Unemployment Insurance Acts, 1935 and 1936.

Part of the debate – in the House of Commons at on 25 March 1938.

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Photo of Mr Duncan Sandys Mr Duncan Sandys , Lambeth Norwood

It is clear that the Committee felt that their scope was restricted and that they had limited terms of reference within which they must keep. At the end of paragraph 63 they say: To consider the problem of dependency in relation to persons who are unemployed leads to an impasse in one direction or another. In the present report we have to take the law as it is. The Committee were clearly working within prescribed limits. I cannot, therefore, agree with the hon. Member for Ebbw Vale in blaming the Committee for not making recommendations which would have had repercussions for outside the field for which they are responsible. That does not, however, mean that Parliament has not a duty to review the whole problem in its wider aspects. On page 24 the Committee themselves say: As was urged by the Family Endowment Society, and is obvious from the figures cited above, the problem of dependency needs to be considered as a whole. We cannot, unfortunately, deal with it as a whole within the scope of this Debate, but it is a question which will have to be considered by Parliament in the near future. In this connection I would like to stress the point that this problem of over-insurance, while it is acute in certain categories, is not very widespread. In fact the obstacle which is holding up these children's allowances is not such a very formidable one. In paragraph 50 of the report it will be seen that the average wage is 55s. 6d., while the average benefit is only 24s. 6d. There are, moreover, only 2.3 per cent. of the claimants who are better off under unemployment insurance than they are when they are earning wages. In fact, even if the additional 1s. children's allowance were granted, as many of us would like to see, serious over-insurance would still only occur in the larger families of four or more children. There are only 19,000 families under the unemployment insurance scheme with four or more children, as compared with 114,000 with three children or less. From these figures, therefore, it will be seen that the additional children's allowances are being denied to the very numerous families which have few children just because of the danger of over-insurance in the comparatively few families which have many children. I would like to examine the possibility of overcoming this problem. The report itself, I think, provides the answer to it. In paragraph 64 it says: If, on the other hand, the wage system made allowance for dependency, the main objection to further increases in rates of benefit would be removed. That is the answer to the problem. It is only by raising the earnings of those in work that we shall overcome the question of over-insurance. It is clear that to ask for a minimum wage based on the assumption that every working man possesses for the whole of his working life a large family of eight or more children is obviously ridiculous, absurd and impossible. The alternative to that is to make an addition to the wages of that small percentage of people who have large families during the actual period in which the children are dependent upon their parents. I should be transgressing the Rules of Order if I went into the question of family allowances in general. I would like to see them for all children, but we must confine ourselves to-day to the question of over-insurance which arises from the report. This could, in my opinion, be largely overcome by a very restricted system of family allowances applicable only to the fourth and subsequent child. An allowance of 5s. a child would cost only about £6,000,000 a year.

I naturally welcome, and everyone will welcome, the increase of allowances for adult dependants. In many cases their need is very great. I recognise also that without a wage adjustment it would be extremely difficult in present circumstances to increase the children's allow- ances. Therefore, in common with all other Members, it does not occur to me to oppose this Order. At the same time I would ask the Minister to review, between now and next year, when another report will be before us, the whole problem of dependency and the entire relationship between benefit and wages. The report recommends an inquiry into this question, and I hope my right hon. Friend will institute such an inquiry and will submit the results to the consideration of Parliament. In conclusion, let me remind the House that this problem of child dependency is not a new one. A former Prime Minister of this country made some very pertinent remarks upon this subject some time ago. He said: There is a difference in the numbers which compose the families of the labouring poor, so that were the minimum wage fixed upon the standard of a large family it might operate to the encouragement of idleness among one part of the community; and if it were fixed on the standard of a small family those would not enjoy the benefit of it for whose relief it was intended. What measures then can be found to supply the defect? Let us make relief in cases where there are a number of children a matter of right and honour instead of a ground for opprobrium and contempt. What I have just read is an extract from the official report of a speech made by William Pitt in a debate in the House of Commons on Mr. Whitbread's Minimum Wage Bill as far back as 12th February, 1796. A century and a half have passed since then. With the passage of years, and with the vast changes which have taken place in our social and economic system, this problem of child dependency has become more acute than ever. I accordingly express the earnest hope that this matter will at length receive from the Government, industry, and Parliament the attention and consideration which it deserves.