the unemployment figure. After lengthy negotiations between the Board and the Ministry of Labour an agreement was reached under which in June, 1921 the Board's Inspectorate undertook the non-compliance work as agents of the Ministry of Labour. It is to be noted that this new duty relates only to collection of contributions, investigations into insurability and allied matters. The inspectors of the Board do not in any way deal with questions of unemployment benefit.

Industrial and Social Conditions in 1921.

The cloud of industrial depression which had already begun to settle on the urban areas of Scotland at the beginning of 1921 became rapidly darker as the year advanced. By midsummer it was at its worst, and so it remained with but small signs of lifting at the end of the year. As a consequence both the Health and Unemployment Insurance Funds suffered heavily by diminution of the flow of contributions and increase in the claims for benefit. In Glasgow and the West, the mining, steel, shipbuilding and engineering industries were seriously affected. In Edinburgh and the South East almost every trade and industry except brewing and certain branches of rubber work were at a low ebb. In Dundee and the surrounding areas textiles, jute and shipbuilding suffered severely. In Aberdeen every large trade, and especially granite, building, linens, woollens, shared in the general depression. Fishing-the staple of the North East-was disastrous except for the white fishing, and many important allied and dependant occupations suffered in consequence. Throughout the country the coal mining industry was acutely depressed, partly because of the general influence affecting all industry and partly in consequence of the great strike of April-June, 1921. Only in the agricultural districts and the Highlands did conditions at all approach the normal, and even in the Highlands, fishing (except in Shetland) and the Hebridean tweed trade were very bad.

So serious and general was unemployment that the majority of insured persons were affected, and in the industrial areas few were able to pay the arrears accruing against them. Indeed but for the emergency legislation towards the end of the year many persons would have passed altogether and unwillingly out of insurance. The inevitable loss to the Health Insurance Fund was, however, not appreciably aggravated by non-compliance. But the financial stringency combined with the direct hostility of many of those brought within Unemployment Insurance for the first time led to great negligence and considerable evasion in the payment of contributions under that scheme. Some small set-off against loss to the funds arose through the general fall in wages. This brought numbers of employed people who had for some time been above the statutory income limit again within the scope of the Acts. The marked falling off in emigration also helped in this respect.

Collection of Health Insurance Contributions.

The collection of health insurance contributions presented few new features during the year. Notwithstanding the widespread unemployment there was no appreciable increase in the number of irregularities. Indeed the insurance system seemed to grow in favour as its usefulness in hard times became more apparent. The farming community, which has always given most difficulty to the inspectors, showed greater readiness than ever before to observe the statutory obligations. Employers generally were more inclined to make their employees pay their own share of the contribution, and the small employers were more prompt in paying the weekly contributions as these fell due instead of allowing them to accumulate. Both these features were obviously due to the general financial stringency and the substantial weekly sums now required under the two insurance systems.

Irregularities occur rather amongst classes of employment than in particular districts. Thus most are found among casual workers, fish workers, seasonal workers, small shopkeepers, cleaners and charwomen. Late stamping and handing loose stamps or cash to the employee are the prevalent irregularities. Wrong value stamping and deliberate deduction by the employer of his share of the joint contribution are rarely found. Trafficking in stamps is being closely

looked for, but although about a dozen cases have been detected and dealt with in the year, there is no evidence that this form of fraud is at all widespread.

In Appendix I. is given a summary of the health survey work for 1921. It will be seen that a wide range of employment both in type and volume has been covered. In round figures 16,500 places were visited in which were found 13,000 employers with insurable employees, the latter numbering in total about 198,000. Taking the total insured population at 1,623.000, the number of employees surveyed in the year was therefore 12 per cent. of the whole. Taking the number of employers at 160,000 (though this must necessarily be only an approximate estimate) the percentage of employers with insurable employees surveyed was 8. If instead of employers with insurable employees we take the full number of places visited, the latter percentage becomes increased to 10. It is believed that these percentages and the variety of employment surveyed give a fair picture of the conditions throughout the whole country.

The table also shows the irregularities, simple and serious, discovered in survey. The employers concerned in simple irregularities numbered 2617 and in serious irregularities 502. The employees affected either by the irregularity of their employers or by their own action numbered-simple 18,559, serious 2426. Simple irregularities by the employer cover failure to stamp in current period; holding up cards for short periods; and other errors of negligence. Serious Irregularities cover failure to stamp in previous period; or in current period where evasion is suspected or there has been failure to stamp in a previous period; obstruction; deduction of employer's share; refusal to return card for full period and the like. In the case of the employed contributor, simple irregularities cover failure to submit card to employer for stamping timeously, and similar minor negligences; serious irregularities failure to present card over full period, obstruction and the like. If we express the above numbers as percentages of the numbers surveyed we have the following measure of irregularity:

The number of employers involved in serious irregularities (4 per cent.) appears high, but from the percentage of employees affected (1.2 per cent.) it is evident that those at fault are mainly the small employers. The figure 1.2 per cent. may be taken as the upper limit of deliberate non-compliance, and as such it gives no substantial grounds for concern.

A second measure of the situation is given in item 1 of the "Summary of Cases" dealt with (see Appendix III.). This table is only for the second half of 1921, so that the figures should be doubled to give an annual basis. The number of contribution complaints lodged with the inspectorate (mainly from employees) for the six months was 1391. These complaints related principally to failure to stamp, or failure of the employer to return the employed person's card. Of course this figure represents only the aggrieved contributors, and therefore cannot compare with the survey figures as a test of the volume of irregularity. It shows, however, that the insured persons are alive to the necessity of having their cards stamped and indicates their reliance on the inspectorate for help in this matter.

Amongst the surveys, reference should be made to an intensive effort in the Fifeshire coal field which occupied two officers for a great part of 1921. Owing partly to the disorganisation produced by the war, of which the effects were still evident, and partly to the great coal strikes of 1920 and 1921, the office arrangements of most of the colliery companies in this area for dealing with insurance matters were unsatisfactory. About 17 separate undertakings, 68 pits and 35,000 workers are involved The miners tend to be migratory, especially when short time is being worked, and this adds to the difficulties. The number of pits surveyed was 58. On the advice of the inspectors the arrangements for dealing with cards and stamping were thoroughly revised, and various irregularities, e.g. unassigned cards, delayed stamping, defacing of cards, inadequate control of loose stamps were rectified. The situation is now much

more satisfactory, and about £1700 of back contributions have been recovered to the Health Insurance Fund.

The number of prosecutions in 1921 was 52. Of these 41 were in respect of failure to stamp, 3 in respect of failure to return card; the remainder related to use of cancelled stamps, defacing cards, removing stamps from cards, obtaining benefit fraudulently and the like. The largest fine obtained was £25.

Collection of Unemployment Insurance Contributions.

Employers and employees generally regard the payment of unemployment contributions with greater dislike than those for health insurance. The former system has, of course, only been in force for the general bulk of the population since November, 1920, while the latter has had a nine and a half years run. Moreover employers had to face the substantial increase in their State insurance payments at a time when they were cutting down rigorously all business costs in order to meet the trade difficulties of 1921. On the other hand the payment of benefit to great numbers of workers throughout the year, and especially in its latter half, was an evident object lesson to the workers in the value of unemployment insurance.

It was no uncommon experience to find employers and employees who were careful in the observation of their obligations under the health scheme quite indifferent to the other. Offices and shops where employees are more permanently attached to particular employers than in large works have given most trouble amongst regular occupations. Special difficulties also arose with collieries, railway companies and local authorities. The casual, seasonal and part time workers have been found, as in health insurance, to give trouble and occupy time out of proportion to their volume. One inspector states that an unemployment irregularity takes twice as long to adjust as does a health case, both in verbal explanation and clerical work. The changes in the rates of contribution and the numerous reversals of decisions as to insurability which occurred in 1921 added to the difficulties.

The number of complaints received at the district offices was, it is true. only about a quarter of that for health (see Appendix III.), but this is due to the facts-first, that these complaints are only the residue of the much larger number lodged in the first instance at the Employment Exchanges; second, that the public do not as yet fully realise that the Board of Health inspectorate are responsible for the collection of unemployment contributions, and third, that as stated earlier the population insurable against unemployment contains a much larger number of people indifferent or hostile to that form of insurance. For a truer picture of the situation we must turn to the unemployment survey statistics given in Appendix II.

It must be noted that these figures are for six months' work only-the second half of 1921. In that period 10.074 places have been visited, at which 7838 employers with insurable employees have been found-the latter numbering 127,402. The whole insurable population is estimated to be 1,350,000 (about 270,000 less than for health insurance, the difference being mainly accounted for by the exclusion of domestic servants and agricultural workers). The percentage of insured persons surveyed to the total is therefore 9 for the six months, as compared with the 12 per cent. for health in the year. It was felt desirable to concentrate on surveys in the latter half of the year in view of the widespread non-compliance with the Unemployment Acts. An 18 per cent. per annum survey was not too much at this stage if difficulties and troublesome work on arrears were to be avoided in the future. The education of employers and employees so given is bound to bear valuable fruit later.

The table in Appendix II. shows the irregularities discovered, on the same basis as the corresponding health table (Appendix I.). Among employers, simple irregularities numbered 2130 and serious irregularities 732. The corresponding percentages to the numbers surveyed are 27 and 9 respectively. For health the percentages were 20 and 4. Amongst employees, simple irregularities numbered 14,929 and serious 5283. The corresponding percentages to the numbers surveyed were 12 and 4 respectively. For health the percentages were 9 and 12. Especially in the serious irregularities, do both employers and

employees show up badly in unemployment as compared with health insurance, -more than twice as many for employers, more than three times as many for employees. But this, of course, was to be expected, having regard to the recent institution of the general system, the insufficient inspection at the start and the frequent change of the rates of contribution. In this connection it is worth noting that the value of the arrears collected by inspectors which would otherwise have been lost to the Funds was for unemployment 23 times that for health.

Four prosecutions under the Unemployment Acts were instituted during the half year, of which three were successful.

The relations between the Board's inspectorate and the managers of the Employment Exchanges have been uniformly harmonious and mutually helpful. At a very early stage in the work the inspecters got into touch with all the Labour Exchanges and Branch Employment Offices of their districts (in Scotland there are 48 of the former and 160 of the latter), and this step facilitated very much the prompt collection of contributions and the tracking down of ignorance and evasion. In particular the inspectors were able to aid the Exchanges in making widely known the contribution requirements of the Unemployed Workers' Dependants Act which came into force at very short notice in November, 1921.

Questions of Insurability.

A considerable part of the work of the inspectors lies in the local investigation of questions of insurability referred either by the Board of Health or by the Ministry of Labour. Especially in demarcation cases, i.e. where the nature of the employment is such that insurability under health and non-insurability under unemployment are likely, is painstaking enquiry necessary. On landed estates the question whether an employment is in agriculture (including horticulture and forestry) or not is often very difficult, and similarly the criterion of domestic service not for the purposes of gain arises acutely in many employments. But the tests common to both insurance systems, viz. contract of service, rate of remuneration and manual labour have also provided many cases. Examples of these dealt with during the year are underground firemen in mines, coal trimmers, drainers, salmon fishermen, professional footballers, stone breakers, check weighers, fur cutters, milk sellers, blind apprentices, marine engineers, licensed slaughtermen, trawler skippers and mates, supervisors of meals provided by education authorities, boiler scrapers, fishing net outworkers, woodworkers in the Highlands. It is of interest to note that in the ninth year of health insurance so many particular problems of insurability still remained to be solved.

Questions affecting unemployment insurance alone arose with railway companies, local authorities and certain other public authorities, who were in doubt whether they could or would claim certificates of exception under the Unemployment Acts. The demarcation questions (agriculture and domestic service) referred to above did not cause any real difficulty, though much work was involved, until in a large number of cases the English High Court reversed the decisions previously given by the Ministry of Labour. An atmosphere of uncertainty has spread over employments of a kind comparable to those covered by the particular decisions, and so the work of the inspectorate has been hampered and slowed down.

The local investigation of questions of insurability in conjunction with the work of enforcing payment of contributions has shown that, broadly speaking, no persons at present excluded from the Unemployment Insurance Acts wish to be included. There is no doubt that domestic servants and agricultural workers are satisfied to be outside the system, and would resent being brought within it.

Administration of Health Insurance Benefits.

The outstanding feature here has been the unprecedented volume of arrears debited against insured persons at the end of the contribution year 1920-21. The industrial workers have, of course, been most affected, but even in the northern district, which is almost entirely agricultural and pastoral, the

arrears are reported to be much greater than for the previous contribution year. The effect on benefits will, of course, only become apparent in 1922. Fortunately, the Prolongation of Insurance Act, 1921, which was welcomed by the societies, did much to relieve the situation. Enquiry amongst society officials indicates that, but for this measure, a considerable number of people would have lapsed from insurance altogether. Steps were taken by the inspectorate at an early stage to advise society officials as to the requirements of that Act and the relative regulations.

The administration of benefits continues to be good. With the passage of time both officers of societies and members have become more fully aware of the conditions under which benefit can be claimed and paid, and this has made for increased smoothness in the working of the machinery. Most societies have welcomed the appointment of the medical referees and have made full use of their help in the settlement of claims.

There appears to be a decrease in the number of benefit complaints, although their volume, at the rate of 2410 a year (see Appendix III.), shows that there still remains room for improvement in the machinery of benefit administration. It is fair, however, to say that in this matter the insured person is to blame almost as often as the society official. Among the societies most complaints arise in the case of the centralised bodies. In the main, complaints relate to delay in payment of benefit or improper deduction or suspension of benefit on account of arrears.

The inspectorate assisted in pressing the formulation of schemes of additional benefits upon societies, and also advised them of the particular ways in which disposable surpluses could be expended. While there has been some comment upon the situation brought about by the different rates of benefit now payable as a result of the additional benefit schemes, on the whole this has been accepted as an essential feature of the system. The increased rates have made insured persons anxious to pay arrears and have done much to increase the popularity of the Health Insurance Acts.

There is no doubt that the popularity of medical benefit has increased rather than diminished during the year. Fewer complaints are now heard of preferential treatment of private patients by insurance service practitioners. Vague statements as to inferior drugs and insufficient attention still appear, but they have not been so numerous during 1921 as in previous years.

Special Work in connection with Insurance Committees and Approved Societies.

A

An exhaustive inquiry was made by the inspectorate into the administration expenditure of all insurance committees during the year with a view to determining what sums might reasonably be authorised for salaries and wages. careful examination of the work and office organisation of each committee was made, and the rates of remuneration proposed were compared with those obtaining in outside employment of similar character and responsibility, e.g., in banks, offices, local authorities and the like. A large number of reductions on the original proposals of the Committees were recommended and adopted by the Board; and with due regard to the particular conditions of each area, a reasonable uniformity of scale was reached. Questions of recommendations for membership, delay in forwarding claims under Article 9 of the Medical Benefit Regulations, returns of the drug fund position, ledger accounts, and audit notes were also dealt with.

Work on the valuation of approved societies was confined to settlement of doubtful points in "alterations," returns, and the completion of ledger accounts. A number of societies required inspectorial visits in connection with the formulation and adoption of new rules. Considerable pressure and assistance were necessary before this work was satisfactorily completed. Arising out of the general demand by societies for an increase of the administration allowance, investigation was made into the office organisation and rates of remuneration paid to staffs. Reports have also been made on various societies in connection with excessive sickness experience.