HL Deb 15 April 1930 vol 77 cc115-24

Order of the Day for the Second Reading read.


My Lords, this is certified as a Money Bill. It deals with the position of the Unemployment Insurance Fund, which is financially in rather a deplorable condition. I am not sure that that is matter for congratulation to any of us. The Bill now before your Lordships provides for further borrowing powers of £10,000,000. The history of the previous borrowings is that £10,000,000 were authorised in March, 1921, a further £10,000,000 in July, 1921, a further £10,000,000 in April, 1922, and a further £10,000,000 in November, 1928. The last, I think, was a Bill of which the noble Marquess, Lord Londonderry, was in charge. On that occasion I addressed some observations to the Bill and to him, and I must say that I have no desire to depart from what I said then. I agree entirely with what was said by the Minister of Labour in moving the Second Reading of this Bill in another place, that it is not a desirable way to finance the Fund by borrowing—the Fund ought, of course, to be self-supporting—and it is in a sense merely putting off the evil day. But, as the Minister of Labour said and as all your Lordships will realise, this is a question really of necessity and of having no other alternative.

It is not reasonable to suppose that at this moment you can raise either the contribution of the workman or of the employer, or, for that matter, of the State; although, as I shall be able to show your Lordships in a moment, the contributions of the State are on this occasion considerably increased. Therefore one endeavours to tide over the period by borrowing. I remember that I asked the noble Marquess last time how long it was expected to last. It was expected to last, I think, until the end of this year, but of course it has not lasted till then. If any noble Lord asks me how long the present sum of £10,000,000 is expected to last, I can only say that no one can tell; it must depend upon the unemployment figures. The unemployment figures are sufficiently well known, I think, but one interesting figure that your Lordships ought to know is the number at which income and expenditure will balance. That figure is now the very large total of 1,240,000 persons. That is due to the additions to this Fund which have been made by the new Government contributions.

The new Government contributions consist of £3,500,000 by the Act of 1929, which raised the Exchequer contribution to an equal third—that is to say from 6d. to 7½d.—and a further £10,500,000 by the Act of 1930, which placed upon the Exchequer the entire cost of transitional benefit; that means, benefit to those who draw upon the Fund without having thirty weeks' insurance stamps on their cards for the previous two years. That is a total contribution to the Fund of £14,000,000 and in consequence of that the figure at which it now balances is 1,240,000. The figure on the third Monday in March was, I think, 1,621,000. As your Lordships know, a very considerable increase in that figure is due to the unfortunate unemployment in the cotton industry in Lancashire, and the figure has this year done what is most unusual, it has increased from January to March instead of, as has been the custom in previous years, decreasing during those three months. I think we can all only hope that these figures will decrease in the future; but when that will happen it is very difficult for anybody to say. The Bill simply provides for borrowing powers for the additional £10,000,000 which is required to make the Fund solvent and to enable it to pay benefit. I understand the present powers are exhausted to such an extent that the Fund will be exhausted by the end of this week; therefore your Lordships will see that the matter is urgent. I do not know that there is anything further in connection with it that I need explain to your Lordships, unless any questions are put to me. I beg to move that the Bill be read a second time.

Moved, That the Bill be now read 2a.— (Earl Russell.)


My Lords, perhaps you will allow me to make one or two brief observations on this matter before the other grave question in connection with the Army and Air Force (Annual) Bill is discussed. It is quite true, as the noble Earl says, that this is a financial matter and that this is a certified Bill. He might also have added that it is absolutely within the right of your Lordships to discuss these questions, and I think that in anything so grave as this matter of unemployment you are not only justified, but it is your duty to discuss the matter. I thought the noble Earl was a little jejune in the facts and figures he supplied about the Bill. I quite understand that he has no doubt been busily engaged in watching the movements and machinations of that very worldly saint Mr. Ghandi manufacturing some very inferior salt for the advantage of those who like to consume it; but I should like to make this observation, that it is only a year or two since my noble friend Lord Londonderry was moving an addition to the borrowing powers of another £10,000,000. On that occasion he was overwhelmed almost, or at any rate he was vigorously and violently attacked, by a noble Lord on that side of the House who, singularly enough, is not present at this moment, the noble Lord, Lord Arnold, who seemed to think borrowing for the Fund and not making the Fund pay its way was an iniquity of the first order. I suppose for that reason my noble friend (Earl Russell), with that self-surrender which he always displays, has taken upon himself this arduous burden, and the other noble Lord is discreetly absent.

I wish to call attention to the seriousness of the matter which has been raised by the noble Earl. He treated it rather lightly, I thought. Previously £10,000,000 had been raised to £20,000,000, and then to £30,000,000, and to £40,000,000, and he omitted, I think, certain relevant facts which bear very closely on the question of whether it is wise or unwise at this' period to raise that £40,000,000 to £50,000,000. I do not wish to attack the consistency of Ministers in their statements made six months ago, because, to tell the truth, I am not very keenly interested as to whether the Minister of Labour or even whether the Chancellor of the Exchequer denounced most vigorously six months ago that which they are advocating to-day. It is a kind of inconsistency I rather expect to find in noble Lords opposite. I am much more interested in this—whether it be wise or unwise, what likelihood is there of this large amount of £50,000,000 being paid back within any very reasonable time? Until that £50,000,000 is paid back the Fund is declared not to be solvent, and I should like to read from this Government White Paper, which discusses the deficiency period and describes it as:— the period between the passing of that Act [the No. 2 Act of 1921] and the date when the Treasury certify that the Unemployment Fund is solvent. Such certificate may not be given while any advances to the Fund are outstanding. I submit that this really is not very honest, because if you look at the circumstances of the case and at the large and mounting figures of unemployment, I think you will come to the conclusion that a large portion of this £50,000,000 far more resembles a definite grant than it does a loan—that is to say, a sum which has some prospect in any immediate future of being repaid. The Government, I suppose, hoped that this question would be settled some six months ago. After all, the borrowing of £10,000,000 now is a far more serious matter than the borrowing of £10,000,000 six months ago because, as your Lordships may remember, the Government grant was increased by no less than £14,000,000, and, as the noble Earl said, that made the balancing point a number of 1,240,000 unemployed. They have made their grant, and they attempted to make the Fund in that way more solvent, and yet six months after having made that great addition to the amount the taxpayers have to pay, they come forward and say: "We must now borrow another £10,000,000."

I should like to point out that the question is becoming more serious. The noble Earl was very careful to say that how long that £10,000,000 would last he could not tell; it depends upon the numbers of the unemployed. Unfortunately, even since the figures and facts were given in the House of Commons, those figures have been mounting up. The sum of £10,000,000 was based upon the amount which was to come out of that Fund to supplement the deficit on the Insurance Fund on an issue calculated on the basis of the figures when the Bill passed through another place. I should be very glad therefore if the noble Earl is able to tell us what is the present figure of issue out of that £10,000,000 to make up the deficiency, and how far that bears upon the period when that Fund will be exhausted. I am very much afraid that at the rate at which the numbers of unemployed are mounting up that £10,000,000 will very soon be exhausted, and I submit that it would be more honest if the Government had come forward and taken powers to raise another £20,000,000 rather than the £10,060,000, which must, I am afraid, so very soon be exhausted.

I cannot help criticising the attitude of the noble Earl in this respect. He seemed to take it almost as a necessary thing that this borrowing must take place. He says, in effect: "You cannot at this time diminish benefits. You cannot lay any burden on the employers or upon the employed, and therefore your only resort is to increase the borrowing powers of the Fund in order that in that form the Fund may be made provisionally solvent." The matter is even more serious than that. When it was discussed in another place we were told that the large number of the unemployed was not due to the operation of the last Unemployment Insurance Act, and that may be true, because I believe that Act only came into operation in the month of March last. I would point out to your Lordships, however, that apparently in that borrowing they really have not taken into account the larger number of persons who may be thrown upon the Unemployment Fund and the further deficiencies in that Fund that may result from the operation of that Act.

Your Lordships will remember that the benefits were considerably increased in many respects and that the transitional period was lengthened; and I should like also to remind your Lordships of that extreme alteration in the provision relating to seeking work by which the whole system of management and administration of the Act has been grievously altered. Instead of any obligation being thrown on the unemployed man to show that he is seeking work, the obligation is thrown almost entirely on the labour exchanges, and the officials are given an extraordinarily difficult task. It is quite true that they may give directions as to what an unemployed person should do, but may I read an extract from the White Paper to show how those directions are to be carried out? The White Paper says: It should be noted that when directions have been given no disqualification can follow unless it is proved that the directions have not been carried out. The claimant cannot be required to prove that he has carried them out. So that the whole burden not only of giving directions but of showing that those directions have not been carried out is put upon the exchanges. As far as I can understand, the claimant may refuse even to answer any question if he is asked by the employment exchange, because he cannot be required to prove that he has carried out the directions.

It is quite evident from that that there must be a considerable increase in the number of those coming on the unemployed list simply by reason of that provision. If you add to that the increased benefits that have been promised by that Act, you will see that as soon as this Act comes into full operation there must be not only a great addition to the number of unemployed but also a great addition to the amount that has to be paid out of the Fund itself. I therefore submit again that this really is not an honest measure for borrowing 10,000,000, because it does not take into account all these other factors which should be in the minds of the Government and which will make a vast difference to the number of the unemployed and the charge to be borne under that Act.

There is another criticism I should like to make, and that is that it really obliterates the whole distinction between an Insurance Act and an Act of Public Assistance or a mere grant of money. It is extremely difficult now for any of those persons who are insured under the Act to know whether they are really getting what they are actuarially entitled to because of the amount they have contributed, or whether they are merely getting some grant, as it were, out of the bounty of the Government and the taxpayer. It is equally unfair to persons who are insured and who perhaps are in fairly continuous work, because they might be enjoying greater benefits if it were not for the fact that persons who are not really entitled to these benefits under an insurance scheme are getting benefits and thus reducing those available for others. I submit that this confusion between an Insurance Act and a mere grant of bounty is extremely demoralising to those who are insured under this scheme.

There is only one further point I wish to raise and that is that in what the noble Earl said he made no allusion at all to any efforts the Government have made to reduce unemployment in this country. It is said that a great deal of unemployment is due to causes over which the Government have no control—general and world causes. Of course there are difficulties in the world now which must affect the state of unemployment even in this country, but what I submit is that the Government not only make no effort but are contributing to the operation of those causes. We even had a statement the other day from no less a person than the Chancellor of the Exchequer that there was some sort of conspiracy among employers to reduce the amount of employment, and minor persons in the Government and supporters of the Government are going about the country attacking capital and capitalists on every platform and at every street corner. It is hardly likely that there will be any greater security for capital or any greater desire to invest capital in remunerative enterprises in view of this attitude of the supporters of the Government, and we know the effect that the action of only a few supporters of the Government may have on the policy followed by Ministers.

I feel that the whole subject is complicated by the situation of the Socialist Government itself, which produces throughout the country a feeling of general insecurity which is so bad for trade. It is not for me to discuss at this moment recent financial proposals, but we all know that trade and business can hardly be assisted by the enormous burdens that have recently been placed upon industry—which, indeed, will be a great consolation to all those supporters of the Government who- hope to injure, modify and ultimately destroy what they call the capitalist system of industry in this country. I therefore submit to your Lordships that though we must, of course, pass this Bill, it is not really an honest Bill and really does not give anything like a true picture of the serious state of unemployment in this country.


My Lords, the noble Earl was careful to tell us that he could not answer the question if it were put to him how long this £10,000,000 will last. I think it is quite clear he was afraid that that question would be put to him, and as he was unable to answer it he would take care to be first in the field and endeavour to prevent the question being asked by saying he could not answer it. However, I am going to put a question to him upon that point and I ask: Does he think it will last until Whitsuntide?


My Lords, I am glad that I have given the noble Earl opposite the opportunity of making a political speech on this measure.


My speech was a business speech.


Not altogether, I should have said. He said I did not deal with what the Government are doing to relieve unemployment. It hardly seemed to me a proper occasion for dealing with that totally different and very large question. If I had dealt in detail with what the Government are doing in that respect I should have had to speak for an hour or an hour and a half. It is really not the question now before your Lordships. Then the noble Earl also spoke about the provision, which he says affects the register, relating to a man not genuinely seeking work. We had two quite lively discussions in this House on that provision and ultimately your Lordships passed it in the form in which it appears in the Act to-day. That again, I think, is not a matter we need discuss on this Bill.

In the earlier part of the noble Earl's speech I was very much struck, and very much interested, to notice that apparently the speech that is made on these Bills to borrow £10,000,000 depends entirely on which side of the House you are sitting, for the noble Earl made almost the same speech that I made when the noble Marquess, Lord Londonderry, proposed the borrowing of the last £10,000,000. I also put a question asking how long the money would last, and I also said, as the noble Earl has said, that I did not think it was the right way to finance an insurance scheme. I said in moving the Second Reading that I still did not think so, and Miss Bondfield, the Minister of Labour, said so in another place. I think we may all agree that it is not the right way to finance an insurance scheme and that the method should not be adopted if there were any other method to adopt. I said this was a stopgap policy, and so it is. The noble Earl may remember that in another place his own supporters said that they did not think that borrowing to the extent of the annual income of a Fund was an unreasonable thing to do.


They did not say that. They said they did not think it a dishonest thing to do. As a financial transaction I do not think it is dishonest, but I think it is wrong.


The noble Earl thought it was dishonest, and there again I would point out that it is the same word that Miss Bondfield used about the last proposal.


Is the noble Earl saying that I said it was dishonest?


I said the noble Earl told us that this proposal was not an honest proposal.


I did not say it was dishonest. I do not think there is necessarily anything wrong in borrowing on a Fund. If I said this proposal was dishonest, it was because I did not think it took into account certain factors which would have made it more honest to come forward and borrow, let us say, £20,000,000 instead of £10,000,000, because the £10,000,000 will be disbursed so quickly.


It still seems to me that the noble Earl and Miss Bondfield are in very considerable agreement, and I thought it interesting to call attention to that fact. In answer to the specific question that the noble Earl put to me when he asked how quickly this £10,000,000 will be used up, in the present state of the unemployment register the £10,000,000 will have to contribute £375,000 every week, and a simple arithmetical sum will show how long that will last if the present rate of unemployment goes on.


Does that include interest?


I suppose so, but I am not sure. In this matter the Government hope, as I am sure every one of your Lordships hopes, that the position will alter. We hope that these terrible unemployment figures will not continue but will shortly fall. If I recollect aright, the noble Marquess opposite, when he made his Motion regarding the last £10,000,000, expressed exactly the same hope. That hope has not been fulfilled. We hope that in our case it may be, but obviously no one can say what the figures on the live register will be for the next half year, and it would depend upon that whether the Fund is solvent or not.

There is, however, one material difference. When the last £10,000,000 was borrowed, the Fund balanced with unemployment at 1,000,000, but now, thanks to the Government contribution, it will balance with unemployment at 1,240,000. The noble Earl seems to think that this made the proposal less honest. It seems to me to make it much more honest, because the Fund is surely, to that extent, more solvent. It would be inappropriate now to discuss the scale on which benefits are given, though a great deal could be said on that point. All that this Bill really does is to borrow £10,000,000. It is a stop-gap, a necessarily temporary measure, though a regrettable one, and it seems to me that we should be doing well to follow what has been done in the past by previous Governments. I cannot see any real distinction between one and the other.

On Question, Bill read 2a: Committee negatived.

Then (Standing Order No. XXXIX having been suspended) Bill read 3a, and passed.