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Catalogue Reference:CAB/129/5
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JTHIS
DOCUMENT I S
THE PROPERTY OP H I S BRITANNIC M A J E S T Y ' S GOVERNMENT)
124
S E C R E T
C P . (U-5) 331
11 TH DECEMBER
COPY N O .
4 e
19L5
CABINET
NATIONAL INSJJRANCE
Memorandum
by
the
Lord
SCHEME
Privy
Seal
1,
At t h e i r m e e t i n g on 6 t h December (C.M.(h5) 60th C o n c l u s i o n s ,
M i n u t e h) t h e C a b i n e t i n v i t e d t h e F o r e i g n S e c r e t a r y ,
the
C h a n c e l l o r of t h e E x c h e q u e r , t h e M i n i s t e r of L a b o u r and N a t i o n a l
S e r v i c e , t h e M i n i s t e r of N a t i o n a l I n s u r a n c e and m y s e l f t o c o n s i d e r
f u r t h e r , i n t h e l i g h t of t h e d i s c u s s i o n , t h e p r o b l e m s r e l a t i n g
to
t h e p a y m e n t of u n e m p l o y m e n t b e n e f i t and t h e r a t e of r e t i r e m e n t
pension.
2*
Unemployment B e n e f i t .
We a g r e e t h a t i t m u s t b e t h e m o s t
urgent t a s k of"the Government to see t h a t the c o n d i t i o n s which
led. t o l o n g t e r m unemployment i n c e r t a i n a r e a s d u r i n g t h e
y e a r s b e t w e e n t h e w a r s do n o t r e c u r , and t h a t , u n l e s s t h e
Government f a i l in t h i s t a s k , i t should normally be p o s s i b l e
t o p r o v i d e s u i t a b l e work or t r a i n i n g t o t h e g e n u i n e t y p e of
u n e m p l o y e d p e r s o n l o n g b e f o r e ho h a s d r a w n b e n e f i t
for
30 w e e k s .
We a l s o a g r e e t h a t t h e c o n d i t i o n s f o r t h e p a y m e n t
of unemployment b e n e f i t i n t h e e x i s t i n g law should be
maintained.
The e f f e c t of t h e s e i s t h a t b e n e f i t i s n o t
p a y a b l e i f a clai.io.nt r e f u s e s an o f f e r of s u i t a b l e work
i n h i s own t r a d e a t a n y t i m e , o r , a f t e r h e h a s b e e n d r a w i n g
b e n e f i t f o r some t i m e , a r e a s o n a b l e o f f e r o f w o r k i n
another trade.
In e i t h e r case t h e q u e s t i o n whether an o f f e r
o f e m p l o y m e n t o u t s i d e a mar. s home d i s t r i c t y o u l d b e
suitable
w o u l d d e p e n d , .. a m o n g o t h e r t h i n g s , o n t h e m a n s i n d i v i d u a l
c i r c u m s t a n c e s end t h e l e n g t h of t i m e f o r w h i c h he h a d b e e n
unemployed.
T
I t i s , i n our v i e w , i m p o s s i b l e t o add t o t h e s a f e g u a r d s
in
the e x i s t i n g law without v i r t u a l l y importing t h e "not g e n u i n e l y
s e e k i n g work'' c o n d i t i o n .
Thus t h e i s s u e I s n a r r o w e d down t o
w h e t h e r t h e new scheme s h o u l d p r o v i d e ( i ) t h a t , a s a t p r e s e n t ,
the insured p e r s o n ' s t i t l e to benefit should cease a f t e r
30
weeks ( w i t h e x t e n s i o n s f o r p e r s o n s with good employment
records
u p t o a s m u c h a s 5 2 w e e k s ) , . o r ( i i ) t h a t t h e r e s h o u l d b e no t i m e
l i m i t on t h e payment of
benefit.
T h e M i n i s t e r of N a t i o n a l I n s u r a n c e f e e l s t h a t ,
hoy/ever
s u c c e s s f u l t h e G o v e r n m e n t ' s e m p l o y m e n t x-^olicy may b e , t h e r e
will
b e s o m e g e n u i n e c a s e s o n whom t h e w i t h d r a w a l o f b e n e f i t
after
30 w e e k s w i l l b e a r h a r d l y , a n d h e a r g u e s t h a t , i f t h e S t a t e
c a n n o t o f f e r work o r t r a i n i n g t o a n u n e m p l o y e d man b e f o r e
the
e x p i r y o f 30 w e e k s , i t i s n o h e l p t o w a r d s a s o l u t i o n o f t h e
m a n ' s p r o b l e m t o s a y t o him t h a t i n f u t u r e he m u s t depend on
a s s i s t a n c e , payable subject to an enquiry i n t o h i s
means.
He
has a l s o p o i n t e d out t h a t the Trades Union Congress i n a r e c e n t
d e p u t a t i o n e x p r e s s e d t h e m s e l v e s a s s t r o n g l y i n f a v o u r of t h e
r e m o v a l of t h e t i m e l i m i t *
T h e F o r e i g n S e c r e t a r y , t h e - C h a n c e l l o r of t h e Exch.ecj.uer
and t h e M i n i s t e r of Labour and N a t i o n a l ' S e r v i c e ,
while
a p p r e c i a t i n g t h e p o i n t of view of t h e M i n i s t e r of N a t i o n a l
I n s u r a n c e , r e g a r d i t a s of t h e u t m o s t i m p o r t a n c e t h a t
the
p r i n c i p l e of i n s u r a n c e s h o u l d b e p r e s e r v e d i n t h e a r r a n g e m e n t s
f o r u n e m p l o y m e n t " b e n e f i t , and. t h e y . b e l i e v e t h a t , u n l e s s t h e
time i s r e t a i n e d , it w i l l be d i f f i c u l t to prevent
certain
c l a i m a n t s who h a v e n o r e a l i n t e n t i o n of t a k i n g u p s t e a d y
employment from drawing b e n e f i t f o r p r a c t i c a l l y
unlimited
p e r i o d s , with the r e s u l t t h a t an u n f a i r burden w i l l be imposed
on t h e i n s u r a n c e fund.
F o r e x a m p l e , a m a r r i e d woman who d i d
n o t i n t e n d to r e - e n t e r the l a b o u r market might draw b e n e f i t
f o r a v e r y l o n g t i m e j p a r t i c u l a r l y s i n c e i t would n o t be
r e g a r d e d as r e a s o n a b l e tb o f f e r her work i n a d i s t r i c t
other
t h a n t h a t i n which she was l i v i n g .
These M i n i s t e r s
accordingly
recommend t h a t the p r e s e n t time l i m i t s h o u l d be r e t a i n e d and
t h a t t h e G o v e r n m e n t s h o u l d n e s t t h e i r m a i n d e f e n c e of
this
on t h e i r d e t e r m i n a t i o n t o p r e v e n t a r e c u r r e n c e of t h e l o n g
c o n t i n u e d unemployment which occurred in c e r t a i n a r e a s between
the. w a r s i
I n o r d e r t o meet the views e x p r e s s e d by t h e
M i n i s t e r of N a t i o n a l I n s u r a n c e , however, t h e y s u g g e s t
that,
before the National Insurance B i l l is introduced,
the
p o s s i b i l i t y s h o u l d be c o n s i d e r e d of a d j u s t i n g ,
zi m a y b e
n e c e s s a r y , the c o n d i t i o n s on which a s s i s t a n c e i s g i v e n b y t h e
A s s i s t a n c e B o a r d t o p e r s o n s who h a v e e x h a u s t e d t h e i r r i g h t
to unemployment
benefit.
We r e g r e t t h a t we h a v e b e e n u n a b l e t o r e a c h a g r e e m e n t
must l e a v e i t t o t h e C a b i n e t t o decide i n t h e l i g h t of t h e
c o n s i d e r a t i o n s s e t out above.
and
3*
R a t e of R e t i r e m e n t P e n s i o n .
T h e q u e s t i o n w h i c h we w e r e
a s k e d t o c o n s i d e r i s w h e t h e r t h e r a t e of r e t i r e m e n t
pension
f o r a s i n g l e person should be 21s. or 26s.
The o b j e c t i o n
w h i c h t h e C h a n c e l l o r of t h e E x c h e q u e r had t o a r a t e of 2 6 s .
was t h a t t h i s would i n v o l v e an i n c r e a s i n g l y heavy a d d i t i o n t o
t h e b u r d e n *n t h e E x c h e q u e r o v e r t h e n e x t t w e n t y y e a r s .
On
the o t h e r hand, the S o c i a l S e r v i c e s Committee f e l t t h a t a
r a t e of 26s-. w o u l d b e much e a s i e r t o d e f e n d , s i n c e i t w o u l d
be l i n k e d with the' r a t e s proposed for unemployment and
sickness
benefit.
The C h a n c e l l o r of t h e E x c h e q u e r h a s new a g r e e d t a a
r a t e of 26s-. on t h e c l e a r u n d e r s t a n d i n g t h a t t h e r e c a n b e no
y i e l d i n g t o p r e s s u r e t o i n c r e a s e t h e r a t e b e y o n d 2 6 s . when
t h e N a t i o n a l I n s u r a n c e B i l l i s b e f o r e P a r l i a m e n t and on
c o n d i t i o n t h a t s p e c i f i c p r o v i s i o n i s made i n t h e B i l l . f o r a ­
s u i t a b l e i n c r e a s e i n t h e amount of t h e c o n t r i b u t i o n s
after
t h e scheme has been i n o p e r a t i o n f o r f i v e y e a r s to meet
some p a r t of t h e a d d i t i o n a l b u r d e n d u e t o t h e
increased
rate.
4,
I n s r e a s e of R e t i r e m e n t P e n s i o n f o r D e f e r r e d
Retirement.
A t t h e m e e t i n g of t h e C a b i n e t o n 6 t h D e c e m b e r i t w a s a g r e e d
t h a t t h e p a y m e n t o f p e n s i o n s h o u l d b e c o n d i t i o n a l on r e t i r e ­
m e n t , and t h e C h a n c e l l o r of t h e E x c h e q u e r i n d i c a t e d t h a t he
was p r e p a r e d t o c o n s i d e r an i n c r e a s e i n t h e r a t e of p e n s i o n
o f 2 s , 6 d . a week f o r a s i n g l e p e r s o n and 5 s . a week f o r a
c o u p l e f o r each y o a r by which r e t i r e m e n t was p o s t p o n e d .
If,
however, t h e b a s i c r a t e of p e n s i o n i s r a i s e d to 2 6 s . a week,
i t s e e m s r e a s o n a b l e t o r e d u c e t h e r a t e o f i n c r e a s e a n d we
a c c o r d i n g l y recommend t h a t the i n d u c e m e n t f o r
deferred
r e t i r e m e n t s h o u l d b e an i n c r e a s e o f I s . a week i n t h e c a s e of
t h e s i n g l e p e r s o n and 2 s . a week i n t h e c a s e o f a c o u p l e f o r
e a c h s i x months by which r e t i r e m e n t i s p o s t p o n e d ,
the 2 s .
b e i n g p a y a b l e o n l y where the w i f e , as well as t h e h u s b a n d ,
has reached p e n s i o n a b l e age.
W h e n a man h a s a t t a i n e d t h e
a g e o f 7 0 ( o r a woman t h e a g e o f 6 5 ) i t w i l l b e a u t o m a t i c a l l y
assumed t h a t he or s h e has r e t i r e d and p e n s i o n w i l l become
payable.
Thus t h o maximum r e t i r e m e n t p e n s i o n p a y a b l e w i l l
be 3 6 s . f o r a s i n g l e p e r s o n and 6 2 s . f o r a c o u p l e .
(72s. for
a c o u p l e w h e r e t h e w i f e i s i n s u r e d i n h e r own r i g h t ) .
We f o o l , h o w e v e r , s o m e a p p r e h e n s i o n a b o u t t h e e f f e c t
of the r e t i r e m e n t c o n d i t i o n in c e r t a i n i n d u s t r i e s , where, owing t o t h e n a t u r e o f t h e w o r k , men a r e u n a b l e t o c o n t i n u e t o w o r k much b e y o n d t h e a g e o f 65 and w o u l d t h e r e f o r e b e u n a b l e
t o q u a l i f y f o r tho- i n c r e a s e o f p e n s i o n r e w a r d e d f o r d e f e r r e d
retirement.
We c o n s i d e r t h a t t h i s d i f f i c u l t y m i g h t b e m e t
by s e p a r a t e s c h e m e s f o r p a r t i c u l a r i n d u s t r i e s , a n d , i f any
such schemes were sot u p , the m a c h i n e r y of the N a t i o n a l
I n s u r a n c e s c h e m e c o u l d be made a v a i l a b l e f o r t h e m .
The
C h a n c e l l o r of t h e E x c h e q u e r h a s a l s o u n d e r t a k e n t o
give
c o n s i d e r a t i o n t o t h e p r o v i s i o n of a c e r t a i n
c o n t r i b u t i o n towards t h e c o s t of any such schemes.
5,
Contributions.
The S o c i a l S e r v i c e s C o m m i t t e e recommended
t h a t t h e w e e k l y c o n t r i b u t i o n f r o m a man i n C l a s s I s h o u l d n o t
exceed 4s.6d.
I t seems c l e a r , however, t h a t t h e b e n e f i t s
which the n a t i o n a l i n s u r a n c e scheme w i l l p r o v i d e a r e worth
more than t h i s to t h e w o r k e r s and t h e S o c i a l S e r v i c e s
Committee of the P a r l i a m e n t a r y Labour Par ty have i n d i c a t e d
t h a t 5 s . i s the maximum c o n t r i b u t i o n which c o u l d be b o r n e .
A c c o r d i n g l y , in view of our p r o p o s a l in p a r a g r a p h 3 t h a t
the b a s i c r a t e of r e t i r e m e n t p e n s i o n for a s i n g l e
person
s h o u l d b e f i x e d a t 2 6 s . , we r e c o m m e n d t h a t t h e i n i t i a l r a t e
of c o n t r i b u t i o n i n C l a s s I should be 4 s . l 0 d . from t h e
e m p l o y e d man a n d 4 s . 2 d . f r o m t h e e m p l o y e r a n d t h a t t h e B i l l
should provide that after five years these r a t e s should
be
i n c r e a s e d to 5s. and 4 s . 4d. r e s p e c t i v e l y .
These
figures
a r e b a s e d on t h o a s s u m p t i o n t h a t t h e p r e s e n t l i m i t of
3 0 w e e k s o n t h e p a y m e n t of u n e m p l o y m e n t b e n e f i t w i l l b e
retained.
I f i t were d e c i d e d to pay c o n t i n u o u s
benefit
u n e m p l o y m e n t t h e i n i t i a l C l a s s I r a t e s would r e q u i r e to be
5 s . f o r t h e e m p l o y e d man a n d 4 s . 5 d . f o r t h e e m p l o y e r ,
rising
to 5 s . 2 d . and 4 s . 7 d . a f t e r f i v e y e a r s .
127 6,
and
To s u m u p ,
the
Cabinet
is
asked
­
( a )
to
d e c i d e , in the l i g h t of the
considerations
set out in paragraph 2 above, whether the
p r e s e n t l i m i t of 30 w e e k s on t h e p a y m e n t of
unerap1oyrcent b e n e f i t s h o u l d be r e t a i n e d ;
( b )
to
approve the payment
to single persons at
on t h e u n d e r s t a n d i n g
increase in this rate
P a r l i a m e n t w i l l be r e
Paragraph 3 above).
( c )
to
agree t h a t the inducement to postpone
r e t i r e m e n t should, b e an i n c r e a s e of I s . a
w e e k i n t h e c a s e of a s i n g l e p e r s o n a n d 2 s .
a w e e k i n t h e c a s e of a c o u p l e , b o t h of
whom a r e o f p e n s i o n a b l e a g e , f o r e a c h s i x
months by which r e t i r e m e n t i s p o s t p o n e d ;
(see paragraph 4 above)'
(d)
to
approve the proposal t h a t for Class I the
i n i t i a l r a t e s of c o n t r i b u t i o n s h o u l d be 4 s . l 0 d .
f r o m t h e e m p l o y e d man e n d 4 s . 2 d . f r o m t h e
employer (or 5s. and 4 s . 5d. r e s p e c t i v e l y
if
t h e r e i s n o l i m i t on t h e p a y m e n t o f u n e m p l o y m e n t
b e n e f i t ) , and t h a t the B i l l should
specifically
p r o v i d e t h a t a f t e r a p e r i o d of f i v e y e a r s t h e s e
r a t e s should r i s e to 5 s . and 4 s . 4 d . (or 5s. 2d. and
4s.7d.), corresponding rates being fixed for
women a n d p e r s o n s i n C l a s s e s I I a n d I V .
(See p a r a g r a p h 5 a b o v e ) .
C-wydyr H o u s e ,
S.W, 1 .
11TH DECEMBER,
1945
of r e t i r e m e n t p e n s i o n s
t h e r a t e o f 2 6 s . a. w e e k ,
t h a t any p r e s s u r e f o r
an
when t h e B i l l i s b e f o r e
solutely resisted;
(see