HL Deb 24 November 1981 vol 425 cc704-7

5.35 p.m.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers) rose to move, That the draft order laid before the House on 20th October be approved.

The noble Earl said: My Lords, the Redundancy Fund Act 1981 limits the amount which the Secretary of State for Employment may borrow for the purposes of the Redundancy Fund to £200 million, but it makes provision for that amount to be increased by order to an amount not exceeding £300 million. The effect of this order is to increase the limit to £300 million.

As the House knows, the Redundancy Fund is used to pay rebates—which are currently 41 per cent.—to employers who have made statutory redundancy payments to employees. It is also used to meet certain debts which may be owed to employees should an employer become insolvent. 0.2 per cent. of an employer's National Insurance contribution is allocated to two funds which are administered by the Department of Employment, 0.15 per cent. normally goes to the Redundancy Fund and 0.05 per cent. to the Maternity Fund. Since March of this year, the 0.05 per cent. which normally goes to the Maternity Fund has been diverted to the Redundancy Fund, because the Maternity Fund has had a healthy surplus.

There have been a number of occasions in the life of the Redundancy Fund when it has been in deficit and when its borrowing limits have had to be adjusted. At the end of February this year, just after the current borrowing limits were set, the surplus in the Fund was just over £34 million. The fund went into deficit in May and, since then, the deficit has been increasing. At the end of October it was over £140 million.

If the deficit were to continue to increase at the current rate the present £200 million limit on the amount which may be borrowed from the National Loans Fund could be reached early next year.

Clearly, a number of factors can affect expenditure from the Fund other than the actual number of people being made redundant. Age, length of service and earnings all affect the average level of payments made. The average payment made from the Fund has increased by nearly 14 per cent. over the past year. This was due not so much to changes in the age or the length of service of those who were made redundant, but to the increase in average earnings.

The causes of redundancy are, of course, complex. Even in periods when new employment opportunities are being created, other jobs may disappear through changes in the pattern of demand or in the organisation of industry or methods of production. We must accept the harsh truth that, where there is over-capacity or structural inefficiency, redundancies may be inevitable, and improvements in competitiveness are vital if those industries are to survive and prosper.

In the meantime, we need to ensure that the Redundancy Fund can continue to meet its commitments and hat is why we are seeking parliamentary approval to extend the borrowing limit to the £300 million which is permitted by the 1981 Redundancy Fund Act. I beg to move.

Moved. That the draft order laid before the House on 20th October be approved.—(Earl Ferrers.)

5.40 p.m.

Lord Bruce of Donington

My Lords, we on this side of the House are pleased to welcome the terms of the statutory instrument. When it was first drawn to my attention I immediately started on some lengthy research because the instrument was short and, in my experience, short statutory instruments are always a matter of some suspicion. So I did a certain amount of research, going all the way back to the Redundancy Payments Act 1965, and traced the matter through. But that was before I read the Thirty-Second Report of the Joint Committee on Statutory Instruments which was published on 27th October and which unhappily escaped my attention, in which it says that the committee had considered this particular instrument and …determined that the special attention of both Houses did not require to be drawn to it". So I would not propose to delay the House very long about this since the Joint Committee has already recommended that our specific attention should not be drawn to it. This, of course, will very much shorten my remarks. Indeed, practically everything has been said, if the noble Earl will forgive me—because it was clear that what he said in regard to this instrument, except for the updating of the figures, was said in the course of the debate on the Bill itself which took place on 26th February last. I would respectfully draw the attention of the House to that debate, since it will save me the trouble of going over the points myself, and to the very excellent speech delivered by my noble friend Lord Davies of Leek, who dealt with the matter very thoroughly.

I would not have spoken further had it not been for the political remarks that the noble Earl addressed to the House in very mild terms towards the end of his very short statement, when he referred to the causes of redundancy and made some observations about the necessity for our becoming competitive and so on. It is important that it should be realised that the Redundancy Payments Act, when originally passed, was intended to remedy a very considerable social evil; that was to do something about allaying the fears of people that they would, on becoming redundant or in the event of unemployment occurring and therefore occasioning their redundancy, in addition to the anxieties they face as a result of having nothing to do and having a bleak life in prospect in which they would be unable to take any active part in the productive work of society, additionally be faced with a financial anxiety.

That was the whole purpose of the original Act, and if one goes through the proceedings of another place and of your Lordships' House it ought perhaps to be noted that it received a very tepid welcome from the Conservative Party, who regarded it as being some obstruction to what they considered to be the very desirable mobility of labour in various areas of industry. The Act itself was introduced at a time when unemployment was very low and now it is very high indeed, and therefore it is important that this order comes into force.

I would dissent from the noble Earl that there are causes other than the policy of the Government themselves that have caused this very large increase in unemployment and its attendant distress. They know perfectly well that the monetarist policies they have been following since they came into office have produced the state of unemployment from which the country is suffering at the present time and they cannot palm it off by referring, as they do from time to time, to competitiveness and to the allegedly high wages received by workers who are therefore pricing themselves out of jobs. This really will not wash any longer.

Those remarks are addressed purely in reply to some of the remarks which were made by the noble Earl at the conclusion of his statement. We on this side of the House have great pleasure in approving this statutory instrument. Our regret is that the increase in the fund to its present levels, and the increase in the borrowing powers should in fact have become so necessary.

5.47 p.m.

Earl Ferrers

My Lords, T am grateful, I think, to the noble Lord, Lord Bruce, for what he has said. He did say that the particular part he wanted to comment upon were the political observations I made at the end of my speech. What I would say to the noble Lord is this: he is a delightful but a curious noble Lord. I did not think I made any political observations at all: I merely made observations of pure practical common sense. The fact is that we have to be competitive as a nation, and if you do have a period of recession periodical redundancies are bound to come about. I would agree with the noble Lord when he referred to the original purpose behind the Act. I think it was his right honourable friend the then Minister of Labour, Ray Gunter, who is 1965 in moving this Bill, as it was then, in the House of Commons said that it had: an important and necessary part to play in allaying fears of redundancy and resistance to new methods and economic change". It is perfectly true that although this fund may enable people not to have financial anxieties it also is an inducement and an encouragement to change. It was the noble Lord, Lord Bruce, who made the most political observation in the whole of this debate that we have had, when he said it was totally the Government's fault that unemployment is as it is. He quite clearly laid the blame for the whole of the unemployment on the Government's economic policies. I reject that totally. The noble Lord knows perfectly well that there is a recession in the world which is hitting almost every other country in the world, and certainly in the western world. Why is it that in the last month alone German unemployment has increased by over 100,000? Why is it that in France unemployment is over 2 million? We are not responsible in the United Kingdom for the policies of those Governments, but they are also affected by world recession.

I would only, if I may, in thanking the noble Lord, Lord Bruce, for his courteous and generous welcome of this order, say in all sincerity that we in the Government dislike unemployment as much as any member of the party opposite. It is a thing which we wish to see removed, and there are two ways in which you can do it. One is by keeping down as far as possible the rate of inflation, because only by doing that can you become competitive. The other is, in a period of recession, to make your industries sufficiently crisp and sharp, which may mean redundancies, to enable those industries to be competitive and enable them to take advantage of the changed conditions when the recession ends. It is to that end that this Government are seeking to pursue their policies, and in so far as there are redundancies we wish to see those as few as possible, but to make provision for them in the way we have by means of this order. I repeat that I appreciate greatly the generous way in which the noble Lord, Lord Bruce of Donington, welcomed this order.

On Question, Motion agreed to.