, they were being so damaged by criticism in another place that they were determined at all cost to avoid a Report stage. Your Lordships will be aware that if a single Amendment is made there must be a Report stage. The Government put down an Amendment in the name of the Home Secretary and then adopted the extraordinary course of not moving it and intimating that the clause would be taken out in your Lordships' House. It is obvious that it was thought that your Lordships would be perfectly ready to do anything that a Conservative Government wants done.

That is not the end of the matter, for last week, in the Second Reading debate, the noble Viscount, when he came to this very awkward stile, rather stumbled. He did not say this was going to be done. He said he might have to move the deletion of the clause later. I began to wonder whether, in view of the highly improper procedure proposed, the Government had thought twice about it and were not going to delete this clause. Yet the very next day these Amendments were on the Paper. The noble Viscount must have known perfectly well they were going to be on the Paper. I suggest that it is a very strange thing to make a statement like that when he knew Amendments were going to be put down for deletion. I will not say more except that I think the whole procedure highly irregular and improper.

LORD JESSEL

I am very much amused by the noble Lord opposite posing as such a Parliamentary innocent. He served such a long and valuable apprenticeship in another place that he must know perfectly well that Governments do resist Amendments in order to avoid a Report stage. There is nothing new in that. On the other hand I may remind him that he and his friends in another place had ample opportunities for discussing this Bill, as can be seen by the number of Divisions and the number of days that the Bill occupied. As regards these two clauses, I am very glad the Government has decided at last to get rid of them, because I do not think they would have served any valuable purpose, and from the machinery point of view I think they were unsound.

VISCOUNT PEEL

I always seem to be falling under the animadversions of the noble Lord opposite for one crime or another. Animadversions shower upon my head in such rapid succession that it is difficult to deal with them. Apparently the present charge is that I did not say that it was quite certain that Amendments were to be moved to delete certain clauses and that I expressed some doubt on the subject. I did express doubt because I am very cautious never to say anything to your Lordships unless I am quite certain, and at that moment I was informed —I do not deal with Home Office matters myself—that the deletion of these clauses was under consideration. Therefore, with my usual caution and accuracy and desire not to mislead your Lordships, I did not say these clauses were to be withdrawn. What I did say was quite accurate, that the matter was under consideration. I hope that this explanation will relieve me from further criticism.

LORD ARNOLD

The noble Viscount is a little too optimistic. The position is this. The noble Viscount says he did not know whether or not the clauses were going to be deleted, but the very next day Amendments were down on the Paper. They must have been handed in that same evening. There is something that wants reconciling there. My only reply to my noble friend opposite is that it is true that I have had some experience in another place and I know that Governments have made attempts to resist Amendments in order to avoid a Report stage. That is perfectly true, but I cannot myself recall—I do not say that it has never happened—the case of a Government having put down an Amendment which they were going to move themselves and, when that Amendment was reached, declining to move it in order to avoid a Report stage, and saying that it will be done in another place.

Viscount PEEL

It is a useful precedent for your Party in the future.

On Question, Amendment agreed to.

Clause 11:

Amendment as to stamping of ballot papers with official mark.

11.—(1) Notwithstanding anything in the Ballot Act, 1872, the returning officer shall cause the ballot papers to be stamped or printed with the official mark prior to the polling, and so much of that Act as requires each ballot paper to be stamped with the official mark immediately before it is delivered to an. elector and as requires the returning officer to provide each polling station with instruments for stamping on ballot papers the official mark, shall cease to have effect.

(2) The provisions of the Ballot Act, 1872, which are set out in the first column of Part II of the Third Schedule to this Act shall have effect subject to the amendments thereof specified in the second column of that Schedule being amendments consequential on or incidental or supplemental to the provisions contained in subsection (1) of this section.

LORD DESBOROUGH moved to leave out Clause 11. The noble Lord said: This clause is in the same position as the unfortunate Clause 10, and I have to move its deletion in accordance with an undertaking which was given by the Home Secretary in another place. It is quite true that, in order to get the Bill through, which I think everybody wanted, it was a very good plan, to avoid trouble on the Report stage, to have this Amendment moved at another stage and, in accordance with a promise that was given that this clause should be deleted at a further stage of the Bill, I rise to move the Amendment that stands in my name. Neither of these clauses seems to me to be very important. The object of both was to save money. I cannot say anything more about Clause 10 but, as regards Clause 11, it did meet with a good deal of opposition in another place and the Government came to the conclusion that, as there was going to be a conference on the franchise on which all Parties would be represented, it would be as well to leave the matter—that is, the subject of Clause 11—for the discussion of that conference and not to press it at the present time. Both these clauses are really small affairs and I do not think that the Constitution will be imperilled by their withdrawal at this stage.

Amendment moved— Leave out Clause 11.—(Lord Desborough.)

LORD ARNOLD

I had not intended to speak again on this stage of the Bill, but I must say one or two words about the speech of the noble Lord opposite. I do not think he realises that he has really made the case infinitely worse, because he now tells your Lordships that the Home Secretary had promised that your Lordships would take out this clause. How could the Home Secretary know that?

LORD DESBOROUGH

No, no.

LOBD ARNOLD

Those were his words. I listened very carefully and the noble Viscount opposite confirms me. Your Lordships might have taken a different view. The suggestion is that your Lordships' House is simply in the pocket of the Conservative Government.

LORD DESBOROUGH

I said "at a further stage." I am quite sure that the Home Secretary would not in the least interfere with the well known wisdom of your Lordships' House. He said that he would make an attempt to have this evil redressed at a later stage. This is that later stage and your Lordships, if you want the clause to remain, can vote for it.

LORD ARNOLD

As a matter of fact, the Home Secretary did not use those words, but the noble Lord did say to the House that the Home Secretary had promised that this clause would be taken out in your Lordships' House. That is the only point and—

LORD DESBOROUGH

I do not think I did say that.

LORD ARNOLD

The noble Lord did say that.

LORD DESBOROUGH

I never said anything of the sort.

LORD ARNOLD

If I misunderstood the noble Lord well and good. We must wait and see what the OFFICIAL EEPORT says. The noble Lord also said that everybody wanted this Bill passed. So far from that being the case, I can scarcely remember a Bill which has been more strongly opposed by both sections of the Opposition or a Bill of any importance that received less support from' the Government's Back Benches.

LORD DESBOROUGH

I said that everybody was in favour of economy. This is £250,000 a year.

LORD ARNOLD

The noble Lord said that everybody wanted the Bill passed, and I am pointing out that, so far from that being the case, it was very strongly opposed and it is well known that the Government had the greatest difficulty in getting their men into the Lobby to support it.

LORD DESBOROUGH

Will you propose that Clause 11 stand part?

LORD ARNOLD

As I have said, I am not discussing the merits of the clause. I am merely stating the position.

On Question, Amendment agreed to

Clauses 12 and 13 agreed to.

Clause 14:

Operation of s. 118 of Education Act, 1921.

14.—(1) For the purpose of removing doubts it is hereby declared that the Board of Education shall not, for the purpose of subsection (2) of Section one hundred and eighteen of the Education Act, 1921, be bound to recognise as expenditure in aid of which parliamentary grants should be made to a local education authority any expenditure which in the opinion of the Board is excessive having regard to the circumstances of the area of the authority or the general standard of expenditure in other areas, or which in the opinion of the Board unreasonably exceeds any estimate of expenditure made by the authority.

THE LORD CHAIRMAN

The noble Earl, Lord De La Warr, has been good enough to tell me that he does not move his Amendment to leave out subsection (1), and Lord Gainford—[who had given Notice to move, in subsection (1), to leave out the words "which in the opinion of the board is excessive having regard to the circumstances of the area of the authority or the general standard of expenditure in other areas, or which"]—is not in his place. I think the next half-dozen Amendments upon the Paper can hardly be taken in the order in which they appear if every noble Lord is to be able to say everything that he desires on every Amendment. The Amendment of the noble Viscount, Lord Peel, comes first.

VISCOUNT PEEL moved, in subsection (1), to leave out "or" ["authority or"] and to insert "and," and after "expenditure" ["general standard of expenditure"] to insert "on corresponding services." The noble Viscount said: I rather think that I may save the noble Earl, the Lord Chairman, from some of his difficulties, because I understand that this Amendment meets the views of my noble friends Lord Jessel and Lord Monk Bretton who have given Notice of Amendments to this clause. I should prefer to read to your Lordships the clause as it will run if this Amendment is inserted. We are dealing, of course, with the question of how it is to be judged, whether percentage grants should be paid on certain educational services and what standard should be taken by the Government. The words will be:— .… which in the opinion of the Board is excessive having regard to the circumstances of the area of the authority and the general standard of expenditure on corresponding services in other areas.… I think that this really sets up a very fair rule by which the Government may judge as to whether or not these are Services on which a corresponding 50 per cent, of the Government grant ought to be paid.

Amendment moved— Page 10, line 5, leave out ("or") and insert ("and") and after ("expenditure") insert ("on corresponding services").—(Viscount Peel.)

LORD JESSEL

I am very glad that the Government have made this concession because, from the point of view of education, especially in London, we felt it rather hard that the circumstances should not be taken into consideration. We had no fear that the President of the Board of Education, who is known to have served his apprenticeship on the Education Committee of the London County Council, would be hard, but at the same time it was felt very strongly by the Education Committee of the London County Council, which is doing some of the finest work in the country, that the effect of the clause as it stood was to give too arbitrary a power to the Board of Education. At this late hour of the evening, I do not wish to detain your Lordships with a speech of any length. I will only reiterate that which I said before, that on both sides and among all those in another place who put forward somewhat similar Amendments, it is a matter of gratification that the Government have now seen fit to accept an Amendment which quite fulfills the views that they have been putting forward.

On Question, Amendment agreed to.

Clause 14, as amended, agreed to.

Remaining clauses agreed to.

First Schedule agreed to.

Second Schedule agreed to.

Third Schedule: