HC Deb 14 February 1980 vol 978 cc1755-66
The Secretary of State for Employment (Mr. James Prior)

With the permission of the House, I should like to make a statement on the special employment measures for 1980–81.

We announced on 12 June last year some changes in the programme of special employment measures for 1979–80, which were designed to focus them more sharply on areas and groups with special employment needs and to reduce public expenditure. The current programme of measures expires on 31 March, and we have been reviewing the measures, again taking account of their cost-effectiveness, the particular groups most in need of assistance and what we could afford. We have reached the following decisions on the programme to operate in the year from 1 April 1980.

We have agreed to a proposal from the Manpower Services Commission to increase the size of the youth opportunities programme from 210,000 entrants this year to 250 to 260,000 entrants in 1980–81, with the number of filled places increasing to 100,000 to 105,000.That expansion will provide further work experience and training opportunities for unemployed young people, designed to improve their prospects of finding permanent jobs. It will enable the commission to continue to operate under the programme its present undertakings for unemployed school leavers and young people unemployed for 12 months or more.

We also have agreed to Manpower Services Commission proposals to maintain the community industry scheme for personally or socially disadvantaged unemployed young people at the current level of 6,000 filled places, and to maintain the special temporary employment programme for long-term unemployed adults at 12,000 to 14,000 filled places, concentrated on special development areas, development areas and designated inner city areas.

We have decided that the small firms employment subsidy, which is the least cost-effective of the special employment measures, should close for applications on 31 March 1980. The temporary short-time working compensation scheme, which reimburses employers for up to six months for payments made to employees on short time as an alternative to redundancy, will continue to operate throughout the country on the present basis.

We are extending for a further year the job release scheme, which opens up vacancies for unemployed workers by enabling older workers to leave their jobs early. The scheme will continue to be open to women aged 59, but for men who are not disabled the age of eligibility under the scheme will revert from 62 to 64. With this change it will not now be necessary to tax the allowance from April 1980, as the previous Government had planned. That also applies to all those who enter the scheme by 31 March this year. The allowance will, however, be increased to £45.50 for a married person with a dependent spouse with income of £10 or less a week and to £36 for all other applicants.

There will also be a special job release scheme to enable disabled men to leave their jobs from the age of 60, as at present, and to be replaced, wherever possible, by an unemployed disabled person. As the allowances for disabled men will be payable for more than one year, they will be taxed, but will be further increased to maintain, on average, their value net of tax. The allowances will be £53 for a married man with a dependent spouse with income of £10 or less a week and £43 for other applicants.

All those changes to the job release scheme will take effect from 6 April 1980—the beginning of the next financial year.

We consider that this programme of measures will make an important contribution towards reducing unemployment and helping particularly hard-hit groups within a level of expenditure that we can afford. The impact of the measures on unemployment has increased during the present financial year and the new programme should maintain that increased impact over the year from 1 April.

Mr. Varley

Is the Secretary of State aware that, although he has worked extremely hard to win a favourable response to the package with his skilful presentation, it falls far short of current needs? Will the right hon. Gentleman accept that, without further substantial special employment measures, unemployment amongst school leaves, on the Government's own figures, will double by 1981?

Is the right hon. Gentleman further aware that many of those who were looking forward to taking advantage of the job release scheme will be bitterly disappointed? They will have to work for a further two years. The scheme could have continued.

Will the Secretary of State accept that, in real terms, he has announced an overall cut in the Manpower Services Commission budget, over and above that made last year? How can he justify not significantly expanding the special employment measures? We can all see that the economy is collapsing. Unemployment is soaring to 2 million, we have unprecedentedly high interest rates and our exports are uncompetitive.

Is it correct that Sir Richard O'Brien told the Secretary of State that the employment services, presently financed by the Government, could not remain effective and strong without further financial assistance?

Will the Secretary of State accept that his statement does not go nearly far enough? We ask for an opportunity to debate and expose it. Will the right hon. Gentleman accept that his statement, and those of other Conservatives, during the election that this Government would bring down unemployment are now sick jokes?

Mr. Prior

Actually, I believe that we have done rather well. We have kept the efficient, cost-effective schemes. We have increased the schemes for young people. Under the special temporary employment programme, we are concentrating help where it is most needed.

A total of 70 per cent. of those who are now in STEP schemes—some of whom have been unemployed for a year or more—are drawn from the priority groups. Under the previous Government, the figure was only 40 per cent. The effect of our schemes this year will be to reduce the register by about 195,000 to 200,000.

The right hon. Gentleman must recognise that it is one thing to forecast just before an election what a Government hope to do, which is what the Labour Government did; it is another to carry such proposals through after an election, when left with a public sector borrowing requirement of the size that we inherited.

Bringing down interest rates and getting the economy moving will do more than anything to help all who are unemployed. We shall not do that by simply spending taxpayers' money in the way that the previous Government did.

Mr. Richard Wainwright

Is the Secretary of State aware that all the key aspects of unemployment that are supposedly alleviated by the schemes are worsening to such an extent that their enlargement is required? In particular, will he bear in mind that the six-month limit for the operation of the short-time working compensation scheme is now ridiculously short in comparison with the length of the trade recession? Will he bear in mind the iniquity of keeping this limit throughout the year?

Mr. Prior

As the hon. Member will recognise, we are considerably expanding and extending the youth employment programme. The temporary short-time working compensation scheme runs for six months. Other groups of people in the same factory can take advantage of a fresh scheme, although no one person can be helped for more than six months. In many cases so far the scheme has not needed to last for six months for individual workers or groups of workers. I realise that this is an important factor, and I believe that many people in the textile industry and other industries will be relieved to hear what the Government have done.

Mr. Gorst

Can my right hon. Friend give the net cost of the measures that he has just announced? Is it consistent with the cutting of the Manpower Services Commission budget by £30 million, which was revealed by Sir Richard O'Brien last night?

Mr. Prior

The additional cut of £30 million in the budget is for the year 1981–82 and not for 1980–81. The Manpower Services Commission will have taken a considerable cut in its budget over a period of years. I have sought to retain an efficient and cost-effective Commission with the schemes that are entailed. Some of the schemes are financed through the Manpower Service's Commission. Some have been financed up to now through the Contingency Fund, and now they will be financed through my Department. The total cost of all the schemes this year is about £360 million, which is about the same amount as was spent last year and the year before. However, because the MSC is more cost-effective this money will help more people.

Mr. Heffer

Although the right hon. Gentleman has claimed that he has done rather well, is it not clear that the people in these areas, including the special development areas, will feel very disappointed because youth unemployment is the greatest problem there? Is he not aware that one of the real difficulties with factory closures is the problem of young apprentices who are in the middle of their apprenticeships and are thrown out of work with no prospects whatever of finishing those apprenticeships? Will he look at that specific problem, as it causes great difficulty and hardship for those youngsters who feel a sense of loss and frustration about their future employment?

Mr. Prior

I shall certainly take up the points that the hon. Member has made. A good deal of this can be covered in the training for skills programme of the Manpower Services Commission. Even though its budget may have been cut, the MSC can still make money available for this purpose. If the hon. Member wishes to send me any specific details, I shall look into them.

Mr. Madel

Is my right hon. Friend aware that there will be a special welcome for the increased opportunities which will come about as a result of the expansion of the youth opportunities programme? Will he confirm that the alterations that the Government propose for unemployed disabled people represent a considerable advance?

Mr. Prior

The scheme is the same as that which was introduced by the Labour Government just before the election. This confirms once more that, despite having to make some very painful and difficult decisions, we have been able largely to protect the disabled.

Mr. Molyneaux

Will the Secretary of State ask the Secretary of State for Northern Ireland to make a statement setting out the specific application of these policies to Northern Ireland, in view of the exceptionally severe impact of unemployment on the Province?

Mr. Prior

I shall certainly relay that message to my right hon. Friend. I have no indication to date whether he intends to make a statement to the House. The Leader of the House is present and no doubt he will pass on the message.

Mr. Golding

Is the Minister aware that the slashing of the job release scheme will cause considerable disappointment to men of 61 who were looking forward to retirement this year and will now have to wait another two years? Is it not completely daft to keep these men working when we expect school-leaver unemployment to double by next year, and the level of long-term unemployment to increase to 500,000 by 1982? Is the right hon. Gentleman aware that the increase in the youth opportunities programme is not sufficient to keep up with the expected increase in youth unemployment?

Mr. Prior

Of course, in the best of all worlds, the Government would have liked to keep the age for men at 62. There is no doubt that the job release scheme is good and one of the more cost-effective schemes. However, I have had to balance out the resources available in such a way as to help the most people. I have decided—and I am certain that this is right—that we should keep the job release scheme, but because of the expense we should put the male age back to 64 for the coming year. That is reasonable. The Labour Government introduced this scheme only last March—very near the election—and I rather doubt whether they could have kept it going.

Mr. Trippier

Will my right hon. Friend accept my thanks and those of my constituents who are connected with the textile and footwear industries for his action on the temporary compensation scheme for short-time working? He has acted positively in response to our representations. Will he confirm that, where the subsidy has been claimed for certain employees in one firm, that subsidy will be available for other workers who are threatened with redundancy in the same firm?

Mr. Prior

Yes. The scheme would be available for other groups of workers in the same firm, but it could not be used by the same workers twice.

Mr. Dan Jones

Why has no reference been made to the intermediate areas?

Mr. Prior

Because there are no schemes operating for them.

Mr. Aitken

While welcoming the Secretary of State's choice of priorities in the difficult decisions that he has had to make, may I ask him whether he is satisfied that the Manpower Services Commission has presented him with sufficiently wide policy options in reducing public expenditure? In particular, is he happy with the fact that the MSC's own corporate plan does not include the option of transferring to private employment agencies, or the private sector generally, any of the functions that it carries out at present? Does that not require some second thoughts?

Mr. Prior

I constantly discuss with the Manpower Services Commission its corporate plan and a good many other matters as well which are brought to my attention. I am satisfied that the MSC is doing a good job and is a much tighter organisation than it was a few months ago. A good deal still requires to be done to make it a really fit organisation. It has an important long-term policy and plan to perform and I wish to give it every possible support. However, like other organisations it has had to bear a considerable cut in expenditure in the last year. On my hon. Friend's particular question, I promise to look at it. Already there are certain plans afoot to bring about a change.

Mr. Radice

Will the Secretary of State tell the House the cutback in the MSC's planned budget for 1980–81? Will he also tell us why the Government are closing down skillcentres in the development areas?

Mr. Prior

Some of these schemes are carried out through the Manpower Services Commission. Others are carried out through the Contingency Fund. The Manpower Services Commission, therefore, bears the cost of only some of the schemes. The actual planned budget for this year might have been in the region of £500 million. It will work out at about £360 million. There will be a saving of about £140 million. Skillcentres are a different question. I am seeking a more cost-effective scheme. We want a higher intake into our skillcentres. We want to make better use of them and better use of the people who are turned out.

Mr. Peter Bottomley

Is my right hon. Friend aware that there is great support for his selective and cost-effective approach? Will he confirm that any expansion in these programmes, however worth while, is at the cost of taxpayers' money, reduces job opportunities in private industry and also reduces the amount available for other worthwhile programmes, such as child benefits?

Mr. Prior

My hon. Friend is right. I have tried to concentrate the aid and the help where there are likely to be the greatest social problems and the greatest difficulty in providing employment, chiefly among the very young and in development areas and special development areas. I recognise that there are also other priorities.

Mr. Mikardo

Is the right hon. Gentleman aware that the high level of unemployment in many inner city areas, such as East London, which has a higher level of unemployment than any region except Ulster, is partly due to the fact that there is a lot of unskilled employment? There are not enough skilled men to man the skilled jobs. Is it not lunacy, therefore, especially in those areas, for the right hon. Gentleman to be shutting down skillcentres?

Mr. Prior

Despite the fact that there are large numbers of unemployed people in central and East London, there are ample job vacancies as well. These are not being filled. We had better recognise that in getting the equation right. There are more skill centre places available now than a year ago. If we are to have skilled people, we have to ensure that the differentials between skilled and unskilled are right. A lot of skilled people are now doing unskilled jobs.

Mr. Forman

Is my right hon. Friend aware that his cost-effective package will be warmly welcomed by all fair-minded people? Can he say whether the Government are considering other measures to encourage employment, particularly of young people, along the lines, perhaps, of the Irish Government, who, I believe, allow a tax holiday of 10 years on new inward investment?

Mr. Prior

One of the reasons why the schemes are for only a year at a time is the need to keep looking at these schemes to see how they can be improved or whether better schemes can be found that are more cost-effective than those that exist. I suspect that over the next year or two we shall need to look at the whole range of schemes so that they fit much better with training and with the period after one leaves school.

Mr. Farley

Will the Secretary of State say more about the job release scheme and his decision to change the age of eligibility from 62 to 64? The right hon. Gentleman has told the House that he regrets this very much personally. If that is so, what are the savings? Will he reconsider the matter and avoid all the disappointment that will be caused?

Mr. Prior

I have looked at this matter carefully. I believe that the Government are right in their decision. I cannot remember the exact figure for the saving of money. It is in the region of £40 million. That is a great deal of money. I believe that the way we have designed the scheme is in the best interests of all the unemployed whether they are over 62 or young people. I am firmly convinced that what we have done is right.

Mr. Douglas

Will the right hon. Gentleman give some indication of what he means by "cost-effective"? Will he give some indication of the total cost of the scheme and of its regional impact? Will he tell the House, as an extension of a previous answer he has given, the duration of the scheme and when he intends to present hon. Members with an overall picture of the total scheme that he proposes during this trade recession?

…Mr. Prior

The schemes that I am announcing today are a continuation or a rejigging of schemes that have been in existence for the last year or the last two years. The effect of the schemes on the unemployment register will be between 195,000 and 200,000 during the coming year. That is rather more than this year and more, I think, than last year. The total cost of the schemes is in the region of £360 million for 1980–81. The regional effect is that some of the schemes, especially the special temporary employment programme, operate in development areas and special development areas. So there is an emphasis on those areas. Added to that, community industry operates much more in those areas.

Several Hon. Members rose—

Mr. Speaker

I propose to call the five hon. Members, three on one side and two on the other, who have been standing.

Mr. Marlow

Will my right hon. Friend consider extending further the youth opportunities programme into the community service sphere, using, where possible, the voluntary organisations? In this way, not only do the people themselves benefit more but the community benefits more. More is achieved for less cost.

Mr. Prior

A certain amount of what my hon. Friend proposes is done already. One wants to make certain that these schemes perform a useful purpose. Up to about a year ago, many of these schemes were not very productive. They included the counting of lamp-posts or picking up wood from the seashore. I have tried to get many more of these schemes concentrated on industry. Where they are associated with industry, the uptake of those young people into industry afterwards is considerably higher. I shall bear in mind what my hon. Friend says, but I believe that the best schemes are those run by industry.

Mr. Terry Davis

Why does the Secretary of State prefer to pay unemployment benefit to young people instead of making job release payments to men in their sixties?

Mr. Prior

I do not prefer paying unemployment benefit to anyone. I am concentrating the help where I believe it will do the most good.

Mr. John Townend

Will my right hon. Friend agree that much of the expenditure of the industrial training boards, in terms of cost-effectiveness, is in doubt and that some could well be abolished? Could not the whole of the £30 million that is to be saved in 1982–83 onwards be taken quite easily out of the £90 million a year grants?

Mr. Prior

We are getting on to a rather wider issue—that of the industrial training boards. This matter is being examined by the Manpower Services Commission, which will be producing a report towards the end of the summer. I believe that the House will wish to debate the report early next winter and the Government must take action on training. We are spending a lot of money on training and not necessarily getting the best results for it.

Mr. Sheerman

Is the Secretary of State aware that while this package of reduced employment measures may keep happy his restive Back Benchers it will not impress the workers in the clothing, carpet and textile industries, who can see no glimmer of light from this reduction in measures? The Secretary of State has still not told the House the net saving to the Government. This is an economy. The workers in these industries are very angry about the measures.

Mr. Prior

When the Government came into office, the impact of the measures on unemployment was 165,000. This year, it will be just on 200,000. Ought not the hon. Gentleman to address his remarks elsewhere?

Mr. James Callaghan rose—

Mr. Speaker

I shall call the Leader of the Opposition afterwards. There is just one more hon. Member to be called.

Mr. Straw

Is not the Secretary of State aware that far from his announcement being greeted with relief in the textile areas of Lancashire and Yorkshire it will be greeted with dismay? The Government have failed to recognise that since these schemes were introduced the crisis in the textile and clothing industries has greatly worsened. Will the Secretary of State at least consider whether the conditions of time limits within the short-time working compensation scheme could be extended?

Mr. Prior

I do not think that I should hold out any hope that the limits of the present scheme can be extended. I do not think that this would be helpful for the industry or the people who work in it. It is far better that there should be a degree of certainty and that we should use the money to the best effect.

Mr. James Callaghan

We believe that the proposals are inadequate. Will the Secretary of State address himself once again to the question that he has been asked a number of times? The cost of raising the age from 62 to 64 is £45 million and about40,000 men between the ages of 62 and 64 will stay at work. On what criteria does the Secretary of State think that it is better to keep 40,000 men between the ages of 62 and 64 at work than to replace them by young men who have been on the unemployed register for a long time?

Mr. Prior

Although it is about the most cost-effective scheme that we have, the gross cost per person, taking into account what the right hon. Gentleman said about young people, is still £2,500 and the net cost is £900. Although it is a cost-effective scheme, it is expensive. When I came to balance the needs of the package as a whole, I decided to take this step. If Labour Members thought that it was such a good scheme, why did they not introduce it before they did?