UNEMPLOYMENT

HC Deb 09 November 1971 vol 825 cc839-964

Mr. Speaker

I have selected the Amendment in the name of the Leader of the Opposition. Before calling the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) to move it, I should like to tell the House what it has heard me say before, that very many hon. Members want to speak. I want to call hon. Members from as many different areas of the country as possible, and, therefore, I make a special appeal for brevity. If hon. Members would limit themselves to about 10 minutes each, I should be able to get a representative expression of opinion from both sides of the House.

3.55 p.m.

Mr. Roy Jenkins (Birmingham, Stechford)

I beg to move, at the end of the Question, to add:

But humbly regret that the Gracious Speech makes no recognition of the worst unemployment for a generation; and puts forward no coherent strategy to deal with this and other economic problems on which Her Majesty's Government is in direct betrayal of its central election promises. The Amendment concentrates on unemployment, and rightly so, for it is the principal economic and social problem facing the country today. It is causing deep human suffering among the many without a job and mounting anxiety amongst the still greater numbers who do not know how much longer they will have one; it is spreading apprehension and bitterness throughout industry; it is a gross waste of the resources which, as a nation, we badly need; and it is a standing indictment of both the economic management and the social priorities of the present Government.

Let us be clear to begin with exactly how much the situation has deteriorated in the past 16 months during which this Government have been in power. In June, 1970, unemployment was too high. I accept that without question. We had got through the post-devaluation 2½ years without any substantial change one way or another. The massive switch of resources necessary to make devaluation work had been achieved without any significant increase in unemployment, but, equally, we had failed in one of the two joint objectives which I certainly had in December, 1967, of securing a simultaneous build-up of balance of payments strength and a reduction in the numbers without a job. It therefore had become in my view a matter of the highest priority to use the new external strength, as soon as it was firmly established, as a foundation from which to mount a determined drive to bring unemployment down, and to bring it down substantially.

The central count against the Government is that they have done exactly the reverse, and the results are plain to see. The wholly unemployed in Great Britain in June, 1970—I am leaving out Northern Ireland in all cases—were 521,000, 561,000 seasonally corrected, or 2.4 per cent. For October this year the figures of wholly unemployed were 800,000, 833,000 seasonally adjusted, or 3.7 per cent. The increase has been just about 50 per cent.

But that is far from giving the whole picture. First, if we take the change in the numbers unemployed above the irreducible minimum of, say, 250,000, the increase has been not 50 per cent. but very nearly 100 per cent., a virtual doubling of the numbers of unavoidably out-of-work. Second, the weakening of the labour market is not to be measured only by those registered as unemployed. The number of unfilled vacancies is in some ways an even more significant economic indicator, although it does not have quite the same human meaning. Over the past 16 months these unfilled vacancies have gone down from 203,000 to 116,000. Again, the position has become just twice as bad.

As a result, there are now nearly six people looking for every available job, but the position is much worse in many parts of the country. It is seen to be much worse if we deal with the adult male population rather than the population as a whole. In the Northern Region 22 male workers are looking for every available job. In Scotland 35 male workers are looking for every available job. In Glasgow, the theatre of this Government's choicest surgical experiment, the unemployment rate for males is 10.6 per cent. and the number of male jobs available is negligible.

Third, there is the loss of jobs, which far exceeds the increase in the numbers registered as out of work. Over the 16 months, the decline in the numbers employed in index of production industries has been very nearly 500,000. The total loss of jobs—this is the loss above the position of 16 months ago—on established ratios has certainly been in excess of 750,000. Added to the previous figure, this means that there must be at least 1¼ million, and probably nearer 1½ million, who are today unemployed in the highly relevant sense that if there were jobs available they would be willing and able to work. Apart from the individual suffering, the national loss is appalling.

Fourth, there is the change in the nature of the unemployment. It now lasts longer, with all that that means. It has been very severe on school leavers, with the long-term social damage of this crushingly depressing entrance to adult life. It has spread rapidly among graduates and other white collar and professional groups. It has infected, particularly and severely in the case of the West Midlands, areas which had an unbroken record of prosperity for a generation or more.

This then is the picture, a picture of apprehension throughout the country and of grinding depression in the worst areas —a picture which appals everybody with any sense of social responsibility or economic management, and which the Minister for Industry expressed somewhat insensitively a month or so ago by complaining irritatedly about the "enormous obsession with unemployment". As I understand it, however, this is not the general view of the Government Front Bench. They probably thought that the hon. Member spoke out of turn. They admit, as I understand it, that the position is very bad. They hope that it will get better, although they will not say when.

But what they do say is that it is not their fault at all, that it was all inevitable when they took over, that 16 or more months of mounting unemployment was a purgatory through which, gritting their teeth, they had to go in order to reach the Tory paradise beyond. If so, it was a purgatory, it must first be said, about which they were stoically silent before and during the General Election.

What did the Secretary of State for Employment say in May, 1970? If we could get back to Tory policies, the unemployment situation would be a great deal better that it is today."—[OFFICIAIL REPORT, 6th May, 1970; Vol. 801, c. 421.] We have got back to Tory policies and we have got nearly another 300,000 unemployed. There was no hint of a warning of this in the right hon. Gentleman's complacent equation of success with dogma.

Then we had the Prime Minister in the never-to-be-forgotten 16th June statement. So indelibly etched is it that I have imposed upon myself a self-denying but possibly temporary ban upon quoting it, at least in relation to prices. But what is not quite so well remembered is that it applied just as much to unemployment as it did to prices. This, too, as a result of the very real alternative which ought to be pursued immediately was to be reduced with, if I may paraphrase, some suddenness.

There was, therefore, no question of the Government having warned the electorate of the hard employment times ahead. They deceived them on this—and, on the arguments which they have now put forward, deliberately deceived them—as on so much else. But the reputation of this Government—we heard a lot about honour in the last exchange—in the last General Election is in any event long since a lost cause.

Still more significant is whether there is any validity in the Government's much more recent claim that the continuing rise was irrevocably there when they took over and that they have just been swept along against their will and desire. I believe that this is nonsense. For there to be anything in it, they would have to show that at each stage—the stages have been rather neatly divided by the seven major economic debates which we have had in this Parliament—they were desperately trying to get unemployment down but have been constantly frustrated, despite all their best 'efforts, by the strength of the current flowing against them.

This bears no relationship at all to what has been happening. What on the contrary has been true is that at each stage, in each of these economic debates, we have urged measures upon the Government which they have complacently rejected—not because the current the other way was too strong, but because they were mistakenly but srtubbornly convinced that it was flowing with them.

Let us consider the debate which took place a year ago last week, on 4th November, 1970. The Chancellor then said: . . I think it right that t should tell the House that on all the information available to me it seems that over the coming six months or so the upward trend in the output of the economy as a whole will be broadly in line with the estimated rise in productive potential. He then went on to dismiss the mistaken fears, as he saw it, which had been there that unemployment would rise to a much higher level during the winter. He concluded that part of his argument by saying: … it follows that it would be wrong to take any steps likely to increase further pressure of demand."—[OFFICIAL REPORT, 4th November, 1970; Vol. 805, c. 1088-9.] Of course, the Chancellor was wrong in every respect. Output, so far from rising in line with productive potential, actually fell by 1 per cent. in the first six months of 1971 compared with the last six months of 1970, and unemployment rose by 150,000 over the same period.

The misjudgment was complete, and the responsibility lies directly with the Chancellor and his Cabinet colleagues. With varying degrees of intensity, he has repeated at every subsequent stage this central misjudgment, this self-deceit, that rapid improvement was just round the corner. But there are further points beyond this central continuing misjudgment which conclusively destroy the argument that the Government have been fighting valiantly against an inexorable unemployment trend.

First, there have been their petty but highly damaging attacks on the flanks of the social services. Will the Chancellor tell us this afternoon exactly how, in view of the demand deficiency with which he has been confronted throughout the past year, he now justifies his decision to raise the cost of school meals, end free milk in primary schools, and impose heavy increased charges on prescriptions, dental treatment and spectacles. Highly objectionable in any circumstances, these levies have been totally without sense in a year when the main battle should have been against unemployment. I ask him to tell us on what conceivable basis of economic reason these have been necessary in the past year.

Second, I turn to the Government's regional policy. Not only are the regions suffering a grinding level of unemployment but they are also unsupported by any well-founded hope for the future. The new factories are not going up on any significant scale. In view of this depressing fact, I gave some figures in the June debate showing that in Scotland industrial development certificates granted offered the prospect only of a quarter as many jobs as in the past three years and in the Northern Region only one-tenth as many jobs as in the past three years. In view of this, will the Chancellor tell us how he justifies the switch from investment grants to investment allowances and the ending of the regional employment premium? This has been one of the most damaging steps taken by the Government, and the results are rapidly becoming plain for all to see.

Third, and perhaps even more important, the Government have destroyed their case for pretending that they were fighting unemployment by the silly little argument that they have so plaintively reiterated throughout the year, that unemployment was an inevitable result of wage claims and that those responsible must just take the consequences. This Pontius Pilate attitude has no basis in economic logic. In fact, as the Prime Minister perhaps unwittingly informed us last Tuesday, real wages have hardly risen during 1971. If wages had gone up less, given the Government's price policy, there would have been higher and not lower unemployment today.

The Government's approach has, in my view, been totally misguided. I do not believe it has in any way contributed to the containment of price inflation. If we had had faster growth and therefore higher employment in the past year, I believe that the result would have been a slower, not a faster, increase in unit costs, a better competitive position abroad and less rapid price increases at home.

The Government had no reason to be misled. They had the sombre example to study of President Nixon's failure with the same policy, accompanied by his inevitable, belated but complete switch of direction. All the evidence was and is that unemployment has no beneficial side effects except for keeping down imports, which, in recent circumstances, has been quite unnecessary. Apart from this, there is not only the central price of the appalling direct effects of unemployment, but also a whole range of undesirable indirect consequences. Yet here, as in so many other fields, the Government have preferred their own dogma to either the experiences of others or the simple lessons of economic common sense.

But the essential point for the argument is this. The Government have not been struggling manfully against an inexorable unemployment tide. They have been at least half welcoming it, because they believed, quite mistakenly, that it would help them to deal with the admittedly serious inflation problem. Unemployment at anything like its present intolerable levels is not an inheritance; it is their own foolish work.

What is the prospect? Consumption demand has at last shown signs of picking up, although the increase is excessively concentrated on consumer durables which can be subject to very sharp fluctuations, as the figures published this morning show. But, apart from its inherent instability as the foundation for a boom, consumer demand by itself is not enough. I remain, like, I think, many Members on both sides of the House, very concerned about the investment outlook. I hope that 1972 will be quite a bit better than 1971. It certainly needs to be, for this year seems likely, on the basis of the Department of Trade and Industry August/September survey, to show a fall of 6 to 8 per cent. compared with 1970. In some crucial sectors the position will be far worse.

A major machine tool manufacturer told me last week that his orders for the first nine months of 1971 were 45 per cent. down on what he had previously regarded as the very bad levels for the first nine months of 1970.

Sir Harmar Nicholls (Peterborough)

Is the right hon. Gentleman saying that the fall in investment, which is this country's real problem, has nothing to do with the exaggerated wage claims, that the two factors do not follow one another, and that it does not interfere with the confidence of people who would otherwise invest if they cannot see that wage claims are to be kept at a proper level?

Mr. Jenkins

I have taken the view, and I have always put it forward very clearly, that the rate of inflation has been a serious problem, but I do not take the view that wage claims in themselves, or even inflation in itself, produce a very bad investment position. Indeed, to some extent, if labour is very expensive—and I do not know what the basis of the Government's argument is unless they are saying this—there is a certain incentive to go in for capital equipment in order to be more capital intensive.

The essential basis is that the Government, which came in as a business Government and which have given vast taxation hand-outs to business and alienated a large part of the rest of the country by the unfairness of doing so, have at the same time completely failed to get any business confidence in investment. Unless investment is sparked into sharp revival, any expansion will be ill-balanced and will contain the seeds of its own destruction. It will also leave certain key sectors of the economy in a state of continuing depression. The now very severe West Midlands unemployment, remarkably stubborn desipte the pick-up of motor car demand, will not be cured until there is a strong revival in the capital goods side of the engineering industry.

What I believe the Government should undoubtedly have done—and even now should do belatedly—is to bring forward with the utmost urgency major investment projects in the nationalised industries. There are a great number of economically productive schemes to be carried through here. Steel and the railways are particularly obvious candidates, although this is in no way an exhaustive list. The effect would be highly beneficial, both directly and indirectly. The productive potential of the country would be more rapidly improved, and the resulting orders would make a substantial impact on the capital goods industries. In addition, signs of vigorous activity in the public sector would have repercussions on confidence in the private sector. In present economic circumstances it would be all benefit.

Why have the Government held back? It cannot be fears about the balance of payments. That is too strong at the present time and shows signs of remaining strong, at any rate into 1973. There is no sense in piling up huge surpluses in the short term. The short-term and medium-term debts are no longer in any way a problem. Taking into account the increase in the reserves and some use of swaps in other countries' favour, I think it highly unlikely that there is anything net outstanding. The danger, on the contrary, is that at a time when packages for currency readjustment are under intensive discussion the Government will find themselves locked in with an embarrassingly high rate for sterling because of short-term strength concealing a longer-term weakness in the competitive position.

There have been some indications that the Chancellor realises this and has been trying to keep sterling down—though what nonsense this makes of the Prime Minister's hysterical statements about national degradation at the time of devaluation! A strong industrial revival now, particularly on the investment side, even at some substantial balance of payments price, would offer a far better prospect of a secure, competitive balance of trade and payments position in the mid'seventies than the present depressed industrial scene accompanied by mounting short-term surpluses.

What, then, is the Chancellor's inhibition? I believe it comes back again, as does so much, to his obsession with taxation. He is reluctant, even when every tenet of economic sense cries out in the opposite direction, to engage in necessary public expenditure because it might restrict his future ability to announce tax hand-outs. I believe he is profoundly mistaken here. He will not be thanked for his hand-outs, even by those who get them, still less by those who do not, if he forgets his prior job of managing the economy so that investment is encouraged, wealth is produced and jobs become available.

I think 1972 is almost bound to show some revival. I very much hope we shall see a change in the unemployment trend, but all the signs are that this revival will not, on present indications, do more than lop off the top layer of the present totally unacceptable unemployment total. We are likely still to be left with a continuing ¾ million problem. An improvement which stops there does not begin to be adequate.

The Government have so neglected, and, indeed, exacerbated, this unemployment problem that it has settled into a dangerously stubborn form. They can only hope to begin to repair the damage of the past disastrous 16 months by giving the battle against unemployment the highest national priority. They must attack it on the central front by putting some life, vigour and confidence back into the economy, but they must attack it on detailed fronts as well. This demands the strongest regional policy, not the weakest one, which we have got today and which we have seen for decades. It demands an end to the ridiculous position that we spend less—in many cases, far less—on adult retraining in industry than almost any other industrial country in the world.

By allowing unemployment to grow and take a deep hold the Government have not only betrayed one of their central General Election promises, just as they have betrayed others; they have gone far towards souring much of the nation and removing from themselves any capacity for constructive, persuasive national leadership. Whatever they do they cannot blot out the past year, but they can at least begin to show that they have learned from their own foolishness and are retreating from their own callousness.

4.24 p.m.

The Chancellor of the Exchequer (Mr. Anthony Barber)

It is now nearly four months since we last had a debate on the economy, and before I come to the Amendment moved by the right hon. Gentleman the Member for Birmingham. Stechford (Mr. Roy Jenkins) I should like to say something about the wider international developments, because developments on this front, as I think the whole House will recognise, can crucially affect the prospects for our own domestic economy.

Our purpose in these matters is clearly stated in the Gracious Speech. The measures announced by President Nixon on 15th August were both dramatic in their immediate impact and far reaching in their content, and certainly no Finance Minister whom I know would deny the problem with which the United States were faced. But now, the United States having taken the action they did, the world, and that includes the United States, has to deal with the consequences.

Those consequences, and the whole question of the future of international trade and payments, have been the central features of the various meetings I have attended since 15th August. First, there was the meeting of the Group of Ten in London; then the meeting of the Commonwealth Finance Ministers, Ministers, I may say, who were speaking on behalf of countries representing half the population of the developing world in the I.M.F., and they, too, are vitally concerned about the consequences of 15th August because the repercussions on trade and payments can have a devastating effect on those peoples of the world who are eking out a living at subsistence level. Then there were the meetings at Washington of the Fund and the Bank. Of course, throughout the whole of this period I have been keeping in close touch with the Finance Ministers of the E.E.C. Indeed, I have just spoken this morning with Professor Schiller, who is here in London for talks, and I shall be seeing him later on today. Next week I go to Copenhagen, and the following week to Rome and a further meeting of the Group of Ten.

I mention these facts because the House should know that very considerable efforts are being made to evolve a solution of the situation. I know that the right hon. Gentleman, and his predecessor, will be the first to recognise that the situation which is now facing the world is immensely complex, and it is potentially a situation of considerable danger.

As far as this country is concerned our first priority must be to ensure that the United Kingdom remains competitive, and this means that the exchange rate for sterling must be a realistic one; and it follows that in any discussions about the global alignment of parities this will be a major consideration for the United Kingdom Government. Our aim is a realistic realignment of currencies and the removal of the United States surcharge and related trade restrictions. What is important is that we should not only reach a settlement of the short-term issues but that we should also deal with the underlying causes of the present difficulties.

I need not elaborate the proposals I put to the I.M.F. because they are on the record. I set out some specific ideas to show how the system which I put before the I.M.F. might work. I need not spend more time on that, but I have spoken about these international monetary matters at some length for two reasons: first, because they are undoubtedly the most significant developments since we had our last general debate on economic affairs; and secondly, because although the international monetary system may appear to many of our citizens as an abstruse and esoteric subject, its operation is directly reflected in terms of jobs and prices.

There is one other point concerning overseas matters I want to refer to, and which is contained in the Gracious Speech, and it is in the sentence on aid which reads: My Government intend to increase aid to the developing countries. I want to say to the House—and there will be a welcome for this on both sides —that Her Majesty's Government are resolved that Britain shall play her full part in the international effort to improve economic progress and living standards in the developing countries. Our official aid programme is planned to rise by 50 per cent. between last year and 1974-75 to a level of £340 million. In real terms this is the fastest rate of growth of almost all our public expenditure programmes.

I come next to the proposal in the Gracious Speech—

Mr. Alexander W. Lyon (York)

Does that mean that we shall at last espouse the target of 0. 7 per cent. of gross national product in official flows by 1974-75?

Mr. Barber

My right hon. Friend the Prime Minister dealt with that point the other day in the House. The point I was making, because I thought it was important to make it, was that, not in money terms but in real terms, this is just about the fastest rate of growth of all our public expenditure programmes. That is a creditable record and, in fairness, I believe that it continues the general trend of the previous Administration.

I come next to the proposals in the Gracious Speech for legislation covering value-added tax and company taxation. At the time of the Budget last March we issued two Green Papers, one on the value-added tax and one on the reform of corporation tax. These have provided the basis for consultations with trade and professional associations, and also with other interested parties. I think the House will agree that this procedure has been universally welcomed. On corporation tax, we have in addition the benefit of a Select Committee, and I hope to have its report soon.

On V.A.T., H.M. Customs and Excise have received approaches from more than 400 trade and professional associations in response to the Green Paper, and these have been invaluable. The discussions which Customs have had have provided us with a great deal of useful information which is helping in the preparation of the legislation. Those discussions are also enabling the practical aspects of the operation of the tax to be analysed and the best solutions to be found. The result is that the V.A.T. system which we shall introduce will be as simple as is practicable, with the minimum burdens on those who have to account for tax.

Originally I had thought of introducing the V.A.T. legislation early in the Session, but this would be a year and a half before the actual introduction of the tax, and there are some advantages in allowing a little more time for discussion. For instance, representatives of the T.U.C. are coming to discuss the tax with me tomorrow. Furthermore—and I am sure this is right—it will then be possible to cover more of the details of the tax in the legislation itself, leaving less to be dealt with later in Statutory Regulations. So the V.A.T. legislation will be included in the Finance Bill next spring.

It may also be helpful if I announce now that, as Easter falls next year right at the beginning of April, I expect to introduce my Budget before Easter and, in accordance with the recommendation of the Select Committee on Procedure, I intend to publish the whole of the V.A.T. legislation at a convenient stage during the Budget debate instead of waiting for the publication of the Finance Bill as a whole, which is normally some time later. The result is that trade and industry and Customs will have more time for consultation. I have always had in mind the need for adequate time for preparation, and I am sure that this arrangement will give enough time for all those concerned to make the necessary arrangements for the V.A.T. to come into operation in April, 1973, as planned. Of course, at the same time, purchase tax and selective employment tax will go.

Mr. Joel Barnett (Heywood and Royton)

Is there any reason, other than the Government's desire to make the tax system yet more unfair, why the Chancellor of the Exchequer proposes to bring in V.A.T. by 1973?

Mr. Barber

Yes, Sir. The reasons for the timing were explained at considerable length by me in my Budget Statement in March of this year. I explained then how this proposal fitted in with the whole programme of tax reform over these two years.

I now turn to the twin problems of inflation and unemployment. Whatever the right hon. Member for Stechford may pretend about his own lack of responsibility for the consequences of his Government's policy, the basic facts are well known. In the second half of 1969 there was an explosive rise in wage rates, by almost 10 per cent. a year as against 5 per cent. over the previous year. From then on we experienced a steady and unrelenting acceleration in the growth of wage rates, pay settlements, earnings and prices. In the early months after we took office average earnings were nearly 14 per cent. higher than in the year earlier, and retail prices were up by 7 to 8 per cent.

The country was in the grip of the worst inflation for 50 years, and there were widespread fears in those early months that the situation might become uncontrollable. That, in brief, was our inheritance. We faced the real danger that the inflation would inflict irreparable damage on the economy, besides imposing unacceptable and completely unjustifed hardship on those social groups least able to protect themselves.

I well remember a year ago that there were many voices which argued that only a return to the detailed statutory control of incomes could meet the critical situation we inherited. As the House nows, I have always believed that such a policy is wrong in principle and a nonsense in practice. My right hon. Friends and I have throughout been consistent in our opposition to such a policy and, as is clear from our discussions in the N.E.D.C., we are at one with the T.U.C. on that. And, happily, I believe that that is now the view of the Opposition. Indeed, I think the right hon. Gentleman, with the benefit of hindsight, would agree that the experience of the previous Administration showed that one of the main consequences of that policy was to strengthen the hand of the militants and to generate pressures which could not be contained and which led to renewed and accelerated inflation.

As the House knows, the Government decided that the most effective way to stop the runaway inflation was to impress on all those responsible the paramount need for a progressive reduction in the level of pay settlements, and the Government remain resolved to stand firm on reasonable pay offers where our own employees are concerned. We shall not be intimidated by threats of industrial action into buying peace by excessive settlements.

Mr. Thomas Swain (Derbyshire, North-East)

Am I to deduce from the right hon. Gentleman's argument, which I am following carefully, that the Government have brought direct pressure to bear on the National Coal Board to control the level of the next wage increase that is being negotiated?

Mr. Barber

Perhaps I had better repeat the words which I used. I said that the Government remain resolved to stand firm on reasonable pay offers where our own employees are concerned. I went on to say that we would not be deterred from pursuing our policy by the threat of Vol. 825 industrial action if we believed it was unjustified.

Hon. Gentlemen opposite sometimes like to paint a picture of widespread industrial strife. Hon. and right hon. Gentlemen opposite perhaps do not like the good news that in the past six months, that is the second and third quarters of 1971, compared with the same period in 1970, the amount of industrial unrest has been halved. There have been only half as many stoppages, half as many workers involved and half as many days lost. Looking back over the past year, even the most prejudiced observer could hardly fail to concede that the inflationary situation and outlook is better than most people were contemplating last autumn.

The Government's policy on pay has been reinforced by the initiative taken by the C.B.I. to secure moderation in the rate of increase of prices. The response of companies to the C.B.I. move is generally agreed to be good. Nearly all the major companies invited by the C.B.I. to sign an undertaking have now done so, and over 700 smaller companies have also voluntarily agreed a similar degree of price restraint. Retail prices have risen much more slowly in recent months. The facts are that between June and September this year the Retail Price Index rose by only ¾ per cent. compared with 1¼ per cent. over the same period last year.

Whatever right hon. and hon. Gentlemen opposite may think about the merits of our decisions to halve S.E.T. and to cut the rates of purchase tax by 18 per cent., this action has certainly contributed to the improvement on the prices front. In addition, the nationalised industries are matching the performance of the private sector members of the C.B.I. by accepting the same restraint on prices on the same conditions. This, too, is a major contribution to greater price stability.

Mr. Roy Jenkins

The right hon. Gentleman has outlined the ¾ per cent. rise this year as compared with 1¼ per cent. last year, and has also mentioned the cuts in S.E.T. and purchase tax. How much of that ½ per cent. does he think has been due directly to changes in taxes?

Mr. Barber

All I have said is—[HON. MEMBERS: "Answer"] I will answer the right hon. Gentleman. When the right hon. Gentleman was Chancellor of the Exchequer he put up indirect taxation by a greater amount than did any of his predecessors. He admitted at the time that this had a direct effect on putting up the cost of living, but he refused at the time to give a comprehensive answer as to the effect this would have on the cost of living. Therefore, I am entitled to take the same line in answering him when I am cutting taxation—which is a much better thing to do than putting it up, as the right hon. Gentleman did.

In some cases, as a result of the decision of the nationalised industries to match the performance of the private sector members of the C.B.I., the financial position of the nationalised industries has been substantially affected. The House will recall that I said in July that the financial and other implications of the response of the nationalised industries were being discussed by the Ministers concerned with the chairmen of the industries. In due course, as a result of these talks, decisions will be reached with them about the financial arrangements which need to be made. These obviously will vary from industry to industry, but in most cases it is likely to be several months before conclusions can be reached as to whether, and if so how far, financial assistance may prove necessary.

We all, on whichever side of the House we sit, want a rapidly growing economy. We all want a rising level of employment. We all want pay increases which are real and not illusory. And we want prosperity for all on a sound and permanent basis. I believe that the country is now better placed that it has been for a long time to secure all these objectives, provided one overriding condition is observed— namely, a reasonable and commonsense approach to the level of pay settlements.

The right hon. Member for Stechford referred to this matter and I took down his words. He referred to the "silly little argument that unemployment is an inevitable result of wage claims", and went on, "This Pontius Pilate attitude has no basis in economic logic". I disagree entirely with the right hon. Gentleman. The fact is that Restraint in incomes is our only guarantee against unemployment"— and right hon. and hon. Gentleman know that as well as I do.

Mr. James Sillars (South Ayrshire)

If that is the case, why is the only reference to wages in the Conservative Party's election manifesto put under the heading of "Steadier Prices", and why did the right hon. Gentleman not then tell the people what he has just told the House?

Mr. Barber

I will tell the hon. Gentleman and his friends why I feel they may consider the statement Restraint of incomes is our only guarantee against unemployment to be a true statement—because those words were used by the right hon. Gentleman the Leader of the Opposition to the T.U.C. on 5th September, 1966. And, of course, those words are in direct conflict with what the right hon. Member for Stechford said this afternoon.

The high pay settlements of 1966 and 1970, far outstripping any possible increases in output, inevitably led to an excessive rise in prices and to an increase in unemployment, instead of to a permanent increase in real earnings. The levels at which settlements are reached are now becoming more reasonable; but they are still much higher than can be covered by the rate of increase in national output. To expect them to match the last year's rise in prices without any regard to the high settlements which came before would merely prolong inflation. Therefore, we must get the level of settlements down further if we are to put an end to the spiral of rising prices and get back as quickly as possible to higher levels of employment. This should be one of the nation's top priorities for the coming year. It is a task which has been made easier by the measures which the Government have taken in stimulating demand and cutting indirect taxes, and also by the C.B.I. initiative on prices.

Mr. Clinton Davis (Hackney, Central)

In view of the fact that the Chancellor of the Exchequer cannot countenance substantially increased wage settlements, how does he square that with the Government's deliberate policy in their new fair rents proposals substantially to increase rents, which of course will have a direct result in causing people to demand higher wage settlements?

Mr. Barber

That matter was debated in the House yesterday, and I have no doubt it will be debated at length when the Bill comes before the House. The point I am making is that I agree with the argument put forward clearly, convincingly, cogently and without equivocation by the Leader of the Opposition when he had the responsibility as Prime Minister.

I was saying that the task has been made easier by the measures taken to stimulate demand, by cutting indirect taxes and by the C.B.I. initiative on prices. The T.U.C. has welcomed these measures and has agreed that they are bound to be taken into account in the levels of pay settlements. I am sure the whole House will endorse that view.

The Government have the duty to ask all those concerned with pay determination—employers and unions, those conducting independent pay reviews and inquiries, arbitrators and wages boards and councils—to consider the interest of the whole community in curbing inflation, and to see that this wider interest is reflected in a much more moderate level of pay settlements, remembering that this, too, is in the long-term interest of those involved in the particular pay negotiations in question.

Mr. William Molloy (Ealing, North)

If the right hon. Gentleman is appealing to people to consider all these aspects, will he not be forthright and honest and ask them to consider increases in school meal payments, rent increases and all the other increases the ordinary family has to meet, rather than that he should make it an offence for a trade unionist to try to meet the expenses put upon him by this Government by asking for an increase in pay?

Mr. Barber

What I said was that I would ask all these gentlemen concerned to consider the interest of the whole community in curbing inflation. I should have thought that that would have been endorsed by the House.

It is also essential to recognise that what matters is not only the basic pay increases, but all payments and changes in conditions which add to labour costs. There can be no doubt that the achievement of more reasonable pay settlements is the only sure foundation for the maintenance of a high rate of growth and for full employment.

Both parties are equally, fully and wholeheartedly committed to the aim of full employment—[HON. MEMBERS: "Oh"] No hon. Member of this House and no party, either, can claim any monopoly of concern for those whose lives are blighted by the impossibility of finding a job.

Today, the right hon. Member for Stechford rightly referred to this as "our principal social problem". He called it, rightly, "a gross waste of resources". In the light of what he said, I am sure that he will agree that no party can claim that it has succeeded in achieving and maintaining full employment. After all, under the previous Administration the level of unemployment doubled. By the time of the change of Government we had already, if I may quote the Amendment moved by the right hon. Gentleman, … the worst unemployment for a generation. Since then, it has risen further to a level which any British Government would find unacceptable.

In the House last Tuesday, the Leader of the Opposition said that the growing level of unemployment was … the direct consequence of Conservative Government policies".—[OFFICIAL REPORT, 2nd November, 1971; Vol. 825, c. 14.] That does not stand up to even the most superficial examination. I need only remind the House of the extent of the measures to stimulate demand which we have taken over the past 12 months.

For reasons which are all too obvious, the right hon. Member for Stechford sneers at talk of tax cuts of one kind or another. In view of his record, I am not surprised. But, if one is thinking in terms of demand, the fact is that since October, 1970, taxation has been reduced by the massive total of £1,400 million in a full year and certainly by over £1,000 million in this year, 1971-72. What is more, the cuts in taxation are only part of the action which will stimulate demand in the economy as a whole. The increase in national insurance benefits, the removal of restrictions on hire purchase terms and the cut in the bank rate to the lowest level since 1964 all will stimulate demand.

Mrs. Renée Short (Wolverhampton, North-East)

When?

Mr. Barber

With the new approach to credit control there has been a marked casing of credit.

Mr. Roy Jenkins

Will the right hon. Gentleman now answer the question that I put to him? He has been listing the effect upon demand of various changes, mainly tax cuts but some others, too. Even so, unemployment has gone up. In the circumstances, what is the economic justification for the whole range of social service charges that the right hon. Gentleman has imposed?

Mr. Barber

I have dealt with this point before. I believe that the measures that I announced in the autumn of last year were justified in themselves. If one looks at the measures that I announced then and also at the consequential significant increases in expenditure on the hospital service, on the primary school service and elsewhere, clearly this was a correct application of priorities. Certainly it was in line with what we had said that we would do if we formed a Government.

Mr. Roy Jenkins

But why cut demand at all in the circumstances of the past year?

Mr. Barber

What we have done overall is to stimulate demand to a very considerable extent—[Interruption.] It is all very well—[Interruption.] I am asked to provide specific figures about this, that or the other—[Interruption.] Since the right hon. Gentleman raises this point, he may like to recall that, in the last Budget for which he was responsible, he forecast a growth in the gross domestic product between the second half of 1969 and the second half of 1970 of 3.6 per cent. It turned out to be exactly half, 1.8 per cent. What no one can deny is that the totality of the action that we have taken since coming into office represents a greater degree of reflation than has been taken by any previous Government.

So much for the assertion of the Leader of the Opposition that the direct consequence of Conservative Government policies has been a growing level of unemployment. Only a man who habitually stands on his head could talk of Conservative policies creating unemployment. Only a simple-minded non-intellectual could say that.

In addition to the Budget and the July measures, the Government have authorised additional public expenditure totalling £160 million on infrastructure in the development and intermediate areas. These areas will also benefit from concessions on capital investment in the service industries which I announced on 19th July, as well as the increases in housing improvement grants and the new programme for naval shipbuilding. We are also looking at the scope for bringing forward more capital expenditure by some of the nationalised industries.

In total, the measures which have been taken to stimulate demand, together with the effect of the C.B.I. initiative, are designed to raise the growth of output to 4 to 4½ per cent. between the first half of 1971 and the first half of 1972. In the light of all this, therefore, I think that one is entitled to make the point that we have taken massive action to reflate the economy. Of course, one can select individual indicators for one month to prove anything. But virtually all the information suggests that, since the July measures, demand has been rising broadly in line with that target of 4 to 4½ per cent.

Possibly the main factor which is for the time being affecting production is a rundown in stocks. Such a rundown can be only temporary. Once the turnround comes and stocks are rebuilt to their normal level, there should be a substantial rise in output. In the nature of things, it always takes some time for reflationary measures to work through to production and employment, but the question is complicated further by the effects which rising wage costs and the earlier squeeze on profits have had on employment.

Right hon. and hon. Gentlemen opposite have alleged that there was too much delay before taking the necessary measures. The right hon. Gentleman has repeated that allegation. However, when the right hon. Gentleman was in charge, in his April, 1970, Budget, to put it mildly he was certainly ultra-cautious. Whatever criticism he may have of me, with the benefit of hindsight he cannot now say that he was right in April, 1970. I do not think that even the right hon. Gentleman would now claim that.

However, I do not castigate the right hon. Gentleman. I remember so well how, after my own Budget in March, quite a few informed commentators were very critical because they said that I had gone too far. I warned in the spring that a great deal would depend on our success in moderating the rate of cost inflation. But I also made it clear that if, after reasonable time had been allowed for the measures to take effect, a further stimulus was seen to be needed, I should not hesitate to take action.

In the circumstances which existed before the Budget and up to the July measures, I believe that the decisions which we took about the need to reflate were correct, just as I think that in the light of the information before the right hon. Gentleman in his last Budget, he thought that what he had done was correct. When it was clear that action was needed, we took it.

What no one foresaw—certainly not right hon. and hon. Members opposite—was the extent to which the high level of pay settlements and the previous squeezing of profit margins would cause companies to lay off men in very considerable numbers. The Budget and the July measures have yet obviously to take their full effect on demand and activity, but I repeat what I said the other day outside the House—that we now have a better opportunity than for a long time of a period of rapid and sustained growth of output with correspondingly improved prospects for employment.

The Amendment accuses us of having put forward no coherent strategy. The Amendment was drafted by men who for six years in government were constant only in incoherence. These are the men of the National Plan, the Declaration of Intent, "Steady as she goes", the July, 1966, measures, devaluation, the collapse of incomes policy and the climb-down from industrial relations reform. There was only one thing that one could be sure of about their Government—whatever course they set they would be blown off it.

We seek and we shall achieve a real and lasting improvement in our ability to compete in the world, which is the one sure way to achieve full employment. We shall seek and we shall achieve a real and lasting curb on the pace of inflation, a real and lasting improvement in our industrial relations, and a real and last-

ing growth in our national wealth and so in our power to care for those in need and to improve the standard of life of all our people.

5.2 p.m.

Mr. Denis Howell (Birmingham, Small Heath)

I start from the vantage point of discussing unemployment, first, as a Member for Birmingham, which, as my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) has said, faces an unprecedented situation, and, secondly, as president of a trade union, the Clerical and Administrative Workers' Union, which, also for the first time, is finding in its ranks increasing unemployment among people who thought that it would never happen to them—people among executive and managerial staffs throughout the country.

There are three principal reasons for the malaise of unemployment facing the country. The first is doctrinaire Government policies, which have produced a complete collapse of confidence and a worsening of economic prospects. Secondly, there is the inefficiency of a great deal of management in British industry. Thirdly, there are the results of increased automation and technology in our society which we have to deal with.

The collapse of confidence, particularly in the building and construction industry, started as the result of Tory policy even before the Government were elected. The present Secretary of State for the Environment, when in opposition, went round the country from the moment Conservative councils were elected begging them to stop building council houses. He made at least two speeches on this theme, and he and his colleagues cannot have been surprised when Conservative councils slashed public expenditure, in particular on the building of council houses. That was the first step towards the unemployment which has gathered momentum. We all know perfectly well that we cannot have a sound basis of employment in the construction industry, with all that means to the rest of the economy, unless there is a high degree of public investment and public activity. When the Government and the Conservative councils under- mined that public activity, they were taking the first major step in the direction of increased unemployment. We see it going on today.

Almost every local authority in the Midlands has stopped building council houses. This has not been anywhere near made up by increased private house building. Even worse, many local authorities, instead of applying properly the improvement area programmes which were the result of the Labour Government's Housing Act, 1969, are using the concept as a substitute for slum clearance. This is one of the aspects to which we should draw attention in this House.

Then there are the social policies to which my right hon. Friend referred—the increased price of school meals, the bigger prescription charges, the increased rates, the increased rents and the alteration in food subsidies for which the Chancellor of the Exchequer is responsible. All of these were calculated to put up the cost of living without bringing back to the economy as a whole any substantial reward in terms of increased investment or increased expenditure. It is no good the Chancellor lecturing those of us in the trade union movement about increased wages when he, as a result of sheer doctrinaire Tory policies, is determined to increase council house rents, for example, by such a substantial sum.

My union is in dispute with the National Coal Board, which no doubt is under instructions from the Government as to what it should do with our claim for increased pay for colliery clerks. It is no good saying to us in the trade union movement, "You must be responsible in your wage demands", when the Government are following a policy of deliberately increasing the major items of expenditure of ordinary working class people. I should be grossly irresponsible as a trade union leader if I took the slightest notice of that sort of claptrap from the Government.

If the right hon. Gentleman wants to evoke a sensible response from people in the trade union movement, he must first give a lead by having coherent and responsible social policies. I agree that he has put £1,400 million back into the economy but he has got precious little for it because he has given it in the wrong direction through cuts in S.E.T. and in tremendous hand-outs to surtax payers. Everyone knows that when he was distributing this largesse he should have given it to people who would spend it. The truth is that what we need now—indeed, we have needed it since the Government took office—is an increase in consumption and not a decrease. If the right hon. Gentleman wanted the tax reliefs which he has given to be spent, he should have given them first in good measure to the old-age pensioner and the family man. Then the money would have been spent.

The second principal reason for the malaise of unemployment is inefficient management. I want to use the case of B.S.A. in Birmingham to illustrate the point. This is a matter of major concern to Birmingham because, on top of an unemployment rate already running at 5.1 per cent., 3,500 people are to be declared redundant in two or three weeks' time. The B.S.A. company is a classic case of a company with grossly inefficient management. When I thought of the mistakes made by the B.S.A. management, I was almost tempted to walk into the Chamber carrying a banner, "Bring back Lady Docker"—and nothing could be more scathing than that about inefficient management.

The company was faced with intense Japanese competition and with an increase in United States import levies. It has had to operate in an inadequate home market. I will not trespass on that point too far but it underlines a point about which we have been exercising our minds recently. It produced far too many new models too lane. I remember going a year ago to the launching of 13 new models by B.S.A., which had apparently learned nothing from Volkswagen, which made one extremely good model and "flogged" it. B.S.A. produced 13 models, with all the capital investment that that means, and that in itself was almost a guarantee that the firm would face calamity.

This has been a growing situation. There can be no doubt that Barclays Bank—and no doubt this is the policy of all the banking houses in matters of this sort—got to the end of its tether and refused to produce more than £10 million to prop up B.S.A. On banking grounds, it was clearly justified in that decision, but the effect has been to put 3.500 innocent men out of employment. Some of my hon. Friends and I have been trying, without success, for the last month or so to meet the directors of Barclays Bank. I should like to ask them why they had been propping up the inefficient management of B.S.A. for so long and why they did not intervene when they saw the direction in which the firm was going.

When we met Lord Shawcross, the present chairman of B.S.A., we asked him directly whether the Government could have done anything to save B.S.A. and what should have been done in the face of this unparalleled inefficiency, the great difficulties and the need to restructure the whole of the B.S.A. management. I am not at liberty to disclose what he said, because he pledged us to secrecy and I would not break that confidence, but in a speech in another place he made it clear that one of the Government's great mistakes was the abandoning of the Industrial Reorganisation Corporation.

The only way in which to save B.S.A. from collapsing—and everyone agrees that it can sell in the American market all the motor cycles it makes, which would have been good for the country— would have been action along the lines of that which would have been taken by the Industrial Reorganisation Corporation. I am certain that if the Government had still had the I.R.C., they would have been happy to have it step in and restructure the management and recapitalise the firm and save the jobs of 3,500 men.

The Financial Secretary to the Treasury (Mr. Patrick Jenkin)

And make them permanent pensioners of the State?

Mr. Howell

The Financial Secretary sits there muttering about permanent pensioners. That is typical of the doctrinaire approach of the Government, but they had to move from it with Upper Clyde Shipbuilders and Rolls-Royce.

As everybody here knows, I am not excessively militant.

Mr. Eric S. Heffer (Liverpool, Walton)

Hear, hear.

Mr. Howell

I am glad that I carry my hon. Friend with me in at least some part of my argument. There is an essential truth in what the workers of B.S.A. have been telling me, particu- larly about wages. They say, "We have had only one day's strike in 21 years and our wage rates on the whole are below the average skilled wage rates of Birmingham and Coventry, and now we have been made to pay the price of our reasonableness and modesty" The Government should have intervened. They should have found some substitute for the Industrial Relations Act. I charge them that by their doctrinaire policies they have helped to bring about the collapse of B.S.A. and certainly failed to come to its rescue.

The 3,500 men who have lost their jobs from B.S.A. in Birmingham have become unemployed at a time when 25,401 people in Birmingham are out of work, when there are 17 unemployed for every vacancy in Birmingham, something not known before. The Chancellor of the Exchequer went back to 1966 to misquote my right hon. Friend the then Prime Minister. I, too, go back to 1966 when, instead of there being 17 men on the dole for every job available, there were two jobs for every man unemployed in Birmingham. That illustrates the dramatic change in the situation.

Mr. Barber

The hon. Gentleman said that I misquoted the then Prime Minister. Would he like to quote what his right hon. Friend said?

Mr. Howell

I did not say that the right hon. Gentleman misquoted my right hon. Friend.

Mr. Barber

The hon. Gentleman did: no doubt it was a mistake.

Mr. Howell

If I did, I withdraw it. I intended to say that the right hon. Gentleman quoted my right hon. Friend. However, the situation now is entirely different from that of 1966, and that is the point that I am making, and the unemployment figures for Birmingham illustrate it vividly.

Today, I have heard of a ludicrous situation which concerns the apprentices of B.S.A. The company has given the sack to 109 apprentices aged between 16 and 21. That is disgraceful to start with, for when a boy enters an apprenticeship he and the employer enter into an honourable contract and both sides ought to honour it. For B.S.A. not to honour that contract is extremely immoral and shameful. I appeal to the Government to take up the matter, and I hope that lord Shawcross will appreciate the moral obligation upon him and his company to see that, whoever else is moved to Coventry, the apprentices are.

But the Government's attitude in this respect is even more disgraceful, because, through the Department of Employment, they have told the 109 apprentices that as part of their time is spent in further education at the technical college it cannot be argued that they are wholly available for work, and so they cannot have unemployment pay. It is ludicrous that these youngsters should be treated in that way. I hope that the Government will he able to tell the House tonight that this adminisrative nonsense is being put right.

The third feature which I want to mention is the development of technology. It is an extraordinary situation, but in Birmingham we are producing more and more motor cars, and yet the more motor cars we produce, the higher our unemployment rate becomes—the greater the number of cars, the fewer the number of work people. This is one of the results of technology and automation. I am sure that the Government would agree that the unions deserve credit for having co-operated to increase the pace of technology and automation. However, British Leyland is closing down more firms in my constituency and in others.

The same picture is true of the air transport industry. As the president of my trade union, I know that the air transport industry has grown by 5 per cent. this year, and yet this very week employers have asked my union to enter negotiations about redundancies. When British Leyland and other firms produce more motor cars and require more workers they get those workers not from among the unemployed but by internal transfers. It is stoping further redundancies, but it is not helping to reduce the pool of unemployment.

There is a similar situation in the aircraft construction industry. Armies of people came down here when Rolls-Royce was threatened. We saw a similar situation in Birmingham with Joseph Lucas. This reinforces my argument that British technology cannot develop in isolation and that there must be multi-national approach to it. Another illustration is to be found in the computer industry. My union has been asked to negotiate redundancies because of the advent of computers. There is a grave danger that unless the Government abandon their lame ducks philosophy and the philosophy demonstrated by the Financial Secretary's interruption a few minutes ago, unless we have direct Government intervention in industries such as the computer industry, there will be a collapse, with the result that firms like the American I.B.M. will hold world monopolies.

The results can be seen all round the country. This morning I asked my union to undertake a count of the number of clerical, administrative and executive staffs who were unemployed. It is easy to give the results. In London 560 are unemployed, and that is quite apart from the thousands of clerks who do not belong to any union; in the Midlands the number is 2,438, and in Birmingham alone the number is 1,100; in the North-East 1,331—and while I was discussing this matter with my union officials this morning two lads walked in who had seven G.C.E. 0-levels and no hope of starting a career—in the North-West 1,750; in Scotland it was said that the position was so bad that they had stopped keeping records; in the West 350; in Wales 700—and this week there are 200 redundancies in the pipeline.

These are people with family responsibilities, with mortgages, who never envisaged that they would see the day of unemployment dawning for them. When I called at the B.S.A., it was explained to me that when the men were called together and told the news, when this disaster was revealed to them, they were ashen-faced, white, incoherent, unable to say anything in the face of this devastation of their prospects.

What are we to do about these technological advances? I do not want to cover the ground already covered by my right hon. Friend in the areas of public works and social policy, all of which is, admittedly, of tremendous importance and of first priority. But we in the trade union movement must be demanding: we must demand early retirement, longer holidays, a shorter working week and all the social benefits that ought to accrue to the nation as a result of increased technological efficiency.

What about social changes? If we go into Europe we shall certainly be required by some member countries to carry these out, because in many ways they are well in advance of ourselves in this regard. What is required is a coherent social philosophy, which I do not believe the Conservative Government are capable of introducing. This Government have no philosophy about the purpose of life, which is, after all, not just concerned with work. Obviously, all of us want the opportunity of work of a satisfying nature, but we also want to believe that the true purpose of life goes far beyond that, and that an age of leisure is coming for us. We can now produce for ourselves, as a nation, in far less time the services and goods we require to keep our society going.

These beliefs require revolutionary changes in the social outlook of government and in the application of government policy. I believe that this Government will not be able to meet this situation, not only because of their outdated social policies but also because they lack a coherent social policy for the nation as a whole.

5.22 p.m.

Mr. Kenneth Baker (St. Marylebone)

I had hoped that as the Opposition Amendment spoke of the Government's lack of a coherent economic strategy, we should have heard, at some time over the last seven days, a word about the Opposition's alternative economic strategy. With the exception of the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) this afternoon, we have heard hardly a word about this alternative policy. On this front there has been total silence. No economic strategy and certainly no coherence. Instead of strategy, we have heard a great deal about the tactics, parliamentary and procedural, over the next year, and about the hopes of hon. Gentlemen opposite that, somehow, our proposals to join Europe will run into the sands of parliamentary procedure.

I am not surprised that a party which has no coherent economic policy is so divided. It may be idle to speculate how a coherent economic policy could emerge from the benches opposite. Which body in the Labour Party opposite would determine its economic policy? Would it be the Fabian Society, as the right hon. Gentleman speculated the other night? Would it be the Labour Party Conference, in which case it would be the economic policy of Mr. Jones and Mr. Scanlon? Or would it be the Shadow Cabinet? But economic strategy emerging from the Shadow Cabinet today might be different from the strategy which would emerge from the Shadow Cabinet in, say, a fortnight's time.

Or would the Opposition's economic strategy emerge from the brisk, decisive and clear-headed body of men, the plenary session of the Parliamentary Labour Party? However it emerges, it certainly ought to emerge, and the Labour Party owe it to the country to let us into the great secret of what their economic policy is.

I would make three points on the Government's economic policy. The first concerns the target which the Chancellor set in July of this year for economic growth, as between the latter half of 1971 and the latter half of 1972. He said then that he hoped we should achieve a growth rate of 4 to 4½ per cent. Since then he has expressed confidence that this target will be hit. I share that confidence. I think that such a growth rate is on the cards. It is likely that, in the next 12 months, we shall indeed hit it.

We should not, however, disguise from ourselves that if we do, this will be an exceptional record. With the exception of two years since 1945, we have never achieved this rate of economic growth. There are now signs in our economy, however, that it will be achieved. The level of capital investment is disappointing, but it always take some time for that to catch up in a consumer boom. But there are signs that it is beginning to pick up, though I do not expect to see any real improvement in capital investment until the spring or summer of next year.

If we do achieve this growth rate for the next financial year I do not want to see it as one exceptional year, one peak of 4 or 4½ per cent. falling back to 2½,3 or perhaps 3½ per cent. I hope that the momentum of growth will be maintained in 1973 and 1974, but I do not believe that it will be maintained unless the Chancellor is ready, early next year, to consider a further reflationary package.

I was pleased to hear the Chancellor say that next year's Budget will be announced before Easter, some time in March. This is wise, because, in order to maintain the momentum of our economic growth and to carry it on to 1973 and 1974, further measures will be required early next year. Like hon. Members opposite, I want economic growth because it is the only way in which unemployment can be brought down. The growth in productive potential is now about 3 per cent. a year. If we are to create jobs, we must therefore have a higher growth rate than 3 per cent. and, to the credit of the T.U.C., this is what it has constantly said. The hon. Member for Liverpool, Walton (Mr. Heller) constantly argued this when we were in opposition.

Let us hope that we have an economic growth rate of 4 to 4½ per cent. in the next 12 months thus out-distancing the growth in productive potential by 1½ per cent. It is a quick and fairly sound rule of thumb that every extra ½ per cent. over productive potential creates about 50,000 jobs. Therefore, if the Chancellor is right, as I believe he is, that we shall get 4 to 4½ per cent. growth, it means the creation, in the next nine to 12 months, of 100,000 to 150,000 jobs. That is why I want the momentum to continue into 1973-74. I would make one observation on the level if unemployment, and acho what the hon. Member for Birmingham, Small Heath (Mr. Denis Howell) said. I believe that we are witnessing in our economy the phenomenon of structural unemployment. Some people call it the unemployment of progress. Some say that behind it lies the old Luddite fear that machines will replace men. But I believe that it is happening in our economy today. Managements are going through the payroll, trying to find savings, trying to produce the same number of goods with a smaller work force. The process was given impetus by the S.E.T., of course, but it is happening. I welcome it, because this is what profitability, productivity and growth are all about. But it means that fewer job opportunities will be created.

In addition, our society is taking certain subjective decisions and saying that some jobs are menial. I do not disagree with that. A good example can be seen in the way the new Victoria Line is operated. One buys a ticket from a machine and then goes through a ticket checking machine instead of through a barrier at which a man checks the tickets. This is excellent, but there will as a consequence be fewer jobs in London Transport for ticket checkers.

This process is occurring throughout our economy, and I consider that the hon. Member for Small Heath was right to draw it to the attention of the House today. He was not the first to draw public attention to it, for at the Labour Party conference delegates had before them an economic document prepared, I think, by Transport House. This is what was said in it on the subject of unemployment: … it is difficult to exaggerate the seriousness of the problem. For it now appears that with any given level of total output in the economy, we must expect a very much higher level of unemployment than previous experience would have led us to expect. I agree with that, and I hope that my right hon. and hon. Friends on the Front Bench appreciate that this element of structural unemployment is now with us. We have to rethink a lot of our basic policies. It is not only a question, as the hon. Gentleman suggested, of shorter working weeks, a shorter working life and longer holidays. It calls for a change in social attitudes particularly the attitude to the creative use of leisure. Further, it calls for a complete rethinking of attitudes to retraining, not only in the public sector but generally as people go through life. This will be one of the major problems of the 1970s.

I come now to my third point, and here I draw attention to what I regard as the most pressing problem facing the Government today. If they do not solve it, all our efforts towards higher economic growth will be overshadowed and come to nothing. I refer to the developments in world trade and, in particular, the action which the Americans took on 15th August. I am referring here not to the closing of the gold window—I welcome that—but to their protectionist measures, the most important measures taken in world trade since 1945. What America is doing is trying to tackle the problems of today with solutions which were tried and found to fail in the 1920s and 1930s. A policy of "beggar my neighbour" succeeds only in beggaring oneself.

In my view, the most important task before the British Government at the moment is to persuade President Nixon and Mr. Connally that the United States cannot grow strong by making others weak, that it cannot prosper by making others poor. The measures introduced on 15th August were extremely protectionist. In effect, President Nixon and Mr. Connally decided to export unemployment from America into Western Europe. What does this mean to a British business man selling some capital equipment to America? If he were selling a piece of equipment worth £1,000 before 15th August, he will now have the disadvantage of £100 as a result of the surcharge, £40 as a result of the revaluation of sterling, and another £70 as a result of the investment tax credit. Thus, the British business man has a price disadvantage on that piece of equipment of over 20 per cent. For a corresponding piece of German equipment, the disadvantage will be over 25 per cent., and for the Japanese over 30 per cent.

The Chancellor of the Exchequer is to go to the meeting of the Group of Ten in Rome on 22nd and 23rd November. Mr. Connally will be there. I hope that my right hon. Friend will continue to stand up to the measures which the American Government have taken. I praise the Chancellor and the Minister for Trade for the strong line which they have taken. We should speak frankly to our American friends. Friendship is meaningless unless one can tell one's friends where they are going badly off the lines. I am certain that, if these American measures cannot be withdrawn, the prospect for world trade over the next year or two will be bleak.

I hope that the terms of any deal in which the Chancellor is able to give a lead will include the withdrawal of the import surcharge by America and, in particular, withdrawal of the investment tax credit, which I regard as the more harmful and I think that we should be prepared on our side to let the £ float higher.

I suggest that the Chancellor of the Exchequer should not be too keen to go back to fixed parities. We have been fortunate in getting off the hook of 2.40 dollars, and I am not keen to go back to 2.50 dollars, or whatever it may be. I regard this as a fortunate event in world trade, and I think that we should make the most of it.

I summarise the matter in his way. On the domestic front, the Chancellor should be prepared to consider further measures of reflation in the early part of next year, to ensure that the growth rate of 4 to 4½ per cent. is maintained in 1973 and 1974, for that is the only way unemployment will be effectively reduced in our economy.

Second, I hope that the Chancellor will stand up to the American Government, and lead Europe in standing up to the American Government, and persuade them to remove the protectionist measures of 15th August so as to bring some degree of stability and real prospects for continuous growth in world trade.

5.36 p.m.

Mr. Peter Shore (Stepney)

I also am gravely concerned about the outlook for unemployment and about the possible repercussions on our own trade and world trade of the American action on 15th August and the reactions to it. However, if the Chancellor of the Exchequer were noting the advice given him by his hon. Friend the Member for St. Marylebone (Mr. Kenneth Baker), I hope that he will not take such a one-sided stand as the hon. Gentleman suggested.

Although we regret the decision and action taken by the United States on 15th August, we should at least try to understand why it took that action, and we should look also to the reactionary policies which have been pursued by the Common Market countries as a group, reactionary both in the nature of the trade treaties which they have been signing—the creation of a new preferential system dividing the international trading community in two—and in the elusive and dangerous pursuit within the Six of a common monetary and fixed exchange rate policy.

All those reactions and actions have repercussed in their turn upon the American decision and upon world trade prospects. Unless we reach a solution soon, we shall, I fear, be in danger of facing the gravest outlook for unemployment both in this country and in the Western world that we have faced since the war.

However, whatever the outlook may be, nobody should be under any illusion that our present experience of unemployment in Britain has anything whatever to do with any downturn in world trade. That alibi is not available to the Government Front Bench and, indeed, I do not think that they would pray it in aid. We have in this country now a level of unemployment well over 800,000, far above what it has ever been at any time during the post-war period, and, if the Government are fair, far higher than it was when they came into office.

Our present very high level of unemployment can in no sense be attributed to adverse external circumstances. Not at all. Indeed, what we find so outrageous—I mean outrageous—is that this level of unemployment should be allowed to co-exist with a combination of favourable economic circumstances the like of which no incoming Government has ever had before. What post-war Government ever inherited a balance of payments surplus as strong as that which the present Chancellor of the Exchequer took on? It was a remarkable circumstance.

Throughout our 26 years of post-war economic management, whenever unemployment departed from the full employment level, it always happened because, under various Governments, of a serious balance of payments deficit. Never be- fore have we had a situation of balance of payments surplus, or even balance of payments balance, accompanied by above-average unemployment. That is the special, extraordinary thing which the right hon. Gentleman has accomplished during his 16 months in office.

When my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) looked at this situation and at the Chancellor's record, he attributed much of what has happened to what he called the right hon. Gentleman's central mismanagement. He took the view that the Chancellor had not once, but on three or four occasions during the past 15 months, looked at the economic situation, misjudged it, and therefore taken inappropriate action in attempting to stimulate demand.

My accusation is different. I do not think that the Chancellor of the Exchequer got his sums wrong. I think that he got them right. He knew what he was doing, but, as it became clear in his speech today, he lacked the courage of his own argument. If his argument meant anything, it was that in his view the rate of growth of incomes was so great that he had to stop it, and he stopped it by operating on the demand side of the economy so that unemployment rose, in the belief that, with greater slack in the economy, the bargaining power of labour and the pressure of demand on employers would be reduced.

We can examine this situation if the Chancellor will admit to it. Having told us about the tremendous problem of inflation, he did not tell us how it entered into his calculations on the level of demand in the economy. But it did. If anyone recalls what the Chancellor was saying last April at the beginning of his Budget they will realise that the charge which I am making is in no sense exaggerated, but very accurate. The Chancellor, speaking about his Budget judgment on 30th March, 1971, said:

… the broad aim should be an addition to demand adequate to raise the rate of expansion of output to the rate of growth of productive potential. which is estimated to be about 3 per cent. The measures I shall be proposing are intended to increase demand in the needed to achieve that result."—[OFFICIAL REPORT, 30th March, 1971; Vol. 814, c. 1370.] That is an increase in production of about 3 per cent.

The Chancellor knew at that time, and those of us who took part in the debate pointed out that he knew, because he had the March unemployment figures, that he was starting from a base of wholly unemployed of 700,000 and totally unemployed of nearly 750,000. The measures which he proposed did not even become operative in the period shortly after the Budget. They were deliberately delayed. So the right hon. Gentleman knew on 30th March that unemployment would continue to rise and would, on his own estimate, if all went well, level out later in the year at a still higher figure.

If my right hon. Friend has any doubt about that, let him consult the Chancellor's further remarks on 28th June, 1971, when he said: On the basic problem of unemployment, I have repeatedly said that, taking account of the Budget measures, I expected that the rate of increase in unemployment would, after a time, slow down and then stop."—[OFFICIAL REPORT, 28th June, 1971; Vol. 820, c. 58.] That is what he was aiming for. Whether by July of this year the levels reached were slightly above his forecast I do not know, but he has taken action.

What are we invited to do? We are invited to commend. Indeed, we are invited, as it were, to clasp him to our bosom as one of us, a man who believes in full employment, a man prepared to fight for this great bipartisan approach to achieving full employment.

On the right hon. Gentleman's latest measures, the 4 to 41½ per cent. which he set himself to achieve in the first half of 1972, this will not, because of the slack in the economy, have any effect on the level of unemployment. It will be at least another year after that before it begins to have any effect. The only reason that the Chancellor has chosen 4 to 4½ per cent. is that he found that the base on which he calculated the 3 per cent. six months ago was lower than he thought. The economy had not expanded so much. So, instead of starting at a particular level, he was starting lower down. The 4 to 4½ per cent. will be easily achieved without any significant effect on the level of unemployment. The Chancellor. having deliberately run the economy for the past year well below the level of demand necessary to maintain the level of employment which he inherited, let alone to go for the full employment which our external situation allows, is prepared not only to allow the unemployment figure to remain near its present high level, but his latest calculations do not indicate that there is to he any significant change in the year ahead.

I found it a bit shameless of the Chancellor to make the claim that he was concerned about full employment. We now face a very serious situation. It is serious because of the unemployment situation and all that goes with it. There is lack of investment and falling off in I.D.C. applications and permissions. They are down 25 per cent. in the first nine months of this year compared with the previous period in 1970. Investment in manufacturing industry is down 6 per cent. to 8 per cent. this year, and the outlook for next year is no better. It is a serious situation. The Chancellor has allowed the economy to go so far towards recession that he will have to make some pretty strenuous efforts to reverse that downward trend. It is more difficult when great damage has been done to confidence and to other matters which operate on the economy.

My right hon. and hon. Friends and some hon. Gentlemen opposite are worried about the longer-term problems of technological change and structural unemployment. It is right that we should have these matters very much in mind when looking to the future, but we should not confuse them with the situation now. Technological change and the impact of inflationary wage claims have not all started in the last two years. They have been with us throughout. What has happened is that we have had the most disastrous, incompetent, shameless and heartless economic management by the Government since before the war. That is the Chancellor's peculiar achievement.

I turn finally to the external situation which I broached at the beginning of my speech. The great problem which the Chancellor may have to face is that when he finally gets round to stimulating the economy out of the recession over which he has presided, he may find that he is doing it at a time when the world economy, instead of expanding year by year, which has been our experience over the past quarter of a century. may be facing the first post-war period of stagnation and perhaps even recession in world trade. This is a serious matter.

It would be a mistake for the Chancellor simply to assume that, because the Americans took the action which they did on 15th August, this is somehow the cause of the problem. It is not. The American Government acted as they did for obvious reasons. They had a serious balance of payments deficit and high unemployment, and they wanted to get rid of the deficit and, probably more important, to reduce the unemployment. They found that the rest of the world was no longer willing to see American deficits financed by taking unwanted American dollars. They also found themselves faced with a growing preferential trading system in the E.E.C. What were they to do? It is no part of my brief to suggest that the Americans necessarily have the best approach to the problem of international trade, but I do say that they are right to take action to put their own affairs in order, and that they had very few alternative actions from which to choose.

The real thing that has worried people since 15th August is the total failure of Western Europe as a whole to respond to the problem. They have met together, but they have found, particularly France and Germany, obsessed as they are with their C.A.P. and the requirement, as the French see it, of keeping exchange rates fixed as between France and Germany otherwise the C.A.P. is upset, that because of this and of their effort to get to the first stage of their currency alignments within the Six, the first stage of the Werner economic and monetary union—because of the desire to achieve these purely internal Common Market objectives—they have been unable to respond to the world problem, either as a group, or individually, as they could well have done, in terms of adjusting their currencies upwards, which would have been a solution to the problem.

What we now need, and need very urgently, is not for Britain, as it were, to align herself with the Six in this matter, but to use her independent voice, which I know some of my right hon. and hon. Friends do not value as much as I do, in the group of Ten, and to use it, not just in the interests of the E.E.C., nor in the interests of America, but in the interests of world trade, the international community, international full employment, which are the objectives for which we should stand.

5.52 p.m.

Dame Irene Ward (Tynemouth)

This debate seems appropriate to a Finance Bill or a Budget. All the speakers so far have dealt with matters of high finance and I am glad indeed that it is my right hon. Friend who is the Chancellor of the Exchequer. My speech will not fit reasonably into all this talk about high finance, because I propose to deal with the unemployment problem in my part of the world. What I have to say follows, I suppose, from the fact that I have been in this House of Commons for a very long time, having been elected to it in 1931 for the constituency of Wallsend, in which 84 per cent. of the employable population were unemployed. I therefore feel deeply, indeed, about the problem of unemployment.

It will be very difficult for me to explain, in my part of the world, all the financial implications of the Government's proposals, when all that the North of England is waiting for is information about plans which my Government have for dealing with our problem. I know that the Chancellor is right to have pointed out that the measures which he has introduced and the money which he has poured into the economy will have an effect in due course. I do not disagree with that, but I must put it on record—it has been put on record before, but I shall do so again —that in my part of the world we do not make consumer goods. My area is dependent on heavy industry.

It is interesting to note that the hon. Member for Sunderland, South (Mr. Bagier), wrote a most stimulating article on how advantageous entry into the Common Market would be for the regions, but I still want to know from my right hon. Friend what my Government, which I support wholeheartedly, intend to do to relieve our unemployment problems.

I am glad that the House has been reminded of the effect which automation is likely to have on unemployment, because this aspect has not previously featured prominently in our discussions on this topic. I am glad, too, that selective employment tax has been referred to, because when it was introduced by the Labour Government masses of people were put out of employment. In British Railways now the number of people employed has been reduced—[Interruption.] I do wish that the hon. Member for Feltham (Mr. Russell Kerr) would keep quiet. I have only ten minutes in which to make my speech, and I have something important to say. Normally I do not mind being interrupted, but today I have something important to say about my area, and if the hon. Gentleman keeps on interrupting me I shall go beyond my ten minutes. What I want to emphasise is that S.E.T. and automation have introduced into our unemployment problem a feature which is extremely terrifying, though it is modern. We have to learn to live with modern inventions. however difficult that may be.

I am delighted that my right hon. Friend the Leader of the House, who knows our part of the world so well, is to reply to the debate. I cannot imagine that he will be able to spend much time on our part of the world and its problems because he will have to deal with the whole of the Queen's Speech, but I should like him to tell me what decisions the Government are taking to deal with the recommendations made by the North-East Development Council. I thought that it was most helpful of the Prime Minister to receive a deputation to discuss our problems, but I was disappointed that my right hon. Friend the Chancellor of the Exchequer said nothing about the discussions which are supposed to be taking place to deal with the recommendations put forward by that Council and by the Northern Economic Planning Council to deal with our problems.

I have not seen the latest report from the North-East Development Council, which was presented to the Prime Minister, but I think that something should be done to speed up the procedure for dealing with reports. My right hon. Friend having received a report and its recommendations, the whole subject is then considered by individual Departments. Following that, the matter goes to the Chancellor to see whether he agrees with what has been recommended. One of the first things that the Government should do to help is to speed up the consideration of important recommendations made to them to help deal with outstanding problems. The length of time that one has to wait before one gets an answer is very bad, indeed.

Many first-class industries have come to my part of the world and I want to thank our Government for the amount of money that has been spent on the infrastructure. Everyone agrees that we have the most magnificent roads, planned by Lord Hailsham. The N.E.D.C. Report suggested that existing industries in the area which wanted to expand should be able to receive incentives although they could not be described as being new to the area. They were new, some time ago.

Answering a question from an hon. Member opposite the other day about what was happening to this suggestion, the Prime Minister asked for the evidence to be supplied. That must have been an off-the-cuff remark because the evidence has been there for so many years that we are getting tired of waiting for the result. What is to happen to these proposals? I get tired of putting forward suggestions which are mixed up by all sorts of Government Departments so that no one ever comes along and deals with them. I am a realist and I can under- stand people saying "No," but I want to know why they say it. I do not like the political machine that sweeps everything under the carpet because it is not convenient to be outspoken. I want to know, and I want to know tonight.

Mr. J. D. Dormand (Easington)

The hon. Lady says that incentives ought to be given to expanding industries in the North-East. Is she aware that I wrote to the Prime Minister about this six weeks ago and am still awaiting a reply?

Dame Irene Ward

I have written every month. It is no good writing once. The hon. Gentleman has to go on and on. Sometimes I get a helpful answer, sometimes not. If I do not get a helpful answer I bang them on the head with another letter.

The Chancellor spoke about putting more capital into nationalised industries, but why must it take so long? He did not mention hospitals, and in Newcastle a very large hospital is being built. I have received representations from a member of the management committee who is also a constituent of mine asking why we cannot have the capital now and get on with the hospital rather than wait until 1976. If the Chancellor wants to spend money on nationalised industries—although I do not call the hospital service "nationalised"; it is a co-operative effort even though it is jolly difficult to get one's own way—why cannot he provide the money now?

Why cannot British Rail get on with things now instead of considering for months and months? I do not want trains going at 350 m.p.h. but I want money. In my constituency, at Percy Main, there are a lot of old people who complain that the platform at the railway station there is so low, because of subsidence, that they cannot get out of trains. I have asked the Chairman of the Railways Board about it and he says that it is true but that they are too hard up to reinforce the platform. They have also taken down an old Victorian roof but have not replaced it with anything so that people have to stand in the snow and and the rain.

Like all people, my people need to feel that they are being cared for. They are the grandest people in the world. Will the Lord President tell us what this extra expenditure means? My people want specific answers to specific questions. I will help my Government to the utmost but my first responsibility is to my part of the world and I want to know what is to happen to my people. I dare say that lots of Navy orders will go to the Clyde but we want as many as we can get because we are very good naval shipbuilders. I hope that my right hon. Friend will tell me a great deal of what is to happen and I will have great pleasure when I go home this weekend in telling my constituents that the debate has been worthwhile.

6.8 p.m.

Mr. Eric S. Heffer (Liverpool, Walton)

We have three important issues to face when discussing the unemployment problem. First, we must understand that the present unemployment levels are due to this Government's inability to reflate the economy at a sufficiently early stage when everyone in the House and outside it was demanding that there should be a greater inflow of cash into the economy.

Second, we have the problem of the structural or technological unemployment that would be with us irrespective of the type of Government in power and even irrespective of the type of system adopted. Tile third is the important problem of the regions. This is a long-standing problem of which, like the hon. Member for Tynemouth (Dame Irene Ward), I have had personal experience for many years.

We are, therefore, faced with a deep- seated problem of an extremely serious nature. The hon. Member for St. Marylebone (Mr. Kenneth Baker) did not live up to the importance of the debate and of this issue in the early part of his speech and it was only later in his remarks that he attempted to get to grips with the real issue.

Let us begin by considering the whole question of unemployment. About 51,000 people are unemployed in the Merseyside development area. The travel-to-work area of Liverpool City has a 7 per cent. unemployment rate, with about 46,000 people being unemployed. It is clear that the percentage of males unemployed is much higher than that figure of 7 per cent.

In the last year there has been an increase in the city's unemployed of about 13,000, and in the area as a whole of about 16,000. In the last two years there has been an increase in the number of unemployed of about 22,000. A lack of responsible economic management has led to this situation.

We in the North-West have the highest concentration of industrial manufacturing industry of any area. Our percentage of unemployed has grown faster than in any other part of the country, excluding East Anglia, which is not a manufacturing area. I do not wish to minimise the unemployment difficulties of other areas, but it is clear that with our concentration on manufacturing industry— I am not being parochial in this: hon. Members who represent similar areas will agree with me—we in the North-West are suffering from a terrible problem.

Let us next consider some of the reasons for this state of affairs. The overall problem is with us basically because of the lack of Government intervention. This is easily seen when we look at the number of I.D.C.s issued and the present investment policy. In the first quarter of 1971 only 56 industrial building projects were approved in the North West, giving an estimated additional 1,800 jobs. That compared with 89 approvals and 5,810 extra jobs in the same quarter of the previous year. In 1969, 116 approvals were given in the first quarter, giving an additional 8,020 jobs.

These figures indicate the complete failure of the Conservative Party's I.D.C. policy. All hon. Members, and particularly those who represent development areas, know that the examples I have given reflect what has been happening in many other parts of the country.

The change from investment grants to incentives has contributed largely to these difficulties. In the North-West, Courtaulds, Philips, Plessey and Shell, all major companies, have announced a major contraction in their investment programmes. Indeed, the North-West Development Council sent a memorandum to the Prime Minister and met the right hon. Gentleman on 29th October. I was interested in what the hon. Member for Tynemouth said about a deputation from her area meeting the Prime Minister. I am sure that the excellent proposals that were put forward did not receive a particularly good reply. The North-West Development Council said in its memorandum: Probably nothing less than the re-introduction of direct cash grants for investment is needed to initiate a revival in the short term, and all I.D.C. restrictions must be removed from the North West. The indictment of the Government is that they have deliberately allowed unemployment to rise for political doctrinaire reasons, simply to use it as an economic weapon against the trade union movement as part of their attack, with the other prong being the Industrial Relations Bill. This has been the basic philosophy underlying the Government's policy.

When the Conservatives took office they started with the lame duck theory. It was a policy of non-intervention in economic affairs. Everybody knows that even within the context of the capitalist system—this is true if one looks at countries in Western Europe or at America or Japan—no Government can possibly avoid intervening nowadays in economic matters. Indeed, it is essential that they should intervene.

It is clear that the lame duck theory has become a dead duck one. Hon. Gentlemen opposite have had to retreat on that policy. They have been forced by economic necessity to intervene in a number of areas such as Rolls-Royce, the Mersey Docks and Harbour Board to some extent and other industries.

Then we come to the regional policy which the Government have followed. It is clear that we must return to the intelligent and sensible policies which were pursued by the last Labour Government.

Dame Irene Ward

Oh dear!

Mr. Heffer

The hon. Lady may laugh all she likes. Even she spoke of the great work that was done for the infrastructure of the area she represents. She will accept that that happened because of the policies followed by the Labour Government.

Dame Irene Ward

Nonsense.

Mr. Heffer

Unless we return to the investment grant system we shall continue to have insecurity on the part of employers, who will restrict their investment programmes. But we have to go much further than that.

The real longer-term answer for the regions is planned growth based on complete control of the economy. There is no other way. The Labour Party, even before it provided the Government in 1964, was committed to introducing in these areas newly-developed, modern, publicly-owned industries, and the quicker we get back to that policy the better.

I am not satisfied, and never have been satisfied with even a 500,000 level of unemployment. To me there is no acceptable level of unemployment. If only one man is left unemployed, to him that is not an acceptable level. This is not an academic exercise for me. It is no airyfairy problem of numbers on a piece of paper. Coming from the region I do, and being a building trade worker and a ship repair worker, I personally have suffered too much from unemployment, but at least in those days if I were out of work for two or three weeks, I had some hope of getting a job in the immediate future. My colleagues now out of work in the regions have no such hope. We now find long-term unemployment.

In particular, I ask the House to consider the effect of unemployment on our youth. In Kirkby, part of the Merseyside complex, 20 per cent. of the young people are unemployed. We have young kids who left school last Christmas or the previous summer and have never yet had a job. Some of them have become so dispirited that they spend most of their days lying in bed, or else get involved in some sort of juvenile delinquency. Juvenile delinquency has increased in the Kirkby area as a result of the increase in unemployment.

There is no acceptable level of unemployment, and I hope that my party will give a very clear pledge that we shall return to our policy of full employment and that we shall guarantee to work towards that end.

Judging from what the Chancellor of the Exchequer said this afternoon the Government are not prepared to accept responsibility for unemployment. They say that it is not their fault. It is the workers' fault. It is the fault of those wicked trade unionists who want better wages and decent conditions. They say that were it not for that we would have no problem. My hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell) killed that idea at once by pointing out that the B.S.A. workers have had one strike in 40-odd years, have wages lower than those in any other part of the Birmingham area, yet still find themselves out of work. The Government's argument is nonsense, and they know it. They know that high wages are not responsible for unemployment. If they have ever read Keynes—and, if they have not, I suggest that they should—they will know that that view is economic nonsense. But that was one of the arguments that they trotted out.

When that argument failed to get across, they said that it was all the fault of the wicked Labour Government who were responsible for the present unemployment level—not their own failure over the last year.

Their final argument, of course, was that the solution of the unemployment problem is entry into the European Economic Community. So first one allows unemployment to increase, then one furthers it and develops it and uses it as an economic weapon against the trade unions, and then, having done that, one says that the solution is to get into the Common Market, when the whole problem will disappear—

Mr. Michael Foot (Ebbw Vale)

At £7 a week extra.

Mr. Heffer

Yes, and one of my hon. Friends said when the Common Market vote was taken that he expected to see all the workers lining up at the first pay day after entry to get their £7 extra. That is nonsense, and the Government's arguments are nonsense as well.

A number of important things need to be done if the Government are serious about solving the immediate problem. First, they can increase the level of public investment from the proposed £100 million, and allow local authorities, particularly in the high-level unemployment areas, to go ahead with public works programmes, and to bring out of the pigeon holes all the schemes that have lain there for so many years. Second, they can use part of their enormous balance of payments surplus, not to get into the Common Market but to make further public investment in the nationalised industries. Third, they can ensure that old-age pensioners and other pensioners get an immediate increase so that they may purchase more of the goods now being produced.

Finally, and this is certainly the best answer of all, the Government, having done these things, should, at the earliest possible moment, go to the nation at a General Election so that we can get a Government really dedicated to the policy of full employment.

6.29 p.m.

Mr. Julian Ridsdale (Harwich)

Coming from part of South-East England which is to be transferred to East Anglia, and from an area which has relatively low unemployment, I am to a certain extent diffident about taking part in the debate. Nevertheless, hon. Members know that, although my constituency does not suffer from the rates of unemployment met with in other constituencies, there are in it a large number of retired people who have been having a very difficult time for the last five years or so as a result of rising costs and prices, and I am equally as anxious as other hon. Members to see that we get more investment so that not only do we cure unemployment but produce a bigger national cake which all of us may share fairly.

When hon. Members opposite were scoring political points, I thought that my experience was that it takes two years before Government decisions can show an immediate effect in the country as a whole. When the country listens to Members making party political points in this debate, they will measure them against the record of previous Governments.

I could trot out many more arguments, and party political arguments, but I do not wish to do so in this debate because the problem of unemployment is extremely serious and I have every sympathy with the hon. Member for Liverpool, Walton (Mr. Heffer) when he said that even if only one person is unemployed it matters to that person, and lying in bed being unable to get a job must mean a great deal as well. Therefore, like many hon. Members, I am equally concerned and I do not wish to see this problem made a matter of party politics. It is a national problem which would be solved much more easily if we looked at it in a national rather than a party way. That is why I was especially interested in what the right hon. Member for Stepney (Mr. Shore) said about the lack of investment not only over the last 18 months but over the last six years. Indeed, this has been occurring over the last 10 years or so, particularly the gradual reduction of investment in manufacturing industry.

I called for a freeze of prices in the nationalised industries the last time I spoke in an economic debate, last July, because I realised that the next step towards that must be that the Government must accept some responsibility for investment in the nationalised industries. If we accept that responsibility we can get at least a measure of investment going again in manufacturing industry, and keep prices more stable. I hope that we shall.

On Monday a Financial Times article said that the gross trading profits in industry were 28 per cent. on gross turnover in 1960, but only 212½ per cent. today. The point here is that they are weighted even more than that, because greater profits have been made in insurance, banking and finance than in the metal industries, the engineering industry, the machine tool industry and all manufacturing industries. This has disturbed me. Over the last 10 years the tendency has been towards a lack of confidence in ourselves as a manufacturing country and a lack of necessary investment in these industries. That is why I pressed for a freeze in prices in the nationalised industries. I thought this would be one way at least of getting some more investment in these industries.

Mr. Eric Ogden (Liverpool, West Derby)

Why does the hon. Gentleman call for a freeze only in the nationalised industries and not in the whole of private enterprise? How can the Lord President of the Council reply to both his hon. Friends, one of whom is asking for less investment in nationalised industries and the other, the hon. Lady the Member for Tynemouth (Dame Irene Ward), asking for greater investment in nationalised industries?

Dame Irene Ward

The whole of the North.

Mr. Ridsdale

Possibly I should not have given way. But most people realise that if we wish to get investment, profits have to be made. The problem is that it is difficult for profits to be made in a nationalised industry if we are to keep prices stable and, therefore, cure inflation. That is my answer to the hon. Gentleman. Nevertheless, the rate of investment in Japan and Germany is due to the greater profits that have been made by their private manufacturing industry, which have been ploughed back.

My first solution, therefore, is to press the Government for further investment in the nationalised industries, especially the metal-using and engineering industries. This would be very helpful. My second point—I echo what was said by the right hon. Member for Stepney—is the importance of retraining in industry. Essex University is in my constituency, and a lot of the graduates are in the social sciences. But whilst I welcome the education they are getting, it disturbs me that industrial workers, as the hon. Member for Walton said, are lying in bed unable to get a job, when retraining could be taking place.

When we are entering Europe, I hope that in the coming Budget the Chancellor will again concentrate his reforms in taxation on easing the taxation on capital. I wonder if it is right for us to bear such a high capital gains tax as compared to that on the Continent, or for us to have the kind of taxes on capital which do not operate on the Continent. Unless we are able to reduce our taxes very considerably, we shall not get the kind of incentives that exist on the Continent.

Finally, I comment upon a matter mentioned by my hon. Friend the Member for St. Marylebone (Mr. Kenneth Baker) and the right hon. Member for Stepney—the effect of joining the Common Market upon our relations with the United States. We have to be extremely careful not to enter into a trade battle with the United States because of the interplay between Western Europe and the large market of Western Europe and the United States as a whole. This is the danger that I see and this is why I am so glad that my right hon. Friend the Chancellor of the Exchequer is taking the initiative at present in trying to solve the uncertainty in the present exchange rates. The sooner this problem can be solved the more we shall have international confidence. It is equally important at present to have not only a European summit to co-ordinate our financial problems but also an Atlantic summit shortly after that. What matters is that we keep in our minds the goal of an Atlantic trading community and not just a Western European trading community. Without the former we shall not restore trading confidence or international confidence.

If we can adopt some of those ideas we shall go at least some way to curing some of our very serious problems of unemployment.

6.37 p.m.

Mr. John Rankin (Glasgow, Govan)

I shall respect the decision about confining remarks to the problem of unemployment, but I beg a little latitude because, within the last few hours, there has been a rather important intimation about one of the Measures outlined in the Gracious Speech. The Government have now decided to go ahead with the raising of the school leaving age, and have made the effective leaving age 16 years. I welcome that very much. I remember much of the excitement which accompanied the previous decision a good many years ago, in which I was concerned, when we moved to 15 years of age in 1947. I also recollect the worries which existed in many of our schools, especially in Scotland, because of the complete lack of preparation for the new leaving age. So I take this opportunity of saying to the Government that I hope that now, if not ready, they are at any rate very nearly prepared for the operation of the new leaving age.

With that I shall confine myself strictly to the problem of unemployment, quoting the following figures which apply to Scotland: out of a population of 5 million, there are 102,459 men aged 18 and over idle in Scotland—the third highest figure in that group in the United Kingdom; 6,881 boys under 18 are idle —the highest figure in that group, the next highest being 6,260 in the South-East; 22,974 Scotswomen aged 18 and over are idle—the highest number in that group in the United Kingdom, the next highest number being about 19,000 in the South-East; 4,122 girls under 18 are idle, the highest number in that group in the whole of the United Kingdom.

These figures depict a pressure of unemployment and its problems being exerted in a country which is far too small to bear such a heavy load and which should be getting special help to meet its problems. But it is not getting that help.

My main purpose tonight is to try to put before the House the intensity of the problem of no work in a country which has not got sufficient resources to bear unemployment. This unemployment is creating a pool of misery over the whole of the Scottish landscape. Because of this, there are no opportunities for young people in Scotland, as the current figures show. So they drift away from Scotland and come to England, particularly to the Midlands.

I did not realise the vastness of the movement from Scotland to England until two years ago when I was in Coventry at a Burns supper. On the Monday night 500 people attended the supper. The total present at all the Burns suppers in Scotland that night would not have been 500, and few of them would have been in dinner dress as they were in Coventry. Most of those attending the supper in Coventry were Scotsmen who could not get a living in Scotland, and their presence at the function in dinner dress showed that they had sufficient ability to make an excellent living in a strange country.

On the Tuesday night at another Burns supper there were 200 guests. There was a smaller Burns supper on the Wednesday night, one on the Thursday night which I attended, and another on the Friday. That shows what the Scot, aided by the Englishman, can do when he is abroad. Even if he cannot be kept busily at work at home, he is not content to sit still and starve but will get out and do something.

Mr. Peter Archer (Rowley Regis and Tipton)

I do not dispute the ability of the Scotsmen my hon. Friend is talking about, but in fairness to the West Midlands will my hon. Friend say what proportion of those Scots are in employment now?

Mr. Rankin:

When the Scot goes down, he is down for good. The lack of opportunities in Scotland, however, does not mean that all our active young men remain at home and mourn and draw unemployment relief. Instead, they leave; and England is a natural habitat for them. It is so handy that, if necessary, they can get there by walking. The Scot does not allow himself to be beaten by disadvantages of distance. My relatives are down in England.

It is a criticism of those responsible for the government of Scotland, both past and present, that a living could not be provided for those people. They had to find it for themselves outside Scotland. This is where organisation—particularly national organisation, for which right hon. and hon. Members opposite are now responsible—was lacking. We do not want to keep people in the same place, but we do not want them to be moving about because they have no jobs.

Jobs are the natural sequence to men and women. Picts should be doing things, making things, earning and contributing to the welfare of society. They can do that only if they have the support of the Government of the day.

Right hon. Members opposite now hold the strings of the money bags. Those strings must be loosened because what Scotland most lacks today is investment. This is where the Government have shirked their responsibility.

I assume that I have consumed my legitimate time in this debate. Like all people who think of others, I never dream when I get to my feet that I shall speak as long as I do. People tell me that is one of my faults. That is perhaps the reason why they sometimes try to prevent me saying what I want to say.

6.50 p.m.

Mr. Robert Hicks (Bodmin)

There is an understandable tendency when discussing unemployment and the need to take preventive measures to think automatically in terms of Wales and parts of Scotland, as did the hon. Member for Glasgow, Govan (Mr. Rankin) in his interesting speech.

This applies also to the North-East of England and certain localities in the North-West, where the unemployed figures are high in terms not only of percentages but also of absolute totals of people. These regions tend to be the older industrial areas whose economic activities and structures have their origins in the late 18th and 19th centuries and whose current difficulties, as has already been pointed out, stem largely from the contraction or the modernisation of industries such as coal mining, steel making, shipbuilding and textiles. I recognise the severe conditions now being experienced in these areas, as I equally accept that the current unemployment position is not only disappointing and unacceptable to the country at large but that at the end of the day the Government will be judged by the success or failure of the methods which are now being used in an attempt to alleviate these difficulties in the regions.

This evening, however, I should like to draw attention to a largely rural part of the United Kingdom which also has high unemployment, namely parts of the West Country. If one looks merely at official statistics one can obtain a misleading picture. The south-west region at present has an unemployment figure of some 3.6 per cent. That is, of course, lower than the national average. But I would remind the House that the south-west region as designated extends from Gloucester and Wiltshire in the north-east of the region to Devon and Cornwall in the south-west of the region, and that within this large geographical area there are marked variations. In general, however, it is true to say that the further west one travels the higher the incidence of unemployment and the lower the average level of earnings, so that in Devon there is an unemployment figure of about 5.1 per cent., in Cornwall 6.6 per cent., and within this overall picture there are black spots with even higher percentages.

In recognition of this situation, the previous Government designated most of Cornwall and parts of North Devon as a development area. Subsequently the area covered by the Plymouth employment exchange received intermediate status, and recently the Government extended the intermediate area to include the Tavistock and Okehampton exchange areas. Therefore, today, in the Bodmin division two-thirds is classified as development area and one-third as intermediate area.

The House will be aware that with this designation as either a development or intermediate area comes a wide range of financial inducements aimed at encouraging job opportunities. It is not my intention to attempt to analyse and quantify the effects and results of these various measures on an individual basis, but I should like to comment that I believe we have reached a situation which is both complex and comprehensive, and that to add still further aids would probably not achieve the desired reduction in the total number of unemployed. The majority of these regional aids seek to have the effect of redistributing national wealth through a diversification of industry and by extending industry into those areas which have no large industrial development at present. But regional incentives on the whole do not create new wealth. The most effective regional policy of all is surely to attain economic growth for the nation, since the prosperity of the peripheral regions such as the West Country depends more than anything else upon the prosperity of the country as a whole.

In June I raised on the Adjournment the matter of an area in my division which had an unemployment figure of about 12 per cent. Since then I had been hopeful that we should get a factory to move into that area, thus relieving that very high unemployment. But only a month ago I received a letter from the chairman of the company concerned informing me that while it was intended to move to Gunnislake in my division, and that the necessary land had been purchased, it was not possible to move at the present time because of the economic situation. In other words, the company had spare capacity at its existing site in the West Midlands, and until this was utilised we in the West Country would not be able to derive the benefits of its subsequent growth.

Having referred to the need to achieve greater national growth, I should like to make the point that it is within this context very necessary to have effective regional policies aimed at securing a more balanced economic development. However, I should like to emphasise to my right hon. Friends on the Front Bench the need for greater flexibility. Here I welcome the remarks of my right hon. Friend the Secretary of State for Trade and Industry on 3rd November when, talking about regional policies, he said: We should aim, on the one hand, for simplification and, on the other hand, for more direct means of tackling the individual problems of individual areas. It is to this purpose that we are addressing ourselves now most urgently with a view to the possible identification of new lines of action conforming to the broad concept I have mentioned." —[OFFICIAL REPORT, 3rd November, 1971: Vol. 825, c. 185.]

I make this point because the south-west development area which I represent is different in character from all the other development areas in the United Kingdom. We are not an old industrial region. We are a region which is essentially rural in character, based upon agriculture, horticulture, fishing, some mining and quarrying, and tourism, and only scattered industrial location.

Any regional incentives employed by our Government, if they are to have maximum effect on the South-West, must be seen in that context. That is why I welcome the emphasis on improving the quality of the infrastructure—roads, housing, primary schools and public services —and the scheme to do away with derelict land, because those measures not only assist in relieving unemployment but help the region to become more attractive in its attempts to persuade industry to move from other areas to the West Country.

In the West Country I hope to see a change in emphasis, so that we have a greater concentration of resources on a limited number of localities—in other words, a return to the growth point strategy, if possible linking regional aids with the employment potential of the economic activity concerned. I have just returned from Brittany, where the amount of grant available is linked to the number of jobs that will be created. I hope that the Government will consider such a scheme.

I should also like to see more assistance available to companies already in the area. I was occupied for most of the weekend in talking with an employer who faces the prospect of having to close down, which would throw 150 more people on to the labour market in part of my constituency. If his cash flow could be improved, we are confident that he could ride the storm.

The extension of retraining and training facilities is essential, and I hope to see an easing of planning restrictions.

I believe that the measures taken by the Government over the past 18 months will achieve their aims. If we increase the rate of economic growth for the country as a whole, the peripheral regions will undoubtedly benefit. But we must first make sure that we have the necessary structures to make certain that the regions such as the West Country can share in the growth and advancement of our economy.

7.3 p.m.

Mr. Fred Evans (Caerphilly)

Like the hon. Member for Tynemouth (Dame Irene Ward), I shall be intensely parochial and, I hope, very brief. I have been very happy with the contributions from hon. Members on this side, particularly that of my hon. Friend the Member for Liverpool, Walton (Mr. Heffer), who put forward a constructive series of Socialist answers to the present problem. I would add only one, linking with the guiding of publicly-owned industries into the development areas the power of actual direction of private industries.

A week ago last Saturday, with my hon. Friends the Members for Bedwellty (Mr. Kinnock) and Ebbw Vale (Mr. Michael Foot), I returned to the Welsh valley where I was born. It was not a nostalgic pilgrimage. The three of us went back to join thousands of men and women demonstrating for their right to work and to retain their human dignity as contributors to the total good of society. Next Saturday in the capital city of Wales, Cardiff, tens of thousands of people will demonstrate in the same cause, and later this month many hundreds of members of the Welsh Trades Union Congress will come to the House to make the same point to hon. Members.

One plank in the Conservative Party's election platform was the creation of one nation. But how does it go about trying to create one nation, to heal divisions, to iron out social tensions? It does it by creating 1 million unemployed, and in reality, the total is nearer 1½ million. The Conservative Party, which has brought on our countr the curse of massively increasing unemployment, is dividing the nation very sharply. A million citizens are made to feel that society has rejected them and no longer needs the skills they have accumulated over years, that society cannot absorb the products of their intelligence and expertise. Is this the creation of one nation, of which the Leader of the Conservative Party spoke? The frustration and despair felt by so many people without work can only immeasurably increase social tensions. It may be that the Conservative Party will make the country reap a very bitter harvest from the seeds they have sown in the past 18 months.

The Government must take action. It was in an area of the Welsh valleys near my home that a man who was born to be a king looked at the tragic plight of hundreds of unemployed men lined up in front of him, in their patched and tattered rags, and with tears in his eyes said, "Something must be done." We on this side re-echo that today; something must be done. In Wales many people still think that what happened to him subsequently was not unconnected with that remark and the reactions of the Conservative Party to it.

We have today depicted the full extent of the tragedy. Because we are drawn from all parts of the country, there have been many regional speeches. Unemployment is as tragic for a man in the North-West as it is for a man in Scotland or in Wales. But my immediate and over-riding concern as a Welsh Member is naturally for my own country. I am sure that hon. Members will forgive me for referring to it as a country and not as a region. Part of our unemployment problem is the devitalising of our country, through the forced emigration of our young people, with consequent loss to the preservation of the Welsh language, an ancient tongue which enshrines an ancient culture. Therefore, I want to talk for just a few minutes about our problem.

In Wales we have 46,400 unemployed, excluding school leavers. That is an over-all rate of 5 per cent., which is much higher than the national average. But in four travel-to-work areas in my constituency and part of that of my hon. Friend the Member for Bedwellty—the employment exchanges concerned, at Bargoed, Blackwood, Ystradmynach and Pontlottyn, overlap the constituencies—2,323 people are without work. That is unemployment of 9.3 per cent. It is an utterly intolerable situation.

Inside the 9.3 per cent., the rate of male unemployment is infinitely higher because much of the light industry which came to Wales did not provide work suitable for female labour. Allied to the massive pit closures, we have now had the closing of engineering units, machine tool units, all kinds of light and heavy engineering units, adding to our problem, and the male rate of unemployment is such that in some parts it is getting to the 17 and 18 per cent. mark inside the total figure of 9.3 per cent. as a whole.

We have seen in my country a 36 per cent. increase in unemployment since June, 1970, and at the same time a sharp drop in the number of vacancies—such a drop that in the whole of Wales 10 men are chasing one job. In one of the travel-to-work areas I have mentioned, at the small town of Pontlottyn, in mid-October 489 people were unemployed, 393 of them men, and there were fewer than six vacancies—that is 80 people chasing one job. It is a continuing situation which, frankly, we are not prepared to tolerate much longer.

I promised you, Mr. Speaker, that I would not take more than 10 minutes, so I want to touch but briefly on a further point. I am very concerned about the young people in this situation. As a former schoolmaster, I know the eagerness and anticipation with which youngsters approaching school leaving age look forward to it and the fact that they are going out to embark on an adult life. In mid September in Wales, there were 3,400 boys and 2,500 girls registered as unemployed with the various careers offices. In my constituency, the Caerphilly office had 253 boys and girls on its books. Of course, this does not stop at those immediately leaving school. It has now crept upwards into the ranks of those who have continued at school for their O and A levels but do not want to go on to courses of higher education. There is simply no power of absorbing them into the present industrial pattern of Wales.

The situation therefore for the people of Wales, young as well as those who once had work, is very bleak. I do not want to see young people particularly, who so look forward to moving into the adult world, not to escape the disciplines of home but to see a new dimension of discipline in the home and the outside world, and who look forward with such eagerness to the independence that is felt through drawing a wage, so under-occupied that, as one hon. Member has said, they sometimes spend all day in bed and feel the bitterness and frustration of rejection at their first tentative step into the adult world. As their per- sonalities rot in this kind of situation, in the bitterness they feel, how can we hope to create a society which retains its virtues of compassion and humanity?

This is the indictment of the Conservative Party—the human indictment. We on this side know what measures we can try to use to alter the process, but the accusation must rest squarely on those who have set this trend. I willingly acknowledge that under the Labour Government unemployment was already too big and at a level which we would not have been willing to tolerate much longer. Had we but had the chance to use the opportunities the Labour Government had created, the situation would not be as it is now. Something would have been done.

Only last Thursday, the National Youth Employment Council brought out a report which shows that the number of boys securing apprenticeships in Wales is well below the national average, as is the number of girls entering clerical appointments. The report says: In reviewing the employment situation the Advisory Committee on Youth Employment for Wales has remained conscious of the persistent and relatively high level of unemployment among young persons in Wales … This is the situation which I feel most keenly. I feel a very deep emotion as someone who lived in the Welsh valleys in the 1920s and 1930s, who came from a mining family and saw and experienced at bitter first hand the soup kitchens in Wales. My hon. Friends can speak with genuine knowledge and experience of this kind of situation and I hope that the time will never come when the sons and daughters of hon. Members opposite will be reduced to the situation which many of us experienced in those years.

Some of the measures advocated by my hon. Friend the Member for Walton were the right ones. We should indeed try to get more money into the hands of those people who can spend it on consumer goods—pensioners, lower paid workers and so on. We need to have a growth economy. We need to encourage investment. We need a lower Bank Rate and there is no reason why that should not be done. There are many areas in which the Government could intervene.

One interesting area which my hon. Friend did not mention was that in modern advanced technology research and development is so astronomically expensive and that there is a real speculative risk involved in recovery of the money invested. Indeed, research and development is so expensive that often it cannot be undertaken except by very large industrial units—in some cases it can only be (lone by some of the richest countries in the world. Thus, intervention by Governments is already happening. In this country, the Government have had to intervene in the cases of U.C.S. and Rolls-Royce. The more sophisticated a society, the more sophisticated its technology will become.

The accusation rests squarely on the shoulders of the Conservative Party. We say to the Government, "You created this situation. We know how it can be cured. Get on with the job, because if you do not do something about it the people of Britain will never forgive you."

7.18 p.m.

Mr. Cecil Parkinson (Enfield, West)

I will not follow the comments of the hon. Member for Caerphilly (Mr. Fred Evans), except in so far as he echoed remarks made earlier by the right hon. Member for Stepney (Mr. Shore). The right hon. Gentleman said that we had inherited the most promising economic situation of any Government in 26 years. He pointed out that we had inherited a balance of payments surplus, which no one denies. But he forgot to mention what is equally relevant—that it was a surplus based on unemployment, on a prices and incomes policy which had collapsed, on a control of the money supply which had been allowed to lapse, and on devaluation, the advantages of which were gradually being eroded. I suggest that only someone as shellshocked as the right hon. Gentleman, as a member of the Labour Government, could describe that as a promising situation.

The right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) was not tempted to go quite that far. He admitted that he had failed in one of his basic aims as Chancellor of the Exchequer. The right hon. Member for Stechford said that he had had two aims: one was to produce a balance of payments surplus and the other was to produce full employment. He knew what the right hon. Member for Stepney was not prepared to admit—that in fact the unemployment situation when we came to power was not an unhappy coincidence but a vital element in the surplus. It was something which had been deliberately created by the Labour Government in 1966. When Labour Members talk about our using unemployment as an economic weapon, I return the challenge: they were the only Government in the last ten years who, as a matter of policy and with deliberate intent, set out to create unemployment, and they were extremely successful, for they increased unemployment by 364,000 in six months.

Mr. Joel Barnett

I do not wish to disagree, the hon. Gentleman will be interested to know, with what he said about prior to 1970, but I should like to take him further on. After all, another 16 or 17 months have passed. Will he also say, as I do, that it is not coincidental that we have the present level of unemployment?

Mr. Parkinson

I hope to deal with that in the course of my speech, because I want in the short time available to me to analyse the situation.

The hon. Member for Liverpool, Walton (Mr. Heffer) resents any attempt on our part to suggest that responsibility for the present situation might in any way rest on the shoulders of the Opposition. It sickens me when I think of the number of times we heard about the 1964 deficit being the cause of all the Labour Party's problems. It was brought up years and years later and even this afternoon, after more than six years, Labour Members are still bellowing about it. Yet we are supposed to be not playing the game if we refer to a situation which we took over only 16 months ago and suggest that in it is the cause of many of our present problems. The right hon. Member for Stechford still refers to the balance of payments surplus as the Labour Government's: I believe that the unemployment situation, too, is theirs.

I have tried to relate the claims being made by Labour Members to my own experience, which has been largely among small to medium-sized businesses. As the Bolton Report, which came out last week, has shown, roughly one person in three in the working population works in a small business and about 20 per cent. of the gross national product is produced by small businesses. They are labour-intensive and as such are able to make an impact on the unemployment situation.

I have compared my experience in the years under a Labour Government with the present situation. I advised a number of small businesses at the time. They suffered severely from the imposition of S.E.T. and from increased social security charges; they suffered severely from increases in taxation, because, as the hon. Member for Heywood and Royton (Mr. Joel Barnett) knows, small private businesses rely largely on retained profits to provide finance for expansion; they suffered particularly from the most prolonged credit squeeze since the war; they suffered from very high interest rates, the highest for the longest period since the Bank of England was formed.

The net result was that those six years were years of low profitability, years of excessive bankruptcies. There were 7,000 bankruptcies in the building industry alone, to take just one example. Our problem was a fight for survival. It was not a matter of whether we could expand. We were forced to cut staff and we were forced to defer plans for expansion. We were forced to concentrate on staying alive.

The failure of new industries to develop during that period, a failure due to the shortage of capital because of the squeeze and because of the need to defer plans, the accelerated decline of other industries which, because of obsolescence, or for some other reason, were incapable of generating the money needed to move into new ventures, and the inability of many companies to expand while many others were forced under at a rapid rate led to many of our present problems.

I contrast that with the present situation. Taxation is now lower, and that is very important. Cash is more readily available from the banks, and to small businesses that is vital. As one person in three works in a small business, we are not talking about small-time matters. S.E.T. has been cut, and that is welcome; purchase tax has been cut and that is increasing demand. We have access to cash and we are moving into better productivity and higher profitability, with ready access to cash for the first time in some years.

In this situation we are now thinking of expanding. I can quote one or two specific instances. In one we have decided in the last month to build new factories in Buckinghamshire—I do not own shares in these businesses, but I advise them. In another instance it has been decided to start a new venture in the Midlands employing 20 or 30 people. This could not be contemplated while the Labour Party was in power. It is a changed situation.

The change can be found all over the country. Although I have limited my comments to small businesses, people generally are beginning to take the same type of view, beginning to think not in terms of surviving but in terms of expanding. They are beginning to think about the future and not only about how to hang on to what they have.

This is where Labour Members make their big mistake. I do not believe that the solution will be found by some master stroke by the Government, by some economic genius, by finding some lever to pull. The solution will come because countless people all over the country will decide that the time is ripe to go ahead and that they can have access to the cash they need. In this way 30, 50, 100, 200 jobs will start to be created, and in this way the problem will be tackled. It will not be tackled by bleating about five or six years of trying to solve the problem—after which it was twice as bad as in the beginning. Hon. Members opposite have said nothing to suggest that they have the answer. There is a ray of hope that activity is beginning, and I think that that is far more constructive than bleating about the past. Now we are concentrating on getting on with creating new jobs.

Mr. Speaker

There are now 92 minutes before the Front Bench speakers wish to begin to wind up the debate. If hon. Members will keep nearer to taking 10 minutes each, I shall be able to call most of those who have so patiently waited to catch my eye.

7.28 p.m.

Mr. T. W. Urwin (Houghton-le-Spring)

It was predictable that most hon. Members would address themselves to the serious problems which have developed in their regions and constituencies instead of emphasising the national position. The hon. Member for Enfield, West (Mr. Parkinson) was concerned with the allocation of blame. Since June, 1970, we have had three Budgets, each completely irrelevant to solving the problems of the unemployment that has developed so rapidly over this period.

It is not unusual for me to speak about regional problem, particularly those of the northern region where I reside and where my constituency is. We have reached the appallingly high rate of 8 per cent. male unemployment. In common with other development areas, we have the continuing experience of thousands of school leavers leaving school starry-eyed, on the threshold of life, but often without any prospect of any form of employment, for even the dead-end jobs are becoming scarcer. Many of these school leavers are still awaiting their first job in industry. One of the worst features in the northern region is that we are top of the league of longterm unemployment. For unemployment lasting more than six months and more than 12 months we take second place to Scotland, but we are way ahead of all the other regions. The position is even worse among people over 40. The cold, clinical figures of unemployment do not, of themselves, tell the whole story. Many people do not register for unemployment benefit, they never report. There are factories, some of them in my own constituency, which, because of the economic climate, are on short-time working, three days on, three days off, sometimes three weeks on and one week off. This pattern is increasing throughout the regions, and in other parts of the country as well.

It is impossible to view this situation with any degree of equanimity, especially in view of the vulnerability to further unemployment of regions like the northern region. We thought, and we were right, that the peak figures in the decline of the coal industry were reached in 1969 and 1970, in terms of job loss, but there are still too many pit closures. In my own constituency last weekend we had to face this situation. A pit employing more than 600 men closed. Despite redeployment in other collieries, there is all too high a proportion of men who will become redundant when salvage) work is completed.

In the midst of the rationalisation programme in the steel industry, it is the development areas again which are being hardest hit in terms of job loss. In the northern region, on Tees-side, the inevitable redundancies are all too hard to bear. In answer to a Question yesterday it was revealed that in the nine months ended 31st October this year, 16,500 men had been declared redundant by the B.S.C., 3,900 of whom are in the northern region. Unfortunately, many more will follow, and these are losses which regions like the north cannot afford. It is no compensation to us to know that the burden is falling almost equally as heavily on other development areas.

I turn next to the statement made last week on rationalisation of the postal services. While it is said that a mere 25,000 jobs are at stake here, and that, when shared out among the regions, perhaps not more than 2,000 or 3,000 jobs per region will be affected, these are, nevertheless, jobs which we can ill afford to lose. More important, while the report states that the estimated 5,000 wastage each year means that there will be no really heavy redundancies, it nevertheless means that there will be an absence of opportunity for people to take up new employment when those 5,000 jobs each year disappear.

I must sound a discordant note on the question of the implications for Britain of joining the Common Market. It is generally accepted that, if there is to be an unrestricted flow of capital, this of itself will influence industrialists to invest more heavily in Europe than in this country, especially if there is a relaxation of the policy regarding industrial development certificates. If. for example, an applicant in the South-East is refused a certificate, there is nothing to prevent him from settling in Europe and taking his capital investment there. There is already too much evidence of the effect of the centrifugal pull in the Community as far as regional development policy is concerned. One stark prospect which emerges is that the situation, as it develops, will be deleterious to the economic advance of the development areas themselves. One cannot look at this serious question and the intolerably high level of unemployment without appreciating the human tragedy and waste of human resources involved.

Government policies must be reshaped to create more confidence for industrial investment. We have been told often by the Government spokesman that the future prosperity of the regions lies in a resurgence of the national economy; that if there is a healthy national economy, the regional economies will follow suit. I can accept this analogy, as would also many of my hon. Friends, but this cliche over-looks the fact that under-developed, to some extent under-privileged regions, in any system of regional policies, ought to have preferential treatment, over the more prosperous areas of the country.

If we enter the Common Market, it is imperative not only that discussions should take place with the Community on regional policy but that, long before the Treaty of Rome is signed—if it is ever signed—we should have hammered out a policy beneficial to the regions of the United Kingdom. We must not allow ourselves to become subservient to the Community. One does not wish to appear too pessimistic, but we cannot face the future with any degree of optimism, having regard to the abject failure which has attended Government policies thus far in relation to regional development.

The first crass mistake, made at a time when consolidation was really necessary in regional policy, was the immediate transfer from investment grants to investment allowances and the second, to announce the abolition of the regional employment premium when the first seven-year period expires in 1974. These two announcements by themselves were responsible for the creation of the crisis of confidence to which so many hon. Members on this side of the House have referred since June, 1970.

The hon. Lady the Member for Fynemouth (Dame Irene Ward) argued the question with her right hon. Friend, but she must know the answer. She will not get any change of direction by this Government, no matter how serious and difficult the unemployment situation is. The decisions have been taken, the new regional policy which we were promised late in 1970 has never been presented to this House. We have had instalments which have not measured up to the concerted and co-ordinated policy which is essential for the development areas.

The Government must recast their policies. The prospect of exporting labour to Europe is not an acceptable solution to the unemployment problem in Britain. In the meantime, the Government can do a great deal to alleviate the situation in development areas. I would briefly refer to the let-down we had in the northern region, in the constituency of my hon. Friend the Member for Chesterle-Street (Mr. Pentland), when the decision was taken not to proceed with the establishment of the P.A.Y.E. centre at Washington, a new project which would have created jobs for over 3,000 people, including many school leavers, the kind of employment for which a region like ours cries out, lacking as we do that kind of opportunity. Then to add insult to injury, it was announced that the V.A.T. centre would be situated at Southend. That was too much for us to swallow.

My hon. Friend the Member for Easington (Mr. Dormand), in whose constituency Peterlee lies, is well justified in the Question which he put, and we wish him success in his efforts to persuade Ministers to change their mind and site that office in Peterlee. If it is not to go to Washington, it should certainly go to Peterlee, in the same geographical area. An urgent review of the Government's location policy is called for. There must be other Government offices which could be redeployed to other parts of the country.

We shall soon see the raising of the school-leaving age to 16. This of itself will have a significant impact on the unemployment figures. It is by no means the best solution to any part of our unemployment problem, but in purely statistical terms it will reduce the number of school leavers at least in one year who are unable now to find a job, and one imagines that the situation will be much the same at the time the present policy regarding the school-leaving age is put into effect.

I conclude with this serious suggestion to the Government. Will they consider reducing the official retirement age from 65 to 60 for men? In this age of advancing technology, jobs are disappearing all too rapidly. Experience with the mine workers' redundancy payments scheme so far—I am sure that it will continue—has been that men reaching the age of 60 much more readily accept the benefits which a beneficent Labour Government bestowed on them through that scheme for retirement at the age of 60, even though they have two blank years, from 63 to 65 years of age, before they qualify for their retirement pension.

In the month ending 30th September, 1971, over £1½ million was paid out in unemployment benefit in the Northern region alone. Some part of that disbursement could be used as a contribution towards the money which would be required to lower the retiring age. I leave that thought with the Government. I have no idea what the cost would be, but I am sure that it could easily be met. I repeat that there are many people, especially in constituencies such as mine, miners and people working in heavy industry, who would, provided that there was an adequate retirement pension, welcome the opportunity to retire at 60.

7.42 p.m.

Mr. David Knox (Leek)

I shall confine my observations to the problem of unemployment, and I hope that the hon. Member for Houghton-le-Spring (Mr. Urwin) will not mind if I do not take up in detail the points which he made.

I regard it as deplorable that at this time in our history, with all the knowledge we now have of demand management, there are almost one million people out of work. I readily concede that demand management is not an exact science, but from 1945 to 1966 we managed to apply it with much greater skill and effectiveness than we have done since then. I am not prepared to accept that the conditions obtaining in the last five years have been essentially different from those obtaining in the 20 years before 1966. To say that the conditions are different is merely to attempt some sort of excuse for our failure in demand management in recent years—a failure which has led to a much higher unemployment and a lower level of employment.

However, although I regard the present level of unemployment in Britain as deplorable and unacceptably high, I cannot support the Opposition's Amendment or the spirit of hon. Members' speeches today, which in many cases have sounded to me much too like the voice of Satan condemning sin.

Why have we reached this present state of affairs? It has come about simply because, from July, 1966, onwards, until the March Budget of this year, we have had a series of credit squeezes and deflationary measures to damp down demand, to lower the level of activity in the economy well below capacity, to reduce employment and to increase unemployment. The architect of that policy is the right hon. Member for Huyton (Mr. Harold Wilson), now Leader of the Opposition, and its principal contractors were the right hon. Members for Cardiff, South-East (Mr. Callaghan) and for Birmingham, Stechford (Mr. Roy Jenkins). Yet today the names of all those three right hon. Gentlemen stand in support of the Amendment.

In so far as my right hon. Friend the Chancellor has any responsibility in this matter—[HON. MEMBERS: "Oh."]—It is that he did not take immediate reflationary action last summer. However, even if he had done so then, as such measures take about 15 months to become really effective, they would only now have begun to have any effect. Moreover, it is well to remind ourselves that there was no pressure from the Opposition Front Bench spokesmen last July, or indeed last October, for the taking of reflationary measures. [HON. MEMBERS: "Nonsense."] I have read the speeches of the right hon. Member for Stechford made in July and in October last year. I read them again this morning. There was no demand whatever in them for reflationary action. It was not until the spring of this year that the right lion. Gentleman, as the official spokesman for the Opposition on economic affairs, started to make such demands.

The right hon. Gentleman made those demands in the spring of this year, from the relatively irresponsible position of opposition. One can assume that, if he had been on the Government Benches, he would not have taken action until rather later, so it seems reasonable to assume that reflationary action would not have been taken by the Labour Party had it been in office until the same time as my right hon. Friend the Chancellor took action in July this year.

Mr. Denis Howell

Is not the hon. Gentleman aware that in my right hon. Friend's last Budget speech, in April 1970, he made perfectly clear, at a time when he was under some criticism for not expanding more—which he did not do because of a sense of financial responsibility, with an election coming—that throughout the summer he would watch the position carefully and take additional steps in September or October of that year if necessary. The present Government stand condemned because they did nothing for 18 months afterwards.

Mr. Knox

No doubt, the right hon. Member for Stechford would have kept a watch on the economy if he had remained Chancellor and, no doubt, from his position as Opposition spokesman, he kept that watch, but he did not, in fact, either in July or in October last year recommend that reflationary action be taken. It was not until the spring of this year that he first made that demand. The hon. Member for Birmingham, Small Heath (Mr. Denis Howell) can check that in HANSARD.

The point I was going to make was that, even if reflationary action had been taken in the spring of this year, it could have had no real effect yet because of the long time which it takes for such measures to become effective.

Whatever the truth of the past may be, however, we now have to deal with the present situation which is far from satisfactory.

Mr. E. Fernyhough (Jarrow)

Will the hon. Gentleman give way?

Mr. Knox

Not again. I have only a limited time, and I have given way already.

We now have over 900,000 people out of work, representing a huge waste of national resources and an enormous human problem as well. I agree with a great deal that has been said on both sides about the human problem. Although unemployment benefits today are better than they were in the past, this is only part of the story. There is still the human indignity for the man who has to go home and tell his wife and children that he has lost his job and who then has to tell his friends when he meets them in his club or pub.

It may be said that that is all very well, but we cannot have 100 per cent. full employment. This is quite true, but as I said in another debate on the subject earlier this year, if we could halve the level of unemployment, we should halve the human problem involved, and that surely is something worth doing.

The reflationary measures taken by my right hon. Friend the Chancellor in July this year marked a real turning point in the economy. He has indicated his intention to let it grow at a rate of 1 or 1½per cent. more than the increase in capacity. This means that we shall be using up the spare capacity now in the economy. I do not wish to enter into a technical argument about how much spare capacity there is, but it is certainly in excess of 10 per cent. My right hon. Friend has now started slowly to use up this spare capacity.

In my view, if we can attain a growth rate of 4 to 4½ per cent. we shall probably get more than the 3 per cent. increase in capacity which my right hon. Friend calculates. This means that we shall be using up the spare in the economy very slowly, so the question then arises whether we need greater reflationary measures now.

One must look at this question from two points of view—the short-term and the long-term points of view. From the short-term point of view, there is a lot of spare capacity in the economy just now, which is unlikely to be used up in the near future. We could be reflating much faster. We have this awful social problem of unemployment which, if the weather is bad this winter, will be a very serious matter. It seems to me that there is a strong case for introducing measures designed to effect a quick but not permanent reflation, until the longer-term measures which my right hon. Friend has introduced become fully effective.

From the longer-term point of view I am not certain that we need reflationary measures now for there are two factors which might result in rather more of the spare capacity that exists being taken up. First, the July measures themselves may well hit up an impetus and carry the growth rate beyond the 4 per cent.—41½ per cent. target. Second, the prospect of our entering the Common Market may generate considerable growth in the economy, and this may involve a substantial take up of spare capacity.

For those reasons, it would seem advisable to postpone any long-term reflationary measures until at least the spring of next year, but that still leaves us with the short-term problem. The Government have taken some action in terms of defence spending in development areas. They could do something in terms of short-term local government expenditure, again in development areas.

But I have another suggestion to make. About £190 million worth of post-war credits are still outstanding. The original conception was that they should be retained until after the war, when they could be repaid in circumstances not dissimilar to those that now obtain. The argument has been advanced, from the end of the war until now, that it would in inflationary to pay back all post-war credits. It would not be inflationary now. If the money paid back were saved by the recipients it would do no harm, and the Government would have got rid of an embarrassment. If, on the other hand, the recipients spent the lot, it would be once-for-all expenditure. It would create increased demand for goods and services, and increased employment, until such time as the longer-term measures that my right hon. Friend introduced in July are fully effective.

I commend this idea to my right hon. Friend. I do not think that prompt repayment of post-war credits would be administratively difficult, and surely it is in everyone's interests that the Government should do this—for its effect on employment and also because it would get rid of an embarrassing debt which the Government owe to some of our people.

7.53 p.m.

Mr. Stanley Orme (Salford, West)

The speeches of some of my hon. Friends have shown the seriousness with which we treat the issue of unemployment. In my opinion the problem will become the central economic issue between my party and the Government. It will become ever-more important during the coming weeks, months and years, and the British people will demand an answer to it.

I admit that under a Labour Government unemployment rose far too much. There were many reasons for that. There is no doubt, however, that this Government, having come into power in June, 1970, not only allowed the unemploy- ment rate to rise still further, but encouraged it to do so. They did so for a number of reasons, one of which was dealt with so painstakingly by the Chancellor this afternoon—the need, as he put it, to control wage inflation.

Another important factor enters into this debate. During my seven years in the House I have listened to many debates on unemployment. Recently, however, some of my hon. Friends—like my hon. Friend the Member for Birmingham, Small Heath (Mr. Dennis Howell) and myself—who represent areas which have hitherto had full employment have found that the problem of unemployment is becoming increasingly important. All I can say is, "God help the regions and the rest of Great Britain".

In the North-West Region there are now 130,000 unemployed people. The only part of Britain that is worse off is Scotland. In the greater Manchester area, in which my constituency is situated, the unemployment figure has now reached 26,141—just under 5 per cent. That proportion has doubled in the last 12 months. In the greater Manchester travel-to-work area, for every vacancy there are now nine unemployed people—which I agree is a much better figure than applies to the constituencies of many of my hon. Friends.

In the Birmingham area, as in Manchester, this is a completely new situation. It is an area which does not rely on one industry. It is a large conurbation, with a wide diversification of industry.

Many of my constituents work in the Trafford Park area of greater Manchester. It used to be one of the great industrial estates in Western Europe. Before the giant A.E.I.-G.E.C.-English Electric merger seven years ago there were 14,500 manual workers on the clock in the A.E.I. factory. When that factory recommenced work after the summer holidays in August of this year there were 3,800 workers on the clock. Since August, about 800 other workers, including many staff workers, have received redundancy notices.

It is an interesting facet of the changing industrial situation that we cannot point to any form of merger or rationalisation taking place in the United Kingdom in recent years that has created employment. Every merger has created redundancies in one form or another, and the rationalisation that is now taking place in the Post Office, as my hon. Friend the Member for Houghton-le-Spring (Mr. Urwin) has said, will create another area of distress, especially in those regions where there is no alternative work.

Even in the narrower confines of the Salford constituency we have seen the closing of a large Courtauld firm; the closing of the Richard Haworth Mill—the last cotton mill in our area—and the recent closure of a large brewery, resultting in the loss of very many jobs. The run-down of the Irlam Steelworks, with its consequent redundancies, is directly affecting the Salford area.

Many small firms that were in at the beginning of the industrial revolution are closing down completely. I can foresee the time when there will be virtually no industry of any size inside Salford. That illustrates the seriousness of the situation.

What does the Chancellor say? He blames the situation on high wage claims. He goes out of his way to talk about wage inflation, and the problems that trade unionists and industrial workers have created. He says that an incomes policy is a nonsense, but what the Government have had is a deliberately instigated incomes policy.

Why did we have the Post Office strike? Only because it was a deliberate attempt by the Government to restrict earnings, and they were able to use their power as an employer to prevent Post Office workers getting higher wages.

Consider the anger of the Government when the local authority manual workers gained their increase. It is interesting that if high wages are creating unemployment, in those sectors of the economy where there is still full employment there are the highest wages and the highest production. The one thing does not tally with the other.

I believe that the Government have used certain selective areas of employment upon which they can bring pressure to bear to create their type of incomes policy. But they do not do it in certain sections of the private sector. We read recently that on the executive side of industry salaries have kept pace with the rise in the cost of living, but we do not hear the Chancellor condemning that. What do we hear when he makes his Budget speeches? We hear that there must be incentives for those who are leading management. These are the people who apparently must be encouraged. What about encouraging the people who produce the goods?

Real changes are taking place in our economy which, running parallel with the disastrous policies of the Government, are only making the situation worse. I understand that on the manufacturing side of industry there are today 500,000 fewer workers than 12 months ago, and there are only 10 million workers out of 26 million insured people working in the manufacturing industries. We are seeing a great transfer from the manufacturing to the service side of industry, but we are seeing it done in a laissez-faire manner. I am convinced that my hon. Friends will not tolerate the market forces working in the way they are now with no control of the economy.

I accept that it is possible now to produce more with fewer workers with our changing technology, but an endemic situation is being created which has to be tackled rapidly. We must take drastic steps. It is not just a matter of reflating the economy, of bringing back proper investment policy for the regions and of lowering the Bank Rate, but of long-tern objectives. That is why I support the call for not just pumping public money into the private sector over which we have no control and into which we are pouring money at the rate of over £600 million a year. I want to see public money put into industries over which there is some public control, where we already build the factories and put in the machines and subsidise workers for the first two years. It is then a short step to deciding to control and run that plant. That is why I am in favour of moving industry to the workers, not the workers following capital, which is what they are forced to do now.

I think that this is where some of my hon. Friends have a genuine disagreement over the Common Market. I believe that the operation of free market forces, the free movement of capital, will mitigate against the policies which I am now advocating. In consequence, I do not want to see British workers having to go to West Germany to find employment. I want us to be in a position to put industries in South Wales, in Scotland, in the North-East, in the Greater Manchester area and on Merseyside where work can be creaed for people who need it. These are the problems with which we are faced.

We have seen an increase in unemployment in recent years. Many of us urged a more urgent reflation of the economy in 1969 and 1970. We wanted the surplus on the balance of payments to be used for the creation of jobs, not to be put on one side, as it were, to cushion our entry into the E.E.C. We honestly argued and debated these problems during 1969 and 1970. But leaving that argument aside, with the criticisms which many of us made in the fight for an alternative policy, looking at the debÂcle now before us, after 16 months of a Tory Government in whose policies unemployment is being used as a lever and a weapon, we see the Tories, finding how unpopular they are becoming, starting to mouth sympathies in this regard. I do not believe that the British people will listen to them. They want real alternatives. It is not beyond the wit a man in a modern industrial society to plan our economy to get growth and expansion in a way which will give people the freedom of choice of jobs. I want to see a situation where the employers are having to compete for labour. I want people to have a choice so that they are not necessarily stuck in dead-end jobs for the rest of their lives.

I believe that the Labour Party will be able to develop these policies. This Government will be judged not only on their economic handling, but on the out-come of that handling and whether full employment is once again attained in this country. Before the 20th July, 1966, Measures we had about 230,000 unemployed. I want us to return to a figure below that. Half-a-million unemployed will never satisfy me, and I know that it will not satisfy my hon. Friends.

8.7 p.m.

Mr. Nicholas Scott (Paddington, South)

All right hon. and hon. Members in this House deplore the present level of unemployment and wish to see it reduced. One aspect of the debate which has caused me a certain amount of resentment has been the suggestion by some hon. Gentlemen that the present level of unemployment is due to some particular malevolence, not even mismanagement, on the part of the Conservative Government. I resent that suggestion. It is not true. Any hon. Member who has been in this House for the past five or six years knows, as my hon. Friend the Member for Leek (Mr. Knox) made explicit, that the origins of the present level of unemployment lie in the Measures of 20th July, 1966, and the post-devaluation over-kill of the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) in the excessively deflationary measures which he then took. Those measures built up the level of unemployment until it had doubled by the time the Labour Government went out of office and built up a momentum behind it which has not yet been reversed. We are only just beginning to see the signs that a reverse may be taking place.

Another aspect which has caused me dismay has been the lack of any new ideas from right hon. and hon. Gentlemen opposite about the way that these trends might be reversed. The hon. Member for Liverpool, Walton (Mr. Heffer) —the hon. Member for Salford, West (Mr. Orme) went through the same argument—revealed at the end of the day the splendid panacea which would see a reversal of these trends—an extension of public ownership and more control over the economy. At least the hon. Gentleman had the decency not to use the words, "he commanding heights of the economy". We have seen those policies tried, and they failed. They were the policies—perhaps not pursued with the extreme enthusiasm which the hon. Member for Salford, West would have liked—which failed and brought about the economic disaster of the Labour Government.

If we wanted any indication that the Labour Party has learned nothing and forgotten nothing, we cannot do better than to look at the statement which the National Executive Committee of the Labour Party presented to its annual conference, which contained this lulu of a sentence: We would stress again, however, that our industrial policies are not intended to be judged solely against the crude criteria of industrial efficiency. They can say that again. We saw just what sort of criteria they were judged against when hon. Gentlemen opposite were in office, and the sad litany of inefficiency and ineffectiveness brought about their dismissal from office in June, 1970. We can all, I think, unite as individual Members in condemning and deploring the level of unemployment.

The second point with which I wish to deal before I come into my short main argument is the suggestion that because the unemployment figures are emotive we should switch the emphasis away from unemployment figures and talk instead about the level of vacancies. As distinguished an economic commentator as Sam Brittan was advancing this argument recently in the Financial Times.

The vacancies figure is meaningless unless there is compulsory notification of all vacancies and can only, in other circumstances, be a loose indication of trends in the economy. The importance of the unemployment figures is that they are not only an economic indicator, but a social indicator as well, and it is the social implications of unemployment which have rightly dominated today's debate.

The point was made by the hon. Member for Walton, and by others, that unemployment is an individual matter. I received a letter from a young man who had at last found employment. He ended by saying: I admit I am obsessed with unemployment but to anyone who is unemployed or has been for a long period it does not mean 'a national 3.9 per cent. it means a personal 100 per cent.'. That is the reality of unemployment which those who seek to exert any influence over these matters should never forget.

We should remember in particular—and this was the point made by the hon. Member for Houghton-le-Spring (Mr. Urwin) in moving terms—the impact on young people when they are not taken into the employment market and are not able to get a job. They feel that society is in a real sense rejecting them, and who can blame them if they for their part begin to reject society? That is the reality to which we must turn our minds.

I should like the Government to go ahead and complete the abolition of S.E.T. before Christmas. This is a tax on employment, and I believe that if the Government were now to remove the rest of S.E.T. they would give a short-term boost to the economy and help to counter the seasonal trend in unemployment that we are seeing now.

There are two points that I want to make about the growth in the economy which we want to see, for it would be a hollow victory if we were now to achieve a renewed growth in the economy, only to see us in two or three years' time having to slam on the brakes again and finding ourselves back in the situation that we are in now.

I do not suppose that I shall carry the whole House with me when I say that I hope that the discussions at N.E.D.C. will flourish and that we shall see the beginnings of a more general incomes policy accepted by the Government, by employers and by the trade unions. I do not want to see a return to the detailed statutory control over incomes which was experimented with by the Labour Government, but I should not balk at some long-stop statutory provision whereby certain trail-blazing wage settlements could be held up while the Office of Manpower Economics could report on them and public opinion could be brought to bear on the issues being raised by the claim.

Mr. Dennis Skinner (Bolsover)

The hon. Gentleman raised a point about the absence of an incomes policy, or the so called alleged absence of one. Perhaps I may help the hon. Gentleman. The miners are negotiating a wage increase. A fortnight ago they met the National Coal Board, and were offered an increase of about 7 per cent. One of my colleagues suggested to the Chairman of the National Coal Board that the Government had influenced the Board's decision to offer that sum. The Chairman replied that the Government had, indeed, conveyed their wishes to the Board, so there is an incomes policy, as one of my hon. Friends said there was.

Mr. Scott

If we are to have an incomes policy, it should be one for the whole of industry, and it ought not to be a question of the Government standing out against claims in the public sector.

Mr. Arthur Lewis (West Ham, North)

What about the payment of £30,000 for a job in the private sector?

Mr. Scott

The hon. Gentleman has not been present for most of the debate. and I hope that he will do me the courtesy of allowing me to continue my speech. There ought to be a more general incomes policy. Now that there is to be no monetary attempt to control inflation, a more general incomes policy ought to be considered carefully.

The question of structural unemployment has been raised several times today. I do not know how real an issue this is. If one looks at the balance of unemployment in the regions, as against the national figure, one sees that it has not changed in this period of high unemployment compared with previous periods If one looks at the operation of unemployment, one sees that there is little significant difference between this period of time and 1968 or earlier periods. It is difficult to detect any signs in the statistics that unskilled workers are suffering more than skilled men during this period of unemployment. I hope that the Government will give us their view of how similar this period of unemployment is in structure compared with previous periods, or tell us whether we may be seeing the beginnings of some more fundamental change in the pattern of employment.

We have at least to consider the possibility that we are faced with what Peter Drucker calls the age of discontinuity, with increasing technological change and the likelihood, at least, of whole industries being born and other industries becoming redundant. I hope that the Government will study ways to achieve a more sophisticated national labour market by improving the employment services that are available to people, and that they will develop and expand training facilities.

I know that there are criticisms of some aspects of the training board scheme, but if the Government are to reform this I hope that they will not reduce, but will expand, the amount of time and money that is spent on providing opportunities for the retraining of workers. I hope that the Government will develop and improve our forecasting services so that information about changes in employment patterns can be fed into the system and enable us, on a wide range of economic and social policies, to plan ahead. I hope, too, that the Government will take a radical look at the patterns of working hours and the retirement age which we now accept as almost immutable.

I have had to canter through the last part of my speech, but I hope that the Government will be able to say that they are looking carefully at several of the issues which I have raised. As I said earlier, the greatest disaster would be for us to come out of this period of unemployment and then, in two or three years' time, find ourselves back in a similar situation. Let us resolve, as the economy begins to grow again and we abolish unemployment from the economic scene, that we shall not let it recur at this level.

8.20 p.m.

Mr. John P. Mackintosh (Berwick and East Lothian)

There is a certain amount of sameness about these debates. I acquit the hon. Member for Paddington, South (Mr. Scott) of any feeling that unemployment is not a horror; we both agree that it is. It is catastrophic, a disaster, it is something which should be eliminated if at all possible. What we are debating is the question of the over all management of the economy, and there is this sameness in that when each side takes power it tends to accuse the other side of mismanagement.

There is a third party which ought to be in the debate and it is the Treasury officials who give the advice to respective Government Front Benches. The serious accusation which we are making against the Government Front Bench is that they started their reflation too late and did not realise that they could move more confidently, given the balance of payments, than they have done. The result may well have been that we have had a longer and deeper recession than was necessary. In moving out of the present recession and moving forwards I hope that the Government will, as the hon. Member for Paddington, South suggested, adopt a fairer incomes policy, if they are to practise one, than the rather arbitrary one that they are now offering. I also hope that they come out of the period of floating exchange rates having learned the lesson we learnt so painfully in 1967 and come out not with a revaluation but I hope a slight devaluation as against the other major trading currencies, to enable us to maintain our competitive position.

I do not want to talk about the problem of relative skill in overall management of the economy but instead I want to look at one continuing theme and that is our management of the regions, particularly the Scottish Region. Over the last 12 years that we have been suffering this stop-go policy one consistent theme has been an attempt to bring the regions up to the level of income and employment enjoyed by the more prosperous central area of the country. We in the Labour Party developed this as carefully as we could, we pushed it forward a long way and the present Government gave us full credit when they published their recent Scottish Economic Bulletin by saying: The latter years of the 1960s are therefore rather unusual —note the word "unusual"— in that they are the only period since the war when Scottish employment has moved in line with, or slightly more favourably than, employment in Great Britain. That is to say that the late 1960s were the only period when the Scottish economy was actually, in regional terms, catching up on the British economy and we were achieving our regional objectives.

In the last 15 months all the indicators have gone the other way, the Scottish Region is slipping back in terms of relative wages, it is slipping back in its share of unemployment and it is slipping back to the position in which it was in the early 1960s when we began this push to catch up with the rest of the economy. It is in a worse condition than the other development areas, which have not lost ground as compared with the rest of Britain as seriously as the Scottish development area has done.

When I put this to the Government in an Adjournment debate during the recall in September, the Government confessed that they had no analysis as to why this had happened. They could not explain why the collapse of the Scottish Region's relative position was so serious. The figures are given in their own publications; their admission was that they had to think about this and try to analyse the situation. That is why I was discouraged when I returned to the House, hoping for some analysis of this in the Queen's Speech and for some solution of the problem to read in the Gracious Speech, of the Government,

In developing their regional policies they will pay close attention to the economic needs of particular areas. What an anodyne remark! The Prime Minister in his speech said: The regional measures that we are using today are not a complete answer. He can say that again. When we wondered what the answer was he said: and we are now studying the alternative options which may be open to us."—[OFFICIAL REPORT, 2nd Nov., 1971; Vol. 825, c. 45.] There was not a single proposal, not a suggestion.

Then I turned to the speech of the man who, if anyone. is in charge of the regional policy. the Secretary of State for Trade and Industry. He produced the curious statement that the Government had … such a complex pattern of incentives and methods of coercion as to make it very hard to assess the effective impact of our total package. He went on: I do not believe that anything is to be achieved by adding to the weight or number of present complex provisions. So he does not propose any positive solution but he said he wanted: more direct means of tackling the individual problems of individual areas."—[OFFICIAL REPORT, 3rd Nov., 1971; Vol. 825, c. 185.] What this means for our people we were not told. We have had nothing but platitudes on this question, no analysis, no understanding, no explanation of the Scottish situation. I fear that this will be a totally disastrous winter for Scotland.

Turning to the remainder of the Gracious Speech, I find that we are to spend next Session on two Bills, one increasing local authority rents and the other restructuring or re-bureaucratising the Health Service in Scotland, both of which Measures are totally irrelevant to the economic problems of Scotland. If the Government want to make some direct contribution there are a number of actions they can take. One is immediately to improve the incentives for investment. It is no good talking about attracting new industry ; the problem is not so much of attracting new industry as of retaining what we have. Stopping existing industries declining is our immediate problem. Deeper than that, we want to get a reasonable level of investment in the existing industry in Scotland. That is the fundamental thing we lack.

I want to endorse the very constructive speech of my hon. Friend the Member for Lanarkshire, North (Mr. John Smith) who pointed out that it is not just the Labour Party which is saying this, it is the Scottish branch of the C.B.I., it is the Scottish Council for Development and Industry, it is even the Tory Party of Scotland which has hauled the Secretary of State for Scotland before it and said, "What on earth are you doing about this?" With one accord they said that regional policies have failed. We on this side of the House can produce some immediate solutions. In the first place the Government can return to investment grants which it is agreed right across the board are a more desirable method of encouraging existing industry to invest now than are investment allowances.

Secondly, the Government could go back on their statement about abolishing the regional employment premium. They have said that this is to go in 1974 and that fact is now being taken into consideration by industrialists in deciding not to go ahead with investment. The Government ought to go further and not merely say that they will keep the premium but they should announce that they will immediately increase it. This would be a much better method of stimulating investment in Scottish manufacturing industry than any other method suggested to-night.

In addition, the Government could take the sort of action which was taken in Italy. I do not suggest the setting-up of new publicly-owned factories, as this is a complex operation, but the Government could insist that contractors and sub-contractors to the Government and the nationalised industries should set up in development areas. The Hydro-Electric Board in Scotland did a splendid job in this direction. A number of firms were tendering to make parts for the Board which said that it would give the contract to the firm which built a factory in the Highlands. Why cannot the Government do what the Italian Government do and say that a whole range of industry catering for the public, if the cost differential is not great, must go to a development area? That is the kind of direct intervention we could have.

There is one further area where the Government's leadership in Scotland is limp and laggard and that is the whole question of house building. One of the reasons why the Scottish economy is in a worse condition than the rest of the British economy and the other development areas is that we are peculiarly dependent on the construction industry. Yet there are 25,000 people unemployed in that industry in Scotland today—30 per cent. more than a year ago. This is partly due to the catastrophic fall-off in municipal house-building. The only thing the Government are doing about it is a Bill on council-house rents which has no relation to the problem whatever. The real reason why house-building is falling off is that the crucial housing problem in Scotland is now in the main a big city problem. Moreover, there are very few sites left inside the big city boundaries. We should, therefore, move rapidly towards regional government in Scotland of the kind proposed in the Local Government White Paper.

It is fantastic to think that the Government should be bringing forward the English local government reform Measure this Session, to go through in 1973 and be working by 1974, while we in Scotland, who had our preparations for the Bill virtually complete, will not have our Measure in force until a year later, in the following Session.

In Scotland, the Bill is due in 1972–73. the elections will take place in 1974 and the new machinery will not be set up until 1975. This will make it impossible for us to go ahead with a sensible overspill housing programme from the cities for another year, which will mean Scotland's housing problems and unemployment in the construction industry continuing for a considerable time longer than they need have done. In other words, this is something the Government could have been doing now instead of indulging in the pointless Measures they have been introducing.

The Government should also be looking ahead and be producing a proper energy programme for Scotland. There is a danger that mining employment, which has held up satisfactorily in recent years, could collapse because we are to have a nuclear power station in 1973 and an oil-fired one in 1974. About 50 per cent. of the output of Scotland's mines goes to make electricity.

If the North Sea explorations produce oil which can be available as fuel at a rate cheaper than coal, it is estimated by the National Coal Board that instead of the present consumption of six million tons of coal by power stations, only four million tons will be required. Further, the Gas Board is expecting to take less Scottish coal. This could all mean a loss of 20,000 jobs in Scotland over and above the catastrophic loss that has been taking place and the already far-too-high unemployment rate.

It is clear that the Government should produce a proper energy programme, go ahead with local authority reorganisation, revitalise the construction industry, analyse the failure of their regional policy and adopt some of the positive steps that we on this side of the House have been suggesting. But it is, perhaps, too much to hope that something will replace the weak, limp and ineffectual Government that we now have, which is nowhere weaker and limper than it is in Scotland.

8.31 p.m.

Mr. John Biffen (Oswestry)

The hon. Member for Berwick and East Lothian (Mr. Mackintosh) ranged at a gallop over the problems of Scotland, and he did so with great parliamentary skill and panache. We expect such expertise from him. I hope, however, that he will acquit me of any discourtesy if I turn to a wider issue.

On this last day of the debate on the Gracious Speech, in which hon. Members have rightly ranged over the whole spectrum of economic issues, the Opposition have properly concentrated on the worrying and seemingly intractable problem of unemployment. However, in virtually every speech, including that of my right hon. Friend the Chancellor of the Exchequer and the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins), there has crept concern about the international monetary arrangements, which provide the backcloth for so much of our commercial and trading activity.

However serious are the considerations of unemployment, serious as they are, at least we have escaped the cruel misfortune that they should have been com- pounded by any tremendous downturn in our export business. Were the international monetary considerations to exacerbate all the other considerations affecting unemployment, we would be that much more gravely concerned.

I have no hesitation, therefore, in addressing my brief remarks to the issues that have flown from the dramatic actions taken by President Nixon on 15th August. This is the first time in this Session that Parliament has had an opportunity to consider those consequences, and I wish to consider them in the light of another key date, 28th October, when Parliament took a tentative look at the possibility of British membership of the E.E.C.

It is clear that we are now moving through a fascinating period of learning to live with free exchange rates. It may be a dirty and qualified floating, but certainly we have exchange rates on a much more flexible basis than many people thought likely; and I warmly congratulate the Chancellor of the Exchequer that when confronted with the action of President Nixon, he opted for flexible exchange rates and did not copy the behaviour of the French and seek to stick to rigid fixed exchange rates.

What is the real significance of this in considering the whole question of our relationship with the European Community? Whatever may have been our sentiments on the evening of the 28th October, there is a widespread disposition to favour more flexible exchange rates, certainly on this side of the House. But on whichever side one voted that evening, above all was the anxiety that, in the working out of our relationships with our European neighbours, we should avoid an excess of centralised, bureaucratic, and remote Brussels control. I believe that free exchange rates offer the best protective course available to this nation in that direction. In pursuit of that course we shall be serving the national interest at its highest.

The first casualty of a more flexible exchange rate is the common agricultural policy. I do not know of anyone—possibly not even the hon. Member for Berwick and East Lothian, who is as thoroughgoing a revisionist as I have come across—who argues that the common agricultural policy is the jewel in the Common Market crown. Yet we know perfectly well that free exchange rates, flexible rates, offer a very real threat, to that policy.

Let me here quote from Mr. George Howard at the annual general meeting of the Country Landowners' Association on 27th October. I do so for the benefit of hon. Friends: I really must make other quotations for hon. Members opposite. Mr. Howard said: … it is virtually impossible for the common agricultural policy to operate properly while the currencies of the Six fluctuate against each other. Community economic planning in general, and the common agricultural policy in particular, really demands a common unit of currency …". For the benefit of the dirigistes on the other side, let me quote from the highly reputable Europe Agence Internationale which, discussing the views of the Commission in Brussels on the whole question, said: The Commission does not conceal its profound concern. … And … can only repeat what it has expressed on several occasions, namely, that the good functioning of the common agricultural market can only take place with fixed parities for the currencies of the Community. There is more likelihood of this country being able to effect a fundamental change in the operation of the common agricultural policy through maintaining the existing flexibility that there now is in exchange rates than there is any chance within the Community of being able to exercise pressure on the French after one has conceded that a national veto remains.

Let me now turn to a second advantage. It seems to me that in the operation of a regional policy within the context of the Community if we have free movement of capital and labour with fixed exchange rates the differential rates at which national economies proceed will be exacerbated, and we will see regional imbalances intensified.

That is exactly what the Commission would I will not say welcome but certainly take advantage of, because the Commission would have a ready-made remedy which is, "You vote us really sizeable Community budgets for the regional development policy. Give us a European social fund we can be proud of, and we will pour in regional development aid as compensating factors out of Community revenues which will soon exhaust the product of the common agricultural levy and the industrial tariffs, and will mean a jacking up of the contribution to the Community through V.A.T.". That is the prospect which is before us, and from which we have the opportunity of escaping through preserving the flexible exchange rate initiative which I believe is now in the hands of the Chancellor of the Exchequer.

Finally, my third point is that if we preserve the present situation of a more flexible exchange rate we have a very fine opportunity to impede the Werner Plan for monetary union, which I believe to be wholly misconceived. I can do no better than to quote the views of my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams), as reported in an article in The Times by the correspondent in Strasbourg: Sir Brandon Rhys Williams, Conservative M.P. for Kensington South … In his view the so-called Werner plan for establishing a monetary union before arriving at greater political and economic integration was rather a pious hope. With characteristic understatement, my hon. Friend certainly indicated all the bureaucratic nonsense which would flow from interlocked currencies at fixed parities long before we had even remotely approached the point of having any degree of fiscal harmonisation within the economies of the Community. Therefore, if we could only successfully impede the implementation of the Werner Plan, file it away, roll up that particular plan for a decade or more—certainly outside the span of most of us in our political thinking—European co-operation could proceed on a much more satisfactory basis, which would be seeking—as one would be in the European Free Trade Area—to minimise those non-tariff trade barriers which can be found in the irritant consequences of national taxation.

Free exchange rates have ceased to be a technicality. They have become the means and the hallmark of pragmatic national independence within an enlarged Community. If Lloyd George could say that war was too dangerous to be left to the generals, I must say, on this reading, finance is too dangerous to be left to the bankers, who now call, almost in unison, for the re-imprisonment of national economies within a discipline of fixed exchange rates. Flexible exchange rates offer to this country and the Government a chance that we can fashion our relationships with the Community in a manner which derives much more from the popular instinct of the British people. That instinct is that those relationships should subsist predominantly upon our own national, parliamentary, and Governmental institutions.

8.43 p.m.

Mr. Peter Archer (Rowley Regis and Tipton)

It is always tempting to follow the hon. Member for Oswestry (Mr. Biffen) along some of the trails he lays so skilfully. I trust that he will acquit me if, in the interests of expedition, I defer that temptation to a later occasion.

I hope that the House will forgive me, too, if I discard the usual graces tonight in the hope of allowing time for at least one other hon. Member to address the House.

I am not an economist and this is not the kind of debate in which I would usually seek to catch Mr. Speaker's eye. I intervene now with a frankly parochial contribution. And if I discard my usual legal draw for something of a unintelligible gabble, I hope I shall be for given. I intervene to support what was said by my right hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell), who expressed some of the concern of West Midlands Members on this side of the House.

It was unusual for any of us in a debate of this kind to plead the cause of the West Midlands, as hon. Members like my hon. Friend the Member for Birmingham, Northfield (Mr. Carter) have been doing in the last few weeks. Previously we have always been prepared to concede that other regions may require help which, in our good fortune we ought not to grudge them. In many ways we have normally been a fortunate region. Right at the beginning of the industrial revolution, industries grew up quickly in the West Midlands. One industry attracted another, and industrialists moved closer to their suppliers and customers. That was the picture right from the industrial revolution onwards.

That was the picture when my great grandfather walked with his family from the Rhondda, because there was no work for him in the Rhondda and there was work in the West Midlands. Even in the bleak days of depression in the 1930s, which I can just remember as a small child, when the first greeting which any man gave to a friend was, "Are you working? ", and when women shamefacedly confessed to the local shopkeeper that they needed a little more time, even then people from other areas came to the West Midlands because they believed that there was a little more hope of finding work there than in the places from whence they had come. And those under 45 in the West Midlands have had no experience of any serious long-term unemployment.

In June, 1970 the seasonally adjusted unemployment figure for the West Midlands was 1.8 per cent. Of the ten regions set out in the Department of Trade and Industry's figures, the West Midlands came eighth. By October, 1970, the figure was 2.4 per cent. and the West Midlands came seventh. It had overtaken the East Midlands. Even then, generally speaking, those in employment were in relatively high-earning groups.

There was still what the economists have been pleased to call "the West Midlands syndrome ", by which they meant that people were accustomed to work hard, to work for long hours, but at least to full employment and to high earnings. The picture was not quite so rosy as some of the more extravagant caricatures that we heard from time to time from the Department of Trade and Industry, but although there were districts in which low earnings prevailed, and although there was poverty among the elderly and handicapped, most of those in full employment enjoyed a relatively high standard of living. Their houses were well furnished, even though the furniture was worn out before they completed the hire-purchase payments. They could take their families out for a weekend outing, even though they needed a contribution from their wives' earnings.

They paid the penalty in terms of the environment. Town planning came too late to the West Midlands to separate industry from residential areas. People had to put up with noise and smoke; but at least the factories which were making the noise and smoke were producing employment, so the people were prepared to settle for relatively moderate investment on amenity conservation measures.

In October, 1971 the figure of 2.4 per cent. unemployment had risen to 5.3 per cent. I do not know what the economists say about that, but my arithmetic says that it had increased two-and-a-third times. Male unemployment had risen from 3.2 per cent. to 7.4 per cent Many more of those unemployed were long-term unemployed.

We are not speaking here merely about the problem of unemployment. We are speaking about a complete shift of a region's place in the national economy. The statistics are startling, but the change in the life of the area is even more startling. As my hon. Friend the Member for Northfield can confirm, the difference can be heard in people's voices and seen in their faces. It has transformed a whole way of life for a whole region.

Other hon. Members have explained what this can mean for the particular individual concerned. Some time ago the programme "Coronation Street" portrayed this in very poignant terms, when Jerry, who had just become unemployed, had to swallow his pride and return to ask for a job which he had given up previously to better himself. He paid his way in buying rounds of drinks; but after feeling in his pocket, he decided that he was not thirsty himself. He insisted on paying his rent, but the last £1 was paid in silver, and then coppers. And he could not manage the last few pence. That is what unemployment means for people in his position.

It is not only for the unemployed that life has changed fundamentally. The future has changed for families whose breadwinner is in full-time employment: whereas previously he was often in work which entailed high earnings, he is now on a much lower income level. He has the humiliation of explaining to his children why the television set is leaving the house, or why they cannot continue to go to a football match on a Saturday. There is the change in the life of many retired middle-aged men who have retired prematurely because they have been laid-off, and they know that they will never get another job. There are the women whose earnings previously meant the difference between a holiday and no holiday, and who are not in jobs any more. There are the school leavers to whom my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) referred and whose case was put so effectively by my hon. Friend the Member for North field a few weeks ago. There are the careers officers struggling in conditions almost of squalor in their offices, to cope with the problems they are meeting in Birmingham and the Black Country. Talk in the clubs is about who is on short time, who is redundant and who is going to be next. I could elaborate on this, but I have no intention of doing so.

We are entitled to know the Government's diagnosis of the problem. Do they see this as a short-term problem which will pass? Can the West Midlands look forward to being restored to its previous place in the economy, or is it a long-term trend? If it is a short-term problem, can we see some short-term solutions? There is no point in solutions which will take three or four years to work out.

It was the Government who chose as their instrument free competition. If that operates too slowly, we are entitled to an economy which is more responsive to public need and public decisions. If it is the Government's view that this is a long-term trend—and I would be grateful if I could have the attention of the right hon. Gentleman the Lord President of the Council because this is a very serious matter for many people—

The Lord President of the Council and Leader of the House of Commons (Mr. William Whitelaw)

The hon. and learned Gentleman has my attention.

Mr. Archer

If the Government believe that this is a long-term trend, and if the West Midlands may find itself in the next few years as a candidate for development area status, may we ask what the Government are proposing to do about it? It is true that it may be a little premature to make that kind of diagnosis, for it is only under the present Government that this kind of situation has arisen. But the whole country has been subjected to the present Government, and the West Midlands have found their place in the league changed from eighth to third. We are entitled to know what the Government say about this.

Some of the possible solutions to the problem have been indicated tonight from both sides of the House. It would help if the Government were to find a way of putting more purchasing power into people's pockets, although, in fairness to my own constituents, I cannot imagine that the first £1 increase in the old-age pension would be spent on more cars. It is true that the engineering industry training board in the Midlands is trying hard to find more apprenticeship schemes, but that does not help either, unless there are firms with sufficient confidence in the future to take apprentices. It might be said that the West Midlands is geared too closely to the motor car industry. We all know what that means in terms even of storage space. Those who make components in the car industry can be turning out work at full spate this week, and next week they may find that there is no demand for a single unit because there is nowhere to store it.

The answer may be to diversify, but if that is the Government's solution they have not made a great contribution to it, because in order to diversify one requires industrial development certificates. Tonight we have heard of the fall in the number of industrial development certificates in the last few months. The Secretary of State for Trade and Industry, speaking in the House on 3rd November, referred to the report of the Committee of Inquiry on Small Firms and the Committee's recommendation that the minimum limit for an industrial development certificate in the West Midlands might be raised from 5,000 sq. ft. to 10,000 sq. ft. He said the Government did not propose to do anything about it. That is no way to encourage diversification.

The people in the West Midlands feel that industrialists and particularly international corporations have taken what the area has to give and now they have lost interest. They can do this in consequence of a deliberate policy of shake-up, and of leaving the lame ducks to fend for themselves. As was said last week by my hon. Friend, the Member for Northfield, private industry is run by accountants, people whose concern is not men and women who are their most valuable assets, but the balance sheet at the end of a decision. Private business is prepared to invest only when it can be persuaded that there is a reward at the end in the form of profit, and if all the Government's tax concessions have not persuaded it that it is now worth while having a massive reinvest- ment, the public may well recollect the doctrine of the pioneers of this Party, that if private enterprise cannot pull itself up by its own bootlaces, we may require more public investment over a much wider sector of public ownership, and the West Midlands is learning that the hard way.

8.55 p.m.

Mr. William Shelton (Clapham)

It is said that the short speech is often the better speech, so let me go straight to my thesis. We have had an average trading surplus over the first eight months of this year of about £14 million a month, and an invisible earnings surplus of about £50 million a month. Consequently, we have the prospect this year of passing last year's record of nearly £600 million in our balance of payments trade surplus. That is a vital factor in our discussion on unemployment and inflation.

The experiencing of unemployment and inflation together is a new economic animal on our scene. The remedy for unemployment which my right hon. Friend the Chancellor of the Exchequer has taken, and with which I entirely agree, is to stimulate demand. The remedies being taken for inflation include the C.B.I. initiative, which we must also applaud.

I believe that the money supply is a root cause of one of the problems, and a very grave problem, that we face today; it is partly the cause of the contradictory situation in which we find ourselves. We know from answers my right hon. Friend the Chancellor has given in the past that the money supply has been increasing at the rate of about 10—12 per cent. this year. It has been financing inflation. On the other hand, we have not had deficit financing. We do not seem to have had an increase in, what I must confess I do not entirely understand, the velocity of circulation. Perhaps the answer must be an enormous movement across the exchanges into this country, a point first made in the House, I believe, by my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell). To me, it carries weight.

Before the war, inflation held the same terror in Germany as unemployment does here. At the first sign of inflation a year or so ago Germany floated the mark.

If the analysis I have given is correct. we have a clear situation.

We have an explosion in wage demands in 1969. An explosion is caused by something, and was not that explosion perhaps caused by the price inflation consequent upon the undervaluation of the pound after the 1967 debacle? If that is so, and there is a price explosion causing a wage explosion in a low price, low-productivity economy, which I think all hon. Members will agree we have, there is what is known in the jargon as a reappraisal of the capital labour content in the economy, a nasty phrase for something that is happening now—less labour and more capital, leading, of course, to unemployment.

The conclusion must be that a consumer boom in the present circumstances will not quickly reduce unemployment, because we still have the pressure of price inflation consequent upon the balance of payments surplus and the situation where we have only 30 per cent. of the work force on overtime and short time has doubled. So there is a lot of slack to be taken up.

My final conclusion must be that in the short term there is no quick answer to the unemployment situation but that in the long term we shall have a sounder based economy than we have had for a long time. About inflation, I echo what was said by my hon. Friend the Member for St. Marylebone (Mr. Kenneth Baker) —let us hope that the £continues to float.

9.0 p.m.

Mr. Anthony Wedgwood Benn (Bristol, South-East)

The number of speeches made by hon. Members who represent different parts of the United Kingdom and the message they have brought to the debate confirms the wisdom of the Opposition in choosing this subject for an Amendment to the Gracious Speech. This is no doubt the biggest problem facing the country at the moment. Having spoken in debates on unemployment both as a Minister before the election and since then as an Opposition spokesman I must confess that there are certain aspects of unemployment debates which I find unsatisfactory.

First, those Ministers, whichever Government are in power, who have to take measures which have led to a rise in unemployment do not themselves personally experience the effects of their own policies. Back-bench Members, however eloquent or fluent they may be—and many today have been fluent—cannot really convey by their oratory the full meaning of the fear of redundancy, the humiliation of dismissal, the exclusion from prosperity, the despair of the long term unemployed or the disillusionment of the school leaver. If there is a subject which lends itself least well to the exchange of statistics or quotations it is, I think, that of unemployment.

The second reason debates of this kind present difficulties to the House is that no Government can guarantee that everyone keeps his job. The reason for this is not very hard to find. First of all—and the Chancellor of the Exchequer touched on this, as did the hon. Member for Oswestry (Mr. Biffen) and others—there are external factors which are not within the control of the Government and which may make a substantial difference to the level of employment. Secondly, there are the technical changes which go on and which are very important, for example, the effect of the growth of oil and the use of nuclear power on the mining industry. or, as my hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell), speaking for the clerical workers, pointed out, of computers on clerical work, and the effect of automation on the unskilled. These changes are increasingly evident in our society. If the Chancellor's speech had a slightly Edwardian flavour about it, it was because he was able to speak about unemployment without making any reference at all to the technical factors which affect it.

I confirm what my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) said—that no member of the former Cabinet can be satisfied that we had solved this fundamental problem. Indeed, I spent much more of my time on employment problems than I did on technological problems, and I found it very hard to succeed—and where one did succeed one was most seriously criticised, as in the case of shipbuilding or work on some advanced industries. When one thinks of my right hon. Friend the Member for Jarrow (Mr. Fernyhough) and the work we did on Palmer's Yard only to find it immediately offset after the election, one realises that the maintenance of employment is not beyond party controversy.

But, of course, the main reason why unemployment today is at a higher level than it should be is that the Government have decided—and decided when they came into office—that unemployment has a rÔle to play in carrying through their economic policies. First of all—and this is the classic remedy—they took the view that unemployment would help them in some way to get a grip on inflation. It is a classic remedy. The Treasury produces this old instrument when rises in prices appear to be getting out of control. It is a brutal remedy, but it would be very deceptive if in the course of the debate the House were not to recognise that unemployment has always been regarded by those supposed to be experts in these matters as being a way of getting inflation under control.

What has happened in very recent years has been that unemployment has risen but the rate of price increases has risen as well. Increasingly, this old remedy has been proved not to work, and the reason for this lies in part in the technical changes to which I have referred. If there is a high degree of specialisation of labour and an extremely complex industry with a very high capital content, the relative bargaining position between the trade unions and the employers in that industry is not much affected even if the level of unemployment is higher outside. That, presumably, was why the Secretary of State for Trade and Industry earlier this year indicated that he was thinking of cutting tariffs on motor cars unilaterally, in order to try to bring foreign imports to bear in a place where the bargaining power of the unions was, as he thought, too strong.

Beyond that, we now have the opportunity of seeing the result of the policy. Although the Government's policy has succeeded in marginally reducing the in- crease in earnings, basic weekly and hourly rates have continued to go up even while this brutal remedy was being applied. While it has been applied, where it has had an effect has been in the regions and the situation in the regions, mentioned by my hon. Friend the Member for Houghton-le-Spring (Mr. Urwin) and others, is now little short of tragic. But, no longer confined to the regions, it is beginning to make its impact on the Midlands and other parts of the country, and yet throughout this period prices have continued to rise. That is one reason why the Government were prepared to defer their reflationary measures—because they thought that unemployment had a rÔle to play in dealing with inflation.

The second reason this was done was that it was part of the strategy for entry into the European Economic Community. It is astonishing to me that the Chancellor of the Exchequer, who, one week ago, made a speech to which I paid tribute because it had an historic perspective about the enormous decision we were taking about Europe, should have made no reference at all to employment prospects in the context of entry into the E.E.C. Here we are one year, one month and 21 days before we enter the Community—if the legislation goes through— and the Chancellor is not able to look even as far as January, 1973, to relate his current policies to what is the central feature of the Government's economic and political strategy.

The need to maintain a large balance of payments surplus to float us into the Community must have been a factor, and we know it was, in the Government's broad economic strategy. So was the decision to encourage a shake-out of labour, on which the Secretary of State for Trade and Industry has been quite eloquent, in order, he would argue—and I am presenting his view—to see that we are competitive when we enter the Community.

The problem of the shake-out is that it is becoming compounded with general structural change in employment, and it is this fact that makes the problem of unemployment much more intractable as the House debates it today. It is the fear that these are the Government's motives which more than anything else has sustained public opposition to entry into the Common Market.

The third reason the Government have pursued this policy, and I agree with what was said by one or two hon. Members about this, was more than just against inflation and more than just a preparation for Europe. It was and it was seen by the Government as part of an attack upon organised labour in this country. Taken with the Industrial Relations Act which the Secretary of State for Employment piloted through the House it shows that there is no doubt that the Government are afraid of the power of organised labour and work people in our society.

It is not only organised labour that has become more powerful in modern industrial society; the large corporations also are more powerful in this society. But when the Cabinet come to consider how they should deal with the large corporations, which are massive in strength, they present to the House quite a different aspect. What they say is that if the corporations are to be allowed to do their best in this country, an environment favourable to capital must be created. That is why they want lower taxation, free movement of capital, less control by Government. They argue that, in order to live in a world in which the great corporations play such a part, Governments must adjust their policies to meet the needs of capital.

But when they come to the question of creating an environment for labour, the Government take a totally different view. Yet, it is at least equally true that if the best is to be got out of a community today there must be policies that create an environment in which labour, too, can give of its best. I say to the right hon. Gentleman that we as a Government did not succeed in establishing the sort of social contract with labour, with workpeople, that would have allowed us to develop the full potential of what I have described. [Laughter.] The House may laugh, but the criticism is that the Government are not even trying to find such a solution.

When I read the commentators, suggesting that Labour was defeated because 1 or 2 per cent. of Guardian readers floated into the Conservative camp, I wonder whether we live in the same world. Everybody knows that the reason we were defeated was that we did not carry our own people with us in the election campaign. That stemmed strongly from the fact that we had not been able, as a Government, to establish that contact.

One day, I do not know when, society will realise that the power of working people in a modern, industrial society, has a great, positive potential for producing wealth, and is not as destructive as Ministers now think it to be, and as one can deduce from the policies being pursued in industrial relations legislation and other ways. The right hon. Gentleman the Chancellor of the Exchequer, in opening the debate, boasted about the fall in the number of industrial disputes in the last few months. Would he put into the statistics how many days have been lost by unemployment alongside the days he claims have not been lost by industrial disputes? The plain truth is that this has been the weapon which he has used to reduce the strength of British working people.

The Government are now thoroughly frightened by the results of their own policies. Investment is falling. The Secretary of State for Trade and Industry, both in his former position and in the House—and I have heard him and read his speeches—is desperately concerned at the fall in investment. It is more serious than when his Government came to power. My right hon. Friend the Member for Stechford gave figures showing the fall in investment, eighteen months after the Government came to power at an election in which the right hon. Gentleman's address was virtually built around the problem of investment. The position is still more serious, and there is a forecast of a further drop in investment. The C.B.I. October Trends indicate that more firms think they will be cutting their expansion plans next year than will be increasing them. This is one reason why the Chancellor has come forward with these measures. Another is that the Cabinet are politically frightened at the effects of rising unemployment on their own standing with the public. Undoubtedly, those two factors have played a part in the new measures which the Chancellor has introduced.

However, the Chancellor having gone as far as he has and he went much further, with the total abolition of hire purchase restrictions and in other respects, than has been done before—his measures are not succeeding. Rising unemployment still has to work its way through the economy, which means that demand is not as buoyant as he had hoped. The fear of unemployment is leading people to save at a time when all the old nostrums would have had us believe that, because of inflation, they would be moving rapidly out of money into goods. The shake-out to which the Prime Minister referred, and to which I referred a moment ago, has occurred and has created such under-use of capacity in industry that, even if the Chancellor's measures were to lead to the consumer boom—which The Times today tells us has already begun to slacken—British industry would quite likely be able to meet the demand without making significant inroads into the unemployment figures.

We have to remember also that, if the consumer boom which the right hon. Gentleman now hopes to create in order to float investment up again were to lead to further imports, which will be easier in the circumstances which lie just ahead, with our entry into the Common Market, we could face a situation—the hon. Member for Paddington, South (Mr. Scott) spoke of this a few moments ago—in which we had to contemplate another stop on the economy, only this time a stop on the economy coming at a time of much higher unemployment than has ever happened before.

Let us, then, look at the record. The old instruments used to deal with inflation have not worked. The old instrument used to reflate the economy has not worked. The House must, therefore, ask itself whether the old economic theories upon which both Governments have based their policies now need to be re-examined.

From several hon. Members speaking in the debate today, among them the hon. Member for Leek (Mr. Knox), saying, with regret, that demand management did not do ail that he, as an industrial consultant, thought it should, and my hon. Friend the Member for Berwick and East Lothian (Mr. Mackintosh), looking at these matters as someone who studies the machinery of government, has come the first serious and, in my view, long overdue questioning as to whether the economists have the answer to the problems actually confronting our society.

I have always suspected that Chancellors of the Exchequer act rather like men on an elephant, with a pin in their hand which they stick in on one side or the other, that procedure being graced with the notion that it is finger-tip control or advanced management control. I agree strongly, which I do not often do, with the hon. Lady the Member for Tynemouth (Dame Irene Ward) when she says that she has no time for high finance; she wants action. It was a very good way of conveying what was said rather more politely by some other hon. Members.

The truth is that the old measures which have been used by Chancellors of the Exchequer over the past 25 years to manage the economy have not produced the results intended by the Ministers who used them. Moreover, we are now coming to a stage when many of the key regulators which a Chancellor is now able to use will be transferred to the Commission in Brussels. If this debate were taking place a year or two from now, the control of tariffs, the control of trade arrangements, the control of capital movements, the approval of location of industry and regional policy, tax harmonisation, and even the control of exchange rates if one goes to full monetary union, together with other aspects of demand management, would not be within the control of a British Chancellor of the Exchequer, at least without consultation—if not more—with the Commission.

I shall not go over the argument which I advanced in the Common Market debate save to point out that the argument about sovereignty which I then sought to deploy is precisely relevant in this connection. It is an argument about whether the machinery for controlling the economy is or is not to be vested in a Minister answerable to the House of Commons.

In the light of all that has been said in the debate today, it is not possible to regard the present problem simply as one for argument about measures of economic management. Plainly, there has been a major change of political objectives. After the war, following the experience of the pre-war years, there was a general understanding that we would never go back to the situation of major unemployment which we had during the 1930s.

The hon. Member for Clapham (Mr. William Shelton) rightly compared this with the Germans who, having had inflation in the 1920s, resolved that they would never have it again. The German sensitivity to anything that might lead to inflation and the British sensitivity to anything that might lead to less employment have been bitten into the consciousness of the two societies. A great deal of our social structure and thinking rests upon the idea that any British Government would try to maintain full employment and would not allow this objective to be driven to one side.

The Government have now to make it clear whether they have abandoned the objective of full employment or, if they have not, why they are not prepared to take more serious measures to deal with it. if the public think that the Government do not care about the level of unemployment, even though the Prime Minister might be able to bring that level down again in advance of another election, if unemployment touches the one million mark a psychological barrier will have been penetrated, and people will not believe that full employment is a major objective of this Government. 'That is the situation that the Government must face. This is not a test of technique; this is a test of will—of whether the Government are prepared to do anything about it.

In this debate there has not been much talk about the way in which unemployment strikes workers in individual firms, but there can be few hon. Members who have not had the experience that I have had, as a constituency Member, of workers telling me that they have been notified, perhaps at only four hours' notice, that their firm was closing, or their plant shutting, with no consultation, no discussion with management and no opportunity of querying what was happening. That story is being repeated throughout the country, whether it be in relation to B.S.A., Westlands, U.C.S., B.A.C., the River Don works, Britten Norman, or other cases which have been drawn to my attention, all of which I have documented.

One thing that the people will not stand is that workers should be treated as if they were disposable bits of machinery, to be thrown out whenever the main hoard decides that it is no longer profitable to employ them. What is happening—and the House had better take notice of this—is that there is a determination on the shop floor, which in my opinion is also long overdue, to defend their interests against manage- ments that treat them in a way that is little short of barbarous in respect of redundancies announced at short notice.

We must ask ourselves—and this is what the Government should make clear—whether the objective of full employment remains a serious objective of the present Cabinet. Market forces will certainly not achieve it. The Government's measures are certainly not adequate to do so. Some hon. Members opposite have criticised us for not having put forward a complete alternative policy, but if we look at the alternatives in the light of the experience that we have had we realise that we were not wholly successful ourselves—although we maintained a higher level of employment than the present Government have done.

It is clear that there will have to be a major change and reactivation of regional policy, with a far greater degree of urgency. We must examine the role of public investment in the regions. We shall have to deal more seriously with the question of social costs, which have been left out of account; we must permit the public sector to diversify, and we must devise a policy which will permit Government investment without simply handing the money to private industry. These are policies on which my party is working, and which the Government will have to adopt in some form if they are not to allow the situation to get completely out of control.

It the Prime Minister is asked about this he simply says, "Subsidy". In his speech last Tuesday he said, "Subsidy" three times, although HANSARD records him as saying it only once. No doubt his secretary thought that it was too excitable to have "Subsidy", "Subsidy", "Subsidy", so that two were struck out. But if society decides that it will not tolerate unemployment, we shall have to spend public money to see that employment is provided.

It is absolutely no use dismissing proposals for dealing with unacceptable levels of unemployment in the regions and elsewhere by simply saying that this would involve some kind of subsidy. I believe that this philosophy of "stand on your own two feet" which is presented by the Government is most unattractive and more irrelevant than all the detailed policy measures they produce.

There is no doubt—everyone knows this to be true—that we live in a period of history when we are more interdependent one upon another than at any other time, and to produce a theory that somehow we can solve these problems by total independence from any sense of responsibility to one's fellow men is wholly unacceptable.

The House is a practical place which distrusts party doctrine. It prefers to tread the footpath of pragmatism, using the old maps and the old compasses. But I think that this debate will have failed if it becomes merely an exchange of views between the two sides and does not open up some rather more fundamental questions.

The problem confronting the man who becomes unemployed is obvious. The questions he asks are: why? who made me unemployed? who put him there? what power does he have over me?

There is to be a conference in London beginning later this month organised by Investment Institute International. Its brochure reached me in the post today. It boasts that the men who will be coming to London between them dispose of investment assets of £1,000 million. These are the men who, by their decisions, will be shaping the pattern of investment throughout not only much of the United States, but no doubt of Western Europe as well. Who are these men? To whom are they accountable? By whom can they be removed? In whose interests are they investing their money? It is these people who will decide which firms, which regions and which people shall prosper and which shall fail.

This raises—the House must know it—some fairly fundamental questions which were brought up in the debate by some of my hon. Friends. During the years of affluence the questions became rather clouded because it was thought that the objectives of Socialism could be met by distributing the fruits of capitalism in a more humane way. But, like my colleagues in the last Government, having tried their hardest to make the old consensus mixed economy work, there are issues of power here which people are bound to raise and which are bound to be answered. The Prime Minister, by advo- cating the crude nineteenth century theories of Adam Smith capitalism which inspire him, is trying to divert attention from them.

A second interest which has been widely discussed in recent years is man in his environment and the extent to which man can achieve in his lifetime some reasonable quality of life. This is always interpreted in terms of noise, fumes, pollution, congestion and privacy. The plain truth is that the environment in which a man gives of his best is that in which he is able to be employed in his skill with his family around him and with opportunities and prospects for them as well. The real enemy of the environment of man today is not so much the white coated scientist as the chartered accountant rigidly applying principles which he thinks right to the prospects of employment of that man.

I finish with a tribute to the hon. Member for St. Ives (Mr. Nott) who opened the debate on the Address, for, in a very remarkable speech, he said two things which I feel sum up what I should like to say to the House. He said: It is the men without roots who are the real poor of the twentieth century. My constituents may be lacking in material wealth, but they have the priceless heritage of having lived and worked among their own families, relations and friends, in the same place, for a thousand years. The House cheered the hon. Gentleman, because hon. Members felt that he was saying something of fundamental importance. Where do those values get reflected in the economist's view of ship workers on the Clyde? Where? Where? Where?

The hon. Gentleman went on to say: constitutions and political forms are nothing but the costumes of the men who wear them. The greatest of our State institutions is not Parliament, but it is the character of the British people who, through their moderation and their tolerance, have ensured the stability of this country for centuries."—[OFFICIAL REPORT, 2nd November, 1971; Vol. 825, c. 9-10.] The House again cheered the hon. Gentleman.

The policy which is now advocated by the Cabinet, however good as men they may be individually, is alien to the philosophy of this country, and will one day be utterly rejected by the people of the United Kingdom.

9.31 p.m.

The Lord President of the Council and Leader of the House of Commons (Mr. William Whitelaw)

I join with the right hon. Gentleman for Bristol, South-East (Mr. Benn) in the tribute which he paid to my right hon. Friend the Member for St. Ives (Mr. Nott) for the remarkable speech that he made in moving the reply to the Gracious Speech. My hon. Friend talked about people having roots in the ground. I do not think that anyone in this House would suggest that my feet were very far from it but, having listened to the right hon. Gentleman, I do not quite know whether I am in this House, in the air, or where the hell I am.

I do, indeed, admire, and sometimes envy, the right hon. Gentleman's eloquence, but when it leads me into all sorts of bypaths and ways which I find it very difficult to contemplate or understand then, on the whole, I prefer him to cone back to the solid, down-to-earth roots of the British people, of which I am bound to say the right hon. Gentleman has no conception, but when he has lived for as long as I have he will appreciate how important they are.

It will be my purpose this evening to concentrate mainly on today's debate and the Amendment moved by the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) because, as he rightly said, unemployment is a central economic and social problem. But before doing so I want briefly to reply to the points raised on the second day of the debate by the hon. Member for Ebbw Vale (Mr. Michael Foot) about the future legislation consequent upon the clear decision in principle of this House that Britain should join the European Economic Community.

The Government are now preparing this legislation, and will present it to the House in the new year. I am sure the hon. Gentleman will agree that that is the moment when the legislation, its form and content alike, can properly be discussed. That, indeed, is the normal method with legislation, and it is the method which has been followed by every Government and by this House.

At the same time I assure the hon. Gentleman, the right hon. Gentleman and others who are worried, that I do regard it as my particular duty to look after the rights of this House in any discussion of such legislation, and the attempts made by the right hon. Gentleman the Leader of the Opposition to ascribe sinister intentions to my hon. and learned Friend the Solicitor General are too absurd to be credible. If anyone thinks that my hon. and learned Friend is a sinister figure he has another thought coming.

Mr. Russell Kerr (Feltham)

He is thick.

Mr. Whitelaw

I am surprised that anyone should think that my hon. and learned Friend is thick, but if one is thick one is usually not sinister—[Laughter.] I can understand that the House may think that I am thick, but if they do think I am thick, they will not think that I am sinister.

Mr. John Mendelson (Penistone)

What about the unemployment situation?

Mr. Whitelaw

I said earlier—the hon. Gentleman did not hear me—that before I came to the debate on unemployment I would seek to answer the points put by the hon. Member for Ebbw Vale. I think it is right that I should do so and I am surprised that the Lon. Gentleman should question it. Perhaps I may turn to the terms of the hot) Gentleman's Amendment—

Mr. Michael Foot

If the hon. Gentleman is purporting to answer the questions I put to him I cannot quite understand how he has not dealt with he series I then suggested. First of all, will he tell us whether there is to be a separate Bill about the coal industry? [HON. MEMBERS: "He has said so."] The right hon. Gentleman can speak for himself; he is of age I understand. Would he tell us whether there is to be a separate Bill for that industry, about which many of us are concerned? Is there to be a separate Bill for the steel industry? Will he consider the proposal I put to him about a White Paper in which these matters would be clearly explained to the House, instead of being confused by the kind of way in which the right hon. Gentleman is putting them to the House now?

Mr. Whitelaw

All I can say to the hon. Gentleman is that I am following exactly the same principle with regard to putting forward legislation as was followed by the right hon. Member for Coventry, East (Mr. Crossman) and the right hon. Member for Workington (Mr. Peart) and all my predecessors—[Interruption.] Yes, indeed—on the basis that no Government are ever expected to tell the House exactly the form of their legislation before they present it.

Mr. Michael Foot

rose—

Mr. Whitelaw

I will not give way—[Interruption.] I will give way when I have finished my sentence but the hon. Gentleman must be fair to me. I will finish my sentence and then I will give way. He has taken a lot of my time. I am following exactly the same procedure as all Governments do and I am surprised that the hon. Gentleman should suggest that I am not because I am.

Mr. Harold Wilson (Huyton)

The right hon. Gentleman, whom I have never thought thick or sinister but always cool—and I hope that he is again cool by this time—will recall that he was purporting to answer what I said on the first day of the debate. [HON. MEMBERS: "No."] He referred to what I said then. Would he now, instead of talking about precedents when there are no precedents, recall that entry into Europe will mean carrying into our domestic law many thousands of regulations written in a different language, affecting company law, consumer law, commercial law and the rest—[HON. MEMBERS:" Too long."] Yes, it is too long. That is the point I am making. Will the right hon. Gentleman give an assurance that every bit of the new law will go through the normal parliamentary procedure of Second Reading, Committee stage and debate and not be done by unamendable procedures, with Statutory Instruments?

Mr. Whitelaw

I thought I had made it perfectly clear that the legislation when it is laid will be produced to this House, and when it is produced. that will be the moment when its form and content—

Mr. John Mendelson

No.

Mr. Whitelaw

When legislation is produced, then it is possible to argue whether it is right, whether it is wrong, whether more of it should be produced and—

Mr. Foot

rose—

Mr. Whitelaw

No. I will not give way again. All these points can be argued at that time—

Mr. Foot

rose—

Mr. Whitelaw

I will not give way. [HON. MEMBERS: "Give way."] All right then.

Mr. Foot

In debating the Gracious Speech hon. Members are entitled to ask the Government about the particular Measures they propose to bring forward. Four days ago I asked the right hon. Gentleman to say whether there would be separate Bills relating to, for example, the coal industry and the steel industry. Will he now tell us?

Mr. Whitelaw

I have said that it is perfectly proper for the Government, following the decision of this House—

Mr. Foot

This is the purpose of the debate on the Queen's Speech.

Mr. Whitelaw

I agree, but I hope the hon. Gentleman equally appreciates that I wish to do my best to reply to the very important debate that we have had today on unemployment. [interruption.] If the right hon. Lady the Member for Blackburn (Mrs. Castle) does not want me to do that, I quite understand because I have some very good things to say to her.

I am simply saying that I am following exactly the procedure that has always been followed in this House on these occasions. I do not see why I should be criticised for that and if the Leader of the Opposition were on this side replying to this debate he would be doing exactly the same—[Interruption.]—and he knows it.

Mr. John Mendelson

rose—

Mr. Whitelaw

I really must get on.

Mr. Mendelson

The right hon. Gentleman knows very well that for the last six to nine months it has always been understood from Government quarters that there would be two major Bills, one asking the House of Commons to agree to accession to the Treaty of Rome and the other, a long Bill of perhaps 100 or 200 Clauses, introducing the details.

Since the Vote was taken on Thursday, a number of reputable British newspapers have reported that on the advice of the Solicitor-General the Government had abandoned these plans and were deciding to dispense with one of those two Bills. Surely the Government have a duty to tell us whether that is true.

Mr. Whitelaw

Such phrases as, "It has always been understood" and "A number of reputable British newspapers have reported" and "Newspapers now assume" must come into the world of gossip and rumour.

Mr. John Mendelson

No.

Mr. Whitelaw

Of course they must. [HON. MEMBERS: "Rubbish"] If they do not come into the world of gossip and rumour, into what world do they come? They cannot come into any other world.

I have made it perfectly clear that when the legislation is ready, it will be introduced to this House, whereupon there will be plenty of time for hon. Members to argue as to exactly what form and type of legislation it is. Then they will be able to say whether it is right, whether it is wrong and whether or not it safeguards this House. That will be the right moment to deal with it.

Mr. Fred Peart (Workington)

Answer the question.

Mr. Whitelaw

Does the right hon. Gentleman wish to intervene?

Mr. Peart

Yes, with a simple question. It is customary for the Leader of the House to reply to the whole debate. My hon. Friends have pressed him on the question of timing. Will he reply to this question?

Mr. Whitelaw

Certainly. The right hon. Gentleman says that I should give a reply about the timing of the legislation. It will be introduced in the New Year. [Interruption.] He asked me for the timing of the legislation and I have answered him.

Mr. Peart

The Leader of the House should now state what form the legislation will take in relation to the Community. He knows that. He is dodging the issue, and he knows it. He has never replied to my hon. Friend. He is absolutely dodging the issue.

Mr. Whitelaw

I have given the right hon. Gentleman a second go. He asked me about the timing and I have answered. Now he asks me about the form of the legislation. No Government have ever said basically what the form of their legislation will be—[Interruption.] No, they have not. Perhaps the right hon. Gentleman the Leader of the Opposition will be good enough to tell me when on any occasion in his period of office his Government ever said how their legislation would be produced.

Mr. Harold Wilson

The right hon. Gentleman can look at the record, because in that period the opening speech from the Front Bench at the beginning of the debate on the Queen's Speech always set out the legislation in very considerable detail. What the right hon. Gentleman has not done, of course, is to answer the question. If the legislation is to come in the New Year, does he still confirm the Government's statement that the Treaty will be signed this year?

Mr. Whitelaw

I have certainly answered the question. The Queen's Speech sets out the legislation, but the right hon. Gentleman knows that the Queen's Speech has never given the exact form and detail of the legislation that is to be produced. That is done when the Bill is produced to Parliament. That has always been the position, and I reckon that I am doing exactly what has always been done.

Mr. Bob Brown (Newcastle-upon-Tyne, West)

The Leader of the House is supposed to be replying to a debate—[Interruption.]—to which a number of my hon. Friends have made serious contributions. We have asked questions to which we want a proper reply, but the right hon. Gentleman is reducing the debate now to a very low level.

Mr. Speaker

Order. I must remind the House of what is said on page 418 of Erskine May: Good temper and moderation are the characteristics of parliamentary language. The right hon. Gentleman has given way many times in the course of his speech.

Mr. Whitelaw

I think, Mr. Speaker, that there has certainly been good temper, and there has certainly been moderation in my case—[Interruption.] If hon. and right hon. Gentlemen opposite wish me to talk about today's serious debate on unemployment—[Interruption]—I must frankly say that they themselves must allow me to do so. I have given way to the Opposition Front Bench far more often—[Interruption] All right—let us get on.

Perhaps I may now turn to the terms of the Opposition's Amendment. That Amendment suggests that there is no recognition in the Queen's Speech of the high unemployment situation. The fact is that the Queen's Speech refers to increasing employment as a first care of the Government, which is far from being an expression of no concern. Nor do I rely on mere words, because the Government's actions speak far more loudly. My right hon. Friend the Chancellor of the Exchequer has taken a massive series of measures to expand the economy. Income tax, surtax and purchase tax have all been reduced. Selective employment tax has been halved. In all, taxation has been reduced by £1,400 million a full year, and that is something which the Labour Party could not claim in six full years of Government. Quite the reverse. They increased taxation by £3,000 million. Bank Rate has been reduced from 7 per cent. to 5 per cent. Again the trend of ever-increasing interest rates has been reversed from what it was under the previous Government. In addition, all the restrictions on hire purchase have been removed.

Perhaps I may now turn to the right hon. Gentleman the Leader of the Opposition, if he and his colleagues will give me a chance to refer to him. At the beginning of the debate the Leader of the Opposition accused my right hon. Friends and myself of deliberately creating unemployment. No Government who have taken the action, and are taking the actions, that we have taken can ever be accused of that. But in any event, the right hon. Gentleman should be careful before levelling such a charge. It comes particularly ill from him, for it was his Government that did increase unemployment quite deliberately as an economic weapon, and my hon. Friends the Members for Enfield, West (Mr. Parkinson) and Leek (Mr. Knox) are right.

Let me refer to the right hon. Member for Cardiff, South-East (Mr. Callaghan). This is what he said on 7th November, 1967: That is true. I will come to the other points later. We must have a somewhat larger margin of unused capacity than we used to try to keep. That is the truth of the matter. On these occasions the right hon. Gentleman the Leader of the Opposition likes to say, "Read on", so I will read on. He always asks for reading on and now he is going to get it. He did not ask for that just now but I am going to give it to him. [Interruption.] The right hon. Gentleman will wait for the next point: MR. MICHAEL FOOT rose— Yes, he did; there he was. What did Mr. Callaghan say? No. I have had to put up with a great deal of this, and I want now to make the case as I see it. My hon. Friends can make their cases later when they have the opportunity to do so.

Mr. Harold Wilson

The right hon. Gentleman was making so much noise that he did not hear what I said. I did not say, "Read on", but I just asked him, what was the level of unemployment in 1967 and what is it now?

Hon. Members

Answer.

Mr. Whitelaw

The right hon. Gentleman did not say "Read on", but I decided to give him the benefit of what he always asks for. If he wishes to make it perfectly clear, what it meant under his Government was that there was double the rate of unemployment during the period of his Government, from then on. That was the position and the right hon. Gentleman appreciates it perfectly well. I will read on: MR. MENDELSON rose—".—[OFFICIAL REPORT, 7th November, 1967; Vol. 753, c. 875.]

Mr. James Hamilton (Bothwell)

On a point of order, Mr. Speaker.

Mr. Whitelaw

It is no use.

Mr. Hamilton

On a point of order, Mr. Speaker. Most of us in the House are deeply concerned about unemployment. The subject is being treated as a pantomime. Will the Leader of the House now talk about unemployment?

Mr, Whitelaw

Indeed I will. If I had been given the chance to do so, I wished to make important statements about training and other matters. That I have not been given the chance to do so is not my fault. The House must face that hard fact.

I turn to two other matters concerning unemployment which the right hon. Member for Bristol, South-East has constantly spoken about in the past—namely, the position of Rolls-Royce and of U.C.S. As much as anyone the right hon. Gentleman was responsible for the fatal deal of the RB211 engine which resulted in the bankruptcy of Rolls-Royce. Does he remember that at the time he described it as a straight commercial deal won on superior technical quality and price"? It was such a straight deal and the price was so good that by the beginning of this year Rolls-Royce was going to lose £60,000 on every one of the 400 engines completed—when they were completed. When the old Rolls-Royce company went into liquidation this Government stepped in and saved about 30,000 jobs by rescuing the RB211 contract from the disasters which the right hon. Gentleman had so cheerfully underwritten. [Interruption.] If I had been given any chance to do so, I should at least have been able to reply to the right hon. Gentleman.

The right hon. Gentleman spoke, too, about the Clyde shipyards. Again, it was not what he said that was interesting. It was what he had forgotten—deliberately

forgotten, I imagine—that was interesting. In the Select Committee on Scottish Affairs he said this: We have never taken the view that at whatever price U.C.S. or any other company in the shipbuilding industry should be kept alive.

We set out to put employment on a basic and stable position in the Upper Clyde, as we are doing. That is surely the right action for us to take.

Before the House votes on the Amendment, it is right to consider it in detail. It refers to the lack of recognition of unemployment in the Gracious Speech. This accusation is manifest nonsense. It then asks for a coherent strategy. A coherent strategy? It is the most amazing effrontery for right hon. and hon. Members opposite to talk of coherent strategy. They have been ever since the Session began slinging mud—filthy mud—amongst themselves. They have been at it unremittingly hour after hour, day after day, night after night, in the Committee Rooms. As a result, they have no plans, no policies, and no basis for putting them forward. As an Opposition they are a shambles and as an alternative Government they are utterly impossible.

I therefore ask the House to throw out this irrelevant and ill-founded Amendment and to support the policies outlined in the Gracious Speech which are designed to improve the employment prospects and the wellbeing of the British people.

Question put, That the Amendment tie made:—

The House divided: Ayes 270, Noes 298.

Division No. 3.]	AYES	[9.59 p.m.
Abse, Leo	Boyden, James (Bishop Auckland)	Crawahaw, Richard
Albu, Austen	Bradley, Tom	Cronin, John
Allaun, Frank (Salford, E.)	Broughton, Sir Alfred	Crosland, Rt. Hn. Anthony
Allen, Scholefield	Brown, Bob (N'c'tle-upon-Tyne, W.)	Crossman, Rt. Hn. Richard
Archer, Peter (Rowley Regis)	Brown, Hugh D. (G'gow, Provan)	Cunningham, G. (Islington, S.W.)
Armstrong, Ernest	Brown, Ronald (Shoreditch & F'bury)	Cunningham, Dr. J. A. (Whitehaven)
Ashley, Jack	Buchan, Norman	Darling, Rt. Hn. George
Atkinson, Norman	Buchanan, Richard (G'gow, Sp'burn)	Davidson, Arthur
Bagier, Gordon A. T.	Callaghan, Rt. Hn. James	Davies, Denzil (Llanelly)
Barnes, Michael	Campbell, I. (Dunbartonshire, W.)	Davies, G. Elfed (Rhondda, E.)
Barnett, Guy (Greenwich)	Cant, R. B.	Davies, Ifor (Gower)
Barnett, Joel (Heywood and Royton)	Carmichael, Neil	Davies, S. O. (Merthyr Tydvil)
Baxter, William	Carter, Ray (Birmingh'm, Northfield)	Davis, Clinton (Hackney, C.)
Benn, Rt. Hn. Anthony Wedgwood	Castle, Rt. Hn. Barbara	Davis Terry (Bromsgrove)
Bennett, James (Glasgow, Bridgeton)	Clark, David (Colne Valley)	Deakins, Eric
Bidwell, Sydney	Cocks Michael (Bristol S.)	de Freitas, Rt. Hn. Sir Geoffrey
Bishop, E. S.	Cohen Stanley	Delargy, H. J.
Blenkinsop, Arthur	Coleman Donald	Dell, Rt. Hn. Edmund
Boardman, H. (Leigh)	Concannon J. D.	Dempsey, James
Booth, Albert	Corbet, Mrs. Freda	Doig, Peter
Bottomley, Rt. Hn. Arthur	Cox, Thomas (Wandsworth, C.)	Dormand, J. D.
Douglas, Dick (Stirlingshire, E.)	Jones, Gwynoro (Carmarthen)	Perry, Ernest G.
Douglas-Mann, Bruce	Jones, T. Alec (Rhondda, W.)	Prentice, Rt. Hn. Reg.
Driberg, Tom	Judd, Frank	Prescott, John
Duffy, A. E. P.	Kaufman, Gerald	Price, J. T. (Westhoughton)
Dunn, James A.	Kelley, Richard	Price, William (Rugby)
Dunnett, Jack	Kerr, Russell	Probert, Arthur
Eadie, Alex	Kinnock, Neil	Rankin, John
Edelman, Maurice	Lambie, David	Reed, D. (Sedgefield)
Edwards, Robert (Bilston)	Lamond, James	Rees, Merlyn (Leeds, S.)
Edwards, William (Merioneth)	Latham, Arthur	Rhodes, Geoffrey
Ellis, Tom	Lawson, George	Richard, Ivor
English, Michael	Leadbitter, Ted	Roberts, Albert (Normanton)
Evans, Fred	Leonard, Dick	Roberts, Rt.Hn.Goronwy(Caernarvon)
Ewing, Henry	Lestor, Miss Joan	Robertson, John (Paisley)
Faulds, Andrew	Lever, Rt. Hn. Harold	Roderick, Caerwyn E.(Br'c'n&R'dnor)
Fernyhough, Rt. Hn. E.	Lewis, Arthur (W. Ham, N.)	Rodgers, William (Stockton-on-Tees)
Fisher, Mrs. Doris(B'ham, Ladywood)	Lipton, Marcus	Roper, John
Fitch, Alan (Wigan)	Lomas, Kenneth	Ross, Rt. Hn. William (Kilmarnock)
Fitt, Gerard (Belfast, W.)	Loughlin, Charles	Sandelson, Neville
Fietcher, Raymond (llkeston)	Lyon, Alexander W. (York)	Sheldon, Robert (Ashton-under-Lyne)
Fletcher, Ted (Darlington)	Lyons, Edward (Bradford, E.)	Shore, At. Hn. Peter (Stepney)
Foley, Maurice	Mabon, Dr. J. Dickson	Short, Rt.Hn.Edward(N'c'tle-u-Tyne)
Foot, Michael	McBride, Neil	Short, Mrs. Renée (W'hampton, N.E.)
Ford, Ben	McCann, John	Silkin, At. Hn. John (Deptford)
Forrester, John	McCartney, Hugh	Silkin, Hn. S. C. (Dulwich)
Fraser, John (Norwood)	McElhone, Frank	Sillars, James
Freeson, Reginald	McGuire, Michael	Silverman, Julius
Galpern, Sir Myer	Mackenzie, Gregor	Skinner, Dennis
Garrett, W. E.	Mackie, John	Small, William
Gilbert, Dr. John	Mackintosh, John P.	Smith, John (Lanarkshire, N.)
Ginsburg, David (Dewsbury)	Maclennan, Robert	Spearing, Nigel
Gordon Walker, Rt. Hn. P. C.	McMillan, Tom (Glasgow, C.)	Spriggs, Leslie
Gourlay, Harry	McNamara, J. Kevin	Stallard, A. W.
Grant, George (Morpeth)	Mahon, Simon (Bootle)	Steel, David
Grant, John D. (Islington, E.)	Mallalieu, E. L. (Brigg)	Stewart, Rt. Hn. Michael (Fulham)
Griffiths, Eddie (Brightside)	Mallalieu, J. P. W. (Huddersfield, E.)	Stoddart, David (Swindon)
Griffiths, Will (Exchange)	Marks, Kenneth	Stonehouse. Rt. Hn. John
Grimond, Rt. Hn. J.	Marquand, David	Strang, Gavin
Hamilton, James (Bothwell)	Marsden, F.	Strauss, Rt. Hn. G. R.
Hamilton, William (Fife, W.)	Marshall, Dr. Edmund	Swain, Thomas
Hamling, William	Mason, Rt. Hn. Roy	Taverne, Dick
Hannan, William (G'gow, Maryhill)	Mayhew, Christopher	Thomas, Rt. Hn. George (Cardiff, W.)
Hardy, Peter	Meacher, Michael	Thomas, Jeffrey (Abertillery)
Harrison, Walter (Wakefield)	Mellish. Rt. Hn. Robert	Thomson, Rt. Hn. G. (Dundee, E.)
Hart, Rt. Hn. Judith	Mendelson, John	Thorpe, Rt. Hn. Jeremy
Hattersley, Roy	Mikardo, lan	Tinn, James
Healey, Rt. Hn. Denis	Millan, Bruce	Tomney, Frank
Heffer, Eric S.	Milne. Edward	Torney, Tom
Horam, John	Mitchell, R. C. (S'hampton, Itchen)	Tuck, Raphael
Houghton, Rt. Hn. Douglas	Molloy, William	Urwin, T. W.
Howell, Denis (Small Heath)	Morgan, Elystan (Cardiganshire)	Varley, Eric G.
Huckfield, Leslie	Morris, Charles R. (Openshaw)	Walden, Brian (B'm'ham, All Saints)
Hughes, Rt.Hn. Cledwyn (Anglesey)	Morris, At. Hn. John (Aberavon)	Wallace, George
Hughes, Mark (Durham)	Moyle, Roland	Watkins, David
Hughes, Robert (Aberdeen, N.)	Oakes, Gordon	Weitzman, David
Hughes, Roy (Newport)	Ogden, Eric	Wellbeloved, James
Hunter, Adam	O'Halloran, Michael	Wells, William (Walsall, N.)
Irvine, Rt.Hn.SirArthur(Edge Hill)	O'Malley, Brian	White, James (Glasgow, Pollok)
Janner, Grevilie	Orbach, Maurice	Whitehead, Phillip
Jay, Rt. Hn. Douglas	Orme, Stanley	Willey, Rt. Hn. Frederick
Jeger, Mrs. Lena	Owen, Dr. David (Plymouth, Sutton)	Williams, Alan (Swansea, W.)
Jenkins, Hugh (Putney)	Paget, R. T.	Williams, Mrs. Shirley (Hitchin)
Jenkins, Rt. Hn. Roy (Stechford)	Palmer, Arthur	Williams, W. T. (Warrington)
John, Brynmor	Pardoe, John	Wilson, Alexander (Hamilton)
Johnson, Carol (Lewisham, S.)	Parker, John (Dagenham)	Wilson, Rt. Hn. Harold (Huyton)
Johnson, James (K'ston-on-Hull, W.)	Parry, Robert (Liverpool, Exchange)	Woof, Robert
Johnson, Walter (Derby, S.)	Pavitt, Laurie
Johnston, Russell (Inverness)	Peart, Rt. Hn. Fred	TELLERS FOR THE AYES:
Jones, Barry (Flint, E.)	Pendry, Tom	Mr. Joseph Harper and
Jones, Dan (Burnley)	Pentland, Norman	Mr. John Golding.
Jones, Rt.Hn.Sir Elwyn(W.Ham, S.)
NOES
Adley, Robert	Barber, Rt. Hn. Anthony	Boardman, Tom (Leicester, S.W.)
Alison, Michael (Barkston Ash)	Batsford, Brian	Body, Richard
Allason, James (Hemel Hempstead)	Beamish, Col. Sir Tufton	Boscawen, Robert
Amery, Rt. Hn. Julian	Bell, Ronald	Bossom, Sir Clive
Archer, Jeffrey (Louth)	Bennett, Sir Frederic (Torquay)	Bowden, Andrew
Astor, John	Bennett, Dr. Reginald (Gosport)	Boyd-Carpenter, Rt. Hn. John
Atkins, Humphrey	Benyon, W.	Brocklebank-Fowler, Christopher
Awdry, Daniel	Berry, Hn. Anthony	Brown, Sir Edward (Bath)
Baker, Kenneth (St. Marylebone)	Biffen, John	Bryan, Paul
Baker, W. H. K. (Banff)	Biggs-Davison, John	Buck, Antony
Balniel Lord	Blaker, Peter	Bullus, Sir Eric

Burden, F. A.	Heseltine, Michael	Oppenheim, Mrs. Sally
Butler, Adam (Bosworth)	Hicks, Robert	Orr, Capt. L. P. S.
Campbell, Rt Hn.G.(Moray & Nairn)	Higgins, Terence L.	Osborn, John
Carlisle, Mark	Hiley, Joseph	Owen, Idris (Stockport, N.)
Carr, Rt. Hn. Robert	Hill, John E. B. (Norfolk, S.)	Page, Graham (Crosby)
Cary, Sir Robert	Hill, James (Southampton, Test)	Page, John (Harrow, W.)
Channon, Paul	Holland, Philip	Parkinson, Cecil
Chapman, Sydney	Holt, Miss Mary	Peel, John
Chataway, Rt. Hn. Christopher	Hornby, Richard	Percival, Ian
Chichester-Clark, R.	Hornsby-Smith, Rt.Hn.Dame Patricia	Peyton, Rt. Hn. John
Churchill, W. S.	Howe, Hn. Sir Geoffrey (Reigate)	Pink, R. Bonner
Clark, William (Surrey, E.)	Howell, David (Guildford)	Pounder, Rafton
Clarke, Kenneth (Rushcliffe)	Howell, Ralph (Norfolk, N.)	Powell, Rt. Hn. J. Enoch
Clegg, Walter	Hunt, John	Price, David (Eastleigh)
Cockeram, Eric	Hutchison, Michael Clark	Proudfoot, Wilfred
Cooke, Robert	Iremonger, T. L.	Pym, Rt. Hn. Francis
Coombs, Derek	Irvine, Bryant Godman (Rye)	Quennell, Miss J. M.
Cooper, A. E.	James, David	Raison, Timothy
Corfield, Rt. Hn. Frederick	Jenkin, Patrick (Woodford)	Ramsden, Rt. Hn. James
Cormack, Patrick	Jennings, J. C. (Burton)	Rawlinson, Rt. Hn. Sir Peter
Costain, A. P.	Jessel, Toby	Redmond, Robert
Critchley, Julian	Johnson Smith, G. (E. Grinstead)	Reed, Laurance (Bolton, E.)
Crouch, David	Jones, Arthur (Northants, S.)	Rees, Peter (Dover)
Crowder, F. P.	Jopling, Michael	Rees-Davies, W. R.
Davies. Rt. Hn. John (Knutsford)	Joseph, Rt. Hn. Sir Keith	Renton, Rt. Hn. Sir David
d'Avigdor-Goldsmid, Sir Henry	Kaberry, Sir Donald	Rhys Williams, Sir Brandon
d'Avigdor-Goldsmid,Maj.-Gen.James	Kellett-Bowman, Mrs. Elaine	Ridley, Hn. Nicholas
Dean, Paul	Kilfedder, James	Ridsdale, Julian
Deedes, Rt. Hn. W. F.	Kimball, Marcus	Roberts, Michael (Cardiff, N.)
Digby, Simon Wingfield	King, Tom (Bridgwater)	Roberts, Wyn (Conway)
Dixon, Piers	Kinsey, J. R.	Podgers, Sir John (Sevenoaks)
Dodds-Parker. Douglas	Kirk, Peter	Rossi, Hugh (Hornsey)
Douglas-Home, Rt. Hn. Sir Alec	Kitson, Timothy	Rost, Peter
Drayson, G. B	Knight, Mrs. Jill	Royle, Anthony
du Cann, Rt. Hn. Edward	Knox, David	Russell, Sir Ronald
Dykes, Hugh	Lambton, Antony	St. John-Stevas, Norman
Eden, Sir John	Lane, David	Sandys, Rt Hn. D.
Edwards, Nicholas (Pembroke)	Legge-Bourke, Sir Harry	Scott. Nicholas
Elliot, Capt,. Walter (Carshalton)	Le Merchant, Spencer	Scott-Hopkins, James
Elliott, R. W. (N'c'tle-upon-Tyne, N.)	Lewis, Kenneth (Rutland)	Sharples, Richard
Emery, Peter	Lloyd, Rt.Hn.Geoffrey(Sut'nC'dfield)	Shelton, William (Clapham)
Farr, John	Lloyd, Ian (P'tsm'th, Langstone)	Simeons, Charles
Fell, Anthony	Longden, Gilbert	Sinclair, Sir George
Fenner, Mrs. Peggy	Loveridge, John	Skeet, T. H. H.
Fidler, Michael	McAdden, Sir Stephen	Smith, Dudley (W'wick & L'mington)
Finsberg, Geoffrey (Hampstead)	MacArthur, Ian	Soref, Harold
Fisher, Nigel (Surbiton)	McCrindle, R. A.	Speed, Keith
Fletcher-Cooke, Charles	Maclean, Sir Fitzroy	Spence, John
Fookes, Miss Janet	McMaster, Stanley	Sproat, Iain
Fortescue, Tim	Macmillan, Maurice (Farnham)	Stainton, Keith
Foster, Sir John	McNair-Wilson, Michael	Stanbrook. Ivor
Fowler. Norman	McNair-Wilson, Patrick (New Forest)	Stewart-Smith, Geoffrey (Belper)
Fox. Marcus	Maddan, Martin	Stodart, Anthony (Edinburgh, W.)
Fraser, Rt.Hn.Hugh(St'flord & Stone)	Madel, David	Stoddart-Scott, Col. Sir M.
Fry, Peter	Maginnis, John E.	Stokes, John
Galbraith, Hn. T. G.	Marples, Rt. Hn. Ernest	Stuttaford. Dr. Tom
Gardner. Edward	Marten, Neil	Sutcliffe, John
Gibson-Watt, David	Mather, Carol	Tapsell, Peter
Gilmour, Ian (Norfolk, C.)	Maude, Angus	Taylor, Edward M.(G'gow, Cathcart)
Glyn, Dr. Alan	Maudling, Rt. Hn. Reginald	Taylor, Frank (Moss Side)
Godber. Rt. Hn. J. [...]	Maxwell-Hyslop, R. J.	Taylor, Robert (Croydon, N.W.)
Goodhart, Philip	Meyer, Sir Anthony	Tebbit, Norman
Goodhew, Victor	Mills, Stratton (Belfast, N.)	Thatcher, Rt. Hn. Mrs. Margaret
Gorst, John	Miscampbell, Norman	Thomas, John Stradling (Monmouth)
Gower, Raymond	Mitchell, Lt.-Col.C.(Aberdeenshire, W)	Thomas, Rt. Hn. Peter (Hendon, S.)
Grant, Anthony (Harrow, C.)	Mitchell, David (Basingstoke)	Thompson, Sir Richard (Croydon, S.)
Gray, Hamish	Moate, Roger	Tilney, John
Green, Alan	Molyneaux, James	Trafford, Dt. Anthony
Grieve, Percy	Money, Ernle	Trew, Peter
Grylls, Michael	Monks, Mrs. Connie	Tugendhat, Christopher
Gummer, Selwyn	Monro, Hector	Turton. Rt. Hn. Sir Robin
Garden, Harold	Montgomery, Fergus	van Straubenzee, W. R.
Hall, John (Wycombe)	More, Jasper	Vaughan, Dr. Gerard
Hall-Davis, A. G. F.	Morgan, Geraint (Denbigh)	Vickers, Dame Joan
Hamilton, Michael (Salisbury)	Morgan-Giles, Rear-Adm.	Waddington, David
Hannam. John (Exeter)	Morrison, Charles	Welder, David (Clitheroe)
Harrison, Brian (Maldon)	Mudd, David	Walker, Rt. Hn. Peter (Worcester)
Harrison, Col. Sir Harwood (Eye)	Murton, Oscar	Walker-Smith, Rt. Hn. Sir Derek
Haselhurst, Alan	Nabarro, Sir Gerald	Wall, Patrick
Hastings, Stephen	Neave, Airey	Walters, Dennis
Havers, Michael	Nicholls, Sir Harmer	Ward, Dame Irene
Hawkins, Paul	Noble, Rt. Hn. Michael	Warren, Kenneth
Hay, John	Normanton, Tom	Wells, John (Maidstone)
Hayhoe, Barney	Nott, John	White, Roger (Gravesend)
Heath, Rt. Hn. Edward	Onslow, Cranley	Whitelaw, Rt. Hn. William

Wiggin, Jerry	Woodhouse, Hn. Christopher
Wilkinson, John	Woodnutt, Mark	TELLERS FOR THE NOES:
Winterton, Nicholas	Worsley, Marcus	Mr. Reginald Eyre and
Wolrige-Gordon, Patrick	Wylie, Rt. Hn. N. R.	Mr. Bernard Weatherill.
Wood, Rt. Hn. Richard	Younger, Hn. George

Main Question put and agreed to.

Resolved, That an humble Address be presented to Her Majesty, as follows: Most Gracious Sovereign, We, Your Majesty's most dutiful and loyal subjects, the Commons of the United King- dom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.

To be presented by Privy Councillors or Members of Her Majesty's Household.