HC Deb 15 March 1978 vol 946 cc440-55
The Secretary of State for Employment (Mr. Albert Booth)

With permission, Mr. Speaker, I wish to make a statement.

I told the House on 30th January of our intention to extend the temporary employment subsidy, the small firms employment subsidy and the job release scheme in broadly similar form for a further year from 1st April next.

We have decided to extend the scope of the small firms employment subsidy by making it available from 1st July to manufacturing firms with fewer than 200 employees in all the assisted areas and in the inner city partnership areas outside them, including London docklands and inner Birmingham. On this new basis the scheme is expected to cover some 70,000 new jobs in the period up to the end of March 1979. We have notified the EEC Commission of this extension.

From 1st April the job release scheme will be extended to cover the whole country. And from 1st July the allowance for a married person with a dependent husband or wife will he increased to £35, with the present rate of £26.50 continuing for a single person and for a married person whose spouse has an income of more than £8.50 a week after tax. On this basis, the scheme should provide an extra 21,000 jobs for the registered unemployed in the period to the end of March 1979.

I turn now to TES. After intensive discussions we have reached agreement with the EEC Commission on limited modifications to this subsidy to make it compatible with the treaty. In future any applicants seeking the subsidy beyond six months will be required to submit a plan before the end of the first six months of subsidy showing how they aim to make the supported jobs viable when the subsidy ends. And we shall be introducing a short-time working scheme for the textiles, clothing and footwear industries which will extend to all firms which are limited in the TES support they can in future receive and to those firms which have exhausted TES support. These alternative arrangements will afford equivalent support to employment in those industries, and TES will not be modified until we can introduce the arrangements.

The short-time arrangements can be introduced before the end of May provided that the Employment Subsidies Bill is enacted in good time. So, from a date in May to be announced, new applicants for TES in the textiles, clothing and foot wear sectors will be limited to not more than 70 per cent. of the total labour force in any establishment for the first six months of subsidy and to not more than 50 per cent. for the second six months. In the case of applications received between 1st April and the May date, the limitation to 70 per cent. will be applied after the first three months of subsidy and to 50 per cent. after six months from first receiving the subsidy. Similar limitations will be applied to the supplement scheme in these sectors and from 1st October to applications for the supplement from any sector. There will be no commitment to provide the supplement to anyone entering the main scheme from 1st April.

We shall introduce new arrangements to support short-time working in the textiles, clothing and footwear industries. Where there would be redundancies which are not covered by the subsidy as modified, workers who in consequence are put on short time will receive 75 per cent. of their gross pay for each day's work lost and employers will be fully compensated from the Exchequer for the costs involved. These arrangements will ensure that there need be no increase in unemployment in the industries concerned through the loss of TES support.

In addition, we have decided that firms in the textiles, clothing and footwear industries which have exhausted TES in the past or will do so in the period to 31st March 1979, should be eligible for a further six months' support for short-time working where redundancies would otherwise occur. We estimate that a further 40,000 workers will benefit for a period of six months each under this further proposal.

The Commission has asked that expenditure commitments on applications received in 1978–79 from the textiles, clothing and footwear sectors for the main TES scheme should not exceed £55 million and that expenditure commitments on such applications from other sectors and on the supplement scheme should not exceed £80 million. We expect that the modifications to the subsidy together with an expected decline in expenditure on the scheme this year in any event, will have this result.

The TES will continue unchanged in Northern Ireland, save where an applicant from the textiles, clothing or footwear industries is directly in competition with an establishment in the Irish Republic. In any such case the limits on the proportion of the labour force to be supported and the requirements of a plan to make the supported jobs viable will apply, unless the competitor is in receipt of an equivalent employment subsidy.

These measures are additional to the new youth opportunities programme and the special temporary employment programme, which come into operation on 1st April, and to the special training measures for 1978–79 for which we have now decided to provide £41 million to support some 40,000 trainees. The current special employment measures are now providing in total some 320,000 jobs or training places and this figure should be raised by these new measures to over 400,000 by March 1979. These measures are likely to add about £300 million to United Kingdom expenditure programmes on employment over the next two years. Rather more than half will fall in 1978–79. The net cost will be much less than this because of savings in unemployment benefit and the flowback of tax and national insurance contributions.

Only higher and sustained economic activity here and in the world economy will solve general unemployment, and this is the aim of the Government's policies. But we cannot leave people unemployed as long as there are sensible ways to offer them employment or training opportunities, often at little additional cost to maintaining them in unemployment. This is the justification of the steps that I have announced this afternoon.

Mr. Prior

Is the Secretary of State aware that his statement brings out with clarity the seriousness of the unemployment situation? Were it not for the measures that he has announced today and on other occasions, the total of unemployment would now be approaching the 2 million mark. Is he aware that his announcement today shows that the Government are now supporting up to 400,000 people? How much is the gross and net cost of all the schemes that are either in operation or planned to come into operation for those 400,000 people?

How similar to the German system are the plans that he has announced today for the temporary employment subsidy mark II? What plans have the Government to deal with the structural problems that exist in the textiles, footwear and clothing industries, bearing in mind that we must seek a long-term solution and not rely on temporary solutions which do not solve the problems in the long run?

Is the Secretary of State aware that we support the extension of the job release scheme but that we should like confirmation from him that this is for people at work and not for those coming off the unemployment register?

Is he aware that we have to look to the small firms for future employment prospects? Why, therefore, did he not consider extending the small firms employment subsidy to all areas instead of restricting it to those areas which he mentioned? Is he aware that changes to the Employment Protection Act would help small firms more than anything else? Is he aware that the help that he is giving is rather like putting one foot on the accelerator and keeping the other on the brake?

Will the Secretary of State comment on the fact that if one is to help small firms, as the Prime Minister appeared to suggest last night, it must be by changes to the Employment Protection Act and by a reduction in Government interference and the amount of form filling? Does he agree that we must look in that direction over the next few years?

Mr. Booth

I welcome the support of the right hon. Member for Lowestoft (Mr. Prior) for the job release scheme. I confirm that it will apply only in cases where the person taking the release—who must be in employment—is replaced by someone who is on the unemployment register. I should have welcomed support for some of the other measures. We are making an extension to the temporary employment subsidy in the development and inner city partnership areas only, because unemployment is higher there. We believe that there is a role for a measure which recognises the regional differences in unemployment.

The right hon. Gentleman mentioned the Employment Protection Act. I have never thought that the solution was to create second-class workers in small firms. The gross and net costs of the schemes that are now running vary. In some cases the temporary employment subsidy may cost nothing at all. In other cases the net cost may be as high as 40 per cent. of the overall cost. The average figure is about 25 per cent.

There are essential differences between the scheme for short-time support coupled with TES that we are operating in West Germany. Our scheme gives a wider scale of support. I believe that the TES scheme, particularly in the textiles, footwear and clothing industries, combines effectively with the industrial strategy support which is given by the Department of Industry. It will enable firms to reorganise in order to sustain working capacity and production in a way that would be impossible without the scheme.

Mr. Noble

Will my right hon. Friend ignore the mealy-mouthed attitude of the right hon. Member for Lowestoft (Mr. Prior) and accept the congratulations of his hon. Friends on his successful negotiations with the EEC? Is my right hon. Friend aware that those of us who are involved in the textiles, footwear and clothing industries are particularly pleased to note that firms which have exhausted TES can have a second bite at the cherry in order to maintain employment? May we have some idea of the help which firms can expect if they have to produce a reorganisation plan after six months when applying for TES?

Mr. Booth

I acknowledge the representations that my hon. Friend the Member for Rossendale (Mr. Noble) has made about the need for short-time assistance to be coupled with TES. It is largely as a result of these representations that we have done the work in the Department to develop this arrangement.

I shall certainly examine how effectively my Department and the Manpower Services Committee might be able to assist firms in developing the restructure plans which they will have to submit. Much of the useful experience that we have from firms which have restructured can be passed on to other firms.

Mr. Peter Walker

May I press the point made by my right hon. Friend the Member for Lowestoft (Mr. Prior) about limiting the area in which small firms will benefit? Is the Secretary of State aware that unemployment in the West Midlands area has risen faster than anywhere else in the country and that the partnership area represents a minute proportion of that region? Is he aware that even after these measures and four years of Labour Government, when school leavers leave this year we are still likely to have more than 1½ million unemployed?

Mr. Booth

This year's school leavers will have the benefit of the youth opportunities programme, which is the most ambitious programme of its kind in any democratic country. It will give them a chance in a recession which they would not otherwise have. Every school leaver will have the chance of a job, further education or of training and obtaining work experience.

The right hon. Member for Worcester (Mr. Walker) criticised the limitation of the extension of TES. Many of our measures, including the job release scheme, are now running nation-wide. If we were not to limit certain schemes to selected areas there would be no degree of regional policy, and that would ignore the different problems in the regions.

Mr. Heffer

Will my right hon. Friend take note of the statement by the right hon. Member for Lowestoft (Mr. Prior) that but for the Government's measures the unemployment level would have been 400,000 higher? Is that not in itself a justification of the measures that my right hon. Friend and the Government have taken? I am sure that my right hon. and hon. Friends, particularly those from Merseyside, welcome the further measures that have been outlined this afternoon. But is it not clear that to deal with the most serious overall problem of unemployment there will have to be a boost in the economy? Does he agree that there will have to be further public expenditure to assist construction, education and health? Will he impress that fact upon my right hon. Friend the Chancellor of the Exchequer and explain to him that, while my right hon. Friend the Secretary of State for Employment is doing a good job, we expect further help from the Chancellor in the Budget?

Mr. Booth

I certainly accept the contention by my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) that actions by the Chancellor to boost the economy are essential if we are to reduce unemployment to the level we want to reach. I accept that an important public expenditure element is directly related to the employment of people in this country.

I was very pleased to note when I visited Merseyside that great use had been made in that area of the small firms employment subsidy. A quarter of the places which have been taken up in the special development areas have been taken up in Merseyside, and it is appreciated in that area, if nowhere else, that the North-West has benefited from the main scheme of TES to the extent of 108,000 jobs, and from the supplementary scheme to the extent of 18,000 jobs. I believe, therefore, that hon. Members who represent that area are well fitted to judge on the desirability of the measures I have announced.

Mr. Speaker

Order. Since I obviously want to call as many hon. Members as possible it would be a great help if they could put short sharp questions.

Mr. Donald Stewart

Is the right hon. Gentleman aware that while we await implementation of the election promises of "Back to Work with Labour", we welcome his efforts and believe that temporary solutions are a great deal better than no solutions? The right hon. Gentleman said in his statement that people could not be left unemployed as long as there are sensible ways of offering them employment. Will he answer the question I put to him in a recent debate concerning my constituency where unemployment is consistently the highest in the country? Will he continue the job creation scheme after 1st April?

Mr. Booth

The special temporary employment programme, which will run from 1st April, will continue the job creation scheme for those outwith the youth opportunities programme. It is for those over 18, and I have arranged with the Manpower Services Commission that priority will be given to those in the 19-to-25 age band who have been six months unemployed, and those over 25 who have been unemployed for more than a year. Therefore, job creation will be continued for that age group, and the youth opportunities programme will run, too.

Mr. Jay

Is my right hon. Friend aware that he deserves great credit for the fact that with these employment schemes we are now hardly any worse off than we would have been if there had been no interference from Brussels?

Mr. Booth

I welcome my right hon. Friend's comment. I can confirm only that that was the object of the exercise.

Mr. Penhaligon

Will the right hon. Gentleman confirm that my colleagues spent some considerable time encouraging the Government—[HON. MEMBERS: "Oh."]—to extend the small firms employment subsidy, and that we are delighted that this has now been announced? Will he explain why he continues to ignore the claims of agriculture? What is the difference from a value-added point of view or in terms of balance of payments or employment between manufacturing components for a motor car and growing cabbages?

Mr. Booth

The main difference between agriculture and small firms engaged in manufacturing is that agriculture is organised in units which generally employ a smaller number of people. The object of the small firms subsidy is to encourage firms to grow from below 200 employees to above that figure.

Mr. Greville Janner

Is my right hon. Friend aware that these measures will be especially welcomed in areas which rely upon the textiles, clothing and footwear industries, particularly in those areas to which the job release scheme did not previously apply? Is he, however, aware that where the job release scheme did apply, not enough people took advantage of it? Will he make sure that the new arrangements, which are so important to areas such as Leicester, will be publicised so that people who can take advantage of them are encouraged to do so?

Mr. Booth

I readily accept that not enough people have taken advantage of the existing scheme. The increase in the payment to £35 a week tax free will encourage many more people to do so, and anything that I and my colleagues can do through publicity to increase the numbers taking advantage of the scheme we shall gladly do.

Mr. McCusker

Will the right hon. Gentleman accept the gratitude of industries in Northern Ireland which will benefit by his announcement, particularly as the scheme is to continue in its existing form there? Will he assure those companies which will be adjudged to be in competition with factories in the Republic of Ireland that when he is assessing whether subsidy in the Republic is equivalent to that in the North he will take account of all the subsidies available to some firms in the Republic?

Mr. Booth

The assessment will be a tripartite process involving the United Kingdom Government, the Government of the Irish Republic and the EEC Commission. We shall seek to ensure that all subsidies paid in Southern Ireland are taken into account for this purpose.

Mr. Ioan Evans

Is my right hon. Friend aware that these proposals will be welcomed in Wales, where unemployment is considered to be a major problem? However, since structural unemployment is likely to remain with us for many years, what consideration has been given to a longer-term employment subsidy? Further, what consideration has been given on the job release scheme to changing the age of retirement to 64 rather than to 65?

Mr. Booth

We did carefully consider whether it would be more effective to reduce the entry age into JRS rather than to increase the payment. We took the view that there were so many additional people in the 64-to-65 age range male and the 59-to-60 age range female yet to come forward that it would be more effective to increase the payment. On my hon. Friend's other point about continuing the employment subsidy, we shall have to work out over the next 12 months to what extent we can co-ordinate existing subsidy schemes, and we shall have to decide whether there is a continuing role for employment subsidy in areas of longer-term structural problems.

Mr. Maxwell-Hyslop

Is the right hon. Gentleman aware that in the South-West many areas are dependent for much of their employment on the textiles and footwear industries, which are declining, and have a higher rate of unemployment than the assisted areas? Is it not illogical to produce measures such as those announced today to sustain employment in those declining industries while denying assisted area status to those areas, which would attract growth industries to replace those in decline?

Mr. Booth

I am not concerned today with the determination of assisted area boundaries. I am, however, very much concerned with the support to be given to the clothing, textiles and footwear industries in the South-West, which I think will very much welcome the extended support they will get as a result of these measures.

Mr. Madden

Will my right hon. Friend confirm that none of the changes he has announced today concerning TES would have been necessary had it not been for the intervention and interference of the Common Market in the Government's policies? What is the total number of jobs that my right hon. Friend expects to be created or safeguarded as a result of all the measures he has announced this afternoon? Does he accept that he has opened the door wide to limited retirement, which will offer prospects to many older workers of welcome leisure time and to younger workers of badly needed jobs?

Mr. Booth

I entirely agree with my hon. Friend's latter point. As to the additional jobs, I have indicated that this will bring the total support up to 400,000. I take that as a measure of the requirement rather than as a condemnation of the measures, as was suggested by the right hon. Member for Lowestoft. The small firms employment subsidy and the job release scheme will, we estimate, add at least 90,000 to the numbers in employment over the next year.

Mr. Scott

Will the right hon. Gentleman confirm that the 400,000 figure that he has just repeated includes young people who will receive nothing more than the fortnight's induction scheme? If that is so, what percentage of the total will they represent?

Mr. Booth

The numbers covered by the youth opportunities programme is equivalent to about 220,000 people being employed for a year, taking into account the fact that different people will be within the scheme for different lengths of time. The average time spent in the scheme will be about six months.

Mr. Hoyle

Will my right hon. Friend please note that at least his announcement will bring joy to the many textile workers in my constituency and that they will be very interested in the weasel words from the Opposition Benches when Conservative Members heard the announcement? Will the Commission be vetting any of the applications for the new scheme?

Mr. Booth

I shall be informing the Commission quarterly of the number of applications we receive. It will look in particular at some of the larger applications, but it will not have the right to determine those applications.

Mr. Higgins

Does not the right hon. Gentleman understand that the real danger to employment is the growth of protectionism and the distortion of world trade? Is he convinced that none of the measures is contrary to GATT? Has he considered whether countervailing duties might be imposed by some of those to whom we export textile products?

Mr. Booth

I am satisfied that none of these measures is contrary to GATT. I do not regard them as protection measures in the narrow sense. They are protection measures in the sense that they protect people's jobs. That is what we are in the business of doing.

Mr. John Evans

Does my right hon. Friend accept that all of us on the Labour Benches welcome the fact that a modicum of common sense has broken out in the competition department of the EEC? We are told that two countries had objected to TES. Therefore, will my right hon. Friend tell us whether this scheme is subject to veto by the Council of Employment Ministers? As there are 6½ million unemployed in the Community and another 9 million young people will be coming on to the employment register by 1985, is it not time that the Employment Ministers, together with the Commissioner responsible for social affairs, got together to start boosting the economy of the EEC countries?

Mr. Booth

The scheme is not subject to the veto of the Council of Employment Ministers. I agree that it is time that Labour Ministers of the EEC got together to decide how far it is appropriate to use the EEC as a means of supporting employment measures throughout the Community rather than pursuing a competition policy in a way that threatens jobs.

Mrs. Kellett-Bowman

Does the Secretary of State agree that it is not correct to say, as his hon. Friend the Member for Sowerby (Mr. Madden) did, that no alteration in the temporary employment subsidy would have been necessary but for the EEC? I welcome his ironing out of the anomalies of the TES, in conjunction with the EEC, which has proved very sympathetic. I refer particularly to the anomaly of the unfairness to firms whose entitlement had run out before the supplementary scheme came in. I hope that when I bring some trade unionists to meet the Under-Secretary later in the afternoon the Secretary of State's hon. Friend will find a way under the scheme to save jobs that are otherwise in jeopardy.

Mr. Booth

I think that my hon. Friend the Member for Sowerby (Mr. Madden) is absolutely right in suggesting that certain of the limitations would not have been put on TES but for the Community. I think particularly of the limitation of 70 per cent. of the workers in an individual establishment. But the parameters within which I negotiated were determined by those in the House who voted for the EEC Act and the people in the country who voted for retaining membership. To that extent I must accept that it is a proper function of a Minister to carry out such negotiations. I very much agree with the hon. Lady that one aspect of the scheme that I have been able to announce will be particularly welcome to firms that have run out of TES entitlement.

Mr. Skinner

Will my right hon. Friend confirm that there would be no need for the extension of corporatism announced this afternoon had we not been dragged into the Common Market by the Conservatives when they were in Government, aided and abetted by some who occupy our Front Bench, and if the present Government had not slashed public expenditure as they have, aided and abetted by the Opposition? But will my right hon. Friend accept also that I admire his timing on the matter, because the announcement comes a few days after the Leader of the Opposition made that weird speech at Bradford to the Conservative trade unionists? It is no wonder the right hon. Lady has not turned up today to listen to what my right hon. Friend said. Nobody is more embarrassed than the scarlet-faced right hon. Member for Lowestoft (Mr. Prior).

Mr. Booth

I regret that I cannot claim credit for the timing of the statement or the embarrassment of the right hon. Member for Lowestoft. The right hon. Gentleman and the Leader of the Opposition must answer for their own policies. I only thank the Lord that I do not have to answer for them.

Several Hon. Members rose

Mr. Speaker

I shall call the hon. Members who have been rising.

Mr. Buchanan-Smith

What are the Government prepared to do for new investment and new jobs, which are the only real basis upon which future prosperity and long-term security of jobs can be achieved?

Mr. Booth

The investment grant scheme and particularly the special accelerated investment project measures are clearly backing some new investment. Couple that with the extension of the small firms employment subsidy, and it will be seen that the Government are also backing the expansion of jobs.

Mr. Raison

Will the right hon. Gentleman consider the point that instead of the large-scale subsidisation of nonviable jobs, which can lead only to worse productivity, it would be much better to spend the same money either on genuine public sector programmes—perhaps particularly capital programmes—or the reduction of taxation and the carrying out of other incentives to genuine growth?

Mr. Booth I see the TES scheme as a way of maintaining viable jobs. That is why I welcomed the opportunity to include within the scheme now the structuring requirements and plans to be submitted wherever TES must be paid beyond six months. It is not a practical option to say that we shall withdraw support from manufacturing industry in order to extend public services. We need to ensure that manufacturing industry survives and grows in order that we can continue to expand our public services.

Mr. Stephen Ross

The Secretary of State's announcement on the small firms employment subsidy will be heard with profound disappointment in my constituency, a county with the highest unemployment of any outside the assisted areas. It is also an area that must put up with the extra cost of transferring all its products across the sea. If the subsidy cannot be extended to the whole country—a measure that I would support—is there not some way in which areas with consistently high unemployment, say, over 8½ per cent. or 9 per cent., or specially assisted by the Development Commission, can qualify for it?

Mr. Booth

I accept that there may be disappointment in the Isle of Wight that it is not covered by the small firms employment subsidy, but I hope that people there will welcome the extension to the island of the job release scheme and the extension of TES entitlement. We shall continue to study ways of helping over certain problems of unemployment in the Isle of Wight.

Mr. Haselhurst

How far does the right hon. Gentleman estimate that the number of jobs he has created or protected through the measures he announced this afternoon will keep pace with the number of jobs he estimates will be lost in the course of the next year through demanning and redundancies?

Mr. Booth

We believe that it is possible to offset demanning and redundancies by industry support measures. Over the last full year for which we have figures there has been a net increase in numbers of people employed in this country. But I do not hide from the House that we have a major concern for the vastly increasing number of people coming on to the labour market, particularly young people and particularly women seeking work for the first time. We shall need to produce about 170,000 more jobs each year to keep pace with that.

Mr. Welsh

Can the right hon. Gentleman tell us how, in practice, these measures will help workers facing redundancy in the Garscadden area of Glasgow? Is he aware of the threat of redundancy at the Goodyear factory in an area which already has an unemployment rate of 30 per cent.? Is he further aware that the Goodyear factory is flanked by two others which have recently closed down? How can these measures help repair the damage done by past Government policy?

Mr. Booth

Measures introduced now are not intended to deal with past policies. They are intended to deal with any possibility of forthcoming redundancies. They can help by extending the scope of the temporary employment subsidy in industries which are operating short-time working. The workers organised in those areas will be involved in these TES measures and in the restructuring because we shall require joint signatures of employers and union representatives in connection with the TES applications and the restructuring proposals.

Mr. Ridley

Is the right hon. Gentleman aware that these are spoof jobs provided by spoof Ministers in a spoof Government? Does he realise that they have to be paid for by real money earned by real people who would do very much better if the Government provided real jobs?

Mr. Booth

I am very much aware that taxpayers' money and the money of those who contribute to national insurance funds would be spent on supporting those who are unemployed, or about to become unemployed, and who, as a result of these measures, will be brought into jobs or maintained in them. There is nothing spoof about that. The problem and the concern is real.

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