§ 4.40 p.m.
Lord WALLACE of COSLANY
My Lords, I beg to move that the Job Release Bill be now read a second time. The purpose of the Bill is to give the Secretary of State statutory authority for expenditure on job release schemes. Its immediate aim is to provide such authority for the scheme which is already in operation and which for the time being is being financed under the Appropriation Act. The job release scheme is one part of the Government's programme of selective employment measures. Noble Lords will remember that we debated the programme only last week, and I then touched only briefly on the subject of job release because we were to deal with the Second Reading today. Therefore, today I have the opportunity to deal with it more fully.
The aim of the scheme is to help older workers nearing statutory pensionable age to leave their jobs early and to release jobs for the younger unemployed, and to reduce the competition for jobs among unemployed people by encouraging older workers without jobs to leave the labour market. Job release is a new initiative in this country and it is indeed true to say that we are among the pioneers. I believe Belgium is the only other country which is trying it at the present time, although I would add that in the debate which was held in January in the Council of Europe, in which I took part, this was one of the recommendations made to the Council of Ministers.
The scheme now in operation began on 3rd January 1977 and lasts for six months 423 until the end of June. It offers a tax free allowance of £23 a week to people in full-time jobs who are within one year of statutory pensionable age—in practice, men of 64 and women of 59—and who undertake to leave paid employment and not to seek work, although they will not be disqualified from receiving the allowance if they have small earnings of not more than £4 a week.
The applicant's employer must agree to release him and to recruit instead from the unemployed register another worker who otherwise would not have been recruited. The new worker need not necessarily be for the same job; there is no requirement for a direct replacement. When people leave an employer there may be room for internal promotions or transfers to fill the immediate gap. What is important is that a vacancy is created somewhere in the firm and that it is filled by a registered unemployed person. It is worthy of note—and I emphasise this strongly—that the scheme is entirely voluntary for the worker and employer. Unemployed people in the same age group may also apply for the allowance. In doing that there is no reason for distinguishing between employed and unemployed people. The point of the scheme is to reduce the overall number of people competing for jobs.
If we want to look at it in another way, in social rather than economic terms, it seems right on equity grounds to include the unemployed: to exclude them would be to put them at a double disadvantage. The scheme operates in the assisted areas where more than half the total area of unemployment is to be found. There are two reasons for this limitation: first, there is the obvious question of cost, which has forced the Government to restrict the scheme. Secondly, it seems sensible with a new initiative to begin on a relatively limited basis while focussing on an area of greatest need. I must say however that the response to the scheme has so far been less than we had hoped. Noble Lords will have seen in the Explanatory and Financial Memorandum to the Bill the estimated take-up upon which the projected costs of the scheme was based. Of course estimates for an entirely new scheme are difficult to make.
424 Up to 18th March there have been almost 12,000 applications of which about 10,000 have been approved, about 3,000 from employed people and 7,000 from unemployed people. More publicity is being given to job release in an effort to include the take-up and particularly to ensure that all in employment who are eligible are aware of the scheme. Television advertisements are being used and my right honourable friend has written to the major employers in the country and I know he would like me to repeat his message today: we hope all employers will do all they can to publicise the scheme to their workpeople.
I turn now to the provisions of the Bill. I make no apology however for having spent a little time in describing the scheme since I believe it is the best way of explaining what the Bill is really intended to achieve. It expresses its intentions in very few words. This is an enabling Bill which provides statutory authority for expenditure by the Secretary of State on job release schemes which meet the criteria mentioned in the Bill. These are, first, that allowances under job release schemes may be paid on only a temporary basis; secondly, that allowances may be payable only to a particular group of persons—those approaching pensionable age—and thirdly, that schemes must be for a specific purpose; that is, creating job vacancies and otherwise mitigating the effects of high unemployment. These three factors define the purpose of job release schemes in the circumstances in which they operate. They create a clear statutory framework within which the Secretary of State can adjust the conditions of schemes rapidly in the light of experience and to suit current needs.
I have said that the schemes under the Bill must be temporary. They would cease to exist when unemployment falls to a more reasonable level, but we are anxious to provide that should unemployment rise to an unacceptable degree it will be possible for a job release scheme to be mounted again. So the authority of the Bill will operate for a period initially of 18 months but the authority must be renewed either at the end of 18 months or at some later date for periods of up to a year at a time. Renewals will be by means of a Statutory Instrument, subject to Affirmative Resolution in another place.
425 The Bill also provides a safeguard from the effects of sex discrimination legislation for job release schemes in which eligibility is defined by reference to the time at which a person reaches pensionable age. We do not believe that the present scheme is in practice discriminatory. It pays the same rate of allowance to all successful applicants for the same period of time but, while the statutory pensionable age differs for men and women, job release schemes must take account of that fact. There is no other practical way of running them. However, we were anxious not to put those operating the scheme, and more particularly employers participating, at any kind of risk. That is why the safeguard is in the Bill.
The Job Release Bill is a necessary measure designed to provide authority for expenditure on a scheme already included in the Government's programme of employment measures. The scheme seeks to create permanent full-time jobs for some of the unemployed and particularly for our younger unemployed people. There can be no question as to the merit of that aid. The scheme is a valuable part of the Government's selective programme and one which we must all hope will have an increasing impact in the months ahead. We also hope of course that the need for such schemes will disappear, but in the meantime it is right to arm ourselves with the powers that we need to tackle the effects of high unemployment.
§ Viscount AMORY
My Lords, I think the noble Lord said just now that the service would be available in only assisted areas. I wonder whether he can correct my ignorance: are assisted areas what used to be known as "special areas", or are they in a different category altogether?
Lord WALLACE of COSLANY
My Lords, I would say that it is more or less the same thing. It is in areas of very high unemployment where special measures have to be taken. So we can more or less say that it is the same thing.
§ Viscount AMORY
My Lords, I was wondering whether there was an element of flexibility in this, because the boundaries of the old special areas are clearly defined and other services are available where there is a little more flexibility than this, and 426 account is taken of the local level of unemployment rather than statutory boundaries.
Lord WALLACE of COSLANY
My Lords, I hope that the noble Viscount will give me an opportunity to give him a more adequate reply when I come to wind up the debate, which I shall endeavour to do. I beg to move.
§ Moved, That the Bill be now read 2ª.—(Lord Wallace of Coslany.)
§ 4.51 p.m.
§ The Earl of MANSFIELD
My Lords, I should like to thank the noble Lord, Lord Wallace of Coslany, for introducing this Bill to your Lordships and for introducing it so succinctly. If he did not get his final sentences quite right, no doubt the Official Box will put him right when he replies to the debate. Any efforts on the part of this Government to bring down the present intolerably high level of unemployment will be welcomed, and to that end I am sure that noble Lords on this side of the House will extend a welcome to this modest measure. Nevertheless, the Bill represents one more of a number of selective schemes which are now in operation. They have this in common: they all relate to different conditions and for different periods of time but they all go to alleviate unemployment in one form or another. Among them, I suppose, are the training opportunities scheme, the job creation programme, the youth employment subsidy, and of course there are others.
I did not take part in the debate last week in which, as I understand it, the noble Lord, Lord Wallace, made his debut from the Dispatch Box, and it may be that all these questions have been answered. So far as I am concerned, I believe that a Manpower Services Commission Working Party is presently inquiring into the effectiveness of all these measures to help the unemployed. One wonders, first, when the Working Party is likely to report, and secondly, once it has reported, whether each House will be given an opportunity of debating that report.
The thought must occur, and the question be asked, whether we are diffusing our effort and, indeed, our money in too 427 many different directions at once. Are we spreading what funds are available in the right concentration in the right direction? That is something to which I have no doubt noble Lords will wish to return.
So far as this Bill is concerned, during its passage through the other place a number of welcome Amendments were made limiting the operation of the scheme to a specific period, as the noble Lord told us, and making any further extension subject to an Affirmative Resolution of the other place. In the Memorandum to the Bill the Government state that they expect the number of applications over this three-year period to amount to no fewer than 78,000. Additional staff numbering no fewer than 150 would be taken on in the first six months.
As to that, and pausing there, if my researches are correct the scheme was announced in September 1976 and applications were invited in November 1976. The scheme actually started on 4th January this year but, as the noble Lord has told us, up to the 18th of this month, only 10,000 applications have been approved. Therefore, one wonders whether the 150 have now been taken on. It is six months and more since the scheme was announced, but less than that since it came into operation. If so, what are the 150 doing? On the evidence of the noble Lord, the work rate so far has not been exactly onerous. The ratio—so far as I was able to work out rather rapidly—remains the same as when the scheme came into operation; that is to say, only three applications from employed persons to no fewer than seven applications from unemployed persons.
The general idea of inducing people to give up their jobs when they are near retirement age and to make way for somebody else who is unemployed, is excellent. It is the cascade principle because, as the noble Lord pointed out, the person who gives up does not have to replace somebody on the unemployment register. Nevertheless, so far as unemployed people are concerend, as I understand it the position would be that they will be paid approximately the same by way of benefit as they would be paid if they had remained on the unemployment register, with this considerable difference: not only 428 will they be relieved of any obligation to seek employment, but in fact they are positively prevented from so doing.
If one was being cynical about this, one would say that this was a matter of playing with statistics, so that the individual who previously had been paid for being on one register was now going to be paid the same sum for being on another register. If the Government were to try to claim that this is reducing the unemployment statistics, one would be entitled to point a finger, and even possibly utter a guffaw. However, I accept the Government's contention that this is not the object of the enterprise. But I am bound to say that it is difficult to see how, by taking out a few of the more elderly unemployed, it will reduce the number of unemployed as a whole.
As I understand the position, the vast bulk of the unemployed are in fact school-leaving teenagers, and they will not really be in competition with the elderly unemployed. Further, what about part-time employment? As I understand the noble Lord, a person who is in a job can, under this scheme, seek employment of some kind and take the remuneration if it amounts to no more than £4 a week. I think I understood the noble Lord correctly when he said that. One does not know whether that is averaged out, or how the figure is arrived at.
There are many people who approach retirement age who are full of vigour and well able, and indeed desirous, of holding down some part-time light employment which would he totally unsuitable for somebody who is younger and fitter. The tourist industry, in which I have considerable interest, is very much a case in point. One wonders how the Government arrived at the figure of £4. I should have thought that this is something which could be kept under review. I would hope that it would be extended, or at least uplifted, to a figure considerably higher than £4.
As I say, these people are quite able to do a light job, and I suggest that with productivity on a national scale being as low as it is they should not be prevented from doing so. By the endorsement on top of the Bill we are constrained in our approach to it and in the way in which we deal with it, but as I said at the beginning it is a modest Bill with modest aims and we must all hope that it succeeds.
§ 5 p.m.
§ Lord ROCHESTER
My Lords, we on these Benches are happy to give general support to the main purpose of the Bill as set out in Clause 1—that is, to pay temporary allowances to people approaching pensionable age so as to create job vacancies and to mitigate the effects of unemployment. But of course the Bill does nothing to create employment opportunities; and, as my noble friends and I never tire from saying, that cannot happen unless there is improved profitability, higher relative rewards for skill and responsibility, and improved training facilities in industry leading to an increase in the rate at which goods and services are produced for the benefit of the community. We understand why the Bill has had to be drafted in general terms that allow considerable flexibility, so that under it new temporary job release schemes can be introduced—for example, to cover non-assisted as well as assisted areas—and I think the noble Lord, Lord Wallace of Coslany, will find the answer to the question raised by the noble Viscount, Lord Amory, on the back of the excellent pamphlet about the job release scheme which defines assisted areas in clear terms.
We regard it as quite essential that any schemes of this kind should be subject to adequate Parliamentary control and for this reason we particularly welcome Clause 1(3) and (4) under which, as I understand the position, if the Government wish to continue to pay allowances for longer than 18 months, with permitted extensions of up to 12 months, this must first be approved, as the noble Earl, Lord Mansfield, reminded us, by an Affirmative Resolution of the House of Commons. I notice that in Committee in another place two weeks ago the Minister gave the further assurance that any changes in job release schemes would be the subject of a Government announcement which could be questioned, and this, too, we welcome.
It is because we support the main purpose of the Bill that, like Lord Mansfield, I was disturbed to hear from the Minister (if I have the figures right) that, of about 10,000 people whose applications to take advantage of the present scheme had been approved by 18th March, as many as 7,000, or 70 per cent., were registered as unemployed. At a time like the present 430 there is of course an understandable temptation for any Government to make use of this kind of scheme simply to reduce the number of people unemployed. But the main objective of such schemes, as the title of the Bill makes plain, is to encourage as many people as possible who are employed to retire early so as to create the maximum number of vacancies for younger people who are unemployed.
The position now appears to be that it is proving more advantageous for someone who is unemployed to claim this new form of benefit—which may, under the existing job release scheme, in some cases be worth a little more than unemployment benefit—than it is for someone who is employed to have his weekly income reduced to less than that which he is already receiving. I should be grateful if, when Lord Wallace replies, he would say whether, and if so how, the Government propose to alter the balance of the scheme so that it gives more encouragement to employed people to retire early. I was able informally to give the noble Lord notice that I would ask this question.
It would also be helpful for us to know whether the Government are prepared to entertain the idea of gradually reducing the minimum age of qualification for job release below 64 for men and 59 for women, depending obviously on the general employment position, which we hope must improve, on the extent to which the present scheme is used, and, particularly of course in these stringent times, on how much it actually costs to run schemes of this kind in practice.
I understand, further, that one of the difficulties about getting enough people who are now in employment to take this tax-free allowance of £23 a week, is that they fear this might have an adverse effect on their occupational pension. Is the Minister in a position to give us any further information on whether this particular obstacle has now been overcome, or what are the prospects for overcoming it? Subject to those doubts, we are happy to support the Bill in principle.
§ 5.6 p.m.
Lord WALLACE of COSLANY
My Lords, I have received a number of questions about this short Bill and I will 431 endeavour to answer them. At the outset, however, I wish to correct a statement made by the noble Earl, Lord Mansfield. If I understood him aright, he said that the vast bulk of those unemployed were teenage people. Actually, that is not quite true. Do I see the noble Earl wishing to interrupt?
Lord WALLACE of COSLANY
I am not quite sure what that means, my Lords, so I will give Lord Mansfield the figures and they may provide him with further food for thought. Only 31,596 school-leavers are involved in a total of 1,328,382. They are the provisional figures for March 1977.
This has been a short but constructive debate. We have had support for the Bill from the Benches opposite, with a certain amount of criticism and a certain amount of inquiry, and that is very welcome indeed. Although it is a small Bill, its importance should not be underestimated. It is an imaginative way of approaching a major social and economic problem. The Bill sets out to create a flexible framework within which job release schemes can be adapted to meet the needs of the time.
Lord Mansfield mentioned the report of the Manpower Services Working Party. This matter came up last Wednesday but I will repeat what I said then. The report of the Manpower Services Working Party is expected very shortly. In another place my right honourable friend is making arrangements, subject to certain considerations—others now having been added—to have a debate on it, and, as I said previously, although I cannot arrange Government business here (I have no responsibility for that) I am hopeful that we, too, will have such a debate.
The noble Earl then mentioned the question of staff. The estimate of 150 staff related to the estimated total of applications; we have certainly not taken on the whole of the 150 at the start. The staff increase is in direct proportion to the number of applicants coming forward. In other words, the gearing in terms of taking up staff will, as I said, be related to the number of applicants coming forward.
432 I appreciate that there is a great deal of criticism about unemployed people coming into the scheme and I frankly admit that it is out of balance at the moment; that is a fact and we admit it. However, the main point on which we wish to concentrate, and to which we wish to give greater publicity, is the attraction to the scheme of people who are in employment, who are getting within reasonable reach of retirement, and who are than at least given an opportunity to retire early, if they so wish, on a tax-free £23—which is not too bad considering all the circumstances—and that in turn will release jobs for others. What is needed is publicity, the co-operation of the employers, and all of us doing the best we can to put over the impact of the scheme.
The £4 limit has been mentioned by, I think, the noble Lord, Lord Rochester. The Government agreed during the progress of the Bill in another place to introduce a rule allowing people in job release to earn up to £4 a week without losing the allowance. This was in response to pressure from the Conservative Benches. It was represented that we should not prevent people from taking up part-time jobs for a few hours a week. The level of £4 was suggested by the Conservative Benches and was accepted by the Government, and it is the disregard of earnings which allowed people, if necessary, to apply for supplementary benefit, dependent on the circumstances of the individual affected.
The noble Lord, Lord Rochester, in a very constructive contribution, suggested that we should possibly consider altering the balance of the scheme. The balance of the scheme will be altered if we are successful in persuading more employed people to accept it. On the question of gradually reducing age the noble Lord raised a very difficult point—that it should be reduced further still. But the cost is considerable, and at present there is no question of considering that aspect. In any case, there are pressures about in political circles for altering the pension age, and that would have some effect on the scheme.
Certainly the question of occupational pensions can give rise to some concern, but for the people involved there need be no concern whatever. First, the amount of the job release allowance payable to an 433 individual is not affected by any occupational pension to which he or she is entitled. The allowance is £23 a week in all cases. Whether it will have any effect upon a person's entitlement depends entirely on the occupational scheme in which the person is involved, but, generally speaking, an occupational pension payable to a person is not affected by the £23 a week allowance. The noble Viscount, Lord Amory, mentioned—
§ Baroness SEEAR
My Lords, I do not speak for my noble friend, but this is really a very important point, because if one is in an occupational pension scheme and one is retiring early, then for the rest of one's life one's pension is reduced because one has fewer years of service. Does this count as retirement? I am not a bit surprised that people are not taking it, if they do not get the same pension as they would have got had they retired at age 65. One may go a year early. But the years of service are the years until one leaves, and the calculation for the rest of one's life, if one gets, say, one-sixtieth, is one-sixtieth multiplied by the number of years that one is at work. That number of years at work is reduced, and therefore the pension for the rest of of one's life is less.
Lord WALLACE of COSLANY
My Lords, it depends on the terms of any individual occupational pension scheme. In some schemes one can retire at 60, in some at 64, in some at 65, and so on. It is entirely related to whatever scheme is in operation. The point is that this is a voluntary scheme and the person must decide for himself whether or not it is a financial advantage, affecting the occupational pension, to take the scheme. The person concerned must reach that decision. It is the right of the individual to decide. He must decide in the light of the scheme and of his occupational pension whether to take it on. But, certainly, if he receives an occupational pension, his occupational pension is not affected or reduced. He keeps that money, and that is that.
The noble Viscount, Lord Amory, mentioned the assisted areas. The assisted areas include the intermediate development and special development areas; that is, Scotland, Northern Region, Yorkshire, Humberside, Wales and the North West. The areas are specified in 434 Section 6 of the Industry Act 1972, and in effect they contain about 40 per cent. of the labour force and about 52½per cent. of the unemployed. That is why, necessarily in the first instance, we have been selective in introducing the scheme in those areas—
§ Viscount AMORY
My Lords, I thank the noble Lord for that information. On my way out the noble Lord, Lord Rochester, slipped me a pamphlet which I think gave me that answer. I wonder whether any consideration is being given to making the boundaries of those assisted areas a little more flexible? I ask this because very often there are pockets of heavy unemployment just outside the boundaries. I wonder whether continuous consideration is being given to local revisions of boundaries in the light of the changing volume of unemployment?
Lord WALLACE of COSLANY
My Lords, the short answer to the noble Viscount is that the scheme itself is under consideration all the time, and the particular points that he has raised would be considered. If the noble Viscount requires further assurance I can certainly get information for him and will write to him in due course. I do not think that there are any more points that I have to answer at present.
I want to conclude by reminding your Lordships once more of the context in which we are debating the Bill. None of us is complacent about the level of unemployment. The Government have mounted a massive programme to reduce its impact, but it is still intolerably high, despite the welcome reduction that again has been announced this morning. Job release is a measure which has the potential to reduce the impact even further, and I hope that the 10,000 or more workers and unemployed who have taken advantage of it will soon be joined by others. It is a straightforward scheme without any complicated rules to deter the applicant. I hope that people will take a good look at it, that people will publicise it, and that they will appreciate that there is something to offer in the scheme which is before them. It is open for another three months, to the end of June, and then the Government will be reviewing its future. But it is highly desirable that we have such schemes in operation at the 435 present time. Small as they might be, they are in fact assisting a number of people in a situation which some of us understand only too bitterly from our experiences in the past.
§ On Question, Bill read 2ª; Committee negatived.