§ Order for Second Reading read.
§ 4.3 p.m.
§ The Under-Secretary of State for Employment (Mr. John Golding)
I beg to move, That the Bill be now read a Second time.
I am delighted to be opening this debate. The Bill is designed to give statutory authority to the Secretary of State to allow him, at a time when unemployment is intolerably high, to pay an allowance to full-time workers, and —with some exceptions—to those registered as unemployed who are approaching the State pensionable age so long as in consequence job vacancies are created for the registered unemployed, or the competition for jobs among them is reduced.
We need the Bill to give legislative sanction to the Government's new job release scheme. This is designed to create additional opportunities for unemployed workers, particularly the younger ones, by making it possible for older workers to leave work early. Under the scheme allowances are paid to women of 59 and men of 64 in the assisted areas if they are prepared to leave work early. In the case of unemployed people the allowance is paid provided that they neither take work nor claim unemployment or certain other benefits, although they can claim supplementary benefit.
The scheme, which is new to this country—though one based on a similar principle is operating in Belgium—started throughout the assisted areas of the United Kingdom on 3rd January and is due to run until 30th June 1977. The scheme is based on the simple proposition that at a time of high unemployment it is better for older workers to take it easy and to have a well-earned rest on an allowance than to have younger people becoming more and more frustrated because the jobs just are not there for them and being forced to live on unemployment and supplementary benefits.
Let us make no bones about it: the problem that the Government face is not 42 that of having hundreds of thousands of working people wanting to live on the State. The problem is that of finding jobs for all those people desperate to have them. One day some Opposition Members will stop hounding those unfortunate enough to be without work.
The scheme is not only of benefit to individual workers. It can also help those employers whose social conscience prevents them from dismissing an older. less active employee to replace him or her with a fitter, stronger, younger person. In some instances—and you, Mr. Speaker, will know my fondness for great literary allusions—it will be very much a case of "new lamps for old".
The scheme offers a tax-free allowance of £23 a week for up to one year to people within one year of their statutory pensionable age—in practice, as I have said, men of 64 and women of 59—on condition that in the case of the unemployed they neither take work nor claim unemployment or certain other benefits and, in the case of those at work, that they are released by their employer, that the application is made with the knowledge and agreement of the trade union concerned, and that the employer recruits as soon as possible a full-time replacement from the unemployment register.
The new worker does not necessarily have to fill the same job. Although this scheme is often described as a job swap scheme, there is no insistence on a direct swap. We realise that when people leave, others at work may have first claim on their particular jobs. The important thing is that a vacancy is created and filled from the unemployment register.
I must emphasise that the scheme is entirely voluntary. It would be absolutely against my Department's policy for any pressure to be brought on individuals; and, of course, employers have a right to choose whether to operate this scheme.
I believe that if older workers want to stay on at work, they should be allowed to do so, provided that they are fit and that there is work to be done. Workers should be employed on their merits, regardless of their age. But, of course, some workers will want to give up work early, particularly those feeling the strain, and the job release scheme will help some of those to do so in the assisted areas.
43 Incidentally, my Department and the Department of Health and Social Security are sponsoring a survey into the reasons why older workers give up or carry on working. We are also considering research into the nature and extent of discrimination against older workers.
I should make it clear that those drawing the £23 tax-free allowance, and supplementary benefit if necessary, will be debarred not only from drawing unemployment, sick and injury benefits or non-contributory invalidity pension, but from receiving widow's or widowed mother's allowance, widow's pension, unemployability supplement, or invalid care allowance.
§ Mr. Jim Craigen (Glasgow, Maryhill)
May I take it that that would not affect such matters as rent or rates rebates?
§ Mr Golding
That will have to be worked out with the Supplementary Benefits Commission. However, I have made it absolutely clear that there will if necessary be an entitlement to supplementary benefit. Nor may they receive statutory redundancy payments.
I turn now to the effects and cost of the scheme. The response so far has been lower than I had hoped. There have been approximately 8,000 applications, of which 1,737 from employed workers and 4,775 from unemployed persons have been approved. We had hoped to remove up to 65,000 from the unemployed register in Great Britain and up to 3,300 in Northern Ireland While these figures may not be realised, I hope that we shall not fall too far short of them.
The cost of the scheme is hard to estimate at present, but, if the targets are achieved, the gross cost will be about £73 million in Great Britain and about £4½ million in Northern Ireland. But the job release scheme will be relatively cheap to run because of the substantial savings on unemployment and other benefits, which will give us a net cost of about £27 million in Great Britain and £1½ million in Northern Ireland.
§ Mr. Fred Silvester (Manchester, Withington)
The Explanatory and Financial Memorandum refers to 78,000 applications as the target. I think that the hon. Gentleman said that it was hoped to remove up to 65,000 from the register. Will he clarify that matter?
§ Mr. Golding
My hon. Friend will take up that matter when he replies to the debate. I do not have the Bill to hand. I think that almost certainly the difference will be between applications and those who are removed from the register. I now have the Bill. My inspiration was correct. The difference will be between applications and those actually removed from the register.
§ Mr. A. G. F. Hall-Davis (Morecambe and Lonsdale)
This is an important matter. Is not the difference between those who will apply and are employed and those who will apply and are not employed?
§ Mr. Golding
That is not the point. In our estimates we have always included those who will get the allowance after having been in work and those who will get the allowance after having been on the unemployment register. The difference will be between applications and success in using the scheme to reduce the numbers on the unemployment register.
The cost has forced us to restrict the scheme to the assisted areas, which at present include just over half the total unemployed. If the scheme is as successful as we hope it will be and if we can find the necessary funds to do so, we may be able, after careful consideration, to extend it. For the moment—and I know that this will disappoint many of my hon. Friends and it will certainly disappoint hon. Members who represent Staffordshire constituencies—we must confine the scheme to the assisted areas.
§ Sir Anthony Meyer (Flint, West)
On a point of information, will the Minister tell me whether, for the purposes of the Bill, intermediate areas are classed as assisted areas?
§ Mr. Golding
If the hon. Gentleman were to consult his hon. Friend the Member for Leek (Mr. Knox), he would tell him that the scheme specifically includes intermediate areas. If one works in an assisted area, one will be covered by the scheme. If one is unemployed in an assisted area, one will be covered by the scheme. The Bill is, however, drafted in such a way that variations on the present scheme can be made by the Secretary of State as long as certain conditions are fulfilled.
45 First, allowances may be paid only on a temporary basis. It is not intended that they will be paid when there is a reasonable reduction in the level of unemployment. However, the power to do so would remain in case unemployment, after it has fallen, rises again to totally unacceptable levels.
Secondly, allowances are payable only to those approaching the statutory pensionable age.
Thirdly, any scheme covered by the Bill must be for the purpose of creating job vacancies and, in the ugly words of the Bill, "otherwise mitigating" the effects of high unemployment.
The Bill is designed to allow the Secretary of State to pay allowances to workers and to the registered unemployed who are approaching the State pensionable age so long as either job vacancies are created or the competition for jobs among the unemployed is reduced. Within this framework the Bill allows variations in the conditions to be made by the Secretary of State for particular schemes. My right hon. Friend may decide on the parts of the country in which they are to be paid, the period of payment—so long as it is temporary—at what age individuals may apply, and what constitutes the level of unemployment which is so high as to justify the introduction of schemes. The Bill enables the Secretary of State to do the common sense thing and to adjust schemes to meet prevailing needs and in the light of experience.
You, Mr. Speaker, will not be surprised to learn that Clause 1(2) provides for Treasury control of expenditure. The Bill also contains two important definitions. "Voted money" makes it clear that expenditure on job release is subject to the normal procedure for approval by the House of expenditure proposed in the Annual Estimates. "Pensionable age" is defined as having the same meaning as in our social security legislation.
The Bill also provides a saving from the sex discrimination legislation for schemes for which eligibility is defined by reference to the time at which a person attains pensionable age under the national insurance scheme. As the same rate of allowance is paid to men and women for the same length of time, it is arguable that no discrimination exists. But it is 46 not easy to devise a scheme that runs no risk at all of appearing to discriminate against women or men. Therefore, we have decided to safeguard, for the whole life of the scheme—which is why the saving is retrospective—both my Department, which administers the scheme, and employees who participate in it.
§ Mr. Kenneth Lewis (Rutland and Stamford)
Does the Minister nevertheless agree that discrimination is built into the Bill? We already have discrimination in the scheme because ladies are to he allowed to pick up whatever is available to them at the age of 59 whereas men will not be able to do that until the age of 64. Does he realise that a man might be persuaded to leave a job and that a woman may be given it? That will not help the family situation of the man, or even the young man, whom we want to employ as against the woman.
§ Mr. Golding
Questions of sex are very much the responsibility of my hon. Friend the other Under-Secretary of State at the Department. He has much more experience than I have of dealing with these matters, and he will take up the point when he replies to the debate. It is better to be safe than sorry, and it is a motto which, I have heard, since last Monday is to be found emblazoned in fire and brimstone on the wall of the Government Whip's office. We have included this saving to ensure that the kind of case raised by the hon. Gentleman is not brought against us in the courts.
I should add that the Bill also covers Northern Ireland, in that it provides for expenditure there on job release schemes on the same basis as in Great Britain. That will, I am sure, be welcomed in some quarters on the Opposition Benches.
The Bill is essential to provide the authority for expenditure on a scheme that is included in the Government's programme of employment measures. It is a good Bill and an imaginative Bill. It will help not only older and younger workers, but employers, and I commend it to the House.
§ 4.21 p.m.
§ Mr. David Madel (Bedfordshire, South)
As the Minister hinted, the background to the Bill is a dramatic increase in unemployment and a strain 47 on the special relationship between the Government and the TUC. The Government are in a race against time for two reasons. First, they must reduce the unemployment level before they will get anywhere near a deal on phase 3. Secondly, they are in a race to get a more effective training scheme off the ground so that many young people now out of work will have an opportunity to train for a job in industry.
The history of the Bill goes back to 3rd August last year when the Secretary of State for Environment, in announcing it, admitted:There are substantial difficulties about the operation of such a scheme and it is not certain that practicable and cost-effective arrangements can be worked out. The Government will be consulting the TUC and CBI on the matter and will report to the House in due course."—[Official Report, 3rd August 1976; Vol. 916, c. 1443.]That being so, my hon. Friends and I have a number of questions about the practicalities of the scheme and whether the difficulties have been overcome.
The Government proceeded in rather an unusual way in bringing the Bill before the House. They announced the scheme in detail on 24th September 1976, and applications for job release were invited from 11th November. The scheme itself began on 4th January of this year. What we wonder is whether up to that time, the Government felt that Section 5 of the Employment and Training Act, as amended by paragraph (2) of Schedule 14 of the Employment Protection Act, was sufficient for them to announce and bring forward a scheme such as we see in the Bill.
It is rather unusual to start a scheme, to invite applications, to get the scheme under way, and then to come to the House and say "By the way, may we have approval for what we are doing?". In view of the unemployment difficulties with which the Government are grappling, they ought to take a close look at the Employment and Training Act and the Employment Protection Act to see whether those measures should be amended, not least in the interests of precision, before they bring forward a temporary scheme such as this. I say that because there have been statements by Ministers, both in the House and outside, to the effect that, if necessary, 48 they will not hesitate to bring forward further schemes. This is rather an unusual beginning for a Bill, and the Government would spend their time well looking at those two Acts.
Halfway through his speech the Minister referred to the latest figures of applications for job release. The figures that I have, which are for 4th February, show that there had been 6,012 approvals, of which 5,026 were for men and 986 for women. Of those approvals, 4,478 applications were from people already on the unemployment register and only 1,534 from employed people. The Minister gave the figures for a week later. I think he said that there had been 8,000 approvals of which 4,775 were from people who were unemployed.
I think that the trend that one saw on 4th February is continuing; namely, that the majority of applications are from people who are already on the unemployment register. Therefore, a problem has arisen for the Government because they are dealing with two categories of people. First, they are paying individuals £23 a week to create job opportunities. Secondly, they are paying a lot of money to remove people from the unemployment register. I take it that the Government would like to see the applications reversed; that is, have more people coming forward who are employed, thereby creating job opportunities, rather than have the majority of applications coming from those who are at present unemployed.
I propose to ask a few questions for the purposes of clarification, because the House needs some more information. The Minister said that his hon. Friend would wind up the debate, and we shall therefore have a chance to hear some of our questions answered.
First, there is the matter of assisted and non-assisted areas. On 14th October last year the Minister said in reply to a Written Question:It is not intended to extend the scheme to cover other areas of the country."—[Official Report, 14th October 1976; Vol. 917, c. 187.]Five days later, on 19th October, the Secretary of State said:It is not beyond possibility that we can reconsider those of our schemes which currently apply solely in development areas, to see whether we maw be justified in introducing them on a nation-wide basis."—[Official Report, 19th October 1976; Vol. 917, c. 1100.]49 To judge from what the Minister said this afternoon, the Government have an open mind on whether to extend the scheme to the assisted areas. Inquiries that I have had from people in industry—managers, for example—show that they would like to know when the Government conclude their thinking on the matter of assisted and non-assisted areas.
§ Mr. Madel
We have many plans for dealing with unemployment when we come to office, and I do not think that in a Second Reading debate of this kind one wants to go into specifics. My question is whether the Government are thinking of doing that. I have a further point to make. It relates to applications from the unemployment register, some of which may come from non-assisted areas.
The second principal matter that I wish to raise relates to the sum that has been set aside for payment per week—£23. In an article in The Financial Times on 4th February the question was posed whether that sum would be sufficient to attract higher paid workers—at age 59 if they are women, and at 64 if they are men. The article refers to the situation at Swan Hunter which employs about 14,000 people, of whom about 200 are eligible under the scheme for day release. Only two people have taken advantage of the scheme, and it is the view of the welfare and recruitment officer in the personnel department of the firm that the few who have shown any interest have tended to be those who are less well paid. If we open up opportunities for jobs and training, there is a query whether the sum being offered will attract a sufficient number of higher paid employees to take advantage of them.
Thirdly, there is the question of occu pational pensions and how they will be affected by taking up job release. On 4th February the Minister wrote to my hon. Friend the Member for Wallasey (Mrs. Chalker) and said:I understand that the way in which pensions may be affected will vary considerably, depending on individual circumstances, and general advice would appear to be inappropriate. Neither the Occupational Pension Board nor the Department has therefore issued advice on this matter and we have relied so far on the guidance given in the explanatory leaflet on the Job Release Scheme….50 The Minister also said that a further leaflet would be published which would mention the occupational pension position. As the Government are considering further publicity for this scheme, and, in view of the fact that the figures so far available do not suggest that the optimistic hope that 65,000 jobs will be found will be met, we need to know with greater precision how this affects occupational pensions.
Does the scheme apply to married women who have not been paying the full national insurance contribution? I mentioned earlier that by 4th February 986 women had taken part in the scheme. It would be interesting to know what proportion of married women were not paying the full stamp. There may well be many people who come into this category.
The scheme stipulates that the employer must undertake to employ someone from the unemployed register. But what happens if he fails to do so because nobody suitably qualified applies? Will there be any checks on this? Taking up the point which the hon. Member for Glasgow, Maryhill (Mr. Craigen) made in an intervention, do we assume that an employer can take someone from the unemployed register in non-assisted areas? I hope that the Minister will clarify this.
Presumably, people in the job release scheme will be removed from the unemployment statistics. In that case, the Government should admit that the number of people unemployed will not be reduced by the scheme. The Government must be realistic and honest and say that the scheme is bound to be limited.
Will small, part-time earnings be exempt from the scheme? If a person comes out of the scheme will he have to pay back what he has received, or does the allowance merely cease? I can think of cases where people who apply for job release may have a part-time job earning a small sum per week. Will that be allowed?
The Minister mentioned the Belgian experience. The Government cannot take much comfort from that because the response to the Belgian scheme has been poor—so much so that last September the Belgian Government had to extend the scheme to apply to men from the age of 60 and women from the age of 55. 51 The retirement ages in Belgium are the same as here.
There is one important difference between what is happening in Belgium and here and we are entitled to ask the Government's view on it. When the employer takes someone from the unemployed register under the Belgian scheme, that person has to be under 30 years of age. The Belgian experience has been that when a person opts for job release, as a result of a combination of his wage and partial unemployment benefit he is receiving about 75 per cent. to 85 per cent. of his former net wage. Even with that fact in mind the response is not very good. I do not think the Government can be optimistic about the take-up on our job release scheme.
I conclude by leaving the Government with four observations. First, as a result of job release, pressure is bound to build up on the Government to lower the retirement age. Many people see this as a forerunner of lower retirement ages.
Secondly, the Belgian experience suggests that the Government may have to consider lowering the qualifying age if they are to provide job opportunities in industry as a result of job release. Thirdly, if the Government want to improve training and job opportunities for young people, as they say they do, they ought to look carefully at whether employers should take the young unemployed off the register of unemployed to fill a job.
Fourthly, the Government say that through this scheme they want to reduce unemployment by up to 65,000 and provide more training for young people in industry. Yet many managers may feel that if people take advantage of the scheme they may have to replace someone earlier than would normally be the case. Since the take-up of job release so far is small, I suggest that the Government should talk to employers in detail about how this scheme is working. Unless there is a reasonable take-up of the scheme and unless many of the people who take job release make way for younger people going into industry, the principles and hopes behind the Bill will not be achieved.
§ 4.36 p.m.
§ Mr. Jim Craigen (Glasgow, Maryhill)
The scheme is already in operation as 52 has been pointed out and I suppose we must support a measure which aims at reducing unemployment, albeit by facilitating earlier retirement for those who wish to take up the option. However, we ought to be alert to some of the danger signals evident now in society.
We are developing into a retiring society where more and more people are wanting to opt out of industry and commerce, quite apart from the difficulties of many people, especially the young, who want to opt into the employment market. There is more evidence of people becoming browned off with the jobs they have in industry and commerce.
I am intrigued that the Minister is commissioning yet another research project to find out why people want to retire in their droves. He would learn more in a pub or a factory or by talking to folk in the street than having a team of academics producing all sorts of computer data and a report that many hon. Members will not have time to read and on which no action will be taken anyway. We have reached the stage where if I wanted to find out how many milk bottles were broken in my constituency over the last four years I should be inundated with people who could tell me that such and such a trust or bequest could give me a research grant for the purpose. However, if I wanted to employ a team of people to sweep up the broken bottles. there would be no money available. I make that perhaps incautious remark because it seems to me we get our priorities wrong about where the money should go in order to provide more employment.
As a small handrail towards earlier retirement the Bill is interesting, but it comes at a time when the Equal Opportunities Commission is scratching its head about which of four options should be taken to remove discrimination between the retiral ages of men and women. By including women at the age of 59, I wonder whether we shall not add more obstacles and difficulties to achieving the desired alignment of retiral ages for men and women.
I am glad that the Minister wants to assist more young people into employment, but I hope that he will not forget the plight of many men and to a lesser extent women in their fifties who have been at work all their lives in a particular craft or occupation and who, 53 because redundancy hits their industry, find themselves unemployed, perhaps for the first time in their lives. They face a considerable disadvantage when reentering the employment market. I had some experience in a personnel department years ago, and I think that particular attention should be paid to this group of people, who often fare rather badly at interviews. There is always the temptation to appoint the younger or middle-aged person.
What is to be done to strengthen and improve apprenticeship opportunities in industry? We are introducing a Bill largely designed to provide more employment opportunities for young people. What measures are being taken by the Department and the various industry training boards to facilitate young people gaining skills and qualifications at an early age? There is a group of young people who miss the opportunity of gaining apprenticeships at 16 and who, by the time they are 17 or 18, find that they are too old to pick up such opportunities.
We have already heard about the position of the assisted and development areas. I have no doubt that those hon. Members who are fortunate enough to represent non-assisted areas will feel this scheme ought to be extended to include their areas. Clearly if that were the case the scheme would cost even more money. For so long the established industries in the development areas have been contracting. There are fewer opportunities for the work force. It is in these areas that there is the highest proportion of unemployed people who have given up any idea that they might find a job but who will now be applying to take advantage of this scheme.
There has been the decision to discontinue the regional employment premium. If there is any spare cash going, it ought to go to the assisted areas to provide that extra fillip to deal with the current economic situation.
Perhaps the Minister can say a word or two about the arrangements for opting out of the scheme. It is possible that if someone decides that he wants to return to employment he would make an approach to the Department.
I said earlier that one of our problems in society is the number of people who 54 are eager for retirement and who after a lifetime in industry or commerce want to get away from it all. There are many retired people who would like to take on small, part-time jobs. This will become a much more pressing and important feature in our society, especially as about one in every four adults is over retirement age. That is a sizeable dependent population. It is here that we should be alert to some of the new complexities that will arise in our pensions provisions. I include here the taxation and social security arrangements.
We are all for job release and job creation if they will help to lower the unemployment figures. However, if the Minister has any researchers available, one task that they might undertake with profit would be to determine the value of work in our society and to assess the value that we are prepared to accord to it through the pay packets of those in employment.
§ 4.45 p.m.
§ Mr. A. G. F. Hall-Davis (Morecambe and Lonsdale)
I am particularly pleased to have an opportunity of taking part in this debate because it was on 17th December 1975, in an employment debate when the present Leader of the House was Secretary of State for Employment, that I devoted the whole of what I hoped was a brief speech to advocating action along the lines now proposed. I said then that there was only one step which the Government had it in their power to take which could make an immediate and substantial impact on the number of registered unemployed. Sadly, that is as true today as it was when I said it 14 months ago. Indeed, the position has deteriorated since then.
In December 1975 the total number of unemployed in Great Britain was 1,152,000. In January of this year, including school leavers the figure stood at 1,390,000—an increase of 240,000 in 14 months. I said that action was urgently needed, but it is obvious that it is, if anything, even more urgently needed today. The value of action on these lines is that it in no way distorts the economy. It is not the creation of candy floss activity and it is not false demand that we cannot sustain. It is, instead, the exchange of voluntary retirement for resented and unwanted unemployment. 55 This is a modest scheme which has got off to a disappointingly slow start. I wish to give some of the reasons why I believe this to be so. I make it clear that I do not chide the Department of Employment in any way because this scheme is modest at its inception. I do not say that because, from a constituency point of view, I happen to be a neighbour of the Secretary of State for Employment. I say it because in advocating this action 14 months ago I realised the administrative resistance that there would be to such a proposal. I must be fair and say that I felt that the attitude of the Department of Health and Social Security was much less adventurous and flexible than that taken by the Department of Employment. I would not expect the Department of Employment Ministers on the Front Bench to agree with that—I might even expect them to deny it. I merely put it on the record as being my considered view.
What the scheme needs now is a "hard sell" by the Secretary of State for Employment—and, heaven knows, he has enough on his mind. Further, the scheme needs a "hard sell" by the Secretary of State for Social Services and other senior members of the Government. My hope is that this debate will put some ginger under the tails of various forces, including Tom Webster's old grey mare. The fundamental figure in this question is the four men in five who normally retire within a year of reaching their normal retirement date. This shows, despite the fact that some of them have no option, that retirement has its attractions.
I am normally a charitable and noncontroversial sort of fellow, but I feel that it is a disgrace that the only Government Back Bencher present should be the hon. Member for Glasgow, Maryhill (Mr. Craigen). This is an insult. We are discussing a scheme that could reduce the unemployment figures by 5 per cent. on the Government's own forecast. We need concerted action by the TUC, the CBI, and members of the Government. It is no good our beating our breasts about the level of unemployment if, when there are practical measures before the House, only one Labour Back Bencher takes the trouble to turn up and listen to the beginning of the debate.
56 I have had a suspicion from the start that there was a reluctance on the part of the TUC and the trade unions to see a scheme of this kind launched. I say that because I cannot otherwise see why they have not been pressing for it much more strongly. To my knowledge, the only trade union body which really pressed for action on these lines was the Welsh TUC, which, at its meeting last year, passed a resolution calling for action of this kind.
It may be that some trade union leaders suspect that the scheme could be used by employers to avoid their responsibility for making redundancy payments. That is the only reason I can see for reluctance to accept the scheme. But, since the trade unions have said that they support the scheme—I assume that they must have done for it to go ahead—I ask responsible Ministers to urge the trade unions to publicise the scheme and to speak in favour of it in the next few months.
I ask Ministers to address the same message to employers, too. This is an area where spokesmen for the employers can be more effective, because they can hold the key to successful action. The best support that an individual employer could give would be to outline his policy towards pensions for those who retire early. When we are facing a great crisis of unemployment and a scheme of this nature is introduced, it is not asking too much for every sizeable employer to let his workers know what his attitude will be and what financial support will be available to his workers should they decide to take advantage of the scheme.
The reason why pensions are so important was touched upon by my hon. Friend the Member for Bedfordshire, South (Mr. Madel). Unless the worker knows what will happen to his pension, the scheme will be taken up only by the low-paid and those who have little to look forward to by way of occupational benefits. I ask the Department of Employment to talk to those arms of government which can make a contribution, particularly the local authorities. I attended a very constructive and friendly meeting with a local authority on Friday afternoon, and it 57 was clear that, with their main preoccupation regarding what they and I considered to be unjust treatment in the rate support grant renegotiations, they had not had time to give much thought to this scheme in relation to their own employees. The Government should ensure that the scheme is looked at seriously by nationalised industries, local authorities and Government Departments, although the latter are still too heavily centralised in London, so that there is not as much scope there as I should like.
One would have to be an actuary to be precise about whether a worker would maintain his expected pension entitlement at what would have been his normal retirement age. Presumably, it would involve the employer in about one year's normal contributions, and he would have to chip in for the employee's contribution as well. It would not be asking a great deal of large employers at least to make the same pension provision for people who take advantage of the scheme as they would make provision for people who are made redundant.
Like the hon. Member for Maryhill, I have had some modest experience in this field. All major pension schemes have some arrangement for redundancy pensions, and they fall, of course, on the employer, not on the trustees, because they are an addition to the normal outgoings of the fund. It would not be too much to ask all employers, in order to help in tackling our present unemployment problem, to deal with people who retire under this scheme in the same way in regard to pensions as they would with someone who was made redundant. I am not talking here about lump-sum payments.
There is one other extremely important point. I ask the Minister to make public the basis of the costings that have just been given to the House. I was unhappy from the beginning with the information given to me when I tried to prove how much a scheme of this kind would cost. I am not levelling my feeble darts at the Department of Employment. I believe that there is some failure in the Department of Health and Social Security to get this right.
Taking the figures in the Bill and the figures that were given this afternoon, the gross cost in the Bill is estimated 58 at £73 million. The net cost has been given as £27 million. It does not matter about the duration for people who are retired under this scheme. It is the ratios which count.
As far as I can see, these figures mean that £46 million is the present cost of supporting those unemployed who will move into employment as a result of people dropping out of work under the job release scheme. In other words, about 63 per cent. of the cost of the scheme is now being paid to people who are unemployed. Thus, 63 per cent. of £23 gives £14.50. Since we are being told by Government Departments that it costs only a total of £14.50 for a man or a woman to be unemployed, I have a horrid suspicion that the net cost is only taking into account the single person's basic national insurance unemployment benefit. People between 64 and 65 are much less likely to be receiving supplementary benefit. According to the figures, the number of people of that age receiving supplementary benefit is quite small. But an unemployed man with children will be getting earnings-related unemployment benefit for his dependants, and possibly supplementary benefit as well.
If we are to extend the scheme, as I hope we shall, if it is successful, it is important for the Department of Employment to be able to prove that it is costing very little or nothing at all. I still do not believe that the figures we have been given are the true figures.
If the Minister who replies to the debate will publish a detailed breakdown of the cost, I shall accept that and wait, but if he makes a general statement that the figures are correct, I shall have to ask someone close to my constituency who is in university work and better trained than I am in the art of calculation to look at the figures. I do not believe that they make sense as they are now presented.
Because of my early interest in the scheme, I congratulate Ministers at the Department of Employment. I think that they have had to fight to get the scheme—it was not, I believe, handed to them on a plate—and it must have been a pretty hard sell for them to persuade the Government. I now ask them and other members of the Government to put in an equally hard sell to all concerned to make the most of the scheme.
§ 5.0 p.m.
§ Mr. David Knox (Leek)
It is a great pleasure to follow my hon. Friend the Member for Morecambe and Lonsdale (Mr. Hall-Davis), whose advocacy of this scheme 18 months ago was so typical of him. I endorse what he said about the absence of Labour Members. I suspect that if we were in government, these Benches would be full for the discussion of a measure like this.
§ Mr. Knox
Like other hon. Members, I welcome this modest measure to help deal with unemployment. Since the present Government came to office, unemployment has more than doubled, to its highest point in the postwar era, with much social and economic suffering. It is regarded today as the most serious problem—certainly by those who live north of Watford, and I suspect by many of those south of Watford as well. The Government's record on unemployment is disgraceful and deserves the strongest possible condemnation. When nearly one and a half million people are out of work, any measure which reduces unemployment is to be welcomed, although we may deplore the fact that it has been allowed to reach such a level.
The Bill assumes about 78,000 applications from men and women over three years. Some will be from those who are already registered as unemployed; others will be from those who will vacate jobs for younger people to fill. I do not know how accurate the Government's estimate is likely to be, nor how many applications will be successful, but it is obvious from the Minister's figures that the Government are thinking in modest terms and that the Bill will merely nibble at total unemployment figures. Something much more ambitious is desirable and a much more powerful attack should be made by the Government on the disgracefully high level of unemployment.
I regret the fact that the scheme will operate only in assisted areas. I suspect that if the Minister were on this side, he would have spoken rather differently. 60 Unemployment, alas, is not confined to assisted areas. It is higher in some parts of the country than others, but it is too high everywhere.
My constituency is not an assisted area, so my constituents are not able to take advantage of the scheme. They find it difficult to understand why that should be so. Since this Government came to power, unemployment in the town of Leek has quadrupled and in the other parts of the constituency it has more than doubled. So, although it is true that unemployment in the constituency is less than the national average, it has increased substantially over the last three years. To the individuals affected by unemployment in my constituency the situation is just as worrying as for those who are unemployed elsewhere.
§ Mr. Golding
The hon. Gentleman is not correct in saying that the scheme will not apply to any of his constituents. Is he aware—I appreciate that it is an anomaly—that the scheme will apply to those in his constituency who travel into Cheshire to work as it will to those in my constituency who travel to Cheshire to work? The ones to whom it will not apply are those who work in Staffordshire and are unemployed in Staffordshire. But it will apply to many of the hon. Gentleman's constituents who travel from Kidsgrove or Talke into Cheshire.
§ Mr. Knox
I am aware of that point, but far from strengthening the Government's case it intensifies the feeling of being badly done by among my constituents who live and work in the constituency. I know some of my constituents feel very strongly about this. Those who live a short distance away and who travel into Cheshire to work will benefit. So also will those people who live in Cheshire. But a few miles away my constituents will not. They feel rather bitter, because there is not much difference between South Cheshire and certain parts of Derbyshire and my constituency. I hope therefore that the Government will think of extending the scheme to the whole country, so that it could have a bigger impact. All of us on this side at least would like that to happen.
One thing which is to the Government's credit is that the Bill seems a better way of dealing with the problem 61 of unemployment than the scheme promoted by some people for reducing the statutory retirement age by one, two or even five years. The Bill is a temporary measure to deal with a temporary situation. There are other reasons—cost is a powerful one—for not reducing the statutory retirement age, but it would be a permanent decision, which would never be changed, to deal with a temporary situation.
We all hope that the current level of unemployment will not be with us long, that it will soon revert to a level more typical of the post-war years, particularly the period 1945–65. The Bill is therefore much more useful than changing the retirement age.
Although I welcome the Bill, I deplore the necessity for it because I deplore the present excessive unemployment. The reason for our record post-war unemployment is simple-the extraordinary economic policy of this Government during their first 16 months in office, when they allowed public expenditure to explode and abandoned the previous Government's incomes policy. As a result of the latter, we had a wages and salaries free-for-all, with increases of 30 and 40 per cent. being common place, with the then Secretary of State for Employment, now the Lord President, standing on the sidelines cheering every increase.
The present level of unemployment is the inevitable consequence of that explosion, encouraged by the Labour Government in 1974 and the first half of 1975. It is the price that the British people are having to pay for the indefensible actions of the Government during that period.
Though the Bill is welcome as a palliative its necessity should be condemned out of hand because it is a consequence of the most inadequate Government this century. The job release scheme will make a small contribution towards lessening the effects of the high level of unemployment that we have today but it will not remove the affront to human dignity that will be suffered by those who are not able to work to the normal statutory retirement age. Although it will not quite be the end of the word for them, it will leave a sour taste in the mouths of some men and women who have served their country well in the past and who find 62 themselves unwanted and un-needed in the closing months of their working lives.
We should never forget that, apart from the social effects of the current level of unemployment, there are economic disadvantages in a situation that requires a Bill such as the measure before the House. For example, there is the waste of resources.
I have a great deal of sympathy with what was said by the hon. Member for Glasgow, Maryhill (Mr. Craigen) about this. When we all agree that we need higher output, I find it difficult to understand, as do many others, how higher unemployment or early job release strengthens the economy. Surely the economy is stronger the more we produce. Surely if those who will be affected by the job release scheme were able to stay in work producing goods and creating a larger national cake, that would lead to economic strength and enable us to get over some of the economic problems now facing us.
This modest Bill should be welcomed. It deserves a Second Reading, but in giving it one we should never forget that its necessity should be deplored and condemned.
§ 5.12 p.m.
§ Sir Anthony Meyer (Flint, West)
I rise with some trepidation to speak on the Bill. The last occasion on which I spoke on a Bill issuing from the Department of Employment—the occasion on which my hon. Friend the Member for Bedfordshire, South (Mr. Madel) spoke with such eloquence from the Front Bench—the Opposition were so successful that they destroyed the Bill. I was very sorry about that because I was looking forward to taking part in the proceedings in Committee. I can assure the Minister that this afternoon he stands in no such danger unless he goes to sleep and does not say "Aye" when the Question is put that the Bill should receive a Second Reading.
As I have now made plain, I welcome the Bill, ludicrously pathetic though it is, for reasons that have been explained by my hon. Friend the Member for Leek (Mr. Knox). It is pathetic for two reasons. First, it is to be confined to assisted areas whereas it is now all too clear that there are terrible pockets of unemployment in areas that have no sort 63 of assisted status. Secondly, it is inadequate because it is confined to those who are within one year of the statutory retirement age.
I am certain that there will have to be a great debate on the age of retirement. I am sure that in that debate the ludicrous anomaly of the different retirement ages for men and women will appear even more indefensible than it seems already. I am pretty certain that we shall move inexorably towards an earlier statutory retirement age.
At the same time we shall have to think much more about the provision of part-time or semi-sheltered employment for those who have retired. Fortunately, people are now living much longer. If they retire at 60, they will tend to deteriorate more quickly and lose the sense of belonging to the community unless we provide the sort of employment to which I have referred. In parallel with ideas such as the present Bill to cause people to retire early we should give equal attention to the provision of new jobs for men and women once they have retired.
Unlike a number of other Government measures purporting to deal with unemployment, at least the Bill is a direct contribution to reducing the total level of unemployment. It has been introduced at a time when evidence is mounting that Government expenditure, even when ostensibly directed to reducing unemployment, usually increases unemployment. By imposing additional costs on industry it destroys more jobs than it creates. However, the Bill is a proposal for additional expenditure of £73 million and it has to be considered with highly critical regard. We shall need to be satisfied that the £73 million that it is proposed to expand under this measure could not be better expended in some other way to create employment.
I am not totally convinced that even so selective and relatively efficient a method of reducing unemployment may turn out to be better value for money than handing back £73 million to industry so that it might use it for investment purposes.
As my hon. Friend the Member for Leek has said, the Government are having to bring this measure before Parliament largely because of the inadequacy of their attempts to reduce unemployment. 64 I simply do not believe in the Government's commitment—still less do I believe in the TUC's-to give absolute priority to cutting unemployment. Certainly, there is little evidence of Government interest in this Bill judging by the number of Labour Members who have come to listen to the debate.
The plain fact is that the social contract has been the great creator of unemployment. It has concealed the need to reduce consumption to release resources for investment. However it is dressed up, we cannot get away from that basic fact. The social contract has put a floor under and not a ceiling over wages. In the process, by eliminating differentials, it has destroyed incentive.
The social contract has increased the social wage. It has done so largely by increasing expenditure in unproductive administrative expenses at a time when it was sadly necessary to call a standstill in the social wage. Above all, it has produced policies of price control that have had a catastrophic effect in discouraging investment. In addition, many of the Government measures ostensibly designed to reduce unemployment have had exactly the opposite effect.
Most notable of all is the Employment Protection Act. It was designed to stop unemployment but it has had the effect of preventing employers from taking on new workers or, alternatively, driving firms into bankruptcy instead of allowing them to hang on as they might have been able to do had they been able to shed employees who were doing jobs that did not have to be done within the firm. It has prevented firms from making themselves efficient by slimming down. It has reduced many firms to bankruptcy that might otherwise have survived.
Over all, the effect of all these policies—for example, the Employment Protection Act and the load that the Government have put on employers by way of social security contributions—has been to increase Britain's industrial costs, making the British economy poorer, less efficient and less able to provide jobs.
Unlike the Government and the TUC, I give overriding priority to dealing with unemployment. I believe that there is no issue more important in British politics today. Unemployment is having a most catastrophic effect on my constituency 65 where the figures have doubled under the present Administration and are still increasing. In fact, they have a long way to go in that direction.
Unlike the Government, I have been frank with my electors. I have told them that there is a choice between more employment or maintaining their living standards. I have said that if they want to maintain or improve employment and cut down the number of jobless, they will have to reconcile themselves to a cut in living standards. That is what we have wanted to hear from the Government over the past two years but that is what they have conspicuously not said.
There is one phrase that causes me to shudder as much as does the phrase "slum clearance", which means driving people out of old houses into high rise suicide platforms. That phrase is "natural wastage". It means that nobody is made redundant, but the number of employment opportunities is drastically reduced. I wonder whether it would be a useful reform for the Government to turn the spotlight less on the figure of the registered unemployed and more on the total figure of job vacancies. That might give a much better indication of the health of the economy. I do not believe that there would be much comfort to the Government if public interest in job vacancies were as acute as it is in the total number of unemployed, but it would be a more useful indicator.
The Bill, unlike other measures that I have been criticising, is at least a direct contribution to reducing the number of unemployed. Moreover, it is at least neutral in the sense that it does not keep in work people who are hardly doing a job at the expense of people who are desperately trying to find a job. Much Government legislation is designed solely to protect the interests of those already in employment, disregarding the interests of those frantically seeking it. The Bill is at least blameless in that regard.
Therefore, I welcome the Bill. I hope that the Government will do a great deal more than they have done so far to make it a success. The scheme cannot be counted a success in practice, however welcome it may be on theoretical grounds. I hope that they will extend its coverage of the country and press for extending it beyond one year before retirement age. Above all, I hope that they will per 66 severe down this road in preference to incurring all the expense of other more highly publicised measures, such as the Employment Protection Act, which I believe to be profoundly counter-productive.
§ 5.21 p.m.
Mr. Esmond Blumer (Kidderminster)
I believe that it is no secret that within the Department of Employment there is no great confidence that the Bill will make any large contribution to the reduction of unemployment. Some of its major weaknesses have been exposed in this short debate. The first is the comparatively low proportion of new jobs made available. If I heard the Minister aright, three-quarters of those who have applied are already on the unemployed register. It would be a better Bill if the discharge were conditional on the provision of a new job and if it were spread across the whole country.
There is little doubt that the Department's estimate was over-ambitious, just as we have heard it was in Belgium. I am not surprised. It seems to me that the benefit is too small and that the legislation is too complex.
I am not sure that the Minister has made clear whether the criterion is living in an assisted area and/or working in one. if one lives in an assisted area and cares to move out, does that mean that the benefit is lost, or if a job is forthcoming but not in an assisted area will one still qualify? There is also uncertainty about what other benefits may be forfeit.
Without doubt, given the present rate of inflation, the cash figure is too low for most people to contemplate. They will want to supplement it with other earnings. If a man goes fruit-picking for a fortnight, does he lose the benefit for that fortnight? Or does he lose it in its entirety?
§ Mr. Bulmer
In that case, I am not surprised that the figures will not meet the hon. Gentleman's original expectations.
On what was the original estimate of £65,000 based? Have the 165 extra civil servants been recruited to administer the scheme?
The principle of early retirement is important. It is certain that an upturn 67 in the trade cycle will not by itself put our national unemployment figures right. If we were to match the productivity of our major overseas competitors, perhaps one-third of the work force would be redundant in many industries. Therefore, when the upturn comes I do not expect to see any large corresponding upturn in the number of people taken on.
Equally, as we become more prosperous it is right that people should have more leisure and, where possible, retire earlier, but we cannot forget that we have an increasingly ageing population and that the present Government have run up a huge raft of debt for the next generation which must be financed by higher output.
Let us consider who wants to retire early and who does not. My experience is that it is those in middle and senior management who want to retire, and they can do so if their pensions arrangements are made earlier enough. Those are the career openings which are perhaps most needed. But craftsmen seldom want to apply to leave early, and the rates in the Bill are not such as to tempt them to do so.
Therefore, as 1 think the Minister recognised by what he said about the sort of person to whom it would apply, we are left with a Bill for the release of those who do the most unattractive jobs. Even they, as the surveys show, are often reluctant to give up work because of the drop in living standards and the family background, and because they enjoy the company of their mates. I hope that the Government are considering these matters in much more detail. Clearly, early retirement is one possible key to the reduction of the numbers of unemployed.
The larger companies want to retire people early. Many are already doing so and are preparing people for retirement by giving them one day a week off perhaps a year before they retire and two days six months before, and enabling them to go to colleges of further education where they can prepare themselves for retirement. Far too many people look on retirement as the end and are not prepared for it.
I have a number of reservations about the Bill. First, the system has not worked in Belgium and we have not been told 68 why it will work here when it failed there, especially as the provisions in Belgium were far more generous.
My second reservation concerns the degree of discrimination built into the Bill. A dirty job is a dirty job, wherever it is done. A teenager's being without a job is a tragedy wherever it happens. A man feeling sick, tired or dispirited is the same whether he lives in my constituency or that of the Secretary of State. The Bill does not face up to that.
The Bill does nothing for my constituency, where unemployment has trebled since this Government came to power and there are more school leavers without a job than at any time since the war. The refusal of IDCs has meant that three major industrial expansions that might have taken place in the constituency have been forced to go elsewhere. I recently did an investigation of the 40 major employers in my constituency. Only five think that in five years' time they will be employing more than they employ now if the policies pursued by this Government are maintained.
Most recently we have lost £8½ million from the rate support grant, which means that teachers will be unemployed and places at the college of further education cannot be taken up. We are heading for the highest rates and the worst teacher-pupil ratio in the country. It is the Government who have brought this about. It seems to me that it would be much better for some of the money that will be spread about in this way to be concentrated on keeping some of the teachers in my constituency employed. Here we have needed jobs which should be retained.
The attractions of the Bill are so lacking that the Secretary of State is to spend tens of thousands more pounds going on television to explain what it is about. I question that, too, as a sensible use of public money.
The Bill is one of a series of measures introduced by the Government to tackle unemployment. But the Government seem to have no conception how to create employment. [Interruption.] At least I have some experience of creating employment. If the hon. Member for Bury and Radcliffe (Mr. White) had the same experience, he might understand why his Government are so unsuccessful and have created record unemployment. 69 I extend the charity of suggesting that the Government do not realise what the effect of their actions are. They have increased the minimum lending rate, pushed forward capital transfer tax, introduced capital gains tax, foreshadowed a wealth tax, imposed the highest rates of income tax in Europe and carried on with the Price Commission regardless of the effect on unemployment.
If the Government are serious about improving the unemployment situation they should realise that a transfusion of blood is little good when the Government are standing on the windpipe of industry. If the Government got off the windpipe there is a chance that the employment situation in this country could be turned round. They should look at the experiences in foreign countries, particularly at the rôle of small business in our major competitors overseas. If they look at Belgium they will find that the self-employed are able to draw unemployment benefit. That would create more jobs in this country than this Bill.
If the Government would spend more time on bolstering industry rather than on this sort of firefighting they would be more successful. But there is one job release more important than any other and that is of this Government from office.
§ 5.31 p.m.
§ Mr. Fred Silvester (Manchester, Withington)
I am glad that the opportunity presented by the Bill has enabled us to range a little wider and to discuss some of the problems arising from the need for early retirement. Before I turn my attention specifically to the Bill I would ask the Minister some questions about the figures so that if he needs advice he can receive it before winding up the debate. I hope it will enable him to clarify the matter because it is important that we should get this right.
From the Explanatory Memorandum I understand that we are aiming for 78,000 applications over three years at a cost of £73 million. As a result of my interruption earlier it seems that 65,000 applications will come from the unemployment register. My first question is, where will the other 13,000 applications come from?
I understand that the object of the exercise is to diminish the unemployment 70 register either by people coming off it directly or by substituting people on the register for someone who has actually got a job at the moment. Therefore the remaining 13,000 applications, and the millions of pounds they represent, need to be explained. I hope the Minister will do so.
Secondly, it is important to get the costings right. I do not know whether the Minister has got his sums right. The way in which the two figures of £73 million and £27 million have been given indicates that an amount of money is simply being set aside to deal with the existing unemployment payments. That sum is likely to be much higher than current estimates. It would be useful if we could have the best estimates that the Minister can give us.
A number of things should be said about the Bill. First, the Conservative Opposition see many advantages in a system which enables people to retire who have reached a point near to retirement, and who would like to retire, and for others to be put in jobs on their behalf. It has not been unusual for companies in the private sector to do this in the past. Companies have offered early retirement on reasonable terms so that they can improve efficiency, create a promotion for someone else, or do something that will generally keep the system of employment moving and more fluid. That has much to commend it.
Unfortunately, that is not the case with this Bill. I should like to emphasise what I think is the real criticism of the Bill. I hope the Minister will direct his mind to it. If we are adopting the principle that I have just described, what we are obviously doing is offering someone a sum of money in return for giving up a job. We are saying to someone "If you are prepared to retire early because of the advantages which flow to the company"—in this case to the country—"we will give you a certain sum of money". That is necessary because if someone gives up a job he will go on to occupational pension, or whatever, and is likely to suffer some loss of earnings. It is easy to understand the value of this if someone else comes into the job. But it is not easy to explain why a similar provision should be made for someone who is currently on the unemployment register.
71 According to the Minister about three-quarters of the people who will apply for this scheme are currently on the unemployment register. That means that only about 20,000 jobs are being moved around. The net effect of the scheme, for people who are currently out of work and looking for a job, is about 20,000 jobs. That is a tiny part of the total number but it represents a small proportion of the cost.
I shall come to the question of the non-assisted areas. But in answer to a question about the cost of extending the scheme to the non-assisted areas we were told that the net figure was £22 million. That is a lot of money. But a high proportion of the money will go to people already on the unemployment register. What the Government are doing is reducing the unemployment figure but they are not actually increasing the number of people in gainful employment.
We have a situation where a man of 64 or a woman of 59 on the unemployment register is having his or her unemployment pay increased. It will go up to £23 a week. But that person will remain unemployed just as he did before. That is a substantial part of the cost of the scheme.
On the other hand, there is no opportunity for people in the non-assisted areas to make a genuine swop even if they wish to do so. We have a situation which both the Minister and my hon. Friend the Member for Leek (Mr. Knox) described where, because of the nature of the boundaries, someone who happens to travel to work in an assisted area will be eligible while his next-door neighbour will not. That is unsatisfactory.
Would it not be better for the scheme to be national but not applied to people currently on the unemployment register? No advantage seems to be gained for the country at present by making it available to such people. Furthermore, it represents a confusion of thought. We are seeking to increase the number of job opportunities. That is what it is all about. The Minister appears to doubt that. That must be the Bill's main point. That is its selling point. It has always been described in terms of someone coming to the end of his period of work and being willing to retire and his job being made available to someone else. That is the way 72 in which the Bill is being sold. That is the way my hon. Friends would wish it to be sold in a tougher and more vehement fashion.
§ Mr. Golding
I want to make it clear that we believe that this scheme has two values. One is to make it possible for job opportunities to be created; the other, which we believe to be of great value also, as I have said specifically on at least two occasions, is that it will mean a reduction in the competition for jobs among the unemployed. We believe the latter to be of as much value as the creation of new jobs.
§ Mr. Silvester
I find that an interesting remark. I am sorry that when the hon. Gentleman said it before, I perhaps did not give it as much weight as I should have done. But I think that it is almost unbelievable. This scheme applies to people of 64 or 59 years of age. The Minister talks about a weight of demand for jobs among the unemployed as though they were one lump of people looking for the same job. But people at 64 or 59 are not in the same sort of employment bracket as those who are younger and who are the sort of people we are seeking to help. The proposition is unrealistic. Perhaps the Minister can tell us, if it can be measured in some way, what likelihood there is of people of 64 and 59 on the register getting the same types of job as younger people. The fact is that these older people, however desirable it may be for them to get a job, are much less likely to do so, and are less likely to be looking for the same type of job as younger people, but this scheme will top up their continuing unemployment pay to a higher level.
My hon. Friend the Member for Flint, West (Sir A. Meyer) said that we were having a large sum of money made available because of the high unemployment situation and that we are trying to find ways to alleviate that situation. He suggested—and he may be right—that the money might be better spent on a scheme which made it easier for people to invest. I think that the scheme as outlined, apart from the aspect dealing with the unemployed, is a useful contribution, and therefore I suggest that some of the money should be spent on it. But we do not want to waste money, and if a large part of it is to go towards reducing the pressure of people looking for jobs, and if 73 it goes on the 64 and 59 age groups, that is unrealistic and absurd.
This proposition is likely to have arisen because the Government think it fairer to do it this way, but I do not think that it is fairer. Fairness lies in a situation where the Government can produce a certain amount of money and a certain number of jobs, and it is up to the Government to do it in the most economic way possible. I asked for the Government's figures, but in the meantime I will use my own, and I am sure that they will not be very different. My sums indicate that the cost of doing this will be about £1,350 a job if one reckons on 20,000 jobs and leaves aside the unemployed. That is not very different from the sum we have been paying out in the form of aid for the creation of a new job, but this is not producing a new job. It is merely a swapping of an existing job.
In other words, we are paying the same amount of money for swapping a job from an older man to a younger man as we are in other forms of industrial aid for creating a new job. One must ask whether that is the most intelligent use of the money. We could reduce the cost considerably if we were to leave aside the unemployed, and here I want to take up another point put by my hon. Friend the Member for Flint, West. The Minister has denied that this is about job opportunities, but to most of us—
§ Mr. Golding
I did not say—and the hon. Gentleman can verify this in Hansard tomorrow—that it had nothing to do with job opportunities. I made it clear that there are two purposes—the first to create job opportunities, and the second, of equal importance, to reduce the competition for jobs amongst those who, unfortunately for them, are unemployed. The hon. Gentleman is doing a disservice to the argument by misinterpreting it.
§ Mr. Silvester
I accept that rebuke. It was a slip of the tongue. I accept fully that the hon. Gentleman said that job opportunities were one of the two purposes. The balance is 75 per cent. to 25 per cent.—although we will not argue about that. But to us and to most people outside, the real value of the scheme will be judged in so far as it gives rise to greater job opportunities, for the reasons I have advanced.
74 My hon. Friend the Member for Flint, West was talking about this in the context in which he finds himself. He and I, who represent a Manchester seat, are looking for circumstances and schemes, to which we are prepared to give our full support, which will take some of the people looking for jobs off the register in the most cost-effective way possible. When the Government do something which has that effect, that is fine, but every time they do something which has that effect but at a cost which is above the sensible cost, they are doing harm to other people.
What we have to look at here is the job vacancy situation, which is the true measure of the extent to which the Government's policy will succeed. If one were a true cynic, which I am not, one could make the case that the whole purpose of the Bill was simply to reduce numbers, and if the numbers which the Department was able to put out month by month appeared to be down by 75,000 by sleight of hand, everyone would say "They have done a good job", although the true figure was about 20,000 workers. I do not think that that is the Government's intention. I think that the reason for the inclusion of the unemployed in this Bill is to create a sense of fairness.
The hon. Gentleman says that the unemployed are most unfortunate, and I agree. But since we are talking about the best possible use of a limited amount of public resources, I urge him as strongly as I can to ask himself whether what he proposes as far as the unemployed of 64 and 59 are concerned is the wisest possible use of money. It can be looked at from three aspects. It is deceptive, because people will imagine that unemployed persons are getting into work when they are not, it is unfair because the Government are denying the use of these resources to make jobs for other people, and it is expensive because it costs a lot per job and the Government are not actually making but only swapping jobs. Whichever way one does it, whether in terms of deceptiveness, fairness or expense, the inclusion of the unemployed is a major fault of the Bill.
We have debated, and will debate again, the necessity for the Bill. The fact that we give it our support as a small measure to alleviate an impossible situation does not mean that we now 75 or shall in the future cease to criticise the Government for having created that situation.
We are faced with an unemployment situation that was the direct result of the Government's activities in their first 18 months of office. They have since demonstrated a total inability to recover from that dreadful position. We shall support them in such schemes as this where we think they will be of benefit to those who are currently suffering from the results of that policy. I hope that, in return, the Government will not expect us to cheer them for having got us into this position in the first place.
§ 5.50 p.m.
§ The Under-Secretary of State for Employment (Mr. John Grant)
We have had a wide-ranging debate on a Bill which is of a length that belies its importance. It was pleasing that the merits of the job release scheme which are given statutory cover by the Bill were so readily appreciated by most contributors to the debate.
The scheme is an imaginative one. It seeks to give individuals freedom of choice in deciding whether to leave their jobs, and it seeks to create fresh job opportunities, particularly for younger workers whose talents are otherwise frustrated. The House recognises the gravity of the unemployment situation as it affects young people. The Bill is a flexible measure which creates a framework within which schemes can be mounted and aimed at a carefully defined target.
The hon. Member for Manchester, Withington (Mr. Silvester) asked whether we were employing these resources in the wisest possible way. Obviously we think that we are employing them wisely or we would not have introduced the Bill.
I shall try to reply to as many points as possible, but if I miss any matters that require to be answered I give the undertaking that we shall carefully consider all the points made in this debate. There have been some helpful and constructive speeches.
The hon. Member for Bedfordshire, South (Mr. Madel) asked me to deal with a whole series of points, and I shall try to cover as many as I can. He asked about the possible use of the Employ- 76 ment and Training Act 1973. I am advised that it would not be possible to use that legislation.
Section 5 of the 1973 Act contains powers for my right hon. Friend to make arrangements to provide temporary employment for people who are unemployed. That Act was amended in 1975 by the Employment Protection Act to provide further powers to cover schemes such as the temporary employment subsidy and the youth employment subsidy, which are now in operation. All these powers are concerned with the creation or maintenance of jobs. They are not designed to cover a scheme under which payments are to leave jobs. Under job release, job vacancies are created indirectly rather than directly. Therefore, new statutory powers for these payments were necessary.
By the same token, there was nothing to be gained from amending the 1973 Act. The new powers which we require do not fit easily into Section 5 of that Act, and separate legislation is the sensible and straightforward answer to the problem.
The hon. Gentleman mentioned the operational difficulties and referred to my right hon. Friend's admission last year that job release might not be easy to operate. We did not wish to mislead the House with a rash promise to introduce a scheme without the necessary detailed consideration. We were also anxious to devise a scheme that would be simple to operate. In the event, we were able to work out a scheme and to announce it at an early date. The mechanics of the scheme are working well.
I was also asked about the level of the job release allowance. The figure of £23 is based on the average of related benefits. An allowance calculated in this way will be unattractive to some people, but there will be those who will wish to take advantage of the scheme to give up work early. That is already happening. They may want to take such a course for domestic or health reasons. We hope that a reasonable number will take advantage of this facility. We are disappointed at the immediate response, but these are still early days. As the scheme works and becomes better known, no doubt we can look to an upturn in numbers. I confirm that we would like to see more people coming forward from employment. 77 That would be a helpful development. I shall return to that matter shortly, but I wish to emphasise that if people can be taken from the unemployment register it will reduce the competition for jobs. We regard that as an important element in the situation.
The hon. Member for Bedfordshire, South asked about the effect of the scheme on occupational pensions. We are ensuring that the leaflet describing the scheme will, when it is reprinted, include information on this subject. It is not easy to give definitive guidance on this matter. What can be said is that the receipt of an occupational pension will not affect a person's entitlement to job release allowances. Whether participation in the job release scheme will affect a person's entitlement to his occupational pension will depend on the condition of his particular scheme.
§ Mr. Grant
I cannot give that answer this evening. I undertake to write to the hon. Gentleman quickly on the point.
The hon. Gentleman also asked whether small part-time earnings would be exempt. The answer is that they will not be exempt, except perhaps as to honoraria. Applicants must undertake not to engage in any part-time employment or business on their own account. That is one of the conditions of the scheme.
§ Mr. Kenneth Lewis
On the topic of part-time earnings, the pension rules give people the opportunity to earn part-time sums up to a certain amount without the requirement to pay tax. If the rule in this instance is to be tightly drawn, will it affect older people who now undertake part-time jobs that are modestly paid, and will it affect their pensions?
§ Mr. Grant
This is not a pension scheme. I note the hon. Gentleman's point, but we must have some reasonably firm demarcation line. It would be difficult if we were to open the door in the way the hon. Gentleman is suggesting.
On the subject of opting out, anybody can withdraw from the scheme at any time by giving two week's notice in writing to the Department of Employment. Allowances properly paid are not 78 required to be refunded, but any sum paid to a person who does not satisfy the conditions for receipt of the allowance—for example, if he starts work and claims unemployment or sickness benefit—would have to refunded, but not otherwise.
The hon. Gentleman also referred to the article in the Financial Times and quoted an example involving Swan Hunter. He was a little selective in his quotation because the article also referred to a case involving Rowntree-Mackintosh, which company, the article said, considered the scheme to be "acceptable as it stands". The article went on to give a different picture and indeed a more balanced account than was the hon. Gentleman's interpretation. However, I do not wish to make heavy weather of that.
I hope that I have dealt with most of the points mentioned by the hon. Member for Bedfordshire, South, but if I have left anything over I shall write to him.
My hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen) asked whether payments would affect entitlement to rent and rate allowance. The answer is that the job release allowance would be treated in the same way as any other income when rent and rate rebates are assessed by local authorities, and when the Supplementary Benefit Commission assesses entitlement to help with rent payments.
My hon. Friend also referred to tho difficulties of the Equal Opportunities Commission in deciding the best way of removing discrimination in respect of the State pension scheme. The Occupational Pensions Board has also contrived to grasp this nettle, but it is a measure of the difficulty involved that these bodies have not yet come up with any answer. I do not accept that the use of different ages for men and women in the job release scheme will make it more difficult to reach a solution in due course. Meanwhile, within the framework imposed by social security legislation we have done everything possible to achieve equal treatment for men and women.
All of us who have had the pleasure of serving on Committees with the hon. Member for Morecambe and Lonsdale (Mr. Hall-Davis) know how constructive his contributions usually are, and that was 79 the case today. He referred to the hard sell that will be necessary, particularly the hard sell that the Government might undertake with employers. The Secretary of State will shortly be approaching employers directly to ask specifically for their co-operation in the scheme. I agree that there is a need for that. I assume—although I cannot give an assurance today—that that reply also covers the points that were made about local authority and nationalised industries.
The hon. Member also raised the matter of costing, as did the Opposition spokesman. There is nothing to hide in the method that the Government used in reaching their conclusion, and although I cannot give details now, we shall write to both hon. Members to spell out the details.
Several hon. Members referred to the more general matter of early retirement. I ought to stress that the job release scheme was designed for the specific purpose of allowing workers to free their jobs for younger unemployed people and to cut down intense competition for jobs at a time when unemployment is high. The Bill makes it clear that job release schemes can operate only at such times. The scheme is not a way of reducing the normal retirement age. That would be a more fundamental and far-reaching change. If male retirement were cut to the age of 64, the additional cost would be £340 million a year. Even if that money were available, it would have to compete with other claims for public spending, and we all have our own priorities. The job release scheme is not designed to deal with and does not pave the way for such a reduction.
I now come to the speech made by the hon. Member for Withington. I have dealt with the matter of costing, but there has been some confusion about the estimate for numbers and spending on the scheme. I shall try to clarify the matter. We estimate that about 78,000 people will take advantage of it, but allowance must be made for employers not finding it possible to replace workers who have left and, in some cases, employers simply failing to do so. We are keeping a check on that, but some employers may not replace such workers. Allowance must also be made for those who go back to work. We thought that 65,000 people 80 might be removed from the register of unemployed.
Throughout the debate references have been made to the overall unemployment situation and the reasons why schemes such as this have had to be introduced. The House has discussed this subject many times, and I do not want to spend long on it, except to say that there are no glib answers, but that if we stick to the policies of the social contract and the Government's industrial strategy we can achieve a great deal.
The short-term problem is immense, but we must recognise that since the 1975 Budget the Government have made more than £600 million available to create or keep open more than half a million jobs and training places. Accordingly, while there is much more to be done, the House cannot write that off as chicken feed. I therefore say, particularly to the hon. Member for Kidderminster (Mr. Bulmer). who dwelt on public expenditure. that incessant demands are made by the Opposition for large cuts that, as a deliberate act of policy, could only add to the total of the jobless.
§ Mr. Bulmer
My point was about the distribution of the rate support grant, and not about the cut, per se.
§ Mr. Grant
I am sure that the hon. Gentleman is concerned about redistribution, but Opposition Members do not like it when the redistribution affects their own areas, although across the board they want substantial cuts.
The House should appreciate the figures. In June 1973 there were 22 million people in employment, as opposed to 544,000 out of work. In June 1976, the estimate was that there were just 185,000 fewer people in employment—that is almost 22 million people in jobs, but the unemployment figure had risen to 1,277,000—an increase of 733,000. Some hundreds of thousands more people will be seeking jobs over the next five years and coming on to the labour market, because of the higher birth rate in the late 1950s and early 1960s and because of the increased number of married women taking up employment. These are facts that the House should recognise.
I want to make a partisan point that turns on what was said by the right hon. Member for Leek (Mr. Knox) about unemployment in his area. My hon. Friend 81 the Under-Secretary of State for Employment was there today and was able to announce that the level of employment in North Staffordshire is now lower than at this time last year. That should give some limited encouragement. The hon. Member for Leek made a strong party political point about the effect of the wages explosion on unemployment, and dwelt on that at length. It is now essential to renew the social contract, and most of my hon. Friends are agreed on that. I am glad that one Opposition Member is nodding his head, because at the weekend the Leader of the Opposition made a speech to the Young Conservatives Conference that was an exhibition of sheer political cowardice. She made no reference to this whatsoever, and I would have thought that instead of shaking their heads hon. Members on the Opposition Benches should be pressing upon her the need for such policies.
§ Mr. Knox
I have supported both phases of the Government's incomes policy, but I have criticised and will continue to criticise the Government for dispensing with the previous Conservative Government's incomes policy and for having encouraged the massive wage and salary increases of 1974–75 that caused all the trouble.
§ Mr. Deputy Speaker (Mr. Bryant Godman Irvine)
The hon. Gentleman must make his remarks relevant to the Bill.
§ Mr. Grant
I thought that you might feel that, Mr. Deputy Speaker. I should be delighted to deal with the point, but will not do so in view of what you have said.
I think that hon. Members on both sides of the House have recognised the significance of job release in the Gov- 82 ernment's programme of employment measures. It is an essential and worthwhile element in the programme that we have mounted to counter the trend in unemployment that we share with many other industrialised countries— though if one looks at the developing world, one sees that our problems dwindle into insignificance. The Government's programme is on an unprecedented scale. Since 1975, more than half a million jobs and training places have been created. That represents a major effort to relieve the effects of an appallingly high level of unemployment.
The Bill will give the Secretary of State the authority that he needs to finance the job release scheme that the Government have already made available to those workers who wish to make use of it. The scheme is a valuable one and it is clearly right that it should receive statutory backing.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Committee of the whole House.—[Mr. Snape.]
§ Committee tomorrow.