REDUNDANCY REBATES BILL (Hansard, 14 July 1977)

Lord WALLACE of COSLANY
My Lords, I beg to move that the Commons Reason for disagreeing to the Lords Amendments be now considered.

Lord WALLACE of COSLANY
My Lords, I beg to move that the House doth not insist on their Amendments Nos. 1 and 2 to which the Commons have disagreed for the Reason numbered 3 978 —namely, because they would unduly restrict the exercise of the powers conferred by the Bill on the Secretary of State or, as the case might be, the Department of Manpower Services for Northern Ireland.

§ Lord LYELL
My Lords, we have heard from the noble Lord, Lord Wallace of Coslany, the brief explanation of the Reason for another place wishing to disagree with us and insisting on the Bill in its present form. Our opinion is that the reasons which have been given by the other place seem, on the Order Paper that we have today, rather pusillanimous, as indeed do the arguments which have been advanced by the Government at each stage of the Bill. Not only were these arguments fallible but we believe they were inconsistent.
The noble Lord, Lord Wallace of Coslany, when he was speaking at an earlier stage, and particularly at Second Reading of the Bill, mentioned that the Bill was purely and simply an enabling Bill. I do not propose to enter into an argument on the semantic side of this, but what concerns me, and I believe many of us on these Benches, is the number of points raised by the noble Lord and by other Members of the Government at earlier stages of the Bill; for example, the full year effect from the proposed and swift reduction in the rebate from 50 per cent. to 41 per cent. The noble Lord gave the figure clearly as £1.35 million per month, and he hoped that in a full year that would be £16.2 million.
He considered that figure to be small beer on a national scale. But this is not the only parameter for considering this particular Bill, nor indeed this measure. The noble Lord, Lord Wallace, referred to the beneficial effect upon the public sector borrowing requirement. Indeed, the Fund is intended to be self-supporting and it is intended to finance the redundancy pay of those employees who, for very good reasons, or perhaps not good reasons, may lose their jobs. Let no one forget that the Fund is composed of employers' contributions which are administered by 979 the Government, and indeed the Government are paid out of the Fund to administer it.
The noble Lord pointed out that, whenever the Redundancy Fund is in deficit, the Government charges interest on any topping-up which may be necessary, yet no interest accrues to the employers when the Fund is in credit, and this is the normal and intended state of affairs. Whether or not the noble Lord intended to become involved in discussions about the public sector borrowing requirement, he made references to the measures which were outlined in another place on 22nd July last year.
Could the noble Lord confirm that the intended order which he says will follow the completion of this Bill through Parliament, and which will reduce the employers' rebate from 50 per cent. to 41 per cent., is solely to enable the Fund to remain in credit? I can hardly think so, for two reasons. First, the Fund is already in credit by approximately £12.7 million—that was the figure given by the noble Lord at an earlier stage. He believed that there were what he called minor adjustments, which we accept, but nevertheless the figure he gave of an addition of £16.2 million in one particular year during the first full year of the new scale of the rebate will push up the level of the Fund by an enormous amount, and indeed far too much for its declared purposes.
Secondly, the declared purpose of the Bill, which has been spelled out many times by the noble Lord and his colleagues in another place, is to enable the Secretary of State to vary the rebate which is paid to employers. We do not argue with this purpose, but we consider that the Government should not use this Fund as any factor in the public sector borrowing requirement.
There are one or two further small points. Can the noble Lord confirm for us that the figure which was mentioned by my noble friend Lady Elles at an earlier stage of approximately £8 million, which was an extraordinary item of income which came into the Fund during the first week of December 1976, was an adjustment by the Government Actuary? I think that the House would absolutely accept that a large swing of this nature 980 in one particular week is utterly exceptional, but the figure of the Fund's total at present is around £13 million, and thus the effect of the noble Lord's proposed order will add, he estimates, £16.2 million in a full year. Can he give us any indication of what size the Fund would be allowed to reach? There is the major point that, the larger the Fund becomes, the greater will be the effect on the public sector borrowing requirement, and indeed the far greater and more harmful effect on the employers, who would be happy to see any relief from the contributions they have to make.
Certainly I have said quite enough to indicate that we are very unhappy with what we call the unfettered power which is to be given to the Secretary of State with regard to this particular Fund. All the more so when the Fund is at present in credit, and is likely to go more into credit with the rebates at their current level, let alone at the level of 41 per cent. which, as the noble Lord indicated, the order will reduce these rebates to. I do not believe that we could be justified in automatically passing any order which would reach us in this respect if it does not lie in accordance with our very modest and reasoned Amendment, which we believe was cravenly rejected by the Government in another place.

§ Lord ROCHESTER
My Lords, I do not think that I can let this opportunity pass without saying a few words from these Benches in the way of reinforcing what the noble Lord, Lord Lyell, has just said. Having read the Official Report of the proceedings in another place, when our own Amendment to this Bill was considered, I am bound to say that I was no more impressed by the arguments against it put forward by the Government there than I was by the arguments adduced by the noble Lord, Lord Wallace of Coslany, in this House.
In our view this Bill, particularly in its unamended form, remains a bad Bill for reasons of principle which I endeavoured to express both at Second Reading and in Committee in this House, and I shall not repeat them now. I am glad, however, that the protest that we then made was made not simply from the Conservative Front Bench and from these Benches but 981 also from the Cross-Benches in the person of the noble Lord, Lord George-Brown. Having said that, I do not think that there is anything more that we can do about it at this stage, but I, for one, acquiesce in the position with the greatest reluctance.

Lord WALLACE of COSLANY
My Lords, the noble Lord raised a point about this mysterious £8 million, over which I issued the slight reprimand to the noble Baroness that this was something that should not be raised in this Chamber. I would advise the noble Lord that allocations of the Fund by the Department of Health and Social Security are made weekly on the basis of estimates prepared by the Government's Actuary's Department—the GAD, as some Departments refer to it. These payments are occasionally supplemented by adjusting payments.
Prior to the introduction of earnings related contributions in April 1975 only relatively minor adjustments were necessary because the contribution income was stable. In other words, it was possible to estimate it accurately at so much per head of the working population. Since that date a certain number of adjustments have been made. I shall not give them in detail, but I could if required. I can give the noble Lord the details if he requires, but that is the reason. We have certainly had a debate where misgivings were expressed on one side and reassurances given on another. This is an enabling Bill, and I would suggest, possibly with some trepidation, that when the order is made it is subject to Affirmative Resolution and can be challenged in both Houses. I think that the House would be well advised to leave it at that and to accept the Motion.