Unemployment and the Trade Cycle
The Unemployment Insurance Fund in recent years has accumulated a substantial reserve, which was increased last year by L16,600,000, though provision had been made for expenditure exceeding income by £8,250,000. The amount standing to its credit is L57,000,000, and it is for the Statutory Committee to recommend how this should be dis- posed of. It has to estimate the needs of the future, keeping sufficient reserves for the years when expenditure may exceed income, and consider whether contributions should be re- duced, or benefits extended ; also there is the question of the old outstanding debt, amounting now to £77,000,000, on which it has to pay interest. In deciding to increase the allowances for the first two dependent children by is. a week, but not to alter contributions or other benefits, it falls into line with the prevailing school of thought in regard to expenditure and savings. The recommendation to allot i37,000,000 to repayment of debt is based upon a number of interesting conclusions in regard to unemployment during the war and after. With some boldness the committee adopts a trade cycle period of eight years from now, and considers that this cycle will cover both the war and a sub- stantial depression after it. There will be reduction of un- employment during the war, but it is anticipated that it will be followed, perhaps after an interval, by a period of severe unemployment, as in 1921. The assumption is that the reserves will be increased during the war, and will be avail- able for use in the subsequent depression. It is not within the province of the committee to consider how such a depression might be averted.
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