UNEMPLOYMENT (NORTHERN IRELAND AGREEMENT) BILL. (Hansard, 17 March 1936)

§ LORD TEMPLEMORE

My Lords, I beg to move that this Bill be read a second time. I know that my noble friend the Secretary of State for Air is waiting to move his important Resolution, to which 5 your Lordships are desirous of listening, and therefore I assure your Lordships that I will be as brief as possible. This is a Bill to give Parliamentary approval to an Agreement of the 29th July of last year between the Treasury of this country and the Ministry of Finance in Belfast. The circumstances in which the Agreement was made are set out in Command Paper No. 5081, which was issued a few weeks ago, when the Financial Resolution on which this Bill was based was before another place. Briefly the circumstances are these. The Government of Ireland Act, 1920, laid down that unemployment insurance should be a transferred service for which the Parliament of Northern Ireland should be responsible. It was not then anticipated that any special assistance would be necessary, but from 1921 onwards the depression fell with exceptional severity upon the two staple industries of Northern Ireland, which, as your Lordships are probably aware, are first shipbuilding and, secondly, the linen trade. Northern Ireland has only a small insured population, owing to its large agricultural community, and it has a very high percentage of unemployment. It was thus obvious from a comparatively early date that Northern Ireland could not, out of its own resources, maintain a system of unemployment insurance at the same level as that in the rest of the United Kingdom.

It was considered at one time that it might be a good thing to amalgamate the two systems, but this idea was rejected, as it would have been totally contrary to the spirit of the Act of 1920, which especially laid down that social services in Northern Ireland should be administered by Belfast and not by Whitehall. Two Agreements were therefore made, the first in February, 1926, and the second, a continuing Agreement, in December, 1928. Under the first Agreement the Northern Ireland Unemployment Fund remained as a separate entity, but by a system of mutual reinsurance the burdens of unemployment insurance in Northern Ireland were in fact shared between the taxpayers of Northern Ireland and of Great Britain. The 1926 Agreement was entered into for a period ending on March 31, 1930, but by the second Agreement, which was concluded in December, 1928, the operation of the first Agreement was continued indefinitely.

6 Under these two Agreements—I shall have to give your Lordships a few figures, as the matter is rather complicated—Northern Ireland was entitled to a contribution from the United Kingdom Exchequer when the total payments by the Northern Ireland Exchequer to the Northern Ireland Unemployment Fund exceeded per head of total population the total payments by the United Kingdom Exchequer to the British Fund; the basis was that of the total population of each country, and not that of the insured population of each country. Translated into figures, this meant that, before qualifying for any grant from the United Kingdom Exchequer, Northern Ireland had to pay £28,000, or 2.8 per cent., to the Northern Ireland Fund to correspond with every £1,000,000 paid by the United Kingdom Exchequer to the British Fund, whereas, if the insured population basis had been adopted, the figure of £28,000 would have been reduced to only £21,000, or 2.1 per cent., a difference of £7,000 for each £1,000,000 paid by the United Kingdom. Until 1931 this point was not of decisive importance, but when the payments by the United Kingdom Exchequer rose to the order of £70,000,000 a year owing to the vastly increased unemployment in this country and the cessation of borrowing for this expenditure, the difference of £7,000 for each £1,000,000 meant a loss to Northern Ireland of some £500,000 a year. The exact sum is, I believe, £490,000. In the year ending March 31, 1931, the United Kingdom contribution to Northern Ireland under the Reinsurance Agreement was £547,416; in the following year it shrank to £165,437, while in the three succeeding financial years no contribution at all was payable.

It was in these circumstances that the Northern Ireland Government urged that the comparison of insured populations afforded a more equitable basis, and asked for the revision of the existing Unemployment Agreement. The whole position was re-examined in the spring of 1935 and it was felt that the contention of the Northern Ireland Government was fair and reasonable. The result of that examination is embodied in the Agreement for which I am asking your Lordships' authority this afternoon. The Articles of the new Agreement provide first of all, that the Northern Ireland Unemployment (Insurance) 7 Fund is to be kept in a state of parity with the Unemployment Fund in Great Britain by means of grants from the Northern Ireland Exchequer. The meaning of "parity" is that if the insured population of Northern Ireland is say 2 per cent. of the insured population of Great Britain the balance on the Northern Ireland Fund—whether surplus or deficiency—must be brought to the point at which it is 2 per cent. of the balance on the British Fund.

Secondly, the contributions made by each Exchequer to its Unemployment Fund, including the grants made by the Northern Ireland Exchequer to bring about parity, are totalled, and the Northern Ireland Exchequer is left to bear an amount which represents, in relation to the payments from our Exchequer to our Fund the proportion between its insured population and the insured population of Great Britain. The amount by which the payments from the Northern Ireland Exchequer to the Northern Ireland Fund exceeds this due proportion is divided as seventy-five to twenty-five between the United Kingdom Exchequer and the Northern Ireland Exchequer respectively. Thirdly, the contributions made by each Exchequer to its Unemployment Assistance Fund are treated in exactly the same way, except that in this case Northern Ireland's due proportion is arrived at by taking the proportion which its "assistance" population bears to the "assistance "population of Great Britain. For purposes of convenience that estimate is based on the populations insured under the Widows', Orphans' and Old Age Contributory Pensions Acts of the United Kingdom and of Northern Ireland.

As regards the financial effect of the new Agreement, the White Paper states that the contribution from our Exchequer in 1935–36 may be estimated at £722,000, as compared with an amount of £275,000 which would have been required under the previously existing Agreements. It is not possible to frame any reliable estimate of the contributions which may be required from our Exchequer in future years since the calculations to be made depend upon the relative burden of unemployment in Great Britain and Northern Ireland. In this connection I would draw your Lordships' attention to 8 page 8 of the White Paper, Command Paper No. 5081, where you will see a letter from Mr. Pollock, the Minister of Finance for Northern Ireland, to the Chancellor of the Exchequer, in which he says:

In the first place I understand and agree that if the liability of the United Kingdom Exchequer under the Agreement should in any one year exceed the sum of £1,000,000, you will be entitled, if you so desire, to reopen on its merits the question of the amount of the contribution and this will not be regarded by me as a breach of faith or of the Agreement."

Now, my Lords, to turn to the Bill. It is a short Bill of two clauses. Clause 1 provides, firstly, that the Agreement in the Schedule shall be confirmed, and secondly, that any sums payable under the agreement from the Exchequer of the United Kingdom shall be charged on the Consolidated Fund of the United Kingdom. The second clause consists of the short title and of the Acts to be repealed, and it lays down that this Measure shall not come into operation unless and until His Majesty by Order in Council declares that a corresponding Act has been passed by the Parliament of Northern Ireland. This Bill was passed by another place without a Division. It is, I think, a more or less agreed Bill, and, as I have said, was passed by the House of Commons as a non-contentious measure. There was a little discussion only on the financial Resolution and on Second Reading. I ask your Lordships to give it a Second Reading here.