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Catalogue Reference:CAB/24/165
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THIS DOCUMENT I S THE PROPERTY - OF HIS BRIT A M I 0
MAJESTY S GOVERNMENT.
1
CABINET SUB-OOMMITTEE.
INSURANCE,
UNEMPLOYMENT
BILL.
MEMORANDUM BY THE MINISTER OP LABOUR.
SECRET
M69 ( 2 4 ) .
1.
As my c o l l e a g u e s a r e aware I have undertaken
to
i n t r o d u o e a comprehensive Unemployment Insuranoe
Bill
a t an e a r l y
date.
a r i s e s from t h e f a c t
The urgency o f
that i t
l e g i s l a t i o n before Easter i f
the m a t t e r
iB n e c e s s a r y t o pass
l a r g e numbers of
unemployed persons a r e not t o be d e p r i v e d o f
benefit
when t h e e x i s t i n g p r o v i s i o n comes t o an end, as
w i l l b e g i n t o do from the middle of A p r i l
onwards.
I t would be most u n d e s i r a b l e however - even i f
were p o l i t i c a l l y
possible - to oonfine
it
the
it
Governments
p r o p o s a l s t o a s t o p - g a p measure on t h i s p o i n t and
it
w i l l h a r d l y nofel be p o s s i b l e t o pass two Unemployment
Insurance B i l l s
particularly
i n the remainder of
The B i l l
deal, w i t h the whole
2.
should c e r t a i n l y
Bill
i n b e n e f i t has a l r e a d y
t o be i n t r o d u c e d must
therefore
subjeot.
The main q u e s t i o n s w i t h which I
(l)
Session,
as one s h o r t Unemployment Insurance
a b o l i s h i n g t h e t h r e e weeks " g a p "
been p a s s e d .
this
deal
think the
Bill
ares­
t h e p e r i o d s f o r whioh Unemployment
should i n f u t u r e
of
Benefit
be p a y a b l e ,
(2)
the r a t e s
Benefit,
(3)
the Exchequer c o n t r i b u t i o n ' t o t h e Unemployment
Fund,
(4)
t h e age of
e n t r y i n t o the Insurance Soheme
and
t h e p o s i t i o n w i t h r e g a r d t o refunds
contributions
of
i n c e r t a i n cases t o i n s u r e d
./contributors
c o n t r i b u t o r s reaching the age of
In a d d i t i o n ,
60.
the f o l l o w i n g major p o i n t s
require
consideration:­
( 6 ) the Trade D i s p u t e s d i s q u a l i f i c a t i o n
for
benefit;
(7)
S p e c i a l Schemes of
Insurance by Industry;
( 8 ) the exception from insurance of
certain
permanently employed workpeople.
3.
I submit proposals on each of the above p o i n t s .
I have included a p r e l i m i n a r y estimate of the cost of
the v a r i o u s p r o p o s a l s , but as i t has not yet been
p o s s i b l e to consult the Government Actuary,
figures
of cost must be regarded as merely
Periods f o r which Unemployment
these
provisional.
Benefit
should be p a y a b l e .
4.
The one-clause Unemployment Insurance
Bill
r e c e n t l y passed closed the three weeks " g a p " in
benefit.
however,
From about the middle of A p r i l
there w i l l b e , f a i l i n g
onwards,
l e g i s l a t i o n on the
matter, a much more s e r i o u s " g a p " , extending
in
extreme cases to as muoh as 26 weeks, since the
maximum b e n e f i t
October,
payable in the twelve months from mid-
1923 to mid-October,
from mid-October,
1924 I s 26 weeks.
1924, onwards not only w i l l
Moreover,
benefit
i n each 12 months be l i m i t e d to 26 weeks but no
uncovenanted b e n e f i t w i l l be payable, so that
if
unemployment remains in anything l i k e i t s present
l a r g e numbers of unemployed persons w i l l
or no b e n e f i t ,
5.
receive
state
little
0
H i t h e r t o there has always been an a r b i t r a r y
limit
to the number of weeks of b e n e f i t to be drawn as a
/maximum
maximum during a p e r i o d of t w e l v e months ( or during
one o f t h o " s p e c i a l p e r i o d s " which have from time
to
time been l a i d down under emergency a r r a n g e m e n t s ) . What
may be d e s c r i b e d as the normal p o s i t i o n now under the
Unemployment Insurance Scheme i a t h a t not more than 26
weeks b e n e f i t
may be drawn i n t w e l v e months.
the s t r e s s o f
the p r e s e n t emergency t h i s r u l e has been
relaxed,
and, t o take a r e c e n t example,
44 weeks of b e n e f i t was a l l o w e d out o f
a maximum of
the 50 weeks
between November, 1922, and m i d - O c t o b e r ,
-6.
P r o v i d e d that
and bona f i d e
I am s a t i s f i e d
q u i t e wrong t o Impose an a r b i t r a r y
the genuineness o f
limit
that i t
is
t o the number
t h a t may be drawn i r r e s p e c t i v e
the o l a i m .
of
The o b j e c t which I have
s e t . b e f o r e me i s t o d e v i s e a scheme, i f
f o r paying b e n e f i t
1923.
the c l a i m a n t i s a genuine worker
unemployed,
of weeks of b e n e f i t
Under
t h i s be
possible,
w i t h o u t any such a r b i t r a r y l i m i t
unemployed workers b e l o n g i n g t o the i n s u r e d t r a d e s
so long as t h e y remain capable o f
work and unable t o o b t a i n i t .
be overcome i s ,
of
course, that
work, g e n u i n e l y
of
difficulty
seeking
to
s e c u r i n g t h a t such a
does not become a s o r t o f p e n s i o n f o r
do not want work.
for
The g r e a t d i f f i c u l t y
system would not be abused, and t h a t
reality
to
In f a c t
such b e n e f i t
persons who i n
I b e l i e v e however, t h a t
this
can be overcome, and I set out i n the Appendix
t o t h i s Memorandum the broad o u t l i n e s of
the scheme which
I would r e commie nd.
7.
The e s s e n t i a l
up t o a maximum o f
features
(say)
of
t h i s scheme a r e
that
26 weeks i n s u r e d persons who
are unemployed should be a b l e t o draw b e n e f i t * o n
which are s u b s t a n t i a l l y
the same as those now a p p l y i n g
under the permanent p r o v i s i o n s of
Not a l l
terms
the insurance
scheme.
insured persons would b e e n t i t l e d to draw as much ss 26
/week
weeks b e n e f i t
on t h e s e t e r m s , because t h e number of weeks thoy
oould draw would bear a d e f i n i t e
r a t i o t o the number of
t i o n s they had t o t h e i r c r e d i t ;
but I should contemplate
workers who have been i n p r e t t y
p e r i o d should be e n t i t l e d
approaching I t .
the worker,
benefit
if
if
After
that
c o n s t a n t work during a r e c e n t
to t h e f u l l
this I n i t i a l
he s t i l l
contribu­
26 weeks o r
something
p e r i o d of b e n e f i t was exhausted
remained unemployed, would go on drawing
he c o u l d show t h a t he s a t i s f i e d
certain special
oondi­
t i o n s designed t o t e s t the genuineness of h i s c l a i m , and so l o n g
as he s a t i s f i e s
these
c o n d i t i o n s t h e r e would be no l i m i t
t o the p e r i o d d u r i n g which he c o u l d draw b e n e f i t .
Important reason why s p e c i a l
conditions
oases t o t e s t the genuineness o f
fairly
the i n i t i a l p e r i o d ,
of
Benefit
the l e n g t h of which w i l l
p e r i o d , however,
There i s an
can be p a i d on
abuse f o r what I have
recent I n d u s t r i a l h i s t o r y and h i s c r e d i t
this i n i t i a l
the r i s k of
of
depend on the
By means of
a scheme o f t h i o k i n d I b e l i e v e
workers, so long as they remain unemployed,
9.
recommend i t
Provided careful
the c o s t of t h i s
for
After
abuse becomes much g r e a t e r
paying b e n e f i t c o n t i n u o u s l y w i t h o u t a r b i t r a r y
therefore
called
applicants
contributions.
and a s p e c i a l s c r u t i n y t o be a p p l i e d from time t o time i s
8,
time
should b e a p p l i e d i n such
claims.
eaoy terms without much r i s k
of
essential.
t h a t the o b j e c t
limits to
of
genuine
can be a t t a i n e d , and I
approval.
s t e p s are taken t o a v o i d u n j u s t i f i a b l e
c o n c e s s i o n , which would f a l l
claims,
on the Unemployment
Fund and not on the Exchequer, would p r o b a b l y be r o u g h l y £2,500,000
to £3,000,000 during the remainder of
ending October, ,1924,
already a l l o w e d , and t h i s p r o v i s i o n
year,
As the r a t e
of
year,
I t i s t o be remembered t h a t during t h i s y e a r
covenanted or uncovenanted b e n e f i t
f o r the f u l l
the p r e s e n t b e n e f i t
up t o a maximum of 26 weeks
i s estimated t o cost
-
is
£35,000,000
*
unemployment e s t i m a t e d f o r the present b e n e f i t
year I s 10$, i t may be taken r o u g h l y t h a t the e f f e c t
proposal v/ould be t h a t - i n a f u l l
t o t a l amount of b e n e f i t
paid (at
year,
of
the
present
with 10% unemployment,
the
the p r e s e n t r a t e s ) would bo about
£58,000,000.
At 7-M unemployment, the amount of b e n e f i t would be about £27,000,000
£27,000,000.
RATES OF BENEFIT.,
10.
The e x i s t i n g weekly r a t e s o f b e n e f i t
are as
follows:
For w i f e
(or invalid
husband)
Basio
rate.
Men,
15/­
Women.
12/-
Boy
7/6d.
F o r each
young
child.
5/-
1/-
(1^-1P).
Girl
(16-IF),
I n the c a s e
;
for
example, o f a claimant w i t h a w i f e
and t h r e e c h i l d r e n the weekly b e n e f i t
11.
is 23/-.
The q u e s t i o n o f b r i n g i n g boys and g i r l s between 14
and 16 i n t o unemployment i n s u r a n c e and of the r a t e s
benefit
t o be p a i d t o them, i s d i s c u s s e d below
paragraph
12.
I
of
in
gg,
c o n s i d e r t h a t the weekly r a t e s f o r men and women
should be i n c r e a s e d t o IP./- and 15/- r e s p e c t i v e l y and the
rate for a child to 2/-;
as i t
is.
t h e 5/- f o r a w i f e might
T h i s would mean t h a t a man with, a w i f e
remain
and
t h r e e c h i l d r e n would draw 2 9 / - .
130
I recognise that before
we must l o o k c a r e f u l l y
the c o s t of b e n e f i t s ,
benefit
14-,
t h i s p r o p o s a l can be adopted
b o t h at the consequent i n c r e a s e
and the r e l a t i o n which the
in
increased
would bear t o wages,
Tho e f f e c t
of
cosf
of b e n e f i t s
i s e s t i m a t e d t o be
t o i n c r e a s e the amount p a i d i n b e n e f i t by about %zfe,
assuming t h a t the number of r e c i p i e n t s
tho change.
i s not a f f e c t e d
With the p r e s e n t r a t e of unemployment,
would mean about £7,500,000 a y e a r ,
or an a d d i t i o n o f
about 4d, a week, on the t o t a l c o n t r i b u t i o n s
omployed and the Exchequer.
of
by
this
,
employers,
15.
As r e g a r d s the r e l a t i o n o f
the i n c r e a s e d b e n e f i t
t o wages,
the r e c o g n i s e d r a t e s of wages f o r u n s k i l l e d l a b o u r e r s i n
engineering
and i n s h i p b u i l d i n g range from 37/- t o 39/- i n a number o f
while i n i r o n and s t e e l
smelting,
33/3d. on the N o r t h East C o a s t ,
in S o o t l a n d .
It
etc.,
they f a l l
as low as
33/lOd, i n the Midlands and 34/5d.
The r a t e s o f wages f o r
from 85/- i n O x f o r d , N o r f o l k ,
Lancashire.
rolling
districts
agricultural
labourers
range
S u f f o l k , and Warwick t o 35/- i n N o r t h
has t o be remembered a l s o t h a t owing t o
t h e a c t u a l weekly e a r n i n g s o f t e n f a i l
short-time
t o r e a c h the above f i g u r e s ,
even when the r e c o g n i s e d r a t e s a r e p a i d , and t h a t i n many
unorganised t r a d e s the f u l l - t i m e
below these
16.
e a r n i n g s f o r a d u l t s are
often
figures,
I should mention a l s o the' p o s s i b l e e f f e c t .of i n c r e a s i n g
rate of unemployment b e n e f i t
i n causing a demand f o r
inorease i n s i c k n e s s b e n e f i t .
be d e a l t w i t h by the M i n i s t e r
the
a corresponding
T h i s i s a p o i n t which w i l l no doubt
of
Health.
Exchequer G o n t r i b u t i o n .
17.
At p r e s e n t the Exchequer c o n t r i b u t e s
just over a quarter
of
the t o t a l c o n t r i b u t i o n s p a i d by e m p l o y e r s , workers and the Exchequer
This p r o p o r t i o n of a q u a r t e r was t h a t p a i d under the o r i g i n a l
Act up t o November,
1920.
The 1930 Act reduced the Exchequer
contribution t o about a f i f t h .
The p r o p o r t i o n o f
o n e - f o u r t h was
restored from the d a t e when the payment of g r a n t s i n r e s p e c t
dependents began i n 1921.
The Aot of
Unemployment Fund i s a g a i n s o l v e n t ,
to be reduced t o o n e - f i f t h
IS-
1911
of
of
1983, p r o v i d e s t h a t when the
the Exchequer c o n t r i b u t i o n 1B
the w h o l e .
The N a t i o n a l C o n f e d e r a t i o n o f E m p l o y e r s ' O r g a n i s a t i o n s
have
recently issued a r e p o r t on Unemployment i n s u r a n c e i n which they
recommend t h a t when the Fund i s s o l v e n t the Exchequer should pay
the same r a t e as the employer and the w o r k e r ,
the whole.
They a n t i c i p a t e
n t r i b u t i c n would a l l o w of
i.e.,
one-third
of
t h a t t h e i n c r e a s e i n the Exchequer
som6 improvement i n the d i r e o t i o n of
creasing the number of weeks f o r whioh b e n e f i t
could be p a i d .
/19.
19.
I propose t h a t from t h e d a t e o f
new A c t ,
o p e r a t i o n of
the Exchequer c o n t r i b u t i o n should be
so as t o become o n e - t h i r d o f
and t h a t ,
further,
the t o t a l
increased
contributions,
t h i s p r o p o r t i o n should not be reduced
when the Unemployment Fund i s a g a i n s o l v e n t .
following.table
the
shows t h e r e s u l t i n g
The
contributions in
the
case o f men:­
(a)
at present
ratess-
Employer.
(b)
20.
lOd.
Worker.
9d.
Exchequer.
9-grd. (aB a g a i n s t
6-fd.now).
maximum r a t e s l e g a l l y p e r m i s s i b l e - a f t e r
solvenoy i s r e a c h e d : Employer.
6d.
Worker.
Sd.
State.
6d.
(as a g a i n s t 3d. as at
present p r o v i d e d ) ,
Tbe e s t i m a t e d Exchequer c o n t r i b u t i o n f o r
the
F i n a n c i a l Y e a r 1924-25, a t t h e e x i s t i n g r a t e s , i s
If
the Exchequer c o n t r i b u t i o n i s r a i s e d ,
this figure
£12,-800,000*
as proposed a b o v e ,
would become £18,350,000 - an i n c r e a s e
of
£5,450,000.
21.
When the Fund i s
contribution,
existing
a t the maximum . r a t e s p e r m i s s i b l e under
legislation,
£5,675,000.
If
I realise
and i n a normal y e a r , would be about
the Exchequer c o n t r i b u t i o n were
as proposed a b o v e ,
22.
s o l v e n t the e s t i m a t e d Exchequer
increased
t h a t f i g u r e would be doubled.
t h a t the s u b s t a n t i a l i n c r e a s e i n the
Exchequer c o n t r i b u t i o n h e r e proposed i s a matter which,
view o f
t h e o t h e r demands on the Exchequer, cannot be
lightly
conceded.
I would p o i n t out however i n support
the p r o p o s a l t h a t i t
can f a i r l y
in
of
be argued that the Exchequer
/ought
ought to bear o n e - t h i r d o f t h e t o t a l c o s t and f u r t h e r
that i t
is
only by increasing, the Exchequer c o n t r i b u t i o n t h a t t h e r e i s any
chance of f i n d i n g money f o r
the o t h e r p r o p o s a l s i n t h i s memorandum
without i n c r e a s i n g the a l r e a d y v e r y heavy
people and t h e i r
employers.
AGE OP EKTRY IHTO UHEMPLOYkEKT
23,
The f a c t
- c o n t r i b u t i o n s from work­
IBBTOABDB.
t h a t boys and g i r l s between 14 and 16 a r e not
against unemployment l e a d s t o c e r t a i n s e r i o u s
Although the g r e a t m a j o r i t y
of
insured
disadvantages.
them e n t e r i n d u s t r y on l e a v i n g
they cannot draw unemployment b e n e f i t when unemployed.
school
Only a small
number of them a r e r e g i s t e r e d at the Employment Exchanges and t h e r e
is,
therefore,
an almost complete absence o f r e l i a b l e
to the e x t e n t t o which they a r e i n f a c t
reason the Employment Exchanges
unemployed:
information
for
( o r the L o o a l E d u c a t i o n
the Bame
Authorities
which do Choice of Employment w o r k ) f i n d i t much more d i f f i c u l t
keep i n touch w i t h boys and g i r l s between 14 and 16 than w i t h
between 16 and I P .
I n areas where unemployment among
is serious the b e s t a v a i l a b l e means of d e a l i n g w i t h i t
by g e t t i n g the unemployed boys and. g i r l s
Unemployment C e n t r e s .
to attend
to
those
juveniles
at p r e s e n t
is
Juvenile
Those between 16 and IP are compelled t o
such Centres as a c o n d i t i o n of r e c e i v i n g b e n e f i t ,
as
attend
but t h i s does not
apply t o those between 14 and 16, and i n p r a c t i c e o n l y a few of
them
attend v o l u n t a r i l y .
the
These are a l l
s t r o n g reasons f o r
age of e n t r y i n t o Unemployment Insurance
124.
if
the age of
Ireduoed t o 14 i t
leasential,
reducing
to 14.
e n t r y i n t o unemployment Insurance were
would be most d e s i r a b l e ,
on a d m i n i s t r a t i v e
grounds f o r
and i n d e e d almost
the r a t e s
of
contributions
jln r e s p e s t o f boys and g i r l s between 14 and IS to be the same ae
£those f o r boys and g i r l s between 16 and 18.
for these boys and g i r l s are as
The p r e s e n t
rates
follows:-;
/Employer
Employed.
Employer.
Boys
53,
Girls
4g-d.
25.,
It
is
and
girls
4s.
The
16
a n d , 18
to
the
4d.
suggested
between
-
current
he
rate
to
and
16,
and
the
benefit
for
them,
he
too
as h o y s
justified
have
only
The
collected
16
high
for
come
paid
total
in
Boys
and
5s.
between
regard
rates
of
girls
between
in
the
the
and
those
benefit
rate
same
18,
are
14
of
contribu­
could
between
and h a v e
boys
Girls
girls
Having
contributions
ths
amount
circumstances
are
estimated
and
16
for
further
14
and
16
therefore
contributions.
and
Employers
pay
insurance
few
amount
and
that
-
6s,
those
they
benefit
hoys
Girls
between
into
he
reduction
ground
very
for
hoys
although
the
weekly
should
wages,
suggested
on
the
7s.6d.
of
8
rates
and g i r l s
just
necessarily
26.
14 arid
Boys
thought
tions
that
corresponding
are
Exchequer.
of
benefit
to
be
likely
paid
in
be
present
as f o l l o w s
!­
£.
employed.
to
1,240,000
Exchequer.
510,000
1,750,000
If
one-third
and
to
the
same,
of
Exchequer
Contribution
is
tho
(as
above
whole
contributions
£150,000
27.
the
The
the
to
from
annual
proposed
employers
revenue
of
uncertain
as
the
rate
and
is
not
accurately
a w£ek
it
and
be
in
to
paras, ip
employed
increased
might
benefit
of
probably
that
would
unemployment
known,
amount
to
but
be
paid
among
at
by
about
£275,000
is
these^boys
gs.
and
4s.
annually.
/28.
,% p q )
remained
£1,900,000.
amount
girls
would
increased
28.
Administrative
expenses would f a l l
deducted and i n a d d i t i o n i t
of
tho revenue from
g i r l s between
is
t o be
contemplated t h a t
tho c o n t r i b u t i o n s
part
o f boys and
14 and 16 and a l s o from those between
16 and 18 should be a p p l i e d t o a s s i o t
o f J u v e n i l e Unemployment C e n t r e s .
that a grant of
tho maintenance
It
is
suggested
a c e r t a i n amount p e r a t t e n d a n c e
should
b e made from the Unemployment Fund t o the L o c a l
Education A u t h o r i t y
i n r e s p o c t of
( o r o t h e r body running a C e n t r e )
a boy and g i r l
required to attend
Oontre as a c o n d i t i o n or r e c e i v i n g b e n e f i t .
the
It
hoped to a r r a n g e through the L o c a l Eduoation
Authority
and in c o - o p e r a t i o n w i t h the Board o f Eduoation
i n s u r e d boys and g i r l s
shall
p o s s i b l e a t t e n d some u s e f u l
oaeea at
29.
that
i n as many c a s e s as
course o f
instruction
p e r i o d s of unemployment, i n s t e a d o f b e i n g l e f t
w i t h o u t g u i d a n c e or t r a i n i n g
is
during
entirely
as they are i n too many
present.
The f i g u r e s
g i v e n i n p a r a . 26 r e l a t e
c o n d i t i o n s when a s p e c i a l l y heavy r a t e o f
i s b e i n g charged i n o r d e r t o meet the
unemployment now p r e v a i l i n g .
the r a t e o f
to present
contribution
exceptional
In normal
clroumstanoes
c o n t r i b u t i o n s would be r e d u c e d and i t
e s t i m a t e d t h a t t h e n e t income, a f t e r
allowing
is
for
expenses, would be no more than about £800,000 a y e a r ,
whereas the b e n e f i t
substantially
expenditure i s not l i k e l y
reduced.
Under the e x i s t i n g
Insurance Sohemo any exoess of
o v e r e x p e n d i t u r e on b e n e f i t s
deraption-of
b a l a n c e of
inoome from
Unemployment
contributions
i s a p p l i e d t o the
re­
the debt on the Unemployment Fund, an& any
c o n t r i b u t i o n s o b t a i n e d from
should n o t escape t h i s l i a b i l i t y
other classes of
risk I s
to be
low.
juveniles
whioh i s
Bhared by
i n s u r e d persons where unemployment
50.
In considering t h i s proposal
it
i s necessary
to
take
account of p o s s i b l e r e a c t i o n on tho H e a l t h Insurance Scheme,
If
the age of e n t r y f o r Unemployment Insurance were reduced t o 14
t h e r e would almost c e r t a i n l y
be a demand f o r
a similar
reduction
i n the case of H e a l t h I n s u r a n c e , whioh would be d i f f i c u l t
r e s i s t as i t
to
would n o t be easy t o defend an arrangement under
which b e n e f i t was p a y a b l e w h i l e a boy was w e l l but ceased on h i s
falling
ill.
the f a c t
One s p e c i a l
the age of
contribution or b e n e f i t
e i t h e r have t o pay
Health Insurance)
s p e c i a l r a t e s of
of
(which would be e n t i r e l y new f o r
r a t e s of
contribution,
Under the f o r m e r arrangement the insured
of h i s b e n e f i t s
o v e r - c h a r g e d in r e l a t i o n
contribution in r e l a t i o n
the f u l l
r a t e of
15s. a week f o r
benefit
of 7 s , 6 d . and would l o a d t o m a l i n g e r i n g .
l a t t e r plan a d i f f e r e n t i a l
r a t o of
duced, which would cause t r o u b l e
is
sickness
a boy had been on unemployment
Under the
c o n t r i b u t i o n would be i n t r o ­
t o employers and would i n o r e a s e
the work of Approved S o c i e t i e s and of
tho M i n i s t r y of
Health.
I s p r o b a b l e t h a t t h e r e would bo a demand from
some quarters, f o r
the l o w e r i n g of
the age l i m i t f o r
Health-
t h a t f o r Unemployment Insurance wore l o w e r e d ,
such p r o p o s a l would be l i k e l y
sections
costs
to t h e wages which he
would bo unduly h i g h a f t e r
older Friendly
would
person
to the c u r r e n t
benefit
While i t
those
and the employer would be c a l l e d upon t o pay a
Moreover,
Insurance i f
and prosumably
Under e i t h e r p l a n s e r i o u s d i f f i c u l t i e s
would be s e r i o u s l y
h i g h r a t e of
contributions
b e n e f i t , would havo to be i n t r o d u c e d f o r
between 14 and 1 6 .
be c r e a t e d .
special
Accordingly,
i n t o H e a l t h I n s u r a n c e , they would
the r e l a t i v e l y h i g h weekly
a p p l y i n g to a d u l t s , or a system
-31.
from
f o r persons below
18 as t h e r e i s i n Unemployment I n s u r a n c e .
persons below 16 wero brought
paying.
in t h i s case a r i s e s
t h a t under the H e a l t h Insurance Scheme t h e r e i s no r e ­
d u c t i o n i n the r a t o s o f
if
difficulty
to meet w i t h o p p o s i t i o n from
S o c i e t i e s who at p r e s e n t l o o k
to t h e i r
as the r e c r u i t i n g ground f o r boys and g i r l s
S t a t e - i n s u r e d members a t age
16.
any
the
juvenile
becoming
52.
The Cabinet have already had t h i s matter before them
and have agreed that the M i n i s t e r of Labour, i n preparing
for
the information arid consideration of the Cabinet an
Unemployment Incurance B i l l
p r o v i s i o n in the B i l l f o r
should be authorised to make
the extension of Unemployment
Insurance to Juveniles ae and when they begin to work f o r
wages.
The Cabinet f u r t h e r decided that the M i n i s t e r of
Labour,
the M i n i s t e r of Education and the Secretary
Scotland,
in a l l
should examine the question of
i t s bearings
f o r refunds of
the age o f
60.
Section 25 of
provides f o r
j u v e n i l e Unemployment
and r e p o r t to the C a b i n e t .
Provision
35.
for
contributions
in c e r t a i n cases
the Unemployment Insurance Act,
at
1920,
a refund to an insured worker a t the age of
60 of h i s share of
the c o n t r i b u t i o n s paid in r e s p e c t of
him, l e s s any b e n e f i t he has received but with the a d d i t i o n
-of compound i n t e r e s t at 2-1 per cent on the excess of
c o n t r i b u t i o n s over
34.
benefit.
I t i s a condition f o r
the r e c e i p t of refunds
500 c o n t r i b u t i o n s s h a l l have been p a i d ;
tire case of
that
except that i n
a worker who entered insurance at the age of
55 or more t h i s q u a l i f i c a t i o n
55.'-
his
is
reduced.
The refunds are c o s t l y i n themselves and Involve a
disproportionate
expense in a d m i n i s t r a t i o n .
refunded in the year
amount w i l l
1922-23 was n e a r l y
increase yearly and w i l l
£1,000,000 i n 1928-29.
figure will
be l a r g e l y
The amount
£200,000.
The
probably exceed
In subsequent years even t h i s
exceeded.
%
,
36.
The refunds were
considered
In 1922 by a Committee
which tho Government A c t u a r y was Chairman.
felt
of
t h a t t h e r e was c o n s i d e r a b l e
contributions
refund
i t was an attempt
They were unanimous
recommending t h a t the system should be a b o l i s h e d
they
Committee
o b j e c t i o n t o the
on t h e ground t h a t
mis insurance and b a n k i n g .
The
of
to
in
thought
i n d i c a t e d t h a t compensation might have t o be made t o
persons w i t h accrued r i g h t s .
They were s a t i s f i e d
t h a t no
m a t e r i a l p r e s e n t v a l u e a t t a o h e d t o any r i g h t s
of
below t h e age of
of whom l e s s
50, or of persons i n r e s p e c t
than 50 c o n t r i b u t i o n s
the n a t i o n a l
had been p a i d .
Confederation
persons
The r e o e n t Report
o f Employers on Unemployment
Insurance r e h e a r s e s the arguments o f the Committee
referred
just
t o and. re commends the a b o l i t i o n o f the refund
w i t h "some o t h e r
have
accrued,
37.
There
of
system
compensatory a d v a n t a g e " in oases where
rights
i s no doubt t h a t the refund system i s an anomaly
i n the Unemployment
Insurance Scheme, and t h a t
it lays a
v e r y heavy burden on t h e a d m i n i s t r a t i o n o f the Scheme,
necessitating
payment o f
as i t
contributions
The argument i n i t s
refund
does the r e t e n t i o n o f e v i d e n c e
over v e r y l o n g p e r i o d s
f a v o u r has been t h a t the
of
of
years.
chanoe of a
i s some compensation to an i n d i v i d u a l worker
s t e a d y employment who never
or h a r d l y e v e r ,
JPund f o r
industrial
benefit
general principle
however,
during h i s
of tho Unemployment
c a l l s upon the
career.
The
Insurance Scheme,
i s t h a t the good r i s k s must h e l p t o pay f o r
bad r i s k s , and i t
is
in
the
i n c o n s i s t e n t t o r e t u r n the premiums
/in
in i n d i v i d u a l good r i s k
matured.
It
in rates of
oases because no r i s k has
should be added t h a t t h e many v a r i a t i o n s ..
c o n t r i b u t i o n and b e n e f i t
c o n s i d e r a b l y the d i f f i c u l t y
that
in any case the
of
inorease
have
increased
c a l c u l a t i n g refunds;
i n the r a t e s
and
of
c o n t r i b u t i o n d u r i n g t h e p a s t few y e a r s has been, and
should b e , g e n e r a l l y r e g a r d e d as a s p e c i a l
meet e x c e p t i o n a l
38.
a b o l i s h e d and t h a t
it
i s made, t h i s
refunds
if
as I hope, t h e
extension
p r o v i s i o n proposed by t h i s memorandum,
extension
g e n e r a l ground f o r
compensation.
could be r e g a r d e d as a good
not p r o p o s i n g any
If,
however,
should be a scheme o f
it
special
i s thought t h a t
compensation f o r
compensation might perhaps be t h e payment t o
(say)
50 c o n t r i b u t i o n s
at l e a s t ,
persons
of the p r e s e n t v a l u e
contributions over
whioh t h e y have r e c e i v e d ,
the r a t e s o f
the
5 0 y e a r s of age and have p a i d
e x c e s s v a l u e of t h e i r
a t 2-^ p e r c e n t .
there
cases where
r i g h t s may be s a i d to have a l r e a d y a c c r u e d ,
who a r e o v e r
should.be
i s not n e c e s s a r y t o adopt any
compensation;
i n the b e n e f i t
to
depression.
I suggest that the p r o v i s i o n for
scheme of
"levy"
p l u s compound
of
the
benefit
interest
For the purpose of t h i s
c o n t r i b u t i o n and b e n e f i t
(say)
calculation
should be t a k e n
as h a v i n g been throughout those o f the P r i n c i p a l Act
1920.
Further,
any a p p l i c a t i o n f o r
compensation
should be made w i t h i n t w e l v e months o f the date
the p a s s i n g o f the new A c t .
/IRAEH
of
of
TjiADE DISPUTE DISQUALIFICATION."
39.
Under t h e e x i s t i n g
since
l a w , whioh has been i n o p e r a t i o n
the i n i t i a t i o n of t h e Unemployment Insurance Scheme
i n 1913, a l l workpeople who are thrown out o f work owing
t o a s t o p p a g e due t o a t r a d e d i s p u t e at the e s t a b l i s h m e n t
a t which t h e y are employed are d i s q u a l i f i e d
as l o n g as the stoppage c o n t i n u e s ,
conditions
for
benefit
save t h a t under
t h e y may remove the d i s q u a l i f i c a t i o n by
o b t a i n i n g work e l s e w h e r e ,
The d i s q u a l i f i c a t i o n
applies
whether or not the workpeople a r e t a k i n g any p a r t
dispute.
of l a r g e
certain
I t has c o n s e q u e n t l y r e s u l t e d
i n the
i n the d i s q u a l i f i c a t i o n
numbers o f workpeople who are thrown out o f work
owing t o d i s p u t e s over which t h e y have no c o n t r o l and i n
which t h e y take no p a r t .
For t h i s
r e a s o n the Trade Unions
and t h e Labour P a r t y have f o r y e a r s been p r e s s i n g
amendment o f t h e law so as t o remove the
from those not p a r t i c i p a t i n g
40.
f o r some
disqualification
i n the d i s p u t e .
The main argument a g a i n s t removing the
disqualification
i n such cases
i s t h a t , a l t h o u g h a workman may n o t be t a k i n g
part d i r e c t l y
i n a d i s p u t e p e r s o n a l l y o r through h i s Trade
U n i o n , h i s Union or some F e d e r a t i o n t o which h i s Union
b e l o n g s may be a s s i s t i n g the d i s p u t e d i r e c t l y
or
indirectly
o f the d i s p u t e may be p a r t o f an arranged plan under whioh,
if
the d i s p u t e
Federation w i l l
i s a s u c c e s s , t h e workman's Union or h i s
benefit.
M o r e o v e r , even i f the d i s p u t e
concerns a grade o t h e r than t h a t t o whioh the workman
belongs,
it
is very o f t e n ,
i f not u s u a l l y ,
the case
a change o f r a t e s o f pay or working c o n d i t i o n s
i n an e s t a b l i s h m e n t
for
necessitates
forgone
a corresponding
o t h e r g r a d e s , so t h a t the workman i s u s u a l l y
in fact
that
grade
change
interested
i n the i s s u e o f t h e d i s p u t e even though he i s not
/taking
taking part in
41.
it.
The p l a n o f removing the d i s q u a l i f i c a t i o n
workpeople
not p a r t i c i p a t i n g
i n the d i s p u t e
open t o t h e v e r y s e r i o u s p r a c t i c a l
be e x t r e m e l y d i f f i c u l t
not a
42.
from
is
further
objection that
i t . would
i n many cases t o d e c i d e whether or
p a r t i c u l a r workman was, so
participating.
The e x i s t i n g law on the s u b j e c t r e p r e s e n t s a
P a r l i a m e n t a r y compromise a r r i v e d
proposals
a t i n 1911,
Subsequent
t o amend i t have been met w i t h o b j e c t i o n s
the e m p l o y e r s ,
and In o r d e r t o see whether
amendment could not be found,
employers,
employed
a Committee
some agreed
representing
and t h e M i n i s t r y o f Labour was s e t up
as long ago as June, 1922.
This Committee has
since
h e l d a number o f meetings without making any r e a l
towards agreement, and has now f i n a l l y
attempt t o a r r i v e at an a g r e e m e n t .
days ago made a r e p o r t
43,
I t now r e s t s
to t h i s
abandoned
i n s e r t e d i n the B i l l
effect.
If
as i n t r o d u c e d
i t would be c a r r i e d
House,
I n the l i g h t
whether
it
a clause
achieve
the o b j e c t
an amendment
is
the
from
i n the d i s p u t e ,
to
i n the case o f
I t h i n k , however,
cannot be a d e c i s i v e
that
the
factor h e r e , since
certain
question
the change
made at a l l would be made i n o r d e r t o remedy a
grievance.
quite
I am c o n s i d e r i n g
such a change i s e x t r e m e l y hard
classes of d i s p u t e s .
if
it
will
t o frame a c l a u s e which w i l l
e s t i m a t e but might be c o n s i d e r a b l e
of cost
not
o f removing the d i s q u a l i f i c a t i o n
persons not p a r t i c i p a t i n g
The c o s t o f
is
on a f r e e v o t e o f
of these faots
would be p o s s i b l e
consider
should be
c e r t a i n l y be moved and s t r o n g l y p r e s s e d , a n d
44','
the
w i t h the M i n i s t e r o f Labour t o
i n c l u d e d i n the proposed B i l l .
progress
The Committee a few
whether a c l a u s e d e a l i n g w i t h the s u b j e c t
l i k e l y that
from
SPECIAL SCHEMES OP INSURANCE BY INDUSTRY.
45.
S e c t i o n 18 o f the Unemployment Insurance A c t ,
allowed
an i n d u s t r y ,
s u b j e c t t o the a p p r o v a l o f
the
M i n i s t r y o f Labour, t o s e t up a s p e c i a l scheme f o r
and so c o n t r a c t
out o f t h e g e n e r a l scheme.
o f r e a s o n s , the c h i e f
1920,
itself
For a v a r i e t y
o f vfhich was the g r o a t . t r a d e
depression,
v e r y few i n d u s t r i e s t o o k advantage o f t h i s p r o v i s i o n .
A
s p e c i a l scheme c o v e r i n g about 80,000 workers has been s e t
up f o r
the Insurance
Industry
i n Great B r i t a i n and
Ireland,
and another scheme c o v e r i n g t h e Banking I n d u s t r y i n England
and Wales I s
i n an advanced
state of preparation.
schemes, h o w e v e r , had been put forward
tentative
No o t h e r
i n more than a
!
f a s h i o n when In the summer of 1921, owing t o
g r e a t s t r a i n on the Fund o f
placed by l e g i s l a t i o n
the g e n e r a l scheme, an embargo was
on t h e f o r m a t i o n o f any new s p e c i a l
schemes u n t i l the Unemployment Fund a g a i n became
solvent.
The r e a s o n f o r t h i s embargo was t h a t i t was c l e a r l y
right
that
special
the
i n d u s t r i e s w i t h low r i s k s
should, by s e t t i n g up
schemes, escape t h e g e n e r a l l i a b i l i t y
debt c o n t r a c t e d by the g e n e r a l
not
fund.
t o repay
the
The embargo d i d not
a p p l y t o schemes which a t t h a t d a t e had been s e t up, or
had been submitted t o the M i n i s t r y of Labour-in a oomplete
form ( i , e .
i t did not a p p l y t o the Insurance I n d u s t r y and
Banking Schemes) but apart from these two no s p e c i a l sohemes
can be formed u n t i l the Unemployment Fund i s
46.
The trend o f
solvent.
i n d u s t r i d . o p i n i o n d u r i n g the l a s t
or two seems t o have been d i s t i n c t l y a g a i n s t t h e
of s p e c i a l
schemes, i . e ,
the p r i n c i p l e
be a l l o w e d
to deal separately with i t s
year
principle
t h a t an i n d u s t r y
should
own unemployment and
not share i n common w i t h o t h e r s the g e n e r a l burden o f
/unemployment.
unemployment.
In practice,
of course,
it
is
the
industries
w i t h the l e a s t unemployment which would form s p e c i a l
and thus' e s c a p e the l i a b i l i t y
for
c o n t r i b u t i n g towards
c o s t o f the h e a v i e r unemployment i n o t h e r
47,
schemes
the
trades.
The R e p o r t on Unemployment Insurance r e c e n t l y made by
the N a t i o n a l C o n f e d e r a t i o n o f E m p l o y e r s '
Organisations,in
response t o an i n q u i r y from the M i n i s t r y pronounced
a g a i n s t the p r i n c i p l e
o f s p e c i a l schemes.
definitely'
The Trades
Union
Congress G e n e r a l C o u n c i l w a s . a l s o asked by the M i n i s t r y
c o n s i d e r the m a t t e r but has not y e t r e p l i e d .
that while
a numerical m a j o r i t y
In f a v o u r
of
is
understood
at the l a s t Congress was
p r o b a b l y opposed t o the p r i n c i p l e
a strong minority
It
o f s p e c i a l schemes t h e r e
it.
The d e c i s i o n ,
in
the m a t t e r t o a
Committee f o r
practically
inquiry,
and t h i s
that
i t was s h e l v e d
f o r t h e time
48.
The q u e s t i o n whether or not s p e c i a l
special
schemes are
o f the
schemes i n p r a c t i c e would
workpeople w i t h the l o w e s t r i s k s
meant
being,
has a most important b e a r i n g on the f i n a n c e
scheme, s i n c e
was
fact,
taken by the l a s t Congress was t o r e f e r
further
to
it
follows
permissible
general
cover
that i f
any
c o n s i d e r a b l e number o f workpeople a r e c o v e r e d by such schemes,
the r a t e o f
contribution required
under t h e g e n e r a l
f o r any p a r t i c u l a r p r o v i s i o n o f b e n e f i t must be
h i g h e r than i t
would o t h e r w i s e b e .
Further,
formed makes i t
impossible
substantially
a state
u n c e r t a i n t y as t o whether s p e c i a l schemes w i l l
scheme
of
or w i l l not be
t o e s t a b l i s h the f i n a n c e o f
the
g e n e r a l scheme on a permanent b a s i s , and exposes the
general
scheme t o t h e r i s k o f having t o remodel i t s
from time
t o time at c o m p a r a t i v e l y s h o r t
49.
I n view o f these
facts
finances
notice.
I have come t o the c o n c l u s i o n
the power t o form s p e c i a l schemes should be e n t i r e l y
f o r the f u t u r e and a c l a u s e to t h i s e f f e c t
new B i l l .
inserted
that
withdrawn
i n the
axOiiiPTioi oi? o a a T A i f l
1
C L A S S E S OP WORKPEOPLE I H
PERMANENT MPLOMEWT.
50.
While
the Unemployment Insurance Scheme c o v e r s
tha manual workers
££50 a y e a r )
generally
(and a l l non-manual workers earning up t o
outside
agriculture
and p r i v a t e domestic
servioe,
there are c e r t a i n c l a s s e s of workpeople who a r e " e x c e p t e d "
from the scheme on the ground p r i n c i p a l l y
that their
employment
i s permanent.
51.
The c h i e f
classes
c o v e r e d by such e x c e p t i o n s a r e : by the A c t .
Exoeptsd d i r e c t l y
Permanent C i v i l
Servants.
Members o f a P o l i c e
Poroe.
T e a c h e r s with Superannuation
E x c e p t i o n by C e r t i f i c a t e
Permanent Railway
rights.
o f the M i n i s t r y
of
labour.
Servants.
Permanent employees o f L o c a l
A u t h o r i t i e s ( o t h e r than Poor
l a w A u t h o r i t i e s and Asylum
Authorities),
Others ( c h i e f l y permanent
employees o f P u b l i c
U t i l i t y Companies).
I t i s e s t i m a t e d that the t o t a l
number i n a l l these croups i s .
about 750,000 of whom
200,000
a r e permanent r a i l w a y s e r v a n t s
and 55,000 l o c a l a u t h o r i t y
employees.
52.
I f the p r i n c i p l e
t o be f o l l o w e d
i s that a l l persons
within tha i n s u r a b l e a r e a should c o n t r i b u t e e q u a l l y
of whether or n o t they a r e l i k e l y
exceptions c o n s t i t u t e
t o draw b e n e f i t * these
a s e r i o u s anomaly which,
moreover,
r e p r e s e n t s a heavy l o s s t o the Unemployment Pund,
to be o b s e r v e d t h a t w h i l e
irrespective
It is
t h e s e groups can be s e l e c t e d as b e i n g
those i n which t h e p r o s p e c t o f permanent employment i s
definite
for exception,
further
sufficisntl
t h e r e a r e a number o f other groups i n
/which
'M0
which the permanence o f omployment i s in p r a c t i c e n e a r l y
great, whilst
as
in most t r a d e s t h e r e a r e some i n d i v i d u a l s who
are p r a c t i c a l l y
assured
o f permanent employment.
These
groups
and i n d i v i d u a l s cannot "be brought w i t h i n the a r e a Of e x c e p t i o n s ,
but t o some e x t e n t any g r i e v a n c e
at p r e s e n t by the p r o v i s i o n
they may f o o l
f o r t h e refund
to them a t the aga o f
60.
provision' for
should be a b o l i s h e d .
refunds
It
of
is
alleviated
their
contributions
i s p r o p o s e d , however,
c o n s i d e r a t i o n w h e t h e r , h a v i n g regard t o
It
that
this
i s worth
the g r e a t e x t e n s i o n
the b e n e f i t p r o v i s i o n now proposed and the consequent need
securing a l l
possible
revenue, a l l
strong P a r l i a m e n t a r y
53.
m
The p o i n t i s a d i f f i c u l t
ought t o c o n s i d e r
Ministry
local
seriously
o f Labour c e r t i f i c a t e s
authority
in a l l
cases...
t h a t t h e r e would be l i k e l y
opposition to
I t must
to be v a r y
such a p r o p o s a l .
one, but I am i n c l i n e d
to
think
whether the groups "excepted by
(principally
railwayman and
e m p l o y e e s ) , should n o t be brought i n t o
The e f f e c t would be t o b r i n g a f u r t h e r
insurance and t o i n c r e a s e
for
these e x c e p t i o n s should n o t be
removed and c o n t r i b u t i o n s made p a y a b l e
be p o i n t e d o u t , however,
of
350,000 p e r s o n s
the annual revenue
lund ( a t p r e s e n t r a t e s o f c o n t r i b u t i o n )
as
of
insurance.
into
the Unemployment
follows:!­
£
Employers.
758,000
iiimployed'.
672,000
Exchequer.
500,000 /
1,930,000
I f the Lxchequer c o n t r i b u t i o n were i n c r e a s e d to one t h i r d
the whole.,
the t o t a l
i n c r e a s e of annual revenue would be ££.,140,000*.
(Intd.)
Ministry
o f Labour.
Msrch. 1 0 t h ,
1984.
of
i.a.
*
-APPENDIX,
Suggested Scheme of Unemployment
Benefit.
The plan s u g g e s t e d i s t h a t t h e c o n d i t i o n s f o r
benefit
should be;...
(1)
a preliminary qualification
of a small number of
few
c o n s i s t i n g of
payment
c o n t r i b u t i o n s during t h e
past
yearsj
(2) broadly
5
the present conditions
tion condition)
( o t h e r than o o n t r i b u ­
as a p p l y i n g t o covenanted
benefit;
and c i t h e r
(3) a c r e d i t
of
contributions, e n t i t l i n g
t i o n a t e number of
weeks of b e n e f i t ,
to a propor­
up t o ( s a y )
26
weeks as a maximum;
or
(4)
satisfaction,
through L o c a l Employment Committees, of
s p e c i a l c o n d i t i o n s d e s i g n e d t o t e s t the genuineness
of t h e c l a i m i n the absence of
a c r e d i t of
contributions,,
6,
In the o r d i n a r y case of t h e worker who does not
much from unemployment,
would be no need t o f a l l
I f a however,
5(1)
s
(2)
suffer
and ( 3 ) would a p p l y ;
there
back on 5 ( 4 ) .
a worker s u f f e r e d from a good disal of
unemploymsnt e i t h e r i n one s p e l l
or i n s e v e r a l s p e l l s
within
a s h o r t space of t i m e , he would u l t i m a t e l y come under 5 ( 4 ) ;
but he might s u b s e q u e n t l y r 6 q u e l i f y f o r 5 ( 3 ) by baying
further
contributionso
7.
The s p e c i a l
c o n d i t i o n s s u g g e s t e d under 5 ( 4 ) are t h a t
applicant, must prove t h a t he (i)
*
w i l l n o r m a l l y seek h i s l i v e l i h o o d b y employment
an i n s u r e d t r a d e ;
the
, .
/(ID
In
(ii)
can show that i n normal times employment
s u i t e d to h i s c a p a c i t i e s would be
likely
to be a v a i l a b l e f o r him;
(ill)
has performed a reasonable amount of work during
the l a s t ^t"wo/ y e a r s having regard to the
o p p o r t u n i t i e s e x i s t i n g during that p e r i o d )
(iv)
i s making every reasonable e f f o r t
to obtain
employment s u i t e d to h i s o a p a o i t i e a and i s
w i l l i n g to aocept such employment.
I t i s regarded as important that i t should r e s t
s o l e l y with the M i n i s t e r to d e o i d e , on the reoommenda­
t i o n s of the Looal Employment Committees, whether these
special
conditions are s a t i s f i e d .
If,
however,
the
question i s whether the conditions under 5 ( 2 )
ere
satisfied,
Insurance
the i3soision would be given by the
Officer, with a r i g h t of appeal to the Court of
and tho Umpire.
Referees