EMPLOYMENT SUBSIDIES

HC Deb 21 March 1979 vol 964 cc1627-56

10.12 p.m.

The Under-Secretary of State for Employment (Mr. John Golding)

I beg to move, That this House authorises the Secretary of State to make payments between 1st April 1979 and 31st March 1980 exceeding £10,000,000 under a scheme established in accordance with section 1(1) of the Employment Subsidies Act 1978 for reimbursing employers from public funds for payments made by them to workers put on short-time as an alternative to redundancies. The motion arises from the Employment Subsidies Act 1978.

Mr. Mike Noble (Rossendale)

On a point of order, Mr. Speaker. It is impossible to hear my hon. Friend.

Mr. Speaker

I hope that the House will observe that. It is also out of order to stand within the Chamber. The hon. Member for Tottenham (Mr. Atkinson) is standing this side of the Bar. I beg his pardon if he is not.

Mr. Golding

It is not often that I am accused of being soft-spoken.

The motion arises from the Employment Subsidies Act 1978. The Act gives power to my right hon. Friend the Secretary of State at times of high unemployment to give financial help to employers to make it possible for them to save the jobs of workers who without that help would or might become unemployed.

The safeguards of the Act have been met. Consultations have taken place with the TUC and the CBI. As it is expected that the cost will exceed £10 million a year, a statement explaining the proposal was laid before the House by my right hon. Friend on 12 March as a preliminary to seeking authorisation by the motion.

Although the procedure that we are following tonight does not apply to Northern Ireland, I am assured by my right hon. Friend the Secretary of State for Northern Ireland that a parallel scheme will be introduced there.

In the Queen's Speech the Government made it clear that our economic policies will continue to be directed towards overcoming the evils of inflation and unemployment. We treat as a priority removing the causes of unemployment, which include inflation. The Government will continue to work hard for the expansion of world trade and to secure new markets for British goods. At the same time the Government, with the TUC and CBI, will press on with the job of modernising British industry through the industrial strategy, making it highly competitive with industries overseas. The Government will also continue to give support to the regions and to particular firms and industries where possible and where this is necessary in Britain's interest.

Although the number of jobs in Britain is greater now than in 1972, we still have a long way to go because of the increase in the working population—an increase of nearly 2½ million between 1976 and 1991. We also face the problem of developing technology. In doing so I am convinced that with all its exciting possibilities we can, if we in politics show the imagination of the scientists, avoid mass unemployment.

As a Government we have introduced many measures to assist long- and medium-term job creation and preservation, but we have also been concerned with temporary job preservation. It does not make sense to me for a firm in temporary trouble to sack its workers when it is probable that within a reasonable time business will have picked up. It is not right for people to suffer all the agonies of getting the sack if that can be avoided. It is wrong to meet the cost of redundancy and unemployment benefit from other employers and the taxpayers if that can be avoided or reduced.

Temporary job preservation schemes can also help to prevent the growth of skill shortages. When the National Economic Development Office reported on the shortages of engineering craftsmen, it said that the main reasons given for men leaving skilled engineering jobs were redundancy and poor prospects for advancement. We must increase the occupational security and the status of craftsmen. However, the problem is not confined to craftsmen. Firms which are forced to break up their work force because of short-term difficulties find it much more difficult to become successful again. All these reasons gave ample justification for the temporary employment subsidy, a scheme that was enormously successful. They also fully justify the temporary short-time working scheme.

The scheme has another justification. Under it, temporary work sharing may take place without the loss of tempo, which happens when work is spread out over the normal week by slowing down production. Everybody, both in management and unions, recognises how hard it is to restore an efficient rate of working when the people on the shop floor, including the supervisors, have got used to a slower pace. As a country, our job is to bring about a massive increase in productivity. We believe that this scheme can help to achieve that.

The temporary short-time working scheme will operate from 1 April, replacing the temporary employment subsidy, which closes for applications on 31 March. Firms that have previously received the temporary employment subsidy will not be precluded from support under the scheme if a genuine threat of redundancy arises. I know that this point is of particular concern to my hon. Friend the Member for Rossendale (Mr. Noble), who pressed this point so hard. Indeed, I pay tribute to the way in which he kept me in touch with the needs of the North-West, as my hon. Friend the Member for Sowerby (Mr. Madden) has constantly pressed the needs of Yorkshire, and as both have pressed the needs of the textile industry. Nor do I think that I can be accused by my hon. Friends of ignoring Merseyside. Sometimes I am accused of spending more time on Merseyside than in my constituency.

Compensation will be paid to employers who put workers on short time—that is, at least one day of work following seven without—rather than make them redundant. For compensation to be paid, we must be satisfied that the declaration of redundancy is genuine. I am anxious that we be as careful as possible about that point. We must be satisfied that the firm is not insolvent, and is not about to become insolvent. It will not apply where fewer than 10 employees are threatened by redundancy.

To qualify for the compensation, an employer must undertake to pay any employees working short time, as an alternative to redundancy, at the rate of at least 75 per cent. of their normal pay, subject to a limit of £110 a week, for each workless day. Where, however, this is less than the statutory guarantee payments under the Employment Protection (Consolidation) Act 1978, the higher statutory payments must be made.

Employers will receive compensation in the form of a reimbursement in arrears of 75 per cent. of normal pay—normal pay being subject to a limit of £110 a week—for all workless days approved, or of the statutory guarantee payment if greater, plus compensation in respect of the national insurance contributions paid, and three payments will be made within each 13-week period.

I know that my hon. Friends from Merseyside will be delighted to learn that employers who face severe cash flow difficulties may apply for a small advance payment, which will be recovered from the compensation refunded for subsequent periods. I know that this will be welcomed by many small firms throughout the country whom we are anxious to assist. I emphasise that the maximum period of payment will be 12 months.

In cases where employers, in addition to introducing short time as an alternative to redundancy, put some workers on short time for other reasons, it will be a condition for approval of payment of compensation that the firm pays them also 75 per cent. of their normal pay or, where appropriate, the guarantee payment. For these workers, however, the firms will be reimbursed to the extent of only 50 per cent. of the payment made plus compensation in respect of national insurance contributions paid.

The statutory obligation to make guarantee payments under the 1978 Act remains. Compensation is paid for employees, but they will not be eligible to draw unemployment benefit. However, the scheme is not compulsory, and employers and trade unions can negotiate alternative arrangements. The maximum amount of compensation will depend on the size of the group of workers threatened with redundancy. If 100 workers run the risk of redundancy and they normally work a five-day week, the maximum amount of compensation payable will be 2,000 workless days in a period of four weeks. It should be noted that the number of workers who can be put on short-time work can be greater than those threatened with redundancy. An employer, with trade union agreement, can spread short-time working throughout his labour force.

The estimates of the take-up and cost are dealt with in the statement before the House, but they are so tentative that I shall not weary the House with them at this stage. It is sufficient to say that if the Opposition challenge them I shall not be taking up a dogmatic position; in fact, I shall pretend that I have not time to go into the detail.

I commend the scheme to the House, because it will help productivity. It will reduce the burden of unemployment on British industry. It will strengthen British industry by reducing skill wastage. Last, but certainly not least for me, it will remove some of the insecurity that working people, regrettably, have at the present time to accept as part of their lives.

10.24 p.m.

Mr. Barney Hayhoe (Brentford and Isleworth)

I think that the whole House would wish to express its gratitude to the Minister and its sympathy, knowing the particular circumstances of the bereavement that he and his family have suffered. We also express our admiration for his personal courage and high sense of public duty in coming here, as was planned earlier, to speak to this order tonight.

The Government are seeking parliamentary authority for the temporary short-time compensation order under the provisions of the Employment Subsidies Act 1978.

Curiously enough, that is done on the very day that they publish the Short-Time Working Compensation Bill. Tonight's order has much the same effect as clause 11 of the Bill, which presumably we are to discuss soon. It would have been better to have the Second Reading debate on the new Bill before debating the order. The Government presumably have their reasons for the cackhanded way that they have dealt with that. But we must remember that there will be Second Reading debate and subsequent stages on provisions similar to those in the order.

Rather than trying to have a mini-Second Reading, Committee and Report stage, we should indicate our concern about the detailed aspects of the proposed temporary scheme. Other matters can be raised when the Bill comes before us for Second Reading.

I propose to recommend to my right hon. and hon. Friends that they should not vote tonight. The temporary scheme is to some extent a replacement of the temporary employment subsidy introduced in 1975. That scheme has cost over £400 million. It has given support to between 400,000 and 500,000 people. It was given a fair wind from this side of the House as an amendment that was introduced to the Employment Protection Act 1975 at a fairly late stage.

It was a temporary measure to bridge a short period of difficulty. The cover has been extended, the threshold of the scheme lowered, the subsidy rate doubled and the period prolonged. Ministers talk of the jobs that have been saved as a result, but it has also had a counter-effect in losing jobs. Documentation from the OECD, the Government and the EEC indicates the displacement effect of job subsidies. In a fair-minded judgment, we should look at the balanced result.

Hon. Members in marginal seats were earlier detailed by the Minister. One can understand that they should cencentrate on the positive side of saving jobs and say nothing of the jobs that have been lost, but a wiser judgment is made by those who seek to get the balance right.

We have had a survey which appeared in the Department of Employment Gazette in May last year. That survey gave available information about this and other schemes, but it left many questions unanswered. In a publication that came out this month—the March edition of Management Today—Rosemary Brown raised a number of questions about the schemes. One needs to take all these factors into account to get a balanced view of the schemes.

The new schemes being introduced could be very costly. The Minister shrank away from commenting on the estimated costs of the order that we are debating. He referred us to the explanation laid by the Secretary of State in which it is estimated that the scheme would cover 55,000 people at an annual cost of £75 million. When one looks at the Bill being published today and its financial effects, bearing in mind the temporary scheme in clause 11 of that Bill, which is the same as the scheme that we are debating tonight, one sees figures of 320,000 workers at an annual cost of £415 million. Therefore, there is roughly a factor of six to one for the estimates in [...] [...] compared with those in the order. Although I understand the Minister's reticence, I hope that he will explain the wide disparity. I have no doubt that the figures are calculated on a different basis.

Also, it would be helpful if he would indicate where the money is coming from for the temporary scheme in the order. It is not coming from the national insurance contribution route planned for the Bill's provisions, so I presume that it will come out of normal taxation.

During Employment questions, the Secretary of State said that he would consult the CBI and the TUC about the temporary scheme that is introduced in the order tonight. May we have an indication of the results of that consultation? When the Minister last mentioned this on 20 February, he gave the impression that the consultation would take place presumably between then and now. It would be helpful to know the results and whether any changes have been made in the scheme as a consequence. Also, will the Minister indicate the views of both the TUC and the CBI on the schemes?

Will the Minister be prepared to look again at the 75 per cent. level of payment laid down in the order for a four-day week? This means that the individual concerned would get 95 per cent. of his normal pay. When one bears in mind that after taxation that percentage will go up a little, according to the individual tax position and the essential expenses of travel and working involved, one sees that the difference between being on short time and in full-time work is very small. Whereas one can make out a case for the desirability for those to be in as close juxtaposition as possible, it can be argued that there are dangers in encouraging the introduction of short-time working. If the matter is in the balance, the pressure may be on to do so. One wonders whether adequate safeguards are built into the scheme to stop that being undertaken collusively, so that the individuals concerned—some within the moonlit section of the economy—find themselves better off.

Mr. Andrew F. Bennett (Stockport, North)

Is there not a danger that if those on short-time work are much worse off, some of the key workers will tend to drift away to other employers, which will make the viability of the firm much less and the security for the rest of the work force much harder to maintain?

Mr. Hayhoe

I understand those arguments. The correct balance has to be achieved. The levels at present show that the differences between full- and short-time working will be very small. Therefore, there is a consequential danger that the tendency will be towards short-time working when it is in the balance. Certain individuals will be better off if adequate safeguards against moonlighting are not built into the scheme.

In Germany there is great support for short-time working. On a recent visit I found that there was much anecdotal evidence of the increase in moonlighting as a result of the provisions. These are matters that we should consider.

How will the scheme affect the existing arrangements, which have been achieved by collective bargaining? We know that substantial sections of the working population are already covered by schemes that have been negotiated between management and unions. In some cases those schemes have better provision than those in the Bill. Suggestions have been made about the possibility of contracting out of the scheme where there is an element of contribution, and that will be a subject for debate. Those areas of industry which have negotiated sensible arrangements may be put at a disadvantage. Will they be able to seek the rebate from the Government in the same way as others—even though their scheme already exists? Their scheme may be more favourable than that laid down.

Will the Minister state clearly how the scheme that he is proposing will affect existing arrangements? He has indicated that he believes that the scheme will be helpful to alleviate the problem of skill shortages. He rightly draws attention to the evidence that shows that some engineers have left their jobs because of fears of redundancy. Reports appear in the press of a skilled toolmaker working on a milk round. From the national point of view, that is undesirable when there are shortages of skilled labour in the economy.

On the other hand, there are areas of our industry that are declining and where structural change will become necessary. Skilled labour may be hoarded as a result of the legislation when it would be right for it to be moved into a declining area and put to better use. If we are to behave sensibly in these matters, we must recognise that there is a balance of judgment that must be made all along the line.

Judging from the experience of the past five years, one of the main motives that appears to have animated Ministers in considering such schemes is whether they would get people out of the employment statistics. Ministers believe that any means by which that can be achieved are worth while—even if, in the long term, they are damaging to the economy.

Mr. Max Madden (Sowerby)

The hon. Gentleman referred to expanding sectors of the economy. Which sectors does he have in mind?

Mr. Hayhoe

There are sectors—the electronics industry for example—where there are possibilities for expansion and areas such as the chemical industry that have had expansion. I am surprised that the hon. Gentleman believes that the whole economy is stagnant or declining. That would not be an unfair presumption of what five years of Labour Government will have produced, but I am glad that some sectors have overridden that and have possibilities for expansion.

Paragraph 5 of the explanatory document says that compensation will be paid for a maximum of 12 months, but is that in respect of a company, a group of workers, or an individual worker? If one group qualifies for 12 months, will another group not be entitled to assistance?

Although the explanatory document gives no indication of a limitation on the numbers involved, the Minister said that at least 10 workers would have to be involved in order to qualify under the scheme. In other words, the threshold applying to the temporary employment subsidy will be extended to the new scheme. I am grateful to see that the Minister is confirming that. It would be an absurd administrative nightmare if a single individual were allowed to qualify.

The temporary employment subsidy has sometimes had the side effect of delaying necessary structural change in firms. There is concern that the proposed arrangements may have the same effect. The explanatory document says that employers applying for compensation under the new scheme will be encouraged to use the period of short-time working to find ways of providing full-time work for the workers threatened with redundancy.

That could be an encouragement to the making of structural changes in a firm, but how will the Government give that encouragement? It is a splendid sentiment, but how will it be put into effect?

What will happen about short-time working that is the result of someone else's industrial dispute? The Minister knows that one of the criticisms of the guaranteed payment arrangements under sections 12 and 13 of the Employment Protection (Consolidation) Act 1978 is that firms have had to make guaranteed payments even when disruption has come about as a result of industrial action by those who have not the remotest connection with the firm concerned.

On the question of short-time working—particularly the proviso that the Minister produced this evening which I do not think was part of the scheme circulated—the order would allow for a subsidy of 50 per cent. to come from Government funds towards subsidising short-time working that was not to prevent redundancy. It seemed to me that in a few sentences he slipped in part of the general scheme contained in the Bill rather than confining the order to the special measures that one originally thought the Government had in mind. It would be useful to get a clearer explanation of the two facets of this scheme that the Minister mentioned this evening.

How will employers apply for help under the temporary scheme? Who will decide? Will this be a matter for decision in the same way as it is under the temporary employment subsidy? Will detailed criteria be established, and will they be published, so that people know whether they are entitled to payments? Since redundancy is not now the determinant—though, as I understand it, it will be the determinant for a 100 per cent. rebate—can the Minister give a clearer indication of the criteria under which applications can be made?

Will there be a right of appeal under the temporary scheme? There is a provision in the Bill for appeal to industrial tribunals. Will there be any right of appeal? Presumably, appeals will not go to industrial tribunals, since that would require the setting up of a statutory right. But, under the present provision, is there some way in which an aggrieved employer can at least have an adverse decision looked at again?

Will the trade unions concerned have a veto right, as they do at present, over applications for temporary employment subsidies? Will that veto right be the same as it appears to be under the temporary employment subsidy arrangements? Will individuals who are on short time have some rights to these payments, or will the matter be wholly determined by whether the employer makes the payments and seeks the rebates? In other words, is the group of individuals who may go on short-time given any rights under these arrangements? I presume that they are not, because that would be the creation of a statutory right, which would require new legislation. Again, it would be helpful if the Minister could clarify that point.

I have raised a number of critical and, I hope, constructive comments and questions on this scheme. I do so in the context of the general views I expressed last February about a replacement scheme for the temporary employment subsidy. If the Minister cannot answer many of the detailed points that I have raised, I hope that he or one of his ministerial colleagues will write to me giving the answers. I would be happy if such a letter were released to others who are interested.

I believe that changes in the provisions for short-time working are required. Many detailed criticisms have already been made of the consultative document issued last April. The Opposition will certainly examine the Bill that was published today, the Government's response to the questions that I have posed, and other questions that will be raised tonight before we return to the matter in the Second Reading debate.

Several Hon. Members rose—

Mr. Deputy Speaker (Sir Myer Galpern)

Order. I remind the House that this debate will finish at 11.41 p.m. Therefore, brief speeches may enable the Chair to accommodate all hon. Members who are anxious to participate in the debate.

10.49 p.m.

Mr. Mike Noble (Rossendale)

I welcome the scheme as announced this evening by my hon. Friend and congratulate him on the amount of work that he has done. I also thank him for the way in which he received delegations that I took to the Department of Employment to raise questions on the type of scheme that was to be introduced.

Those of us from the North-West and those of us with any concern for the textile, clothing and footwear industries recognise the value of the temporary employment scheme. We also recognise the value of the scheme introduced last year for the footwear industry, which has made great use of it.

What must be said at the outset is that many Labour Members prefer the temporary employment subsidy and ask why it has been necessary to abandon it. We can provide the answer. It is because those faceless masters in Brussels have compelled us to drop the scheme. It is as simple as that.

The hon. Member for Brentford and Isleworth (Mr. Hayhoe) talked about the temporary nature of the scheme. Let us assure him that the scheme has always been temporary for the firms in receipt of it, because they have been able to apply only for a limited period. It seems inconsequential to me that if a scheme should continue to help more and more firms on a much wider basis, it should remain temporary for those firms that have already had an allocation.

Those of us in the North-West note that 127,000 out of a total of 500,000 jobs have already been saved by these schemes. One can imagine what the economy of the North-West would have been like had it not been for this type of scheme. We also note that 113,000 jobs nationally have been saved in the textile industry, and 111,000 in clothing and footwear.

The hon. Member for Brentford and Isleworth talked about the scheme causing jobs to be lost. It is worth noting that one survey indicated that if the TES had not been made available, two-thirds of the applicant firms would have closed. Instead, they are still in being. There- for, I am quite convinced that the balance is on the positive side. Through the recession these schemes have given vital props to firms, which have enabled them to carry on and in many cases to restructure.

I should like to ask my hon. Friend two questions about the scheme. First, will he state whether the scheme covers firms in the clothing, textile and footwear industries, which have not only already enjoyed TES but have had a payment under the temporary short-time working scheme that was introduced last year? People in the industries have contacted me and said"We are not sure whether we will be eligible, because we have already had short-time working, as well as temporary employment subsidy ".

I should also like to ask my hon. Friend a question in relation to the footwear industry, which is a seasonal industry, especially the slipper section, in my constituency. Because of the seasonal nature of the industry, labour demand fluctuates considerably. I note that, under the rule, payments are available for 12 months. What would be the situation if, after the Christmas boom, a firm had to declare some redundancies, went on to short-time working supplement, went through the summer boom when the need for redundancies disappeared, but later, within the 12-month period, faced a further threat of redundancy? Can it have two bites of the cherry within that 12-month period?

One of the important features of the schemes has been the confidence effect on industry, which has been able to feel that in a situation where it might lose labour that it might not recover it would be able to carry on. What concerns many people in industry is that there should be some continuity of policy.

It was interesting to note the tortuous, tightrope walking of the hon. Member for Brentford and Isleworth, who, on the one hand, wanted to assure people—particularly in those marginal seats that he is so fond of mentioning, since he has one himself—that there will be no change in policy and, on the other is not prepared to give any guarantee in respect of continuity. I accept the difficulty that he faces. I accept that he is one of the moderate faction in the Tory Party. But assuming that at some distant date in the future we are unfortunate enough to have a Tory Government, people in my constituency will want to know whether his moderate posture will prevail. One can only judge by looking at what his party's newspapers say.

What does The Daily Telegraph of last Friday say? It quotes the"Joseph wing"view that a change in the tax environment will aid industrial confidence, investment and innovation, encourage job creation and produce a change of attitude.

The hon. Gentleman's critics on the Left of the Tory party maintain that continued intervention will be necessary to avoid further industrial setbacks. On which side of this split in the Tory Party does the hon. Gentleman stand? Which path would a Tory Government take, should they be elected? Will the Tories be prepared to continue the job subsidies?

The article goes on to say that the main strategic thrust of Tory industrial policy will be aimed at cutting the extensive range of subsidies available to industry and introducing tax reforms to provide stimulus for industry and individuals. It talks of curbing union power and changing the social structure to provide the incentive to work. Then comes the nub of the argument, which is that subsidies are excessive and provide an unnecessary element of feather-bedding and job protection.

That was in last Friday's Daily Telegraph. That was a statement that has not been denied by the hon. Member for Brentford and Isleworth tonight. He knows as well as we do that there is a considerable split in his party and that every time a Conservative speaker speaks at the Dispatch Box he is not prepared to tell anyone what his party's industrial policies will be.

I am confident that this measure will be welcomed and that the Second Reading of the Bill will also be welcomed. On behalf of my constituents who have been kept in work as a result of these various measures, I once again thank the Minister and his Department and wish the scheme well.

10.56 p.m.

Mr. David Penhaligon (Truro)

The temporary employment subsidy has clearly done good work. It was a good idea, which was popularly received, but unfortunately it helped none of the three major employment problems in my constituency. On at least two occasions that was because the employer would not apply for the subsidy. There is no way around that dilemma, but the troubles in the tin mine in my constituency go on and on.

Will the Minister indicate why the number of employees should be limited to 10? Clearly he had support for that idea from the Tory Front Bench spokesman, but much employment in areas such as mine is with employers who employ less than 10 people. I draw to the Minister's attention, though it is not his particular responsibility, the fact that this year's broccoli crop has been killed by the frost.

I am constantly approached by people who farm broccoli in the west of Cornwall who ask me why the temporary employment subsidy and other schemes do not apply to them. It is a valid question. Much employment in constituencies such as mine qualifies for the temporary unemployment subsidy. I see no reason why the qualifying number of employees could not be brought down. Perhaps it could not be reduced to as low as one, but I do not understand why it could not be brought down to fewer than 10.

I do not accuse the Minister of malice, because I have spoken to him often about this, and I thank him for his co-operation. But this is an example of the bias in this Government's legislation against rural areas. That bias is not always ill intended, but it demonstrates that members of the Labour Party do not understand the working environment in rural areas. They do not understand the problems of small firms and the small number of people who work for them. Certainly, in the agriculture industry I cannot think of a farmer in my constituency who employs as many as 10 workers.

Reference to the £110 a week cut-off will raise a smile in my constituency. We are told that the national average wage now is £85 a week. In my area there are few people other than those who work for the Government who earn anywhere near £110 a week. I sometimes wonder whether the Government use certain wage levels to save expenditure. Clearly, those being paid £110 a week—which is 25 per cent. over the national average—are able to make some sort of minor contribution towards the difficulties experienced by their company. On the whole this is a good scheme, which we welcome, but why is it necessary to impose a limit of 10 workers? I see no logic in that.

11.0 p.m.

Mr. Doug Hoyle (Nelson and Colne)

Like my hon. Friend the Member for Rossendale (Mr. Noble), I am pleased with the Minister's statement. The new scheme is not as good as the old scheme. It is a shame that we have had to change it, at the behest not of the Opposition but of people outside the House, such as officials in Brussels. It is another unfortunate consequence of the mistaken zeal with which the Conservatives took us into the Common Market.

I was perplexed to know whether the hon. Member for Brentford and Isleworth (Mr. Hayhoe) welcomed the scheme. He said that it was all right on the one hand and wrong on the other. He made a churlish speech, but perhaps he has not yet received his instruction. The Opposition do not know where they are going. They do not know whether they want to apply the Act. I suspect that they do. Their problem is that they do not wish to cut the feet away from Conservatives who represent marginal constituencies or from candidates in such constituencies as Liverpool, Edge Hill.

The TES was a good scheme. Large sums of money were saved for the Exchequer because of it. Those involved paid income tax and national insurance contributions. One should offset that against what it would have cost if they had been unemployed. The cost of saving 500,000 jobs has been minimal.

The scheme has been a life-saver for the textile and footwear industries. That counts for a lot in the North-West, even if it counts for little in Brentford and Isle-worth. The views of the hon. Member for Brentford and Isleworth will not be welcomed by Tory candidates in textile and footwear areas. They will not jump up and down and praise the hon. Gentleman for what he said tonight.

Constituents will praise the Minister for what he said, because he is preserving key industries in areas such as the North-West. I wonder whether, if the Conservatives had been in power, we should have been bothering tonight about the future of the textile and footwear industries. Those industries would probably not even exist.

I welcome the measure. I thank the Minister and the Secretary of State for Industry for the help that they have given already to the textile and footwear industries. It has been much appreciated in my constituency, where unemployment would have been much higher without these measures.

I welcome the provision that allows firms that have already qualified for the old TES to have another bite at the cherry. My hon. Friends and I were worried that some firms that were not out of the water would need a little further assistance but would not qualify for it. Under this scheme they will receive it.

I speak for all the people in Nelson and Colne when I say that this measure will be welcomed. I am sorry that the hon. Member for Brentford and Isleworth did not welcome it more warmly, because he may have helped Conservative candidates who will be in difficulty, particularly in Edge Hill next week.

11.5 p.m.

Mr. Douglas Henderson (Aberdeenshire, East)

First, I join the hon. Member for Brentford and Isleworth (Mr. Hayhoe) in his personal words to the Minister, which, I am sure, found an echo throughout the House. We all appreciate his presence on the Front Bench this evening, and I admire him for it.

Secondly, I associate myself with the comment of the hon. Member for Brentford and Isleworth that it is rather melancholy that the state of the economy is such that we have to discuss motions of this kind and have to consider a whole battery of employment protection measures introduced at such expense. It is rather ominous that we are talking of spending even more money on these projects over the next year.

I join the hon. Member for Nelson and Colne (Mr. Hoyle) in asking why the temporary employment subsidy was removed in the first place. It had many advantages as a measure for tackling certain employment difficulties where they could be overcome if companies were given a breathing space in which to operate.

I thought that we might expect a robust comment from the Minister about the pressure and arm-twisting that has gone on behind the scenes in Brussels. I see the hon. Gentleman shaking his head. I can only hope that the Secretary of State, who is so forthcoming in these matters, will take the opportunity to tell us about it, because it would be instructive to the whole country if we knew exactly why the temporary employment subsidy had to be withdrawn and why we had to change our legislation in order to accommodate the wishes of people in Brussels.

I assure the Minister that my hon. Friends and I will support this measure, but I have one or two detailed points to put to him. He said that firms that had previously benefited from the temporary employment subsidy would not be precluded now from applying under the new provision. There is a question in relation to temporary employment subsidy because, when firms were applying for it—I went through this agony with three substantial firms in my constituency, and I take this opportunity to pay tribute to the Minister concerned for the way in which the applications were dealt with in the Department of Employment—they were required to show that the pay increases had been within the Government's guidelines over the period immediately prior to the granting of TES.

Is any such condition to be applied under this scheme? If there will be, with what pay guidelines will companies be expected to comply? I hear the Minister say, from a sedentary position, that there is to be no such condition, and that, I suppose, is another sign of the times in which we are discussing these matters. But I am relieved to hear that there is to be no policing of a company's wages records before its application is taken into account.

Mr. Nicholas Winterton (Macclesfield)

No sanctions.

Mr. Henderson

No sanctions, as the hon. Gentleman says.

Secondly, the Minister used the phrase"genuine declaration of redundancies ". We should like a little more definition of the term"genuine declaration of redundancies ". Does it mean that there must be a notification to the Department under section 100 of the Employment Protection Act, or is there some other test which the Minister intends to apply to a company? I see the hon. Gentleman looking a little hesitant. I think that any company likely to apply would want to know the rules and in what circumstances it would be eligible to apply.

Mr. Golding

I was feeling hesitant only because I should have to speak for an hour and a half if I answered every question that I have been asked. May I make clear that every question asked will be answered, but I propose not to use the method of reply by letter but to pursue the procedure which my right hon. Friend and I have pursued throughout when using discretion, that is, that we would answer questions and lay that information in the Library, and give an indication to the House if a Member asked a parliamentary question showing that that had been done.

Mr. Henderson

I am grateful to the Minister for that.

Next, how soon will applications be accepted under the new scheme? May we know the date when applications will be accepted? I mention this because, in common with many other hon. Members, I have companies in my constituency where redundancy notices have already been issued and where, under the Employment Protection Act, part of the 90 days is ticking away.

I wonder whether, in these cases where the redundancy notices have already been issued and the Department has already been notified, it would be possible for a reprieve to come in the shape of this scheme, even though the redundancy notices may expire before 1 April. I ask the Minister to look at that point.

The industry with which I have been particularly concerned and which has had so many difficulties in this period has not been textiles or footwear but fish processing. The Secretary of State is well aware of that. The Under-Secretary will know that we have had many problems because of difficulties over materials, and, again because of the Common Market's failure to negotiate a realistic common fisheries policy, our fish processors as well as our seagoing fishermen have had their jobs put at risk.

One point that emerged very clearly about the previous scheme, and was brought to my attention by constituents—this point will apply to this scheme—is that firms with fewer than 10 employees will not be eligible to apply. I hope that the Minister will reconsider this matter. In my constituency I have three large companies in fish processing. One company, which employs about 500 people, is a subsidy of Associated Fisheries. Another company, employing about 800 people, is a subsidy of Unilever. A third company, employing 450 people, is a subsidiary of Salvesens.

These three companies were all able to qualify for the TES because more than 10 employees were involved in the projected redundancy, but there are about 150 companies, many of them employing fewer than 10 people, which face exactly the same difficulties and which, collectively, employ almost the same number of people as do the three large companies. These small firms say that they have been unfairly prejudiced and that the Government have given money to the big boys, such as Unilever, Associated Fisheries and Salvesens, and that they have been put at a disadvantage in economic competition from the giants.

I can understand the problems of processing the number of applications with which, perhaps, the Department would be swamped. However, is it not possible to have a very crude rule-of-thumb method by which one could deal with firms of 10 employees or fewer? These companies, collectively, employ a very large number of people. It would be very unfair if these small firms were disadvantaged by the large firms being able to draw on Government money of this kind, as they were able to draw on the TES.

Having made those points, I conclude by wishing the order well. I hope that we shall have replies from the Minister, if not at the end of the debate, very quickly thereafter.

11.12 p.m.

Mr. Bob Cryer (Keighley)

I shall be very brief.

Firstly, one of the reasons why the temporary employment subsidy has been abandoned is pressure from the EEC. The fact of the matter is that we are in the Common Market. We are facing difficulties of a transfer of power from the British Labour Government and this Parliament to Brussels. There is no question but that our control over the economy, our power to take action to retain, preserve, extend and develop jobs, is limited by the EEC. That is a constant factor.

Along with my hon. Friends on the Labour Benches, I welcome the scheme. The Department of Employment has shown a great deal of imagination in taking action to preserve jobs. In spite of the carping remarks—totally unsubstantiated—from the Opposition Benches, the Department has made considerable efforts in preserving hundreds of thousands of jobs. The Opposition spokesman showed scant regard for the ordinary working people who have to join the dole queue and he did not pay due regard to the efforts of my hon. Friends in the DOE who have tried at least to retain dignity for people by retaining jobs.

The hon. Member for Brentford and Isleworth (Mr. Hayhoe) raised a criticism on the question of moonlighting, but we are talking of people who are receiving 75 per cent. of their normal wages. Tory Members of Parliament moonlight the whole of the time. They do not regard it as something rotten. They pick up directorships and parliamentary adviser-ships as fast as their greedy fingers can get hold of them. If ordinary working people moonlight under this sort of scheme—I do not approve of it—they are only apeing Tory Members of Parliament. Before Tory Members start talking to ordinary working people about moonlighting, they should all try living on their parliamentary salaries for a change, which salaries happen to be rather more than the average working wage, anyhow, and rather more than those concerned will receive under the 75 per cent. scheme. Those are the sort of double standards that we have been hearing about and talking about.

This scheme will be particularly helpful for the textile industry, mentioned by my hon. Friend the Member for Rossendale (Mr. Noble). I want to refer to the wool textile industry, which has retained a significant number of jobs throughout the whole of West Yorkshire because of the temporary employment scheme. There were expressions of concern by the industry about the conclusion of the scheme. Contrary to what the Opposition spokesman claims, the textile industry in West Yorkshire is modern. There have been structural changes. Although we have some regulation of trade in the textile industry, we are facing unfair competition from places such as Hong Kong, which have relatively poor working conditions. Hong Kong applies only about 24 of the International Labour Organisation conventions, whereas we apply 79. There is no parity of standards between us. That is also true of South-East Asian countries.

We have a modern, well developed industry, with good research and development facilities, but we are facing international difficulties. The scheme will be welcomed by this industry and other industries, particularly in intermediate areas. At least 1,000 jobs have been preserved in my constituency by the temporary employment subsidy scheme. I know that the new scheme will be welcomed as a replacement.

I want to ask one or two questions. I want to echo the point that has been made about small firms. The scheme will not apply to firms employing less than 10 persons. I understand the administrative difficulties. This is a real problem. We have to make a judgment about the number of civil servants who are employed to apply the scheme and the possible extent of the scheme. If the administration of the scheme is relatively straightforward, will the Minister examine the possibility of an extension below 10? I do not expect a statement tonight, but I would be grateful if he would look at the matter.

In some instances large and powerful organisations in this country—the multinationals—have benefited in some instances from TES. A firm like GEC has money flowing everywhere. It is stacked with money. My hon. Friend said that he must be satisfied that redundancies will take place. I would like to know whether financial scrutiny of the firm is involved. This would enable the Department to say that a firm had sufficient investment, an excellent cash flow and there was no need to make redundancies. The firm could be told that if it made these redundancies, its action was against the national interest and the Department must be satisfied that it needed financial support in order to preserve and retain those jobs and that there were reasons other than financial ones for embarking on redundancies. There are many instances of firms that receive this sort of financial support, retain jobs, get over the difficulty and keep production going. I have an uneasy feeling, however, that many of the large corporations which treat people as though they are bagatelles, to be disposed of when necessary—like Thorn, which sacked 2,300 people in Bradford and imports about 90,000 portable colour television sets a year—might see the short-time working scheme as a form of subsidy in an already highly profitable concern. Thorn, which rejected the TES, made a net profit of £57 million in 1977. I wonder what the Minister means by saying that he is satisfied that redundancies will take place.

The scheme will be welcomed. The Department of Employment has used its wit and imagination to remedy the deficiences of our largely private enterprise system. The Government are facing the problems of a world recession. They are preserving jobs. They are helping to preserve jobs in private enterprise. They are to be congratulated on producing an imaginative scheme that will help keep workers off the dole.

11.21 pm

Mr. Nicholas Winterton (Macclesfield)

I join my hon Friend the Member for Brentford and Isleworth (Mr. Hayhoe) and the hon. Member for Aberdeenshire, East (Mr. Henderson) in thanking the Under-Secretary of State for his attendance at a time of tragic bereavement. The hon. Gentleman has shown great courage. All hon. Members appreciate his personal attendance.

I give a cautious welcome to the scheme and I feel that I shall give a cautious welcome to the Bill that will be presented to the House for a Second Reading in a relatively short time. I do so because I think that the temporary employment subsidy, which the scheme replaces and which the Bill will replace, was a far better way of giving assistance to industries that needed it. There is no doubt that the TES was more flexible and was of considerable benefit.

I, too, come from the North-West, and I know how helpful the TES was, for example, to the textile and paper and board industries. As the hon. Member for Keighley (Mr. Cryer) said, these industries have faced unfair competition from countries mainly outside the European Economic Community. I strongly believe that we need to maintain them. Various forms of Government assistance must be given to them until we can guarantee them fair competition.

It is a pity that the hon. Members for Rossendale (Mr. Noble) and for Keighley spoiled what could have been constructive contributions to the debate by making blatant partisan political comments. It seemed that there was some collusion between Labour Members below the Gangway and the Under-Secretary of State in issuing a pre-election manifesto. However, I congratulate them on that, and I welcome the purpose that lies behind the scheme.

It was surprising how easily the hon. Members for Rossendale and for Keighley overlooked the fact that under this Government unemployment has increased from slightly under 600,000 to over 1,400,000. That is a fact, and they do not deny it. That has been the result of a Labour Government, irrespective of outside factors such as the oil crisis and the world recession. In the past, despite slighting remarks made about policy promoted by Conservative Governments, Tory industrial and economic policy has worked. It will work again, to the benefit of all workers.

It is unfortunate that Britain has been forced to change its assistance to industry because of the demands of our partners in the EEC. In other places the Government have admitted that the change has been brought about because the Community could have taken us to the European Court. The Community felt that the assistance that we were giving to industry through the TES was unfair. The Government decided that they had a weak case. They considered, having signed the Treaty of Rome, that we were obliged to change our financial assistance to industry, and that has been done.

I ask the Minister one or two questions. I am concerned about what the Government are doing in other spheres. I hope that in seeking to preserve jobs they will seek to create new jobs. We are here not only to preserve jobs in the short term; we want to guarantee employment, especially for young people leaving schools and colleges and going into industry. We are concerned about long-term employment. I support the argument of my hon. Friend the Member for Brentford and Isleworth and the hon. Members for Aberdeenshire, East and for Truro (Mr. Penhaligon). Is it possible to extend the assistance that is described in the scheme to companies that employ fewer than 10 workers?

It is smaller businesses in the end which will grow and provide the jobs which are so desperately needed. The Minister gave statistics about the fantastic number of jobs which will be required between now and 1990. They will not all be provided by big industry and the companies to which the hon. Member for Keighley referred in such disparaging terms. They will be provided by the smaller companies in this country.

I therefore hope that the Government, if not in this order, will ensure, in the Bill that they introduce, that such assistance is available to the smaller companies. We know that it is oak trees that out of little acorns grow, and that in the long term it will be the smaller businesses in this country which will provide the employment to soak up the unacceptably high level of unemployment that we have at this time, and provide the extra jobs so desperately required.

The multi-fibre arrangement is of great benefit to the textile industry, which is particularly important, in turn, to the North-West region of the United Kingdom. If the Government allow the provisions to be so stretched and extended, by allowing higher and more quotas under the existing multi-fibre arrangement, I believe that the fair competition that the textile industry is seeking will not be possible, and more and more jobs will be lost in the textile industry. It is not only an industry which has rationalised, as some Labour Members have said; it is an efficient industry in which there is a first-class record of industrial relations. If we sell this strategic industry down the river, it will be a tragedy and the workers in it will not forgive any Government for so doing. I hope that the provisions of the new MFA will not be undermined by the action of the Government in granting extra quotas, as has been done in the case of the Mediterranean associates.

I have referred in the House on other occasions to the negotiations being undertaken at present with America on the general agreement on tariffs and trade Tokyo round. If the Government are so concerned about employment—this is what the order is about—why are they apparently going along with the additional concessions being granted to the United States by the European Economic Community, under the GATT Tokyo round, both in textiles and in the paper and board industry? I believe that it will undermine these industries and open them to unfair competition. The tariffs on our goods going into America are very much higher than the tariffs relating to American goods coming into the Community—

Mr. Deputy Speaker

Order. The hon. Member for Macclesfield (Mr. Winterton) is going far beyond the terms of the order.

Mr. Winterton

I will now bring my remarks to a close, Mr. Deputy Speaker, but I was asking the Government what is the point of handing out to a company hard-earned taxpayers' and companies' money in the way of subsidy while, at the same time, allowing the companies which will apply for this aid to be undermined by unfair competition from abroad. That question ought to be answered.

This is an important debate. I appreciate that the Minister cannot deal with all these questions in reply, but I hope that some of the points raised will be dealt with and that if they are not included in the order they will be included in the Bill that we shall be debating at another time.

11.29 p.m.

Mr. Max Madden (Sowerby)

I associate myself, Mr. Deputy Speaker, with the expressions of sympathy that have been extended to the Minister and emphasise the comments made by several of my colleagues that the order would not have been introduced tonight had it not been for the direct intervention of the Common Market against the temporary employment subsidy.

It has been said, and I wholeheartedly agree, that the temporary employment subsidy is one of the most successful weapons to be introduced by the Government against unemployment. At the end of last year, about 8,000 applications had been made under the scheme, protecting 500,000 jobs. In Yorkshire and Humber-side that represented a saving of 58,000 jobs.

It is interesting to note that in the area represented by the hon. Member for Brentford and Isleworth (Mr. Hayhoe), namely, the South-East, 66,000 jobs were saved by the TES. Furthermore, the hon. Member for Truro (Mr. Penhaligon) no doubt knows that in the South-West 28,000 jobs were protected by the TES.

Total expenditure up to the end of 1978 was £380 million. The hon. Member for Brentford and Isleworth obviously over- looked the fact that there was a considerable saving in unemployment and supplementary benefit which otherwise would have had to be paid to redundant workers. There was a benefit to the Exchequer through tax revenues and national insurance contributions. Therefore, the net cost of saving 500,000 jobs during the period of the TES has been virtually nil.

We also heard from the hon. Member for Brentford and Isleworth some equivocal words about his attitude to schemes of this sort. I am sure that we are all reminded of the view of the right hon. Member for Leeds, North-East (Sir K. Joseph) that all grants and subsidies do great harm. We should also be reminded that under this Government there are more people in employment than ever before. The number of people seeking employment is larger than ever before, and the number of married women and young people now looking for work, and who will be doing so in the next few years, is far larger than has ever been the case in previous years.

Many will take exception to the view of the hon. Member for Brentford and Isleworth about the possibility of collusion between management and workers in this scheme. The scheme is seen as an important additional protection against unemployment. We thank the Minister for what he has done in the past in respect of the TES, which has done a great deal to help the textile, footwear and clothing industries. We look forward to the implementation of this proposal as adding to the many measures introduced by the Labour Government to safeguard employment.

11.33 p.m.

Mr. Golding

I sometimes feel that I am the only one who voted in the referendum to stay in the Common Market. Pressure there has been, but there have been additional reasons for the phasing out of the temporary employment subsidy. For firms which have exhausted their entitlement to the TES and the supplement, the value of this scheme is that additional support can be given.

I must inform the hon. Member for Aberdeenshire, East (Mr. Henderson) that if the House passes this motion, if a firm is in difficulties but the employers retain workers until 1 April, payments can be made from 1 April.

My hon. Friend the Member for Rossendale (Mr. Noble) will be pleased to know that clothing, footwear and textiles will be fully covered, whether they have received support under the special scheme this year or under the TES. He asked whether they could have two bites at the cherry. Actually, I am the sort of man who eats two cherries with one bite, but, to answer the question, they can have as many bites at the cherry as are necessary to avoid the declaration of redundancies. I know that workers and management will welcome that.

I have been impressed by the welcome given by industrial managers for the way in which the Government have been determined to stop the collapse of firms because of temporary difficulties. The emphasis must be on the word"temporary ". We cannot prop up firms for ever, but it does not make sense for people to become unemployed because a firm faces temporary difficulties.

On subject of the level and the figure of 10, I am troubled about this arbitrary limit. One difficulty is that within the Employment Protection Act there is a lower limit for notification. In addition, one of the problems that I have faced with the temporary employment subsidy has been the delay in approving applications. If delay is too great, firms can go to the wall while waiting for help. Because of these practical difficulties we have had to keep to the level of 10. I emphasise, however, that I find it difficult to support this lower limit on principle, despite the practical reasons for its existence. My right hon. Friend will certainly reconsider this question.

The hon. Member for Truro (Mr. Penhaligon) chides us for not taking an interest in rural areas. He must admit, however, that we listened carefully to speeches by him and others before formulating regulations for the small firms employment subsidy. We listened carefully to his point of view and will consider it further. We must, however, weigh up the pros and cons of additional public expenditure and employing more civil servants, and the possibility of delay in approving applications. This is an important point, which we shall take into account.

Mr. Henderson

I am most grateful to the Minister for his response to our comments. Is it possible that the Department will try a pilot scheme in, say, one of the special development areas to see how it works?

Mr. Golding

We shall certainly consider that. We have overcome some of the difficulties of the old scheme by redefining the word"establishment ". We are always prepared to find ways of saving jobs.

I do not have time to answer all of the points put by the Opposition Front Bench. However, my right hon. Friend and I believe it to be absolutely right that those questions were put. We believe that, because this is a discretionary scheme. My right hon. Friend has the power, with the approval of the Treasury, to make any detailed regulations whatever if the House approves this scheme.

I was asked about the difference between the estimates in the Short-Time Working Compensation Bill, published today, and elsewhere. This arises partly from the fact that our practical experience is that the longer a scheme is in existence, the more it is used. We are talking about different years and different estimates. I do not want to wrangle about that, because there are more important questions to deal with.

I was asked why we did not have the Second Reading debate on the Bill first. We had to have this scheme if we are to save jobs from 1 April. I make no apologies for that. Why was the Bill not brought in earlier? It is because we have spent a long time on consultations to try to get it right. Does the CBI like it? No, it does not. The CBI thinks that the Bill will make people work-shy. Our experience is quite the opposite—that it will increase the tempo of work. We believe that in time the CBI will be thanking us for the scheme, as employers have thanked us for the temporary employment subsidy.

I accept that displacement takes place and that defects can be found in our schemes. It is beyond the wit of man to devise perfect schemes. We believe, however, on balance, that because of the jobs they save and the misery they avoid, these schemes are worth while.

I was asked how the proposals will affect collective bargaining. If firms wish to pay more, they are free to do so. They will be able to collect rebates according to the scheme. We shall not stop free collective bargaining. I was asked how firms would apply. The answer is, through regional offices.

There are several other detailed questions which I have not time to answer. I shall go through them and put the replies in the Library.

I was asked whether the trade unions would have the right of veto. The answer is"Yes ", because that is a good method of making certain that we are not cheated. We shall have to decide whether there is a genuine case of redundancy, and we shall do that by looking at the books, asking questions and conducting a thorough examination. At the same time, we expect that the conditions of the Employment Protection Act will be observed.

I often test your patience, Mr. Deputy Speaker, by speaking for too long, and I will not do so tonight. I commend the scheme to the House. I believe that it will be very valuable in increasing industrial efficiency and in avoiding unemployment—

It being one and a half hours after the commencement of Proceedings on the motion, Mr. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted Business).

Question agreed to.

Resolved,

That this House authorises the Secretary of State to make payments between 1st April 1979 and 31st March 1980 exceeding £10,000,000 under a scheme established in accordance with section 1(1) of the Employment Subsidies Act 1978 for reimbursing employers from public funds for payments made by them to workers put on short-time as an alternative to redundancies.