HL Deb 26 February 1931 vol 80 cc150-62

Order of the Day for the Second Reading read.


My Lords, in moving the Second Reading of this Bill, I think the House is entitled to some brief explanation of the objects and meaning of the Bill. In December of last year I presented the Unemployment Insurance Bill, and the remarks I made then apply equally to the present Bill, and I shall merely bring up to date the statistics which were involved at that time. The objects of the present Bill are to raise the borrowing power of the Unemployment Insurance Fund by £20,000,000 from £70,000,000 to £90,000,000, and also to extend the period during which transitional benefit is payable from 36 months by a period of six months, making 42 months in all.

I want to say one word about transitional benefit, because I know it will interest your Lordships to understand the position in that connection. The transitional benefit payments were started in April, 1928, as a result of the Blanesburgh Committee's Report. The Blanesburgh recommendation replaced the extended benefit which then existed, and the Act which was passed to put into force the Blanesburgh Report introduced transitional benefit for a period of twelve months from the passing of that Act. In March, 1929, the then Conservative Government extended by a further twelve months the twelve months introduced by the original Act; and the present Government, in February of last year, added another twelve months, making thirty-six months in all. The provisions of the present Bill include an additional six months, making an arrangement whereby the claims which would normally have run out between the months of April, 1931, and October, 1931, endure until the period from April, 1932, up to October, 1932. The reason why the normal twelve months has been reduced in the present case to only six months is that it is expected that the Report of the Royal Commission will be received, and it is hoped that legislation will be passed before October of this year.

Your Lordships will understand that if we do not extend the transitional benefit period, persons who have been expecting this payment will be deprived of benefit under the existing legislation day by day throughout the year, and therefore I am quite sure you will realise that it is obviously impossible not to extend this benefit. At the present moment members are being transferred from the Unemployment Insurance Fund to transitional benefit at the rate of about 5,000 a week, and to-day something like 430,000 are receiving transitional benefit at a cost of something in the neighbourhood of £480,000 a week. The total estimated cost of this extension is about £20,000,000 of which £13,000,000 will fall in the financial year from April, 1931, to March, 1932.


Is it assumed that the transfer from the Insurance Fund to transitional benefit is to continue at the rate of 5,000 a week?


It is impossible to say what will be the rate of transfer. It depends entirely on the number of people whose ordinary benefit runs out.


Of course, I would not have asked a question of that sort, but the noble Lord has given a figure based on certain assumptions. I was only asking what was the assumption as to transfer which would make up that number.


At the present moment the rate of transfer is what I said. Sometimes it is up and sometimes it is down; but the tendency must be to increase.


Might I press the question? For the purpose of arriving at the amount of transitional benefit, what average figure is taken for the next few months as the figure of transfer from one fund to the other?


That is a calculation by the statistical advisers to the Ministry, and is based presumably on the rate of about 5,000 a week, and not based on any extension other than that which can be actuarially calculated by our knowledge of the present position of unemployment in this country.


That is, the assumption of 5,000 a week.


Yes, with the additions which we know will take place. Other additions are incalculable, but certain additions we know will take place by a simple actuarial calculation as to the number of people who will cease to have ordinary benefit. With regard to the Fund itself, by to-morrow the debt to the Treasury will be about £69,000,000 and the number of unemployed on February 16 was 2,631,000, of whom, as I said, 430,000 were receiving transitional benefit and about 2,000,000 were on the Fund. The remainder were either not claiming or had been disallowed or were not insured. The total payment to these 2,000,000 persons amounts to £1,800,000 each week; the present rate of benefit is 17s. a week for a man, 9s. for his wife and 2s. for each child. That is not an excessive rate. I am not giving it because I expect any of your Lordships will claim this benefit at any time, but it is well that we should know it. The balancing point of the Fund, which I mentioned in December, 1,275,000, is the same at the present moment. There is no change in that. In this connection your Lordships may like to know that the total number of insured persons is about 12,000,000 and that 9,500,000 of them are contributing every week to the Fund.

With regard to the question of how to deal with those who are unemployed, apart from the human side, which I do not propose to stress, it is quite obvious that they must be kept either by rates or by taxes, and it is generally felt that the method of taxation and the method of the Unemployment Insurance Fund is better than denying this organised method of assistance and putting people on the rates. Taxes are fairer and the Fund is surely a reasonable method of administration, while such improvements as are necessary in the administration of the Fund will be suggested by the Royal Commission which is now sitting and which is carrying through its work at the maximum speed possible.


Can the noble Lord say when the Royal Commission is likely to report?


In that connection I have already said that we hope that the Report will be made and legislation enacted before October of this year. I cannot say whether there will be a Report or an Interim Report in May or June, but it is hoped that the Report will be issued in time for legislation to be enacted by October. One other point I wish to mention before I leave that is that the employment exchanges have been used recently more effectively for their proper purpose of placing unemployed men in jobs. There has been an increase in 1930 over 1929 of 173,000 extra men who have been placed in jobs by the exchanges. The figures are that in 1930 1,727,000 unemployed persons were placed in positions compared with 1,554,000 in 1929.

It may be asked why the proposal is to extend the borrowing powers by £20,000,000 instead of by £10,000,000, and the answer is, broadly, that, when the £10,000,000 was the extension by the Conservative Government, the deficit was increasing at the rate of £350,000 a week, whereas at the present moment the deficit is increasing at nearly three times that rate. It is essential, there- fore, that we should have a larger borrowing power than the £10,000,000 then provided. I suggest to your Lordships that, in the difficult circumstances which are facing the country, this is the best means we can employ to deal with the situation.

We should remember that the position of this country does compare favourably with other industrial countries. From June, 1929, to December, 1930, unemployment has increased in this country by 132 per cent., but in Germany the increase in the same period has been 248 per cent. and in Italy 232 per cent. In France we were told for a very long time that there was no unemployment, but we are now told that there are 350,000 unemployed and about 1,000,000 partially employed. In The Times of February 25, in an article dealing with this matter, it is said:— It will be seen from the above figures that unemployment in France is and has been for years far more serious than any published statistics would suggest. In the United States it is exceedingly difficult to get accurate information, but we have various estimates and we are told that the number of unemployed may be as high as 9,000,000. Lower estimates put it at 6,000,000 or 7,000,000. That is in a population of 123,000,000. In Italy we are told that those wholly unemployed at present number 642,000 out of a total population of 42,000,000, while in France they number 350,000 out of a total population of 40,000,000. In the United States we learned from an article in The Times a few weeks ago that 23.8 per cent. of the industrial workers of the United States were without employment in the first week of last December and that 21.3 per cent. were working only part time. Only 54.9 per cent. of the industrial population had full-time jobs at that time in the United States.

When we realise the appalling suffering that is going on in the United States at the present moment, the bread queues, the soup queues, the charitable organisations which are failing to deal adequately with the problem, your Lordships will be thankful that we have got a system of unemployment insurance in this country which, while the industrial system has been unable to avoid unemployment, at least has mitigated the sufferings of many of those who are com- pelled to suffer unemployment at the present moment. I do not want to deal with the causes at all. In the circumstances, I think I can leave the matter at that, but I shall be very glad to do my best to answer any questions which any of your Lordships may desire to put. I beg to move that this Bill be now read a second time.

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


My Lords, I am well aware that this Bill is a certified Bill and that in that sense your Lordships have no control over it, but I make no apology at all for addressing your Lordships for a few minutes upon it, because another place can, I regret to say, in present circumstances only be called the guardian of our finances with certain very strong reservations. The noble Lord introduced this Bill and discussed it as if it were a mere matter of statistics. I am bound to say I followed his cold statement of these terrible, growing figures with the greatest anxiety. I can assure him that on this side of the House we do not regard it as merely a question of figures, but as the gravest matter which is before your Lordships and before the country to-day.

I should like first to call attention to the Memorandum on the Financial Resolution proposed relative to unemployment. These words are rather remarkable:— The deficiency period is defined in Section 16 of the Unemployment Insurance (No. 2) Act, 1921, as the period between the passing of that Act 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. One wonders whether there is not a touch of irony about that observation by the official who drew up this Paper as to when this debt, now growing up to £90,000,000, is to be paid so that the certificate of the Treasury may be forthcoming stating that the Fund is solvent.

Next I should like to call attention to one or two grave statements made in connection with this Fund in the evidence that has been given before the Royal Commission. The noble Lord tells us that that the Royal Commission is going to report in time for certain legislation. I venture to assert that this Royal Commission will not report before the next Unemployment Insurance Bill is brought before your Lordships' House, and that then we shall have a similar speech, with perhaps similar excuses, probably made by another member of the Government from the opposite Bench. Sir Francis Flood, who is Permanent Secretary of the Labour Ministry, is reported to have said:— First the Fund was heavily in debt and the debt was increasing rapidly. The increase of the debt was taking place— and these are the significant words— although the Exchequer now made an additional grant equal to the whole cost of transitional benefit, thereby relieving the ordinary revenue of the Fund. When your Lordships are considering this vast increase in borrowing which we are asked to pass to-day, I would ask you to remember that that Fund is relieved entirely, by fresh contributions from the State, from all that heavy amount of transitional benefit.

I said that I would suggest that this is far more than a mere question of statistics. Let me quote from Sir Richard Hopkins, who, in his evidence before this Commission, said:— The State has every year to borrow large sums for various productive purposes. This additional borrowing for purposes other than productive is now on a scale which in substance obliterates the effect of the Sinking Fund. Considering the enormous importance we have paid not only before but since the War to the reduction of our vast Debt by means of the Sinking Fund, considering the immense efforts successive Chancellors of the Exchequer have made to increase that Sinking Fund, it comes with a terrible significance from this representative of the Treasury that this borrowing is practically doing away with any effect of the Sinking Fund upon our finances. I remember making that very suggestion myself not long ago and we were told that it was the view, I think, of the Government that that was not so; that this money was secured on a particular Fund, and had nothing whatever to do with the Sinking Fund. But now we have it on the evidence of this leading member of the Treasury that it is in effect doing away with the Sinking Fund itself and with the consequent effect upon our finances.

I should like further to call attention to the observations made—I referred to this six months ago, but I think it will come with greatly added weight now—by the Minister of Labour, I think over a year ago, when she was bringing forward another Bill for borrowing. She then said:— If you come forward and wipe out the limit of borrowing powers at £40,000,000, and went on borrowing to £50,000,000 or £60,000,000 it would be a dishonest course. And the reason given was this—"because it would be contracting a debt that you saw no possible way of paying off." Six months or more ago, when the question of borrowing beyond £40,000,000 came forward, it was denounced by the Minister of Labour herself, on the part of the Government, as being a dishonest course because they saw no possibility of that money being repaid. They now come before us and want to increase that debt to £90,000,000—more than double the amount that we then dealt with. Are those words still true, and are the Government coming before us and telling us we must borrow up to £90,000,000 when, on the words of their own Minister,' there is no possibility of that money being repaid? We are not the guardians of the country's finances. We can only comment on them, and all I can do is to brand as doubly dishonest Ministers who come before your Lordships and borrow another £20,000,000 on the security of the Fund, and do not tell you that though they borrow on the security of the Fund there is no chance of that money being repaid out of the Fund itself.

You have only to look, indeed, at some other observations made to see how difficult, if not impossible, it is for that money to be repaid. May I cite another piece of evidence? I am not giving my own facts and figures; I am taking the figures and evidence given by these officials. I want to quote from Mr. Bowers, Accountant-General of the Ministry of Labour. He says:— The annual amount which would be required for interest—assumed at 4¾ per cent.—and to amortise a debt of £100,000,000 in ten years was £12,800,000, equivalent to 6d. per week in contributions, and in thirty years was £6,320,000, equivalent to 3d. per week in contributions. Are there any of your Lordships who think that it is likely the contributions will be raised at that rate? Is there any one of your Lordships who does not realise that the chances of that debt being repaid out of the Fund are exceedingly small, and that when you talk of borrowing on the security of that Fund you are not borrowing on a good security and that you are really borrowing on the security of all the taxpayers of this country, so that that sum is nothing else but an addition to the general Debt of the whole country?

Let me refer next to observations made by different Ministers when they bring, every three months or six months, Bills before your Lordships and in another place for the purpose of borrowing money. I will only take one example of this. There were three Bills in April, July and November of last year, in each of which £10,000,000 was to be borrowed. On the first occasion the reason given for this further borrowing was that some twelve months must elapse while the question was being critically examined and therefore you must allow this money to be borrowed. The next time they came before your Lordships and another place in order to get the money, the difficulty was skated over by saying there was going to be a three-Party Conference which was to be a Council of State. Then they told us that the Committee was an entire failure, that apparently nobody on it had any ideas worth noticing, and that we were going to have a Royal Commission—a Royal Commission which was going to investigate the whole thing, which is going to report some time (we do not know when, possibly before the Summer Recess) and then we are going to have, at some unknown time, legislation. If the Government could only govern as well as they are ingenious in finding excuses for producing these Bills, I should have nothing but praise for noble Lords opposite.

The noble Lord has also raised the question of why it is that we are borrowing £20,000,000 at a gulp this time instead of only £10,000,000. He says the reason—and it seems a very unsatisfactory reason—is that the money is going so rapidly that you will spend nearly £20,000,000 in something like the same time as you spent £10,000,000 before. I cannot help thinking that there is a certain carefulness or reticence on the part of the Government, and that one reason is that they do not want to come before your Lordships' House in another three months and make another set of excuses for having to borrow another £10,000,000 or £20,000,000, as the case may be. The noble Lord who introduced this Bill gave a great number of reasons and excuses, and he seemed to find a certain satisfaction in the fact that certain figures from other countries showed that they were labouring in troughs of unemployment as badly as we are. He gave certain percentages, but as he did not give positive figures of unemployment it was difficult to calculate in one's head whether these percentages corresponded to the numbers we are suffering from here.

But of course the charge one brings against the Government is that, owing to the changes they have been making in the unemployment insurance scheme, they have blurred the distinction between what is really insurance and what is merely another form of public assistance. The whole scheme now has become a sort of jumble of insurance and assistance, so that nobody knows where one begins and the other ends. You cannot imagine anything more demoralising not only to the moral fibre of the country but to the financial understanding of the country than a system with these vague distinctions. It is unfair to those persons who are really insured, who make their contributions with their employers and the State, that they should in the public mind be apt to be mixed up with those who are merely receiving the "dole," so that there is no clear distinction drawn between the two classes. In addition, there is no doubt that the work of the Fund is gradually being demoralised by certain laxities of administration. I refer, first of all, to some of those legal laxities under the Act, such as the case of women who marry and go to another part of the country and remain for a length of time on the Fund. Then there are those who earn substantial sums in part of the week and live for the other part of the week on the "dole." These laxities are growing to such proportions that they constitute a very heavy and unfair charge on the Fund.

Moreover, the Government have very largely assisted the break-down of the Fund by the changes which they introduced in the provision as to seeking work. Again, I want to quote. I will quote from Mr. Price, who is Principal Assistant Secretary in charge of the Unemployment Insurance Department at the Ministry of Labour. He says there is no obligation on an individual now to look for work. The onus has been removed from him to seek work. While I admit the terrible wave of unemployment now in this country, I think it is true that the Government have substantially added to it by taking away, as they have done by legislation, the incentive that before existed for a man to seek work.

There are just one or two other points I want to deal with. We have heard a great deal about economic troubles and about the shortage of trade in other parts of the world, but I submit to your Lordships that it will really not do for the Government to sit back and say that they can do nothing because of this world disturbance that is going on. If really nothing can be done to assist trade and diminish unemployment in this country, then the Government becomes a superfluous and unnecessary luxury and might as well be done away with altogether. But I submit further, that the Government have not only not assisted, but really have done everything they can by their actions to increase unemployment. I need hardly refer to their sweeping away of Safeguarding Duties. They have, in addition to that, consistently laid fresh burdens and duties on manufacturers and intend to lay more. In face of foreign competition against our manufacturers, they have done nothing whatever to assist them.

Looking at the actions of the Government and examining their functions, I am afraid that I do not see that they really are interested in the question of unemployment. The matters that really seem to interest them are such matters as the Trade Disputes Bill, the attempt to make general strikes legal, or perhaps some tampering with the electoral system of this country which may be necessary as they have to keep their bargains and arrangements with another Party. These matters seem to be in the forefront of their minds and the great matters of trade and business and unemployment seem to have slipped aside. They have given them up because they say they are involved in these general world economic difficulties.

I must say this, lastly, that this Government and their followers have done great harm in this matter of unemployment by going about the country making, as they do, constant attacks on capital and capitalists, so that manufacturers have been instilled with fear as to the risks they run if they try to develop their business or try to extend their production. They tell us that the capitalist system has broken down when they have done their best to break it down, and then they turn savagely and attack manufacturers because they do not borrow large sums to develop their business when they do not know that the products can be sold. There are great difficulties in connection with this unemployment question. I am convinced that the Government hang like a blight over the manufacturing trade and commerce of this country, and the best thing that they can do to assist employment and reduce this borrowing, to staunch this flow of this money to the unemployed, is to retire gracefully and, by a great act of self-abnegation, allow better men than themselves to try to govern the affairs of the country.


My Lords, I hope that the noble Earl who has just sat down will allow me to say that I listened with a great deal more interest to the first part of his speech than to the second. I was glad to hear the speech, but the first part of it seemed to me to be the more valuable contribution to the general discussion of unemployment insurance. I hope and believe that his remarks will be brought to the notice of the Royal Commission that is now enquiring into the subject. As one of the authors of the Parliament Act, I remember very well being told, when that Act was passing through your Lordships' House, that a certified Money Bill could never be discussed by your Lordships. We said this was not our view, but that we thought that such Bills would be discussed, and that the discussion that took place would be very valuable. After all, we in this country are governed by public opinion, and speeches in this House help to govern public opinion. I hope and believe that the speech that has just been made by the noble Earl will have considerable influence, especially in its first part, in forming public opinion with regard to unemployment insurance in this country.

From my own part, like most members, I think, of your Lordships' House, I look upon this Bill as a disagreeable neces- sity which we are obliged to pass in the present situation. We wait with anxiety for the Report of the Royal Commission, whether it be a full Report or an Interim Report, enquiring into the irregularities. I should like to press upon His Majesty's Government the great desirability, if they have proof of administrative laxity in the evidence which comes before them, of taking immediate steps in these administrative cases to deal with them without delay. They can wait to deal with legal matters until the Report which deals with those matters is produced. There is a clear distinction between the two subjects, and I hope that His Majesty's Government will bear that distinction in mind. I notice that the noble Earl did not suggest any alternative to this Bill, and perhaps this is not a proper occasion. I think it would be a very valuable thing if, on some future occasion, we could have another discussion upon unemployment insurance and the administrative irregularities which are alleged to have taken place.




I feel this rather deeply, because when I was in the United States the other day there was a good deal of discussion on this insurance, and it was almost taken for granted that there was an immense amount of irregularity. I am not quite sure that it is so, but if those who think it is the case would present their instances in your Lordships' House, I think it would be very valuable for His Majesty's Government to be able to go into all these cases and see what amount of truth there is in the charge. I would venture before I sit down to say how fervently I hope that the Royal Commission will report as soon as possible. I assume that the intention is that they will report at such a date that we may be able to get legislation through this House before the end of this Session of Parliament. I do not think that I am anticipating the position when I say to His Majesty's Government that, if they do produce legislation to deal with these irregularities, there is nothing that your Lordships will not do to assist them in passing the necessary legislation through this House.

On Question, Bill read 2a: Committee negatived.