4. In these circumstances, we have come to the conclusion that, whatever may be our ultimate recommendation, it is not possible to bring a combined card into use so soon as next July, and we think it desirable to bring this conclusion to your notice without delay.

UNEMPLOYMENT INSURANCE BILL, 1922.

REPORT

BY THE

GOVERNMENT ACTUARY ON

THE FINANCIAL PROVISIONS

OF THE BILL.

Presented to Parliament by Command of His Majesty.

mon droit

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1922.

BY THE

GOVERNMENT ACTUARY ON THE FINANCIAL
PROVISIONS OF THE BILL.

To the Rt. Hon. T. J. MACNAMARA, LL.D., M.P.,

SIR,

Minister of Labour.

1. As instructed, I have examined the provisions of the Unemployment Insurance Bill, 1922, and have to report as follows. 2. The existing provision for unemployed persons is made in the form of unemployment benefit paid under the Unemployment Insurance Acts, 1920 and 1921, together with the grants under the Unemployed Workers' Dependants (Temporary Provision) Act, 1921, which cease to be payable on 9th May next. The general effect of the Bill is to extend the period of payment of Dependants Grants and to combine these grants with the sums now provided under the Unemployment Insurance Acts into a single Unemployment Insurance benefit.

At the same time the rates of contribution now payable by employers, employees and the State under the two schemes are continued at their present amounts and a further extension is made of the number of weeks of benefit which can be drawn without reference to contributions paid.

The conditions as to benefits and contributions are to continue during the deficiency period, i.e., until the Unemployment Fund is solvent.

3. The principal financial provisions may be summarised as follows:

Married Man-20s. a week plus 1s. a week for each dependent
child.

Single Man-15s. a week.

Woman-12s. a week.

Married women with dependent husbands are to be entitled to 17s. a week together with the allowances for children. Juveniles are to receive benefits at half the rates applicable to single

persons.

:

(c) Periods of Benefit.

The "third special period" is to run from 6th April, 1922, to 1st November, 1922, and the fourth special period" from 2nd November, 1922, to 1st July, 1923.

In the third special period 15 weeks of benefit are to be payable in three periods of 5 weeks each, separated by intervals of 5 weeks. Further, when a person has received 22 weeks benefit in all since 2nd November, 1921, he is not to be entitled to benefit until 17th April next.

In the fourth special period 12 weeks of benefit may be paid but the Minister has power, if he so determines, to grant two further periods of 5 weeks each, making 22 weeks in all.

(d) The borrowing powers in respect of the Unemployment Insurance Fund are increased from £20,000,000* to £30,000,000 during the deficiency period.

(e) The maximum appropriation-in-aid of expenses of administration is increased from 10 per cent. to 12 per cent. of the income of the Fund.

(f) The Bill applies to Great Britain only.

4. I estimate that the number of persons coming within the scope of the Bill is approximately 11,250,000. Further, I am informed by the Minister of Labour that, for the purposes of these calculations, the numbers of unemployed, based on unemployment insurance books lodged at Employment Exchanges in respect of persons wholly unemployed, together with half the numbers registered as working systematic short time, should be taken at an average of 1,900,000 up to 2nd July, 1922, and 1,500,000 from 3rd July, 1922 to 1st July, 1923.

5. On the basis of the above figures I estimate that the total contributions payable by employers, employees and the State within the period 6th April, 1922 to 1st July, 1923, will be approximately £56,000,000. From this sum there falls to be deducted the appropriation-in-aid of expenses, which I have taken at its maximum figure of 12 per cent. thereof, leaving a net sum of £49,000,000 available for payment of benefits.

6. The cost of benefits must be estimated in relation to the assumed averages of 1,900,000 and 1,500,000 unemployed persons given in paragraph 4. As already stated, these figures are based on the total of books lodged together with one-half of persons. working short time.

This figure does not, however, represent the probable numbers which will be entitled to benefit. A person may have lodged his unemployment insurance book but may be disentitled to benefit for various reasons. Thus he may be undergoing the statutory waiting period of six days which is imposed at the beginning of a claim for benefit, or he may fail to satisfy the qualifying conditions. From an examination of the available figures I find that,

*This sum applies to the United Kingdom; the proportion applicable to Great Britain may be put at £19,000,000.

36462

A 2

ignoring cases where the right to benefit has been exhausted, normally 80 per cent. of the numbers unemployed calculated as above are entitled to benefit, and I have, therefore, adopted this figure for the purposes of the present calculations.

7. It is difficult to estimate with any degree of precision what will be the relief to the Fund through exhaustion of the benefit rights conferred during the third and fourth special periods, since the position in this respect will be largely influenced by the actual course of unemployment.

Making such assumptions as seem reasonable and assuming, further, that the power to grant a maximum of 22 weeks of benefit in the fourth special period will be fully exercised, I estimate that the total benefit payments between 6th April, 1922, and 1st July, 1923, inclusive, will amount to about £60,000,000. In addition, the Fund will incur a liability, in respect of interest on its debt within the period, amounting to about £1,500,000, thus making a total expenditure of £61,500,000.

8. I am informed by the Minister of Labour that the outstanding debt of the Unemployment Fund on 18th instant amounted to nearly £14,000,000, and that the balance of the Unemployed Workers' Dependants Fund was about £700,000. I estimate

that the net debt to the Exchequer in respect of Great Britain on 5th April next, after allowing for the transfer of the appropriate part of the surplus on the Dependants Fund, will be approximately £14,500,000.

As shown above, the expenditure in the following 15 months will exceed the income by about £12,500,000. The total debt on 1st July, 1923, will thus be increased to £27,000,000.

This will not be the maximum amount of the debt. On the assumed conditions as to payment of benefit, I estimate that the debt will reach its maximum in March or April of 1923 at a figure of about £28,500,000.

9. It should be pointed out that the above figures are based strictly on the assumption that the assumed averages of unemployment will be realised each week, and contain no margin for contingencies. If, for example, unemployment were such that, whilst the assumed average of 1,500,000 in the year July, 1922— June, 1923, were unaltered, the actual numbers were, in fact, higher than this figure in the winter when benefit rights were current, and lower in the summer when those rights began to be exhausted, then the cost of benefits under the scheme would be higher than I have estimated. Further, a continuance of the present trade disputes is bound to have an unfavourable effect. upon the finances of the Fund the extent of which clearly cannot be measured at the present time.

10. In these circumstances it is obviously of importance, if payment of benefits at the proposed rates is to be ensured, that the borrowing powers should be fixed at a figure higher than the estimated maximum of £28,500,000.

The Bill provides that the maximum sum which may be advanced by the Treasury in respect of Great Britain is £30,000,000, thus giving a margin of £1,500,000 over and above the maximum