Wrongful Claims to Benefit.

As stated in previous Reports, it is the general policy of the Department to institute proceedings in cases of claims to benefit, where there is reason to suspect fraudulent misrepresentation and on the evidence a conviction seems probable. In the last few months of 1925 there was a decided downward tendency in the number of cases of fraud revealed, and this continued during the first part of 1926. During the latter part of 1926, however, the number of cases increased; this increase was coincident with the large increase in unemployment in many trades consequent upon the stoppage in the coalfields. Nevertheless, the total number of cases of fraud in 1926 was substantially lower than in 1925.

The number of persons prosecuted during 1926 was 1,750, i.e.. an average of 146 a month, as compared with 2,034 in 1925, or an average of 169 a month. Of the 1,750 persons prosecuted in 1926, 1,144 (or 65.4 per cent.) were fined, 341 (or 19.5 per cent.) were imprisoned, and 166 (or 9.5 per cent.) were bound over or admonished. The summonses were dismissed in 99 (or 5.6 per cent.) of the cases. The corresponding figures for the year 1925 were 1,273 (or 62.6 per cent.) fined, 496 (or 24.4 per cent.) imprisoned, 146 (or 7.2 per cent.) bound over or admonished, and 119 (or 5.8 per cent.) dismissed.

There was also noticeable a continued decrease in the number of cases of fraud of a serious character. This is illustrated by the fact that, whereas during 1925 the number of persons sent to prison for periods of two months or more was 86, during 1926 the number was 64.

The most prevalent type of fraud was that of persons claiming unemployment benefit for days on which they were employed; 1,234 (or 70.5 per cent.) of the prosecutions in 1926 were in respect of offences of this kind. It should be mentioned that in most of these cases the offences related to single days or short periods on or during which the claimant represented that he was unemployed though he had obtained employment of a casual nature. In 305 (or 17.4 per cent.) of the prosecutions the offence consisted of making false representations for the purpose of obtaining benefit in respect of dependants, e.g., that the claimant's wife or children were being maintained by him; that the claimant's wife was not in regular wage-earning employment, &c. The remaining cases included, inter alia, false representations made by short-time workers as to their earnings, for the purpose of obtaining extended benefit (61 cases), false representations by claimants that they were not in receipt of benefit under the National Health Insurance Acts (47 cases), and false representations as to previous employment made with a view to avoiding disqualification under Section 8 (2) of the Unemployment Insurance Act, 1920 (28 cases).

As in previous years, the Department has been greatly assisted by insured contributors and the public generally in protecting the Unemployment Fund against fraudulent claims, and the Police throughout the country have continued to lend their invaluable co-operation.

Arrangements for Payment of Unemployment Benefit through Associations.

During the year under review, new arrangements for the payment of State unemployment benefits were made with ten associations having a total membership of about 53,900 while arrangements with four associations having a total membership of about 5,290 were terminated. Two of the new arrangements are with associations which formerly had such arrangements. At the end of the year the total number of associations with arrangements in operation was 154 with an approximate total membership of 1,150,460.

A provision was included in the Unemployment Insurance Act, 1926, further postponing until 31st December, 1927, the operation of the provision of the Unemployment Insurance (No. 2) Act, 1924, which prescribed certain increased rates of supplementary out-of-work benefits to be paid by associations from their own funds in addition to the State unemployment benefits.

Steps were taken during the year to ascertain, in the case of every association administering State unemployment benefits, what out-of-work benefits were being paid from its private funds and what changes (if any) had taken place in the rates, periods and conditions of the association's private benefits since the arrangements were approved. In those cases where the minimum out-of-work benefits from the association's private funds as required for the purpose of an arrangement under Section 17 of the Act of 1920 were not being paid, notice was given to the associations that the arrangements must be terminated unless they resumed at once the payment from their private funds of the minimum benefits necessary.

Officers of the Department visited further associations for the purpose of inspecting their systems for complying with the statutory requirements in the matter of obtaining notification of vacancies and of filling vacancies. As a result of their reports, the attention of certain of the associations was called to defects discovered, and in the case of one association which had neglected to remedy defects previously reported notice of termination of the arrangement was given.

Unemployment Benefit Questions arising out of the General Strike, 1926.

The general strike, which commenced on 4th May, 1926, threw an unprecedented amount of work on the statutory machinery for dealing with unemployment benefit claims.

In

addition to more than one million miners who were unemployed on 1st May, approximately 1,580,000 workers were directly involved in the general strike stoppage.

Test claims for benefit were originally disallowed by the Insurance Officer under the trade dispute clause (Section 8 (1) of the Unemployment Insurance Act, 1920), but it was subsequently decided that this ground of disallowance was appropriate, as it was held that the general strike was not a trade dispute within the meaning of Section 47 (1) (c) of the Act. Claims were accordingly disallowed by the Insurance Officer either on the ground that the claimants were not unable to obtain suitable employment or that they had left their employment voluntarily without just cause. The general duration of disallowance was limited to the period of the general strike. The action of the Insurance Officer in this matter was supported by the Umpire in decision no. 1845/26 in which he took the view that the general strike was due to a dispute between His Majesty's Government and the Trades Union Congress General Council, and not between employers and employees within the meaning of Section 47 of the 1920 Act, and that it was not, therefore, a trade dispute within the meaning of the Unemployment Insurance Acts.

Unemployment Benefit Questions arising out of the Coal Mining Dispute, 1926.

The national stoppage of work in the coal industry which occurred on 1st May, 1926, raised questions of special interest in regard to unemployment benefit and provided a searching test of the trade dispute clauses of the Unemployment Insurance Acts, 1920 and 1924.

Approximately 1,050,000 workpeople were directly involved by the stoppage, and in addition approximately 100,000 mine workers were unemployed prior to the stoppage. The miners who were unemployed prior to the stoppage were, generally speaking, entitled to benefit, but almost the whole of the mine workers who lost employment on 1st May were disqualified under Section 8 (1) of the 1920 Act. A small proportion escaped disqualification owing to the fact that they were employed in separate departments on work which is commonly carried on as a separate business from coal mining, e.g., workers in coke ovens, central engineering shops and coal washeries. During the course of the stoppage a number of miners were relieved from disqualification on becoming either regularly engaged in some other occupation or bona fide employed elsewhere in their usual occupation.

Apart from a small number of officials and similar workers, no mine workers established a title to benefit under Section 4 (1) of the 1924 (No. 2) Act. Important test cases were argued before the Umpire-notably in respect of deputies, safety men and mechanics-but in every case, notwithstanding that the

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Umpire was satisfied that these claimants were not themselves directly interested in, participating in or financing the dispute, they nevertheless failed to show that they did not belong to a grade or class of workers members of which were participating in, financing or directly interested in the dispute." The information supplied to the Umpire in each case showed that, although the majority of the grade of workers in question were organised in unions separate from the Miners' Federation, an appreciable proportion of workers in the grade belonged to miners' unions in various parts of the country.

The fact that Section 4 (1) did not afford relief to a large number of men who claimed to be innocent victims of the dispute led to many complaints, and representations in the matter were made by the unions concerned to Lord Blanesburgh's Committee.

SPECIAL SCHEMES.

The two special schemes which have been made under Section 18 of the Unemployment Insurance Act, 1920, namely, the schemes for the insurance and the banking industries, continued in operation throughout the year.

Insurance Industry Special Scheme.

At the instance of the Insurance Unemployment Board, a new Special Order entitled the Unemployment Insurance (Insurance Industry Special Scheme) (Variation and Amendment) Special Order, 1926, was made on 13th November, 1926, and came into force a month later. One of the more important amendments effected in the scheme by the new Order is a revised condition for the receipt of benefit requiring employment in the insurance industry in 30 weeks during the last three years (instead of in 13 weeks since 8th November, 1920) subject to waiver on conditions as favourable as under the general scheme. The constitution of the Insurance Unemployment Board has also been amended in certain respects. Other amendments are designed to bring certain provisions of the special scheme into line with corresponding provisions of the general scheme.

Some difficulty was experienced in cases where contributions were found to have been wrongly paid under the general scheme instead of under the special scheme and vice versa. Refunds under the general scheme were limited to contributions wrongly paid within three years of the application for their return. The result was that, in so far as the period of wrong stamping exceeded three years, the employers were in the position of having to pay contributions under the special scheme for a period for which they had already paid, but for which they could not obtain a refund under the general scheme. This difficulty has been met by new regulations called the Unemployment Insurance (Return of Contributions) Regulations, 1926, made on 31st

March, 1926, under which the period within which a claim may be made for the return of contributions wrongly paid has been extended to six years.

The converse case in which contributions have been wrongly paid under the special scheme instead of under the general scheme has been met in a similar way by new rules which have been added to the Insurance Industry Rules (1924).

A system is in operation whereby the adjustment of cases of incorrect stamping is dealt with in the first instance between the Department and the Insurance Unemployment Board.

Revised provisional rules for the allocation of claims to benefit of persons who have been insurably employed both under the general scheme and under the insurance industry special scheme were introduced as from 1st March, 1926.

A decision affecting the scope of the insurance industry special scheme was given on 2nd March, 1926, by Mr. Justice Roche, on an appeal by the Scottish Provident Institution against a decision of the Minister in the case of a caretaker of a block of offices owned by the Institution and occupied partly by it and partly by tenant firms. The Judge laid it down that where investments have been made in undertakings collateral to or independent of the insurance business of the undertakers, and persons are employed solely or mainly in such collateral or independent undertakings, such employees are not employed in the insurance industry. It was not sufficient that the undertaker or employer should be engaged in the insurance industry; it was essential also that the employee should be engaged in the business of his employer in and about the insurance industry. The Judge accordingly decided that the Minister was right in deciding that the employee in question was insurable but was outside the scope of the special scheme.

Banking Industry Special Scheme.

A similar decision was given by Mr. Justice Roche in the case of a person employed by Lloyds Bank, Limited.

Revised provisional rules for the allocation of claims were introduced as from 15th December, 1926.

COST OF ADMINISTRATION.

The ratio of administrative expenses to the income of the Fund was 91 per cent. in the financial year 1924-5. In 1925-6 the ratio was 9.8 per cent. On the basis of the voted Estimates it was anticipated to amount to 10'8 per cent. in 1926-7, but, in view of the general strike and mining dispute and the consequent increase in the live register and diminution of Fund income, it is possible that the actual ratio will exceed 12 per cent. of Fund income, the maximum contribution towards the expenses. of administration payable by the Unemployment Fund under