HL Deb 01 February 1938 vol 107 cc593-600

Order of the Day for the Second Reading read.


My Lords, in the absence of my noble friend Lord Hutchison of Montrose, I have been asked to move the Second Reading of the Bill which stands in his name. It is, I understand, a measure which is generally agreed upon by your Lordships and one which should not therefore prove to be of a very highly controversial character. The principal objects of the Bill are fourfold: firstly, to extend the powers of education authorities by authorising them to provide meals for unemployed juveniles attending industrial centres; secondly, to bring into the agricultural scheme of employment insurance those persons whose employment is specified in the Schedule to the Bill; thirdly, to amend the law relating to the discharge of the debt; and, fourthly and lastly, to alter the present system of insurance of men discharged in certain circumstances from His Majesty's Forces.

Perhaps I might now turn to the Bill and explain to your Lordships the clauses which contain the principal objects that I have enumerated. The first clause carries out the recommendation of the National Advisory Council, who reported some time ago that in their opinion education authorities should be given powers to provide meals for juveniles at junior instruction centres under the same conditions as at present apply in public elementary schools, and, further, that education authorities should also be empowered to provide biscuits and milk free of cost to juveniles attending these industrial centres. Both these recommendations are given effect to in the first clause of the Bill, and Clause 6 applies those principles to Scotland. With regard to Clause 2, as I have already mentioned those persons whose employment is set out and specified in the Schedule will be brought into the agricultural scheme of unemployment insurance on and after April 4 next. I understand that some 25,000 persons are affected by this clause. I might mention at this stage, although the matter does not come into this measure at all, that we already have power whereby chauffeurs can be included by regulations in the general scheme of the Unemployment Fund, and this in fact will happen on and after the same date—that is, April 4 next.

The next two clauses of the Bill contain new provisions relating to the disposal of balances in the General Account of the Unemployment Fund and to the repayment of debt. Noble Lords will no doubt be aware that at the present time the debt of this Fund stands at a figure of about£103,000,000, and is repayable under the 1935 Act in half-yearly instalments of£2,500,000. The Statutory Committee is in fact paying interest at about 3⅛per cent. on this debt. I think that is a brief but none the less accurate and true statement of the debit side of the balance sheet, and perhaps I might now turn to what I shall describe as the credit side of this balance sheet. I maintain that, due to the policy of His Majesty's Government who have by legislation and by action endeavoured to render every possible assistance both to industry and industrial employment, the General Fund has to-day a balance of some£60,000,000 which is invested in short-dated Government stocks bearing interest upon the average of about 2 per cent. per annum. Whilst I am perfectly prepared to admit that some disparity in interest rates between these two figures is inevitable, it is, I think, to say the least, desirable to minimise this anomaly as far as possible by making arrangements that will prove to be both fair and equitable to the present and future contributors to the General Fund in their effort to discharge this debt.

Under the 1935 Act the Statutory Committee has power to recommend the use of the disposable surplus—that is to say, any part of the current balances of the General Account which is not required to be retained as a reserve against future expenditure. Observe what will happen. If this surplus is applied towards the reduction of the debt over and above the half-yearly instalments if£2,500,000 the only result is that the debit will be extinguished at an earlier date than 1971, and most of the existing contributors to the General Account would gain no advantage. Accordingly the policy of the Government was to find a means whereby the debt could be reduced without damaging the financial stability of the Fund and at the same time to give general assistance to the present contributors to the Fund. We believe we have found such a means and it is embodied in these two clauses. They provide, firstly, that any sums in addition to the annuities applied from the balances of the Fund towards the reduction of debt should result in a proportionate reduction in the annual debt payment, leaving the final date for the extinction of the debt unchanged and unaltered; secondly, that not only the disposable surpluses but all the balances of the General Account can be used for the repayment of debt; and, thirdly, that there shall be power to reborrow as and when necessary in respect of such use of non-disposable balances up to the limit which the debt of the Fund would have been if there had been no repayment from the reserves.

I pass to Clause 5 which repeals subsection (6) of Section 96 of the 1935 Act. Noble Lords will no doubt be aware that as the law stands at present a man who is discharged from one of the Services is placed in the same position as regards contributions as if he were an insured contributor who had been employed continuously up to that date. If, however, his service was terminated otherwise than on the normal completion of service no credit of contributions is made except in a few cases with which I need not weary your Lordships at this stage. It has been pointed out, and we agree, that this provision operates in many cases with extreme severity. The anomaly is accordingly removed by Clause 5 of this Bill. Then there is the case of the ex-Service man who is discharged in consequence of conviction by a Civil Court or by a Service Court. He will receive a credit for his period of service, but he will not be entitled to benefit until six weeks after the date of his discharge. Deserters, of course, will receive, as at present, no credit of contributions whatever. I do do not think I need weary your Lordships with any further explanation of the Bill at this stage. You will observe that the object of the measure is to render assistance to those suffering from lack of employment either by providing meals for juveniles attending industrial centres, or by reducing the debt of the General Account for the benefit of all contributors to that Account, or by altering the system of insurance for men discharged in certain circumstances from the Forces. That is the Bill which I present on behalf of my noble friend, and it is one which I heartily commend to the favourable consideration of your Lordships. I beg to move.

Moved, That the Bill be now read 2a.—(The Earl of Munster.)


My Lords, the noble Earl has explained this little Bill very clearly, but it represents a lost opportunity and in his explanation the noble Earl failed to refer to that opportunity. He failed also to refer to a singular act of meanness embodied in this Bill; I cannot call it anything else. I am sure we all welcome the extension of the benefit of unemployment insurance to those to whom it is now extended by this Bill—namely, gamekeepers, grooms, lodge-keepers, stable-keepers, chauffeurs and others. It is all to the good that they should be included. But there are two main criticisms and one minor criticism of which your Lordships should be informed before the Bill is given your approval.

I will take first the minor criticism. We are all glad that His Majesty's Government authorise contributions to be made to young persons attending instructional centres who are in need of food, for it is a justification of what a good many of us have been saying for a long time—that there have always been a lot of young people unemployed who would be better for a good square meal. I am very glad that His Majesty's Government are authorising education authorities to provide those meals. But this is a gift horse which we ought to look in the mouth. Who are these young people? They are people between the ages of fourteen and sixteen in the main who are unemployed. In the Unemployment Fund in respect of those who are between fourteen and sixteen years of age there is a surplus of about£360,000 a year. That surplus, of course, is derived from the contributions of those children, as I must call them, not many of whom, happily, are unemployed. The cost of these meals will come out of this fund. They are, in fact, paying for their own meals. There is this to say further. Unless I am misinformed—perhaps the noble Earl before the Committee stage will make inquiry on this point—where an education authority selects a child between fourteen and sixteen years of age in attendance at an instructional centre who is deemed to be in need of feeding, if the parents of that child are in receipt of poor law relief the cost of the food given wilt be deducted from the relief given to the parents. If I am rightly informed on that point it is a matter which should certainly be put right, otherwise the food is paid for twice over—first at the expense of the relief afforded to the parents, and secondly out of the surplus in the fund derived from the contributions of children between these ages. I know that the noble Earl who is acting for a colleague will not be in a position to reply to this point to-day, and I do not expect him to do so, but I hope he will make inquiry into the matter before the Committee stage is reached.

Now I come to the two main cricitisms. The first concerns a grievous omission from the Bill; that is, the failure to extend the benefits of unemployment insurance to those who are known as black-coated workers. Their case was inquired into by a Royal Commission and that Royal Commission reported strongly in favour of the inclusion of the black-coated workers, as they are called, in unemployment insurance. I understand there are something like 400,000 who will be affected—namely, those whose earned income is between£250 and£400 a year. It is estimated that they would bring into the Fund£2,400,000 a year. The extension of unemployment insurance to this class is badly wanted. It has been recommended by a Royal Commission set up by the Government, and it is exceptionally easy to make the extension at this time because of the large surplus in the Fund. I suggest that it is a singular and grievous omission on the part of the Government to have extended benefit simply to chauffeurs, gamekeepers and so on, and not to have included this very large and extraordinarily deserving section of the population. That is the omission to which want to call your Lordships' attention, and which I have described as a lost opportunity.

There is another criticism of a provision in the Bill itself which I say is singularly mean, and that is the action which is supposed to be taken in respect of the Fund. What is the Fund? This is the Fund that has been accumulated because the payments out since it was established have been less than the payments in. The payments in are derived, of course, from the payments of the employers, the workpeople and the Government. How has the surplus been accumulated? It has been accumulated in the main by the application of the means test. It has been accumulated because there has been a more stringent scrutiny of the claimants upon the Fund, and it has also been added to by cutting down the benefits payable from the Fund—namely, by extending the waiting period which workpeople had to observe before they were entitled to benefit, and by diminishing the benefits which are payable out of the Fund. Before the Act, I understand, if a person had thirty stamps on his card payable over two years, he was entitled to benefit for one year and four months. This was cut down to six months. This Fund has been accumulated—at all events added to very largely—by the administration of the means test and by the curtailment of the opportunities to benefit in this way.

The workpeople and their employers have in fact provided this Fund, but it ought not to have been called upon to repay a debt which was accumulated before the Fund was established. This debt, repaid at the rate of£5,000,000 a year, is not a debt which ought to be repaid from the Fund at all. As even The Times newspaper said at the time, it was not anticipated that this debt—the debt that existed in the time of severe depression—would have to be paid by those who contributed to the new Fund. It was not their affair; it was a debt that had accumulated in a time of exceptional depression, and it was a national obligation, just as many other obligations were that were incurred about the same time. I see that the Economist at that time—I am talking about November, 1933, when this thing started—said: It is surely unwise and unreasonable to charge upon the Fund the surplus of amortisation of the£115,000,000 debt incurred during a period when all pretence at actuarial solvency had been abandoned by successive Governments. That is a fair statement of the case. We object altogether to the Fund paying this£5,000,000 at all; but this Bill makes it worse. It enables the Government to extract more from these contributions of the unemployed to pay somebody else's debts. That is why I said at the beginning that this Bill contained an act of singular meanness which did not appear on the surface.

I will not detain your Lordships' House any longer, but I do notice—I say it with profound respect—that this matter, which affects a million unemployed persons, does not seem to attract the same attention as the Bill which we have just been debating for a considerable time. I confess that I came in prejudiced against that Bill, but I thought that its opponents put up such a poor case that I voted for it. But this is a much more important Bill than that, when all is done and said, and I am sure that it deserves a very close and consistent attention from your Lordships. For the reasons I have given, I hope that it will receive your careful scrutiny when it gets into Committee.


My Lords, perhaps I might briefly reply to the questions which the noble Lord opposite has addressed to me. With regard to his point on the first clause of the Bill, perhaps it would be better if I replied at a later stage, as the question is not directly connected with the Ministry of Labour. With regard to black-coated workers, perhaps I might add this. My right honourable friend has said that the salary limit for unemployment insurance will not be altered this Session. This does not and should not imply in any way whatever that ultimately and in the near future the decision will not be altered. But I think I might carry that a little farther by reminding the noble Lord that voluntary pensions for persons in non-manual employment and in receipt of remuneration at rates in excess of£250 per year are available during the present year upon very favourable terms. It will, I think, be interesting to see what use the higher-paid non-manual workers will make of this opportunity to provide for their future. Incidentally, it was not a Royal Commission but the Unemployment Insurance Statutory Committee which recommended that those in receipt of higher salaries should be brought into the unemployment scheme.

Secondly, the noble Lord opposite appeared to believe that the surplus of £60,000,000 on the General Account at the present time was due entirely to the means test. I maintain, on the contrary, that it was due entirely to the policy which His Majesty's Government have pursued by rendering assistance to industry and to industrial employment. Moreover, there have been considerable improvements. It is within my recollection that during the last three years a shilling extra has been paid for children; we have abolished three days of the waiting period; we have given additional weeks to those who had five years' good employment experience; and furthermore we have reduced the figure which is normally paid by a penny a week—which, incidentally, represents an annual loss of revenue of about£6,500,000. I maintain, therefore, that we have done very considerable work to alleviate the distress amongst those who are suffering from unemployment.

I come lastly to the question of the debt. I do not want now to be led into a quarrel over whether this debt should remain a burden on the General Fund or whether it should be transferred entirely to the Treasury. At the time the 1935 Act was passed the debt on this fund stood at a figure of£115,000,000. It was very fully discussed, not only in another place but also in your Lordships' House, at that time, and I do not feel that I can ask my right honourable friend to reopen the whole of this question. As I have said, I will bring to the attention of my right honourable friend the other points which the noble Lord made in the course of his remarks and I will also endeavour to obtain some reply to the question he raised on Clause 1 of the Bill.

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