Unemployment Insurance

During 1925 and 1926 the whole subject of unemployment insurance was examined by a committee under the chairmanship of Lord Blanesburgh. They made a number of important recom mendations for the amendment of the scheme with a view to putting it on a sound and permanent basis. In particular they advised the abolition of the dual benefit system, i.e., the con current existence of standard and extended benefit. The recom mendations of the committee were accepted in principle by the Government, and with one main exception were passed into law by the Unemployment Insurance Act of 1927. That act made a number of changes in the scheme, dealing amongst other matters with the rates and conditions of benefit, the creation of a class of young persons between 18 and 21 years of age, the abolition of extended benefit and of contracting out.

The governing condition of the scheme as amended by the act of 1927 was the payment by the claimant for benefit of 3o con tributions during the two years preceding the claim. During a transitional period which ended in individual cases between April 1931 and April 1932 this condition was relaxed in favour of some claimants who could prove that they normally worked in an in sured trade.

The Scheme in 1930.

The broad outlines of the scheme as it was revised in 1930 and under the 1934 Act, are: (I) With certain exceptions, the scheme applies to workers over 16 years of age in all industries save agriculture and private domestic service; the insurance and banking industries have separate special schemes of their own. (2) Contributions are payable by the employers, the employed and the Exchequer, the rates for an adult male being at present 8d., 7d. and 7/d. respectively ; lower rates than these apply to women and to young persons. (3) Benefit is payable at the following weekly rates: Unemployment Insurance Benefits The principal conditions for the receipt of benefit are given herewith: (a) The payment of 3o contributions during the last two years ; (b) Making a claim for benefit and proving continuous unemployment ; (c) Being capable of and available for work. (7) Benefit is not limited in proportion to the number of contributions previously paid, nor is it restricted to a given number of weeks in a period. (8) A claimant is disqualified for benefit if he loses his employment by reason of a stoppage of work due to a trade dispute at his place of employment or if he has left his employment voluntarily without just cause or been dismissed for misconduct ; or if, without good cause, he has refused the offer of a situation in employment which is suitable in his case.

(9) Benefits may be administered by Associations on behalf of their members. (io) Industries may set up supplementary schemes, but may not contract out.

During the years 1931-34 unemployment insurance became a menacing factor in British public finances and a major factor in political party struggles. In 1931, expenditure for contributory and non-contributory benefits was at the rate of £125,000,000 a year, while the contributions of employers and workers were at the rate of less than £30,000,000 a year. In addition, the Govern ment was spending approximately £30,000,000 on relief works.

Nov. 12, 1931, benefit rates were cut o% (adult males from 17s. to iss. 3d. and females iss. to 13 s. 6d., and adult dependents from 9s. to 8s.), and their duration to 26 weeks per year. These new rates remained in effect until the 1934 law went into effect on July 1, 1934, when the 1930 rates were restored, but every claim ant was made to prove 3o contributions in the two years preceding the date of his claim. These restrictions excluded over half of the current list of claimants from drawing insurance benefits as a right.

They cut off over 1,000,000 persons. These were now offered a new relief called "Transitional Payments" subject to a means test. These payments could not exceed what the person in question would have drawn under insurance, but they might be less. The Exchequer footed the bill. In addition, stiff regulations were made to deter married women, seasonal and casual workers, and semi retired persons from obtaining either insurance or transitional payments. This purge, together with the means test, was deeply resented by many poor people. The rolls were reduced by approxi mately 200,000 persons, equivalent to a saving of .110,000,00o a year. Another effect was a substantial increase in private relief for the unemployed. The constructive results produced by the new transitional payments scheme were that it re-introduced the giving of non-contributory relief according to needs instead of as a right, and that it kept thousands of people from making applica tions who could not apply on a basis of need but did apply when public "doles" were given as a right at fixed rates and without re quiring previous insurance contributions.