HC Deb 20 January 1976 vol 903 cc1123-7
11. Mr. Stonehouse

asked the Secretary of State for Employment what is the present level of unemployment; how he anticipates the situation will develop; and what measures he proposes to replace the present pay policy in the light of this situation.

Mr. Foot

At January 1976 the seasonally adjusted rate of unemployment in Great Britain was 5.1 per cent. There is likely to be some further rise in the next few months, whatever developments may affect the situation and whatever measures are taken. No decisions have yet been taken about pay policy for the period after 31st July 1976. This is something that the Government will be discussing fully with the TUC and the CBI and others concerned in the coming months.

Mr. Stonehouse

Is the Secretary of State aware that there is great concern on both sides of the House about unemployment? Is he also aware that there is concern about disagreements between Ministers about what should be done about pay from July onwards? Does he agree with the Chancellor of the Exchequer that pay increases should be fixed below the £6 limit from July onwards?

Mr. Foot

I acknowledge that there is grave concern in all parts of the House and the country about the scale of unemployment. Anyone who could not appreciate that fact would be a complete fool.

As for any question of differences about future pay policy, as I have already said in my reply, no decisions have yet been reached on the nature of the pay policy after 31st July. We are doing what we did before. We are discussing that matter, along with the whole question of unemployment, in the greatest detail with representatives of the TUC.

Mr. Peter Walker

Is the Secretary of State aware that this is the third time that the Chancellor of the Exchequer's predictions on unemployment figures have been proved wrong? As unemployment in the West Midlands has now more than trebled, is almost the same as in Scotland, and is more than in the North-East and in Wales, will he at last take action to stop discrimination against the West Midlands?

Mr. Foot

I do not accept the right hon. Gentleman's figures. I do not accept that the Chancellor's predictions were necessarily incorrect. Having been to the West Midlands a week or two ago, I certainly acknowledge the seriousness of the unemployment problem there. There has been a comparative increase in relation to other parts of the country, compared with previous occasions. Trade unionists and others in the West Midlands made urgent representations to me about the situation, and I am in the course of discussing them with my right hon. Friend the Secretary of State for Industry. We shall be replying to those representations at an early date.

Mr. Madden

Does my right hon. Friend accept that he will not secure the agreement of workers on an extension of the pay limit or anything else unless there is a dramatic reduction in unemployment? Does he further accept that he will secure a dramatic reduction in unemployment in the short and medium term only if he introduces wide-ranging and effective import controls—an argument that is winning more influential supporters every day of the week?

Mr. Foot

I agree with the first part of my hon. Friend's proposition, namely, that if the Government are to secure a general understanding about pay policy, it is clear that unemployment and employment policies must be central features of it. That is what TUC representatives have told us in discussions, and I think they are absolutely correct.

Import control is a matter that must always be considered. It is correct, as I said earlier, that we wish to secure, as speedily as we can, a situation in which we can safely embark upon a general reflation of the economy. One factor that must be considered as a possibility in that sense is, of course, import control.

Mr. Cyril Smith

Does the Secretary of State accept that when the present wages policy ceases on 31st July the Government will have to follow it with another kind of wages policy? Do they therefore accept the principle that there has to be a second stage of the wages policy? Whilst accepting that the Government have not yet arrived at a conclusion on what that policy should be, may I ask whether the right hon. Gentleman is able to give any indication of the Government's thinking on this matter? For example, do they accept that a percentage as opposed to a flat rate increase might be allowable?

Mr. Foot

All these different possibilities must be considered, but what we did on the previous occasion—I think that it was the right way to secure a pay policy—was not to make decisions in advance and say that that was what we demanded the TUC should accept. If we had done that, we should have had no agreement with the TUC. It is far better for us to have discussions with the TUC and the employers and others to see what is the best way of proceeding, and to reach agreement that way. The difference is that we did reach a voluntary agreement on this subject, and the way that we secured it is the best way to secure a further voluntary agreement.

Mr. Noble

Does my right hon. Friend agree that the present level of unemployment is a result of capitalist failures rather than Socialist failures, and that we need a little bit of Socialism among Labour Treasury Ministers at the moment? Does he further agree that it is no good saying that we want to reflate as soon as we can but that import controls cannot be introduced now to control the inflow of imports that would result from a reflation?

Mr. Foot

I agree with my hon. Friend that the crisis afflicting this country, along with other countries of the Western world, is a crisis of capitalism. It is a crisis of the dominant economic system that prevails in all those countries. In order to overcome the crisis we can take some short-term measures ourselves. We cannot ourselves take all the measures that we would like, because we are also governed by the constraints of our situation. We are governed by our balance of payments and by the price of oil. We are governed by all the legacies of right hon. and hon. Members opposite. Those factors have to be taken into account as well. Certainly, however, we wish to take, in this country, the maximum number of measures that we can to overcome the problem. Some of them are measures that we can take on our own; others we must take in co-operation with other countries.

Mr. Hayhoe

What different language we are hearing from the Secretary of State today—[HON. MEMBERS: "Question."] Is it not a different language that the right hon. Gentleman talks now, compared to what he was saying before the last General Election? How can he equate his argument today, about wage restraint helping to deal with unemployment, with the policy, 18 months ago, of letting wages rip and contributing to the existing high levels of unemployment? Is the right hon. Gentleman not aware that with unemployment having more than doubled since he took office and with the unadjusted figures now topping the 1 million mark for the seventh month in succession, he has a worse record than any responsible Minister since Miss Margaret Bondfield, in the 1929–31 Government? That is sex equality; he has equalled her bad record.

Mr. Foot

If the hon. Member wishes to make a constructive contribution to the discussion, I suggest that he considers the position in other countries as well as here. He will then see the relevance of what I have said on previous occasions. What the Government have done, what I believe is absolutely essential for overcoming the worst economic crisis that the Western world has had to face since 1945, what we certainly have to secure, and what we promised in our manifestos, is to carry out our policies in concert with the trade union movement. [Interruption.] The yelling from Tory Members shows that they are jealous because they could never get the same kind of co-operation.

12. Mr. Hicks

asked the Secretary of State for Employment if he is satisfied that the various measures introduced by the Government to alleviate unemployment are sufficiently flexible in their application to meet the requirements of rural areas.

Mr. John Fraser

Yes, Sir. Rural areas are making good use of the assistance on offer.

Mr. Hicks

When will Department of Employment Ministers use their influence with the Chancellor to lift some of the taxation burdens placed on smaller businesses, which, after all, are the key units in rural areas? Why is it necessary for a company to have a minimum of 25 employees to be eligible to apply for the temporary employment subsidy?

Mr. Fraser

We lowered the temporary employment subsidy figure from 50 to 25 on account of representations that we had received from rural areas—not least from Cornwall. The figure of 25 has been chosen as one that can be dealt with without overstraining administration. Of course, we shall keep the matter under review. The other points in the hon. Members prepared question are matters for the Chancellor.