Orders of the Day — New Clause. — (Amendment of s. 12 (3) of principal Act.)

– in the House of Commons on 6th April 1922.

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The proviso to Sub-section (3) of Section twelve of the principal Act (which provides that such sum as the Treasury may direct, not exceeding one-tenth of the receipts of the Unemployment Fund, shall be applied as an Appropriation-in-Aid of the moneys provided by Parliament for the purpose of the salaries, remuneration, and expenses therein mentioned) shall have effect as though "one-eighth" was substituted for "one-tenth."—[Dr. Macnamara.]

Brought up, and read the First time.

The MINISTER of LABOUR {Dr. Macnamara):

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

Since the first Insurance Act of 1911 a sum not exceeding 10 per cent. has been charged against the Fund for administration. In this Bill, as it went upstairs, we proposed to make that sum not exceeding 12½ per cent. My hon. and gallant Friend the Member for East Rhondda (Lieut.-Colonel Watts-Morgan) objected to the change, and, indeed, thought that a smaller sum rather than a larger sum should be charged against the Fund for administration, but his only course was to move the objection of the Clause, which would leave things exactly as they are at present. He did that, and the Committee agreed with him to the extent of 20 votes to 12, thereby rejecting the Clause. In moving this new Clause, I am asking the House to restore the Bill to the position in which it was before it went to the Committee. I am asking leave to alter "not exceeding 10 per cent." charged on the fund for administration to "not exceeding 12½ per cent." Unfortunately, I was away during the discussion in Committee on the Amendment for rejection. I was, in fact, called away to an urgent conference on a very grave industrial dispute. My hon. and gallant Friend the Under-Secretary of State for the Home Department (Major Baird) made a most admirable defence and explanation of the justification for the 12½ per cent., but I have read the Debate, naturally, with very close interest, and it is quite clear to me that there was very considerable confusion of thought and no less misunderstanding as to what my purpose was, though let me say at once that is no manner of means the fault of my hon. and gallant Friend who for the moment was in charge of the Bill.

It is quite clear that my hon. Friends who voted for the rejection of the Clause thought that increasing the charge on the fund for administration from a sum not exceeding 10 per cent. to a sum not exceeding 12½ per cent. would make more money available for administration and therefore make for extravagance in administration. They thought that it would have the effect of decreasing the benefits to the beneficiaries under the scheme, and some said that, while salaries have fallen and bonuses are being reduced in accordance with the fall in the cost of living figure, so far from a larger percentage being taken for administration, we really ought to be asking for less. I think I have summarised in these few sentences the views of my hon. Friends who upstairs thought it expedient to support the rejection of the Clause. It was suggested that 12½ per cent. would make more money available for administration, and, therefore, give an opportunity for more extravagant administration. The increase to 12½ per cent. will not in any way increase or decrease the money spent on administration. It will only affect the proportion of the cost of administration falling on the fund on the one hand, and on the Treasury on the other. As to the second misconception, that it would have a prejudicial effect upon the payments, or the periods during which they might be payable, that, again, is entirely wrong. The Bill provides for the benefits to be paid, and they are not affected; full provision is made for them in the finance of the Bill, as well as for this appropriation of 12½ per cent. Therefore, the benefits cannot in any way be affected.

The third point is, of course, a very important point, because of the desire I for proper, economical expenditure of public money. It is said, "The cost of living is falling; salaries and bonuses are falling. How is it you are asking for more and not less." I am not asking for more, but only for a new adjustment. The suggestion that this would make for increased cost of administration is really not borne out by recent experience. The rate of administration charges has very greatly fallen. For instance, from about a rate of £620,000 a month in July, 1921, I have managed to get it down to about £500,000 a month in March, 1922. The staff in that period has been reduced from 21,000 persons to 15,000 persons, and, if human effort can achieve it, I shall certainly continue to reduce administration to the minimum, consistent with the prompt and effective carrying out of the purposes for which this machinery is devised. The fact is this. The Appropriation-in-Aid, of 10 per cent., has never covered the full cost of administration. In fact, the actual percentage of administration charges under the Act of 1911 has never been less than 14 per cent., and year by year, from the very beginning, the Vote of Parliament for the Ministry of Labour has always contained an amount of money which has, in fact, gone to cover the administration charges under this fund which went beyond 10 per cent. What I am trying to do is to straighten out this finance, get it on a business-like footing, and present my account to Parliament, the Exchequer and Audit Department, and the Comptroller and Auditor-General in a self-contained and businesslike way, instead of having what has always been, in effect, a concealed subsidy over and above the charges which Parliament has agreed shall fall upon the fund, by way of an addition from the Treasury, for the cost of administration beyond the 10 per cent. provided by the fund.

That is the purpose of this Clause, and it is entirely different from the misconceptions which arose in Committee. Surely I am on a sound basis when I say we really want to get this straightened out. The Fund must be economically administered, but we want to see that the charges against it are borne by it. It is penalising nobody. It is no good putting in an Act that you can charge against this Fund 10 per cent, for administration charges, when, as a matter of fact, it is 14 per cent., and the 4 per cent, has to be obtained in another way. That really is not business. I should have thought I should have had the support of all those who want a sound financial policy. If this Clause be not reinserted in the Bill, this is what will happen. In the year 1922–23, upon which we have just entered, something like £750,000 will be necessary above the 10 per cent. to cover the direct charges of administration which ought to fall upon the Fund. That £750,000 will be a new subsidy—if you like, a concealed, or half-concealed subsidy—from the Treasury. That is not business. I must draw the administration charges for this Bill from the proper quarter, and present my account in the right way. Let me say to those hon. Members who thought this was an endeavour—and I gather my hon. Friend still thinks it is—to throw on the Fund an increased charge for administration, to the prejudice of those who draw benefits, that an Appropriation-in-Aid of not more than 12½ per cent. was allowed for by the actuary as part of the finance of the Bill, and the benefits are based upon that. Therefore, how can it be said I am doing anything in prejudice of the benefits?

It seems to have been assumed upstairs in Committee that this proposal was inserted with the intention of indulging in an orgy of extravagance. I have read the speech of my hon. Friend the Member for North Aberdeen (Mr. Rose) with something approaching amazement. He appeared to think that I want this in order to launch out into all sorts of bloated salaries. I think he said it was a piece of gross impertinence for us to make this proposal. To the ordinary machinery of unemployment I have had super-added in the last six months the machinery of the Unemployed Workers' Dependants Act. I am working at the moment with a permanent staff which is based upon 3 per cent. of unemployment, whereas I am faced with 15 per cent. of unemployment; and, further, in the year 1921, the Exchanges had to examine, check and make 90,000,000 payments under the machine which I am now endeavouring to run. Yet in face of that, it is suggested that, in asking for not more than 12½ per cent., I am being more extravagant than in the past, when, without these heavy charges, there was an administration charge against the fund of at least 14 per cent. I do think the charge that we are endeavouring to get more money to squander is, under the circumstances, grotesque. I am not adding a farthing to the administration expenditure. But I cannot go year by year, as has been the case in the past, and ask for an additional subsidy, which I have called a half-concealed subsidy.

Let those who think a sum of not more than 12½ per cent. for administration charges extravagant compare the experience of commercial firms in insurance. I recognise that they have to get new business, for which they have to pay, and they have charges for commission, but I have made a close examination of their accounts, making due allowance for differentiation, and I think anyone who does that will agree with me that we are not extravagant in the administration of this vast and greatly multiplied work which we have now upon our shoulders. The Clause is simply an endeavour to put the charge properly against this Fund, and not put a part of it on the Fund and a part of it on the Treasury, which has always been done in the past. It is our endeavour that national finance should be free from confusion and ambiguity, and those who desire that will support me in moving the re-insertion of this Clause. I simply ask that there shall be no charge against the Treasury which is by way of being an additional subvention in aid of our insurance scheme, not so declared to Parliament. In the interest of making this scheme self-supporting, wisely and properly administered, and putting it fully before Parliament and the Exchequer and Audit Department as a business-like proposition, I must press for the re-insertion of the Clause.

Photo of Mr Frank Rose Mr Frank Rose , Aberdeen North

Upstairs in Committee my right hon. Friend said that my hon. Friend the Member for St. Helens (Mr. Sexton) was disingenuous. I suppose that was all right upstairs in a mere Committee, but if anyone were to suggest disingenuousness in this House, he would probably be called to order, and, perhaps, properly so. Therefore I abstain. Although I thought I had outgrown the possibility of being astonished at anything, even from the right hon. Gentleman, I must say I was very much astonished at the statement he has just made. It has been my lot to examine, and it will be my duty—not altogether self-imposed— of examining much more closely when the time comes, the Estimates which the right hon. Gentleman has presented. What I want to know just now is this. Has this new arrangement been based on the assumption that the House was going to pass this Bill, or has it been based upon status quo? Although I am not going to examine these Estimates meticulously at this juncture, I do propose to offer one or two general observations. I cannot avoid these references, because they are rather apposite to the particular subject we are discussing now. There is a statement on page 39 of the Estimates as to the total cost of administration—£4,610,875. But the total cost of administration is this sum, with the addition of £1,543,700 (see page 40), purely administrating charges. Note also Sub-head J in the Estimates where there is a figure of £220,000. This makes a total for administrative charges of £6,344,000. I want to know whether this Estimate is based on the status quo of 10 per cent. or whether it is based on some impertinent assumption that this Bill is going to be passed by this House without any sort of consideration, because it seems to me to open up a very much larger, wider, and more important question than this temporary Unemployment Bill. It is this—a question of urgent and greater public importance—are the Estimates which have to be presented to this House to be based upon the assumption that the House is going to pass some Bill which provides for certain amounts, or are these Estimates based upon what the law already provides and authorises to-day. This extra million pounds is what the right hon. Gentleman proposes to take from the fund—

Photo of Mr Frank Rose Mr Frank Rose , Aberdeen North

I beg your pardon. Let us examine it a little more closely. The total is £6,344,600. The sum of £3,839,000 is taken from the fund. Does that mean 12½ per cent. on the contributions of 12 million members, or does it mean what the law authorises the Minister to take— because this is not an Act yet; it is only a Bill? If it is 10 per cent. it means that £38,000,000 is the sum total of the contributions, and 12½ per cent. on the £38,000,000 is something over. [An HON. MEMBER: "Give it roughly."] Well, in round figures, the Minister is going to take from the fund four millions odd instead of about three millions odd, just about a million more. I would like the Minister to make it plain as to whether the estimate of £3,800,000 from the fund is based on the 10 per cent.?

Photo of Mr Thomas Macnamara Mr Thomas Macnamara , Camberwell North West

Certainly. I cannot alter it.

Photo of Mr Frank Rose Mr Frank Rose , Aberdeen North

That clears up that point. The right hon. Gentleman has no authority to take more than 10 per cent. until he gets this Bill.

Photo of Mr Frank Rose Mr Frank Rose , Aberdeen North

When the right hon. Gentleman gets this Bill, is he going to recast his estimate, which will be put wrong by the very fact of the passage of this Bill? Is he still going to present his estimate upon which the Estimates Committee have already spent two or three weeks' examination? What I have to protest against more than any other thing is this awful slipshod accountancy, the absolutely frightful and wanton way in which Estimates are presented to this House. It is proposed to take a million out of the Fund and so relieve the State of that million. What does that really mean? Is it not a sort of subterfuge to encourage extravagant expenditure upon more officialism? The right hon. Gentleman talks about having reduced the number of his staff—

Photo of Mr Frank Rose Mr Frank Rose , Aberdeen North

Yes, but at which end?

Photo of Mr Frank Rose Mr Frank Rose , Aberdeen North

Is it not a fact that most of the reduction has been in connection with very little people with a couple of pounds a week or thereabouts; charwomen, messengers, junior clerks, and typists? There is hardly a case in which the hierarchy of the Department has been touched in any way, and this is the policy, we understand, which has to run through the whole of the Estimates next year, and it is one of the things which we will protest against when the time comes much more forcibly than I am doing now. We are going to oppose, so far as we possibly can, the re-insertion of this Clause into the Bill. We believe it to be unnecessary. If you put it in the whole of these Estimates stand null and void, because they are inaccurate.

Photo of Mr Frank Rose Mr Frank Rose , Aberdeen North

On the Minister's own showing, if we pass this Bill based on a 10 per cent. contribution from the fund, we are passing a Bill which will enable him to take some other sum, larger or smaller—

Photo of Mr Frank Rose Mr Frank Rose , Aberdeen North

I hope the right hon. Gentleman will. We think it right and proper to make this protest now. We were under no misapprehension at all in Committee when we pleaded for throwing out this Clause. We are going to fight to keep this proposed Clause out altogether. In this case we want to invite the co-operation of our economist friends. This is something which is to be taken from the fund. This 12½ per cent. is going to standardise the future, and from a fund contributed by workmen and their employers there is going to be taken an ever-increasing percentage of the funds to which the employers as well as the workmen contribute. If there is to be any balancing of this fund on the basis of 10 per cent. and the State is going to make itself responsible for it, we ought to be informed. If so, what is the position? Our people and their employers contribute £38,000,000 in this coming year. The State contributes £9,000,000, and for that contribution the State arrogates to itself the right to set up any sort of administration that it likes without consultation in any shape or form with the members of what is really a huge benefit-paying union. All that seems to us to be wrong. It seems to us the contributions you are taking from the fund should be employed to cover the whole of your expenditure. What would happen—think for a moment!—if by some miracle trade were to increase and be better during the forthcoming year? What would inevitably happen? You have been taking 12½ per cent. of this fund—

Photo of Mr Frank Rose Mr Frank Rose , Aberdeen North

We know what "no more than" means when it gets into a Gov- ernment Department. It means "not less than." We have ample precedent for that. It means this, that as the fund increases there are more contributors and less obligations upon the fund; it means that they are taking an ever-increasing sum for administration which will absolutely relieve, or should even now, relieve the State from any further expenditure. We want to enter this protest against the increasing audacity of elected persons, against the arrogating by this Department, this Whitehall monstrosity, of all sorts of authority which it was never the intention of Parliament or the people to invest it with. It is an extravagant Department, exceedingly wasteful; it is overstaffed and underworked. One end of it is the very much overpaid, and the other end that does the work rather, I am afraid, underpaid. We intend to resist the inclusion or the re-insertion of this Clause, and are doing it in what we believe to be the highest public interest.

Photo of Mr Joseph Johnstone Mr Joseph Johnstone , Renfrewshire Eastern

I supported upstairs my hon. Friends who voted against the Government on this Clause. In view of the fact that this Measure is a temporary one and as by-and-by the consolidation of these Unemployment Insurance Acts will have to be sought and a permanent Measure introduced into the House and placed upon the Statute Book. I feel with regard to this scheme of the Minister who asks for 12½ per cent. instead of 10 per cent., which he is only allowed to take at present for the cost of administration, that he ought not to do so. The Treasury I understand has dealt with this matter, but they have not been always right in the past. We have been told that in connection with the funds contributed by the workmen and by the State that these funds have not been sufficient even to meet the benefits given under this Bill. Claims have been put forward to increase the benefits, but it appears to me to be an extraordinary thing that the fund being in the condition in which it is—three-quarters of the fund has been contributed by the employers and workmen—looking to the state of the funds, and considering how insufficient they are to meet the obligations cast upon them, that the Minister should make this further raid upon them. I think the Minister would be well advised not to press this Clause, in view of what happened upstairs, more particularly as this is a temporary Bill to meet an emergency. Last year the Minister under-estimated his obligations with regard to unemployment insurance. We have, perhaps, got to the high-water mark of unemployment, and if matters improve and unemployment decreases, and a larger number of people have contributed to the fund, then the amount produced by the 12½ per cent. which the Minister wishes to take for administrative expenses will be largely increased.

What I think the Minister ought to do is this: he ought to be content with 10 per cent., for if you increase it to 12 per cent. you are putting a premium on extravagance. I am sure of this, or perhaps I had better say that I am not satisfied that the cost of administration in connection with unemployment insurance schemes have not been too high. The Minister is cutting down his staffs, and his costs, and some of us feel that he might go still further, perhaps very much further, and that the whole aim of the Minister should be towards economy of administration. I think one inducement in his Department to exercise economy and not to indulge in extravagance would be for the sum allowed for the cost of administration to be limited; that they should only be allowed to raise 10 and not 12½ and the matter should be under the eye of the Treasury. I think the Minister should seek to remain satisfied with the 10 per cent. allowed him from those contributing to the fund, and not desire to raise the amount to 12½ per cent. I do not think we should upset the decision of the Committee upstairs, which had all the facts before it, and which rejected this claim for 12 per cent. instead of 10 per cent. as in the past. When extra money is required in other directions we are told by the Minister that the Bill must be kept within the bounds provided under the scheme, but when additional remuneration is required for the purpose of administration there is no difficulty about it at all.

In any case, there is going to be a charge on the Treasury. In view of the present emergency in which the Minister finds himself, and the fact that he is going to introduce the Bill next Session, the right hon. Gentleman ought to be content with his present allowance for administration, and waive the question of an increased amount until he introduces the permanent Measure. The funds should bear the cost of administration. The contributions are made by the State, the employers, and the workmen, and it is only reasonable that the cost of administration should be charged to the fund and no balance should fall upon the Treasury at all. In present conditions, and in view of the fact that the Minister is making strenuous efforts to assist unemployed workmen and their families to get through this temporary time of depression, the right hon. Gentleman should not make this additional charge upon the fund. It is largely for these reasons that the Committee upstairs, when dealing with this part of the scheme, refused, by 20 votes to 12, these additional powers to charge 12½ per cent. I invite the House not to readily agree to the restoration of the Clause which the right hon. Gentleman now seeks to reimpose.

Photo of Lieut-Colonel Penry Williams Lieut-Colonel Penry Williams , Middlesbrough East

I do not regard this increase of 2½ per cent. as being at all necessary. Not long ago we had a statement from the right hon. Gentleman in which he told us that a very substantial saving had been made in the administrative expenses of the fund. I think he told us that £1,000,000 per annum had been saved in this way. The Minister is now attempting to take too great powers for administrative expenses. He has an income of about £40,000,000 a year, but he is incurring a debt equal to a further contribution of £20,000,000 a year, making a total income of £60,000,000 a year. If the right hon. Gentleman takes 12½ per cent. of that amount, then he is taking £7,500,000 a year for expenses. The Minister may argue that the money is not immediately available, but it has to be paid back by contributions, and that money will flow into the Treasury, and those funds will be available for administrative expenses. You have for the next few years an ample margin in 10 per cent. for expenses. The right hon. Gentleman seems to think that we misunderstood the purport of this Clause when it was before the Committee, but we did not do anything of the sort. If the right hon. Gentleman takes £1,500,000 from this fund, it follows that there will be that amount lees in the fund.

Photo of Lieut-Colonel Penry Williams Lieut-Colonel Penry Williams , Middlesbrough East

The contributors are the workmen and the State. Now you have the State contributing a certain amount towards the expenses of administration. If you relieve the State in regard to the administrative portion of the expenses and throw it on to the fund, then the State will not be paying its fair share. I must ask the right hon. Gentleman to justify his refusal of the extra 1s. or 6d. per child while he is asking us to vote £1,500,000 for administration expenses. The thing will not hold water at all. I am sorry there are not more hon. Members present to hear this discussion, because I am sure they would agree that 10 per cent, is ample, and the right hon. Gentleman ought to cut his coat according to his cloth, and bring down his expenses. This is the second attempt that has been made to increase the administration expenses. The Health Insurance Acts put very heavy charges on administration expenses, I know the Minister of Labour is not responsible for that, but he has taken a bad leaf out of his colleague's book. For these reasons I hope the House will vote against this new Clause.

Photo of Mr Arthur Hayday Mr Arthur Hayday , Nottingham West

I desire, first of all, to rebut the suggestion of the right hon. Gentleman that any deficiency which has to be made up in administrative charges over and above that realised by the 10 per cent. under the present Act is a concealed subsidy. When I called attention to this statement, the right hon. Gentleman said that perhaps it was the wrong word to use. Under the existing Acts, and all the Acts passed dealing with this subject except the Unemployed Workers' Dependants (Temporary Provision) Act, it was clearly decided by the House of Commons that up to 10 per cent. should be taken from the funds, but where the cost of administration exceeded 10 per cent. that was to be a Treasury charge and a Government charge. That was clear and definite and it is not a new idea. This is the third or fourth Unemployment Act we have had, and each one of them except the Dependants Act, which will be merged into this Act, 10 per cent. was the fixed figure, and if the administrative charges turned out to be more it was clearly stated that the State ought to provide them.

Why was the 10 per cent. figure mentioned? I can only imagine that it was because the State as a third partner to a joint undertaking was not paying anything like a third share, and that anything over 10 per cent. from the funds should be a charge to make good the deficiency of the State's share. It has been said that there was some doubt upon this point in the Committee, but at any rate those doubts were never present in the minds of those who voted for the 10 per cent, as against 12½ per cent. I suggest that it is a very serious thing to upset the decision of a Committee, otherwise you will very rarely get Members of the House prepared to sit for whole days discussing earnestly matters that are brought before them, and then, because of the temporary absence of the Minister in charge, who feels that something has been deleted from his Bill, and because he thinks it has not been properly understood, he claims the right to get it re-inserted. If many such instances occurred on any Committee of which I happened to be a member, I should resign and refuse to take any further part in discussing the matter.

The 10 per cent. relates to paying out the amount paid in unemployment benefit and the amount received in contributions and those two different matters the right hon. Gentleman has not taken into consideration. The sum of £62,000,000 was spent in unemployment benefit last year. The sum of £38,000,000, or thereabouts, was the amount considered, the remainder going towards the debt to repay which there must be a lengthened deficiency period after paying the benefits. To tell us that 16 per cent. was the total cost of administration of £62,000,000 is wrong. It was perhaps 16½ per cent. on the £38,000,000 received, and I suggest that it was only 8¼ per cent. on the total money disbursed. I am not using this as a general attack upon Employment Exchanges' administration. I am not going into the Estimates or into the question of cutting down expenses. I am simply asserting that 10 per cent. was good enough for the other Acts, and now when you are asking for a greater amount, when the deficiency period will be extended over a much longer time, you want to still further extend that period by taking another 2½ per cent. from these slender resources. That is the whole position.

5.0 P.M.

It is said that upstairs the Committee had the idea that this other 2½ per cent. would reduce the amount or in some way handicap the immediate purposes of the fund. They never thought that for a moment, but they did think that at a time when you are borrowing money and you cannot do this because of the years that will have to pass after this Bill becomes an Act and has ceased to exist, to clear up the debt in the deficiency period would take another £1,000,000, and that will mean extending the deficiency period. If the deficency is to be extended to clear off the debt, we prefer it to be extended by increasing the allowance for the children rather than increasing the amount to be drawn from the fund to meet this extra 2½ per cent. call the Ministry is making. The right hon. Gentleman ought not to ask for this extra 2½ per cent. We are informed by the right hon. Gentleman that he has reduced the expenditure in his Department on the labour administration side. That may be all right, but from my point of view that has very little relationship to this extra call of 2½ per cent. If the right hon. Gentleman wants to put this on a sound financial basis, as he said, let him do so. The State at the present time finds one-fourth of the total income, and three-fourths must be supplied by the other two parties. The other two parties have to find three-fourths of the money, and have no say as to the 10 per cent. which is taken from them. Where is the equality? Would it not be much better for the State to pay one-third, the employers one-third, and the workpeople one-third? Then the total cost of this administration could come from that common fund, and I would suggest, further, that each should have some voice as to the administration of the fund. It is no use the right hon. Gentleman coming and saying that this is sound finance, when that voice comes from the very partner that is not paying its share. It is like the confidence trick, where you are told that there are three bright shillings coming into your pocket if you pay one shilling for it. You pay your shilling, and the man gives you three bright halfpennies. That is the case here.

We are told that the fund should be self-supporting and pay its way, and this comes from the very partner who pretends to be offering us something great and at the same time is robbing us and not paying his fair share. It seems to me that in the dividing up there is one who stands paramount and whose word must be accepted, one who means the State, and that is the right hon. Gentleman in this case. He says, "I must have a say in it; my Department must do this and do that." I contend that if the fund is to bear all these charges the three parties should bear an equal share, and I hope the House will refuse to re-insert this Clause.

Mr. TREVELYAN THOMSON:

The Minister has told us that since 1911, during a period of normal unemployment, 10 per cent. has been taken from the fund, but when he says that he has to put the fund on a sound financial basis, I submit to him that now, when things are most abnormal, and when unemployment is so much above the average, is not the time to reverse the process and basis which have held good up to the present.

Mr. THOMSON:

The right hon. Gentleman does not understand what I mean. He is attempting to reverse the system which has been in operation up to the present time.

Mr. THOMSON:

The right hon. Gentleman is playing with words. Since 1911 the fund has had to bear only up to 10 per cent., and from 1911 till the present time unemployment, on the whole, has been normal. To-day, when unemployment is abnormal and unheard of in its extent, he suggests that the system, which, whether good or bad, has been in operation, should be altered to the disadvantage of the Insurance Fund. I think the House will agree with me that in the main the fund should be self-supporting, but is this the time, when unemployment on an average is 15 per cent. and in some districts 25 and 30 per cent., to increase the burden on the fund? This is a temporary Measure, and he should leave the system which has held good up

to the present time to continue. Then when the new Measure comes in he can put things on a sound financial basis. We might then make the charge on the State and employé equal and make the fund self-supporting, but I do submit that it is not business and it is not fair now to make an alteration in a system which has held good up to the present, and to penalise the fund to this extent. He tells us that the benefits are not affected, and that is perfectly true, but surely he has on the Floor of the House over and over again used the argument: "I cannot increase these benefits; I cannot give a shilling extra to the child; I cannot decrease the waiting period from six to three days, because, if I did, I should bankrupt my fund." I submit that it is not really fair to the fund, which I know he has so much at heart, to increase these administrative charges at a time when the burden of unemployment is more than the fund can bear.

Photo of Lieut-Colonel Penry Williams Lieut-Colonel Penry Williams , Middlesbrough East

At the present moment you have three parties, the employer, the employé, and the State, contributing to this fund. Out of it, under the Bill, you pay certain benefits and the whole cost of administration. As far as I can see, the only proposal we have here is that, in order to make the fund sounder from a purely financial point of view, and secure better administration, we should raise the percentage taken from the fund from 10 to 12½. I have been somewhat curious in the matter of the cost of administration, and, from the point of view of a representative of the ordinary taxpayer, I would like to know exactly what we have to contribute. I should like to make it clear that what the right hon. Gentleman is doing here is certainly fair to the general community, and I would like to support him and to congratulate him on the efforts that he is making at the present time to get the administration on a sound, financial basis.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 177; Noes, 84.

Division No. 80.]AYES.[5.12 p.m.
Armstrong, Henry BruceBonbury, Rt. Hon. Sir Frederick G.Bennett, Sir Thomas Jewell
Ashley, Colonel Wilfrid W.Barnett, Major Richard W.Bexhell, Sir John Henry
Atkey, A. R.Barnston, Major HarryBigland, Alfred
Baldwin, Rt. Hon. StanleyBeauchamp, Sir EdwardBlades, Sir George Rowland
Balfour, George (Hampstead)Benn, Sir A. S. (Plymouth, Drake)Blair, Sir Reginald
Balfour, Sir R. (Glasgow, Partick)Bonn, Gapt. Sir I. H., Bart. (Gr'nw'h)Boscawen, Rt. Hon. Sir A. Griffith-
Bowyer, Captain G. W. E.Hambro, Angus VaidemarPease, Rt. Hon. Herbert Pike
Breese, Major Charles E.Hannon, Patrick Joseph HenryPeel, Col. Hon. S. (Uxbridge, Mddx.)
Bridgeman, Rt. Han. William CliveHarris, Sir Henry PercyPhilipps, Sir Owen C. (Chester, City)
Brittain, Sir HarryHennessy, Major J, R. G.Pownall, Lieut.-Colonel Assheton
Broad, Thomas TuckerHigham, Charles FrederickPratt, John William
Brown, Major D. C.Hilder, Lieut.-Colonel FrankPurchase, H. G.
Bruton, Sir JamesHinds, JohnRaeburn, Sir William H.
Buchanan, Lieut.-Colonel A. L. H.Hoare, Lieut.-Colonel Sir S. J. G.Randies, Sir John Scurrah
Buckley, Lieut.-Colonel A.Hopkins, John W. W.Raper, A. Baldwin
Bull, Rt. Hon. Sir William JamesHorne, Sir R. S. (Glasgow, Hillhead)Raw, Lieutenant-Colonel Dr. N.
Burn, Col. C. R. (Devon, Torquay)Hudson, R. M.Rees, Sir J. D. (Nottingham, East)
Butcher, Sir John GeorgeHunter, General Sir A. (Lancaster)Rees, Capt. J. Tudor- (Barnstaple)
Carew, Charles Robert S.Hurd, Percy A.Remnant, Sir James
Cecil, Rt. Hon. Eveiyn (Birm., Aston)Hurst, Lieut.-Colonel Gerald B.Renwick, Sir George
Chamberlain, Rt. Hn. J. A.(Birm., W.)Inskip, Thomas Walker H.Roberts, Rt. Hon. G. H. (Norwich)
Chamberlain, N. (Birm., Ladywood)Jackson, Lieut.-Colonel Hon. F. S.Roberts, Samuel (Hereford, Hereford)
Clay, Lieut.-Colonel H. H. SpenderJames, Lieut.-Colonel Hon. CuthbertRodger, A. K.
Coats, Sir StuartJameson, John GordonRoundell, Colonel R. F.
Colfox, Major Wm. PhillipsJesson, C.Rutherford, Colonel Sir J. (Darwen)
Cooper, Sir Richard AshmoleJodrell, Neville PaulSanders, Colonel Sir Robert Arthur
Cowan, Sir H. (Aberdeen and Kinc.)Jones, J. T. (Carmarthen, Llanelty)Scott, Leslie (Liverpool, Exchange)
Curzon, Captain ViscountJoynson-Hicks, Sir WilliamSeddon, J. A.
Davidson, J. C. C. (Hemel Hempstead)Kidd, JamesShaw, William T. (Forfar)
Davidson, Major-General Sir J. H.King, Captain Henry DouglasShortt, Rt. Hon. E. (N'castle-on-T.)
Davison, Sir W. H. (Kensington, S.)Kinloch-Cooke, Sir ClementSmith, Sir Malcolm (Orkney)
Dockrell, Sir MauriceLaw, Alfred J. (Rochdale)Stanley, Major Hon. G. (Preston)
Edgar, Clifford B.Lloyd-Greame, Sir P.Stanton, Charles Butt
Ednam, ViscountLocker-Lampson, Com. O. (H'tingd'n)Stephenson, Lieut.-Colonel H. K.
Edwards, Hugh (Glam., Neath)Lorden, John WilliamStewart, Gershom
Evans, ErnestLowther, Major C. (Cumberland, N.)Strauss, Edward Anthony
Eyres-Monsell, Com. Bolton M.M'Donaid, Dr. Bouverie F. P.Sturrock, J. Long
Faile, Major Sir Bertram GodfrayMackinder, Sir H. J. (Camiachie)Sugden, W. H.
Farquharson, Major A. C.McMicking, Major GilbertSutherland, Sir William
Fell, Sir ArthurMacnamara, Rt. Hon. Dr. T. J.Taylor, J.
Flannery, Sir James FortescueMacpherson, Rt. Hon. James I.Thomas, Sir Robert J. (Wrexham)
Foreman, Sir HenryMagnus, Sir PhilipThomson, F. C. (Aberdeen, South)
Forrest, WalterMalone, Major P. B (Tottenham, S.)Thomson, Sir W. Mitchell- (Maryhill)
Fraser, Major Sir KeithMarriott, John Arthur RansomeWaddington, R.
Ganzoni, Sir JohnMoreing, Captain Algernon H.Ward, William Dudley (Southampton)
Gardiner, JamesMorrison, HughWaring, Major Walter
Gee, Captain RobertMorrison-Bell, Major A. C.Warren, Sir Alfred H.
Gibbs, Colonel George AbrahamMunro, Rt. Hon. RobertWhite, Col. G. D. (Southport)
Gilbert, James DanielMurray, C. D. (Edinburgh)Williams, C. (Tavistock)
Gilmour, Lieut.-Colonel Sir JohnMurray, Hon. Gideon (St. Rollox)Williamson, Rt. Hon. Sir Archibald
Glyn, Major RalphMurray, John (Leeds, West)Wilson, Col. M. J. (Richmond)
Goff, Sir R. ParkMurray, William (Dumfries)Wise, Frederick
Grayson, Lieut.-Colonel Sir HenryNail, Major JosephWolmer, Viscount
Green, Joseph F. (Leicester, W.)Newman, Sir R. H. S. D. L. (Exeter)Wood. Hon. Edward F. L. (Ripon)
Greenwood, Rt. Hon. sir HamarNewton, Sir D. G. C. (Cambridge)Yate, Colonel Sir Charles Edward
Greig, Colonel Sir James WilliamNicholson, Reginald (Doncaster)Young, E. H. (Norwich)
Guest, Capt. Rt. Hon. Frederick E.Nicholson, William G. (Petersfield)Young, W. (Perth & Kinross, Perm)
Gwynne, Rupert S.Oman, Sir Charles William C.
Hacking, Captain Douglas H.Parker, JamesTELLERS FOR THE AYES.—
Hall, Lieut.-Col. Sir F. (Dulwich)Pearce, Sir WilliamColonel Leslie Wilson and Mr.
McCurdy.
NOES.
Adair, Rear-Admiral Thomas B S.Grundy, T. W.Parkinson, John Allen (Wigan)
Adamson, Rt. Hon. WilliamGuest, J. (York, W.R., Hemsworth)Raffan, Peter Wilson
Amnion, Charles GeorgeHallas, EldredRendall, Atheistan
Banton, GeorgeHalls, WalterRichardson, R. (Houghton-le-Spring)
Barker, Major Robert H.Hancock, John GeorgeRoberts, Frederick O. (W. Bromwich)
Barker, G. (Monmouth, Abertillery)Hayday, ArthurRobertson, John
Barnes, Rt. Hon. G. (Gias., Gorbais)Henderson, Rt. Hon. A. (Widnes)Rose, Frank H.
Barnes, Major H. (Newcastle, E.)Henderson, Lt.-Col. V. L. (Tradeston)Scott, A. M. (Glasgow, Bridgeton)
Bowerman, Rt. Hon. Charles W.Hogge, James MylesSexton, James
Bromfield, WilliamHolmes, J. StanleyShort, Alfred (Wednesbury)
Cairns, JohnIrving, DanSimm, M. T.
Cape, ThomasJohn, William (Rhondda, West)Sitch, Charles H.
Carter, W. (Nottingham, Mansfield)Johnstone, JosephSpencer, George A.
Casey, T. W.Jones, J. J. (West Ham, Silvertown)Thomas, Rt. Hon. James H. (Derby)
Clynes, Rt. Hon. John R.Jones, Morgan (Caerphilly)Thomson, T. (Middlesbrough, West)
Cowan, D. M. (Scottish Universities)Kiley, James DanielWatts-Morgan, Lieut.-Col. D.
Davies, Evan (Ebbw Vale)Lawson, John JamesWedgwood, Colonel Josiah C.
Davies, Rhys John (Westhoughton)Lunn, WilliamWhite, Charles F. (Derby, Western)
Doyle, N. GrattanLyle-Samuel, AlexanderWilliams, Aneurin (Durham, Consett)
Edwards, C. (Monmouth, Bedweilty)Maclean, Neil (Glasgow, Govan)Williams, Col. P. (Middlesbrough, E.)
Edwards, G. (Norfolk, South)Maclean, Rt. Hn. Sir D. (Midlothian)Wilson, James (Dudley)
Entwistle, Major C. F.Malone, C. L. (Leyton, E.)Wilson, Rt. Hon. J. W. (Stourbridge)
Finney, SamuelMartin, A. E.Wintringham, Margaret
Foot, IsaacMills, John EdmundWood, Major M. M. (Aberdeen, C.)
Galbraith, SamuelMosley, OswaldYeo, Sir Alfred William
Gillis, WilliamMurray, Dr. D. (Inverness & Ross)Young, Robert (Lancaster, Newton)
Graham, R. (Nelson and Colne)Myers, Thomas
Graham, W. (Edinburgh, Central)Naylor, Thomas EllisTELLERS FOR THE NOES.
Griffiths, T. (Monmouth, Pontypool)Newbould, Alfred ErnestMr. Waterson and Mr. Kennedy.

Question put, and agreed to.

Motion made, and Question proposed, "That the Clause be added to the Bill."

Major BARNES:

I want to ask a question as to the effect of this Clause. By taking this extra 2½ per cent, out of the fund for administration expenses, will not the effect be that the fund will run out more quickly, that the Minister will have to borrow more quickly, and that, in the future, in consequence of this addition to these borrowings from the Treasury, the benefits must be diminished in order to recoup the money, or else the contributions must be increased?

Photo of Mr Thomas Macnamara Mr Thomas Macnamara , Camberwell North West

I have already explained that the finance of the Bill, as prepared by the actuary, is based on a 12½ per cent, deduction, and in the borrowing powers for which I have asked the calculations have been made on the assumption that the fund will bear the whole of its share in this respect.

Clause added to the Bill.