HL Deb 19 December 1929 vol 75 cc1616-74

Order of the Day for the Second Reading read.


My Lords, this is the third Unemployment Insurance Bill that has been introduced into your Lordships' House in the current year, and the twentieth since 1920. Of the two previous Bills of the present year, one was introduced by the late Government last April and the other by the present Government in July. I shall refer to the second Bill presently. The object of the April Bill was to prolong what is called the transitional period for twelve months—namely, until about the middle of April next year—and Clause 16 of the present Bill again prolongs the transitional period for another twelve months; to be precise, until April 18, 1931. I would remind your Lordships in a sentence what the transitional period is. Without going into great detail, it is a period during which large numbers of unemployed persons continue to be given benefits although the number of stamp contributions which they have made to the Fund need not be more than eight in the two years preceding their claim or, again, need not be more than thirty stamps in all at any time. These regulations for the transitional period mean, of course, that the contributions made are less than those actuarially required. In short, the position is that, unless legal provision had been made by Act of Parliament for this transitional period and for continuing to pay benefit to these persons, they would have been thrown out of benefit and a very large proportion of them would have become a charge upon the rates.

This Bill continues the transitional period for twelve months longer than the Bill of the late Government, and this will give time for the whole subject to be reviewed. I told your Lordships in the recent debate on Second Reading of the Widows', Orphans' and Old Age Contributory Pensions Bill, that the Government has already set up a Committee to make a general survey of the various national insurance and pension schemes, and when this examination is finished the larger policy of the Government in these very important matters can be decided upon. Meanwhile we have this Bill, which meets the immediate necessities of the case. So far as the extension of the transitional period is concerned, it is estimated that in all the cost will amount to £10,500,000 a year.

The next provision in the Bill about which I will speak is that which increases the Exchequer contribution to the Unemployment Insurance Fund. This is dealt with in subsection (2) of Clause 16. I am not taking the clauses in their numerical order, because it is better for the sequence of exposition to take them in a somewhat different order, but that is a detail. The position regarding this clause and the increase of the Exchequer contribution can be stated very shortly. The Fund has borrowing power now up to £40,000,000, and at the present time the debt on the Fund is £37,800,000. Accordingly, the un-exhausted margin of borrowing power is small. Your Lordships will, I think, remember it was to deal with this question of the financial position in relation to borrowing power that the second Unemployment Insurance Bill of this year, to which I have already referred, the one introduced in July, was brought forward. The position then was that unless something was done there was a risk as the winter went on, when unemployment always increases, that the limit of the borrowing power would be reached. As it was thought undesirable to raise the limit of borrowing power above £40,000,000, the Government boldly faced the position, and in the July Bill increased the Exchequer contribution by £3,500,000 a year. That was a Bill which was said at the time to meet an emergency, and now the situation must again be dealt with, otherwise there is risk that within no very long period after the turn of the year the limit of borrowing power might be reached. Not only was there this contingency to be guarded against, but the further circumstances arising owing to the prolongation of the transitional period. Unless something is done to meet the situation, the limit of £40,000,000 will be reached before long.

There are three possible courses, in these circumstances, which this Government or any Government could follow. First, they might apply to Parliament to increase the borrowing power above £40,000,000. The Government are not doing that, although it would be the easiest course to adopt. Secondly, they might increase the contributions of employers and workmen. The Government, I need scarcely say, rejected such a solution. Under existing conditions they felt that it was impracticable to proceed along those lines. Thirdly, there remained the plan of keeping the Unemployed Insurance Fund within the limit of the borrowing power by increasing the Exchequer contribution. That is what this Blll does, and so the present difficulty also is being faced boldly. I mentioned, during the debates on the Widows', Orphans' and Old Age Contributory Pensions Bill, that the financial policy of the present Government is and will be in all respects infinitely superior to that of the late Administration. We see that very well typified in this Bill. The Bill provides, in Clause 16, subsection (2), for increasing the Exchequer contribution so as to meet the cost of extending the transitional period. That is estimated to amount to £10,500,000 a year, in all.

I come next to Clause 2, which makes certain increases of unemployment benefit. The clause increases the rates of allowance for adult dependants from 7s. to 9s. a week. Those adult dependants will nearly all be the wives of unemployed men. The Bill also increases the unemployment pay of young people of 17, 18 and 19 by amounts varying from 2s. to 4s. weekly. Exception has been taken to this proposal to increase the benefit of young people, but I think the opposition largely arises through a misconception of the position. First of all it must be remembered that the children of the insurable class nearly all go out to work at 14 years of age, and by the time they are 18 they are for all practical purposes full adults; and, indeed, in many cases they are then receiving either full or nearly full wages. In these circumstances it seems to me anomalous that their benefit should be so low as it has been during the last two or three years. I would point out that with the increase in the benefits made in this Bill the benefits will still be lower than they were a little over two years ago, under the late Government. Yet there has been such an outcry in certain quarters about this proposal—this very just proposal, as I think it—that it might be thought by those unfamiliar with the facts that something unheard of was being proposed. Clearly that is not so at all having regard to what I have just told your Lordships about what the rates were only some two years ago. This Bill will merely make the benefits more in accordance with the needs and equities of the case. The cost of the increased benefits to these young people is estimated to be £370,000 a year, and the cost of the increased adult dependants' allowance, that is, chiefly for the wives of unemployed men, is estimated to be £1,750,000 a year.

I now come to Clauses 1 and 2, which provide, subject to raising the school age, for bringing into insurance from April, 1931, young people between the ages of 15 and 16, whereas the present age for beginning unemployment insurance is 16. This proposal has been much criticised, but here again I submit that the arguments against the proposal will prove on examination to be scarcely sustainable. We are told on the one hand that it is demoralising young people of this age to bring them into the unemployment insurance scheme, and on the other hand that there is very little unemployment among those of this particular age. As regards the latter point, it is true that unemployment is, and is likely to be, extremely small at this age, and it is for this reason that some people have contended that it is unfair to bring in these young people because they will be paying out more than they will receive in benefit. But many young people in various forms of insurance have to do that. I quite agree that in the present instance the amount to be paid in unemployment benefit will be less than the contributions. The total contributions under this provision will, on the average, amount to £600,000 a year. It will be divided in nearly equal thirds between young people, employers, and the State, so that they will pay round about £200,000 each. On the other hand, it is estimated that the benefit which will have to be paid under this provision will only be about £100,000 a year; so it is estimated that there will be paid out a sum of only about one-half of that which the young people themselves contribute. Surely those figures are sufficient answer at any rate to some of the criticisms made about this matter!

Moreover, it must be remembered that unemployment insurance begins now at the age of sixteen. I am quite unable to agree with, or even understand, the theory that it is quite right to begin unemployment insurance at sixteen, but that it is entirely wrong to begin at fifteen. The argument is used, I know, that this provision means giving pocket money to boys and girls. Those who talk in this way have little knowledge of the conditions in working-class homes, or they would know that boys and girls of this age are required to take home the major part of their money week by week to their mothers, as a contribution to the household expenses. Only a small proportion of the young people will be unemployed and will receive benefit—though, so far as they do receive benefit, they will be fully entitled to it, because they will have been paying towards it. But, even so, we may depend upon it in those cases that nearly all the money would have to be taken home to the mothers. Whether those young people of that age have unemployment benefit or wages they have to take home nearly all of it to their mothers. It is straining language extremely far to say that a scheme of this kind is demoralising, and it is particularly inconsistent in those who are constantly telling us of the virtue of the contributory principle and of the vital necessity of inculcating the virtues of thrift. Why, what does this clause do? This clause will begin from the very day these young people leave school to teach them to make provision for the time when they may be unemployed. What is there wrong in that?

But there is more. It is a condition that these young people, and indeed all young people between fifteen and eighteen, must undergo an approved course of instruction as a condition of receiving benefit, subject only to its being practicable for the authorities to provide such course of instruction. Every effort will be made to do that. In so far as provision can be made for this instruction to be given to these young people it will be made, but it is impossible to do everything all at once, though it is to be hoped that before very long it will be practicable so to arrange matters that a large number of them will be receiving training right up to the age of eighteen. As regards young people over eighteen, up to about twenty-five years of age, some of them are receiving it now, and will continue to receive training in the training centres which have been set up in various parts of the country by the Ministry of Labour.

Now I pass to a very important clause in the Bill, about which I anticipate that there will be considerable discussion to-day, and probably in Committee. It is Clause 4, which alters the law and regulations with regard to the obligation of a man to prove that he has been genuinely seeking work in order to qualify for unemployment benefit. The procedure hitherto in this matter has in practice unquestionably operated harshly in a large number of cases. The difficulties have arisen mainly from two sources. First, it has been a sheer waste of time in many towns and districts for men to go round again and again to various workshops and firms—"parading round" as it is called—to get a job when they know perfectly well when they start out that no job is available in those workshops and firms. Secondly, it has been admitted that the test has in many cases been what is called a psychological test. It has been necessary for officials or the Court of Referees to determine the state of a man's mind, and, of course, in many cases this has been an impossible task. Also the procedure has operated most unfairly because many men, decent, honest men of very limited education and mentality, have been unable properly to state the facts when confronted with the ordeal of an interview with the officials. To them it is almost like being in the witness box of a court. A great many things of that kind have occurred.

This whole matter was very keenly discussed at great length in another place, and the Government, which had asked for the collective wisdom of the House, finally incorporated the views of members in this clause, and it is supported not only by Labour members but by nearly all the Liberal members in another place. Under this clause if the applicant, after being notified in writing of a suitable vacancy or impending vacancy, refuses to apply for such a situation he will be disqualified from receiving benefit; or, similarly, he will be disqualified if, without good cause, he fails to carry out written directions given to him by the employment exchange with a view to assisting him to find suitable employment. As I have said, the whole procedure completely broke down in practice as a fair test of eligibility for benefit, and I submit that this new clause meets the needs of the situation, and that the suggestion that it will lead to impositions upon the Fund and to keeping men in idleness who ought to be working cannot be sustained.

After all, what is the position? The employment exchanges only fill about one-fifth of the vacancies which occur in the country, which clearly suggests, so far as these general statistics are concerned, that there is genuine search for work on the part of the workers; otherwise the other vacancies, amounting to about four-fifths of the whole, would not, of course, be filled. But they are nearly all filled because—I am sure there will be general agreement about this—in nearly every case in the country where there is any vacancy it is filled either immediately or with very little delay. I have said that about four-fifths of the vacancies in the country are filled by means other than the employment exchanges, but apparently from the way some people talk and write it might be supposed that employers all over the country have got vacancies but cannot get men to fill them, although there are men in the neighhourhood who are workless. That is a complete misstatement of the position. I repeat that with very few exceptions there are no such vacancies, and such as there may be are usually filled with very little delay.

The utmost that can be said in relation to shirking about this new clause is that possibly in a very small percentage of cases men who are what is called "work-shy," or shirkers, will not get the job which is vacant, and it will go to someone else. If the work-shy man had got the job the other man would not have got it—that is the point; and, as these work-shy men are proportionately very few in number, there really is no argument of substance which can be founded against the new clause as regards shirking. All or practically all available jobs are filled. And there is more than that. If the matter is analysed closely it will be seen that you are not going to bring what is called shirking—as a matter of fact, there is very little shirking indeed in the country—you are not going to bring it to an end by throwing men off the Unemployment Insurance Fund, because such men have to be kept somehow by somebody and if they were not kept by the Unemployment Insurance Fund they would have to be kept and would, in fact, be kept, either out of the rates, or by relatives or friends, or by charity. Indeed, in some cases they would be better off with out-door relief or when kept by relatives than under the Unemployment Insurance Fund. So it really will not do to get indignant about the Unemployment Insurance Fund and the payment of benefit, and to suggest that these things are the cause of shirking, and furnish the means of shirking.

The facts when they are examined do not bear out those contentions. It is clear that whatever you do or do not do with the Unemployment Insurance Fund its effect in keeping men in idleness amounts in practice to virtually nothing at all. As I have just said, these workless people have to be kept somehow and for the most part if they are not kept by the Unemployment Insurance Fund and paid from that Fund, they will be kept on out-door relief and will become a charge upon the rates. Therefore, even if the case against the new clause were a good one, and in my view it is not a good one, the position is that if the new clause were not inserted most of the people who under it will become entitled to unemployment benefit would otherwise be a charge upon the rates. That is the position. So far as the total national resources are concerned, it matters little whether they are kept from the Unemployment Insurance Fund or from the rates, except that if they are kept from the rates there is an adverse effect upon industry because the money paid for rates is a direct charge against the cost of production.


Hear, hear.


That was the reason which led the late Government to introduce their so-called Derating Bill.


And that is, no doubt, the reason why you opposed it.


The noble Marquess is quite in error there. We opposed it because it was brought in on entirely unscientific lines and did not do enough for the purposes for which it was intended. I will leave that now. I shall have more to say about the rates in a moment. I am glad, at any rate, that we are agreed that rates are a charge on the cost of production. I am going to say a word about the keeping of unemployed men by relatives rather than by the rates because there are a certain number of them kept by relatives or friends—a certain number, but it is not very large. The poor are wonderfully kind to each other. They try to help each other at great sacrifices sometimes. They try to help those who are down and out. But this is the point, that such help is often given only through depriving others of the necessaries of the home. I do not think that can be denied. For instance, the giving of assistance to an unemployed man will mean, and often does mean, in certain cases that the children and the home are not getting, because of the money which is going in this way, the proper amount of nourishment. That is not good for the health of the nation. It is not good for the State. It does not help to make efficient workers later on.

Before I leave this point I want to make it perfectly clear that in my view—I do not think, if it is analysed, this can be denied: I have made most careful inquiry on the subject—the number of shirkers is very small. Indeed, the Chancellor of the Exchequer, speaking the other day, said that probably more than 99 per cent. of the workers of the country are men who prefer work to benefit and who do all that is reasonable to get work. In practice, the not-genuinely-seeking-work procedure has not infrequently meant that hundreds of decent men have been disqualified from benefit in order to catch one or two shirkers. That is what has happened. As I have been saying, when you have caught these one or two shirkers and disqualified them, what happens? They go on to the rates or they are kept by relatives or by friends. You do not stop it. Those I believe to foe the true facts about this matter.

While still on Clause 4 I should like to refer to the attempt which has been made to create difficulties for the Government in this matter by contending that trade union regulations regarding the onus placed upon unemployed men to find work before trade union benefit is paid are more strict than the words of this new clause or than the procedure will be under this new clause. There really is nothing in this point which will help the opponents of the clause. The question is not what are the words of certain trade union regulations, but how are these matters administered by them in practice? That is the point. I have no hesitation in saying that in practice the procedure of trade unions in regard to unemployed men is and will be no more strict than, if as strict as, the procedure under this new clause. If noble Lords are sceptical about this, there is a very easy way of bringing the matter to the test. It is this. I challenge them to adduce evidence to the contrary and I leave the matter there. There is one further point before I pass on which I might mention at this point. In many cases I understand that these trade union regulations were drawn up twenty, thirty, forty and even fifty years ago when circumstances were quite different from what they are now. In many cases they have not been revised. However that may be, in practice, I am informed by the best authorities which I can consult and who ought to know from practical experience of these things, that there is nothing in this particular point to help those who are opposing Clause 4.

I do not think I need deal specifically with the further clauses of the Bill. I have put the main clauses before your Lordships, but I want to speak next of the finance of the Bill. The estimated cost of the change in Clause 4 is £4,000,000, £2,000,000 of which will be borne by an increased Exchequer contribution and the balance is allocated to the Unemployment Insurance Fund. Looking at the whole finance of the Bill and summarising it, I will first deal with the amount which the Exchequer will have to provide, and secondly, I will show what is going to be done with the money. The estimated amount which the Exchequer will have to provide in a full year under this Bill is £10,500,000. To that must be added the additional Exchequer contribution under the July Act of £3,500,000 a year. The two together make £14,000,000. This sum of £14,000,000 will be increased to £14,500,000 owing to the normal growth of the Exchequer contribution due to the increase in the number of insured persons. Taking that into account we arrive at the grand total of £14,500,000.

So far I have been dealing with what I may call the revenue side of the account which I am building up. Now let me turn to the other side, the expenditure side. First, you have the estimated cost of the extension of the transitional period which, in all, will be £10,500,000. Then the increase of the dependants' allowances will absorb £1,750,000. The higher rate of benefit for juveniles aged seventeen to nineteen will absorb £370,000, and half the cost of training up to the age of twenty-one will be £1,000,000. The balance making up the £14,500,000 is the cost of certain alterations and relaxations of the benefit conditions which cannot be precisely divided and detailed. The total of these items is £14,500,000 which balances with the estimated increased Exchequer contribution of, in all, £14,500,000.

I should, though, make it clear that the only one of the expenditure items which the Exchequer under this Bill is contractually pledged to meet—that is, in contradistinction to the Unemployed Insurance Fund itself—is the first one of £10,500,000, being the estimated cost of the extension of the transitional period. With regard to the other items which I have detailed, to an estimated total amount of £4,000,000, these will, it is anticipated, in effect be met by the increased Exchequer contribution under the Act of July of £3,500,000 and the £500,000 of normal increase of Exchequer contribution due to the growth of the number of insured persons—totalling together £4,000,000. In addition to the items of expenditure to be charged to the Unemployment Insurance Fund which I have just detailed there may be a further charge on the Fund of £2,000,000, being; the balance—namely, a half—of the estimated cost of Clause 4, that is, for claims in respect of the abolition of the old not-genuinely-seeking-work procedure.

There is an important point which I wish to touch upon in relation to this. I have stated that the total additional revenue with which I have been dealing is £14,500,000 and the items of expenditure which I have dealt with also total £14,500,000. But when everything is taken into account this Bill gives a net increase in the current revenue of the Fund of about £5,000,000 a year. That is due to the fact that about £6,500,000 of the cost of extending the transitional period is already provided for in the finance of the Fund because that amount is being paid out now for the existing transitional period. In addition to these items of expenditure of which I have been speaking there may be a further charge on the Fund of £2,000,000 a year, being the balance—namely, half—of the estimated cost of Clause 4. That is for claims in respect of the abolition of the old not-genuinely-seeking-work procedure.

This item is only an estimate. It is in the White Paper, and it may not be incurred in full. For it to be incurred in full it would mean, looking at these matters from another angle, that the Fund can, by means of the Bill, carry out of revenue a much larger number of people, should it be necessary, than would have been carried under the provisions made by the late Government. For this amount to be incurred in full the good margin which is in hand would have to be fully used up. There is a good margin in hand. The matter is now so arranged that the Fund, by means of the Bill, carries a much larger number of people out of revenue than would be carried under the provision made by the late Government, and, therefore, it is to be hoped that the debt on the Fund will not be increased by this £2,000,000. But should the Fund so work out that it is so increased by this £2,000,000, I submit it really does not rest with noble Lords opposite to criticise that, as I see some of their colleagues did in another place, because what is their record in this matter? Under their administration of four and a half years the debt on the Fund was increased by about £32,000,000.


The General Strike.


The noble Marquess says "the General Strike." If he will allow me to say so, not for the first time in this connection, whenever this matter of the Unemployment Insurance Fund comes up for discussion before your Lordships' House and the noble Marquess speaks—and we are always very pleased to hear him—he takes refuge in what he calls the General Strike. I cannot discuss this now at any length, because it would divert me from my main argument, but I gather that will be the main prop on which he will rely, and perhaps I had better say now that we on these Benches do not agree with noble Lords opposite, and will never agree with them, about the General Strike and the responsibility for it. Perhaps the position is that neither we on this side of the House nor noble Lords on that side are quite impartial, and are perhaps not the best judges. I suggest to the noble Marquess that probably the country is the best judge. If that is so, I think it is a fair submission to make that at the General Election they tried to make this an issue, and the verdict went against them. Does the noble Marquess deny that the verdict went against them? Does he deny that the Conservative Party at the last Election tried to make this an issue? Of course they did, and the people simply did not accept what they said about it; therefore I say that the verdict went against them. For the moment I will leave the matter there.

To bring up the General Strike will not help the noble Marquess because I would point out—I shall not detain your Lordships long now—that the actions of the late Government worsened the condition of the Unemployment Fund by about £18,000,000. I was saying before the noble Marquess interrupted me that under the late Government the debt on the Fund was increased by about £32,000,000, and I should further observe that I never heard even a most violent partisan suggest that the cost of the General Strike in respect of unemployment insurance amounted to £32,000,000. That the noble Marquess knows very well. He really agrees with me.


I do not say that.


A great deal of this result was brought about by the act of the late Government in cutting down contributions, particularly under the Economy Act of 1926. To resume, I say that even if this £2,000,000 should in the end come to be added to the debt on the Fund, it is a very small sum compared to the record of the late Administration. We can claim, and do claim, that, with this possible small exception, we are arranging that the finance of the Unemployment Fund shall balance out of current revenue instead of borrowing. I should like to say a few general things before sitting down about the cost of the Bill, and about unemployment generally and social services, though I may not touch upon that in detail. I leave that to my noble friend Lord Banbury. No doubt he will bring it up, as he usually does upon these occasions. I shall not speak at any length upon it now, but I am prepared to deal with points of this kind at the end of the debate. I did venture on the occasion of the Second Heading of the Widows' Pensions Bill to point out that a largo proportion of the money spent on social services is essential expenditure anyhow. It has to take place in some form or another. Surely that cannot be denied. It cannot be stressed too often that these unfortunate unemployed people have to be kept somehow. Therefore the expenditure due to this Bill does not lessen the total resources of the country, because it would have to take place anyhow, and in so far as the expenditure is more regular and on a little better scale than might otherwise be the case, I say there is good value got by the State for the money in increased efficiency and national well-being.

When noble Lords complain of the cost of this I must refer to the dealings with the Fund of the late Government. It is the case that whereas the debt on the Fund is now £37,800,000 it would, had it not been for the various Acts passed by the late Government, and particularly the so-called Economy Act of 1926, only be about £20,000,000. They have in fact added no less a sum than about £18,000,000 to the debt by cutting down contributions in various ways. That being so, the position clearly is that if it had not been for the various actions of the late Government it would not have been essential to increase the Exchequer contribution at the present time and to pass this Bill. All that is being done under the Bill could for the time being have been financed within the existing borrowing limit of the Fund, and even if that process had gone on for about two years the debt on the Fund would then probably only have been what it is now.

Nevertheless, despite these facts, noble Lords will, I expect, talk about this Bill as their colleagues have done in another place, as if the cost could have been avoided, as if it is something which the Government are incurring which they could easily avoid, and we shall have strong words about the effect of taxation on industry and so forth. We have had all that up again and again in your Lordships' House, and we never seem to get any further. We had it up on the occasion of the Second Reading of the Widows' Pensions Bill. But no attempt was made by noble Lords opposite to contravene the various points which had been advanced from this side of the House, or to go contrary to the quotations given from the Report—a very authoritative document—of the Colwyn Committee upon these matters. I pointed out that there was no support to be found for these exaggerated theories of noble Lords opposite. I respectfully submit it does not carry matters any further to go on with wearisome and quite unconvincing reiteration, saying that taxation is a great burden on industry and something must be done. I think we are entitled to a little more detailed argument than that. I think the matter, if it is to be raised again, ought, if I may respectfully suggest it, to be thrashed out fully in detail. These exaggerated theories which are pub forward by noble Lords opposite are not supported by authoritative economic teaching; they are not supported by the findings of the Colwyn Committee, and they are not really supported by the experience of the last few years when taxation was reduced to help industry and industry did not get better but got worse.

I am not going to discuss now the question of the incidence of taxation but we are agreed that whatever controversy there may be about that, rates are a definite burden on production. My noble friend Lord Melchett will agree with that because he has frequently said so in this House. The main alternative to this Bill is a large increase in rates and, in general, that increase will take place in the areas where it will be most serious, where trade is worst, and where an addition to the cost of production can least be borne. That is the position. In those circumstances, it is far better, it is more economically sound not to put additional burdens on the rates, but to find the necessary money in other ways. It has been again and again pointed out that direct taxation is an appropriation of profits after they have been made. It is not a charge against profits before they have been made and, therefore, it is not a charge against the cost of production. That I submit is the vital point in this controversy, and the point to which I will respectfully ask noble Lords, if they discuss this aspect of the matter, to address their arguments.

It is the case, and it really cannot be denied, that the finance of this Fund was conducted by the late Government in an unsound manner and it is a little hard on the present Administration that one of their early duties on coming into office has to be to try to undo the mischief not only in this matter but in so many other matters in connection with our national finance. No one can read the powerful speech delivered by the Chancellor of the Exchequer a few days ago without being impressed with the heavy task left to him by Mr. Winston Churchill. Therefore, when complaint is made about the cost of this Bill and the position of the national finances, I submit that we are in a strong position to reply. This Bill is due to the action of the late Government and the present Administration is dealing with the matter in accordance with sound financial principles. It is paying its way and not pushing off its difficulties on to others by the process of borrowing.

I trust I have dealt sufficiently and not at too great length with the main points of the Bill, the subjects of controversy. I do not propose to say more now. I shall be pleased to the best of my ability to answer any questions put in debate and then, of course, there is the Committee stage. I would ask your Lordships to bear in mind that the Bill is designed to deal with a situation which any Government would have to meet. His Majesty's Government claim that they are dealing with it in a good way and, as they think, the best way, and I leave the matter at that.

Moved, That the Bill be now read 2a.—(Lord Arnold.)


My Lords, I am sure you will agree that the noble Lord, who has just sat down, has given us a very lucid and eloquent exposition of the Bill of which he is moving the Second Reading. Apart from a few vivid flashes of the style of the noble Lord to which we are accustomed, I am inclined to use the words of the poet and to say it was the speech of the mildest-mannered man that ever cut a throat or scuttled a ship. The noble Lord has addressed himself to a very difficult task and I am bound to say that I missed that enthusiasm which I would have thought he would have put behind a Bill of this description. Your Lordships will agree that his speech was almost apologetic in character and he was fully determined to show that the responsibility for this Bill rests upon the noble Lords who belong to a different Party to himself on this side of the House. I do not feel there is any necessity for me to engage in controversy with the noble Lord upon that subject. In fact I think I ought to apologise to the noble Lord for having interrupted him at all in his speech. That is not the line which I desire to put before your Lordships to-night.

I feel that your Lordships have a great opportunity in this House. There are members of this House of unrivalled experience in these matters and it is only fitting that a Bill of this description should receive the minutest attention from your Lordships. That is why I have no desire to approach it in anything of the nature of a Party spirit. I am not thinking in connection with this Bill of the tactics which naturally play a certain part in the procedure adopted in another place. I hope that your Lordships will bring to bear on this Bill the whole force of your experience and wisdom—to use the expression which the noble Lord opposite used—the collective wisdom of the House. I hope that, what-ever recommendations your Lordships bring forward, they will receive consideration from the collective wisdom of another place.

I am not thinking of asking your Lordships to reject this Bill. I am one of those who believe that it is seldom advisable or wise to reject measures which come to this House on the Second Reading. I feel that, if that is done, a good deal of that opportunity of revision and review which is so valuable and which can be taken by your Lordships is lost. There is another reason. The Party now in office have not been very long in office. They have introduced the Bill in another place, the clauses there having been passed by larger majorities than I certainly anticipated, and I feel it is only right that a Second Reading should be given to this Bill and that we should bring to bear upon it whatever wisdom and intelligence we can for the purpose of improving it and removing from it objectionable features and sending it down as a workable measure.

There is another reason to which the noble Lord alluded. That is that something must be done. A Bill has certainly to be brought in. I may say, and the noble Lord will forgive me, that one would have thought from what one had heard in all parts of the country from himself and his colleagues, that instead of a stop-gap, piecemeal measure of this description we should have found they had grappled with the problem of unemployment and brought in a measure dealing with it in all its details. This Bill gives no additional borrowing powers but Clause 12 relieves the Fund of a burden which otherwise would have fallen upon it.

I would like to say one word about the principle of insurance. That is a principle to which we all subscribe. I remember very well how in another place in 1911 that Act was passed on some small foundations. I feel it is our duty to do what we can to maintain that principle throughout the whole country. At the present moment I think I am right in saying that no less than 60 per cent. of the workers of this country have borne the burden of that Fund and have never been in receipt of benefit, which shows there is a great underlying valuable principle to which we should adhere. The indictment which I would venture to bring against the Government on their Bill at the present moment is that, side by side with this great principle of insurance, there is another edifice growing up of very dangerous dimensions, bringing the workers of this country under another system of relieving unemployment.

I think your Lordships will agree that this Bill is not at all a satisfactory Bill, from many points of view. It seems to me to convey no message of hope, nor does it show any real evidence of the Government either desiring or being able to grapple with the problems with which we are confronted at the present moment. The Bill gloomily envisages a live register of no less than 1,200,000 persons. It is impossible to say that the country can be looked upon as prosperous if there is a, live register of no less than 1,200,000 unemployed. I have heard nothing in the noble Lord's speech showing that they have a definite policy for dealing with the great problem with which we are confronted. I have no desire to go back to the noble Lord's speeches, but I well remember his criticisms. I can assure him that I was not very sensitive to those criticisms, but I did perhaps at the back of my mind think that when this Government had been in office for as long as they have we should see something for dealing with this problem which we had not thought of before. I hear nothing, however, but the speeches which were made on innumerable occasions by my own colleagues.

I hear the Lord Privy Seal telling us that we must work, that nothing can succeed without effort, that there is no magic fund which can be poured into the pockets of the unemployed. These are the very unattractive phrases with which he is now going up and down the country, and, if I may venture to say so, they are lowering the stock of the Government from the height to which it rose when his colleagues went abroad east and west and came back with the policy which they were supposed to be carrying out. I am not prepared for one moment to say that the Socialist Party do not find themselves in very grave difficulties; but I have read the speeches of what may be called their Left Wing and I think that the noble Lord cannot deny that it was owing to the representations of that Left Wing that a complete surrender has been made over Clause 4. I do not feel that this is the place or the occasion to discuss the mentality of the Left Wing of the Socialist Party. They seem to think that if everything can be destroyed after that destruction something will arise which may be of benefit to someone; but beyond that it is quite impossible to define the policy which they endeavour to enunciate.

The indictment which I venture to bring against this measure contains what amount to six definite charges. Those charges were best enumerated in the Amendment which was moved in the House of Commons. I will venture briefly to states those indictments against the Bill. The first is that it casts an unfair burden on the proposed new entrants into insurance by its proposals with regard to juvenile unemployment. The second is that it alters the scales of benefits arbitrarily and without reference to recent scales laid down after careful and impartial inquiry. Thirdly, it is calculated to produce administrative confusion by the vague and unsatisfactory nature of its tests as to whether an applicant for benefit is seeking employment. Fourthly, it puts an impossible strain upon the adjudicating machinery. Fifthly, it proposes to carry those who have fallen out of insurance wholly by an Exchequer grant. Lastly, it lays grave additional burdens on the country without doing anything to lessen unemployment.

I will endeavour as briefly as possible to bring those indictments before your Lordships. The first is in reference to the juvenile entrants. I hardly think that the defence which the noble Lord made in regard to that provision in the Bill can in any sense be said to be adequate. I am sure your Lordships do not agree nor, I believe, does the country agree with the inclusion of juvenile entrants in this Bill. After all, their contributions are a benefit to the Fund as the noble Lord said. They go towards strengthening the solvency of the Fund. There is very little possibility of these juvenile entrants drawing anything out. The noble Lord gave us the figures, but he brushed aside what I think is a very important matter. The interest which has been taken in education in the last few years is increasing every day. We feel that it is our responsibility not only to look after the cultural advancement of the children but also the formation of the character of those children, and I profoundly disagree with the noble Lord when he says that it is a matter really of comparative indifference whether they are brought into the scheme at the age of 15 or 16. I think there is a great difference.

I do not feel that it is necessary at that tender age primarily to teach the children the benefits of thrift. I think that can be done when they arrive at a later stage in their career. But I do feel very strongly that it is a dangerous principle, and one which is bound to be attended with difficulties, and though I should not like to use exaggerated language almost with disaster, to teach the children of this country to look to the Labour Exchanges not as centres for the development of their own efforts, as institutions where they can be provided with honest labour, but as institutions where they can receive money, and money on occasions when they do nothing for it. I do not want to exaggerate this point, but as one who is chiefly interested in education and has occupied official positions in education, I feel that one cannot exaggerate the importance of considering the interests and the well-being of the children. I come to the second indictment, which is the alteration of the scales of benefit. I did not detect in the noble Lord's speech anything which justified these alterations. We know quite well that the scales were fixed after very mature consideration by the Blanesburgh Committee. The Blanesburgh Committee gave very long and careful consideration to these matters and at a time when our commitments are increasing every day, when our Revenue does not appear to be expanding in any way, for the Government to come down and for no reason that I was able to understand from the noble Lord's speech to increase those benefits, I say is a matter which requires the very careful consideration of your Lordships.

Now I come to Clause 4, the subject of which has been very much debated in another place. I would venture to suggest to your Lordships that this clause is really being read a second time to-day, because I think we are the first of the lucky recipients of the newly-printed measure, which means that whereas the Government—after very long and very minute consideration, I am sure—had drawn up their original Clause 4, almost in a moment of time in the middle of the debate the clause was withdrawn and another brought forward in its place. I think I am justified in saying that the new clause is a complete surrender. I have heard nothing in the noble Lord's speech which has really justified the surrender which has been made by the Government in connection with this clause. Your Lordships will agree with me when I say that there is a general consensus of opinion in this House, in another place and throughout the country, that the genuinely-seeking work condition, which has been eliminated, should have been insisted upon. If I turn to the Report of the Morris Committee, I find these words on page 20:— It is generally conceded that in a scheme of insurance against unemployment, benefits should only be paid to those people covered by the scheme who desire to obtain employment, and that it is right to include some requirement that those who are unemployed shall make reasonable effort to obtain employment. I do not think I need read the words of the Attorney-General which are very fresh in our memories, but I might perhaps be allowed to refer to the remarks of the Secretary of State for War, who used these very pregnant words:— It is proposed to delete a paragraph which provides that a man under certain circumstances, having received benefit for a considerable time in proportion to his contributions, must show that he is making every reasonable effort to obtain employment suitable to his capacity, and that he is willing to accept such employment. Mr. Shaw went on to say:— Surely there is nothing wrong in that requirement…. I think that is a perfectly reasonable condition to make. Where is there a society of any kind whatever where the onus of proof does not lie upon the man making the application? I know before the trade unionist gets his benefit he has to prove that ho is entitled. I am not willing that the benefits of the Fund should be given to a man whether he is entitled to them or not. Those are very striking phrases. They were used in the same debate in which that clause was withdrawn and another put in its place.

The phrase "genuinely seeking work" has now become very well known. I am willing to agree that it requires revision and certainly ought to be considered. We know quite well that individuals have been denied benefit when they should have received it. Let me refer again to what I said in the beginning of my speech, that this is a matter for the collective wisdom of all those who are interested in these matters. Your Lordships are in a, particularly good position, from the wealth of experience that there is in this House, to bring forward some words which can clarify this situation, and I sincerely hope that the Government will not feel that it is necessary for them to refuse such words. That is a matter of the gravest importance, which touches everyone of us. It is our duty to do our best to consider some form of words which can satisfy those conditions. I have with me now the conditions required by trade unions. The noble Lord says that these requirements were drawn up 50 or 60 years ago. There is no reason whatever, because a principle was enunciated 60 years ago, why it should not apply at the present time, and I think that you will find that throughout the trade unions there is a real desire that "genuinely seeking work" should be one of the principles to which we should rigidly adhere.

The noble Lord passed quickly over what I may call the proper perspective of these matters, but there are one or two figures which I will give to your Lordships. From 93 per cent. to 94 per cent. of all claimants receive unemployment benefit without any trouble whatever, but we have to deal with the 6 per cent. or 7 per cent. who are disqualified under the genuinely-seeking-work condition. We know very well—there is no need for me to repeat what the noble Lord has said—that the great bulk of these men are very respectable men indeed, men whom we all desire to help. We know also, as he said, that there is a small percentage of "wasters." There is a larger percentage of what I might call weaker vessels. It is these two classes, the "wasters" and the weaker vessels, which justify the principle that the claimants should be required to make some effort. Otherwise we are establishing a system in which this effort is supposed to be unnecessary and we shall reach in this country—it may be very small at present, but it may develop to dimensions that we do not envisage—what I may call the stage of contagious demoralisation.

The new Clause 4 sets out three conditions of disqualification in place of genuinely seeking work: (1), refusal to apply for a specific situation notified to the claimant by the exchange or an agency or employer; (2), refusal of such a situation if offered; and (3), refusal to carry out written directions by an exchange official assisting a man to find employment. The whole onus of proof is now placed on the exchange officers. I hardly think that enough importance has been attached to the work of this very excellent body of men. It is obvious that a far larger staff will be required, and also that the exchange officers cannot possibly follow up every case. There is the further consideration, which I should like to bring to your Lordships' attention, of the physical strain upon the insurance officers. Not only is there a physical strain, but there is the uncommonly distasteful duty that you are further imposing upon them.

I want to ask the noble Lord whether the test under either the first condition or the second condition can be effective? Of every 100 jobs at present, at least eighty-three are filled through the ordinary trade channels. I think it is doubtful whether even the remaining 17 per cent. claimed to be filled through the agency of exchanges are genuinely so filled. The exchange can get no proof. That is the difficulty of these new duties that you are putting upon them. The second question I should like to ask the noble Lord is: Can the exchange get information through a compulsory notification of vacancies notified and not applied for, or jobs offered and not filled by applicants? We know quite well that no system of compulsion can be of any use whatever. It is quite notorious at the present moment that employers are most unwilling to give information against workpeople. They do not want to do it and it is not to their interest. I feel quite sure that all employers would resent very much being made use of—if I may use the expression—as detectives for the exchanges. Furthermore, these considerations would gravely imperil the good relations between employers and employed.

My next question is this: Can it be made compulsory to fill all jobs through the exchange? That again would be quite impossible. It is recognised at present that any places made through the exchange can only be done by persuading employers, and not by pressure. Again, any system of compulsion would be bitterly resented by the trade unions as well as by the employers, and, as we know, the arrangements which are made for the filling of vacancies between the employers and trade unions are very highly valued by the trade unions themselves. Even if the compulsory scheme could be made to work, what would be the result? It has been admitted by the Minister of Labour that the Exchange would in every case try to offer the best and most suitable person for a job to be filled by them. A successful compulsory system, if it were conceivable, would lead to there being a residuum of men at the bottom, to whom no vacancies at all could be offered. Therefore, if tests 1 and 2 are to be the only tests, there would be a certain percentage of men at the bottom of the scale entitled to draw benefits indefinitely. So I feel that there is nothing in the clause which can bring about the improvement which we desire.

I have only one word to add, and that is in connection with finance. The noble Lord in his speech discounted a certain amount of what I propose to say, but I can assure the noble Lord that nevertheless I am still proposing to say it. It would be presumption on my part if I were to venture very deeply into this very difficult question. There are many of your Lordships far more capable of dealing with it than I am, but I think we must agree that every additional burden which is placed on this country reduces employment rather than relieves the problem of unemployment. The Chancellor of the Exchequer, in his speech on the Third Reading of this Bill, admitted that the extra expenditure would be something like £14,000,000, which, added to the £12,000,000 which the scheme has already cost, would amount to a burden on this country of something like £26,000,000. I think a noble Lord who sits behind me has stated, in a very interesting speech which he made the other day, that the burden of our social services has risen in a comparatively short space of time from 8s. to £8 per head, which means that these are all inroads into our hopes and endeavours to solve the problem of unemployment.

There are innumerable warnings to those who are prepared to listen to them. There is, first, the continuance of unemployment, which I am sure noble Lords will agree has some direct relation to the expenditure which we are incurring. There is the obvious and very significant lack of resilience in industry, and the grave repercussions which follow the lack of confidence for which some of the declarations of members of the Government are responsible. There are also the proposals which are put before us. There is the Minister of Health who tells us, in effect, that it does not matter what social reform costs; that the country must afford it, or do its best to afford it. Then the noble Lord opposite is addicted to the policy of spending money and he says that the greater expenditure of money throughout the country is a very good thing, while the Chancellor of the Exchequer spoke very gaily of the incidence of this new taxation in his Third Reading speech.

What I am going to say is merely metaphor, but I prefer to appeal from Philip drunk to Philip sober, and to quote from a speech on October 8, in which he said:— Still, the fact remains that the total volume of savings in Great Britain to-day is, if we take the changed value of money into calculation, less than it was in the years before the War, at a time, mark you, when the need for saving is greater than ever. I have ventured in the time at my disposal to deplore some of the provisions of the Bill. This Bill seems to me to denote a failure to recognise the dangerous trend of legislation of this kind. It seems also to whittle away the principle of insurance by disregarding the effect on character, by subsidising idleness and, in general, by disregarding all financial considerations.


My Lords, I must confess that it is with feelings of great depression that I have listened to this debate, after having read the Bill and also various discussions which have taken place in the other House on this matter. For this reason, that they all seem to be based upon the unfortunate expectation that there is no immediate road to any really large reduction in the amount of unemployment in this country. Therefore it is that although I support this Bill I do so without any great enthusiasm. The Government promised, before they came into office, that they would supply to the people of the country either work or maintenance. In 1924, before they came into office on the last occasion, they told us that they had schemes ready which could be put into operation at once. They have had six years in which to go into those schemes and improve them, and yet during the months that they have been in office those schemes have not materialised to any large extent. They are not materialising at the present moment, and it is with very real regret that I feel bound to say that it does not seem to me that they are going to materialise in the future to any adequate extent.

Of course we should all like to see trade improve and provide work for people. For my own part, instead of having increased expenditure upon the relief of unemployment, I would rather see increased expenditure upon things which would give work to people and help industry to revive. This Bill is necessary in the circumstances of the case, although I regret that it should be necessary. In passing, may I congratulate those who are responsible for the way in which this Bill is drafted? Lately, we have had to criticise Bills in this House because the clauses have dealt by reference with the matters contained in the Bill. This Bill is a great improvement upon many Bills lately introduced into this House, because there is so little legislation by reference in it, and when we get a Bill of this kind I think we should express our thanks to anybody who is responsible for the drafting of it. This Bill is necessary because of the enormous increase in the debt of the Unemployment Insurance Fund during the last two years.

It is a matter of satisfaction to those who sit with me to think that this Bill does maintain two great principles of the Liberal Act of 1911. I am very glad that the noble Marquess, Lord Londonderry, dealt with the acknowledgment of the great principle of insurance which has taken root in the social life of the people of this country. It is a matter of great satisfaction to noble Lords who belong to the Liberal Party to think that that is now a necessary part of the social life of Great Britain, and it is a cause of particular satisfaction to me to think that the statesman who was responsible for introducing the first measure of insurance is now a member of your Lordships' House, I mean Lord Buxton. I am only sorry that he is unable to be here this afternoon in order to speak upon this Bill. But we are naturally pleased to think that this Bill maintains the two great principles upon which the Liberal Act was founded: in the first place, that of tri-partnership, so that the employer, the workman, and the State all contribute their share towards the general Fund. The second great principle is that the Fund should be placed upon a real insurance basis, that is to say, that in normal times it should be on thoroughly sound financial principles, and able to pay for itself.

It is interesting to see how much since insurance was originally introduced into the general life of this country the benefits have increased. In 1911, while both employers and employed paid 2½d. each and the State paid 2d., the benefit to the single adult was only 7s. a week, and there was nothing for dependants. Now, while the employer pays 8d. and the employed 7d. and the State pays one-third of the two combined, a family with three children receives a benefit of no less than 32s. a week. It shows a remarkable increase. I am glad to think that in the course of discussion in another place, the provisions of this Bill were considerably improved. There was inserted, for instance, the clause which provided that young people should be trained, and that as part of the conditions of their receiving benefit under the Bill, they should go through a certain course of training. There was a second improvement in the Bill, though I am afraid that this will not be approved of by noble Lords sitting beside me—namely, that the insurance is to begin at an earlier age. It will fill a gap—a gap which was an unfortunate one during the last few years. There was a temptation to a bad employer to employ young people when they first left school, without having to pay contributions to the Insurance Fund, and then when they reached an age at which the insurance was payable, to dismiss them and take on in turn younger people. That temptation is now removed, and at any age at which these children or young people go into employment the employers will be obliged to pay their share of the insurance. That seems to me another very happy change in the Bill.

Then there is another thing, that is with regard to a matter to which the noble Marquess who has just sat down devoted a good portion of his remarks—namely, the onus of proof. I must confess that that seems to me to be an improvement in the Bill. After all, the change which has been made by the Government falls in with the general principle of English justice that a man is supposed to be innocent until he is proved to be guilty. It is in accordance with one of the great principles of English justice that until it is proved that a man or woman has not genuinely attempted to get work it is presumed that they are innocent of this failure, and they get the relief provided under the Bill. On the whole it does not seem to me to be a very important matter. On the assumption that there are 1,200,000 people unemployed, some of them coming back over and over again to the labour exchange, and that something like 10,000,000 claims are made, it must be a very small proportion of these who are really concerned in this particular matter.

I do not know whether there is any information at the disposal of the Government or of any other body in this country—it would be very interesting if it could be elicited—as to whether there is any real proof to show that there is more than a very small proportion to whom really this particular clause would apply. It is at any rate fair to point out that the clause brings no more people on to the charge than were there before. It only concerns those who were already entitled to receive unemployment pay, and they will not in consequence of this Bill be any more in number than they were before. I believe that the cost is small. I have a profound faith in the British workman. I believe that both the workman and workwoman would far rather have work than unemployment pay, and that the number of shirkers is really very small indeed.

There is the other point—a provision now in operation in the Bill—with regard to the cost of the transitional period. When insurance was introduced it was as a real insurance measure on a financial basis, and after a time there was a surplus of no less than £20,000,000. Then came the War, and many people were added before they had paid their share of contributions. I do not criticise that, but the unfortunate result was that the surplus of £20,000,000 has gone, and there is now a debt of nearly £40,000,000. It seems to me that in cutting their loss and in removing from the Fund the responsibility for that amount of money the Government have been doing the right thing. This extra payment will be cut off, and we shall now return to a real insurance basis on sound financial risks. It is obvious that the burden on industry and on the individual is heavy. It is not too much to hope that there may be a very real reduction before very long. It has been admitted that during the last few years one of the reasons why the contributions from the employers and employed have been so high has been the attempt to get back, if possible, to a sound financial basis. That has been difficult because of the heavy debt, and when the debt is removed I hope it is not too much to expect that the contributions from employers, employed and the State may be reduced without affecting in any way the advantages which the unemployed get at the present time.

We are so much accustomed to the insurance system to-day that it is almost surprising to remember how new it is as a part of the constitution of this country. It has been of incalculable service to this country during the bad days through which we have just passed and it has enabled this country to pass through bad times without any of those disturbances to which we might otherwise have been liable. Therefore I support this Bill. I regret that during this Session the main Bills so far introduced by His Majesty's Government have been concerned with increasing the expenditure upon social services. The first has given pensions to another 500,000 widows, and now we are going to give insurance pay to a number of young people. What I want to know is when we may hope to get some Bills which will develop the resources of Great Britain, and provide work instead of maintenance. When are we going to have Bills to develop the canals and the roads of this country, schemes which will give us better docks, and which will afforest many of the hillsides of this country; some Bills which will help the prosperity and add to the capital of this country instead of emphasising the impoverishment from which we suffer to-day.

We realise, of course, the pledges which were made by His Majesty's Government and which naturally embarrass them to day. The noble Lord, Lord Banbury—I am sorry he is not here—has referred more than once to what I have said on previous occasions in regard to the Widows' Pensions Bill. If I may say so, I think he misunderstood a little bit part, at any rate, of my criticism of His Majesty's Government. My criticism was not that I wanted them to go further. I said that their pledges showed that they had promised to go further themselves and I criticised them for not having carried out the promises and the pledges they had made. So it is in regard even to this measure. They gave pledges that the waiting period should be reduced. On every Labour platform in the country before the last General Election the promise was made that that period should be reduced; but when an Amendment to that effect was moved in another place it was refused on the ground that there was no money. Why did they not say so before? Had they told the people of this country that the money would not be delivered, I think it would have been fairer to the misguided people who voted for them on account of the promises which were made.

It is just the same as it was with regard to pensions—they made these promises and now they do not deliver the goods. It is just as if goods were knocked down to the highest bidder at an auction and then the highest bidder refused to pay for the goods which he bought. That, after all, in regard to this Bill and the Pensions Bill of His Majesty's Government is exactly the state of the ease. They have secured the goods, but they will not pay for them now they have got them. It is not for other people to bid higher than they have done themselves.

I would beg of them in regard to the other portion of their promises to carry them out without further delay. Where are the schemes of development which have been promised? We have waited for some time for them. We may be told that this Bill ought to come first because it is a matter of emergency. I agree that it is a matter of emergency. It is, as it were, ambulance work. But I want to see His Majesty's Government proceeding with legislation which will prevent accidents from taking place and make the presence of the ambulance wholly unnecessary. If they will provide work and secure a real reduction in the number of unemployed we need not think so much about the provision of money for unemployment insurance for the people of this country. I want not inadequate measures of relief for the casualties of industrial depression; I want to see His Majesty's Government removing the causes of the industrial depression and doing something to stimulate trade and industry in the country. I hope this will be the last Bill of its kind and that for a change the next Bill dealing with social measures will be one which will enrich the nation and which, instead of assisting unemployment, will do something to prevent the occurrence or the increase of unemployment in this country.


My Lords, I regret that I did not hear the whole of the speech of the noble Lord who introduced this Bill. I heard some only of the concluding remarks ho made. But he challenged us to a debate on the doctrine which is apparently very fashionable in certain circles to-day, that however heavy taxation is it does not affect industry. He said that we could not produce any economist to controvert such an absurd proposition. It seems to me unnecessary to produce an economist to controvert it and that common sense and experience are sufficient. The history of the world teaches us that there is nothing so depressing to the prosperity of a country as over-taxation, and there is nothing in the world that is so depressing to enterprise, nothing so discouraging to work or effort, and nothing which, as the history of the world has shown, has led to economic ruin more certainly than heavy taxation of the citizens of a country. No findings of any Committee, however eminent, can do away with that experience nor is it necessary to go into the subject in detail.

The noble Lord himself has considerable experience of the management of public companies. If he will tell me that the taking away of a large amount of the reserves of public companies by means of taxation is not hampering the development of industry in this country he certainly will stand alone among all those who have studied this subject. This facile doctrine, very much in favour in high quarters of the Treasury, is one which does not bear the light of economic discussion or the application of common sense. It is in fact contradicted by the actions of Chancellors of the Exhequer of all times.

If the noble Lord was right the present Chancellor of the Exchequer would not refuse claims, as he has done every day, for more money from the Treasury; he would gladly welcome them and assist in spending money because after all it makes no difference. Again, the great work of the late Mr. Gladstone which we have been taught to look up to, and which the noble Lord opposite in former days looked up to as the ark of the covenant of what finance ought to be, was the diminution of taxation in the country and the abolition almost of the Income Tax. That was his great life work. We find in countries like the United States, France and Germany, that tax reductions are being made, that there is an enthusiastic welcome of the fact and that the statement is not unnaturally made that it will be a great stimulus to the industries of the country. The whole doctrine that money fructifies better in the pockets of the citizens than in the pockets of Government Departments has not been abolished by the views of some faddists who call themselves economists. I have never really known what an economist is except that he is said to be a gentleman who makes more dogmatic statements in obscure language than any of his fellow citizens.

The noble Earl, Lord Beauchamp, referred to Clause 4 of this Bill on which I desire to say a few words. He committed himself to the somewhat remarkable doctrine that it is the law of this country that if a man makes a claim it is not for him to establish it but for the person who pays it to do that. If the noble Earl had a fire in his house and was insured against fire and wished to get anything from the fire insurance company, I think he would discover that it was he who had to make the claim. It is not the business of the fire insurance company to demonstrate whether his claim is a good or a bad one. We are not dealing in this matter with the question of guilty or not guilty. We are dealing with a man who is a participant in an insurance fund and who claims certain benefits of insurance. He is in the same position as any man is in regarding accident insurance, fire insurance, or any other form of insurance. Therefore the idea that he is not bound to take any active steps himself except to claim the insurance money, that he is not bound to take steps to show that he is entitled to the insurance money or is not bound to make any effort whatsoever—apparently that is what is implied or I cannot imagine what it means—not to be a burden on the Insurance Fund is, surely, an entirely irrational and illogical one.

The noble Marquess referred to the regulations of trade unions. I was only recently discussing this matter with the secretary of one of the oldest and greatest of the craft unions of this country and he expressed strong disapproval of this clause. He said it was subversive of discipline and that no trade union would tolerate for a moment any provision of this character. They have found by experience that human beings are human beings and not angels. Therefore, if you make it easy to obtain benefit you are taking away the most elementary stimulus that a human being has—that of doing something for himself. What was the view of the Attorney-General of the noble Lord's own Party? He used most violent language in regard to it. He described people, if this clause was passed, stopping at home and having the money brought to them. In this case that was an exaggeration, because they would have to go to collect the money at the labour exchange. But there was the view of the Government, and they were compelled into a most humiliating surrender. It is a clause which was forced upon them in the hurly-burly of a House of Commons mix-up.

This draft was produced which nobody in the House of Commons ever saw finally completed, and which certainly no one understood when the Bill was given its Third Beading there, and which I myself confess I find it extremely difficult to understand as it is drafted now. The labour exchange official is quite incapable of carrying out these duties. He is not put in a position to carry them out. I know a good deal from practical experience about labour exchanges and the difficulties officials have. If you had—and I think it would be a very reasonable thing to have—a notification by employers to the labour exchange of people they take on, then the labour exchange official would be in a position that he is not in to-day of knowing whether a man has actually been able to find work. He does not know to-day even whether a man is in work or not, and in many cases people will get unemployment money when they are actually employed. The labour exchange officials have told me that they have no means of ascertaining whether a person is in employment or not except by means of what they may be fold by some one or the person himself.

The first step you ought to take is this. I think that the employers should notify the labour exchanges of the men they take on and when they take them on. I do not think there would be any serious objection on the part of employers if there was a short clause put in the Bill asking them to do this. I have not heard of any employer who has raised any difficulty on that point. That at any rate would be a step forward. Even then the harassed exchange official would be in an extraordinarily difficult position to carry out this kind of work. It is difficult to see, under the clause as it is drafted, whether he is to be the only person, because the words used are of a very general character—" or other recognised agency. "Perhaps we shall be told what is regarded as a "recognised agency" under this Bill. Personally, I have always thought it a considerable drawback, under our unemployment insurance, that we have not got the assistance or help of trade union organisations in dealing with this very difficult subject.

As Minister of Health I was responsible for some time for the very difficult matter of national health insurance, and I must say, had it not been for the assistance of the approved societies I believe that Fund would have been financially in exactly the same position as this Fund is in to-day. That it is not is simply due to the fact that the friendly societies and trade union approved societies had a direct interest in seeing that funds were properly administered and that people were got off those funds as soon as possible. That was what made a great success of that Fund. If some scheme could be worked out which would bring in some of these organisations, I believe you would find a much better administration of the Insurance Acts than we have had in the past.

Might I point out that we go on passing Insurance Bills, but really, in spite of what the noble Earl said, we have departed from insurance in the last eight years. You have not had an Insurance Act in this country since 1921. Surely the principle of insurance is that the benefits and contributions have some relation, and that either the contributions go up or the benefits come down; but since 1921 we have really been in the position that whatever happened the Treasury has stepped in, and by loans on future contributions has really financed what has become a huge system of national out door relief. As soon as you introduced un-covenanted benefit you were giving people benefits for which they had paid no contributions. You are really departing from the principle of insurance. It is no exaggeration to say that in reality this Fund has been bankrupt because the whole scheme has been applied to a set of circumstances for which it was never designed, and for which no insurance scheme could be carried out. The scheme was started with the idea of meeting normal unemployment, and we have all this time had abnormal unemployment.

We are all equally involved in this. There is no charge against any one Government for all Governments are responsible. We have used this machinery to get over a very difficult economic situation, but I think the time has come when we ought to begin to approach our insurance schemes from an entirely different angle, and that is how to support large bodies of unemployed who are permanently out of work in times of industrial depression. There are really two quite separate questions, and it is the mixture of these two questions that leads to these continual Bills and this awful mix-up of the finances. Moreover, the contributions are being levied on the industry of workmen as well as of employers in trades which have practically no unemployment, in order to deal with what is really a national question of grave unemployment in exceptional industries. Originally, of course, it was always contemplated in the Insurance Act that industries should be allowed to contract out and form schemes of their own. The idea of that was that each industry would then have a real direct interest in keeping down its unemployment. Unfortunately, with the lapse of time, these provisions have all disappeared, and to-day your best industries are continually being burdened for those which are either less fortunate or less efficient.

Clause 4 as it stands to-day really will not do. I do not say that it is easy to find a form of words. We all know the case of the workman tramping round some place in which it is known there is no employment and pretending to seek work. We do not wish to increase unnecessary hardships. On the other hand it is impossible to throw away all reasonable safeguards. The question of whether the number is large, as the noble Earl who preceded me said, is not really the question we have to consider. The number is probably not so large. It is the spirit which is created, and I may say frankly that an intense irritation is aroused among the working men themselves. Nothing incenses the working man more than to know that people are getting benefits out of a scheme to which he contributes to which they are not entitled. After all he is just as much interested as anybody else in the administration. It is not a question of percentages. It is a question really of saying that we do not intend to allow funds contributed out of wages or by employers or from public funds to be loosely administered or wasted. Laxities of this kind spread with a horrible contagious effect, and it is almost too common that public money is looked upon as something the expenditure of which nobody is concerned with, and that it does not much matter because it is money found by the State. Those are the considerations which really lead one to look with the greatest apprehension at a clause like Clause 4.

Speaking with no sense of exaggeration I say that clause has created consternation throughout the length and breadth of the country. People who have no political bias of any kind feel strongly about it. It is contrary to the idea which most people of this country hold as to how these things ought to be done. If the noble Earl (Earl Beauchamp) will make inquiries among the supporters of his Party in the North of England he will find that what I say is correct. I was told by a prominent member of that Party that the attitude of the Liberal Party in the House of Commons towards this Bill would have a very serious effect upon their prospects when they came again to seek Liberal support. Liberals have always been zealous guardians of the public purse.

The question of juvenile unemployment appears to me even more difficult, for you have to assume that the statistics seem to prove that there would be no juvenile unemployment for some time, yet you are immediately collecting contributions from young people in employment in order to make your Fund more solvent—a not very heroic procedure—or you have to assume there will be unemployment among them, and then you get into an even more dangerous place. Surely we are all agreed on one thing. We cannot have people all brought up with the idea that they can receive money for doing nothing. To start people at the age of 15 on the basis that they will simply do nothing and that some kind person every week will hand them out enough money to lead a not altogether unpleasant existence, must have upon the best, the most hard working of us, the most demoralising effect.

That is what I think is the root objection to the introduction of this clause. You are again taking from the insurance principle when you say that we will hand out money to people on the condition that they are being trained, that they attend night school, and on other conditions of that character. What has that got to do with insurance I Either the people are paying contributions and entitled to their benefits, or you are really creating a State-aided maintenance for education, which may be a good thing or a bad thing—I am not arguing that—but ought to form a separate subject for legislation. The noble Lord opposite rather complained and said, "This is not really our Bill at all. It has been forced upon us by previous Governments." I understood him to admit that the financial part of this Bill could have been dealt with without this Bill at all.

LORD ARNOLD indicated dissent.


I am sorry. I misunderstood him. Why are there these new provisions in Clause 4? They are no legacy from any previous Government; they are not necessary to make the Fund solvent or to find new funds for it. They are really new excrescences or additions to our already bulky legislation on this subject, and it seems to me extraordinary, when you have had a Committee sitting under Lord Blanesburgh, which spent a long time on this subject, and when the present Minister of Labour was a member of that Committee and signed that Report, that the Government should entirely disregard practically all the recommendations of that Committee, should disregard the signature of their own Minister and should come forward with proposals whose only recommendation is that for the moment they have placated the wild men from the Clyde. The noble Lord reminds me of a man driving across a frozen plain with wolves behind him who throws out one child after another so that he can get away. In the end, there is an end to the children; but a better way would be to face your wolves and deal with them on the first opportunity rather than on the last.

I hope that we have finished with these measures and that we shall obtain a financial equilibrium on this Fund. We have been promised that so often. We have so often all hoped that we were reaching a position where that would take place. At one time there was a downward curve in the Treasury debt and the Fund was getting towards solvency. At present we seem to have abandoned all hope of this taking place by automatic means. At any rate, I shall be glad to think that the Fund will not start upon a new career of debt and once more take a downward plunge. Really, this whole question of paying people to do nothing is one which is becoming serious, not merely here but in all countries which have adopted it. Quite irrespective of country and nationality, there is a psychology created and a very serious psychology—I will not say of a desire for idleness, but I will say of a less willingness to work and a curious view that, after all, the difference between the actual wage and the benefit is so small that you cannot ask people to work, as they say, for ten shillings a week.

This consideration is a most serious one. It led me a good many years ago, when I had more responsibility than I have now on matters connected with unemployment, to put forward seriously a proposal by which this scheme of benefits—if benefits they can truly be called—which have flown unceasingly all these years and left us exactly where we were, might be diverted to subsidise not idleness but work. A scheme of that kind, by which the unemployment benefit might be used by a man to buy himself a job rather than as at present to discourage him from a job, difficult as it is and open to many objections to which I am by no means blind, still has advantages so great that I will really ask for it to be reconsidered. It is not an impossible scheme by any manner of means. It is open to economic objections, but candidly I have got very tired of economic objections because they do not seem to solve any of our problems. A scheme whereby, under proper conditions, under proper regulations, in industries especially adapted and depressed, you would undoubtedly and indirectly be subsidising wages and cost of production would seem to me to offer a greater prospect of dealing with the human aspects of this question than these Bills.

After all, there is a fact of which all of us with industrial experience are aware, and that is the demoralising effect of years of unemployment on the finest class of workmen you can have. Men employed in heavy industries find their muscles gone and they have got out of the rhythmic swing of heavy work. They have, through no fault of their own, degenerated to such an extent that when work is once more available they are incapable of the work they once did. Any method that can be employed, however unorthodox it may be, to prevent the deterioration in one of our greatest assets, the morale of our working classes, would be worth a large amount of this legislation, introduced by whatever Government, which is finally always a palliative, leaves you exactly where you started and offers to the workman a lower or a higher benefit but never the one thing he wants, work to occupy his time, to exercise his skill, and to make him feel, when he has returned to his home, that he has produced something which is represented, as far as he is concerned, by a wage.


My Lords, I only venture to intervene in this debate because I was at one time brought into close contact with a number of unemployed, I knew them and their families well, and I had a knowledge of the problem from the inside. Since that time I have done my best to follow the various schemes and policies proposed to deal with this matter. The noble Lord who spoke first told us we ought to view the matter in the proper perspective. The proper perspective seems to me to be this, that there are to-day a large number of men who are seeking work and cannot possibly obtain it. If your exchanges were perfect and if every job were made known, you would still find a large number of men who were unable to find any work whatsoever. That is the real perspective in which we ought to consider Bills such as the one before us now. There are hundreds and thousands of men who are out of work to-day through no fault of their own. Of course, the real remedy, the permanent remedy is to make more employment, but even the most optimistic will recognise that it will take a long time before we are able to reduce to any material extent the amount of unemployment which now exists, and in the meantime we must do our utmost to see that those who are out of work do not suffer unduly from conditions which are not due to any fault of their own.

It is in that perspective that I venture to approach the Bill now in front of us. I cordially support the proposals dealing with juveniles. The noble Lord who has just spoken told us that unemployment leads to serious deterioration. That of course is true if it is over a long period, but of a juvenile it is true if it is over a very short period indeed, and one of the problems which has concerned most of those who have had to deal with juveniles has been what is called the gap. The State pays for the education of the child up to the age of fourteen. Then the State ignores the child until it comes into insurance at the age of sixteen. Luring these most critical years a boy may go into blind-alley employment, he may be out of employment, he may deteriorate and the State has paid no attention to him. But under the policy of the present Government that gap will be bridged. The compulsory age of education will be raised to fifteen and the age of insurance will be reduced to fifteen.

Now two objections are raised to this. First we are told that this reduction will demoralise the boy who comes under the insurance benefit. A great outcry was made in 1924 when a proposal similar to this was made. I remember at that time conferring with a number of men of great experience who give up their spare time to work among lads in the poorest parts of London, and I asked them what they thought of this proposal. Every one of them said they would welcome it. If you turn to expert advice to-day—I always hesitate in using that word "expert"—you will see that those who are most intimately acquainted with conditions of juvenile work are in favour of this proposal. Take for instance the Malcolm Report. In the Malcolm Report we have a statement that they have examined the various criticisms and have also considered the age of insurance, and they say:— We cannot but come to the conclusion therefore, on the evidence before us, that in actual practice boys and girls of 16 and 17 are not in general demoralised by reason of the fact that they a re within the scope of unemployment insurance. In our judgment if boys and girls of 14 and 15 were insured the same negative result would be obtained. Then you have the report which has been published quite recently by the National Advisory Council for Juvenile Employment. This report, signed by Lord Shaftesbury, recommends that the age should be reduced to fifteen. Turn where you will, I venture to say the majority of those who have had close practical experience with juveniles of the age of fifteen welcome the lowering of the age of insurance.

Then we are told on the other hand that this was all very well some time ago, but that juveniles have fallen off in numbers and that within a comparatively short time there will be no juvenile unemployment. At the present time there are something like 67,000 juveniles under the age of sixteen who are registered as unemployed at the labour ex-changes. These numbers will gradually decline, and with the exception of one year the decline will be quite gradual until 1941. It is true that taking the country as a whole you will find that juvenile unemployment will be a thing of the past. There will be more work for juveniles than there are juveniles.

But this does not mean that there will be no unemployed juveniles. The report I have quoted says there will always be pockets of juveniles unemployed. You will find juveniles fully employed in one town and in another town perhaps 100 miles away you may have a large number of juveniles out of work. There is a very interesting reference to this in the Report of the Ministry of Labour for this year. In that Report it is pointed out that in those districts where recruiting was very successful in the War there will be a shortage of juveniles in the coming years. In other districts where there was a great deal of munition work and the men did not go to the front you will find a large number of juveniles and therefore in all probability you will find considerable juvenile unemployment in the future. Although juvenile unemployment will be for a number of years nothing like what it has been in the past there is no doubt I think that there will be large pockets of unemployed juveniles. This measure will deal with their case.

Of course all I am saying is conditional on this: that juveniles are compelled to have instruction. I was filled with con sternation, I admit, when the Bill appeared in its original form and no pro vision was made for this juvenile instruction, and I admit I am still a little anxious about the clause—I think it is Clause 15—dealing with this matter. I should like to be reassured by the noble Lord who will speak for the Government that the Minister of Education fully supports this proposal. I followed the debates on this matter with great care and there was rather an ominous silence on the part of the Minister of Education. In the past there has been a certain amount of friction between the Minister of Labour and the Board of Education on this particular subject, and I trust that this provision will not be merely a pious hope but that it will be made a positive condition.

And now I turn to another point. The noble Marquess who spoke second in the debate raised the question about the scales of benefit, and he said, if I remember aright, that he saw no reason to increase benefits. I wonder if it is always realised what hardships even now are suffered by those who are out of work through no fault of their own. At the present time a man who is out of work and has a wife and three children receives 30s. a week. Under this Bill he will receive 32s. As the result of an investigation carried out by authorities in social science like Professor Bowley and Mr. Rowntree it is stated that the minimum amount necessary to obtain the bare necessities of life for a man and wife and three children is 35s. a week. 23s. is required for food, 4s. 11d. for clothing 4s. for fuel, 1s. 4d. for insurance, and 1s. 6d. for household expenses. That does not take into consideration rent, which cannot be put at less than 8s. 6d. The man has 30s., whereas 35s. is necessary merely for the bare essentials of life, excluding newspapers, amusements or any of the ordinary amenities of life. When a man is out of work for a short time he has savings to fall back upon, but when the period is prolonged, or when the period of being out of work is repeated, suffering becomes acute and the home has very often to be sold up. Therefore I hope that when your Lordships are discussing the question of increased scales of benefit you will bear in mind the actual hardships which have to be suffered in many homes to-day.

Next I want to turn for a moment or two to that most difficult clause, Clause 4. I am bound to say that I am not a supporter of the clause as far as I understand it in its present form, though I believe it is a great improvement on the old system. I believe the old system of the test for those who were genuinely seeking work caused a great deal of real injustice. Men were forced to walk round from factory to factory, from workshop to workshop, looking for work which they knew did not exist. It is almost impossible to exaggerate the resentment and the bitterness caused by this test when it has been applied as it has been applied undoubtedly in some localities. After all, the number of men whom this affects, according to the last Minister of Labour, constitutes three or four per cent. of the total. Because there is some possibility of three or four per cent. gaining relief to which they are not entitled, it is utterly unjust that the other ninety-six per cent. should have to go through the humiliating, useless and stupid farce of wandering round looking for work which they know does not exist. That formula has been condemned. It was not admitted as satisfactory by the Blanesburgh Committee, and it was regarded as impracticable by the Morris Committee. The late Minister of Education, in a recent debate in another place, said that he was becoming dissatisfied with the ordinary operation of the genuinely-seeking-work condition. Accordingly I am glad that this condition will be changed by this Bill.

Nevertheless I am not at all sure about the meaning of the clause. Does it mean that the man out of work will be entitled to wait until work is sent to him? I am perfectly certain that in practice the great majority of men will be seeking for work, but will a small minority be entitled, under this clause, to wait until work comes to them, and is the burden and responsibility of finding work thrown on the exchanges? If so, the exchanges, as at present manned, are quite incapable of dealing with this duty. And what is meant by these words?— ….a claimant has without good cause refused or failed to carry out any written directions given to him by an officer of an employment exchange with a view to assisting him to find suitable employment. That may mean anything or nothing. Such written directions might repeat again the very conditions to which so many are objecting; or, on the other hand, it might be a written direction concerning one post which is vacant. I think we ought to have a great deal more explanation of Clause 4, and I hope very much that the members of His Majesty's Government will be prepared to consider with very open minds any suggestions that are made to them on this subject.

There is one other matter to which I should like to refer. It is not anything that is in the Bill, but something that is not in the Bill. A few days ago The Times, in some very remarkable articles on unemployment, said, dealing with the figures, that 1,000,000 unemployed were drawn from about 4,000,000, and in the million there was "a hard core of rather more than 400,000 that resists ordinary ameliorative treatment." It added that these people have scarcely a hope of re-employment in their former occupations and that even an industrial revival would pass them by. I can see no way of helping these men who have lost their ordinary employment and have been for a very long time out of work except through the development of voluntary training centres. Already these training centres, tried on a small scale, have proved remarkably successful, and I hope that His Majesty's Government will not regard maintenance or part-maintenance as by itself sufficient, but will endeavour to bring forward some proposals which will assist these men who, through no fault of their own, are in danger of becoming unemployable, so that when there comes a revival of industry they will be able to take their place in it.



My Lords—


No doubt the noble and learned Lord will reply at the end of the debate.


No, Lord Arnold will reply. My Lords, we have had four very interesting speeches, all of them, I think, in general favour of the proposals contained in the Bill, though critical, no doubt, on matters of detail. The noble Marquess, Lord Londonderry, told us in terms that he was not opposing the Second Reading of the Bill. The noble Earl, Lord Beauchamp, told us in terms that he was supporting the Second Reading. So far as the noble Lord, Lord Melchett, is concerned, he, after all, applied his criticisms to two points, and two only, which I should like to deal with when I come to the particular matters to which he referred. One was the criticism, also made by the right rev. Prelate, of Clause 4, and the other concerned the financial point.

On the financial point I should like to say—it is not a matter that I intend to deal with at any length—that, assuming that insurance is given, which is the admission of the noble Earl and also of the noble Marquess and of the right rev. Prelate, you must make it financially sound. I think that opinion was expressed by all the speakers. What I should like to put to the noble Lord, Lord Melchett, who is not here, is that, if it be desirable that it should be financially sound, you have to make up the advance from outside the terms of the insurance. Where would he go to make it up except to the State and State funds? Of course all these charges, with which I will not deal in detail, may, beyond a certain point, interfere to some extent—though the extent has often been grossly exaggerated—with industry. But I should have thought that it was generally admitted that, if you want financial soundness in a matter of this kind and particularly in a matter affecting unemployment, you must go to the State for financial assistance. That is the principle adopted in this Bill, and it is the only principle, as it seems to me, that can be applied in cases of this sort.

I should like to say one other word while I am dealing with what Lord Melchett said. He gave us the benefit of his thoughts, and he is not here for any purposes of criticism. I have lately had to see something of what the trade unions do to-day. About 300 have what are called conditions of unemployment or of benefit—that is to say, conditions approximating to those which are applied here under the principle of Clause 4. Of course there is no principle in insurance as regards conditions. The conditions are the terms of the contract. In one case the conditions may throw the onus on the insurer and in another on the insured. There is no principle in that. So far as the trade unions are concerned—I have not the facts before me, for I did not know that the point was going to be referred to—information derived from the Registrar of Friendly Societies shows that only about 300 trade unions give unemployment pay or benefit with certain conditions, and only 100 give it to a greater extent than £1,000 in the year.

Perhaps I might say one word to the right reverend Prelate before I come to what was said by the noble Marquess and the noble Earl. The right reverend Prelate has expressed his dissatisfaction with the terms of Clause 4. If he will forgive me, I will come back to them when I deal with what has been said by the noble Earl and the noble Marquess. On the other point about which he asked me a question I hope that I can reassure him. I refer to the question of juveniles. I agree that it is extremely important. I do not appreciate exactly the criticism that the noble Marquess made on this point, particularly when he dealt with the question of interference with cultural development. I will deal with these criticisms together, and perhaps the noble Marquess will follow what I am going to say to the right reverend Prelate.

The right reverend Prelate called attention to Clause 15 of the Bill, which deals with the provision of approved courses of instruction for persons under eighteen. He asked me whether that declaration was intended to be carried out in truth and in fact. Certainly it is, and he himself quoted the opinion of the Minister of Education, who seeks to raise the age limit, a most important point in considering the question of juvenile insurance. This provision is considered an essential point in the Bill and I am bound to agree with the right reverend Prelate in the importance that he attaches to it. I would remind him that subsection (2) contains these words: "If he fails "—that is the juvenile—" without good cause to attend the course, he will be disqualified for the receipt of benefit. "I understand that this is a provision to which the right reverend Prelate attaches great importance, and with that provision I understood him to say that he was entirely in favour of the juvenile proposals in the Bill. We value very much the opinion of the right reverend Prelate, because we know the great experience which he has, and how often he has assisted the House in these matters.

In reply to the noble Earl and the noble Marquess, let us see what is the point of difference between us. The noble Marquess opposite was in favour of the insurance principle. The noble Earl, Lord Beauchamp, went a little further, because he pointed out the series of Acts by which the insurance principle has gradually been developed and extended. He said that what at one time was 8s. has now become 32s., and we know the development of the insurance principle which was introduced by Lord Buxton, whose absence to-day we regret. Therefore, so far as the insurance principle is concerned there is no difference of opinion. If you are to have an insurance principle, then there are only two questions involved on which we may have some difference of opinion. I agree with what Lord Beauchamp said, and I am afraid that I shall not convince the noble Marquess that he is not very sound upon this point, although at the same time I recognise that he has taken great pains on questions of this character. One question was: What conditions should be attached as a security that what is intended for the unemployment difficulty is not made the cause of absolutely increasing the problem of unemployment? The other question is that which was touched upon by the noble Earl, finance.

So far as the conditions are concerned, they really entirely depend upon Clause 4. There is no other clause, or important clause, in the Bill which really deals with that question, leaving out of consideration the juvenile question with which I have dealt. I think there is much consensus of opinion that whatever the value of the new conditions may be, the old condition of "genuinely seeking work" was entirely unsatisfactory. I am not sure that any one has suggested that it should be brought back. I listened to what the right rev. Prelate said and pictured the hopelessness of constantly wandering round under the old condition, when it was constantly known that no work could be obtained. The difference between the noble Earl and the noble Marquess is this—and we agree entirely with the noble Earl. In Clause 4, it is true, the onus is changed. The onus is not placed upon the applicant, but rather on the officer of the Ministry of Labour, to show that certain matters have been complied with. Surely that is right in principle. It may be difficult to carry out, and it may want further consideration and adjustment, but surely it is right in principle that a person entitled under the general principle of insurance to receive insurance benefit, should be entitled to that benefit unless it can be shown, in this case by the officer of the Ministry of Labour, that he could obtain employment if he cared to ask for it. I think that what the noble Earl said was perfectly right upon that point, and we are very glad that he appeared entirely to agree with us.

There is only one other point, because we are in very narrow compass here, with regard to the difference of opinion on the Bill. It is the financial question. There are only two sources from which you can get financial assistance—the rates or Imperial taxation. Is there anyone here with knowledge of life in various country districts and industrial districts who can say that the rates are the proper source from which to make up deficiencies of this sort? I say without hesitation, although Lord Melchett was not very complimentary as regards economists, that I know of no social thinker or economic thinker on matters of social science, who has not laid it down as a principle that the liability here is really the liability of the State, and that it is from the State that you should get assistance in matters of this sort. It is most material to my mind always to keep in mind that if you want financial assistance you must go to the State. It would be an unjust charge upon localities, and distressed localities cannot bear it. That is one of the features of distressed localities, that they have been called upon to pay for matters which ought to have been paid for from headquarters. I was a member of a Royal Commission presided over by Lord Balfour of Burleigh which laid down certain principles as regards local payments and payments from headquarters. It laid it down clearly that this was not a matter to be placed on the rates, and I ask anyone to suggest any other source from which you could get this fund except the State. I include in that entirely what the noble Earl has said, that it is essential to deal with this on a business basis, so that your scheme may be financially sound. At the present time money has, unfortunately, to be found to make it sound. It is £32,000,000 behind, I think, and it has to be dealt with on that footing.

It seems to me that there is really no reason whatever for saying anything more about the Bill at the present time. It is going into Committee. The only critics we have had have said in terms that their objections are Committee objections. I do not think many changes that will improve it can be made in the Bill, but by all means let us consider very carefully any suggestions that are made. I rejoice that there has been such a large measure of agreement on essential points. Of course, we are not discussing the whole matter of unemployment to-night. But on this question of unemployment insurance, speaking for myself, I certainly have been extremely gratified at the way in which this Bill has been received, because all the criticisms have been on matters of detail, and not on matters of principle.


My Lords, you have listened to a very interesting debate, and there does not remain very much which I can usefully contribute without incurring the charge of useless repetition, which I hope your Lordships will not suffer at my hands. There have been, however, several very notable speeches delivered to-night, and not least the speech delivered by the right rev. Prelate opposite. The noble Earl, Lord Beauchamp, spoke with a certain restrained enthusiasm for the principle of insurance, of which, he claimed the patent as belonging to the Liberal Party. I do not know whether that is so. I am quite willing to accept it from the noble Earl. All three Parties have contributed to the present legislative provisions for insurance. But I agree with the noble Earl that one's enthusiasm for it should be rather restrained. After all, certainly in so far as it belongs to the uncovenanted type it is an evil, a necessary evil perhaps, but an evil. No one can contemplate the uncovenanted payment of benefit without profound misgiving, and it is that feeling of misgiving—which I thought was almost universal—which is an answer to a great deal of what the right rev. Prelate said.

He seemed to think that insurance benefit—and I gathered that he meant by that benefit alike to those who paid the insurance and to those who had it paid for them—ought to place the recipient in a position of something more than comfort—of a little luxury as I understood. That is not the view that has hitherto been taken. The view which has hitherto been taken is that this money should maintain the recipient up to a certain standard of living, but not one atom above it, because the whole theory has been that it should be so fixed as to prevent there being any inducement to a worker to prefer insurance benefit to wages. Now it is perfectly true, as many noble Lords have said, and as the right rev. Prelate himself said, that most working men are much more anxious to get work than to receive these benefits—by far the larger number of them; but we have to legislate, as we always have to legislate in these matters, these correctives to legislation, not for those who are meritorious persons, but for those who are taking advantage of the law in order not to behave properly. That is always the case. And therefore the figure has been fixed, and properly fixed, at something less than the man would receive were he in receipt of ordinary competitive wages.

The right rev. Prelate said that the figure which had been fixed was so low as to put the man and his family to great hardship. I confess I was very much surprised at that statement, because all these figures have been quite recently under the consideration of a powerful Royal Commission—the Blanesburgh Report is in your Lordships' hands. All these rates of benefit were thoroughly gone into then, and were fixed by these perfectly impartial persons upon those considerations which I have ventured to recall to your Lordships' memory, and it is very difficult to believe that they agreed upon a Report which involved undue hardship to the recipient. And indeed I suppose the right rev. Prelate speaks of what he knows in London—he certainly is a very great authority; but there are other parts of the country with which I am very familiar in regard to which I do not in the least agree with him. If he thinks of the rates of wages which were current before the War, and he adds the 60 per cent. which, I suppose, is all you ought to add for the change in the value of money, he will find that the figure is certainly not higher in many parts of England—would not be higher even if a man were in full wages—than the 32s. which he has condemned. Deeply though I feel the sufferings of the poor, and greatly as I feel the difficulty for persons in our position of venturing to comment upon and criticise what they consider suitable as the standard of living for the poor, I am bound to say that an undue feeling of compassion is liable to lead us very much astray in fixing these very difficult figures. And I deprecate, if I may say so very respectfully—and it is quite sincerely that I say very respectfully—I deprecate the kind of point of view from which the right rev. Prelate has approached this question.

I am sure the Government must have realised that though, as the noble and learned Lord said, we do not propose to resist the Second Reading, we are by no means in general approval of the Bill which they have submitted to your Lordships. We criticise a great many provisions. The noble and learned Lord said: "If you object to the large sum of money which is going to be paid for the purpose of the uncovenanted benefit, would you prefer that it should be thrown on the rates?" Of course we should not prefer that it should be thrown on the rates. I do not know of any Conservative speaker in either House of Parliament who has said he would prefer that it should be thrown on the rates. It may very properly be a burden on the taxpayer. We note, however, the very grave matter that the Government have recognised—namely, that there is a permanent body of unemployed. That has never been recognised before. I do not blame them for recognising it, but I note it as a very serious sign of the times. Unemployment has always been treated as a temporary passing state of things. Now it is recognised that in addition to the ordinary body of properly insured persons who receive benefit when they are out of work, there is to be a permanent body who are to enjoy what is nothing more than a form of out-door relief although administered at the expense of the taxpayer instead of at the expense of the ratepayer.

The criticism which has been made on this part of the Government's Bill is not that the burden is thrown upon the taxpayer, but that as it is in effect nothing more nor less than outdoor relief it should be administered locally and not centrally. It is not a question of the shoulders which should bear the burden, but of the hands which should guide the administration of the relief. It has been contended very strongly that the Central Government has not the machinery and has no method of checking the proper expenditure of this part of the relief. Seeing that the burden is falling upon the taxpayer it ought to be administered locally, otherwise great mischiefs may arise.

I do not wish to delay your Lordships but we are by no means convinced that unemployment insurance ought to be extended to the children, and I am afraid that, notwithstanding the pleading of the right reverend Prelate, we are not convinced. To us it seems clear that the longer we can keep any part of the population out of this system of unemployment insurance the better. No doubt it is a very good thing where there is unemployment. But where there is very little employment or next to none at all it is far better to avoid the system altogether. Look at the figures which were given by the noble Lord who moved the Second Reading this afternoon. He showed that for a contribution estimated at £600,000 there were only benefits to be paid at the rate of about £100,000.




That is about right—and that £200,000 of that £600,000 would be contributed by the children themselves; so that the children are asked to contribute twice as much as they will receive. A system of that kind is hardly honest. Certainly it is most unfair to the children, or rather to their parents because it really falls back upon the parents. It is most unfair and, if I may say so, I think that the right rev. Prelate ought to look at it from that point of view. The right rev. Prelate also said that he was not at all satisfied that the system of training provided by the Bill was watertight. Similar doubts and hesitations have occurred to other people, and I hope that when we come into Committee the Government will be able to satisfy us that the system of training which is provided is really worth having.

I must say a word about the genuinely-seeking-work controversy because it was referred to by the noble and learned Lord. I understand that he thinks it is proper that the onus of determining whether a man is deserving of this relief should rest entirely upon the public authority and that there is no reason in the world why a man should be called upon to do anything at all. It is sufficient to ask the noble and learned Lord to read the speeches of his own colleague the Attorney-General. He will find out then that about a fortnight or three weeks ago the Government held a precisely opposite opinion. That, I think, is sufficient. Both the noble and learned Lord and the Attorney-General are lawyers, and lawyers have a greater facility for changing their point of view than almost any other body in the community. The Attorney-General certainly is a master of the art, as we all know.

For these reasons we think that the Bill is open to very grave criticism which ought, of course, to find its place when we come into Committee. But there is a very great difficulty regarding the conduct of this Bill. I am very nervous indeed in saying anything about the opportunities which your Lordships have for dealing with a particular Bill, because when I ventured to say something recently I was taken very much to task by noble Lords opposite. I will not make any complaint; I will merely state the facts. I am not going to whine because of the unfair treatment of the Opposition by the Government. I only point out to the noble and learned Lord and the Government the position in which we are placed. With the general consent of your Lordships this Bill was read a first time on Monday. It is being read a second time on Thursday. That, of course, has not afforded us any great amount of time to master the terms of the Bill or to deal with it thoroughly in debate. We shall go into Committee, as I understand, on January 21, and the noble and learned Lord has intimated to us that he thinks it absolutely essential that the Royal Assent should be given, if Parliament agrees to the Bill, by the end of that month; that is to say, there is to be about a week more of Parliamentary time in which to do what remains of the work upon this Bill.

What is the condition of the Bill? Has it, been properly discussed even in another place? It is notorious that owing to the dissensions in the Party of which noble Lords opposite are ornaments the Bill has been transformed in important respects during its passage. Really, as I think my noble friend and colleague Lord Londonderry, who made an admirable speech a little earlier in the debate, said, this Bill is before us on almost the first occasion on which either House of Parliament has seen it. The new Clause 4 was never printed in the Bill when it was before the House of Commons. I suppose they had to print it on amendment, but the Bill has never been reprinted for them with the new Clause 4 in it, and I think the House of Commons have very little knowledge of what it contains. Then there was a very remarkable document issued by the Government Actuary and it was only last week that his information was imparted to Parliament. The Actuary found that in consequence of the new drafting of Clause 4 there would be £5,000,000 or possibly £4,000,000—I think that is the way he put it—more drawn from the taxpayer, and I think the new beneficiaries—I mean those benefiting for the first time under this Bill—would in consequence of the new drafting be more than doubled by the new Clause 4.

I do not want to pledge my reputation upon the absolute accuracy of all this, for we labour under great disadvantages owing to the very recent character of these changes in the Bill. But observe this, that a Bill which involves very heavy charges upon the taxpayer has never properly been considered in the House of Commons at all, and it comes to your Lordships and will have to be dealt with in all the more detailed stages of it within a week of Parliamentary time, or thereabouts, next year. I do not complain. I am only stating the facts as they will be presented to us when we reassemble after a brief holiday. I think your Lordships will have the greatest difficulty in dealing properly with this Bill in what remains of its stages if the Government programme of time is to be adhered to, but of course it may be that the Government will be very ready to consent to the Amendments we shall propose. May I have an assurance from the Government before this debate closes that they will be open to any reasonable Amendment which we may put forward?


As to whether an Amendment is reasonable or not there may be a different view on each side of the House, but we desire that every Amendment shall be fully and properly discussed.


Fully and properly discussed, I dare say. May I say with all respect to the noble Lord that he cannot prevent them from being fully and properly discussed, but what I want to know is, whether they will be accepted by the Government?


How could anyone say at the present time?


If they were reasonable, would they be accepted? I wondered whether the noble and learned Lord and his colleagues intended to pass this Bill through without amendment. I suspect that is the case. Of course, your Lordships are not bound by the decision of the Government in that respect, and we shall see what we shall see. I should have been pleased if the noble and learned Lord had told us that the Government would be open to any reasonable Amendment, and looked to your Lordships to help them to improve their Bill. That would have been, I think, a becoming attitude for them to have adopted. If there is going to be a rigid attitude by the Government, then I say that a week is wholly insufficient for what remains of the stages of this Bill. I think the Government will find, when we come next January to discuss it, that they will require many more days than they have allotted if this Bill is to be properly discussed. It is a Bill dealing with a very difficult, intricate and complicated subject. It was inadequately explained to the House of Commons, and is to be inadequately discussed in your Lordships' House. If your Lordships do your duty, and it is possible to amend this Bill, then I look forward to a profound change in the Government programme of time when we meet next month. So far as the Second Reading of the Bill is concerned, for the reasons stated by my noble friend Lord Londonderry we do not intend to dispute it. We earnestly hope that in the final result some advantage will accrue to the country from this legislation.


My Lords, there is other important business awaiting the House, and I will resist the temptation of replying in detail to the noble Marquess on the latter portion of his observations, though it requires great self-denial on my part, because, with a little effort of memory, I could cite innumerable instances when your Lordships have passed Bills far more important than this in much less time than is allowed for this Bill. It was first introduced into the House of Commons on November 21. We hope to pass it by about the end of January. It is not a first-class measure. It comes to your Lordships' House first on December 16, and we hope we can pass it by the end of January. If that is not long enough to pass a Bill of this sort, I venture to think Parliamentary business would become almost impossible. I could, by precedent, show the noble Marquess that we are treating the House very liberally in regard to this Bill, and that we have made every possible attempt to meet the convenience of noble Lords.

The noble Marquess said this was the first time it had been recognised that this sort of thing was permanent. But the noble Marquess is mistaken. It is not recognised that it is permanent. No one has suggested that. On the contrary, the Minister in introducing the Bill said this was an experimental Bill, and I myself, if the noble Marquess had heard me, reminded your Lordships that it was to continue the transitional period for twelve months, and that would give time for the whole subject to be fully considered. I pointed out that a Government Committee was sitting discussing this matter, that the whole question of national insurance and pensions was being considered, and that when this examination was finished the larger policy of the Government would be decided upon and made known. This is not a permanent Bill but one to meet a special state of things. The only other observation of the noble Marquess about which I would speak has relation to the insurance of young people of fifteen and sixteen. He says they will be getting out far less than they put in. That applies to practically every insurance scheme in the earlier years. It is the essence of all insurance schemes. The noble Marquess, if I may say so, was not on very strong ground in his remarks on that point.

The noble Marquess who opened the debate on the other side, Lord Londonderry, made a very interesting speech as he always does. I have very little to say at the moment in regard to his remarks. I have little or no complaint to make about them, if it is any satisfaction for him to know that. I would, however, say this, that I think he was going too far when he expected us, as apparently he did, to put before your Lordships this afternoon the details of this Bill, and also at the same time propound our whole unemployment policy. He seemed to think that by this time we ought to have solved the unemployment problem, although we have only been in office six months. He referred to the additional burden which, he said, this Bill puts upon the country, being quite oblivious of the fact, as I endeavoured to point out, that in one way or another the burden has to be borne anyhow. He spoke of the lack of resiliency of industry, and suggested that was due to our heavy taxation. While he was speaking about that, there occurred to me a phrase from the Colwyn Report dealing with that point. It speaks of the lack of buoyancy and uses words to the effect that that lack of buoyancy is due to wider causes than taxation.

As regards the noble Earl, Lord Beauchamp, I should like to thank him for his support, and in particular for calling attention to the fact that certain employers do take on young persons at fifteen and have a temptation to dismiss them at sixteen. I am sorry to say, according to my information—and it was confirmed by the right rev. Prelate—it is not merely a temptation but they do it. I do not say it is done in a large number of cases, but it is done, and if this provision does nothing else—it will do a great many other things—it will at any rate stop that being done. With regard to what was said by the noble Lord, Lord Melchett, who has now left the House, I wish to deal in one minute with the charge he made that many men are enjoying benefit although they are in work. There is absolutely no evidence of this. Now and then there is a case discovered and it is taken up, but the procedure of the exchanges is designed to prevent it. Normally men have to sign the register every day during working hours or they have to go a good many times every week to the exchange. If he has evidence to the contrary, the noble Lord ought to produce it. I shall not deal at this late hour with his changed economic views or with his citation from Mr. Gladstone. It is strange to hear these views coming from him as not long ago he was a supporter of the advanced reform programme of Mr. Lloyd George which involved the expenditure of a large sum of money.

The only other point I wish to refer to is an observation made by Lord Londonderry and two or three other noble Lords. There seems to be a suggestion that the change in Clause 4 was due to the Left Wing. Anybody who followed the debate in another place must be aware that there is a great deal more to be said than that. It is certainly news to me that Sir Herbert Samuel is a member of the Labour Party Left Wing and he was one of the chief protagonists in pressing this change upon the Government. Practically the whole of the Liberal Party supported it and even a Unionist Member, Mr. Allen, a Member for Belfast, supported it from his own experience as an employer, and I would commend his speech to the noble Lords opposite as a very interesting speech. I believe he also voted for it.


We were quite concerned with the speech of the Attorney-General before the change.


The noble Marquess must allow me to put my point. I am telling him about a member of his own Party. That is my reply. With regard to the question put to me as to whether the exchanges are to compel employers to notify, I would say that there is Clause 5 which we hope will deal with these matters. It is not compulsory, but in Clause 5 we do indicate our views about this matter. We hope it will work well and that all parties will do their utmost to secure the greatest measure of co-operation with employers and we hope employers will reciprocate. We attach importance to Clause 5 and think it will be useful in meeting some of the points brought up by noble Lords opposite. There is still the Committee stage and I will not therefore deal now with some of the points raised, including the points raised by the right rev. Prelate about the interpretation of Clause 4, though in Committee I hope to convince him that his fears are unfounded.

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