HL Deb 21 June 1977 vol 384 cc540-53

2.55 p.m.


My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, that the House do now resolve itself into Committee.—(Lord Wallace of Coslany.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD ABERDARE in the Chair.]

Clause 1 [Power to vary rebates]:

Baroness ELLES moved the following Amendment:

Page 2, line 12, at end insert— ("( ) No order shall be made under subsection 1 above unless the Secretary of State thinks it expedient to do so with a view to adjusting the level at which the Redundancy Fund stands for the time being and having regard to the sums which may be expected to be paid from that Fund in any future period.")

The noble Baroness said: I shall not waste the time of your Lordships by going into all the arguments that we discussed in relation to this Bill during the Second Reading. However, I should like to draw your attention to the fact that those who spoke supported the intent of the Amendment which I am putting forward for the consideration of your Lordships—barring, naturally, the reply of the Minister concerned. I hope, however, that he will listen with a certain degree of generosity and kindliness to this Amendment.

During the Second Reading of the Bill I indicated our legitimate concern regarding its purpose—the reasons for variation and the manner in which variation could be introduced into the percentage of the rebate payable to employers. As at present drafted, no criteria are laid down in the Bill to guide the Secretary of State when considering the introduction of a variation. No obligation is placed upon him to take account of any particular circumstances, whether as to the size of the Fund at any given time or as to any other factor such as a large number of redundancies which might be expected for a certain reason in any particular area. As the Bill stands, therefore, there is no safeguard to prevent the Government from varying the Fund rebate to suit their own ends—in effect, to use payments made by all employers to assist specific employers to deal with redundancy problems and meet redundancy payments for which they are statutorily obligated, and to use this Fund for purposes other than those for which it is intended by Statute under the Redundancy Payments Act 1965 and the later Redundancy Rebates Act 1969.

The proposed Amendment would have the effect of requiring the Secretary of State, before making an Affirmative Order, to take into account both the size of the Fund and any expected number of redundancies which may have a considerable effect on the size of the Fund, either putting it into deficit or affecting its balance. Since the Fund has steadily increased since December last year to over £12 million in credit—that is the latest figure at 10th June which I have, and perhaps the Minister would be kind enough to confirm it—there should be no necessity, according to the evidence before us, for a variation in the near future. In fact, if the Government choose to ignore the figures showing the way the Fund has steadily risen over recent months, they will confirm, regrettably, our suspicions that they will be using the Redundancy Fund in a way which was not intended and which would be totally unjust to those who are paying into the Fund.

As the noble Lord will be aware, under Section 122(4) of the Social Security Act 1975, the Secretary of State already has power to make an order to vary secondary Class 1 national insurance contributions. Under Section 86(5) of the Employment Protection Act, the Secretary of State may also vary the limit of the amount of pay on which redundancy payments are to be made. I believe that the figure at present is £80 a week. In both of these cases statutorily the Secretary of State has to take into account certain factors: for instance, in the case of the Employment Protection Act such matters as the general level of earnings, the national economic situation, and so on.

The wording of the proposed Amendment follows very closely that which is used in the first example I gave—Section 122(4) to which I referred just now. The Minister will therefore appreciate that this Amendment does not in any way prevent the Secretary of State from making an order to vary the percentage of rebate payable, but nevertheless it imposes certain obligations on the Secretary of State to be guided by certain criteria before making that order. Of course the wording of the Amendment might need some adjustment in order to fulfil certain legal or drafting obligations, but I think the purpose of the Amendment is clear. From what I have said I very much hope that the Minister will consider whether he will be able to accept this particular Amendment, because if he is not able to accept it I shall have to ask my noble friends to follow me into a Division. I beg to move.


I should like briefly to support this Amendment. At the Second Reading of the Bill I endeavoured to stress the point that, when the Redundancy Payments Acts of 1965 were introduced, it was made plain that the Redundancy Fund should not be used for any purpose other than the making of redundancy payments. Yet a month ago the noble Lord, Lord Wallace of Coslany, frankly told us that, although the Fund was then in surplus to the tune of about £13 million and he did not deny that the surplus was growing, it was the Government's intention to make this further impost on employers by reducing the amount of rebate from 50 per cent. to 41 per cent., thus reducing also the Public Sector Borrowing Requirement and enabling the Government to use the money they have saved for other purposes. It seems to me this is not a proper use for the Fund and therefore I must subscribe to the underlying purpose of this Amendment as the noble Baroness, Lady Elles, has described it to us; that is, that if the Secretary of State wishes to vary the amount of rebate he should be required to justify his action by reference not to the general financial position in which the Government may find themselves at the time but rather to the extent to which the Fund is then in surplus or is likely, on the basis, for example, of future employment projections, to be in surplus at a later date.

It seems to me that this is an eminently reasonable principle on which to base legislation, and indeed as the noble Baroness has reminded us it is already incorporated in legislation of this Government in the Social Security Act 1975. The amounts involved here are not great particularly when compared with the 2 per cent. increase in employers' National Insurance contributions which was imposed last autumn. Therefore, as did the noble Baroness, I very much hope that when the noble Lord replies he will find it possible to accept this Amendment.

3.3 p.m.


I was holding back because I hoped that we might hear from the Minister before, maybe needlessly, we let the debate run on. I should like to have known his intention. The three of us who graced the House during the Second Reading will know that I took the view very strongly then that the Bill is totally misconceived; that in fact, far from having any enabling Bill for the purpose of reducing the rebates on redundancy payments to the employers, any sensible economic plan at the moment would require exactly the opposite—a Bill which would help and encourage employers to be more willing to declare redundancies, in order that we might assist the general purpose of getting people to move from jobs which are no longer required into new jobs which are required, and to get them to accept new training and even greater mobility. My view was that the Bill was doing exactly the wrong thing in relation to the requirements of the economic position of the nation.

The Minister's answer to that seemed to be that the IMF exercise and the undertakings we have given about reducing the borrowing requirement, required some part of that reduction to be found from this particular Fund, even if it made an economic nonsense. That is a jolly bad reason, and if the IMF in fact required us to make an economic nonsense in order to find an additional sum of £11 million to take off the borrowing requirement, we might perhaps explain the situation in a little more detail to them.

The Minister admitted that the Fund was currently in surplus. I might remind the noble Lord, Lord Rochester, that at first the Minister referred to £13 million and then, in the course of a few minutes, he reduced it to £11 million, which of course is about in keeping with the accuracy of general Treasury statistics. That £2 million was lost during the time it takes for a message to be passed from the non-existent box of officials at the back via a suitable messenger to the Minister down here, and if we lose £2 million at that sort of rate then the economic nonsense is even greater than I suspected at the beginning; but it is in keeping with the general figures that the Treasury has been producing in recent times. However, in the end the Minister settled for £11 million; I only trust that no more millions have been lost in the few weeks that have elapsed since then and that it still stands at £11 million.

In that situation we ought to be considering firmly whether or not at this stage we should be encouraging, even more than we are doing with the Fund in that condition, a much more active look at how we get people into new jobs. But certainly with £11 million in the Fund it seems to me there is no case for what is proposed by the Minister—and indeed, to do him justice he did not make the point that it was in any way justified by the considerations to which the redundancy payments legislation is addressed.

As to the Amendment, I personally am very surprised that anybody should think that the Amendment goes sufficiently far or ties the Minister down sufficiently firmly. I should have preferred some much stronger form of Amendment, one which actually stated a figure above which the Fund should not move, rather than these somewhat vague words which merely require him in an undefined way to take it into account. I have had talks with people and I am assured that the advantages of the present wording are, first, that it already exists in other legislation, and in other legislation of this Government, as the noble Baroness has said; and, secondly, that it would give the other place the opportunity of calling the Minister to account if he made a reduction at a time when any sensible examination of the Fund would clearly make that reduction unnecessary or unsatisfactory, or indeed wrong. So that it does enable us to call him to boot if he acts in an arbitrary fashion.

If that is correct advice, then I will certainly accept the Amendment; but in view of the words used by the Minister on Second Reading, I think it would be wrong to let the Bill proceed without some Amendment. In his habitual fashion of total candour he told us he did not want us to be in any doubt; the whole purpose of the enabling Bill was not to enable in the general sense, but was to set the scene for the order which he said will be introduced, cutting the rebate from 50 per cent. to 41 per cent. He made it quite clear that, far from just being a vague enabling situation (they could have the freedom, should they need it) it was a preparatory Bill so that they might immediately proceed to lay the order, making this, as I believe, quite wrong cut in the cash assistance made to employers who have to face the consequences of redundancy in this economic situation. I think the House in that case really would be, with respect, acting contrary to all its responsibilities, allowing the Minister to have a Bill which provided no check whatever on the action he might take under it.

In that situation, with that very candid statement made to us by the Minister, I think we are bound to lay down some guidance as to what the House expects the Minister to take into account if and when he wishes to act under the enabling powers of this Bill. It seems to me that to require him to take into account the balance in the Fund, and to require him to take into account a reasonable estimate of what calls may be made on the Fund in a future term, are the least requirements one can ask for. Ministers in the past, myself included, might well have got up and said, "But you can always trust us to act perfectly reasonably. Of course, we would not do anything so unreasonable I as not to take these things into account". I must have said that myself on a hundred occasions. But if the Minister was hoping to get away, as we used to hope to get away, with such a clearly rational and sensible remark, then, of course, he has shot the ground from under his own feet in his burst of candour by telling us in advance that he did not propose to do anything of the sort, that he proposed to act—or rather his senior colleagues will no doubt direct what he does—without taking anything into account. Once they have this Bill safely on the Statute Book they will reduce the balance in the Fund by cutting the rebate whether or not the balance in the Fund justified it; whether the likely calls on the Fund in the future would justify it or would not. Having been clearly assured of the nefarious purposes which the Government unhappily have in mind, I suggest to the House that we simply would be totally lacking in responsibility if we allowed the Bill to go forward in that way.

I join with the noble Lord, Lord Rochester, in making it quite plain that this is not a cri de Coeur on behalf of the employers, which is what the Minister seemed to be implying to the noble Baroness, Lady Elles. I said I was quite prepared to believe that it may be that normally she does act in that capacity. That is not my business. This is simply an all-Party or all-group or all-people attempt in this House to ensure, so far as we can, that the Government do not make economic asses of us all and make the economic situation of the country more of a nonsense than it already is, that they act with the economic requirements in mind rather than some general requirement, whether by the IMF or anybody else, that we have to claw a notional £11 million out of any fund that is going in order to make up a notional total reduction in the borrowing requirement of the country. Since the Chancellor, I am now told by senior Ministers, feels able to live with a Budget which has already been mulcted of £1,000 million, I reckon he could live with a reduction in the borrowing requirement which is short of £11 million.

I, therefore, hope very much, first, that the Minister will do credit to himself and his past by saying, "I have been given a nonsensical brief here, not for the first time. I do not propose to read it out; I am very impressed with the excellent economic advice I have received from the Floor of the House and I accept the Amendment". I emphasise again that the Amendment does not commit him to doing anything. It only commits him to taking into account certain factors if he does do anything. So he would not be doing any harm to anybody. He could always come along and prove that he has taken those factors into account. I hope that he will do that. I will very happily have a word with the Prime Minister to see that in the next cleaned-up version of the Honours List whatever he is lacking at the moment is suitably provided for him.

If he is not able to do that, then with great seriousness I say to the Committee that we ought not to let this Bill go in its present form. We have been warned what will happen if we do let it go, knowing that that is what the Government intend to do without any justification at all. We will be the ones to blame, not them. Therefore, for our own protection, for that of our citizens, the working force and the employers, and the economy of the country, the least we can do—and I think it is very little; it is too little for me—is to insert this Amendment in the Bill, and at least require the Minister to explain to us and to the other place, if and when he moves, that he has taken these matters into account, and to show us how these matters justify him in doing what he does. I support this very tiny Amendment which I hope the House will see, with or without his acquiescence, will get on the Statute Book.

May I just remind your Lordships of what he knows and every ex-junior Minister in this House knows; that is, that sometimes it strengthens one's hand powerfully with one's senior colleagues to have been seen to say all the right things and yet despite that have to report, "Those wretched fellows in our House forced the Amendment on me". It makes life easier for him. The Chancellor can then go and tell the IMF that he did his best. Joel Barnett has got a perfect answer to everybody else in the other place. So I hope nobody will be taken in by the fact that the Minister has to read out his brief; that we all understand. We will listen with the utmost interest and sympathy, and then, I hope, proceed to pass the Amendment.

3.17 p.m.


After that I am almost speechless. The well-known and rather attractive Irish streak in the noble Lord, Lord George-Brown, certainly came out in his speech. I am not very ambitious, quite frankly. All I am worried about is whether my peas will get filled out when the sun conies along and I will he able to get on with something worth while. The noble Lord, Lord George-Brown, and the other noble Lords and the noble Baroness who have spoken, have really anticipated things. The noble Lord, Lord George-Brown, has made a speech which would be admirable when the Affirmative Resolution procedure comes before the House, when the Government decide it is appropriate to introduce the order reducing the rebate to 41 per cent. At the moment, although I said they intend to do so, they can only do so—and I want to emphasise this—by the authority of Parliament, including the noble Lord, Lord George-Brown, who has been such an ornament in many ways to Parliament for such a long time.


More than an ornament on this one.


Well, at the moment I could say other things, but I want to see him later outside. To get down to the serious business of the afternoon: first of all, in regard to the Redundancy Fund's surplus I can give the figure, not reducing it in the process; it was £12.7 million at 17th June 1977. The noble Baroness referred to previous legislation, particularly Section 122(4) of the Social Security Act, and the most interesting thing about that, as with this Bill, is that any alteration considered by the Minister is subject to the Affirmative Resolution procedure. Indeed, if any change is made under this enabling Bill that will be subject to the Affirmative Resolution procedure, and subject to challenge both by the other House and this House.

It would seem clear that the Amendment is intended to ensure that the power to vary rebates is used only as may be necessary from time to time for the management of the Redundancy Fund. Briefly, that is the purpose of the Amendment. However, whether it does so is open to question. The Amendment does not define what may justifiably be taken into account by the Secretary of State for Employment in coming to the view that it is expedient to adjust the level of the Redundancy Fund. For example, it is expedient at the present time to reduce the rate of rebate in order to reduce the Public Sector Borrowing Requirement. In coming to that conclusion account has been taken of both the state of the Fund and of foreseeable outgoings.

Accordingly, the conditions of the proposed Amendment would appear to be satisfied and its adoption would not prevent an order being laid in draft before both Houses of Parliament under the Affirmative Resolution procedure. In other words, the Minister could still bring forward his order. The Amendment is, therefore, of little or no practical effect and, with respect, I believe that it should be withdrawn as it does no more than acid unnecessarily to the wording of the Bill. Moreover, the social security legislation should be considered against the background of the Act as a whole, and any undertakings which are given in Parliament during the course of the consideration of the Bill.

On the other hand, the Redundancy Payments Bill stands in isolation and must be considered against the unequivocal statements which were made about using it in the first instance to reduce the rebate to 41 per cent. as part of the Chancellor's economy package of July 1976. That only repeats what I have already said in this House but, again, is subject to the challenge of both Houses under the Affirmative Resolution procedure.

I would suggest that it is neither appropriate nor necessary to write in such a condition as is involved in the Amendment to the present Bill. As has already been made clear, the Bill is an enabling instrument to permit rebate to be varied from time to time in the future. Having said that, clearly there can be no argument about the need for adequate control over the management of the Fund, and the power to vary rebate should be used only after full and careful consideration. It is considered that both conditions are adequately safeguarded by Clause 1 as it stands. The rate of rebate cannot be varied without the specific authority of both Houses of Parliament. The time made available for debate under the Affirmative Resolution procedure affords ample opportunity for the reasons underlying any change to be fully explained and for Parliament to decide whether those reasons are such as to justify a change being made.

Although at first sight it may seem appropriate to follow the precedent of the Social Security Act, it would be wrong to confuse the present Bill and the use to which it will be put in the first instance with the provisions of a quite different piece of legislation related to the collection of contributions. The Redundancy Rebates Bill should be considered on its individual merits. Throughout the passage of the Bill the Government have been at some pains to explain openly the reasons underlying it and the use to which it will be put. At no time does it seem likely that the enabling power will be used without due regard to the state of the Fund and foreseeable demands upon it, as the prudent administration of public money demands that a careful watch should be kept on such matters. However, utlimately the final say-so will remain firmly with Parliament under the Affirmative Resolution procedure.

A far more difficult Amendment was moved in another place, but I believe that this Amendment really does not alter the character of Clause 1. As I have said, in point of fact the Minister could still introduce his proposals under the Affirmative Resolution procedure. I suggest that the challenge will come when the order is made, if and when it is made. At present we are dealing with a purely enabling measure which would allow the Minister not only to reduce the rebate, but conceivably, with an improvement in economic conditions, to increase it.


Pull the other one!


The noble Lord, Lord George-Brown, has said, "Pull the other one", but I am simply giving him a statement of fact. It is an unhappy situation that measures of this sort are necessary. However, the noble Lord has had some experience of economic problems; he knows the necessary and proper measures to take and has faced them in the past. That is what we are doing at present. Therefore, I ask the Committee to reject the Amendment; or perhaps the noble Baroness, Lady Elles, will withdraw it and possibly reconsider it.

Baroness ELLES

The Minister will realise that I do not find his reply at all satisfactory. In fact, everything that he has said points to what we have already suspected, that the money in the Fund will not be used for the purpose for which it was originally intended or for which it is paid. I do not think that this is the time to go into arguments about whether one should encourage redundancies. When industrial investment is so discouraging, as it is at present, I, personally, do not feel that we are in a position to encourage redundancies when there is nothing to be retrained for. However, that is a major debate which we should have another time.

I should like to express my thanks to those who have supported this Amendment. It should be said—because this point has not been raised by the Minister and this is what makes me suspicious—that when the decision was taken on 22nd July to vary the rebate, the Fund was standing at about £5 million in deficit. What has never been brought to light in this House is the fact that at the beginning of December there was a very mysterious payment of about £8 million into the Fund. I have never been a Minister so I cannot say from personal experience that I know how £8 million was suddenly found. However, to those who are knowledgeable about these matters it certainly seems that this £8 million must have been found through bad accounting by whichever Department looks after this particular Fund—presumably the Treasury—and that the decision was taken in July last year because the Fund was in deficit to £5 million. The Government have not had either the courage or the honesty to admit that, the Fund now being in credit, they have no right to take the action which they are considering.

When the Minister said that this is a purely enabling Bill, the noble Lord, Lord George-Brown, quite rightly pointed out that the Minister said during the Second Reading debate:

Accordingly, the first action to be taken under the proposed legislation will be the introduction of an order reducing rebate to 41 per cent". [Official Report, 17/5/77; col. 636.] I know that the Minister is in full agreement, knowing perfectly well what he said. Therefore, for all those reasons, including the one to which the noble Lord, Lord George-Brown, referred, we should be economic asses; and I object that because of bad financial accounting by the Government we should also be made financial asses. Regrettably, therefore, I have to ask my noble friends to go in with me to a Division to press this Amendment.


The noble Baroness mentioned a mysterious £8 million, of which I have no knowledge. That figure certainly did not come from me. With respect, I would suggest that that is hardly a matter for your Lordships' House. I shall certainly make some inquiries. I do not think that it is a matter for your Lordships House to deal with; we shall find ourselves in severe trouble with another place if we do so.

Baroness ELLES

I certainly take the point and apologise if I have overstepped the mark. However, it is difficult when one is arguing very much a financial matter not to draw the attention of the Committee to such things. If I should not have done so, I apologise to the Minister.

3.30 p.m.

On Question, Whether the said Amendment shall be agreed to?

Their Lordships divided: Contents, 114; Not-Contents, 58.

Adeane, L. Brooke of Cumnor, L. de Clifford, L.
Airedale, L. Brookeborough V. Denham, L.
Alexander of Tunis, E. Byers, L. Derwent, L.
Allerton, L. Caccia, L. Drumalbyn, L.
Ampthill, L. Campbell of Croy, L. Ebbisham, L.
Ashbourne, L. Carr of Hadley, L. Eccles, V.
Avon, E. Carrington, L. Effingham, E.
Banks, L. Cathcart, E. Ellenborough, L.
Barnby, L. Chelwood, L. Elles, B.
Barrington, V. Clancarty, E. Elton, L.
Belstead, L. Clifford of Chudleigh, L. Emmet of Amberley, B.
Berkeley, B. Clwyd, L. Exeter, M.
Boothby, L. Cottesloe, L. Foot, L.
Boyd-Carpenter, L. Craigavon, V. Fraser of Kilmorack, L.
Brentford, V. Cullen of Ashbourne, L. Gage, V.
Geoffrey-Lloyd, L. Lauderdale, E. Rochester, L.
George-Brown, L. Lloyd of Kilgerran, L. Romney, E.
Glasgow, E. Long, V. Sackville, L.
Glenkinglas, L. Loudoun, C. St. Aldwyn, E.
Greenway, L. Lovat, L. Sandys, L.
Grey, E. Lyell, L. Selkirk, E.
Gridley, L. Macleod of Borve, B. Sharples, B.
Grimston of Westbury, L. Mancroft, L. Spens, L.
Hailsham of Saint Marylebone, L. Marley, L. Stamp, L.
Halsbury, E. Mersey, V. Strathspey, L.
Hampton, L. Monck, V. Sudeley, L.
Hankey, L. Monson, L. Suffield, L.
Harmar-Nicholls, L. Morris, L. Thurso, V.
Hatherton, L. Mowbray and Stourton, L. [Teller.] Trefgarne, L. [Teller.]
Hayter, L. Vernon, L.
Henley, L. Northchurch, B. Vickers, B.
Hunt, L. O'Hagan, L. Vivian, L.
Hylton-Foster, B. Onslow, E. Wade, L.
Ilchester, E. Piercy, L. Ward of North Tyneside, B.
Inglewood, L. Porritt, L. Ward of Witley, V.
Killearn, L. Redcliffe-Maud, L. Windlesham, L.
Kings Norton, L. Reigate, L. Wynne-Jones, L.
Kinloss, Ly. Robbins, L. Young, B.
Kinnaird, L.
Arwyn, L. Gardiner, L. Rusholme, L.
Aylestone, L. Hale, L. Sainsbury, L.
Bacon, B. Hanworth, V. Shinwell, L.
Birk, B. Harris of Greenwich, L. Sligo, M.
Blyton, L. Henderson, L. Snow, L.
Boston of Faversham, L. Janner, L. Stedman, B.
Brockway, L. Kilmarnock, L. Stewart of Alvechurch, B.
Buckinghamshire, E. Kirkhill, L. Stone, L.
Burntwood, L. Leatherland, L. Stow Hill, L.
Burton of Coventry, B. Llewelyn-Davies of Hastoe, B. Strabolgi, L. [Teller.]
Champion, L. Maybray-King, L. Taylor of Mansfield, L.
Chorley, L. Morris of Grasmere, L. Thomson of Monifieth, L.
Cooper of Stockton Heath, L. Oram, L. Wallace of Coslany, L.
Crowther-Hunt, L. Pannell, L. Wells-Pestell, L. [Teller.]
Davies of Leek, L. Pargiter, L. White, B.
Donaldson of Kingsbridge, L. Peart, L. (L. Privy Seal.) Wilson of High Wray, L.
Douglass of Cleveland, L. Phillips, B. Wilson of Radcliffe, L.
Elwyn-Jones, L. (C. Chancellor.) Popplewell, L. Winterbottom, L.
Evans of Hungershall, L. Raglan, L. Wootton of Abinger, B.
Gaitskell, B.

On Question, Motion agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.

Clause 1, as amended, agreed to.

Remaining clauses and Schedule agreed to.

House resumed: Bill reported with an Amendment.