THE PROBLEM OF UNEMPLOYMENT

HL Deb 11 March 1959 vol 214 cc969-1113

2.42 p.m.

VISCOUNT ALEXANDER OF HILLSBOROUGH rose to call attention to the present problem of unemployment; and to move for Papers. The noble Viscount said: My Lords, I beg to move the Motion which stands in my name on the Order Paper with reference to the problem of unemployment. It is the view of ray Party in this House, and has been for some time, that the position with regard to the unemployed in this country is such that we ought to draw the attention of your Lordships' House to the matter; to explain what we believe to be the facts, and to show, if we can, where Government policy has been responsible; where it has been mistaken, and to make suggestions for the urgent and immediate action which would seem to be required in order to try to improve the situation. It is quite fortuitous that when we made that decision in our own meeting here three weeks ago we had no idea that the survey which has been made by our colleague in another place would be published yesterday. It is a short but, I think, extremely valuable survey, and therefore noble Lords will not be surprised if, in view of that fortuitous aid to my arguments published yesterday, I use it quite freely.

I think mere was a possibility in 1944, in the last year but one of the rule of the war-time Coalition Government, that the general problem of unemployment and the national and social treatment of it would become a non-Party matter. But a lot of water has run under the bridge since then, and the situation is such today that I have no doubt at all that once more there will be strong differences of opinion between the main Parties in the country about this matter, and that probably from time to time—in fact it is already taking place—strong things will be said on either side of the wall dividing the two national points of view. Your Lordships must not blame me, therefore, if at times I say things that you will regard as being forthright and which, indeed, might almost be regarded by the noble and learned Viscount, Lord Hailsham, as he regarded a Cross-Bencher yesterday, as being even tendentious.

The best thing that I can do, I think, at the start is to give my Party's view of the facts as they exist to-day. My colleagues and I have been working on them in this House, and we are very much reinforced by the figures given in the Douglas Jay pamphlet. I must apologise to the House if at times I am not perhaps as free in utterance and more tied to notes than usual; you will understand that the reason is that I want to get statistical emplacement and expression absolutely correct. In January, 1959, the unemployment figure in Great Britain rose to 621,000, and I would just point out, inter alia, that that is the highest figure of unemployment for over ten years. It showed an increase over January, 1958, and of course we all take into account the proper weight to be given to seasons and times, and we know that the peak of unemployment in almost any year, however the average may be, high or low, is in the two central winter months. But that figure in January was 226,000 over that of the year before, 1958, and was, in fact, a 288,000 increase over the same period in 1951.

But in certain areas the percentages of unemployment were much higher. If you take the overall percentage, which has been given by the Government as 2.8, you have to contrast that overall figure with the area figures; and they are as follows: North West Region, 3.6 per cent.; Northern Region, 3.9 per cent.; Wales, 4.6 per cent.; Scotland, 5.4 per cent. In North West Scotland, by the way, the Jay Report points out that figures of over 15 per cent. in certain areas have been common. In Anglesey, not a very large population, but an important one, during the winter the figure went to well over 12 per cent.—about 12½ per cent. In Caernarvon, it was 9.5 per cent.; in North Lanarkshire, 9.3 per cent.; and in Llanelly, in the area as a whole, 8.6 per cent. Certain parts of Lanarkshire, places like Coatbridge, Bellshill and elsewhere, have had a figure of over 10 per cent.; Greenock and Port Glasgow have touched 9 per cent.; Cornwall, 7.1 per cent.; parts of Ayrshire and also the the Rhondda Valley, the same figure, 7.4 per cent. Other figures are: Jarrow and South Shields, 6.6 per cent.; Dumbarton, 6.4 per cent.; Sunderland, 6.1 per cent.; Hartlepool, 5.8 per cent.; Colne, 5.3 per cent.

It is also very significant to observe, do you not think, that in dealing with local percentages like that and thinking of the problems of the men and women there unemployed, you have got to relate their sort of experience to a much higher postulated national unemployment figure than in fact we have at the present time. Everything depends in those areas on what is the figure of vacancies to be pursued by those poor unemployed people in relation to their numbers. It has been estimated, for example—I will give one example—that for every seven places offering themselves for filling in Scotland there are 100 unemployed to apply. It means of course that you have as a condition for these people in their anxiety in seeking employment and in obtaining employment, the thing that we in our Party long ago established in our minds and fought for as being the right of the people of the country, the right to work. It means that they are under as difficult local conditions in seeking employment as would be the case if there were an overall figure of unemployment in the country of 2½ million—such figures as we had, for example, in between the wars. Therefore, the problem of the people in these areas is to be treated very urgently indeed.

Of course, it looks from some of the figures that I have quoted as if we have thrown a net wide over certain areas and not thought of what is the situation particularly in concentrated areas of population. But the Jay Report gives illustrations of that. Take large, or reasonably large, areas of population—I take only the few that have been mentioned as being over 5 per cent. There is West South Wales, 5.6 per cent.—and I hasten to add that of course that area includes Swansea, where the percentage is 6.2 per cent.; Dundee, 5.2 per cent.; Birkenhead, 5.3 per cent.; Glasgow, 5.2 per cent.; Liverpool, 5.1 per cent., and Burnley 5.7 per cent. Governments have a very grave responsibility for dealing with situations like that. The Government were themselves obviously feeling that way when they arranged for it to be said in the gracious Speech from the Throne that they were concerned to deal with the matter. I have looked the passage up and I will get one of my colleagues perhaps to quote that short statement which will be in the minds of Ministers.

If you look at the position in 1944, when, for example, Conservatives like Lord Woolton and others, alongside Ernest Bevin and the late Lord Jowitt, were dealing with the problems of reconstruction after the war, you will see that there was a full commitment of all Parties to reassure the people who had suffered so much during the war and given their all for their country, that they should never be worried again with this kind of social problem if anything that Governments could do would avoid it. We have quite honestly to put it to the Government that they have a great measure of responsibility for the situation, and they must take responsibility for it.

In common, I am sure, with all Parties when they go to the polls, the Government take credit for everything that they possibly can. But of course if you take credit for things when you go to the polls, you must be able to stand the criticism if the hopes that you have expressed go in the other direction. Because we on this side of the House do not forget the famous poster of 1955: "It's full employment. Vote Conservative". They took full credit for it then, and if it is not full employment now, and if there is not a great possibility of its being full employment in the very near future, the responsibility for the failure to keep full employment rests as much on the Government now as they took credit for the full employment of 1955.

On that point it is interesting—one remembers reports of speeches by Ministers—to look for some authority as to how serious a view responsible journals take in the financial and economic sphere. For example, the Financial Times of to-day, in an article which commends, partly in appreciation though damning with faint praise here and there, the Jay Report, says: It now seems very likely that Britain will survive the current recession without unemployment going above Mr. Macleod's forecast of a 2.8 per cent. peak. It would be reasonable to expect some fall in numbers out of work this month, followed by bigger seasonal falls in April and May. But there is no sign of any easing in the problem of local areas of depression, and indeed the incidence of unemployment seems to be becoming more rather than less uneven. Many observers believe that the expected recovery of the next few months will leave a 'hard core' of unemployment of between 400,000 and 500,000. It is to be left at that figure in the summer months. It was not far short of that figure—I am speaking from memory now—as the summer went onwards last year.

Do, please, let us all remember that when one speaks of a figure of unemployment of 400,000 or 500,000 it does not make it any the less a great social problem for all those who live in the homes affected by the individual or individuals unemployed—not for a moment. With a family of no more than four in a household to be provided for, parents and children, 400,000 unemployed would affect the lives and the daily standard of life of something like 1,600,000; and if the unemployed number 500,000, the population affected will be about 2 million. This is not a small problem, and it is not made any easier to deal with because it happens to be in the areas to which I have drawn attention this afternoon. Certainly, if you look at the position of Scotland, you will see that some percentages in the North-North West rose to as much as 15 per cent. of the population. It may not be a heavy population, but every household under that percentage suffers in the way I have mentioned, and you have to do something pretty drastic to help the people in the area out of that difficulty.

Take such cases as the one we took up with the First Lord of the Admiralty twelve months ago—a case I have not mentioned yet in the figures I have given—of the Island of Sheppey, which is especially affected by the closing of the Sheerness dockyard, which is I think now about to begin. There will be block discharges of workers from that closing dockyard, and the percentage of unemployed already is more than 5 per cent. and it is going to be added to considerably. I noticed with interest and pleasure the view of Her Majesty's Government that when it is a question of very largely closing down the dockyard at Malta the Government will do almost anything by way of expenditure in order to see that the workers are employed. I cannot see anything of quite the same effort being made to employ the Sheerness dockyard workers who are just about on the point of final discharge within the next two or three weeks. There is a grave responsibility resting upon Her Majesty's Government in these matters; and that responsibility becomes all the graver when the source from which certainly a good proportion of this unemployment has arisen is known.

We know that attempts have been made to suggest that this country is exceedingly fortunate in relation to what is reported as being a world recession in trade, and that our figures are not very high. But the world recession in trade was going on some time ago, and I should like to say a word upon some aspects of that before I sit down this afternoon. I must say that no one can look at recent history—and I am quite sure we shall have to come back to this question again and again; I have raised it before, and undoubtedly it will come up again—without realising that it is the financial and economic policy of Her Majesty's Government which has to bear a considerable share of the responsibility for the situation which has arisen. We are hearing from the views of some economists, as well as of quite ordinary people like ourselves, that, just as we used to have after the First World War books like The Economic Consequences of the Peace—The Economic Consequences of Mr. Churchill—apparently now we are beginning to gather up all the elements for writing The Economic Consequences of our Chancellor of the Exchequer in 1957. It does not need a very great deal of gathering to size up the position then.

Do let your Lordships remember that before 1957 we had a smaller financial crisis in 1955. Do let your Lordships remember that between 1955 and 1957 there was a widespread campaign against the working class—not addressed as such but always hinting, hinting, hinting of the grave danger of over-full employment. There will be no difficulty in producing, in due course, masses of detailed information on that point; and if there is any dubiety about it let their Lordships (if they have not already bought and read it) read Looking at Industrial Relations issued by the Engineering and Allied Employers' National Federation. I do not want to bother your Lordships with long quotations, but I will do at any time that I am challenged upon this point.

Clearly, the Engineering Federation published that they were under the impression that they, the British Federation of Employers and Her Majesty's Government were of opinion that it was no longer good for the industry or for the workers to continue to have demands for wages granted. I am sure that those in all Parties will remember the speeches in which Ministers said over and over again that wages ought to be stabilised; and to make quite sure that I am right I would draw your Lordships' attention to the fact that the Prime Minister himself made an appeal to both the employers and the workers to refrain from anything which would increase wages. "Stabilisation" was the word to be regarded with great care concerning wages—but there was not very much concern about profits.

If your Lordships will read this book you will find how disappointed the Federation were, after the threatened strike in 1957 on an engineering wage claim, that in their view they had been let down. Earlier in the book they speak of the risks they were prepared to take for a show-down with the workers which they had been prepared to have on more than one occasion in the previous four years. This is what they say: The Government and the employers' organization—notably the British Employers' Confederation, in a document Britain's Industrial Future, published late in 1955—were in complete agreement in 1956 that further pay rises were not in the best interests of workers in a period of rising prices, when bigger pay packets would buy less and further aggravate the inflationary spiral. When all appeared set for a struggle to which the Federation and the Confederation were irretrievably committed, the Government, shaken by the economic and political repercussions of intervention in Suez, decided that the country was not strong enough to withstand the probable effects of transport, engineering and shipbuilding strikes. There was not the slightest doubt about the association of the Government with the employers, nor about the disappointment of the Engineering Federation at being, as they felt they had been, let down because the Government were not prepared to risk it, in the new emerging industrial and financial circumstances which had arisen as a result of policy in Suez, and the loss of prestige, and (if I may use a word used by the noble and learned Viscount, Lord Hailsham, in a previous debate) the loss of confidence in this country by the world, which led to the run against the pound in 1957.

Nor can there be any doubt at all about the effect upon the general policy of Her Majesty's Government at that time: that all the way through that period there was a general tendency to clamp down upon certain classes of investment in industry. When it came to the actual fact of what we had to deal with, in order to try to rehabilitate the pound, we came to the increase in the bank rate. Now what really happened? It is a curious thing but there is not the slightest doubt that Her Majesty's Government did their duty, and did it well, in setting up the Parker Tribunal to inquire into the rumours which were about at that time concerning the alleged "leak". If the Tribunal did nothing else, it did reveal very closely, from the actual personnel of the witnesses called before it, those from whom the Government were really getting their advice during the financial crisis.

The first step taken by the Government was to raise the bank rate from 5 to 7 per cent.; and let it be observed that when it was raised in 1957 it had not been at 7 per cent. for forty years. We were just at the end of, almost in, the full enjoyment of prosperous industry and what was called over-full employment; and we had the bank rate raised to a height that had not been known for forty years, to 7 per cent. There is not the slightest doubt—and I read my financial papers from time to time; not perhaps quite so often as those who have had more freedom from political responsibilities—that the aim was to retract investment and slow down the expansionist nature of industry, which had been going on since the war, though by 1955 it had already shown signs of slackening down, and which led to what is now an ascertained period of almost complete stagnation in industry from the end of 1955 until this year. That was a very serious step to take.

The Government may claim that it was necessary in order to rehabilitate the pound in the eyes of the exchanges of the world. But it is also clear, I think, from what has been said from time to time, that there is always another objective in mind; and that is, that, in order to ease the situation from the money point of view, you would do well to have your eye upon having rather more in the pool of unemployment for industry to draw upon, which will also assist in checking some of the evils of which the Government and capitalist leaders had complained.

I am very glad to see the noble and learned Lord, Lord Cohen, in his place. I have a note here of the first Report of his Council, that of February, 1958. The noble Lord, Lord Cohen, will remember that in recording their view as to what was possible and what might happen they showed that there would be a tendency in the deflationary policy to reduce the number of people registered for employment; that it would have la particular effect, probably, upon married women and older people, who in the pressure for production in this country in the post-war period had been working beyond the normal age of employment. The Council did not say it as fully as that, but that is what they meant; and no doubt the other measures would also result in a general increase of some registered unemployed.

If anybody wants any support of the correctness of the theory, he had better have a look at the Macmillan Report on Finance after the First War, from Which you will find that the late Lord Norman (whom I have mentioned before in this House when I have been recounting our experiences of 1931) said, in answer to a question, "Of course, unemployment could be one of the objectives of a high bank rate"—very nicely phrased and stated on something with we in our Party, long before that, established as being proved by industrial and economic history. So the Government must take responsibility, in so far as this general policy of stagnation, of stabilisation and of lower production, has meant building up the figure of unemployment. If one locks at the general information that appears in the Press from time to time, there is no doubt of the general effect which we claim the policy of the Government in the last year or two has had. It has probably resulted in the loss of about £1,700 million worth of goods and services which could have been added to the wealth of the nation. One economist, I think from the Manchester school, said it would be a loss equal to what would be the total output for the country in three months of absolutely full employment.

If we look at the steel industry, we find that there have been statements over and over again in the last few months that the steel industry has been working from about 73 to 76 per cent. of its capacity. If you look at your engineering journals and at that very important and valuable part of our industry, machine tools, you will find that the order books of the machine tool industry have been steadily falling—they just wobbled one year and have been steadily falling in the last five years from nearly £100 million until this year when the figure is down to £53 million. There has been too much encouragement of stagnation in the expansionist side of industrial policy by the Government. If you look at the leading article in the Financial Times of March 5, you will see that the Editor of the Financial Times, who probably has among his resources as good an industrial expert and probably as good a research service as any financial and economic journal in the world, does not hesitate to say that this, in spite of what some members of the Government are saying, must mean a serious political impact.

In view of the reply of the noble Viscount, Lord Hailsham, to a question at the Harrow East By-election meeting last Monday, I think it might be as well to draw his attention to these words. This is what the Financial Times leader said on March 5: Politically this issue could determine the result of the next election. That is, unemployment. It continues: No-one who has been outside London can appreciate fully the change in the political atmosphere in the North. The Government's marginal seats in Yorkshire, Lancashire and the North East Coast must all be regarded as in some jeopardy. There is a contrast between this and the atmosphere in the South where unemployment has not yet become an issue about which the electorate seem to be sharply concerned. Lord Hailsham's visit to Lancashire, and the Prime Minister's recent visit to the North East Coast, can be regarded as an indication of the Conservative Party's concern about the political impact of unemployment and of the fear of unemployment in those parts of the North where there has not, as yet, been any substantial rise. There cannot be much doubt, really, about the responsibility of the Government and the fact that they have to accept the political impact of the situation which I have described as fairly as possible as being the facts of the situation.

There are to be a lot of speakers in this debate. I wanted to say a great deal more because one is usually charged when one makes a speech on the attacking side with failing to be constructive. But at any rate I will say this in general. The Government, in my view, have come to the decision to adopt (as it is described by the Financial Times in another leader, which this time I do not like) a reinflationary policy—that is to say, they have stopped the stagnation of investment policy. However, they have stopped it too late, and it is going to be exceedingly difficult for them to be able to do anything effective unless they can put their house in order, especially in the areas in which unemployment is worst. In the pamphlet to which I have referred Mr. Jay sets out very fully the reasons why we say this. In the distressed unemployment areas, there is no doubt at all that confusion has arisen between the administration of what they call the D.A.T.A.C.—the Development Areas Treasury Advisory Committee is, I think, the proper title represented by those initials—and the administration of the development Acts (finance, and so on) of 1958.

I shall ask some of my colleagues who follow to develop that side of it, and to show where the mistakes have been; and, in order to save time, I think also that they might, on my behalf, say something about what we want to be done—immediately, not for the next Election. Do it now! Do it in the interests of the unemployed! Do it now, and get the matters cleared up! Put back the restraint upon unduly large building in the congested areas, such as London. Make it possible more quickly to provide new industries in the development and the D.A.T.A.C. areas. I have not seen the paper yet, but I understand the Government are beginning to move a little in this direction. In an announcement yesterday, though I have not seen it yet, I understand that they are suggesting some extra work for the D.A.T.A.C. areas. But it is something which must be done now—not from either Party wanting to wait to get an advantage in an Election. You want to do it now if you are going to arrest this continued stagnation.

I think everybody who knows about the organisation of industries knows that you do not get irresponsible statements from the General Council of the Trades Union Congress, and the Chairman of that Council puts the figure not as low as the 73 to 76 per cent. of capacity in the steel industry, but, over productive industry as a whole the production is about 20 per cent. short of capacity. I do hope that the Government will get right on with that job at once, and that we in the Party that I respect and love as much as Conservatives respect and love their own Party shall not be charged, as we have been charged, with having raised the bogy of unemployment. My Lords, I beg to move for Papers.

3.24 p.m.

LORD REA

My Lords, I think we are all grateful to the noble Viscount for having raised this subject at a particularly appropriate time, when the spectre of unemployment is certainly not entirely absent, though fortunately, it is not present in any particularly alarming size at the moment. I had hoped that any remarks that came from these Benches would be uttered through the silver tongue of my noble friend—perhaps I might say our noble friend—Lord Beveridge, who, your Lordships may remember, celebrated his eightieth birthday last week. Unfortunately, he is not able to be in his place to-day—though I hasten to add that there is no connection between his absence and the celebrations which took place in the monastic precincts of an Oxford College. Speaking, therefore, at very short notice, I ask your Lordships' indulgence if I do not range over the whole Liberal programme for unemployment—which, if your Lordships have any time left after reading your own Party literature, can be obtained at Liberal headquarters.

My Lords, the question of unemployment is, and of course, unfortunately, always will be, with us. It is a chronic thing; and, of all our domestic problems, as distinct from foreign affairs, I think it is probably the most important because it impinges not only upon our reason and our sense of justice, but very much upon our hearts and consciences. Unemployment is a symptom of something a bit wrong with the national economy somewhere—wrong production, wrong distribution, wrong ideas in some way. Ideally, the unemployment figure should be 0 per cent., but there are always a certain number who, for reasons of some mental or physical defect, are unemployable, and there are a very small number—I think a considerably less number—who in fact do not want to be employed. Your Lordships will forgive my reference to a very old Punch joke of a man who went to his doctor and said: "I eat well and sleep well, but when I see a bit of work I come all over a-tremble "—and there is that element still with us.

VISCOUNT ALEXANDER OF HILLSBOROUGH

That does not help matters.

LORD REA

The noble Viscount says that that does not help matters. I was merely mentioning that in passing, as a fractional element, and one not worth consideration. If my noble friend disagrees with me, I take it he thinks that it is worth consideration; I do not.

I think we can agree, then, that the optimum of 0 per cent. is not realisable, and we have to face the fact that we must have art acceptable—reluctantly acceptable—unemployment figure which may be put at a half of 1 per cent., 1½ per cent., or (as I think most responsible economists would put it), say, not more than 3 per cent. All political Parties naturally want the minimum, and for the best reasons as well as, perhaps, for not such good reasons at times. It is sometimes held against the Conservative Party (I do riot know whether as a whole, or whether it is applied only to certain members of it) that they rather appreciate a floating margin of unemployment to use as a political weapon. That, if it were true—which I do not think it is—would not be a very good principle on which to work. Nor, equally, do I think the contrasting argument about the Labour Party a good principle: that perhaps they would like a certain margin of unemployment because, without the basis on which they have built their Party during the last 100 years, which after all was on ill-health, under-employment, ill-payment, and so on—I hope the noble Viscount will kindly give me his attention—

SEVERAL NOBLE LORDS

Hear, hear!

LORD REA

I suggest that it could be held against the Labour Party that they desire a certain amount of unemployment, in order that they can keep together those people who are bound together by a class feeling which is much regretted in many parts of the country.

VISCOUNT ALEXANDER OF HILLSBOROUGH

Quite preposterous!

LORD REA

My Lords, there are, I suggest, three types of unemployment: seasonal unemployment, which occurs in such places as hotels, the catering industry, and so on; secondly, the occupations where there is a world decline in trade, as happened in the 'thirties; and, thirdly, of course, the localised unemployment, where one industry is suffering either from obsolescence or from unusual competition. As to the seasonal unemployment, I think we can do little. We can hope that it will pass, and perhaps try to arrange some interchange of employment within those industries. On the second and third headings, of world decline and localised unemployment, I think there are some possible remedies, and I should like to suggest one or two.

It has been said before that the duty of an Opposition is to oppose, but, at the risk of boring your Lordships, may I repeat that, in our view, the duty of the Opposition is to support, so far as it can. That is to say, speaking as a Liberal, if I see a Socialist Government promoting Liberal measures, or a Conservative Government doing the same, I do not consider it my duty to ridicule them because they are not of my Party but rather to support them.

The sort of thing I think the Government could do is get on with a new programme of building roadways; that is, motorways—large motorways—in particular, to depressed, declining or undeveloped areas. This is not an end in itself: it is not the object to employ large numbers of men or skilled teams building these roads. It is to open up to manufacturers these areas which are at present unattractive, by reason, largely, of poor road access and because they cannot be reached either speedily or cheaply. I have specifically in mind several areas—Wales (particularly North and Central Wales), Cornwall, East Lancashire, Devon and West Cumberland. North and Central Wales are poorly supplied with good roads to link them with the Midlands and London, and a big trunk road would bring potential trade to that unexploited area.

Then East Lancashire and West Yorkshire district is very concentrated industrially but the road system is more or less chaotic. That could be improved by a fast motorway running through Liverpool to Hull and linking up these very busy areas. I think there might also be a main road developed in Scotland from Stranraer to Edinburgh and Glasgow and, ultimately, down South. Perhaps the Government will bear that suggestion in mind. In the West, on the Cornish road, your Lordships well know that there is little in the way of a good road from here to Land's End. There are stretches of good road but not enough. The great city of Bristol might be brought into that.

The last part of the country I would mention is West Cumberland Coast, the area from Barrow up to Whitehaven and Carlisle. Here I must declare an interest, because I have served on the Development Board there. This Board have done an extraordinary amount of good in reducing unemployment in that distressed area from about 90 per cent. to approximately 2 per cent. Then perhaps I should pay tribute to the moving spirit there, a Member of your Lordships' House whom we do not often see here, the noble Lord, Lord Adams, who sits on my left. The Development Council there have established important businesses—chemical, tanneries, et cetera, and they have been pressing the Ministry for years to develop a good road up the coast, without any tangible results whatever.

Leaving roadways, I turn to the training and re-training schemes sponsored by the Government. I feel these are good ideas and facilities not used. The schemes themselves are a little inflexible. In the recent recession in the motor trade in Coventry I am given to understand that at the Birmingham centre not one single man reported from Coventry to help himself with these facilities. In Hull, through lack of initiative or some reason, the centre was closed down, and when there were, last November, 7,000 unemployed in Hull there was no centre for them to apply to. I suggest there should be less rigidity in these matters. They could be movable or even mobile, and the Minister might co-operate with the trade unions in seeing they are made more attractive and put to better use.

I suggest there could be from the Government an incentive to companies to train the large number of children who are known as the bulge. They are still at school but it is a very short time before they are coming on to the market as employable. Special provisions should be made for them. I therefore also ask the Government to take direct action in the remote areas, and areas depending on the export trade, by making roads and road transport much more efficient. Of course, that is normally done through fiscal arrangements but there are things which could be looked into in these special areas.

Noble Lords will remember in South-East Lancashire the great recession in the cotton trade which caused some anxiety. I noticed that my noble friend Lord Rochdale—whose capability and integrity I admire—went to Hong Kong and by some magic induced the manufacturers there not to export as much as they previously had to this country. I am still waiting to see whether there was a quid pro quo or whether the appeal was, possibly rightly, one of patriotism to consider poor Lancashire, although we know part of the trouble has been obsolescence of machinery, and perhaps not a dying but a declining cotton trade where the operatives concerned ought to be trained in other trades.

I suggest that the Government's inducement policy, inducing industrialists to go to other areas, has not really succeeded. I gather that under the Government scheme only forty-six applications have been made. That is indeed disappointing. Private firms will not go in the present poor conditions. I suggest that the State itself should institute something like a development corporation. We know that the Colonial Development Corporation has had, in many ways, great success and I suggest that consideration might be given to setting up a development corporation in this country. It could build factories, finance machinery, giving as much freedom as possible to management, and when on a sound footing, in about ten years, hand them over at the proper valuation to private enterprise. This corporation should aim at forestalling a decline and not acting after the decline has started. That has been the trouble in many cases up to now. What is needed is imagination and determination to surmount tradition. The difficulties are not insurmountable. We need first-class roads, clean air and an imaginative housing programme where not only utility but beauty and amenity would have far more place than they do at the moment. Those will help as much as anything to banish squalor, grime and mental lassitude which is the bugbear of unemployment.

Finally, it is damaging to our country if any person, body or political Party should—on such a grave matter—deliberately spread dissatisfaction and distrust. I would suggest that this is an example of what I mean of the duty of an Opposition, to support when it can, although I know that that theory is not supported on my left. In industrial matters confidence surely is of vital importance, and I ask Her Majesty's Government to consider with an open mind such points as I and others in to-day's debate are seeking to put constructively before them.

3 39 p.m.

THE MINISTER WITHOUT PORTFOLIO (THE EARL OF DUNDEE)

My Lords, the Government and, I think, all your Lordships are grateful to the noble Viscount opposite for enabling us to have this debate on the subject of unemployment. It may perhaps be in the nature of an interim debate, since your Lordships may possibly wish to discuss the subject again in the light of our annual Economic Survey which I understand will be published early next month and also, of course, of the Budget which is now recognised as perhaps the chief instrument in our employment policy—but on whose possible contents it is sometimes unwise to speculate in advance. I would assure the noble Viscount that I am certainly not going to accuse him of raising any bogeys, which he said, at the end of his speech, he was afraid of. I thought that his speech, if he will allow me to say so, was more moderate and restrained than the Jay Report, from which he derived so many of his figures, and also than many of the speeches on this subject which have recently been made elsewhere.

I think that the number of your Lordships who have indicated your intention to speak in this debate shows the deep interest taken and the concern felt by your Lordships' House in the subject of unemployment. There must be many of us who do not belong to the younger generation in politics, in all political Parties. Whose political background is strongly coloured by the pre-war unemployment problem which was so baffling and heartbreaking to all of us. The constituency of West Renfrew, which I represented in the other place, contains one large industrial town where the unemployment percentage at one time was as high as 46 per cent.; in my native town of Dundee it was seldom below 20 per cent.; and in the country as a whole, if we leave out the peak years of 1931 and 1932, when the figure was, I think, over 20 per cent., it was usually somewhere between 11 and 14 per cent. The Ministry of Labour at that time (I am speaking of more than twenty years ago, and do not think they would take the same view now) estimated that if unemployment were entirely cured, if we had a condition of full employment, so that the only people on the register at the peak period of the year as unemployed were those normally in seasonal work, or in the interval between one job and another, or temporarily stopped or unemployable, the figure would then certainly be more than the figure of 3 per cent. which has been indicated to us since the war by various authoritative economists. Speaking from memory, I think the figure was 4 or 4½ per cent., which we should now regard as a very serious amount of unemployment.

It was not only in this country that unemployment gave so much trouble and unhappiness to all classes of the community. In the United States of America the terrible wave of unemployment which followed the 1931 slump led to that great revolution in the economy of America which began with the New Deal. It has always been recognised, I think, that any great industrial country which does a lot of foreign trade cannot unilaterally deal with the whole of its unemployment problem, assuming, of course, that it is a free country and that forced labour is not permissible. If the industrial countries which trade with each other are all to deal successfully with the problem of unemployment there must be some measure of international collaboration. The terrible tragedy of Germany, where the despair of 7 million unemployed men drove the country into the arms of Hitler, helped to show the nations of the world that unemployment in one country may be greatly to the injury of all the others, both commercially and politically.

Therefore, before the end of the war the Allied countries, who afterwards formed the nucleus of the United Nations, agreed at the various economic conferences which they held that after the war it would be right that they should all collaborate in trying to maintain stable economies, including high levels of employment. Lord Keynes, who was not a member of the British Government but who was the British Government's representative at the International Monetary Conference, was, I believe, largely responsible for the Government's White Paper of 1944 (Command 6527) which lays down the principles for our post-war employment policy in Great Britain, and which was accepted by all political Parties. Of course there is room for the strong differences of opinion which the noble Viscount the Leader of the Opposition mentioned; and there is room for strong differences of interpretation on some points, and of emphasis on others. But I take it that all our political Parties in this country are still basically agreed on the principles of this 1944 White Paper, which has formed the basis of our employment policy for the last fifteen or sixteen years.

There is one sentence which, in present circumstances, may particularly lend itself to differences of interpretation or emphasis that I might quote. Paragraph 49 says: Action by the Government to maintain expenditure will be fruitless unless wages and prices are kept reasonably stable. This is of vital importance to any employment policy and must be clearly understood by all sections of the public. But it has been stated repeatedly by Chancellors of the Exchequer, both Conservative and Labour—and so far as I know, the main Parties would still all adhere to it—that our purpose is to maintain the highest level of employment which is consistent with the avoidance of inflation, with stable prices; and since we adopted this common policy in 1944 and 1945, I think we have been equally successful in our first objective and unsuccessful in our second, until, at least, last year. Unemployment, except for the temporary increase at the time of the snowstorm in 1947, which was wholly exceptional, has been more or less at about 330,000 from 1945 until last year; that is, about 1½ per cent. That is to say, the level of employment was higher than the total we were given to understand by the economists was likely to be practicable, and certainly, I think, it exceeded the figure on which our economic estimates after the war were all based.

At the same time, while we have until last year maintained this full employment, we have by no means succeeded in preventing inflation. From 1946 to 1951 prices rose by 32 per cent. and from 1951 to 1958 by another 25 per cent. So that if you add these two figures together, you get a total increase which represents a very heavy dose of inflation in a period of fourteen or fifteen years. This inflation has saddled us with a continual unplanned progress—I emphasise the word "unplanned"—from one financial or economic crisis to another. I did not expect the noble Viscount to deal with more than the crisis of September, 1957. He did not mention the numerous previous crises in both Governments, particularly that in which Sir Stafford Cripps was obliged so heavily to devalue the pound. All these unexpected crises have had to be met by some such expedient as devaluation or by heavy cuts, either in one kind of expenditure or another, and very often in Government expenditure on objects which in themselves are good and desirable, such as building Government factories in development areas. The reason why that was cut down in 1956 was not that we did not regard it as a desirable permanent policy, but that it was necessary, in order to preserve our balance of payments, that we should reduce Government expenditure in Great Britain.

In spite of these disadvantages, we have maintained full employment, and I am sure that many of your Lordships must often have asked yourselves, as I have certainly often asked myself, whether if this inflation is the price for full employment, it would not be a good thing to make up our minds to pay that price. As for those classes of the community who are most immediately and unjustly injured by inflation—widows, clergymen, retired officers and civil servants, who have not any political lobby, and the old-age pensioners who have a political lobby but who, nevertheless, lag a long way behind wages: and, in short, everybody who lives on fixed incomes—would it not be possible to arrange for their incomes to be increased at the same time as wages? That, of course, would greatly accelerate and intensify the pace of inflation. But if we are going to go in for inflation, why not go in for it properly?

I shall not attempt to give the international answer to that question, but from the point of view of our own small, thickly populated island, which lives by foreign trade, I think the answer is well known to your Lordships: that if our price level here gets too high, we shall be priced out of our foreign markets; we shall not be able to earn enough foreign exchange to buy the raw materials and the food which we require to keep our economy going. If nothing is done to prevent that from happening, we shall then have in this country unemployment on a scale far greater than we had in the 'thirties, when we could at least claim that we were successfully employing 87 or 88 per cent, of the population.

May I remind your Lordships that this danger of inflation to employment—not just to full employment, but to almost all employment in Great Britain—becomes greater the further away we get from the post-war sellers' market. When, after the war, nearly everybody was scrambling for almost any kind of goods from almost anywhere, in order to make up what they had not been able to do in the war or to repair war damage or loss, it was then very easy to sell without bothering about efficiency; and it was possible to pursue an inflationary policy without disastrous effects on full employment. But as that sellers' market disappears, as competition becomes keener, as people are no longer anxious to buy any kind of goods from anywhere, but wish to exercise their choice of getting the best goods from the best places, the more important to our economy does it become that we in Great Britain should keep our price level stable. That is more important to employment than to anything else in this country.

Two years ago, the great dollar countries of North America, the United States and Canada, who perhaps may not be so greatly injured by inflation as we are, but who had for a long time been very worried about the inflation that was going on there, began taking deflationary measures to stop it. What happens in the United States has a great effect—perhaps it is the greatest single factor of all—in influencing the course of world trade. This deflationary action in America contributed, of course, towards the recession which began about two years ago—nothing at all to be compared with the enormous slumps in world trade which used to take place in the early part of this century and in the last century, but, nevertheless, a distinct and recognisable recession which had the effect of diminishing the total volume of world trade.

We have been criticised, I should not say immoderately by the noble Viscount, but more immoderately elsewhere, for the protective action which we took in September, 1957, in raising the bank rate to a figure at which it had not been for forty years, in placing more restrictions on hire purchase and in discouraging expenditure in other ways. I would most sincerely suggest to your Lordships that if, at that particular time, when world trade was declining, when prices were becoming keener and more competitive, we had then tried to pursue an expansionist policy with rising costs and prices at home, we should have had, perhaps in a few months, a disaster which would have led to worse unemployment than we have ever known in this or in any other century. Although as a result of that action we have become so much stronger, if we were now to run the machine flat out, in the hope of taking up the slack and using our unused industrial capacity, without regard for the consequences on the price level, it might not be in a few months, but in twelve months, or a little more, we should have run into equally great trouble again.

As the noble Viscount has said, unemployment between last January and January this year increased from 380,000 to 621,000, and I entirely accept the observations in the pamphlet from which he quoted that that does not give the whole picture, because there is also an increase in short-time working, a reduction in overtime and so on. I should like to say to your Lordships that the Government are not at all complacent about that situation. We are not satisfied with the fact that there is so much slack to be taken up, so much under-capacity in industry; nor are we satisfied with the percentage of unemployment at the present time. Of this total increase in unemployment since last year, we estimate that about 100,000 is due to loss of foreign trade, and we believe that the admittedly deflationary measures which we took in September, 1957, by strengthening our foreign exchange position will eventually put us in a much better position to recover our share in the foreign markets of the world. Meanwhile, I think it is a not discouraging feature of the situation that although our export trade has fallen by about 3 per cent. in 1958 it has not fallen—indeed, it has rather increased—in the dollar countries of the United States and Canada.

My Lords, there are indications that this world recession has turned the corner. Although we do not expect a quick recovery in export trade, I think there are reasons for expecting a slow recovery, and I think we are entitled to claim that the measures which have strengthened sterling will put us in a very much better position than we should otherwise have been in to secure our share, and more than our share, of world trade when that recovery comes.

The noble Viscount and many others have charged the Government with having created what is called "stagnation" by these emergency measures which were taken eighteen months ago. And it is said that by doing so we have caused our industries to be working under capacity and unemployment to increase. As for the word "stagnation," I do not quarrel about that, although production has increased since 1951 by 17 per cent., and I would not call our present economy a stagnant thing in present circumstances at all. Nevertheless, it is the case that in the last two years production has either not increased at all or decreased slightly, and the word "stagnation" may be justified in that extremely limited sense.

If it is suggested that we, by our action, have deliberately tried to cause stagnation or unemployment I think all your Lordships, or most of your Lordships, will agree that such a suggestion is untrue. If it is only suggested that by those measures which we took in order to save our foreign exchange position in September, 1957, we may have indirectly contributed to the rise in unemployment, I would reply that I think that is a truism. The whole problem which we are all engaged in trying to solve is surely how to reconcile stable prices with full employment, and if everything done to prevent inflation had no adverse effect at all on the employment situation, then there would be no problem at all; everything would be too easy.

LORD SILKIN

My Lords, may I ask the noble Earl a question? I am following him with great interest. Would he say whether the Government foresaw that the measures they were taking would lead to unemployment? I would not allege that they deliberately took those measures in order to create unemployment, but did they foresee that that would be the probable result?

THE EARL OF DUNDEE

My Lords, what they did foresee in the following year was that, with the continuance of the world depression and the successful results of our policy in keeping our price level at home stable, our economy would by the end of 1958 and the beginning of 1959 need some reflationary measures; and the Government began to take those measures last year.

First, in regard to the public sector of investment they decided that it could safely be increased by £150 million without incurring a renewed danger of inflation. It may be argued by some noble Lords that that was not enough. That, I think, is a very difficult question of judgment, exactly how much you should spend. The Government foresaw that there would be some decline in the private sector of investment, and one reason why they decided to embark on an increased expenditure above the line of £150 million was to counteract, so far as they could, this fall in private investment. At the same time the Government tried to encourage private investment by lowering the rates of interest, by abolishing the control of the Capital Issues Committee and, in last year's Budget, by increasing the initial allowance by 50 per cent. It may be argued that those measures are not enough; that interest rates should be lowered still further; that more should be done to stimulate expansion of our economy. That, again, is a question of judgment. But in the light of the circumstances as they are at this moment, it is our view that what we are trying to do is about right, though if it should appear, in the light of circumstances at any time, that more requires to be done in the way of encouraging investment or expanding the economy in any other way, we shall certainly not hesitate to do it

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, might I ask the noble Earl what is the target of Her Majesty's Government, in considering that policy, as to what the figure of hard core unemployment, as it is called, should be? I have indicated that a financial paper indicates it is likely to be between 400,000 and 500,000. The assurance the noble Earl has very kindly given us is not much use unless we know what the target is.

THE EARL OF DUNDEE

My Lords, the target of Her Majesty's Government is that which I think was stated very well in the words of the Chancellor of the Exchequer not long ago: to maintain the highest level of employment that is consistent with the avoidance of inflation. I entirely agree with the noble Lord, Lord Rea, in what he said about all Parties wanting a much lower percentage than 3, or even 1½, if that should be found to be practicable.

The noble Viscount mentioned that there would be strong differences of opinion which would no doubt become stronger as the Election approached, which I have no doubt is true. But when I spoke as a private Member to your Lordships on this subject last year I ventured to suggest that there need be no fundamental difference on this matter of employment between the Parties, and, indeed, that sometimes the difference on unemployment policy within Parties had been greater than the difference between them. Only a year ago the differences very sincerely and honourably held within the present Government, which seemed to those outside it to be concerned with a very small amount of expenditure, were nevertheless great enough to cause the resignation of the Chancellor of the Exchequer and two other Ministers. There have been comparable differences within all Parties, not on matters of principle but on fine points of judgment, or how exactly we are to fix the happy mean between expansion and avoiding inflation; and I would most earnestly suggest to your Lordships that this is a question on which no one should be anxious to dogmatise and on which everyone should be willing to learn. I hope that the Government are willing to learn; I hope that the Opposition are willing to learn too.

If I may respectfully make a suggestion to noble Lords opposite, I hope they will consider the possibility of learning that their policy of nationalising more industries and of increasing taxation is not really likely to remove that industrial stagnation, as they call it, which we are all anxious to get rid of. What we do want to do is to advance on a sounder basis, to increase our production, to take up the slack without incurring the dangers of another round of inflation. What a pity it would be, now that we have at last succeeded in stopping it after so many years, if, by too much impatience, we should allow it to start all over again!

The noble Viscount, quite rightly I think, referred not only to the unemployment position in general but to the structure of unemployment—that is to say, those areas where unemployment is exceptionally high. We have endeavoured to do what can be done. It is not the easiest thing to do it in a slack period of trade. We are endeavouring to do what can be done, both to persuade and to induce more industries to go to these four areas, South Wales, North-West England, North-East England and Scotland, in relation to which in the last twelve months, 277 industrial development certificates have been given. These, of course, are refused to industries who want to go where we think there is already too much conurbation or too much industry, as the noble Viscount suggested is the case in greater London. The amount of employment given by those 277 factories is estimated at about 13,000.

The noble Lord, Lord Rea, asked about the new D.A.T.A.C. provision, which is, of course, a slightly different question. To some extent, D.A.T.A.C. areas overlap the development areas. The number of approved schemes so far is not very large: it is only twenty-two. There are another forty under consideration, but there are a very much larger number of inquiries which have not yet reached the stage of final consideration. It is our hope that a great deal more will be done by means of these inducements to get more industries to go to those areas of high unemployment.

I think the noble Viscount referred to an extension which was announced yesterday that involves the inclusion in the D.A.T.A.C. area of Rochdale and Oldham, in Lancashire, of Sunderland, in the North-East, and of Carnoustie, Arbroath and Sanquhar, in Scotland. It will be our continual endeavour, both by advertisement and by inducement, to persuade and help as many light industries and heavy industries as we can to go into these areas. If your Lordships are thinking of a longer-term policy, I would also mention the strip mill which my noble friend Lord Forbes will no doubt deal with in regard to Scotland, and the Pressed Steel Company's factory at Swansea, in South Wales. It is not our intention to pursue this policy as a stop-gap device to mitigate a temporary rise in unemployment, but as a long-term policy, to achieve a better distribution of industry throughout the country and a greater diversity of industries in those areas which are too much dependent on one or two forms of employment.

My Lords, I began by indicating that did not think it was impossible that the Parties should agree in principle on their employment policy. I should like just to make one brief reference to the letter written by the present Leader of the Labour Party in 1951, when he was Chancellor of the Exchequer, to the Economic and Social Council of the United Nations. The reason I refer to it is not only that I agree with it myself, but that it seems to afford so much general ground for agreement. He says: It is the firm policy of His Majesty's Government to keep unemployment at the lowest level compatible with the avoidance of inflation "— exactly what the present Chancellor of the Exchequer said a month or two ago. I hope that the qualification "compatible with the avoidance of inflation" is still borne in mind by the Party opposite. He goes on to say that measures outside the control of the United Kingdom might make it impossible … to keep unemployment at the low levels of recent years ". Then he continues: The Government has, therefore, decided … to express the full employment standard of the United Kingdom as a level of unemployment of 3 per cent. at the seasonal peak "— that is, because it may be affected by forces outside their control. He adds that this does not mean that the Government would allow unemployment to reach 3 per cent. before taking vigorous counter-action ". That is what we claim this Government have done: we have last year taken vigorous counter-action to stimulate the economy, so far as is possible, without taking the risk of a renewal of that inflation which at last, after so many years, has been brought into check.

I would assure your Lordships that the Government are certainly not complacent or satisfied about the present under-capacity production of our industry, or with the state of the unemployment figures; nor are we unwilling to listen to advice from any quarter. But we are confident that if we can pursue our present policy, and if we are not diverted from it by the temporary fear of unpopularity, it will be possible for us to resume, on a sounder basis, steady expansion in our annual industrial output, combined with full employment, but without the continual inflation and the perpetual fear of a new financial crisis such as those which have so disfigured our economic history for the last fourteen years.

4.17 p.m.

VISCOUNT HALL

My Lords, I think I can say on behalf of my colleagues on this side of the House that we have little complaint of the speech of the noble Earl who has just spoken. There are just one or two questions which I might put to him and which probably will be answered later on in the debate. He referred to the fact that 277 schemes of new works have been approved.

THE EARL OF DUNDEE

I said that 277 industrial development certificates have been given in those areas.

VISCOUNT HALL

Yes. Is it possible to know into which areas those schemes are likely to settle down? I think that notice should be given in advance in connection with this matter; it may give a good deal of satisfaction to the people living in those areas to know that there is some possibility of works being brought there.

I am not going to deal any further with the noble Earl's speech because my noble friend and Leader has ably covered the ground in dealing with the general difficulties of unemployment in the country as a whole. I am going to confine myself to the one part of the country which I know best of all. Before I proceed with that, I should like to tell the noble Lord, Lord Rea, that he gave us a description of some of the unemployed which I have never heard given in public before. I should like to ask him whether he can give any idea of the percentage of the unemployed to whom he ascribed that attitude to employment which he put forward this afternoon.

Whatever can be said about the policy of Her Majesty's Government, it is a fact that we have in this country at the present time a higher number of unemployed than we have had during almost the last two decades. It was in 1940 that we had about one million unemployed; but not since 1940 have we had a total of 609,000. Of that total some 55 per cent. have been employed for a period longer than eight weeks; and as the noble Earl, Lord Dundee, has rightly said, it is not only a problem of those who are totally unemployed, because for the week ended January 26 last there were 168,000 workpeople in this country who were working short time.

Figures such as these are always accompanied by an increasing fear that it may be the turn of a considerable number of other workpeople next. I do not want to refer unduly to the period from 1920 to 1939, but that fear still remains in the minds of millions of people in this country. That was something they could not forget and they had to hand it down to those who followed them. We may be assured that that fear itself affects the psychology of those men who are in employment, so we cannot really measure the effect of unemployment solely by the number who are unemployed. My noble friend gave the figures of unemployment in certain areas—Anglesey (I believe) 13 per cent., a part of Scotland, 15 per cent., South Wales nearly 5 per cent. The number in South Wales in the last return which we had two weeks ago is 45,200 persons unemployed, making nearly 5 per cent. there as compared with 2.8 per cent. for the rest of the country: and the percentage of unemployment in Wales continued at about twice the average rate for Great Britain. It has exactly doubled between June, 1957, and the present time. For nearly two-thirds of those who are unemployed it is long-term unemployment. Those figures relate to adults. One quarter of the young persons who are unemployed have been unemployed for a period of more than eight weeks, and short-time working is increasing while overtime is decreasing.

It is a rather strange fact, which perhaps noble Lords have not realised, that these redundancies are largely in areas where we have the older industries, such as coal, tinplate and slates, in South Wales. In addition, the manufacturing industries are slow, and there is a reduction in production of something like 5 per cent. As to the coalmining industry, the average number of wage-earners on the colliery books of the coalfields of this country at the present time is about 680,000—the lowest number of persons employed in the coalmining industry for, I should say, about seventy or eighty years. There has been a reduction in the average numbers employed during the whole of the 1920s. right up to about 1932, as compared with the level at the present time, of no fewer than 400,000 persons. From 1938 until the present time there has been a reduction of about 93,000. Of that number, strange to say, the major portion is in South Wales. There are at present 46,000 fewer people employed in the mines in South Wales than there were in 1938.

The same thing can be applied to some of the other industries. There is the tinplate industry. My right honourable friend Mr. Griffiths represents the area where tinplate has been produced for almost a hundred years. At one time there were no fewer than 20,000 work-people in quite a large number of tinplate works. Recently two new tinplate strip mills have been erected and are in full production, and it is said that with 4,000 to 5,000 workpeople they are producing more and better tinplate than was produced with 24,000 persons under the old method of tinplate production. That applies, too, though on a smaller scale, to some of the industries in North Wales, and particularly to the slate industry. Before the war there were 9,000 work-people employed in that industry; at the present time the number is 3,000. It can be said even of some of the modern industries, such as the steel industry, that as a result of a reduction in production capacity they have had to put quite a number of their workers on short time.

That is the picture, and that, I believe, is where there is a demand for some consideration to be given to providing work, particularly where we have older industries. We cannot prevent modern methods of production from coming into existence, but we ought to have sufficient fore- sight to see when these changes are likely to be brought about and to prepare to meet this difficulty when it arises. I want to be quite fair in connection with this matter, and I should say that a good deal has been done in South Wales to meet the position. It has not fully met it, but there has been a substantial increase in the manufacturing industry. In a recent statement made on industrial progress in Wales by the regional controller of the Board of Trade—this was said quite recently, and I think the noble Lord, Lord Brecon, was present when the statement was made—he said that in the 'twenties the manufacturing industry in Wales employed only about 150,000 persons; to-day the figure was 320,000 persons, half as many again as the steel works and the coal mines employ. But my Lords, even that has not been enough. We still have 45,000 persons unemployed.

Whilst it is true that the noble Lord, Lord Brecon, and those who are associated with him say that there are prospects that work will be provided for another 10,000 persons, I think, in South Wales, I should like to know when and where the works are likely to be situated. But if work is provided for another 10,000 persons there will still be 35,000 persons unemployed. Further new factories will be required in North and South Wales. In moving around London one is surprised to see the number of new factories that are being built in the already over-industrialised areas, instead of their being scattered round about in the country in these centres, where there are these very heavy pockets of unemployment.

My Lords, my home is in a valley, the Aberdare Valley in South Wales. It was a completely mining valley until about twelve or fourteen years ago. Something like 17,000 miners were employed there. At the present time just 8,000 miners are employed. Fortunately, during the war we had a works put up, which has been converted into a trading estate, and instead of only 4,000 persons being employed in industry other than coalmining, we have about 11,000 persons so employed. The interesting part about it is that every employer who has come down and established a new industry has given great credit to the workpeople for their adaptability, for their efficiency and for their co-operation; indeed, they say it is an area where one scarcely hears of an official or an unofficial strike. These people are quite adaptable for almost any industry which is put into areas of that kind; and I beg of the Government to make further use of the powers which they have in connection with that matter. I think it is infinitely better to keep the people in their own areas, in their own communities which have been built up around the work. It is very much better for them and for the country.

There is one other point to which I want to refer, and that is the very important matter of the plight of the thousands of school-leavers and the young people to whom the Ministry of Labour have to say, "There is no work for you." There are nearly 30,000 of these young people in this country at the present time. There are 4,500 of these young people in South Wales. This is a serious situation for them. Many of them are anxious to combine their studies at technical schools and night school courses with some practical work. I am afraid that the problem of placing these young people and apprentices will soon add up and be much aggravated, because of the fact that industry must now be preparing schemes to absorb the 200,000 young men who will not now be liable for National Service over the next two or three years. Some employers have already been saying that they will not take on any apprentices whom they are not able later to fit into men's jobs. For industries with apprenticeship schemes the problem will be to absorb trained men rather than newcomers, since apprentices have always been able to defer their military service, and employers must by law re-employ them after they finish that service. I should like to know what action the Ministry of Labour and the Board of Trade are taking in connection with this matter.

A meeting of the local district employment committee recently made a statement which dealt with the recommendations of the Carr Committee, and what they say they felt in connection with this matter is that, in spite of the publicity given to this problem and the employment of youths, there have been no tangible results, and the responsibility for the training of these youths should rest firmly with the industrialists, who should make preparations for them. I should like to ask the Government whether they are going to do anything as a result of the recommendations of the Carr Committee. The Committee reported some twelve months ago and recommended that more training schemes, an expansion of the apprenticeship system and the setting up of a national apprenticeship council should be brought about. Perhaps the noble Viscount will say whether these recommendations are going to be put into operation, for we cannot allow these young people to be held up and, indeed, frustrated because no action is being taken by the Government to deal with this problem.

LORD REA

My Lords, might I ask leave to answer a direct question which I believe the noble Viscount put to me when I was not in the Chamber, for which I apologise to him? I believe the question was: what percentage of unemployed do I think would not take work if it were available to them. Frankly, I do not know; but in my opinion, if it is of any interest, I should say it is a very small fraction of 1 per cent. I was rather surprised at the assumption of the noble Viscount and his colleagues that such people who tremble at the sight of work are exclusively members of the Labour Party. That is not my experience; but they may be right.

VISCOUNT HALL

It was not a question of Party at all. If it is a very small section of 1 per cent. of the unemployed, I am surprised that the noble Lord deemed it necessary to refer to them. Why should he? From the way in which he put the point one would regard it as a very large proportion—that he was referring to a very large proportion of the unemployed. He does not know the unemployed as I do.

LORD REA

My Lords, perhaps when the noble Viscount reads Hansard he will see that did not say that. I was putting it forward as a completely minute fraction of the unemployed and as not worth paying much attention to.

4.40 p.m.

LORD JESSEL

My Lords, I must confess that I had expected that the noble Viscount, the Leader of the Opposition, in his opening speech, would be bound to hark back a good many times to the bad old clays of unemployment in the 'thirties: but, owing to Mr. Douglas Jay and the Engineering and Allied Employers' Confederation, he resisted that temptation. The reason for that, presumably, is that, in his opinion, the situation today is in no way comparable with that of say, 1931—and of course, in that he is quite right. Last week I listened on the radio to an octogenarian being interviewed on his eightieth birthday. Actually, it was a distinguished Member of your Lordships' House, Lord Beveridge, and he was in his usual sprightly form. He was asked, if he were a young man to-day, to what causes he would devote his energies. He replied that in his youth it was the problem of poverty which worried him most, but today that had ceased to exist. What worried him today, he said, was inflation, the continuing fall in the real value of money, and also what he described as "that horrible word 'conurbation'"—the fact that people were spending hours and hours of their working lives travelling to and from work.

If we admit that Lord Beveridge's assumption is a valid one, I think we can get the problem in a better perspective. Nobody likes the February figure of 2.8 per cent. unemployed, but, in proper perspective, I suggest that it is nothing very terrible. After all, the proportion of unemployed in the United States and Canada is far higher: far higher even now, and they are supposed to have emerged from their recession. One thing we have learned from America, I think, is that, although there has been an up-swing there in production, that has not meant a corresponding increase in the numbers of those employed; and I think the same thing is going to happen here. I think that, first of all, one will get unused capacity coming into production, but that will not mean more people being employed immediately: that will follow next.

I contend that, to-day, no Government can honestly claim to guarantee full and perpetual employment. How can they in this country, where we have to import 40 per cent. of our food, most of our raw materials, and, in order to pay for them, have to sell about 30 per cent. of our production? Anybody who is in industry or business knows that it is getting harder all the time to sell the exports. The traditional manufacturing countries have now recovered from any ill-effects of the war; new countries are becoming industrialised, they have cheap labour, new plant, and are becoming severe competitors. Yet I have seen it seriously suggested quite recently by some unions that short-time working is a cure for unemployment. My Lords, how can that be? All it would do would be to put up costs and make the selling of exports even harder than it is at the moment.

Of course, there are special cases, and Lancashire and the cotton textile industry is obviously a special case. During the last few years the number of people employed in this industry has continued to decline; but is it surprising? Does it make economic sense to ship cotton from, say, India to Lancashire, there to be made up into cheap cloth, and then to ship it back again, to be sold to the local population? Of course that is not going to happen any more. However, it is worse than that, because cloth is coming in from these countries to the detriment of home sales. The problem of diversification in the textile towns is a real and urgent one, as many of these towns are entirely geared to cotton. Actually, the labour force has dropped from 370,000 in 1951 to 245,000 at the end of 1958, which is a loss of 125,000 workers in that industry in the short space of seven years. Today, therefore, we have an unemployment percentage in cotton spinning and dubbing of 10 per cent., and in weaving of 7 per cent. But it is really much worse than that, because there is a great deal of short-time work, and married women do not as a rule register as unemployed, so there is no check on them.

We are also faced with a great human problem. The young workers have left the industry, and it is the older, married people who remain. They have developed specialised skills, and cannot readily be absorbed in other industries. I know that the cotton industry to-day realises that there are too many spindles installed for the amount of trade which is likely to be available, but I do not think it is unreasonable to think that the present level of production can be maintained. We all know that stocks are low, and there must be a time when they will have to be replenished. Further, as my noble friend the Leader of the Liberal Party said, an agreement has been reached with Hong Kong—and I am glad to see present to-day Lord Rochdale, who has been carrying out arduous negotiations all over the world during the last few months—which limits not what is coming into this country at the moment, but the future target which they can send here. I am hopeful that similar agreements will be made with India and Pakistan.

Then there is the Cotton Development Board Committee, which is pressing forward with plans for reorganisation and re-equipment which it is hoped to submit to the Government within the next few weeks. It is up to the Government to help this industry to rehabilitate itself so that a newer cotton industry can emerge: smaller, but more competitive, and able, as in the past, to lead the world in quality, originality, and design. Here I should like to say that I was pleased to read in the papers this morning that some of these cotton towns—such as Oldham, Littleborough, and Castleton—have now qualified for financial assistance under the Act. Of course, Lancashire is not the only black spot. Another is Northern Ireland, which I understand the noble Lord, Lord Pakenham, is going to deal with—and I am sure we are all grateful for that. In spite of the efforts of the Government of Northern Ireland, unemployment there is still about 9.4 per cent. of insured workers. But I know from my own experience that, although this is the figure, it is still extremely difficult to get agricultural labourers and impossible to get domestic assistance.

There is another form of unemployment which is always an embarrassing one to touch on; and it has not been mentioned. There is unemployment as a result of unofficial strikes. At the moment it seems to be the issue of the closed shop which is the one exploited by Communist elements among shop stewards to stage strikes. I should like to know what is the official policy of the Labour Party on the closed shop. Presumably, it is in favour of it, as it made it compulsory in all the nationalised industries which it created. On the other hand, there are some unions, some big unions, which are tolerant of individualism; and I think that is the attitude that appeals to the mass of people in this country. There is an excellent letter, I thought, in The Times by Mr. Cyril Osborne, a Member of another place, which, to me, puts the situation very clearly. He said that the chief task of all politicians is to make the British people realise how lucky they are, how precarious is their hold on their present standard of living, how flexible they must be to retain it and how stupid they are to think that by restrictive action they can retain it.

4.53 p.m.

LORD PAKENHAM

My Lords, it is sometimes objected to by noble Lords that we do not always answer each other's speeches. I feel that I should incur that criticism if I concentrated on what the noble Lord, Lord Jessel, who made a very thoughtful speech, was kind enough to mention and he will forgive me if I do not follow his points with the care they deserve.

If I concentrate on unemployment in Northern Ireland, it means I shall be trying to stick to economics, rather than politics, although one or two Members of the House will not be surprised to hear that there is plenty I could say on the latter. I shall be talking about economics. That means I shall say as little as possible about the Prime Minister's speech last week at the Unionist lunch at Belfast. He is, as we all know, a good and statesmanlike speaker, but even his greatest admirers would hardly call that particular effort a good or statesmanlike speech. He announced to his wildly enthusiastic audience that if the Labour Party won the Election the country could be changed from a free country into a Socialist and more or less bankrupt State. Then he got into his stride and said: Socialism starts with the incitement to break the Tenth Commandment. I need not remind your Lordships what the Tenth Commandment is, but you will probably recall that it ends by instructing us not to covet our neighbour's ox or ass "or anything that is his." To drop into the Prime Minister's vein, or attempting to imitate it, I can assure noble Lords opposite that we covet nothing in their record, particularly their record in Northern Ireland. So far as their oxen and asses, politically speaking, are concerned, they can keep them to themselves. So we do not fall under this charge in any wrong sense.

I am not talking politics to-day, but I am bound to notice that the Prime Minister at the same time made some hectoring remarks in regard to Mr. De Valera. Mr. De Valera dealt with the matter gently but firmly, and I hope that that lapse on the Prime Minister's part will soon be forgotten or, if remembered, will be attributed to an understandable fatigue after his gallant journey.

To return to economics and the subject of unemployment in Northern Ireland, Mr. Macmillan said: I am very conscious of the unemployment situation in Ulster. But one thing is certain. It would have been much worse if it had not been for vigorous measures to draw in new industries and to encourage the expansion of existing industry. I shall be speaking fairly sharply about some aspects of the economic position, but I hope the House will realise that I am trying to be unbiased if I quote the Irish Independent, of Dublin, which said: Even the most bitter opponents of the Unionist regime cannot deny that things might be very much worse if the Government's efforts since the war had been less strenuous. I am not sure to which Government that refers—perhaps the Labour Government receives part of the bouquet. The view of the Irish Independent, which would not be biased in favour of the Six Counties, points out that farmers now employ 20,000 fewer workers than ten years ago and the linen industry 10,000 fewer. In the same period, 36,000 new jobs have been created in industry with Government assistance. Admittedly, this has cost between 24 and 25 million in loans and grants and factory buildings. Indeed. I am informed that the total number employed in Northern Ireland is now 68.000 more than in pre-war days. We must certainly bear that in mind in talking about unemployment. So in anything I say, I hope it will not be thought there is any desire not to pay a tribute to the tough and courageous people in the Six Counties. They have been faced with big economic difficulties since, as before the war, and they have done a great job in many vital respects.

A remarkable article in the Financial Times on Monday makes the point in another way, and I commend it to your Lordships. In answer to the question, "What is the Northern Ireland Government doing about the unemployment problem?" they answer under three heads. The first is an extensive programme of public works and housing. Public works cost the Government about £4 million a year, and the figure is likely to be increased. The second is that substantial expenditure is being undertaken on improving transport facilities to and from England, particularly at the ports of Belfast and Larne. Thirdly, the article deals with what it calls the main effort of the Government, which is to attract private industry to Northern Ireland. Here the Financial Times concludes—and I have no reason to dispute it—that the range of inducements offered is unparalleled elsewhere in the United Kingdom. These are opinions, but they come close to being facts, and should be part of our general background.

They mention, in particular, £15 million spent on building factories either for sale or which can be let at very low sub-sidised rents; grants to industry of up to £10 million, which include an annual grant towards net capital spending on plant, machinery and new buildings, which has just been raised from 25 per cent. to 33 per cent. Last, but by no means least, we certainly should not fail to bear in mind the assistance given to the Ministry of Commerce in Northern Ireland since 1955 by the Northern Ireland Development Council, under the chairmanship of a respected Member of your Lordships' House, the noble Viscount, Lord Chandos. No one who knows the noble Viscount will suppose that a better choice could have been made, or is likely to underestimate his exertions. As many of us are aware, a wide range of industries has been brought to Northern Ireland.

My Lords, those efforts have been made, but whatever the credit, and whatever may be thought to be the blame, what in fact is the unemployment situation in Northern Ireland at the present time? This is stated in the starkest possible terms at the beginning of the same article in the Financial Times—and again I do not think this will be disputed by any dispassionate judge: To visit Northern Ireland to-day is in some ways like returning to the Britain of the 1930's. The problem of unemployment dominates all others as the recovery in the fortunes of the Northern Ireland Labour Party shows. That is an interesting comment from a newspaper that will hardly be tarred with our Labour Party brush. Here, in one sentence, is the pith of the matter: … at present one in ten Ulstermen is out of a job, and despite strenuous Government efforts there is little doubt that the proportion will rise still further in the next few months. That is an expert appreciation, quite remote from Party consideration and from any bias in favour of anything that I can particularly commend politically.

The United Kingdom Government, under the existing constitutional set-up, have decided to carry, and indeed cannot avoid carrying, a heavy responsibility for the level of economic activity and employment in Northern Ireland. That is surely beyond dispute. I have my own views, as I said earlier, which may be known to one or two Members of your Lordships' House, about the wisdom and justice of this constitutional set-up in Northern Ireland. However, I am not arguing that question to-day, because if anything would he out of order in this Motion, I should think that would be. I am taking the set-up as given; and while it endures I say that any Government in this country which acquiesces in a 10 per cent. level of unemployment—and a level that seems likely to rise—in Northern Ireland is failing signally to perform its duty. I have in mind (though this was not said on his recent visit by the Prime Minister) that Ministers of the Party opposite are rather fond of saying, when they find themselves in Belfast, that they will never betray the people of the North. There is more than one form of betrayal, and after all we have been through and learnt since the 'thirties a Government which allows the situation of the 'thirties to return—and, in the opinion, of the Financial Times, at least, it has returned—with every sign of it getting worse, is betraying the people of Northern Ireland in a sense that all of us who lived through the 'thirties will understand.

Am I being unfair in suggesting that Her Majesty's Government, with whom we are debating to-day, are acquiescing in the present plight of Northern Ireland? If the noble Viscount, Lord Hailsham, proves me so in his reply, I shall have a further chance, always welcome, of apologising to him. But it is difficult to to believe that if anything striking is intended the Prime Minister would not have referred to it during his recent visit ten days ago. I cannot deduce from anything I have discovered in his lunchtime oration that there is to be any new or helpful departure. It can hardly be said that I or anybody else (perhaps the noble Lord, Lord Jessel, would have spoken of this if I had not intended to do so) is over-hasty in calling the attention of this House to the troubles of Northern Ireland. Ever since the war the unemployment level in Northern Ireland has been much higher than in Great Britain, only once falling below 6 per cent., at a time when the British average was under 2 per cent. In 1951, unemployment in the Six Counties was 28,500.

LORD JESSEL

Perhaps I may interrupt the noble Lord, in order to have the picture made clear. I do not know the answer to this, but if he does, I should be grateful if he would tell us. What is the unemployment figure now, and what has it been since the war, in Eire? Is it comparable with that in the North?

LORD PAKENHAM

The figure in the Irish Republic, to bring the noble Lord up to date, is 78,000. It was 82,000 a year ago, and 91,000 two years ago. If one takes a slightly complicated comparison (though I do not feel that it is particularly relevant), that is, the proportion of the insured population in the South, which excludes agricultural labour, the proportion is just over 10 per cent.; it would be slightly higher in the North. But if you take the proportion of the unemployed to the total population, it would be distinctly lower in the South. To put it in quite a simple way, the proportion of the population of the Irish Republic is more than twice the population of Northern Ireland, and from the figures I have given, 78,000 against 44,000, the noble Lord will see that the number of unemployed in the South is less than twice the number of unemployed in the North. I hope the noble Lord will realise that, since we are being completely candid in these matters, it did flash through my mind that this question might be put to me, and I am particularly glad to have bad the opportunity of answering it. I feel that I should express my gratitude to him for having given me such an excellent cue.

The total figure of unemployment in Northern Ireland in February was just over 44,000—higher than in any comparable area in the United Kingdom. I think we have heard one or two higher percentages mentioned to-day, but they would be in much smaller areas, and this is the highest in any substantial area in the United Kingdom. In 1957, the average percentage was 7.3 and in 1958 it was 9.1. In January, 1959, it was 9.7, and in February, admittedly, the latest figure for Northern Ireland shows a slight drop from 9.7 to 9.4. But the Financial Times concludes that the figure will go upwards, and that seems to be the expert opinion that I have checked elsewhere. So I think we must take it that the figure is very high; that it appears to be rising, and is likely to rise still further.

It is not enough, in my opinion, for our distinguished and much-admired Prime Minister to say that he is very conscious of the unemployment situation in the Six Counties. It is not enough to indicate that apparently he proposes to do nothing about it and to secure a stormy ovation by schoolboy jibes at the British Labour Party and provocative criticisms of Mr. De Valera. It is his attitude and approach, if I may say so, which appear to be all wrong; and that, I venture to suggest, is something which will be changed, as the Prime Minister has shown himself frequently to be capable of new thoughts. But when we come to practical steps, undoubtedly we are under some difficulty. It becomes a question of working out the precise steps to secure general agreement.

The Six Counties (I am trying to be factual, with occasional rejoinders to those who have criticised my colleagues) labour, as things are, under a permanent handicap which it is not within the power of any beneficent or maleficent Government to alter. Their markets in raw materials lie to so large an extent across the Irish Sea that transport costs are inevitably high. There is also, by general agreement, a psychological obstacle which holds back United Kingdom and foreign industrialists who think of starting up a business there. There is a drift from the land which could be argued about at greater length. There is the birth rate, which is the highest in the United Kingdom, and there is also the contraction of the linen industry, again a subject which could be pursued. But none of those is, on the face of it, the fault initially of any Government. But they represent admittedly a grave and far-reaching problem.

The Northern Ireland Labour Party have recently issued a programme which has aroused a good deal of interest and consideration among sympathisers and non-sympathisers alike. I cannot summarise the whole of that policy for noble Lords this afternoon, but if anyone is interested I would tell them how they can procure it. I would touch upon one or two of the leading points. A development corporation to survey the country's resources, to plan necessary development, and to supervise the carrying out of such a plan, is perhaps the most striking proposal. It should be made responsible, we are told in the programme (and it is to act, of course, on behalf of the Government) for establishing new industries and providing capital, some of it at special rates; for investigating freight rates, and for encouraging efficient marketing and co-operative enterprises. I must not detain the House with a list of all the other proposals, but I must at least refer to the call for a textile development council, working with the development corporation, and the emphasis on the farmers' need for capital assistance and a greater measure of security. They also urge that special encouragement should be given to industries which should be co-ordinated with the farming programme, such as chilled beef, canneries arid fertilisers. They urge also that a large new dry dock should be built at Belfast, where a suitable site is available.

I am not asking the House or the Government, unless they have studied this programme with great care and have had the time to do so, to endorse without further reflection or clarification these or other proposals from the same source this afternoon. But I do think that these proposals can fairly be described as serious, economic and social suggestions which contain, so far as I can see, little, if any, Party implication, and which deserve a serious and full attention. If the Government here or in the North of Ireland have more constructive ideas than these, then, for heaven's sake! let us hear of them, and let them be pushed on with. Unless there is a very different approach we are not likely to see any improvement, and in face of a deteriorating situation any Government who fold their hands, beat their drum and talk about loyalty as a substitute for jobs deserve the most severe censure.

I would end on a slightly different note. I certainly do not want any words of mine to convey the impression that the situation is all black in Northern Ireland. I mentioned earlier some of the inducements which are being held out and some of the efforts which the Government there, with support from here, have made to attract industrialists. Perhaps I may be allowed to offer my own opinion. I have had some contact with Northern Ireland apart from politics. My opinion is that there are magnificent opportunities in Northern Ireland for industrialists, whether from this country or from abroad. In particular, I hope and believe that American industrialists, who have begun to show great interest, will be further attracted to Northern Ireland, knowing well that the potentialities, the inducements and the opportunities there are absolutely first-class. Whatever the long-term future holds for Northern Ireland, it can hardly be doubted that her fortunes will be considerably affected for the better by world recovery. Northern Ireland is very much affected by what goes on outside, and also is affected for good by any policy of greater expansion in this country.

The Prime Minister admitted candidly on his recent visit that the restrictions (of which we have heard a good deal to-day) imposed in the United Kingdom in 1957—thoroughly justifiable restrictions, as he naturally called them—had adversely affected Northern Ireland, in spite of attempts to exempt her from, for example, the credit squeeze. But whatever the economic impact of events in Britain and the outer world, the best friends of Northern Ireland and her wisest sons and daughters are aware that her real contribution on all planes, including the economic plane, is to-day seriously impaired by the political and religious tensions which have no parallel, thank heaven! in this country.

Recently, the Northern Committee of the Irish Association, an all-denominational body, set up a sub-committee to consider the usefulness and the possibility of a sociological and economic survey of the causes of tension between the Protestant and the Roman Catholic communities in Northern Ireland. It has now been decided that this survey is to proceed under a direction committee of five—a mixed committee as between the denominations, the first two names being those of Sir Graham Larmor, last year's President of the Belfast Chamber of Commerce, and Professor Carter, of Queen's University, an outstanding economist who will be editorial director. The people running this inquiry believe—and some of them are leading people of both main denominations—that this inquiry should serve a useful purpose in, reducing political and religious misunderstandings and in lessening emotional tensions based on one-sided or distorted propaganda. They believe that in this way artificial and unnecessary barriers will be removed.

In this way, they believe, and I believe, that it might he somewhat easier for members of the community to work together in mutual confidence for peace and prosperity. They lay special stress, I notice., on this. It may become easier to solve such chronic problems as unemployment and emigration. May that great hope be realized! I regard this inquiry, under all denominational and completely objective auspices, as the most hopeful thing that has happened in Northern Ireland for many years. It points the way, as nothing else can, towards that balance of mind in which her people can deploy their immense gifts of mind and character and work out in freedom their ultimate destiny.

5.18 p.m.

LORD TEVIOT

My Lords, I have listened with great interest to this debate and to all the speeches, which have been instructive and full of knowledge, in particular in regard to the figures of percentages given. They are rather difficult to follow and, as we know, figures and percentages of that sort are so easily twisted that there may be other opinions with regard to them. I think the most outstanding speech to-day was the speech of my noble friend Lord Dundee. He gave us Ian exhaustive and comprehensive speech on the general situation, and I feel that all of us will read it with greater understanding than we have merely by listening to it. It was extraordinarily goad.

I am one of those who always try to bring some constructive ideas into any speeches that they make. I was glad to note that the noble Viscount, the Leader of the Opposition, was very quiet and not at all abusive to this side of the House. I thought he was very kind to us. I should like to point out something which, perhaps naturally, he did not mention. Looking back over the years of unemployment, I believe I am quite justified in saying, that the highest unemployment in this country was at the time when the Socialist Party were in office.

LORD PAKENHAM

May I interrupt the noble Lord? I believe that that is wrong. I have not got the date, but I should not mind laying a small bet that that is wrong.

LORD LATHAM

My Lords, the facts are that it was in January, 1933, that the total of unemployed reached nearly 3 millions, and that was eighteen months after the cessation of the Labour Government.

LORD TEVIOT

My Lords, that does not alter my opinion, because I know that it was higher than that when the Labour Government were in, and from the moment that the Conservative, or Coalition, Government came in it gradually began to decrease.

There is a subject which I wish noble Lords would consider—it is very material to our future and the welfare of this country—and it is the fear that we have of the policy (which I believe has not been departed from) of increased nationalisation of industry in this country. We all know the results of nationalisation in the past. It has not been a success, and I feel that it has a great effect on the minds of industrialists and importers in other countries when looking into the future. We are told we are going to have an Election quite soon. Suppose we have it in October; that is not very long to look forward. If the customers of this country are a little apprehensive with regard to the possible nationalisation policy as enunciated by the Socialist Party, it is quite understandable that they should hold off a great many of Their business transactions with this country, to see first what is going to happen. I will make this prophecy: if, as I hope and believe, this side of the House comes back with a thumping majority, then you will see a great improvement in our exports, and our foreign customers will immediately then begin to buy.

The noble Lord, Lord Silkin, asked whether the Government foresaw the unemployment danger. I think the noble Earl, Lord Dundee, answered that question. It is quite evident that they did foresee it, in that, as has already been mentioned, they have built a number of factories and have done everything they can to help in the dangerous unemployment areas. There is one thing which I have had in mind for some years: that is, the desperate condition of the cotton industry here. It is not as bad as it was. I have always had the feeling that if we could make up some business that could be adapted to Lancashire and involving the use of Australian wool, then we should find that it would increase employment there. As we know, the Japanese would be competitors, but I can see no reason why we should not tackle that and see whether something cannot be done in that direction.

I do not suppose for a moment I shall get an answer, but I think the time has come when this point should be established—I do not know whether it has been established already. Could I have a "Yes" or "No" answer to this question: is the policy of the nationalisation of industry going to be pursued should the present Opposition get in at the next Election? Is there any sort of an idea about it there? Would anybody like to say "No" or "Yes"? It is very important that we should know something about it. I do not suppose I shall get an answer; still, it might come later on. The noble Lord, Lord Lawson, I see is to speak just after me. He is a very old friend of mine and I am sure that if he can answer it he will. I see that he is smiling.

My Lords, I go a great deal to Scotland, which is my country. I find that lately there has been an increase in employment in the domestic world, and I feel that if we could get some of these young people who do not quite know what to do to find themselves domestic employment, it would be a great benefit to a great many people. I cannot see why we should be very despondent about the situation. If one thinks back to the two world wars one realises that it would be most astounding if there were not some recession in various countries which were heavily engaged in them and spent a colossal amount of money on them. In view of that, I do not see that we could possibly get away without suffering or being worried about our future. There is no doubt—and noble Lords opposite know it perfectly well—that there is a recession in world trade. Perhaps my noble friend, Lord Lawson, may be able to tell me, but I have been trying to think out whether any Act was ever introduced by the Socialist Party which really did anything to increase developments in areas where there is unemployment. I believe that all that has been done by a Coalition Government or by a Government of the Party on this side of the House. I do not think there is a doubt about it. I see the noble Lord, Lord Stonham, smiling. If he can get up and tell us just one thing that was ever done by them by their own initiative, I shall be grateful.

LORD STONHAM

My Lords, since the noble Lord invites me—I would not otherwise interrupt—may I say that we did introduce in 1945 the Industrial Development Act, which I think has been responsible for most of the development of that kind.

LORD TEVIOT

I was not aware of that, and I am sure that what the noble Lord says must be true. Naturally, I accept exactly what he says. There is no doubt that this recession in trade is certainly not due to anything this Government have done. I do not believe that that charge can be substantiated at all.

LORD BURDEN

It is what they have left undone.

LORD TEVIOT

After all, compared to other nations and the unemployment and the suffering they have, due to want of employment, owing to world recession in trade generally, our numbers compare very favourably. I do not know whether it was said here or whether I read about it, but the Government are accused of not building for letting to an extent they ought to, and of not building in development areas when requested to do so by local authorities. I believe that the Government have done everything they can to encourage local authorities to take advantage of all the facilities available to help those areas that are, as we all know, in a most depressing condition. It is all very well to be clever and wise after the events. I shall look forward to the day when, in the event of a national trouble facing all of us, the Opposition will join with the Government in trying to overcome the difficulties. I always look back on the days when I was in another place, when I think Mr. Ramsay Macdonald was Prime Minister. He was in a difficult situation such as this, and he remarked, "If only at moments like this we could have a National Council to settle this question, eliminating Party politics altogether and seeing whether, with the special knowledge on both sides of the House, we cannot overcome the difficulties we are suffering from!"

5.32 p.m.

LORD LAWSON

My Lords, the noble Lord told us at one point in his speech of the evils of nationalisation, and said that the British public wanted no more nationalisation. We shall have an opportunity of testing that as soon as the Government are ready for an Election. But may I remind noble Lords that one of the most evil times industrially through which this country has passed was the time of the depressed areas, in the mining areas particularly, where the mines were privately owned. If the noble Lord wants a sample of what took place in what were called the depressed areas—because this country appears all too conveniently to have forgotten what did take place—Welsh miners, instead of being in the pits, were on the streets here singing hymns. I used to leave Parliament and go home to find at my back and front doors a great queue of men who once thought they were indispensable—first-class craftsmen, proud of their craft, for whom the day had come when they were no longer needed. How grateful they were to get an old suit, or some clothing for their wives and children, which was sent by kindly disposed people from all parts of the country!

I would remind the noble Lord, and your Lordships, too, and the country, through this House, that the worst time most of the people of this country endured in regard to unemployment, and the highest rate of unemployment they had, was when at least the mines were privately owned. I heard the noble Earl, Lord Dundee, who spoke for the Government say, I think, that they had given 277 approvals or directions in some form or another for industries in other parts of this country.

THE LORD PRESIDENT OF THE COUNCIL (VISCOUNT HAILSHAM)

My Lords, I think he said "industrial development certificates to development areas."

LORD LAWSON

I was pleased to hear him say that. But I have never been able to understand why Governments are not more decided upon this matter of approvals and directions for industrial development. As I understand it there is hardly a single instance in Which a factory or factories that have been serif to the extreme ends or to other parts of the country outside this great City have not proved to be a success.

There was one particular instance referred to by the noble Lord, Lord Rea. Was there ever a worse example in this country, or perhaps in any other country, of woebegone people lacking any industry at all than existed in West Cumberland? I know that part of the world—as a matter of fact, I was born there. It was always a difficult area, from the point of view of employment. I have seen it since the developments have taken place, and I agree that great credit is due to one particular man, Lord Adams, who has done splendid work in West Cumberland. He has lent his influence and his talents and all his industrial experience. It is wonderful to see what has been done in that part of the country which, so they said, was apparently a hopeless proposition. I think it was Lord Davidson who went there and saw it, and wrote a moving description of what the country was like. It seemed to me in regard to what I have always thought was a proved fact—that the particular contour of the country was against it and made it altogether hopeless—that when one points to what has been done in that part of the world, the raised standard of life and the enlarged hopes of the people, it gives a sample of what can be done.

I have seen it in my own county, in places far remote from the main roads. I cannot understand why Governments are not more decisive upon this matter of spreading industry throughout the country. Recently, whilst going South, I drove through the southern part of London, and I was amazed to find how industry had developed, in spite of the warning that was given during the war. Sir Malcolm Stewart was one of the representatives of the Government in Durham and Northumberland. Time and again in his reports did he warn Governments about what would take place in this city. He pointed out that most of the aeroplane parts and other necessary things produced for war were produced round about here at that time and would lay open for sure and certain attack in times of war. And those of us who know what London was like at that particular time can only confirm how terribly the warnings of Sir Malcolm Stewart were justified by the actual events.

I say, therefore, that Her Majesty's Government should be more decisive upon this matter of spreading industry. Here is a country which seems to be packed with people, and yet even in industrial areas like my own there are wide stretches of land, so that if one gets a mile or two away from where I live, going to the Consett Steel Works, one will go twenty or thirty miles and never see anything but sheep and farms. That is the case all through this country. The impression is given that this is an overcrowded country, but it is nothing of the kind. I am glad, of course, that we have set aside some part of it for parks and rural enjoyment, as necessary, but apart from those great areas that have been set aside there is plenty of room in this country for the direction of industry.

I do not want to speak for too long, but I want to say just a word or two about unemployment in the mining areas. Only a few small collieries have been closed recently, but these people live in small communities where sometimes there is no other work within scores of miles. I hope I am wrong, but I must say that in recent months I have felt as though there was a calamity hanging over the whole of the mining world of this country. I have tried to resist saying that in the past, but I must tell your Lordships and the country, through this House, that things are in a very bad state. I see in my own community men going to and from meetings, and I see notices in the Press; and it is quite clear that the mining industry itself is perturbed about its future.

I saw the noble Lord the Minister of Power here. I am sorry that I did not give him notice of this point, but I must say that, while I hope I am wrong, I feel that the time has arrived to consider the rapid advance of oil. It is difficult to get any figures of actual increases in imports, but I looked at one set of figures to-day and it seems to me that oil imports have increased by about sixteen times since 1938. The story is that oil is to be applied to the railways. If Her Majesty's Government believe that that is right, it is up to them; but they must take note of the fact that in case of war, as in the last two wars, the coal industry has been the salvation of this country. Had it not been for the coal industry we should have been sunk, both in the last war and in the previous war. The situation was realised, and miners were stopped from going into the Forces six months after the first war started; and they were stopped from entering the Forces immediately the last war started.

If we want oil to dominate this country let us say so. But I tell your Lordships, quite frankly, that I believe that finance is playing a considerable part in this, and I am not quite so sure that, in the long run, it will not indirectly affect policy. But if we want oil let us decide. I believe that the mining industry has arrived at the stage when it is time for the Government themselves—and not merely a Department—to judge this question and to make up their mind whether or not they want the mining industry to survive. If it does not survive, or if a calamity suddenly comes upon us, through neglect or drift, we shall find a repetition of the old depressed areas, with all the woe and the tragedy.

I will end on this note: one of the best things that has come to this country, and to the mining industry, too, is the nationalisation of the mines. It has given us self-respect in the mining villages. It has built up men and women with an outlook on life such as they have never had before. I could tell stories of what I had to do when I was a youngster, when one had to work for nearly a week to get a simple book costing a few coppers. Now, of course, the situation is all altered. Miners, with their families, have been brought up into strong, self-respecting people. They are a great asset to this country, and the Government of this country ought not to let this question drift until tragedy conies upon them.

5.47 p.m.

VISCOUNT MASSEREENE AND FERRARD

My Lords, I was extremely interested to listen to the very good speech of the noble Lord, Lord Pakenham, on the North of Ireland, as I have myself just returned from there. I believe that the noble Lord quoted the figure of unemployment in the North of Ireland as 10 per cent., but I was of the opinion that it was not quite so large. I should have thought that at the moment it was about 9.6 per cent.

LORD PAKENHAM

Does the noble Lord want me to correct that?

VISCOUNT MASSEREENE AND FERRARD

No; the point I am going to make is that if the figure of 10 per cent. given by the noble Lord is correct, it has arisen only in the last four or five months. I should like to point out to the noble Lord that during the six years of Labour Government the figure of unemployment in the North of Ireland was, up to September of last year, higher than the figure under the Conservative Government. The North of Ireland is in a very peculiar position in regard to unemployment. In the war it had 4.4 per cent. of unemployment, which was highly unusual as no other part if the United Kingdom had any unemployment at all at that time.

The North of Ireland has, of course, a great many disadvantages, and the noble Lord, Lord Pakenham, very fairly pointed out certain of them, such as her geographical position, which adds 2 per cent. to the costs of all companies there exporting goods. He also explained how she has no raw materials such as fuel. But I should like to point out other disadvantages. In the whole territory, the whole country, there is only one large town, Belfast, and so only a comparatively few people are employed in insurance and shops and similar city occupations. Again, also in farming, owing to mechanisation a great labour force has left the land; and her shipping and ship repair yards are extremely sensitive to world trade.

Every year we have had to find extra jobs for 5,000 new population. That takes some doing. The noble Lord, I think, said that 68,000 more people were employed in the North of Ireland nowadays compared to the pre-war number. I am told that the actual figure is 70,000. Of course, if we consider the subsidies for factory building, I would say that one can rent factories in the North of Ireland for 9d. a square foot. The economic cost is 4s. 6d. That is a great thing. It has attracted certain industries to the North of Ireland, and I hope will continue to do so, because the labour in the North of Ireland is excellent and is not so prone to strikes as perhaps is labour in other parts of the country.

We have also had the capital allowance raised to one-third for the equipping of industry, which will also be a great help. But we have that sea, which is a great stumbling block and, I am afraid, will always remain so. There is one point that has not been brought out: that the North of Ireland, per head of the population, exports, for instance, four times more than the whole of America per head and twice as much as New Zealand, Canada and Australia.

I should like to say a few words about the North of Ireland's oldest industry, apart from agriculture, and that is the linen trade. There is no denying that the linen trade is in a bad way. The trade employs 14.2 per cent. of the population of the whole of the North of Ireland and I think that 7.5 of the population are employed in the clothing trade. There is little flax now grown in the North of Ireland. They are growing only 1,000 acres this year, which will produce about 200 tons. In the war years they were growing about 20,000 acres—but then, of course, they had a subsidy. The North of Ireland has to import nearly all her flax, £5 million worth, from Western Europe.

The danger is that flax-growing in the rest of Europe is dwindling fast. It has dwindled by over 50 per cent. in about six to seven years, and if the position of the linen trade goes any lower the flax-growers in Europe will stop growing flax. Russia is growing 8 million acres of flax and is constructing eighty-seven new mills this year. The danger is, as I foresee it, that they are going to flood Europe, and of course the North of Ireland, with extremely cheap flax and destroy all the flax-growing trade; and after they have cornered the market they will put the price up and will charge what they like.

Where the linen trade could be helped is in publicity. It spends only £200,000 on publicity. If we consider a firm like Unilever's, I understand that they spend £80 million on publicity. In comparison, £200,000 is an absolute fleabite. But what I am hoping is this. If Her Majesty's Government, through the North of Ireland Government, could use for publicity for the linen trade the money which was previously used for subsidising flax-growing in the North of Ireland it would double the funds for publicity in that trade and, I am sure, would be a great help. If every housewife in the United Kingdom would only buy eight yards of linen per year, the industry would be fully employed. If only teenagers would buy their jeans in linen it would keep the trade going. But the whole trouble is that the trade has hardly any publicity at all.

I should like just to say something about unemployment as a whole in the United Kingdom. The whole trouble appears to me to be that we are losing our slice of the cake—and by "cake" I mean the foreign-trade cake. The cake grows larger, yet our slice of it grows ever thinner. Why is this? Because we have spent vast capital on new machinery to raise our production. The disquieting fact is that our production is lagging behind that of the rest of Europe. Certainly one of the reasons for this, so far as I see it, is restrictive practices and unofficial strikes. We read nearly every day that some great industry has been brought to a halt due to a walk-out of 10,000 or 20,000 workers over some absurdly childish and quite irrelevant happening—perhaps because the foreman has sworn at somebody on the bench, or trodden on his toe, or upset the tea over him, or something like that. When the men go back they are always told that they have won a great victory. But the truth is, of course, that they have succeeded in making the threat of unemployment even more likely, because, as all your Lordships know, every time we cripple an industry our competitors overseas have an advantage, and we cannot afford that.

Japan has just constructed the largest tanker in the world. She is of 106,000 tons, I think, and they have constructed her in just under six months. I am told that it would take our yards about two years to do that. We cannot afford these strikes the whole time: it is complete national suicide. I have a slight interest in shipping, and I know that if you want to have a ship repaired you can send her to Germany and have her repaired in one-third of the time it would take to do it here. The position is extremely serious: but I do not know how one can cure that in a democracy. I suppose that in time it will be cured by education. I can only hope so—though I hope the time does not come too late.

I have spoken quite long enough, I think, my Lords. Of course, the Government cannot work miracles. I personally think that, in view of the recession in world trade we have had, they have done extremely well to keep the overall figure of unemployment down to 3 per cent. I rather feel that, if your Lordships opposite—and I refer to the Socialist Party—had been in power, we might have had a higher figure. Anyone, of course, can cure unemployment temporarily if he is prepared to raise production irrespective of the balance of payments. It is easy to spend £1,000 million on unproductive work, but if it does not bear any relation to world trade and the balance of payments, it is obvious that, in the end, it will only create far worse unemployment. I personally think the Government have done an extremely fine job.

6.6 p.m.

LORD STONHAM

My Lords, owing to the fact that I was in Committee upstairs, I was unable to hear the whole of the speech of the noble Earl, Lord Dundee; but I was in time to hear his reference to my right honourable friend Mr. Gaitskell, and to the speech which my right honourable friend made in 1951. I should like to say how grateful I am to the noble Earl for quoting it, not only with complete accuracy, as I am certain he would, but at sufficient length to ensure that there is no distortion. I am sure he will agree with me that that is somewhat rare in the quotations that are made of that particular speech.

The noble Earl quite rightly said that my right honourable friend referred to the effect of world conditions, over which we had no control: but, of course, at the time that speech was made, world conditions were vastly different from what they are now. The prices of our imports were simply cascading upwards—if a cascade can go upwards: at any rate, they were going upwards like a Sputnik—and we had no control over them. But the noble Earl cannot argue that there is anything like that situation now. For several years now, world prices have been going down; prices in this country have been going up; and the unemployment figures, unhappily, have also been going up. In that speech my right honourable friend said that we would not allow unemployment to reach 3 per cent. without taking drastic steps, and the noble Earl said that the Government had in fact taken such steps. My Lords, in my view, the results which we are now considering in this debate show that those steps were badly planned—too little, and too late!

My Lords, I have been surprised to detect (if I am right) a note of diffidence and a defensive attitude on the part, of noble Lords opposite over this question of the unemployment figures. I should rather have expected a quiet air of triumph at having achieved what they set out to do—because the present situation was planned, predicted, and achieved. When the Government decided on a 7 per cent. bank rate, the credit squeeze, cuts in industrial investment, and cuts in the expenditure by the nationalised industries and local authorities, they decided at one and the same time to put hundreds or thousands of people out of work. There can be no denial of that whatsoever. In fact, I have in my hand the Report of the debate in your Lordships' House in June of last year on unemployment in Scotland. I am sorry that for the moment the noble Lord, Lord Forbes, has left the Chamber, because I had hoped he would be here when I quoted him from column 1064.

The noble Lord, whose kindliness and sincerity is, I am personally aware, beyond any question, said [OFFICIAL REPORT, Vol. 209, col. 1064]: ….we must face up to the fact that it is known by everyone, though admitted by only a few, that the country as a whole benefits by a small percentage of unemployment… A little lower down he went on to say: The vast majority of workers, I am convinced, prefer that there should be a small percentage of unemployment, at least among the almost unemployable, … I am quite sure the noble Lord is wrong; and I believe that the majority of people in this country will agree that he is wrong. But that view is sincerely held by the noble Lord, and I believe that it is sincerely held by the Government. They have acted on that belief, and have achieved their purpose. In fact, for a Party that does not believe in planning it 'has, with conspicuous success, planned some 600,000 unemployed and, in accordance with some calculations, the equivalent of a million unemployed.

Now, having hit the target, the Government ask: "Where do we go from here"? The best advice I can give them is to abolish the traditional Conservative policy of solving these financial problems by creating unemployment. It is no use saying, "We are doing it to counter inflation" when you do it by methods you know will create unemployment. We on this side of the House say that it can be done by other methods. I advise the Government to substitute for their policy the wise plans we have urged for so long: plans based on the conviction that the unemployment of human beings is the least excusable way of wasting our national capital.

My noble friend has painted the national picture and outlined the way in which the problems of unemployment vary in intensity in different places. I want to examine in some detail one region which I believe shows conclusively a situation approaching tragedy, arising entirely from the Government failure to make vigorous use of the Distribution of Industries Act of 1945. I would direct your Lordships' attention to the unemployment situation in Scotland—the largest and, in many ways, blackest of all the black unemployment spots in the whole of Britain. It is a large spot because it comprises one-third of our land area and only one-tenth of the population.

Last month the total unemployment in Scotland was 116,000, or 5.4 per cent. Of these, one-fifth had been workless for over six months. I started in business in 1922, so I went through two slumps; and I saw so much of the effects of unemployment that it has always been my major endeavour to see that no one connected with me was out of work except for very gross misconduct. I know that these things can be achieved. I would ask your Lordships to imagine what is happening to some people to-day, men of 45 to 50, who, having given most of their adult lives to a particular industry or firm, now, for reasons quite beyond their control, find themselves out. There are those, too, of the younger generation, who have not been tested in the same fires as my noble friend Lord Lawson: they do not know what has hit them. They did not think it ever could hit them. When a man is out of work for six months it does something to his very soul.

SEVERAL NOBLE LORDS

Hear, hear!

LORD STONHAM

Another disturbing feature, so far as Scotland is concerned, is that the number of people in civil employment has dropped by 51,000 in one month. And things are not getting any better. Last month, in Britain as a whole, unemployment figures fell by 12,000; in Scotland there was a small increase. I would say that the overall figure in Scotland of 5.4 per cent. concealed some really frightening examples. Thus Ayrshire's average of 5.8 per cent., includes Kilbirnie, 16.6 per cent.—one man in six. In Stornoway the figure is 38.9 per cent.—nearly two out of every five men: men without hope. There are State-assisted road schemes in Lewis and Harris, but out of nearly 1,000 men registered for employment under these schemes, 815 are unemployed.

Coming to the industrial areas, Greenock has every eleventh man out of work, and two-thirds of these have been workless for more than two months. In the county of Lanarkshire, the industrial heart of Scotland, we find again that the eleventh man is on the dole. If that rate prevailed through Britain, we should have 2 million unemployed. That is the nature of the position in Scotland. In the same county of Lanark, 1,275 girls and boys under 18 cannot find work. A large number of them have never had a job since leaving school. To make matters worse, thirty Scottish pits are closing, twenty because they are uneconomic, ten because they are exhausted. These are areas in which the Coal Board cannot find alternative employment.

I submit that it is imperative that the Government take immediate steps to bring industry to the area and provide work there. I hope that the noble Lord, Lord Forbes, will be able to tell us something about it. Can there not be something comparable to the Labour Party scheme, under which, when mines in Lanark were worked out, we moved families to Fife and provided small townships of council houses to which they could move? If there is no hope of work the Government must do something in the way the noble Viscount, Lord Alexander of Hills-borough, mentioned in the same debate of June last year.

When we look at vacancies in Scotland the position is even more gloomy. In Scotland fourteen workers are chasing every vacancy: fourteen men for one job. The real position is worse than the figures, because the vacancies are, in the main, for the scarce skilled men. In practice there are virtually no vacancies. Recently the Sunday Pictorial, stirred to its very depths by this situation, offered a service to the Ministry of Labour in putting its readers in Scotland in touch with vacancies. The Minister thanked them for the offer but could not make use of it because, in the words of the manager of the Exchange in Edinburgh, "There are no vacancies." It is the same story all over Scotland. Glasgow has 35,000 unemployed—the worst-hit major city in Britain. Dundee has 6 per cent.; Mother-well, Clydebank, Paisley, Coatbridge—another 1 in 10 town. It is a very sad roll-call of towns which are known throughout the country—throughout the world almost—for their products and skill and the courage of the people.

The saddest part is that such a large number of young people cannot get jobs—and that is happening even before we feel the effects of the known population bulge which is coming and which will soon be on us. In December, 1958 (to give one example), there were 597 young Scots between 18 and 20 who had been unemployed for over six months. But if you get down to the Midland area with a larger population there are only 93. In London and the South East the number is only 137. So, if we take into account the relative populations in the areas, there are ten times as many young men out of work for more than six months in Scotland as in either of the other two regions.

What could be more soul-destroying than to fall on the scrapheap before the age of 20? We urge them to train and equip themselves at schools, provide youth employment officers to advise on jobs. But there are no jobs. It is the same for boys under 18. In December there were 3,261 boys under 18 wholly unemployed, and only 747 vacancies. That means four boys for every job. By contrast, in the Midlands on the same day there were 2,658 vacancies for 500 workless boys, who each thus had a twenty-times better chance of employment than a Scottish boy. It is small wonder that on the average 25,000 Scots take a one-way ticket for England every year; and, in fact, in 1957 the number was 32,500, the highest figure for thirty years. Despite this exodus from one of the least populous parts of the country to the most populous areas, an exodus virtually enforced by the economic conditions created by the Government, we still have these high levels of unemployment. And it is endemic. It is always twice as bad in Scotland as the national average; and I think it will remain so until we have a Government that is steadfastly and resolutely determined to do justice to the North.

I would remind your Lordships that we had such a Government in 1945, when Sir Stafford Cripps, despite all the abuse and criticism levelled at him, applied the Distribution of Industry Act to such effect (and I hope the noble Earl, Lord Dundee, will note this point, which is absolutely fundamental) that two square feet of factory space was provided in Scotland for every one square foot in London and the South-East. It is very different today. Last September there were 60 million square feet of industrial buildings under construction or approved in the London region compared with 15 million square feet in Scotland. In other words, it was four to one against, where before it was two to one on, and the Labour Government was looking after Scotland eight times better than the present Administration.

What possible justification can there be for allowing this rate of construction in the over-congested London region and denying it to Scotland? I urge noble Lords opposite to press the Government to instruct the purchasing departments, whenever possible, to allocate contracts to areas of heavy unemployment, and to press on with the many schemes at present held up for no apparent reason. We have the extraordinary situation to-day that Scotland's steel industry is running at only 56 per cent. of capacity. Thousands of steel workers are unemployed, and all the rest are on short time. That, again, is mainly because the shipbuilding industry is not calling for steel and many berths are empty. Yet, to give one example, after many frustrating months a start has not yet been made on the construction of the proposed Clyde Graving Dock at Greenock, because the Government have not yet decided to give the necessary financial assistance. I hope the noble Lord, Lord Forbes, will be able to tell us something about that project which will put men at work. There are many similar cases of inexcusable delay. Scotland will benefit from any general improvement in employment arising from changes in Government policy. But general improvement will not cure the deep evils to which I have referred; they require special measures.

I urge the Government to build factories in advance of need, and to let them at rents which will attract firms who can provide work. Also—and I hope that we may hear something about this tonight—I would urge them to abandon for the present the huge increases in rents they are demanding for factories on the industrial estates. I know that originally these rents were low; they had to be to attract the firms. But at a time when we say we need work, to double the rents and drive firms out is surely madness. I hope that the Government will try to provide manufacturing industries alongside some of the new enterprises which are producing basic products. I think this is important, and it is a point to which the noble Lord, Lord Bilsland, made some reference in his speech last June. We must have these things, as it were, in colonies. For example, chemicals are being produced on a large scale at Grangemouth, but no manufacturing industries have been set up to turn those materials into consumer goods and other products.

Then, again, the development areas must be extended to include many more areas in Scotland. By extra grants and lower interest rates local authorities in badly affected areas should be encouraged to press on with the provision of badly-needed services, such as road improvements, water supply, docks and bridges. For example, the Tay Road Bridge was mentioned in your Lordships' debate last year, but this is still the subject of conversation and not of action. Could we not have some decision and action on things of that kind? I hope that this year there will be taxation relief for the shale oil industry. I sat in the other place for a good many years, and every year there were Motions about remitting taxation from the shale oil industry, which was declining all the time. The hope was recently expressed that no more works would have to close down. Surely we should help this sort of industry in that way if there is going to be a Budget surplus.

I have no doubt that noble Lords opposite are saying to themselves that everything for which I have asked is Government-aided. But if that is what noble Lords feel, I would again ask them to recall the debate on unemployment in your Lordships' House last June. On that occasion the noble Earl, Lord Dundee, made it clear that it was only the Labour Government's plan which had made possible the continued employment of 20,000 workers in the jute industry; and the noble Earl, Lord Woolton, confirmed that he had been obliged to continue State trading in jute in order to keep them at work. I was very struck (as I often am) by a passage in the speech of the noble Earl, Lord Dundee, on that occasion. He said that people who west to the Board of Trade were met with the sort of reply [OFFICIAL REPORT, Vol. 209, col. 1044]: 'We haven't any idea upon the subject ourselves; we haven't really thought about it. But we should be delighted to hear what you have to say'. The noble Earl referred to something which the right honourable gentleman Sir Winston Churchill said in relation to the attitude of his own Departmental officials, once described as [col. 1044]: ' the padded cells of indubitable fact and the solid masonry of unanswerable objection ' ". I would ask the noble Lord, Lord Forbes, whether the Government now, eight months later, have any idea of what the position is in Dundee; and whether it is still the case, as I believe it to be, that prosperity in Dundee depends mainly on the arrangements for State buying which were made by the Labour Government.

Would any noble Lord like to contemplate what conditions would be like in the Highlands without the employment provided by the Hydro-Electric Board and the extended work of the Forestry Commission? They are all State schemes or State-aided schemes. The noble Earl, Lord Dundee, said last June that expansion in Scotland was in the best interests of the British economy and that we should envisage the employment situation in 1960–61. I entirely agree with him, and I hope that he and other noble Lords opposite will join us in pressing the Government to abandon doctrinaire prejudice against State enterprise, and to press on with all soundly-conceived schemes which, in both the short and the long term, will provide for the people of Scotland the fulfilment of their inalienable right—the right to work in their native land.

6.30 p.m.

LORD BILSLAND

My Lords, I wish to pursue the question of the situation in Scotland, regarding which the noble Lord, Lord Stonham, has given comprehensive and disturbing facts. The noble Viscount, Lord Alexander of Hills-borough, in introducing the discussion, said that the figures of unemployment in the country as a whole to-day are the worst they have been for ten years. In Scotland they are the worst they have been for twenty years. It is unnecessary, after the speech of the noble Lord, for me to quote some figures I wished to quote, but I would say that it is a very disturbing fact that for a number of years prior to the recession the average number of unemployed in Scotland has consistently and doggedly been double the average for the United Kingdom. I submit that the distribution of industry policy in the Act of 1945, for all its success, has failed to achieve its full purpose, in Scotland at any rate.

During recent months, the whole problem of unemployment and its incidence in Scotland in comparison with other parts of the country has been the subject of careful inquiry by the Scottish Council, an independent body composed of representatives of management, labour, the banks, all local authorities and many other interests in Scotland. The purpose of the inquiry has been to analyse the reason for the Scottish position and to suggest the remedies. The plain fact emerges from the inquiry that the diversification of industry, the need for which has for so long been obvious, has not gone nearly far enough in Scotland. In consequence the recession in trade and on investment which has affected the country as a whole has borne more severely on Scotland, because the production of capital goods is relatively so much larger and the representation of consumer goods so much smaller than it should be in order to achieve a proper and satisfactory balance.

The lack in Scotland, in terms of total size, of certain types of manufacturing industry, which elsewhere is showing considerable capacity for expansion, such as electrical engineering, vehicle building and certain sections of the chemical industry, to give three examples, has resulted in a lower rate of expansion of employment, opportunity and industrial activity. Various Government measures, such as the reduction of the price support in the jute industry, and the closure or contraction of Service and Ordnance establishments, have led to a reduction in employment. Circumstances have caused the obsolescence of a large part of the shale oil industry, and in the coalmining industry the effect of recent decisions on employment has been considerable and is likely to have further consequences.

In proportion to total employment, Scottish manufacturing employment is relatively one-eighth smaller than in the United Kingdom as a whole. Over the past ten years it has grown at less than half the United Kingdom rate—that is to say, by 4.2 per cent. compared with 11.3 per cent. The smaller proportion and slower growth of Scottish manufacturing industry has been much the most important reason, in my judgment, for the slower growth of total Scottish employment. From 1949 to 1957, total employment increased by 4 per cent. in Scotland against 7 per cent. for the United Kingdom as a whole.

There is, fortunately, a brighter side to this picture, in that since the Distribution of Industry Act became operative in 1945, 66,000 new jobs have been created in Scottish industrial estates, and various sections of native industry have considerably exceeded these figures in the fresh employment they have provided. New sectors of industry have arisen, partly through Scottish enterprise and partly by importation from America and elsewhere. But the stark fact remains that, over the period from 1949 to 1957, there were, on the average, 30,000 more unemployed in Scotland than there would have been if the unemployment rate had been reduced to that prevailing in the United Kingdom as a whole.

There is a more sinister fact. Net emigration from Scotland to other parts of the United Kingdom—apart altogether from emigration overseas—averaged 11,400 people per annum over the period 1949 to 1957, a net loss to Scotland of approximately 4,500 workers per year. It is plain that the maldistribution of industrial population, to which the Barlow Commission pointed with such force nearly twenty years ago, has been and is being still further intensified, and that the figures of unemployment are not a true reflection of the position on account of a continuing migration of labour, mainly from North to South, to an extent which is neither healthy nor desirable.

I must add the footnote that 12½ per cent. of the working population of Scotland earn their livelihood in shipbuilding or ship-repairing, and it is clear that the prospects of maintaining these activities in the medium-sized and smaller yards at the present level are somewhat doubtful. In order to counter and redress the unfavourable factors which I have detailed, it is clear that a more vigorous and active policy is necessary, directed towards the expansion of manufacturing industry. The object should be, I suggest, to create conditions favourable to an expansion of employment in Scottish manufacturing industry comparable with the expansion occurring in the United Kingdom as a whole. From 10,000 to 12,000 new jobs would be required annually in Scotland to maintain such a rate in place of the existing rate of 4,100.

I have referred to the fact that the Distribution of Industry Act, 1945, and subsequent legislation have failed to achieve their full purpose. It is proper, of course, to point out that the application of this legislation has been repeatedly retarded by the economies imposed by our recurring national financial difficulties. For example, in 1947, 1948, 1951 and 1952, work was held up or slowed down very much indeed by postponing the provision of new factories in industrial estates. I am not clear that the announcement of June, 1956, which was made in another place, that Government assistance for the provision of factories in the industrial estates in the development areas would be forthcoming for only a very few projects of special urgency and importance, has ever been rescinded. It is, however, an encouraging fact that quite recently approval has been given to the provision of considerable additions to existing factories in the Scottish industrial estates. That is a healthy development. It seems unfortunate, however, that the present time has been chosen to raise the rents falling due for renewal in the industrial estates from a figure which, admittedly, was low to one that is almost three times the former rent.

Obviously, the number of inquiries for Government factories in the meantime is negligible. There is a certain amount of interest from American sources, but this interest will not become active inquiry until some favourable solution can be found to the Common Market problems. One cannot expect, therefore, a revival of inquiries for new factories, either from home or from oversea sources, immediately. I hope, however, that that revival will come, and I suggest that the existing policy to cater for such a demand should be reviewed now.

I have spoken of the need for an active and vigorous policy and I should like to submit to your Lordships five practical suggestions. I have long held the view that the limitation of Government assistance to development areas, defined for the most part fifteen years ago, is out of date and that the criteria for giving such assistance should be to arrest heavy unemployment, or the danger of it, where-ever it may occur, or to promote development that is unlikely to occur without such assistance. I shall be told, as I was told when I raised the matter in the debate to which the noble Lord, Lord Stonham, referred, that that would be spreading the provision too widely. I reject that answer as a pusillanimous one. I appeal for flexibility to replace rigidity.

My second submission is that the rents charged for Government-financed factories for new projects should, for a period of, say, ten years, be less than the economic rent, in order to encourage growth. My third point is that the recently-announced Board of Trade decision to authorise the building of one standard advance factory in each of the development areas, one being in Scotland, is altogether too paltry. I well remember that when Scottish Industrial Estates began operations in 1937, the provision of advance factories was one of the principal factors in the success achieved. I speak with some experience as I was chairman of the company for the first nineteen years. There is another announcement by the Board of Trade this morning, to which reference has been made in the discussion this afternoon, which I regard as similarly inadequate, giving three Scottish towns, with others in the South, the benefit of financial assistance under the 1958 Act because unemployment there is above the national average. There are, however, other places equally deserving, and I repeat my plea that the criteria for assistance should be to arrest serious unemployment wherever it may be or to promote development.

My fourth point concerns communications. The improvement of communications, particularly to and within the central belt of Scotland, and the necessary development of sea and air terminals are essential. I am not satisfied that Scotland is receiving a fair share of Government expenditure on roads. The noble Lord, Lord Rea, referred to that matter this afternoon and I support warmly what he said on the subject. The programme in Scotland for the four years from April, 1958, to March, 1962, provides for the authorisation of schemes involving the expenditure of £40 million, but two projects alone—the Forth Road Bridge and the Clyde Tunnel—will absorb 46½ per cent. of the £40 million, and 25 per cent. of it will be in the form of loan, not grant. This morning's announcement encourages me to feel that the Government will spend another £1 million or so on roads in Scotland. My final suggestion is to make a strong plea for Government support in the provision of a large graving dock in the Clyde, concerning which the shipbuilding and ship-repairing industries on the Clyde have taken a very active initiative and which is of great importance to employment in the Greenock area, to which the noble Lord, Lord Stonham, referred, and to the welfare of the industries concerned. These are the principal points which the Scottish Council has in mind in pressing for an active and vigorous policy.

Before I sit down, may I say that I should be giving a totally false impression if it were inferred from what I have said that Scotland is waiting inactively for Government action. It is far otherwise. The great developments which are taking place in the steel industry are well known. Millions of pounds have been spent by the shipbuilding industry in modernising its facilities in recent years. These are two of several examples which I could develop of enterprise and progress in Scotland to-day. I should like to tell your Lordships that this year, in September, the third major Scottish Industries Exhibition held since the war, financed by a Scottish guarantee fund, will be held in Glasgow. It has been assured of wholehearted support by the whole of Scottish industry. Lord Polwarth, the Chairman of the Scottish Council, which is promoting the Exhibition, and Sir Robert Maclean, the Chairman of the Exhibition, are in the United States visiting various centres on a propaganda mission on behalf of the Exhibition and thereafter they will go across Canada from East to West. They are also taking the opportunity of meeting representatives of American corporations which have expressed interest in operating in Europe. I received a report from them yesterday confirming that action on the part of the Americans, as one would expect, will be dependent upon the outcome of Common Market negotiations.

It is not an accident that 70 per cent. of the American corporations which have set up plants in the United Kingdom since the war are located in Scotland. It is a testimony to the satisfaction with Scottish conditions and especially with Scottish labour. It is the intention of the Scottish Council to send missions similar to that in which Lord Polwarth is at present engaged to various centres in Europe in the course of the next few months. In these and in many other ways, Scotland is endeavouring to pull herself out of her difficulties.

6.49 p.m

LORD WISE

My Lords, the debate has ranged over a wide area. We have touched very much on Scotland, we have gone to Wales, we have also traversed to Northern Ireland and we have dealt generally with the national position. I wish, however, to deal shortly with unemployment in country districts. It might be thought that this is a local matter which is not of very much importance in the national set-up; but it is, and we who live in the country areas are much concerned at the rise in unemployment which has taken place during the last few months. In many ways we who live in the country live under certain difficulties. I can assure you that country folk do not want unemployment added to those difficulties.

If you look at our menfolk you will realise that the scope of their employment is somewhat limited. In our areas there are no large industrial undertakings, and very few factories, as a rule, which can absorb extra labour and engage new hands. Once unemployed, a countryman may find it very difficult indeed to be absorbed once again into his own industry, particularly if he is aged. In our districts we find many such, and they have become casual labourers, part-time gardeners and generally odd-job men. A man may lose his employment for reasons beyond his personal control. He may have spasmodic or regular periods of unemployment. But once he has experienced the bitterness of being out of work and the soul-destroying process of seeking work at possibly frequent and ever-recurring intervals he must sooner or later be labelled with that terrible stigma of being either unemployable or permanently out of work and work-shy. This is indeed a tragedy for anyone, and I argue, and I think I am right, that it surely must be our job as legislators to do whatever we can to assure to every—and I say "every" emphatically—British man and woman a fair day's work for a fair day's pay, and thus remove from their lives the scourge and degradation of unemployment.

My noble Leader has made a plea for urgent action on the part of the Government, and I want to endorse that plea so far as our countryside is concerned, and generally as well. If we are ourselves decent honest citizens, we cannot sit back and treat with callous indifference the suffering which our present national mode of life inflicts upon those unfortunate men and women who are genuinely seeking work and not finding it. Decency in us does not allow us to refer to unemployment in any frivolous or light manner. It is indeed a very real thing. My noble Leader has suggested, and I think he is right, that when a man is unemployed, that unemployment affects no fewer than four people in his family, and you can see that on present figures this means that possibly between two and three million people, men, women and children, are living in uncertainty, fear of the future, and a growing measure of poverty. This, indeed, is a grave reality of some dimensions. Freedom to inflict starvation on our fellows is a doctrine that has a place only in an unplanned free-for-all system of society. But such a doctrine—and I am sorry to say that it prevails in some influential quarters and is there lauded as being very desirable—is rotten to the core. It should be blotted out from our conception of the rights of brotherhood and humanity with all possible speed.

I want for a moment or so to deal with the local aspect in regard to unemployment in an area which I naturally know very well, and it is a typical British country district. The county of Norfolk, excluding Norwich, on February 9 had 3,131 men and 745 women unemployed, a total of 4,214 in the county excluding the large centres, excluding Norwich and Lynn and others, with a percentage rate of unemployment of 4.4 as against the national percentage of 2.8. That, in a country district, is a very serious state of affairs, and these figures which I have given do not include 338 boys and girls who also were seeking employment. This is a serious situation for the county. In a small country market town nearest my home there were on February 19, less than a month ago, 160 men and women out of work, and just previous to that 31 or 32 had been declared redundant, and half of them had not at that time found other employment.

These figures are small but they are material to what I have to say. They are significant because in this small country town 600 good, honest folk have been afflicted or are afflicted by unemployment, and if those 160 workers had been employed their weekly spending capacity in that small town would have been approximately £2,000. That is very material among small shopkeepers—comparatively few shopkeepers, the baker and grocer and the rest—and very material indeed to the prosperity of that particular area. This loss, made up, of course, partly by unemployment pay, meant a loss, as I have said, to the small shopkeepers, loss of production in agriculture and other rural industries and in the small factories, loss of morale for the unemployed, and eventually loss to the nation. The figures in another town in my vicinity are these. There are 20,000 in that particular area employed, and this week there are 500 men and 170 women out of work. That is a percentage average of about 3.5, and it is very significant. It does not take any account of the dockers and others who may be on part time in that particular town.

I want now to say a word or two about the agricultural position. In January of this year 20,793 agricultural workers, men and women, were wholly unemployed or temporarily stopped. I believe that this figure has been relieved to some extent during the last month, but those were the January figures. The corresponding figures for the last three years are as follows: In January, 1958, 15,364; in January, 1957, 12.564, and in January, 1956, 9,934. Noble Lords will see, therefore, that year by year in January, as in other months, these figures of unemployment in agriculture are rising; they have worsened and are continuing to worsen. There has also been a decline year by year in the number of workers remaining permanently in the industry. They are leaving the industry and, if possible, moving off to other employment. Here I want to pay tribute to the Government on the operation of the industrial finance provisions of the 1958 Act. I am concerned and interested in regard to a small new factory in Cornwall which has received some assistance under the new scheme, and for that we are most thankful.

I hope that the Minister will give me some definite information as to the reason for the increase of unemployment in rural areas. Conditions there are so different from the great industrial areas, and there may be some explanation forthcoming from the Government, apart for the explanations which we have heard already, which will show us that there is a reason, and, if the Government say so, a need for unemployment in the rural areas. I know that I may be referred to weather conditions or winter conditions, or to the introduction of machinery. But if it has been a definite part of the policy of the Government to create unemployment, then I hope the Government will be courageous and open and will say so. If, for any reason, they have failed to hold employment steady by reason of sponsored decreased production, then I hope that they will be prepared to admit the stupidity and error of such a policy.

Just one final word with regard to the agricultural aspect—I am glad to see the noble Earl the Parliamentary Secretary to the Ministry in the House. Month by month we hear from the Government how prosperous is our agriculture. Repeatedly have we been told that the agricultural policies of the Government are perfection in themselves; that there is not a weed or a pest anywhere in those policies—that everything is flourishing. I wonder? They have told us that every farmer is prosperous; that he is creditworthy, except the small farmer—and so on: a really prosperous state of affairs! But a really prosperous agriculture should be able to absorb all the machines, implements and manpower available. There should be no unemployment on the countryside, and the industry should be able to perform all the work necessary, not only for the benefit of the nation but for the benefit of the industry.

About 20,000 agricultural workers and their families are asking the Government for a regular job on the land. What are the Government going to do about it? What have they in mind to do about it. I am pleased to see that there is on the list a possible agreement between ourselves and the United States in regard to wheat. But cannot we get together with the United States and make some arrangement whereby we may stabilise our import prices and the commodities which the farmer and the rest of us have to buy? Cannot we order our society or our affairs in a way whereby we may both benefit from mutual trading, the one with the other?

Redundancy is an iniquity which good honest British workpeople should not have inflicted upon them. It has become a nightmare in many working class homes. We who sit in this House will never experience the Friday evening when a British workman comes home from his work, sits down to tea with his family and has to tell them that next week he will be unemployed because he is redundant. What an appalling state of affairs! What a tragedy these black Fridays are in so many British homes! There should be work for all. I ask the Government to think on these things, and to do so with all seriousness, with a determination to right these wrongs—because they are wrongs which we inflict upon our society. The Government have the power. May the Government also have the will! If not, may they themselves soon be judged as being redundant!

7.8 p.m.

LORD STRATHCLYDE

My Lords, during his recent visit to the North-East coast towns, Mr. Gaitskell was reported to have said that the Labour Party would not tolerate unemployment. I should have thought that that statement would apply equally to every single thinking member of the community, certainly to Her Majesty's present Government. None of us feels any inclination to tolerate unemployment. But it is a different thing to produce a policy that will eliminate it and give the country a complete and conclusive answer to it for all time and in all circumstances.

I have little doubt that many of our fellow-citizens took Mr. Gaitskell's statement to mean that the Labour Party had just such a policy, and I came here this afternoon in the hope that I might hear that policy expounded. I have been sadly disappointed. I have been quite unable to find, in the speeches to which we have hitherto listened from the Benches opposite, any cure for this evil which is the cause of so much human suffering. But I have heard a good deal of denunciation of the efforts which Her Majesty's Government have made to check the rise in unemployment and to reverse the trend; and to my mind that is not very helpful. It is not very helpful to the man who is out of work; it is not very helpful to the country, and it is not very helpful to the Government, who are so obviously anxious to do everything in their power to ensure a high and stable level of employment.

As I understand it, one of the contentions of the Party opposite is that through the exercise of physical controls they can ensure the prosperity of this country and eliminate unemployment. If I am not mistaken, that is one of the things on which the noble Viscount the Leader of the Opposition has spoken to us from time to time, and one which he managed, I thought rather cleverly, to introduce into his speech in the defence debate yesterday. I can only assume that that means that they would control our imports of both food and raw materials and would allocate raw materials to industry in such proportions as they might consider most beneficial to the economy of our country as a whole; and, further, that that means they would have to dictate to industry the kind of goods and the volume of such goods—both capital and consumer—which should be manufactured; and also, presumably, what proportion should be retained for home consumption and what should be exported.

In other words, my Lords, this claim seems to me to amount to this: that under a Socialist Government there could be assembled a body of experts capable of correcting the whole complex economy of this country. I like to remind myself that we have here a country with a population of some 50 million which cannot feed more than half its population from its own soil; which has no natural resources other than coal and whose livelihood therefore depends on being able to sell abroad manufactured goods in such a manner as to enable it to buy the food and raw materials necessary to maintain not only its standard of life but its very existence. That, again, amounts to being able to forecast the trend of demand, not only in this country but throughout the entire world, and not merely for one class of goods but for every class of goods that we in this country are capable of producing. It requires only a moment's consideration to see how utterly unrealistic such a proposition is.

No Government, by themselves, are capable of providing conditions under which a measure of unemployment will never arise. By easing the terms of credit, by granting loans and by going ahead with public works, Government can help of course. But do let us recognise that it is no answer to the skilled craftsman who is out of work to be offered a job on some new road project or public undertaking: for what he requires is employment in which he can continue to exercise his skill.

May I tell your Lordships what I consider to be the most promising answer to this problem? To my mind it is to be found in co-operation between Government, management and labour of every kind. The Government, for their part, must provide such conditions as lie within their sphere and capacity. Management must seek so to organise its enterprise as to produce the maximum efficiency. It must study the needs and desires of its customers and constantly prepare to meet them; and it must be ever on the look-out for new markets. In addition, it must work in the closest co-operation with its labour force; and in that labour must reciprocate. Special skills must be rewarded, and I would suggest that that should apply not only to production but also to salesmanship, which in these days is of such immense importance. To put it shortly, if we are to avoid unemployment all must work harmoniously together, seeking to produce goods of the highest quality and at prices that will bear reasonable comparison with those of our competitors; for, after all, it is only by satisfying our customers overseas that we can avoid unemployment.

I repeat, and let us recognise the fact, that Her Majesty's Government by themselves can do little. Let us not play politics with this great human problem, but rather let us seek, both by word and by deed, to inspire that confidence, to achieve that co-operation and that harmony in industry which alone can ensure a high and stable level of employment for our people. At the moment the overall position in the United Kingdom is that something less than 3 per cent, of the insured population are unemployed. That gives no justification whatsoever, particularly in a time of world recession, for either despondency or despair, and still less for extravagant and partially, at least, untrue statements, such as those which we have heard in recent months, of stagnation and of our position being almost akin to that of the early 1930s. For such statements serve only to create apprehension, fear and uneasiness and to undermine that confidence which is essential to any forward drive. Let me say that such talk is really nothing less than sheer defeatism, and in no way helps to solve our difficulties.

Nevertheless, the rise in the unemployment figures to which, let me say, the very severe weather conditions of the earlier weeks of this year undoubtedly have contributed, leaves no room whatsoever for complacency. Those areas where unemployment is above the national average call for vigorous action; and such action, to my mind at least, Her Majesty's Government have taken. As witness to that there are the matters to which I have already referred—the additional credit, public works and other matters of that kind and also the passing of the Distribution of Industry (Industrial Finance) Act. That is an Act which I believe will help us greatly in Scotland and I hope other places where unemployment has been persistently high.

At this hour I do not intend to take up the time of the House by giving my views as to why the unemployment figures in Scotland are so much higher than they are in England. The noble Lord, Lord Bilsland, has already given your Lordships his views and I am not going to touch on the great efforts which have been made and which, I know, are continuing to be made to bring these figures down, for these are matters with which I am quite certain my noble friend the Minister of State will deal. But the noble Lord, Lord Stonham, made one remark which I feel calls for some reply, perhaps from a Back Bencher, when he spoke of miners being moved, in other days, from the closed pits in Lanarkshire to the new coalfields in Fife. Although I do not want to be at all political, might I remind the noble Lord of houses having to be ready for them? And I want to remind him that it was a Labour Government which limited what was originally intended to be the size of the new town of Glen Rothes. Perhaps there is something there which answers the noble Lord's question.

LORD SHEPHERD

My Lords, would the noble Lord explain why?

LORD STRATHCLYDE

It was because the then Secretary of State did not consider that the mining operations in Fife were going to develop as he had originally understood had been planned. In fact, these developments are going ahead.

LORD SELKIN

My Lords, might I ask the noble Lord whether he would not agree that if that was a mistake—and it may well have been so—the present Government have had seven years in which to put that mistake right and have not done so?

LORD STRATHCLYDE

My Lords, they have done so, if the noble Lord will look at the matter.

In that connection I want to pay a tribute to the work of the Scottish Council, in which two Members of your Lord- ships' House, the noble Lords, Lord Bilsland and Lord Polwarth, are playing such a prominent and notable part. I also want to pay tribute, perhaps rather an unusual tribute, to the Scottish Controllers of the Border Trade and the Ministry of Labour, whose help and advice is so much appreciated by Scottish industry, both management and trade union. I have had the good fortune to meet these gentlemen from time to time in the course of recent years, and I have been astonished by their knowledge of the labour and industrial situation throughout the whole of Scotland. But what really astounded me was the information they possess of firms, not only in the United Kingdom but overseas, and particularly in the United States and Canada, who were contemplating expansion. Both the Scottish Council and these two Departments together have made known to such firms in the greatest possible detail the advantages which Scotland had to offer; and we owe to them, I feel, a deep debt of gratitude, for industry from overseas which has settled in Scotland has done so largely because of the initiative and the information which was made available to them by that organisation and by these Departments.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, although I entirely share the view just expressed, would it not be wise for the Government to restore the Board of Trade Office in Dundee to pursue that good work?

LORD STRATHCLYDE

My Lords, the noble Viscount does not want offices everywhere all over the country. Scotland is not a very large country, I may tell the noble Viscount, and it might be better to concentrate the efforts. One can get from Edinburgh or Glasgow to Dundee in a very short space of time. No one in either Glasgow or Edinburgh need be ignorant about the situation in Dundee.

I want to say a word about our labour force in Scotland. Those American firms that have come to Scotland have one and all expressed their satisfaction with the conditions that they have found there, and particularly with the skills and adaptability of our Scottish people. They have proved that they are equally capable of developing light industry as they have been of developing the great industries of Clydeside and Lanarkshire; and that, surely, should give cause for satisfaction and should inspire us with hope that our industry in Scotland will be further diversified, both from home sources and from overseas. I see no reason for gloom, but rather for confidence in the future, for while I am not in any way inclined to be complacent, I am confident in my own mind that the steps which the Government have taken and which they continue to follow will see a very great improvement in the employment situation over the coming months.

7.24 p.m.

LORD GEDDES OF EPSOM

My Lords, it is very heartening to this side of the House to know that the noble Lord who preceded me, Lord Strathclyde, gives such wholehearted support to Labour's policy On unemployment as expressed by Mr. Gaitskell. It is heartening, too, to know that he supports the statement of the noble Earl, Lord Dundee, that the Government are not complacent on this matter. But the salient fact is, of course, that unemployment has risen to be three times as much as it was in the last three years, and it is small comfort to the unemployed man to know that. Unemployment has risen to that extent in three years in which the present Government have had absolute control. They can produce no excuses whatever by referring to what happened in 1868 or 1933, because they have had the matter completely within their own hands; nevertheless, unemployment has risen to this extent. It struck me that the noble Lord who preceded me, having said that he would not tolerate unemployment, proceeded to produce all manner of excuses and all manner of reasons why there must be unemployment, presumably almost at the level it is at at the present moment.

In my view, this problem is one of the most important problems that any Government, this or any other, have to face. It is a problem of loss, of waste of manpower, of waste of machinery, of millions of pounds' worth of productive power lying idle, and of hopelessness and despair. This is the problem. In the defence debate yesterday reference was made to the fact that we should not need the hydrogen bomb if only we could capture men's minds. By that we meant, of course, that if only we could convince men that our way of life, that democracy, was the best way of life, then the hydrogen bomb would be unnecessary because the cold war would be defeated on the basis of our thinking. My Lords, if this Government or any other Government cannot remove from men's minds the insecurity and the fear of unemployment, Communism will win the cold war, hydrogen bomb or no hydrogen bomb. It is no use our saying in the democracies that our way of life is so much better; we have to prove that it is better, and we do not prove it if we allow unemployment to increase as an act of policy. The noble Earl, Lord Dundee, rejected the suggestion that the Government were guilty of a deliberate policy of creating unemployment. But I thought he then admitted that the deliberate policy of the Government had created unemployment. And there can, I suggest, be no doubt whatever about that fact. The deflationary measures of the Government were designed to contract industry and therefore, inevitably, to bring about unemployment.

I want in a few moments to reduce this matter to the human level and refer in this connection to the "black Friday" mentioned by my noble friend Lord Wise. Can one really justify the stabilisation of the pound? Can one really justify building a new and stronger economy at the expense of the few? And if we are going to do it, do we not owe something to the few? Can one imagine a man who has just been dismissed going home to his wife and saying: "My dear, I have lost my job. I have really no idea when I am going to get another one. This, of course, means that it will be very difficult to pay the rent without National Assistance. The children, probably, will not be able to have any new clothes or any new shoes. We shall not be able to go for any holidays, and everything will be on short commons. But, my dear, don't worry. The pound is getting stronger every day and the international financier who was making money by selling the pound is now making money by buying it. That is a great deal of comfort to us in our new misery"?

You cannot expect or hope to convince the man who is a victim of this policy, who is the unemployed man as the result of it, that you have really done the right thing. And are you satisfied that you did the right thing, in any case? It is said you could not do otherwise. We on this side do not accept that. We do not believe that the only way to strengthen the pound was by contracting industry; nor do we believe for a moment that expanding industry of this country means a flight from the pound. We believe that if you had taken steps to use this unused productive capacity, and if you had demonstrated to the world faith in ourselves and faith in our ability to use this productive capacity, to use the skill of our men and women, you would have accomplished the same thing you have accomplished but in a much better way.

I am not going to detain your Lordships, because much has already been said. I wonder whether the Government are really satisfied that the instruments they already have to deal partially with this problem are properly being used. Are they satisfied that their powers under the 1948 and the 1958 Acts are being used with the intensity that they ought to be in the circumstances in which the Government find themselves: or are they allowing Treasury control to stultify, or to put the cold hand upon, those who otherwise might be willing to allow some freedom of action under those two Acts? Is it true, my Lords—and I address this question to the Government—that many industrialists who might be interested, and who start initially with an interest, find that the delays and the frustrations are such that they lose that interest? I believe that that is true.

But something further has to be done. We have to convince industrialists that not only is it a good thing from the national point of view that they should take advantage of these facilities, but that it is good from their point of view. One has to deal with the development areas on the basis of either compulsion or of persuasion, and it is no use believing that you can persuade them on the basis of suggestion that they should come; then making it difficult for them to come; and then, when you have got them there, making it even more difficult for them to stay. It is the belief on our side of the House that that is precisely what is happening.

My Lords, I am now closing; but I hope my noble Leader will forgive me if I ride one of my own pet hobby horses in this debate. He said that this was a matter which had to be dealt with urgently: it must be dealt with now, he said—and I entirely agree. But, my Lords, I think that the time has come—in my view it has past—when we ought to think of something a little novel, a little revolutionary. We ought to try to see whether the people who have to decide this issue finally are prepared to consider a solution now. I believe that the time must come when the Government, as the policy-makers and as the representatives of the consumer, must get round the table and discuss this question of a planned, full employment, and of a planned economy, with the two sides of industry, with the employers on the one side, and the workers' representatives on the other. I do not believe that this can be done by meetings of the N.J.I.C. or by meetings of the Economic Planning Board or other bodies. I believe it has to be an imaginative approach. It has to be a desire on the part of the Government to see whether they can solve the problem by a new approach.

I would leave this thought in the minds of the noble Lords opposite: that it might well be that we have arrived at the time when it would be a good thing to see whether a round-table conference should be held, not on the basis of exhortation on the part of the Government, or on the basis of allowing the employers to tell the trade unions how wrong they have been in the past, but on the basis of seeing whether the three parties cannot solve something which, if it is not dealt with and solved, will become a very, very serious problem indeed, not only for this country but for the world at large.

7.35 p.m.

THE MINISTER OF STATE, SCOTTISH OFFICE (LORD FORBES)

My Lords, I want to say something about Scotland, which I hope will answer some of the questions that were put to me by the noble Lord, Lord Stonham. As time is getting late, however, I am quite certain that the noble Lord will not expect me to answer all of the many questions that he raised. Let me begin by saying that the comparatively high rate of unemployment in Scotland is of great concern to Her Majesty's. Government, and I want, as briefly as possible, to say something of the background to the situation—what the Government have done, and what we are now doing.

One of the questions raised by the noble Lord, Lord Stonham, was about the Tay Bridge: why we were not getting on with the Tay Bridge, and providing employment in that respect. I can tell the noble Lord that we are going ahead with preparatory works; test borings are going on, and we are carrying out discussions about the site. The main thing is that, even if this project were authorised to-day, it probably would not be able to start for about three years; so it does not affect the present unemployment situation.

Then the noble Lord, Lord Bilsland, asked whether we could in any way reduce the rents of Government factories. I can assure the noble Lord that this is a matter which is constantly kept under review by the Government. As I think the noble Lord knows, we have recently announced that any increase in the rent of Government factories will be spread over five years; and that, in the case of factories standing empty, there will be a rebate of 25 per cent.—and, of course, this is on the market value of the factories.

My Lords, while the percentage of unemployment in. Scotland last month was 5.4 per cent.—which is a higher figure than the figure for Great Britain as a whole—this difference is no new thing. As the noble Lord, Lord Bilsland, has pointed out, for a long time the Scottish figure has always been higher than the English one; and even during the period since the war, when unemployment was remarkably low, the Scottish figure, though very small, was higher than that for Great Britain. The reason for this is, I think, well known. The Scottish economy has traditionally depended to a very large extent on the heavy industries—coal, shipbuilding, steel, heavy engineering—and the present recession has once more brought into prominence our lack of a healthy balance of industrial activities.

It is unfortunately only too clear that a country dependent on heavy industry takes longer to recover from any recession, however slight, than a country manufacturing consumer goods. It will therefore not be surprising if, to some extent, Scotland lags behind England in any improvement in giving employment to her citizens. This is indeed a challenge to all Scots, and all those connected with the administration of Scotland. The Government's policy has been, and will continue to be, directed towards developing our existing industries and to securing a wider diversification of industry in Scotland, which is the only way to guarantee, in the long run, reasonable freedom from unemployment.

The present position, though far from satisfactory, is yet much better than it would have been if we had not succeeded to some extent in this effort. In this respect, let me remind your Lordships of the remarkable growth of industries in Scotland, such as those making typewriters and other office equipment, earth-moving equipment (of which Scotland is now one of the biggest producers in the whole world), watches, chemicals, and domestic appliances. A very recent example is the arrangement by which the Torpedo Experimental Establishment at Greenock is to be taken over by the first firm to make washing machines in Scotland. Washing machines instead of torpedos is, I believe, a change which has very real merits, not only for Greenock, but for Scotland as a whole. We are doing all we can to stimulate developments of this kind, and I feel sure that the new strip mill which is to be built at Ravenscraig, with the help of a Government loan of £50 million, which was mentioned by my noble friend Lord Dundee, will attract still more of the newer industries which depend on a supply of sheet steel.

I should like here to join with my noble friend Lord Strathclyde in paying tribute to the work of the Scottish Council—so ably begun by the noble Lord, Lord Bilsland—in attracting to Scotland new industries from the rest of Britain and from overseas, especially from North America. Something like thirty American firms have set up business in Scotland since the war, and the Scottish Council deserve a great deal of credit for this.

I turn now to steps currently being taken by the Government to deal with the situation. Apart from what is being done to encourage industry generally, the Government's main weapons for dealing with the lack of employment in the areas most affected are factory building and financial assistance under the Development Areas Treasury Advisory Committee. The amount of loans to industry recommended to date in Scotland is over £2 Million—that is, £1¾ million under the 1945 Act, and a quarter of a million pounds under the 1958 Act. I have during recent months visited a large number of areas of comparatively high unemployment, including Inverness and Invergordon, Aberdeenshire, Dundee and Angus, North Lanarkshire and North Ayrshire, and shall continue to visit other areas in the immediate future. In fact, next week I shall be visiting the shale oil area about which the noble Lord, Lord Stonham, had a good deal to say. I can assure the noble Lord that no further contractions of the shale oil area are contemplated. I am doing these tours because I am convinced that personal contact is of great mutual benefit to industrialists and to myself and my colleagues at the Scottish Office.

Turning to D.A.T.A.C., I am sure noble Lords will know that there are two very substantial schemes at present under discussion. They are for the construction of two dry docks on the Clydeside at Greenock. However, since these schemes are still being discussed I cannot go into any detail about them. There is also the Government's encouragement to local authorities in development areas to clear derelict sites and supply basic services of water and sewerage.

LORD STONHAM

Before the noble Lord leaves that point, can he give any details about the graving docks? Can he say whether the difficulties are technical, and whether the projects are viewed favourably by the Government? Can he say when they will come to fruition?

LORD FORBES

These projects have gone before D.A.T.A.C., and D.A.T.A.C. is nothing to do with the Government. Advice will be given to the Government as to whether they will be accepted or not.

Going on with the Government's encouragement to local authorities, I may say that in the course of my tours I have been impressed by the need to improve sites by clearing away old factory buildings or unsightly things, and I hope that these grants will do something to make some of the older industrial districts of Scotland more attractive to modern industry. Having seen for myself the Coatbridge area, I am glad to be able to say that the town council have been authorised by my right honourable friend the Secretary of State to acquire a large derelict area in the heart of Coat-bridge, occupied by an old ironworks, with a view to its clearance under these arrangements. I hope that this site, which is in a very good location, adjoining the main railway line, will prove attractive to new industrial enterprise when the clearance operation is completed.

Then we come to the question of Government-built factories. The amount the Government have done up to the present is measured by the fact that in some areas no less than three-quarters of the new factories have been financed by the Government. I need not remind your Lordships that the Board of Trade are prepared to build factories for firms that wish to set up new production or to expand in Dundee, Greenock and North Lanarkshire, while the Development Commission can give similar help in the Highlands and the Buckie-Peterhead district. Twenty-one new projects have recently been approved by the Board of Trade in Scotland, and it has been estimated that they may provide employment for nearly 4,200 people in the first place. Arguments have been put forward that Her Majesty's Government should be building factories in advance of specific demand. I am doubtful whether this would be so effective to-day as it was immediately after the war, because to-day industrialists so often want their premises made to measure. In addition, we must not overlook the fact that there are, unfortunately, some factories already standing empty in various parts of Scotland.

My noble friend Lord Dundee has mentioned, however, the Government's decision to build three advance factories. Scottish Ministers are discussing the location of the Scottish factory with the President of the Board of Trade and a decision will be announced very shortly.

For dealing with the immediate employment problem Her Majesty's Government are expanding the rate of Government spending on public investment. In this field Scottish Departments have sanctioned the bringing forward into 1959–60 of a considerable number of schemes which would otherwise have had to be deferred until later years. These cover education, housing, roads, hospitals, electricity and other works and total £9½ million.

Now, my Lords, may I turn to the Highlands? The Government are very conscious of the need for further employment in the Highlands, and we have tried to stimulate it in many different ways—especially by assistance to the existing basic industries, farming, fishing and forestry and tourism, and by improvement of the essential services such as water supply and roads; while hydro-electric schemes have both provided employment and made available the power supplies which are essential for further development. In conjunction with the Scottish Council (Development and Industry) we are constantly trying to interest firms in setting up in the Highlands, especially those which make use of the natural resources of the area. D.A.T.A.C. assistance is, of course, available to any project which is going to lead to increased employment, and of the thirteen D.A.T.A.C. schemes for which approval has been given in Scotland nine are in the Highlands and Islands.

I am sure that it is by proper exploitation of the natural resources and attractions of the Highlands that we are most likely to see the unemployment problem in the area brought under control. Thus one of the main ways of improving the prosperity of the Highlands is by encouraging the tourist industry. This is already developing rapidly: over the last six years the number of tourists coming to Scotland has almost doubled. I need not remind your Lordships that D.A.T.A.C. assistance is available for hotel-keepers in the Highlands and others who require to extend their premises to attract more tourists. Whilst I know that the state of the Highland roads is often said to deter tourists from visiting the area, I am certain that any thoughts of motorways would kill the beauty and value of the Highlands. However, I can assure noble Lords that my right honourable friend the Secretary of State realises the need for great improvement in the Highland roads. Even now, about one-fifth of the total estimated provision for roads in Scotland is spent in the Highlands.

My Lords, I know that this is a time of a small recession, when a cautious business man may not be inclined to expand his activities. But the recession is not going to last for ever, and this is the very time, when labour and materials are in plentiful supply, for forward-looking industrialists in Scotland to be putting themselves in a position to take full advantage of the upswing in trade the moment it occurs. In the past these areas in the industrial belt of high unemployment have often been known as "black spots". What industrialist would wish to tell his staff that he was moving to a "black spot"? These areas, with excellent labour readily available, and often with splendid communications, are surely the areas of opportunity for the far-seeing industrialist. And that is what we must call them—"areas of opportunity".

Here let me compliment my noble friend Lord Strathclyde on his excellent speech, in which he expressed the importance of co-operation between management and workers. The future growth of employment in Scotland can lie only in a combined operation, an operation in which Government, management and workers must all, with a high sense of responsibility and statesmanship, play an essential part. The link between Government, management and workers must be so strong that nothing can burst it asunder. It must be equally strong enough to withstand the full strain of common purpose heaving in one direction, as if we all pull together in this great time of opportunity, all can, and all will, profit from the opportunities that lie ahead in Scotland's great areas of opportunity.

VISCOUNT HAILSHAM

My Lords, I rise for a moment on a point of Order. It would not ordinarily have been thought by my noble friends and myself desirable for two Ministers to speak one after the other, and I do not think in general it is desirable for four Ministers to speak in a debate. But my noble friend Lord Forbes, who has just spoken so well, wanted to talk about the Scottish position, and we felt that it would be desirable to have the Minister to speak about the Welsh position. What had originally been planned was that the speech of the noble Lord, Lord Granville-West should come in between those two. I hope the House will agree that my noble friend Lord Brecon should speak next.

7.51 p.m.

THE MINISTER OF STATE FOR WELSH AFFAIRS (LORD BRECON)

My Lords, I did not expect that Scotland and Wales would do a double act in the middle of this debate, but I am pleased to follow my noble friend Lord Forbes, because so many of his problems are similar to those we have in Wales. I do not intend to repeat them all in my speech but will keep it to a reasonable length. I have not worked all my life in Merthyr and the valleys of South Wales without knowing something of the hardships and heartaches that unemployment brings to men and their families. But when I received my appointment just over fifteen months ago I felt that I could serve Wales best by giving most of my time and energies to this end; that is to say, to the task of helping the unemployed. I found that not only were individual men and women in Wales unemployed, but that we had communities unemployed, too; and that was a serious matter with which I greatly sympathised.

My first duties were to investigate the conditions that existed in West Wales and also in North Wales. In West Wales, the problem was one not so much of recession, but of the changing pattern of industry that was taking place. The old tinplate works and some of the old steel works that gave them their supplies of steel were completely out of date, and with a slight falling off of orders for tinplate, industry found that these works had to close some two or three years earlier than they would otherwise have closed. It will be remembered that about two and a half years ago in Llanelly there was a shortage of workers, and, in point of fact, Italians were being imported to keep up the labour force. It is heartening to know that this part of Wales still leads the world in the production of tinplate and has two of the finest continuous mills in the world. And at Margam we have Europe's finest steelworks at the present moment.

In North Wales there has been little industrial background. The employment has been very seasonal, with the tourist trade, and has caused some concern. The slate industry, which is the main industry of North Wales, has suffered from the competition of alternative roofing materials and has reduced the number employed for many years. At the present moment, about 93 per cent. of its production is for the maintenance of roofs only. Recently, Wrexham, Rhyl and the Rhondda have come into the list where high and persistent unemployment exists. I have visited Wrexham and Rhyl, and I shall visit Rhondda very shortly.

I think it is fair to say that the Government's action in Wales has been vigorous and successful in bringing new industries into these difficult areas. The noble Viscount, Lord Hall, stated that the number of men employed in the coal industry and in many other industries had reduced by considerable numbers. In fact, I think the coal industry had gone down by 46,000, the tinplate industry by 24,000 and the slate industry by 9,000. But it is an interesting fact that from 1951 until 1958 there has been an increase of 45,000 in the insured population of Wales; and that is one expansion which we welcome.

In West South Wales, new industries and expansion of existing ones will provide about 9,000 new jobs in this area, and at present the total unemployed of Llanelly, Swansea and Pontardawe is about 8,000. It does not mean to say that we can produce those 9,000 jobs straight away: they will come during this year, next year and the year after. Tinplate works or any other works can be closed almost by giving a week's notice; but I am afraid we require more than a week's notice to negotiate with a firm, to build them a factory, and to get them into production and provide the jobs.

LORD STONHAM

My Lords, may I interrupt the noble Lord? Can he say with regard to the tinplate works whether the Government have in mind any projects at towns like Pontardawe, where there is great distress? Can he at the same time say why they did not keep the pits that have just been closed—the Mount and others—on for another year until the Aberrant was ready?

LORD BRECON

The prospects for. Pontardawe are that we hope to get new industries to go there, and we shall build them factories if we can find the people prepared to go. The point is that firms wish to be near the main line and the main road, and this is difficult in the valleys. I cannot answer for the Minister of Power, but representations were made on the particular point made by the noble Lord by many people in Wales. I think the noble Lord can get the answer on this from the Minister of Power.

We are pleased with what the Board of Trade did for us in getting the Pressed Steel Company to come to South Wales—the foundation stone of the works was laid last week by the Parliamentary Secretary of the Board of Trade. This will mean 4,000 jobs, new work and a new scheme, and will be a great help. The Crawley Engineering Industry at Llanelly will provide 300 to 500 jobs. We are delighted that Teddington Aircraft Controls Company are going to Pontardulais, again a community that has unemployed, having taken over an old tinplate works which will be developed and provide the skills and crafts that are required in the area to diversify the trade. We are also pleased that Richard Thomas and Baldwins Limited are going to open their press-shop at Gorseinon, again with 350 jobs. Other projects are also being initiated and when these are agreed they will provide further jobs. I am sure that in due time we shall be able to bring sufficient industry into West Wales that will give full employment once again to that area, and we shall not have to see the queues of unemployed that we have at the present moment.

We have also spent in that area, on new roads and bridges, something like £2½ million, and that is going to mean more attractive approaches and communications for the firms that are coming there. We are also pleased that we have the new steel works to go to Newport—we share some of it with our friends in Scotland—and I am certain that they, like ourselves, are delighted that this new project, this vast industry, is coming to provide work. In North Wales, a difficult area, we are pleased that the extension of a factory at Llandudno will provide work for 500 and at Penygroes, Austin Hopkinson have taken over a small factory. The Board of Trade are just completing the erection of a new factory which again will provide between 150 and 200 jobs.

We are also pleased that the new power station at Trawsfynydd is going to give much work for many people in the next four or five years, and the small factory making clothing will be—

LORD OGMORE

My Lords, I am grateful to the noble Lord for giving way. Before he leaves that point about Trawsfynydd, which is a very difficult area, as he knows, could he say whether the labour force will, in the main, come from the area, or is it to be imported from other areas?

LORD BRECON

In the main, the labour will come from the local areas. I understand that the numbers they will require in construction are very large, and they may have to bring them from some distance. But in the main it will be local labour for the construction—all those who want to work on it. I am giving particular attention to that point.

LORD OGMORE

I meant not only the constructional staff, but the people who are going to be there permanently, those engaged in the maintenance and other works. I take it that the people in that area will have the first chance of the jobs.

LORD BRECON

I expect a good deal will depend upon qualifications and ability, but I hope that will be so. We have also the hydro-electric scheme going on in that area, and that is providing a number of satisfactory jobs. The thing I am concerned about is that we have not more other industries in that area. It is an interesting fact to note that in the heyday of factory building, which was 1945 to 1951, only one factory was built in this area of North Wales, and since 1951 four factories have been built there. But this is not sufficient, and Anglesey, in particular, is a county to which we must induce industrialists to go and provide work for the 1,500 who are unemployed there at the moment.

Further projects are being discussed, particularly the prospect of a chemical works at Glynlliffon Park. A public inquiry concerning a water supply has just been held, and it is hoped that a decision will be given shortly by the Minister of Housing and Local Government and the Minister for Welsh Affairs. In the slate industry, there is the great difficulty of competition. The Minister of Housing and Local Government has agreed that any English local authority who will use slates shall be allowed to raise money on loan to meet the additional cost. That has previously applied to the Welsh local authorities. I myself have made an appeal to Welsh local authorities to put slate on 5 per cent. of the houses they are building. I am glad to say that a great number of the Welsh local authorities are already agreeing to that. But it is, as I have said, in Anglesey particularly, and Caernarvonshire, that we require new industries, and every effort is being made to do just this.

We in Wales welcome the Development Corporation for Wales which has been set up, and we should like to thank Sir Miles Thomas, the Chairman, and his members for what they are doing at the moment. I saw a Press report that the trade unions are also supporting the Development Corporation. Here we have an organisation which will provide the means, with a full-time and permanent staff, to see that Wales will get her fair share of new industry. It has not been set up to compete with the Scottish Council, but perhaps we can have some of the work as well.

Loans from D.A.T.A.C. are now available to all those areas named where unemployment is persistently high in South and North Wales. The Board of Trade and the Development Commission will also build factories in Anglesey and Caernarvonshire. These two counties of North West Wales have almost the same benefits as the development areas. To help in the interim period, until these factories are built and are in commission, the Government Departments are spending £2½ million in these areas of unemployment, on roads, rural agricultural roads, electrification, housing and services, health and welfare hospitals. The Board of Trade are also spending a good deal of money on the clearance of sites, such as at Wrexham, where they are spending £42,000 on clearing sites there ready for any industry to come. The Board of Trade have also agreed to factory extensions at twenty-four factories, costing about £600,000. These, when they are completed, will provide about 1,250 jobs. There are nine empty factories in South Wales at the present moment. These can be let at the market value, less 25 per cent. So we are not short of factories in South Wales. We have in Wales the labour, the factories, the sites and the services. What we require at the moment is the men with the initiative and firms to occupy them, and I say that the Government are doing everything they possibly can to bring this about.

8.8 p.m.

LORD MELCHETT

My Lords, my approach to the problem which has been debated this afternoon is based on two simple premises: first of all, that unemployment in the modern Western World is unnecessary; and secondly, that money was devised by men to serve them and not to master them. The problem in this country at the present time is almost as much one of under-employment as it is one of unemployment: a problem of short working weeks, low level of output from people working a full-time week, of little overtime and no night shifts. All this adds up to the under-employment of our available resources of material and manpower.

On a broader front we are faced with a more challenging problem. The world has now recovered from the Second World War, and we have at last ample raw materials, ample food and no lack of desirable developments to be tackled all over the globe. Governments and people are striving to expand their economies, to improve their way of life, to invest and to develop. But what has happened? The leading industrial countries in the Western World, including, unfortunately, ourselves, are now faced with falling investment, falling order books and a certain amount of unemployment. Steelworks are running below capacity. Modern ships are going down slipways only to be completed and tied up at a buoy without ever going to sea and trading. Surely, no one can be satisfied with such a state of affairs. In these circumstances, it is not unreasonable to question the methods of management of our financial and economic affairs. I hope, therefore, that if what I say is in some respects critical of recent policy, the Government will realise that it is because I believe that these vital issues need further careful examination.

The existing theories and policies are not producing an entirely satisfactory answer, otherwise your Lordships would not be debating unemployment this afternoon in a world of potential plenty. Unless we find better methods of managing our affairs, we have a very real fear of the competition of the Communist world, particularly from Russia and China, during the next quarter of a century.

Although these problems are not peculiar to this country, we are most concerned with the immediate difficulties which face us here. Leaving aside the international recession, the present position follows, at least partly, from the steps we took during the 1957 balance of payments crisis and the policy which we have pursued since then. The high bank rate and controls on lending which were used for about a year have worked considerably better than their keenest exponents had reason to expect. The pound was saved from threats of further devaluation and currency stability was restored, but the continued application of high bank rate and restriction of credit, of which I complained mildly in the debate in your Lordships' House on the stability of the pound about a year ago, have brought in their train a considerable measure of deflation and have resulted in the under-employment of our industrial resources and manpower.

It seems to me that the trouble about using deflationary policies to fight balance-of-payments crises is that, while they work very well, they also reduce internal spending, and they hit at individual enterprise, particularly small businesses. Order books tend to fall, stocks are reduced and a certain amount of unemployment is almost inevitable.

I am unrepentant about the suggestions I put forward a year ago. I believed then that we were fighting the wrong enemy and using weapons which in time would inflict wounds on our own domestic economy. In fact, during 1958 a mild but quite definite deflation set in. Nobody wants inflation, and I am sure that no reasonable person wants deflation, and least of all the present Government. Surely the object of policy must be full employment, with stable prices and a stable value for money. It is probably impossible to be rid of inflation altogether without getting some measure of deflation. The problem of the Government has been to steer between these two evils.

The important question about the last year is whether we have been so busy trying to get unconditional surrender from the forces of inflation that we have failed to see the forces of deflation massing on another horizon to attack us in 1959. This is a question of difficult judgment. The Government have told us a great deal this afternoon about various plans, some of which have already been put into effect, to re-energise and revitalise the economy. The difficulty, as I see it, is that one cannot be too certain how well, and particularly how quickly, a satisfactory effect can be expected from these measures. If one looks across the Atlantic, there is not much comfort to be gained. The United States and Canada have found it more difficult than they expected to establish economic recovery, and the facts and figures in North America still do not bear out the optimism which is voiced in many quarters.

I do not want to be over-pessimistic, but I regard it as vital at this stage to realise that conditions to-day are entirely different from those of any other period since the war. The further the 1957 crisis gets into perspective, the more I believe that people are convinced that the Government were mistaken in concentrating for too long all their energies on anti-inflationary measures to protect the pound. There was an emergency, and emergency measures had to be taken to avoid devaluation; but inflation was not the cause of the emergency. Our current account at that time was in a quite healthy state; it was the capital account that was in difficulty. And it was fear of further inflation, and fear that the current account would get into difficulties, which started the speculation against the pound. Above all, the cause of the crisis was that we had insufficient reserves. However much we fight against inflation, we shall never produce adequate reserves in this country by that method alone, because the effects on our economy, if it were carried too far, could be disastrous.

I urge the Government to give a strong lead on one or two simple points. The first is that we should build up adequate reserves. I believe that if we gave the highest priority and set our minds to increasing the reserves, this could be done to a greater extent than has so far been popularly believed and that this is the only possible bastion against further attacks on sterling. It is of equal, or, possibly, even greater, importance to create some means of managing and backing sterling overseas on the lines suggested last year by Sir Oliver Franks. This in itself would provide a great deal of strength, which we should otherwise have to obtain by the painful process of building up our reserves slowly. Thus it may never again be necessary for high bank rate and internal deflation to be used as a means of protecting the pound.

Secondly—and this is of great importance for noble Lords who sit on the other side of the House—it is a matter of the first importance that, if and when full employment returns, the leaders of the unions should be moderate in their demands and not create the beginning of further wage-cost inflation. Several factors ire necessary to get stability, and this is of the first importance. On the other hand, it would be dangerous to assume that the leaders of the unions have not learnt from recent events and it would be unwise to base policy upon the assumption that they will always react in the same way under all conditions. Then the Government could do more to give a lead to encourage those in charge of industry to be more enlightened in their investment policy, more energetic in improving plant, equipment and efficiency and to make greater use of scientists, proper costing, work study and other modern developments which, in many firms and industries, of all sizes, are still sadly lacking in many parts of the country.

Lastly, my Lords, before I sit down, I should like to make one further suggestion. There seems to be in the international field, which affects, of course, the whole of our export trade, a very serious problem of lack of credit. I mentioned earlier that there were great projects which required to be undertaken all over the world, many of them in territories either associated with this country in the Commonwealth or our direct responsibility in the Colonial Empire. We have steel works and other works in this country not fully used; we have people not working for want of work. The difficulty is shortage of capital. At the time of the Bretton Woods Conference the late Lord Keynes was very anxious to create a World Bank in a form in which, under these conditions, it could work as a credit-giving institution which would alleviate these various problems. This was all foreseen. Might it not now be an opportune moment for the Government to consider whether they could not take the lead in revising the constitutions of the International Monetary Fund and the World Bank in order to provide much-needed credit for these very desirable developments all over the world?

8.22 p.m.

LORD SHEPHERD

My Lords, I should not like to create any embarrassment for the noble Lord, Lord Melchett, by saying that this is not the first occasion on which noble Lords on this side of the House would agree 90 per cent. with his views on economic affairs, which he has given in this House on two or three occasions in the last eighteen months. I believe that in many ways this has been quite a remarkable debate. I think it has shown that the Government does view the unemployment position in a very serious light, in that it has given us, or will give us, four Ministers to state the Government's views this evening.

I believe Her Majesty's Government face two very serious charges: that the serious unemployment, in particular its steady growth during 1958, is the direct result of the Government's economic policy since the financial crisis of 1957; and, secondly, that Her Majesty's Government have failed to meet their responsibilities and have failed to keep their General Election pledges in regard to full employment, and that their plans to relieve the stress and hardship of unemployment are completely inadequate. Earlier this afternoon the noble Earl, Lord Dundee, was asked what was the Government target for unemployment. I appreciate the difficulty of giving such an answer. The noble Earl's reply was, "The lowest compatible with no inflation." I think the workers are entitled to a better answer; they are entitled to an assurance that those who are employed stand a reasonable chance of keeping their employment and those who are unemployed will have employment brought to them as quickly as possible.

The noble Viscount, Lord Hailsham, on many occasions in your Lordships' House and outside has used the word "freedom". The word "freedom" appears on most of the Conservative Party posters. Freedom of thought, freedom of worship, all the conventional freedoms that we accept to-day as a right in this country, I believe will sound completely hollow, a complete mockery, to the many thousands of men and women who are unemployed and to their families who are affected by their misfortune. The soldiers who came home from war believed that work would no longer be a question of privilege and a question of luck, but that work would be their right.

The noble Viscount, Lord Hailsham, a spokesman in your Lordships' House on economic affairs, has naturally lauded the results of the Government's economic policy. The Government, I believe, are entitled to all the praise that they deserve. We have had a degree of restraint of inflation, but it has not been due entirely to Government policy; there have been other contributing factors: we have had low commodity prices; we have had restrictions on imports through falling production. But we are going through a period of stability, and it is only right that the Government should have their praise. But it was apparent to noble Lords on this side of the House that this economic policy was crude, in the sense that it hit the essential trades, it hit the non-essential trades, it hit the import departments and it hit the export departments of companies in like manner. The story of 1958 is one of falling production, a loss of position in the export market and now a steady increase in unemployment.

As I listened to my noble Leader, Lord Alexander of Hillsborough, read out the percentages of unemployment, I could not help but being struck by one fact: that all the names he mentioned are of areas of great industrial production, the areas in which the exports of this country are manufactured. I do not propose spending too long on details of how production has fallen, but there are two industries which we should look at. The first is the shipbuilding industry. I believe that 1958 will go down as the blackest year in the history of shipbuilding. Britain has dropped from second place in shipbuilding to third place; we have had to give way to Western Germany. The situation looks extremely bleak. Mr. Milne, the president of the Shipbuilding Conference, has pointed out that the small yards' orders prospects are extremely bleak. Out of seventy United Kingdom shipyards building seagoing vessels, thirty have already laid down their last keel against their last order, and sixteen more will be doing it this year. It is difficult to see in the shipbuilding industry that the position will greatly change unless the Government can give a breathing space by bringing forward their naval programme. The serious position in the shipbuilding industry is affecting the steel industry, which we know is operating at approximately 70 per cent. of capacity.

I believe that the Government are aware now of the dangers that face this country in regard to production. The Government have now reverted to the policy of 1955, 1956 and 1957 which may well lead to a boom. There are already certain signs in the consumer industry of better trade; but are we to anticipate that when the boom has reached its peak it will be necessary to bring back the restrictions of 1957? It is essential, if this country is to progress, that we have a definite plan and that we move steadily forward. We cannot go back to the prewar era of booms and slumps.

I have mentioned a fall in production as the fruits of Government policy. When one looks at the statistics one appreciates that the fruits are far from sweet. Stagnation of production has had its effect in unemployment. We have had the figures time and time again this afternoon. In January, 1958, they were 391,000; in December, they were 531,000, and in January last they were 620,000. But I believe that if you look at the monthly figures you will find that the most significant fact is that except for the month of July, 1958, there was a steady and relentless increase. The February figure shows some encouragement; it shows a decline of approximately 12,000. But if the figures in The Times are correct, 6,000 of those came from the building industry and 4,000 came from agriculture—no doubt due to the remarkable weather of that period. But would it not look, from those figures, that the bulk of the increase in January was not due to seasonal trends or climatic conditions, but came from general industry? I believe we must ask ourselves whether the Government's policy, even if it were energetically pursued, will have a great effect on unemployment figures in cases where the large majority have been unemployed for two months or over.

The first Government measure to inflate economy and production was the Distribution of Industry (Industrial Finance) Act. I believe the Government themselves will acknowledge that the results following that Act of July of last year have been disappointing. The Minister in another place said that many managing directors and companies were not fully aware of the purposes of the Act or the intentions of the Government, and it was for that reason that he was sending out a fresh circular. May I suggest to the Minister of State for Welsh Affairs that, so far as his area is concerned, writing letters to managing directors would get one nowhere? You must send out your officers to "sell" the Act to the people; you have got to canvass the business. It is no good sending out letters.

The easing of credit restrictions will, I believe, make some difference in investment, although I must admit that investment in the private sector has been fairly good. What we must ask ourselves is, has the investment that has been made been channelled in the right directions? Is too much going to those industries which have little position in the export market? Your Lordships will have seen in the Press the other day of the remarkable result of capital flowing in a certain direction. On that very day I was attending a company meeting, when I heard the chairman of an important company and other companies complaining that during 1958 the company's application or request to the Capital Issues Committee for permission to increase capital had been refused, with the result that the company had lost well over £1 million in exports during that period. If our capital is limited, it is essential that it is channelled where it has most effect.

In regard to exports, the House will have read with great concern that we have lost at least one round with Germany in the export market. It is said that we cannot force a foreigner to buy British goods. But we need not force them to buy from Germany. From my experience of taking samples round the bazaars in the Far East, I know that you sell if your price is right and you can deliver; and it is there that I believe we have lost.

I believe that we have also lost in that, as the noble Lord, Lord Melchett, mentioned, we have not been giving sufficient credit. I belong to a company that has to give credit to Eastern custom, and I know that since the Government restrictions were imposed we have had great difficulty in financing our overseas trade. Now credit has been eased, I hope that we shall be able to increase our business. But can Her Majesty's Government give any explanation of why, when our import prices have fallen, our manufacturing costs in 1958 have risen? I wonder whether the answer does not lie in falling production. Overheads remain fairly constant, irrespective of whether or not the factory is working full time, and those overheads must be added to the cost. I believe, therefore, that we have to get back into full production those factories that are capable of export business.

The noble Earl, Lord Home, yesterday afternoon spoke of the British Navy showing the Flag in distant waters. I think he was right when he said that the country earns great prestige, but I believe that in some respects that view is rather out of date, and that to-day a country earns itself prestige, at least among the free countries, by trading—by its honesty in trading, and by the display of its manufactured products. We have been told by noble Lords opposite that the degree of unemployment in this country depends on inflation. Is there no alternative to boom and slump in our economic life, with all its effects on the lives and happiness of people? Is it not possible that we in this country can have increased production and full employment and yet maintain our young people and our old people and enjoy a reasonable life of relaxation without fear of inflation? I am perfectly convinced that we can. I am perfectly convinced that we can get it, provided that Her Majesty's Government show the will.

8.41 p.m.

LORD HAWKE

My Lords, the noble Lord, Lord Shepherd, answered his rhetorical questions in the affirmative. Unless I misheard them, I am inclined to answer them in the negative. I should like to associate myself with much that has been said in the monetary field by my noble friend Lord Melchett, as I did in the debate last year in which he spoke. I think that it was the late Lord Keynes who said: "If your savings exceed your investment you will inevitably have unemployment." Well, we have unemployment to-day. The trade cycle, which I am afraid is rather inevitable, is largely caused by changes in sentiment which become reflected in fluctuations in investment, particularly in investment in inventories; and our job is to iron out the bumps and hollows of this trade cycle, acting, so far as we can, with all the other free countries concerned.

One can easily damp down or stimulate consumer demand by monetary means, and to a degree one can do this in the case of private capital investment; but in the last resort it is not the monetary conditions of the moment which determine the volume of that investment but the conditions which businessmen believe lie ahead. In fact, a looming General Election may be a more potent factor than the bank rate in the determination of the level of private capital investment. In circumstances like these it is really only Government investment that can provide the balancing factor, to step in when private investment is too low, and step out when it is too high.

Now there are very difficult monetary aspects which flow from such a policy, and I certainly have not the time to go into them to-night; although they are difficult, I believe them to be perfectly surmountable. In fact, the main difficulties are diagnosis and implementation. The machinery of Government is devised for collecting statistics, brooding upon them, digesting them and ponderously and slowly taking action upon them. It is not devised to anticipate the trade cycle. Implementation also is extremely difficult. I doubt whether the Government machine, as at present constituted, is capable of stepping quickly enough in and out of investment.

In face of these difficulties some people might say that we had better leave it to chance, because in the long run chance evens things out. But if we were to accept such advice we should be playing straight into the hands of the Marxists, who believe that the capitalist system will destroy itself inevitably by its failure to control the successive booms and slumps of the trade cycle. It is our job to prove them wrong in this, as in everything else, and I do not accept a policy of laissez faire; nor do Her Majesty's Government—indeed, I rather doubt whether noble Lords on the South West benches do so either, nowadays.

Her Majesty's Government are making vigorous efforts to get out of the trough quickly. They have adopted various methods of stimulating consumer expenditure, and these, I believe, are now acting. But the main gap seems to be caused by our savings in recent months overmatch- ing our investment. These figures are almost impossible for the layman to lay his hands upon—I only hope that they are supplied to my right honourable friend the Chancellor of the Exchequer. But working backwards, if one assumes that there are 250,000 more men unemployed in this country than there ought to be, it is probable, I believe, that at least £250 million of savings are not being invested.

Her Majesty's Government are planning to fill the gap, and my noble friend Lord Dundee gave the figure of £150 million of Government capital expenditure being planned. I wonder, however, whether the machinery of Government is capable of putting these plans into effect quickly enough. It is spending, not authorisation, that counts; and the machine is extremely slow in actual performance. We are all crying out for roads, but if the Chancellor of the Exchequer went to the Minister of Transport and said, "Spend another £50 million" probably the Minister of Transport would have a heart attack; and if the Minister of Transport was told he had to spend that amount by next September he would pass right out, because he would know that he had not an earthly chance of being able to do so, for the machine would not work fast enough. The same applies in the many other departments of Government expenditure and that is why it is so very difficult to get Government investment in in time to fill the gap. If one goes in for a programme of authorisations throughout the whole Government field one stands in grave danger of ending up with a very large capital investment bill coming forward just at the top of the next inflationary boom when we want to shed capital investment.

It is inevitable at this stage of the trade cycle that new export orders should be difficult to get, particularly from the countries which have suffered from the fall in the value of their exports to us; and I greatly welcome the new system of Government-to-Government loans resulting from the Montreal Conference. But the results to-day are not what one would have liked to see. Out of £50 million taken up, £28½ million go to India, £10 million to Pakistan—I strongly suspect to pay for current orders. What we want to see is loans taken up and new orders placed which would not otherwise be placed. Surely there are numerous members of the Commonwealth who want new transport material, harbour material and so on. Is it that they are fearful of committing themselves to loans at interest because they fear for the stability of their budgets in the present state of depression? If that is the case why should we not offer these loans free of interest on the portion which is actually spent in this country on new orders during this calendar year?

The essence of all this, my Lords, is speed. We want additional orders for goods, the manufacture of which can start right now and not in two years' time. We must all welcome the attempts to redistribute industry, but it is an extremely difficult thing to do except when industry is booming. Nevertheless, it is a thing which we must do now, in the hope that when trade picks up the resulting factories will fill up. We have had several years of inflationary boom, and during this time we were not able to carry out all the investment we should have liked. There were simply not enough savings to finance the private investment and the public investment that we required, and the result was that we had inflation. To-day the position is reversed. We have the savings, and therefore the resources are free; and instead of treating the situation as a disaster, let us treat it as a challenge and an opportunity—a challenge to the flexibility and speed of Government action, and an opportunity to do some of the things which we have been longing to do for years but for which we have never been able to provide the resources.

8.54 p.m.

LORD ROCHESTER

My Lords, I am determined to say a few words on the subject of youth employment, a subject which has hardly been mentioned to-day but which, it seems to me, is of the greatest importance in any discussion of employment generally. In the northwest region, from which I come, according to information published by the Ministry of Labour a total of 9,261 boys left school last Christmas; and on February 9, the last date for which figures are available, 960 of those boys, or rather more than one in ten, were still registered as unemployed. I do not want to paint this picture too darkly. I understand that comparable figures of school-leavers are not available for the country as a whole, and even in the north-west region it is not possible to compare the position this year with that in previous years, but I think that these figures are sufficient to show that there is already a problem in this field; and, as I have already said in your Lordships' House, there is surely no section of the population for whom prolonged unemployment would be more demoralising than for young people.

It is three years since the Carr Committee was set up to consider the arrangements for the training of young workers in industry, and it is more than a year since they reported. Since then an Industrial Training Council has been established and they are now engaged in collecting information about what industry plans to do in this field. In my view it is very important that this information should be collected and that industry should establish more precisely than it has so far done how many craftsmen it really will need to satisfy its long-term requirements. I ought really to be careful what I say about the Industrial Training Council. Their chairman, the noble Lord, Lord McCorquodale of Newton, is an honoured Member of your Lordships' House, and he, I know, is going to speak after me.

I have the greatest respect for those members of the Council whom I know as individuals, but it seems to me that the time has come for a little irreverence, and it may be better that it should come from somebody like me, since I have no particular reputation to lose. I do not speak of the noble Lord himself, but it seems to me that the Industrial Training Council are able to progress only painfully and ponderously through elephantine federations and confederations of employers and trade unions and nationalised industries. They are the mumbo-jumbo of industry—and may they live for ever! But they are not exactly built for speed and they are constitutionally incapable of stripping for action.

Since the Carr Committee reported, things have been made much worse by the trade recession about which your Lordships have been talking to-day; and however much we may deplore it, in the country as a whole, in keeping with these economic conditions, there has been not an increase but a reduction in the number of apprenticeships available. The trouble is that unless as a nation we are going to lose this priceless opportunity of ensuring that all those boys who are capable of profiting from training for skill—which, after all, is our greatest industrial asset—do in fact get that training, we cannot afford to wait until the recession is over or until the Industrial Training Council have collected their information through the normal channels. The plain facts are that these boys are already beginning to leave school and if they are to receive adequate training a start must be made now to provide the accommodation and the equipment which will be needed for this purpose.

Perhaps my only claim to speak in this debate is that I myself serve on the local employment committee in an area where there are a number of small engineering and shipbuilding firms. I can assure your Lordships that in the place of which I speak it is not merely a question of those firms absorbing an increased number of apprentices; it is just as much a matter of seeing that the apprentices receive training of a standard which such small firms cannot reasonably be expected to provide themselves, but which must be provided if the training is to be adequate for the boys and acceptable to the trade unions.

My Lords, let me say at this point that I sympathise with the dilemma in which the Government find themselves in this matter. The Parliamentary Secretary to the Minister of Labour said in reply to a Question in another place only the other day that unless industry was prepared to train these apprentices they could not be trained, and I believe that the Government are right in not trying to impose a solution on industry from the centre. After all, a wheel is made to move, not by hammering on the hub but by pushing al the perimeter. And here I should like to make the positive suggestion that it is the education authorities who should start to do the pushing.

I take this view for several reasons. First, they exercise control in most places, at least, over the youth employment service, and this is a problem, obviously, of youth employment. Secondly, they are independent of employers and trade unions, and therefore they will not be thought within industry to have any particular axe to grind. Thirdly, in so far as much of the training which will be required can best be given in technical colleges, these education authorities have themselves a practical contribution to make towards the solution of the problem.

In my own county of Cheshire, I understand that the education committee is proposing to convene meetings of the chief employers and trade union representatives, to pose the problem and see what industry is prepared to do in each locality. Like the Government, this committee recognises that industry must accept responsibility for employing the apprentice—and, indeed, for giving him much of the practical training that is required. But in cases where the smaller firms cannot themselves provide the more formal, full-time training that is desirable, at least at the start of the apprenticeship, it is proposed that the education authorities should themselves offer the necessary facilities at the technical colleges. In other words, what is planned is a partnership between industry and education—and this is surely just what is needed at a time when industrial training and further education should go hand in hand. I think that this particular education committee are being realistic, also, in recognising that, although this is a problem which closely concerns local employment committees, it is the chief employers and trade union officials in each locality whose attitude will be decisive.

There remains, of course, the question of who is to foot the bill. In the example I have just quoted, responsibility will presumably continue to rest on the employer to pay the wages of the apprentice, and largely on the county ratepayers to contribute towards the cost of the training facilities provided in these technical colleges. That, it seems to me, is as it should be. But, given that local firms and education authorities do prove themselves willing to accept their responsibilities in this way, I should like, before I sit down, to ask the Government to consider whether they cannot demonstrate the sympathy and support of the State by offering some form of allowance to the firms and some additional grant to the education authorities which respond to this national challenge.

9.5 p.m.

LORD TAYLOR

My Lords, I do not propose to detain your Lordships for more than a very few moments. I listened with great interest to the speech of the noble Lord, Lord Hawke. He gave us a most interesting analysis of the trade cycle, and he made some cogent criticisms, not perhaps of the Government but of the machinery of government. In particular, he stressed the point that the Government machinery is too slow in dealing with the effects of trade recessions. With this I entirely agree. I do not think that this is a Government fault; but it is, as he said, a machinery of government fault. This fault needs to be rectified, and action must be quick—otherwise, instead of coming at a time of slump, the effect comes at the time of the following boom.

I was very glad that the noble Earl, Lord Dundee, referred to the White Paper of 1944, and to the late Lord Keynes. I think that we all owe to Lord Keynes our knowledge of the cause and the cure of mass unemployment; and it is only since the publication of the White Paper of 1944 that Governments have realised how to cure mass unemployment. They realise that the causes of depression are under-spending and under-investment—perhaps this is rather an overs-implification—in both the public and the private sectors of industry. The Treasury are perfectly familiar with monetary and fiscal methods of dealing with mass unemployment: the problem is how to achieve industrial expansion, and continued industrial expansion, without the harmful effects of inflation.

Our criticism from this side of the House, is that the Government have, I think, oscillated in their policy between inflation and deflation, without a long-term plan and without planning to cushion the worst effects of deflation when they were produced. In the present phase of our economy the Government have been conducting an experiment in an attempt to control prices in a semi-free, semi-planned, economy, by deliberately producing deflation and some unemployment. Now the attempt has worked inasmuch as it has produced some unemployment; but it has been only partially effective in controlling inflation. Taking the pound at its October, 1951, value, in January, 1957, the pound was worth 16s. Id., and in January, 1959, it was worth 15s. 2d., so inflation has continued. Those are Hansard figures, given on February 24.

The bad thing about using deflation and unemployment as a method of price control is that their effects are grossly unfair and uneven. We have heard this afternoon of the plight of Scotland, South Wales, and the other special areas. There is nothing very surprising about this, because the effects of deflation in the shape of unemployment are always greatest in the basic industries, the oldest industries, the heavy industries, and in the places furthest from the capital: they are least in areas of industrial diversity and in the most modern plants.

The immediate problem—the problem of areas of extreme unemployment and of considerable employment—ought to have been foreseen by Her Majesty's Government when they planned their deflationary policy two or three years ago, because it requires time for the remedies to act: and the noble Lord, Lord Hawke, is quite right when he says that to start re-investing in these areas now means that this reinvestment may well coincide with a period of expansion just when we can do without it, perhaps, from the general economic point of view. The, machinery is there: it consists of the industrial development certificate; the machinery for Government building; Government financing of factories; the building of factories "on spec."; and the appropriate loan machinery to local authorities.

But it has not been used, or it has not been used in time. I think the reason why it has not been used in time is the unwillingness of the Government to accept remedies which involve positive State action. They are only starting to act now; and they are acting too little and, as we think, too late. It is only where these remedies have been applied vigorously that positive effects have been achieved. For example, in Dundee: Mr. John Rodgers. Parliamentary Secretary to the Board of Trade, said in the Director: In Dundee almost 10 per cent. of all jobs are in Government-financed factories Well, we welcome Socialism, even when applied by a Conservative Government. The remedies are bound to involve, and indeed the Government itself is proposing to apply, State action in order to achieve a higher level of employment in these areas. One would like once more to stress the importance of building factories "on spec.", as it is called in real estate circles, as it is much easier to persuade industrialists to come to a factory already built than try to sell him a site before there is anything there.

There is one other matter I should like to refer to and it also involves long-term planning. Lord Rochester spoke of the importance of training youth. Lord Rea and my noble friend Lord Hall both referred to the problem that is going to arise in the near future as a result of the increase in school-leavers. Fifteen years ago this country was still at war and the birth rate was low. And very fortunate it is for the Government that it was so, for it means that they are not facing the great influx of school-leavers to add to the problem of unemployment. But in two years' time the post-war bulge will begin to take effect and over the next ten years it will become a very formidable problem indeed, not only for the Government but for industry to make its plans to cope with this great influx of young people. It is made more difficult by the cessation of National Service. It can be met only in two ways: first, in the general atmosphere of economic expansion, and secondly, by the allocation of new industry which should be planned in relation to increasing local labour resources.

I would therefore ask the Government whether they could have made in each area a survey of potential labour resources for the next ten years, so that they could communicate the results of such a survey to the industrialists in each area who would then know what labour is going to be available. It should be made clear that the industrial development service would be available for meeting factory expansion wherever they can keep in step with the incoming labour forces. Only thus would it be possible, I think, to solve the problem of the great increase in the number of young people coming into employment.

9.14 p.m.

LORD MCCORQUODALE OF NEWTON

My Lords, I will start my few remarks with an apology that I could not be here at the beginning of the debate. I had to fulfil a long-standing engagement to present the prizes to the nurses at one of our larger hospitals, which is a most enjoyable function, and I am sure that I shall be forgiven for having missed the Leader of the Opposition's speech in so doing.

I ventured on the occasion of the debate on the gracious Speech to make a few comments on the problem of unemployment. I should like to follow up those remarks and amplify them a little on this occasion. The present position of unemployment has been put quite clearly before the House. But there are one or two comments I would make. We have 609,000 unemployed in this country, which we all realise is far more than anyone would like or wish for. Experience has shown that every year since the war the peak of unemployment is reached in January or February. If I may quote a speech delivered by my noble friend Lord Lawson in that debate of November 5, he said that on the basis of information given to him by a man who knows this question as well as the Minister of Labour himself there would be 750,000 unemployed by the end of January.

I am sure that we are all, including Lord Lawson, very pleased that that prophecy has not been fulfilled. The fact is, that the numbers of unemployed have not exceeded 600,000 and have shown no increase in the last month but a diminution which should indicate an improvement in the situation as it appeared to the authorities four months ago—

LORD LAWSON

I agree that I did say that: I was thinking about unemployed that are not on the list at all. But I am very glad to find that it is not 750,000 in terms of registered unemployed.

LORD MCCORQUODALE OF NEWTON

We all very much respect Lord Lawson in this House, as we did in the House along the passage, and I know that he does not make this statement inadvisedly. But it seems that a little too much gloom has been used today over the whole position. Over the whole position, as brought out in the debate, the figure is still below the 3 per cent. mentioned in Mr. Gaitskell's controversial statement. However, I am not going to enter into that argument this afternoon.

I would say that the country as a whole has stood up remarkably well to the influence of the severe recession that took place last year in America and Canada—a recession which is only just lifting. I was in America myself the week before last, and it would appear that since the New Year there has been a very definite improvement over there which will be reflected here in due course.

These overall figures do not, of course, really bring out the position. I think this debate has been extremely valuable, especially for the analyses from Scotland and South Wales. It is Scotland and South Wales—apart from the problem of Northern Ireland, with which I am not competent to deal—and, to a lesser degree, the North West and North, which have higher rates than the average or than we should like to see. Nevertheless, some light is shown even on these areas. Recent developments do show some encouragement, and I do not believe that this has yet been brought out. In the four weeks ended February 4, the average number of vacancies filled each week by unemployment exchanges was 366, an increase of 20 per cent. on the average of the previous two months. But the weekly placings in the North West and West areas, where unemployment is higher than in the rest of England, were 40 per cent. higher than in the average of the previous two months and in Scotland they were over 50 per cent. higher. These figures suggest that even with the relatively high unemployment in those areas jobs are becoming a little easier to find.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, I do not dispute the noble Lord's figures, and he knows a great deal about Ministry of Labour administration. But is it not a corollary fact of the situation that in the last few weeks there has been a decline in the vacancies available overall, so that in relation to the figure of those who remain unemployed the problem is still very serious in those areas?

LORD MCCORQUODALE OF NEWTON

I agree that the problem is still serious, and in Scotland especially; I am not going to minimise that. But these figures do show some hope that the velocity of placings has very much increased since the two months before Christmas. I hope that this means that the measures taken under the Redistribution Act and other measures taken are beginning to make their effect felt. There is one other comment I should like to make on the figures, and that is on the occupational analysis of the unemployed. The Ministry of Labour Gazette in February, which is the last date we have, does not show the position by regions—I wish that it did—but it does confirm what similar analyses have shown in the past: that over the whole country no less than three-quarters of all the unemployed men are labourers and unskilled workers.

So much for the present situation. What is the immediate future? I should like to take two main themes. The measure of employment in the future, with all the field of automation and electronics opening up before us, will depend, in my opinion, to a large extent on the numbers and the training of our skilled operatives, our technicians and our higher scientific experts. For, as I have said, three-quarters of the unemployed now are the unskilled. I am grateful for the remarks made by the noble Lord, Lord Rochester, and the noble Lord, Lord Shepherd, about: the special problem for training for what is known as the bulge. As Lord Rochester said, I have the privilege and responsibility of being chairman of the new Industrial Training Council. If I say a word or two about that again, as I did in November, to try to put the position before the House, I hope your Lordships will forgive me. The next meeting of the Council, when we will certainly consider the suggestions put forward by the noble Lord, Lord Rochester, is the week after next; and his speech will be valuable to us. I hope, in spite of my own size, that the Industrial Council will not prove so ponderous as he fears it might; indeed we have on it, I am glad to say, some of the best brains on both sides of industry.

Up to now the boys and girls leaving school have been the products of births during war time and have been in short supply. Therefore, not only has there been a great demand for young entrants, but it has been so great that some industries and some firms who in the past recruited young men and young women have now virtually ceased to do so. One of the problems before us, that of placement, has been the selection of jobs for the young people in the past, rather than the selection of candidates to fill vacancies. This year is rather an exceptional year, because there is what some authorities call the little bulge. This year will see a substantial increase in the number of boys and girls reaching the age of fifteen. But this number will drop away again next year. Those responsible for the placing of young people will have to pay more attention to their selection this year, and, indeed, they will have the opportunity to do so. So far as we can see from the figures available to us, the supply should not exceed demand up until 1961. But from 1961 the bulge in school-leavers resulting from post-war births will really be on us: a large increase, some 50 per cent. over four years, followed by a levelling off to about 20 per cent. above the last few years. This poses a problem of substantial dimensions and an opportunity which must not be missed by industry in this country.

It is to this problem that my Council are paying urgent attention. One of the steps we are taking at the moment is that we have persuaded the British Employers' Confederation, on the employers' side—because the responsibility of making the best use of these young people rests, in the first place, with the employers—to take serious and energetic steps now. The bulge will need a different attitude towards recruitment from that which has been adopted by many employers during the last twenty years when young people have been so scarce; and it is the Employers' Confederation's object to bring home to the employers the need for them to change their attitude both in their own interests and in that of the young people concerned.

As a first step, the Confederation have agreed to the general principle that employers should during the bulge years—and we are assured of trade union support in this matter—train more young workers than would be required to meet their immediately foreseeable requirements, and are urging their member organisations to bring this recommendation to train more young people even than they think they wish at the moment to the notice of their constituent employers, and to stress the need to take prompt action so as to be ready to meet the challenge when it comes in 1951. As I have said, we are meeting again on March 21. I am quite sure that all the resources of industry are going to be necessary to see that these young people, the first fruits of young men coming back from the war, should find skilled employment and not be thrown on the unskilled heap which is so largely our unemployment problem today. I hope that any of your Lordships who are engaged or have influence in industry will help us in this task. When the time comes we shall need all the publicity and influence we can get.

There is one other point to which I should like to refer with regard to the future of employment in this country. I believe that, in the long run, the future long-term employment condition in this country will rest largely in the hands of our great trade unions. They have won for themselves tremendous power in the trade and economy of this county. I say, in all seriousness, that with that power their responsibility in the field of employment is overwhelming. If we have (which heaven forbid!) mass unemployment at any time, our trade unions and employers, and especially the trade unions, will have to bear heavy responsibility. If, on the other hand—and this we all hope—industrial prosperity and good employment remain with us, then the trade unions can rightly and largely take credit for that position.

The Government—any Government; and both Parties agree to this and are on record as doing so—must place as first priority the strengthening and maintaining of the value of the pound sterling in this trading country of ours. If inflation increased wages and dividends without increasing productivity, any Government would be obliged in the long run to impose restrictions to protect the pound. Thus, if the trade unions forced up wages so as to price us out of the export markets, unemployment would be bound to ensue. Similarly, if unofficial and wildcat strikes developed seriously—as, indeed, in some cases they would appear to be doing at the moment—in our principal exporting industries, our balance of payments must be affected. I trust that the difficulties in the motor industry at the present time will shortly be resolved, for the motor industry has shown such wonderful export figures during the past few months.

VISCOUNT ALEXANDER OF HILLSBOROUGH

If this action by the trade unions, such as the noble Lord has mentioned, is essential, what does he propose to do about the employers' side and the profits distributed out of industry? If you look at the share markets for the last two years and see the enormous leap in the share values on the market at a time of steadily reducing production, and the increases in the distribution to shareholders, I think you have to persuade the workers as to what is going to be done about that.

LORD MCCORQUODALE OF NEWTON

I did say, perhaps not clearly enough—and the noble Viscount will see it in Hansard—"increased wages and dividends."

VISCOUNT ALEXANDER OF HILLSBOROUGH

I missed that.

LORD MCCORQUODALE OF NEWTON

But if we look at the figures, we find wages are up 90 per cent. or more as compared with the dividends, which have little effect compared to wages. I see that one group of unions in one important industry are now making wage demands and demands for shorter hours which in the aggregate would put up the labour bill in that industry by something in the neighbourhood of 20 per cent. Such increases, if granted generally throughout industry, would, as I think everybody realises, stultify the whole of our position and would land this country in heavy unemployment.

I am quite confident that wiser counsels in the trade union movement know of this, and that they fully realise that they can best help their fellow men by restraint, by increased production to balance increased wages, and by internal discipline. If they are told to curb their more reckless and extreme fellows (and every movement has its extreme partisans), and I am confident that they can curb them, if they really set about it, then all will be well. I would say, in all seriousness, that the trade union movement has had many brilliant pages in its history. I believe that future generations will judge it finally on how it faces up to the present responsibility in We new conditions that we have in the field of employment.

9.34 p.m.

LORD SILKIN

My Lords, this has been one of the most important debates that we have had in recent times, and the level of the debate has been in accordance with its great importance. We had a good tone set by the speech of my noble Leader and, if I may, for once in a way, praise the other side, by the speech of the noble Earl, Lord Dundee. Both of them were worthy of the occasion. The importance that the House attaches to this debate is evidenced by the fact that I am number twenty-three in the batting order, and there is still one to come. I would say that practically every speech which has been made on this subject has been a notable contribution to the subject before us. If I may be invidious, I should like to mention three speeches which have impressed me very much. One was the contribution of my noble friend Lord Geddes of Epsom, who made a most impressive speech. To be impartial, I would also mention the speech of the noble Lord, Lord Bilsland, and, finally, the speech of the noble Lord, Lord Melchett, to whom we have always listened with great attention and pleasure.

There is no great conflict of fact. I believe that we are all agreed that the unemployment position is serious. Figures have been produced by a number of noble Lords and have not been challenged in any way, and that is certainly a good beginning for a debate of this kind. It is true that, while the Government themselves have not challenged the gravity of the present unemployment situation, one or two noble Lords have attempted to minimise its seriousness. For instance, the noble Lord, Lord Jessel, said that no Government can guarantee full and perpetual employment, and that 2.8 per cent. was nothing very terrible; that it was worse in other countries, and particularly in the United States and Canada. I submit that the whole tone of that speech tended to indicate that the position is not so serious as some of us make out.

Even the noble Earl, Lord Dundee, made one remark which I wonder whether he really intended. He said that if we were to run the machine flat out for twelve months in order to take up the slack—and I take it that by that he meant if we were really to deal with the problem of unemployment and bring it back to its previous state—we should once more run into an inflationary condition. However, by and large, I would say that the tenor of the whole debate has been an appreciation of the gravity of the situation, and I do not wish to make any debating points about particular sentences which have been uttered in the course of the debate: I want to try to deal with the thing in a broad way.

I should like to mention one or two aspects of the matter which I think require emphasis, or even some repetition, though I do not propose to cover the ground which has been so adequately covered in the course of the debate. First of all, I should like to stress the effect on young people—boys and girls leaving school. There are many of them who left school last July who have not yet had employment. Now that is a shocking start in life and completely demoralising. I realise the difficulties and the problems of the bulge, but there it is. I would ask the noble Viscount who is to reply whether this is not some justification for raising the school-leaving age to 16. I do not suggest that it can be done in five minutes, but it would have been far better if these boys and girls could have remained at school for another year, rather than be walking about the streets hopelessly, looking for employment. I think the time will come when it may be worth while seriously considering the question of raising the school-leaving age from the unemployment point of view.

Next, I want to stress the effect on men over the age of 45 losing their jobs. Once a man is unemployed at 45 or over, his chances of getting another job are greatly diminished, unless he happens to be a member of a political Party in this or another House. In the ordinary labour market, however, there is very little hope for a person over 45 who has lost his job.

From the point of view of the economy of the country, it has been brought out by a number of my noble friends, and by noble Lords on the other side, that we are working only to 80 per cent. capacity. Not only is 20 per cent. of our capacity idle and being wasted, but the fact that this is so is undermining the costs and increasing the overheads in respect of the remaining 80 per cent. of our production. Similarly, is it not extremely wasteful to have 600,000 men and women capable of work and willing to work, but to have no occupation for them? I put it on the basis of wastefulness. I do not know whether anybody has mentioned, at least at any length, a problem with which we shall be confronted, the problem of auto- mation. This will be a serious problem in the future. We ought to be looking ahead and thinking about it now, not waiting for it to overtake us and then be taken by surprise.

The other problem which is already rapidly overtaking us is that of the older people. The population is gradually ageing, and it will not be many years before one-third of the population will be over 65 years of age. Although we are today much younger at 65 than our forefathers were, there comes a time, at 65 or some age of that kind, when one ceases to be capable of work. Noble Lords will appreciate that this means that an increasing proportion of the population will have to be maintained by the remainder. These are problems which should be faced and faced in good time. One of the criticisms which I make of the Government is that they never face these problems in sufficient time.

A number of noble Lords have dealt with the causes of unemployment, and there is very little difference of opinion between the two sides of the House as to what has been the primary cause. I want to put it as non-controversially as I can, to set an example to the noble Viscount who will follow me. I will say, therefore, that the severe unemployment from which we are suffering is the result of the attempts of the Government to deal with inflation and the severe restrictions that were imposed in 1957. We are all familiar with them: the high bank rate, the credit squeeze, the restriction on capital investment, especially in connection with the nationalised undertakings and the local authorities, and the restrictions on hire purchase. I am not prepared to say that in the end they did not have the desired effect—I concede that; but whether that was the best way of doing it, I should not like to say. In my opinion, there were open to the Government other methods of restricting excessive expenditure which would not have had the effect of restricting employment.

For instance, instead of imposing a restriction which affected everybody alike, could not the Government have restricted unnecessary consumption in the form of, say, luxury building, particularly in those areas where such building is undesirable? We have only to look round and see the enormous number of big blocks of offices that are going up which could have waited until other times. It was quite unnecessary that they should go up. Indeed, it may be that with a certain amount of persuasion, the people for whom these offices were being built would have gone elsewhere if they had not been allowed to go to the South Bank or to places of that kind. Would it not have been likely that they would have moved, if at all, to parts of the country where they would have been welcomed and would have made a contribution to a solution of the unemployment problem? There are quite a number of activities of this kind which, I submit, were not in the public interest but which might have been controlled.

LORD DERWENT

What would the noble Lord do with the workmen who were employed on this work, and who, he suggests, should be employed somewhere else, if there were no accommodation for them elsewhere?

LORD SILKIN

I am speaking of London. In many cases, these men were not even Londoners but came from outside.

LORD DERWENT

But they were employed.

LORD SILKIN

Yes, they were employed. I am not saying that the noble Lord has not drawn attention to a difficulty, but difficulties are not insuperable. We solved this problem during the war. We put up buildings in all sorts of outlandish places and we dealt with the question of accommodation. If it were necessary to do that again, we would do it.

I am not afraid of the use of the word "control." After all, it is just as much a control to restrict hire purchase or credits, or to control the amount of capital expenditure of nationalised undertakings or local authorities, as it is to control the kind of expenditure on luxury building to which I have referred. Building is controlled by planning. If only pluming were made a little more rigorous, if we ensured that, at least at this time, we did not put up buildings which were not in the public interest and which could be diverted to other places, we should make a substantial contribution towards the solution of the unemployment problem.

1 said it was true that the problem of inflation has been dealt with. I said also that I was not sure whether it was as a result of the particular measures which the Government introduced. It is true they introduced the measures, and I would concede that inflation has been, for the time being, cured. But is it a fact that it is a result of the actions that were taken? May I mention just one or two things that might have had an equal effect on the question of inflation? One is what the Prime Minister some months ago called his "little bit of bloomin' luck", which noble Lords will remember was the fact that we were able to buy cheaply primary products from the Colonies and Dominions and other countries, and thereby get favourable terms of trade. May it not be that this "little bit of bloomin' luck" had a deflationary result, in that the countries which were selling us these goods at low prices have been able to buy less from us than they would have bought if the prices had been more reasonable?

My Lords, it was not my purpose to embark on a financial debate tonight, although a number of noble Lords have done so. In winding op I am concerned merely to deal with a number of aspects which have arisen in the course of the debate, and I should like to confine myself to considering what action the Government are taking now to deal with the question of unemployment. Is this action adequate, and is it right? The Government are mainly banking on the policy of trying to encourage industry to go to the development areas. Even today there was an announcement that this policy was being extended. I submit that, although this policy may be right, and one which we on this side should support, they have done too little of it and they have done it too late, as my noble friend, Lord Taylor said.

I asked the noble Earl, in the course of his speech (I apologise for having interrupted him), whether the Government foresaw, when they adopted the restrictions policy in 1957, that that policy would create unemployment; and, quite understandably, he did not answer. If I may answer for him, I would say, first, that they ought to have understood it; and I hope they did. And if they did understand it, and if it was deliberate, would ask what action did they take then—not now, but then—to deal with the unemployment which they knew would arise? If, on the other hand, they did not know, I think they were guilty of a lamentable lack of foresight in not realising the probable consequences of the action they were taking. But I think they must have realised; the whole purpose of the restriction policy was to reduce consumption and create a certain amount of unemployment. I would ask the noble Viscount: if they did foresee it, what unemployment did they contemplate would arise as a result of their action? If they realised that, what steps did they then take to deal with the unemployment which they foresaw would result front their action?

I said that the action in connection with development areas was too little and too late, and quite obviously it is not meeting with the success for which we all hoped. I wonder what the reasons are. Is it, as one noble Lord said (I think it was the noble Lord, Lord Melchett, but at any rate it was a noble Lord on the other side), that in order to attract industry into the development areas it is not sufficient to appeal to their sense of patriotism? I do not suggest for a moment that industrialists are any less patriotic or more patriotic than anybody else, but when you are running an industry you cannot run it on patriotism alone. The appeal to industrialists must be on the basis that they will not be worse off financially by going to a development area than if they stay in the place where they would prefer to be.

I would submit to the noble Lord that, generally speaking—not always but generally speaking—the terms upon which industrialists are invited to go to development areas are not sufficiently attractive from that point of view. Many of the industries have to go long distances; they will thus incur considerable extra cost of transport. They may have to embark on retraining of their workers. There would be a considerable initial loss in efficiency, but in many cases there would be also a permanent loss; and while the Government do make some kind of a grant—or, rather, I think it is a loan—and in some cases offer to reduce the rent for five years, I would suggest that that itself is not sufficiently attractive. I would invite the noble Viscount and the Government to look into this matter and see whether the terms that are offered really are sufficiently attractive to get industry to move out in the numbers and on the scale that is desirable. I think it was the noble Lord, Lord Bilsland, who took that view, too. It does look as if it has not been very successful.

I understood from the noble Earl that there were 277 industrial developers getting this grant—not a very large number—who would in due course employ 13,000 workers. But the grant of an industrial development certificate is only the beginning of the story. From that moment, assuming even that the industrialist is serious and intends to go on as quickly as possible, it may take two or three years before he is actually established in his factory. First, he has to get planning permission, and that very often takes a long time, an unnecessarily long time—but that is another story to which I may come in a subsequent debate. But I do find that the mere operation of getting planning permission takes far too long today, and it does affect this whole question of industrial development. Even when he has got that permission, of course, he still has to prepare his plans and build his factory—because the ordinary factory in the development area is not always suitable for a particular industry. In a great many cases, and especially where large-scale industry is required, the industrialist will want to build his own place to suit his own requirements; and so this is a long-term job. I would submit, therefore, that two or three years from the time when the industrialist gets his certificate to the time when he is actually established and carrying on is not too long a period to envisage. So I would submit to the Government that this policy alone, unless it is greatly speeded up and much greater facilities are offered to the industrialists, is inadequate to deal with the question of employment.

A number of noble Lords have said, and I think the noble Earl tended to imply, that it is impossible to have full employment without inflation—at any rate, I think he said something of the kind, because he said that if we went all out in dealing with employment, as I have quoted his remarks, for twelve months, we should be back again in inflation. If he did not mean that, if I misunderstood him, I accept his denial. But it has certainly been suggested by a number of noble Lords that it is impossible to reconcile full employment with a lack of inflation. I challenge that, because if it is true then we are doomed to large-scale unemployment for all time. It is an admission that neither the present Government nor any other Government can handle unemployment or deal with it without creating inflation, and that would mean, of course, that we were once more back to a constant wave of inflation, restriction, unemployment and so on. I would suggest that that is certainly not true.

The noble Lord, Lord Strathclyde said: "We cannot guarantee full employment". I wonder whether the noble Viscount would not agree with me that a Labour Government would be expected to guarantee full employment; that, if they did not, they would be strongly criticised by noble Lords opposite. As my noble Leader pointed out, Governments today play so great a part in the commercial and industrial life of the country, they exercise so much control over the affairs of the country, that they are, quite rightly, blamed when things go wrong and they take credit when things go right. The present Government took a great deal of credit when unemployment was low, arid I think they must accept responsibility when unemployment is high. I think it would be utterly wrong to suggest that the present scale of unemployment is beyond the capacity of the Government to deal with, and is something for which they have no responsibility. I refuse to accept that position.

I think that one of the reasons for present-day unemployment is the fall in our export trade. A number of noble Lords have touched on that point. I believe that we have lost a good many orders, first of all, because we have not been able to give a satisfactory delivery date, but even more, because we were not able to provide adequate facilities. I wonder whether we cannot do more. There was some question of establishing a credit bank in connection with Commonwealth trade. I have in mind something much wider. We have certainly lost a number of important orders because other countries outbid us, not on the quality of our goods or the price, but simply because they were able to give longer credit terms than our industrialists could give. That is a matter on which the Government could help. They could facilitate these export credits. I believe that some form of insurance is possible, and that some insurance companies do it, but on terms which, certainly in my limited experience—I have had some experience of it—are almost prohibitive, with the result that many industrialists find themselves unable to take advantage of any specific export credit insurance scheme.

I hope that the noble Viscount will consider that suggestion and put it before Her Majesty's Government as one of the factors which would improve our export trade. As I believe this debate has shown, this is a problem which transcends Party, and I would urge Her Majesty's Government to treat this matter seriously and be prepared to do some fresh and clear thinking. I would say this to my own friends, and I say it to noble Lords opposite: we have all to forgo all fetishes and dogmas; unless we do that unemployment cannot be solved. I believe that it can be solved, but not by the doctrine that Conservative freedom pays.

10.6 p.m.

VISCOUNT HAILSHAM

My Lords, more than one of your Lordships, including, I believe, the noble Lord who has just resumed his seat, and certainly the noble Lord, Lord Rea, when he spoke second in the debate, have pointed to the very long list of speakers whose contributions we have enjoyed, and have said, I believe with complete justification, that this establishes the interest which the House has taken in the subject matter of this debate; and I can do no more than echo that sentiment.

But I feel that there is more difference of opinion as to whether or not one appreciates the spirit in which it was argued from the Benches opposite. Certainly I have nothing of which to complain in the courtesy or tone which the noble Viscount who introduced it or the noble Lord who has just concluded it from that side of the House have employed, but I shall have something to say of its polemical content and political objective—not that I complain that a debate on this vitally important subject should be presented in a polemical way. I would myself have agreed with the noble Lord, Lord Silkin, in his final remarks that this is a subject which ideally should transcend Party, and certainly I should like it to do so. I should be less inclined to agree that noble Lords opposite have allowed it to do so, having regard to the contents of their speeches. However it is entirely within the discretion of any political organisation what matters they select as a subject for polemics and I have no reason to complain that it should have been selected in that way.

The only complaint I would utter is that the suggestion should have been made that there were no polemics. Certainly the noble Viscount who opened the debate made no such suggestion, for he said—rather coyly for him, I thought—that he proposed, for once, to be tendentious and hoped that this would not offend me. I am not offended by tendentiousness in debate. I prefer to have it in debate rather than at Question Time. I certainly should not complain of the noble Viscount being tendentious, but I do have criticisms to make of the casus (if I may so put it) for the Opposition and as it was presented this evening. If, for a moment, I concentrate to some extent, perhaps, on two or three of the speakers, I am sure noble Lords whom I have not mentioned by name will not feel that I have overlooked them in intention or by reason of any desire to slight.

I would, however, say in particular of the noble Viscount who opened for the Opposition that he showed an extraordinary unwillingness either to deal with or to admit the true causes of the present recession in trade and of the unemployment which has resulted from it; an extraordinary reluctance to say quite frankly how much of it was due to the decline in the volume of world trade, in which, incidentally, we have retained our relative share in the last twelve months. I think it would have been much more valuable if this fact had been frankly admitted instead of the Party polemics. I think it is a great pity he did not do so.

I also think he showed an extraordinary unwillingness to grapple with the real difficulties of restoring or creating a higher rate of employment in industry in an individual country in an atmosphere in which there is a world recession, and a very great unwillingness to face the real difficulties of pursuing the policy to which the Government are undoubtedly committed, and of which the only criticism that I have heard is that it was not done with sufficient decisiveness (to use a phrase which I think the noble Lord, Lord Lawson, employed), of steering new industry to areas and parts of the country which are affected by local or structural unemployment.

I got the impression from some of the speeches, particularly from the noble Viscount, that some noble Lords did not fully realise that, although you can stop a firm from building something in London, it does not follow, however much you encourage the entrepreneur, that he will be equally willing to start the same building in Cornwall; in other words, that the various devices which worked in 1946 and 1947, when the world demand and the national demand were overwhelming, do not necessarily operate in the same way in 1959. I think it is a greaty pity that the noble Viscount never recognised that frankly. There was a want of realism about his speech, but I think he was really motivated, unconsciously of course, by his desire, which was re-echoed by speakers opposite, to try to make a Party issue of this matter and to fasten whatever blame there was on to the Government, rather than to ask sincerely what are the causes and how they ought to be dealt with.

Thirdly, I thought there was a great unwillingness on the part of the Opposition to define correctly our true economic objectives. I thought that my noble friend Lord Dundee put that point rather well when he pointed out that, although full employment is of course, and has been since 1944, an economic objective of successive Governments of different political persuasions, it was not the only economic objective which a Government could safely pursue. The stability of prices, confidence in currency and the maintenance of balance of payments had to be considered as well; and the problem of a Government dealing with this question is obviously how and at what times and in what proportions to reconcile these objectives.

I thought that the case for the Opposition was almost entirely vitiated, certainly to the point of intellectual disingenuousness, by their utter unwillingness to define their principal economic objectives in terms which were acceptable. And I am bound to say that I thought they failed to prescribe any effective remedy.

A great number of the things which have been suggested are commonplace practices of the present Government: and although, of course it is possible in any debate, when you are sitting on those Benches, to say in general terms that the Government is doing too little and is doing it too late, the actual number of constructive suggestions which were made could have been numbered on the fingers of one hand—and I think that most of those which were made could have been fairly rapidly shot down, even at this hour of the night, if they could have received individual attention.

But in each case I felt very strongly that the object of noble Lords opposite, from the noble Viscount who led for the Opposition, through the noble Lord. Lord Stonham, to the noble Lord, Lord Silkin, was less to discuss this matter objectively (although, as I have said, their tone was altogether admirable) than to try to make a political case that, in some way or another the Government must be held responsible for the present employment situation—the main cause of which is quite certainly the diminution of the volume of world trade which has been caused by the so-called recession. This political and polemical attempt was not improved, at any rate in my submission, by the suggestion that the whole thing was really non-controversial. The noble Lord, Lord Silkin, for instance, said in his speech that the primary cause—and he said he was then going to be non-controversial, as an example to me— of the present state of unemployment was the result of the attempts of the Government to deal with inflation. My Lords, I am going to try to show, and I lave already said, that that is approximately the opposite of the truth—and if that is a non-controversial statement, I do not think that the noble Lord's example to me was a particularly good one.

The noble Lord, Lord Stonham, who appeared to have relied for much of his material on Transport House—and perhaps this is one of the examples—said that the present situated was "planned, predicted and achieved", and obviously it was his intention to create the impression that the Government had planned an unemployment level of 620,000, or 609,000 as it now is. Now I personally regard that as highly offensive and utterly wrong; and it is idle for the noble Lord, Lord Silkin, as if butter would not melt in his mouth, to try to tell us at the end of the debate that he is going to be non-controversial as an example to me when, all the time, he and his noble friends are putting forward a case which, rightly or wrongly, we on this side of the House deeply resent and are completely convinced to be utterly incorrect.

My Lords, I must say that I deprecate the tactics of noble Lords opposite. I deprecate them not only because, as I shall indicate, the story is pure mythology—it is utterly without foundation of any kind in sober fact—hut I also deprecate them for a far more serious reason. I deprecate them for the reason which I think was given by the noble Viscount. Lord Hall, and the noble Lord, Lord Lawson. We are dealing here not only with the facts of unemployment—not as serious as noble Lords opposite would have us believe, although serious enough, of course, in all conscience, provided they are treated seriously—but also with the psychology of unemployment, as I think the noble Viscount, Lord Hall, and the noble Lord, Lord Lawson, reminded us. That is something quite as serious as the effects of unemployment. The anxiety, the loss of confidence, the fears engendered by wild (and I would seriously ask noble Lords opposite to consider whether I am not also entitled to say, irresponsible) talk at this present time, causing people to worry whether the terrible events of the 1930's are going to be repeated now, in this age—hearing in mind that the figure we are now talking about, the overall figure in the country, is 2.8, whereas the figure then was 22 per cent.—I seriously ask noble Lords opposite what public advantage they think is obtained by awakening the anxieties of the people, who are deeply concerned about the security of their future, upon such a slender and fragile foundation as they have sought to build their case upon?

I am bound to remind them that they even indulged in a standard technique. You select a subject, highly sensitive because of the deep anxieties of the people—their desire for security of tenure in their houses for instance. We were deliberately being told sonic time ago that tens of thousands, and sometimes hundreds of thousands, were going to be thrown out of their houses by the Rent Act—without a word of justification, as it transpired. Now people are being encouraged to believe that the same kind of thing that happened in the 1930's, with a 22 per cent. rate of unemployment, is likely to repeat itself when, at present, at any rate, there is a 2.8 per cent. rate of unemployment. The noble Lord, Lord Stonham, even went so far as to quote from my noble friend Lord Forbes, while he was a private Member of this House, when he made a comment which, in my opinion, had no more effect than to say that zero unemployment was an impossibility, and that no country could carry on its economy with zero unemployment. That is something so obviously true that if we were to criticise my noble friend at all it might be because he was saying something a trifle obvious.

LORD STONHAM

His noble friend said that it was known by everyone that the country as a whole benefits by a small percentage of unemployment and that the vast majority of workers were willing to accept a small percentage. I believe that that is untrue and nonsense.

VISCOUNT HAILSHAM

I still believe that all my noble friend was trying to say, and all I think he was saying, was that zero unemployment is both impossible and undesirable, because nobody wants the pattern of industry to remain permanently frozen. If you did have a situation in which the pattern was permanently frozen you would have a situation in which the pattern of industry was permanently dead.

It really does not do to try to make clever quotations from peoples' speeches which are clearly designed and, I must now add, intended to have the effect of arousing and exploiting the deep anxieties of the people. This will have a double disadvantage: first, the disadvantage of misleading people as to the intentions of the Government, because, although we are no doubt likely to differ about remedies, it is utterly wrong to try to mislead the people as to the intentions of your opponents.

Secondly, it has the disadvantage of misleading people as to the facts of the situation and as to the remedies which can profitably be applied, and, indeed, as to their limitations, because one of the most important features of democratic government on a matter as sensitive as this is to discuss quite objectively the limitations of what can be done. Of course to discuss the problem at the present time in a rational spirit is a public service; and so far as I am concerned, and so far as the Government are concerned, we welcome all discussion. It is a public service, because the effect of objective discussion can, I think, to a very real extent allay public anxiety. It must allay public anxiety, in my opinion, because from rational and objective discussion it will emerge that this is a problem limited alike in its extent and in its scope, and the evidence is, upon the whole, that it is under control.

LORD SILKIN

Is the discussion objective only if one agrees with the noble Viscount?

VISCOUNT HAILSHAM

No. I should be sorry, on the whole, to think that the discussion is objective when it has the characteristics which I have, rightly or wrongly, attributed to noble Lords opposite who have taken part in this debate. Granted that these matters require to be treated seriously and sympathetically, I can claim that the Government are treating the subject seriously and sympathetically, and that they will soon be seen to be grappling with it effectively.

I turn now to an analysis of the problem, because really we are discussing two allied but separate questions, each of which has its close hearing and repercussion on the other, but which. I think, none the less need to be analysed and discussed separately. We are discussing a general issue bound up with the general level of employment in the country—I will call that the general problem—and we are also discussing a number of separate problems of employment intimately connected with the geography, history and industrial resources of particular localities—and that I will call the structural problem. Because, as has emerged, I should think, half a dozen times at least in this debate, we are discussing things like the future of the tinplate industry in South Wales, where an old and tried industrial method has given place to a modern industrial method which has taken away the employment of thousands of skilled workmen. We are dealing with a special problem in the shipbuilding industry, where the volume of international trade and the quantity of production in post-war years has led to a laying up of tonnage. We are dealing with problems, such as those I encountered when I visited Lancashire the other day, of the future of a great historic industry like the textile industry, faced with new competition from hitherto unknown sources of competition; and we are faced with problems like those in North Wales and Scotland, which have already been discussed, and, therefore, with the means of dealing with the structural problem; far more acute, of course, in a period of industry recession, when the general level of employment is not as high as we should wish, but none the less fundamentally different in its causes, and, being different in its causes, requiring different remedies to restore the situation.

I would, with respect, deal first of all with the general problem, because, if I may say so, despite all the Party polemics, I profoundly agreed with my noble friend Lord Dundee when he said, in effect, that what has happened now is exactly what Mr. Gaitskell envisaged in 1951, when he was Chancellor of the Exchequer, and issued on behalf of the then Government the letter—it was not a speech—in which he gave to the United Nations the policy which the Government of that day were trying to pursue. He used exactly the same language as my right honourable friend the Chancellor of the Exchequer used only the other day. He said that it was the firm policy of the then Government to keep employment at the lowest level compatible with the avoidance of inflation. Our policy is exactly the same. He said that it was necessary to consider the possibility that factors arising outside the United Kingdom, such as a widespread fall in demand for United Kingdom exports, or a shortage of raw materials obtained from abroad, might make it impossible for a time to keep unemployment at the low levels of recent years.

In other words, he was clearly envisaging that it may be quite impossible to isolate a trading country like this from general world conditions, completely, if I may say so, destroying the argument of the noble Lord, Lord Silkin, when he said that when the Labour Government came into power they would be expected to create high employment, and would he criticised if they did not. Mr. Gaitskell did not think so when he had the responsibility of office. He said then that countermeasures would be set in train, but that they might take time to become effective, thereby destroying the argument of, I think, the noble Lord, Lord Taylor (I may be quoting the wrong noble Lord), who was even so bold as to say that what we were doing now, and had done since August, ought to have been done three years ago, when, as everybody who took part ill the debates on inflation only last year will remember, we were discussing the rise of prices, and from all corners of the House the Government were being urged to restrict expenditure.

Mr. Gaitskell said, furthermore—and this is a passage which I should dearly like noble Lords opposite to take to heart—that the danger of provoking inflation in such a situation would be more acute than in the case of unemployment caused by a decline in the internal demand. He would clearly indicate, therefore, that the dangers of inflation are still, even in conditions such as he envisaged, exactly those of the present—serious questions with which a responsible Government ought to grapple. He went on to define full employment as being when there is not more than 3 per cent. unemployment. Of course, noble Lords know perfectly well that that means 3 per cent. all over the country. The noble Viscount, Lord Alexander of Hillsborough, read out a list of, I should think, fully twenty-five places where the figure was greater than 3 per cent., and sometimes quite serious indeed. But I wonder why, if he was going to read out twenty-five names, he did not read twenty-five names where it was less than the average; because, of course, for every name with a figure greater than the average there must be some other name with less than the average. But perhaps he likes worrying people and causing anxiety among the people.

VISCOUNT ALEXANDER OF HILLSBOROUGH

It is about time you stopped being insulting. You know very well I was drawing attention to special areas, and saying that we knew the average over the whole country was no more than 2.8 per cent.

VISCOUNT HAILSHAM

The noble Viscount always supposes that when I answer, as well as I can, a case which is put forward strongly and tendentiously, that it is necessarily insulting.

VISCOUNT ALEXANDER OF HILLSBOROUGH

You directed a motive to me which was directly insulting.

VISCOUNT HAILSHAM

I certainly did not intend any direct personal insult to the noble Viscount. But I still think it was unfortunate—I will say no more than that—that having got a situation in which the general level of employment is known to be 2.8 per cent. a long list of names, not one of which was under the average but every one of which was over the average, is read out to the House, which can only have the effect of deepening the anxiety which people have at the present time, although, as a matter of statistical certainty, it would have been possible to select the names fairly.

I should have thought it was plain that the account which I have read from Mr. Gaitskell in 1951 much more exactly described the present situation than any which has been given by noble Lords this afternoon. Noble Lords opposite and several others have said that the registered figure for unemployment does not tell the whole story. There are the families of the unemployed. There is the absence of overtime and the presence of positive short time. No doubt there are married women who do not continue to, register and, therefore, do not appear in the figures. A number of other examples could be given. With that, I wholly agree. Those considerations, however, in no way invalidate, and for certain purposes are irrelevant to, the points which are being discussed. The figure of 22 per cent. in 1932 was a strictly comparable figure. The figure of 3 per cent. given by Mr. Gaitskell in 1951 was also a strictly comparable figure. The European and American figures, although, I am advised, not exactly comparable, are none the less sufficiently so to make them adequately comparable for this purpose.

This is a convenient moment at which to consider some of the arguments which have been put forward by noble Lords in criticism of the Government and try to show the entire consistency between our policy this year and last year and the entire integrity of that policy for the purpose of securing the three economic objectives which I have tried to define. The noble Viscount appeared to be offended because in 1956 and 1957 we had urged a policy of wage restraint. He used the phrase that it was an attack upon the working class. I hesitate to remind your Lordships of earlier debates in which I took part, but I provided the statistics on at least three separate occasions when we were debating inflation in the last eighteen months. On each occasion, I proved statistically—and I was never answered from the Benches opposite; I suppose it was thought too insulting to answer—that the fact was that wages were pushing up prices, because there had been an increase of wages and salaries over eighteen months of approximately £900 million without comparable increases of production, and when the rise in prices was lower than that. Since the noble Viscount again raised the hoary old myth of profits, I went on for the sake of completeness to point out that without taxation, which is deflationary, the profits during the comparable period had run to something like £25 million. I was seeking to prove statistically that wages at that time were one of the principal causes of inflation. I may have been wrong, but I do not think it is particularly insulting to hold that view.

The noble Viscount treats an appeal to wage restraint as an insult to the working class. His attitude is a monument to the irresponsibility of the Labour Party, because the truth of the matter is, and let us face it, that if the Labour Party had used their enormous influence with the trade unions to respond to our invitation to co-operate in wage restraint at that time, there is no doubt whatever that the inflation could have been curbed without the smallest economic pain suffered by anybody; and, as a mere matter of history—the noble Viscount has to face the responsibility for this with his Party—the steps we took in September, 1957, which have been purported to be used by the Benches opposite as an indictment of our policy, were taken because, having had wage restraint refused as the voluntary and painless method, we, as the Government, were driven out of our duties and responsibilities to the people, to face inflation and to carry out the measures of September, 1957.

VISCOUNT ALEXANDER OF HILLSBOROUGH

I would say this: I prefer to accept the reason I read out from the Engineering Federation's booklet, that the Government apparently ran out on it because they were facing the dreadful economic position arising out of the action of the Government in relation to Suez and the loss of world confidence.

VISCOUNT HAILSHAM

Unfortunately the noble Viscount will not face the facts.

VISCOUNT ALEXANDER OF HILLSBOROUGH

Nor will you.

VISCOUNT HAILSHAM

The inflation of 1956–57 was very largely world wide. In so hr as it originated in this country I was able to show statistically at the time that it had nothing whatever to do with Suez but had precisely to do with the subject of wages with which I have been dealing at some length, and that profits, the mythology of which the noble Viscount, I thought rather unworthily, tried to exploit, formed a statistically insignificant factor in the situation which we were trying to discuss. Since we are on profits, let me say this to the noble Viscount. He said that there was no concern with profits. A factor which noble Lords opposite never think it worth while to discuss is that of all the economic features of our society profits are the most heavily controlled; the control was invented in about 1806 by William Pitt and it is called income tax. When profits are made by a company the income tax is deducted at source at the standard rate, and if, when so diminished the profits fall into the hands of an immoderately rich man who may earn even as much as £2,000 a year, he is then mulcted by the additional control of surtax. So to say that the Government have no concern with profits is to underestimate the abilities of the Chancellor of the Exchequer.

But, my Lords, the noble Lord, Lord Silkin, fell into the same trap, because, completely oblivious of the causes of inflation of only a year ago, completely unable or unwilling to face the argument with which he had then been presented, he says, "Why do you not deal with luxury building—those vast offices which are going up in the City of London?" On those occasions we dealt with luxury building ad nauseam, and we were able to show that it was another piece of Socialist mythology, and that the quantity of building which by the greatest stretch of the most inflamed imagination could be described as luxury building was statistically insignificant. Of course, noble Lords opposite never give any figures when they state this kind of thing. I was able to show quite frankly that I am not prepared to accept that decent offices for decent workers is an unnecessary luxury in the public interest. I regard them as ordinary, decent conditions of employment for a praiseworthy section of the population. I must say to noble Lords opposite that there are people in this country who were glad to see the City of London resume its position of economic importance after the war, who consider that a great deal of restraint in the matter of building was shown year after year in restoring the City to its former usefulness, and who think that office buildings, which the noble Lord held in such contempt, are no more than the necessary capital equipment of industry and commerce.

The noble Viscount, Lord Alexander of Hillsborough, talks about stagnation. That is another of the myths to which we have been treated this afternoon. This country's economy is more vigorous than I think it has ever been during the period of office of the present Government. Capital investment has been almost consistently at an all-time high, and although production may slightly have declined owing to a world recession in the past eighteen months, it has still remained relatively higher than it has ever been before, and it is at such a level that we have more than retained our share and proportion of world trade. I venture to say to your Lordships that if this is stagnation, Niagara Falls is a millpond; and why we should be treated to this extra-ordinary fairy tale about a stagnant economy, when we are living in one of the most highly industrialised societies of all time, is something which absolutely baffles me.

But noble Lords have another series of ideas which are associated with the false myth of stagnation. I wonder whether it has ever occurred to them that production has still a relation to world demand? If there is a world recession, you must expect to find a certain gap between your productive capacity and actual production. I wonder why the noble Lord, Lord Silkin, thought it worth while to criticise my noble friend Lord Dundee for his, to my mind, unexceptionable statement that if in a period of world recession you run the machine flat out—I think that was the phrase of my noble friend—you ultimately, and before very long (he took the most modest view that it would take twelve months, but I think that probably it would take much less), will meet with disaster. What my noble friend was seeking to convey to noble Lords opposite was that if, in a period of trade recession, you bolster up production without regard to markets and exports, you will ultimately reach both inflation and unemployment.

That, after all, should not he too hard a lesson for noble Lords opposite, because that is precisely what Mr. Gaitskell said in 1951, in the passage to which I have referred. The truth is that, to hear some people talk, one might suppose that balance of payments difficulties could not possibly take place in an atmosphere of recession, or that inflation could never be a danger at the same time as unemployment, or that currency crises could only supervene on an inflationary spiral. That is not so. Mr. Gaitskell himself referred to the danger of inflation as in some ways more, and not less, acute in such circumstances as the present. We all remember the crisis of 1931, when balance of payments difficulties were associated with deflation and acute unemployment. We all know that a currency crisis would inevitably be associated with a lack of confidence in our economic stability. Our three economic objectives are therefore complementary. We want a stable currency; we want full employment, and we want the ability to compete at reasonable prices in the markets of the world. They are complementary necessities and not alternatives. In the words of my right honourable friend the Minister of Labour, Our anti-inflationary measures have been the guardians and not the assassins of full employment. Nobody can believe that our share of world trade would not have suffered if at a time when markets were contracting we had allowed our prices to rise, or that we should have suffered anything short of crisis had we permitted ourselves to remain an island of inflation and overproduction in a world of trade depression which bad reduced the demand for our products. The truth is that, so far from accentuating the situation, it was really providential that Her Majesty's Government had completed their anti-inflationary operation in time to embark upon what I trust and believe will be an equally effective campaign to combat the trade recession.

It must be admitted, of course, and in any but a highly charged political atmosphere it would be admitted by rational beings, that in a country as heavily dependent on international trade as our own, the level of employment here is bound to be affected by the state of that trade; and the public man or woman who suggests the contrary is unworthy of credit. When America and Europe suffer from inflation, we are going to suffer to some extent from inflation. When those countries suffer a recession of course we are going to suffer to some extent from a recession. It is not possible, even if it were desirable, to insulate our own trading community from outside influences. What we can do, and what Her Majesty's Government are trying to do, is to counteract those effects. That is what we are doing now, just as last year we were seeking to control and counteract the effects of inflation and, I suggest, doing so successfully.

Bearing in mind the figure of 2.8 per cent. which I have given. I have tried to collect comparable foreign figures. I know that comparisons must be treated with reserve. I know that some definitions are not identical and that some of the methods of ascertainment are not the same; but they are sufficiently close to be comparable. So far as I can ascertain, shortly before Christmas the figure for the United States of America was 6 per cent.—not quoted by the noble Viscount who was so keen on figures. For Canada the figure was 6.2 per cent.——not quoted by the noble Viscount; Belgium, 7.2 per cent., and that not including the temporarily stopped; Germany. 6.7 per cent.; Italy. 8.5 per cent.; and even Holland and Sweden, 3.2 and 3.3 per cent. respectively.

To hear noble Lords discuss this subject in the terms they saw fit to employ this afternoon without mentioning these decisive facts is really to witness an exhibition of political disingenuousness which I consider at least remarkable. It is worth reminding the House that the recession of 1958 was the largest encountered in post-war years. During the term of the Labour Government both the late Sir Stafford Cripps and Mr. Aneurin Bevan admitted that even during the high period of world demand of the late 1940s there would have been 1½ million unemployed in this country under the Labour Government had it not been for Marshall Aid. How can noble Lords opposite have the temerity to complain that we, who have had none of these advantages, are weathering the recession of 1958–59 with a total of a little more than 600,000 unemployed in February? I am sorry to have to refer to these painful facts, and really noble Lords opposite must contain themselves, for the noble Viscount, Lord Alexander of Hillsborough, said that he was going to be tendentious, and so he was.

When the Labour Government were driven into devaluation in 1949 Mr. Harold Wilson said: The whole basis of our recovery was knocked away by a slight recession in America. Yet despite the absolute decline in our exports, after the much more acute recession of the present day, which has been going on much longer, we have actually maintained our share in world trade for the first time since 1950. I wonder that the Party opposite has the face to talk of the pound and unemployment. I remember that the noble Viscount was vastly incensed the other day when I reminded him of the facts; but the fact of the matter is not that Governments of different complexions do not have crises, for crises are going to occur under whatever Government we have in power in this country. The difference is not whether or not Governments have crises but how they deal with them. The fact of the matter is this. Every time there has been a period of Labour Government it has culminated in a ghastly economic disaster. My noble friend was quite wrong in saying the peak of unemployment took place during the Labour Government of 1931; but his case was essentially sound because it was under their period of Government that unemployment doubled to over 2 million and reached the high level from which it only receded after two years of National Government. It takes this country about two years to recover from the results of a Labour Government. It was about that lime that it took us in 1951.

The same kind of trick question which was put to my noble friend, Lord Teviot, about unemployment figures is being put to Conservative speakers all over the country about figures on the gold reserves. They sank after we came into office because it takes eighteen months to two years to recover from a Labour Government. But I am astonished that a Party with this peculiar record in the realm of employment and currency stabilisation should have the temerity to challenge us on the issues of economics. We are prepared to face the challenge because we think that this debate was brought about for the purpose of deepening anxiety rather than allaying it, and because we think we have shown, however seriously we may take the situation—and we take it very seriously indeed—that the reasons for the anxiety which have been given are insufficient and the criticisms which have been levelled are wholly without foundation.

10.57 p.m.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, I should like, first of all, to thank all the noble Peers who have taken part in this debate on the Motion which we put down, and for the very orderly manner in which the debate has gone up to the present. I should like them to know how thankful I am now, looking back, for my membership at birth of the working class and how I did not have to go to Oxford University to be a bully.

SEVERAL NOBLE LORDS

Order, order!

VISCOUNT ALEXANDER OF HILLSBOROUGH

Certainly. I am entitled to sit fairly quiet at the receiving end, and I am entitled to say what I have to say in reply. We have been listening for nearly fifty minutes to the kind of bullying assault that is made upon a general meeting of the public in the big political meetings—I repeat, for the last fifty minutes—and I must say that it just shows fairly clearly that we are getting regularly now from the noble Viscount just briefs from the Party office. I hope very much that he will continue as Chairman of the Conservative Party, whatever appeal there may be to the country, because he will increasingly become an asset to the other side. The motive that he has attached to myself and my noble colleagues who decided to ask for this Motion more than three weeks ago was absolutely scandalous. We had to state the facts of how we saw the present position; and I asked especially, as a matter of urgency, having no regard to the political issue or when the Election would be, that the Government would get on with the kind of things that we want to get on with, especially in regard to the special development areas and especially in regard to the unemployment areas. There was not the slightest need, except to gratify his own special political objectives at the moment, for him to adopt this tone and the manner and the matter which he has to-night.

However, I said in just one brief word at the end of my speech this afternoon that we did not want to be charged again with raising a bogy. But we have been charged with worse than that, with lack of motive, and therefore I want to say I have now been able to get exactly the circumstances in which we were charged in the Labour Party with raising a bogy, because I have here a transcript from the shorthand note taken by the newspaper staff reporter. Lord Hailsham was at Harrow on Monday night in connection with the Harrow East By-election. Lord Hailsham was constantly heckled during his speech, and in reply to a shout, "What about unemployment?" he said: It is extremely foolish to raise that issue. The Labour Party ever since they have been in office have sought to trade upon and exploit the anxiety and fears of the ordinary man and woman about their security. This is the miserable truth about their attitude towards unemployment. The truth is that this situation is well in control. This is just another bogy they have invented. I should like to know what sort of spirit that is from a Leader of a Party towards the motives of another Party. In my long political experience, I have never heard such a dastardly kind of suggestion made as that. I mean what I say. I am speaking from my own, pretty long political experience, and I am quite sure that, if that is an indication of how the Chairman of the Conservative Party at its headquarters is intending to conduct the campaign, then it will be just as well to let the people know now what is the spirit, and to go on with it.

I hope, nevertheless, that when the Government as a whole come to their consideration of the points which have been made in this debate today as to the best way to deal with the situation of unemployment, they will pay attention, at least, to the views we have expressed on what might be done. I do not think it is much use quoting the results of a Labour Government in 1929. That was thirty years ago, and they went into office without a majority in the House, and with no attempt to apply—and when it was impossible to apply—the policy of Socialist controls that we were able to apply quite successfully in 1945. I do not think it is much use for the noble Viscount to refer to the period of 1945–51 in the way he did, and the financial troubles that arose; or to sneer about Marshall Aid—because he knows as well as I do that this country, through its Government, was equally supplying other countries that had to be set on their feet, and was trying to set world trade going from what was supplied to us through Marshall Aid. You have no right to make those suggestions.

VISCOUNT HAILSHAM

The noble Viscount must not say that I sneered at Marshall Aid, which is not correct. What I said—and I repeat it—was that the Party opposite was seeking to say that we had created the present unemployment; and it was perfectly legitimate for me to say that, in spite of the fact that we had no Marshall Aid, we have a far better position in this country than that which two of the Leaders of the Labour Party admitted would have been the case under their Government if they had not had Marshall Aid—which was a very good thing, but which was not the result of Labour policy.

VISCOUNT ALEXANDER OF HILLSBOROUGH

What right on earth has the noble Viscount to compare the situation of 1945—after the second Great War, when our country was in a position of complete bankruptcy, with no export trade left, and with the whole of industry having to be switched over from war-time production to Peace-time production—with to-day? The noble Viscount has no right to make a comparison of that period with to-day; and he knows that, on the basis of the facts, it is an absolutely unworthy thing to do.

A NOBLE LORD

That is a contradiction.

VISCOUNT ALEXANDER OF HILLSBOROUGH

I do not think it is a con-

CONTENTS
Alexander of Hillsborough, V.	Lucan, E. [Teller.]	Shepherd, L.
Amulree, L.	Mathers, L.	Silkin, L.
Burden, L. [Teller.]	Milner of Leeds, L.	Stonham, L.
Crook, L.	Ogmore, L.	Taylor, L.
Geddes of Epsom, L.	Pakenham, L.	Wilmot of Selmeston, L.
Henderson, L.	Rea, L.	Wise, L.
Lawson, L.	Shackleton, L.

NOT-CONTENTS
Aberdare, L.	Dundee, E.	McCorquodale of Newton, L.
Ailwyn, L.	Ellenborough, L.	Massereene and Ferrard, V.
Ashton of Hyde, L.	Fairfax of Cameron, L.	Melchett, L.
Atholl, D.	Falmouth, V.	Merrivale, L.
Auckland, L.	Ferrier, L.	Mills, L.
Bathurst, E.	Forbes, L.	Monckton of Brenchley, V.
Blackford, L.	Furness, V.	Mowbray and Stourton, L.
Boothby, L.	Goschen, V.	Radnor, E.
Boston, L.	Gosford, E.	Reading, M.
Brecon, L.	Grenfell, L.	Remnant, L.
Buckinghamshire, E.	Hailsham, V. (L. President.)	Rochdale, L.
Chesham, L. [Teller.]	Hampton, L.	St. Aldwyn, E. [Teller.]
Clitheroe, L.	Hatherton, L.	St. Oswald, L.
Coleraine, L.	Home, E.	Sandford, L.
Colville of Culross, V.	Howard of Glossop, L.	Selkirk, E.
Conesford, L.	Howe, E.	Shaftesbury, E.
Croft, L.	Hylton, L.	Soulbury, V.
Crookshank, V.	Ingleby, V.	Stonehaven, V.
Davidson, V.	Jellicoe, E.	Strathalmond, L.
Derwent, L.	Jessel, L.	Strathclyde, L.
Devonport,. V.	Kilmarnock, L.	Teynham, L.
Dorchester, L.	Kilmuir, V. (L. Chancellor.)	Waldegrave, E.
Dovercourt, L.	Lansdowne, M.	Waleran, L.
Dropheda, E.