HC Deb 03 April 1935 vol 300 cc471-99

9.4 p.m.


Before the Question, "That Mr. Speaker do now leave the Chair," is put, I should like to bring the House back to a very immediate, practical, and important question, if my voice will allow me, because I am suffering from a slight temporary failure at the moment. This question of the position of the local authorities is now very serious, and it is not one which they have created for themselves. The position in which we are now placed because of the postponement of the second appointed day arises, not because the local authorities have committed any sin, but because of the muddle into which the Government has fallen, arising out of this Unemployment Act and the regulations which were made under it. That muddle has been admitted. The Chancellor of the Exchequer himself, I think in the country, admitted that it was a most unfortunate mistake. However that may be—it is not for me to-night to go into that question—the truth is that the Government have had in effect to suspend the operation of the Unemployment Act of last year. After all the magnificent things that were said about it from the Government Front Bench—it was described as the greatest piece of social legislation of modern times—one would have thought it would be able to hold water. As it was, it was clear that when the regulations were published—and this is the first piece of legislation we have had where the regulations were far more important than the substance of the Statute itself—they would not work.

On the 7th January the regulations came into operation and there was a protest against them not merely from people who were concerned to make trouble in the country but from the unemployed, from employed persons, from persons who were not likely ever to be unemployed, from ministers of religion, and not less important from the point of view of this House, from Members who support the Government. The Government, therefore, determined that their regulations should be, for the time being, suspended, and what has been called a standstill arrangement was agreed upon with no definite date for its termination. Unfortunately, however, that involved the local authorities, and they are among the victims of the Government's own incompetence. Hon. Members will remember that under Part II of the Act of last year local authorities were to be relieved of their responsibility for the maintenance of the able-bodied unemployed. That was a long overdue recognition of what ought to have been the case many years ago. I imagine, if the usual procedure were followed, that prior to the introduction of the Bill there had been discussions with the local authorities as to the terms and the date on which this transfer should take place. An arrangement was arrived at sharing the responsibility as between 60 and 40 per cent., and the new principle of British law was established for the first time that local authorities were to contribute to the expenses of the State. Hitherto the boot has always been on the other leg and the State has contributed to the expenses of local authorities.

I cannot deal with any question of new legislation, and it is not for me to raise the justice of the division of 60–40 per cent., but I cannot believe that, when these negotiations were taking place, there was no mention of the date when the transfer had to take place. It may be that the Chancellor of the Exchequer and those who were engaged in the negotiations with the local authorities never gave any binding undertaking with regard to the date on which the transfer of the care of the able-bodied should take place, but it was rumoured—I put it no higher than that—that local authorities might be relieved of their responsibility for the able-bodied as from 1st July last. It is certainly true that local authorities were led to believe that they would be relieved as from the 1st October. I have seen a good many reports which make it dear that county borough councils and county councils were allowed to believe that. I am not putting it higher than that because that is part of my case, which is that they have been very badly let down. They were led to believe that the date was to be the 1st October. When I mentioned that date in the House on the 12th February an hon. Member interrupted me, and then the hon. and gallant Member for Tiverton (Lieut.-Colonel Acland-Troyte), who is, or was, the chairman of the County Councils Association, said that when the question was considered by the Government and the County Councils Association the 1st October was mentioned.

There is not the slightest doubt that local authorities had obtained the impression, without perhaps a definite statement from the right hon. Gentleman, that they were to be relieved of this burden on 1st October. It is undoubted that a very large number of authorities did, as a matter of fact, begin to prepare their budgets for the current financial year on the understanding that the new arrangements were to come into effect on that date. After the Act was on the Statute Book— the second appointed day was not stated in the Act— the Government made up their mind that the appointed day should be 1st March. As I understand it, that was done behind the backs of the local authorities. So far as I know, the negotiations were then over, the Government had got what they wanted, and they could make the appointed day whenever they liked. Instead of consulting the local authorities frankly, they issued their own edict that the appointed day should be the 1st March. That brings the story up to the point of the collapse of the Government scheme and of their regulations and the beginning of the operation of the standstill arrangement. But prior to the 1st March disappointed local authorities, hastily revising their estimates, were still of opinion that the appointed day would be the 1st March this year. Their estimates were quite rightly based upon that assumption. At the eleventh hour, within a few weeks of the beginning of their new financial year, when they had all their plans made and their rates settled, the Government took off the appointed day. I say that that is a betrayal of the local governing authorities in this country, and t0hat if the Government make a mistake, and if their regulations will not work and they have to withdraw them, they ought not to call upon the local authorities to be the victims. The present position is that the Government have not declared when the new appointed day is to be. When they came to this House in sackcloth and ashes, as they did, they might, in common decency, have told the local authorities the date of the second appointed day. But I suppose they do not know. "Standstill arrangement" is a very good description of the kind of arrangements this Government makes. I suggested in a previous Debate that the standstill arrangement would continue until the next General Election, so that all the dirty linen would have to be washed by some other Government.

The local authorities are now faced with a burden which the law said they would be relieved of on an appointed day which the Government had determined should be before the expiration of this financial year. It is not for me to enter into calculations of the effect of the Government's formula, but there is not the slightest doubt that local authorities are facing an increase of the rate burden due to the fact that the Government have capitulated and left them in the lurch. It is all very well for the Chancellor of the Exchequer, who represents the city of Birmingham. So far as I can calculate, the postponement of the appointed day means only an additional third of a penny rate in Birmingham. On the same basis of calculation— and the right hon. Gentleman may be able to challenge my figures— Liverpool, which has not enjoyed the economic prosperity of Birmingham during the last seven or 10 years, finds itself with an increase of 1ld. Then there is Merthyr Tydvil, a derelict town if there ever was one. There is no more distressed borough in this country than Merthyr Tydvil. It has been hit as hard as the city of Liverpool, and hit longer than the city of Liverpool. Because of the Government's betrayal of its interests and of the Government's own promises, Merthyr Tydvil finds itself faced with an additional rate of 8½d. Gateshead will have to face an addition of 5¼d. and Sunderland an addition of 7¾d., and other towns will pay accordingly.

Those are burdens cast on the local authorities after the State had given a solemn undertaking that they were to be relieved of them, after the Government had declared that whatever happened they were to be relieved of them on 1st March. I will take the county boroughs, without the county councils, because, on the whole, it is the county boroughs, apart from one or two county councils, which are most affected by the action of the Government. They would have been asked to make a contribution of £1,200,000 per year to the Unemployment Assistance Board. That is the way in which this Government transfer the responsibility for the unemployed from local rates to the Exchequer. I cannot believe that all the responsible local administrators invented 1st October as the date when this change was to commence, and assuming that they were led to believe that the change would operate as from 1st October, from that time up to the beginning of March—21 weeks—the contribution would have been rather more than £480,000. In that period I think I can say that the out relief of the county boroughs in England and Wales would have amounted to £4,000,000. As regards the able-bodied it would have amounted to £1,400,000. If the Chancellor of the Exchequer thinks my figures are wrong, he will give me the correct figures. It is true that in that period of 21 weeks from 1st October to 1st March we should have had a little bit of this miserable £500,000 for the distressed areas, which the Minister of Labour announced with pride was to tide the worst of them over the difficult time.

The net effect of it all is this, that in the five months from 1st October to 1st March the county boroughs have lost through the postponement of the operation of the Act over £800,000. From 1st March onwards, because of the fact that the Government cannot make up its mind as to when the appointed day is to be, that sum will be proportionately increased. But that does not end the trouble of the local authorities. If the amount of destitution in the country were the same as in the standard year 1932–33, the local authorities instead of having spent over £800,000 in that five months would not have spent half that amount, they would not have spent over 2350,000. But the truth is that in the interval between the standard year and to-day their problem has increased, and instead of the local authorities dividing these responsibilities with the Government in the proportion of 60 per cent. and 40 per cent. they are, in fact, bearing the whole burden and bearing it on an increased scale.

Since then the Government have provided £2,000,000 for the depressed areas. I am very sorry to say that I have almost lost my voice. It has provided £2,000,000 for a year. That will be spent subsequently. Unfortunately, it is not coming to the assistance of many areas which are, in fact, depressed but which do not come within the definition. Here are the local authorities, who during the past three and a half years have been deprived of assistance which had been previously forthcoming to them, who have had to face very considerable difficulties, who have been compelled to retrench on very necessary services because of the policy of the Government and have to do things now because of the postponement of the last three and a-half years. They meet the Chancellor of the Exchequer and put, I assume, this case They are still carrying a burden that Parliament never intended them to carry after 1st March. What is the right hon. Gentleman offering? Either the right hon. Gentleman ought to have made no concession at all, or he might have exercised a little real generosity to the local authorities. He has, in effect, said" I know you are having to bear these burdens through the misdeeds of the Government of which I am a member "—a fact he has admitted in public"— but I cannot help you. All the burdens I am casting upon you you can pay in the next five years instead of this year." To borrow to meet current expenditure, that is one of the most dreadful expedients that any orthodox financier could ever be expected to have to accept, least of all the Chancellor of the Exchequer. I always thought that the worst kind of expenditure was to borrow in advance for current expenditure. The Chancellor of the Exchequer and the Treasury were so hard driven that the best they could do for the hard-driven local authorities was as much as to say: "True you have to spend perhaps 1,500,000 more this year, because nobody knows when the appointed day will be, but you spend it, and we will allow you to repay it over five years." I do not believe current expenditure ought to be carried out on the instalment system. The honest thing for the Government would have been to admit this mistake with regard to unemployment, and to indemnify the local authorities for the additional expense because of their action. I think that would have been common justice to the local authorities of this country.

I am only sorry to think that the, Government, who have been in discussion with the local authorities, and claim to be anxious to assist the local authorities, should have treated them in this shabby fashion, for the local authorities have done nothing; it is all the mistake of the Government. I hope even at this late stage, that, just as the right hon. Gentleman the Minister of Labour made a complete climb down about the Regulations, so the Chancellor of the Exchequer will be prepared to repent his ways and to show it little more generosity to the local authorities of this country, who are being expected now, who indeed must, carry responsibilities which were to have been transferred to the State, who have never grumbled at accepting responsibility, but who have quite rightly objected to having to meet a large heavy bill for the maintenance of the unemployed which the Government said last year was a responsibility that they were prepared to bear. I think this episode in the history of the Government is perhaps one of the most unfortunate, one of the meanest, and, late though it may be, having regard to the right hon. Gentleman's surplus I hope he will be able to agree to-night to make a statement that will reassure the local authorities. Because of the misfortune of the Government, the local authorities and the poor they have to assist should not be in any way prejudiced by that mistake.

9.30 p.m.


I want to make a few remarks on this subject this evening, not merely as a Member of this House, but as a member of a local authority, having in mind my experience in the City of Liverpool, which is one of the distressed areas that has taken the initiative in conven- ing the recent conferences to discuss this matter with the Chancellor of the Exchequer. I want to suggest that these discussions must go on inside and outside the House until the Government accept full and complete responsibility for unemployment, for until we have that basic question settled local authorities, particularly distressed areas, are likely to labour under a grievance. We do feel in cities like Liverpool, and in areas that are even more distressed, that unemployment is something caused by national and international factors. Because of that industrial areas in the nature of things are least able to bear that burden, and should not be called upon to bear a disproportionate share of that liability" while other areas, for example residential, escape scot-free from a burden they can at least bear in part. Local authorities have been justified in expecting the Government to accept that position. On 12th April, 1933, during the discussion of a problem similar to that now under review this evening, the Minister of Health made the following statement One of the bases of this redistribution of responsibility between local authorities and the central Government will be that the central Government shall accept responsibility, both administrative and financial, for assisting all the able-bodied unemployed who need assistance.—[OFFICIAL REPORT, 12th April, 1933; col. 2,607, Vol. 276.]

That, I think, was an undertaking that we had a right to anticipate being fulfilled in the near future. The Government ought to face up to this problem as a national one. The Government have not done so. The grants to distressed areas of £440,000 have proved altogether inadequate, having regard to the increasing load thrown upon distressed areas. The total number of persons receiving poor relief in 1930 was 976,000, and at the end of 1934 that figure had risen to 1,432,000, so that there has been a progressive increase in the number of persons receiving poor relief and the financial liability falling on local authorities. In the city of Liverpool, which I mention because of my intimate knowledge of its burden and only use as an illustration of the 50 odd other local authorities which have been brought into consultation recently—some of which have suffered over a longer period—according to yesterday's meeting in Liverpool there will be an increase in the public assistance rate of 1s. 4d. for this year. The amount to be raised is £1,286,799, which is an increase of £131,827 over last year. In the budget for Liverpool only one-fifth, &£270,000, which is our extra burden from the period starting 1st October, and ending in March, was included, due to the promise of the Government to facilitate a spread-over period for five years.

Local authorities claim that they had some right to anticipate that 1st October would be the appointed day. Some areas, including Liverpool, expected that 1st July would be the appointed day, and Liverpool budgeted upon that basis. I am not going to argue with regard to 1st July, but I suggest that the authorities were justified, because of the Government's vacillation and indecision upon this matter, and of statements that had been made in the House and outside by responsible Members of the Government, in expecting that 1st October would be the appointed day. They are justified in coming to the Government by direct negotiation and asking for some kind of relief. Local authorities are, in many cases, great corporations carrying on, in their own sphere, the work of administration in this country, and they come to the Government as responsible corporations, not to beg, but to ask for relief which only comes into question because of the Government's policy, and the muddle and mismanagement regarding the unemployment Regulations which resulted in the further delay of the appointed day. The Government should bear the full burden of the consequences of their failure to face up to the policy which they placed before the House of Commons.

Many people and many interests are approaching the Government, probably indirectly, expecting blessings to come from the wonderful surpluses which are always rumoured at this time of the year. We are led to understand that the country is not exactly impoverished, and that something like £7,000,000 is likely to be available. Part of that money will presumably be used to relieve taxation here and there, and to relieve hardships. Have the local authorities not the right to ask for a share of that £7,000,000? Can any argument be placed against their request? The Government have argued that they cannot afford it, but the case of the local authorities is morally right, and the only refusal that can be made is on grounds that the Government cannot afford further to relieve the distress of the local authorities. Now that we are told that there will be this surplus, unexpected I believe, of over 27,000,000, it is right for the local authorities to ask for help.

I do not expect the Chancellor—to use the immemorial phrase—to anticipate his Budget statement, but I expect him, when the time comes for him to consider various interests, to take into consideration the distress of the local authorities Which has been continuing over a long period. The local authorities are bearing their share of the distress of the country and of the consequences of the failure of Government policy, and the Chancellor might consider with a little more sympathy the great local authorities, in the administration of which he himself has had vast experience. I speak as a representative of the City of Liverpool, and other hon. Members will speak because they are interested in other distressed areas. The right hon. Gentleman the Chancellor of the Exchequer represents a city which can hardly give him the right outlook with regard to the distressed areas of the country. We have in mind our own cities and our distressed industries, and I ask him therefore to view the question as Chancellor of the Exchequer and as a Member of His Majesty's Government. In that light, and having regard to all the circumstances Which I, in a very humble capacity, have placed before the House, I ask the Chancellor of the Exchequer to grant the local authorities some relief out of the Budget surplus.

9.41 p.m.

Brigadier-General Nation

I want to say only a few words upon this subject, which has already been fully covered during the Debate. I do not wish to quote figures; hon. Members who take an interest in the distressed areas must be very familiar with all the figures, in view of the various deputations which we have had to London and of the debates which have taken place in the House of Commons. I represent one of the cities which are mostly hardly hit. I can assure hon. Members that in Hull the unemployment question transcends every other and the question of benefit from the Government is taken very seriously. The policy of the Chancellor of the Exchequer throughout this period has benefited a great many towns, but for the city which I represent the benefits have not been so apparent. We have suffered to a large extent from the shipping policy and from the tariff policy, as well as from the employment of coloured and foreign labour on British ships. What we have gained in industry and in business we have lost at the docks.

We consider in Hull that relief of the unemployed is a national charge and should not be borne by the local authorities. We have contributed our quota towards national charges by way of taxes and so on, and we have not complained about that, but when it is a question of paying for the unemployed, which are no fault of the city, we consider that it is a national charge to be borne by the nation as a whole. When the Unemployment Act was introduced we made no complaint about the appointed day. We made no complaint as to the delay when the appointed day was postponed, and when it was postponed again. We made no complaint when the Regulations were introduced and when they were withdrawn. We recognised that a mistake had been made, and we made no complaint about the mistake. I do not wish to know who made the mistake, or anything of that sort. We are convinced that neither the postponement of the second appointed day nor the withdrawal of the Regulations can in any way be attributed to the local authorities, and therefore we think that the local authorities should not be called upon to bear the burden.

It is true that the Chancellor of the Exchequer has to some extent made concessions, but they are so small that they have made little or no difference to the rates. In Hull, the rates at the present time approach 20s. in the pound. With the further postponement of the Regulations there may be a further addition to the rates. We consider that the cost should be borne by the taxes rather than by the rates, which hit the poorest people in places where there is the most distress. Last week-end we had a very cheering piece of news. I refer to the financial position at the end of the year 1934, and I do appeal to the Chancellor of the Exchequer once more, after having taken part in deputations and meetings

with him, that in view of the surplus and representations that have been made to him and the deputations that have come to London, he should reconsider his decision once more, and see if he could not make a further contribution to help those who are really hard hit through no fault of their own.

9.46 p.m.


I regret that I did nor, know until a very short time ago that this discussion was going to take place at this time, otherwise I should have been able to look up details of the position of local authorities which I have the honour to represent in this House. I observe that speakers who have come before me have all confined their illustrations to the county boroughs, and have made no reference to the county councils. Whatever may have been said about certain of the county boroughs, it is equally true, and true to a greater extent in regard to certain of the county councils, that these industrial counties have suffered depression for many years and are finding their rate burdens increasing year by year, and even with the relief that has been given, are more conscious of the tremendous burden they are carrying in rates than they have ever been before.

It is not the time to-night to retrace the history of these long negotiations which led to the insertion in the Unemployment Act of the Section which agreed that the burden would to some extent be taken over by the Treasury, nor do I think it profitable at this stage to argue the merits or demerits of the claim of unemployment being made a national charge. The point we are discussing tonight is simply whether or not the position in which we find ourselves is the position in that the Government are in honour bound to take over the burden which would have been taken over if the Unemployment Act had taken its natural course.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)

What does the hon. Member call its natural course?


I will just continue. I remember a discussion which took place in this House on the regulations, after the re-assembling of Parliament, when we had a discussion in this House in which the regulations were withdrawn. I think it was the generally expressed opinion at that time that whoever may have been responsible for that situation, the local authorities were not responsible, and should not be asked to carry a greater burden, and therefore it was hoped that the standstill order would not affect the coining into operation of the second appointed day. The purpose for which I intervene in this discussion is because I do not think I should be doing my duty here if I did not attempt to make the Government aware that there is a real feeling of disappointment among the local authorities in the areas from which I come.

I understand that, in my district the precept is up again this year by 1s. and there are other authorities on the North-East Coast where the increase is, I understand, greater still. I have not the knowledge to suggest that this is entirely due to an increase in the public assistance charge, but it is obvious that if they are not going to get the promised relief, their rates will be higher than they would otherwise have been. It is not only the county council. I have here a copy of a resolution to which I would respectfully draw the Chancellor's attention, because I think he would like to say something in reply to it. It has been passed by the corporation of Newcastle-upon-Tyne, and I understand that it has been forwarded to other Members of Parliament. The resolution is "This council supports the conference of representatives of local authorities, etc., in their request for co-ordinated action on the part of Members of Parliament representing distressed areas, in order to secure the payment to local authorities of an amount representing the payment of which local authorities should have been relieved in respect of the able-bodied unemployed from 1st October, 1934, being of opinion that the Government are under an obligation both explicit and implied to pay this sum. If a large borough like Newcastle-upon-Tyne solemnly passes a resolution of that sort, it is difficult to believe that it has not some substantial reason for using the term "1st October." That date has long since passed out of our mind. We understood that it was to be 1st March. Still further has that date been postponed I ask the Chancellor of the Exchequer if he cannot see his way to do in more even than was promised in the Act

of 1934 for the relief of the rate burden in many of our industrial areas. It is really growing serious, and while authorities may have their faults, and while the Treasury may have reason to differ from many of their actions, the fact remains that the local authorities of this country deserve well of the central Government, and it is not at this time that the central Government should seek to make more difficult the discharge of a difficult task.

9.52 p.m.


This Debate has revealed an astonishing misunderstanding on the part of nearly every Member who has taken part in it. The hon. Member who has just addressed the House told us that he had had only short notice, and had not had an opportunity of looking up the figures. He has evidently not had an opportunity of looking up even the facts. I can hardly blame him, because the right hon. Gentleman the Member for Wakefield (Mr. Greenwood), to whom his friends and supporters must have listened in amazement and consternation, packed his speech with so many complete misunderstandings, errors and misrepresentations. The right hon. Gentleman seems to be completely ignorant of the negotiations which recently took place with the representatives of local authorities in respect of the financial arrangements to be made by them in consequence of the postponement of the second appointed day after 1st March. He has told the House over and over again that the local authorities are bearing the whole burden of that sum of which they would have been relieved if the second appointed day has been as was intended, 1st March. Let me inform him that he is entirely and absolutely mistaken. He has no right to come down to this House and make a charge against the Government without having first made himself acquainted with the facts which are is the recent memories of Members of the House.

I would say to the hon. Member for Bishop Auckland (Mr. Curry) with reference to his statement that the Government were in honour bound to relieve the local authorities, that so far as the period after 1st March is concerned, the Government took the view, and publicly announced that they took the view, that they did consider themselves in honour bound to see that the local authorities did not suffer by reason of an alteration which was by no means due to them, and which was necessitated by the action of the Government. I thought that everybody knew it, but I must repeat that I met the representatives of local authorities in Scotland and in England and Wales, and came to an agreement with both as to the terms on which we should make arrangements for the purpose of putting the local authorities at least in as good a position as they would have been in if the appointed day had been maintained at 1st March. There is, therefore, no grievance on the part of any of the local authorities in this respect through the postponement of the second appointed day after 1st March. That was the gravamen of the right hon. Gentleman's charge, but of course, if one begins with false premises, one is apt to be led into false conclusions.

The real case concerns a very narrow point. It concerns entirely the period between the 1st October, 1934, and the let March, 1935. It is that period which alone is the subject of difference of opinion between the local authorities and the e Government. As to the suggestion that there was any pledge by the Government, some hon. Members have heard me quote before, but I will quote it again for the sake of those who did not hear it or have forgotten it, a letter from the County Councils Association dated the 24th April, 1934, in which they said: Admittedly the Association have not received any undertaking either written or verbal that the Bill would come into force on the 1st October next. If it were true, as the right hon. Gentleman has Bo often asserted, that local authorities were led to believe that the appointed day would be the 1st October, one is tempted to inquire how it was that the City Council of Liverpool took the 1st July as the date. There was no question of any undertaking, but of course local authorities made their own guesses at the date on which they thought it possible or likely that the appointed day would be fixed. Therefore, while I cannot admit that there has been any breach of any pledge or undertaking, I think it is perfectly fair, as I have said before, to discuss whether, since the appointed day was in fact later than some local authorities bad hoped it would be, there is a case that some special

relief would be given for that period. But in considering the point whether the local authorities ought to be compensated for not having had the relief at the time when they expected it, I think it is fair to take some other circumstances into account.

In particular, let me remind the House that we are not here to-day to discuss questions which would require an alteration of existing legislation, and, therefore, I am not proposing to discuss any suggested Amendment of the Act. When, however, the amount of the local authorities' contribution towards the cost of relieving the able-bodied unemployed was fixed, the 60 per cent. in question was not 60 per cent. of what is being spent to-day, but 60 per cent. of the expenditure in a standard period. At the time when that standard period was fixed— the standard period being the year 1932—it was said by a good many local authorities that it was not fair to them, because, they said, it was probably a year of peak expenditure, and, since the amount expended on relief would probably come down, the contribution should be fixed at a lower figure. As everyone knows, however, they were mistaken, for, so far from its being a peak year, the expenditure of that year has continually been exceeded, and the latest estimate, which I have only had to-day, of the rate expenditure in the current year, namely, the year beginning on the 1st April, contemplates a figure some £3,000,000 in excess of the standard year; but the 60 per cent. is still only that percentage of the expenditure in the standard year, and, therefore, the local authorities have made a bargain very much better, and the Exchequer has made a bargain very much worse, than we anticipated at the time when the bargain was made. Seeing that the period in question is only this short period between the 1st October and the 1st March, and seeing that the local authorities are going to get a higher scale of relief than they anticipated, I must say I do not think there is any case for a further concession. I am afraid that this is one of those cases where appetite comes in eating. Every time they get a fresh concession they seem to make that a jumping-off place for a fresh demand.

After all, we have to consider that the taxpayers too have their burdens

to bear. I am sure that everyone sympathises with those parts of the country which have suffered so much and so long from unemployment, but do not let us forget that, although this 60 per cent, is often quoted as though it were the local authorities' share of the burden of the cost of relieving the able-bodied unemployed, it is only 60 per cent. of a very small fraction of the whole amount which is being spent upon the able-bodied unemployed, and, as I have informed the House on previous occasions, the Exchequer to-day is bearing, of the cost of assistance to the able-bodied unemployed, not 40 per cent., but something like 95 per cent., and it is only the difference between that 95 per cent. and 100 per cent. that is still left as the contribution of the local authorities. That being so, it is really, practically speaking, the case that the relief of these people has been made a national charge; what is left resting upon local authorities is a mere trifling fraction of the whole cost. In these circumstances, I think the House must agree that there is really no case for any further concession.

10.4 p.m.


I rise, not to continue the discussion on the previous point, but to raise another matter of which I have given notice, concerning a point which I previously raised with regard to standard benefit. Hon. Members who were present at Question Time last Thursday will recollect that I then raised the question of the right of certain unemployed people to their, standard benefit so far as dependent children were concerned. On that occasion I endeavoured to raise the matter on the Adjournment, but you, Mr. Speaker, in your judgment, thought it would be best to raise it here. Accordingly, I now desire to raise a matter which is of importance to a large section of those who are unemployed. After the last Unemployment Insurance Act had gone through the House, we had what is commonly called a consolidating Act. Part I, roughly speaking, dealt with standard benefit, and Part II with what is called transitional benefit. That was subsequently altered in the consolidating Act, but for the purposes of our present discussion Part I enacted that the applicant for standard benefit

was entitled to that benefit without any means test being applied to him.

It was the common conception in the House of Commons that if a person had the stamps, there ought not to be any form of means test applied to that person. I raised two cases, one of a man at Stanningley in Leeds, the other at Dudley in Birmingham, where applicants for standard benefit were questioned when they applied for dependants' benefit as to the household income. In regard to the man Simpson in Leeds, the facts, broadly, are not in dispute. He was in standard benefit. He is a tradesman of my own, and was paid his benefit through the Pattern-makers' Association. When he applied at the Exchange, the insurance officer, or someone acting on his behalf, started questioning the man, and wanted to know whether anyone else in the house was working, how much they handed in to the household, so that afterwards a calculation could be made, and if it were found that other members of the household who were at work handed in, in combination, more than the parent, the parent would be disqualified from receiving standard benefit for his children.

In the Dudley case the circumstances were similar. The man had two children who were at school, and two adult children who were admittedly at work. There were questions as to the amount the two adult children handed in, in order to calculate the proportion of the family income, and if it worked out in a certain manner the parent would be disqualified from receiving dependant's benefit. In the Leeds case it is disputed by the Minister that the man was asked as to how much he gave in to the family income. When a Minister in this House makes a definite statement denying facts, one must take notice. I took notice, and have again got into touch with the man and the society which paid his benefit. The man is a good type of citizen, and he is prepared to swear before any court that he was questioned as to how much he gave in.

The second and more important fact is the question of the child. The Minister's defence is that he is entitled in a claim for standard benefit, if the adult members of a family who are at work give into the household a sufficient sum, to disqualify the parent for standard bene- fit in respect of dependent children. That is a state of affairs that frankly I have never known to prevail in standard benefit claims. I am sick and tired of the defence, although I never praised the Labour Government, that for everything wrong the Government are doing they say that the Government before them did the same. That is good enough in a Censure Debate, but when you are dealing with a man's right to benefit it does not fit in. Whether the other Government did it or not is not my concern; I am concerned with the practice.

Since the Minister answered my question, I have made further inquiries to find out if it were the practice throughout the country that in claims for standard benefit questions as to the contributions of other members of the family were asked. I cannot find a single case where it has been done. It would be wrong of me to quote the managers of Exchanges, because it might involve them in wrangles across the Floor of the House, and I have a great admiration in the main for the way in which they do their work. I have a feeling of shame when I think that I do nothing but irritate them from morning till night, and I am not anxious to attack them, because I think that they do a difficult job decently. But I have tried through the medium of the Exchanges to find out whether in. Scotland this is done, and I cannot find a single case where it was done. I should like the Minister to tell us in how many standard benefit claims a person has been refused dependants' benefit on the ground that the amount handed in to the household outweighed the contribution of the parent.

The Minister sought refuge and defence in Section 37 of the Act, which says if a child is under the age of 14 and is maintained wholly or mainly by. Section 38 applies in the same way to a wife. It says: where the assured contributor is residing with her or is wholly or mainly maintaining the wife. The Minister seeks, in defence, to say that the Government of the past did it, and that wholly or mainly dependent depends on what the family income is. That was never the construction of the Act, and was never meant to be. I admit at once that a child may not be dependent because the child has an income of its own. In that case the child is not a dependant child; the child itself has its income. The practice has been in unemployment insurance that where the child had an income, that is to say, if it were the child of a deceased person and a man had married a soldier's widow who had a pension of 10s. a week, in such a case the child was not taken as being a dependant. In the case of a man marrying a widow, a, child may have a pension of 5s. or 3s., according to age. There the man has to prove dependency. In these cases it was not dependent on the family income; it was dependent on the income of the child itself. Here the family is asked. It means, in effect, that if this practice goes through, the child of a man on standard benefit is in danger. In effect it is a premium on honesty. I represent a division, I suppose, where poverty is worse than in most divisions, and which is an average kind of constituency in respect of people who sometimes break the law. I hope that the House of Commons will never put a premium on decency and honesty. This sort of thing is really putting a premium on honesty. Take the typical case of a miner. The average wage of a miner is about &£2 8s,


£2 1s.


I will say £2 5s. or even £2 10s. a week. He has three sons working and two at school. That is an average family. The three sons who are working may not all be miners. One may be earning £3 or £4 a week, another £2 10s., and the third £2, and they may give £3, £2 and 30s., respectively towards the combined income, and this obviously makes a child, if you argue the matter on an equitable basis, more dependent upon the sons than upon the father. What is your insurance principle? When the Bill was going through the House, the great defence of the Tories was that on a question of insurance you have no right to examine these things. If you were insured and there was a fire, theft or burglary you should not, having paid the premium, be examined in regard to these matters. The premium of unemployment insurance includes a wife and children. It is said that they only ask the family income. I believe that when the Tories fought the party above the Gangway more bitterly than they do now, they claimed that they were the upholders of family life and that Socialism would smash it. That used to be the stock argument. For goodness sake do not put a premium on decency. If a man comes along and says that he earns £2 or &£5 a week, but only gives £1 a week to the household, who is to say whether this is right or wrong? Under the family income test in regard to standard benefit, if a man tells the truth, you can put a premium on him and can disqualify a child. If someone with £5 a week pays only £1 into the household, you give the family the benefit because they are being treated less generously by members of the family than they were before. I come from a family where a brother carried on the whole family, even when my father was alive, giving £4 and even £5 a week. Under this sort of thing he would be punished for being decent to the rest of the members of his family, whereas if he only contributed £1, full benefit would be granted.

The whole approach to the question is entirely wrong. When a man claims in respect of his wife he has to sign a declaration saying whether she is working, whether he is living with her, and whether he is maintaining her. He has to sign that declaration. For a child it should be the same. The Section was never meant to apply to the family income. If it did, obviously you could have no test of family income which was worth anything unless there was verification of earnings. When a man claims for his child he should say whether the child is dependent on him.

When the Section of the Act of 1930 was framed, children were allowed to work and earn wages, and you applied the same dependency test to a child's earnings as you did to the man's earnings. Now all the test that is needed from the man is the same test as in the case of a wife; does he maintain the child and is he prepared to make a sworn statement that he is maintaining the child? If he makes a sworn statement to that effect then, obviously, he is entitled to claim that he is maintaining his child. I look upon this as a serious issue; if it is allowed to go unchallenged, if the Minister adheres to the statement that has been made, it places the standard benefit in the case of children in danger, and I shall take the earliest possible steps to remedy it.

10.23 p.m.

The MINISTER of LABOUR (Mr. Oliver Stanley)

There appears to be some misunderstanding in regard to the question which the hon. Member has raised. It is not possible on this occasion to discuss anything which requires legislation and, therefore, I take it that the hon. Member is not asking for amendments of the law, but trying to prove that in the administration of the Act there has within the last three months been introduced into unemployment insurance in respect of dependent children an entirely new principle. I can assure the House that the principle of which the hon. Member has complained has been a feature of the administration of this Act ever since dependants' benefit in respect of children was first granted. The dependants' benefit for children had its origin in the Act of 1922. It was laid down in that Act that dependants' benefit was not to be granted as of necessity in respect of a, child but only in respect of a child maintained wholly or mainly at the cost of the person entitled to benefit. On that point there is no dispute.

For some years subsequent to the Act of 1922 the granting of children's benefit was in the discretion of the Minister, and was not subject to a decision of the umpire, but, even so, it happened that in one or two cases which went to the umpire on other points this point of being wholly or mainly maintained a incidentally. The umpire even as far back as 1927 laid it down that that was a question of fact which had to be decided in each case and involved an examination of the sources of income in the family, not of earnings but of contributions to the household fund. In 1928 the administration of this dependants' benefit was brought within the purview of the umpire, and subsequently the umpire gave several decisions which made it quite clear that the matter must be determined by what is known as the family fund. I quote the words of one of these decisions: The applicant is entitled to benefit in respect of each of his children if they are maintained wholly or mainly by him. Whether the children are so maintained is a question of fact. In my view, in order to determine this question it is necessary to inquire who provides the main or greater part of the fund out of which the children are maintained. That was in 1928. As a matter of fact these umpires' decisions are not really of immediate relevance, because although they governed the practice of the time the substance of the decisions was subsequently embodied in the Unemployment Insurance Act which was passed in 1930 by hon. Gentlemen opposite—an Act to which the hon. Member for Gorbals (Mr. Buchanan) gave his support.


With many qualifications.


I think the hon. Member for Gorbals has overlooked this Section in that Act which in 1930 quite clearly set out a provision that disposes entirely of his contention that these inquiries were never meant to extend to the contribution of other members of the family to the household fund, but only to the total earnings by the children themselves. Let me read Sub-section (2, f) of the Act of 1930: An insured person shall not be deemed to be wholly or mainly maintaining any other person unless the insured person when unemployed contributes towards the maintenance of that other person an amount not less than the amount of the increase of benefit received in respect of that other person, and when in employment (except in a case where the dependency does not arise until after the date on which the insured person became unemployed) contributed more than one-half of the actual cost of the maintenance of that other person.


Hear, hear.


It is quite clear that the applicant for the benefit has to prove, in order to be entitled to it, that he contributed more than one-half of the actual cost of the maintenance of that person. It has been the practice of—


Not the practice.


If the hon. Member will listen to me perhaps I shall convince him. It has obviously been laid down by law that somehow or other the applicant for benefit has to discharge the onus of that proof; he has to prove that he wholly or mainly maintains the child, and that means that he has to prove that when in employment he contributes more than one-half of the actual cost of the maintenance of the child. To enable the applicant in the easiest way, from his own point of view, to discharge that onus, it has been the practice for many years since the introduction of children's benefit, to insert upon the form which the applicant has to sign questions directed to this particular point. In 1922 the question took this form: Which of them (the children) are resident with you and maintained wholly or mainly at your cost? Are any of the children earning wages? In 1928, this matter first came directly within the purview of the Umpire and the decisions to which I have referred were given and the form of the question was altered. It then read as follows: Do any of the children contribute to the household expenses? Is any pension or allowance payable in respect of any of thorn or is any other payment for their maintenance made by any person other than yourself? After the passage of the 1930 Act, including the Section which I have read to the House, clearly setting out the position with regard to dependants allowances, the question on the application form was altered to read as follows: Have you any other children living at home who earn wages? If so state names and amounts paid towards household expenses From February, 1931, until some time in 1934 every applicant for children's allowance had to fill in an answer to that question and sign it. It is true that since that date certain differences were made in the question, in order, it was hoped, to meet the convenience of the applicants themselves. It will be remembered that the actual words of the original question were: state names and amounts paid towards household expenses. It was found that in many cases applicants misunderstood the purpose of the question. They misunderstood the only question which we were entitled to ask them and they actually filled in what we neither asked for nor were entitled to know, namely, the actual earnings of the other children living at home. They were also apt to misinterpret the word "children" and to think that it only meant sons and daughters under a. certain age. Therefore, purely for the convenience of the applicants—as we believed—in July of last year the direct inquiry on the form with regard to the amount contributed by the sons and daughters was dropped and this question was asked: "Are there any other sons and daughters or any other persons living with you?" If that were answered in the affirmative the applicant was then asked orally: Whether and what they contribute to the family fund? That was done purely because it was found that the answers to the written questions were sometimes incorrectly given to the disadvantage of the applicant. It is clear that if the applicant filled in the amount of earnings, instead of the amount of his son's contribution to the household fund, he would be increasing, against his own interest, the amount which he would be entitled to take into account. I think it is plainly established that for many years the law has been that this family fund has to be taken into account. It is established that far many years every applicant for dependants benefit in respect of children had to fill up and sign a form stating the names of any other children living at home and the amounts which they paid towards the household expenses. The only change in practice in recent years has been that to which I have just alluded, namely, that instead of including that question on the printed form the applicant is merely asked, "Have you any sons or daughters living at home" and the question "How much do they contribute" is put orally.

That change was made, not for the convenience of the Department, but in the interests of the applicants themselves. If it has caused any misgiving or if any hon. Members can give any evidence that, as a result of it, inquiries have been made which were improper or which were not made before, I am perfectly willing to consider the substitution in the application form of some form of question directed to meeting that case. I submit to the House that it is abundantly clear that as the law stands the applicant for this benefit has, before he is entitled to claim the benefit, to discharge the onus of proving—


Assuming that the income of one of the family is more than the parent's income and he, rather than the father, is held to be the person maintaining the child, will he become eligible, if unemployed, for unemployment benefit for the child? Is the right hon. Gentleman aware that another Section deliberately cuts him out and that therefore, nobody could claim for the child in that case?


I cannot answer as to what in a particular case would be the meaning attached to that Section which I read, but if the hon. Member refers to the possibility of the father not being able to claim in respect of a dependant and nobody else being able to claim in respect of him, I wonder if he has not overlooked the proviso to Section 39, Sub-section (1) of the new consolidating Act, under which the father and the earning members can claim under a joint dependency. I think he will find in that Section the answer to his question. It is clear that as the Act stands. the applicant, to entitle himself to benefit, must prove that he wholly or mainly maintains the child, and that means that he has to fulfil the conditions laid down in the Act passed by hon. Members opposite as long ago as five years. During those five years until this day no complaints have been raised against the provisions of that Section, nor has it been suggested that any hardship was caused by it, nor, I am sure, did hon. Members opposite, when they introduced and passed it, ever think they were instituting a means test into unemployment insurance.

I give the House the assurance that there has been no change in the practice whatsoever and that, in so far as an alteration has been made in the machinery, it is purely for the benefit of the applicant. In so far as that can be shown not to have contributed to his greater convenience, then I am prepared to consider a reversion to the old system and to consider finding some new form of question; but the House will realise that I can only discharge the duty laid down by the Acts of Parliament, and it is clear that those Acts demand that in fact proof of this dependency should be given.

10.38 p.m.


I wish to draw attention to Sections 37 and 38 of the 1930 Act. It is remarkable that nothing has turned up between 1930 and 1935, after the Minister himself has stated to us to-night that he has sent out a different form to be filled in by the people who are claiming for dependent children. I am satisfied that there has not been a similar case to those mentioned by the hon. Member for Gorbals (Mr. Buchanan) in the country. Those are two cases that have just come up now, and the reason for their coming up is primarily that the Minister, after the passing of the 1934 Act, has sent out a different form entirely. This will raise a storm of contention all over the country. I have been thinking, while the Minister and the hon. Member for Gorbals have been speaking, of the man with part-time employment who has sons at home. His sons may be working and he may be only working short time. Because he is working short time he has to suffer through not being able to draw benefit for his children. The Minister tells the man when he is out of work that he can maintain a child on 2s. a week, but he does not ask the man whether he has contributed to the child's keep so far as claiming benefit is concerned. If this kind of form is to be filled up because a father for the time being may not be able to work to earn as much as his son, and because the son is contributing to the upkeep of the home and the maintenance of his brothers and sisters, it is brutal to deprive the father of the benefit for his children.


It is the result of the Act passed by the hon. Member's Government.


It is the result of the circular which the Minister has sent out. It is due to the right hon. Gentleman's administration. Why is it that cases have never arisen before July, 1934? The Minister cannot cite a case where anything of the kind has arisen.


I can give the hon. Member at least half a dozen cases which have gone to the umpire for decision since 1930.


It is a remarkable thing that the right hon. Gentleman did not say anything of the kind until I put the question to him. These men have

paid their contributions, and they expect to draw benefit for their own children. They are not the children of the sons or the daughters, and the men are entitled to draw the benefit in respect of the children. When they go to the employment exchange, however, they are told that they are not wholly or mainly maintaining their children. It is a wrong which has only just arisen. The Act was passed in 1930, and the Government seem to be saying that what they have not been able to get on the swings they are going to get on the horses, and the horses in this instance are the fathers who should be allowed to draw benefit for their children. If this thing is carried on, there will be a row from one end of the country to the other.

10.44 p.m.


This is the most important question with which the House can be faced. The Minister is going to cause such a turmoil throughout the country by applying the means test to dependent children on standard benefit as he cannot imagine. Can the Minister tell us in how many cases this means test has been applied where the father was on standard benefit?


I could not do so offhand, but will certainly make inquiries. Five or six cases have gone up to the umpire—since 1930—and I think in two of them the umpire decided against the applicant and in the others in his favour.


Were they adopted children Was there any point of that sort?



Question put," That Mr. Speaker do now leave the Chair."

The House divided: Ayes, 121; Noes, 34.

Division No. 140.] AYES. [10.45 p.m.
Acland-Troyte, Lieut.-Colonel Broadbent, Colonel John Copeland, Ida
Adams, Samuel Vyvyan T. (Leeds, W.) Brocklebank, C. E. R. Crooke, J. Smedley
Albery, Irving James Brown, Ernest (Leith) Croom-Johnson, R. P.
Allen, Lt.-Col. J, Sandeman (B'k'nh'd) Brown, Brig.-Gen. H.C.(Berks., Newb'y) Cross, R. H.
Apsley, Lord Browne, Captain A. C. Davies, Maj. Geo. F. (Somerset, Yeovil)
Aske, Sir. Robert William Burghley, Lord Denman, Hon. R. D.
Atholl, Duchess of Burnett, John George Dickle, John P.
Baldwin, Rt. Hon. Stanley Campbell, Vice-Admiral G. (Burnley) Duncan, James A. L. (Kensington, N.)
Baldwin-Webb, Colonel J. Castlereagh, Viscount Dunglass, Lord
Beaumont, M. W. (Bucks., Aylesbury) Cazalet, Thelma (Islington, E.) Elliot, Rt. Hon. Walter
Blindell, James Christle, James Archibald Elliston, Captain George Sampson
Bowyer, Capt. Sir George E. W. Collins, Ht. Hon. Sir Godfrey Erskine-Bolst, Capt. C. C. (Blackpool)
Bracken, Brendan Colville, Lieut.-Colonel J. Everard, W. Lindsay
Braithwaite, Maj.A.N. (Yorks, E. R.) Cook, Thomas A. Flint, Abraham John
Briscoe, Capt. Richard George Cooper, A. Duff Fremantle, Sir Francis
Gillett, Sir George Masterman Llewellin, Major John J. Ropner, Colonel L.
Gilmour, Lt.-Col. Rt. Hon. Sir John Lloyd, Geoffrey Russell, Albert (Kirkcaldy)
Gledhill, Glibert Lockwood, Capt. J. H. (Shipley) Russell, R. J. (Eddisbury)
Goodman, Colonel Albert W. Loftus, Pierce C. Rutherford, Sir John Hugo (Liverp'l)
Greene, William P. C. Lovat-Fraser, James Alexander Salt, Edward W.
Gretton, Colonel Rt. Hon. John Lyons, Abraham Montagu Samuel, M. R. A. (W'ds'wth, Putney).
Gunston, Captain D. W. Mabane, William Sanderson, Sir Frank Barnard
Guy, J. C. Morrison MacAndrew, Lieut.-Col. C. G. (Partick) Shaw, Helen B. (Lanark, Bothwell)
Hannon, Patrick Joseph Henry MacAndrew, Capt. J. O. (Ayr) Smiles, Lieut.-Col. Sir Walter D.
Hartington, Marquees of McConnell, Sir Joseph Somerville, Annesley A. (Windsor)
Headlam, Lieut.-Col. Cuthbert M. McKie, John Hamilton Stanley, Rt. Hen. Oliver (W'morland)
Hope, Capt. Hon. A. O. J. (Aston) Macmillan, Maurice Harold Stevenson, James
Howard, Tom Forrest Magnay, Thomas Stourton, Hon. John J.
Howitt, Dr. Alfred B. Margesson, Capt. Rt. Hon. H. D. R. Strickland, Captain W. F.
Hudson, Capt. A. U. M. (Hackney, N.) Martin, Thomas B. Stuart, Hon. J. (Moray and Nairn)
Hudson, Robert Spear (Southport) Mayhew, Lieut. Colonel John Taylor, C. S. (Eastbourne)
Hume, Sir George Hopwood Moore-Brabazon, Lieut.-Col. J. T. C. Thomson, Sir Frederick Charles
Jamieson, Douglas Morris-Jones, Dr. J. H. (Denbigh) Titchfield, Major the Marquess of
Jones, Lewis (Swansea, West) Ormsby-Gore, Rt. Hon. William G. A. Ward, Irene Mary Bewick (Wallsend)
Kerr, Lieut.-Col. Charles (Montrose) Palmer, Francis Noet Williams, Herbert G. (Croydon, S.)
Kerr, Hamilton W. Petherick, M Wise, Alfred R.
Lamb, Sir Joseph Quinton Radford, E. A. Womersley, Sir Walter
Law, Sir Alfred Ramsay T. B. W. (Western Isles)
Leckie, J. A. Reid, William Allan (Derby) TELLERS FOR THE AYES.—
Leech, Dr. J. W. Ramsden, Sir Eugene Sir Victor Warrender and Lieut.-
Lindsay, Kenneth (Kilmarnock) Rhys, Hon. Charles Arthur U. Colonel Sir A. Lambert Ward.
Little, Graham-, Sir Ernest Rickards, George William
Adams, D. M. (Poplar, South) Dobble, William Macdonald, Gordon (Ince)
Addison, Rt. Hon. Dr. Christopher Foot, Dingle (Dundee) McEntee, Valentine L.
Batey, Joseph Gardner, Benjamin Walter Maclean, Neil (Glasgow, Govan)
Brown, C. W. E. (Notts., Mansfield) George, Major G. Lloyd (Pembroke) Mainwaring, William Henry
Buchanan, George Greenwood, Rt. Hon. Arthur Mallalieu, Edward Lancelot
Cleary, J. J. Griffiths, George A. (Yorks, W. Riding) Maxton, James
Cocks, Frederick Seymour Groves, Thomas E. Milner, Major James
Cripps, Sir Stafford Grundy, Thomas W. Salter, Dr. Alfred
Curry, A. C. Jenkins, Sir William Smith, Tom (Normanton)
Daggar, George Lansbury, Rt. Hon. George Tinker, John Joseph
Davies, David L. (Pontypridd) Logan, David Gilbert
Davies, Stephen Owen Lunn, William TELLERS FOR THE NOES—
Mr. John and Mr. Paling.

Supply accordingly considered in Committee.

[Captain BOURNE in the Chair.]