HC Deb 02 March 1972 vol 832 cc740-2
Q6. Mr. Joel Barnett

asked the Prime Minister if he remains satisfied with the co-ordination between the Department of Trade and Industry and the Department of Employment on employment questions; and if he will make a statement.

The Prime Minister

Yes, Sir. The employment policies of all Departments, including massive reflationary measures, incentives for industrial expansion in the development and intermediate areas and expanded training programmes, are closely co-ordinated.

Mr. Barnett

While welcoming the coordination which has resulted in a reversal of his "lame duck" policy in order, we are glad to see, to help unemployment on the Clyde, may I ask the Prime Minister whether he will confirm the new policy of giving £35 million handouts to companies with neither assets nor profits and whether he intends to do the same for those companies which happen to have both assets and profits?

The Prime Minister

I made it absolutely clear to the shop stewards when they came to see me in July that the Government wished to have a shipbuilding capacity on the Upper Clyde which would be as modern as any in Europe. What my right hon. Friend has announced is not the gradual dribbling away of millions of pounds to a yard which was unable to spend any of the money on capital investment, but a properly considered programme of capital investment together with £17 million to pay off a lot of the losses which were incurred by the previous Administration's company.

Mr. Jay

Will the Prime Minister explain what puzzles the country: namely, why what he calls the greatest stimulus ever to the economy has had the worst effect ever on employment?

The Prime Minister

I should have thought that the right hon. Gentleman, with his experience in Government and his general knowledge of economic affairs, would have had some knowledge of the causes of the present unemployment cycle and would have recognised, as we did in the recent debate—which was a serious one, unlike the right hon. Gentleman's question—that the reflationary measures have had an impact on the economy but that, against that, the impact of high inflationary wages on productivity and the reduction of manpower has pushed up unemployment figures to their present level.

Mr. Atkinson

In similar answers two days ago in the House, the Prime Minister said that employers should now invest in employment. This has caused considerable controversy and doubts among machine makers generally. Will the Prime Minister now explain clearly what he meant? Is he advising employers to invest in employment or to invest in labour-saving machines? Which one is he talking about when he says that employers should invest in employment?

The Prime Minister

I was suggesting to employers that they should look ahead to the size of the market that they are likely to have to meet in two, three or four years and that what they should then do is to replace obsolete equipment and create additional capacity. It may be that the replacement of obsolete plant leads to a reduction in labour. But, to counter that, one wants an increase of at least the same and probably more in capacity. I hope that those responsible for taking investment decisions can look at the position from the standpoint that anything they arrange now will not be effective for two or three years. We do not want them to have bottlenecks, but the capacity to meet the demand which will undoubtedly be there.