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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 Fred Silvester Mr Fred Silvester , Manchester, Withington 12:00 am, 7th February 1977

We do not suggest that the Bill creates a new redundancy situation; but it provides the opportunity to examine the problem of redundancy and to see whether the Bill moves in the right direction. I conclude that it does not move in the right direction, for a number of reasons.

The large sums of money which are now devoted to redundancy payments compare in size to those which are devoted to other forms of industrial support. We debated the North-West Region a few days ago. North-West hon. Members know that there is a crying need for all types of assistance in that area, through either the private or public mechanism, to stimulate declining industries, particularly on Merseyside. All parties have been involved in providing substantial sums of money for industry. The method has varied from pumping the money into industry, to easing the pain of redundancy through the redundancy payment scheme. When that scheme started 70 per cent. of the money was provided by the State and 30 per cent. by the employer. The State's contribution dropped to 50 per cent. and today it is down to 40 per cent.

The effect of that is to take away some of the original purpose of the scheme. The original scheme was intended to provide a type of insurance scheme for people faced with redundancy. Payments were made even if the companies concerned could not afford them. It seems right that the employer should pay a fair share, but the scheme should not be considered to be a form of taxation upon the employer. It was intended to be a partnership between the Government and the employer. However, the burden of the partnership is swinging more towards the employer.

We must consider whether that continuous trend is having a bad effect upon the employment situation. The Department of Employment undertook a study in 1975. It involved a sample of 10 per cent. of those who were benefiting from redundancy payments. It was a matter of some interest to me that the weight of those payments was going to the South-East. That strikes me as an odd conclusion to reach if one is concerned with the effect of these payments upon people suffering unemployment. It is not the sort of area to which one would expect to find the weight going. Also, one then says to oneself that these sums of money—I am not sure of the current figure, but it has been running at £200 million a year or more—are very large indeed for assisting unemployed people.

On Thursday we were discussing all sorts of other schemes which would involve lesser sums, and we were scrabbling around to find the money with which we might do other jobs. We were proposing another scheme on the lines of the job release scheme. We are all the time looking for ways of finding money to alleviate the situation of people faced with the dramatic event of unemployment suddenly coming into their lives. Therefore, it is reasonable to ask whether this is the right way for us to do it, or whether we should have a thorough look at the whole scheme.

My hon. Friend the Member for Basingstoke (Mr. Mitchell) always makes the plea for small businesses, and quite rightly, too, but there is an aspect of the whole matter of the burden upon small businesses and on companies in respect of redundancy payments that we should recognise. The Employment Protection Act, in addition to the payment, provides for prior notification of redundancies on a larger scale than was done previously. It also provides for time off to find work, and so on. All those things are admirable, and I am not saying that they are not the way in which we should be moving. However, if one adds them all together, one finds that more and more burdens are being placed upon the company that seeks to take on additional labour. I emphasise that it is not a question of saying that all these things are undesirable and that we should return to the dark ages. What we have to ask ourselves is whether these additional burdens, these hesitations at present, are having a bad effect on employment prospects.

I do not think that it is an accident that the problems of youth employment are particularly acute. If one looks at youth data over the last two years and compares the number of school leavers out of work in January with, say, the number out of work in the preceding August, one finds that for years past the number unemployed used to be between 10 per cent. and 15 per cent., but it is now runinng at 25 per cent. or more. That is not something—although I am subject to correction if someone has done a detailed study—that has happened in previous recessions.

Therefore, we must ask ourselves whether on this occasion something different has happened from what has happened in previous recessions in regard to the unemployment of young people. We can all put forward different things that we thing may have happened, but one thing that I suggest is a high probability is that it is easier to keep on people whom one might otherwise suggest be moved off to a different job, particularly if they have been in a company for some years and, therefore, the redundancy payments would be higher, than it is to take on young people, particularly as every time one takes on a young person nowadays one is taking on more and more obligations.

I say that not because I do not think that that is a way that the employment policies of this country will develop or should develop; there is very much to be said for that; but it is important in the interests of those people seeking a job, who have also to be considered, as well as those people who are trying to hold on to a job or are in a job, that we consider whether these policies are having a negative effect. I should have thought that at least a prima facie case had been made that these burdens are having a bad effect, particularly on smaller businesses, and that we should take a closer look at them.

I do not think that this Bill will have an earth-shattering effect. It is just another small contribution to the gradually deteriorating situation. Therefore, it would be right for this House to take stock of the way in which redundancy is operating and to say to ourselves "Well, this time we shall say 'No'—till we have had a good and thorough look at the whole operation".