UNEMPLOYMENT INSURANCE (NORTHERN IRELAND AGREEMENT) BILL. (Hansard, 20 March 1929)

§ LORD OLIVIER
My Lords, this debate was adjourned yesterday evening 771 about 8 o'clock in rather remarkable circumstances. My noble friend Lord Arnold had addressed to the Government a long series of questions with regard to the principle of this Bill, and asking for their interpretation in regard to it. Due notice had been given to the Government at the beginning of last week, and again yesterday, that these questions, which were perfectly legitimate questions, were going to be asked. They were questions of principle, namely, as to how this Bill differed from the principle of unemployment insurance in this country. Lord Cushendun was asked for a reply, and the noble Lord for some reason sat in an attitude of despondency—perhaps it was due to the state of the House—and made no reply. Under those circumstances, although in the state of the House we had no desire to obstruct the reasonable passage of the Bill, and wished to deal courteously with the noble Lord if he had dealt with the points, we felt that we had no alternative but to challenge a Division, well knowing that it would retard the progress of the Bill. The points put to the noble Lord were perfectly definite, and one of them was really important, namely: Why are the Government making this large grant to the Northern Ireland Unemployed Insurance Fund as a free gift, and not debiting it against the account, as they should do? There are two other questions which the noble Lord has put on Paper, and which I will not, read, to which we want a definite reply. We want to know why the Government are dealing differently with the Northern Ireland Insurance Fund from the way in which they are dealing with the English Fund. I am sorry to see that Lord Danesfort is not here this evening, because only a week ago he made a protest against the continual giving of doles to the Irish, of one class or another. I see no reason why the Government should depart in this Bill from the principle which we follow in the case of England.

§ THE CHANCELLOR OF THE DUCHY OF LANCASTER (LORD CUSHENDUN)
My Lords, I must apologise for not having answered these questions last night. The fact was that owing largely, I think, to the acoustic qualities of the Chamber, possibly assisted by insufficient acoustic qualities of my own, I did not realise 772 that the noble Lord was putting questions to which he wanted an immediate reply. I thought he was putting questions, in the well-known manner, as rhetorical questions, for the purpose of bringing out his points, and I did not realise that he wanted an immediate reply, or I should, although the hour was very late, have answered him. I can assure him that my not doing so was a quite unintentional discourtesy, if a discourtesy at all, and I will proceed to answer the questions put to me.
The whole of the criticism of Lord Arnold, reinforced as it is by that of the noble Lord opposite, rests upon an entire misconception of the whole situation. We are not giving a dole or present, or anything of the sort, to the Parliament of Northern Ireland. Let me try to explain how the matter arises. When unemployment insurance was first started, the natural thing would have been to have had one Fund for the whole of the United Kingdom. That was not done, though many persons thought it should have been done at the time. I was one of them, and spoke to that effect in another place in 1926 or earlier. I thought the Fund should have been one and indivisible in this country and in Northern Ireland, and I was very interested to see, when this Bill was debated the other day in another place, that that view was endorsed by no less an authority than Mr. Snowden, who also took the view that an amalgamation of the Funds would be the proper remedy. I have been told—and it was on that ground that the Government of the day acted—that it would have involved great administrative difficulties to have had one indivisible Fund for the whole of the United Kingdom. Consequently they separated the Unemployment Fund for Northern Ireland from that of Great Britain.
I suppose it was not realised at the time how great ate divergence would become between the positions of the two Funds. Owing to the extraordinarily larger proportion of unemployment in Northern Ireland as compared with Great Britain, due to the fact that their insured population is almost entirely employed in two trades which are greatly depressed, the percentage of unemployment to population in Northern Ireland 773 has been for several years very much greater than in this country. It became necessary, therefore—the ideal always having been that the two Funds should be on the same footing—to have some formula of payment from one side to the other by which you could keep the two Funds stabilised as far as possible on an equality. It is not true, therefore, to say that we are relieving Northern Ireland. We are not relieving them of their existing debt, nor treating their Fund preferentially in any way. All that we are doing is to make an arrangement for an equalisation payment which will keep the two Funds, so far as possible, on the same footing.
Let me refer, first of all, to the debt of the Unemployment Fund in Northern Ireland. I will divide it into two portions in order to explain the situation. Before 1926 the existing debt, that is to say the debt over and above what it would have been on terms of equality with this country, amounted to £3,424,000. That represents the portion of the whole debt, which is out of proportion to the debt on the British Fund. May I say, as showing the excess of the debt, that, if the debt in this country was equivalent to the Northern Irish debt, it would amount now not to £33,550,000 but to no less than £200,000,000. This debt of £3,424,00ft was in 1926, when the principal Act which we are now amending was passed, put on suspense account and had to pay interest, which was part of the liabilty of the Fund. Under present agreement that debt will be written off by the Northern Ireland Government. There is no relief from this country at all. It will be written off, first of all, by a "write off" of £400,000 odd within the next few days before the 31st March, and hereafter by "writes off" of, £100,000 a year, interest in the meantime being paid on a diminishing amount. Under the ordinary equalisation plan, two-thirds of that interest falls in the ordinary course to be paid by Great Britain, and one-third to be paid by the Northern Ireland Parliament. The Exchequer of Northern Ireland thus assumes responsibility for the whole of that pre-1926 debt which it will gradually clear off, and as the interest is paid off—£113,000—it will wipe off that, amount of the liability of the British Fund until it is all extinguished.
774 The second part, of the debt is a balance of £791,000. That remains a liability on the Irish Fund, and exactly the same as the debt on the British Fund. That is to be treated in exactly the same way as the debt in this country, the only difference being that the amount is to be kept at an equalisation standard by periodical payments from the British Exchequer. Under conceivable circumstances, the payment might be the other way. That was one question which the noble Lord put to me. He used very strong language, saying that there was a paragraph in the White Paper which was false information. It was not false at, all. It was perfectly correct and perfectly clear. Of course, I admit that the circumstances are never likely to arise when a payment will be paid by the Northern Irish Exchequer to the English Exchequer, but there is a liability which might arise.

§ LORD ARNOLD
Is it not the case that there is only a liability if we alter our whole method of conducting the finance of our Fund?

§ LORD CUSHENDUN
No, it is a, liability which would arise if the proportion of unemployment became greater in this country than in Ireland, and we here called for an equalisation payment. It is perfectly clear in the White Paper. I quite admit that the circumstances are not likely to arise, but it is a thing for which we may respect the Northern Irish Government that it was at their desire that this provision was made, because they wanted to have the arrangement, so far as it could be made, reciprocal on both sides. This matter was fully explained by the Chancellor of the Exchequer in 1926. He admitted then, as I have admitted now, that no payment was ever likely to be made on that account from the Northern Irish Exchequer to the British Exchequer, and he explained that it was done at the desire of the Northern Irish Parliament. The effect of this agreement will be that this portion of the debt, this sum of £791,000, will be kept strictly proportionate to the British debt on a basis of the respective insured populations of the two Funds. It will be calculated what the proportion of difference between the insured population and the unemployment of the district is, and they will be adjusted so that there will 775 be an equal liability in each case in proportion to the extent of their unemployment. This amount has grown from £190,000 in 1926 up to the present figure, and the British Fund has grown in the same time from £8,000,000 to £34,000,000, showing that in both cases there has been a very large rise. This sum of Irish liability will increase or diminish in future just exactly as the British Fund diminishes or increases. There is, therefore, no question of dole, or gift, or anything of the sort in this matter.
Any noble Lord who complains of the arrangement which is being made ought to be ready to show what plan would have to be adopted in its place; because the members of the Labour Party in another place have reiterated that it was not their desire to force the Northern Ireland Insurance Fund into a position in which the workpeople would be required to pay larger contributions or to receive diminished benefits. It is quite clear that would be the only alternative had this arrangement not been made, or had it been made by way of loan, as is proposed; though that would have upset the whole arrangement so far as insurance is concerned. If by any chance it 776 had been arranged to make a loan to enable the Irish insurance to be carried on at the old level that would have made the Fund bankrupt. The only way of avoiding that bankruptcy would have been to diminish the benefits and to increase the contributions, which no one wishes to do. Consequently, I think it is fair to say that we have adopted the only feasible plan, and the only possible alternative to allowing the Northern Ireland insurance to fall into the condition of diminished benefits and increased contributions. That is the answer to the complaint made by the two noble Lords that we ought to have proceeded by way of loan. There was, I think, one other question which the noble Lord, Lord Arnold, put to me, but I cannot recall it at the moment. But the question about the loan was, I think, the most important and the one to which he attached most importance, and I think I have given a very full answer on that point.