Orders of the Day — Reduction of Redundancy Rebates Bill

Part of the debate – in the House of Commons at 12:00 am on 7 February 1977.

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Photo of Mr Barney Hayhoe Mr Barney Hayhoe , Hounslow Brentford and Isleworth 12:00, 7 February 1977

The more the Minister of State goes on with these explanations the less convincing he becomes.

In 1972 adult students were included in the raw total figure for unemployed, but now, by common consent, we have excluded them because we do not think that their inclusion gives a reasonable measure of unemployment. If the Minister of State wanted to grub around in the mire of statistics to produce a figure which concealed the truth, I accept that he was very successful. That is what I am criticising, for he should have the honesty to accept that unemployment is much worse now than it was in 1972 and he should not seek to hide behind a phoney figure, as he has done.

I now turn to the figuring on which the Bill seems to be based. If we look at the monthly figures from January to June 1976 we see that the fund started in January with a deficit of about £60,000 and that by June it was up to £7·6 million. The figure was for 25th June, which would have been the last figure available when the Chancellor was putting together his package which he announced on 22nd July. By then the figure was £7·595 million—let us say £7,600,000.

If one takes an average one finds that over the five months January through to June there was an increase of £1½ million a month. If one converts that into an annual rate, it appears that the fund was going into deficit at a rate of £18 million a year. How extraordinary that a measure which flows from what the Chancellor said on 22nd July is now intended to change the outgoings from the fund by not £15 million, or perhaps £20 million, but precisely £18 million a year.

Could it be that at that time, looking at the trend in the figures and considering the best information available, those concerned saw the fund going into deficit and asked themselves how they could overcome that and decided that it could be done by putting an extra impost on industry, as has been done in the past, by lowering the amount of money statutorily paid out for redundancy payments, or by changing the level of the rebate?

If they did that, what is so interesting is that the apparent growing deficit, running at an annual rate last July of £18 million, was based upon phoney figures, because when corrections were made later in the year one discovered that, instead of the fund ending the year heavily in deficit, it ended £5·27 million in credit, and it looks as though the fund will stay in credit even after meeting the increased outflow resulting from the insolvency provisions of Sections 63 to 69 of the Employment Protection Act which have been activated. On looking at the figures, which have been made available by the Department in response to Questions from myself and one of my hon. Friends, the impression that one gains is that the fund will probably stay in balance, and perhaps even gain a little, unless there is a rapid change in the number of people becoming redundant.

If unemployment were to rise sharply and many more were made redundant the charges on the fund might be great, and one must ask: What is the logic behind the Bill? Is it that, deep down in the recesses of the Department, it is being decided that it looks as though unemployment will continue to rise and that the charges on the fund will continue to increase because of a rising number of people becoming redundant? If that is so, the Minister of State was singularly reticent in putting the true reasons before the House.