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Orders of the Day — Reduction of Redundancy Rebates Bill

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

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Photo of Mr Nicholas Scott Mr Nicholas Scott , Kensington and Chelsea Chelsea 12:00 am, 7th February 1977

The Bill has been called ignoble, mean, small and little. Apart from the Minister, not a single Labour Member has risen to advocate the Bill. The hon. Member for Thornaby (Mr. Wrigglesworth) made a brave effort, but he said that he would go into the Lobby reluctantly. I am astonished that the Treasury Bench has been unable to persuade a single one of the distinguished occupants of the Labour Benches to advocate the Bill with the same strength as the Minister.

The principal reason for supporting the Bill given by the hon. Member for Thornaby was that it flowed from the Government's economic strategy. I suppose that is as good a reason as any, but, having watched the Government's economic strategy in operation over the last two and a half years, I should have thought that that would be a reason for not supporting the Bill rather than for supporting it. The fact that we have to have the Bill is, in part, a measure of the failure of the Government's economic strategy.

It is right that the people of this country who are presently unemployed should be reminded that their fate was settled during the early days of the Labour Government. On that party's return to office in March 1974 it abandoned the restraints on public expenditure that had been introduced by the previous Tory Government, and all attempts at wage restraint. We wasted 14 months in a total free-for-all while the fate of those who are presently unemployed was sealed by the abdication of responsibility by those who were then, and are now, responsible for our economic affairs.

I appreciate the difficulties faced by the Secretary of State for Employment in forecasting the future level of unemployment and in forecasting how the figures are likely to move in the medium term, but I wish that the Minister would be rather more forthcoming. Some commentators claim to have perceived an unemployment pattern that is a new phenomenon, to have seen a new pattern emerging. They say that much of the unemployment which has been created in the past two and a half years may not go away when the economy begins to expand; that there is an underlying structural element that may mean that young people and those with few skills will find themselves unemployed for very much longer than has been the case in the past; and that the pool of unemployment may not be mopped up as it has been in previous expansion periods of the economy.

This has relevance to the provision that we make for unemployment, redundancy and retraining. We should not look at the redundancy payments scheme in isolation from the general provision for those who are unemployed.

My hon. Friend the Member for Harrow, West (Mr. Page) said that the Minister of State was the longest-serving Minister at the Department of Employment. I must be the shortest-serving Minister, having been appointed in January 1974 and finding that events quickly caught up with me and took me not only out of the Department, but out of the House. Despite my great admiration for the Minister of State I was disappointed when he slipped into his speech a reference to employers getting the benefit of redundancy rebates. This is not just a semantic argument; this sort of thing happens far too often. The whole concept of the redundancy payments scheme was that payments to people who became redundant would be made by a partnership of employers and the Government. If the Government are now turning this round and saying that the rebate is a benefit, they are indulging in the same sort of double talk that they use when equating mortgage interest relief with housing subsidies in the public sector.

The Bill is yet another burden on industry. It may be a small burden, but it is another straw closer to the breaking of the camel's back, and it comes at a time when companies are least able to afford the extra burden of redundancy payments. I once worked for a company which had to declare a number of people redundant, and the cost of financing the operation was a tremendous worry to those who were responsible for the orderly management of the company's affairs. The Bill can only make such a situation worse.

I support the argument of my hon. Friend the Member for Brentford and Isleworth (Mr. Hayhoe) that it is time for a full-scale review of the workings of the redundancy payments scheme, although, since that criticism was being made from these Benches before 1970, it is a pity that there was not such a review during the period of the last Conservative Government. We know that there are abuses of the scheme; many may be against the spirit rather than the letter, but everyone in industry knows about them.

My main complaint, however, is that the scheme is an extremely blunt instrument for carrying out the task that it it supposed to do. The way in which payments are calculated takes no account of the social and human cost to the people being made redundant. The scheme does not pretend to be an efficient mobility allowance. It is an extremely crude instrument. While the hon. Member for Thornaby claimed to support the Bill he drew attention to the increases in administrative expenses and collection costs and to the deficiencies in the investment policy of the fund.

These matters should be examined together in a full-scale review of the scheme. At present, there are a variety of measures designed to help those who lose their jobs—for example, flat-rate unemployment benefit, earnings-related benefit, mobility allowance, retraining allowance, and redundancy payments. Since unemployment has doubled under this Government—and we hear noises that it will go still higher—surely the time is ripe to review the whole package of provisions for those who lose their jobs, and to see that they are as sophisticated and as finely tuned as possible.