UNEMPLOYMENT

HC Deb 23 November 1971 vol 826 cc1145-270

3.56 p.m.

Mrs. Barbara Castle (Blackburn)

I beg to move, That this House deplores the continuing failure of the policies of Her Majesty's Government which have led to the present intolerable level of unemployment. It was exactly a fortnight ago today that the House last discussed unemployment, on an Opposition Amendment to the Address in reply to the Queen's Speech. But there is no one in the country who believes that we are playing party politics in raising the matter again today or that the Motion is not completely justified.

A fortnight ago the situation was already appalling enough, with the total number of registered unemployed reaching a new peak in October of 887,000, or 3.9 per cent., while the wholly unemployed rose to the alarming level of 833,000, seasonally adjusted, a rise of 50 per cent. since the Labour Party left power. Yet there were voices to be heard in certain sections of the Press last month, no doubt encouraged by sedulous briefing from the Department of Employment, to the effect that the figures for October were encouraging and showed that the rising unemployment was beginning to flatten out. Patient and courageous policies, it was hinted, were beginning to pay off and all the Government had to do was to ride the storm.

But with the publication of the November figures the mood of even the Government's most sycophantic admirers has changed dramatically. The alarm bells are really ringing in the country and, I believe, in the Cabinet. What do the November figures show? The total number of registered unemployed has jumped to 926,000 in Great Britain alone and reached a sombre milestone of 4 per cent. If Northern Ireland is included, it needs a rise of only 0.1 per cent. to take us over the 1 million mark of registered unemployed. Few people now doubt that that is inevitable.

It is no use the Chancellor of the Exchequer's taking refuge, as the Prime Minister and his supporters tried to do earlier today at Question Time, behind the effects of the Coventry tool room strike. The only thing the Government are any good at manufacturing is alibis. The most damning, damaging and relentless element in unemployment under them has been the rise in the number of wholly unemployed, which has reached the fantastic total of 855,000, seasonally adjusted, for Great Britain alone, another grim record for right hon. Gentlemen opposite.

It might be argued that it is unfair to compare this with June, 1970—to compare a winter month with a summer month—so let us compare like with like. Let us take the last November figure of the Labour Government. In November, 1969, the number of wholly unemployed, seasonally adjusted, fell by a few thousand, giving a total of 538,000. So the increase since then under this Government has been not 50 per cent. but nearly 60. As The Times put it last Friday, such figures are morally, economically, socially and politically intolerable. But the figures do not tell the whole story. While the picture continues to darken in the traditionally hard-hit areas—4,400 more wholly unemployed in Scotland, 4,100 more in the South-West, nearly 3,000 more in Yorkshire and Humberside—other areas are now overtaking them. In the North-West, where the textile industry is on the edge of total collapse, there were over 5,000 more wholly unemployed last month, which, taken with the increases in previous months, means that the North-Western Region is rapidly becoming one of our major depressed areas. In my area of Blackburn, where unemployment at the time of the last General Election was below the national average of 2.4 per cent., the figure has risen to 4 .5 per cent. and, as the textile unions pointed out in their memorandum to the Prime Minister, 500 more people face unemployment as a result of mill closures in the Blackburn area alone.

In the West Midlands, once this country's thriving industrial heartland, there is no sign of returning confidence. The figure of wholly unemployed is up again by over 400,000—[Interruption.]I mean 4,000, and it is no good the Prime Minister quoting strikes to try to argue that away. So unemployment in the West Midlands has risen from 2.8 to 7.8 per cent. in the past year.

But the really dramatic increase has taken place in the South-East, which has now jumped to the top of the league table with an increase in wholly unemployed of no fewer than 10,482 people in the past month.

The disease of Toryism has indeed bitten deep into the economy. There are two proofs of that. Although the number of school leavers without a job has, as we would expect, fallen this month, it is still more than twice as high as it was a year ago. The number of unfilled vacancies is down again by over 10,000, half of them in youth employment. As a result, the figures given by my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) only a fortnight ago must already be uprated. In October—the latest month for which regional figures are available, and they have got worse since then—14 adult males in the West Midlands were looking for every available job. The number of adult males looking for every job in the North-West is 15 and in Scotland it has arisen to 36—and I repeat that the figures have become worse since. People are looking for jobs in a country whose productive capacity to create jobs is shrinking all the time, so that many people, particularly women, have been forced out of employment who have not bothered to register. There is no doubt that the registered unemployment figures gravely underestimate the Brim realities and the waste of human resources which is the direct result of Tory policies.

I say that it is the direct result of Tory policies advisedly, because it is not as if the Government have not been warned time and again about what is happening. In the past 16 months we and the country have become tired of the Government's capacity to produce not deeds but words—an endless stream of complacent prophecies. As long ago as November last year the Chancellor of the Exchequer admitted to the House that he was being urged to reflate the economy on the grounds that output was stagnant and that unemployment would rise. He rejected those pleas. He said that the economy was more buoyant than some people had been suggesting and that, therefore, it would be wrong to increase the pressure of demand.

In March, output having been stubbornly stagnant, the Chancellor introduced a Budget which took away with one hand what it gave with the other. He said: I could have brought about a reduction in … unemployment by giving a still larger boost to consumer demand than I have."—[OFFICIAL REPORT, 5th April, 1971 Vol. 815, c. 167.] But he still refused to do so. In July, with unemployment still rising relentlessly, he had another nibble at the mushroom, taking measures which he assured the House would stimulate an increase in national output of between 4 and 4½ per cent. between the first halves of 1971 and 1972. He added these confident words: The level of unemployment, after allowing for seasonal factors, should stop rising, perhaps after a couple of months or so, and before very long it should start to fall."—[OFFICIAL REPORT, 19th July, 1971; Vol. 821, c. 1043.] "Start to fall"! The number of wholly unemployed was then 788,000. It has risen every month since.

The Prime Minister has boasted that his Government would never allow themselves to be blown off course. Therefore, he must have been deliberately steering for these economic rocks. As The Times put it on 22nd October: Unemployment is at its present level quite simply as the result of a combination of forecasting mistakes"— and some mistakes!— and of a conscious policy preference for unemployment over accelerating inflation. The trouble is that we have had both.

The question we want to ask, therefore, is: shall we at last have a change of heart and a change of course, or are we to have the sort of whitewashing operation in which the Chancellor of the Exchequer indulged at such length in last Sunday's Sunday Telegraph? Does the Chancellor really believe that this country can achieve an annual growth rate of 4 to 4½ per cent. between 1971 and 1972 as a result of his July measures? If so, when will they start bringing unemployment down, and by what amount? The first indictment against the Government is that they have deliberately allowed us to drift towards the scandal of having 1 million people unemployed—a new peak from which their measures must claw us down. Nothing can now avoid the misery and insecurity which the Government have brought to over 1 million homes, to say nothing of the loss of production which they have thrown away.

However, the really alarming factor is that the effect of the Chancellor's July measures on unemployment even when they take effect, will be quite inadequate. I ask the Chancellor again—he has been asked it before: what is the estimate of the new jobs which his July measures will create—150,000 or 200,000? That is the general estimate, certainly not more. This means that it will take two years, even if the estimated growth is achieved and sustained, to bring unemployment down to 600,000 or 700,000, a figure which the Government said was unacceptable when we were in power. Yet we left them with a record balance of payments surplus, and, as my right hon. Friend the Member for Stechford said a fortnight ago, if we had been returned to power our highest priority would have been to use that new strength to bring these unacceptable figures down substantially.

What is the Government's policy? I warn the Chancellor that the House is in no mood to listen to his tired alibis. It is no good the Government saying that they found the situation worse than they expected when they came to power. Worse than they expected after all the warnings of imminent economic disaster by the Prime Minister during the General Election campaign? Worse than they expected after Lord Cromer's intervention in the Tory cause? Worse than expected when one of the last speeches the Prime Minister made in the General Election contained a warning that devaluation was round the corner? Yes, right hon. Gentlemen opposite were well aware of the economic difficulties. They merely said they had a foolproof method of dealing with them "at a stroke".

What was that method—to hold wage increases down, as the Prime Minister only this afternoon has again been suggesting at the Dispatch Box? On the contrary, the way to deal with inflation, the Conservatives said, was a painless one or the whole community. It was to act directly on prices. So they have. They have acted directly on prices to put them up.

No doubt the Chancellor of the Exchequer's speech will consist of tedious repetition of the old argument that we have had in the Sunday Telegraph and from the Prime Minister, that the only way to cure inflation and, therefore, to cure unemployment is to stand firm against "excessive pay claims", as the Chancellor of the Exchequer called them in the Sunday Telegraph, adding: We mean to go on doing that. If that has always been the Government's belief and the Government's policy, why had they not the honesty during the General Election to tell the country that this was their policy? Why did not this man of steel, the Prime Minister, talk frankly to the trade unions, instead of trying to woo their votes by saying exactly the opposite? Let me remind the House of what the right hon. Gentleman said on Thames TV on 30th April last year, a few weeks before the election campaign: I think you are being unfair to the unions and to the workers in saying that this price explosion is due to a wage explosion. The right hon. Gentleman, squaring up for the election battle, said that it was due to deliberate Government policy. The right way, he told us, was not to hold wages down but to get production up. He added: And this is the new approach I want to bring about. Judge his success: in the first six months of the year production actually fell. Yet he dares to talk about the irresponsibility of trade unions. One cannot win a General Election by promising paradise and then expecting people to accept purgatory. They are likely to realise that they have been following a false god.

In any objective quarter no one now doubts that the roaring inflation and the record unemployment which we are now experiencing are due to the collapse of the Government's policies. We are faced with something far more serious than just a bit of bad forecasting. We are faced with the consequences of a Government which from the start have misjudged the needs and the mood of the people of this country and of British industry, a Government which have been obsessed with the wrong priorities, obsessed with cutting taxation instead of creating jobs, obsessed with legislating against the trade unions instead of getting ahead with that "massive" expansion of industrial training that was promised during the General Election.

The Secretary of State for Employment has still to produce to the House the plans which I left on his desk 16 months ago for the radical modernisation of our employment services, a practical step which we were taking to deal with the unemployment problem.

The fact is, as the House knows, that all the Government's pet nostrums have failed. Halving S.E.T., giving tax incentives to the rich, passing the Industrial Relations Act, getting into Europe, clamping down on wage increases—none of these has cured inflation, given us a stronger economy or restored business confidence.

The most telling judgment on the effectiveness of the Government is being passed by the business community. Forecasts show a fall in manufacturing investment this year of 6 to 8 per cent. compared with last year, and investment intentions remain obstinately muted. Indeed, criticism of the Government from every quarter is now merciless.

The most serious element in unemployment is the regional element. Last Friday The Times complained of the collapse of significant regional policies under the present Government, and said: The simultaneous loss of the regional employment premium, of effective industrial incentives and a determined I.D.C. policy has been too much. On Sunday the Sunday Times came out with "Eight Points to Cure the Jobless Tragedy", every one of which calls for a reversal of Government policies. The Sunday Times added that no doubt its proposals went against the Tory grain: But only direct action by the central Government can speed up the economy when the private sector has no confidence. Indeed, the bitterest criticism of their past philosophy is coming from the Government themselves as they steadily beat a retreat from their old positions on prices, on public expenditure and on the nationalised industries. The scapegoats of the past have become the new saviours of a desperate Cabinet. A Government dedicated to cutting public expenditure as a method of getting the economy stimulated again have now been forced into reverse and are raising millions of pounds in a frantic effort to stem the rising unemployment. We had another example of this new largesse yesterday from the Secretary of State for Social Services.

Last October the Chancellor of the Exchequer, faithful to his party's ideology, was cutting the budgets of nationalised industries. He said that the trend of public expenditure in the nationalised industries was too high and must be reversed. Now we read in the Press that nationalised industries are to be urged to spend, spend, spend. Not for the first time, the public sector has had to be brought to the rescue of the market economy.

The final irony is that, as we heard on the radio on Saturday, the Government are to set up a new body, the Commission for Fair Competition, which we are told will deal with firms which abuse their market power by passing on increased costs through price increases. Shades of the Commission for Industry and Manpower! Just before the General Election I introduced a Bill to set up the Commission for Industry and Manpower, which the Secretary of State for Employment denounced as "a recipe for disaster", adding, for good measure, that my proposals were: … nothing but a spoof—a great big spoof."—[OFFICIAL REPORT, 8th April, 1970: Vol. 799, c. 578.] The only consolation that the right hon. Gentleman can have today is that, apparently, he will not have to introduce the new Bill.

This afternoon we shall await the Chancellor of the Exchequer's announcements with interest. Will he tell us that the Government's policies are working and should not be changed, or shall we have a tacit admission of failure, under the guise no doubt, of perfect timing, by the announcement of new measures which he will claim he always had up his sleeve in the first place? If he announces new measures, we shall certainly welcome them, and we shall scrutinise them carefully to see whether they are adequate. But nothing can alter the fact that for 16 months the Government have stubbornly pursued priorities that have led us to this tragic level of unemployment and brought misery to a million families. Nothing can alter the fact that the Government's philosophy is incompatible with full employment and with the planned economy that can alone make it possible.

The Government did not act until there was a national outcry. The best the Government can now do is to tinker with a great social problem which they have no idea how to solve. The only shake-out this country needs is the shake-out of this Government. That is why we shall press this censure Motion to a vote tonight.

4.20 p.m.

The Chancellor of the Exchequer (Mr. Anthony Barber)

As the right hon. Lady the Member for Blackburn (Mrs. Castle) said, it is exactly a fortnight since we had a full day's debate primarily concerned with unemployment, in which I spoke. There have been some observations in the Press about the reasons for the change in business at the request of the Deputy Leader of the Opposition, but I can say that from my personal point of view I am pleased that the business was changed and that we are having this debate today because it gives me the opportunity to express the Government's views in the light of the latest developments.

Whatever differences there may be between us—and I will come to them later—I hope that the overwhelming majority of the House can agree on one thing. The determined objective of the Government is the reduction of the present unacceptable level of unemployment. [HON. MEMBERS: "Oh."] To pretend otherwise is both pernicious and ludicrous. I say that because I am just as concerned as the right hon. Lady about the personal misery, worry and hardship caused by unemployment, and I will not have it said otherwise. [An HON. MEMBER: "Wipe away your tears."]

The problem which we and the country face, and the consequences for individuals in terms of human disappointment and waste, are such that I do not believe the British people would lightly forgive right hon. and hon. Members opposite if they were merely to use this debate as an attempt to make political capital. [HON. MEMBERS: Oh. "] I shall come later to the question whether the Government ought to have done more or whether they ought to have acted earlier.

Mr. Alex Eadie (Midlothian)

Is the right hon. Gentleman aware that the fact very few Scottish Tory Members are listening to his speech at this very moment is no fault of theirs, but is due to the fact that at this moment they are meeting in this House a deputation of over 90 local authorities which have lobbied all Scottish M.P.s because of the disgraceful unemployment figures? Will he take back what he said about this being a political issue, because all shades of opinion are represented in this lobby this afternoon?

Mr. Barber

If I understood the hon. Gentleman aright, he is saying that this occasion should not be made a party political matter, in which case I agree with him.

I was saying that I shall come later to the question whether the Government ought to have done more or whether we should have acted earlier. First, it is necessary to say this: for reasons which I explained in the debate a fortnight ago I believe there is now a combination of factors which makes possible in the years ahead a more rapid and sustained rate of economic growth. I believe it will be universally agreed that that is the one sure way to a rising standard of living and full employment. If we are not to prejudice that objective, it is necessary to consider the underlying causes of the increase in unemployment. Certainly it is not a simple case of falling demand. Demand and output have on the whole been rising, but productivity has been rising, too, and indeed has been rising very fast.

In the past when we have had a period of unusually rapid growth of productivity, it has generally been in the context of a strong upsurge in demand and production. But the past 12 to 18 months have, in this important respect, been different. At a time of rather moderate growth in production the growth of productivity has been unusually large. In fact, in the third quarter of this year output per head in the index of production industries is provisionally estimated at 6¼ per cent. higher than in the same period last year. Of course, in terms of our ability to compete with the rest of the world and so in terms of our future prospects for sustained growth, this change is wholly welcome. But the concomitant of this remarkable improvement in productivity has on this occasion been the very large increase in unemployment.

Nobody who is in touch with industry has any doubt at all about two things. First, employers generally have been carrying out a policy of economising in labour as far as possible. Secondly, one of the principal reasons for this lies in the very large increases in wages and salaries—[HON. MEMBERS: "Oh."]—which were accepted both before and during this period. All I can say to those who doubt this is that it is not only the commonsense point of view; it is the consensus of views of those who take the decisions in industry.

Mrs. Castle

I thought that, according to the right hon. Gentleman and his right hon. Friend the Prime Minister, the Conservative Party believed in a high wage economy. Is this not always an accompaniment of a high wage economy?

Mr. Barber

Yes, indeed, we do believe in a high wage economy, but, like Mr. Victor Feather, we believe in high real wages. It is all very well for the right hon. Gentleman the Leader of the Opposition to laugh, but it was the right hon. Gentleman himself who said: Restraint on incomes is our only guarantee against unemployment.

Mrs. Castle

No doubt this is the second time the quotation has been made from my right hon. Friend's speech on 5th September, 1966. Is the right hon. Gentleman aware what the level of unemployment then was? It was 1.4 per cent.

Mr. Barber

No doubt the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins), if in the new circumstances he disagrees with his right hon. Friend's remarks, will tell us when he comes to wind up the debate on behalf of the Opposition.

Mr. Harold Wilson (Huyton)

If the right hon. Gentleman cannot say what was the unemployment figure when I said that, could he say what the inherited balance of payments deficit still was when I used those words?

Mr. Barber

I could also tell the right hon. Gentleman, if he does not know it, what the level of debts was which he left to us. The simple truth is that people have literally been pricing themselves out of jobs. One manager after another will say that he has been compelled by the pressure of labour costs to streamline the labour force and think twice before taking on additional workers. That is the reality of the situation.

Mr. Norman Atkinson (Tottenham)

rose—

Mr. Barber

There is one point I should like to put to the right hon. Member for Stechford.

Mr. Atkinson

Will you give way?

Mr. Deputy Speaker (Sir Robert Grant-Ferris)

Order. The hon. Gentleman knows perfectly well he must not make that sort of interjection ever in the House.

Mr. Atkinson

rose—

Mr. Deputy Speaker

The hon. Gentleman knows that if another right hon. or hon. Member does not give way, he must not persist and must not try to make himself heard in the way he did.

Mr. Atkinson

The right hon. Gentleman ought to have said he was not giving way.

Mr. Barber

I have a great deal to say to the House, and I was just going on to say that it is surprising that the right hon. Member for Stechford went out of his way in the debate on the Address to deny what I have just been saying about the effect of wage settlements on unempoyment.

If I might remind the House of the right hon. Gentleman's speech a fortnight ago, he said: If wages had gone up less, given the Government's price policy, there would have been higher and not lower unemployment today."—[OFFICIAL REPORT, 9th November, 1971; Vol 825, c. 844–5.] I find that a surprising observation, because, if wages had gone up less, prices would also have gone up less, and certainly there is nothing in the Government's price policy which would have prevented that. I can see little or nothing in the right hon. Gentleman's argument about consumer demand. On the other hand, there seems to be no doubt that if wage increases had been lower the policy of economising in labour would not have been carried to the point of producing the unemployment situation that we see today.

Mr. Roy Jenkins (Birmingham, Stechford)

The right hon. Gentleman must be aware that so far this year real wages have increased by only the narrowest possible margin. The increase in either hourly wage rates or in average weekly earnings above the rate of price increase has been very small. Clearly, there is some time lag between wages increases and the effect upon prices. Given the Government's price policy, had wages increased by less this year the inevitable result would have been a fall in real wages, with still lower purchasing power, still lower demand and higher unemployment.

Mr. Barber

I have no doubt that the House will recall that when the right hon. Gentleman was Chancellor of the Exchequer he was preaching wage restraint. I hope that, when he comes to reply to the debate he will as a former Chancellor of the Exchequer, weigh his words carefully and answer one simple question. Is he now advocating an escalation in the rate of pay settlements? I think we are entitled to know the answer, because that was the implication in what he said last week.

Mr. Atkinson

Will the right hon. Gentleman give way?

Mr. Barber

No.

Mr. Atkinson

On a point of order, Mr. Deputy Speaker. This sort of question and answer business seems to be on the basis of which school a right hon. or hon. Member attended. Are interventions restricted to an élite in this House? If so, will the right hon. Gentleman say who are the élite?

Mr. Deputy Speaker

A right hon. or hon. Member gives way to whom he wishes to give way to and to no one else. No hon. Member can seek to intervene of his own volition unless the right hon. or hon. Member on his feet allows him to do so.

Mr. Atkinson

Further to that point of order. If this is to be the attitude of the Chancellor of the Exchequer, with the employment record that he has—

Mr. Deputy Speaker

Order. I am afraid that I cannot accept any of that us a point of order.

Mr. Barber

I referred specifically to the right hon. Member for Birmingham, Stechford. For that reason, it seemed only courteous to give way to him when he wished to intervene.

The high level of pay settlements was not the only factor in the situation. Over the past few years, under the previous Administration, company profits and liquidity had been squeezed, and the restraints on credit made it difficult for firms to escape the results of their liquidity situation by borrowing. So the policies of restriction and inflation pursued by the previous Administration made their mark, as they were intended to do.

The situation has now changed in a number of ways, very largely through the measures that we have taken. To a considerable extent, profit margins have been restored and the liquidity position of companies has improved greatly. Consumer demand has risen strongly since the middle of this year, especially but not exclusively in cars and other consumer durables. But still, as we know from our own experience, many companies say that they have not yet seen the increase in orders for which they are looking. One reason for this is that in many cases the first reaction of traders and manufacturers to the higher demand has been to run down their stocks. But this cannot go on for long, and the turn-round, when it comes, will have a considerable influence in spreading the effects of higher demand along the line of production.

The worst thing for industry and commerce is uncertainty. There can be little doubt that one factor in the uncertainty arises from the matter which we considered at Question Time today. That is the international monetary situation and doubts about the future of exchange rates, the American surcharge and the danger of an international competition in protectionist measures. The Group of Ten meets again next week in Rome. I hope we shall make some progress on that front.

Mr. Thomas Swain (Derbyshire, North-East)

rose—

Mr. Barber

I hope I shall not be asked to give way any more because I have a considerable amount of material to get through before I complete my speech.

Mr. Swain

Will the right hon. Gentleman give way?

Mr. Atkinson

Which school, Tom?

Mr. Swain

Borstal. Before the right hon. Gentleman leaves the point about security, will he, if he believes in the security of industry, now give some security to British miners by rescinding the order allowing foreign coal to come into the country?

Mr. Barber

No, Sir. Every Chancellor of the Exchequer knows—certainly the right hon. Member for Stechford knows—that in the management of the economy one cannot proceed solely by looking at the most recent economic indicators of the immediate past weeks. It is also necessary to have regard to action already taken which will affect the future course of the economy. It follows that if, as I believe, the House wishes to make a serious appraisal of the situation and to consider objectively how the Government should react to that situation it is necessary first of all to consider the action that the Government have already taken.

I said in the debate a fortnight ago—it was not challenged then, and it has not been challenged since—that never before have a Government taken so much action to expand demand and stimulate employment. The action that we have taken falls into two parts. The first consists of the measures of general reflation by way of reductions in taxation: the reductions in income tax, the two cuts in corporation tax, the halving of S.E.T.—which was derided by the right hon. Lady, who obviously wanted it to remain—and the biggests cuts in purchase tax for 18 years.

It is important to recognise that most of these measures did not start to have an effect on demand until the summer. Inevitably, in the nature of things there is bound to be, as there always has been, a time lag between general reflationary action of this kind and its full effect on employment. The right hon. Member for Stechford will agree with that, I am sure. At any rate I am sure that, with the benefit of hindsight, he will not challenge the proposition that the restric- tionist policies that he pursued year after year were bound to have some depressing effect on the level of activity after he left office. I put it no higher than that.

In addition to the cuts in taxation, the other general reflationary measures which have been taken include the abolition of all hire-purchase terms controls, and the results of this are apparent already in the figures for sales of cars and consumer durables. Next, the Bank Rate has been reduced from 7 to 5 per cent., and it is now at its lowest for seven years. Also there has been a general easing of credit. Finally, we have provided the biggest ever increase in pensions, an action which is both reflationary and directly meeting needs.

On two or three occasions the right hon. Lady referred to the leader in The Times last Friday. I, too, wish to quote from that leader, because it went on to say: There is no denying that the economy has received an enormously powerful fiscal and monetary stimulus over the past few months. In addition, there has been one other development which is bound to have, and was intended to have, a general reflationary effect. That is the price restraint policy of the nationalised industries, matching the similar restraint by private industry. This policy, by acting directly on prices, is very similar indeed in its impact on demand to cuts in indirect taxation, and in this way is a further powerful influence on the side of reflation.

But of course the action already taken does not stop there. It is quite right that in the present circumstances there should also be talk of direct action in addition to general measures. I summarise the position here, and do so because, as the various measures have been announced at different times, it is clear that in some quarters their full extent is not realised. The fact is that, over and above the cuts in taxation and the other general reflationary actions, the Government have taken measures amounting to nearly an additional £500 million over the next two years or so—measures specially designed to boost investment and employment.

These measures include over £200 million on capital works and housing improvement grants in development and intermediate areas, and the additional amount of more than £70 million to be spent on naval shipbuilding, almost all of it in development areas. On top of all this, we have extended to the service industries free depreciation for plant and machinery installed in the development areas. Taken together, these measures will both create more employment in the regions and will also make the regions better places to live in. Outside the development areas, industry will have available over the next two years a further £150 million by way of accelerated depreciation allowances.

This is action already being taken. It is certainly, if I may say so to right hon. Gentleman opposite, who keep on intervening, no mere winter works programme and far more than a sudden response to one month's figures. The fact that it has taken some time for me to list the main elements of the action already taken, even to list them in summary form, is in itself an indication of the variety and extent of these actions.

I am astonished on such an occasion, when we are having a serious debate on unemployment, to hear the right hon. Lady referring to the taxation changes since this Government took office in terms of the March Budget as being neutral and of the July measures as being a nibble. I will put this into perspective for her. During the two and a half years when her right hon. Friend was Chancellor, acting, I do not doubt and have never queried, in what he believed to be the best interests of the nation, he increased taxation by £1,400 million. In the last 12 months, I have announced reductions totalling more than £1,400 million on a comparable basis.

Whatever the differences between us—and I recognise that the right hon. Lady in many of the things she was saying was speaking genuinely—no one can seriously deny that the totality of the measures we have taken over the past nine months or so is nothing short of massive. It is certainly far greater than has ever been undertaken by any previous Government, and it makes a mockery of the charge that the Government have stood cynically by, passively allowing unemployment to rise without check as though it was a deliberate element of our economic policy. Although the level of unemploy- ment is by far the most worrying aspect on the domestic front it would be foolish to ignore the effect on demand of the measures which have already been taken.

Mr. Roy Jenkins

In view of what the right hon. Gentleman has just said, will he explain why my increase of £1,400 million in taxation produced an increase in unemployment during my two years and seven months as Chancellor of only 26,000, while his reductions have produced an increase in 17 months of over 300,000?

Mr. Barber

The right hon. Gentleman must take one of two views. Either he thinks that I have cut taxation too much or he thinks that I have cut it too little. Perhaps he will in due course say which.

As I was saying, it would be foolish to ignore the effect on demand of the measures which have already been taken—for instance, the rapid growth in hire-purchase credit, which is up 37 per cent. from the finance houses in the third quarter of the year, and new car registrations, which on present indications should rise to a total level this year of £1. ¼ million, the highest ever.

Mr. Harold Wilson

Is the right hon. Gentleman not going to answer my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins)? When he does, will he answer this question? Did he or did he not indicate in July that in his view, as a result of the July measures, unemployment would be affected for the better in, as he put it, a couple of months? Does he think that that has happened?

Mr. Barber

I am coming shortly, as I said at the outset, to the question of the forecasts, but in answer to the other point raised by the right hon. Gentleman the Leader of the Opposition, I do not think, whatever may have happened during this past year, that he will deny that when he was Prime Minister unemployment also increased very considerably. Perhaps he will tell us one day whether he planned to ensure that unemployment at the time of the 1970 General Election was at the highest level in any June for 20 or 30 years.

I was listing for the benefit of the House some of the economic indicators which have to be borne in mind if the House is to treat this matter seriously and reach a sensible conclusion. Exports, for example, are continuing to do extremely well, with an increase of no less than 7 per cent. in volume in the third quarter over the level of the first half. Private house building is also doing well. The House will have noticed—I hope with approval—from the figures issued yesterday, that the demand for engineering products, both at home and, even more, abroad, is encouraging. Certainly, there is every reason, on present indications, to endorse the estimate of a 4 to 4½ per cent. economic growth rate which I gave in July.

Mr. Atkinson

rose—

Mr. Barber

I mention these indicators—

Mr. Atkinson

On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker

Order. No point of order arises on a right hon. or hon. Member not giving way. The hon. Member for Tottenham (Mr. Atkinson) knows that I have ruled on this already—incidentally, he should sit down while I am on my feet—and he should not try to get in what he is trying to say by putting a point of order to me. He knows perfectly well that the Chancellor—as, indeed, anyone else—will not give way to an intervention unless he is willing to do so. I hope that the hon. Gentleman will not think that I am dealing too harshly with him, but the rules of the House must be obeyed.

Mr. Atkinson

I honestly believe that you are being very prejudiced at the moment, Mr. Deputy Speaker. I am raising a point of order. I am seeking your advice on this matter. Is it not courtesy, and part of the rules of debate in this House, that when an hon. Member seeks to put a question to a right hon. or hon. Member, particularly if that person is speaking from the Front Bench, for him to indicate whether he will give way or not? Is it usual for a right hon. or hon. Member just to continue speaking, as the Chancellor is doing? Could you not give him some advice about rules of debate?

Mr. Deputy Speaker

No. The hon. Gentleman knows quite well that none of that whatever is a point or order for me. What the Chancellor does is entirely up to him. [Interruption.] The whole House knows that the Chancellor is just as good a Parliamentarian as anyone else and that he will do what he thinks to be the right thing.

Mr. Barber

rose—

Mr. Atkinson

Will the right hon. Gentleman give way?

Mr. Barber

It does no good to the country or to the unemployed for the hon. Gentleman and some of his Friends to try to break up the debate.

I have given these various indications and I have given this assessment not in any spirit of complacency, but because I thought it right in this debate to take account of the action which has already been taken. The House will recall that when I spoke in the debate on the Address a fortnight ago, I announced that, in addition to the additional public expenditure programmes already approved in order to provide employment in various industries, we were also looking at the scope for bringing forward capital expenditure by some of the nationalised industries. I can now inform the House of the results of the review so far.

Mr. Dennis Skinner (Bolsover)

On a point of order. This is a serious point of order, Mr. Deputy Speaker. I am entirely convinced that in his very tedious speech the Chancellor is now getting his pages mixed up and is re-reading one of the pages with which he began.

Mr. Deputy Speaker

That is not a point of order.

Mr. Barber

On this problem of unemployment, chosen deliberately for today's debate by the official Opposition, the country will take note of the sort of interventions which we have had from hon. Members opposite. The unemployed will despise the sort of interjection which they have made.

I can now inform the House of the results of this review so far. I should mention that the review has been conducted subject to two conditions. First, our object has been to bring forward projects which could be put in hand without delay and which would create employment over the next two years without involving large additional claims on expenditure over a long period beyond those two years. The reason for this condition is that we are determined not to undertake in the years ahead excessive commitments of a kind which would put at risk our strategy for sustained growth.

Mr. William Ross (Kilmarnock)

No fear of that.

Mr. Barber

The second condition has been that the projects must also satisfy all the normal investment criteria for the nationalised industries, with the exception of the matter of phasing.

I will deal first with the nationalised industries. Arrangements which are now in hand are intended to bring forward into the two years 1972–73 and 1973–74 capital expenditure of about £100 million. Items which will now be brought forward by the nationalised industries include capital expenditure on a new power station, expenditure on distribution and transmission by the Gas and Electricity Boards, and capital works expenditure by the National Coal Board. The British Railways Board will bring forward plans to replace rolling stock for use on the Southern and Eastern Regions' commuter lines into London. This will help to maintain employment in the board's workshops at York and to generate employment elsewhere in the North.

The British Railways Board will also bring forward plans for the building of two new ferries to replace existing ships on Sealink services to the Isle of Wight, and the Scottish Transport Group is considering the possibility of advacing a new ferry for use on the Clyde. As part of these arrangements infrastructure grant is being made available to the London Transport Executive so that it will be able to bring forward orders for new trains for use on the Northern Line.

The new power station will be constructed at Ince in Cheshire and negotiations for the placing of the order will start at once. In addition to work at the site, this should provide employment for engineering industries in the North-East. In some cases there will be special payments to the nationalised industries in respect of the additional costs incurred as a result of accelerating these projects.

Mr. Ross

Will the right hon. Gentleman give way?

Mr. Barber

I will give way to the right hon. Gentleman. However, I have some more points to put to the House which will interest individual hon. Members and their constituencies.

Mr. Ross

Will the right hon. Gentleman say whether the proposed closure of railway workshops has been put off by direction of the Government? Secondly, can he give a guarantee that the ferries to be built will be built in the United Kingdom and the one for Scotland in Scotland? He will remember that the last was built in Italy, which was no great help to the employment situation in Scotland.

Mr. Barber

I have more announcements to make. I have been on my feet for more than half an hour already as the result of interventions. This is an important debate and I do not propose to give way again. I do not intend to answer detailed questions, which should be put to the various Departmental Ministers responsible.

In addition to the nationalised industry programmes, we have also approved further expenditure by Government Departments designed to provide additional employment and amounting to roughly £60 million over the next two years. The larger part of this consists of about £50 million of work on road maintenance and improvement, most of which will be to accelerate the implementation of the recommendations of the Marshall Committee on Road Maintenance. This is additional to the roads expenditure already announced as part of the infrastructure works programme for the development and intermediate areas.

The total also includes £4½ million of additional defence expenditure, including an order for more than 100 Bulldog light aircraft for the R.A.F., which will help the employment position at Scottish Aviation's Prestwick factory. An order will also be advanced for a Scottish fisheries protection vessel.

It has also been decided to accelerate the payments of amounts arising from the former investment grant scheme. This will bring forward roughly £10 million into 1971–72 and £15 million into 1972–73.

This does not necessarily exhaust the possibilities for bringing forward public expenditure, but the proposals which I have announced today, coming on top of the public expenditure measures previously announced, amount to a considerable increase. But the important point about the actual proposals is that by acting in this way we shall be increasing demand substantially in the near future—over the next couple of years or so—without prejudicing the longer term.

This afternoon the House was treated to the spectacle of the right hon. Lady, who served in the most restrictionist Government of modern times, criticising the present Government's policies. What are the Opposition's criticisms? There are those on the left who continue to mouth, parrot fashion, the accusation that the Tory Government have cruelly set out to create unemployment as a deliberate instrument of economic policy. They know it to be untrue and the country knows it to be untrue and the more they repeat it, the more lacking in credibility they become.

Then there are those on the right who, like the right hon. Member for Stechford, who is to wind up the debate for the Opposition, deploy a more sophisticated, and, if I may say so, a slightly more élitist argument. To the right hon. Gentleman the criticism is that over the past year the situation has been misjudged. I would only say that I am now chided for having changed my mind in the course of the year—for having taken a different view in July from the one I took in March. No doubt because I have announced new measures today the same criticism will be made again.

Let me say quite clearly that we on this side of the House will continue to adapt our policies to the changing circumstances of the time. To act in that way is no embarrassment to me; it is sheer common sense. It is a pity that right hon. Gentlemen opposite did not adapt their policy a little more from time to time. It is a pity that they did not have the good sense to scrap S.E.T., which was specifically designed to make labour more expensive.

Of course, I never expected unemployment to rise as it has, neither did the right hon. Member for Stechford, and he is on record as making that clear. Let me repeat what I said when I became Chancellor of the Exchequer: wherever the changing circumstances and the fore- casts warrant it, I shall not hesitate to take the appropriate action and to take it at any time during the financial year.

The whole nation is concerned about the level of unemployment, but this Motion is a charade. It should and will be rejected.

5.2 p.m.

Mr. Douglas Jay (Battersea, North)

If there is one thing which I find more gloomy this afternoon than the unemployment situation it is the speech of the Chancellor. If it is true that full employment is the principal aim of this Government, then, judging by results, it must be one of the most incompetent Governments of modern times. In my view, all one can say about the new measures announced by the Chancellor today is that they are too little and too late, like most of his other actions in his present office.

I do not want to follow any of the Chancellor's party political arguments. I would make four brief, simple and practical suggestions of what I think he could and should do in the present emergency—because that is what it is. The first thing he should do—

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

—is to resign.

Mr. Jay

Assuming that the right hon. Gentleman does not resign, the first thing he should do is to cut the Bank Rate by at least 2 per cent. from its present 5 per cent. on Thursday this week. I do not know why he has not done so yet. I cannot remember any time since 1926 when all factors and relevant arguments cried out together as they do now for lower Bank and interest rates. We have, at the same time, a huge payments surplus, heavy unemployment, low investment and an embarrassing in-flow of funds. An immediate cut in Bank Rate would help in all four directions at once.

Secondly, the Chancellor should make a substantial cut in indirect taxation, including the food levies which the Government have introduced. If the Government want to halt the rise in wages and prices, that is an obvious, simple and effective way of doing it.

Thirdly, in the development areas the Government should launch a new programme of advance factories on a substantial scale. Roads, power stations and school building, although helpful, are not the essentials in the unemployment areas. What they need is manufacturing industry that gives lasting employment. Advance factories have the great additional merit that they give employment precisely where it is most acutely needed. Of the 234 such factories built since 1964, when the previous Government initiated the programme, over 180 have already, despite these conditions, been allocated to firms. Yet no new advance factory programme has been launched in the development areas since March, 1970.

Fourthly, the Government should restore the investment grants now, with full preference for the development areas. In the present emergency the Government should forget the stale, partisan argument that we have heard about investment grants, and recognise what everyone, both in industry and in Whitehall, now knows, that the abandonment of investment grants was a disaster and that strong new incentives are now needed to get investment going again.

All these decisions together, taken now, would transform the outlook for employment, and nothing less will do.

5.8 p.m.

Earl of Dalkeith (Edinburgh, North)

We have just heard an admirably brief and pointful speech from the right hon. Member for Battersea, North (Mr. Jay). I only hope that I can emulate him in delivering an equally brief, pointful speech. I shall not comment on his four points, because no doubt these will be dealt with in the winding-up speech later on. I was, however, interested in what the right hon. Gentleman said about advance factories. In that connection, I was saddened to see on the outskirts of London recently a large factory with a notice on it saying "To let". It seems to me that if something like this can happen to large factories on the outskirts of London, in a highly desirable area, the prospects are not as rosy as they might otherwise be for development areas. Naturally, firms go first to these readily accessible vacant sites.

I am grateful to you, Mr. Deputy Speaker for giving me this opportunity to break my rather prolonged and enforced silence in this debate. Ever since I became involved in politics I have had two flags nailed metaphorically to the top of my mast—one, better housing; the other, full employment. It is with a sorrowful heart that I approach this debate today with the figures for unemployment at their present tragically high level. I hope that a debate of this kind will serve some useful purpose, although I feel that this is always questionable. Some hon. Member might propose an inspired solution not already thought of or suggested, although this is, perhaps, a little unlikely. Another hon. Member might draw attention to what he believes to be past errors of previous Governments or of the present Government in the hope that they will not repeat them but will learn by their lessons.

There is, too, the obvious opportunity for party political point-scoring, and I have no doubt that we shall have the usual flow of this today, however sterile that might be.

I would not try to be harsh with anyone in this respect because I have been guilty of the same thing myself in the past, not least at the time of the last General Election when I repeatedly drew attention to the fact that we were suffering from the highest post-war unemployment. It is sad when it is suggested that the present unemployment figures are the result of deliberate policy on the part of this Government. Such accusations are unworthy of those who make them. If the day ever dawned when I suspected that the Tory Party was no longer dedicated to a policy of full employment I should resign from it forthwith. I have said it before, and I have no hesitation in saying it again, that high unemployment is the most inhuman extravagance in which any Government can indulge. The temptation obviously always arises on these occasions for each party to pass the blame to the other. This, too, is a sterile pastime and one which sickens the majority of our population.

My own assessment, which I advance with great humility, is that I believe that both Labour and Conservative Governments are partly to blame for the present high unemployment figures. They have both to some extent miscalculated the timing of reflation and the amount of reflation which should take place. I suspect that they both made this mistake for identical reasons. I never had the opportunity of poking my nose behind the scenes of power in the Treasury, but I imagine that every Treasury Minister is surrounded by a bevy of high-powered advisers, men of great wisdom, double firsts, bankers, high-powered economists, civil servants and a great many other business men in and out of politics. I am sure that all these people have been giving successive Chancellors the same advice, partly out of terror that they might find themselves being accused once again of landing the Government in another period of "stop-go", which became so thoroughly unpopular before.

It would take a most brazen and arrogant Chancellor to go against the advice of such weighty opinion, even if he did feel that the time had come for the reflation of the economy sooner than his advisers suggested. I would not for a moment suggest that my right hon. Friend could be described as being brazen or arrogant, any more than his predecessor the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins).

In blaming both Governments for being partly responsible for our present sad state of affairs, I draw attention to the fact that I am not being wise after the event. I am on record as having urged the Government of the day some three years ago to start reflating. I have no better witness than the hon. Member for Liverpool, Walton (Mr. Heffer), whom I see sitting on the Front Bench opposite. It was one of those rare occasions when I found myself chanting in unison with what I do not disrespectfully refer to as the "Heffer brigade". We were urging the Government at that time to start some measure of reflation.

One reason for the reluctance of these varied advisers to encourage the then Government to begin reflating was the terror of being accused of starting another round of "stop-go" I cannot help feel-ling that even "stop-go" is better than permanent "stop". This is something from which we have suffered for so long. No doubt we shall be told that one of the reasons why we have not reflated faster and sooner is that what we are aiming for is real boom and real growth, not an artificial boom. I hope that those who give this explanation are right even though the present high unemployment figures are a great price to pay for this.

To divert briefly to more parochial matters, I take this opportunity of reminding hon. Members that when things look bad for employment throughout the United Kingdom they are invariably much worse in Scotland. Anything which anyone can do to assist in this respect is welcome. I was pleased when earlier this year the Government relented to some extent in their absurd policy of excluding Edinburgh from development areas status. At that time Edinburgh was the only small area between John o' Groats and York which had been so excluded. The Government relented to the extent of making it an intermediate area. What a pity they could not have gone the whole hog and made it the same as the rest of Scotland. This is an example of cheeseparing which is not really worthy of our Ministers, and I hope the Government will think again and allow Edinburgh to have the same status as the rest of Scotland.

Turning to general affairs, we are all delighted to hear the announcements that the Chancellor made this afternoon, coming as they do on top of the recent announcement about handing out £160 million to local authorities, £60 million of which is to go to Scotland. Many of the measures announced today will bring immediate benefits and bridge the gap. From the long-term point of view I hope that the uncertainty about joining the Common Market will have some effect on encouraging industry to get cracking on serious investment programmes. No doubt industries have been holding back to see what will happen, and I was delighted to hear my right hon. Friend the Prime Minister at the Lord Mayor's Banquet exhorting businessmen and manufacturers to use this opportunity to invest and stressing that the right time is now. This could go a long way towards providing new jobs and stimulate the construction industry.

I come now to the subject of lame ducks, about which no doubt more will be said today. Clearly every lame duck has to be judged and assessed on its own individual merits. We do not want to see a Government irresponsibly pouring other people's money down a bottomless well. At the same time it is worth while bearing in mind that because for so many years "profit" has been a dirty word in the English language there are today rather more lame ducks than there deserve to be. This is also due to the fact that for many years we have had a penal taxation system. I am a bit of a lame duck myself at the moment, and I cannot help feeling that it is rather better to encourage lame ducks to fly rather than to die. I hope that with that humanitarian outlook which is always the byword of the Tory Party we shall see rather more encouragement being given to some ducks who are lame through no fault of their own.

For a time I was very tempted to abstain from voting tonight because I am so shocked by the high unemployment figures. There is one good reason why I will not abstain but will instead support my right hon. Friend, and that is because it is my conviction that this Government alone have the qualifications to rescue the country from the difficult situation in which it finds itself.

5.9 p.m.

Mr. J. Grimond (Orkney and Shetland)

I am grateful to you, Mr. Deputy Speaker, for calling me at this stage because it gives me an unexpected and great pleasure to welcome the noble Member for Edinburgh, North (Earl of Dalkeith) back to the House of Commons and to say once again how much we admire the courage which has brought him here. We were all pleased to hear him in such excellent form and to see that he has lost none of his parliamentary tricks.

The noble Member starts with the high-minded rejection of anything like party political debate; he hopes that the Government will look after lame ducks, but I thought that he discharged one or two rather effective shots at the Chancellor himself. The noble Member may not approve of the Labour Party or even the Liberal Party taking part in party political debates, but I am glad that he has not inhibited himself in attacking his own Government and even hinting that he might abstain. We are immensely glad to have him back, and I agree with a great deal of what he said.

This afternoon the Chancellor of the Exchequer started and finished by acknowledging that his economic policy has been a failure. He made it crystal clear, as he has before, that he is shocked, as we all are, by the level of unemployment. Therefore, it cannot be wrong for the House to examine his future plans with more than ordinary care.

I understand that the right hon. Gentleman has given up the claim that the Tory Party and Government have any consistent policy. We used to be told that there was a thing called Tory philosophy. We are now told that the Tories play the economic instrument by ear and that, as the Chancellor said at the end of his speech, they would not be ashamed to go back on their policy and start in other directions. We used to be told that this was being "blown off course". I remember how much play there was with that phrase. As the Leader of my party has suggested, we are now in for a period of Government by delayed shock.

There is a fundamental flaw in the Chancellor's thinking, and he owes it to the House to explain what he means. His contention in each economic debate is that the reason for high unemployment is the grossly inflationary policies pursued by the Labour Government. To begin with, it has not usually been thought that inflation was a cause of unemployment. One can see that in certain circumstances it might be. However, on the whole unemployment has usually been caused by deflation, and inflation has been thought to be the remedy.

Having pronounced this as the cause of unemployment, the right hon. Gentleman went on to say that it will be cured by a further burst of inflation. I know that he calls it reflation, but calling inflation reflation is like calling a rat catcher a rodent operator. If we get into this situation by inflation it is for the Chancellor to explain why he thinks we can spend ourselves out of it without getting into other troubles. Part of his argument seems to be that, while cost inflation is wicked, demand inflation is all right. I do not follow this. It is demand inflation which again and again has got us into trouble—over the balance of payments, for instance. It is notorious that if we suddenly have a large increase in demand one of the things which will most certainly happen is that there will be a large increase in imports and we shall be back in a situation which we know only too well.

No one should be under any doubt about what the Chancellor is doing. He takes pride in it. He says that this is the largest inflation which any Chancellor has attempted for 50 years. We are told that hire purchase is up 37 per cent., that new car registrations are up 35 per cent., that consumer expenditure is up 6 per cent., and that the retail price index is up 9.9 per cent. When the Conservative Party was in Opposition and the retail price index rose by 7 per cent., the right hon. Member for Mitcham (Mr. R. Carr) described it as an explosion of nuclear proportions. I do not know what 9.9 per cent. represents, but the position is a total reversal of what the Government used to preach.

If the Government's position now is that we need inflation, it makes complete nonsense of all the business about Rolls-Royce and Upper Clyde Shipbuilders. In those days we were told that what was needed was a slap of firm Government, that lame ducks must go to the wall, and so on. What is happening now is that they are spending more on Upper Clyde than would have been necessary if they had never allowed it to go bankrupt. Furthermore, they are prepared to take pleasure in it. If their present policy is to increase the amount of money and credit in circulation, what is the sense in abolishing free school milk? What we are in for is not the slap of firm Government but random slaps of infirm Government.

I question whether we can spend our way out of unemployment. I hope in some ways that we can. If we can, it makes nonsense of the Government's arguments about how we got into it. There are certain new features in the situation which the House would be well advised to look at. Whatever measures the Government take will not, alas, have any effect on unemployment in the next month or two. What we are going to determine is whether we can get the economy right in a year or two and whether, by then, we shall have full and useful employment.

It is probable that industry has been over-manned and is now laying off men whom it does not intend to take back. I am not sure that merely increasing the amount of money and credit in circulation will increase the amount of employ- ment in certain important industries. It is all too likely that unless we take some measures to forestall it, we shall get back to a situation of demand-induced inflation and we shall be back in a squeeze, without having cured unemployment.

The Government have rejected the possibility that we ought to accept floating exchange rates. I think that they are wrong. One thing which makes industry reluctant to take full advantage of the immense amount of money and credit being pumped into the economy is that it sees now all too well that, in a year or two, there is likely to be a squeeze and its new investment, and so on, will find no market for its products. If industry was assured that we would not again attempt to defend the pound at an unreal value, I think that it would find more confidence in the future.

I do not believe that the cure for unemployment lies in encouraging unproductive expenditure. This was tried and rejected a long time ago in what was called the Speenhamland system, whereby men were employed to dig holes and to fill them up again. Nor do I believe in expenditure on the higher technology for the sake of the higher technology. We have to be certain that the Government's measures are being directed to effective and productive expenditure. We should bear in mind that one of the chronic troubles of this country is the failure to direct resources to productive work. They have been wasted on prestige and nonproductive expenditure for what I should describe as totally mistaken motives.

We all want to see some increase in investment. I have suggested that flexible exchange rates would be of some help, because they would give confidence. The Goverment should also go back to investment grants. I agree with the right hon. Member for Battersea, North (Mr. Jay) on that matter.

The Government must also declare a holiday in the constant alteration of the tax system and methods. There is a grave danger that the whole system will break down. I am inundated with letters from constituents saying that they cannot find out what their tax is, and when they write to the Exchequer it admits that it is very much behind. I do not blame the Inland Revenue. I think that successive Governments have put an almost impossible burden upon it. It is a serious matter that industry and ordinary people should have to spend so much time struggling with tax changes.

The main failure of the Government lies in regional policy. An interesting article in the Financial Times points out that contrary to general impression, the difference between the regions of high unemployment in Britain and regions not so designated is much less than the difference between equivalent regions within the Common Market. The Government's measures have made the development areas far less attractive for industry. Indeed, it is relatively more attractive to go to the development areas in Europe as against the non-development areas in Europe than in this country. This is an extremely serious matter at a time when there is great unemployment in the development areas. Unless the Government can put it right—investment grants are one way to do it—their measures will not be effective.

I agree with the hon. Member for Edinburgh, North that the situation in Scotland is crucial, though my part of Scotland is not suffering from such a high rate of unemployment as is prevalent elsewhere. What the Government have done is to shake confidence in the whole build-up of the development areas. There is a complete lack of confidence about whether the differentiation between these areas will be maintained, and this is a very serious matter indeed.

The problem has to be cured now. There is a lot to be said for encouraging devolution, taking decision-making away from the centre and pushing Government industries to these areas. Let the Government be under no misapprehension. The situation in Scotland is very much on a see-saw, and in places such as the Clyde depression about the future can be felt by anyone visiting the area.

I was glad to hear some of the Chancellor's proposals, but the Government should pay even more attention to building up the infrastructure. In my constituency, one difficulty in the way of getting new employment is the fact that there is insufficient housing. If we go into the Common Market, it is vital to get on with the terminals on the Clyde and the project Ocean Span, or the bridge, as it is sometimes called, for enabling Scottish trade to flow direct to the Continent. I wonder whether the Secretary of State for Scotland has heard about the Chancellor's proposals? If he has, the sooner he gives the go-ahead to improve the services in my constituency, and the sooner he agrees to pay something towards freight rates, the better. So far he has been stalling on these issues as though the Government's policies have not been altered.

The Government should distinguish in favour of industries which are directly able to provide employment. The Post Office is a vital service and one of social importance. I shall be sorry to see the Post Office indulging in technological experiments and not getting down to the basic fact that it is necessary to keep the postman going and to pay him a proper rate for his job. Other industries—for example, fishing—are of the greatest importance.

I want to mention one or two measures which have been mentioned before but which seem to have been forgotten. When he was in Opposition, the right hon. Member for Mitcham made a rather effective plea for what he called a more sophisticated employment policy, and it was mentioned today by the right hon. Lady the Member for Blackburn (Mrs. Castle). What has happened to the plans for better retraining, for a more sophisticated register of unemployed, and so on?

Second, there are the proposals associated with the right hon. Member for Wallasey (Mr. Marples), who I am glad to see is present today. He has outlined them before, and it looks as though he will do so again today. In the interests of brevity, I shall leave him to do so. The right hon. Gentleman made some proposals, and I have no doubt that he is a man who is not easily put off. I shall therefore miss out part of my speech to allow the right hon. Gentleman to put forward his proposals.

Two other matters have been mooted which seem worthy of further investigation. My hon. Friend the Member for Cornwall, North (Mr. Pardoe) has often asked what would be the effect of reducing the retirement age and paying the old-age pension earlier than it is paid now. I think I am right in saying that if the retirement age were brought down to 60 for men, it would cost about £750 million. That may be more than the Government can face. But the retirement age perhaps should be somewhat reduced, because we have to accept that what we have talked about for some time is now coming about. There is going to be a real problem because it is now possible to produce wealth with less labour. The situation is bound to arise in which there will be, I do not say increased leisure, but increased lack of employment. This may be a matter which we have to face as something that is basically built into an industrial society. Technical change and the power of tools have changed the demand for labour. One way of dealing with the problem is to reduce the retirement age, apart from putting up the existing pension.

What about post-war credits? It would do the Government's standing a considerable amount of good if, while they are giving away money, they were to repay post-war credits. The Government's proposals may be in the right direction, but I am worried about their own logic. I am concerned in case we are building up a demand inflation which will lead us into trouble in about 18 months' time. I am concerned about the way in which extra money is put into the economy. I am not sure that we have grasped the new situation.

Nor am I sure that all the matters which have been brought forward are really economically justified, but I take it that some may be. There are other measures which I have tried to outline, and I should like to conclude with a quotation from the right hon. Member for Mitcham which I think is pertinent. In winding up a similar debate when in Opposition, he said: What will Ministers do? We do not want excuses, because the facts, when compared with the promises, are inexcusable … We just want, for a change, some plain truth and some hard, properly-thought-out action."—[OFFICIAL REPORT, 3rd February, 1970; Vol. 795, c. 225.] I stress the words "properly thought out". We may be getting some action, but is it properly thought out?

5.35 p.m.

Mr. Ernest Marples (Wallasey)

It is a pleasure to follow the former Leader of the Liberal Party, who is a Scotsman, and my hon. Friend the Member for Edinburgh, North (Earl of Dalkeith), who is also a Scotsman. The only reason why I have the temerity to stand on my feet now as an Englishman is that I was a regimental sergeant major in the London Scottish. More than that, I was probably the only Englishman in the unit.

I agree with the right hon. Gentleman that it is no use asking men to dig holes and fill them up again and give them money for doing that useless job. I come from a family which knew unemployment. My father worked as a foreman at Metropolitan Vickers, and he had to stand off his own brother-in-law at 24 hours' notice. Unemployment is not just a question of money. It is not a question of being frightened or disillusioned. It is a question of not being wanted and of nobody caring, and the person unemployed loses heart and his guts. That is the real point about unemployment. One has no dignity, and I know from experience what that means.

But I want to deal with something rather different from what we are debating at the moment. We are debating the short-term policy. That is: what should we do in the short term to provide employment? We may argue about the measures, but there is too much emphasis on the short term. We tend to discuss and cook à la minute.

What are the problems? Let us deal with them today. I did that as the Minister concerned when it came to London's traffic. Today there is a Motion of censure against the Government on unemployment. The first Motion of censure moved by the Labour Party when I became the Minister of Transport was against me for not solving some of the difficulties of urban traffic congestion. But the Motion was a bit too late because by the time we came to debate it the Government had taken over London's traffic as a "pink zone" and traffic was moving fast. But it was a case of a short-term policy; that is, cooking à la minute. All I could do was to make use of the Roman streets, and do it fast. It was the best that I could do. It was the only thing that I could do for a short-term solution.

But what about the long-term solution? I did something which I should like hon. Members to consider. I thought, in the short-term, that all I had done was to annoy many householders by moving extra heavy traffic down their streets and creating more noise and more smell.

On the other hand, how could I tackle the long-term solution? We in this House always think of short-term solutions, because we are here for only five years at a maximum, and sometimes less. We therefore tend to think only in the short term. Another reason for thinking short term is that we do not get credit for long-term proposals. So for my long-term solution on traffic I started by reading every book by anyone who had long-term experience of traffic. I found that the best book was written by a Colin Buchanan. So I asked him to set up a working party to consider what we were going to do to re-build the cities to come to terms with the motor car. He produced a report and a splendid book.

I was proud when on 3rd November Colin Buchanan got the International Road Federation's Man of the Year Award. The citation said: In recognition of his comprehensive and original work on the relationship between traffic, roads and towns which has had a major and beneficial impact on planning and design for movement in the environment in the United Kingdom and throughout the world. I mention that only because in this debate most hon. Members will be talking only about the present and the next year or so. That is quite right. I hope that they succeed in finding a solution. But I want to do more than that. I want to talk about the long-term solution, about what will happen in the next 10 years on unemployment if we are to avoid short-term remedial measures.

The next 10 years will, I believe, witness the most astonishing expansion in the scale and scope of what I call change. By change I mean new products replacing old ones, new manufacturing methods replacing old ones, and new jobs replacing old ones, and a new life entirely replacing the old one—in the next 10 years. I may be wrong, but, at any rate, my words will be reported.

It is not so much the fact that these things are new as the pace and rate of change itself which will hit us for six. We do not know how to calculate the rate of change. The last 20 or 30 years have seen change, but that will be peanuts, compared to the next 10 years, when we shall be facing a really violent change and a difficult situation.

Basically, the problem is how to cope with the avalanche of change. There are two conflicting elements here. First, if there is to be change, how does one get human beings to accept it? In 1811, or thereabouts, we had the Luddites and a very slow rate of change. We had chaos from the workers throughout the country. That brought repressive measures against the workers. But they were simply frightened of losing their jobs because of the change. That is the first element—the reluctance of human beings to accept change.

The second element is technology. Will the change that technology produces be forced upon us? Can we slow it down? If not, how do we reconcile the conflicting elements of human beings who do not want change and of technology which will force it? Let me take technology first, not because it is the most important—human beings are the most important—but because we have not been able to stop technological change in the past, and we shall not be able to do so now or in the future. Whether we like it or not, it is a fact.

There are many examples to prove this. One is the Post Office. The right hon. Member for Orkney and Shetlands (Mr. Grimond) said that we must produce postmen. But, of course, that will not happen in the modern world. I hope to see what they are doing about replacing postmen in America in a month's time. Their principle is this. Television can be brought to one's home by cable, as is done by Rediffusion in this country. But via that cable one can send newspapers which can be printed in the home. One can send letters through the cable also to be printed in the home. The whole technology will change. It is no good the right hon. Gentleman thinking that he can go back 100 years. He cannot. Other things will happen.

Mr. Grimond

Of course technology will change lives, but it must be useful technology, useful for human beings. Has the right hon. Gentleman costed this? As a director of a newspaper, I have had it looked into and the cost is astronomical.

Mr. Marples

But the newspaper proprietors have been saying that for a long time and they are still going down the drain in Fleet Street. They must recognise the facts of life—and not many Liberals tend to do that.

Another example is the advent of the atom. The man who discovered it was, Rutherford. In 1933 he said that the energy in the nucleus would never be released. Nine years later in 1942, it was released. Three years after that we had Hiroshima and Nagasaki. So inventors do not know what they are inventing or what the end will be, but they will continue to invent and force their inventions on the rest of the population. This will happen whether we like it or not. Consequently, there will be an end to stability. Instead, there will be rapid changes in which situations will be fluid and volatile. Peace will really depart and there will be no permanence.

But there will be advantages. There will be huge resources from a much smaller expenditure of labour. Oddly enough, everything which is happening in the modern world is an attempt to stop men working and at the same time provide more resources. The aim is not to give them employment but to give them perhaps leisure and perhaps something else.

In one of the best remarks that I think he has ever made, U Thant said: The central stupendous truth about developed economies today is that they can have—in anything but the shortest run—the kind and scale of resources they decide to have. It is no longer the resources that limit decisions; it is the decisions that make the resources. This is the most fundamental change, perhaps the most revolutionary, man has ever known. This has been so for quite some time. I mentioned this to my right hon. Friend the Prime Minister. He then asked me to make the Conservative Political Centre speech on this I did make the speech and also produced a pamphlet on it—so he is quite aware of this problem.

Whatever we may say, this progress will go ahead at a fast or a slow pace. But what I want is progress to go ahead at a controllable pace. That is the key to success.

As for human beings, the other element in my equation, the majority of them hate and detest change. I mentioned my own father. He literally trembled for about six weeks when he was offered another job with another firm. It meant he had to leave Metropolitan Vickers. But he did not want to leave his home. It was only a very small home but he liked it. He did not want to move away from the club where he played bowls with the same people every Saturday and Sunday. He did not want to shift. My mother, who was more adventurous, wanted him to shift, and there were enormous rows between them. Very few people like to change.

I know from being a Minister of Transport that people resist change. They want the benefits of change but not the difficulties of change. This is a human failing. It is not wrong. It is natural. Human beings are creatures of habit. They want stability, but in the next 10 years they will be faced with instability. They want permanence, but in the next 10 years they will be faced with insecurity.

Mr. Eric S. Heffer (Liverpool, Walton)

I have been sitting here in absolute patience listening to the very philosophical argument which the right hon. Gentleman is developing about future change. Since he comes from an area which has 53,500 workers unemployed at this moment—over 7 per cent. of the working population and well over 10 per cent. of the male workers in Liverpool—would he like to say what he proposes to deal with the immediate question of solving their problems—apart from some future philosophical argument about likely changes?

Mr. Marples

I thank the hon. Gentleman for sitting down to let me intervene in his speech. What happens in the North-West is that I have tried to get firms into my constituency in Wallasey, and I got them. I brought Cadbury's in, and Squibbs, a pharmaceutical firm. When Cadbury's now have vacant space in its factory I find firms will not rent the vacant space. The reason is that they do not want to go to Merseyside because of the very difficult labour relations there. I am telling the honest truth. It is not popular, but it is my problem. Even now I am trying to negotiate with Cadbury-Schweppes to get more employment. I am getting co-operation from them, but I cannot get anyone from outside to come to Merseyside.

Mr. Heffer

How many strikes has Cadbury's had?

Mr. Marples

It has had one or two. It was not that so much as the fact that any civil engineering contractors—

Mr. Heffer

Do not deceive the House.

Mr. Marples

I do not want to get side-tracked into—[Interruption.] Anyone in this House knows Merseyside is a difficult area, but they also know that it is the hon. Member's area as well. But I will not let him side-track me. This is a favourite ploy of his. When he says that he is patient, that is a terminological inexactitude. I am trying to make a serious contribution—[Interruption.] I do not speak in this House as much as the hon. Gentleman does. He never stops. I hope he will be a good boy and listen for a change.

In peacetime people do not normally wish to change—I do not blame them—hut in wartime they will accept change because it is a question of survival. Also, there is a common enemy. If some Post Office workers are made redundant in peacetime it will be said that one is hitting at a certain class, and those affected will say, "Why not make somebody else change as well?".

The problem, therefore, is to reconcile these two schools of thought—the minority who are willing to change, and who will win, and the human beings who do not want to change. In an effort to make this reconciliation, I put forward a suggestion which I trust the Government will consider carefully. I do so in the knowledge that it is not necessarily the job of the politician to work out the details and do things. It is our job to see that things are done.

I would like to have something similar to what the Buchanan study group produced, but on a much larger scale. We need a working party with no vested interests whatever attached to its members. The group would look at the unemployment and employment problem in the longer term—in terms of, say, 10 years ahead. Its members would be full-time, as Buchanan's were. They would be paid, and the working party would be completely independent.

The membership should comprise a variety of talents and nationalities. Among them should be, for example, Swedes, Americans and Indians. Although the problems faced in India are rather different from ours, we have some lessons to learn from such quarters. If such a wide spectrum of opinion and expertise were brought together, we could have a working party similar to Buchanan's successful attempt.

But by itself, that will not be enough. In addition to a working party we must have a steering group. This group could meet the working party every couple of months to see what progress was being made. After all, it is not enough simply to give an order. One must see that it is carried out. But vested interests could come in on this steering group. For example, there could be people from industry, the trade unions, and academic spheres. They could come from other countries. They could see what the working party had studied and make suggestions.

In other words, I want the working party to be independent, as Buchanan was, though Buchanan also had a steering group, the chairman of which was Lord Crowther. But I want the steering group to get advice from people representing all sections of industry and other suitable walks of life.

I trust that this long-term suggestion will be considered in depth by the Government, because it is clear that we shall not solve the problems that we face in a minute or in a few months. We must look years ahead and not simply discuss crises as and when they occur. Of course there are bound to be arguments about the instant effects of inflation and deflation, but it really is clear that everything we are trying to do now is putting men out of work and into retirement. It must be worth having at least one serious study into the next 10 years or so, rather than continue arguing on a crisis-by-crisis basis. The present system is not good enough.

My suggestion will have to be considered by the Government. As I said, it is for back benchers to put forward ideas. The Floor of the House is really a talking shop where the Government receive ideas and criticism. But the real power of action lies with the occupants of the Government Front Bench. I hope they will consider my suggestion for a long-term study, and I hope it will prove as rewarding as the Buchanan Report proved to be.

5.55 p.m.

Mr. Charles R. Morris (Manchester, Openshaw)

Despite the provocation which the right hon. Member for Wallasey (Mr. Marples) provided for my hon. Friends, I take pleasure in speaking after him.

I was impressed by the courage and refreshing nature of the speech of the noble Lord the Member for Edinburgh, North (Earl of Dalkeith), whose contribution was in marked contrast to that of the Chancellor of the Exchequer, who made a bleak speech.

The Chancellor adduced the usual sophisticated economic argument and made desperate efforts to justify the catalogue of policies which he has enunciated, which he has tried but which have failed. He cannot persuade the nation that the Government are taking seriously the problem of rising unemployment.

Instead of conducting an economic analysis of the situation, I wish to identify the problem as far as it affects the people I seek to represent. I was grateful that my right hon. Friend the Member for Blackburn (Mrs. Castle) referred to the regional problem of escalating unemployment and instanced the North-West. I have 136,444 reasons for considering it a privilege to speak in this debate, because that is the number of people in my part of the world who are demanding action from the Government to deal with this problem.

In percentage terms, the increase in unemployment in the North-West is a matter for great concern. In human terms, the increase is causing positive alarm to my constituents. There are as many people unemployed in the North-West as there are in the whole of Scotland and nearly three times the number unemployed in Wales.

In the Greater Manchester and North-West area in September, 1971, the number wholly unemployed had increased by 52 per cent. over September, 1970. In the 12 months between 1970 and 1971, 72 firms closed in this area, creating 6,450 redundancies, and in the first three months of 1971 an additional 54 firms closed, creating 3,507 more redundancies. Thus, in a little over 12 months there have been nearly 10,000 redundancies in the Greater Manchester area, one of the major provincial areas. In fact, in the North-West as a whole there have been 40,000 redundancies in a little over 12 months. The October, 1971, figures indicate that the number of redundancies is rising faster in this region than in any other.

Redundancy, rationalisation, restructuring, streamlining, shaking out—call it what one will—has played havoc with the basic industries in my part of the country. About 330,000 people found their livelihood in the textile industry of the North-West in 1951. By 1971, just two decades later, that force of 330,000 had slumped to a mere 98,000. Last year 26 mills closed, with a loss of 6,000 jobs. At the time of nationalisation the North-West Region had 75 coal mines employing 60,000 men; by 1971 the figures had fallen to 14 pits and 16,000 men.

Wherever one looks at heavy industry, the same pattern emerges. Just weeks ago 600 steel workers in my constituency lost their jobs, and the future employment of a further 900 is threatened. If the Irlam steelworks are closed, the steel industry in the Greater Manchester area will be virtually eliminated.

Against that background we should today have had from the Chancellor of the Exchequer a catalogue of positive action. In the short-term he should have announced, if he believes that which he says, that he is prepared to rethink his policies in the light of experience. The Government should have announced that they are substituting investment grants for their present policy of investment allowances. They should be looking at the liberalisation of their industrial development certificate policy and telling us of advance factories and training centres.

I am glad that the right hon. Member for Wallasey (Mr. Marples) referred to long-term policy. Against the background of what is happening in the basic industries, and with escalating redundancies throughout industry, the time has now come to look at the factors which are responsible. We cannot stand by when another major industry, the Post Office, has just published a document, "The Restructuring of Postal Services", which envisages a further 25,000 redundancies.

It is all very well for the Minister and the Government to say that these redundancies will not create great difficulties because they will be taken care of by natural wastage, but it still means 25,000 fewer future employment prospects. The statistics I have provided for the textile, steel and coal-mining industries all tell the same story of escalating redundancies and unemployment.

Rather than the working party suggested by the right hon. Member for Wallasey I should like a Royal Commission to identify and examine the factors which are contributing to increasing unemployment and empowered by its terms of reference to indicate what action can be taken to alleviate these difficulties.

It is right that today we should examine the problem from many points of view. Regrettably, there are those who look at rising unemployment and escalating redundancies as merely a statistical exercise, but it is a very human problem as well. If I needed that fact brought home to me, I had it brought home at the weekend during a conversation with a young lady constituent who asked me whether I could do anything to get her father a job. She said, and it summed up the whole problem graphically: "Since Dad has been out of work, nothing has gone right in our house". This is a human problem. The whole family harmony and relationship is affected if the main breadwinner is out of work. Such a conversation as I have quoted illustrates the terribly demoralising effect of unemployment.

We are entering the season of good will and charity. Nearly one million people will have that much bleaker a Christmas than those who are in jobs. I hope that the Ministers and the Government as a whole will bear these facts in mind in approaching what is not only an economic but a very real human social problem.

6.6 p.m.

Mr. R. W. Elliott (Newcastle-upon-Tyne, North)

I am very pleased to follow the hon. Member for Manchester, Openshaw (Mr. Charles R. Morris) as he and I used to be part of what in this House are called the usual channels. The problems of his area are very much those of my own. Declining industry is one of the major factors in the general unemployment situation. The hon. Gentleman suggested the establishment of a Royal Commission to ascertain the causes of unemployment, but a Royal Commission is not needed. We know the causes.

The hon. Gentleman spoke with obviously deep sincerity, and I assure him that no one on this side of the House fails to recognise that unemployment and redundancy are very serious matters for very many people in this season, as he says, of good will and cheer. We on this side do not regard the subject as a statistical exercise. We all want to find the answer to this enormous problem of our time, wherever we may sit.

A great deal has been said about the difference in the approach of the political parties to this subject. I, like other hon. Members, have taken part on many occasions, here and elsewhere, in straight political arguments. Today, like other hon. Members, I shall seek to avoid straight political arguments and try to face the realities of the situation for the Government, for the Opposition and for the unemployed.

The right hon. Member for Orkney and Shetland (Mr. Grimond) said that we should never have unproductive expenditure. With that we all agree, but I felt like intervening to ask him what he meant by unproductive expenditure. No one sugests employing people to dig holes and then to fill them in again. One might say that improving the infrastructure of a development area was unproductive expenditure, but this is arguable. We have had to indulge in an enormous amount of this expenditure in an attempt to overcome our problems.

It is very true to say, and if we do not all realise it now it is time we did, that the real problem is that in modern times we can produce wealth with less labour. I have the honour to represent a constituency in a very famous industrial part of the country. In the years during which I have been a Member I have visited engineering plant, engineering concerns and so on, with regularity as part of my duty. My most recent visit was to one of the greatest shipbuilding yards in the world—Messrs. Swan Hunter and Wigham Richardson—where I was shown the latest development, costing £3 million. It was very inspiring to see this wonderful development, but I was told that it meant that fewer people would be employed on the processes that that development was undertaking.

I find some of the points that have been made this afternoon a little difficult to follow. For instance, I do not see how the right hon. Member for Blackburn (Mrs. Castle) can say that the halving of S.E.T. has not helped the employment position. I believe that it has helped considerably. When first inflicted, the incidence of S.E.T. cost the North-East of England a lot of jobs. According to the North-East Development Council's statistical department, we lost 12,000 jobs in the first year of S.E.T. because of its incidence. I fail to see how halving it has increased unemployment.

By the same token, I found it very difficult to follow the right hon. Lady when she suggested that the restraining of wage claims—which the Government have done comparatively successfully during the past 12 months—has contributed to unemployment. Anyone who has any knowledge of industry and is visiting engineering concerns and small and large businesses will know at once, and will be told if he does not know, that heavy wage awards have meant the pruning of labour. The fact that it has made industry more efficient does not help us out of the enormous problem of unemployment.

I do not wish to go over ground which has already been covered, because I hope to be brief. The Government have done a very great deal to tackle the enormous problem of unemployment—which we inherited. I do not want to get into a political argument, but we inherited the problem. Unemployment did not begin in June, 1970. In the North-East of England unemployment doubled between 1966 and June, 1970. It is ludicrous to suggest that the present Government are responsible for the high level of unemployment. Of course they are not. Our reflationary measures have been not only substantial but extremely courageous, and there is considerable evidence that they are beginning to work.

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

Where?

Mr. Elliott

I do not know whether the hon. Gentleman has made inquiries, but I have. Knowing that this debate was to take place this week, I took par- ticular care to visit one of Newcastle-upon-Tyne's largest department stores at the weekend. I was assured by the managing director that retail sales had not only increased but had increased substantially as against this period last year. He was very grateful indeed for the halving of S.E.T., the reduction in purchase tax, and so on. Retail demand has improved.

The great difficulty in my part of the country, and the difficulty in the North-West, is that we are dependent in the main upon heavy industry, and it takes longer for reflation to show in heavy industry. I believe that it will show, and I welcome wholeheartedly my right hon. Friend's announcements today. I very much welcome the new power station to be built in Cheshire, with all the consequent work that this will mean for the heavy engineering and electrical industries of the North-East of England. I welcome the advancement of the Coal Board's development proposals and the railway proposals. I do not see that as unproductive development. It is something that was planned but which is being brought forward. We welcome this very much.

I am delighted that the North-East will see an improvement in its employment position as a result of today's announcements. I wish also to record the enormous pleasure it has given me to learn that the North-East is to have a substantial share in the recently announced naval building programme, and to learn of the social spending announcements yesterday. It is also good to know that the North-East, as I have often advocated, is helping itself to the limit of its ability.

I was delighted to read in The Times today that the chairman and director of the North-East Development Council have returned from the United States very optimistic about the possibility of bringing to Teesside an American company to develop an oil centre.

We are still weak in an all-important sphere of our employment problems. I refer to training. It is of considerable regret to me at this time that in our greatly increased number of training centres there are empty places. When the right hon. Member for Blackburn was Secretary of State with responsibility for employment I used to appeal for the fullest possible inquiry in the development areas as to whether our training centres were meeting the needs particularly of new, incoming industry. We have never had sufficient training. We need to look harder at training, and not only retraining.

I know full well how difficult is the position of the skilled man of 50-plus who finds himself redundant, but we have many young people on the streets of Tyneside and other places at present who need training of some sort. It seemed somewhat ludicrous, almost ridiculous, that I should receive a letter recently from a constituent, which stated simply: Why is it, in this city of high unemployment, when I advertised for a gardener I did not get a single reply? When I was having breakfast one morning it seemed ridiculous to listen to the B.B.C. announcement that there was to be a march of the unemployed through the City of Newcastle, headed by a brass band and Mr. Vic Feather, followed by many thousands marching, when later, in the same broadcast and by the same announcer, I was told that in Sunderland—where there is a very high level of unemployment, I am sorry to say—certain bus services were being withdrawn because there was a shortage of drivers. It is impossible to obtain the services of a highly skilled shorthand-typist in the City of Newcastle. We need to look very hard at training, especially the training of our unemployed school leavers. I ask my right hon. Friend to examine this most carefully.

Finally, there is enormous hope in our present situation, however grim it may be.

Mr. Gordon A. T. Bagier (Sunderland, South)

Would the hon. Gentleman give his source of information about the shortage of bus drivers in Sunderland? That is not the position as I understand it.

Mr. Elliott

The information was given to me by an announcer of the B.B.C., Newcastle-upon-Tyne. If I have the opportunity, perhaps later I may give the date.

Mr. Bagier

It is not so.

Mr. Elliott

The point was accepted when I made it at a meeting of the North East Development Council which took place in County Durham some time ago. I am afraid that it is so, or was so at that time.

The message of hope for the development areas is that there has been a distinct improvement in the balance between heavy industry and light industry. This is what we must achieve throughout the country. No development area will prosper if our national economic policy is failing. Nor will it ever have a secure future unless we can obtain a better balance between our heavy and light industries and, therefore, become much less vulnerable than we have been in the past.

6.18 p.m.

Mr. Frederick Lee (Newton)

The hon. Member for Newcastle-upon-Tyne, North (Mr. R. W. Elliott) and the right hon. Member for Wallasey (Mr. Marples) made the point that we are now seeing far more productive labour than has been the case hitherto. In other words, they believe that we are now beginning to see the onset of technological unemployment. I agree that this is a vital element in the problem that we are now discussing.

I remember protesting on 6th May, 1970, from the other side of the House, that the figures we get from the Minister responsible for employment are almost pre-historic. We get no moral conception of what unemployment is about, or what is the irreducible minimum number of people changing jobs on each particular day, no matter what the day when the figure is taken. I protest again that the House is discussing this vital issue almost in the dark as to the nature of the unemployment we are seeing.

As regards technological unemployment, the answer to the Chancellor of the Exchequer's rather complaining attiture may well be that he has done so much re-priming of the pump that the pump will not work; in other words, he is probably using the wrong measures.

The Chancellor listed the nationalised industries whose capital programme is to be brought forward and spoke about flexibility in his policies. This is the ultimate in flexibility, for only a few weeks ago the Government refused to allow the British Steel Corporation to proceed with the capital programme for which it had budgeted long ago. By so doing the Government helped to cause heavy unemployment at lrlam in my constituency. It is no good the Chancellor seeking to describe his hurried fluctuations in policy as "flexible policies". The Government's confidence goes in the face of policies of the type they embarked upon during their first 12 months in office.

So great was the Government's obsession with the relationship between unemployment and the amount that trade unions could obtain in wage increases that the Government tried to out-Paish Professor Paish without taking into account the fact that their policies cannot be appropriate when the stage is reached at which the main wage negotiation takes place at the factory level or when employers decide that it is better to pay up than face the chaos of a strike.

The Government are now suffering from their policy of trying to emasculate the unions in the public sector, many of whose members are amongst the lowest paid in the land. At a time when efforts should be made to increase the purchasing power of the low-paid, the Government content themselves with giving tax remissions to the wealthier sections of the community. That will not do much good, because such people do not spend 100 per cent. of their income anyway.

If it were desired to embark upon a policy which would give more purchasing power, there would be something to be said for a holiday with National Insurance contributions and for a commensurate increase in employment benefits and retirement pensions, whose recipients spend 100 per cent. of what they get. This is what we should do at a time when it is desired to get the economy to tick over faster.

Again in this contradictory vein, at a time when the Government have been attacking lower-paid workers with the story, which we heard from the Chancellor again today, that unemployment can be related specifically to large wage increases, for the last six months—in other words, during the period in which unemployment has risen enormously—the Chancellor of the Exchequer and the Prime Minister have been boasting that they are getting down the rate of increase in income rises, and unemployment has risen to nearly 1 million. There is no consistency in the Government's argument that large wage increases cause unemployment when the end product of their own policies is an increase in unemployment.

I regret it as much as anyone, but any trade union which is trying to break even for its members cannot accept an increase of less than 11 or 12 per cent.

Mr. Atkinson

Any trade union which accepted a smaller increase would be losing ground.

Mr. Lee

That is the present situation. I have criticised the Government for their refusal to accept a more ordered prices and incomes policy than they believe they can face because of the way in which they reacted to the Labour Government's policy. The Government are in a hopeless dilemma. If they really want to reprime the pump, the policies they have pursued by way of tax remissions on high incomes must be scrapped and unemployment must be tackled by putting into the pockets of those who spend 100 per cent. of their incomes a much greater reward than is the case now.

Mr. John Page (Harrow, West)

Will the right hon. Gentleman comment on a rise in incomes being lower than a rise in productivity? I am sure he wants to see incomes and the wealth of the community as a whole rise.

Mr. Lee

I want to see, as the hon. Gentleman does, wealth and production increase rapidly, and I want to see wages, salaries and incomes of all types increase correspondingly. That cannot be achieved in the higgledy-piggledy way in which income increases are now negotiated, especially when those at factory level do not know what is happening nationally whilst they are negotiating an increase applicable to their factory. This is why I have always been in favour of a reasoned prices and incomes policy.

Almost without cessation from the end of the last war there has been no need for Governments to have a full-employment policy. In other words, since the end of the war Governments' economic policies have pre-supposed high levels of employment, and, with certain exceptions, when the tap has had to be turned on a little there has been no need for the first priority in economic policy to be full employment.

That period has passed. From now on the creation and maintenance of full employment must be the first priority of economic policy. This will create other problems, but such is the urgency of the present situation that the Government must abandon economic policies which as a by-product produce unemployment, which is followed by a small turning-on of the tap in an attempt to cure it. As the Chancellor lamented today, that is no longer working.

At the moment the Government have no instruments for creating and maintaining full employment. The Treasury cannot begin to be such a Department. The Department of Employment never has operated, and never can, given present dispensation, operate such a policy. I regret that that Department seems to look upon itself simply as an ambulance squad; it waits until somebody in industry gets a broken head; then it dashes in, binds up the wound, and gets that person back into the fray again. I grant that the Department is marvellous at doing that, but what is needed is an instrument with economic powers to make full employment the first priority.

I believe it was a mistake to get rid of the Department of Economic Affairs. Instead, it should have been given much greater power. Any Government which seriously set about creating full employment will have to resurrect that Department in one form or another.

This Government have abolished the National Board for Prices and Incomes, the Industrial Reorganisation Corporation and the Consumer Council. If the Government are serious in their intentions they will have to re-create those bodies. I do not want to rub their noses too far in the dirt, so if they call them by other names I shall pretend that I have not noticed, and it seems that they are now beginning to re-create one or two. But the vehicles necessary for the creation of full employment are not at present in existence.

I accept that we are now in the phase of technological unemployment. We must, therefore, do far more—again, I agree with something said by the hon. Member for Newcastle-upon-Tyne, North—about the business of retraining than we have ever thought of before. Looking back on it, I feel that we have simply played about with the retraining issue. As hon. Members know, I have heavy unemployment in the steel works in my constituency. No provision is being made for retraining those men to do a skilled job, or, indeed, to do a semi-skilled job. One of the great losses which we shall sustain is that when skilled men cannot find skilled work they will accept semi-skilled or unskilled work. Their worth to the nation as skilled artisans will have gone. This is another of the losses to be put in the scale when we weigh these matters.

The Chancellor has announced the bringing forward of the capital programmes of the nationalised industries. It is well worth doing. I hope it will have an effect in the steel industry at Irlam. But if we are right in saying that technological unemployment is now with us, the bringing forward of those programmes will entail the acceleration of advance in modern methods of producing goods. Plainly, one cannot rely on the old methods of production; there must be a breakthrough. But let there be no misunderstanding about it: this will not necessarily he one of the ways to reduce unemployment. It may well be that the very bringing forward of these programmes will exacerbate the problem which we are all trying to solve. The House must face this matter because of the consequences which may flow from it.

If it is right that the nationalised industries' capital programmes should be brought forward, what is wrong with applying the same principle to private enterprise? The Chancellor tells us that one of the problems is that people lack confidence, that they feel that they cannot invest at this stage, that they fear that they will lose their investment. But is not the Chancellor afraid that the nationalised industries also might lose their investment? To put it another way, although I believe that he is right to have the capital programmes brought forward in the nationalised industries, I believe, also, that in this sense all business is the nation's business. In spite of all we hear about the "lame duck" theory, we do a lot in this nation now to assist private enterprise in a great many ways. We have a right to expect the same social responsibility from private enterprise as we insist upon from the nationalised industries.

Admittedly, this will mean intervention from a non-interventionist Government—though I wonder whether they call themselves non-interventionists any more after the Chancellor's speech today—but if we are serious in wanting to tackle the problem of unemployment and if it is true, as the Chancellor and the financial pundits say, that we are not seeing enough capital investment, what do we do about it? Do we sit back and say that it is all just too bad? If I say, "Let us nationalise the lot", do we say, "That is just Fred Lee's bias in favour of nationalisation"? We cannot have the greater part of British industry, the private sector, immune from this kind of thing while at the same time we argue that it is right and proper in the country's interest that the capital programmes of the nationalised industries should be brought forward.

With all the incentives offered now, I think it wrong that private enterprise should not be investing. I happen to believe that a time of slackness is the right time to invest in preparation for the day when the slack ends. But, apparently, the Government and their friends always work the other way round.

In my view, therefore, if the Government are serious in wanting to convince the House—they have not done it yet—that they now realise the folly of the policies which they have hitherto adopted, that they understand that they must re-prime the pump in nationalised industry, if not in private industry, they must acknowledge that at a time when we want purchasing power to rise we must ensure that the higher purchasing power goes into the pockets of those who, generally speaking, have to spend 100 per cent. of their incomes.

I acknowledge that this is a very difficult time. The right hon. Member for Wallasey said that the next 10 years would see vast changes. I accept that. But he seems to forget that there are those of us in the House now who have lived through the period of greatest industrial and technological change the nation has ever seen. This is why we are still here. Those of us who were here at the end of the war were, frankly, apprehensive about whether man could survive. We have survived, and we have survived because this generation has successfully faced the greatest and most rapid changes that man has ever seen.

I believe that, given the right Government policies from now on—I despair of this Government—we can tackle technological unemployment. This is an age in which leisure is possible in a measure never known before. I sometimes wonder whether my friends in the trade union movement are arguing the right cases in their discussions with employers. If I were leading a trade union now instead of having degenerated to my present level, I should be spending more money and effort on research into the use of leisure time than on any other subject I can think of. I commend to my friends in the industrial world the thought that that is the sort of problem which we must now face if we are to come through what will be a very difficult period anyway.

6.37 p.m.

Mr. J. Enoch Powell (Wolverhampton, South-West)

There is inevitably a danger in a debate of this sort that we shall concentrate our vision too much upon the present and the immediate past and, it being a censure debate, that the date 18th June, 1970, will be presented as an economic watershed. That date was certainly a political watershed, but there is no reason to suppose that it has any special significance in retrospect in Britain's economic story.

I do not believe that we can form a just view of the problem which the House is now discussing unless we widen our vision sufficiently to take in at least the last five or six years. I believe that the pattern of events in that period viewed as a whole was extremely significant. Between 1966 and 1967 there was a sharp increase in unemployment. Then, from 1967 to 1969, unemployment was almost absolutely constant; there was virtually no change whatever in the level in those three years. Then, in 1969, occurred a further swift increase in unemployment, succeeded by a much sharper increase still between 1970 and 1971.

The significant point is the parallel between that experience with unemployment in the last five years and what was happening to inflation. The jump in unemployment between 1966 and 1967 was, as one might have expected upon the doctrines on which we have been brought up, accompanied by a reduction in the rate of inflation; but what has happened since is that inflation has gone ahead, first steadily and then at an accelerating rate, so that the rise of unemployment, first over the foothills between 1969 and 1970 and then up the escarpment between 1970 and 1971, has corresponded almost exactly with the movement of inflation itself. Here is a new and striking phenomenon, which we dare not ignore. The experience of the past four or five years has been something not only unparalleled but something which it had been confidently predicted could not happen, a coincidence between the continuance and acceleration of inflation and the continuance and acceleration of unemployment.

I think it probable—and certain figures which were given this afternoon by my hon. Friend the Financial Secretary to the Treasury tend to bear this out—that the rate of inflation is now declining again. If that is so, I believe that the floating of the £ in August and the consequent diminution of the huge surpluses on the balance of payments, converted into internal domestic purchasing power, will have had something to do with it. Now we should all admit—I do not see how it can be disputed—that some temporary or transitional unemployment must be the consequence of the slowing down of inflation. But even if inflation has been slowing down in these past three or four months, it cannot be that which gives us our clue to the meaning of the phenomenon of major unemployment which the House confronts this evening.

The coincidence of an unparalleled rise in unemployment with an inflation unparalleled in its duration and severity forces us to revise the philosophies upon which nearly all of us have operated for the past 30 years. For the past 30 years it has been part of the vocabulary of politicians of all parties that whatever else might be our disadvantages in the modern era, at any rate we had, to use an American expression, "got the goat" of unemployment; we knew the trick; there was a device, a monetary mechanism; and it was mere stupidity or carelessness on the part of Governments if, possessing the mechanism which would do the trick, they did not use it.

I noticed an expression that the right hon. Member for Newton (Mr. Frederick Lee) used. He said that from time to time in the past 20 or 25 years the tap had had to be turned on. That tap to which the right hon. Gentleman was referring has been full on in the past four or five years, and all our endeavours have been devoted to turning that tap down. Yet it has proved to be worse than irrelevant to the phenomenon of unemployment. Therefore, to be using today the parrot cry, the conditioned reflex reaction, "Reflate, reflate" is nonsense. The right hon. Member for Orkney and Shetland (Mr. Grimond) punctured that balloon very well.

Reflation means, if it means anything, ceasing to deflate and starting to inflate. If it does not mean that, if it is being used in a looser sense, all we are saying is that the disease ought to be cured by curing the disease. If all we mean by reflating is stopping unemployment, that is the thing we are talking about and we do not produce the answer to it by using the word "reflation". In any intelligible sense, reflation in a period of rapid inflation is worse than irrelevant. Surely it is not the idea of either party that with the present rate of inflation—6 per cent., 10 per cent., or whatever it might be—we shall find a cure for our problems by adding another 2 per cent. to the going rate?

When my right hon. Friends come forward with proposals for increased Government expenditure, each of which in itself may be meritorious, the dilemma which faces us and them is this: is that extra expenditure to be financed by increased borrowing or taxation—in which case there will be no net increase in total demand, and presumably none, therefore, in total demand for labour—or is it to be financed by the creation of additional money—in which case what reason have we for supposing that that additional monetary demand will not simply be absorbed, as it has been in the past four years, in rising prices and a further twist to the spiral of inflation?

The monetary belief, or the monetary myth, upon which a whole generation has been reared—that an injection of money into the system is the automatic cure for unemployment—has collapsed in the face of the experience of the past four or five years.

Sir Harmar Nicholls (Peterborough)

rose—

Mr. Powell

I wonder whether I shall be answering my hon. Friend's question before he asks it. I shall gladly give way if my suspicion proves not to be correct.

I may be told, as we often are, "Yes, but it is not inflation generally that is being talked about; the problem on which one has to concentrate is wage inflation." We are told that that is the specific phenomenon of recent times and that it is there that we are to seek the cause, and perhaps consequently the cure, of our present difficulties.

Sir Harmar Nicholls

My right hon. Friend has answered half my question but the other half is just as important. Does he consider the reduction of taxation to be reflating or inflating? Such a reduction is vital in order to encourage the necessary investment, the lack of which I believe to be the problem that is interfering with the normal working of the machine as it has worked in the past.

Mr. Powell

As my hon. Friend knows, I am a lifelong advocate of the balanced reduction of both Government expenditure and taxation; but a reduction of taxation without a corresponding reduction in outgoings has the same monetary effect as an increase in expenditure with no corresponding increase in taxation and borrowing. So that still falls within the limits of the dilemma which I was posing.

I return to what is a commonly canvassed notion, that we are characteristically in a period of wage inflation and that wage inflation is in some way to blame, at least as part of the cause of our current difficulties. "Wage inflation" is a term which we should be careful not to use without analysis. Obviously, in a period of inflation, of a general rise in prices or a general fall in the value of money, wages, like all other prices, will participate in that movement, whether it is 5 per cent. or 10 per cent. per annum. So we can eliminate that element from the increase in wages—the element which merely corresponds with, and reflects, the going rate of inflation.

There is another element. If the productivity of labour increases by 3 per cent. or 4 per cent. in a year and the price of labour—wages, earnings—rises by a similar amount, again we cannot properly describe that as wage inflation. Indeed, without such an increase in wages we should not be taking out, in terms of an improved standard of living, the increase in our productive capability.

The only sense in which the increase in wages could be relevant to our problem is if, after we have deducted the going rate of inflation and the current rate of increase in productivity, we are left with an increase in the real value of wages which represents an actual shift or redistribution amongst the factors of production in favour of labour as against the other factors. I accept that it is theoretically possible that such a shift could take place; and certainly such a shift, if carried beyond a certain point, would inevitably throw labour out of demand: if it had the result of reducing the return on capital and the return to enterprise beyond an acceptable point, then quite clearly production would be abandoned or enterprises would not be undertaken.

Nevertheless, having posed what I believe is the kernel of the argument that we are faced with the consequences of wage inflation, I must admit that I find this a very difficult proposition to accept; for it becomes necessary to explain—and I find this impossible to do—why the trade unions, the sellers of labour, have started just at this time to force up the real price of labour, to force up real wages, in such a way as to put their own members out of employment.

We are told that the unions—and there is truth in this—possess monopolistic power; we are told—and I see no harm in this—that they use their bargaining power to the utmost. Perhaps they do: if so, that is what they exist for. What no one, so far as I know, has satisfactorily explained is why, for year after year after year, this virtually unchanged monopolistic power, this equally exercised power of the unions, did not produce the effect it has suddenly started to produce in the last two years. If one is to account for that sudden change, one either has to assume an alteration in motivation and in human nature on the part of trade unions which I find quite incredible, or one has to look in some other direction altogether for the explanation.

Here I think we have been inhibited by the assumption that because deflation—inadequate demand—can cause unemployment, therefore it is always the cause of unemployment. After all, the memory of this generation of men, the outstanding experience of their historical or personal memories, is of a massive unemployment caused by deflation. We know that monetary factors, even if they were not the only factors at work then, were certainly important and probably decisive. It is not unnatural, therefore, that our minds should be dominated by that experience and that we should be tempted to conclude that there can be only one causation of unemployment.

But if one goes further back, beyond the searing experience of the 1930s, one finds that it was quite widely recognised that unemployment could, and periodically did, arise from a different sort of cause altogether; and it has been a remarkable feature of this debate that so many right hon. and hon. Members, speaking from different points of view—the right hon. Merrier for Orkney and Shetland, my right Hon. Friend the Member for Wallasey (Mr. Marples) and, in some parts of his speech, the right hon. Member for Newton—have gravitated towards the same analysis.

There is no inherent reason why the rate of improvement of productivity and the rate of obsolescence of current processes should be precisely and invariably balanced by the emergence of a new pattern of demand and of new forms of production—new needs to be met and new ways of meeting them. Hitherto, for the last 25 years, we have lived in a period in which that balance has existed and been kept. It was not we who kept it—we may attribute to ourselves, on either side of the House, the virtue for having kept it, but I do not believe we did; it was a period in which this happened. Anyhow, I believe that that period has now come to an end and that we are in a new period when the rate of obsolescence, of technological change, of increase in productivity, has, at any rate for a time, outstripped the rate at which we are producing new needs, new demands and new methods of fulfilling them.

That is an analysis which has been common to a good deal said already in the debate. If the analysis be even par- tially true, it is possible to indicate what kind of policy will be most beneficial, under what kind of policy unemployment is likely to be least severe and least protracted. Defined in the abstract, the policy will be one which makes it as easy as possible for obsolescence to take place, as easy as possible for resources and labour to move from what is obsolete to what is new, and which gives the maximum inducement and the maximum opportunity for new lines of production, new ways of meeting needs to be explored and experimented with. That must be the general prescription; that must be the general type of policy under which we shall suffer least from unemployment, if it is the sort of unemployment I have suggested.

I do not think it can be disputed that in its broad outline, that is the kind of policy—that these are the principles of policy—on which this Government came to office and which they have pursued, on the whole, during the last 18 months. Now we stand at a point of decision—and this does not only apply to this side of the House—and a point of temptation. Tomorrow, right hon. and hon. Members are going to be lobbied by their constituents, and on whichever side we sit we shall not only have personal sympathy with those whom the lobbyists represent but a lively political interest in giving them satisfaction.

There is a grave temptation to seize the short-term, the facile, the habitual, the traditional answer and either to promise that by short-term Government action, expenditure or whatever it may be, unemployment will be alleviated or cured, or, if we sit opposite, to say, "It would be perfectly easy if only Her Majesty's Government would take the measures which we have commended to them." That is the easy course. But it does not correspond with the analysis which many right hon. and hon. Members know is most appropriate to the phenomena with which we are confronted.

Therefore, I say to the Government and to my hon. Friends that when we persist in policies which give the maximum encouragement and reward to the successful exploitation of new forms of production and the meeting of new forms of demand; when we decline to use public money to maintain processes which are obsolete or obsolescent; when we place the emphasis on everything which will facilitate, encourage and even enforce change, then we are doing perhaps the utmost which is in the power of any Government to moderate the severity and shorten the duration of unemployment.

Our concern for unemployment and those who suffer from it can best be shown by doing what is sometimes the most difficult thing for politicians—to tell what we know to be the truth, even though it may indicate that we do not have within our power as politicians all the answers.

6.59 p.m.

Mr. Norman Pentland (Chester-le-Street)

Whenever the right hon. Member for Wolverhampton, South-West (Mr. Powell) rises to speak in the House he always commands attention because, whether one agrees or disagrees with him, he tries to analyse the roots of many of the problems facing us. I must confess that the Minister on the Front Bench seemed during his speech to be as confused and bemused as to the real purpose of his analysis, particularly on the long term and the relationship with the trade unions, as anyone else in the House.

For many years the right hon. Gentleman was a Minister in a previous Tory Government. He referred to the unemployment march which is to take place in London tomorrow. He will be able to meet the lads from the shop floor and the unemployed who are coming here to speak to all of us. They will say that, despite his brilliant analysis of how the situation has developed and how the problem may be solved in the long term, their first question is why, for the first time since the end of the last war, with a Tory Government in power again there are almost a million unemployed. The right hon. Gentleman was right to say that in this debate we are concerned with the immediate problem of the staggering and appalling unemployment figures. These are the questions which these men will want answered tomorrow.

I shall concentrate what I have to say on the problems of the North-East. The hon. Member for Newcastle-upon-Tyne, North (Mr. R. W. Elliott) said we should face up to the realities of the situation. I wish the hon. Gentleman would face up to them as they exist in the Northern Region. He knows, or should know, that all sections of the community in the North are appalled by the prevailing high unemployment figures there. There is deep anger and deep resentment among all sections of the community.

In the Northern Region every responsible trade unionist and industrialist is dismayed and apprehensive about what the future holds for the area, and they have every right to be. There are now nearly 85,000 unemployed, which is 23,000 more than a year ago. These are the worst November figures since the end of the war. We know, and the hon. Member for Newcastle-upon-Tyne, North should know, that before the winter is ended there will be more than 100,000 people out of a job in the North-East.

Despite what the Chancellor has said today and despite the packet he has introduced today, that figure is unavoidable. If it is not unavoidable, this is the time for the Chancellor or some other Minister to say that unemployment in the Northern Region will fall over the next six months and certainly not reach the figures which I have forecast. Building a power station is all right, but the Chancellor and the rest of the Cabinet know that it will not "bite" immediately, that it will be nine or twelve months before anything results. That is true of many of the other measures which the Chancellor has announced.

Throughout the whole of the North many workers have lost their jobs since the Government took office. The Chancellor asserted that it was because of wage cost problems that workers were losing their jobs in industries in the North and other development regions. It is nothing of the kind. It is because there is a lack of demand for their products.

In my area and throughout the whole of the North many tens of thousands of workers have lost their jobs since 18th June, 1970. They were working in engineering, in the chemical industries, industries in which they thought they had job security for the rest of their working lives. Now workers in those industries live in perpetual dread of the day when the manager will say, "I am sorry, old boy; your services are no longer needed in this industry." In other words, sense of job security that existed in the region under a Labour Government has been completely shattered by a Tory Government.

No one will persuade me that history does not repeat itself under Tory Governments, for I know that it does. In my area I see youngsters looking for their first job, or looking for another job after having been at work for only a few months. These youngsters are 17, 18 or 19 years of age, and they are looking for work throughout the whole of the North. That takes me back to when we were their age, in the 1930s, when we were doing then exactly what they are doing now in 1971—looking for a job.

It should be recorded that in the County of Durham, for instance, a man has to be almost 40 years of age to be able to remember a time when unemployment was as high as it now is. That is a shocking indictment of the Government and their policies. They have stood aside while all this has been happening. Every responsible Minister in the Cabinet has had advice from various quarters. The Prime Minister has been most complacent of all as this situation has arisen throughout the whole of the development areas.

We are all capable of speaking at great length about the problems facing our areas and about the policies which have brought about lack of confidence and a sense of despair among the people we represent, and we are able to produce the evidence. I do not have the time this evening to deal with that. Since 18th June, 1970, my hon. Friends have consistently drawn the Government's attention, during Questions and in debates, to various suggestions which they wanted to be implemented, but time and time again they have been completely ignored by the Prime Minister and other responsible Ministers.

We could discuss this subject at great length, but the simple fact, as my right hon. Friend the Member for Blackburn (Mrs. Castle) pointed out and as the right hon. Member for Orkney and Shetland (Mr. Grimond) said, is that as soon as the Government dismantled the Labour Government's regional policies without providing any effective replacement the situation in the Northern Region and throughout the development areas began to go from bad to worse until now it has become critical. In the past 15 months every responsible body in the region has expressed concern about the situation, and the Chancellor and his colleagues know it. The trade unions, the local authorities, the Northern Regional Planning Council, the North-East Development Council, the employers' organisations and so on have all warned the Government about the situation which would develop and have urged the Government to take positive action. That has all been to no avail. Even what the Chancellor said today will do very little to relieve unemployment in the Northern Region during the winter.

On November 18th one of our North-East newspapers, the Newcastle Journal, carried a report of a survey which it had carried out into the North's unemployment position and the prospects for the future. It was a remarkable survey. It was sent to the Prime Minister and other members of the Cabinet, and I hope that they have examined it, because it highlights, with depressing clarity, the grim situation in our area. It also directs questions to the Prime Minister, the Chancellor of the Exchequer, the Secretary of State for Employment, the Secretary of State for the Environment and the Secretary of State for Trade and Industry—to all those Ministers whose responsibility it is to take realistic steps to deal with the development region problem. The Newcastle Journal said of these Ministers: These are the men who must make it their business to put faith in place of fear, money in place of misery, and work in place of waste. Even the Newcastle Journal—and I would not say that it is always sympathetic to the Labour cause—is appalled by the situation in the area. I would, therefore, congratulate the newspaper on its initiative in drawing public attention to the grim facts of our unemployment problem in the North. I wish I could believe that its remarks would have an impact on the Government's long-term or immediate policies, but I fear that they will not.

I concede at once that there are many hon. Gentlemen opposite who are seriously concerned about the present unemployment position. The hon. Member for Wolverhampton, South-West must face the fact that history proves that when Tory Governments have wanted to fulfil philosophical objectives they have, over and over again, used unemployment as an instrument of policy. That is what has happened now; that is the charge that we level at this Government; and that is why we in the development regions are experiencing the worst unemployment since the 1930s. That is why the people we represent look forward to an early General Election when they can once again demonstrate their intention of removing the Tory Government and replacing them with a Labour Government.

7.14 p.m.

Mr. Rafton Pounder (Belfast, South)

I am glad to follow the hon. Member for Chester-le-Street (Mr. Pentland). We are tending to go round the geographical clock as this debate wears on.

I must confess that I do not wholly accept the oft-used argument that what is good for the national economy as a whole is also good for the regional economies. The regions have their own special problem. The majority of branch factories throughout the regions are offshoots of parent companies based in the affluent Midlands or South-East. The situation inevitably arises when a chill economic wind blows that the branch factories in the regions—often Government-financed, where the company concerned has less to lose—are closed. Likewise, when there is an economic upturn, it can often take six to nine months for the fruits of this to percolate through to the regions. Using the ordinary national argument, therefore, the regions can be a two-way loser—being hit by the chill breeze and then being the last to derive benefit from an improvement in economic conditions.

For a long time it has been inevitable, even if we do not like it, that there must come a shake-up in industry. One of the things which, some years ago, made me angry—and perhaps I am envious of those areas which have a high level of employment—was the tendency of some firms to hoard labour on the offchance that they might need their skills in boom conditions. This tended to distort the market considerably. I speak of the days when I worked in the motor industry.

The assumption has been made that we are masters in our own house, able to create or cure present levels of unemployment. Surely we are at the mercy of world trends and these trends, certainly in the North Atlantic area, are not encouraging at the moment. I hope that whatever happens as a result of the thinking and policy-making that is going on, at last we shall get away from the stop-go economics which have characterised both Governments' policies in recent years. I speak in a non-partisan way when I say that we have not found the stop-go philosophy attractive in the regions.

I have been suprised that there has not been a greater resurgence of business confidence in the light of the measures taken by my right hon. Friend the Chancellor in the spring and midsummer. I find this particularly distressing, because the initatives were positive and by any ordinary standards would have led to a considerable expansion of the economy and a considerable reduction of unemployment. For some odd reason, however, which I do not pretend to understand, the measures taken to try to halt the cruel spiral of inflation—easier credit facilities, increased opportunity for consumer spending, reduction of taxation—all these, laudable policies in the past do not appear to have been successful on this occasion.

I am equally certain that if we are to talk in terms of a credible regional policy, that policy must lay considerable emphasis on infrastructure because unless there are good roads, amenities and adequate housing, no industrialist will come to the area, yet he may be able to create considerable employment opportunities.

Like everyone else in the House I am deeply distressed by the current level of unemployment. I have noticed particularly in the last few months the number of my own friends who have become afflicted by unemployment. I have, thank goodness, never had that experience, but I am satisfied from what they tell me and from what I know of them that unemployment, be it for only a short period, leaves a scar that can never disappear from a person's personality. Unemployment has been no respecter of the positions held by individuals in companies. The man at management level has found himself every bit as much in the front line of redundancy as the man on the shop floor.

I turn now to the employment situation in Northern Ireland and the pattern which has emerged there in recent months. I do not pretend to be able to draw any conclusions from it, but the unemployment figures in Northern Ireland have not always followed the national trend, although the November unemployment figures show this month to have been one of the worst we have ever had. Two months ago we were going in the opposite direction. Northern Ireland, despite the disorders, last year achieved a higher proportionate rate of growth than any other region of the United Kingdom, a figure of almost 7 per cent.

One of the things I find tragic almost beyond expression, is that having made Herculean efforts—the Northern Ireland Government and the Government here—to attract industry to Northern Ireland, to produce investment and consequential job opportunities, we find that some factories have now attracted the attention of the terrorists. It is bad enough having an unemployment problem but when it is compounded by acts of terrorism it has the gravest consequences for an area such as Northern Ireland.

I would hate anyone to get the idea that the Northern Ireland economy is on its knees. It is bruised—of that there can be no doubt—but vast sections of industry are operating normally. Obviously in the retail and distributive trades problems have arisen, as is to be expected when people are reluctant to shop in towns any more than is necessary. If there had been no assistance to Harland and Wolff a year ago, the economic situation in Belfast would have been totally catastrophic. I want to put it clearly on the record that I am extremely grateful to the Government for their assistance at a critical period.

People have often said that the Northern Ireland economy is in a bad way, but I recently looked up the figures. In the last three years, out of 2,900 manufacturing firms only five have gone out of business. Out of a work force in manufacturing industry of 182,000, only 300 people have lost their jobs directly as a result of the disorders. A C.B.I. survey of the 200 firms in Northern Ireland representing 80 per cent. of the working population revealed that 85 per cent. of those firms' orders books were as good as or better than in the corresponding period a year ago. Set against that background, how can we even attempt to find an explanation for unemployment running at very nearly 9 per cent.? Is there any comfort to be derived from the remark of the Chairman of the Londonderry Commission, Mr. Brian Morton, who recently said that but for the disorders the unemployment problem in Londonderry would be nearly cured?

What can we do to offer some comfort to the regions as a whole, and to a specific area such as Northern Ireland? We have three crosses to bear in Ulster. First there is our general vulnerability as a region. The recent disorders which have manifested themselves in physical damage and adverse publicity, which are inevitably injurious to us, means also that companies find it harder to obtain insurance cover and there are the increased costs of providing their own security. Add to that the perennial problem of high transportation costs and it can be seen that we have fairly massive problems to resolve. For an area like Northern Ireland—and I suspect it is true of many other regions, particularly those further away from the Midlands and the South-East—the answer is to find a, high-value, low-volume, labour-intensive article. Having spelled that out as the ideal requirement, I cannot think of any industry which will meet such a requirement.

I welcome the announcement made by my right hon. Friend today for increased public expenditure, even though none of it will directly come to Northern Ireland, so far as I can gather. This is the time when a lot of work which has to be done, such as the building of new roads, the modernising of ports and hospitals, ought to be done. This will help considerably in relieving unemployment.

The right hon. Member for Newton (Mr. Frederick Lee) made two valuable points. He talked about education for leisure and the tragedy of the skilled person having to accept semi-skilled or unskilled employment with a consequent wastage of talent. There is also the problem of the school-leaver on the threshhold of his commercial and industrial life. There is nothing more demoralising than for a young person to come out of school with a number of qualifications of a reasonable quality and to find that he is starting his life on the labour market.

I have been surprised at how little selective employment tax has come into the analysis of the factors leading to our current unemployment level. I am not thinking in any emotive or partisan sense but of something like the tourist trade, which is seasonal anyway and which was severely affected by the imposition of S.E.T.

Just as a couple of centuries ago the United Kingdom was a pastoral community and then moved to an industrial one, I feel that we are now moving towards a service economy. If we are, what is so selfish or unreasonable about that? I have never been able to understand why manufacturing industry is put on a pedestal while service industry is several steps further down the ladder. It seems quite illogical and I hope that when we talk about getting the economy moving again and reducing unemployment, we are thinking not only of manufacturing but also of service industries.

What we desperately need is an imaginative regional policy. I utterly reject the idea that the regions, with good basic services and a surplus of good labour, are a liability. On the contrary, they are an asset, they are the one part of our country which can expand without creating over-heating and general inflation. Can we please now have a realistic regional policy which gets away from stop-go and which recognises this fact about the regions? I call upon the Labour Party to think about that too.

7.28 p.m.

Mr. John Morris (Aberavon)

The hon. Member for Belfast, South (Mr. Pounder) called for an imaginative regional policy. That is the one thing that this Government have patently failed to provide. It was refreshing to hear him say that he did not accept that what is good for the national economy is necessarily good for the regions. We know that too well in Wales, and, I am sure, in Scotland and Northern Ireland.

Mr. Pounder

I thought I said "automatically" rather than "necessarily".

Mr. Morris

I hope I did not mislead anyone by paraphrasing the hon. Gentleman.

We have had some philosophical speeches. We had the right hon. Member for Wallasey (Mr. Marples) peering into the dim and distant future. Then the right hon. Member for Wolver- hampton, South-West (Mr. Powell) told us of the danger of concentrating too much on the present and immediate past. He forgot that this is a Motion of censure, deploring the Government's continued failure to produce correct policies and deploring the disgraceful level of unemployment. The words of the right hon. Gentleman are interesting but when the verbiage is stripped away what we have is a statement of the need to balance new production on the one hand with obsolescence on the other and of the obvious need for more investment. But he would not go that one further step which the logic of his argument required him to go and admit the need for an interventionist Government.

I listened with care to what the Chancellor said today about his new proposals to try to alleviate existing problems. They were bits and pieces. They represented the action of a frightened Government. I can well imagine a frightened Cabinet calling on a Cabinet committee to scrape the barrel of every Government Department to try to produce something to deal with the immediate situation.

One thing that the Chancellor has done that underlines the failure of this Government—it has probably done more harm to the economy of the regions than anything else—is to substitute investment allowances for investment grants. His confession that he was proposing to bring forward the payment of investment grants was an admission of the speed with which such grants have acted in providing new employment in the regions.

The hon. Member for Edinburgh, North (Earl of Dalkeith) made a most moving speech. We welcome him back to our debates. He said that from time to time all Governments had miscalculated in respect of timing and the amount of reflation necessary. We can certainly say of the Chancellor's present proposals, "Too late, and too little". If there is anything that thoroughly discredits the Government it is their complete failure to deal with the employment situation. They cannot be excused on the ground that they knew not what they were doing; indeed, there is an element of deliberation in what they have done. Faced as they were—and we concede this—with rising wage demands, they warned the workers of the danger of pricing themselves out of a job and of the need to be competitive. Some firms, including one in my constituency, took that literally. The firm in my constituency told one important trade union that if it pursued its claim the firm would shut down.

That atmosphere was created by the Government. They gave that line to the employers. The Government would seem to have had a deliberate interest in creating the atmosphere and climate which led to the situation of 10 men chasing one job. I cannot excuse them on the ground that they were not deliberate in what they were doing. They wanted to keep wages down and to break the power of the unions in order to do so. Against that background, it is no wonder that they delayed reflating the economy. We have had experience of heating the economy on the one hand and cooling it on the other. We know that those measures, on both sides of the coin, take a great deal of time to have their full effect.

The only comfort that I could possibly seek to draw from the present situation on behalf of the unemployed in my part of the country is that some of the steps that are being taken now, together with some of those taken earlier, may enable us at some distant point to cope with some of the problems arising from the grave situation in which we find ourselves.

The other reason why the Government have delayed reflating the economy is that they have worshipped for too long at the altar of the balance of payments. They have taken great pride at the good trading figures with external countries that we have had month after month, but at the end of the day those figures are of only limited value. I pay ready tribute to my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) for laying the foundations for the present balance of payments situation. But this Government have failed to realise that the time would come—and it has come much sooner than they would seem to have estimated, judging by their failure to take any steps to deal with it—when it would be dangerous to go on worshipping at the altar of the balance of payments if that could be done only at the expense of ordinary working people, who were being denied the chance of earning a livelihood.

We all realise that if this Government achieve their object of entering the Com- mon Market vast amounts of money will have to be paid by this country across the exchanges in the difficult early years. Various estimates have been made about the price of our entry ticket. The recent estimates are all greater than the earlier ones. There is a need to be strong in balance of payments by that time—a need to have money available to meet the inevitable rainy day. This Government have ensured that the balance of payments situation has been kept strong. They have avoided reflating the economy, although they should have done so much earlier.

The tragedy of the situation is that the price of our entry ticket into Europe is being paid by the unemployed and their families. Whatever may be the ultimate benefit of our joining the Common Market, today the sacrifices are being borne not by right hon. Gentlemen on the Treasury Bench or other hon. and right hon. Members opposite, but by the unemployed throughout the country, and especially those in the regions, in Wales, the North-West and Scotland.

I do not know when right hon. and hon. Members opposite last spoke to unemployed persons. I do not know how familiar they are with the problems of people who month after month are being denied the opportunity of employment. That is the situation in my area, and in South Wales generally. Week in and week out in our surgeries, in the clubs, in the churches and chapels and all over our constituencies we meet people who are unable to find employment.

The hon. Member for Belfast, South mentioned the tragedy of the situation. There can be no greater tragedy than for a young man or woman leaving school, college or apprentice course—for whom the world should be an oyster—to find that there is no job available. Such young people leave Wales. That is what has happened over the years. The young men of Wales, Scotland and the North leave the towns and villages where they have been brought up to find employment elsewhere.

A famous Government report, published as far back as 1954, said that depopulation was used as a form of economic adjustment. That is true. The young move out, leaving the old behind. That will continue to happen to our community unless fundamental action is taken to ensure that people in the areas to which I have referred are able to earn a living in their own communities.

One thing is obvious; the regional policy of the Government, if they can be said to have one, has completely and utterly failed in Wales. I am sorry that the Secretary of State for Wales is ill and unable to be present. We regard his stewardship as being akin to that of the absentee landlord. He has sought to serve two masters, and has not done either job particularly well. I hope that the Prime Minister will take an early opportunity to relieve the Secretary of State for Wales of one of his jobs. If the Prime Minister does his task properly, he will relieve the Secretary of State of both jobs at the same time.

What advantages have we had from the stewardship of the right hon. Gentleman and his hon. Friends? What decisions have flowed from the palsied hand of the Secretary of State? The flow of new jobs to Wales has ceased since the right hon. Gentleman took office. The number of jobs in the pipeline has dropped dramatically. The number of new small businesses has not risen with the change from investment grants to investment allowances. That is the general situation in Wales, and in some pockets in my constituency unemployment affects 201 males in a very small community. It is not possible to give percentages, but 201 males and 69 females are unemployed, and those figures do not include 34 males and one female who are trying to find work under sheltered conditions.

That is the situation under a Government which do not believe in intervention. We had begun the vital task of ensuring that new work came to our community. On 18th June, 1970, we were denied the opportunity of completing that vital task.

The Government have wholly failed to bring any hope whatsoever to the regions. There is no policy. We know it, and I am sure that in their hearts they know it. The Chancellor of the Exchequer can produce his bits and pieces, but the whole House knows that there is no strategy for dealing with the real problems of the regions.

A poet of the people in my country a tong time ago sang, Not charity for man but work Man is too great for charity, For charity leaves its scar. Our people have been scarred in the past. Again, people in Wales know that the Conservative Party is synonymous with unemployment, and they will not forget it.

7.41 p.m.

Mr. Cranley Onslow (Woking)

This has been an interesting and worthwhile debate. This has been shown all the more clearly by the way that most hon. Members have made thoughtful contributions, and with the exception of the right hon. Member for Aberavon (Mr. John Morris) there has been little ranting and raving.

I do not wish to do more than intervene briefly. I wish to refer to the aerospace industry and the employment situation that prevails in it. It is a major export earner, a major defence industry and a major technological leader. It is also an industry which has lost nearly 20 per cent. of its labour force since 1964. Some people say that the redundancies have not yet come to an end. It may be helpful to take this industry in particular and to consider some of the reasons why this is so.

The first and most obvious reason, which will be familiar to right hon. and hon. Gentlemen opposite, and not least to the right hon. Member for Aberavon, is that the demand which has been put upon the aerospace industry, particularly by the previous Government, has been a diminishing one. It will be an irony that the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins), who is to speak tonight from the Opposition Front Bench, should be the man who was responsible for the cancellation of the TSR2. That decision,—the more to be regretted the more time passes, was one point from which the major decline in that industry can firmly be dated.

Mr. Eric Ogden (Liverpool, West Derby)

Will the hon. Gentleman give way?

Mr. Onslow

I am afraid not. If further redundancies are in prospect, and if they are to come from the avionics section of the industry, it is worth remembering that this is because, in the award of contracts for the multi-role combat aircraft the Government have been bound by the terms of the deal which was set up by the Secretary of State for Defence and the Minister of Technology in the previous Administration. If there is work which might have come to British firms but which has now gone overseas, and if that means that there will be fewer jobs in the avionics industry, it is well to recall that this is because of decisions taken by the right hon. Member for Bristol, South-East (Mr. Benn) in particular. It is some consolation that we have so far today been spared the presence of the right hon. Gentleman, who has an unequalled record for putting pobs at risk, as hon. Members on both sides of the House well know.

We can put some of this right. The Government have already made a start in that direction. We had a further announcement today of a very welcome order of 100 Bulldogs which will provide work for Scottish Aviation Ltd., which Scottish Members might recognise as a great step forward. The Bulldog is a good aeroplane, apart from anything else, and Scottish Aviation has done a wonderful job picking up the pieces where the old Beagle Company dropped them under the guidance of the right hon. Member for Bristol, South-East.

The industry has also received defence orders for Harriers and Buccanneers which will provide more work. The Jet-stream is another excellent aircraft which should be ordered for the Royal Air Force, and this would also help Scottish Aviation. I hope that it will soon be ordered. I shall certainly go on pressing for it, and I hope that hon. Gentlemen opposite will do the same.

I should welcome some more positive assurances than the Government have so far felt able to give on Concorde. If it is the case, as I believe, that cancellation is now out of the question, and if this is an aircraft which has proved itself and met its specifications and for which there will be a long-term demand around the world, I wish that we as a nation would make a virtue of the necessity that faces us. If we are to continue backing Concorde, as I believe we must, we should show rather more confidence in our achievement instead of appearing, as we sometimes do on the international scene, to be plodding along in the footsteps of the French.

This is all on the purely demand side of the industry where it is possible, by turning taps on to effect some increase in the jobs available. But the most instructive feature of the industry, which is a technological innovator, comes elsewhere. In the last 10 years, apart from a slackening of demand, we have seen an end of overmanning. The leaders of the aerospace industry would probably now admit that they used to hoard labour on an unjustified scale because they were always expecting work to come their way and afraid that if they let labour go, it would be snapped up elsewhere in conditions of full employment. But when full employment ceases to obtain the compulsion to hoard labour disappears altogether. A multiplier effect comes in when the margin below full employment begins to open up. We should recognise this as a fact, and a fact which is the fault of no one in particular.

Another significant point is that management has found labour too expensive and has had to do something about it. In this situation I do not join my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) in exculpating the trade unions, because they have had a powerful part in making management realise the expense of labour and have accelerated the willingness of management to move towards laboursaving devices of one kind or another. But this need to recognise change has always been there and perhaps we are all to blame for not seeing it sooner.

I recall about eight years ago going round an avionics factory. I was taken through a big workshop full of youngish men in white coats doing jobs which were past my comprehension but which clearly required great skill and training on their part. When I came out at the other end the man who had been taking me round said: "You realise, of course, that most of those chaps in there have a working half-life of 10 years." I said: "I do not follow you." He said: "I mean that in 10 years, half of what they know will be useless because technology will have overtaken them." Therefore, it was easy to see that the firm would inevitably need to replace them by people with more up-to-date skills at their disposal.

We need to adjust ourselves to this situation. We might as well ask ourselves, among other things: how many unemployed graduates do we need in our society, let alone how many can we afford? In a situation which can best be defined not by emotive references to unemployment, with all the overtones that carries from the past, but as a condition of labour surplus, which defines it more accurately, we should find it easier to feel our way towards some answers. Hon. Gentlemen who put such faith in leisure as an alternative to employment might reflect on the fact that American experience shows that the greater the leisure a man has at his disposal, the greater the chances that he will moonlight and take another job. This, in a sense, merely makes the unemployment situation worse because it is those who have the first jobs who start competing with the unemployed for the second jobs on offer.

The most useful function which this debate will perform is not in the ritual of censure, which is a fairly empty process, as hon. Gentlemen opposite really know in their hearts, but in the impetus which it must give to us to rethink the problem facing us, to determine that we are faced with conditions which are the more unacceptable for being unfamiliar, and to resolve that we must now chart our way towards a different goal rather than try to set course back to a familiar position which many have regarded as the only one possible. One thing about which there should be no dispute is that there can be no hon. Member, on either side of the House, who regards the present temporary situation of a labour surplus as one which should be allowed to become a permanent feature of our society.

7.50 p.m.

Mr. Norman Atkinson (Tottenham)

The speech of the hon. Member for Woking (Mr. Onslow) was full of the usual contradictions and lack of understanding. He referred to increased leisure meaning that men took on extra jobs. There is no more leisured class than those who dabble in investment, and they have 30 or 40 directorships. I do not know what sort of moonlighting that is. To argue that a reduced working week means that people take on additional jobs is nonsense.

I now come to the hon. Gentleman's comments about the aerospace industry, and I want to deal with two features of his argument. I want to deal, first, with the question of overmanning and, second, with the so-called high cost of labour which it is said has meant that over the last 12 months there has been a considerable shake-out of labour in this industry. Those were the two features of the hon. Gentleman's argument: that there had been overmanning, and that employers had come to recognise the high cost of labour.

I want to use my time to make what might be regarded as an extended intervention in the Chancellor's speech. Having been denied that right earlier, I now want to intervene at what might be thought to be considerable length compared with a normal intervention in a speech, but that is not very long anyway. I want to push on and analyse one or two things said by the Chancellor.

I welcome two features of what the right hon. Gentleman said, or what I believe he was saying. One is that the Government will not countenance the giving of grants on any foreign contracts for infrastructure work. I am sorry that all the guilty men on the Government Front Bench have disappeared, with the exception of one, and he is insufficient for my purposes. I take it that what the Chancellor was saying was that in respect of infrastructure work for the railways, for London transport, for shipbuilding, and so on, none of the money would be spent on foreign contracts. If that is so, I welcome it as an improvement on some of the Government's recent attitudes.

The other matter to which I wish to refer is the microscopic reflation about which we are talking. From the figure given by the Chancellor, it appears to be less than ½ per cent. of the G.N.P. If that is correct, it will not solve many problems. If that is the size of the reflation, it is perhaps less than microscopic even. That is the figure which we have been given. It represents a very small proportion of G.N.P., and, therefore, it amounts to a very small reflation, indeed.

It is rumoured in the Press that the Secretary of State for Employment will make an announcement about prices and incomes, or give guidance to employers. I take it that that is his intention this evening, and it may, therefore, be premature to discuss some aspects of what he may say.

The Chancellor of the Exchequer spoke about exceptionally good prospects for the engineering industry, and I want to analyse those. I also want to say something following what was said by the right hon. Member for Wolverhampton, South-West (Mr. Powell). I remind the right hon. Gentleman that during the last few years volume sales have increased by less than 1 per cent. per year, and that is what really matters.

Sir Harmar Nicholls

Why does the hon. Gentleman hide behind percentages? Does he really call £1,500 million to £2,000 million microscopic? That is the kind of reflation that is going on. It may be that more is wanted, but "microscopic" is not a suitable description of what has been done so far.

Mr. Atkinson

Why does the hon. Gentleman hide behind statistics? He used some sort of measurement. There are about 55 million people in the country. Therefore, when the amount of reflation that is taking place is spread around it covers very thinly indeed. The only way to demonstrate the true position is to devise a method which is simple enough for hon. Gentlemen opposite to understand, and percentages are the way to do it. However, let me push on and take up the argument of the hon. Member for Woking.

I agree that the level of demand is low. This is demonstrated by the fact that volume sales are almost stagnant. If we are to achieve any stimulus in the economy of the kind that we want, the whole question of volume sales has to be considered, and one has to consider, too, the lack of Government investment and spending. Even though £18,000 million, to use the method preferred by the hon. Gentleman, has been spent by the Government, they ought to have spent considerably more. The Government's spending has a considerable influence on what happens in the economy, and they are, therefore, denied the escape route for which they are looking when they claim that they have no responsibility for the present position.

A remarkable feature of the Chancellor's speech was his admission that even this Government have no final weapon with which to manage the economy other than an employment rate of plus or minus 2 per cent. That is a fantastic statement. If the primitive method being used for economic management adds up to plus or minus 2 per cent. unemployment, the situation is remarkable, indeed.

I now want to consider some of the figures to which reference has been made. The first thing that we ought to recognise is that no fewer than 1¼ million people are totally unemployed right now. That is the true figure, and not the figure that we have been given. There is proof that the real unemployment figure is 1½ million. The Treasury said recently that the number of P.45 forms issued for tax purposes amounted to just under 11 million a year. This year the figure will exceed 11 million. It means that 11 million people change jobs every year, and we know from the statistics put forward that 12 per cent. of those receiving P.45 forms are unemployed for no less than a two-week period.

If those figures are correct—and we have no reason to disbelieve them—it means that 1¼ million people are looking for jobs; but we are told that there are now fewer than 100,000 vacancies. It is that which demonstrates the seriousness of the situation, and not all this business about people signing on at the employment exchange. Only one unemployed person in seven goes to the employment exchange to register his desire for work. The others are out looking for work themselves.

As I said earlier, there are 11 million job changes per year, and the fact that a great proportion of those—12 per cent.—are unemployed for no less than a two-week period is a measure of the unemployment problem. Are the trade unions to blame? Is it a question of high wages, and so on? Let me talk for a moment about the engineering industry. Let us consider this question of trade unionists pricing themselves out of work and deal with it once and for all.

In the 12 months from September, 1970, to September, 1971, 419,000 workers left manufacturing industry. There was a total loss to the industry of 419,000 jobs, which included 259,000 jobs for adult male workers. Of those, 208,000 were employed in the engineering industry, including the aerospace industry, to which the hon. Member for Woking referred, The total work force of the metal-using industries is down to just over 3½ million. This is a fantastic situation. It is almost unbelievable. Figures of that sort are an absolute condemnation of the policies being pursued by the guilty men on the benches opposite. If the Chancellor analysed those 208,000 unemployed workers, he would see that they are practically all from the lowest-paid areas of engineering, which receive the lowest wages. In capitalist terms, this makes sense, because the areas of engineering which are most buoyant pay the highest wages and pursue a high wage policy. They have a low turnover in their work force.

If ever there was a case to make, we could claim that unemployment is the result of a low wage policy rather than a high wage policy. I challenge the Chancellor to give some facts and information. In the last few months Ministers have failed to tell us where they get this information about people pricing themselves out of a job. They just want to extend the myth and increase employers' resistance to wage claims.

No fewer than 60 per cent. of engineering workers are working no more than a normal week, most are working less and less than a third are on overtime. That shows the tremendous capacity which will absorb most of the stimulus which the Chancellor talks about, without creating an additional new job. Many engineering employers are now talking about more reduction in the work force, so the outlook is pretty grim for those in engineering.

There are many jokes about this matter. Working-class people have a keen sense of humour. The process is not referred to these days as "Barberism", as it could be—although it is indeed a barbaric process in origin. There is a new set of jokes about "Weinstocking" the industry. This means that factories are likely to be treated like "bin ends". I am sorry that the right hon. Member for Wallasey (Mr. Marples) is not here to hear something about this "Weinstocking".

Some of us would like to hear what has happened to G.E.C., A.E.I., English Electric and all the other 27 parts of this amalgamation, what has happened to the work people under the chairmanship of Sir Arnold Weinstock—who has been knighted for his tremendous con- tribution to unemployment. He has made the biggest single contribution to engineering unemployment—much more even than the barbaric characters opposite. This is the man we presumably honour for the butchering which has gone on in engineering, for the way these work forces are being slashed down to the minimum. These are the realities of the situation.

Another reality, which will cheer the hon. Member for Peterborough (Sir Harmar Nicholls) is that the engineering unions are now negotiating for a reduction in the working week to 35 hours. The whole nation should applaud them if they withdraw their labour in support of that claim. They are not only making conditions easier for themselves but are helping to solve the unemployment problem. I am glad that the Secretary of State for Employment has arrived at the right time to hear my call for support from him and all his colleagues for the engineering unions' claim for a reduction in their working week to 35 hours as a contribution to solving this country's inherent unemployment problems. That could be the biggest contribution to the stability of engineering employment. We should thank them for their effort. If the stupidity and resistance of employers leads to a withdrawal of labour, the nation should applaud the workers for their stand.

I have no doubt that part of this claim will be described as a political strike in terms of the right hon. Gentleman's new legislation, but it will be a central feature of the Labour movement's fight back against Government policy, which has been directed towards creating this massive unemployment as a means of strengthening employers' resistance to wage claims.

I would ally the Chancellor's comment about people pricing themselves out of work with the support which we seem to be getting from the right hon. Member for Wolverhampton, South-West, who now says that the rise in the cost of living or price inflation should be added to the increase in production as an immediate wage increase. This is something with which we all agree. We have been trying to argue this case for goodness knows how long. If prices went up by 10 per cent. over the period which he was talking about and there was also a 5.5 per cent. productivity increase, workers, according to their region, would be entitled right away to that minimum increase.

But any worker on average rates who has to get a wage increase to overcome price inflation needs at least 13 per cent. to give him a take-home pay equal to the rise in prices. So if the right hon. Gentleman is going to oppose that concept later on, he will be contributing towards unemployment by reducing general demand. So there should be some additional wages to stimulate the economy. This is one of the things to which the trade unions can contribute.

The Secretary of State for Employment (Mr. Robert Carr)

The hon. Gentleman has made a very interesting point. I hope he will continue and say what he thinks would happen to prices—another thing which concerns the Labour Party opposite—if his policy were followed.

Mr. Atkinson

Certainly. If we were to talk about the negotiation of wages against price ceilings, an overwhelming number of hon. Members on this side and a majority of trade unions would welcome that opportunity. Trade unionists recognise that their own standards are being eroded far faster by price inflation than through any other cause. We would do everything possible to stabilise price levels in this country and would welcome an opportunity of seriously negotiating wages against price ceilings.

But under the present arrangement, the right hon. Gentleman is not prepared to say to his employer friends that they also must bring in open books to the trade union negotiators, that they must tell them what is happening in the capital market and in investment, who is getting what out of the kitty in the firm, that all this information must be given to the unions, which will then negotiate their wages against price maxima. With a system like that, and with the whole idea of competition removed, we could get down to a profitable wage policy and start to negotiate wages against price maxima. If we are to discuss this later on, I hope we shall have some imaginative ideas on how employers will contribute to that concept.

I believe that the majority of my hon. Friends and the whole of the Labour movement have now rejected the idea of using unemployment as a means of regulating the economy. It is no longer permissible to talk in terms of an "acceptable" level of unemployment.

I regret that my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) is not in his place because I want him and anybody who aspires to a place in the leadership of the Labour Party to know that we are no longer prepared to talk in these terms. Anybody who submits himself as a candidate for the leadership of this movement must be prepared to commit himself to the policy that every man has a right to work, and he must be prepared to accept the implications of that commitment.

An almost revolutionary change has occurred in the approach of the Labour movement to the economic management of the country. We have arrived at the point when we must reverse some of our previous attitudes. We must look afresh at this question of unemployment and commit ourselves to the belief that every person has a right to work.

8.12 p.m.

Sir Gerald Nabarro (Worcestershire, South)

I do not propose in the few minutes at my disposal to attempt to comment on the various subjects to which the hon. Member for Tottenham (Mr. Atkinson) referred, except to assure him that every member of the Conservative Government accepts a policy of full employment.

The situation we face today has arisen largely, though not entirely, from the misdemeanours and mistaken policies of the Labour Government. [Interruption.] We inherited roaring inflation. It was the worst inflation this country has ever known. We are in sight of stabilising prices, but only if we do not allow unemployment to become totally out of control.

In this debate it is evident that the House is divided between those who are deflationary bears, such as my right hon. Friend the Chancellor of the Exchequer, and those who are reflationary bulls, such as myself. I do not believe that the announcements made this afternoon for the expansion of public expenditure in nationalised industries is likely to make a substantial impact on the rise in unemployment.

I feel bound to tell my right hon. Friend the Secretary of State for Employment and Productivity—[HON. MEMBERS: "Not 'Productivity'."]—that despite this afternoon's measures, I still expect unemployment to be at 1.2 million by February, 1972, and possibly as high as 1.5 million by the middle of next year. Otherwise the economy is in a very strong position. It is probable that we will have a surplus on our balance of payments of about £1,000 million this year.

Mr. Skinner

Who is to thank for that?

Sir G. Nabarro

Part of it is no doubt due to the measures of the Labour Government, but a large part is undoubtedly also due to Conservative measures of the last 18 months.

The second feature is, of course, that our exports continue to rise and show every prospect, in spite of the terms of trade being slightly against us now, of improving still further next year.

I am prepared to grant my right hon. Friends that the reflationary measures of £1,400 million or more in the reduction of taxes, the abolition of credit control and a number of parallel measures have reacted favourably on the strength of the economy. However, unless we are prepared in the next few weeks to take additional reflationary measures, it is my conviction that unemployment will continue to increase in the few months following Christmas.

In my local paper, the Berrow's Worcester Journal, last Friday there appeared these words from the Under-Secretary for Employment and Productivity. [HON. MEMBERS: "Wrong."] I do not know why hon. Gentlemen opposite say "Wrong" when I mention this Ministry. My hon. Friend is the Under-Secretary of State for Employment and Productivity. [HON. MEMBERS: "No."] I am not parodying his title and I think I have correctly described it. [HON. MEMBERS: "No."] In any event, the article described my hon. Friend as having said: Now that Parliament has set us so convincingly on the right course for Europe, I believe there will be a new urge of business confidence, a real determination to invest for an expanding future. All this adds up to an enormous economic and industrial opportunity—the first oppor- tunity, indeed, for years of achieving the sustained growth that we all want and need. I do not believe those words and in my view they contain two fallacies. I have not doubt that the article was written by a departmental official who sent those words to my local newspaper. That is the customary practice.

If my hon. Friend is right about Europe—and I am an anti-European—investment will not take place in this country to stimulate employment. It will most largely take place in Europe. That is the first thing wrong with his contention. The second is his reference to it adding up to an enormous economic and industrial opportunity". Although he believes that investment will increase, I see no sign whatever of that happening. Everyone is holding back. They do not believe that substantial profits are available in industry because of the punitive level of taxes.

Alternatively, we will not get investment in this country until we are safely tucked up in Europe. There is also a good deal of dubiety about that—about whether, if we ever get tucked up in Europe, there will be such rewarding investment.

The Under-Secretary of State for Employment (Mr. Dudley Smith)

rose—

Sir G. Nabarro

I should not give way to my hon. Friend. Ministers must learn their lesson. Many of us have been sitting here since half-past two this afternoon waiting for a few minutes' grant of time from the Chair. Immediately my right hon. Friend the Secretary of State entered the Chamber he interrupted the speech of the hon. Member for Tottenham, and that set the hon. Gentleman off for another quarter of an hour. The Minister will have between 9.30 and 10 o'clock tonight in which to reply to the debate. He must not be greedy. That should give him ample time in which to reply to all the points that have been made. I rebuke him. He should remain seated.

Mr. Dudley Smith

rose—

Sir G. Nabarro

Very well; just this once.

Mr. Dudley Smith

My hon. Friend is a well-known anti-European. I rise only to assure him that the words he quoted from his local paper were mine, and I stick by every one of them.

Sir G. Nabarro

If my hon. Friend wished to write in the Worcestershire county newspaper he might have consulted me first, because it covers my constituency. I would not go into his constituency without consulting him. He should have consulted me before intruding into mine.

I shall be brief and allot one minute to each of the reflationary measures I would like to see carried out. On the day after tomorrow, Thursday—because traditionally Bank Rate is dealt with on Thursdays—Bank Rate should be reduced from 5 per cent. to 4 per cent.

Mr. E. Fernyhough (Jarrow)

Why not 3 per cent.?

Sir G. Nabarro

That would be too low in present circumstances.

The second measure that is urgently necessary and long overdue is to deal with the rump or balance of post-war credits. When we started at the end of the war in 1945 there were £765 million of post-war credits outstanding for repayment. To day the balance is £147 million plus £45 million of interest that has accrued added to that balance, giving a total of £192 million. The whole lot should be paid forthwith. It has been outstanding for long enough. This would be a valuable reflationary measure for people who are in late middle age or elderly.

The third measure I should like to see is a cancellation of the balance of the selective employment tax costing £300 million per annum, which my right hon. Friend can well afford to do. To be kept waiting until June, 1973, for this modest reprieve of the balance of this odious form of taxation is, in my judgment, much too long.

The fourth measure that I should like, and which this afternoon I asked my right hon. Friend at Question Time to do, involves no rebate of taxes, involves no directly reflationary measure, but is designed to prevent the rundown of stocks in the hands of wholesalers and retailers in the distributive trades. The idea that we now have to wait until next April to have the form and scope of value-added tax explained to the nation is, in my judgment, entirely damaging.

What is happening at present, and it will all be accelerated after Christmas, is that all wholesale and retail firms, including retail shops, are deliberately running down their stocks because they do not want to be caught next year with large purchase tax-paid stocks In hand and being in a position of not having the purchase tax chargeable against value-added tax. They might be charged twice on the same goods. It is not unreasonable, therefore, to ask that the Chancellor of the Exchequer should state now the purchase tax paid on stocks will form a charge against any ultimate assessment of value-added tax.

Fifth, I believe that we ought now to tackle the earnings rule for men and women, which at £9.50 per week is wholly unrealistic having regard to the average male industrial wage in Britain today. It would cost the Treasury practically nothing in real terms, having regard to the extra production and consumption which would be engendered if my right hon. Friend raised the earnings rule from the present £9.50 to £15 for men aged between 65 and 70 and for women aged between 55 and 60.

Sixth, I should like to see the Conservative Party honour the undertaking to restore arrangements whereby interest on bank overdrafts is fully chargeable against income tax and against surtax. If it does not come now, it must come next spring. It would be a valuable reflationary measure. It would cost very little and it would help a great deal, because the banks are bursting at their seams with funds to lend both for capital investment and for consumption purposes.

Finally, my seventh measure is that capital gains tax should be abolished for one important reason not in any way connected with the taking of profits. It should be abolished because it would free the Stock Exchange, restore investment security in large measure and cause people to trade freely on the Stock Exchange, which is the object of a financial marker in capitalist and free society.

All these things are reflationary in character. My right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) has little support from me in what he said today. I believe that unemployment, though partially endemic in this country—and I cannot yet determine for myself at what level it will become endemic—ought to be contained by the Conservative Party and ought to be reduced as early as possible. I remind my right hon. Friends that a continuing increase in the levels of employment is the sure high road to Communism.

8.25 p.m.

Mr. Bruce Millan (Glasgow, Craigton)

At the beginning of the speech of the hon. Member for Worcestershire, South (Sir G. Nabarro) I thought I was going to agree with pretty well all that he was saying, but I must say that the good work began to tail off towards the end of his remarks. But I do agree with him to the extent that unless some considerably increased stimulus is very quickly given to the economy, unemployment levels will certainly be as he says in the spring or summer of next year.

I speak particularly against the Scottish background of a male unemployment rate of 8.6 per cent. and a male unemployment rate in my constituency of over 10 per cent. The figures we have are the worst since the 'thirties. There is very widespread concern in Scotland—more widespread concern than I have known—about the present position. That is exemplified by the fact that today we have had no fewer than 91 Scottish local authorities lobbying Labour and Conservative Members of Parliament. Some also wanted to see the Secretary of State for Trade and Industry. I do not draw from that lobbying the conclusion that this is a non-political issue because councillors of all kinds of political persuasions were involved, but I do draw from it—and this I emphasise to the Government—the very considerable and widespread concern there is in Scotland at present, even among the Government's own traditional supporters, in local authorities, industry, commerce and generally.

I do not believe that the excuse that has been made time and again—and we had it again today and no doubt we shall have it again in the Government's reply—that this situation is all, somehow or other, the fault of an inheritance in June, 1970, really stands serious examination, so I shall not spend time on it.

Hon. Members opposite were elected in June, 1970, on a false prospectus, and it was soon seen by business and by trade unions that they had been elected on a false prospectus. There is one thing that has depressed me almost more than anything else about the present position. It is that some of us in Scotland and in other development areas who have lived with unemployment at higher rates than the average rates for the United Kingdom as a whole recognised the deteriorating situation and the exceptionally incipient gravity of the situation at least a year ago and expressed our very deep concern at that time to the Government.

We expressed our concern at the time of the October, 1970, measures, when Ministers, including the Secretary of State for Scotland, were saying that the Budget then would provide a new impetus to the economy, and to the regions in particular. We told them that the situation was deteriorating, that it was decreasing confidence in the business as well as the trade union community, and that unless considerable stimulus was given quickly to the economy the unemployment situation and the exceptional incipient of hand. Unfortunately, that is what has happened over the last year.

It has happened not simply because of the Government's incompetence, although incompetence is one of the major factors in this situation; it has also happened because the Government were very well willing to use unemployment as a weapon against high wage claims and inflation. But the fact is that this use of unemployment, even if it were effective—it has not been effective—would be effective only at completely unacceptable rates of unemployment and rates very much higher even than the present rate.

Singling out high wage claims and wage inflation as a unique factor in the situation which requires to be dealt with, and using unemployment as one of the weapons to deal with that particular problem as the Government saw it, is one of the cardinal mistakes made by the Government over the past year. Again, it is a mistake against which we warned them, as even the right hon. Member for Wolverhampton, South-West (Mr. Powell) pointed out in his interesting speech earlier today.

Another factor in the situation is the "lame duck" philosophy, and the deliberate intention to demonstrate that this was a tough Government which would deal with industry toughly. That again has been a major factor in leading to the loss of confidence in industry at present. I cannot think that in the U.C.S. situation, in particular, one could have a more flagrant example of looking only at short-term considerations and completely failing to understand the long-term implications of what is involved. We have had this not only in U.C.S. but also in Rolls-Royce until pressure from this House and elsewhere made the Government, fortunately in that particular case, change course. But, again, the general attitude there has very considerably contributed to the lack of confidence generally.

Another major mistake, which again was pointed out at the time, was the changes in regional incentives that were announced in October, 1970. Whatever the arguments may be in another situation for the removal of investment grants, for example, and their replacement by tax allowances, in the particular situation in which that change was made—I repeat that this was pointed out at the time—that was the worst possible change to make in terms of regional incentives. British industry, and Scottish industry in particular, which shortsightedly in the first instance welcomed the change, has now increasingly come to see that this has been a major deteriorating factor in the situation in the regional areas. Again, the announcement, completely gratuitously, unnecessarily and damagingly, that the regional employment premium was to be cancelled as from 1974 has been a serious factor in the loss of confidence in the development areas.

We warned the Government against all these various deliberate actions that they need not have taken. Over the last 18 months we have had created a situation in which unemployment is now virtually out of control, and in which it was demonstrated by the Chancellor's speech today that the Government have no very clear idea how now to tackle it. One of the depressing features of the situation is that the Chancellor has obviously so little grip on it. He was unable to answer even the simplest question on interventions during his speech, and any- thing more complicated sends him into a complete tizzy. There is no confidence in the trade union movement, in industry or in the economy generally when there is such a conspicuous lack of leadership at the highest level, particularly from the Chancellor.

Many of the things done by the Government recently have been, in themselves and taken by themselves, measures taken too late and measures which have been tending to trifle with the situation rather than deal with it at its roots. Many of the measures taken are obviously very desirable in themselves. It is, I suppose, a certain irony that the use of the public expenditure weapon now seems to be virtually the only weapon that the Government feel able to use. The advancement of the orders for naval vessels, the bringing forward of nationalised industries' capital expenditure announced today, and the improvement in the whole social services expenditure announced yesterday, are very much to be welcomed, and we on this side of the House are very happy to see this being done. But there are a number of other things which the Government ought to do in the public sector that are not being done at present. Just as in the situation in a regional development area it is as important to preserve existing employment as it is to bring new employment to the area, similarly in the nationalised industries it is as important to protect and preserve existing jobs as it is to allow them, for example, to bring forward their capital expenditure.

In Scotland we have two very good examples of that at present. First, there is the closure of the Barassie workshops of British Rail, which the Government should not allow in any circumstances whatever. There are 460 jobs involved here, and immediately involved, and what we require is a Government directive that British Rail should not be allowed to close down the Barassie workshops.

We have another situation with the British Steel Corporation. Leaving aside the question of major developments like Hunterston, we have a threat to several hundred jobs at the administration headquarters of the tubes division in Glasgow. I see that a Minister very foolishly said yeserday that that was a matter only for the British Steel Corporation and that the Government were not in any way to intervene. If the Government can intervene in the matter of capital expenditure, there is no reason why there should not be firm Government intervention in this issue. The British Steel Corporation, if the necessity arises, should be told that in no circumstances should these jobs be lost in Scotland and, similarly, in no circumstances should similar jobs be allowed to fall out in any other development area.

Apart from what is done on the question of public expenditure, I agree with the hon. Member for Worcestershire, South that a general stimulus to the economy is required. I do not accept either the analysis of the right hon. Member for Wolverhampton, South-West nor echoes of it from this side about technological unemployment. This is not a new idea. From time to time it arises as a new analysis of the situation.

If the right hon. Gentleman would occasionally widen his horizons beyond the shores of the United Kingdom and consider what is happening in the other countries where, with considerable technological development and considerable improvements in productivity, there is an accompanying unemployment trend which makes our figures even more shameful, he would see the fallacy of the argument. However, even if the argument were valid, the prescription for the cure which the right hon. Gentleman gave—namely, that somehow or other the Government should encourage the speeding up of the technological process—would make matters worse rather than better.

Mr. Powell

The fact that this phenomenon is general is a support, not a refutation, of the analysis, especially as it is occurring in economies which are very differently managed in other respects.

Mr. Millan

The right hon. Gentleman has misunderstood me. I say that it is not occurring. Fortunately, the situation in Britain is not repeated elsewhere. It is the unique achievement of the present Government that Britain has a low productivity rate, a high balance of payments surplus, raging inflation and very serious unemployment all at the same time. There is not another developed country which can show that appalling combination of circumstances. I therefore do not believe that a false analysis of that kind should allow the situation to be obscured and should be used as an argument against giving the economy a general stimulus.

Apart from giving the economy a general stimulus, the Government should admit that their changes in regional policy have been mistaken and have failed. A little humility from the Chancellor, in view of his record, would be welcome. If he would occasionally say, "The Government's actions have been mistaken and we shall reverse them", he would command more respect not only on this side of the House but in the country as a whole.

There is now an overwhelming case for saying that the regional employment premium will be continued and that we shall return to the investment grant position. Particularly in the Scottish context, there is an overwhelming case for a major effort in public expenditure, hopefully Hunterston development, which would give a general stimulus to the economy and help in a way which nothing else would do to recreate some of the confidence that has been lost over the last 12 or 18 months.

Unfortunately, nothing that is now done—none of the measures announced either today or yesterday—will prevent an extremely critical situation from developing over the winter months with the unemployment rate obviously rising well above the million mark. Even though that is so, and even though no measures which could now be taken would have an immediate short-term effect, this is not a good argument for doing nothing. It strengthens the argument for taking much more vigorous action now.

One of the dangers in this situation, with the Government persisting in believing that the measures already taken will somehow or other take effect when they have worked through the economy, is that even when they do work—some, at least, are bound to work more effectively in due course than they have up to now—we shall still have a rate of unemployment which we on this side at least would regard as utterly unacceptable, and, moreover, within that general high rate of unemployment there will remain an extremely critical situation in the regions. I do not believe that the measures taken so far, unless accompanied by powerful regional incentive measures, will solve the problems of Scotland, Wales and the other regions.

The present situation is recognised as critical by virtually every strand of public opinion in Scotland today. The local authorities have spoken today. The trade unions will speak tomorrow. We in this House may be able to make moderate speeches in a debate of this kind, we may contain our anger, our resentment and our frustration, but those who are themselves unemployed, and those trade unionists over whom the threat hangs, do not feel the same moderation. They are not able to express their views with the same calmness. They express themselves with anger and bitterness, and it is a bitterness compounded by their knowledge, which we share, that all this was completely unnecessary and could have been avoided if the Government had taken the action which we on this side have pressed upon them during the past 18 months.

8.42 p.m.

Mr. Idris Owen (Stockport, North)

I have listened with great interest to the speeches from the Opposition benches today. I have been deeply impressed by today's debate, and I have always been most concerned about the problem of unemployment. I had the unfortunate experience of entering industry from school at a time when there were almost 3 million people unemployed and, as it was known in those days, on the dole. In the main, in those days, the people on the dole were those whom we would call the breadwinners. Today, I respectfully suggest, there are not quite so many breadwinners unemployed in relation to the total as there were at that time.

I do not criticise the Opposition for putting down their Motion. They are perfectly justified in so doing and they would be failing in their duty if they did not criticise the level of unemployment today. But they are not themselves without blame. I shall devote my modest contribution to the offering of some minor practical short-term solutions, but I must at the outset issue a note of warning If we carry on talking as we are about unemployment, we shall be in danger of creating a weakening of confidence in this country.

Mr. Ogden

Should we keep quiet about it, then?

Mr. Owen

Too much talk can weaken the confidence of industry in this country. We are now reaching a point at which we are in danger of talking ourselves into a greater measure of unemployment. I am satisfied in my own mind that in a reasonably short space of time, we shall considerably reduce unemployment. I am convinced that the long-term strategy is right. I am convinced also that in the short term we can take measures which will tend to reduce the figure below the emotive one million mark. I realise that there is much political advantage to be gained from referring to one million unemployed. A million unemployed can mean a million votes.

Mr. Ray Carter (Birmingham, Northfield)

They would not vote Tory anyway.

Mr. Owen

It was not a Conservative who said in the House: Any worker by hand or brain who goes slow or is an absentee, or demands more money for no more output, is, in fact, doing his best to put up his own household bills and to put somebody—quite possibly himself—out of a job."—[OFFICIAL REPORT, 27th September, 1949; Vol. 468, c. 32.] That was the late Sir Stafford Cripps, and he was no Conservative. The basics were right then and I am sure that they are right today.

What can we do in the short term? I am very interested in the short-term situation. In the North-West, where I spend most of my time when I am away from here, I find that the statistics presented by Employment Department officers are phoney in many ways, particularly with regard to vacancies. My hon. Friend the Under-Secretary of State, in answer to a Question from the hon. Member for Stockport, South (Mr. Orbach) on unemployment in our joint constituency town, said that there were 52 vacancies for men and three for women in engineering, construction, vehicle building, woodworking and printing, occupations generally regarded as skilled. The hon. Member for Stockport, South rightly calculated from that information that there were 26 men chasing one job. As an employer of labour in that town, however, I have to say that we have over 100 vacancies in our company in the construction industry. There is a big shortage of workers in that industry, and the vacancy figures are phoney in the extreme.

There are at present 80 column inches of advertising in the Manchester Evening News begging for construction industry labour, and four or five pages asking for labour generally. In the London Evening News there are columns and columns of announcements asking for labour. Millions of pounds are being spent on advertising for labour. My company spends 10 times as much on advertising for labour as we do on advertising the commodity we produce. So there is something radically wrong. The going rate for craftsmen in my industry is 51p an hour. But firms are advertising for labour at £1.37 an hour. That indicates not an excess of labour available but a desperate shortage.

There is an imbalance in the country that needs to be rectified, and I ask my right hon. Friend the Secretary of State and hon. Members on both sides to direct their energies to ensuring that there is a balance. The hon. Member for Liverpool, Walton (Mr. Heffer) has complained about unemployment in Liverpool, but there is a shortage of labour in the construction industry in the Manchester conurbation. Are the unemployed prepared to move?

The situation is the same on the apprentice training side. In 1906 there were 1,800 apprentices indentured in the construction industry in the North-West. This year we shall not reach 1,000 and next year, when the school-leaving age is raised, we shall not have indenturing for a year. There will be a gap, and we shall be desperately short of apprentices. Because of production bonuses, craftsmen do not find time to train the apprentices. Moreover, the lump has intervened; the lump merchants do not want to train apprentices either. There will be a desperate shortage of apprentices, and I invite my right hon. Friend to consider a crash programme to train apprentices in my industry.

We have been promised that capital will be poured into the construction industry, civil engineering, and so on, to stimulate growth. My local authority is asking me to invite the Minister to meet a deputation from it, because it has been waiting five years for a decision on a road programme worth £18 million. If it had the clearance to go ahead, it would do so tomorrow. The plans are ready. A great deal could be done in the present situation if we showed the will to do it. Long-term strategies are not all that we need. We can resolve part of the problem, however small a part, forthwith by a little common sense.

I suggest that what we should try to do is a crash programme for the retraining of those unfortunate people who have been made unemployed in industries where they will not again be employed. In my constituency, at least 1,000 machine tool workers lost their jobs when a factory closed down and they will not be employed as machine-tool workers in that town again. However much we reflate, they will not be re-engaged in the machine-tool industry. Another 1,000 jobs were lost at the Hawker-Siddeley plant. I do not think that the group could re-engage them even if it were given new large orders. There must be retraining in the light of present-day needs. We are crying out for labour in my industry, and there is shortage of such labour in London and North Wales. I urge a crash retraining programme which would absorb some of those who are unemployed.

Mr. Charles Loughlin (Gloucestershire, West)

The training of people in any industry depends to some extent on the degree of co-operation from management. Can the hon. Gentleman tell us some of the experience of the Construction Industry Training Board, which has found an enormous resistance among employers to participating in its work?

Mr. Owen

I would be the first to criticise the industry in which I have spent my working life. I said initially that there has, for example, been too much emphasis on production bonuses. One cannot start craftsmen unless one gives them £40 to £50 a week and they are not interested in reducing their production capacity in order to train youngsters in craftsmen skills. In addition there there is the lump, which does not want to train boys either. So there is a resistance. Perhaps the board could create a crash training apprenticeship school of its own. That may be possible.

What I am suggesting is that there are many approaches to the problem of immediate unemployment which we have not yet explored. I repeat and emphasise that there is no doubt that the vacancy notification is utterly phoney at local employment exchanges. I am sorry to have to say it, but when one asks why employers are not notifying their vacancies to the Department, the answer is that they have experienced a period of relatively full employment for many years and the type of labour which has been available to them from the Department has not been the type they have wanted. They have, therefore, chosen to spend millions of pounds in direct advertising for labour. If they could have filled their demand from the Department, they would not have needed to spend millions of pounds on advertising. They do it because the type of labour they want never seems to come from the Department.

Let us not be misled by the vacancy figures which my right hon. Friend the Secretary of State for Employment receives from his Department. They are utterly phoney. They do not mean a thing. Let us get down to the grass roots of the situation and recognise that a fantastic amount of labour is needed in the country and that it is a matter of sensible redeployment. That is one angle of approach. It is not a big angle, but at least it is one angle of approach by which we might modestly begin to reduce the unemployment figure.

8.54 p.m.

Mr. Raymond Fletcher (Ilkeston)

I have only four minutes, and, as I keep my promises, I shall confine myself to that time.

Four minutes is not nearly enough time to answer the formidable speech of the right hon. Member for Wolverhampton, South-West (Mr. Powell). I regard that speech, in spite of my disagreements with the right hon. Gentleman on other issues, as the one important speech to have been made from the Government side in the debate, and I ask my hon. Friends not to disregard it because of its source, because its premises could be carried through to conclusions quite different from those that we expect from the right hon. Gentleman.

But it is a fact, and I sincerely hope that my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) will bear this in mind when he replies to the debate, that the present level of unemployment and the present type of unemployment are totally inexplicable in terms of the type of analysis which we all more or less accepted 25 years ago. We are confronted with a different kind of problem.

As I do not have the time to engage in the usual practice of the House of insulting quotations exchanged between one side and the other, which is the normal substitute for debate, perhaps I may be permitted to quote myself, in rather peculiar circumstances in that an article that I once wrote was quoted with considerable approval in the other place. I am perfectly well aware that I cannot quote from the other place, but I take it that I do not stretch the bounds of order too widely if I quote myself as quoted in another place. What, apparently, I wrote and had totally forgotten, and what is, to a great extent, not confirmation but anticipation of what the right hon. Gentleman said was: Ministerial power is exercised today in a strange environment. No longer can a Chancellor correctly anticipate the result x from fiscal measure A. People spend more when according to past habits they should be spending less. That intangible thing confidence comes and goes like spring showers. Human behaviour in fact seems to have gone random and this, while not making governmental planning impossible, makes it damnably difficult. It seems that four years ago when I wrote that I was rather more sensible than perhaps I am now.

I do not accept that pump priming by and of itself will bring down this these terribly high unemployment figures to any large extent. If there is to be pump priming, it must be highly selective, both in the geographic and the technological sense. If confidence is to be restored on both sides of industry—and it should not be forgotten that people on the one side of industry are as important as those on the other—there must be some kind of consistency in the policies pursued in other respects by the Government.

My third and final point, and I now have to sit down—[HON. MEMBERS: "No."] I gave a promise and, unlike right hon. Gentlemen on the Government Front Bench, I always keep my promises—is that what has to be scotched in this debate is the total fallacy—which I ascribe more to ignorance than to malevolence, being a charitable sort of fellow—that this high level of unemployment is in any way due to the steady pressure of wage demands in the economy. I have never been able to find a causal link between these two totally unrelated phenomena, and when I put a series of Questions to the Department of Employment—I must not add "productivity" any more—to establish such a link in my constituency, answer came there none.

I finish on this note, much as I should love to continue a 50-hour argument with the right hon. Member for Wolverhampton, South-West, and perhaps we may continue it in the Press: the one thing necessary to restore confidence in all sectors of industry is that the Government will show some consistency in their policies and some confidence in themselves.

9.0 p.m.

Mr. Roy Jenkins (Birmingham, Stechford)

I begin by thanking my hon. Friend the Member for Ilkeston (Mr. Raymond Fletcher) for having kept his promise, as far as I can tell, to the minute and probably to the second as well. I congratulate him on having put his argument with a force which equalled its succinctness and with a succinctness which equalled its force.

This is the second debate on this subject in two weeks, but the Motion today is in sharper terms than that a fortnight ago, and I think that a return to this subject, even without last week's unemployment figures, would have been overwhelmingly justified in view of the complete absence of any adequate answers from the Government on the last occasion. On that occasion, the Chancellor—and this is always a sign of strain at the Treasury—scurried back to his Central Office briefs about the last Government for a large part of his speech. Nor do I think that the best friend of the Lord President, and he has many friends, would take the view that his winding-up speech was a totally satisfactory, comprehensive survey of the Government's hopes and plans for dealing with unemployment.

A further debate would therefore, in my view in any event, have been highly desirable to try to get some clear answers out of the Government. We have not got them yet. The Chancellor this afternoon gave us a few ameliorative plans, and I welcome them as far as they go. He will recollect that two weeks ago I urged the speeding-up of investment in the nationalised industries. The measures announced today are too late and not nearly enough. One is bound to ask about one or two gaps in the plan, notably the absence of anything relating to the steel industry, which would have been particularly appropriate for bringing forward in these circumstances.

I suspect also that those plans, already too late and not enough, would have been later still if this debate had not been announced for today. Certainly, the Leader of the House gave not the slightest indication last Thursday that any announcement was due this week. I do not think that there were any plans last Thursday; there may have been some by Friday, ready for announcement this week, but no doubt that had a good deal to do with the Press reaction to this debate.

Mr. Barber

The plans were decided by the Government before the right hon. Gentleman intervened last Thursday.

Mr. Jenkins

Will the Chancellor then tell us why the Leader of the House gave no indication of any plans to announce these proposals which the Government presumably regard as of major importance? Was it his intention to deal with the unemployment situation by keeping those plans secret as long as possible? If this was not the intention, his actions do not make sense.

Mr. Barber

The right hon. Gentleman said he assumed that the plans had not been decided upon before he intervened. I have given him the answer. They were decided upon by the Government—all the plans which I have announced today. That is surely reasonable, and in due time the announcement would have been made.

Mr. Jenkins

I have no doubt that if we had waited long enough the Government would have been forced to come out with plans modifying their previous proposals. There was not the slightest indication that the Government were coming forward with anything this week, and the Chancellor has not contradicted that. What we still do not have from the Chancellor is any coherent explanation of the Government's strategy in dealing with unemployment and the guide posts for the future which will show whether or not that strategy is succeeding.

We shall expect from the right hon. Gentleman the Secretary of State for Employment answers to these questions, some indication of what are the immediate plans for the future and the stages by which the Government hope to see whether their employment strategy is beginning to succeed. In particular I would ask him a few specific questions. They are simple questions, and I hope he will be able to give clear answers. They go to the centre of the Government's approach and are questions on which the House is entitled to be informed.

This debate is also pegged to the November unemployment figures. There can be no doubt about their seriousness. It is not only the absolute level, appalling though that is; it is also the fact that in the past month the number of wholly unemployed, seasonally adjusted, has risen faster than in any month since the two exceptionally bad ones of the spring and early summer of this year. It is this question of the wholly unemployed, seasonally adjusted, which the right hon. Gentleman will agree is the key figure from the point of view of the underlying trends and from the point of view of the prospect. Male unemployment throughout the country is now shown as 5.5 per cent. with variations. The South-East is still the best, despite a substantial increase to which my right hon. Friend the Member for Blackburn (Mrs. Castle) referred, with a rate of 3.1 per cent., and Scotland the worst with 8.6 per cent.

I was sorry not to hear the speech of the noble Member for Edinburgh. North (Earl of Dalkeith). We were glad to hear that he was speaking again in this House, and even more glad because, I gather, he spoke with great forthrightness about the Scottish unemployment problem. The Scottish position in Great Britain is the worst at 8.6 per cent., but the Northern Region is 8.4 per cent. and in the West Midlands there is now a rate of 7.6 per cent. wholly unemployed males—a level which I do not believe has been approached, certainly not in the city of Birmingham, not merely since 1939 but since much further back in the 1930s, towards the depths of the depression days.

It has been a feat of organising genius of which the Chancellor and the Employment Secretary can jointly be proud to produce in Birmingham a near-record of motor car sales and a record level of unemployment at the same time. [Interruption.] I could not distinguish any sound coming from the benches opposite; if I had I would endeavour to answer it. What we have just seen is a general and national movement, accentuated in particular areas, and resulting in one of the worst monthly increases we have ever known in the number of wholly unemployed.

The first question I want to ask the right hon. Gentleman is this: was this expected by the Government at the time of the July measures? Was it then the internal view of the Government that the position had already been allowed to get so bad that nothing could prevent a disastrous autumn? If so, this was certainly not the impression which the Chancellor gave in July. My right hon. Friend the Member for Blackburn quoted the remarks he made not, I think, in the debate but when introducing his statement on the July measures, which showed that he was expecting an improvement in a few months. The more likely explanation is that in July the Chancellor expected a small pick-up, but he got it wrong, as he did last October, as he did last February, as he did last April and as he has probably done again today—admittedly, it must be said, as Mr. Macleod did in July, 1970, and I did in April of that year. We all over-estimated the growth of demand. But where the right hon. Gentleman is unique is that he has made the same mistake over and over again in the face of the most deliberate and considered warnings, and at very heavy expense to the unemployed, their dependants and the whole economy.

What we have now is not a controlled dip in employment, with the Government callously and calmly waiting for the appointed improvement—and let us not forget how much faster employment has decreased than registered unemployment has increased. What we have now is employment spiralling down, with very little Government idea why it is happening, how far it will go, or when it will turn. Let us at least have a simple answer from the Secretary of State: when the July measures were set in train was this major deterioration in the autumn foreseen or was it not?

I have a second question for the right hon. Gentleman: do the Government accept essential responsibility for the level of employment? By that I do not mean that, if they wish, they cannot continue with their puerile little argument, attempting to blame it all on us. If that pleases them, let them do it. It is not true, and with every month that goes by it strikes the country as increasingly childish and irresponsible. If they cannot grow up into being a Government, that is their affair; the more they use this argument the more it damages them, and not us. I therefore leave that argument aside.

What I intend to do by asking my second question is to raise the much more fundamental issue of whether the Government are receding from the basic principle in the 1943 White Paper and taking refuge in the view that if there is severe inflation in the economy it absolves them from their central employment responsibility.

The Chancellor asked me a question about that point this afternoon. I do not for a moment dispute that it is highly desirable to bring down the rate of both wage and price inflation. That would improve our competitive position for the future, make the economy easier to manage, and produce a fairer system for many groups in the community. I have never under-estimated the inflationary difficulties which this Government took over. Balanced against that, they took over great balance of payments strength. I do not for a moment believe that they took over an uncontrollable unemployment situation, but they took over considerable inflationary difficulties.

What I dispute is, first, that inflation has been the prime cause of unemployment growth in the past year. What I dispute even more strongly is that failure on the part of the Government to deal with inflation in any way justifies them in washing their hands of the unemployment problem, saying, "It is nothing to do with us; it is all the fault of people who are pricing themselves out of a job." They have not done that completely. They have hovered between two contradictory approaches: half the time applying ineffective stimulants—too small and too late—and half the time plaintively saying that it is nothing to do with them and it is the fault of those who drove themselves into unemployment. Goodness knows, there is little enough hard evidence of this. In all too many cases it is the worst-paid who have been worst hit by unemployment. In all too many cases it is the most restrained who have been given the reward of redundancy notices. In any event, the Government will never get unemployment substantially down as long as they half welcome it—that has certainly been their attitude; I put it no higher than that—as a weapon—I believe an ineffective weapon—to deal with wage increases.

Therefore, will the Secretary of State please clear up the second point: do the Government accept this central responsibility or are they retracting from the position which every British Government until them since the end of the war have accepted?

I come now to the Chancellor's reiterated defence of his own position without which—it is, perhaps, natural—he never makes a speech: that he has pumped the record sum of £1,400 million into the economy and that, therefore, he has done everything which anyone could expect him to do to deal with unemployment.

I asked the right hon. Gentleman a question when he was making that point this afternoon and contrasting it with the circumstances—very different circumstances and very different problems with which to deal—in which I had to impose heavy taxation. I asked why it was that as a result of that imposition, which the right hon. Gentleman worked out at £1,400 million, unemployment varied by only 26,000 between November, 1967, and June, 1970, whereas with his measures of giving away £1,400 million it has risen by over 300,000 in 17 months. It will be within the recollection of the House that he did not make any serious attempt to answer that question this afternoon. He has now had time to think about it and possibly even to consult his officials. If he would like to give me an answer now, I should be happy to give way to him. [HON. MEMBERS: "Answer."] It is a little late at this stage for the Chancellor to try to get the answer from the Secretary of State for Employment. It might have been a good idea earlier in the evening, but the moment for it has now gone.

Noting that the right hon. Gentleman has no more desire to answer this evening on consideration than he had this afternoon without consideration, although I thought it was a sufficiently fundamental point that he might have had the answer in the forefront of his mind, I turn to three points which I should like to make on his £1,400 million.

First, the test in dealing with unemployment is the result, not the effort. The Chancellor is like a motor manufacturer who, when confronted with broken-down cars along the roadsides all over the country, points out that he has already spent more money paying for repairs than any other motor manufacturer in the world has ever been known to do. That is a result which is unlikely to give either much consolation for the present or much confidence for the future.

The second point is that the £1,400 million, as the Chancellor knows, is a false figure. It is not a net figure. It takes no account of the approximately £400 million which he has clawed back from the community, and mainly from the worst off members of the community, in increased social welfare charges of all sorts. What has been the possible point of these vicious impositions at a time of demand deficiency and mounting unemployment? The Government plod on with them, however, with a stubborn meanness which is as socially vindictive as it is economically nonsensical.

Last Thursday we had the crushing unemployment figures, the worst since 1939, which are the basis of this debate tonight. What piece of action in the social or economic field did the Government announce on that same day? What was their immediate response to the challenge? So far as I can discover, it was only one—the threat to surcharge 25 Midlothian county councillors for continuing to supply free milk to school children. They are saving resources, saving them in one of the areas of highest unemployment, saving them in a peculiarly mean way—saving them for what, in present circumstances?

Third, on his £1,400 million, does it occur to the Chancellor of the Exchequer, when he contemplates both the deficiency and the pattern of demand, that he may have given some of the £1,000 million net, or £600 million I think it is in this financial year, to the wrong people? Savings are up certainly, but this does not help unemployment, particularly if investment is as sluggish as it is now and shows, I regret to say, every sign of remaining so. The Chancellor this afternoon congratulated himself on improved engineering orders. I agree that they were a chink of light but, to be seen in context, it should be remembered that the improvement still leaves them lower than they were a year ago today.

What else is there? There is the beginning of a durable consumer goods boom, but it is concentrated on far too narrow a segment of the economy and is inherently unstable by its very nature. More basic patterns of expenditure on food, clothing and fuel show very little if any real growth. That is not only a cause of holding back the economy; it is also a result of millions of people—the old, the low-paid, and the unemployed—having no opportunity at all to increase their purchases of the necessities of life. Indeed, in many cases they have suffered—and not only the unemployed—a real fall in their standard of living as a result of the accumulated policies of the present Government.

The Government's deliberate and regressive redistribution has not only been socially wrong. It has also produced an imbalance of purchasing power which is a menace to the healthy development of the economy and the enemy of a rapid decrease in unemployment. This imbalance applies both between industries and between regions.

In view of present unemployment figures, what defence do the Government now put up for their dismantling of any effective regional policy? With male unemployment of 8.6 per cent. in Scotland, 8.4 per cent. in the Northern Region, and nearly 7 per cent. in Wales, with no real hope for the future in any of these regions, with the creation of new jobs and new factories, as measured by the granting of industrial development certificates, pitiably low by the standards of recent years, what sense does it make to have damaged the regional incentive to the extent that as Dr. Rhodes, of the Cambridge Department of Applied Economics, has calculated, the changes in investment provisions have reduced the differential incentive in the regions on £100 of investment from £12 to £2? What sense does it make in these circumstances to proceed with the abolition of R.E.P. in 1974?

The difficulty, of course, about the Government's whole position is that all the weapons available to them to deal with unemployment—both those which they are hesitantly using and those which they should be using—run directly counter to their basic economic philosophy. Does anyone doubt that? What is their basic economic philosophy? It is to lower public expenditure, cut taxes in favour of those who save more of their income, reduce the rôle of the public sector, hive off as much nationalised industry as possible, give no support to private industry except where it is already profitable, make regional incentives a function of profit—

Sir G. Nabarro

Hear, hear.

Mr. Jenkins

I am glad that the hon. Gentleman agrees. I think that I was giving a fair account of basic economic Tory belief at the present time. That is the theory. It has been proclaimed over and over again that it is not invariably the practice, even with the present Government. Sometimes they hesitate, but as unemployment mounts and their unpopularity mounts with it they will hesitate even more.

Some in those circumstances—most notably the right hon. Member for Wolverhampton, South-West—cry "Back to our dogmas". The right hon. Gentle-mean weaves a web of such intellectual elegance that very few notice that it is economic nonsense—false premises carried to an extremity of conclusion which, if carried out, would mean suffering and disruption on a scale which he occasionally talks about in another context but which we have never known and need never know in this country.

The issue within the Conservative Party is perhaps symbolised by the argument over the future of the Giro—

Sir G. Nabarro

Scrap it.

Mr. Jenkins

I am not really very impressed with the hon. Member's views; this goes far deeper within the Conservative Party.

The Government have just come down on the right side here, but there were many on the benches opposite, and no doubt some within the Government, who would much rather have seen 3,000 jobs go on Merseyside, where unemployment is already over 50,000, than keep Giro going as a bit of public enterprise. That was a squalid argument but it is one which will have to be repeated many times. What is the sense of a Government depending on Tuesday, today, on the advancement of investment in nationalised industry because they cannot get private industry to move, and on Wednesday, as they propose to do tomorrow, bring forward a Bill to reduce the scope of public industry as much as they can?

What is the sense of denouncing public expenditure and needing it more and more—for example, on roads, hospitals, even defence spending—to try to contain unemployment? What is the sense of proclaiming that profits are the king and then failing to get a spark of investment enthusiasm out of most of the most profitable companies? The Government's policies have produced record post-war unemployment with inexorable speed. Their doctrinaire beliefs have strangled their attempts to deal with this problem. An uncontrolled market economy is as incapable of producing full employment now as it was in the 'thirties.

This Government will always hover—[Interruption.] There is very little evidence of the success of the policies of right hon. and hon. Gentlemen opposite. All the measures they take to try to stem the disastrous rise in unemployment are dependent on public enterprise or public spending. The truth of the matter is that this Government will always hover between their fears and dogmas. It will be the country, and above all the unemployed, who will pay the price, as they have done in the past 16 months.

On the issue of unemployment the Government have forfeited the confidence of the country. They will never regain it unless they give up their beliefs or their offices—or, preferably, both.

9.31 p.m.

The Secretary of State for Employment (Mr. Robert Carr)

I will take up the last words of the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) straight away.

Mr. Skinner

And resign?

Mr. Carr

We shall hold the confidence of the electorate because we intend to stick to the long-term policies in which we believe. They are based on a strategy of expansion and renewal. They will succeed, and at the end of this Parliament we shall be happy to stand and be judged on their success.

Before I reply to the detail and principles of the debate I am sure the House will agree with me on at least one point, and this was mentioned by the right hon. Member for Birmingham, Stechford. It is the very great pleasure it gives us all to welcome back my noble Friend the Member for Edinburgh, North (Earl of Dalkeith) in a speaking capacity, as he was today. I am sure that we all look forward very much indeed to his future contributions.

May I tell my noble Friend at the outset that I agreed very deeply with one thing he said; namely, that I, too, would resign if I ever believed that unemployment was the policy of the Conservative Party? [HON. MEMBERS: "Resign!"] No one—certainly no party—has a monopoly of caring in this subject.

I was at school in London in the 'thirties and remember watching and hearing the marches of the unemployed from Jarrow. It was in revolt against that that I and many other men and women of my age took an active part in politics, and we shall continue that driving force in our political activities, some in one party and some in others. But our desire is the same, even if we differ about the means.

If hon. Gentlemen opposite are either too suspicious or too self-righteous to allow any genuineness of motives to anyone else, at least let them admit that the very base, and basic, motive—[Interruption.]—yes, "base" as well as "basic"; the base motive of self-interest and self-preservation. At least let them admit the basic motive that any Government must care and must act on this problem of unemployment. The Government have already acted, and acted in a massive way.

To answer at once the second of the two specific questions put by the right hon. Gentleman, we accept absolutely the essential responsibility for the level of unemployment. We accept that. We have always made it clear that we do accept it. We said in the Queen's Speech that to increase employment is our first care. I therefore answer that question quite categorically.

But is the charge perhaps not one of caring but one of misjudgment? It is true, and we have admitted it, that our forecasts were proved wrong by events. It is true, and we have said so, that we would have acted sooner had our forecasts been different. It is true, also, that the measures we have taken are taking longer to have effect than we had hoped for or had reason to expect. That has been so right through this last year, and, to answer the right hon. Gentleman's first question, it is unfortunately true also of the July measures. We had expected to see effects sooner. So let me say that, too, quite clearly.

But, as the right hon. Gentleman was kind enough to admit, we have no monopoly of misjudgment in this area. He himself said that he got the judgment wrong in his last Budget. When we took over and saw the forecast he had had, with the figures brought up to date, we accepted at that time the judgment he had accepted. Unfortunately, it proved to be wrong.

It is not as fair of the right hon. Gentleman to say, as he did say, that he had been wrong only once whereas my right hon. Friend had perhaps been wrong more than once. When the right hon. Gentleman was commenting in a television programme—I have the transcript here—on my right hon. Friend's Budget, he accepted that what my right hon. Friend had done in that Budget would, or at least should, be at least enough to prevent unemployment soaring as unfortunately it has soared. So even then the right hon. Gentleman was still misjudging the situation if we were. That is quite clear.

Mr. Jenkins

I also made it clear that as unemployment was already 200,000 above the too high level at which we had left it, I certainly thought that the aim of the Chancellor of the Exchequer, which was not realised, merely to hold it where it was, was far too modest.

Mr. Carr

But at least as to accuracy of forecasting and judgment the right hon. Gentleman's judgment as to what was to happen was, unfortunately, wrong just as ours was, unfortunately, wrong.

Therefore, if we are to discuss this subject seriously, and I believe that that is what the country as a whole and most of the unemployed want, everyone has to admit that the sort of measures of demand management which appeared to work, and indeed did work, to control the overall level of unemployment in the past seem now to have lost at least some of their previous effectiveness, or, if not their effectiveness in the end in total, at least something of the speed at which they produced results, and it is worth noting that in the last year or so other countries have been having the same experience.

In the other words, we may be entering a period when the old principles of demand management based on Keynes and the rest may no longer be operating as Governments here of all parties, and Governments in many countries, had come to expect them, with justice, to work hitherto. Perhaps I may be allowed to return to that point a little later.

Mrs. Castle

We all appreciate the right hon. Gentleman's exercise in rather unusual honesty—[HON. MEMBERS: "Oh."]—but, though he says that the Government misjudged—that they planned for growth and failed to get it, and that, therefore, this high level of unemployment is due to their miscalculation—I must point out that he has not helped to a solution of this modern sophisticated problem by adopting the crude expedient of blaming it on high wage increases and on the trade unions.

Mr. Carr

Neither I nor any of my right hon. Friends has ever blamed it all—[HON. MEMBERS: "Oh."] What we have said, what we still say, what the right hon. Member for Birmingham, Stechford has said, and what the right hon. Gentleman the Leader of the Opposition also said when he was Prime Minister, is that the levels of wage increases, when they became inflationary, are causes which aggravate unemployment, and the right hon. Lady knows that perfectly well. In his last Budget speech, the right hon. Member for Birmingham, Stechford laid down as one of the three essential requirements for the economy that wage settlements could not continue at the level at which they were running under his management. So it is a factor, and it is absolutely idle and misleading to the country to deny that it is a factor.

This is a national problem and a very serious one, and we want to look seriously at what can and should be done about it. The problem and the cure lie very obviously indeed at two levels; first, at the level of the overall national policy in the overall rate of activity in the country; second, at the level of particular areas and particular industries.

It is no belittling of the very great problems of the particular areas and industries of which we have heard today from many hon. Members when I say that the most urgent need at present is to stimulate the rate of activity overall in the economy as a whole. We must get overall growth before there is the mobile expanding industry to attract to the difficult areas. I am sure that this diagnosis is confirmed by the fact that unemployment this year has risen proportionately less in the main development areas than in the country as a whole. So this is a factor. There are indices which show this.

I am not in any way belittling the very serious nature of unemployment in the regions. But what I am saying is that there can be no doubt that the first urgent need is to stimulate the rate of activity in the economy as a whole, because it will be when we have got an expanding economy again that the incentives to attract the new mobile industry into the development areas can become fully effective.

Mrs. Castle

Will the right hon. Gentleman give way?

Mr. Carr

No, I am afraid not.

I deny absolutely as nonsense the charge that we are dismantling regional policy. It simply is not true. It is true that we have made changes. We are making changes, and perhaps we shall make some more changes. But we are going to get growth, and when we get the growth we shall have effective incentives to see that a fair share of that growth goes into the areas.

If one looks back historically, the time when any Government showed the most signs of solving our regional problems was in the early 'Sixties—[HON. MEMBERS: "Oh."]—when we were pressing very hard on the policy of growth points and infrastructure. The way in which unemployment has been limited, relatively speaking, to some of the growth point areas in the middle of some of the bigger and worst regions in this connection shows that this is so.

So the first objective is to get growth in the economy as a whole and growth based on efficiency and on future needs. We must stress this basis of future needs. It is no good pouring out precious resources into supporting undertakings which have no future in the modern world in which we live.

In this objective of obtaining growth in the economy as a whole we are acting in six main areas which we believe form a coherent strategy. First, we are acting in the area of the general stimulation of purchasing power. Whatever the right hon. Gentleman may say about the net effect of our £1,400 million, and even if I were to agree in part with him that the net effect is less than £1,400 million, it is still a very big injection, a bigger injection of purchasing power into the economy than there has been in a single year before.

Second, we are acting in the area of especial priming of investment. This is seen by our bringing forward the public sector investment announced by my right hon. Friend today. We are continuing to search for good, viable projects and shall not hesitate to bring more forward in time as they are identified. We are acting by bringing interest rates down and removing credit restrictions. We are acting by giving a two-year period of 80 per cent. tax allowances on investment and by giving free depreciation to service industries in the development areas.

The third area in which we are acting is that of attacking cost inflation. I have already mentioned this to some extent. Let no one forget that when we came to power nearly 18 months ago the situation was that earnings of all kinds were rising six times faster than national output. That had to be dealt with as a matter of first priority. It has been dealt with to a considerable extent. That position is now considerably improved. It is not yet fully solved. Therefore, my right hon. Friend rightly made clear in his speech in the debate a fortnight ago the vital importance of keeping up pressure on bringing down the level of settlements nearer to the level of increase in the national output.

We are also acting in the fourth area of employment policy. I shall within the next few weeks be putting plans to Parliament for reforms in our employment services and for a very large expansion in our training programme. We have been getting on with the job in advance of putting forward these papers. For example, the number of Government training places, which was about 8,000 when I took over my present position from the right hon. Lady, is now 11,000 and will be 14,000 by the end of the winter. This is a rate of expansion about three times that which she achieved.

I agree with the point made by my hon. Friend the Member for Newcastle-upon-Tyne, North (Mr. R. W. Elliott) and others that there is at the moment clearly a lack of matching in the labour market. It is urgent that these services be improved. There is a need also for more training. The training plans will, among other things, include the possibility of substantial improvement—in, for example, the construction industry. We are running a major campaign to fill the vacancies in the training centres, a matter to which my hon. Friend the Member for Newcastle-upon-Tyne, North referred, and I am glad to be able to tell him that in the last two or three months the percentage occupancy rate has risen considerably.

The fifth area in which we are operating is the vital one of international currency and trading arrangements. My right hon. Friend the Chancellor referred to this today, and I am sure that the right hon. Member for Stechford will not expect me to go into this aspect in any detail; only Chancellors should do that. But I am sure that the whole House will have two considerations in mind in this connection. First, it will appreciate the vital nature of this problem if we are to have continued expansion in this country. Second, it will recognise that the Chancellor of the Exchequer and the Government have played a leading part in the international negotiations in this field. I do not believe that that can be denied by anyone.

The sixth area in which we are acting is the pursuit, now being brought to a successful conclusion, of our negotiations to join the European Community. [Interruption.] We believe, as right hon. and hon. Members opposite believed when they were in Government—[Interruption.]—that membership of this most rapidly growing market will in the long run probably offer an incomparable incentive and opportunity to British industry.

Sir Harmar Nicholls

On a point of order, Mr. Speaker. The House listened to the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) for half an hour in complete silence. Are we not entitled to the same consideration from hon. Members opposite? May we have the protection of the Chair?

Mr. Speaker

Order. I am told that the right hon. Member for Stechford was heard in comparative silence. I hope that the same courtesy will be extended to the Secretary of State for Employment.

Mr. Carr

Our action in all these six ways adds up to a coherent strategy on which to base a new and prolonged expansion in this country. The Government are creating the conditions for expansion. [HON. MEMBERS: "When?"] Our policies offer a new prospect for British industry and business. We have turned the lights of our economy from red to green. [Laughter.] What we now ask for is a national response. We appeal to all local authorities to bring forward their plans and press on with their projects.

Mr. James Hamilton (Bothwell)

rose—

Hon. Members

Sit down.

Mr. Carr

We appeal to all boards of directors to hasten their investment decisions and have confidence in the future. We appeal, also, to the trade unions to make and press their claims with realism and responsibility.

We are determined to have a strategy for growth and expansion. We are committed to this policy absolutely. If I may sum up—[HON. MEMBERS: "Oh."] The unemployed and the country generally will, I think, notice how little opportunity hon. Members opposite are prepared to give Government spokesmen to explain all that they are doing. I should like to give a summary of the 11 main points. We have reduced taxation by £1,400 million in a full year. We have got rid of restrictions on consumer credit. We have released restrictions on bank credit. We have reduced Bank Rate to a lower level than it has been since there was last a Conservative Government. We have provided an extra £160 million for a crash programme of public works in the development areas. We have provided an extra £46 million of grants for the modernisation of old houses in the development areas. Old houses in the development areas and throughout the country are now being modernised at record and rising levels, employing much labour in the process.

We have brought forward £70 million of naval shipbuilding to help employment, particularly in Scotland and the North-East. We have stimulated local authorities to make much faster headway with the clearance of derelict land. In 1970, 50 per cent. more was cleared than in 1969, and this year clearance is going forward faster still. Next year there are to be no limits on expenditure for the clearance of derelict land. We have today announced the bringing forward of £160 million of capital expenditure by nationalised industries and the Government.

In the social services, the net effect of our increases in pensions and other social security benefits, the increase in primary-school building and the large additional Health Service expenditure have in net added significantly to purchasing power in the economy, and they will provide work directly through the jobs that the construction and fitting out of the extra facilities provide, together with the work available in them. We have launched a vast programme of new work to attack environmental pollution, of which the £800 million five-year plan for our rivers and seas is but a part. We have expanded our training programmes by a large percentage in the first 15 months, and that will go on.

That is a massive catalogue of actions already taken. Having taken those actions we now call on the whole country—and we believe that we have a right to call—for a response, to take up the challenge. We call on local authorities to go forward with working programmes. To industry we make the call to invest, and from the trade unions we ask for responsibility and realism in the way they make and press their claims.

Our actions have been designed to get the economy out of its six-year rut, to get it on the move again. We shall do it. We shall not cease until we have.

Question put:—

The House divided: Ayes 289, Noes 311.

Division No. 14.]	AYES	[9.59 p.m.
Abse, Leo	Edwards, Robert (Bilston)	Lambie, David
Albu, Austen	Edwards, William (Merioneth)	Lamond, James
Allaun, Frank, (Salford, E.)	Ellis, Tom	Latham, Arthur
Allen, Scholefield	English, Michael	Lawson, George
Archer, Peter (Rowley Regis)	Evans, Fred	Leadbitter, Ted
Armstrong, Ernest	Ewing, Harry	Lee, Rt. Hn. Frederick
Ashley, Jack	Faulds, Andrew	Leonard, Dick
Ashton, Joe	Fernyhough, Rt. Hn. E.	Lestor, Miss Joan
Atkinson, Norman	Fisher, Mrs. Doris (B'ham, Ladywood)	Lever, Rt. Hn. Harold
Bagier, Gordon A. T.	Fitch, Alan (Wigan)	Lewis, Arthur (W. Ham, N.)
Barnes, Michael	Fitt, Gerard (Belfast, W.)	Lewis, Ron (Carlisle)
Barnett, Guy (Greenwich)	Fletcher, Raymond (Ilkeston)	Lipton, Marcus
Barnett, Joel (Heywood and Royton)	Fletcher, Ted (Darlington)	Lomas, Kenneth
Baxter, William	Foley, Maurice	Loughlin, Charles
Beaney, Alan	Foot, Michael	Lyon, Alexander W. (York)
Benn, Rt. Hn. Anthony Wedgwood	Ford, Ben	Lyons, Edward (Bradford, E.)
Bennett James (Glasgow, Bridgeton)	Forrester, John	Mabon, Dr. J. Dickson
Bidwell, Sydney	Fraser, John (Norwood)	McBride, Neil
Bishop, E. S.	Freeson, Reginald	McCann, John
Blenkinsop, Arthur	Galpern, Sir Myer	McCartney, Hugh
Boardman, H. (Leigh)	Garrett, W. E.	McElhone, Frank
Booth, Albert	Gilbert, Dr. John	McGuire, Michael
Bottomley, Rt. Hn. Arthur	Ginsburg, David (Dewsbury)	Mackenzie, Gregor
Boyden, James (Bishop Auckland)	Gordon Walker, Rt. Hn. P. C.	Mackie, John
Bradley, Tom	Gourlay, Harry	Mackintosh, John P.
Broughton, Sir Alfred	Grant, George (Morpeth)	Maclennan, Robert
Brown, Bob (N'c'tle-upon-Tyne, W.)
Brown, Hugh D. (G'gow, Provan)	Grant, John D. (Islington, E.)	McMillan, Tom (Glasgow, C.)
Brown, Ronald (Shoreditch & F'bury)	Griffiths, Eddie (Brightside)	McNamara, J. Kevin
Buchan, Norman	Griffiths, Will (Exchange)	Mahon, Simon (Bootle)
Buchanan, Richard (G'gow, Sp'burn)	Grimond, Rt. Hn. J.	Mallalieu, J. P. W. (Huddersfield, E.)
Butler, Mrs. Joyce (Wood Green)	Hamilton, James (Bothwell)	Marks, Kenneth
Callaghan, Rt. Hn. James	Hamilton, William (Fife, W.)	Marquand, David
Campbell, I. (Dunbartonshire, W.)	Hamling, William	Marsden, F.
Cant, R. B.	Hannan, William (G'gow, Maryhill)	Marshall, Dr. Edmund
Carmichael, Neil	Hardy, Peter	Mason, Rt. Hn. Roy
Carter, Ray (Birmingh'm, Northfield)	Harper, Joseph	Mayhew, Christopher
Carter-Jones, Lewis (Eccles)	Harrison, Waller (Wakefield)	Meacher, Michael
Castle, Rt. Hn. Barbara	Hart, Rt. Hn. Judith	Mellish, Rt. Hn. Robert
Clark, David (Colne Valley)	Hattersley, Roy	Mendelson, John
Cocks, Michael (Bristol, S.)	Healey, Rt. Hn. Denis	Mikardo, Ian
Cohen, Stanley	Heffer, Eric S.	Millan, Bruce
Coleman, Donald	Hilton, W. S.	Miller, Dr. M. S.
Concannon, J. D.	Hooson, Emlyn	Milne, Edward
Corbet, Mrs. Freda	Horam, John	Mitchell, R. C. (Shampton, Itchen)
Cox, Thomas (Wandsworth, C.)	Houghton, Rt. Hn. Douglas	Molloy, William
Crawshaw, Richard	Howell, Denis (Small Heath)	Morgan, Elystan (Cardiganshire)
Cronin, John	Huckfield, Leslie	Morris, Alfred (Wythenshawe)
Crosland, Rt. Hn. Anthony	Hughes Rt. Hn. Cledwyn (Anglesey)	Morris, Charles R. (Openshaw)
Crossman, Rt. Hn. Richard	Hughes, Mark (Durham)	Morris, Rt. Hn. John (Aberavon)
Cunningham, G. (Islington, S. W.)	Hughes, Robert (Aberdeen, N.)	Moyle, Roland
Cunningham, Dr. J. A. (Whitehaven)	Hughes, Roy (Newport)	Murray, Ronald King
Darling, Rt. Hn. George	Hunter, Adam	Oakes, Gordon
Davidson, Arthur	Irvine, Rt. Hn. Sir Arthur (Edge Hill)	Ogden, Eric
Davies, Denzil (Llanelly)	Janner, Greville	O'Halloran, Michael
Davies, G. Elfed (Rhondda, E.)	Jay, Rt. Hn. Douglas	O'Malley, Brian
Davies, Ifor (Gower)	Jeger, Mrs. Lena	Orbach, Maurice
Davies, S. O. (Merthyr Tydvil)	Jenkins, Hugh (Putney)	Orme, Stanley
Davis, Clinton (Hackney, C.)	Jenkins, Rt. Hn. Roy (Stechford)	Owen, Dr. David (Plymouth, Sutton)
Davis, Terry (Bromsgrove)	John, Brynmor	Padley, Walter
Deakins, Eric	Johnson, Carol (Lewisham, S.)	Paget, R. T.
de Freitas, Rt. Hn. Sir Geoffrey	Johnson, James (K'ston-on-Hull, W.)	Palmer, Arthur
Delargy, Hugh	Johnson, Walter (Derby, S.)	Pannell, Rt. Hn. Charles
Dell, Rt. Hn. Edmund	Johnston, Russell (Inverness)	Pardoe, John
Dempsey, James	Jones, Barry (Flint, E.)	Parker, John (Dagenham)
Doig, Peter	Jones, Dan (Burnley)	Parry, Robert (Liverpool, Exchange)
Dormand, J. D.	Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)	Pavitt, Laurie
Douglas, Dick (Stirlingshire, E.)	Jones, Gwynoro (Carmarthen)	Pearl, Rt. Hn. Fred
Douglas-Mann, Bruce	Jones, T. Alec (Rhondda, W.)	Pendry, Tom
Driberg, Tom	Judd, Frank	Pentland, Norman
Duffy, A. E. P.	Kaufman, Gerald	Perry, Ernest G.
Dunnett, Jack	Kelley, Richard	Prentice, Rt. Hn. Reg.
Eadie, Alex	Kerr, Russell	Prescott, John
Edelman, Maurice	Kinnock, Neil	Price, J. T. (Westhoughton)
Price, William (Rugby)	Skinner, Dennis	Urwin, T. W.
Probert, Arthur	Small, William	Valley, Eric G.
Rankin, John	Smith, John (Lanarkshire, N.)	Wainwright, Edwin
Reed, D. (Sedgefield)	Spearing, Nigel	Walden, Brian (B'm'ham, All Saints)
Rees, Merlyn (Leeds, S.)	Spriggs, Leslie	Walker, Harold (Doncaster)
Rhodes, Geoffrey	Stallard, A. W.	Wallace, George
Richard, Ivor	Steel, David	Watkins, David
Roberts, Albert (Normanton)	Stewart, Donald (Western Isles)	Weitzman, David
Roberts, Rt. Hn. Goronwy (Caernarvon)	Stewart, Rt. Hn. Michael (Fulham)	Wellbeloved, James
Robertson, John (Paisley)	Stoddart, David (Swindon)	Wells, William (Walsall, N.)
Roderick, Caerwyn E. (Br'c'n & R'dnor)	Stonehouse, Rt. Hn. John	White, James (Glasgow, Pollock)
Rodgers, William (Stockton-on-Tees)	Strang, Gavin	Whitehead, Philip
Roper, John	Strauss, Rt. Hn. G. R.	Whitlock, William
Rose, Paul B.	Summerskill, Hn. Dr. Shirley	Willey, Rt. Hn. Frederick
Ross, Rt. Hn. William (Kilmarnock)	Swain, Thomas	Williams, Alan (Swansea, W.)
Sandelson, Neville	Taverne, Dick	Williams, Mrs. Shirley (Hitchin)
Sheldon, Robert (Ashton-under-Lyne)	Thomas, Rt. Hn. George (Cardiff, W.)	Williams, W. T. (Warrington)
Shore, Rt. Hn. Peter (Stepney)	Thomas, Jeffrey (Abertillery)	Wilson, Alexander (Hamilton)
Short, Rt. Hn. Edward (N'c'tle-u-Tyne)	Thomson, Rt. Hn. G. (Dundee, E.)	Wilson, Rt. Hn. Harold (Huyton)
Short, Mrs. Renée (W'hampton, N. E.)	Thorpe, Rt. Hn. Jeremy	Wilson, William (Coventry, S.)
Silkin, Rt. Hn. John (Deptford)	Tinn, James	Woof, Robert
Silkin, Hn. S. C. (Dulwich)	Tomney, Frank
Sillars, James	Torney, Tom	TELLERS FOR THE AYES:
Silverman, Julius	Tuck, Raphael	Mr. Lames A. Duen and
		Mr. John Golding.
NOES
Adley, Robert	Cooper, A. E.	Gummer, Selwyn
Alison, Michael (Barkston Ash)	Cordle, John	Gurden, Harold
Allason, James (Hemel Hempstead)	Corfield, Rt. Hn. Frederick	Hall, Miss Joan (Keighley)
Amery, Rt. Hn. Julian	Cormack, Patrick	Hall, John (Wycombe)
Archer, Jeffrey (Louth)	Costain, A. P.	Hall-Davis, A. G. F.
Astor, John	Critchley, Julian	Hamllton, Michael (Salisbury)
Atkins, Humphrey	Crouch, David	Hannam, John (Exeter)
Awdry, Daniel	Crowder, F. P.	Harrison, Brian (Maldon)
Baker, Kenneth (St. Marylebone)	Dalkeith, Earl of	Harrison, Col. Sir Harwood (Eye)
Baker, W. H. K. (Banff)	Davies, Rt. Hn. John (Knutsford)	Haselhurst, Alan
Balniel, Lord	d'Avigdor-Goldsmid, Sir Henry	Hastings, Stephen
Barber, Rt. Hn. Anthony	d'Avigdor-Goldsmid, Maj.-Gen. James	Havers, Michael
Batsford, Brian	Dean, Paul	Hawkins, Paul
Beamish, Col. Sir Tufton	Deedes, Rt. Hn. W. F.	Hay, John
Bell, Ronald	Digby, Simon Wingfield	Hayhoe, Barney
Bennett, Sir Frederic (Torquay)	Dixon, Piers	Heath, Rt. Hn. Edward
Bennett, Dr. Reginald (Gosport)	Dodds-Parker, Douglas	Heseltine, Michael
Benyon, W.	Drayson, G. B.	Hicks, Robert
Berry, Hn. Anthony	du Cann, Rt. Hn. Edward	Higgins, Terence L.
Biffen, John	Dykes, Hugh	Hiley, Joseph
Biggs-Davison, John	Eden, Sir John	Hill, John E. B. (Norfolk, S.)
Blaker, Peter	Edwards, Nicholas (Pembroke)	Hill, James (Southampton, Test)
Boardman, Tom (Leicester, S. W.)	Elliot, Capt. Walter (Carshalton)	Holland, Philip
Body, Richard	Elliott, R. W. (N'c'tle-upon-Tyne, N.)	Holt, Miss Mary
Boscawen, Robert	Emery, Peter	Horn by, Richard
Bossom, Sir Clive	Farr, John	Hornsby-Smith, Rt. Hn. Dame Patricia
Bowden, Andrew	Fell, Anthony	Howe, Hn. Sir Geoffrey (Reigate)
Boyd-Carpenter, Rt. Hn. John	Fenner, Mrs. Peggy	Howell, David (Guildford)
Braine, Bernard	Fidler, Michael	Howell, Ralph (Norfolk, N.)
Bray, Ronald	Finsberg, Geoffrey (Hampstead)	Hunt, John
Brewis, John	Fisher, Nigel (Surbiton)	Hutchison, Michael Clark
Brinton, Sir Tatton	Fletcher-Cooke, Charles	Iremonger, T. L.
Brocklebank-Fowler, Christopher	Fookes, Miss Janet	Irvine, Bryant Godman (Rye)
Brown, Sir Edward (Bath)	Fortescue, Tim	James, David
Bruce-Gardyne, J.	Foster, Sir John	Jenkin, Patrick (Woodford)
Bryan, Paul
Buchanan-Smith, Alick (Angus, N & M)	Fowler, Norman	Jessel, Toby
Buck, Antony	Fox, Marcus	Johnson Smith, G. (E. Grinstead)
Bullus, Sir Eric	Fraser, Rt. Hn. Hugh (St'fford & Stone)	Jones, Arthur (Northants, S.)
Burden, F. A.	Fry, Peter	Jopling, Michael
Butler, Adam (Bosworth)	Galbraith, Hn. T. G.	Joseph, Rt. Hn. Sir Keith
Campbell, Rt. Hn. G. (Moray & Nairn)	Gardner, Edward	Kaberry, Sir Donald
Carlisle, Mark	Gibson-Watt, David	Kellett-Bowman, Mrs. Elaine
Carr, Rt. Hn. Robert	Gilmour, Ian (Norfolk, C.)	Kershaw, Anthony
Cary, Sir Robert	Glyn, Dr. Alan	Kilfedder, James
Channon, Paul	Godber, Rt. Hn. J. B.	Kimball, Marcus
Chapman, Sydney	Goodhart, Philip	King, Evelyn (Dorset, S.)
Chataway, Rt. Hn. Christopher	Goodhew, Victor	King, Tom (Bridgwater)
Chichester-Clark, R.	Gorst, John	Kinsey, J. R.
Churchill, W. S.	Gower, Raymond	Kirk, Peter
Clark, William (Surrey, E.)	Grant, Anthony (Harrow, C.)	Kitson, Timothy
Clarke, Kenneth (Rushcliffe)	Gray, Hamish	Knight, Mrs. Jill
Clegg, Walter	Green, Alan	Knox, David
Cockeram, Eric	Grieve, Percy	Lambton, Antony
Cooke, Robert	Griffiths, Eldon (Bury St. Edmunds)	Lane, David
Coombs, Derek	Grylls, Michael	Legge-Bourke, Sir Harry

Le Marchant, Spencer	Orr, Capt. L. P. S.	Stainton, Keith
Lewis, Kenneth (Rutland)	Osborn, John	Stanbrook, Ivor
Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)	Owen, Idris (Stockport, N.)	Stewart-Smith, Geoffrey (Belper)
Lloyd, Ian (P'tsm'th, Langstone)	Page, Graham (Crosby)	Stodart, Anthony (Edinburgh, W.)
Longden, Gilbert	Page, John (Harrow, W.)	Stoddart-Scott, Col. Sir M.
Loveridge, John	Parkinson, Cecil	Stokes, John
McAdden, Sir Stephen	Percival, Ian	Stuttaford, Dr. Tom
MacArthur, Ian	Peyton, Rt. Hn. John	Sutcliffe, John
McCrindle, R. A.	Pink, R. Bonner	Tapsell, Peter
McLaren, Martin	Pounder, Rafton	Taylor, Sir Charles (Eastbourne)
Maclean, Sir Fitzroy	Powell, Rt. Hn. J. Enoch	Taylor, Edward M. (G'gow, Cathcart)
McMaster, Stanley	Price, David (Eastleigh)	Taylor, Frank (Moss Side)
Macmillan, Maurice (Farnham)	Prior, Rt. Hn. J. M. L.	Taylor, Robert (Croydon, N. W.)
McNair-Wilson, Michael	Proudfoot, Wilfred	Tebbit, Norman
McNair-Wilson, Patrick (New Forest)	Pym, Rt. Hn. Francis	Thatcher, Rt. Hn. Mrs. Margaret
Madden, Martin	Quennell, Miss J. M.	Thomas, John Strading (Monmouth)
Madel, David	Raison, Timothy	Thomas, Rt. Hn. Peter (Hendon, S.)
Maginnis, John E.	Ramsden, Rt. Hn. James	Thompson, Sir Richard (Croydon, S.)
Marples, Rt. Hn. Ernest	Rawlinson, Rt. Hn. Sir Peter	Tilney, John
Marten, Neil	Redmond, Robert	Trafford, Dr. Anthony
Mather, Carol	Reed, Laurance (Bolton, E.)	Trew, Peter
Maude, Angus	Rees, Peter (Dover)	Tugendhat, Christopher
Maudling, Rt. Hn. Reginald	Rees-Davies, W. R.	Turton, Rt. Hn. Sir Robin
Mawby, Ray	Renton, Rt. Hn. Sir David	van Straubenzee, W. R.
Maxwell-Hyslop, R. J.	Rhys Williams, Sir Brandon	Vaughan, Dr. Gerard
Meyer, Sir Anthony	Ridley, Hn. Nicholas	Vickers, Dame Joan
Mills, Peter (Torrington)		Waddington, David
Miscampbell, Norman	Ridsdale, Julian	Walder, David (Clitheroe)
Mitchell, Lt.-Col. C. (Aberdeenshire, W.)	Rippon, Rt. Hn. Geoffrey	Walker, Rt. Hn. Peter (Worcester)
Mitchell, David (Basingstoke)	Roberts, Michael (Cardiff, N.)	Walker-Smith, Rt. Hn. Sir Derek
Moate, Roger	Roberts, Wyn (Conway)	Wall, Patrick
Molyneaux, James	Rodgers, Sir John (Sevenoaks)	Walters, Dennis
Money, Ernie	Rossi, Hugh (Hornsey)	Ward, Dame Irene
Monks, Mrs. Connie	Rost, Peter	Warren, Kenneth
Monro, Hector	Russell, Sir Ronald	Wells, John (Maidstone)
Montgomery, Fergus	St. John-Stevas, Norman	White, Roger (Gravesend)
More, Jasper	Sandys, Rt. Hn. D.	Whitelaw, Rt. Hn. William
Morgan, Geraint (Denbigh)	Scott, Nicholas	Wiggin, Jerry
Morgan-Giles, Rear-Adm.	Scott-Hopkins, James	Wilkinson, John
Morrison, Charles	Sharples, Richard	Winterton, Nicholas
Mudd, David	Shaw, Michael (Sc'b'gh & Whitby)	Wolrige-Gordon, Patrick
Murton, Oscar	Shelton, William (Clapham)	Woodhouse, Hn. Christopher
Nabarro, Sir Gerald	Simeons, Charles	Woodnutt, Mark
Neave, Airey	Sinclair, Sir George	Worsley, Marcus
Nicholls, Sir Harmer	Skeet, T. H. H.	Wylie, Rt. Hn. N. R.
Noble, Rt. Hn. Michael	Smith, Dudley (W'wick & L'mington)	Younger, Hn. George
Normanton, Tom	Soref, Harold
Nott, John	Speed, Keith	TELLERS FOR THE NOES:
Onslow, Cranley	Spence, John	Mr. Reginald Eyre and
Oppenheim, Mrs. Sally	Sproat, Iain	Mr. Bernard Weatherill.