Unemployment (Hansard, 29 November 1966)

§ 28. Sir C. Osborne
asked the Chancellor of the Exchequer what assurances he gave to the Trades Union Congress Economic Committee on 7th November about unemployment and the figure at which he will take special action; what plans he is now making on the action to be taken; and why this assurance was not given first to the House of Commons.

§ Mr. Callaghan
I had a useful exchange of views with the Trades Union Congress Economic Committee at their request, but as the meeting was private, and no official account of the proceedings was issued, the hon. Gentleman should regard with some scepticism some of the accounts that later appeared.

§ Sir C. Osborne
Does the right hon. Gentleman remember that the leader in The Times said that the T.U.C. leaders were disappointed with what he said to them? Can he now tell the House to what height unemployment will rise before he reflates? Second, how can he reflate without encouraging inflation again?

§ Mr. Callaghan
As regards The Times leader writer, I am not aware that he was present at the meeting of the T.U.C. Economic Committee and I do not know how he knows what was said there. As to the substance of the question, this is not the moment to reflate. The present moment and for some time to come is a period for encouraging productive investment and the diversion of the interests of firms into the export market. It is along these lines that the Government intend to pursue their policy.

§ Mr. Orme
Is my right hon. Friend aware that the unemployment figures have now already exceeded by 70,000 —the total is up to 560,000—the figure which his right hon. Friend the Prime Minister forecast as a high figure? Does he not agree, as do many on this side of the House, that the time is now ripe for reinflation as well as added reinvestment?

§ Mr. Callaghan
I am sure that my hon. Friend does not want to take us back to the same situation that over-inflation got us into last summer. This would be the wrong moment at which to start to re-inflate consumer demand, and the Government have no intention of recommending that course to the House.

Mr. Edward M. Taylor
Whatever assurances may have been given the T.U.C. or anyone else, will the right hon. Gentleman assure us that he is aware that in Scotland it takes six times as long for a recovery programme to work through the economy compared with the rest of the country, and will he, therefore, consider having a recovery programme on a regional basis?

§ Mr. Callaghan
Yes, Sir. The care of the development areas is a very important matter, especially in a period when we have taken heat out of the economy. A lot of the measures which have been taken—indeed, many of them taken by the previous Administration as well as by the present one—are having the effect of shielding the development areas more than they would otherwise have been shielded. I am not satisfied with the extent to which this has gone and I assure the hon. Gentleman that the Government will certainly consider all possible ways of shielding these areas. Nevertheless, it 203 would be wrong to indulge in a general consumer reflation at this time.

§ Mr. Iain Macleod
Can the right hon. Gentleman tell us, at the same time as making that categorical statement about reflation, whether it is not to some extent at variance with what he said earlier about investment? Is he limiting what he said to consumer reflation in the narrower sense, or is he speaking more generally?

§ Mr. Callaghan
I think that the right hon. Gentleman will find that I was careful to use the phrase "consumer reflation" in this regard.

§ Mr. Michael Foot
Reverting to my right hon. Friend's original Answer, does he believe that those who are being made unemployed in Wales at the present time are moving into productive employment, and, if so, would he say in what numbers?

§ Mr. Callaghan
This is partly true. It is certainly true, for example, that in the coal mining industry of South Wales, there are now more recruits than there have been for a long time and that much of the wastage has fallen away. To that extent it is a net gain. There is also a substantial improvement in a number of essential services in South Wales, for example such services as the transport service. To that extent it must be regarded as a net gain, too. However, I say to my hon. Friend and the House that no one should be satisfied until this process is completed, that we are now going through an interim stage and that the last thing I would recommend is that we should return, by means of the old methods, to a situation from which we have just emerged.