Shipbuilding (Redundancy Payments Scheme) (Great Britain) (Amendment) Order 1981 (Hansard, 24 February 1981)

Viscount Long
My Lords, I beg to move that the Shipbuilding (Redundancy Payments Scheme) (Great Britain) (Amendment) Order 1981, which was laid before the House in draft on 19th January, be approved. For the convenience of your Lordships, I should like to point out that my remarks on the technical aspects of this order apply equally to the order which my noble friend Lord Elton will move later. The shipbuilding redundancy schemes in Great Britain and Northern Ireland are identical in substance, as are the amendment orders we shall be looking at this afternoon.
Because of the continuing uncertainty about the future of the industry we announced last November that we propose to prolong for a further two years the Shipbuilding Redundancy Payments Scheme which is due to expire in the middle of this year. Enabling powers are being taken in the Industry Bill, which has recently had its Second Reading in this House. In due course, it is hoped to lay before Parliament the necessary order to prolong the scheme to the end of June 1983. The amendment order now before you should therefore be considered on the basis that, provided Parliament approves, the Scheme will not expire in the middle of this year, but that new redundancies 1020 over the next 2½ years will be eligible for scheme benefits and that, because benefits can continue for up to 2 years after redundancy, payments under the scheme will be made over a period of 4½ years from now. The Joint Committee on Statutory Instruments considered these orders and have reported to the House. The committee was concerned that the definition of an unemployed person should be made clear and I shall come to this in a moment.
The amendments in the order deal with three points. The first will be familiar: that is, the increase in the "previous earnings limit" from £120 to £130 per week. This is dealt with in Article 4 of the amendment order. The "previous earnings limit", which is the maximum of an individual's pay which may be taken into account in calculating his redundancy benefit, has been raised on two previous occasions in the life of the scheme exactly in step with the increase in the previous earnings limit in the general state redundancy scheme. The most recent increase in the previous earnings limit in the general scheme, from £120 to £130 per week with effect from 1st February 1981, was debated and approved in December and the purpose of this amendment is to keep the shipbuilding scheme in step.
The other two amendments are new and both are of a technical nature. Article 2(1) retrospectively changes the definition of a "qualifying company". This retrospective element, though unusual, is needed to put right a situation in which certain employees of British Shipbuilders have been inadvertently excluded from eligibility under the scheme. To be eligible for redundancy payments, a beneficiary must, among other things, have been employed by a qualifying company for at least one year.
In April last year, British Shipbuilders, in reorganising its engine building sector, reactivated a dormant subsidiary, Clark Hawthorn Limited, and transferred employees to it. As the scheme stands at present, Clark Hawthorn Limited is not a qualifying company, even though it is now carrying on qualifying activities, because it was dormant and thus not a qualifying company on 1st July 1977. The employees of Clark Hawthorn Limited have thus been made ineligible for benefits under the scheme as a result of their transfer. It would not be possible to bring them back into eligibility by transferring them back to their original subsidiaries because, as I have said, to be eligible they have to be employed by a qualifying company for 12 months. This situation is clearly inequitable and the amendment in the order now before your Lordships is intended to remedy it by widening the definition of a qualifying company to include companies which have, at any time since vesting day, been engaged wholly or mainly in qualifying activities. It also gives British Shipbuilders flexibility in organising its corporate structure.
The third amendment is dealt with in Article 2(2) and is the most complex of the three in its drafting. The policy, however, is comparatively simple. About half of the redundancy benefit of beneficiaries aged over 40 is paid weekly over a period of up to two years. Certain criteria have to be met each week if the beneficiary is to continue to be eligible for these periodic payments; he—or she—must, among other things, be unemployed, or be undergoing approved training, 1021 or be employed or self-employed but receiving less than 90 per cent. of his or her previous earnings in British Shipbuilders. At present, "unemployed" in this context is defined in the original order setting up the scheme as meaning "unemployed and registered for employment". The underlying policy is that an unemployed beneficiary should be actively seeking, and available for, new employment. The same policy underlies one of the criteria for receiving unemployment benefit. Problems can arise, however, when someone remains registered for employment when he is not, in practice, available for work.
Last year, the Manpower Services Commission adopted a more flexible attitude towards its employment register, widening the circumstances in which someone could remain registered for employment despite, for example, absence abroad. There is, as a result, a potential for anomalies to arise when unemployment benefit is withheld but registration for employment is retained, and the present criterion of unemployed and registered for employment has become difficult to administer fairly. In order to clarify the situation, and to ensure that the original intention of the scheme is maintained, I have decided that a direct link with entitlement to receipt of unemployment benefit, subject to some modification to which I shall come, would be fairer and avoid doubt. No beneficiary will have his redundancy benefit clawed back as a result of the change. The link to receipt of unemployment benefit already exists for similar purposes, for both the Iron and Steel Employees Re-adaptation Benefits Scheme and the Redundant Mineworkers Scheme.
The modifications to the unemployment benefit criterion are contained in Articles 2(b) and (c). These are necessary to deal with circumstances in which unemployment benefit is withheld for reasons other than that the beneficiary is not actively seeking and available for work. This brings back within the scheme those who do not receive unemployment benefit because of sickness or injury, or who are ineligible for it—for example, married women who pay reduced rate contributions. This list is designed so that the new link to unemployment benefit does not disentitle anyone who would otherwise have normally been entitled to receive scheme benefits. The final subparagraph (d) of Article 2(2) simply restates the present position of the beneficiary who undergoes training.
The cost of the amendments in the order before your Lordships today is not significant. The number of beneficiaries affected by the previous earnings limit is very small; the qualifying company amendment brings back into the scheme employees who were once in its scope but were inadvertently removed and to whom British Shipbuilders is making the equivalent of scheme payments. This amendment will, therefore, not lead to any increase in the net Government funding of the shipbuilding industry. The third amendment clarifies the circumstances in which periodic benefit is paid and will have virtually no effect on scheme financing. The scheme has been effective in easing the hardship caused by redundancy and facilitating the restructuring of British Shipbuilders. From time to time, its complex structure needs amending to reflect changing circumstances and I commend to your Lordships the present amendments.

§ Lord Boston of Faversham
My Lords, your Lordships will be grateful to the noble Viscount, Lord Long, for having explained the purposes of these orders. In the circumstances that he has described, the changes proposed are clearly desirable ones. I should perhaps mention to your Lordships that I have had the benefit of the advice of my noble friends who are most closely concerned in these matters, including the noble Lord, Lord Blease, and they are content that I should join in supporting these orders. So it only remains for me to commend them to your Lordships as the Minister has done.

Viscount Long
My Lords, I am most grateful to the noble Lord, Lord Boston. I hope that the House is able to understand this extremely technical order. I am most grateful for your Lordships' patience.