§ 10.45 p.m.
§ The Under-Secretary of State for Health and Social Security (Mr. Paul Dean)
I beg to move,That the National Insurance Act 1966 (Commencement No. 3) Order 1971, a draft of which was laid before this House on 6th May, be approved.This change was provided for in legislation of the previous Government in 1966. They carried out part of their intention in that year, and this Commencement Order completes it.
Section 3(1) of the National Insurance Act, 1966, introduced a rule which provided for payment of unemployment benefit after the first six days of suspension by an employer this commonly being called the six-day suspension rule. It applies to earnings-related supplement from October, 1966, and was to have applied to flat-rate benefit from March, 1969, but that was postponed to allow progress towards a guaranteed pay scheme.
This Order brings that rule into operation for flat-rate benefit from 1st January, 1972, more than five years after the original announcement. The effect is that at present flat-rate benefit is payable not only to workers who have lost their jobs, but to those on short time, employed less than a full working week or temporarily suspended by their employers. When the six-day suspension rule is applied, benefit will not be payable for short periods of suspension not exceeding six days, nor for the first six days of longer periods. This brings the flat rate into line for short time and temporary lay-off. Since the Government announced 177 the change, a good deal of progress has been made towards guaranteed payments in industries subject to lay-off, including one of the main industries affected—the motor car industry.
The Government do not propose any system of statutory guarantee payments, but welcome voluntary agreements freely negotiated between employers and employees in an industry and tailored to the needs of that industry, and much progress has been made in this since the previous Administration announced these proposals.
The main reason why we have put this proposal forward today, against that background, is that we feel that there has been a misuse of the National Insurance scheme. It has been a subsidy from the scheme for short-time working, not for unemployment, while unemployment benefit is intended for people who have lost their job and are looking for another. It is unfair to contributors that they should have to subsidise the scheme in this way. This includes low wage earners in regular employment, while many of the people getting these subsidies from the scheme at present tend to be in the higher earning ranges, as in the car industry where earnings average £30 a week.
Another factor is that in employment exchanges much work is involved which should be devoted to administering unemployment benefit and assisting people in getting jobs. We estimate that there will be a saving of about 300 staff and about £3 million a year as a result of this change.
There will be safeguards. I emphasise that the Order does not affect unemployment benefit for people who have lost their jobs and are seeking other jobs. For those in need who are not covered by guarantee payment arrangements, supplementary benefit will be available. To summarise, this is a saving in non-priority expenditure so as to spend more where the need is greatest.
§ 10.50 p.m.
§ Mr. W. H. K. Baker (Banff)
I oppose the Order on one rather narrow ground; that is, as it applies to share fishermen. It may help the House if I explain why I feel this and exactly what share fishermen are.
178 All share fishermen are treated as self-employed; they are partners in a joint venture and are remunerated wholly by their share in the joint venture. There is absolutely no employer/employee relationship in the inshore industry where share fishermen operate. Share fishermen are exclusive to the inshore fleet, which is scattered along the coasts of the United Kingdom, notably on the north-east, east and west coasts of Scotland, certain parts of the east and north-west coasts of England and in South-West England. A total of possibly 17,000 people in the fishing industry will be affected by the Order, and the amount of unemployment benefit paid had the Order not come before the House would not be great.
All these men pay class 1 insurance. Not only do they pay their own share, but they pay the whole stamp. Under the Statutory Instrument which gave effect to that Part of the Act which makes share fishermen entitled to receive unemployment benefit. National Insurance leaflet No. 47 of March, 1970, says in paragraph 7:… your share of the stamps may be deducted either from the gross earnings or from your share in the proceeds. Where this is done your card will normally be stamped at each share-out for the period … If the profits or gross earnings on one voyage do not cover the cost of the stamps … the stamps can be paid for out of the proceeds of the next voyage.Generally speaking, when the catch is sold, 50 per cent. of the proceeds of sale go to the boat—that is known as the boat's share—and the remainder is shared out equally among members of the crew. The average crew is five or six men. The boat's share goes to paying for loans from the White Fish Authority or banks for the purchase of the boat, electronic gear, new and replacement parts of fishing gear and the general overhead running costs of the boat. The basic rule is "no cash, no share"; that is to say, no remuneration. There is virtually no unemployment among share fishermen; indeed at times it is difficult to find adequate crews. If this Order becomes effective for share fishermen, it will make the crewing situation even worse.
Equally, there is no redundancy in the inshore fleets in Which share fishermen operate. The redundancy payments contributions are repaid to share fishermen, 179 and paragraph 8 of the pamphlet to which I have referred mentions that. It says:… share fishermen are excluded from the scheme (and) arrangements have been made by the Department of Employment and Productivity to refund annuallythe amounts paid in under that scheme.
Remuneration for share fishermen is available only if the boats put to sea and if they have caught, landed and sold their catch. If there is no catch, there is no cash. The only unemployment which exists is if the boat can put to sea. If the boat cannot put to sea, there is no employment.
My hon. Friend referred to arrangements which have been made in various industries whereby agreement has been made between workers and management for payment to a certain extent during lay-off periods—suspension periods. This is not possible in the fishing industries, because there is no fall-back money where this can be done. The proceeds of catches are shared, 50 per cent. to the boat and 50 per cent. to the crew.
Other than for rare mechanical failure, the only reason for boats not being able to put to sea is adverse weather conditions. Gales and high seas are not in the control of the skipper, and it is his decision whether to hazard the boat and the lives of his crew. It is pertinent to point out that the highest accident and death rate in any industry in the United Kingdom is that which comes, unfortunately, into the inshore fishing fleet.
Statutory provision was made for share fishermen to receive unemployment benefit in Section 100 of the National Insurance Act, 1965, and it was give effect specifically by Statutory Instrument No. 386 of 1967. The share fisherman is mentioned specifically in this respect. The new rule to govern the payment of unemployment benefit to workers is not "terminated" but is "suspended" by the employer. I understand from the original Explanatory Memorandum when this Statutory Instrument was first issued that it could not possibly apply to share fishermen. The employer-employee relationship does not exist, as I have pointed out.
I want to refer to two or three other points in the leaflet NI.47 which help make my case. There are three additional rules for benefit which apply to share fishermen. The first is: 180… benefit would not be payable for any day on which you were out with the vessel, even though your fishing was unsuccessful." It is saying, in other words, that benefit is available if the boat is not at sea for any reason.The second is:So far as fishing from a vessel is concerned, you must show that you were unable to engage in any type of fishing for which the vessel could reasonably be used in any area to which the vessel could reasonably go.I take that to mean that the man must have been available for employment had any boat in his port been being put to sea.
The third is:If you are the skipper or a member of the crew of a fishing vessel … you must also prove there was a good reason for not having fished on the day for which you are claiming benefit. Good reason might be bad weather, absence of fish … or the repair or reconditioning of the vessel (other than routine or period maintenance work …)",which, of course, the share fisherman must carry out in the interests of the joint venture of which he is a member.
Unemployment benefit has been available to these men for a considerable time. If suspension is due to bad weather it is unlikely that it will hit all the regions at the same time. It is more likely to hit the south-west of England and leave the north-east of Scotland free, or vice versa.
Therefore, overall I am asking for a quite small thing from the Government; namely, that the Department of Health and Social Security should recognise the right of share fishermen to unemployment benefit. I would ask my hon. Friend to look closely at the position and, having done so, to take steps to exempt share fishermen from this Order in the interests of the fishermen themselves and of the nation as a whole.
§ 11.2 p.m.
§ Mr. Hugh D. Brown (Glasgow, Provan)
I congratulate the hon. Member for Banff (Mr. W. H. K. Baker) on his new-found interest in National Insurance regulations. However, I do not expect him to get much "joy" from the Government. If the regulations concerning married women are difficult to understand, the provisions relating to share fishermen are even worse. I do not think this is the main reason why the Government are attacking the unemployed, but it certainly looks like it.
181 The Under-Secretary in introducing the Order kept appealing to hon. Members on his own side for support. However, he failed to convince me with his arguments, and certainly did not provide the House with any information. May we be told where this abuse is taking place? Is it among dockers, or in the car industry, or where? Is there said to be any collusion between employers and employees? This is an essential point, and the hon. Gentleman has given us no information. Surely if somebody, through no fault of his own, finds himself unable to work and earn on that day, then, provided that other things are acceptable, he should be entitled to unemployment benefit. In the provision of unemployment benefit there does not need to be the suggestion of somebody having lost his job. That would be a new concept of the conditions for such benefit.
Perhaps we can be given examples to show how the system is to work. The hon. Gentleman should not on the one hand say that this is something peculiar to the car industry, with average earnings of £30 a week, and then suggest that if the man were off for two days a week he would be nowhere near the supplementary benefit level. If he lost only two days on earnings of £30 a week, I am sure that that would not take him anywhere near the level for such benefit.
§ Mr. Brown
The hon. Gentleman is still not giving us any information. Why quote average earnings of £30 in the car industry? Is that an industry in which this practice is prevalent? We are surely entitled to more information. If a man is sick for one or two days in a week, he could in certain circumstances get sickness benefit. Why should we introduce the concept that because he is unemployed through no fault of his own, it is not genuine because it is not long term?
I am surprised at the little interest in this point. This is certainly a matter of great concern to numbers of workers who are afflicted with this regularly—like share fishermen. There are a number of industries where this is common practice, and the Minister has never said that there has been any discussion with trade unions 182 or the T.U.C. This is rather a shabby little Order.
§ 11.6 p.m.
§ Mr. Brian O'Malley (Rotherham)
I am grateful to my hon. Friend the Member for Glasgow, Provan (Mr. Hugh D. Brown) and the hon. Member for Banff (Mr. W. H. K. Baker) for ensuring that this is not just a brief exchange between the Front Benches.
I had never heard of the problems of share fishermen before I went into the Department of Health and Social Security—where they seem to be perennial. One always seemed to be considering one aspect or another of the problem of people who I assume are among the constituents of the hon. Member for Banff.
We are not opposed to this change in principle, provided that certain conditions are satisfied. It is because these conditions are not at present satisfied that my hon. Friend the Member for Provan reflects the concern which would be felt in industries where short-time working is sometimes endemic and at best is something to be expected at least during given recurrent periods. It is on the conditions which I mentioned and the Government's intentions that I seek clarification. The history of this proposal goes back to 1965. Section 20(1)(c) of the National Insurance Act, 1966, says:
… 'day of interruption of employment' means a day which is a day of unemployment or of incapacity for work.Paragraph (d) says:any two days of interruption of employment, whether consecutive or not, within a period of six consecutive days shall be treated as a period of interruption of employment, and any two such periods not separated by a period of more than thirteen weeks shall be treated as one period of interruption of employment.So, reduced to its simplest, the situation is that a number of men who have been on shortened working weeks and short-time working have been drawing unemployment benefit once they have passed through the three waiting days within a period of 13 weeks. It is true that there have been examples over the years, although few, of abuses of the system.
A couple of months ago there was newspaper publicity of what could clearly be argued was abuse. We are certainly not taking the side of, or attempting to defend, that small number of people who 183 have attempted or might attempt to abuse the operation of the system over the years. Indeed, we take the view that generally men claiming unemployment benefit as the result of short-time working at their place of employment have been hit by this financially, because their families often need financial help of one kind or another, particularly in a period like 1971 when we have soaring prices and an unacceptable degree of inflation. We would not regard that as abuse. I hesitate to use the word "misuse" of the system, but, as it has grown, men have understandably and properly learned to depend on National Insurance when they have been on short-time working.
In 1966 the Labour Government reviewed the situation and came to the conclusion that three years after the passing of the 1966 Act—namely, March, 1969—where the contributor's employment was not terminated but suspended by the employer a day should not be treated as a day of unemployment until the seventh or later days in a continuous period of suspension. It was a case not merely of saying that there will be six waiting days instead of three waiting days, but that the whole system set out in Section 20(1)(d) was changed and that the only people who would draw benefits, even after the expiry of the six waiting days, as it were, would be those who were not merely working, say, a three-day week but were unemployed consistently over a longer period than six days. I am talking of a continuous period without any allowances for interruption of employment.
The result of that proposal, which was to come into operation in March, 1969, was that generally the short-time worker would no longer be able to get unemployment benefit. Unemployment benefit would be payable where men were laid off for a period longer than six working days. This could particularly apply to people in a strike situation not disqualified under Section 10(1) of the Act but entitled to unemployment benefit and able to draw it after the first six days of being laid off because of a strike situation.
As this situation will now come into effect as a result of the Order, it is time for the Government to do something about implementing the changes in grade or class provisions about which Donovan 184 talked. I am sure that the hon. Gentleman does not disagree with the Donovan recommendations. I suggest that the sooner these are implemented the better. This is merely another example and reason why they should be so implemented.
In 1966 the Labour Government proposed that this practice, for which an appointed day has been set tonight, should come into operation in March, 1969. Chapter 4 of the National Insurance Act, 1969, replaced the provisions of the 1966 Act. Instead of the three-year provision it set an appointed day. It was further delaying the introduction of the principles which are today issued by this Statutory Instrument. The House should examine briefly the reasons why the Labour Government acted as they did——
§ Mr. Deputy Speaker
Order. I hope that the hon. Gentleman will keep strictly to the terms of the Order. He is getting a little beyond it.
§ Mr. O'Malley
This is relevant to a number of questions that I want to ask. The proposals which will come into operation as a result of this Order arise from legislation enacted in 1966. The view taken then was that the responsibility for the payment of loss of earnings for short periods of suspension was with the employer rather than with the National Insurance system and that the system should not be used for these purposes. In this period the then Government had been seeking voluntary agreements and discussing the question of statutory schemes to provide such cover for workers and such agreements between employers and employees.
Before letting this Order through I must ask the Minister whether he is satisfied that the date he has set, 1st January, 1972, is right. He pointed out that there has been an extension in the number of voluntary agreements and payments for workers laid off. He mentioned the motor industry, and I could mention at least some substantial sections of the steel industry. What kind of numbers are covered by such voluntary agreements? We ought to know how many people are on short-time working at present and what will be the likely situation when these Regulations come into effect. Thirdly, we would like to know whether 185 the hon. Gentleman has consulted the T.U.C. and the C.B.I., and what the result of those consultations has been.
We are in a period of unacceptably high unemployment levels and a high level of short-time working, and it is conceivable that the problems of short-time working and the financial deprivation arising from it could get far worse before they begin to get better. This House has a responsibility towards workers who may well be affected in this way. They are not all people earning £35 or £45 a week. Some of the lowest-paid workers in the country can be affected adversely by this Order. We do not oppose it now, but we expect that between now and 1st January, 1972, the Government will take urgent steps to assist wherever they can the introduction of voluntary agreements between trade unions and employers and, secondly, that——
§ Mr. W. H. K. Baker
Would the hon. Gentleman care to reinforce my point that such agreements are impossible for share fishermen?
§ Mr. O'Malley
I recognise the peculiar difficulties which share fishermen face, and I hope that the Under-Secretary will look at this problem with more sympathy than the present Government look at many of the propositions which we on this side of the House put forward. The hon. Member has made a serious point which deserves consideration.
We want the Government to extend the area of such agreements and the area of coverage before the introduction of the proposals contained in the Order, in January, 1972. While we are prepared, with reservations, to allow the Order through without dividing, I must tell the hon. Gentleman that if the situation over unemployment and short-time working later becomes as serious as it could be and if there is a situation where large numbers of working people——
§ The Deputy Speaker
Order. I am sure the hon. Gentleman will realise that he is following the path to which I previously drew his attention.
§ Mr. O'Malley
I realise that it is a somewhat narrow Statutory Instrument, Mr. Deputy Speaker. I have only two more remarks. 186 We do not intend to divide the House on the Order, but if it were the situation that many people were adversely affected by it because the Government had not moved in other directions, we should certainly seek time in the House to bring into question again the whole matter of the date from which the Regulations begin to apply.
§ 11.21 p.m.
§ Mr. Dean
With your leave, Mr. Deputy Speaker, and that of the House, perhaps I may deal briefly with the points raised.
My hon. Friend the Member for Banff (Mr. W. H. K. Baker) asked particularly about the position of share fishermen. When he was describing the problems of share fishermen and the National Insurance categories in which they fall, it was clear to the House that we are dealing with a special category of person—one might almost say a unique category—regarding National Insurance. As my hon. Friend rightly described, they are self-employed, although for National Insurance purposes they are Class I and pay the combined contribution of the employer and the employee.
As my hon. Friend reminded us, this goes back over a considerable period of years in the National Insurance scheme. Before 1948 share fishermen were wholly remunerated by a share in the proceeds of the vessel in which they worked and were excluded from unemployment benefit. After it was accepted that share fishermen should be covered for industrial injuries insurance, there was pressure for them to be treated as employed persons for unemployment benefit purposes. The matter was referred to the National Insurance Advisory Committee, which recommended that they should be brought into Class I for National Insurance provided that certain additional safeguards for benefit purposes were devised. They were brought into insurance by regulations coming into force in 1948, and there were additional tests which the share fishermen had to go through in order to qualify for unemployment benefit.
I recognise that this is a case where, if these people have no cash they have no share-out. I will gladly give the assurance for which my hon. Friend asked; namely, that the Government will consider seriously what he has said regarding 187 this category of person to see whether it is possible to meet the points which he has put. Although, clearly, I cannot give an absolute undertaking on this matter, I hope that my hon. Friend will feel that what I have said is reassurance to him and to his case.
I am grateful to the hon. Member for Rotherham (Mr. O'Malley) for saying that the Opposition do not intend to oppose the commencing Order. He also made the point that there is some abuse in this area and the possibility of collusion. He answered the points made by the hon. Member for Glasgow, Provan (Mr. Hugh D. Brown). There is, clearly, the possibility of collusion, and this has taken place in some areas. But it is not so much a matter of collusion. The question we ask ourselves in all of our insurance arrangements is whether we are absolutely certain that the large sums of taxpayers' and contributors' money going into the scheme are used to the best effect or whether there are areas of expenditure on benefit which have grown up which are no longer of high priority or that benefit is not being used as originally intended. There is little doubt that these are a group of people who are not unemployed in the normal sense of the word and who are at a moment getting a benefit, and this benefit was not intended for such people.
The hon. Member for Rotherham asked how many people were covered by guaranteed wage schemes. The latest position is that about 10 million workers are so covered. As the hon. Gentleman said, the number is growing, and we assume that it is likely to grow further as a result of the coming into operation of the Order.
The hon. Gentleman asked whether we had consulted the T.U.C. and the C.B.I. We consulted both bodies. It is only fair to the House that I should say that the T.U.C. is not in favour of the proposal. The C.B.I. has no objection to it. It would have had an objection to imposing guaranteed wage schemes in this area. We do not think that this is the right approach. We think that it is much better for these arrangements to be made on a voluntary basis through free negotiation between employers and employees rather than for them to be imposed by the Government of the day.
§ Mr. O'Malley
I hope that the Under-Secretary will be able to say that the Government will throw whatever weight they think they have behind representations to the employers pointing out that they have a responsibility in this matter. This was the attitude of the then Opposition spokesmen on the subject, including the present Secretary of State. I hope that the Government will tell the C.B.I. clearly that it should be negotiating such agreements.
§ Question put and agreed to.