§ Considered in Committee under Standing Order No. 71A.
§ [Mr. JAMES HOPE in the Chair.]
Motion made, and Question proposed,
That, for the purposes of any Act of the present Session to make provision for reducing in respect of certain services the charges on public funds and for increasing, by means of the payment into the Exchequer of certain sums and otherwise, the funds available for meeting such charges, and to amend accordingly the Law relating to unemployment insurance and certain other matters and for purposes related or incidental thereto, it is expedient to authorise the payment out of moneys provided by Parliament of a contribution under the Acts relating to unemployment insurance of such an amount as would be produced if, so far as relates to exempt persons, the rates of weekly contributions on the basis of which the said amount is calculated were the same as respects the part (if any) of the extended period after the first day of January, nineteen hundred and twenty-eight, as the rates applicable theretofore "— [King's Recommendation signified].
§ The PARLIAMENTARY SECRETARY to the MINISTRY of LABOUR (Mr. Betterton)
This Resolution, to the superficial reader, may at first sight seem to be somewhat involved and its meaning somewhat obscure, but, as I hope to satisfy the Committee in a moment or two, its meaning is quite simple and its object quite clear. I say at once that the Resolution is necessary owing to an oversight in drafting the Bill in the first instance. I think it better to state that at once. The point is a very short one, but it is rather a technical one. It deals, as far as the amount is concerned, with no more than £28,000 a year, after January, 1928. The Resolution is necessary because the Bill, as it is drafted may involve a charge on the Exchequer in respect of exempted persons should it prove to be the case that the extended period does not come to an end by 1st January, 1928. I do not think I need trouble the Committee with a definition of an exempted person. [HON. MEMBERS; "Yes! "] Quite shortly, exempted persons are those persons who are specified 868 in Section three of the Act of 1920, and, speaking broadly, they are persons who have a small income of £26 a year or over apart from the amount of wages which they get in their insured employment.
According to the law, the State and their employers pay contributions in respect of such persons at a. lower rats than the normal rate of contributions, but the exempted person does not pay any contribution at all, although, of course, he is entitled to benefit should he fall out of work. Under the Act of 1925 the contributions in respect of such exempted persons are for men 2½d.,for women 2¼for boys 1¼d. and for girls 1⅛d. Under that Act those contributions remain at that rate until January, 1928, or the end of the extended period, whichever is the earlier, and after January, 1928, if the extended period has not come to an end then, the contributions are slightly less. In the case of men they are reduced from2½ to 2d., in the case of women from 22¼d.,to 12¾d., with corresponding reductions for boys and girls.
Under the Bill, as it is drawn, it will be noted that, according to the Second Schedule, the contributions in respect of these exempted persons remain at the higher rate to the end of the extended period, whether that extended period extends beyond January, 1928, or not. Therefore, should it turn out that the extended period extends beyond January, 1928, contributions would still he payable at the higher rate, but, inasmuch as under the Act of 1925 it is possible the contributions will be lower from then until the extended period has come to an end, it is necessary to get this Financial Resolution in order to provide for a possible further charge on the Exchequer after January, 1928, for the whole of the extended period, to cover the difference between the higher and the lower rates. That is a very technical matter, but I have endeavoured, as shortly as I can, to make it clear why the Resolution is necessary. The amount which it is estimated is involved is £28,000 a year after January, 1928, to the end of the extended period.
§ Mr. BETTERTON
Before I answer that question, I ought to correct one slip in my speech. Exempted persons are not entitled to benefit.
§ Mr. BETTERTON
The answer is really, as I said quite frankly a moment ago, that there was a mistake in drafting the Bill; and, having made that mistake, we thought it only right and fair to the Committee to provide that the State should make up the difference between the higher and the lower rate.
§ Mr. ARTHUR GREENWOOD
The Parliamentary Secretary to the Ministry of Labour invariably treats the House to a clear explanation of the subject under discussion, and he has given a clear explanation, though not, I think, a defence of the money resolution. He disarmed criticism by referring to this Resolution as being made necessary because of an oversight. It seems to me that there has been far more than an oversight. As I understand it, there has been a change of policy some time between Wednesday and Friday. On Wednesday evening the Minister of Labour put down an Amendment, which appeared on the Paper on Thursday, to provide for a reduction of the State contribution in respect of exempted persons in 1928. Therefore, un till Wednesday evening, at any rate, it was never intended that this Money Resolution would be submitted. On the contrary, the Government were so certain that they were right about this matter that they put down an Amendment to re-enact what had already been enacted in the Act of 1925. That was the Amendment of the Minister of Labour which appeared on Thursday's Order Paper. Some time on Thursday or Friday this Amendment was taken off the Paper, and during the week-end there has been placed on the Paper this Money Resolution, with the deliberate object of reversing the policy that was contained in the Amendment which had appeared a few days before. That, I submit, is more than an oversight. It is, I say, a deliberate change of policy, for which we have had no adequate explanation from the hon. Gentleman.
I am not surprised that we should be placed in this most unfortunate position. Members will look in vain for any refer- 870 once whatever in the Memorandum on the Clauses of the Bill to exempted persons, and they will find nothing in the body of the Bill about exempted persons, but, if they search the Schedule and the repeals at the end of the Bill, they will find it hidden away there. It is because they tucked it away so very carefully that they forgot all about it and that the Government have been placed in the position in which they are at the present time. The hon. Gentleman did not deal at length with exempted persons. They are the least important persons who are insured under the Unemployment Insurance Act. They are a very small group of persons. They are persons who are proved to be
Those persons, relatively to the great mass of insured persons, are few in number, and they are on the whole better-to-do persons. I suppose we ought to congratulate the Chancellor of the Exchequer that he has allowed these people to keep their pensions or incomes of the annual value of £26 or upwards and has done nothing more than make a small present to that part of the fund to which their employers contribute. These persons make no contribution. What was the objection of making this provision in the 1920 Act? It was said that if persons of this kind were put outside the Act entirely there would be some inducement on the part of employers of labour to employ them rather than other people because of the contributions. Therefore, in order to put these people more or less on the same footing as other employed persons, the Government said; "We will compel the employer to pay contributions in respect of them." That seemed a very sound proceeding.
- " (a) in receipt of any pension or income of the annual value of £26 or upwards, which does not depend on his personal exertions; or
- (b) ordinarily and mainly dependent for his livelihood upon some other person; or
- (c) ordinarily and mainly dependent for his livelihood on the earnings derived by him from an occupation, employment in which does not make him an employed person within the meaning of this Act."
The Chancellor of the Exchequer, who so earnestly desires to save money, might have employed the device of increasing the employers' contributions and not increasing the State charge. Did the Chancellor of the Exchequer consider 871 that possible alternative in order to relieve the Exchequer of a subsequent charge of £28,000 a year? For the great mass of the 12,000,000 insured persons the State's contribution is to be decreased, and it is not only illogical but it seems clearly unjust that the State, having determined to diminish its contribution in respect of the mass of the insured workers, should, because of the muddle into which they have got over this Bill, single out these people and say that their pension or income of the annual value of £26 and upwards is not going to be in any way prejudiced, their dignity is not to he impugned or their self-respect reduced. The State, in fact, is going to make a greater grant on their behalf than it would have made ordinarily, and at the same time the Government are going to reduce the contributions in respect of the great mass of insured persons.
If the Parliamentary Secretary to the Ministry of Labour had come to the Committee with a Money Resolution to increase the State contribution in respect of all insured persons, he would have had the support of everyone on these benches, but this only illustrates the extraordinary muddle of this Bill. Here we have an attempt to save so many millions of pounds on unemployment and health insurance and then, when the Bill is dragging its weary way through the Committee stage, we are treated to a Financial Resolution asking that the State charge in respect of certain people shall be increased should occasion arise at the end of the deficiency period. The Committee is entitled to a fuller justification of the Government's proposal and a much fuller explanation as to why the Amendment which appeared on the Order Paper last. Thursday has been taken off; why that policy has been changed, and why we have in its place the proposal embodied in this Resolution. I hope the Government, as we desire to help them in this work of economy, will tell the Committee why it has changed its policy.
§ Mr. HARRIS
I do not think the Committee has been treated with proper courtesy by the Government. Night after night last week we sat up in order to facilitate the passage of this Bill. This is not an ordinary Bill. It might have been brought in much earlier, for the 872 Government have had plenty of time to think out their plans. During the earlier part of the Session they could have thought out its details. The Parliamentary Secretary to the Ministry of Labour is very courteous and very industrious, but at the moment there is no Minister on the Front Bench. The Financial Secretary to the Treasury is not present, much less the Chancellor of the Exchequer. After all the efforts of the Committee, it is now found that the Bill is not water-tight, and owing to the incapacity of the Government we are to be asked to vote away Government money at a time when national economy is needed. During the early hours of one morning last week we were told that it was absolutely essential this Fund should be robbed of the full Government grant and the employers made to pay an extra amount. Now, at this late stage, after all this debate, we are told that the Government have not thought out their financial policy and owing to their blundering and incapacity we are asked to pass this Financial Resolution.
I hope some of the economists on the other side who claim to be the guardians of financial purity will protest against this proceeding. I should like to know whether the Treasury was consulted. Who is responsible The Parliamentary. Secretary to the Ministry of Labour is the personification of innocence. He is a high-minded man, and that is perhaps why he is selected to do the dirty work of the Government. There is an empty Front Bench. The Parliamentary Secretary to the Treasury is there to support the Parliamentary Secretary, but otherwise he is left isolated on the Front Bench. The proper thing to do is to recommit the Bill. There is no reason, no justification, for this differentiation between contributors to the Fund. The more you study this Bill the more incomprehensible, illogical and unsatisfactory' it becomes. If we had had a fortnight in which to consider it instead of a week, it would never have passed in its present form.
§ Mr. KELLY
I hope we shall have a very clear explanation why the Government have suddenly taken to their heart people with an assured income of £26 a year. It is a strange proceeding that the Government should harden their heart against those who require benefit 873 and at the same time be prepared to pay greater sums to those who do not receive benefits at all. It shows how badly the Government have been advised. They are not quite sure as to whether these exempted persons receive unemployment benefit when they are out of work. I think we should have some explanation why the Treasury, which has been taking as much as it can— the word "robbery" is a very mild one for their conduct— during the passage of this Bill now find that they can afford to part with £28,000 to people who are not to receive unemployment benefit at al Why are they paying this £28,000 into the Fund and at the same time taking away from all other insured persons, unjustifiably, contributions which may keep many who are unemployed from starvation?
§ Mr. A. V. ALEXANDER
I do not know, Mr. Chairman, whether the Amendment I have handed to you in manuscript is in Order or not?
§ The CHAIRMAN
The terms of the Resolution for which the King's recommendation is signified will not cover the Amendment of the hon. Member.
§ Mr. ALEXANDER
I am much obliged. It is hardly fair to expect you to give any other ruling at such short notice. But that brings me again to the point that it is very inconvenient for Members of the Committee, when dealing with a highly technical subject, to have this Resolution placed on the Order Paper over the week-end and have only a few minutes in which to consider its full import and effect. I believe there is good ground for the Amendment which I handed in, but I do not complain of your ruling. I put it to the Parliamentary Secretary to the Ministry of Labour that it is unfair to the Committee to come along with a Money Resolution at this stage of the Bill without any separate actuarial report in regard to the Unemployment Insurance Fund. This is not the first time we have had to complain of the reluctance of the Government to supply the Committee with full actuarial details on matters on which they are asked to vote. Last year, when we were considering the Widows', Orphans' and Old Age Pensions and the changes it proposed, and its relation to the Unemployment Insurance Fund, it was only after a great deal of 874 pressure that we were able to get the Government to submit to the Committee a report of the actuary upon the actuarial position of the Fund. In respect of the general Clauses of this Bill and in respect of this Resolution we have had no information as to the actuarial position. There are statements in the White Paper, but without any general explanation of the actuarial position.
In my opinion we ought to oppose this Money Resolution because it does not go far enough. The Government ought to submit a Money Resolution which would provide that at no time should the debt on the Fund exceed the figure of December, 1925, and that the Government should be prepared at any time to make up any extra deficiency that may occur. It is true this is a. comparatively small sum, £28,000, but we on this side of the Committee are unhappy about the actuarial position. There have been so many different statements made on this subject. Only last week in the early hours of the morning we were given different figures as to the numbers of unemployed and their relation to the deficit. The Parliamentary Secretary, on 23rd February, in answer to a question in the House, said that when the figure on the live register was 1,070,000 the income and expenditure would balance, but in the beginning of March he also said that the actual weekly expenditure of the Fund was £900,000 and the income £825,000. Therefore, only some six or seven weeks ago there was a weekly deficit of something like £75,000. That raises a very serious question, and it becomes even more serious when you look at the White Paper which has been issued and find that in the course of a few weeks the figure given on the 23rd February has been changed, and instead of requiring 1,070,000 persons on the live register it must be reduced to 1,030,000 for the Fund to balance.
§ Mr. ALEXANDER
I am trying to put before the Committee the position actuarially of the Fund, and it is so serious that I think the Money Resolution should be extended. I hope I shall he allowed to develop that argument. There has been much discrepancy in the 875 figures given to the Committee. We submit that there is every indication, with the effect of the Clauses of the Bill for reducing the Government contribution in other respects, that there will be a serious deficit on the Actuarial Fund. The Parliamentary Secretary comes to the Committee with a proposal that we shall cover him for a charge of £28,000 after 1st January, 1928. He should also ask the Committee to cover any additional deficit over the deficit in 1925 or such other date as the Government like to submit. I have not consulted my hon. Friends, but I would be prepared to divide the Committee against this Resolution, because of the failure of the Government to produce proposals of the kind I have indicated.
There is another point which has been touched upon briefly already. These exempted persons who pay no contributions must have contributions paid for them by the employers, and the State also makes a contribution. The actual contribution made by the employer in respect of the exempted person is very much lower than in the case of the person who is not exempt; the employer does not pay at anything like the same rate. Surely that emphasises very strongly the point made by my hon. Friend, that if there was any ground at all for the Chancellor of the Exchequer to raid the Unemployment Insurance Fund, as he has been doing in the name of economy, here was a field which he could very well have explored and have got considerable advantage to the Exchequer therefrom. The Parliamentary Secretary will recollect that in the drafting of the original scheme of Unemployment Insurance it was desired that employers should not be encouraged to employ at a cheaper rate than that at which they could get an ordinary insured person, those who had some income or special provision made for them and who were thereby exempt from the Fund. Therefore, a certain charge was put on the employer In the present state of unemployment, surely prima facie it, it would have been a good plan to have increased very largely the present low contributions, in respect of exempted employés, on the part of the employer, and to have provided funds for the Exchequer in that way rather than by reducing still further the contribution from the Government in that respect.
876 This is further evidence—I will not say of the incapacity of the Government, because that has become almost a by-word, but evidence of the very great lack of consideration which the Government give to their Measures before submitting them to the House. I should have thought that if they had given more consideration to this proposal, with a Chancellor of the Exchequer having predatory designs on all kinds of funds, ho would not have missed any opportunity of getting some funds from the employers who are paying so low a rate in respect of exempted persons. I very much regret that it is not possible at this stage to move the manuscript Amendment to which I have referred. I know what the Government's proposal will mean to necessitous areas, if some Amendment of the kind is not brought forward. I know what it will mean to Sheffield.
§ The CHAIRMAN
I have every sympathy with that aspect of the subject, but it will not be in order to work in such a reference.
§ Mr. ALEXANDER
It is perfectly true, Mr. Chairman, that you and I are keenly interested in that city. Although it may be difficult to bring the subject into order on this Resolution, it may be in order for me to say that, unless the Government make adequate provisions for meeting the increasing deficit on the fund, it is likely to be a serious matter for those areas in which there is, and is likely to be, heavy unemployment. Unless we get a more satisfactory explanation from the Parliamentary Secretary, I do not think we ought to pass this Resolution.
§ Mr. BETTERTON
I confess that I am a little disappointed with the reception that this Resolution has had, because it is a Resolution which proposes actually to increase the amount which the State will pay into the Fund after January, 1928. Instead of the proposal being received with expressions of gratitude, there have been certain criticisms, not all of them very relevant to the Resolution, but criticisms which seemed to express the wish that we had moved an Amendment such as has been mentioned, which would have caused a loss of £28,000 to the funds instead of adding that amount to them. There was one point raised, with regard to the alleged discrepancy in my answers to questions some time ago, as to the balancing of 877 the fund with the respective figures of 1,070,000 and 1,030,000. The answer is that in one case the Treasury contribution is 6¾d., and in the other case it is 6d.
§ Mr. BETTERTON
I am not sure that the hon. Member for Hillsborough (Mr. A. V. Alexander) was not under a misapprehension as to the amount which the employer and the State respectively pay in respect of exempted persons. It is true that the State pays very much less, but the employer pays the same, and, of course, the insured person pays nothing. I need not take up the time of the Committee longer, but I ask the Committee to accept this offer of £28,000 to the Fund.
§ Mr. SNOWDEN
There appears to be a discrepancy between what the Parliamentary Secretary has just said and what he said in his opening speech. I understood him then to say that the employer in the case of the exempted person paid only 2½d. a week. Now he says that the employer pays the same for an exempt person as for a person not exempt.
§ Mr. BETTERTON
It is the State that pays the 2½d. The employer pays the same for the exempt person as for the non-exempt person.
§ Mr. SNOWDEN
I do not know whether or not a point which I wish to raise is appropriate at this stage, but I submit that the proposal is outside the Title of the Bill, which is:To make provision for reducing in respect of certain services the charges on public funds and for increasing, by means of the payment into the Exchequer of certain sums and otherwise, the funds available for meeting such charges, and to amend accordingly the law relating to national health insurance, unemployment insurance, the registration of electors and the holding of elections education, bankruptcy and companies winding-up fees and certain other fees, and postmarks, and for -purposes related or incidental to the platters aforesaid.There is nothing whatever in the title which would permit a proposal to be included for increasing the contribution from the Exchequer.
§ The CHAIRMAN
That would be a very proper point upon which to rule on the Second Schedule. At present we are engaged on a Resolution which is submitted to the Committee for the first time, and it is an enabling and not an enacting Resolution, might be a foundation for a separate Bill of its own. Therefore, I think it is not out of order to proceed on the present occasion.
§ Mr. ALEXANDER
The Parliamentary Secretary did not tell us why we have not been furnished with an actuarial report. We did not have such a report for the unemployment Clauses of the Economy Bill. We had similar difficulty in getting an actuarial report last year, and I had then to move the adjournment of the Committee.
§ Mr. BETTERTON
As the money involved is £28,000 a year only on a, turnover of many millions, and as we are satisfied from the best inquiries that we can make that it fairly represents the amount of the charge upon the Exchequer, we have stated so in the White Paper which was issued.
§ Resolution to be reported To-morrow.