HC Deb 30 November 1933 vol 283 cc1073-186

Order for Second Reading read.

The MINISTER of LABOUR (Sir Henry Betterton)

I beg to move, "That the Bill be now read a Second time."

3.48 p.m.

I regard this as one of the most comprehensive and constructive pieces of social legislation which have been introduced into this House for many generations. I am well aware that it may be criticised in detail. You cannot indeed have a Bill containing 60 Clauses and seven or eight Schedules without expecting criticism, but, taking it as a whole, I believe that in its main structure it represents the logical, the inevitable, and the obvious development of the policy which has been pursued by every party in this country during the last 30 years. It has long been recognised by all parties in the House, and by all sections of the House, that the Poor Law is not the appropriate medium of relief for able-bodied industrial workers who are unemployed through causes quite outside their own control, and who are anxious to work, as the overwhelming majority of them are.

The first statutory recognition of this fact, as I see the picture, was in 1911 when in the first Unemployment Insurance Bill the State became a contributor to a joint scheme of compulsory insurance. Under that scheme something like 2,500,000 persons were included, and I believe that the action which was taken in 1911, for which I think perhaps the right hon. Gentleman the Member for Epping (Mr. Churchill), the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), and the present Lord Buxton were primarily responsible, has proved of incalculable value to this country. Let me remind the House that that policy was adopted in a time of what may be described as abounding prosperity, but in the days of adversity that followed who will be found to deny that its service has been infinite? There are those in other countries who for years have derided and mocked and scoffed. Now in their bewilderment and perplexity they are hastily improvising an imitation of our scheme.

Let me proceed to the next milestone. The War intervened. During the War unemployment was non-existent and among the many and terrible problems which we had to face then, unemployment was not one of them. The story of the short-lived boom after the War is familiar to everybody. In 1920, before the boom had exhausted itself, there was a great extension of the scope of the insurance scheme and under this revised and renewed system something like 11,000,000 persons were brought in. That scheme provided, quite properly, for a qualifying number of contributions before benefit could be obtained. But long before these new contributors had a chance of making their contributions we had entered into what has proved to be the greatest industrial depression in our history. The Government of the day were faced with an increase of unemployment which was unprecedented both in its suddenness and in its severity. They had nothing to guide them except the experience of former depressions which were far less serious. They had, it is true, the advice of economists, who were generally wrong then, and, as far as I can judge, are usually wrong now, but they had nothing else to help them.

No insurance system which could have been devised could have supported so intolerable a strain so soon after its inception. The Government of the day adopted a course which other successive Governments up to the present Government adopted, a course which has been much criticised and which violated every insurance principle. They instituted what was known as uncovenanted benefit. It was known as uncovenanted benefit because it had no covenant or contract to support it. What it meant was that a man got benefit in advance of his qualifying contributions. I am bound in candour to say that had I in 1920 been in a position of responsibility, and had it been my duty to advise the Government of the day as to what course they should take, believing that the depression was but temporary I should have probably taken exactly the same course as was taken by the Government then. But there is another reason. As things then stood the only alternative was the Poor Law, and I believe it would have been utterly repugnant to public sentiment that, in the circumstances I have described, those who had not qualified for benefit, including thousands of ex-service men, should have been thrown straight on to the Poor Law.

I do not propose to trace the details of subsequent developments. Extended benefit succeeded uncovenanted benefit and transitional benefit succeeded extended benefit. All these methods had the one feature in common that for many years we were paying as of right vast sums of money to those who had no insurance qualifications. The first recognition of the essential difference between payments made in accordance with the principles of insurance and payments made without regard to contributions was made in 1930 by the Labour Government, when they—quite rightly as I think—threw the whole cost of transitional benefit on the Exchequer and removed it as a charge to be borne by the Insurance Fund. They did it for two reasons. They did it, first, so far as I can judge, and I think this must be obvious, in an attempt to preserve the insurance principle; and, secondly, to arrest the growth of the debt which was rapidly approaching an amount equal to the whole annual income of the fund. With the subsequent increase of the debt there arose a situation, which, we were officially warned at the time, threatened the financial stability of the country. The amount of the debt of the fund increased between February, 1930, and September, 1931, by £65,000,000, while during the same period the Exchequer paid no less than £37,000,000 in respect of transitional benefit.

The position, therefore, that we found in September, 1931, when the National Government took charge, was a bankrupt fund loaded with a debt which at that time was more than double the annual income of the fund. We found also a system under which transitional benefit was paid regardless of their need to persons who had no claim to insurance benefit because they had not paid the qualifying contributions. Moreover, it was paid without a limit of time at fixed rates. Finally there was in existence a Poor Law system, based on. the Act of Elizabeth, which was the only resort for able-bodied unemployed persons whose ordinary occupations were uninsured, and it was the resort, too, of many young men and women who since leaving school had had no opportunity of getting into an insured industry. I need not refer in detail to the measures that were taken in 1931. I would, however, remind the House that as a temporary measure the administration of a test of need was placed in the hands of the local authorities. Since then we have had the advantage of a very careful review by the Royal Commission on Unemployment Insurance, and I should like to express what I have expressed before, my appreciation of the infinite trouble, care and time which every member of that commission devoted to the very difficult task they had in hand.

The Report of the Commission brought us face to face with what I may describe as a double problem. The first part of the problem is how to restore the credit and stability of the Insurance Fund. This is absolutely necessary if you are to retain the insurance principle. The second part of the problem is how to provide for those who have never had an insurance qualification, or, if they once had it, have lost it by the exhaustion of their rights to benefit. I approach these questions with confidence because I am convinced that a country which faced up to its difficulties and problems as we faced up to ours two years ago has a great industrial future. I face the problem, believe me, without any feeling of complacency, because I know quite well there must he many men now who have, perhaps, passed the meridian of life who will find it increasingly difficult to obtain work in the occupations in which they have spent their lives. I know, too, there must be, and there are, many of the younger men suffering prolonged periods of involuntary idleness who, however willing, may be physically unable to avail themselves of opportunities of employment when employment comes to them. For a third reason, I believe there is no greater tragedy than the spectacle of children who have neither employment nor occupation, and who are thus prejudiced from the very start in the battle of life. May I say also—and I do not think the House will misunderstand me—I have faced this problem with a very deep and real sense of personal responsibility, for this reason. We on this side of the House have an immense majority. Hon. Members on the other side are comparatively few. That, it seems to me, places an especial responsibility on anyone in my position who is proposing a Measure which will affect, for good or ill, millions of people in this country.

The complexity and the difficulty of devising an adequate system of unemployment relief are recognised by everybody. It is not the slightest use burking those difficulties. They have often been burked in the past, but I do claim that this Bill not only faces them but tackles them in a courageous and practical manner. The Bill is based on the fundamental principle to which I have already referred, that there should be, on the one hand, a contributory insurance scheme covering as much of the field as possible, and that outside insurance the State should assume a general responsibility for the relief of the able-bodied industrial unemployed. In the application of this principle it is the aim of the Bill that the insurance scheme should cover as many persons as possible, consistent, of course, with solvency, thus reducing to the lowest possible figure the number of those who have to prove need. The Bill, therefore, inevitably and naturally falls into two parts. The first is insurance, and the second assistance to those outside insurance. Each of these two parts—insurance and assistance—is based on certain broad principles Which, I hope, will be equally acceptable to the House. I do not propose, and I do not suppose the House would expect me, to deal in detail at this stage with a Measure of this complexity, but we shall have, and rightly, a prolonged discussion in Committee, and, so far as I am concerned, I shall welcome and consider any constructive proposals which will enable me to establish a permanent scheme on a sound basis.

Therefore, if I may be allowed to do so, I will deal rather with broad principles than with minute and intricate details. First of all, let me put to the House the three broad principles on which Part I—insurance—is based, and afterwards I will put to the House the three broad principles on which the assistance side is based. First of all, with regard to insurance. It is based on these three principles:

  1. 1. That the scheme should be financed by contributions from the workers, employers and the State:
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  2. 2. That benefit should be dependent upon contributions;
  3. 3. That the scheme should be maintained on a solvent and self-supporting basis.
The first principle is, as I have just mentioned, that the scheme should be financed by contributions from the workers, employers and the State. In coming to that conclusion, I have not overlooked the various alternatives which have been put forward by responsible people, but I am satisfied and in this matter I have the support of many independent observers—that the ordinary independent industrial worker would be tile first to protest against the abandonment of the contributory principle. What the great majority of workpeople want is a greater measure of economic security. It is the final justification of the insurances scheme against all its critics that in the difficult years since the War it has brought that security to millions of homes. Under an insurance scheme, an insured person has the knowledge that he is protected first of all against the ordinary risks of unemployment, and that, without regard at all to his own savings or his own resources, he has a right to a fixed payment for a substantial period. A scheme which can make this provision, in spite of all the trials and tribulations of the last 13 years, has surely something to commend it. It is very significant—and I confess that when I asked for and obtained these figures, they surprised me—that in a year like last year, a year of heavy unemployment, the records show that out of 5,000,000 insured workers who experience unemployment at one time or another in the course of a year, over 4,000,000 qualify for insurance benefit on losing their employment. A scheme which does so much, must obviously go a long way towards removing that anxiety which a wage-earner is bound to feel at the risk of losing his employment. In taking this view, that the insurance scheme should be continued, I am supported by the action of the last Government. In setting up the Royal Commission their terms of reference were: To inquire into the provisions and working of the Unemployment Insurance scheme and to make recommendations with regard to—
  1. 1. Its future scope, the provisions which it should contain and the means by which it may be made solvent and self-supporting;
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  2. 2. The arrangements which should be made outside the scheme for the unemployed who are capable and available for work."
 That is all I will say at this moment on the principle of contributory insurance.

The second principle I laid down was that benefit should be dependent upon contributions. It is surely an essential feature of an insurance scheme at least to provide a minimum benefit in return for the payment of a qualifying number of contributions. The Bill makes no change at all in the provision whereby an insured person who has paid 30 contributions in the last two years is qualified for a minimum—I emphasise the word "minimum"—period of benefit of 26 weeks. What we propose to do is to extend that period of 26 weeks to the advantage of the good contributor. In September, 1931, when the National Government took office, the excess of expenditure over income on the ordinary insurance account was at the rate of £60,000,000 a year. I am happy to say that at the present time, following the improvement in recent months, and, I think I may fairly say, due to the measures which have been. taken by the National Government, the income would exceed expenditure by about £8,500,000 a year, on a live register of 2,500,000.

In regard to the live register of 2,500,000, I want to make it perfectly clear at the outset that I believe that our prospects now are brighter than they have been for many years past, and that we may face the future with greater confidence. At the same time, I remember the experience of other Ministers of Labour who have one after another based their estimates upon expectations which have not been realised. While, as I say, I believe that conditions will improve, no one can tell what the state of world trade may be in the future, and I do not think I should be carrying out my duty as custodian and trustee of this fund unless I took all possible precautions against contingencies which cannot be foreseen. In spite, therefore, of my belief that improvement will continue, I have based the finances upon this very large figure of 2,500,000. I may be criticised for excessive prudence, but I trust, at any rate, I shall escape the charge of approving doubtful finance. The rates of contributions and benefits, remain the same. After allowing for the cost of adminis- tration and the charge in respect of accumulated debt which is to be amortised, there is an estimated net balance of income over expenditure of about £8,500,000, on this live register of 2,500,000.

I have considered. as I was bound to do, most anxiously how in the best interests of all concerned this balance should be used, and my conclusion is that the right course is to reintroduce the principle of relating the period of benefit to contributions, and to extend the period for persons with the best industrial record beyond the present limit of 26 weeks. In extending the period of benefit, I have had in my mind the following considerations: A uniform limit of 26 weeks was necessary in the crisis of September, 1931. Now that we have achieved a position where the income exceeds expenditure, which is an abnormal experience to anyone concerned in unemployment insurance, it seems to me a sound principle that the worker with the better record should have an extended period of benefit. At present there is no discrimination at all between the man who has made many claims on the Fund and the man who is making his first claim to benefit after a prolonged period of continuous employment. We propose, therefore, to extend this minimum period of 26 weeks in the following way.

Looking over the past five years, we propose to give an advantage, up to a possible 26 weeks, to the man who has a good record. If a man during the previous five years has paid all the contributions that he could, which would be 260, and has drawn no benefit, he will be entitled to 26 weeks benefit in addition to the 26 weeks which he will get as a minimum. Where his record is not so good, that is where he has had some benefit and his contributions have not been the full number he might have paid, he will get something less, something between 52 and 26 weeks benefit, according to the state of his balance-sheet. It is estimated that of the persons who make claims to benefit in the course of a year—these are very startling figures—no fewer than 690,000 men and 100,000 women will, under this rule, qualify for some extension of the period of 26 weeks. If we consider the position at any point of time in the year, it is estimated that the average number of persons in receipt of insurance benefit on a particular day will be increased by about 167,000. That is, at any particular date there will be 167,000 more persons entitled to benefit and 167,000 fewer persons will be subjected to a needs test.

The third principle I stated just now was that the scheme should be maintained on a solvent and self-supporting basis. The Bill not only puts the insurance scheme on a sound financial basis for the immediate future but also establishes machinery to enable it, to be kept solvent in the future. The Royal Commission made a very striking observation on this question of the solvency of the Fund. They attributed the methods of financing the scheme which were adopted with disastrous results by successive Governments partly to the unjustified optimism with which the level of unemployment was regarded, and partly—and this is significant—to the fact that throughout the currency of the unemployment insurance scheme the only alternative form of assistance for able-bodied unemployed workers has been the Poor Law. Part II of the Bill will remove, I hope, any further justification for ignoring the principles of insurance on the latter ground. I am concerned for the moment to consider the Commission's criticism that successive Governments made changes in the scheme which were determined less by the careful balancing of anticipated claims and revenue than by a desire to find the politically easiest way of providing relief for the unemployed. I have quoted that from paragraph 202 of the Commission's Report. The remedy recommended by the Royal Commission for this undue optimism of politicians is that which we have adopted in the Bill. Under Clause 17 it is proposed to constitute an Unemployment Insurance Statutory Committee, whose duty it will be to report to the Government once a year, or more often if necessary, on the financial position of the Fund and to make recommendations. If this Measure passes there will no longer be any excuse for any one to be under any misconception as to the financial position of the Fund. But if the Bill stopped just there it would still be open, I suppose, to the Minister of Labour or the Government to say, "Oh, but the Statutory Committee has taken too pessimistic a view of the situation, or too optimistic a view." We have introduced such safeguards as are practicable to avoid that eventuality. The Minister will be required to place before both Houses of Parliament a draft Order making such amendments in the Acts as are duly recommended by the Committee, or, if the Committee's recommendations are not adopted, substituting such amendments as will have substantially the same effect on the finances of the Fund.

The main reason for making these alterations by Order and not by legislation is this. It may be necessary, on the one hand, to take steps to restore the solvency of the Fund at once, if any unforeseen contingency should arise. On the other hand, the machinery will enable us to give the benefit of an accruing surplus to the contributors without delay, should there be a surplus. N o change—and in this respect the privileges and position of the House of Commons are amply safeguarded—may be made by Order except by an Affirmative Resolution of each House, so that Parliament will have a full opportunity to consider the changes in the interests of the contributors to the fund and the beneficiaries will thus be fully protected.

The other duty of the Committee is that contained in Clause 20. The Committee are required as soon as possible to make such proposals as seem to them practicable for the insurance against unemployment of persons engaged in argiculture. The possibility of extending insurance to agriculture has been considered most carefully. I have gone into it myself with my advisers. The real obstacles to insuring agriculture are set out and dealt with in full in the report of the Royal Commission. They call attention, in particular, to the lack of information on the extent of unemployment in agriculture, to the differences between England and Scotland in the conditions of employment in agriculture—what is known as the six-monthly hiring principle is much more widely adopted in Scotland—and to the administrative difficulties, particularly in obtaining evidence of unemployment and ascertaining the true relationship of employers and workers living together on a farm. That last difficulty is a very real one. Germany found just that difficulty in defining the true relationship between employer and worker on a farm. Germany insured agricultural workers, but this year cut out agriculture from the insurance scheme. The Germans found that there was a regular system of transferring a son from one family to another. Two farmers exchanged their sons, one worked for the man who was not his father, and the other worked for somebody else other than his father. The reason for that action was that if the sons were working at home with their fathers they were not entitled to benefit, under the German law, hut when they were working for somebody else's father under a contract of service they were insured and entitled to benefit if unemployed. In all the circumstances the Germans came to the conclusion that agriculture was not a suitable industry for insurance, and I am told this this year they gave it up. It seems to me, therefore, that there is everything to be said for adopting the Royal Commission's recommendations that the Statutory Committee should explore the position in consultation with the two parties and make such proposals as may seem practicable for the insurance of agriculture in this country.

I confess that I am very glad to have this Statutory Committee for another reason. Where you have a vast scheme like this, with 12,000,000 insured persons, it is not right that we should imagine that it can be rigid and inflexible for all time. It will be of the greatest benefit to me personally, and, I am sure, to every successive Minister of Labour, to have a body such as this committee to which he can put problems to which he needs an answer and from which he can get the considered advice of experienced persons. The committee will advise the Minister, also, on draft Regulations.

The Committee will consist of five members. Its constitution is, of course, a matter of very great importance. The Bill provides that two of the members shall be appointed after consultation with representative organisations of employers and Workers. It is essential, of course, that the contributing parties should be consulted. There is one other proposal which I think has everything to commend it. I propose that one member shall Ire appointed after consultation with the Minister of Labour for Northern Ireland. My reason for that is that there is and always has been the closest relationship between the insurance scheme in Northern Ireland and the insurance scheme in this country, and if that relationship is to continue it is essential that the effect of any changes upon the Northern Ireland scheme should be taken into account by the Committee.

I am going to mention one further matter in connection with Part I of the Bill, that relating to the proposals with regard to juveniles. I regard the new provision for juveniles as of major importance. I believe myself that we simply cannot afford to go on as we are doing at present. There is now no provision at all for a child leaving an elementary school, who may pass straight into unemployment. Something must be done. What the Bill proposes is to bridge the gap between the school-leaving Age and the age of entry into insurance. The Unemployment Insurance Act of 1930 provided that the age of insurance should be lowered to the school-leaving age when the school-leaving age was raised to 15 years or higher. That provision has not, however, come into operation, and the position to-day is that a juvenile is not insured until he is 16 years of age, and consequently he cannot qualify for benefit until he is practically 16½, that is, until he has paid 30 contributions after having attained 16 years of age.

Unemployed juveniles between 16½ and 18 who are qualified for benefit may, at the present time, be required to 'attend an approved course of instruction where such a course is available. The House will observe how this works out. At present there is power to tell a child over 162 years of age who is receiving benefit that if he does not go to an instruction centre he will lose benefit—but there is no control whatever over the child between 14 and 16, or over juveniles between 16 and 13 years of age unless they happen to be drawing benefit when you can say to them that, unless they go to an instruction centre, the benefit will stop. A child is probably less in need of instruction at the centre if he has had some experience of employment. Nevertheless, alone of all the juvenile classes, he is the only one over whom you have any control. I think that I am justified in saying that that position is highly unsatisfactory.

I should remind and warn the House that this problem is likely to assume considerably larger proportions during the next few years, owing to the large increase in the birth rate shortly after the War. Of those who were born in 1919 and 1920, large numbers will shortly be leaving school. What the Bill proposes to do is this: the age of entry into insurance, as I have said, is lowered to the school-leaving age, and when the juvenile enters employment he will be required to pay a very low premium of 2d. a week against the risk of future unemployment. He will pay 2d., the employer will pay 2d. and the State will pay 2d. These contributions may be used to qualify for benefit at the age of 16 years, and not 16½, as is the case at present, so that he receives that advantage for a comparatively small sum. In addition, the contributions will have a value at the age of 19, when we come to consider what are his rights under the ratio rule, to which I have referred.

The Bill does not attempt to interfere in one way or the other with the question of raising the school-leaving age, if, on educational grounds, such a policy is adopted; nor will the Bill encourage parents to take their children away from school earlier than they otherwise would. Children who voluntarily continue their education beyond the school-leaving age will be credited with contributions, in accordance with a scale contained in the First Schedule of the Bill. In addition to that, there will be certain cash benefits. I am utterly opposed to anything which could be described as "doles for children." The Bill provides that where a child between 14 and 16 is unemployed, and is the child of an unemployed insured person, the parent may get a dependant's allowance. This is a continuance of the dependant's benefit for children which now stops at the age of 14. The Bill also provides a very considerable benefit in the form of increased instruction for children. It imposes a statutory obligation upon the local educational authorities to set up courses of instruction, where the need exists. Those centres will be administered, as now, by the authorities, in collaboration with the Ministry of Labour, and thus, I hope, will form a bridge between school and industry such as we have endeavoured to build in the past.

It follows, from what I have said, that the Bill imposes a statutory obligation upon all unemployed juveniles between the ages of 14 and 18 to attend courses of instruction, if such attendance can reasonably be required. These proposals have, I am glad to say, the approval of the representative educational authorities, and of the Board of Education. By placing this system of instruction on an enlarged and permanent basis, I hope that there will be attracted, to this specially difficult class of work, men and women who will help the educational authorities to carry out courses of instruction suitable for the needs of young people who are preparing for industry, and who are anxious to go into industry, but who are most apt to suffer from failure to secure employment.

One further point. The Bill makes provision enabling me to require employers to notify the discharge of juvenile labour. Unless we have that information, it is impossible for us to carry out the duties imposed upon us by the Bill. There are 138 instructional centres at the present time, and the average number of juveniles in attendance is about 14,000. Information as to the extent of unemployment among juveniles is incomplete, and it is not possible to say exactly how many new centres will be established, when the Bill becomes law. It is proposed to ask local education authorities to provide 25 per cent. of the cost of setting up and running the centres. Half of the remaining 75 per cent. will be provided by the Insurance Fund, and the other half by the State. I regard these provisions as a bold and constructive effort to protect young industrial workers against the dangerous consequences of unemployment, at an age when they are particularly susceptible to outside influences, and we hope to turn their enforced leisure into an experience from which they will gain mentally, physically, educationally, and industrially.

That is all that I propose to say with regard to Part I of the Bill. There are many provisions, as I said before, which we shall debate in Committee. I say, in regard to Part I, that it puts our unemployment insurance scheme upon a sound and permanent basis. This fabric has been built up by many hands. It has stood the stress and strain of adversity, and it has sheltered many a man and woman in time of difficulty. So far as I am concerned I want, not merely to maintain, but to strengthen, what I regard as a typically British system which, I am quite sure, is the envy and the admiration of the world.

I will now deal, as shortly as I can, consistent with the complication and the importance of my task, with Part II of the Bill, and I will attempt, as I did with regard to Part I, to explain the three principles which underlie it. Those three principles are: first, that assistance should be proportionate to need;secondly, that a worker who has been long unemployed may require assistance other than, and in addition to, cash payments, and, thirdly, that the State should accept general responsibility for all the industrial able-bodied unemployed outside insurance, within, of course, the limits of a practical definition. The proposals of the Bill flow naturally and inevitably from those three principles. I will deal with them in order.

The first principle was that assistance should be proportionate to need. Under an insurance scheme, a man is receiving something to which he has contributed. Within the limits of his insurance contract, he is entitled, with a minimum amount of inquiry, to a fixed rate of payment, regardless altogether of his resources. When we come to payments made out of ordinary taxation, whether local or national, then, obviously, the principle is entirely different. The question then is how to discharge the responsibility of the community towards the unemployed man, bearing in mind that any assistance is at the expense of his fellow-citizens and his fellow-workers. It is sometimes suggested that an unemployed man—and no doubt this is the suggestion of the official Opposition now—that an unemployed man should receive, out of the pockets of his fellow-citizens, a fixed payment as of right for the duration of the period of his unemployment, whether he needs it or not. That, I know, is now the policy of the official Opposition. Let me just warn the House, if I may, of the conditions which then follow. Any such system would involve the closest control by the State of the terms and conditions of industrial employment. If the State were to pay compensation for 'loss of employment, the State must, for its own protection, determine what kind of employment the worker should be willing to take and upon what terms. In its own interests, the State would have to impose strict discipline and control over the private actions of unemployed persons. I am satisfied that the workers themselves would never agree to the regimentation involved in such a policy. The most that the State can or should do, with money provided by taxation, is to make payments where they are needed: in other words, a test of need is essential.

The right hon. Gentleman the Member for Wakefield (Mr. Greenwood), who is to follow me, will say that I am proceeding upon a principle stated in a circular which he issued when he was Minister of Health. In fact, the Bill differs greatly to the advantage of the applicant, from the Poor Law, as I shall explain when we reach the particular Clause. In any case, what this House has to bear in mind is the principle, which some hon. Members will accept and others will not, that a man should. turn to his own family for help in need, before he calls upon the community. I suggest that the principle is a right one, and that the community is entitled to see whether his family can help him without hardship to themselves, and to expect them to do so. In short, I cannot attach any meaning to a test of need which is not related to the resources of the household of which the applicant is a member. I am now stating the principle, and when we come to the particular Clause I shall explain how we have modified that principle in its practical application.

One of the main features of the Bill which will commend itself to all parties, is that. the genuine workman who has lost his employment and is in need of assistance, may apply for and receive assistance without the traditional stigma of the Poor Law. I do not attempt to analyse the varying emotions which contribute to the repugnance with which the Poor Law is still regarded, but, if I might hazard a speculation, it lies to a large extent in this: An applicant detests having to apply for public relief at the cost of his fellow townsmen, and being forced to make a full disclosure of his intimate family circumstances and, perhaps, of his personal failings, to a body composed of his neighbours and, possibly, of his friends; and all the time he may have a vague apprehensive fear that he is speaking into a whispering gallery of gossip which in due. time may permeate the whole neighbourhood in which he lives. This Bill puts an end to that, and I believe that for this reason if for no other it will be welcomed, by very large numbers of people.

The second of the principles to which I have referred is that the worker who has been long unemployed may require assistance other than and in addition to cash payments. Relief of need arising from unemployment has more than one aspect. Monetary assistance may not be enough. Long-continued unemployment often creates more needs than can be relieved by mere cash relief. The relief of unemployment is not merely the relief of poverty. Most important is the maintenance of a man's employability, and the maintenance of his feeling that he is still within the industrial field. Therefore, we have to provide that there shall be an opportunity for men to keep fit for employment. In addition we must recognise, as people of experience in social administration have recognised, that restorative treatment is in some cases necessary. This aspect of the matter was dealt with by my predecessor, Miss Bond-field, who was so ably assisted by the hon. Member for Chester-le-Street (Mr. Lawson). In the report of the Ministry of Labour for 1930, this was said: In many instances a man's disinclination to make any effort on his own behalf shows the necessity for some course of instruction"; and in another passage: Difficulty was experienced during the early part of the year in getting unemployed men in the depressed areas to avail themselves of the facilities offered by transfer instructional centres. Their reluctance to volunteer for a course of instruction was often due to that deterioration of morale which it was one of the purposes of the scheme to remedy. My predecessor thereupon put into force the powers which she had under the Act.

The third principle is in regard to the question of the State's responsibility. I would remind the House that the Bill provides that the State should take general responsibility for all able-bodied industrial unemployed outside insurance, within, of course, the limits of a practical definition. This principle was recognised in a Resolution passed by this House on the 12th April, 1933, which declared: That this House resolves that responsibility for assistance to all able-bodied unemployed not over 65 years of age should be accepted by the Government, with such re- adjustment in financial relations between Exchequer and local authorities as is reasonable, having special regard to the necessities of distressed areas. It is quite clear that, before we take away from local authorities the duty of assessing need, I must be prepared to give the House reasons for doing so. Local authorities have had this duty for something like 300 years, and the essence of the Poor Law Act of Elizabeth was that each parish or district should be responsible for its own poor. But who would maintain, at this time of day, that this outlook and this local machinery are appropriate for the large-scale industrial unemployment of which we now have experience? Industry and employment do not follow the boundaries of local authorities. May I remind the House of the fact, which will be perfectly familiar to many Members of the Opposition, that a special feature of unemployment at the present time is that it is, I will not say principally, but largely to be found in certain localities and in certain industries. Certain industries are still suffering from wartime expansion in excess of normal peace time requirements. It must not be forgotten that, as a direct result of the War, there was an immense and artificial stimulus of production in certain industries, and a movement of population from one district to another to satisfy demands which were made upon us. Other industries, which before the War were largely dependent on their export trade, have suffered since the War a very large loss of their overseas markets. Speaking quite broadly, those industries which have suffered most are just those industries to which, if I may so put it, this war-time stimulus was most ruthlessly applied. If, therefore, unemployment is due to something which is quite without the control of the locality, if it is due to causes which are international or national, then there is every reason why its victims should be treated nationally.

What follows from that is surely this, that, if you are dealing with this problem nationally, you must, so far as is practicable, provide for the industrial unemployed under one system of unemployment relief. Let hon. Members consider what the position now is. Under the existing arrangements, one man is given cash assistance at the Employment Exchange, and has the protection of certain items of income which was afforded by the Determination of Needs Act. Another man has to apply for relief to the Poor Law authority, and is then relieved subject to Poor Law conditions. This differentiation is not based on relative personal merits or on the individual's prospects of employment, but is due solely to the fact that the one applicant has been in an insurable trade at some time and the other has not. Perhaps the most striking example of this anomaly is to be found in the case of the agricultural labourer. At the present moment, if an agricultural labourer finds himself in difficulty or distress, he has to go to the Poor Law. On the other hand, an unemployed mechanic living next door, in the same village, who has been in some insured trade, is treated differently. He goes to a different authority, merely because he has had a period of insurable employment. It seems to me that that differentiation is wholly indefensible, and one of the purposes of this Bill is to bring that differentiation to an end.

The service for dealing with the industrial problem of men requiring opportunities of regaining employment must be, as far as is practicable, a comprehensive national service, and, in my view, it must, by the nature of the case, be associated with the Ministry of Labour and the Employment Exchanges. Considerations of finance also demand that unemployment should be, in the main, the responsibility of the central Government. In most areas the local authorities are quite unable to meet the cost of relieving their own unemployment. Moreover, it must be remembered that the revenue of local authorities, in areas where there is heavy unemployment, is reduced, and that they have to meet special demands in respect of other social services due to the decline in industrial activity.

The position to-day, in respect of unemployment assistance as defined in the Bill, is that the State is paying £51,600,000 as transitional payments, while the local authorities are providing about £6,000,000. By far the larger part of the cost, therefore, is provided by the State, and surely it is right that the central government should take responsibility for the administration of the payments. The local authorities are at the present time administering transitional payments on behalf of the central government, but without any financial responsibility at all. There is a complete divorce between the responsibility of the central authority, which is providing the money, and that of the local authority which disburses it I would venture to lay down this rule as axiomatic, that, if the responsibility is to be a national obligation, the administration can no longer remain local but must be national also.

Since 1931, when this duty was first of all undertaken as a temporary expedient by the local authorities at the request of the Government, no feature of it, I suppose, has been criticised more often in this House than the great disparity in treatment as between one man and another where their circumstances were to all appearances exactly the same. I myself, in some cases, have found this lack of uniformity to be quite impossible to justify, but, on the other hand, I have been quite helpless to remedy it. Where a local authority pays its own money out of its own rates, and adopts a particular course or a particular scale, that is its affair; but it becomes wholly different when the local authority is spending State money and is acting merely as agent for the State. Then it seems to me that you must secure an assurance that such disparities are brought to an end. I do not mean that there should be a rigid, uniform system all over the country; but I do feel quite certain that it is indefensible that one authority should provide the money while another spends it.

These, then, are some of the justifications for transferring this service from local to central government. The final justification that I would offer for making this a national service is the necessity, to which I have already referred, of providing facilities for men who are suffering from prolonged unemployment to keep themselves fit to enter into employment again. The insurance scheme meets a man's needs during a period of temporary or seasonal suspension from work, but for the man who has been long unemployed something more is needed. My right hon. Friend the Minister of Health, and also his predecessor, who is to follow me in this Debate, have encouraged local authorities to give special attention to the need for restorative treatment, and, under their encouragement, some local authorities have provided schemes of training and occupation. It is, however, impossible to expect to achieve a co-ordinated or adequate service if it is left to 200 or 300 different local authorities. The local authorities are in this dilemma: if they have a large percentage of unemployment, they cannot afford to make adequate provision for their local unemployed, while in the more prosperous areas the authorities may find that the numbers of unemployed would not justify the provision of special training and occupational centres. Surely, what is needed is a national authority which can take a comprehensive view of the whole problem, with power to co-ordinate and extend existing facilities, not only for the transitional payments class but also for those industrial workers who are now left to the Poor Law. I say, therefore, it is in the interest of the local authorities themselves, it is in the interest of the applicant, and it is in the interest of the State that this service should be administered and controlled by a central authority.

If it he accepted that a central authority is the proper authority to deal with this matter, we then have to consider by what kind of machinery the central service is to be administered. There are three courses open. One would be to administer the scheme under the Ministry of Labour. Another suggestion is that you should hand over the whole question to an independent board entirely free from Parliamentary control. The third, which is the one adopted in the Bill, is to devise some way of keeping the Minister of Labour free from responsibility for individual decisions while maintaining the right of Parliament to approve the general policy to be followed and the general standards of assistance to be adopted. It may be said—I gather that this is the view of the right hon. Gentleman the Member for Darwen (Sir H. Samuel)—that administration should be by the Ministry of Labour, and he may think that is an obvious course to take. But to do so, if you examine it, would mean transferring the whole question of discretionary payments into national politics in a most acute form. The assessment of need is a discretionary service. If needs were assessed by officials of the Ministry of Labour, discretion would be exercised on behalf of the Minister. No Minister of Labour should or could be held responsible for the amount of the payment given in individual cases. It may be suggested that the decision should be given by a local committee. How can a local committee, which has no responsibility at all for raising the money, have responsibility for spending it? It would seem that rules would have to be laid down for the committees and the Minister would have to control them and, in the last resort, accept responsibility for their decisions. That, in my view, would be a perfectly intolerable situation.

The second suggestion has been made in the Press and elsewhere that we should set up a board independent of Parliament. In my view, that would be just as objectionable as the first, but for precisely the opposite reason. I do not think the House of Commons would or should be asked to accept a scheme under which it may be asked to pay out large sums of money to a board independent of everyone, without any control over its actions at all. I do not believe the House of Commons would do it, and I do not consider it should be asked to do it. Parliament must under our constitution share in the responsibility for a service of this kind. We have adopted the third course. The Minister of Labour will be responsible to Parliament for general policy and for obtaining the necessary money, but the application to individual cases of the policy approved by the Minister and by Parliament will be the business of an independent Board.

I ought to warn the House that one effect of the Bill will almost certainly, at first, be a substantial increase in the number of registered unemployed. I will be quite frank about it. I do not mean, of course, that the Bill will cause unemployment or that I anticipate that employment will not continue to improve. It must be realised, however, that many able-bodied persons who are not qualified for insurance benefit or transitional payments are reluctant to apply for outdoor relief although they may be in need. The new scheme will be free from the traditional stigma of the Poor Law, and it is probable that some appreciable numbers will apply for assistance and register for employment who do not now apply to the Poor Law. As the Royal Commission pointed out, if you improve social services, you must expect the im- provement to have an influence upon the number of applicants.

I will now say a word about the functions of the Board. There is to be created an Unemployment Assistance Board of not more than six members, appointed by the Crown and being a corporate body. The Board will administer assistance in accordance with the regulations submitted by them to me and requiring the affirmative approval of both Houses of Parliament. As Minister of Labour, and on behalf of the Government, I shall take responsibility for submitting regulations to Parliament and the general standard and policy of the Board will require to have the assent of Parliament. Determinations in accordance with the regulations will be given by officers of the Board after investigation of the circumstances of the applicants. Registration for employment and payment of assistance will normally take place at the Employment Exchanges of the Ministry of Labour. In certain circumstances an applicant may appeal to an appeal tribunal, whose chairman is appointed by the Minister with two other representatives, one appointed by the Board and one from a panel of work-people nominated by the Minister.

It is said: Are you not going to avail yourselves of the services of men and women who have devoted perhaps their lives to this work? I felt that that was a criticism which should be met and that we should do what we can to ensure that the services of those people are not lost. The Bill, therefore, provides that the Board will be assisted in their local administration by advisory committees which they may establish wherever they think fit. These committees will consist of persons having local knowledge and experience in this very difficult branch of local administration, and I feel certain that the Board will be quick to seize this opportunity of securing the services of such persons, many of whom have devoted years to the study of the problem in their local areas. I think this part of Clause 34 will turn out not the least useful part of the Bill.

May I say a word on another very important matter; that is, the question of scope. The scheme will cover all able-bodied workers between the ages of 16 and 66 whose normal occupation is insur- able employment under the Widows and Old Age Contributory Pensions Act. Someone may say, Why do you stop there? Why do you not include others? The answer is this: This is essentially a scheme dealing with industrial workers. There must be some frontier which can be seen and which is not susceptible of more than one administrative interpretation. The local authorities themselves were insistent on the need for a definition as objective as possible. The frontier by reference to the Contributory Pensions Act is the widest that I could find in any of the social laws which would give us a working definition. It will be seen that there is no qualifying contribution principle in this part of the Bill, and that provision is made for the inclusion within the scope of the scheme of those who through trade depression have been unable to follow insurable employment.

In the vast majority of cases, as the Bill shows, the intention is that cash assistance should be given together with opportunities of training for maintaining employability and improving chances of return to employment. But any one who has had experience of these matters knows that the scope is so wide that, of those who come under the Board, there will be a small number for whom the Board must have the necessary powers of discrimination. It is, to my mind, sheer hypocrisy to pretend that you can entirely ignore this problem. You must take these powers of protection against exploitation in the interest of the genuine worker. On the other hand, there is no need whatever to exaggerate the size of the problem or to make alarming statements about what the Board can or will do. The House should realise that, apart from the trade dispute disqualification which, no doubt, we shall consider in Committee, the conditions and disqualifications for the receipt of unemployment benefit do not apply to the receipt of assistance. This means, of course, that an applicant who leaves his employment voluntarily or refuses suitable employment will not be disqualified for a period as he is now disqualified for transitional payments. Instead of being left to the Poor Law, he will continue to be dealt with by the Board and the Board must have appropriate powers. There will be other cases where men refuse to avail -themselves of opportunities of employment. Again, it is obvious that with a scope so wide there may be a number of people whose personal character may be such that it would be quite inappropriate to give them a cash allowance in respect of all the needs of the members of their household. These are described in the Bill as cases of special difficulty. We have safeguarded the condition so far as we possibly can and we have given a right of appeal. I am perfectly well aware that this Clause is liable to distortion and to wilful misrepresentation. I am not suggesting for a moment that the right hon. Gentleman for Wakefield or the official Opposition will descend to these methods for the purpose of making some partisan attack on the scheme. Nothing would have been more easy than to leave these cases where they are now, namely, the Poor Law, and that course has something to recommend it. But what I had to consider was what, in the general interest of the unemployed, the scope of the scheme should be. There are two ways of dealing with this very limited class. One is to reject them from the scheme altogether leaving them to the Poor Law. The other is to keep them within the scheme but to take such powers as are necessary to discriminate between them and the vast majority of genuine applicants. I have throughout the Bill regarded the problem with which we have to deal, not as a Poor Law problem, but as an industrial problem. I want to bring as many as I can inside the scheme in order to do what we can at the Ministry of Labour to help them.

I want to say a few words upon the question of the assessment of need. In two important respects the provisions for the determination of need mark an advance on the existing position. The protection of certain forms of income conferred by the Determination of Need Act applies by Statute only to those in receipt of transitional payments; it is permissibly applied to those in receipt of public assistance. In this Bill protection is conferred upon all those under the Board; that is to say, that the discrimination between those who apply for transitional payments and those who apply for assistance is now taken away, arid all are dealt with alike under the Board.

The second change is this: I explained some time ago why I cannot conceive of any needs test except in relation to the resources of the household. If those words are taken literally, they mean that all the resources of all members of the household must be held to be available for the maintenance of the applicants. If that were to be the practice those members of the household who contribute to the household upkeep from their earnings might be tempted to leave work or to leave home. A man must feel that something of what he earns is in his own pocket. Many local authorities already recognise this principle in administering both public assistance and transitional payments, but the Bill gives it statutory recognition and requires the Board, in drawing up their regulations, to take into account not merely the needs of those who contribute the resources, but their personal requirements. This would allow, for example, some distinction between the reasonable requirements of a person who has to spend money in maintaining a certain appearance as, for example, a teacher, and other workers who have no such direct obligation.

I want to say a few words about training. As I have stated, for persons long unemployed, and particularly for younger men, monetary assistance is not enough. They need to have opportunities to keep themselves fit for employment, and thus maintain their self-respect. Therefore, the Bill authorises the Minister in Part I, and the Board in Part II, to provide courses of training for the purpose of giving men these opportunities. The practical possibilities of training ought not to be exaggerated. The, experience of the Ministry shows that training, to be valuable, should be for a definite period and on work which the men recognise has some good purpose. It is not easy to find unlimited opportunities of this kind which would not put out of work other men engaged for wages, and that is one reason why most of the training schemes have been confined to work on Forestry Commission land which has only a remote connection with the afforestation programme. Still, I hope for a very considerable development of this policy of training. If these centres are conducted in the future as they have been in the past, I have little doubt that unemployed men will want to take advantage of them. That has been our experience in the past We cannot ignore, however, the experience of the Labour Government in 1930, that "reluctance to volunteer to attend a course of instruction was often due to that deterioration of morale which it was one of the purposes of the scheme to remedy," and further "that a man's disinclination to make any effort on his own behalf showed the necessity for some course of instruction."

Therefore, the Bill in Part I continues the power which has been unchallenged since 1911, to require as one of the conditions of benefit that a recipient of benefit should attend a training course. That is a power which has been kept in reserve. That power was contained in the Act of 1911, and it was reenacted in 1920. Therefore, through six or seven Parliaments, with Governments of every complexion, that power has remained unchallenged and has been accepted by each one in turn. It was in fact used under my predecessor, Miss Bondfield, and a certain number of these people under the powers of the Act of 1920 went to a training centre as a condition of getting benefit. If that power remains as it is in the Act of 1920, it is inevitable that you should give some similar powers to the Board when they are dealing with assistance. Otherwise, you would have the ridiculous anomaly of powers being in existence to deal with those on benefit without any equivalent powers to deal with those on assistance. The Bill gives the Board power to grant an allowance for the maintenance of a man at a training centre, and payment of training allowance while he attends there. If the man does not go to the training centre, he does not pass out of the responsibility of the Board. The Board is free to make it clear that their offer of assistance is maintenance at a training centre.

I want to make it clear that there is nothing in the Bill 'at all which interferes with the voluntary schemes, of which there are so many in existence, for giving occupation to the unemployed. Those must exist side by side with the efforts of the Ministry of Labour and the Board. All that the Bill does in this respect is to enable the Minister to contribute towards the cost of voluntary efforts, a principle which will probably commend itself to the House.

I now wish to refer to a Clause to which I must attach a very great deal of importance. It is Clause 36 (b). This Clause provides that it is within the power of the Board to make arrangements with local authorities whereby applicants for assistance may, as part of a course of training, be employed for short periods, not exceeding three months, upon work for the authority at ordinary rates of wages customary in the district. The Board may contribute towards any additional expenditure incurred by the authority by reason of the fact that the work is being utilised us part of a training course. One of the difficulties of affording adequate instruction to men who have suffered from long periods of idleness is to accustom them to the commercial conditions of ordinary employment. This arrangement is intended as a transition from the conditions of a training centre to the conditions of ordinary commercial employment. I realise that many forms of work undertaken by local authorities are not suitable for training purposes, but there are some in which conditions can readily be adapted to include instruction.

Mr. LOGAN

Does that mean stamping the cards?

Sir H. BETTERTON

Perhaps the hon. Gentleman will raise that and any other points later on. To indicate what I have in mind, I should like to refer to the schemes of work which were approved by Miss Bondfield when men from Transfer Instructional Centres were employed in carrying out improvements at Whipsnade, and in preparing playing fields for the University of London. According to her report, which I have before me, these schemes were very successful in achieving the objects in view, namely, in the words of the report: "The transition to employment under ordinary conditions and to a status of dependence from the sheltered conditions of the training centres." I think it would be unwise to empower the Board to make arrangements with bodies other than local authorities, because, as the House will realise, you have to be very careful in this matter to see that you do not begin a general system of subsidising wages. We have endeavoured to avoid this by regarding, as a condition of training, that there shall be progress from the training centres for a limited time which will put a man in an infinitely better condition than if he merely went out of the training centre without work to do.

I want to say a few words about finance. This matter will be dealt with in full on the Financial Resolution, and beyond stating shortly, and, I hope, clearly, what the financial provisions are, I do not propose to deal with it further. The Bill establishes an Unemployment Assistance Fund which will be under the control and management of the Board. From the fund will be paid all the expenses of the Board, except the salaries of members of the Board, which will be on the Consolidated Fund, and the salaries of the staff of the Board, which will be on the Votes. The financial effect—I am sure the House will be interested to hear this—as between the Exchequer and the local authority is, that the Exchequer will be paying, as it is now, the whole cost of transitional payments, and, in addition, will be relieving local authorities of 40 per cent. of the cost of the services transferred to the Board which would have fallen upon the local authorities in the standard year 1932–33. With the effect of the block grant, which is being undisturbed until 1937, the Exchequer will on the average be giving a rate relief of 50 per cent. in respect of the local authorities' liabilities taken over by the Board. On such estimate as can be made, the result of the transaction will be that the local authorities will have some £2,600,000 available in relief of rate charges. In addition, the financial Clause ensures that the formula adopted in the Bill shall not reduce the value of the concessions by the Exchequer in the case of those areas which, under the special grant for necessitous areas, receive a payment this year in advance of the settlement in the Bill. There is a further Clause which safeguards the authorities against the possibility that Clauses 39 and 40 may operate to put a charge larger upon the local authorities than is anticipated. Finally, the whole financial settlement will fall due for review in 1937, when the block grant also comes to be adjusted. Having regard to the other burdens upon the Exchequer this settlement must be considered extremely fair.

Part III of the Bill deals with the transitory provisions—for the transition from the existing arrangements to the amended insurance scheme and the new assistance scheme. With regard to Part I, the insurance part, that will come into operation one month after the Bill is passed. The reason that I have expedited by every means in my power and put in this very short limit of a month is that I want as soon as possible those who will be entitled under it to get the benefit of the ratio rule and the increase of the minimum from 26 to 52 weeks. With regard to Part II, it will come into operation as soon as equitable arrangements can be made.

I have endeavoured in the limited time at my disposal to give a broad outline of a very complicated and complex Measure. I have endeavoured to explain to the House as clearly as I can the motives which have prompted us in the preparation of this important and far-reaching Bill. I think we may say that we have re-established the Unemployment Insurance Scheme on a solvent basis, and we have provided new machinery to ensure the solvency of the scheme and to safeguard the interests of the insured contributors. We have provided that the period of benefit shall be extended to give the fullest advantage to those with the best employment record. The Bill embodies bold and constructive proposals for mitigating the dangers of idleness in the case of boys and girls who have left school and have no employment. In addition to preserving the insurance scheme as the first line of defence against unemployment, the Bill represents the first attempt by any Government to deal comprehensively, outside the Poor Law, with the position of able-bodied unemployed workers not covered by insurance. The Bill takes employable industrial workers away from the Poor Law and greatly extends the whole conception of the obligations of the State towards them. In asking the House to give a Second Reading to the Bill I claim, and I think I can claim justly, that it is the greatest Measure of social progress which has been presented to this country by any Government for many generations. I believe that this is a great advance; I believe in the Bill and if I did not do so I should not be here to commend it.

5.32 p.m.

Mr. ARTHUR GREENWOOD

I beg to move, to leave out from the word "That," to the end of the Question, and to add instead thereof the words: this House declines to assent to the Second Reading of an Unemployment Bill which fails to recognise that all the victims of the unemployment which is inherent in the modern system of industrial capitalism are entitled to equal and honourable treatment and maintenance from national funds so as to preserve intact their value to and status in the community. The House will, I am sure, wish to congratulate the right hon. Gentleman on the way he has performed a very difficult and arduous duty in explaining a very large and comprehensive Measure. If we congratulate him on the manner of his presentation of the Bill I am bound to say that we cannot agree with much of its substance. I cannot for a moment agree with the most exaggerated advertisement of this Bill which fell from the lips of the right hon. Gentleman, as being one of the greatest Measures of social progress for many generations. We regard the Bill as very full of defects. In the first place, I should like to make a, formal complaint on behalf of many Members of this House regarding the manner in which the House has been treated. We have a reasonable right to complain that, within a fortnight of the Bill being originally introduced, we are suddenly, without notice, without any statement being made, presented with a new Bill, which is longer by several Clauses than the Bill which was given to us at the end of last Session. In the second place, I think it is not customary to introduce a Bill which deals with the results of negotiations with outside authorities, when those negotiations have not been completed. On this side—hon. Members on the other side will not subscribe to my form of words—we do not believe that the Government should be forgiven for this slipshod, unfinished method of bringing Bills into the House of Commons.

Our real objection to the Bill is that it bears little relation to the realities of the situation and to the outlook of to-day. What the Government have done, in face of 2,500,000 unemployed people and in face of the fact that in England and Wales alone there are 1,100,000 people on Poor Law relief, or 40 per cent. more than in 1931, is to attempt to render permanent the arrangements made in 1931, with relatively minor alterations. The right hon. Gentleman spoke of the importance of bringing as many people as possible into the insurance scheme. But this scheme leaves the scope of the Unemployment Insurance virtually what it was. It has brought in juveniles under the age of 16, largely due to the fact that this will provide another means of restoring the solvency of the fund. Juveniles between the ages of 14 and 16 are to have paid in respect of them 6d. a week for two years, for which they are themselves to receive no benefit. But if it be that their parents are out of work and they are themselves out of work, then the sixpences contributed by the State, the employer and the juvenile will provide 2s. a week dependence benefit to the young person between 14 and 16 years of age. I would remind the House that the British Medical Association reckons that a. youth between the age of 14 and 16 requires an expenditure on food alone of 5s. 11d, a week. This proposal is therefore not a serious extension of unemployment insurance.

What about agriculture? Agriculture has been talked about for years as a possible insured industry. I dare say the right hon. Gentleman knows that there are schemes—no doubt he has considered them—in his pigeon-holes, but the best that the Government can now do for the agricultural labourers is to put the responsiblity for them on to the new Statutory Committee, in the hope that they will produce a report which at some time or other may result in legislation. What about domestic servants? During recent years they have found it very difficult to maintain a foothold in their employment. They are left outside.

Viscountess ASTOR

No.

Mr. GREENWOOD

If the Noble Lady will pursue her inquiries a little further she will find that what I am saying is true. There is an increasing demand for the insurance of domestic servants. I have had letters during the past fortnight from people engaged in domestic service, hoping that they were going to be brought within the scheme. Rightly or wrongly, they have expressed that. hope: but they are not to be brought in. The black-coated workers are not to be brought in. Professional people, blackcoated people, superior people, are now hanging their heads in shame in suburbia, rotting to pieces, with nothing but the Poor Law before them. But they are not to be brought in. The scheme remains what it has always been, a limited scheme. Had it been the bold and generous Measure which the right hon. Gentleman has tried to persuade the House it is, we should have expected that at least another 4,000,000 or 5,000,000 people would have been included within its provisions.

The right hon. Gentleman referred to the extension of the period of benefit. I gathered from what he said that something like 167,000 more people will, under the provision for the extension of benefit, be entitled to added weeks beyond the 26. He did not tell us that all these people would be entitled to an additional 26 weeks of benefit. What it means is that 167,000 people out of an enormous army of people will get something additional to the 26 weeks. The impression that has been created in certain newspapers that this is going to mean an enormous decrease in the number of people who will have to go to the Board for unemployment allowances, has I think been disposed of by the Minister himself. It may be true that he is bringing a small percentage of people into insurance for longer benefit than hitherto, but what else is he doing? He is restoring the old system under which the onus lay on the worker to prove that he has been unable to obtain employment. The first effect of that will be the refusal of benefit to large numbers of people, because they will be unable to give proof.

What follows is equally important. When the late Labour Government altered that regulation and shifted the onus of proof from the worker there was a great outcry about anomalies, and the Anomalies Act was passed to meet the clamour in the House of Commons. The Anomalies Act still remains, although the justification for it has gone. If we are to go back to the old system of placing the onus of proof on the workman, then the old anomalies cannot arise and the Anomalies Act ought to have been repealed in the Schedule of this Bill. The workers now are going to get the worst of both worlds, because we are going back in effect to the not-genuinely-seeking-work principle, and at the same time we have the imposition of regulations in regard to anomalies. In the aggregate there is not going to be a larger number of people benefiting under this Bill. It may be that the number benefiting will actually be decreased.

The right hon. Gentleman referred to the question of the debt on the Fund. The proposal is to put the responsibility for the debt on the contributors to the Fund. That has been described by the "Economist," not a representative of the red Press, as a piece of "Treasury pedantry." It says: The only criticism which can reasonably be brought against this financial scheme is the heaviness of the debt charge, equivalent to nearly 10 per cent. of the income from contributions. The charge is to be £5,500,000 for 40 years. The "Economist." goes on to say that: It is surely both unwise and unreasonable to charge upon the Fund the services of amortisation of the £115,000,000 debt incurred during a period when all pretence at actuarial solvency had been abandoned by successive Governments. If there is any debt or any expenditure which it is justifiable for us to regard as part of the National Debt this is the debt. It would be a more creditable addition to the National Debt than most of the sums of money of which the National Debt is composed. For 40 years, at the rate of £5,500,000 a year, the contributors to the fund are going to be worse off than they would have been if the State had done a clean decent job and made this definitely a national responsibility. Workers yet unborn are going to have to contribute to a debt which was incurred long ago.

The right hon. Gentleman did not refer to the fact that no alterations are being made in the scale of unemployment insurance benefit. Two years ago, under the stress of a national emergency, unemployment insurance benefit was reduced by 10 per cent. Undertaking after undertaking was given by Members of the Government that it was only for the period of the crisis and that as soon as it was over they could look forward to the benefits being put back to the old rate. I understand that the economic situation to-day is brighter than it has been for many years. The Secretary of State for the Dominions has informed us many times that trade is returning. We are told that improvement is taking place day by day, yet the Government have not the courage to back their own belief by showing in the Bill that they believe the time of stringency is over. It would not have been so bad if they had said that for a further short period of time they proposed to continue the present scales of benefit and would then consider the matter. This is an attempt to fasten permanently on the insurance system the rates of benefit imposed, unwillingly, on working people two years ago.

I cannot at this stage go into all our objections to Part I of the Bill, but we shall have much to say about it as the Debate proceeds. We have no confidence in the Government. After our experience of its administration of the Anomalies Act, which is being used as an instrument of oppression, we can have no confidence in the Government's method of administering Part I of the Bill even if its terms were as good as the Government think they are. But, as regards Part II, which deals with those who are ineligible for unemployment benefit—the able-bodied unemployed outside the scheme we are even more apprehensive The right hon. Gentleman has tried to draw a distinction between the new board and its machinery and the Poor Law system, and he went so far as to claim that this new method freed these people from the traditional stigma of the Poor Law. It does nothing of the kind. It centralises, bureaucratises and intensifies the Poor Law principle. It makes as permanent as it can the arrangements made in 1931. The only change is that instead of transitional payment and Poor Law assistance for the able-bodied being dealt with as it has been for the last two years, it will be carried on on almost identical terms but under another authority. This is the old Poor Law system; and it has not got the advantage behind it that it is to be administered by a representative body of people. This body is to consist of people appointed by the Crown and removed from the criticism of this House. When I said that it bureaucratised the system I meant it, and the composition of this body proves it.

I go further, and I say that this centralised system will tend to give you a hard uniformity irrespective of local considerations. It will be a difficult problem for the right hon. Gentleman to devise a system of administration national in character which is not going to be hide bound in operation and which, because of its uniformity, will not, inflict serious hardship on a large number of people. Although the new board is not bound to restrict its assistance according to means to the scale of unemployment insurance benefit, now that unemployment insurance benefit and the board are both under the right hon. Gentleman's hands the chances are that the maximum scale allowed, outside unemployment insurance, will be the unemployment insurance scale, irrespective of the requirements of the applicant.

Our chief objection to this part of the scheme lies in the treatment of local authorities. The right hon. Gentleman regards this part as a great achievement, because he is relieving local rates of 40 per cent. of the amount they have been spending on the administration of out-relief to the able-bodied and their dependants. The whole of our ease is that they ought never to have had to bear one penny of this expenditure, and it is not doing justice to them to-day to say that you are going to relieve them of 40 per cent. of the cost and then try and bribe the ratepayers by saying that there will be £2,600,000 available for relief of rate charges. What are the facts? I have a letter from my own constituency. The city council does not happen to consist of a majority of my supporters, but it takes a strong line on this question, as no doubt a large number of other authorities do, against the proposal. I understand that the County Councils Association, who are more amenable to Government influence than other kinds of local authorities, who are a little more disposed to Tory views than urban local authorities, but who are more remote except in about four counties from this problem of Poor Law relief than the urban areas, have been cajoled or persuaded into agreement by the Chancellor of the Exchequer. On the other hand I am told that the Association of Municipal Corporations, who are faced with the major part of this problem, are still at this hour united in their opposition to the Government's financial proposals under Part II. They may say thank you for a very little, but they still regard themselves as suffering from a real grievance in having to meet 60 per cent. of what they were paying before in the relief of able-bodied unemployed.

It is an entirely new principle in the history of government that local autho- rities should subsidise the State for a service and have no control whatever of the money expended. That principle cannot be supported by people who will think in terms of effective government. In a city like Sheffield, according to the latest returns, as they will be affected by the Bill they will still be left with an out-relief burden, primarily for the unemployed and their dependants, of a rate of 3s. 10d. in the £, and certainly over 3s. of that will be devoted to dealing with able-bodied unemployed who do not come under Part II.

Mr. GURNEY BRAITHWAITE

Will the right hon. Gentleman give us his authority for that statement?

Mr. GREENWOOD

Our chief objection—

Mr. BRAITHWAITE

Will the right hon. Gentleman give us his authority for that statement?

Mr. DEPUTY-SPEAKER (Captain Bourne)

The right hon. Gentleman has not given way, and the hon. Member must not interrupt.

Mr. GREENWOOD

It is an official document emanating from the city treasurer's office. Our chief objection to the Bill does not lie in its individual Clauses, but in the mode of approach to the problem which faces the country to-day. Repeated attempts have been made by Government after Government to make Unemployment Insurance a satisfactory instrument. We started in 1911 with about 2,250,000 people. In 1920 we extended it to cover 11,000,000 people, and since then we have passed about 30 Acts of Parliament dealing with Unemployment Insurance until now it is a maze of difficulties to the layman and would require the perspicacity of the Prime Minister himself to understand. It is not that Governments have not tried to work it, they have, but it does not cover the field, and it never has been insurance. That is admitted by the right hon. Gentleman. I made the comment two or three weeks ago in this House that Health Insurance has been insurance, but Unemployment Insurance never has been insurance. There has been a varying debt on the fund, and it would have been quite possible at any time to have made it solvent by cutting down benefits, doubling contributions or alter- ing the State's contribution. But there never has been an insurance basis to the scheme, and there never can be during the years ahead.

Moreover, the rates of benefit, as everyone must know, have always been inadequate to meet the needs of the unemployed persons. When Unemployment Insurance was first introduced, when the rate of benefit was 7s. per week with no dependant's benefits, the theory was that those unemployed would be only out of work for a few weeks and that it was to tide them over that period of difficulty. We must have got out of that atmosphere of mind by now. It is undoubtedly true that the present scales of relief are not adequate to meet the needs of people who have been undergoing long periods of trade depression. This is borne out by the result of the inquiry by the British Medical Association, about which we shall no doubt hear a good deal during the course of this Debate. According to the British Medical Association, an independent body, a man, wife and three children, of specified ages, need to spend £1 2s. 6½d. per week on food alone. The maximum benefit under the present scale which a man, wife and three chilrren could receive would be £1 9s. 3d., leaving 6s. 8½d. for the week's rent, coal, lighting, clothes, and all the other necessary items of working-class expenditure. Even if every working-class housewife could measure out her food in calories and keep it down to £1 2s. 6½d. the balance left, in cases where people have been out of work for long periods at a time, is bound to mean a degradation of the home life and a degradation of the physique of the individual.

This period of economic depression has exhausted the fount of assistance that there used to be in the working-class movement. All subsidiary sources of income have gone. The trade unions are impoverished and practically none of them can pay unemployment benefit. Friendly societies are not nearly as well off as they were. People have drawn their money out of the co-operative societies in order to keep going. With all these extraneous and supplementary sources of income gone, we are left in the average family with this 6s. 81½d. In our view, the Bill obviously does not meet the situation. People who ought to be within the scheme are excluded; the benefits are too low for proper sustenance; and there is in the Bill provision for differential treatment which is unjust as between men who have suffered unemployment for different periods. The idea that because a man has been lucky for five years he should be better treated is one which calls for criticism.

On this side we believe, in the first place, that the labour power of the nation should be concentrated in the most effective period of life. Our alternative to this new insurance for those under 16 would be the raising of the school age and the permanent exclusion of young people from the industrial field. At the other end of the scale we wish to see aged workers out of it, so that you can concentrate your labour power in those years of vigour and maturity when labour is most effective. For those who are capable of work we reaffirm our principle of work or maintenance. Everyone believes in this principle in some degree. Even die-hard Tories could not be expected to-day to rise in this place or another place and say that people should be allowed to starve. Therefore, the principle of maintenance has been accepted by the community.

The question is as to the method by which and the scale on which maintenance should be provided. The Bill will continue to do it in the old way. There will be inadequate money payments, eked out by charity, by the assistance of step-aunts and step-uncles or anyone who can he brought within the realm of a household, by the Poor Law, by the actual breaking up of family life—scores of thousands of homes have been broken up by the means test—by undermining the health and physique of the people if the British Medical Association is right, and by creating that psychological reaction in the minds of the people which is perhaps one of the most dreadful things on the coalfields to-day, where there is very little hope for the future.

However difficult its attainment may be, we believe that provision should be made for the unemployed on a scale which, in the words of the British Medical Association, will enable "health and working capacity to be maintained"; and we would have it done in such a way as not to cast a slur on those who receive that help. We believe that that system of maintenance ought to be a national charge falling on the whole community, that it should not in any way burden the local rates, that the burden should not fall on a section of the community, because unemployment is a national and international problem. Our conviction is and always has been that unemployment is inherent in the present industrial system. I have not time to read the full quotation, but I would like to read part of a statement the authorship of which I shall disclose when I have finished: I repeat, unemployment crises are inherent in the industrial system of capitalism, and are a proof that capitalism as a system of production and distribution cannot run steadily and smoothly, and, therefore, cannot be accepted by society as a satisfactory method of supplying the needs of the people … The system of insurance is a half-way house. It divides the responsibility between three interests, the man's own, that of the capitalist employer, and the State's. Its working necessitates large reserves of inefficiently used capital, and its use must always be very limited both as regards the help given and the time for which it is given. We need a much simpler and more scientific system. Insurance is a make-shift to cover capitalist risks, by imposing burdens on wages which do not fall properly on wages at all. Those were the words of the present Prime Minister some 10 years ago. They express a very sound doctrine, and I am very glad to have had that admission from the right hon. Gentleman. Recent developments have confirmed us in our view that unemployment is not going to be eradicated as things are to-day. Slight fluctuations in trade figures ought not to blind people to the seriousness of the economic situation. I am glad that the Chancellor of the Exchequer is here, because when he came down to the House in March to try to explain away his statement in February about "unemployment for 10 years," he did it in a way which made things perfectly clear. I agree with what he said. These were his words: I did not mean to say that we could not expect good times for 10 years. I did not mean to say that there would be no reduction in unemployment for 10 years. What I did mean to say was that as prosperity came back again we should not be able to employ the same number of people in producing the same number of articles as we could have done, say, 10 years ago, or before the introduction of these new industrial or mechanical devices. This statement should be repeated. It is not everybody who agrees with it. There are some who say that an adjustment will take place so rapidly that it does not present any really serious problem. I cannot make up my mind to accept that view."—[OFFICIAL REPORT, 22nd March, 1933; col. 380, Vol. 276.] I think that that is a very sound reading of the economic situation as we have it to-day. Because of that, we regard the present unemployment insurance system as unsatisfactory and as inapplicable to the situation of to-day. Recognising the stern realities of the situation and the gloomy outlook for to-morrow, I would like to ask the Government and Government supporters two questions. First, do they believe that the major question is the provision of normal wage-earning employment for those who are without it now? Obviously I think the answer must be "Yes." I ask, secondly, do they believe that if any efforts that are made to restore people to normal employment are unsuccessful, the victims of circumstances which are outside their own control should receive the same treatment as they themselves would like to receive in similar conditions, after having performed their work to the community and being ready to do it again?

That is what we mean by "work or maintenance." It is a moral claim on the part of the citizen to a chance of support himself and his dependants, and, if that fails, to honourable and adequate maintenance to keep him within the status of citizenship. Unless the House answers both questions in the affirmative, hon. Members are going to condemn a very large number of people to physical and spiritual degradation, for Part IT of the Bill is still the Poor Law, applying Poor Law principles. The Government may balance the fund, they may restore it to permanent solvency, but they are going to do it, on the facts as they are to-day, by continuing the impoverishment of mind and body of the poor, by continuing the humiliation of large numbers of people, by branding large numbers with the iron of pauperism, whether through an unemployment assistance board or a board of guardians; and the final result will be injurious to our best national interests.

Let us admit, if you like, that the late Labour Government did not carry this policy into effect. I am prepared to admit that it did not do so for more reasons than one. Let us say, if you like, that we are open to criticism for riot having done it. Let us say that we failed. But the question still remains, is it right that we should tinker with the old insurance system, brought a little up to date, with more financial stringency, when all the experience of the years since the War proves that it is incapable of dealing with the situation? If we were wrong it is open to the Minister, who still believes in those principles that I have quoted, to adopt them now in place of this jig-saw puzzle of 63 Clauses. I have no hope that the House will support us in our Amendment, but at least I hope that before the Debate is ended the House will be aware of the real issue which confronts us, which is that the old scheme has broken down and that we ought to be bold enough and honest enough to stand for "work or maintenance for all."

6.14 p.m.

Mr. GRAHAM WHITE

I do not think that anyone will be inclined to disagree with the Minister's opening sentence, that this Bill was a bold attempt to deal with a difficult situation. Nor do I think anyone would be guilty of exaggeration who went further and said, with regard to the first Clause of Part II, that it was, in regard to local government, a revolutionary proposal. Nevertheless, I recognise freely, as everybody must, that it is a courageous attempt to deal with the difficult situation which exists in this country to-day. I would like to add that I am sure no Minister has ever come to the House to perform the difficult task of introducing a great Measure who has given his subject more anxious consideration and brought to it more sympathetic intention than the right hon. Gentleman has done on this occasion. That makes it all the more regrettable that there should be in the Bill proposals which, after mature consideration, we find we must resist to the limit of our capacity.

It would have been more gratifying if one could have joined with the rest of the House to put such small stock of knowledge and experience as one might possess into the framing of a Measure, which would be more acceptable to those in need and which the nation could afford. Who would not wish to co-operate in such an effort? My own ambition, and I am sure that of other Members, would be satisfied if we were able to do something which would ameliorate the lot of those who are in the deplorable condi- tion of having nothing to do and of having nothing on which to do it, whose economic freedom is limited by the fact that their income is 15s. 3d. a week, and whose liberty of movement is restricted to the distance which they can travel on their own feet within the limited range of an Employment Exchange.

Although there are points in this Measure to which we take exception, we do not consider that that fact absolves us from making, at the right time and place, such contributions by way of amendment and constructive criticism as may be within our power. I need not say that we are in favour of every measure and step which can be taken to ensure that there shall be no relapse of the insurance scheme proper into the thoroughly unsatisfactory position in which it was in 1931. As for the new statutory commission which it is proposed to set up, I confess I am puzzled to see the complete necessity for it although I would not quarrel with it. But it seems that all the information which the board will get will have to come from the Minister or with his authority, and it is difficult to see why machinery could not have been evolved within the range of the Ministry, to make those reports and to deal with the situation as circumstances arose from time to time. There would be much more to be said for the board than can be said at the moment if it had power to make recommendations with regard to the scheme as a. whole and not only to those matters which originate from financial causes. I am not quite sure whether or not it is the intention that the board should make recommendations with regard to anomalies which may arise or difficulties which may develop out of the scheme itself apart from financial difficulties.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)

Is not the hon. Gentleman confusing the board with the Statutory Committee?

Mr. WHITE

I am referring to the Statutory Committee under Part I.

Mr. CHAMBERLAIN

The hon. Member said "Board".

Mr. WHITE

I am very sorry. It is the Statutory Committee of which I am speaking. Those who have seen unemployment insurance Measures go through this House and pass into the field of administration know that they have often been interpreted in administration very differently from what Parliament originally contended. There is no means of getting such matters rectified except by waiting for a Parliamentary opportunity, which may not be readily available, to introduce a new Bill and have it passed into law. There would be more to be said for the Statutory Committee or commission if it had those extra powers which possibly it may be the Minister's intention that it should have. The right hon. Gentleman when speaking of the proposals for dealing with juveniles between the ages of 14 years and 18 years said that the situation in this respect was highly unsatisfactory. He is guilty of no exaggeration in using those words. The situation is more than unsatisfactory; it is positively alarming. Each year that passes, for the next three or four years, will, owing to the bulge in the post-War birth-rate, see large numbers crowding into industry and if that movement is to be without any control the situation is very difficult to contemplate with equanimity. In the years from now up to 1938, if steps have riot been taken to deal with the position, the numbers of juveniles out of work may easily exceed 500,000 and may possibly reach 600,000.

By our neglect of this matter, we are undermining the future of our country. The future man-power of the country is being allowed to decay both in the towns and rural districts, and the effects in the rural areas are no less disastrous than in the towns. It will be in the country districts where there are thin and scattered populations that the right hon. Gentleman will find the greatest difficulty in bringing his projects and schemes to fruitful results. This country, in the last century anyhow, enjoyed a commercial supremacy which was due mainly to the fact that we had a long start, in the race of industrial development, and, in the second place, to the fact that we had more readily available supplies of raw material than any other country. Those advantages have now passed away from us. They were not, I agree, the only advantages which we enjoyed but they were at all events very prominent. We can only hope to maintain a satisfactory standard of life in this island if our population is to be as highly educated, as physically fit, as ready to adopt experiments, as alert in mind and body, as the population of any other country in the world.

It is that state of things which we have hitherto neglected. We have left these matters in a chaotic condition. We have allowed children to crowd into the labour market and compete with their parents. In a certain district in Lancashire in the Autumn of last year no less than 25 per cent. of the boys and 31 per cent. of the girls who left school crowded into the cotton industry, in an area where already 22 per cent. of the boys and 15 per cent. of the girls were unemployed. Could anything be worse than that? This Measure gives for the first time, some opportunity of control in regard to this vital aspect of our domestice affairs. One asks therefore whether the proposals in the Bill are those best calculated to achieve the end which in my judgment is essential. The Lord President of the Council on Monday evening, referring to this Bill, expressed the hope that it was going to usher in an era of more humane treatment of the unemployed. If humanity is to be the slogan and the practice in the administration of the new Measure, it will be a relief to many people who are anxious at present and will give satisfaction to all.

The right hon. Gentleman on the same occasion referred to the "core of unemployment" which had baffled and defeated successive Governments since the end of the War. I regret that the Government in handling this matter have taken just the line which they have taken in the Bill. Any proposals are better than none, but there are proposals and there is a procedure which would be better than those presented to us this afternoon. Living under the conditions that we find to-day, living in a machine age, it must be clear to us that there is going to be, under any conditions which are now foreseeable, a great amount of enforced leisure for the people of the world. We see the reactions of it in America in the Industrial Code, and in Italy in the five-day week. My right hon. Friend opposite and the International Labour Office are no doubt keeping in touch with these developments. But the logical way of dealing with this terrible problem of enforced leisure is to direct its incidence—and this is within human capacity—upon those who are of an age to benefit from it, that is to say, the elderly who are entitled to freedom from their activities and those up to 18 years of age.

I hope that this Measure will not deter the Government from going on with the proposal to raise the school-leaving age. I know that on two occasions previously, I have ventured to mention certain figures to the House in this connection. I mention them again to-day, on the principle adopted by a certain well-known character in fiction who believed that what he said three times was true. If the the school-leaving age were raised to 15 for a start, if part-time education and training were provided up to 18, if children under the age of 18 were made subject to the Board of Education rather than to the Ministry of Labour, then the 2,000,000 children—and if the figure is not of that order now it will shortly be of that order—who would be withdrawn from labour would make an appreciable effect upon that hard core of unemployment which the Lord President of the Council lamented. It has been estimated that if we organised matters on that basis, places would be found for 600,000 men in the prime of life and the saving to the Unemployment Fund would be of the order of £28,000,000. That would be a great saving of public money and would pay for the education and welfare of the juveniles. While regretting that the Government proposals have not taken that form, I still express the hope that the school-leaving age may yet be raised. It is only by doing so that you will help to relieve the general volume of unemployment among juveniles and I hope the Government will not lose sight of that aspect of the question.

I do not wish to touch in great detail upon the various aspects of Part I of the Bill, but I am puzzled to know why an alteration in the third statutory condition has been suggested. I cannot think that it is the intention of the Minister to reintroduce the "not genuinely seeking work" condition or anything like it. He has said in this House, if my memory serves me right, that he does not wish to see that condition replaced on the Statute Book, but I have little doubt of what will be the effect of this alteration when it is put into practice administratively, whatever the intention may be, and we shall certainly ask the House to consider an alternative to that proposal.

I welcome the proposal for relating insurance benefit more closely to contributions. I think that is a step in the right direction though I wish it had been a rather longer step, and that it had been proposed to relate benefits to contributions over