§ The Under-Secretary of State for Employment (Mr. Peter Morrison)I beg to move,
That the draft Redundancy Fund (Advances out of the National Loans Fund) Order 1981, which was laid before this House on 20th October, in the last Session of Parliament, be approved.The Redundancy Fund Act 1981 limits the amount which my right hon. Friend the Secretary of State for Employment may borrow for the purposes of the Redundancy Fund to £200 million but makes provision for that amount to be increased by order to an amount not exceeding £300 million. The effect of the order is to increase the limit to £300 million.As the House knows, the redundancy fund is used to pay rebates—currently 41 per cent.—to employers who have made statutory redundancy payments to employees. It is also used lo meet certain debts owed to employees when an employer becomes insolvent.
The fund is financed by an allocation, normally 0.15 per cent. of salary, from employers' national insurance contributions. Since March of this year, a further 0.05 per cent. of the employer's contributions has been diverted from the maternity pay fund, which had a healthy surplus, to the redundancy fund.
As. the House will recall, there have been a number of occasions in the life of the fund when it has been in deficit and when its borrowing limits have had to be adjusted. The original limits, set in 1965, were raised on three occasions during 1967 and 1968, and again in 1972. A new borrowing limit was set by the Employment Protection Act 1975, and this was increased by the Redundancy Fund Act 1981.
At the end of February this year, just after the current borrowing limits were set, the surplus in the fund was just over £34 million. We anticipated that the fund would go into deficit in May, and since then the deficit has been increasing at varying rates. At the end of October it was over £140 million.
The increased number of payments and the rate of the fund's decline in recent months partly reflects the efforts which my Department has been making to work off a significant backlog of claims which had developed in the early part of the year. I am glad to say that this backlog has now been virtually eliminated. But in saying that, I do not want to pretend that that is the main reason for the current state of the fund. There is no doubt, unfortunately, that the number of claims received by my Department has remained at a high level throughout the year.
If the deficit continues to increase at the present rate, the present £200 million limit on the amount which may be borrowed from the national loans fund could be reached early next year.
It is not possible to predict very precisely when this might happen or how the fund will behave beyond that point. Previous Labour Governments have recognised how hard it is to forecast future demands on the fund.
A number of factors can affect expenditure from the fund. Expenditure can, for example, be affected by the 378 ages, length of service and earnings of those made redundant. The average payment made from the fund has increased by nearly 14 per cent. over the last year.
The causes of redundancy are complex. Even in periods when new employment opportunities are being created, other jobs may disappear through changes in the pattern of demand or in the organisation of industry or methods of production. We must accept the harsh truth that, where there is over-capacity or structural inefficiency, redundancies may be inevitable, and improvements in competitiveness are vital if those industries are to survive and prosper.
One further factor should be taken into account in forecasting the future state of the redundancy fund. I have already mentioned that from March of this year income has been diverted from the maternity pay fund to the redundancy fund and the surplus in the maternity pay fund has been used to finance expenditure on maternity payments. This cannot continue indefinitely, and we shall need to consider reinstating the maternity pay fund's normal allocation of income in the early part of next year.
In the meantime, we need to ensure that the redundancy fund can continue to meet its commitments; and that is why I am seeking parliamentary approval to extend the borrowing limit to the £300 million permitted by the Redundancy Fund Act 1981.
I accordingly seek the agreement of the House to the motion approving the draft order.
§ Mr. Barry Jones (Flint, East)The House will be grateful to the Under-Secretary for his succinct statement about the order. He has needed to come to the House for consent for the extra powers, because since 3 May 1979—the date of the general election—registered unemployment has risen by 1,700,000. As the Shadow Chancellor of the Exchequer, my right hon. Friend the Member for Stepney and Poplar (Mr. Shore), has said, every day there are 1,850 redundancies; every week, 13,000; every month, 52,000; every year, 620,000 people lose their jobs. That represents a great avalanche of redundancies engulfing British manufacturing industry.
The redundancy fund was established in 1965 and the supreme irony is that the object of the original legislation was to cope with a shortage of labour in certain regions. It was designed to encourage the mobility of labour.
As regards the redundancy fund account for 1979–80, I should like to put a series of questions to the Minister. I look first at item 2 on page 6—"Recoveries from Employers". I note there that the cumulative total of amounts outstanding at 31 March 1980 was £51 million. Of that, £49 million related to insolvency cases and £13 million to preferential debts. The amount deemed to be irrecoverable in the year, of £6.1 million, totalled £5.9 million.
How can employers appear to default so hugely on their responsibility? Does the nation obtain any redress later from such employers?
As regards the insolvency provisions, £10.7 million was paid to employees direct, where employers failed to make payments in respect of arrears of pay, compensation in lieu of notice, holiday pay, or compensation for unfair dismissal, and about a further £250,000 went to the occupational pension schemes in respect of unpaid contributions.
379 It would be helpful if the Minister would answer such questions, because clearly they have to do with the accountability of a large amount of the nation's money.
In my constituency, redundancies have rained down mightily upon us. The degree of satisfaction expressed by local citizens with regard to amounts of redundancy pay has varied greatly. State steel men apparently got a better deal than that given by private enterprise textiles. The Minister should be fully aware of the rapid way in which views and news spread in communities that live cheek by jowl and that are very dependent on one or two factories. In my constituency there have been 8,000 redundancies in but three months. What later astonished many of those redundant workers was that, if they had thriftily saved their redundancy payment and thus had a capital sum exceeding £2,000 in their bank or building society, they were not eligible for supplementary benefit.
More than one Catch 22 situation exists. If a man spent his redundancy cash but had no receipts by which to prove that he was truly broke, he would get no supplementary benefit. What interest does the Minister take in such matters? Does he, in conjunction with his ministerial colleagues at the DHSS, ask about the ways in which redundant workers might get early, clear and ample warning of pitfalls such as these?
The surplus in the fund is falling at present by approximately £20 million per month. How many redundancies is the new borrowing limit expected to cover? It is reasonable to assume that the confidential files of the Department hold the latest estimates for unemployment, until next spring at least. The Minister knows that the Treasury is a tough Department. It does not sign money away unless a Department such as the Department of Employment provides detailed assessments of the likely job losses. Surely, the Department of Employment has calculated the ratio of the number of redundancies to the total level of employment. Sanction is sought tonight for Parliament to grant a large sum of money to the Government. I urge the Minister to lift the veil of secrecy, take his courage in his hands, and inform the House of his grim insights.
There are distressing facts behind the need for the Under-Secretary to come to the House tonight. Almost 1 million jobs were lost in 1980, of which 700,000 were lost in manufacturing industry. The largest relative falls were in steel making and textiles. Unemployment among young people has risen rapidly. The number of long-term unemployed men and women has increased seriously. I believe that the United Kingdom unemployment total has doubled in just two years. The less skilled worker has been hit very hard. Those who are disabled and those who are black have experienced higher than average unemployment. Regional differences in unemployment are widening; and within the regions some localities are disproportionately affected.
The Government have created in some areas and in some minority groups a truly frightening situation. We do not need the testimony of sociologists or criminologists to draw out the implications. This reactionary, incompetent and insensitive Administration have created the longest dole queue in Europe.
The House should be told in which regions the next redundancies are expected to fall. It should not be forgotten that unemployment is high in the regions and 380 terrifyingly high in some of our industrial towns. In the West Midlands, unemployment now stands at 15.1 per cent., in the North-West it is 14.9 per cent., in the Northern region it is 15.9 per cent., in Wales it is 15.7 per cent., and Northern Ireland has a frightening 19.5 per cent. In the steel town of Corby, unemployment stands at 20.8 per cent., in Consett it is 25.8 per cent., Holyhead—the port—has 21.2 per cent., North Lanarks 20.5 per cent. and in Strabane it is 36.2 per cent. In the town of Liverpool, unemployment exceeds 18 per cent. In Wrexham it exceeds 19 per cent. In the Shotton travel-to-work area it exceeds 17 per cent.
To help to concentrate the Under-Secretary's mind, I remind him of some recent redundancy announcements, all of which will be funded by the £100 million which the Government ask Parliament for tonight. Imperial Chemical Industries have announced that there will be 3,000 redundancies before the end of the year, in addition to the 6,000 already announced in February. Scots Meats has announced 1,500 job losses and the Bletchley plant will be hardest hit, losing 1,200 jobs. James Mackie of Belfast has announced that there will be 800 redundancies by the end of the year. Hoover at Perivale says that 2,000 workers must go. British Airways says that it expects 9,000 redundancies. Indeed, it is now suggested that that figure could be as high as 10,000.
The Minister may find that he will soon have to return to the House for more cash. He should read what the National Economic Development Council has predicted will happen between 1979 and 1985. It predicts that there will be a staggering loss of 611,000 jobs in the engineering industry, 239,000 jobs in the textile industry, 89,000 jobs in the steel industry and in metal manufacture and that 127,000 jobs will be lost in the transport and communications industry. Therefore, the Minister has come to us with only half of the story. He should tell us his Department's estimate for further job losses in the year ahead. Indeed, what further pressure will there be on the fund?
I remind the Minister that the right hon. Member for Sidcup (Mr. Heath) and the right hon. and learned Member for Hexham (Mr. Rippon) have attacked various aspects of Conservative economic policy. Both have denounced the Government's tolerance of mass unemployment and large-scale redundancies. One of them has even defined the Treasury as an arid desert. I want the Minister to know that the Manpower Services Commission has published an estimate of the cost of unemployment for 1981–82. That will be important ammunition for those economists and Conservative Party dissidents who have urged the Government to start on a programme of reflating the economy.
It has been estimated that the total cost of keeping an extra person unemployed is £84 per week. With over 2.8 million people out of work, the cost amounts to over £12 billion a year. That is a staggering statistic but does not include the cost of the redundancies that we are, in part, debating. How much stronger the British economy would be, if more—not fewer—British people were kept in work by the intervention of policies that were untainted by monetarism.
We should not for one moment forget the humanity that lies behind the technical measure before us. It is morally wrong for an oil-rich State to tolerate mass unemployment and even to permit it to increase month by month. Mass unemployment demoralises whole communities. It 381 demoralises individual citizens and encourages those who have a vested interest in disaffection and even in disorder. In the home, it can easily rot away self-esteem and self-confidence. The warmth and spontaneity of happy family life is easily undermined by unemployment and by large-scale redundancies.
Those sad features highlight unemployment. Redundancies open the door to such miseries. We want fewer redundancies, and to that end we call for the abandonment of the monetarist experiment. The Tory Party is undoubtedly and recognisably the party of unemployment and redundancies.
§ Mr. Ken Eastham (Manchester, Blackley)Once again, a small order provides the opportunity for us to indict the Government. Massive sums are involved. A further £100 million is needed to bolster the redundancy fund. It is a symptom of Britain's position. How long will it be before the Minister returns to ask for further funds to pay for the failures that we experience week in and week out, month in and month out?
The Minister says that the causes are complex. They are not. 'The reasons are straightforward. We are faced with a deep recession, lack of demand, shortage of money and lack of confidence. That lack of confidence reverberates throughout society, industry and commerce. It builds up and unemployment continues to grow.
A complete change of philosophy is needed. We need a reflation of the economy. Shadow Ministers say that constantly. We need a change of heart. The Government must have the sense and honesty to recognise that their monetary policy is not successful. It is disastrous.
We must think about lowering interest rates. Industrialists and people in the commanding heights of commerce say that they are crippled by the Government's monetarist policies. High interest rates result in massive unemployment. Industry and commerce do not confirm that the destructive recession has bottomed out. They do not see an end to it.
It is strange that month in and month out Ministers can come to the Dispatch Box and carelessly and glibly make orders for more money. Millions of pounds are required to bolster redundancy funds. We do not want redundancy funds. We want investment in jobs and in industry. Industrialists and people in commerce are crying out for that.
Well over 3 million people are unemployed. The true figure is probably nearer 4 million. How soon will it be 5 million? Economists are no longer confident that the figure can be retained within 4 million. In two years it is possible that 5 million people will be on the scrap-heap. Among them will be highly skilled people who have much to offer the nation's future.
Young families in their thousands are emigrating. They are the seed corn of the nation. They say that there is no confidence and r o future, and they are leaving Britain. It is time that the Minister recognised that monetarism is a dismal failure and a disaster for Britain's future. I have never come across anyone who said that he wanted redundancy pay. Workers want jobs and a future for their families. The sooner that Ministers learn that, the better it will be for Britain.
§ Mr. Jim Craigen (Glasgow, Maryhill)Like my hon. Friends, I do not believe that the order should be passed without some comment.
The Under-Secretary of State says that it is difficult to estimate future calls on the fund. What surprises me is the amount of effort that has been devoted at the Department of Employment to clearing up the backlog of claims, to the exclusion, I suspect, of work on reducing unemployment.
We have spent most of today discussing British universities. The estimate of the chairman of the University Grants Committee of the the probable cost of redundancies in the universities was about £300 million, the same figure that we are debating tonight on the order. That is the cost to Britain of the Government's policies on redundancy.
We are paying a heavy price in terms of labour shedding. My hon. Friend the Member for Flint, East (Mr. Jones) mentioned the number of jobs lost last year and already this year. The object of the Redundancy Payments Act 1965 was to facilitate the moving of people from one line of work to another when it was possible for them to find alternative employment. We have now reached a stage where redundancy means premature retirement with no prospect of employment elsewhere. The Government are not making it easy for people who become redundant, because earnings-related benefit disappears and unemployment benefit will be de-indexed yet again. The problems have become more acute for those who end up on the scrap-heap.
Will the Minister give us his view about the point made by the new director of the Manpower Services Commission, who said that, by 1985, a further 1 million unskilled jobs will be lost? If that is so, Ministers must appreciate that, even if we have the economic upturn that the Government talk about, it will not absorb those presently unemployed, far less those who will become unemployed between now and 1984–85.
The hon. Member for Northampton, North (Mr. Marlow), on the two previous occasions that he spoke, suggested that his wet colleagues should not surrender at this stage. He said that the Government are three-quarters of the way towards where they are going, and that his hon. Friends should hold out until they get there. When they get there, can the Minister tell us where the new jobs will be? My firm impression, looking at companies in my area, is that any additional demand will be met by the existing labour force, by higher productivity, in-house training or an increased amount of sub-contracting, which is a growing factor in industry.
The Secretary of State for Employment and all Ministers at the Department must get down to brass tacks and consider ways in which they can increase job opportunities within the economy. That means that they must become involved in economic and fiscal matters rather than leaving them to the Treasury, as they do at present. They will have to consider the shape of employment policy in Britain and get down to working out the detailed cost of reducing the working week, introducing earlier retirement for men and introducing greater opportunities for part-time employment. We cannot continue, month by month, watching the unemployment total rising and listening to the trivialisation to which we have become accustomed from the Government.
§ 11 pm
§ Mr. Bruce George (Walsall, South)I wish to make a brief political point. On the odd occasion when members of the alliance party are here in strength, they make a song and dance. Having done so a few minutes ago, they have disappeared into thin air.
I partly compliment the Government on what they are doing. In a perverse way they are increasing the money available to redundant workers. In fairness, I should say that at least they are giving redundant workers, who otherwise would have completely lost out, the opportunity of some form of cash payment. On the other hand, the fact that the Government are obliged to return to the House with the draft order and ask for power to borrow more money is testimony to the futility of their economic policies. It is a sign of the bankruptcy not only of their ideas, but of many companies in my constituency and virtually all constituencies.
I am sorry that the Secretary of State chose to depart from the Chamber. I hoped that his presence earlier showed the great importance that he attaches to the issue. His dinner jacket added to the sartorial elegance of the House. He reminded me of one of the escapees from the first class lounge dance band of the "Titanic". There may be something of a parallel. The band played as the ship went down. The measure may be some palliative or device to minimise the impact of unemployment while the ship of State goes down. The parallels are incredibly similar. As with the captain of the "Titanic", the captain of the Government heads towards the iceberg oblivious of the dangers, and people have to suffer the consequences. In a way I compliment the Government, but I must also say that the order is a sign of the failure of their policies.
The death of a company is sad for the person who established it. He sees his life's work shattered. That may, in part, be caused by his own fault, but probably it is the result of external factors. The death of a company is sad for the country, which loses the productive capacity of the enterprise and will have to pay unemployment benefit and money from the redundancy fund. The saddest and greatest loss of all is to the individual and his family because of the indignity of unemployment and the realisation that the prospects of a job are receding out of sight.
Last week a member of my local party told me that he keeps applying for jobs as a lorry driver. The companies that have the courtesy to reply to him or to interview him tell him that he is too old. At 40 years of age, to be regarded as too old is something for which the Government must accept some responsibility.
The statistics of unemployment and the statistics that reflect the high unemployment—notably the amount of money paid from the redundancy fund in rebates to employers and in direct payments to employees—are testimony to the Government's bankruptcy. A written answer on 31 July 1981 states that the amount paid was £37 million in 1967, compared with more than £200 million in the first six months of 1980. The greater the generosity of the Government, the greater the unhappiness that they have created. Moreover, it is estimated that the cost for 1980–81 may be £300 million. We were told 10 months ago that the latest working assumption was that it would be between £250 million and £400 million. What an indignity it is for Ministers and Conservative hon. Members to come here in such circumstances. Most, of 384 course, have sought to avoid the indignity by not coming. At least the Minister is compelled to face the music, only some of which is his responsibility. It is, indeed, a testimony to failure.
Which industries are the main recipients of this State beneficence? In mechanical engineering over the past couple of years the amount paid out has risen from £25 million to £50 million. In metal manufacturing, it rose from £17 million in 1979 to £46 million in 1980. Those are just a few of the depressing figures.
I do not intend to make a constituency speech, but I cite the example of my own area. Three years ago, unemployment was just over 6 per cent. in an area which was the heartland of British industry. In many ways, the West Midlands did not suffer as other regions suffered. Now, however, it is suffering a rate of unemployment beside which those of some regions which were previously almost alone in terms of high unemployment fade almost into insignificance. That is sad, it is tragic and it must be reversed.
I see at my surgery people who are on the receiving end of the effects of companies going into liquidation. A few years ago a man told me that the company in which he had invested had gone bust. It is now nine years since that happened, but he has still received no money from the liquidators. The liquidators' fees have risen enormously, but no money has yet been paid. Ex-employees of another company in my constituency which is in considerable difficulty now find their monthly pension cheques bouncing. Another company went into liquidation in April, but many of the workers are still battling to obtain the money due to them.
Is the Minister satisfied that the checks on companies which go into liquidation are adequate? Could a large enterprise comprising a number of different companies by some form of clever management shuffle its resources around, allow one of the companies in the group to go into liquidation and then compel the taxpayer to cough up the money for its own failures? This may have occurred in a number of cases. The responsibility should not be upon the taxpayer but upon the company itself. I hope that the checks are adequate. The Government are sharp enough in their pursuit of people who defraud the social security system. Let us be certain that the vast amount of money being paid out in this case is being paid out genuinely. I hope that the matter will be investigated and that we shall be assured that the checks are adequate.
Some of us have written to the Department of Employment asking for an explanation of the circumstances relating to the redundancy fund. I hope that greater effort will be made at local offices to explain to workers who may come within the scope of the regulations exactly what their entitlement is. I know that leaflets are available and there is case law affecting payments, but I hope that the technicalities and complexities will be explained to those who may be disadvantaged if they are not fully aware of their legal entitlement.
How many men and women receive payments under the insolvency provisions of the Employment Protection Act and the regulations? I am particularly interested in the figures for the West Midlands and especially for my constituency. Is the Minister satisfied with the workings of the regulations and the legislation? We are talking about increasing the money, but we need to know whether the Minister is satisfied that the law is operating satisfactorily. Many of us have heard criticisms from workers who feel 385 that they have been done out of money, because after a certain period they have been obliged to pay back money. The complexities of the matter appear to be beyond some of them. I hope that the issue will be properly explained to those who are affected.
I wonder how long it will be before the Minister is obliged to come back to the House because the figures have risen still further. The time has come to call a halt. The "Titanic" has hit the iceberg. The Opposition are baling out and I suspect that Conservative Members will also be baling out soon. For the sake of all on board, Government policy must be changed.
Affection for our system of parliamentary democracy may be diminishing among those on the receiving end of Government policy, but there is still respect for the system. One must ask, however, how many hundreds of thousands more people will become unemployed before that satisfaction evaporates and some of the problems that we thought were endemic in certain other European countries arise here. The decision-makers in our society will have to accept the consequences and they will certainly be responsible for some of the disasters that may befall the nation
§ Mr. Allen McKay (Penistone)I welcome the increase in the fund, but it is a back-handed welcome, because the Government are admitting that unemployment will increase. The rise in unemployment that has already taken place has affected my constituency considerably. While the Government have been implementing their policies, unemployment in Penistone has risen and the basic industries have been eroded and, in some cases, decimated.
My constituency is in South Yorkshire where two major industries—steel and coal—have suffered great setbacks. The unemployment rate in the county is 15 per cent., which is far higher than the national rate of 12.4 per cent. In Sheffield, the unemployment rate in May 1979 was 4½ per cent. It is now 13 per cent. That is unprecedented in the city's history; and unemployment there has risen far faster than the national average. About 40,000 people are out of work in an area that could once boast the best employment figures in the country, the finest steel and engineering works, and a worldwide cutlery industry. On top of that, the Government took away the area's intermediate status at a time when it needed it more than ever.
The unemployment rate in Barnsley in May 1979 was 6.3 per cent. It is now 16.3 per cent. In the area's black spots, unemployment has reached 20 per cent. or 25 per cent. According to a report in the Sheffield Morning Telegraph, there is 30 per cent. unemployment in parts of Sheffield.
Hon. Members have today received delegations from many universities. The cutback in universities will affect 5,000 education jobs in the Sheffield area. That is a sad indictment of the Government and their policies. Unemployment continues to worsen throughout South Yorkshire. The number of adults out of work has increased for 16 consecutive months. In 1979, 5.8 per cent. of adults and young people were unemployed and that unemployment is now 15 per cent. The most disturbing feature is the position of school leavers. The unemployment of school leavers declined nationally by 9,000 compared with a reduction of 58,000 in the same period last year.
386 Mothers and fathers are being made redundant and their children are unable to find employment. Before the election of May 1979 the Conservative Party talked about the family and family responsibilities. It spoke of what families should do and what it would do for them. The policies of the Government have led to mothers and fathers being thrown out of work and to their children being unable to find work. The situation is bleak and serious. There is only one vacancy for every 65 who are out of work. In Barnsley there are 2,617 on the young persons' register. There are 2,288 who have never seen work. One thousand, six hundred and fifty-one 1981 school leavers are out of work. There are still six pre-1980 school leavers who are unemployed and eighty-six 1980 school leavers are in the same position.
There are 545 youths who have been through the YOP and who find themselves without work. There are 1,146 who are participating in the scheme and they have little hope of finding work when 545 have already been through it and have been unable to find work.
The further measures that the Government are taking will reduce the call on the redundancy fund. The withholding of £200 million-worth of rate support grant and requests that authorities cut budgets by 0.6 per cent. of the 1978–79 figures mean that local government will produce its share of redundancies. The Government should be seeking to increase local government employment. The Sheffield city council offered the Government a gift. It asked them to give it the money that was being made available for the YOP and unemployment pay on the understanding that it would supplement the total by means of the rate fund to produce wages that would be accepted by the trade unions. If that offer had been accepted, another 1,000 would now be in gainful employment.
The Minister received a delegation from the city council, but he turned down its proposals. In a hard and militant speech the newly appointed Secretary of State said that he would raise no false hopes until the economic recovery had been established, inflation conquered and a competitive industry had been established.
Next year, 223,000 people will be unemployed in the area that I represent and only one in three will have a chance of finding work. These are the Manpower Services Commission's figures. About 1 million adults will have been unemployed for over 12 months. The cost of unemployment is about £12 billion per annum. That money is being wasted; it is being frittered away.
I worked for a considerable time in the industrial relations department of the National Coal Board. Part of my work concerned the closing of collieries. A colliery did not close unless every man working at it had been interviewed. The trade unions and I ensured that the traumatic experience of redundancy was offset by a humane approach. The Coal Board's redundancy scheme is humane. It eases the traumatic experience of redundancy by providing a lump sum that is based on 90 per cent. of take-home pay for three years and the equivalent of unemployment pay until retirement age is reached. The individual does not have to suffer what he might feel is the ignominy of applying for social security benefit.
The Government have virtually asked people to spend their redundancy money, because until they have less than £2,000 they cannot claim supplementary benefit. That is one of the most disgraceful things to happen to people at a time when it should not have to happen. The Government have also taken away the earnings-related supplement, 387 which was intended to cushion the first effects of redundancy. All those benefits have been taken away for the sake of monetarist policies that the Government pursue.
I should like the Minister to consider a constituency problem which also has a national effect. It concerns the insolvency fund. A company in my constituency, Parramore, had to make people redundant, and because it was insolvent it had to obtain the money from the insolvency fund. The receivers, who are now looking into the position, paid out the redundancy payments and took one-third in notional tax. I have no quarrel with that on mechanical grounds, but I certainly have a quarrel with it on moral grounds. The mechanics say that no man should be treated unfairly and that no man should be treated better than any other man who is made redundant.
However, people are being unfairly treated. In normal circumstances, a person who is out of work would be able to draw back a tax rebate if tax had been deducted in the usual way. But because the insolvency fund is a notional fund, and because money has not been paid to the Inland Revenue, it cannot be claimed back. People are thus being treated very unfairly at a time when they should be looked after.
Many factories in my constituency have closed, including Rockingham, Wentworth Silkstone, Smithywood and Barley Hall; and the process has been fair and diplomatic and carried out with sympathy and understanding. But the time has come in the mining industry when there is nowhere else to go. If the Government try, under their new economic policies, to close collieries when they should not be closed, they will find the biggest resistance that they have ever had. The matter should be examined very carefully.
The blight over my constituency has gradually grown, due to the Government's policies. The steelworks, the pits and the engineering works have gradually closed down as unemployment increases—and unemployment is the biggest call on the redundancy fund. But the greatest sin of all is that in most cases—the mining industry is an exception—the redundancy payments are paid in such a way that they destroy family life. The only thing that will put the matter right is for the Government to get out. Let us return a Socialist Government with alternative socialist policies. Let us return a Socialist Government who make a priority of employment and not a priority of a monetarist system.
Until that time comes, the Government should look at their redundancy schemes and treat people as sympathetically and compassionately as possible. I should like an answer from the Minister on the Parramore problem but not tonight, because I realise that he will only quote the Act. I do not want that. I know the Act. It has been quoted to me on too many occasions. I simply want to point out the anomaly of some people not being able to draw back a tax refund like everyone else. That should be carefully examined.
§ Mr. Dennis Skinner (Bolsover)My hon. Friend the Member for Penistone (Mr. McKay) mentioned pit closures in Yorkshire, He will agree that coalfields in 388 Durham, South Wales, North Derbyshire, Lancashire, Scotland and other areas have suffered even greater casualties.
My hon. Friend is correct to talk of the victims of redundancy. He witnessed the casualties, as we did in North Derbyshire, in the late 1950s and 1960s, when a swathe of collieries was closed. Not long ago one was closed at Langwith. My hon. Friend mentioned the blight and despair. That colliery village is worth visiting. Rows of houses are boarded up and other rows knocked down. The old people remain and the young ones have gone to get jobs in nearby coalfields. That is the residue of introducing a scheme that throws people out of work. The Secretary of State for Employment talks of people going on their bikes to find work, as his father did in the 1930s. He should visit Langwith on his bike and see the desolation.
In my area unemployment has not increased as fast as in the West Midlands. Once, that area did not know much about redundancies. It was the place to which people went to find work, but nobody can find work there now.
The order epitomises everything that the Government stand for. I am prepared to gamble that, had it been brought forward during the Labour Government, the Opposition would have bayed for Labour blood and would almost certainly have voted against it, as they did against many orders in which we attempted to spend money on co-operatives and so on. The Tories marched through the Lobbies to stop money being spent to keep people in work.
My hon. Friend also recalled the general election. What about the promises of a new entrepreneurial society in which more people would get jobs and all the people would come back from the United States and elsewhere as a result of the tax incentives flowing hither and thither? They would come over on P & O boats to provide work throughout Britain. In the event, thousands of firms have been made bankrupt. There is no lifeboat for them, as there was in 1972–73 for the secondary banks and other institutions that were baled out.
For the people we are talking about it is miserly redundancy payments, unlike the 10 directors of Dalgety Ltd., who recently shared out £1.7 million—yet the Government have the cheek to tell us that there are no class divisions in our society. The people who will get redundancy payments under the order will not get anything like that. They will get peanuts, as they have always done. The order represents everything that the Government stand for.
The Government set out to weaken the trade unions by reducing the numbers at work so that so-called free collective bargaining would be at a low ebb. That is their twin strategy. Let no one say that it is not working. The Tories are failing all over the place, but no one can say that their operation to cause misery and despair among workers has not been carried out almost to the letter. They have no compassion. They intended to have 600 people on Merseyside running after one job and people in the West Midlands scrambling over one another to get jobs, so that when it came to free collective bargaining, which was heralded in their election campaign, they could frighten the workers into settling for 4 or 5 per cent.
Nothing pleases me more than to read in the newspapers and to see on television that the workers are beginning to turn. They have had enough of the attacks launched on them by the Tories in the past two and a half years.
389 The order is typical of what the Government have been attempting to do from the outset. Their tax incentives have not worked. Monetarism has not worked. Indeed, the new-found philosophy that was transported across the Atlantic to America has not worked. But Mr. Stockman blurted it out in quick style. He told President Reagan that it is not working. At least, one fellow in the White House dares to speak his mind—unlike the people who surround the Minister and his right hon. and hon. Friends. Of course, he has spoken out. But he has had to back down, grovel on television, and say that he did not mean it. But Mr. Stockman has come out loud and clear. He has said that the high interest rate policy, cutting back on the public sector and the so-called reduction in taxation for those at the top of the incomes scale will not work. And it is not working here.
It would be nice if on occasions Tory Ministers showed a little compassion for those who have been thrown out of work—the 4,122,000 that the TUC has calculated are now on the scrap-heap. It would be nice, too, if occasionally they showed that they were concerned about the small businesses that are closing because of the Government's policy—for example, small engineering firms on the new industrial estates in my constituency. Small firms sprouted on those industrial estates as a result of the area's intermediate status, which was granted under the Labour Government. We managed to attract industry to areas, such as Pinxton, in my constituency, and to other areas in the constituency of my right hon. Friend the Member for Chesterfield (Mr. Varley). Not everything was rosy, but we could see some benefits emerging.
All that has now been eroded. Indeed, the Government have had to say "Here is another £100 million." The Secretary of State for Employment is not telling the beneficiaries of this £100 million to get on their bikes and look for work. He is saying "There is not enough money in the redundancy fund. We shall increase it to £300 million, because you will have to get on your bikes to get to the dole to claim your dole money."
There will not be any earnings-related supplement after January, because the Government have taken steps to get rid of that. In fact, in some of the new social security measures, they will clamp down even harder on those who are thrown out of work. Let no one imagine that the extra £100 million will result in greater benefits for those who are thrown on the scrap-heap.
One could understand it if there were any economic sense in the Government's policy. There was a report by the Manpower Services Commission last weekend. I understand that that quango belongs to the Government. It has not been dismantled, so it must be all right. It is not on the Prime Minister's hit list. The Government have kept that body in being. According to the newspapers, the MSC has calculated—we have been waiting for this calculation, because we use figures from time to time—that it costs £4,500 a year to keep a man or woman out of work. That works out to more than £12,000 million—nearly as much as the public sector borrowing requirement for the last financial year.
§ Mr. CraigenMore.
§ Mr. SkinnerI am talking about the last financial year. It reached £13,500 million. It should have been only £8,500 million, but the Government made a £5,000 million mistake in the figures. That is a much bigger 390 mistake than the mistakes made by the local authorities, but they have been hammered left, right and centre. The Government made a mistake of £5,000 million in their public sector borrowing requirement calculation. But the total amount now being spent on keeping men and women out of work, according to their quango's calculation, is more than £12,000 million.
The Government reckon to be comprised of business men. They are supposed to have business acumen. But all this money is being cast away to keep people out of work. Of course, it fits in with the Government's strategy of demoralisation—that is their policy—and they are trying to spread it across the whole of the public and private sectors.—[Interruption.]—The hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) is worried. He has a marginal seat and he is making noises from the Government Front Bench below the. Gangway. He is now one of the rebels on the local government referendum Bill. He is fighting for local democracy. He should not talk about unemployment doubling over five years. He has a bigger load to carry in Birmingham than that. Shouting will not solve his problem. He will have to find better answers than that.
It sounded all right on the night. The Government's promises sounded all right for about 12 months. The fact is that the Tory Party has now shown to the nation, as happened in the 1930s, that it is the party of unemployment. The hon. Member for Selly Oak will never be able to get that from around his neck. It is fastened round his collar and he will have it there at the next election and he will not be able to wrest it off. It is firmly stuck there.
It is true that I had some pretty rough things to say when I sat where the hon. Member for Selly Oak now sits. I had to vote against the Labour Government to show that they were our of line in their beliefs. The last 15 months of the Labour Government showed a marginal decrease in unemployment. Some of us were saying that the cuts in public expenditure had to stop and it was nonsense to be paying out money to keep people out of work. We got the trend moving in the right direction. There will be no trends in the right direction for the hon. Member for Selly Oak when it comes to the next election.
The sad thing is that, while the industrial base is withering away in the hon. Gentleman's constituency, and throughout Britain more and more people are being driven out of the factory gates, there is running in parallel the casino economy. There are not many houses being built in Britain, but there are building societies sprouting up all over the place like mushrooms. What a state of affairs. There are all these estate agents, one or two on the Government Benches—they are not here tonight because they are getting their beauty sleep—springing up everywhere. At the same time, people are clamouring for work. Why?—because people with money to invest have a better chance of making a fast buck if they put their money into the banks and the institutions and some sleazy operations when interest rates are tottering around 14 to 17 per cent. Why put money into industry in such circumstances?
People can put their money into the United States, where the prime rate has gone up to 20 per cent. It has dropped recently, but there is plenty of money to he made now that the Tories have removed exchange controls. Why put money into the West Midlands, where the small firms that used to exist in abundance have now been flattened 391 by this Government? This is the casino economy. The hon. Member for Selly Oak ought to understand that there are two sides to the nation.
I have nothing but praise for my hon. Friends who have spoken in the debate. This order encapsulates everything that the Tory Government stand for. They are throwing people out of work. There are 600 to 700 people running after the same job. There are youngsters without the chance of work. There are more than 1 million people aged 25 who are out of work and the Government are inventing YOP and WEEP schemes to deal with the problem at the margin. There are now 3,500 of these schemes, with people being exploited right, left and centre. What a comment upon this lousy, rotten Government. All that they are interested in is in looking after their friends, in feathering their own nests. That is why bank rate is up to 15 or 17 per cent. It will probably go higher before this Government are finished. There will be a new plateau before the Government go, just as there will probably be an even higher plateau of unemployment. The Minister might have to face the possibility of coming to the House with another redundancy payments order in order to raise payments further. It is Tory business men, who think they have the answers to everything, who are, in effect, bringing in orders of this kind.
There will be no lifeboats to bale out the small businesses this time, as there were in 1972 and 1973. There will be no lifeboats to pick up the businesses which have been closed. There will be no lifeboats to pick up those who have been thrown out of work.
In order to ensure that we get the policy right next time, we need a policy from the Labour Party shouted from the rooftops day in and day out, so that it gets through to the working class in every city, town and rural area in the land. It must not be based simply on increasing the industrial base, important as that is. It must not be based simply on increasing the amount of money going to the public sector, building more houses and spending more on the railways and the many other areas which badly need money in terms of maintenance and improvement. They are all important, of course, and they will help to produce jobs. But, above all, we need to be saying that we shall introduce a 35-hour week and find some way of limiting overtime.
We shall have to think more about earlier retirement, based not on the simple scheme of letting people get their old-age pension but on the scheme that was drawn up by my hon. Friends for the miners. That was a good scheme, giving miners an incentive to leave work because they were able to receive more than the old-age pension. They were able to get a sum that was based roughly on what they would have received as redundancy pay.
That is the sort of policy that we need. I am not making my appeal to Conservative Members. Their strategy is clear. Our strategy has to be illuminated in every street and in every town and city. We have to get through to the people that our policy will work. Yes, it will cost money. We shall use the £30,000 million that is being used now to pay those who are out of work. That is the area in which we must move. We must take over North Sea oil and use the oil revenue as well, instead of dissipating it in the form of Girocheques and redundancy pay.
392 That is the kind of policy that we need on the Labour Benches. Those are the sorts of ideas that we must get across more and more. The order has given a few of us a chance tonight to begin to get that message across.
§ Mr. Peter MorrisonThe hon. Member for Bolsover (Mr. Skinner) is a very prominent member of the national executive committee of the Labour Party, and I was particularly interested to hear what he said in the latter part of his speech. He expressed the hope that his party's manifesto would be forthcoming at the time of the next general election on the lines of his speech tonight, and I am sure that his hon. Friends will have listened carefully to him. As he said, he was addressing himself principally to his hon. Friends rather than to Conservative Members when he made his concluding remarks.
The hon. Member for Flint, East (Mr. Jones) understandably referred to the large increase in unemployment as being one of the reasons why we were bringing the order to the House this evening. I accept that. I accepted it in my opening remarks. But it would be fair to say that, although there has been an increase in unemployment, so has there been a significant number of new jobs created over the last year. About 350,000 new jobs exist today which did not exist a year ago.
It is also fair to point out—in answer to the hon. Member for Flint, East and to other hon. Members—that every week about 140,000 people find a job. Of those 140,000, 70,000 leave the register. It is not always, as I said in the House recently, a stream which is flowing in only one direction; it is flowing in two directions.
The hon. Member for Glasgow, Maryhill (Mr. Craigen) referred to the large number of bankruptcies. There is always a substantial number of bankruptcies.
§ Mr. EasthamWill the hon. Gentleman give way?
§ Mr. MorrisonI shall give way later to the hon. Gentleman, but, having listened carefully to all the points made by hon. Members, I am trying to reply to the debate.
There are bankruptcies, as there always have been, but one has to look at the matter also in terms of the number of companies being born; and that number is now about 2,500 a week. There is a balance in the scales; it is not all one way. There are more births of companies than deaths. There are about 2,500 births a week and substantially fewer deaths per week.
The hon. Member for Flint, East raised some specific questions. As regards recovery from employers who have become insolvent, my Department makes very considerable efforts to recover the money paid out of the redundancy fund to employees whose firms have become insolvent, but, as the hon. Gentleman will appreciate, we stand alongside other creditors in these cases.
The figures that the hon. Gentleman quoted were from the 1979–80 redundancy fund account. The 1980–81 accounts are currently with the auditors. I shall write to the hon. Gentleman and let him know the latest figures as soon as possible.
As regards the £2,000 limit, it has been accepted by the present Government and previous Governments that an individual's capital resources should be taken into account when considering entitlements to supplementary benefit and that lump sum redundancy payments should be treated as a capital resource. If hon. Gentlemen were to think 393 about this matter carefully, in terms of some very large redundancy payments they would not like to see the situation changed, although I accept that they were putting an alternative point.
Almost all hon. Members who have spoken in the debate have asked me, understandably, what my forecast is. Perhaps they were in the House when my right hon. Friend the Secretary of State replied to the first question on Tuesday. He said that it was not his custom and would not become his custom, just as it was not the custom of his predecessors, both Labour and Conservative Secretaries of State, to make forecasts. I think that that is an entirely correct attitude. I do not think that any hon. Member would expect me to do otherwise tonight.
The hon. Member for Manchester, Blackley (Mr. Eastham) talked about a reflation of the economy. He said that he thought that it was very important, and he wanted to see a change of heart. If we had a reflation of the sort of size that I think that he is proposing, the most likely thing that would happen first is that interest rates would go through the roof—unless one did not fund the public sector borrowing requirement—so one encounters the other side of the argument that the hon. Gentleman was putting. The second thing that would happen is that after a period we would become less competitive. He accepts that there is no point in producing goods unless people will buy them, because if no one buys them, the company goes out of business, and if the company goes out of business, there will not be the jobs that exist today or the future jobs. I should have thought that that was straightforward logic.
The hon. Gentleman says that monetarism is a disaster. Surely he realises that all his constituents have, since they have had to look after their own money, been pursuing what has come to be called a monetarist policy—that is, they have had to live within their means. That is no different from the Government's policy. The trouble is that for too long we did not live within our means. That is why we now find ourselves in such difficulty. I assure the hon. Gentleman that, unless his constituents are very different from mine, they understand what living within one's means is all about.
§ Mr. EasthamThe Minister is confusing me. He talks about success and the number of people who have been taken off the register and the number of companies which are now being floated. One would not imagine that he needed the extra £100 million. If there has been so much success, why is he asking for that extra money? He talks about people in my constituency, but they cannot understand why 1 million families have no home to live in when ⅓ million building trade workers have no job. It seems illogical to me to have skilled electricians and bricklayers drawing, say, £4,500 on the dole, when they could be producing and building houses. Is that logical?
§ Mr. MorrisonWhen there is a period—as I believe there was—of standing still, marking time, and then moving forward with the technological changes that took place, the transition is bound to make some jobs redundant. That is why I am standing at the Dispatch Box this evening. As and when local government can afford new housing—new infrastructure—the matter will be looked at, but it must be looked at in the context of the resources that are available.
The hon. Member for Maryhill asked what effort had been made in the Department to help people who are either 394 out of work or who may become out of work. He knows, because he has taken part in all our debates on employment measures, that my Department has many schemes, to the tune of £1 billion this year and £1½ billion next year—about £50 for every taxpayer in the land—which are solely designed to help those who are about to lose their jobs or who are without a job. I shall not elaborate on that, because I have done so on previous occasions. The hon. Gentleman quoted the director of the Manpower Services Commission, who said that there would be 1 million unskilled jobs fewer by 1985. As I am sure the hon. Gentleman is aware, my right hon. Friend the Secretary of State is working hard on producing a statement in the not-too-distant future—I hope, before the end of the year—on the objectives of the new training initiative. He heard my right hon. Friend say earlier this week that he was committed to those objectives. The objectives of the new training initiative will ensure that school leavers and adults who need to be retrained have a certain flexibility which will permit them to get a job other than the one that they might originally have expected.
I have already said that it is estimated that we have 350,000 new jobs today, as compared with a year ago. I think that I am right in saying that, between 1972 and 1973, ½ million new jobs were created. So it is possible for new jobs to be created at speed when the economic climate is right.
§ Mr. CraigenI am sure that even the Under-Secretary is not suggesting that 1 million places will be found in the new package of vocational education and training which the Secretary of State intends to bring forward before Christmas. Moreover, many unskilled jobs will be essentially adult jobs, and they will involve adult retraining, quite apart from youth training.
§ Mr. MorrisonPerhaps I did not make myself clear to the hon. Gentleman. I did not mean to suggest that there would be 1 million new places on the new training initiative. I suggested that, because of the emphasis placed on the new training initiative, there would be adult retraining, training for work and work experience for school leavers on a more sophisticated scale than before. That will make them more attractive to potential employers.—[Interruption.]
The hon. Member for Walsall, South (Mr. George) kindly sent me a note explaining that he would be unable to be in the Chamber for my reply and I understand that. He made a point that I—and I suspect all hon. Members—wholeheartedly agree with. He pointed out that it was remarkable that not one Liberal Party Member or Social Democratic Party Member had been present throughout this debate. During the debate on the Loyal Address that covered employment one Liberal Member was present for just three-quarters of an hour. At any one time, no more than two Social Democratic Members were present. Therefore, I wholeheartedly agree with the hon. Member for Walsall, South and with other hon. Members on that point.
I am sorry that the hon. Gentleman had to liken my right hon. Friend—because of his evening dress—to the captain of a ship that is going down. His remarks did not appeal to any hon. Members. As he will appreciate, my right hon. Friend the Secretary of State was no doubt on his way to two, three or four hours of "boxes" in order to help to solve the problems that face him in his office of Secretary of State.
395 The hon. Member for Penistone (Mr. McKay) rightly pointed out that unemployment in South Yorkshire was high. I accept that. However, I must pick him up on one of the remarks that he made. He said that there was one vacancy for about 50 unemployed people. I am not contesting that fact as such. That may be true at any given moment of any day, but even in the hon. Gentleman's constituency I think that many more vacancies are being filled than the figures demonstrate on any given day. In addition, as the hon. Gentleman probably realises, only about one-third of the vacancies are referred to the employment services division of the MSC and only about one-quarter of the vacancies are filled through jobcentres. Therefore, that one vacancy does not necessarily give the entire picture. However, I am only trying to set the record a little straight.
The hon. Member for Penistone referred to a constituency case, that of Parramore. I have written to the hon. Gentleman. I do not know whether he has received my letter, but I have suggested that he might like to come and see me to discuss the case. I hope that he will feel happy to accept that invitation. He will appreciate that I cannot give any further information now, but I hope that he and I can have a discussion in my office, at the Department.
I see that the hon. Member for Bolsover has departed from the Chamber. That is a pity, because I thought that he was less than fair to those who are on the youth opportunities programme and to those who operate it. Given that there are 14,000 applicants a week, I think that the hon. Gentleman will accept that the programme is a success. It is making a major contribution to solving the difficulties that school leavers face.
396 I hope that the basic protection and help that we owe to those who have lost their jobs will, as a result of the order, be underlined. The Government care, and care considerably about those who have been made redundant.
§ Question put and agreed to.
§
Resolved,
That the draft Redundancy Fund (Advances out of the National Loans Fund) Order 1981, which was laid before this House on 20th October, in the last Session of Parliament, be approved.
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