HL Deb 04 February 1969 vol 299 cc72-83

5.50 p.m.


My Lords, I beg to move that this Bill be now read a second time. This short Bill has a dual purpose. First, it enables the payment of flat-rate unemployment benefit to continue to be made to suspended workers during the first week of any period of suspension after March 9, when it would otherwise cease. Secondly, it paves the way for regulations to be made to implement the recommendation of the National Insurance Advisory Committee that benefits should remain encashable for twelve months (I see that the noble Lord, Lord Conesford, has gone, but I apologise to him in his absence for the horrible word "encashable"; I could not find any other word) instead of six months as at present. These are quite separate matters and can best be considered separately.

My Lords, Clause 1 of the Bill follows naturally from the Government's decision, announced in another place on October 14, that more time must be allowed for negotiations with both sides of industry about proposals for legislation requiring employers to make guarantee payments to workers on short time or laid off for a week or less. Workers who are affected by short time or lay-off in this way are at present entitled to flat-rate unemployment benefit in accordance with the normal rules. But Section 3(1) of the National Insurance Act 1966 provides that this entitlement shall cease on March 9. The first purpose of the Bill is therefore to enable the payment of this flat-rate unemployment benefit to continue after March 9 until a day to be appointed by the Secretary of State.

Section 3 of the 1966 Act embodied the principle that financial responsibility for short periods of suspension should be placed upon employers. The Government's view continues to be that this principle is the right one. As your Lordships will know, the purpose of unemployment benefit is to replace the lost income from earnings of those who are wholly unemployed: it is not intended to provide additional income, over and above their earnings, for workers laid off by their employers for brief spells or while they are on regular short time. The Government take the view that it is neither economically nor socially justifiable that the National Insurance contributions of employees in general, many of whom receive less when they are working full-time than others are getting when they are working short-time, should be used to subsidise the earnings of workers in certain industries. With the introduction in October, 1966, of earnings-related benefits, it would certainly have been wrong to pay the improved rates of benefit for part of a week to people who are still in work and are receiving earnings for the remainder of the week.

Because of these economic and social considerations the 1966 National Insurance Act (which, as your Lordships are aware, introduced an earnings-related supplement to unemployment benefit) provided that the supplement should never be paid during short-time or layoff for less than a week. This provision is in no way altered by this Bill. But the 1966 Act went further and provided that three years after it had received Royal Assent—that is, on March 10, 1969—flat-rate unemployment benefit should also be withdrawn for these periods.

My Lords, these provisions with regard to unemployment benefit do not of course stand by themselves: they assume that employers have a financial responsibility for the employees concerned. But at the same time the Government recognised that both sides of industry would need an adequate period in which to negotiate voluntary agreements to deal with financial provision for short-time working within the industrial context. The three-year interval which I have already mentioned provided time for the negotiations of appropriate voluntary arrangements. As a further safeguard, the Government also undertook, in the absence of satisfactory voluntary agreements, to introduce a statutory scheme of guarantee payments.

In the interim, the First Secretary of State has been responsible, first, for encouraging the negotiation of voluntary agreements where they did not already exist and, when it was clear by the end of 1967 that voluntary agreements would not be reached, for initiating negotiations with both sides of industry about the introduction of a statutory scheme. During the course of these negotiations substantial problems have emerged, particularly about the form and level of the guarantee and about the provisions to be made for workers whose suspension from employment is the consequence of a strike. It was also necessary for the Government to take account of related developments, and here I have in mind the proposals arising from the Donovan Commission's Report and the plans for the new earnings-related social security scheme, both of which have recently been dealt with in White Papers. Summing up, Clause 1 enables payment of unemployment benefit to continue after March until a day to be appointed by the Secretary of State, after approval by both Houses of Parliament.

My Lords, the remaining part of the Bill springs from a National Insurance Advisory Committee Report on time limits, which included recommendations for extending from six to twelve months time limits for making claims and for cashing instruments of payment. It is concerned only with changes in the time limits for the encashment of instruments of payment. Changes in the claim provisions can be made by regulations under existing powers, and we are not concerned here to-day with this aspect.

Clause 2 of the Bill will enable regulations to be made for all Social Security benefits extending the period within which these benefits must be cashed from six months to not less than twelve months. This new rule is not only more generous but also more flexible than the old rules. Judging from the present pattern of complaints, the vast majority of people will be covered by the period of twelve months. But the National Insurance Advisory Committee also wanted cover to be given to a small minority of cases where, for example, the person becomes quite incapable of looking after his own affairs because of mental or physical incapacity, and has no one readily available to help him. It is the intention to extend the time limits in such cases indefinitely. The Government intend to introduce the new encashment regulations as soon as Royal Assent has been received. The opportunity will be taken to simplify the existing Regulations so that they are easier to understand and to apply.

My Lords, the time limit on the encashment period has sometimes been opposed in principle. In their Report, the Committee considered carefully whether such a time limit was necessary. They concluded that it was for reasons which carry conviction, the most important of which was the cost. If people had an unlimited period in which to cash their instruments of payment, because of the need to check payments the Department would be obliged to store indefinitely millions of orders and postal drafts and to search through them whenever a late request for payment was made. Even within the present six months encashment period 24,000 people a year claim that they have not cashed their authorisations, and have had to be convinced that they have done so by the production of the cashed instrument with their own signature on it. This storage and searching would be a very expensive business if required over a long period, and the cost would be excessive. Moreover, most benefit payments are not unconditional, and the beneficiary has to sign that he is currently entitled. Such a declaration years after the event would be of little value, and would leave the way wide open for dubious claims.

In short, my Lords, abandonment of the rules would be very hard to justify, but the relaxation of the rules will help those few people who run over the present six months' limit. It will, for example, help those elderly people who like to save up pension orders to meet a periodic payment and who in the past have sometimes overrun the time limit. It provides an adequate solution to these time limit difficulties.

Clause 3 makes a customary provision of National Insurance legislation as regards regulations which are consequential to the Bill. As to unemployment benefit it is intended to maintain in being certain technical rules about payment of benefit for days when a person would not normally work: these rules would otherwise be revoked after March 9. As to time limits, it covers regulations to implement all the changes recommended by the National Insurance Advisory Committee which have to be brought into effect at the same time as the Bill becomes law. Your Lordships will wish to know that the cost of continued payment of unemployment benefit is estimated as approximately £3 million per year. I commend the Bill to your Lordships' House as a minor but beneficial measure. I beg to move.

Moved, That the Bill be now read 2ª. —(Baroness Phillips.)

6.1 p.m.


My Lords, I should like to thank the noble Baroness for introducing so clearly this Bill which is quite small in compass and for making clear matters which are not very clear on the face of the Bill itself. This Bill is a short and, if I may so call it, a two-pronged Bill. The Government have had to bring it in because they needed the first prong to avoid leaving a vacuum. They have sensibly taken the opportunity—and the opportunities are rare—to add the second prong to implement the recommendations of the National Insur- ance Advisory Committee which were made about a year ago. Incidentally, I take it that the words "et cetera" in the Title relate to the fact that the recommendations apply to family allowances which are outside the scope of National Insurance. It is not a very elegant Title, but it is shorter than saying "National Insurance and Family Allowances Bill".

So, while we should not wish to oppose the Bill, perhaps your Lordships will permit me to probe it a little. May I first deal with the second prong—Clauses 2 and 3, which are more straightforward than Clause 1. As I am already on record in your Lordships' House as favouring an extension of the time limits—and I was castigated by the Government for saying so—I am naturally glad that the National Insurance Advisory Committee has recommended 12 months instead of 6 months as the time limit, both for the cashing of benefits—and I suggest this to the noble Baroness as a phrase—and for the admission of claims for retrospective payment where "continuous good cause" is shown and where the entitlement (whether to sickness benefit or retirement or widow's pension) continues up to the time of the claim. The Committee records in paragraph 8 of their Report that their attention was drawn to comments made by the National Insurance Commissioners indicating that they on occasions regret their inability to accept for a past period of more than six months although they are satisfied that good cause for not claiming existed for a longer period". As has been said, I appreciate that hard cases make bad law; but 24,000 hard cases are quite a lot. I do not say that all are hard cases; but, equally, I think it true to say that it is bad law if too many hard cases are made. I am sure that in this respect the law can be improved so as to lessen the feeling of injustice that sometimes arises from a refusal to honour payment orders or to accept retrospective claims.

The noble Baroness said that the Bill deals only with the cashing of benefits because the Minister already has power to extend the period in which claims for retrospective payment must be made. She did not say in terms that the Government intended to do that; but I take it that the Government accept the recommendations of the Advisory Committee in their entirety and will bring in the necessary regulations. Perhaps the noble Baroness could tell us at the same time whether this would mean one big, block regulation or separate regulations dealing, on the one hand, with claims for retrospective payment and, on the other hand, the extension of the period for cashing benefits. I am also glad that the National Insurance Advisory Committee has recommended that the adjudicating authorities should have discretion to allow encashment of benefits even after the period of 12 months has expired where the contributor was incapable of obtaining payment during the period or of getting someone else to obtain it for him. I would ask the noble Baroness to confirm that in this case the "adjudicating authorities" means the insurance officer with an appeal to the local tribunal and from there to the National Insurance Commissioner.

My Lords, I turn now to Clause 1. As the noble Baroness has said, Section 3(1) of the 1966 Act provides that as from March 10, 1969, the first six days during which employment is suspended, as distinct front being terminated, are not to count as days on which the employee is entitled to flat-rate unemployment benefit. As Sundays are disregarded, I take it that "six days" means, in effect, a week. The noble Baroness has told us that the saving resulting from this provision will be about £3 million. That is a sizeable sum, although it is less than 0.2 per cent. of the combined flat-rate and Exchequer contributions. Clause 1 postpones the coming into operation of the provision indefinitely; that is, until a day to be appointed by the Minister. I would ask the noble Baroness whether this means that the Government are still hopeful, as they appeared to be in 1966, that voluntary arrangements will be made between employers and employees and will go on being made; and whether there is, in the Government's view, any prospect of this being done right across the board to make it unnecessary to bring in legislation. I am not sure that I can agree with the noble Baroness that the principle that responsibility for short periods of suspension should rest with the employers is valid in all circumstances. I take it that what is meant by "short periods of suspension" is, as in the Bill, six days or less.

The Minister of State said in another place, and I think the noble Baroness said much the same to-day when introducing this Bill: Unemployment benefit is primarily intended to provide for the wholly unemployed. Primarily, no doubt; but the principle that enabled unemployment and sickness benefits and retirement pension to be brought together in a single unified scheme was the principle of making insurance payments where work is interrupted; that is, where employment is suspended through sickness or other causes beyond the control of the contributor. The noble Baroness referred to the Royal Commission on Trade Unions whose Report recommended that where there is a strike at an employee's place of work that employee should no longer be disqualified from receipt of benefit simply because he is a member of the same grade or class of those workers there who are actually participating in the dispute or helping to finance it, or are otherwise directly interested in it, even if the employee himself is not in any way participating in it.

I shall not argue this point here. I will merely mention that an employee in the same grade or class may stand to gain from the strike to the extent that its objectives are achieved even although he is not in any way participating in it. If that recommendation were to be accepted as things are at present, and were to be brought into force now (and I think this is the easiest way of expressing it) then many more employees in such circumstances would be entitled to benefit than can do so at present; but after the appointed day they would be deprived of benefit unless the strike lasted for more than six days. It is true that unemployment benefit would not be paid for the first three days of an interruption of work caused by a strike unless there were at least 12 days of unemployment in the 13 weeks. But it must be remembered that it is not only employees at the same place of work who are concerned: in some cases men employed elsewhere may also have to be laid off as a result of the stoppage. And where they are, of course, both employers and employees suffer.

I should have thought it inconceivable that the Government would transfer entirely from the National Insurance Fund to the employer the responsibility for paying these men unemployment benefit. Men who are laid off because of a strike elsewhere have their employment suspended through the cause of the strike, not by their own employer; and this, I should have thought, is just the sort of risk that employers and employees ought to, and do, join together to ensure against in the National Insurance Scheme. The noble Baroness used the present tense in saying that this is not intended to be covered. But, my Lords, it has been covered for many years by the National Insurance Scheme, and it is a risk of this kind which ought to be spread over the whole contributing community and not just borne by particular employers on whom it happens to fall.

The noble Baroness also spoke of the cases where employers and employees—but perhaps here I ought rather to refer to what was said by the noble Lord, Lord Bowles, when he introduced the 1966 Bill. He said: At present workers who are on short time or are temporarily laid off can qualify for unemployment benefit, subject to a complicated set of rules. But these have caused difficulties and anomalies, and in some industries arrangements for short-time working have been manipulated to get round the benefit rule."—[OFFICIAL REPORT, 28/2/66, col. 491.] I am aware that employers and employees in some industries have negotiated agreements about short time which took into account unemployment benefit in a way that probably was not intended under the National Insurance Act. In some cases this may have been done as an alternative to making a substantial proportion of the work force wholly unemployed. It was necessary to continue with short time in order not to lay off workers altogether. I wonder how much of the £3 million which these payments for short-term suspension are said to cost a year would have been paid out in longer-term unemployment benefit if these arrangements had not been made. I also wonder how many strikes might have resulted if some men had been paid off, instead of all the men working short-time, and what those strikes would have cost. I should have thought it would have been several times more than £3 million, so I am not sure that the £3 million has not been well spent.

My Lords, I should like to ask the Government what they expected to happen in the three-year period which is now running out. Did they really expect that in every single enterprise in the country agreements would be negotiated to take the place of National Insurance benefits? Perhaps the noble Baroness would tell us a little more about what guidance was given to these enterprises as to how to set about reaching agreement. She said that the First Secretary had been in charge of this aspect. Perhaps she could tell us also a little more about what is the state of play now. What are the Government doing now; and what do they intend to do? There have been reports that they were on the point of introducing legislation, to use the words used by the noble Lord, Lord Bowles, on February 28, 1966 (col. 492), "to make guaranteed week agreements compulsory."

I am all in favour of guaranteed week agreements to cover period of short-time working, but how on earth can one compel people to agree? Those were the words used: to "make … agreements compulsory". Is this really the purpose of legislation? Obviously there is no alternative to accepting Clause 1 of the Bill, because Section 3(1) of the 1966 Act cannot be brought into operation by March 10, 1969, as planned. In other words, the Government's plans have not worked out. In this case I suspect it was because the Government were not sufficiently clear in their minds at the start when they legislated about the objectives to be achieved and the steps needed to achieve them.

My Lords I would only add that if the Government's intention about legislation corresponds in any way with what I have heard here and there, it will be no great loss if the appointed day never dawns. At least this Bill gives the Government time to think again, and to think better; and to negotiate with industry in the meantime. And for that reason we certainly shall not oppose it to-day.

6.15 p.m.


My Lords I should like to thank the noble Lord, Lord Drumalbyn, for at any rate welcoming the Bill generally. I will endeavour to answer the various points he raised. On the question of the Title, the noble Lord was quite correct in assuming that "&c."—which I must say is not my favourite expression—included the other matters he mentioned, and obviously that goes a little wider than the title "National Insurance", The noble Lord made the point that after the 1966 Act the Government should have been busy looking into the question of getting voluntary agreements and so on. I am sure he will realise that extensive negotiations have been going on, but I think the more general reasoning which the noble Lord has presented to us to-day will show that there are definite lines of conflict on the very point he has raised, which is only one of many, on the question of suspended workers and so on.

Added to this, my Lords, we have had the new Donovan proposals. I think I should go no further with the Government's case than to say that the Government are sympathetic towards the objective of avoiding disqualification for unemployment benefit for people remote from an industrial dispute. Those, I think, were some of the people to whom the noble Lord referred. But these recommendations need further consideration in the light of comments so far made by the C.B.I., the T.U.C. and the nationalised industries. The Government intend to resume consultations on this matter as soon as possible. In other words, consultations are now in process of being resumed on some of these very "knotty" points—if I may use such a colloquial term—which the noble Lord has raised.

I can give the noble Lord a definite assurance that all the recommendations of the National Insurance Advisory Committee have been accepted. There will be one block of National Insurance regulations which will cover both late claims and the encashment. The adjudicating authorities, as the noble Lord suggested, are the insurance officer, the tribunal and the commissioner, in that order. The hard cases to which the noble Lord referred were not the 24,000; they were people who thought that they had not cashed these orders when in fact they had. I noted the noble Lord's suggestion that the £3 million should be spread over the whole of the contributing community. I am not sure whether there is any real difference between employers or the community meeting certain things, as I have a feeling, as a consumer, that some of this must inevitably come back to us. But I take the noble Lord's point. The Government are anxious to get voluntary arrangements—


My Lords, if the noble Lady will allow me to interrupt her, may I say that up to a point what she has said is perfectly true. But surely this may happen in one part of the country, and it will be people in competition, employers in other parts of the country, who are quite arbitrarily hit by a strike for which they have absolutely no responsibility at all.


My Lords, I take the noble Lord's point, having been in one section of the car industry where I saw this happening. It is because of this point, which has been raised so eloquently by the employers and to a certain degree by other sections of the negotiating bodies, that we cannot give a categorical answer now. The voluntary arrangements are those which the Government would seek for preference, and these are also under discussion. The noble Lord raised other specific points to which I will let him have a reply during the process of the Bill, or at any rate in writing. I should like to thank him for his general welcome and commend the Bill to your Lordships.

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