Unemployment

HC Deb 27 July 1982 vol 28 cc935-1017 4.19 pm

Mr. Eric G. Varley (Chesterfield)

I beg to move, That this House condemns Her Majesty's Government's economic, industrial and monetary policies which have led to a massive increase in unemployment, reaching a record 3.2 million in July 1982; and calls upon the Government to abandon policies that have clearly failed the nation and to introduce new measures to revive output, industry and employment.

Mr. Speaker

I have selected the amendment in the name of the Prime Minister.

Mr. Varley

Today the House of Commons is debating the waste of a nation. We are debating the worst peacetime disaster to strike our country in modern times—the scourge of mass unemployment that afflicts every part of our land—and we are indicting the Government and, above all, the Prime Minister.

We indict the Government for deception. Three years ago, they deceived the nation into believing that they could solve an unemployment problem which, grave though it was, was little more than one-third of the size that it is today. We indict them for inaction, for standing by and watching the tide of unemployment rise and doing nothing to reduce it. The measures that this leakiest of all Governments leaked to the press at the weekend and that we are told to expect today are utterly inadequate. In some respects they are a fraud—a device to reduce the number of registered unemployed but not the number of people out of work.

Above all, we indict the Government for callousness. Certain members of the Government are becoming increasingly addicted to adorning themselves with the Union Jack as though it belonged to them and to them alone. When it comes to fighting unemployment, however, the standard that the Prime Minister runs up is the white flag. Three years ago, she told the nation: there is nothing inevitable about rising unemployment". Five days ago, she told the 1922 Committee that she intends to do nothing whatever to reduce unemployment. [HON. MEMBERS: "How do you know?"] It was reported in The Times newspaper and it has not been denied by anyone at No. 10 Downing Street.

Millions of families throughout the country curse the day that the Prime Minister walked into No. 10 Downing Street. It is a long time since she had the effrontery to utter the words of St. Francis: Where there is despair may we bring hope". Where there was hope, she has brought despair. We all know that the use of those words was suggested to her by the playwright Ronald Millar and they have earned him a knighthood. At a theatre a few minutes walk from the House the Prime Minister and her colleagues can see his latest play. It is called "A Coat of Varnish". It will take more than that to cover up the crimes against the unemployed.

According to The Times the Prime Minister told the 1922 Committee last Thursday that The Government wanted no gimmicks, no special election policies that would have to be changed afterwards. They wanted to go to the electorate totally honest, doing what was right. That is certainly a turn-up for the book. In the Conservative manifesto before the last general election, the nation was told that it was a Conservative Government's task To restore incentives so that hard work pays, success is rewarded and genuine new jobs are created in an expanding economy. That deception was carried further few weeks later in the Government's first Queen's Speech in which the following words were used: My Government will give priority in economic policy…and create a climate in which commerce and industry can flourish…and increased employment in all parts of the United Kingdom."—[Official Report, 15 May 1979; Vol. 967, c. 48.] What have the Government created in the last three years? They have not created genuine new jobs or a climate in which commerce and industry can flourish. They have created not unity but a uniformity of suffering—the uniformity of mass unemployment. From the South-East with 9.7 per cent. to Northern Ireland with 21.1 per cent., no part of the country has escaped. It is the unique achievement of the Government that areas of the country which knew relative prosperity even in the 1930s now face unprecedented mass unemployment. It is the Government's extraordinary achievement that unemployment in the West Midlands is now even higher than unemployment in Scotland. In the West Midlands, one worker in six is out of a job. It takes a special kind of incompetence to turn what was once regarded as the heartland of British manufacturing industry into a depressed area.

The picture in the rest of the regions is both appalling and instructive. In Northern Ireland, for every 100 people who were without jobs under the Labour Government there are now 199 and in Scotland there are now 211. The situation is the same in the South-West and in Wales. For every 100 unemployed when the Labour Government left office, there are now 246 unemployed in East Anglia, 239 in the North-West and 262 in Yorkshire and Humberside.

Those figures are terrifying enough. I turn now to areas which, until the Government took office, had always known some prosperity. In the South-East, represented by the Chancellor of the Exchequer, the Secretary of State for Employment and the Prime Minister herself, for every 100 unemployed when the Labour Government left office, 274 are now seeking work. The story is the same in my own area of the East Midlands.

Top of the list again, however, is the West Midlands where for every 100 unemployed on the date of the last general election there are now 314. I wonder how many Tory Members who gained seats from Labour in the West Midlands in 1979 told the electors that the result of electing them to Parliament would be to turn their constituencies into unemployment black spots.

Unemployment throughout the United Kingdom is nearly three times what it was when the Government took office. We shall hammer that fact home day in and day out, week in and week out, month in and month out until the next general election.

That statistic, grim though it is, does not give the complete picture of mass unemployment. The situation is even worse for some sections of the unemployed. The proportion of jobless teenagers is now three times as high as it was three years ago. Youth unemployment is not just keeping pace but shooting far ahead of unemployment generally. Throughout Britain, boys and girls are being given the impression that once their formal education is over society has no use for them.

Unemployment among women has become mass unemployment in its own right, even taking only those who register as unemployed. As we know, many do not register at all. In many parts of the United Kingdom, the rate of registered unemployment among women now exceeds 25 per cent. That is especially disastrous because, with such devastating mass unemployment among men, women are often the only breadwinners in their families.

The most disturbing feature of mass unemployment in Britain today is that long-term unemployment has taken deep roots. It is a terrifying fact that more than 1 million workers in this country have now been out of work for more than a year. The number of long-term unemployed alone is almost as great as the total number of unemployed when the Government took office.

The Prime Minister and her colleagues have a ready excuse. They tell us that Britain is merely suffering from a world-wide trend. Interestingly, when unemployment in Britain was 1¼ million, the right hon. Lady and her colleagues insisted that it was all the fault of the Labour Government and that international trends, the fivefold increase in oil prices and so on had nothing to do with it. Now, however, when unemployment is not 1¼ but 3¼ million, the Tory Government ask to be acquitted of all responsibility and world trends come into their own.

Mr. Tony Marlow (Northampton, North)

Has there or has there not been a massive increase in unemployment in the Western developed world as a whole? Instead of trying to make political capital out of other people's misfortune, will the right hon. Gentleman tell the House what he intends to do about it?

Mr. Varley

I shall answer both of the hon. Gentleman's points in good time. Although there is a recession throughout the developed world, Britain is suffering the impact of unemployment far more heavily than any comparable industrial country. When the Labour Party left office Britain's unemployment was below that of Italy, Canada and France and only a minute fraction ahead of the United States. Now, after three years of a Tory Government, Britain is not simply ahead of all those countries but far ahead of them. If there was an OECD cup for unemployment, Britain, under the Tories, would be undisputed champions.

By the use of highly selective figures and the tendentious use of statistics, the Secretary of State for Employment claims that Britain under the Tories is doing better than France under the Socialists. No doubt he will do so again tonight. In fact, I can guarantee that the Secretary of State will return to that argument. However, unemployment in France is far below that of Britain. Industrial production in France is higher than it was three years ago, while industrial production in this country is massively down. If the Secretary of State for Employment wants to look overseas at a country in economic trouble, he should examine what is happening in the only Western country pursuing policies similar to those of the Government. In the United States of America—Reaganism is its version of Thatcherism—industrial production is decreasing, just as ours has done. Competitiveness is down by 20 per cent. compared with last year and unemployment and poverty are increasing.

Every economic indicator here tells the story of the mismanagement of our economy by the Government. Manufacturing investment in the Government's first two years of office fell by 19.1 per cent. Industrial production is 16 per cent. down on three years ago. The number of apprentices and other trainees in manufacturing industry in the first three years of this Government is down by 33 per cent. In the first half of this year business failures were at the highest level ever recorded. Company liquidations and bankruptcies are up by 22 per cent. on last year and by 75 per cent. on 1980.

Mr. Michael Colvin (Bristol, North-West)

In order to paint a clear picture, will the right hon. Gentleman divide voluntary liquidations from bankruptcies? He will be aware that one of the measures brought forward by my right hon. and learned Friend the Chancellor of the Exchequer made it easier for people to obtain voluntary liquidation so that they could start new businesses. Can the right hon. Gentleman provide separate figures?

Mr. Varley

It does not matter on what basis the figures are taken, they are still record figures and those that I have given are accurate in every respect.

The building and construction industries have been especially hard hit. Last Thursday the president of the National Federation of Building Trade Employers sent a copy of the federation's latest quarterly report to the Prime Minister. In his accompanying letter the president told the right hon. Lady that the report shows that the recession continues—a recession of unrelieved length and depth.

There is one industry about which the Government ought to feel an especial sense of shame—the shipbuilding industry. We all recall that a few weeks ago the Prime Minister said "Rejoice, rejoice." That was the Prime Minister's advice to the nation when our Service men and seafarers won victories in the South Atlantic. They won those victories with great courage and at great cost. But it is the shipbuilders of Korea and Japan who are now getting ready to rejoice as they eagerly look forward to work that will go their way if they can get their hands on the building of the replacement for the "Atlantic Conveyor".

The day after the Argentine surrender in the Falkland Islands the Daily Express covered its front page with a "V" sign surmounted by a portrait of the Prime Minister. Yesterday the Daily Express continued that theme with an interview with the Prime Minister that, in its subservience, could easily have appeared in Pravda. The Prime Minister told that sober commentator, George Gale, that in the Falklands conflict the honour of our country was at stake. The right hon. Lady added: We now had a renewed sense of purpose … When the call came out of the blue we were not found wanting. That newspaper and its heroine are partners—or look like being partners unless there is a great change of heart today—in allowing the Korean shipbuilding industry to hoist the victory flag over whichever of its shipyards secures the contract for replacing the "Atlantic Conveyor".

Mr. David Ennals (Norwich, North)

Does my right hon. Friend agree that, as regards jobs, it is not just the shipbuilding industry that is affected? A large range of industries in many of our constituencies, including mine, provide all sorts of marine equipment. Tens of thousands of jobs across the country will be affected by the decision to buy the replacement abroad.

Mr. Varley

It is difficult to go through the complete list of industries that have been hard hit. If the "Atlantic Conveyor" replacement is built on the Tyne, which my hon. Friend the Member for Whitehaven (Dr. Cunningham), with others, has been arguing should happen, undoubtedly it will bring prosperity for a time to our shipyard workers.

There has not been much talk about the honour of our country. There is no call coming out of the blue to our shipyard workers. I do not know whether the Chancellor of the Exchequer or the Secretary of State for Employment will tell us more about the replacement for the "Atlantic Conveyor", but, looking at the sordid stories in the newspapers, I do not know who is more contemptible—Lord Matthews of the Daily Express and Cunard for demanding the extra subsidy, or the Prime Minister for haggling about it. The Swedish and French Governments are providing the finance necessary to ensure that the sister ships of the "Atlantic Conveyor" are built in their own yards. If the replacement for the "Atlantic Conveyor" is not built in this country, the Prime Minister will never be forgiven by our shipyard workers. They were ready to make their sacrifice for Britain in her hour of need. Men and women were not found wanting when the call came.

The unemployed are not the only people who are suffering from the Government's policies. People in work have watched their living standards fall since the Government came to office. In the last three years of the Labour Government living standards rose for millions of workers. For those on half average earnings the increase was 8.1 per cent. For those on twice average earnings it was, quite properly, somewhat less, but still substantial, at 6.6 per cent. Since the Conservative Party took office there has been a slight fall of 0.1 per cent. in the real incomes of those on twice average earnings, while for those on half average earnings the reduction is 3.6 per cent.

The economic slump is not the only reason for that. Those in work are being heavily taxed to finance the cost of those out of work. The nation is now wasting £15,000 million a year to finance unemployment. That is nearly 6 per cent. of our gross national product. It is being wasted because the dole queues, for which the Government will be remembered long after they have left office, are taking that amount of money. That waste can never be recovered. The years without work that have been lost by the unemployed can never be given back to them. The goods that they could have made, the services that they could have provided and the wealth that they could have created have been permanently stolen from the nation and can never be restored.

This is how The Times last week described what the Government have done: The output lost over the past three years is lost forever … Something like a fifth of our industry has been destroyed and will not come back. Two million fewer people now have jobs than in the spring of 1979. That drop in employment, about 9 per cent. of the workforce, is six times as big as the drop in employment in the 1974–75 recession. The years of work which those two million people have lost, are lost forever. That is what the Secretary of State for Employment is presiding over. Last week the right hon. Gentleman appeared on the television programme "Panorama". On the same programme was a representative of the 1 million long-term unemployed, Mr. Mick Lally, a 50-year-old skilled fitter who has now been on the dole for 18 months, the first time in his life that he has ever been out of a job. The other day, when he cycled to sign on to show that he was still available for work, he was told "Don't bother to come in every fortnight any more. From now on every three months will do." Mr. Lally said "I told them I was finished." Tens of thousands of people in Britain think that they are finished under this Tory Government of no hope.

Last week the Secretary of State confided to a glossy colour supplement that politics needed "a bit of fun". The right hon. Gentleman may be having a bit of fun, but 3¼ million unemployed do not see the joke.

The chorus of demands for a change of policy has now become deafening and more insistent than ever before. The Government have become accustomed to deriding the case made by the TUC, but in the past few days it has been joined by the Financial Times, which said that the promised recovery is now a full year behind schedule". We now have the devastating case made by the CBI. The CBI's survey of Britain paints a bleak picture. The following are some of the reports from the regions. The North-West: general level of industrial activity remains low and there is some evidence that it will deteriorate still further". The West Midlands: Overall, the West Midlands economy remains depressed … many companies report a further decline in the second quarter. The output of manufacturing industry in the region is reported to be somewhere between 60 and 80 per cent. of 1979 levels. The Eastern Region: The previously reported evidence of an improvement in domestic demand has not been sustained … Prospects are regarded as bleaker than previously". The South-Eastern region: The recovery which had been gathering momentum slowly during the earlier part of this year has shown more recent signs of faltering". London: there has been little change in the general picture which remains flat. Yorkshire and Humberside: The region's economy shows no improvement and indeed there is evidence of trading conditions worsening for some companies". The Northern region: Overall activity is sluggish with business confidence deteriorating. In the home market it seems that demand has taken a turn for the worse. The East Midlands: Most companies continue to operate at very low profit levels and survival continues to be the keynote for a lot of smaller companies. Wales: Little sign of any improvement, with some companies reporting that initial signs of buoyancy have been totally dashed … in general Welsh industry seems to be bumping along the bottom. The Southern region: No abatement in the number of companies going into receivership, being liquidated or ceasing trading. Scotland: absence of improvement suggests that any substantial recovery later in 1982 is unlikely. That is the picture painted by the Government's friends.

There is no sign of the renewed sense of purpose and confidence about which the Prime Minister boasted in the Daily Express yesterday.

It is no wonder that the CBI has pressed for immediate action to revive the economy. I understand that today its president, Sir Campbell Fraser, said that industry is bracing itself for a new wave of redundancies in the winter. The CBI is even demanding additional investment in the public sector. It is now generally recognised by everyone other than the Government that a boost for public sector investment is vital to prevent the crisis from lurching completely out of control.

We in the Labour Party demand from the Government a massive increase in railways investment, and the TUC in particular has earned the right to demand that. We also call for an increase in construction, housing and roads programmes. For a fraction of the money being frittered away unproductively on unemployment, tens of thousands of jobs could be provided to build homes to house our homeless.

The disaster threatening some of our older inner cities from crumbling decay could be put right and would create jobs in both the construction and material industries.

The increase in telephone charges, unnecessary as they are, should be used to finance additional investment in telecommunications.

Instead of picking on the nationalised industries, as the Prime Minister continually does, as a scapegoat, the Government should be using their potential to get Britain's economy moving again. That course of action would do much more for Britain than the ideologically motivated privatisation and looting of public assets that so obsesses the Government.

The local authorities, which have taken such a hammering from the Government and have had a further blow today from the Secretary of State for the Environment, are massive private sector customers. Private firm after private firm tells me that it is desperate for public sector orders. Why do not the Government decide in favour of the P110 military aircraft about which there have been early-day motions and Adjournment debates? Above all, before the end of the debate we expect the Government to announce that the "Atlantic Conveyor" replacement will be built on the Tyne. I know that the Prime Minister was not in the Chamber at the beginning of the debate. I hope that she has been trying to convince Lord Matthews that that order should be placed on the Tyne. I hope that during the debate she will tell her right hon. Friend that that can be announced today.

It is intolerable for the Prime Minister to say, as she told the 1922 Committee last Thursday, that she does not intend to change her policy. Unchanged policies mean even heavier unemployment, even greater waste of precious resources, and even greater social devastation and even greater human suffering.

The right hon. Lady says that she cares about unemployment. If she does so, let her do something today to show that she cares. She must cast aside her dogma and obstinacy and tell us what the Government intend to do to stop the disaster that is taking place. What does the level of unemployment have to be before the Government act? What does it have to be before the Prime Minister shakes herself and does something about it? However, I fear that that it too much to ask of her and her colleagues.

The Government have failed the economy, they have failed on production, which is even lower now than when they came to office, but, above all, they have failed on humanity. They are ready to see unemployment soar way above last week's record figures. They have given the nation the impression that they are quite prepared to go into the next general election with 3½ million unemployed, hoping that the 85 per cent. of people who have been able to hang on to their jobs will not give a fig about those who are jobless and have no hope. If the right hon. Lady will not change policies, it is time that she went and took her Government with her.

4.49 pm

The Chancellor of the Exchequer (Sir Geoffrey Howe)

I beg to move, to leave out from "That" to the end of the Question and to add instead thereof: this House, recognising that the problem of rising unemployment is world-wide, supports the policies of Her Majesty's Government, which offer more realistic prospects of economic recovery and secure employment than the failed Socialist policies of the past". I had hoped to start my speech by saying something about the prescriptions and solutions advocated by the right hon. Member for Chesterfield (Mr. Varley). The House will have noticed that he offered not one word in that direction.

Mr. J. W. Rooker (Birmingham, Perry Barr)

Yes, he did.

Sir Geoffrey Howe

I should like, even so, to find common ground with him on one thing, despite his efforts to make that difficult. There is no difference of opinion between the two sides of the House on the grim tragedy portrayed by today's unemployment figures. The point at which we register our disagreement with the Opposition is when they seek to portray, as the right hon. Member for Chesterfield did this afternoon, the problem of rising unemployment as a new one, which did not exist before May 1979, and has been wilfully invented by the Government. Nothing could be further from the truth and the Opposition know that.

In this country unemployment has been on an upward trend for almost a quarter of a century, starting at 300,000 in the 1950s, rising to 500,000 in the late 1960s, 800,000 in 1972, and to almost 1,500,000 in 1979.

Mr. Giles Radice (Chester-le-Street)

Rubbish.

Sir Geoffrey Howe

The Opposition shout "Rubbish" at those facts, but they are important. It cannot be denied that the unemployment level has been rising steadily during the past two decades. There is no point in trading blame for that background fact. The proper and responsible task for the House is to agree on the basic causes. The most obvious and fundamental cause of rising unemployment has been the decline of industrial competitiveness that has been sustained over many years. For years, as the right hon. Member for Chesterfield knows, management and unions have agreed on levels of pay settlements that have borne no relationship to the underlying productivity and performance of the industries in which they are interested.

The right hon. Member for Chesterfield drew attention to the fact that unemployment in the West Midlands has risen to levels beyond those to which that prosperous area was accustomed. The reason for that springs to a large extent from the industry with which he had to grapple for so many years—the motor industry. It is an industry dogged by an inflexible adherence to outdated and restrictive practices in which over-manning was perpetuated for years. That was hidden unemployment that finally came to the surface.

The right hon. Member for Chesterfield is intimately concerned with the steel industry. It cannot be disputed that the massive redundancies of the past three years in that industry are the price that the nation had to pay for deferring action for so long in the past under the leadership of the right hon. Member. If we are to get our people back to work—even if the rest of the world were more prosperous than it is—it is crucial for us to recapture markets that we have lost at home and overseas.

In the past two years we have made some headway in recovering the competitiveness lost in the past six years. Although we have recovered about one third of the ground lost since 1975, there is still a long way to go. The right hon. Member for Chesterfield sought to mislead the House into believing that the conditions outside this country have nothing to do with the problems that we face. The truth is that the conditions we face are more urgent than they are abroad, but the problems are certainly not ours alone.

The unemployment rate in Canada is now 10 per cent. The unemployment rate in the country to which the right hon. Member for Chesterfield referred—France—is 10.8 per cent. [HON. MEMBERS: "8.2 per cent."] I shall discuss France later. The seasonally adjusted unemployment level in France is 10.8 per cent., and in Italy 10 per cent. It is close to that figure in the United States of America. In other countries within the European Community it stands at 12 per cent., and in Belgium it stands higher than that. It is more important that unemployment in this country is now running at a significantly lower rate than in the countries to which I have referred. Unemployment for the year ending May rose by about 15 per cent. In Germany and Canada the figure rose by 40 per cent. The German rate also stands at 8 per cent.

The problems that face us face other countries as well. It is fruitless to bandy this kind of argument across the Floor of the House when right hon. and hon. Gentlemen know that the world economy suffers severely from rising unemployment in virtually every country that I can name. Our own country faces greater difficulties because of the longer period for which we have been losing competitiveness compared with other countries.

Mr. Peter Shore (Stepney and Poplar)

The right hon. and learned Gentleman has been blaming virtually everything and everyone except himself for the country's present plight. Does he accept, or with what authority does he deny, that we have lost about 36 per cent. of international competitiveness since he took over? What responsibility does the right hon. and learned Gentleman accept for the present disastrous position?

Sir Geoffrey Howe

Over the past two years competitiveness has been improving significantly. [Interruption.] We have recovered about one third of the competitiveness lost since 1975. It is true that between 1977 and 1980 we lost competitiveness on a massive scale. One of the principal reasons for that was the huge pay explosion that we inherited from the previous Government, generated by the Clegg commission, which was bequeathed to us. Since then we have made slow but painful progress to recover that lost competitiveness.

Mr. Shore

We must have a basis of fact. Is it not the case that during the first two years—the second quarter of 1979 to the second quarter of 1981—we lost about 40 per cent. in international competitiveness, and it was restored to a loss of 36 per cent? That has happened since the right hon. and learned Gentleman took on his present responsibilities.

Sir Geoffrey Howe

There are two causes for the loss of competitiveness. [Interruption.] The first cause was the rise in the exchange rate during that period. The exchange rate level today stands at almost exactly the level of 1979 and no longer contributes to that loss of competitiveness. The second cause was the massive rise in unit labour costs, which were the direct result of the pay explosion bequeathed to the Government. There can be no escape from that responsibility. If one moves from that analysis of the problem, the important thing to recognise is that—

Mr. Norman Atkinson (Tottenham)

rose—

Sir Geoffrey Howe

I shall not give way again. I have given way a number of times already. No responsible Government abroad seek to solve the problem of unemployment by the prescription of reflation that is constantly urged upon us by the Opposition. On the contrary, almost every other country grapples with the problems by reducing expenditure or raising taxes. Some have done both. In Germany and the Netherlands both those things have been done, and both countries are enjoying a better record on inflation than most of the others.

In the United States of America the performance on inflation has been good, but their problem persists because their deficit and interest rates remain high. There is only one exception to the proposition I have just made, which is that offered by the French Government. The right hon. Member for Chesterfield expected my right hon. Friend the Secretary of State for Employment to discuss that. It is only just over 12 months since the people of France elected an enthusiastic Socialist Government. During that 12 months, the banks have been nationalised, a full panoply of exchange controls has been introduced and a massive programme of reflation has been undertaken. What has happened?

Mr. Jack Straw (Blackburn)

Unemployment has fallen in France in the past four months.

Sir Geoffrey Howe

Unemployment in France has risen sharply and is still rising. Indeed, in the past three months for which figures are available, unemployment in France was rising four times faster than in this country. Inflation, too, has been moving up. The French franc has been devalued twice against the deutschmark, by a total of over 17 per cent. Within 12 months of their election the French Socialist Government have had to reverse their policies. Does the Labour Party deny that within 12 months of entering office the French Government have abandoned all the policies to which they were at first committed? They have set a ceiling on their budget deficit of 3 per cent. of gross domestic product. They have introduced a package of austerity measures, shelved many of their public expenditure plans, introduced a four-month prices and wages freeze and are planning cuts in spending on social security benefits.

Even the Labour Party could hardly wish for a plainer demonstration of what would happen more quickly in Britain if the plans to which it is committed were ever to be implemented. Indeed, the only plainer example that I can think of is its experience in 1976.

Mr. Radice

Has the right hon. and learned Gentleman seen a report today in the Financial Times from the EEC showing that the jobless total in France dropped from 1,880,000 in May to 1,867,000, thus reducing the unemployment rate fractionally from 8.3 per cent. to 8.2 per cent. and marking the fourth consecutive monthly drop since March, when the rate was 8.7 per cent?

Sir Geoffrey Howe

The figures that I have show that in France the seasonally adjusted level of unemployment has been rising during the past 12 months.1 [Interruption.] The fact remains that the French Government have reversed their policies of reflation and expansion, to which they were committed, recognising that they laid the foundations for disaster.

Mr. Raymond Whitney (Wycombe)

Did my right hon. and learned Friend see the report in yesterday's edition of the Financial Times, which revealed that France's trade deficit in June was the highest for 14 years and that this year's trade deficit is likely to be double last year's?

Sir Geoffrey Howe

I saw that report and I also noted the salient factor, of which I have just reminded the House, that inflation in France has been rising. However, although the French Government came to office on policies just like those prescribed by the Labour Party, they had to reverse them within 12 months of the election.

By contrast, we are following the alternative policy that commends itself to other nations. Of course, the recovery that is taking place is uneven and frustratingly slow. We have never said that it would be anything other than that. Indeed, in current world conditions we could not have offered anything more. However, disappointment with the pace of progress should not blind us to the facts.

The facts are that in the three months to May industrial production was 3 per cent. higher than in the spring of 1981. The hesitation apparent during the winter may be coming to an end and the longer leading indicators certainly continue to rise strongly. Most outside forecasters are looking for growth of 1 per cent. to 1.5 per cent. this year and of 2 per cent. to 2.5 per cent. in 1983. Manufacturing productivity, which is the key to further progress, is now 12 per cent. higher than at the end of 1980.

Lessons are being learnt—for example, in the motor industry, where Ford has achieved continental standards of efficiency at Bridgend, and during the past two years British Leyland has improved productivity by more than 50 per cent. In addition, the Metro line approaches the performance of anywhere else in Europe. Because manufacturing pay settlements have come down and productivity has risen, unit wage and salary costs have risen only 3 per cent. in the past year, which is well below the average of our major competitors. However, cost competitiveness has improved by 10 per cent. to 15 per cent. in the past 18 months.

Those are the facts and they show that, despite the difficulties, British management and workers are responding to the difficult circumstances that face them. But the Government can help and are helping directly. We are making it clear that we remain determined to pursue responsible monetary and fiscal policies and to hold down public sector borrowing to match them. As part of that policy, the Government aim to hold to the published public expenditure plans and I should clearly state that that includes the provisional plans for local authority current expenditure next year, which have just been announced by my right hon. Friend the Secretary of State for the Environment.

Public sector borrowing was below expectations last year and so far this year the figures are consistent with the Budget forecast. So too with monetary conditions: all the monetary aggregates have been growing at rates well within or below the target brackets that I set out in my Budget Statement. The growth of bank lending has been falling and the exchange rate has been firm. Those are the circumstances that have enabled us to secure a slow but steady fall in interest rates. They have fallen by four full points since the turn of the year.

Until recently, much of that progress has been against the tide in the United States of America. While at the start of the year our rates were 2 per cent. above dollar rates, they were 3 per cent. below at the end of last month and the tide in the United States of America may now be turning. That, too is an encouraging sign for the rest of the world.

Linked to our success in sustaining the fall in interest rates, and no less relevant to our fight to check the rise in unemployment, is our solid and continuing success in the fight against inflation. Last autumn, we forecast inflation of 10 per cent. by the end of this year. At the time of the Budget that figure had been revised downwards to 9 per cent. with the prospect of 7.5 per cent. by the middle of next year. There is now good reason to hope that we shall reach the figure of 7.5 per cent. by the end of this year. We do not intend that reaching that figure should be the signal for a reversal, as it was when, for the only time in the past decade, it was reached by the Labour Government for one month in 1978. Unlike them, we are determined to win the battle against inflation.

Even so, there are those who advocate change in this balance of policy. Some of those who argue for a fiscal stimulus maintain that it could be consistent—as it would have to be—with the medium-term financial strategy, because money GDP may be growing more slowly than expected. I would not want to put too much weight on short-term movements in a measure such as money GDP, which tells us more about what has happened in the past than about what is likely to happen to prices and output in the future. Even if we had a money GDP target—which we do not, for that very reason—it would not be sensible to try to fine tune it by adjusting policy every few months.

It is my firm belief that falling interest rates will help to boost demand and give help where it is most needed—to companies and investment. However, we should not forget that business and industry are just about to start benefiting from the national insurance surcharge cut that comes into effect from 2 August. It is a cut in the effective rate from now until the end of the financial year of 1.5 per cent. It was the main Budget measure, designed to bring £640 million of direct help to business. It would not be sensible to write off such a major measure as ineffective before it has even had time to come into effect.

Mr. D. N. Campbell-Savours (Workington)

Will the right hon. and learned Gentleman address his mind to the remarks made in the past few days by the CBI? Its surveys from the regions show that more people are to he made unemployed. Does he not understand that it is expecting him at least to give some sign to the House today that he will make changes? The CBI knows—and it is about time that the right hon. and learned Gentleman knew—that unless he increases consumption our people will not find jobs for many years.

Sir Geoffrey Howe

The hon. Gentleman has put his finger on precisely the wrong point.

Mr. Campbell-Savours

So the CBI is wrong?

Sir Geoffrey Howe

In many cases and in many parts of the economy there is no problem about generating and increasing consumption. Again, I cite the motor industry as one example among many of where import penetration is high and where—because we have still not achieved a sufficient advance in competitiveness—consumption is all too likely to take place at the expense of British manufacturing.

Mr. Keith Stainton (Sudbury and Woodbridge)

Is my right hon. and learned Friend saying that the recession owes more to financial pressures than to a classic fall in demand?

Sir Geoffrey Howe

The recession is caused by many things. However, if I had to, I would identify two causes. First, the world recession has affected every country in the world and, consequent upon the huge levels of inflation previously reached, it has affected our economy at a time when it had already achieved uniquely poor levels of competitiveness compared with other countries. The answer is not to embark upon an expansion of so-called demand in this country if by doing that one achieves not an improved performance but an improvement of inflation. Of course, it is possible to argue at the same time for lower taxes, higher public spending and lower interest rates, but those who argue for those three things at the same time are deceiving themselves. To expand public borrowing by raising expenditure and cutting taxes at the same time as hoping to achieve a fall in interest rates cannot be done. Our policies, by achieving lower interest rates, are bringing to British industry and to British consumers a major benefit relative to other countries. It is important to retain that benefit. Industry also attaches importance to it. We would not help business and industry or jobs if we were to endanger confidence by higher public spending or premature tax reductions and so put at risk the prospect of a further fall in interest rates.

Mr. Peter Tapsell (Horncastle)

As my right hon. and learned Friend knows, I have never advocated a general fiscal increase in demand. Indeed, even with the relaxation of hire purchase controls that was announced yesterday, there seems to be a danger, as my right hon. and learned Friend indicated, of sucking in imports without increasing employment. He knows that I have advocated for some time that we should pursue traditional Tory policies, such as were pursued in the early 1930s, when the world faced a similar position and when unemployment was rising all over the world. The Conservative Government of that day, particularly Neville Chamberlain as Minister of Health, launched a major house building programme. It is by investment in the construction industry that an enormous amount of additional employment can be provided and the entire pump of the economy can be primed.

Sir Geoffrey Howe

My hon. Friend's contribution is founded on a misreading of the history of the 1930s in several important respects. First, and most importantly, the 1930s was not a time of inflation. The price level was actually falling, in total contrast to the position faced by Britain and the rest of the world at present. Secondly, the house building expansion of the 1930s was over-whelmingly and characteristically an expansion of house building by the private sector. Thirdly, that expansion of the economy was founded, above all, upon the prospect and the reality of lower interest rates. It is that prospect that we must offer to the country today.

Alongside that, it is important not to lose sight of the other causes to which I have already drawn attention, to recall the need to improve competitiveness and to underline, yet again, the need for continued restraint in pay settlements. I was pleased to see that that message has been taken to heart by the Labour Party. I understand that it is offering to those who work for the party a zero pay increase on the ground that the party's finances are in such a condition as to preclude any pay rise. It is heartening to see such a classic illustration of the principle of cash limits being applied. I hope that the Opposition will stand as firmly behind other employers who resist irresponsible pay claims, as they are understandably prepared to do when they face them in their capacity as an employer.

The reality is that pay rises are slowing down. That is a good thing. There is a long way still to go. Average settlements in manufacturing in Britain are still half as high again as in Germany and Japan. Those who take the problem of unemployment seriously will settle in the years ahead for much lower pay increases than those of the past 12 months. The importance of such restraint is manifest in the private sector where jobs are clearly at risk and where it is obvious to all that firms can be driven by strikes or declining competitiveness as a result of increased costs, to lay men off.

The need for pay restraint is no less real in the public sector. The public service pay bill amounts to £35 billion per annum. The Government are determined to resist unjustifiable pay increases there, in order to keep public spending down. That is essential if we are to see the prospect of lower interest rates and lower taxes.

The right hon. Member for Chesterfield spoke about the need for a big investment programme in British Rail. There is a good example of how the matter should be approached. Of course we are glad that British Rail workers are now back at work. We are glad of the good sense shown by the rank and file of the National Union of Railwaymen. We are glad also to note the responsible role played by the TUC in that respect, but if we are to start setting about discussion of an investment programme for British Rail and if we are to start restoring British Rail's finances and to provide a basis on which that investment can be justified, we must have sense and sensibility from the Opposition about productivity, about achieving the improvements that are necessary and about pay restraint in British Rail. We need to have a great deal more sense from them in such matters than we have heard in the rail dispute from the Leader of the Opposition.

An early end to the dispute in the National Health Service is equally important. The Government take pride in the fact that the level of services has been maintained and that a record level of resources in real terms has been provided for the service. No more money can be provided for National Health Service pay this year. To pay part of the increase claimed would inevitably direct resources away from patient care and would mean fewer jobs in the service as well as a lowering of standards. Surely none of us on either side of the House wants that to happen.

I have mentioned also the features that are fundamental to the prospect of progress, but it is no less necessary to encourage change and enterprise, to encourage new business and the restoration of profit margins. It is for that reason that we have swept away a whole range of controls left by our predecessors. We have swept away controls on prices, dividends, office development and industrial development, all of which stood in the way of enterprise and business. That is why we have removed exchange controls and also hire purchase controls, the last of that line.

The experiment with enterprise zones has been a considerable success. The example of enterprise zones is now being followed in the United States. The present 11 zones are achieving impressive results. A range of development is now under way, bringing new enterprise and much needed investment to old dockland areas such as the Clyde, to steel closure areas like Corby, and to other areas of physical decay. At Clydebank, for example, more than 100 firms have moved in—almost 50 of them new firms—with potential for more than 1,300 jobs. The private sector is grasping the opportunities and public authorities are supporting the initiative with enthusiasm.

I am glad to be able to tell the House today that we intend to designate 11 more enterprise zones—seven in England, two in Scotland and one each in Wales and Northern Ireland. They will not all necessarily be of the same size. The same attractive package of benefits will apply to these as to the first 11. My right hon. Friend the Secretary of State for the Environment will make details available later today.

Mr. Ray Powell (Ogmore)

Is the right hon. and learned Gentleman aware that, with regard to the enterprise zone in Swansea, £10.1 million was spent to create only 31 jobs?

The Secretary of State for Wales (Mr. Nicholas Edwards)

That is untrue.

Sir Geoffrey Howe

My right hon. Friend the Secretary of State for Wales repudiated that proposition as soon as it was uttered. I am also told that it has been repudiated by the leader of the Labour council in Swansea.

The measures of that type, with which I have been concerned, are directed to the long-term purpose of improving the economic prospects for industry and so for jobs. But we can also provide direct assistance on jobs for those out of work. We shall do everything we can to help those who are caught in the process of industrial change. That is why we have already in place a wide range of special employment and training measures, now costing £1½ billion a year and helping about 500,000 people.

In my Budget speech I mentioned the suggestion by Lord Scarman among others that there could be advantage in bringing together on the one hand, tasks of environmental improvement in local communities, or help to those in need, that are crying out to be performed, and, on the other hand, those who are anxious to find work. The Manpower Services Commission has now put to my right hon. Friend the Secretary of State for Employment recommendations for the operation of such a scheme which the Government accept. There will need to be further consultations on the details but the commission will introduce on 1 October a new community programme providing opportunities for community work: and voluntary service for those who have been unemployed for some time. The community work part of the programme will bring together the existing community enterprise programme and the initiative that I proposed in my Budget speech to provide a much larger number of opportunites at a relatively low unit cost. If the demand is there, this will together provide up to 130,000 places for the long-term unemployed. Most of the places will be part time and assistance will be given with training if required.

The new community programme will also encompass the scheme for voluntary service announced in May. The whole programme will continue for at least two years at a gross cost in a full year of about £575 million including existing measures. The net expenditure cost of the extra 100,000 community work places will be £185 million a year after allowing for savings on benefits payments. This figure, which includes supervision, is much in line with the figure of £150 million which I foreshadowed in my Budget speech and which did not include supervision costs. It will be found within existing planned totals.

The Government have also decided to encourage the extension of part-time work more generally in the economy. The object will be to provide additional opportunities for productive jobs for unemployed people. The scheme will be open from 1 January next year until 31 March 1984. It will offer employers who split a full-time job into two part-time jobs a flat rate grant designed to cover their additional costs during the first year and to provide some incentive. The grants will be payable only in cases where the splitting of a job results, directly or indirectly, in a reduction in the number of unemployed people claiming benefits. This proposal is similar in principle to a suggestion made in the recent report on unemployment from a Select Committee in the other place. The idea has also been under examination by the Manpower Services Commission.

Full details of the scheme will be announced in the early autumn. It is not possible to forecast what the effect will be in putting back to work people now unemployed. But if, for example, the grant amounted to £500 and 100,000 jobs were split, the gross cost would be of the order of £55 million over the life of the scheme. Since there would be savings from benefits that would otherwise be paid, the scheme should have no net cost in terms of total public expenditure.

I hope that the House will support these imaginative new measures. [Interruption.] The Opposition may laugh but these measures meet real needs. They deserve a positive response. They should provide what the Opposition claim they want to see provided—an opportunity for many of the long-term unemployed to undertake useful work to their own benefit and that of society as a whole. Unemployment is indeed a tragedy. If there were simple solutions, they would have been found long ago.

Mr. Michael Meacher (Oldham, West)

Will the Chancellor give way?

Sir Geoffrey Howe

No. I am not giving way at this stage. We have to continue with our efforts to get the economy back on the right lines. Against an unfriendly world background, these efforts are beginning to pay off. There is no reason now to depart from the steady economic policies that we have adopted. To abandon those policies would be to abandon the prospects of success. They have led to massive gains on inflation, which should not be ignored. They are creating, and have created, conditions for falls in interest rates. They will lead to further progress on inflation and on output. To give up our policies, as the right hon. Member for Chesterfield has urged, would be to give up the real chance that we now have for a lasting, improved economy and for a sustained reduction in unemployment. I commend the amendment to the House.

Hon. Members

"Resign".

5.23 pm

Mr. Joel Barnett (Heywood and Royton)

Few hon. Members will, I think, disagree that the Chancellor is guilty of the most appalling complacency if he really believes that his economic policies have been succeeding over the past three years. Even worse is the fact that he attempts to mislead people outside the House into believing that there is the slightest prospect of these policies succeeding in the future. I hope that the right hon. and learned Gentleman realises that his speech today has convinced no one. Indeed, the miserably small reflationary measures announced yesterday and those that hon. Members have heard about today will have a virtual nil effect over what was already known from the Budget.

I understood the Chancellor to say—he will no doubt correct me if I am wrong—that even these miserably pitiful community measures are already within planned programmes and will therefore have no effect other than that already planned in his Budget. There is no real economic consequence of the measures that he has announced today. That is the assumption that hon. Members must draw from the Chancellor's remarks.

My right hon. Friend the Member for Chesterfield (Mr. Varley) was understating the case against the Government when he condemned the Chancellor's strategy, which the right hon. and learned Gentleman now says that he proposes to continue. He has persisted stubbornly with policies that have failed devastatingly, with harsh consequences not only for the unemployed and their families but also for family companies that one had imagined Conservative Members came to the House to see sustained and improved.

It is precisely those companies that are going bankrupt in their tens of thousands, as shown by the latest figures on liquidations and bankruptcies. Yet the Chancellor blithely says that he proposes to continue with this kind of policy. We would not believe it if we did not see with our own eyes what is happening in our constituencies. We would not have believed that the Chancellor, supported by Conservative Members, could watch these companies going into liquidation with the consequent effects on millions in families up and down the land.

Any strategy pursued by any Government, at this time or any other, must seek to curb inflation and to improve productivity. No one doubts, I hope, the need for action on those two fronts. There is no evidence that anything that the Chancellor has done in the past three years has had any meaningful long-term effect on either problem. If, in the short term, one depresses the economy sufficiently, one will bring down the rate of inflation. That is what has been done.

As for improvements in productivity, it is known that the minute an upturn occurs in the economy, the productivity gains that may have been achieved from the massive increase in unemployment will disappear like snow in the summer. We know that this will happen because nothing fundamental has been done about the problems of productivity.

The policies pursued by the Government and the Chancellor in the past three years consist primarily of massive deflation and little else. They can only result in the economic and financial situation and the tragic unemployment seen today. Even worse perhaps than the effects of the Chancellor's policies on unemployment have been his actions in frittering away the benefits of North Sea oil. Of all the Government's terrible deeds, this is probably the worst. The benefits have been frittered away on maintaining levels of consumption that the country could not afford, given the fall in GDP seen in the past three years. I put this question to the Prime Minster some time ago.—[HON. MEMBERS: "The Chancellor is not listening."] I am grateful to my hon. Friends. I am sure that the right hon. and learned Gentleman can listen to two conversations at the same time. He must be able to do something miraculous. He has not been able to do it with the economy.

The benefits of North Sea oil, frittered away by the Chancellor, should have gone into capital investments, both public and private, to ensure that, when North Sea oil runs out, something worthwhile remains. No Chancellor can be guilty of anything worse than the manner in which the right hon. and learned Gentleman has seen to it that we have eaten the seed corn. We have eaten it with a vengeance. Millions of people and future Governments will pay bitterly for what he has done.

The rest of us could feel equally guilty of seriously misleading the public if we promised, or even implied, that there was some simple solution to the huge problem of unemployment. I say that whether it be the solutions of import controls, leaving the Common Market or pumping huge sums into the economy.

Import controls, other than selectively, and leaving the Common Market would almost certainly result in increased unemployment. Pumping in huge sums would quickly lose more jobs than it created if it simply went into higher wages. I hasten to assure the House that I am not suggesting that we should not be pumping in some money, but I hope to explain how.

The message that should go from the House is the honest one not to believe in the peddlers of panaceas for our great problems. It does not mean that nothing can be done, but it is strictly limited and heavily circumscribed by the extent of any agreement that any Government can obtain with the trade union movement.

With that major qualification, I should wish to see a substantial reduction in interest rates that would result in a fall in the exchange rate much faster than anything that the Chancellor has suggested that he is prepared to accept. I should wish to see an increase in tax thresholds to help those who are on the lowest incomes. At the same time, we should increase social security benefits, which would equally help those on the lowest incomes who have been hit so hard in the past three years.

I should then wish to see substantial increases in capital investment in the public and private sectors with some assistance from the Government, in the way that it was done by the Labour Government, when, with the selective assistance of about 25 per cent. of the cost of new investment over a short time span, we achieved substantial increases in investment in the private sector.

These are some of the things that should be done, and they would mean a major reversal of the Chancellor's strategy. It would not be too bad if we had that, as I hope many Conservative Members will recognise. None of those things would reduce unemployment much. They could quickly increase unemployment and inflation without the kind of understanding, to which I have referred, with the trade union movement, on what we have called in some of our documents an "economic assessment". I understand why those words are used rather than what is presumably meant by my right hon. Friend the shadow Chancellor—some form of voluntary incomes policy—although I do not expect him to agree with me just now.

Those who dismiss that suggestion must answer the question "What is the alternative?" We have seen what happened under the Government. Their incomes policy is a massive increase in unemployment to hold down incomes, which is the worst possible way, hitting hardest those on the lowest wages. I have never pretended that it would be easy to achieve such a voluntary policy, particularly as it needs to be achieved over a long time. It must be acceptable not only to the trade union leaders and any Government, but to trade union members. That was the failure of past incomes policies and would he the failure again.

I have no doubt that achieving such an alternative strategy would be extremely difficult. That is why I am somewhat pessimistic about achieving it. I also have no doubt that there is no chance of a Government headed by the right hon. Lady, running policies that are primarily designed to control incomes by unemployment, achieving such an understanding.

Mr. Dennis Skinner (Bolsover)

While it might be easy for a Government to try to put an incomes policy on, and build a fence around, hundreds of thousands of Health Service workers, firemen, dustbin men and many others, can my right hon. Friend tell me whether any Government have succeeded in putting a 5 per cent., 10 per cent. or zero per cent. incomes policy around an accountant or an estate agent?

Mr. Barnett

I find my hon. Friend's views on these matters conservative. I know that in my constituency the lowest-paid workers did best when we had an incomes policy with a flat rate increase of £6 a week and increases at levels that they had never had in their lives.

Mr. Skinner

The right hon. Gentleman still lost the election.

Mr. Barnett

We shall never achieve fairness in our society when those who are top in our society are able to get the most for themselves while those at the lowest end of the incomes scale receive the least. That is not fairness, equity or the kind of policy or society that my hon. Friend should want to see.

As I was saying, before I was politely interrupted—politely by my hon. Friend's standards—I remain convinced that the Government have no chance of achieving any understanding with the trade union movement, no matter how reasonable the trade unions may seek to be with the Government. Equally, the alliance, with its similar policies to those of the present Government, would not have a chance.

Only the Labour Party could achieve this understanding. Therefore, our greatest need is to have a Labour Government at the earliest opportunity. That is not because I am satisfied that it will be a simple matter, but because it is the only way to solve these economic, industrial and unemployment problems. If the first priority for any Government or any hon. Member is to make a start on bringing down these devastatingly high Levels of unemployment, we can do so only by an understanding with the trade union movement, without being guilty of promising that we can solve these problems by the use of miraculous measures that do not exist.

For the moment, I hope that some Conservative Members, including some within the Cabinet, will recognise that no matter how much they may still believe in some of the dogmas that they espoused in the last election campaign, and which are still being spoken of by the Chancellor, they must bring pressure to bear on their right hon. Friends to ensure that they get some change. Otherwise, they will not achieve any reduction in this devastatingly high level of unemployment.

5.38 pm

Mrs. Angela Rumbold (Mitcham and Morden)

I am grateful to you. Mr. Speaker, for giving me the opportunity to address the House. I understand that it is customary to pay tribute to my predecessor, and I should like to do so. Mr. Bruce Douglas-Mann gave a great deal of assistance to the House in housing matters. Similarly, the constituency was grateful to him for his help on matters of local interest and work in the constituency.

I wish most of all to draw the attention of the House to Mr. Douglas-Mann's integrity and honour in deciding, once he had changed the political stance on which he was elected both in 1974 and 1979, to return to the electorate and ask it to give him a further mandate to remain as a Member of the House. Would that many other hon. Members would follow that example.

I also follow tradition in mentioning my constituency. Publicity in the by-election created the somewhat false impression that Mitcham and Morden is a dusty London suburb. London is made up of a series of villages that have merged with the metropolitan sprawl, and the people of my constituency have merged in a similar way. However, there are many fine examples of architecture, such as Morden Hall, the Canons and Eagle House, to name but a few.

It is easy to overlook the many green spaces in both Mitcham and Morden. Morden Park is a beautiful park and it is enjoyed by many of the residents. The green space of Mitcham Common, 440 acres of it, is also greatly enjoyed by the residents. We have, too, a cricket ground which enjoys, with Hambledon, the distinction of being the only one which has been in existence for 275 years. It is the oldest cricket club in the world. I have therefore gained the impression that the friendly people of Mitcham and Morden are rightly proud of their amenities. I share that feeling, and I shall seek to improve those amenities, wherever possible.

Like many other outer London constituencies, we have an aging population. In Morden, we have the Haig memorial homes, which provide housing for retired men and women who have served in the Forces during the past two world wars. For their sake, I hope that the Government's fight against inflation will be successful, because they are the people who suffer most when inflation overtakes them, particularly those on fixed pensions.

I welcome the announcement of my right hon. and learned Friend the Chancellor of the Exchequer that there will be further investment in enterprise zones for industry. In Mitcham and Morden, many of the people who work locally are employed in light industry. Commerce and office jobs are not predominant. However, we have four substantial industrial areas, of which the largest employs about 500 people. When I was speaking to one of them—Morfax—last week, I discovered that its main concern, if it is to continue, is that interest rates should be lowered, and also commercial rates, which impose a huge burden on commerce.

I share my right hon. and learned Friend's view that the present level of unemployment is something that we must deplore—as much as anything, because we in this country believe that work is the essential way to prove a man's or a woman's worth. However, I am not alone in believing that if the economy is healthy and the Government are not creating false jobs by borrowing money, unemployment, as we have it today, is something that we shall have to live with for a few more years.

That brings me to the young. The right hon. Member for Crosby (Mrs. Williams), in the debate of 21 June, admitted that this is the first Government to introduce sensible training measures in the new training initiative. Here I should like to make two points. First, it is important, if the initiative is to work, that the new school leavers should be given credit for being anxious to prove that they can do a useful job. Therefore, we must be sure that everything that we provide for them is seen to be highly valued. If they go to employers for training, let them do it as a job. Let them work for five days a week, so that they can be seen to be doing something useful in society. Employers will prefer it if young people work for five days a week, and work for a qualification during the evenings, or possibly for periods of a month or a week when they are given time off. The young are not afraid of hard work, although sometimes we seem to think that they are.

Secondly, the courses that we offer in connection with the youth training initiative, in polytechnics and colleges of further education, should be directly related to likely areas of employment. In Merton, our technical college has done something which should be brought to the attention of the House. It has started courses which are of general benefit to young people who wish to pursue sensible careers. It runs a course for repairing motorcycles—not motor cars. It has also started a course for the renovation and repair of musical instruments. Those two unusual courses will provide employment for young people in my area and elsewhere, and it is such courses that our schools, colleges and polytechnics should consider, instead of training for jobs which will not exist in the future. The most important task of the present generation is to harness the enthusiasm of our youth so that it can work for the future for the coming generations.

5.45 pm

Mr. Cyril Smith (Rochdale)

First, I congratulate the hon. Member for Mitcham and Morden (Mrs. Rumbold) on her maiden speech. It was a capable speech and one to which she had clearly given much thought. I have cause to thank her for the tribute that she paid to her predecessor, Mr. Bruce Douglas-Mann. As she rightly said, he is a man of integrity. I listened with interest, as I am sure the House did, to what she said about her constituency, and the tour on which she took us around it. She expressed concern for her constituents. I am sure that we all believe—I certainly do—that she will serve her constituents to the best of her ability. We look forward with pleasure to the many occasions during the next Session on which we hope she will address the House.

Before the House rises, it is right to draw attention to probably the most serious problem facing this country at present—unemployment. We should be grateful to the official Opposition for tabling a motion on their Supply day on this important subject. Having listened to the Chancellor of the Exchequer this afternoon, I am bound to say that I have more faith in the forecasts of the CBI than in his. I am sorry to have to say that. I wish that I could attach more weight to what he said than to what the CBI says. However, as one who has a small business—a business that is very much a supply industry to large engineering companies—I must tell him that my experience is much more in line with the CBI's forecast than with the optimism that he expressed this afternoon.

Whatever one thinks of the Government, it must be said that on employment—or, rather, unemployment—they have failed the country miserably. They may have a capacity to solve wars created through their own incompetence, they may succeed in screwing down wage levels by insecurity of jobs, instead of a proper incomes strategy, such as was called for in what I thought was an excellent speech by the right hon. Member for Heywood and Royton (Mr. Barnett), they may even manage to reduce inflation to a level which is almost, but not quite, as low as when they took office but they are clearly incapable of controlling the rise in the number of jobless. I use the word "incapable". Perhaps I am misjudging the Government. Perhaps it is not that they are incapable of doing 'it, but simply that they are unwilling to do it. Many of us suspect that to be the truth.

The Government talk about controlling public expenditure. This afternoon the Secretary of State for the Environment made a great speech about controlling public expenditure. What the Government fail to say is that, far from controlling public expenditure, the rising level of unemployment greatly increases it. The right hon. Member for Chesterfield (Mr. Varley) quoted the figure of £15,000 million—£15 billion if one wants to roll it off the tongue—as being the annual cost of keeping over 3 million people on the dole. That figure was not challenged by the Government Front Bench. We are paying £15 billion a year to people not to work.

Many hon. Members believe that it is possible to channel a proportion of that money into paying people to work instead of paying them not to work. It is as simple as that. The nation is crying out for houses and house improvements, new hospitals and better roads. Yet there are skilled bricklayers and engineers on the dole. Teachers who have been educated at public expense, many of them leaving college this summer, are being paid not to work when the Government could pay them to teach children and thereby further to reduce the size of classes.

We talk of closing railway workshops, when we have a clapped-out railway system that needs modernized rolling stock, and of electrification of railway lines. Thousands of elderly people need a little help to prevent them entering institutions. We have people able to provide that help but they are paid to stay on the dole.

Scores of miles of sewerage installations and water pipes desperately need to be replaced, particularly in the Manchester area. There are men capable of doing that work, but we pay them to be on the dole and to do nothing. We fail to take steps that are open to us to conserve energy when we know perfectly well that the cost of energy is rising and that sources of supply are limited. It is a mad situation.

I understand the Government's constant pleas about the need for industry to sell and to create demand. However, when the buyer is the State, or an agent of the State, and it refuses to buy because the State refuses to provide the necessary wherewithal, what is private industry expected to do? I do not believe in creating false jobs. I accept that we cannot easily escape a high level of unemployment. However, neither do I believe in frittering away millions of pounds of taxpayers' money to rot people's souls while they linger in the dole queues.

There are men in their early fifties who know in their heart of hearts that their employment prospects are now finished. Teenagers are learning, with disastrous consequences for our future, that it is possible to live in this world without working. Young couples who took out mortgages in good faith now find themselves unable to cope with them, and, as I said earlier, there are university graduates leaving college this summer who know full well that their training, certainly in the immediate future, has been wasted.

Unemployment is about people and their souls. The Government stand condemned for their callous disregard of the plight of those people. Their plight is as much related to emotion and dignity as it is to economics.

In addition to meeting many of the needs in the public sector, to which I have already referred, we should stimulate the private sector. If we were to stimulate the public sector in some of the ways to which I have referred—investment in the railways and sewerage replacement schemes—that would help to stimulate the private economy as well.

There are many other ways. We have heard a great song and dance this afternoon about how the national insurance surcharge—the tax on jobs that was introduced by a Labour Government—will be reduced next week. Some hon. Members believe that that should be not only reduced, but abolished.

We agree that the Government have reduced interest rates in the past 12 to 18 months, but from what? They have reduced the highest rate of interest that any Government have ever imposed on the private sector.

I accept that local government must play its part by properly controlling rates and rates increases. However, with respect to the Government, it is a little disheartening to councils which are making strenuous efforts to reduce local expenditure to find at the same time that grants are cut because they cannot reduce expenditure as much as the Government are demanding.

In an attempt to meet the future needs of the nation, we must have training and retraining. I give the Government full credit for the training schemes that they have introduced, but, at the same time, they are abolishing many first-class industrial training boards. We argued about that in the House seven days ago. There is much about training and retraining that still needs to be sorted out. Many new attitudes must be struck. Is it not ludicrous that a person can become a doctor, a dentist, an accountant or a solicitor at the age of 21 and over but be too old to become a skilled engineer?

This afternoon the Chancellor mentioned some palliative measures that are supposed to help. He said that 11 enterprise zones will be created in addition to the 11 already existing. He gave one interesting statistic. He said that one of the zones—I think that it was in the North-East, but I stand to be corrected—had attracted more than 100 firms, 50 of which were new businesses. The implication is that 50 were old ones. Therefore, those 50 had shifted from areas that were not enterprise zones in order to obtain the benefits available in enterprise zones—benefits being paid for by the British taxpayer. Such benefits will be enjoyed at the expense of those not in enterprise zones who will be less competitive as a result and have to pay full rates and taxes and put up with the planning boards. The one thing that they have in common with those inside the enterprise zones is that they have to sell in the same markets.

Mr. Michael Ancram (Edinburgh, South)

I think that the hon. Gentleman is referring to the enterprise zone on Clydebank, to which my right hon. and learned Friend the Chancellor of the Exchequer also referred. He has made much of the "old firms" that are moving in. Is he aware that some of the old firms might not have survived if they had not moved in to take advantage of the tax concessions and that would have led to job losses?

Mr. Smith

The hon. Gentleman writes his own epitaph for the Government. He is absolutely correct. Thousands of firms have not been able to move into enterprise zones, and consequently they have not survived. That is what the debate is all about.

Mr. Jim Craigen (Glasgow, Maryhill)

I am not sure whether the hon. Member for Edinburgh, South (Mr. Ancram) is advocating that there should be sheltered employment conditions for those moving into enterprise zones. As I understand his philosophy, such firms will go to the wall anyway.

Mr. Smith

I agree with the hon. Gentleman. I had more regard for another part of the right hon. and learned Gentleman's speech, and I was somewhat surprised by the reaction of the official Opposition. I believe that job sharing must be considered seriously. The country will have to accept unemployment in future, whatever Government are in power and whatever system we adopt. Job sharing may be one of the solutions to prevent long-term unemployment. I welcome rather than condemn that part of the Chancellor's speech. Job sharing is worth a try and it is worth considering. I commend the right hon. and learned Gentleman on that part of his speech.

The Government lack the will to fight unemployment. They do not lack the necessary resources, but they certainly lack the will. More than 3 million people are unemployed, and their numbers are rising. That is the Government's record, and it is disgraceful.

The remedy does not lie in more State control. As the right hon. Member for Heywood and Royton said, the remedy does not lie in withdrawing from export markets that are now open to us, in general import controls or in dividing the nation. The remedy lies in uniting and leading the nation as a whole in a new crusade which will require self-restraint in return for security. It must be a crusade which creates a working partnership between capital, labour and Government. The nation needs a new beginning, new attitudes and new ideas. I believe that neither the Government nor the official Opposition are able or willing to provide that new lead. That is why I believe that Britain's future lies in the new political alliance.

6.3 pm

Mr. Edward du Cann (Taunton)

It is an unusual pleasure to agree with the hon. Member for Rochdale (Mr. Smith) in two respects. I refer, first, to the tribute that he generously and correctly paid to my hon. Friend the Member for Mitcham and Morden (Mrs. Rumbold) for an important and remarkable maiden speech. It was a fine speech, beautifully constructed and beautifully delivered. I hope that my hon. Friend will enjoy a long, useful and happy career in this place. I am sure that she will.

Secondly, I agree with the hon. Member for Rochdale that this is a most important debate. I make no excuse for repeating a remark that I made in the public expenditure debate in April 1981. One can advertise that the recipe for success in the House is consistency and persistence. I said then that the unemployment level was intolerable. It stood then at 2.5 million and it is now almost 3.2 million. If the level of unemployment was unacceptable in April 1981, it is even less acceptable now. I recommended then—not for the first time—what I called a programme for national economic recovery—in other words, a new initiative. If that was appropriate then, it is even more appropriate now. We cannot continue as we are.

I wish to make what I hope the House will consider to be some constructive suggestions. Before doing so however, I say clearly to my right hon. and learned Friend the Chancellor of the Exchequer that I support strongly the thrust of the Government's policies and their objectives, which he reaffirmed this afternoon.

As the right hon. Member for Heywood and Royton (Mr. Barnett) has said, inflation is the No. 1 enemy of society. I thought that the right hon. Member for Chesterfield (Mr. Varley), who opened the debate on behalf of the Opposition, was wrong and perhaps a little unfair when, in his powerful speech, he failed to acknowledge that our national balance sheet has some pluses.

In the past three years we have made great gains in the reduction in the rate of inflation. We have made great gains also in productivity in our nation, in industry, in containing unit costs and in competitiveness. Fewer days are now lost in industrial stoppages. We have a strong balance of payments that has enabled us to repay much foreign debt. The strength of the United Kingdom's position was shown during the military campaign in the Falklands when the pound remained strong. Indeed, we hear from hon. Members on both sides of the House that the pound is overvalued by contrast with the dollar. That is all the more reason why we should see not a small reduction in domestic interest rates but a substantial one. I know that that is a cause that my right hon. and learned Friend has at heart. We can very well stand such a reduction.

Above all, among the pluses for which my right hon. and learned Friend deserves much of the credit, there is a refreshing note of realism in the country. There is much greater realism now than in the past years in the approach of our people to the country's economic problems.

This is no time for us to lose our resolve. The United Kingdom's inflation rate is still above the rates of Germany, Japan and the United States and it must come down further. It is still public enemy No. 1. We must hold the gains that we have made and continue their pursuit. Speaking generally, the public sector has yet to match the private sector in its reform and adaptation to the needs of this competitive age—for example, the abandonment of restrictive practices and economy of labour. There is a distance still to travel and in some of the State services, such as the National Health Service, the distance is considerable.

As we take stock before the Summer Recess we can rejoice, and we should rejoice, that the direction now is identified and certain. We may bewail the lost opportunities of the past, the chances of reform which we never took. My right hon. and learned Friend was right when he said that it is all so much harder now at a time of world recession. The current cost is fearful. We see closed factories and a shrunken industrial base. As the right hon. Member for Chesterfield said, manufacturing output is 15 per cent. lower than it was three years ago. Speaking as one who has responsibility for the management of businesses, I never hear of new factories and work places opening on the scale that I see old ones closing. The truth is that we have a crisis, and it is just as well to acknowledge it plainly.

I believe in the keenest possible degree of free trade. I believe in competition. Does my right hon. and learned Friend the Chancellor agree with me when I say that it is wrong that we should give such liberal access to the United Kingdom market? I am beginning to believe that, in certain respects, we are far too liberal with our markets. If we give people from overseas free access to our markets we should insist on reciprocity and, if we do not get it, we should consider alternative policies. We must now say plainly that our first duty is the nurturing of United Kingdom interests.

We could have a whole debate on imports but meanwhile, as the hon. Member for Rochdale and others said, and as we all know, unemployment rises and it will certainly rise further. I repeat that now is no time to abandon or mitigate the central objective of policy, which is the further reduction of inflation, but it is high time to cry halt to the increase in unemployment and to attempt to reverse present trends. However, let the Opposition be in no doubt that the trend has endured for a considerable time. Under their Administration unemployment first doubled.

Mr. David Winnick (Walsall, North)

Not at this level.

Mr. du Cann

No, not at this level, but the trend was established then. Let it also be understood that there is no magic formula for dealing with unemployment. As my right hon. and learned Friend said, within the context of world recession the difficulties are immense and we may not be able to succeed, but the attempt can be made without damage to the Government's strategy. It must be made, because, like inflation, unemployment is a scourge, a waste, an evil that is potentially destructive of society and damaging to individuals and sometimes to whole communities. It is a despairing thing that cannot end unless we take action.

I first draw attention to the fifth report from the Treasury and Civil Service Select Committee that covers the Government's expenditure plans for this fiscal year, 1982–83 to 1984–85. That report merits the serious attention of the House.

Paragraph 15 says: In the past we"— the Committee— have urged the Government to raise significantly the proportion of public investment within the total of public expenditure. At this point an earlier report in which the same suggestion was made is referred to in the footnotes. The report continues: But in 1981–82, plans for current expenditure in cash terms appear to have been exceeded,"— in other words Government have continued to spend more than budgeted for on administration— whilst those for capital expenditure have suffered a significant shortfall"— the House may think that that is serious enough— and the Government do not appear to be taking any steps to bring the situation back to the course they originally intended. We wish to know whether that is still true.

General government investment is estimated to be £671 million, more than 10 per cent., below the level planned. The House will agree that that is a very large figure for a shortfall.

I now quote from a table on the same page of the report. It shows total public fixed investment as a percentage of total public expenditure including debt interest. The House will be interested to know that the table shows that for 1976–77, the percentage was 17.7 per cent. and that for last year, 1981–82, the estimated outturn shows the proportion reduced to 10.7 per cent. To be fair, the plans for 1982–83 estimate that that figure will rise slightly to 11.4 per cent. but I daresay that hon. Members on both sides of the House will agree with the comment of the Committee: This is a profoundly disturbing trend. Administration expenditure goes up continually, while capital investment as a proportion of Government expenditure continues to fall.

Table 3 of the report shows public expenditure by economic category in cash terms and includes the nationalised industries. I shall not quote the figures but read one sentence from paragraph 17: There must be considerable doubt as to whether the forecast increase in nationalised industry investment will occur. That is also a serious matter and it would be helpful to have the Government's comments on it.

We should set out deliberately to change the balance between capital investment and current items. It is a severe weakness in the Government's record that a greater proportion of public expenditure continues to be spent on administration and a lower proportion on capital items. My aim is that we should invest increasingly in the future and less in the present.

The United Kingdom's only hope for survival depends on the best use of our manpower, which is our greatest asset. As unemployment grows, the Government's endeavour to achieve that, especially in the public service—which I strongly support—will come under increasing pressure. There was evidence of that in the speech of the hon. Member for Rochdale. It may even be at risk if the nation decides against it on social grounds. That would be ironic, for it would mean that all the sacrifices of the past three years have been in vain. That is why I argue strongly that the Government should follow the logic of their arguments more thoroughly. Of course we must reduce overmanning, increase efficiency and make restrictive practices harder to maintain, but we must not ignore investment, which is the seed corn of future employment.

Mr. Sidney Bidwell (Ealing, Southall)

Does not underspending on capital investment flow inevitably from mad monetarist theories? Does not an increase in capital expenditure under Government control mean a turn away from those theories?

Mr. du Cann

No, it does not. We require more attention to be paid to the ordinary business of management.

Second, I propose an initiative and repeat what I have argued previously. We should set up a national economic recovery programme and I hope that my right hon. Friend the Prime Minister will set up a small task force for that purpose. It could include one Minister, two people with practical experience of industry, one representative of the nationalised industries, two financial experts with experience in accountancy and consultancy and two people from the City of London with experience of putting money to work. Nowhere in the world is there greater experience of that than in the City of London. That team should be given a clear objective: to identify potentially profitable capital projects and to mobilise the necessary private capital to finance them. We must remove all obstacles to doing that and speed decisions.

I remember well, when I was at school in the years immediately before the Second World War, cutting out from newspapers pictures of the new Cunard liners that turned out to be great assets for Britain. The list of projects that could be financed privately is enormous. We require only the determination to find them, bring them out of the cupboard and finance them. Huge sums are available for the purpose. Hon. Members should examine the money that flows into pension funds—the Wilson committee estimated that it would reach almost £10 billion a year. Thirty per cent. of all equities quoted on the Stock Exchange are now owned by pension funds. There is an argument about whether we should regulate pension funds. I would rather provide a series of new investments that would attract them and the private saver. It is better that they finance specific projects than be swallowed up in the maw of the City's new growth business—the gilt-edged market. As savings they would be non-inflationary.

It was disappointing, when the chairmen of the nationalised industries appeared before the Treasury and Civil Service Select Committee a little while ago, that they seemed to be short of ideas on projects. I suggest that the reason is that so often in the past they have been disappointed. As the hon. Member for Rochdale said, there is now a marked deterioration in our infrastructure. The scope for remedial work is substantial. I do not argue, as the CBI and the TUC do so carelessly, that we should spend, spend, spend our way out of the recession. We should be selective and choose only the projects that are economically viable. Something like that has to happen or many of our services will break down sooner rather than later.

As my hon. Friend the Member for Horncastle (Mr. Tapsell) suggested in his intervention, there is good sense in encouraging our depressed construction industry, which has no propensity to import and, unlike other industries, is labour intensive.

However, above all at this time of crisis we should do our utmost in the House—and the Government should—to bring practical hope and encouragement to British managers and work people. We cannot say truthfully that people have a right to work. We can say that society and the House of Commons have a duty to provide and organise the conditions that enhance a man's prospects of an honest opportunity to work, and all the self-respect that goes with it. That, in particular, we owe our people.

6.21 pm

Mr. T. W. Urwin (Houghton-le-Spring)

I congratulate the hon. Member for Mitcham and Morden (Mrs. Rumbold) on her excellent maiden speech. I trust that, if only for her sake, she will always be listened to in the House with the same attention that she received today.

One cannot speak in this debate with anything other than a heavy heart because of the gravity of unemployment. More than 3 million people are now registered as unemployed. An additional unidentifiable number do not take the trouble to register. There is now a record level of unemployment, and I regard this debate as one of the most important since the Government assumed office three years ago.

Inevitably attention is drawn to the absolute failure of Government policies, as my right hon. Friend the Member for Chesterfield (Mr. Varley) cogently argued. Despite the Prime Minister's strong protestations about economic recovery, I must tell her and the Chancellor of the Exchequer that the optimism that they generate so easily is by no means shared by my constituents. Nor is it shared by millions of people throughout the country. It is not accepted or supported by the CBI or the TUC, both of which persistently call for expansionary measures to be introduced into the economy. As other hon. Members have said, the forecasts of the CBI are much more reliable than those of the Chancellor of the Exchequer.

It is also inevitable during such an important debate that reference should be made to regional aspects of unemployment. The ugliness of regional and local scars will be exhibited not with relish but with dismay and distrust as they appear because of the policies pursued by the Government. Therefore, I make no apology for referring to the level of unemployment in the Northern region, which at present is 17.5 per cent. and is still rising.

There are five black spots in the region where the figures are worse than average. They include my area of Wearside where one man in four is unemployed. That means that more than one person is unemployed in some households, creating difficult problems for the domestic economy. In the region redundancies are continuing at the highest levels since the 1930s. Almost 100,000 jobs were lost in 1980 and 1981. Sadly and tragically, there are few vacancies for the people rendered unemployed. We have hundreds of people chasing after one job. Worse still is the evidence that industrial demand, which is already desperately low, is likely to decline further.

Long-term unemployment, the common lot of too many people, causes despair and frustration. It creates disharmony in families. It can and does affect whole communities. Studies and research have revealed that physical and psychological illnesses can be triggered by long periods of unemployment.

I turn, all too briefly, to youth unemployment. It is sad to reflect that the nation is in the process of wasting a whole generation of young people. They have no prospect or possibility of obtaining employment. Even those with academic qualifications suffer the same fate. Currently 25,000 school leavers are looking for a first job and another 18,500 are kept off the register only by participation in various youth opportunities schemes.

I was by no means impressed by the announcement that was made by the Chancellor of the Exchequer this afternoon about his proposals for community work. Such a scheme, although it can be given a soft and half-hearted welcome, is no substitute for real jobs and apprenticeships for youngsters coming on to the labour market.

Youngsters today face desperate difficulties. I recall with clarity leaving school 56 years ago—that was one hell of a long time ago—and, in common with the youngsters of today, desperately searching for my first job. The right hon. Member for Taunton (Mr. du Cann) referred to his school days. I recall my school days, too. Almost all my free time was absorbed in cutting out and responding to advertisements in newspapers for the all too few jobs that were available.

I can understand the attitude of young people today, and the eagerness and optimism with which they set out to seek employment in a highly competitive labour market. That optimism is all too quickly succeeded by feelings of resentment, bitterness, rejection, frustration, personal inadequacy and, finally, in many cases, unfortunately, utter rejection of the system that places them in such difficult circumstances. It is no credit to the Prime Minister, the Government or Conservative Back-Benchers to be able to claim that they have turned the wheel full circle in three years so that the problem is as bad as it was in 1926 if not worse.

The use by the Secretary of State for Employment of the phrase "Get on your bike" has a hollow ring in my constituency and the North-East. Even more sadly, the Chancellor revealed today that he has no answer to the major problem of our time. Unemployment has indeed reached crisis level. The social problem that has been created requires the Government's urgent attention, and I hope that it will receive urgent attention from the Government's successor after the next general election.

No purpose is served by talking about the problems that have been created and about cause and effect without trying to throw some light on remedial measures. I am inclined to agree with my right hon. Friend the Member for Heywood and Royton (Mr. Barnett) about the negative aspects of pursuing a policy of import control. Not only is it negative; it can have unwelcome and unsavoury repercussions. I have some reservations about accepting what he said about incomes policy as a measure of economic control. Nevertheless, I agree with what he said about the benefits that accrued to some sections of industry and the public service from the Labour Government's incomes policy. Free collective bargaining would not have produced the same benefits for those in lower income groups who received as much as £6 a week at one stage.

Nevertheless, it is abundantly clear that there is no prospect or possibility of an incomes policy succeeding unless it is accompanied by a strictly controlled prices policy. In any event, an incomes policy can bring no satisfaction to the 3 million or more people on the unemployment register. An incomes policy is an imposition for them. We must try to find solutions to what are admittedly difficult problems.

Everyone agrees that the reduction of inflation should be the major objective of any Government. When the Chancellor and his colleagues grow self-indulgent and bestow praise on themselves for having reduced inflation to its present level, they should be aware that they have only succeeded in reducing it to about the level that it was when the Government took office in 1979. I cannot imagine how they can so easily wear the laurel wreath. That is no achievement to be pleased about. The Government's Micawber attitude must be replaced quickly by positive efforts to stimulate the economy.

I declare an interest. I am a former construction worker, a former trade union officer and a Member sponsored by the Union of Construction and Allied Trades Technicians. I welcome the support that has been given by hon. Members on both sides of the House for the revival of the construction industry. It is nothing short of tragic that 250,000 building trade operatives are now unemployed and that 1¼ million bricks are stockpiled in yards around the country. That is enough bricks to build 120,000 three-bedroomed houses. Stimulation of that industry would cost the economy nothing, as the right hon. Member for Taunton pointed out. Local authorities and private builders should be given greater encouragement to create employment and badly needed apprenticeships as well as the houses that people are entitled to expect.

There should be a restoration of local authorities' autonomy, free from the dictatorship of the Secretary of State for the Environment. His statement today showed clearly that he intends to create even more unemployment in local government services. He is bent on pursuing that policy. He should encourage local authorities' efforts to generate new industry in their areas. Above all, he should even now begin to think about restoring the cuts in rate support grant so that councillors who have been democratically elected as representatives of the people should once again be masters in their own house.

The Chancellor should relax the highly restrictive cash limits that are imposed on nationalised industries, especially those that generate new jobs. The Government should cast aside their blind allegiance to political dogma which dictates their policy of hiving off profitable public assets, which invariably reduces the number of jobs in those sectors. They should halt the massive deindustrialisation process, a major contributor to high unemployment. They should harness North Sea oil resources to stimulate manufacturing industry. They should redeem their election pledge to operate a strong regional policy.

A recent report that was issued by Tyne and Wear council reveals that assistance from regional aid schemes has fallen by 50 per cent. since the mid-1970s. The Northern region relies heavily on the basic industries, including ship repair and shipbuilding. A few days ago, British Shipbuilders dropped a bombshell about ship repair in the Northern region. Because of the present state of the market, the labour force is to be reorganised with the possible loss of 1,500 jobs. As was intimated at Question Time, that means, once again, the loss of an unidentifiable number of jobs in industries that are ancillary or subsidiary to ship repairing.

Shipbuilding also needs orders. I take this opportunity to re-emphasise the appeal of my right hon. Friend the Member for Chesterfield about the replacement ship for the "Atlantic Conveyor". It would not merely be tragic, it would be criminal and immoral if that ship were to be built anywhere other than in the United Kingdom, indeed anywhere other than in the Tyneside ship yards, which I understand are the only ones capable of dealing with a ship order of that size.

Finally, the message must go out loud and clear from the House today that the Opposition have absolutely no confidence in the Government's ability to remedy this woefully difficult and pitiful situation in which more than 3 million people are on the unemployment register. Positive action is not invited but demanded of the Government in the interests and in the name of all those whose lives are being wasted through the lack of employment opportunities caused by the Government's policies.

6.40 pm

Mr. Robert Hicks (Bodmin)

It is right that this debate should take place before the House rises for the Summer Recess, for two interrelated reasons. First, we must consider the full implications both for the country as a whole and for the individual families and communities involved of having 3.2 million people out of work. Secondly, the debate allows us to discuss in advance the consequences for employment if certain decisions about public expenditure are made by the Cabinet in the autumn.

Hitherto, my right hon. and learned Friend the Chancellor of the Exchequer has placed great emphasis on the need to reduce; inflation. I believe that that was correct and he has undoubtedly been successful in doing that. Furthermore, the immediate outlook for a further reduction looks encouraging. I respectfully point out to him, however, that whereas a year or so ago inflation was probably the principal worry of the electorate, my impression is that unemployment has now become the major economic and political issue in the constituencies.

In this context, people in work are not only anxious about their own job security and likely to become increasingly more worried if predictions of a further round of redundancies on a national scale in the autumn are correct; they are also perplexed about the economic cost to the nation of 3.2 million unemployed. As has already been stated, it is frequently suggested that the cost of unemployment to public funds is £5,000 per year for each family. At the same time, the Government give high priority to the need to control public expenditure.

It is surely not beyond the capabilities of all concerned to devise the necessary arrangements whereby these financial resources are used for positive job creation. Such a programme would not only have the desirable effect of improving output or the extent of services provided, but go some way towards alleviating the adverse social implications resulting from unemployment.

I represent an area in which, irrespective of the state of the national economy, unemployment is invariably between 50 and 100 per cent. above the national rate. Unemployment in Cornwall is currently 15.1 per cent. In the South-West assisted area, it is more than 16 per cent. The underlying worry that is not revealed by the figures, however, is that long-term unemployment has more than doubled in the past 10 months. Furthermore, that undesirable and distressing trend applies to all age groups.

That brings me to the key question of what the Government can and should do to try to reverse those trends. I appreciate that my right hon. and learned Friend the Chancellor does not wish to take any action that would prejudice his desire to reduce inflation still further. I also understand that he wishes to guard against any action that will result either in excessive pay demands or in a rapid increase in imports. Despite those constraints, however, I believe that it would be wrong, and certainly politically foolish, for Ministers to ignore the evidence of sagging levels of economic activity.

My right hon. Friend the Member for Taunton (Mr. du Cann) talked about consistency in one's arguments and advocacy. I think that I, too, can claim that. As long ago as May last year—and perhaps May two years ago—it was clear to me that certain requirements were necessary if economic activity in this country was not to decline still further. About 12 months ago, certain Ministers predicted that the worst of the recession was over. The jargon was that the economy had "bottomed out", or some such phrase. I certainly did not see much evidence then, nor do I see much evidence now, of a gradual but sustained economic recovery. Moreover, it is not without significance that many outside organisations and interested observers who six or 12 months ago advocated caution, now say that the situation is far more urgent and that certain Government action is necessary.

One of the tragedies of the past eight years has been that successive Governments have allowed our public works capital investment programme to be steadily eroded. It seems an appropriate moment to reverse that trend by providing long-term investment for the nation's benefit while at the same time providing short-term, much-needed employment opportunities. It should be remembered thatwe would start by saving £5,000 per annum per family. That should appeal to my right hon. and learned Friend the Chancellor from the point of view of the public sector borrowing requirement. The creation of real rather than synthetic jobs should also strike a favourable chord with my right hon. Friend the Prime Minister.

Numerous areas cry out for such selective investment—house improvement, energy conservation, water and sewerage replacement schemes, rail electrification, to name but a few. Most of them involve the building and construction industry, which is labour intensive and does not require large amounts of imported raw materials to produce and serve. In addition, every local council, water authority and health authority has projects drawn up, but shelved, which could be implemented if the necessary funds became available. I am convinced that sufficient unused resources are available for any limited reflation that would result from my suggestions which would in no way prejudice the Government's overall economic objectives.

It is also important to emphasise the implications for the regional economies of the United Kingdom, which urgently require—certainly the South-West does—capital investment programmes, with all the economic and social benefits that would accrue as a result.

In conclusion, I cite the example of the far South-West and Cornwall in particular. The region is essentially non-industrial in character. Therefore, it is more dependent than most on public investment in determining the local level of economic activity. Furthermore, it has been estimated that 90 per cent. of contracts in the county over the past decade or so from the public sector go straight to the private sector. Therefore, there should be no objection on doctrinaire grounds to that course of action.

My views are well known and well established on this subject. My position within the Conservative Party is also well known. It is important that my right hon. and hon. Friends should take note that unemployment is becoming increasingly important in the minds of the electorate. If the Conservative Party is to get back to the notion for which I believe it should stand, and what attracted me to it, of being the party of one nation, we must take action on the lines that I have suggested, and quickly.

6.51 pm

Mr. Norman Atkinson (Tottenham)

The hon. Member for Bodmin (Mr. Hicks) asked for growth. With dangerous ideas of that sort, he will shortly need to be positively vetted. Although he prefaced his remarks by saying that he has no wish to offend the Prime Minister, he none the less said that he wanted a little bit of growth.

However, that was not as brass-necked as the speech of the chairman of the 1922 Committee, the right hon. Member for Taunton (Mr. du Cann), who says that enough is enough. We must certainly be getting near a general election when the chairman of the 1922 Committee calls for lower interest rates. He said that we could not go on in this fashion and continued by contradicting the Chancellor's statement and then set out his own ideas to stimulate growth in the economy. Well, that is marvellous. I welcome these progressive ideas that are starting to come from Conservative Members. The monetarists are beginning to see the error of their ways and are attempting to bring about a conversion. Although they are halfway through the tunnel and the lights have gone out, they are none the less hoping for something to happen.

The Chancellor has obviously forgotten the criticism some time ago of the 364 leading economists in this country who condemned the Government's policies. They said that the policies were economic bedlam with no future. They predicted, in precise terms, all the tragedies that are now occurring in the economy. If any group in a profession has ever been proved absolutely right, having been totally ignored by the Government, it is the 364 leading economists who attempted to correct the Government's direction.

As a result of the Government's actions, we have probably become the most decadent society in the Western world. We are now to have more decadence. The Government want an extension of that part of the economy that I associate with Petticoat Lane. The ideas of Petticoat Lane are being encouraged right across the economy, with small traders and small business people setting up small factories underneath railway arches. That is what the enterprise zones are made up of. They have buckets for lavatories, because there is no regard for planning agreements. They have irresponsible attitudes. They have the worst possible working conditions. Such businesses say "To hell with responsibility", and set themselves up with a bucket, a hammer and a pencil, and that is the lot. [HON. MEMBERS: "Rubbish".] If that is rubbish, hon. Gentlemen should visit existing enterprise zones. The firms there have been able to avoid their planning and safety responsibilities. The evidence is there; I need not go into detail. All the characteristics of Petticoat Lane are spreading across the economy.

Any visitor to London will confirm that London is the biggest rip-off in the Western world. We have the biggest black economy in the Western world. We have the biggest retail margins in the Western world. We now have the most unequal society in the Western world. All of that is due to the policies pursued by the Government.—[HON. MEMBERS: "Nonsense".] Hon. Gentlemen may smile and say "Nonsense", but I shall quote the Chancellor's own figures. He publishes them in great detail. He says that the top 25 per cent. of the population takes 53 per cent. of total incomes. Less than half of total income is shared by 75 per cent. of the people. If that is not an unequal society, what is? We are moving towards a society that is epitomised by monetarists and the like. The Government ignore the fact that the bottom 75 per cent. of our people are now virtually the lowest paid in the Western world.

If we are considering wages, we must also consider the facts produced by the Chancellor of the Exchequer. We are talking about the lowest living standards in the Western world, but all we hear from the Government is that the trade unions have a monopoly power that must be broken. The Secretary of State for Employment devotes all his waking hours trying to devise schemes to break down what he calls the monopoly powers of the trade unions. He says that trade unionists are unfairly taking more than their share of the cake. He wants to weaken the trade unions, because he blames them for much of the unemployment.

If ever there was an inane slogan over the past 10 years—used by my right hon. and hon. Friends as well as by the Government—it is that one man's pay rise is equal to another man's place in the dole queue. That is an inanity. It is an unjust accusation. Not one person is in the dole queue today because someone has taken more than his fair share of wage increases. I shall return to that aspect later in my speech.

The reality was demonstrated recently when Ministers, talking privately in the City—so privately that certain commentators were able to overhear—said that we had avoided serious rationing of essentials, including food, only because our geologists and engineers had discovered oil in the North Sea. The non-oil production figures confirm that the Government would have had the country in the midst of severe rationing were it not for the discovery of oil.

I take up the Chancellor's claim that he wants to improve the manufacturing base and look to the future with much more confidence than at present. What is the manufacturing base? The position is very revealing. The debate relates not to living standards, but to productivity. Of the total male working population—I mention men because they are the subject of much criticism by the Secretary of State for Employment—18 million are between the ages of 16 and 65. Only 11½ million of those men are in work. All the rest are students, in the Armed Forces, or self-employed. Only 4 million of the 11½ million work in the manufacturing industries. In other words, the base on which the Chancellor hopes to give confidence and go for growth consists of only 4 million men, the majority of whom are trade unionists. Yet it is alleged that through wages they are taking more than their share.

The Chancellor has often asked why productivity is so low. I am sorry that the chairman of the 1922 Committee, the right hon. Member for Taunton is no longer present, because he commented on management and its quality. Britain has the worst management in the Western world as well as the poorest management organisation. No wonder there is an appalling response from industry to the leadership that is given. This has nothing to do with trade union monopoly. It has much to do with poor wage levels, particularly in engineering.

On 27 May, the CBI, including Sir Terence Beckett and others, said: the downward trend in wage settlements must continue during the next 18 months despite the prospect of lower inflation and gradual economic recovery". Jobs can come only from higher, not lower, wages. As well as the CBI, the Chancellor, the Prime Minister and other Cabinet Ministers are now calling for lower wage settlements as a solution to our problems. That ignores the fact that Britain is now at the bottom of the Western wage league, excluding the Republic of Ireland. If it were not for trade union monopoly power, I wonder where we would be.

Mr. Geoffrey Dickens (Huddersfield, West)

Probably at the top.

Mr. Atkinson

The hon. Gentleman and his colleagues misunderstand. They say that the trade unions have such a grip on industry that they have squeezed massive wage agreements from the employers. Yet we are at the bottom of the wages league.

Mr. George Park (Coventry, North-East)

When my hon. Friend worked in industry, was he ever given a voluntary wage increase without asking and pressurising his employer for it?

Mr. Atkinson

Never. The Chancellor has talked about the trade unions standing in the way of productivity. Yet neither he nor any of his colleagues can name any productivity agreement that has been turned down by the trade unions in the past 10 years, certainly not in the engineering industry.

This obsession with low wages exposes a monetarist snake pit. It is an attitude about which I am concerned. That is what worries me about incomes policies and so on. Certainly, when the former Labour Prime Minister talked about 5 per cent., it was contrary to reality at that time.

In February this year, average manual wages for men over 21 were £121.90, and the national average for non-manuals was £163.10. Skilled workers received £133 for 43 hours—£3.10 an hour. Lord Matthews may talk about high wages among shipyard workers, but in February their hourly rate was:£3.10. He conveniently forgot that he makes no complaint about paying £15 an hour to his linotype operators in Fleet Street. He does not seem to worry about that, because they deliver and get the Daily Express out each night. I appreciate that overtime and night payments are included in that figure, but that is what a linotype operator earns.

This argument about unit labour costs is not about earnings. The fact is that unit capital costs are low. That is never mentioned when we discuss productivity. It is because of their obsession with supply and demand that Conservative Members are worried about the demand side of the equation. That is why they try to give credence to the allegation that workers are taking more than their share. That is why they attack wages.

This afternoon, the Secretary of State for the Environment announced further cuts in public expenditure. He ignores the fact that, even if public sector borrowing is aggregated with private sector borrowing, the total is less than total savings. Therefore, there is no inflationary ingredient in the borrowing requirement. That is even less the case if transfer payments are excluded from the borrowing requirement.

There could be a massive extension of borrowing and the use of public funds in some areas to provide the stimulus that the economy needs. There is no reason why we should not have a reduction in our high interest rates—there could even be variations—to create jobs.

It is an outrage that hard-hit industries should have to pay the same interest rates as the leisure industries. Surely favourable advantage should be given to the industrial sector, but, instead, the Government are trying to control inflation by lowering demand.

I return to the argument that one man's pay rise is another man's place in the dole queue. It is nothing of the kind. We must start talking realistically about decent wage rates. That is where the stimulus will occur. Only when we talk about realistic wage levels will we get the response that is necessary from those working in industry.

We can learn a lesson from international leadership in the multinationals, some of which have very good management teams. They have talked realistically about decent wage levels and have had a response from their employees. Some British firms are second to none and are able to compete with the best in Germany and anything from Japan. They all pay the highest, not the lowest, wages in British industry. The firms that have the greatest buoyancy and industrial strength are those in which there is a leadership that is not afraid of high wages. They are prepared to pay people and demand delivery and accountability. Conservative Members nod in agreement, but no trade union leader has ever turned away from delivery as a result of a bargain struck. Let the occupant of the Government Front Bench name one trade union leader who has gone back on an agreement that he has made?

The Secretary of State for Employment (Mr. Norman Tebbit)

I do not have to go further than refer the hon. Gentleman to the remarks made by Lord McCarthy, the leader of the Trade Union Council and many others, about the productivity agreements which have not been implemented on British Rail.

Mr. Atkinson

Is it not the case that the Government were asking British Rail drivers to drive more miles for less money? Was not McCarthy talking about more miles for less money? That is what they were arguing about. Flexible rostering means that drivers are required to drive more miles for less money.

Mr. Tebbit

I hesitate to discuss in detail the difficult affairs of British Rail across the Floor of the Chamber with the hon. Gentleman, who seems to have become detached from the events of the past few months. He should go to the NUR headquarters and chat with Mr. Sidney Weighell who would be willing to explain carefully to him how drivers, guards and other NUR members have benefited from flexible rostering. They have increased not only their productivity, but their pay. The hon. Gentleman requires a lesson from his trade union colleagues before he lectures us.

Mr. Atkinson

It is the Minister who is getting it wrong. The railwaymen fear reduced wage packets in the future. They argue about it. Sidney Weighell has expressed some doubts about British Rail's future manpower policies relative to the agreements that have been made. Sidney Weighell says that the union will not in any circumstances accept one-man trains because the living standards of workers in his industry are declining. That is why the new rolling stock on the Bedford line is at a standstill. I stick to my point that where industry has good leadership, the workers have responded. It is because employers always want something for nothing that workers have turned away and refused to deliver.

In those industries where there has been good capital investment and good machinery, there is a chance to equal anything else in the world. The way to create jobs is to have buoyancy and growth in industry. I hope that the Government will change and start to do something real about manufacturing industry, which is at the root of all our problems.

7.12 pm

Mr. Esmond Bulmer (Kidderminster)

The hon. Member for Tottenham (Mr. Atkinson) can be relied upon to provoke Conservative Members into feeling that some of his remarks should be rebutted. I shall resist the temptation, although I agree with him about the need for leadership in industry. I wish to concentrate on what Government action would lead to investment in industry by those who have the capacity and responsibility to take such decisions.

I have recently had the opportunity to discuss the present position with major employers in my constituency. In Kidderminster, in common with the West Midlands, we have had the same problems which have been attracting the attention of the House for some time. Among industrialists I find that there is a general recognition that there is a limit to what Government can deliver. The problems go back for years, to the time when the Americans printed money to finance the Vietnam war and the space programme. That was followed by the oil crisis. These factors created a position in which industry throughout the free world had grave problems. There is an enormous temptation for nations to play "beggar my neighbour". I hope that that temptation will be resisted.

I believe that my right hon. and learned Friend the Chancellor of the Exchequer can take some credit for having insulated this country from the worst of the effects of high interest rates in recent months. There is every chance that our interest rates will stay below those of America and that theirs will come down. If that happens and energy prices remain constant, there is a chance that the recovery which is developing here and there and unevenly can be sustained.

Among people I have talked to there is a consensus that the first priority must be to continue the battle against inflation and drive interest rates down. They back the Government's policies on those objectives. They wish to see Government spending devoted more to capital projects and less to incomes. They wish to see nationalised industries behave more efficiently, and reduce the level of price increases passed to the private sector. Overall, they wish the Government to continue the fight to restore confidence in money and to create a better balance between the private and public sectors.

I often wonder whether those Opposition Members who advocate withdrawal from the Common Market understand what effect that has on the confidence of many people in industry. It is an invitation to many companies to invest on the mainland of Europe and influences many companies from abroad against investing here. I have recently returned from France. The French Government's actions have had an almost catastrophic effect on confidence. I have little doubt that those actions will be reflected by rising unemployment in the next few months.

When I talk to my constituents I find that there is a consensus that Government and industry have to devote more time to explaining the effect of economic processes and the relationship of cause and effect. Over the past couple of years those of us who work in industry have been through a tough time, and many have found an enormous response from the people who work in our companies, and a recognition that we are all in the fight for survival. If the lessons can be learnt—of the effect of wages outstripping productivity and the price that is paid if property rights are written in to jobs—there is a greater chance that more jobs will be created in the future and that those jobs will be maintained.

Many trade union organisers, officials and shop stewards have a difficult task ahead of them. They have to put across two paradoxes. The first is that if less is taken more will be received and that the important factor is what the money will buy. West Germany has learnt that lesson. The second is that if one is prepared to change a job one is more likely to have a job. The United States of America has learnt that lesson. That does not work here at the moment because we delayed reacting to technology for far too long.

Companies should have joint working parties of management and trade unions to monitor the effect of technology and to assess its impact. Adjustments can then be made gradually and not as traumatically as they have been made in the past couple of years. There would then be much more creative thinking about the nature of the working week, how shifts can be altered, and how more people can be employed at the same time. I welcome the Chancellor of the Exchequer's statement about job-sharing, which could be relevant to married women and office workers, where new technology will replace many jobs in the next four or five years. That new technology will, however, create other jobs.

The lessons from my constituency since 1974 have been plain. My constituency depends on the carpet industry. In 1974 there were more than 12,000 jobs. By 1980 that figure had fallen to 7,500 and today it is 5,800. Most hon. Members can find one major industry of which that is true. However, the lesson for Kidderminster is that the worst is now over, although there will not be any rapid pick-up. Of the 22 companies that I have spoken to in my constituency, only one expects to employ more people next year. Therefore, two further lessons can be drawn. Our dependence on small business for jobs—

Mr. Straw

How many expect to lose employment?

Mr. Bulmer

I would guess that the majority would reckon that they would be about the same. Nobody anticipates a dramatic drop: 2 per cent. to 5 per cent.

I greatly welcome all that my right hon. and learned Friend has done to encourage small businesses. The second lesson is the need to support school leavers. I also welcome the support schemes that the Government have launched. However, they are no substitute for what happens in Germany. We need a far better training scheme than at present and there should be a more considered evolution from school to work. Those who take the investment decisions in my constituency are looking to my right hon. and learned Friend and to the Government for several things. They want the Government not only to hold down interest rates but to create an environment in which people can feel that interest rates will fall further and in which we shall not return to the old cycle. They would like the national insurance surcharge to be abolished, but greatly welcome what the Government have done so far.

For many companies rates remain the largest single tax and control of local government expenditure remains crucial. Those who take the investment decisions would like to see specific investment on capital account, partly along the lines spelt out by my right hon. Friend the Member for Taunton (Mr. du Cann). That applies particularly to the building industry and would, in turn, help the carpet industry through more house building and home improvements.

The future of British Leyland is crucial to the whole of the West Midlands. The measures taken yesterday by the Secretary of State for Trade will, I hope, prove to be helpful. Opposition Members have expressed the doubt that they may lead only to the sucking-in of imports. However, we must have a viable motor industry, and there are signs that the situation is improving.

Exchange rates remain important for many companies. The pound/dollar ratio is perfectly satisfactory to the companies in my constituency. However, those that are competing with European companies would very much like Britain to join the European monetary system. Overall, companies are telling the Government to carry on the policies on which they have embarked. In the short term they are bound to be painful, but in the long term they offer the best chance of real jobs.

7.23 pm

Mr. John Horam (Gateshead, West)

In our economic debates we are becoming used to hearing Conservative Back Benchers give token support to their Ministers. The speech made by the hon. Member for Kidderminster (Mr. Bulmer) was the third speech in a row from a Conservative Back Bencher that put a different focus on matters from that given by the Government. We welcome that move towards understanding what is happening in the real world. I wish only that Conservative Members carried their feelings into the Lobby more often.

During the debate there has been little dispute about the dimension of the problem of unemployment. According to the "headline" total, there are 3.2 million people out of work. The July OECD report predicts that that figure will rise towards 3.5 million by the end of the year. The long-term forecast by the institute of employment research at Warwick university suggests that more than 3 million people—again according to the "headline" total—will be unemployed during the rest of the decade.

Although worried families mention it often, the extremely disturbing position of school leavers is perhaps less precisely spelt out. The youth task force of the Manpower Services Commission has predicted that of the 1.1 million young people aged between 16 and 17 who will be looking for jobs on the labour market, 527,000 will be in work on 1 Sepember 1982, while 584,000 will be unable to find jobs. More than half of the young people in that age group will be unable to find jobs although they are quite willing to work. It is staggering to consider how the figure has worsened during the three years of this Government. Less than three years ago that figure of more than 50 per cent. was less than 25 per cent. In other words, 75 per cent. found jobs. That shows the severity of the problem.

The unemployment problem can be tackled in two ways. First, we can ensure that demand for industrial products and services is not deficient. Secondly, we can tackle the problem directly by taking measures specifically designed to reduce unemployment. The tragedy of the unemployed is that the Government have refused to do either of these things. Those who have attended our economic debates will know that we have had a prolonged debate about a demand stimulus and the possibility of industrial recovery. That debate has lasted for at least two years. There can be no doubt about who has won the argument.

Treasury Ministers, particularly the Chief Secretary—who is not in the Chamber today—have argued that we were about to turn the corner and that that recovery would follow effortlessly, as night follows day. However, that industrial recovery has not taken place. The Government wanted an industrial recovery and forecast it, but it has not occurred. That is the proof of their failure. Now, 15 months after the cheerful forecasts made by the Chief Secretary and others, the CBI's description of the economy is "flat, flat, flat".

The motor car industry is giving rise to greater concern than can be remembered in the lifetime of those associated with that formerly strong industry. Import penetration is at a new peak. Investment is flagging and may be declining again. Indeed, the forecast may be for a further decline next year. Bankruptcies are mounting all the time. Small companies in particular are going to the wall and, however much rooting powder may be used to create new shoots, companies are dying faster than they can be created.

Among small companies the number of bankruptcies is greater than the number of newly created firms. That is true. [Interruption.] The Chancellor of the Exchequer gave some pretty rum unemployment statistics. If he looks at the facts he will find that his statistics for the failure rate of small companies are equally rum. The Chief Secretary and other Treasury Ministers sit on the Front Bench like parrots saying "It's a lovely day. It's a lovely day", although it is pouring with rain outside. Not only are the Tory wets and Opposition parties calling for a reflation, but the CBI is too. As has been said, it is calling for a reflation not on a cautious note but, for the first time, with a sense of urgency. In addition, that noted financial commentator Samuel Brittan, has contributed to the debate. He pointed out that for the first time in a decade he is calling for a demand stimulus. The circumstances are so exceptional that he has joined those making that call. He is not being modest, but is talking about a £5 billion reflation being possible within the context of the medium-term financial strategy.

However, there is little sign that the Government are listening. Comments have been made about the abolition of hire purchase controls. The Government almost glory in the fact that that was done not so much to stimulate demand as to remove controls—considered bad in terms of Government ideology. There has been a little help for enterprise zones. We have had an extension of those sensible schemes, but there has been nothing at all to match the scale of the problem that we face. The phenomenon of a Government with their eyes and ears tightly closed to the real world has been commented on before. We have heard speeches such as those from the hon. Members for Kidderminster, Bodmin (Mr. Hicks) and others, who have commented on the fact that this Government of all Governments do not seem to understand industry, or do not seem to understand or even sympathise with industrial problems.

There is a growing gulf between how the world is perceived from the Treasury Bench and how it is perceived by industrialists outside. That is an alarming and dangerous position that demands explanation. More than anything else, it requires a spot of psychoanalysis to explain how the Government have reached their present state of mind. I believe that it has something to do with the Prime Minister's inherent and profound attachment to Conservative instincts about sound money and balanced budgets, together with the monetarist intellectual climate, that has been so rampant but is now rather tarnished, and the strength of the Government's position, supported as they are by a substantial majority and a docile group of Back Benchers.

All this has led to a type of tunnel vision with the only objective being to beat inflation. Indeed, the Prime Minister has gone on record as saying that unemployment is bad, but inflation is evil. That is the exact reverse of the truth. Inflation certainly causes inconvenience and disorder for many, but unemployment destroys people and is an affront to human rights. It is being suffered particularly by those who have the rawest deal anyway in our society.

We need a more balanced approach to inflation and unemployment, a more rational approach to letting the public sector borrowing requirement and borrowing generally rise during a period of recession. That has been pointed out again today by no less a person than the chairman of the 1922 Committee, who asked again for a capital programme. I support his arguments, as he has supported mine in the past. I agree with Sam Brittan and my hon.. Friend the Member for Rochdale (Mr. Smith) who argued for an abolition of the jobs tax—the national insurance surcharge—rather than the pathetic cut made in the Budget.

In addition, a substantial part of such reflationary measures must be directed towards specific job creations. The SDP has suggested, from Warrington onwards, means by which this can be done. If the Government want a non-partisan source for such sensible measures they should read the document on unemployment that was produced in another place. As my hon. Friend the Member for Rochdale pointed out, a great deal of work can be done by properly maintaining run-down council estates. We know the number of people on the ground it requires to pull round a really sick estate. We know what can be done to improve older housing and by house insulation. Indeed, the hon. Member for Horncastle (Mr. Tapsell) intervened in the Chancellor's speech to point out what can be done and what has been done traditionally by the Conservative Party in times of recession by such public works programmes. We have had little response.

The Chancellor spoke today of job-sharing which I, too, welcome, as I welcome community work. All that that added up to, on his own reckoning, was about 100,000 jobs at the end of the day, and the day is a long time from now because the scheme is not starting until 1 October. If the Chancellor reads the House of Lords document, he will find that it suggests about 400,000 jobs from such schemes at a cost, roughly similar to the Chancellor's cost, of £2 billion. That is the type of reaction that we require from the Government. It is the very timidity of the Government's reaction that gives the truest idea of their sheer lack of concern.

Of course, as has been said repeatedly, there are no quick or easy remedies to this appalling problem. But that is not to say that there is no alternative to the Government's policies. It is not true that nothing, or next to nothing, can be done about unemployment, while keeping a proper concern for inflation. We can and should do something, but it will need a degree of compassion, a degree of common sense and a degree of commitment that the Government do not begin to approach.

7.34 pm

Sir Russell Fairgrieve (Aberdeenshire, West)

It always interests me when the Opposition put down the subject of unemployment for one of their Supply day debates. My reason for saying that is that it should always be remembered in such debates that it is now 37 years since the end of the Second World War, which is longer than some hon. Members have lived.

In that period there been 11 British Administrations, six Labour and five Conservative. The interesting fact is that every time a Labour Administration have been in office during those 37 years unemployment was higher at the end than it was at the beginning of their term of office. That has not happened with Conservative Administrations. Opposition Members should remember that.

Is there any reason why this historical fact should be broken now? Obviously, from the opinion polls, the electorate does not think so because, in the unlikely event of the Labour Party winning the next general election, it is an odds-on bet that when they demit office unemployment will again be higher than when they came in. Perhaps they could buy down for a short period a few thousand of those out of work, but at the end of the day, in the future as in the past, they would end up with a catastrophic increase in the figures of those out of work. I do not want to belabour the debate by going on to the dogmatic policies of clause 4 and nationalisation to explain why that is absolutely inevitable.

There is nothing so soul-destroying, unfair or morale-sapping as being unemployed, particularly for the young school leaver who rightly believes that he is entitled to a job. At the same time, what can be more demoralising for the married man than to get up in the morning, see his children off to school and his wife start on the housework while he has to hang around in enforced idleness?

The hon. Member for Rochdale (Mr. Smith) mentioned job-sharing. The black market is one of the factors underlying the unemployment position. I can give an example from my constituency. Recently, at one of my surgeries in a school in my constituency, I was told by the janitor's wife that her husband was not there because he was doing his other job. He was a lorry driver and when he finished work he came to look after the school. When he arrived he told me that his wife also had a job at another school and a job in a pub in the evening. Their children were away from home. They had four jobs between two people. Such examples, together with the black market, must be taken into account.

There is only one redeeming feature about unemployment today compared with the 1930s. It is not accompanied by the same deprivation of food, clothing and housing that so often accompanied unemployment in the 1930s. I was fortunate enough to have parents who made sure that my sister and I knew exactly what it meant by being made to visit regularly whole families who were living in one room. As I said, this is the only redeeming feature of unemployment today, compared with that of two generations ago.

It is obvious now that there will be no easy solution to our unemployment problems and it is no good any members of any political party—I say this having listened to the hon. Member for Gateshead, West (Mr. Horam)—thinking that there is a quick and easy solution. We must examine the problem completely differently in the light of what is happening throughout the whole of the developed world.

There is no point in making steel that nobody wants to use or making ships that nobody wants to sail, or digging coal out of uneconomic pits. We have got to look to new industries and in this country there is scope for much more expansion in electronics, tourism, forestry and many service industries, including support industries for the oil industry.

I repeat also what I have said on previous occasions. We must really start a determined process of bringing down the age of male retirement. We must also study schemes of early retiral and help people to understand that there is nothing wrong in learning about the intelligent use of leisure. As mankind continues to progress it stands to reason that we will have more time for leisure and will require less time to produce the wherewithal for our standard of living. We have just seen the modern luddites epitomised in the strike called by the leaders of ASLEF over flexible rostering. In this context, it is interesting to note that Japan, the country with the lowest unemployment figures, can also boast the highest percentage of robotic technology. There is surely a lesson here—the same lesson that has been proved time and time again in history.

While casting around these pearls, there is another interesting fact on a slightly different subject. The Parliament that sits longest: in the developed world is Britain's. Those that sit for the shortest time are in Japan and Germany. Maybe there is a lesson here, too. More talk and more legislation seem to produce less work and less prosperity.

It is also a great pity that, to help us out of our troubles in this country, so many, though not all, of our trade union leaders are more interested in politics than in industry. Trade union leaders overseas spend a great deal of their time and attention on behalf of their members in matters of pension rights, holidays and health schemes. It would be of great benefit to British workers if our union leaders would do the same.

I have never heard of a trade union leader in Britain banging on the door of the managing director and demanding to know why the profits of the company are so low. That happens regularly in America. If it happened to a managing director in Britain, he would probably faint on the spot. How can wages be high unless profits are high and money is ploughed back in investment for new machinery and new technology?

I wish to highlight what is without doubt the most asinine policy of the Labour Party. With 3 million unemployed, the Opposition talk about taking Britain out of the Common Market. That would immediately put at least 2 million jobs at risk. So, in the unlikely, catastrophic and devastating event of the Opposition ever being returned to office in the foreseeable future, their policy over Europe could raise unemployment to 5 million. This point cannot be stressed too often.

Governments cannot cure unemployment. Customers can. If we knock inflation out of our economy and then produce goods and services at the right price and of the right quality then, and only then, shall we start cutting into the unemployment figures.

7.42 pm

Mr. Jim Craigen (Glasgow, Maryhill)

It was the hon. Member for Beeston (Mr. Lester) who, while a Minister at the Department of Employment, remarked that we should keep unemployment in perspective and remember that 22 million people are at work. The recent Manpower Services Commission manpower review points out that the number of people at work in Britain is 20.4 million, the lowest figure since the early 1950s. This shows the deterioration in employment that has occurred in the short time since the hon. Member for Beeston departed from the Department of Employment.

I represent a west of Scotland constituency that has less than its fair share of that employment total. In the Glasgow travel-to-work area, 102,000 people are out of work. To talk about higher productivity means little to people who have no job and who are therefore not able to contribute production, far less productivity. The Chancellor of the Exchequer's unfolding this afternoon of a new blueprint for the long-term unemployed sounded to me like an announcement that Britain is going on to part-time employment. That was the message that came across. The Chancellor's announcement was not as constructive as the hon. Member for Rochdale (Mr. Smith) suggested. The hon. Gentleman was, I believe, thinking more about the job-sharing aspect rather than the scheme proposed by the Treasury and the Manpower Services Commission which is unrealistic given the number of long-term unemployed, now approaching 1 million.

I believe that two of the new enterprise zones are to be located in Scotland. It may benefit firms not to have to pay rates. There is, however, a certain marking up of the rents that are often required in enterprise zones. If the Government are serious in wishing to help industrial and commercial concerns, they could abolish industrial rating but, as the Government's Green Paper shows, they are hesitant about fulfilling their manifesto commitment on rates.

This is a debate about employment and the state of the United Kingdom's economy. I wonder what a future A. J. P. Taylor will make of the state of the United Kingdom in the early 1980s. Our energy position is second to none. We have an offshore oil province that gives us a remarkable advantage over our major competitors. We have coal below the ground. We have nuclear capacity and capability. We have wave, wind and solar potential which, I believe, goes largely unexploited. Yet all these advantages are largely written off by the Government's wasteful policy.

In terms of investment, we have a stability and maturity that is envied throughout the world. We have democratic institutions that are copied assiduously in different parts of the world. Yet our banks and institutions are prepared to lend more abroad than for investment in this country. Despite the war with the Argentine, plenty of bank loans had been available for investment in that part of Latin America. In an international sense, we are a major leader of world opinion. Yet, at the level of summitry, we are unable to exploit that situation to win changes in the policies pursued by all the major industrial countries.

Looking at the employment situation, it is clear that the Government are prepared to write off half a generation of school leavers. Notwithstanding the new training scheme for young people, the fact remains that, when those young people reach 17, their prospects of employment will be pretty grim. Yet it is that same young generation of Service men who, by their courage and military skill in the Falklands, were able to retrieve a situation that the politicians 8,000 miles away had got them into. Our young generation deserves far better from the Government. The hon. Member for Gateshead, West (Mr. Horam) touched on the real explanation. What matters is the formula. That formula at the moment is monetarism. The Prime Minister, in her early days, before she became a barrister, studied chemistry.

Mr. Derek Foster (Bishop Auckland)

An alchemist.

Mr. Craigen

The alchemist was the right hon. Member for Down, South (Mr. Powell) who said that she had passed through the test and had become an iron lady.

Mr. Robin F. Cook (Edinburgh, Central)

She turns what she touches to dust.

Mr. Craigen

We do not doubt the Government's will power. What is lacking is intelligence to tackle the problems. The announcement yesterday about the abandonment of hire purchase restrictions will be better news for financiers and importers than for the average family. The best boost that the Government can give to hire purchase, if they are serious, is to reduce interest charges.

With regard to the long-term unemployment programme that has been announced this afternoon, the Government ought to have responded much more positively to the suggestion made both by the House of Lords Select Committee on Unemployment and the House of Commons Select Committee on Employment that the Chancellor should boost and develop the present community enterprise programme. Time and again we keep changing the names and the nature of these programmes, and more confusion arises and much waste of public expenditure occurs.

A great new growth industry is developing with people providing support services to these new schemes. We know that the Chancellor's benefit-plus scheme, announced in March and quietly pushed into the background today, was not wanted by the voluntary organisations, which felt that it was not the way to do things.

Nobody mentioned the important Rayner review of the role of the jobcentres, and its proposals. An inquiry team has suggested that we kick the jobcentres upstairs. It has called for a review of 125 of the jobcentres immediately and a review for another 72 later. For the unskilled and semi-skilled unemployed, who form a formidable proportion of the unemployed, there will be little hope for the future.

I represent part of the country where even when an economic upturn comes it takes a long time to reach us. Places such as central Scotland and the North-East of England do not benefit immediately from any economic upturn. However, the Government have succeeded in something that no other Government have managed to do. They have brought the recession to parts of the United Kingdom that never thought they would experience any economic draught. The warning bells are beginning to ring in the South of England.

What worries me, when I look at different parts of the country and have the opportunity to visit them, is that I find the same concern about unemployment and the lack of economic activity. If the Government persist in allowing this to go on, they are in danger of fracturing the unity of the kingdom. Increasingly one part of the country will deperately compete and fight with another part for economic activity.

It would be paradoxical if a Prime Minister and a Government so dedicated to unionism were to end up creating more disunity and fracturing of the kingdom. One of the points that has emerged from speakers from the Government and the Opposition Back Benches in this debate has been the extent to which this deterioration in the United Kingdom is developing.

7.53 pm

Mr. Robert Rhodes James (Cambridge)

The hon. Member for Glasgow, Maryhill (Mr. Craigen) spoke on the key point of youth unemployment, which I wish to develop later, and I accept what he said.

I thank the hon. Member for Rochdale (Mr. Smith) for his characteristically generous references to my hon. Friend the Member for Mitcham and Morden (Mrs. Rumbold) and her maiden speech. What he said is deeply appreciated by my right hon. and hon. Friends. We have had so many debates on unemployment in this Parliament that there is a serious danger of the subject being devalued by inter-party recriminations, charges and counter-charges. It may be thought by some to be a subject on which everything possible has been said in our debates. I have recently reread most of our debates on the subject over the past three years—not the most exhilarating of occupations. Lord Rosebery once posed the question "Who now reads old speeches?" and compared them with a glass of decanted champagne, which is a real SDP analogy.

Having read all those speeches on unemployment over the past three years, I would not describe them in such a flattering manner, and I would not exclude my contribution to the unemployment debate in March 1980. I remind the House of what I said at the end of that speech. I apologise for inflicting the same speech twice on the House, but I said: I fully accept and applaud the general strategy of the Government. People who voted for economic realism should not complain if that is what they are getting. I believe that we shall eventually win the battle against inflation, but I ask: what happens in the meanwhile? How can such a battle be truly said to have been won if the dismal shadows of unemployment and under-employment still darken our nation and our society?"—[Official Report, 5 March 1980; Vol. 980, c. 550.] I do not quote that with complacency or say that I was right, because I was wrong. Unemployment was then at 1.6 million, and I thought that it might rise to 2 million. However, since I made that speech two years ago, unemployment has more than doubled.

The Government have addressed themselves with real energy and determination to the immediate problems that unemployment has created. I never thought that I would be a strong and warm admirer and supporter of my right hon. Friend the Member for Chingford (Mr. Tebbit) who has introduced measures at which I hinted in my speech two years ago.

It is fair to emphasise that the problem with which we are dealing, and with which any Government would have had to deal, is the extraordinary upsurge in the birth rate in the early 1960s. That is the problem that has hit us and that will cause problems in future when the subsequent low birth rate affects us as well.

The debate has been mainly concerned with youth unemployment, and it is that to which I wish to address myself. However, there is another aspect of unemployment that we should bring into the debate. I cannot think of anything more demoralising than family men—or women—in their fifties with heavy family commitments becoming suddenly redundant. It is more grievous for them than for the school leaver or the young employed with no family responsibilities. It would be a tragedy if this debate were confined solely to the young unemployed.

Mr. Winnick

rose—

Mr. Rhodes James

I shall not give way.

It is the problem of youth unemployment to which I wish to address myself. The Government are coping adequately with the current problem, but I wish to look to the future. One glaring feature of the present problem, and one that troubles me greatly, is that prospects for university graduates have been and remain considerably better than they are for the bulk of their contemporaries. For example, last year 90 per cent. of university graduates were placed in jobs and careers within three months of leaving university. At Cambridge, it was 95 per cent. One group, a small minority, is in a privileged and better position than the vast majority of its contemporaries.

One reason for that is the vastly improved quality of the careers advice that is given to graduates. Another reason is the inadequacy in schools—I do not blame them, because I know that they are hard-pressed—and in certain institutions of higher learning of careers advice given at a relatively early age. I do not advocate over-specialisation too early. Nor do I suggest that children should be diverted into subjects suitable solely for employment. None the less, that aspect of our education system has been seriously neglected over a number of years. It did not particularly matter when there was high employment, when the unskilled school leaver could get virtually any employment that he or she wished. Today, the neglect of careers advice in schools and institutions of higher learning is one of the key problems that we face.

I want to mention one aspect that has struck me, as a member of what is called the Churchill group. We call ourselves by that name because we meet in Churchill college. In fact, we are university and other careers advisers, and we include representatives of industry and business. The key factor is the increasing interest of young people in small businesses and in setting up their own businesses. That has been one of the most dramatic growth areas during the past three years, and it is one that should be encouraged. The jobs involved may not be many, but the opportunities are considerable. I started my own small business, manned by a few graduates, so I am in a strong position to speak on the subject.

Teachers, university teachers and, indeed, Ministers must realise that the old days of sending semi-skilled children out into the world on the assumption that they can get jobs are over. The biggest and best investment that we can make is in highly qualified careers advisers who understand their subject. They can be of the greatest help to children. Tragically, some unemployment is inevitable, but there is a large amount of quite unnecessary unemployment. That worries me profoundly. The gulf between what we lightly call "education" and "business", although reduced slightly, is still very wide. As a result, our children are not being guided by either parents or teachers in directions that will be useful to them for the whole of their lives.

I want to stress one aspect to my right hon. Friend the Secretary of State for Employment and my colleagues. For a long time—since 1944, or even earlier—we in this country have thought of education as starting at six and going on to 15, 16, 18 or, for the privileged few, 21. We have not begun to grasp the fact that in future it will be unusual for people to be in the same profession or business from school to retirement. We should not lament that fact. We should recognise, first, that it is a fact, and, secondly, that it is a great opportunity. If we grasp that opportunity, we then realise that many of our assumptions—for example, on grants, retraining, the role of universities, and so on—have to be revalued. Otherwise, our education system will not be relevant to the problems of our society and its future.

I am talking about the future. I strongly believe in the link between education, particularly higher education, and the real world. I have found it difficult in the five years that I have been a Member of this House to persuade my colleagues how crucial that link is not only to the future of the nation, but to jobs and the development of earning potential. I point, for example, to the science part in Cambridge. There are other examples. I want to say one thing, at the risk of being accused of being that most awful thing—an intellectual. I passionately believe that the future of our national lies in the brains and energies of young people. Anything that we can do to encourage and support those young people is the best investment that we can make in them, in our country, and in ourselves. We are rightly worried about our present problems, but we should be ill-advised to forget that we should not be creating the foundations for that future, because it is on the young people and their future that our future depends.

8.6 pm

Mr. Ron Brown (Edinburgh, Leith)

I am sure that we all agree that unemployment is a cancer in our midst. We know the official figures. Over 3 million people are unemployed. However, that statistic is misleading. When it comes to the official figures, we are dealing with "Lies, damned lies—and Tory propaganda". Many women are not registered, nor are youngsters who are on so-called training schemes. They would certainly bring the total up to over 4 million. The fellow who let the cat out of the bag was Sir Richard O'Brien. He was the chap who got the boot because he was probably too honest. So let us be clear that the official figures understate the real position.

The official figures are bad enough. In my area, unemployment over the past three years has increased by more than 108 per cent. That exemplifies what is happening in the country. In Scotland especially there is great suffering as a result of the closures that have taken place. We could say that yesterday we had the problems of Talbot and Massey Ferguson. Today it is the smelter at Invergordon. Who knows what it will be tomorrow? Clearly many other companies will go to the wall and many people will suffer and lose their jobs, perhaps for ever, because of this Government's policies. The House does not need me to tell it that many other areas, particularly in England, have been devastated and turned into latter-day Dresdens where people do not count any more and where whole values are thrown aside.

It can be seen from the CBI figures that production has plummeted. The vast majority of firms are working below capacity. We know that the end of the recession is not in sight. That message came over to us clearly the other day. Who knows what will happen in future? All that we can say is that the Government's economic miracle has not happened. So much for all their boasting about Britain solving its problems. It simply has not happened. We can say with validity that unemployment is not an act of God. It has been made to happen by Conservative Members and by the Government as a deliberate policy.

The Government believe in so-called private enterprise. That system has failed in the past and it is failing again with a vengeance. If we call a spade a spade, we must call that capitalism. It is basically an unfair system because wealth is concentrated in fewer and fewer hands. It is also corrupt. We know about the black economy and that about £4 billion a year is fiddled. We know about the Vestey family, who, incidentally have given a new meaning to the term "vested interests". The biggest indictment of the capitalist system is that it is inefficient. It cannot produce the goods and it wastes resources, particularly human resources.

What is the Government's answer during this crisis? It is the old one—make the workers pay. That is their only answer, hence their attacks on jobs and living standards. The reality is that Britain suffers from low wages, not high wages. Not long ago a former Minister in the Department of Industry pleaded with American investors to come to Britain. He said that they should come here because of cheap labour. The Government must face the fact that one of their leading spokesmen made that boast not long ago.

Britain's real problem is a lack of investment, new plant and new techniques simply because when profits were good in the past the speculators, the people who control the wealth, invested overseas, chasing many dubious projects simply because they were after a fast buck. They squandered the resources built up by the working people of Britain.

If it is argued that some people are pricing themselves out of jobs, why are the generals, the judges and top civil servants not doing the same? They are certainly over-paid. However, that does not apply to the working people of Britain as a whole.

The Government call their strategy monetarism. That is not new. Incidentally, it was not invented by Milton Friedman. It had been tried before in the 1920s. Then there was an argument for a return to sound money—the gold standard. Like today, it meant attacks on jobs and living standards. It ended up in a major conflict in 1926—a general strike. The working class were defeated then because of their lack of leadership. That defeat led directly to the terrible conditions of the 1930s. We must always remember that.

The Government appreciate that the trade union movement today is far stronger than it was then. About 12 million people are organised into trade unions and, despite redundancies, are potentially powerful. That means that the Government's tactics have changed. Ever since they came into office they have been picking off one group of workers after another and defeating them. They have been very good at that.

The problem is that the TUC general council has been back-pedalling. It has said that there is not much that it can do. Because of that lack of endeavour, the Government have become more and more arrogant and confident. They have put the screws on working people. That is why there was a change in the Secretary of State for "Unemployment" and in due course new laws will undoubtedly be applied to the trade union movement. It is because of that lack of fight from the top—not from below—that we are in this position today.

We must face the fact that, while the trade union and labour movement says that unity is strength, mere slogans are not enough. We must implement these slogans. We must build up solidarity and understanding so that we can fight back. I believe that ASLEF was betrayed by the TUC leadership. It should have been supported. The fight was not confined to a small railway union. It involved all workers concerned with defending jobs and living standards. Now that ASLEF has been defeated, National Health Service workers and others have been isolated. They are facing the chop because the Government are pursuing the old tactic—they are successful in using it—of divide and rule. It is the implementation of that policy which leads to our defeat. I hope that it does not, but it could lead to another 1926.

The only answer is to fight back. The industrial and political wings of the Labour movement must oppose the Tories. They must put their action where their mouths are. That will be crucial in the coming struggles. It is vital that we rally working people and make them appreciate that it is necessary to fight back. If we do that, we can face the challenge. The Government have no right to ride roughshod over working people. We should be telling them to get on their bikes. I say that in the knowledge that they have Rolls-Royces and other large cars. It was the Secretary of State for Employment who coined the phrase "Get on your bike". He should be the first one to get on a bike.

Above all, we need a Labour Government who are pledged to Socialist policies. The Parliamentary Labour Party and the trade unions should be working towards that end. That is the only way in which we shall eliminate unemployment. There is no easy answer. It will be a long hard slog, but the more that we get together to fight under the banner of unity in challenging the Tories the better it will be for working people.

8.17 pm

Mr. Stephen Dorrell (Loughborough)

I agreed with the hon. Member for Edinburgh, Leith (Mr. Brown) only when he said that there is no easy answer. He made an interesting speech. I thought that he was going to develop a new theory of historical causality. He attributed the depression of the 1930s to the defeat of the 1926 general strike. It is an interesting theory, but, sadly he did not elaborate it. Perhaps that was as well in the interests of the efficient dispatch of business.

It is not my purpose in contributing to the debate to try to apportion blame for the present very high and tragic levels of unemployment. Any dispassionate observer must accept that neither of the two major political parties is blameless. It would not be a worthwhile occupation for the House to seek to apportion blame. Equally, it is not my purpose to set out a series of detailed proposals or measures that should be adopted to try to alleviate the present position. I agreed with much of what my hon. Friend the Member for Bodmin (Mr. Hicks) said when he set out his proposals, but my purpose is rather different. I wish to consider the long-term objectives of economic policy and to stand back from what I regard as a regrettable fascination with technique. I wish to examine what it is that we are trying to achieve in our policy towards the unemployed and the economy.

What is the proper target for our policy in the months and years ahead? It has become fashionable to talk about unemployment as something with which we have to learn to live. We have been told that it is inevitable and permanent and that there is nothing very much that we can do about it. That view has been advanced by theorists across the political spectrum and not only by the representatives of big business. Labour Members will be well aware that their comrades in West Germany have found themselves in a difficult political position in being faced with the threat to the SPD which comes from the "Greens". The "Greens" have advanced the theory that there is a physical restraint to growth and that therefore the West German society must learn to live with lower employment and increased use of leisure. Their theory is that unemployment is permanent and something to which we must accustom ourselves. That theory has been advanced by a depressing alliance of the directors' dining room and the academic common room—an alliance of the comfortable establishment that I find offensive. The view takes a variety of forms and I shall examine them separately to see how the theory stands up.

One school of thought is that unemployment is purely a function of competitiveness. It would have us believe that unemployment in Britain results purely from the fact that the British economy is less competitive in world trade and that therefore British industry has taken a smaller share of the world trade cake. In so far as the theory goes, it is true. If a British company cannot sell in competition with a French company, the French company will get the order, more French people will be employed and fewer British. In that sense we are the losers.

However, that theory does not explain why unemployment is not confined to the losing nations in the game of world trade. Why can unemployment be found among the winners of world trade as well as among the losers? That theory alone is not sufficient to explain unemployment. It is a fallacy to argue that unemployment is an international phenomenon that is the result of competitiveness. In the end, we are competitive only against our international competitors and if all those competitors suffer from high unemployment, the causes of unemployment must run deeper.

The second school of thought attributes high unemployment to increased automation. It argues that increasing automation and output of the productive process has resulted in machines replacing men, and men being thrown out of work. That theory deserves a place of honour in the pantheon of human error. To imagine that if the productive process becomes more efficient, men will be thrown out of work is the most enduring economic fallacy of them all. The inescapable lesson of history is that machines allow men to improve their living standards and that they do not represent a threat to them. The word "luddites" was coined to describe people who believed that the improved efficiency of the clothing industry caused by the invention of the sewing machine represented a threat to the living standards of clothing workers. The lesson of history is precisely the opposite. The people who were more efficiently employed enjoyed a higher standard of living and were able both to enjoy more leisure and to purchase more goods.

History does not bear out the theory that, in improving efficiency, the microchip is a threat to employment. It is possible that historical evolution has come to a dead halt and that what has held true for the past 200 years is no longer true in 1982 but, to put it at its mildest, the burden of proof rests firmly on those who argue that theory. They have not succeeded in winning that argument.

The view that unemployment is permanent, either because of the uncompetitiveness of British industry or because of increasing automation, is untenable. Nor do I believe that unemployment is inevitable or permanent because of the physical-limits-to-growth argument, which says that we are running out of finite resources and that we have reached a standard of living where our economy cannot absorb more goods. Those who argue that view—they tend to be confined to academic common rooms—must explain why our capacity to absorb extra goods in Britain is barely half that of West Germany and the United States of America, where living standards are enormously higher.

I utterly reject the three arguments that I have isolated and there could well be similar ones. The basic theory is that unemployment is structurally inevitable. No one has made out a convincing case that that theory is true nor explained why we should learn to live with it.

There is an argument that unemployment is not inevitable but that the price of reducing it is too great. It is dangerous to be dogmatic about the importance of priorities, which change with changing circumstances. But the importance of unemployment as a social and political ill and the dangers attendant on high unemployment should be restated constantly so that political and economic decision-makers are not allowed to develop a false sense of security about the willingness and the ability of a society to withstand high and stable unemployment.

The regrettable experience—all my right hon. and hon. Friends on the Front Bench regard it as such—of the past three years gives us ample evidence why unemployment is a dangerous social phenomenon. It has been shown once again that when an economy is afflicted by high unemployment the weakest in our society are hit first. The first to be thrown out of work when jobs become scarce are the disabled, members of the minority communities, those who live in remoter regions and those who live in the run-down inner cities where the social problems are already more intense than in more fortunate parts of the country. Those clear trends become even more worrying when they are combined with the concentration of unemployment among young people.

The difficulty of obtaining apprenticeships or training that leads to real jobs is a great threat to the stability of our society. We face the danger of a lost generation—a generation of youngsters that left school and felt that no one wished to employ them and that it was all very well to give them a year of training but, if there were no jobs for them at the end of the training, how could we expect them to take it seriously?

The House should examine unemployment, not only from the bird's eye view of a macroeconomic decision-maker or a company manager who is worried about employment in an inefficient subsidiary, but from the worm's view. When we talk about 13 per cent. unemployment, we do not mean that one person is 13 per cent. unemployed. An individual is either employed or unemployed. He is not a statistical abstraction. Unemployment is a personal disaster. The worker's contribution has, in his eyes, been rejected by society. He has been denied the opportunity to make the contribution that he is ready and willing to make.

The Conservative Party has always advanced itself as the party that emphasised the importance of the family as the cornerstone of our civilised society. My right hon. and hon. Friends and I believe in that firmly. However, it does not take much imagination to envisage the tension in a family when the father is aged 55 and the son is aged 18 and the son is sitting around with nothing to do. Similarly, it does not take much imagination to envisage the tension with the wife who cannot work because she must look after her children but who cannot provide them with the toys and clothes that she would like because her husband is unemployed.

It is true that unemployment in 1982 is not a matter of the difficulty of paying for basic foodstuffs, finding a roof over one's head or clothes to keep one warm. Thank God it is not. However—this has not changed between 1932 and 1982—it is a matter of the mutual rights and obligations of society and its individual members. We have all said many times that the individual has rights within society, which bring with them corresponding obligations. From the point of view of the individual there is not much reason to feel a commitment to redeem his obligations if, in his eyes, society cannot redeem its obligations to the individual and if his rights are not realistically honoured by society.

I know that this is a controversial view. It is inevitable that the failure to deliver the right to a job and to participate as a full member of society will lead to alienation from that society, which will lead to vandalism. To predict vandalism and petty crime is not to excuse them. I make no excuse for petty criminals but I merely predict that high and stable rates of unemployment will bring about crime. To deny that is to deceive ourselves and ultimately our constituents. Some 3¼ million people are unemployed, which, thankfully, has not led to riots in the streets.

Mr. Alfred Dubs (Battersea, South)

It has.

Mr. Dorrell

I do not accept that it has been the principal cause of riots in the streets, or of the breakdown on a large scale of law and order. However, I believe that unemployment is an acid that is undermining the structure of our society. History is littered with examples to remind us that the institutions of a civilised society are fragile. Unless they are cared for and nurtured they are ultimately found to be brittle. I ask my right hon. and hon. Friends not to subject the institutions of society that we all hold dear to needless risk.

8.32 pm

Mr. Alfred Dubs (Battersea, South)

The hon. Member for Cambridge (Mr. Rhodes James) talked about the links between schools and universities, and job opportunities. He mentioned the need for better careers advice. I endorse his comment. However, he did not make one other point about advice that is given to school leavers. They need help to cope with not having a job. We need to ensure that school leavers, who may spend months or years on the job market, have been given advice on how to cope, advice about the DHSS, how to claim supplementary benefit and how to come to terms with enforced leisure and the sense of failure that faces too many people when they leave school. I seriously believe that that is a gap in what our schools are doing. I hope that our teachers and educationists will do something to overcome it as quickly as possible.

The reasons why the subject of unemployment is so politically controversial is that the Conservative Party made it one of the main planks in its election campaign in the months leading up to the election of May 1979. Conservatives convinced the British public—or hoodwinked them—that they would do something about unemployment. The first thing that the Government did on taking office was to introduce a set of measures that led directly to a further increase in unemployment.

In the past three years we have had statements from the Chancellor of the Exchequer and other Ministers. For example, today the right hon. and learned Gentleman said that we needed a responsible monetary and fiscal policy, whatever that means. He talked about pay restraints and improved competitiveness. Such statements have been made by Ministers month after month since May 1979. The Chancellor also said today that unemployment was everyone else's fault, not the Government's. He said "Do not blame me. I am only the Chancellor. Unemployment is not my fault. It is someone else's." Therefore, it is not surprising that not one Conservative Member who has spoken in the debate has unreservedly supported the Government's economic policies. They have all hedged their bets and some have attacked forcefully. There must be a lesson to learn from that.

It will not be long before the increase in unemployment that has been caused by the Government since the last election will have reached the 2 million mark. That unemployment may be caused by redundancy, by the collapse of employing firms or unemployment for school leavers who cannot find a job. We have had three years of soaring unemployment, from little more than 1,300,000 when the Government took office to nearly 3,200,000 now. As the hon. Member for Loughborough (Mr. Dorrell) said, that represents a social tragedy. It also represents an economic and industrial tragedy for Britain.

The Chancellor said that there were three reasons or justifications for the present difficulties: first, that the Government's policies that lead to higher unemployment are necessary; secondly, that unemployment also existed under the Labour Government; and, thirdly, that other countries are suffering equally. I shall deal with each.

The Chancellor, the Prime Minister and other Ministers have said that it is necessary to pursue the policies that have led to the present level of unemployment in order to reduce inflation. No one disagrees that it is important to reduce inflation. We should all like there to be lower inflation. But not one Minister has said at what point that need becomes secondary to the need to tackle unemployment. Nor has any Minister said what will be done when inflation is at a more manageable level. What will happen then'? What policies will be introduced? Or will the Government simply carry on as at present?

The Government have said that we must reduce interest rates. We all want lower rates of interest, but that can be achieved by other means than a horrific level of unemployment. Above all, the burden of the Government's policies has been to cut public spending. The Secretary of State for the Environment's statement today was merely another example of that. It centres on the need to reduce the public sector borrowing requirement.

We therefore hear extraordinary statements such as that of the Secretary of State for Industry when he explained his proposals to privatise British Telecom. He said that one of the advantages of privatisation would be that the private sector, in owning British Telecom, could invest to a greater extent than the public sector because the public sector must be constrained by the need to keep the PSBR down. There is not one shred of evidence to suggest that there is any difference between the economic effects of investment by the public sector and investment by the private sector. But we have been caught in that straitjacket for the past three years. It has resulted in public sector industries being starved of investment.

There is an additional aspect of the PSBR argument. Even if one accepts the basis of Government thinking that underlines their economic policies—I do not—there is still no reason to believe that the PSBR could be controlled only at the present level of economic activity. The same level of PSBR could be achieved with a much higher level of economic activity. The Government have never pursued that argument. Instead, they have been concerned to depress the economy. Manufacturing output is now 15 per cent. below what it was in 1979. The simple fact is that there is not enough demand in the economy.

The Chancellor said that unemployment had been bad under the Labour Government. It was unacceptably high but it was a lot lower, immeasurably lower, than it is now. In the last two years of the Labour Government, unemployment fell, perhaps not at a fast rate but there was a slow and steady decline. That was reversed only when Conservative economic measures began to have their effect.

The Chancellor also said that other countries are doing equally badly. There must be doubts about the source of his figures. I shall let that rest. The latest available OECD figures that cover May 1982 show that the United Kingdom, with Belgium, shares the unenviable distinction of having the highest level of unemployment of all the countries that were covered by the analysis. The Netherlands has 10.2 per cent. unemployment, France has 8.5 per cent., and. Germany has 6.2 per cent. A few countries that are not in the Common Market have still lower levels of unemployment—Sweden has 3.2 per cent., Switzerland has less than 1 per cent. and Japan has enjoyed exceptionally low levels for some time.

What bothers me is how the Government have managed to hoodwink the British public into living with such high unemployment. One of the political mysteries of this age is how the British public have been persuaded by the Government's peculiar arguments that we must live with 3 million unemployed. The Government say that they do not like it, but they have not suggested that we should have our sights on something significantly lower.

If we read the history of the late 1920s and 1930s, we are reminded how similar the arguments were at that time. It was argued that there was nothing that the Western economic world could do about the unemployment which began to grip us from 1929 onwards and that we simply had to sit back and accept it. The exception was a small number of economists and politicians who said that it was not inevitable, that we should not accept it and that there were alternative policies.

It is not only the traditional regions of high unemployment that are suffering. Unemployment in London and the South-East is nearly ¾ million. That is the same total as in the Northern region, Wales and Scotland combined. Even if the percentage in London and the South-East is lower than in the regions of high unemployment, the numbers are very high indeed, although they may be less obvious because they are lost in the metropolis and the adjoining areas. The latest figures, for June 1982, suggest that in the Wandsworth area, of which my constituency is a part, nearly 13,000 people are unemployed. That figure includes large numbers of young people and black people.

Long-term unemployment is now almost 1 million. The social consequences of that are despair and alienation. Let anyone who doubts that talk to someone who has been unemployed for six months or a year. What is worse, there is no sign of improvement. Treasury officials play the desperate game of hunting for favourable indicators and occasionally come up with one, but the weight of evidence from economic indicators, the CBI and industrialists, is that there is no sign of improvement. If anything, the situation is likely to worsen in the coming months.

No one suggests that there are easy solutions, but there must be a commitment to reducing unemployment. That requires a change in Government economic policy. Above all, we must increase demand in the economy. An improvement in the unemployment figures will then follow. We need significant reflation of the economy, including major investment. If the private sector will not invest, the public sector must. To avoid sucking in high levels of imports and negating our attempts to cut down the number of jobless, we must control imports. That may be on a selective basis, but some controls will be necessary.

I am optimistic that under a Socialist Government who will introduce such policies there will be voluntary agreement between Government and trade unions on the planned growth of incomes. We might have to go further in terms of earlier retirement and proper education and training to raise from 16 to 18 the effective age at which people come on to the job market.

The present more than 3 million unemployed people represent a major crisis and challenge to our society and its institutions. The Government have not begun to grasp the urgency of the problem. I believe that at the next general election, which the Prime Minister has apparently said will be in October 1983, unemployment will be the key issue. When the public are faced with clear alternative policies, I believe that they will throw this Government out for what they have done to the country and elect a Labour Government in their place.

8.45 pm

Mr. Michael Ancram (Edinburgh, South)

I hope that, to save time, the hon. Member for Battersea, South (Mr. Dubs) will allow me to respond to some of his remarks during my speech rather than immediately.

It has become clear that remarks and imputations made by some Opposition Members about Conservative Members not caring about unemployment or the unemployed have at last died the death. Every speech made by a Conservative Member has shown that we are equally horrified by high unemployment. I hope that my speech will confirm that. We realise that unemployment is a human tragedy and a social evil and that it is soul-destroying and creates resentment.

We are particularly sensitive to this problem in Scotland because we have a history of economic deprivation. We cannot take lightly the 15 per cent. rate of unemployment. As the hon. Member for Glasgow, Maryhill (Mr. Craigen) said, traditionally Scotland takes longer to recover from recessions than other parts of the United Kingdom. The deep recession that we now face is serious.

I condemn the easy promises made by the Opposition. I exclude the right hon. Member for Heywood and Royton (Mr. Barnett), who said that making easy promises is perhaps more dangerous to the unemployed than not making them. The right hon. Member for Chesterfield (Mr. Varley) seemed to wave his hand as if it was a wand and in two sentences pretended that the Labour Party had a complete solution to unemployment. I tried hard to gather from his speech, and the speeches of his hon. Friends, what that solution is. I have studied the plan put forward. It must rank as one of the most unpromising building operations since the tower of Babel. That failed because the constructors spoke with different voices at the same time. It is a mass of contradiction parading as a whole without even the elementary principles of counterbalance that, architecturally, can hold unlikely edifices together.

The hon. Member for Battersea, South dealt with a number of those points. The plan promises jobs by introducing lower interest rates, but it is based on borrowing that can only force interest rates up. It promises jobs and an increase in the standard of living by controlling inflation, but proposes to finance the programme with the very fuel that rocketed inflation in the past. The plan promises jobs with a programme of vast public spending, but the nature of financing that spending can only tear at the hearts of those industries that can provide jobs for the future. In a sense, the plan is new jobs for old, but at an exchange rate that will inevitably increase the number of people without work after it is carried through.

Neither the Labour Party nor the SDP can escape reality, even when in Opposition. Their policies—and some hon. Gentlemen have admitted it—will raise interest rates and inflation. We know from experience that that will lose jobs faster than they can be created while present conditions last. In exchange for rising unemployment, falling interest and inflation rates, the Labour Party and SDP are offering the unemployed a brave revisited world of rising interest and inflation rates, as well as further unemployment.

France has demonstrated that in one short year of Socialism. Hon. Gentlemen may find that surprising, but why, if Socialism in France is working so well, did the French Government only a month ago reverse their policies and turn them on their heads? Perhaps the right hon. Member for Stepney and Poplar (Mr. Shore) can explain that. I hope that Opposition Members will look across the Channel and perhaps, for once in their history, be wise before the event.

Jobs can never depend on public subsidy in anything but the shortest term. It is doubtful whether jobs can be created by public spending at any cost that does not ultimately create a greater loss elsewhere, unless those jobs are legitimately earned. The Government cannot create lasting jobs, except of the least productive and most wealth-consuming kind. Industry creates jobs, but in a world recession that is no easy task. Industry and the Government must create the base and background for creating jobs in future. Industry will expand and invest in new jobs if the atmosphere is right.

That atmosphere has certain requirements. It requires a buoyant market, which will require the world recession to end, and international co-operation will have a great part to play in that. It requires an economic climate where endeavour will be rewarded, and that requires the right tax regime and lower interest rates. It requires the right labour force with stable industrial relations and the skills needed for new industries. It requires the right environment, which means the right amenities and facilities for people who wish to set up in business. Above all, it requires a good prospectus. It must be positively sold. One of the most damaging things in my part of the country is the continual talking down of the Scottish economy by Labour Members. That is now positively putting off people who would otherwise invest and create jobs.

The arguments against massive reflation and greatly increased public spending are broadly correct, but I trust that they will not cloud the Government's judgment on where spending must be undertaken, such as in the replacement of necessities—sewers have already been mentioned—where failure to act now will cost more later. Such expenditure is merely good husbandry. Nor should the Government's judgment be clouded on the investment of public money where it can show a net return, as I believe it can in energy conservation and environmental improvement. This is the argument of the net savings which, after all, has been the justification for the building of a number of power stations before they were needed. If we can do that, we can do it on a wider scale.

I do not believe that this will create a vast number of jobs, but it will help and it can be justified at the present time. Nor do I believe that we have closed our eyes in the past to job-creating or job-saving projects. Scotland certainly has not. There is the power station at Torness which, among other reasons, is being constructed to preserve jobs in the nuclear industry and to create jobs in the construction industry.

There are now proposals for the electrification of certain railways, a proposal to build a new exhibition centre in Glasgow, and only last week the Scottish Development Agency announced a scheme for Dundee that will create 1,200 jobs at a cost of about £39 million. That is a flexible response to the gravity of the problem and is a declaration of the Government's concern about unemployment in Scotland.

None of this can obscure the long-term economic reality that, if we are to succeed, we can do so only if we compete effectively. Increased demand cannot help job requirements if it is not for our own goods. It should never be part of our task to help reduce unemployment in other countries before we reduce our own.

Competitiveness may be a harsh word, particularly where it requires job reductions, but, where it is the key to survival and future expansion rather than collapse, there really is little choice. In the long term, our task must be to prepare for the upturn so that we are ready to take advantage of it, particularly in Scotland where endemic economic problems are that much worse than in the rest of the United Kingdom.

The Scottish picture is not all black. Last week's much maligned CBI survey, which was perhaps gloomy, talked about Scotland suffering from lack of improvement rather than deterioratior—that we were on a plateau. The Scottish Register of Companies has announced a 23 per cent. increase in the number of companies incorporated this year compared with last year. That may not be immensely significant, but it is the seedcorn for jobs in future.

The increase in Scottish unemployment has been much less than the average for the rest of the United Kingdom. While that might be cold comfort in terms of the history of the Scottish economy, it is exceptionally significant for our chances of recovery in the future.

We must still prepare the ground for that long-term recovery. We have to produce jobs which will last a generation. That is the only honest answer to our unemployment problem. We have to train our youth, as the Government are doing with youth training schemes, and increase our competitiveness by modernisation. We need to look for jobs, as the SDA and Scottish Office are doing, and make sure that the right facilities are available when the upturn comes. That can be done only when the Government and industry work with the labour force and the unions—if they are able to set politics aside.

The Opposition recently called upon the Prime Minister to show the same determination and courage in tackling unemployment as she showed when dealing with the Falklands crisis. They were right to say that, because the Falklands success was achieved not only because of the Prime Minister's determination and courage, but because the country was prepared to support her and realised that there was no easy answer and that people had to graft to succeed.

If that same mentality could be fostered to deal with unemployment, and the Opposition were prepared to put all their fine words and easy answers to the test against such co-operation, we could solve the problem once and for all.

8.56 pm

Mr. Ray Powell (Ogmore)

I should like to take up the remarks of the hon. Member for Edinburgh, South (Mr. Ancram) about the compassion that the Government feel for the people. Unemployment this month has risen alarmingly to the highest level recorded of 3,190,621 people out of work—one person in eight of the entire population. That is an increase of 129,381 over the June figures. They even caused the Prime Minister to concede that the figures were very disturbing indeed. The right hon. Lady gets upset only about things like Dr. Runcie's tone at services in St. Paul's cathedral. The media spelt out the Prime Minister's attitude. Her husband, Denis Thatcher, is reported as saying after the service: The Boss is spitting blood. The hon. Member for Epping Forest (Sir J. Biggs-Davison) is reported as being revolted by the cringing clergy in St. Paul's. The message is clear.

Mr. Dickens

On a point of order, Mr. Deputy Speaker. I do not know whether you have noticed, but at the moment this speech is dealing with the service in St. Paul's cathedral yesterday morning. I am sure that we would rather concentrate on the 3¼ million unemployed people.

Mr. Deputy Speaker (Mr. Ernest Armstrong)

It is a very wide debate. I have listened carefully. The hon. Gentleman must keep in order.

Mr. Powell

I am coming to the point, if the hon. Gentleman will sit down, and perhaps concentrate on his tea parties.

Why are the Prime Minister, her Cabinet, her wets, her dries and dried-out wets, not spitting blood over the plight of the 3 million people that they have thrown out of work instead of continually beating the war drum? I am participating in the debate to convey to the House the plight of unemployed people to get under, over, through or below the crocodile-skinned Members on the Tory Benches. Members of our society find themselves in an unreal, unjust, un-Christian, inhuman, and unwarranted position when they are thrown out of work.

One newspaper recently referred to the simmering unease on the Tory Benches about unemployment. The Labour Party does not feel simmering unease. It is furious, appalled and disgusted. It feels absolute contempt for the uncaring and utterly indifferent attitude of the Prime Minister, the Chancellor, the Secretary of State for Employment and others in the Cabinet and Government. The Government's economic policies have condemned a whole generation to life on the dole and have sentenced ½ million people to dispirited despair at the start of their lives. The Government are a total disaster.

Numerous remedies have been suggested from numerous quarters with varying enthusiasm, but I respectfully suggest that the first step towards a solution is the present resident's departure from No. 10. She has shown herself bankrupt of ideas, bereft of compassion and totally out of accord with the people of this country.

9 pm

Mr. Peter Shore (Stepney and Poplar)

It is my happy duty to congratulate the hon. Member for Mitcham and Morden (Mrs. Rumbold) on her very successful maiden speech. We enjoyed the manner in which it was delivered and many of the things that she said. She had the good fortune to address a fairly full House and to hold it to the end, to the satisfaction of hon. Members on both sides. As the noises of assent demonstrated, we particularly appreciated what she said about the honourable course chosen by her predecessor in putting the strength of his changed convictions to the test and in consulting the constituency's electorate. I am sure that her constituents will read with interest what she had to say about the constituency. Indeed, I am also sure that the Chancellor of the Exchequer was gratified that at least one Conservative Back Bencher had nothing to say about the country's economic mismanagement. That subject has clearly engaged the attention of virtually all other hon. Members, with the possible—and, indeed, proper—exception of the hon. Member for Edinburgh, South (Mr. Ancram).

We have had a useful debate, which has reflected the serious concern felt on the Opposition Benches, and also among Conservative Members, about the appalling phenomenon of mass unemployment throughout the length and breadth of our land. We heard from the Chancellor of the Exchequer who has, during the past three or four months, been a stranger to the House. He made what I might describe as a predictable, vintage speech. It was complacent, insensitive, evasive and self-righteous and contained the usual handfuls of statistical dust with which to blind the credulous to the reality of our economic situation. There was, of course, the odd bone or two, such as yesterday's hire purchase announcement and today's announcement on further enterprise zones with which to quieten the snarling dogs of industry up and down the country. The details of those momentous announcements will fill up some column inches of newsprint in tomorrow's newspapers and will, perhaps, give some small, if temporary, comfort to Conservative Back Benchers. However, it will not wash and it will not do.

Outside the ivory towers of Nos. 10 and 11 the world in which real people live and seek to earn their keep grows steadily harsher and bleaker. The scale of the measures announced today and yesterday was pitiful and even contemptible given the size of the problem facing us. The July figures for unemployment stand at the highest level yet—3,191,000, or one in eight of the total work force. Indeed, 350,000 more people are out of work than when we debated the economy about 12 months ago. Moreover, the composition of that appalling figure gives great cause for concern.

Two weeks ago the MSC published its annual manpower review for 1982. It made chilling reading. It is not just the growing number who have been out of work for more than 12 months, it is the particular age groups where the rate of unemployment is far in excess of the national average of 12.3 per cent. that should give acute anxiety and concern.

The Manpower Services Commission's figures were recorded in its annual report in January this year. At that time, no less than 23 per cent. of those under 18, 26 per cent. of those aged 18 and 19 and over 22 per cent. of those aged between 20 and 24, were unemployed. At the other end of the age scale, 20 per cent. of male workers aged over 60 were also out of work. The under-18 figure of 23 per cent. will have been vastly reinforced by the flood of school leavers this month. These figures would be substantially higher but for the range of MSC schemes that provide temporary employment for 300,000 young people.

The hon. Member for Gateshead, West (Mr. Horam) mentioned the appalling figure that is likely to emerge this October when about 50 per cent. of the total number of young people under 18 will be unemployed. That is one in two. Here, in the most vivid form, we see not only the waste of unemployment and the cost, direct and indirect, to the finances of the nation, but also the human cost in terms of disappointment, bitterness, estrangement and self-doubt as hundreds of thousands of young people find that they have entered an adult world that apparently does not want them now or in the future.

No one with the welfare of this country at heart can view the prospects for these young people and for society as a whole if this blight of unemployment is not lifted with anything but dismay. There will be not just dismay but also anger when people recall what the Prime Minister and the Chancellor of the Exchequer had to say when they were seeking to win votes shortly before the last general election. On 23 April 1979, in a speech at Darlington, the Prime Minister, then the Leader of the Opposition, addressed herself precisely to the unemployment question when she said: Another Labour accusation is that the Tories plan to increase unemployment. But we Tories believe in policies that will create real jobs—not just in paying youngsters to do artificial jobs without a future. Unemployment, when the Prime Minister made that speech, was between one half and one third of what it is today. As for paying youngsters to do artificial jobs without a future, over 300,000 are precisely in such schemes now and a further £180 million is being spent in increasing the number today. The effects of this self-same blight on our industries are all too clear. The output of manufacturing industry is down 15 per cent. on 1979. Output in the construction industry, to which my right hon. Friend the Member for Houghton-le-Spring (Mr. Urwin) referred, is down by 17 per cent. All industries, apart from North Sea oil and gas, are down by 13 per cent. We are a poorer country in terms of national income and GDP, substantially poorer than when the Government came to power.

None of this is in dispute. What should be clear, even to the most obtuse Treasury Minister, is that the long predicted upturn has simply not taken place. For the past 18 months, we have been fobbed off in one economic debate after another with optimistic assurances that the worst is over, that the economy has bottomed out and that there is clear evidence of recovery and growth.

In their efforts to mislead, short of downright falsehood, the Prime Minister, the Chancellor and his team have almost exhausted the vocabulary of deception. I say "almost" because the Prime Minister made a valiant effort in yesterday's "Interview of the Year" with the Daily Express to add to the statements of ambiguity on this subject when she said: We're better than we were a year ago. We started to grow, undoubtedly we started, then there was a plateau, undoubtedly a plateau. That is an addition to the vocabulary. We are grateful to the Prime Minister.

The painful facts cannot be ignored. Compared with the first quarter of 1981, when the Prime Minister, the Chancellor and the others first saw pink in the sky, the latest index of industrial production figures for March to May 1982 compared with March to May 1981—I cannot think of a fairer comparison—shows an increase of not 3 per cent., as the Chancellor was seeking to claim, but of 0.7 per cent. in industrial output other than the increased output of North Sea oil and gas. Bankruptcies in the second quarter of this year were at a record 10 per cent. above the previous high, while company liquidations based on the first half of 1982 will comfortably exceed last year's record total of nearly 8,900 liquidated firms.

There is no comfort to be found in any of the forecasts, either official or unofficial. On the present policies, not one predicts any substantial fall in the present level of 3 million unemployed. Those who see some little growth in 1983–84 acknowledge that it will be too modest to affect the level of unemployment. A growing body of opinion sees a further remorseless increase in the numbers of unemployed towards the 3½ million, if not the 4 million mark.

By next month, the Chancellor will have occupied his high office for some 1,100 days and he must know that, day in and day out, some 1,800 jobs have been lost throughout his period of tenure at No. 11. What does the Chancellor say about his uniquely awful period of economic mismanagement? We heard three excuses today, and I wish to deal with all of them.

The first of these is that the ruin that he has inflicted or the economy is a necessary evil to combat the still greater evil of inflation. If that was his principal aim, he has secured a minimum success at a maximum cost. The purpose of containing inflation, along with the maintenance of employment and the growth of output, are the three central aims of economic policy, or should be, of any Government of whatever political stance. No Chancellor in his right mind would abandon both output and employment to obtain so modest an impact on inflation.

To reduce the rate of employment from 10.3 per cent., which is where it stood in May 1979, to 9.3 per cent., where it stands ft July of this year, three years and three months later, is hardly worth celebrating. When it is seen against the background of more than doubled unemployment and a catastrophe to output, it is simply not worth having. Any fool can achieve a reduction in the rate of inflation to considerably lower than the present 9 per cent. if he is prepared to pay the necessary price in unemployment. We have 3 million unemployed and 9 per cent. inflation—perhaps 8 per cent. If the Chancellor had 4 million unemployed, no doubt he would bring inflation down to 6 per cent. If it were 5 million unemployed, heaven knows, he may even get it down to 2 per cent or 3 per cent., but does he really think it is worth the price?

There is a second and more plausible excuse, central to the Government's amendment and to the Chancellor's speech this afternoon. That is that not only Britain but the whole of the Western world is suffering from a severe recession. What the Chancellor has to answer is why Britain of all Western countries has suffered so much worse during the past three years.

Let me illustrate what has happened. The second oil shock, with its doubling of oil prices, occurred almost exactly when the Government came to power in the second quarter of 1979, so we can with some ease compare what has happened to the economies of Britain and its principal industrial competitors from then to June of this year. In industrial production, Japan has grown fast, at no less than 13 per cent., Italy by 10.6 per cent., France by 0.8 per cent. When we come to the minuses, Germany has reduced industrial production by just under 1 per cent., the United States by 7 per cent. and Canada by 7.7 per cent. The prize goes to the United Kingdom, which has reduced industrial output by just on 12 per cent. So while it is true to say that the second oil shock had a depressing effect on the output of the Western world, it is obviously and notoriously true to say that no country has been hit as hard as our own.

What about unemployment? It is more or less the same story. In mid-1979, Britain, with an unemployment rate of 5.7 per cent., stood exactly half-way in the league table of the industrial Seven. In the first quarter of 1982, Britain was an order of magnitude above the rest, with the highest unemployment—over 12 per cent. There have been some increases since, as today's release of the unemployment figures from Brussels shows. Britain's position at the top of the league table remains unchallenged.

Let me say another word about the Chancellor of the Exchequer's extraordinary use of statistics about France. I have the figures here, and they are his own figures. My hon. Friend the Member for Blackburn (Mr. Straw) asked the Minister of State at the Department of Employment about the latest available seasonally adjusted standardised unemployment rate, estimated by the OECD for various countries. The question was asked in June 1982. The answer was: United Kingdom (May) 12.7 France (May) 8/"—[Official Report, 6 July 1982; Vol. 26, c. 74.] Today, the Financial Times quoted the Brussels press release showing that the French unemployment rate had slipped from 8.3 per cent. to 8.2 per cent. I do not know how the Chancellor of the Exchequer managed to produce a figure which, if my memory is correct, was over 10 per cent. If he wants to put the matter right, he can do so now.

Sir Geoffrey Howe

The right hon. Gentleman must accept that the OECD figures for seasonally adjusted unemployment in France over the past 12 months show a steady increase, quarter by quarter, from 9.2 per cent. in May 1981 to 10.6 per cent. in May 1982.

Mr. Shore

I have just quoted the OECD figures, given in an answer by one of the right hon. and learned Gentleman's colleagues. If this is another failure of co-ordination between Government Departments, the right hon. and learned Gentleman should know about it. I cannot make sense of the Chancellor's figures, because I checked them with other sources. Even the French Government's own official figures show that unemployment has dropped from 8.3 per cent. to 8.2 per cent.

I come to the third point in the Chancellor's case. It is his plea in mitigation that, as a result of the recession, productivity in Britain has shown a remarkable increase. In some firms, in some industries, there has indeed been an increase in output per man hour, but how large that increase is, whether it is exceptional compared with other earlier phases of the recessionary cycle, and whether it is likely to be sustained in the future are questions that have not been answered. However, what we do know is that the effect of increased productivity has not merely been countered and offset, but literally overwhelmed by the massive loss of international competitiveness from which British industry so patently suffers. Comparing 1981 with 1979—I repeat the figure that I gave when I intervened in the Chancellor's speech—IMF figures show that we sustained no less than a 36 per cent. loss in our international competitiveness. I do not believe that we have records of any similar experience in our national history, and I know no other industrial country which has suffered so great a reverse. This is what will ravage, as it already does, our balance of trade.

Of course, the great British slump of 1979 to 1981 led to a massive destocking and a dramatic fall of Britain's imports—and, indeed, to almost desperate export efforts by those firms in the United Kingdom that could find no market at home. The effect was to produce in 1980 and 1981 large surpluses on our current trade accounts. Now that the trade figures for the fourth quarter of 1981 have begun to re-emerge, the House should note a massive and alarming deterioration, due not to an expansion of the United Kingdom economy but simply to the end of destocking within it.

Our visible trade surplus, which was running at an annual rate of getting on for £2,000 million in the fourth quarter of 1981, dropped to £700 million in the first five months of this year. That total conceals the massive deterioration in our trade in manufactured goods and the part played by oil. In manufactured goods, the turn round has been from a surplus at an annual rate of more than £2,000 million in the fourth quarter of 1981 to no surplus in the first five months of this year.

Our oil surplus—incidentally it did not exist in 1979—is now running at no less than £3,300 million a year. Without it we should be in desperate difficulties. What is happening is plain. Even with a flattened, depressed economy, the import-export balance in non-oil trade is moving sharply and dangerously to our disadvantage. It is a record of three years of gross mismanagement, or worse. The great benefit that should have come to Britain from the North Sea is now being squandered on imported industrial goods and, moreover, in the outflow of British capital to assist the development of the industries of our competitors.

There is no serious dispute as to the causes of our present economic plight. The attempt to achieve sterling M3 targets for the growth in the money supply, however unsuccessful they may have been, have led to high interest rates and to the maintenance of the £ sterling at what is clearly an unrealistic and uncompetitive level. It has had a crippling effect both on private industrial investments and on the capacity of British industry to sell abroad and to maintain its share of the British domestic market.

At the same time, the Government have heavily cut their public expenditure programmes. That in turn has reduced the public sector borrowing requirement, although, as we all know, by far from an exactly matching amount. One of the obvious, if paradoxical, consequences of cutting public expenditure and maintaining a monetarist policy has been to inflate public expenditure through the maintenance of the vastly increased numbers of unemployed, subsidies to industries and services that are no longer viable, and the servicing of an ever-increasing national debt.

As if that was not enough, the Government, in flagrant contradiction of their election pledges, have substantially increased the burden of direct and indirect taxation on virtually the whole of Britain, other than the minority on very high incomes.

Just what has happened here, and how much more damaging the Government's fiscal policies have been, is recorded, on a regular basis, in the OECD's economic outlook, which measures the extent to which the Budget balance has been deliberately set to more than offset the built-in stabilisers and thus to achieve a greater deflationary impact.

In the three post-second oil shock years, 1980–82, the change in what economists like to call "the discretionary fiscal policy" in the United Kingdom has amounted to more than 5.5 per cent. of our total GDP. Not one of the big six industrial nations has changed its discretionary fiscal policy by even a half of the British total.

Nobody who looks at the evidence, at the specifically British unemployment levels, the unparalleled collapse of British industrial output and the stubborn and deliberate pursuit of deflationary policies, can have any doubt whatever that the greater part of the major deterioration in the British economy is a direct consequence of the policies and strategies pursued by the Government.

Mr. Tim Renton (Mid-Sussex)

rose—

Mr. Shore

Earlier today, attention was drawn to the recent publication by the Institute of Economic Affairs of a new pamphlet in which the central point was the advocacy of 5 million unemployed as inevitable, necessary and desirable to promote a healthy economy.

Mr. Renton

rose—

Mr. Shore

I shall not give way. The hon. Gentleman has not been present throughout the debate.

I do not know what figure the Chancellor has in mind, but I must say that it is becoming increasingly apparent to us, not only from what he has said but from his actions and inactions, that he is using the 3 million unemployed as a principal economic regulator—a principal weapon—against inflation and as a principal way of changing the balance of power in industry in his economic policies. It is no good asking what the Government propose to do. They do not propose to do anything but carry on with their present policies.

Four months ago in his Budget Statement the Chancellor of the Exchequer described the 1982 Budget as a Budget for industry, a Budget for jobs and a Budget for the people. Only yesterday the Secretary of State for Trade in another place was once again asserting that the latest figures are encouraging. He confirmed the view that, taking one month with another, recovery is under way. That is what the Chancellor of the Exchequer, with his tortured statistic, was seeking to put to us this afternoon but the evidence is all against him. It is not only the National Federation of Building Trade Employers which is calling for a modest, steady and effective programme of construction and investment". That is also the considered view of the CBI. As my right hon. Friend the Member for Chesterfield (Mr. Varley) rightly said, that is the CBI's view in every region in the land, not only in London. Only this morning, having heard about the abolition of hire purchase controls and the well-advertised further measures that have been announced, Sir Campbell Fraser, the CBI's president, warned against a second wave of redundancies in Britain". If we are ever to resume the expansion of our economy and if we are to make any progress towards reducing the massive total of unemployment, we shall need to set a new course in economic policy and match measures to the scale of events. We need immediately a strong stimulus to the economy. We have unused capacity, unused skills and unused people. We have capital available and we have enormous and unsatisfied public and private needs. The element that is missing is demand. Therefore, we need an increase in public investment programmes. Apart from dogma, there is no reason why British Telecom, which has a large and beneficial investment programme that is ready to be expanded, should be forced to curtail its plans because the Government are not prepared to allow them to be implemented until 51 per cent. of its shares are sold off to private investors.

Expansion programmes for nationalised industries make sense, and they should have their EFLs increased to permit additional investment. Of course we should carry through a substantial increase in infrastructure programmes on roads and sewers. We need a substantial increase in housing expenditure, both on new housing and on modernisation. We need also an immediate increase in the spending power of those who have been penalised by the Government's retentions. The 5 per cent. cut in unemployment benefit should be remedied at once. There should be a proper uprating of child benefit, and there should certainly be an increase in the rate support grant for our inner city areas with all their appalling problems.

There should be, as the CBI has urged, a further cut in the national insurance surcharge and an immediate restitution of income tax thresholds to take account of what was filched in the Budget in 1981.

Mr. Arthur Lewis (Newham, North-West)

rose—

Mr. Shore

There should be a sharp cut in interest rates to bring down to a sensible level the exchange rate of the pound.

Mr. Renton

rose—

Mr. Shore

It was precisely along those lines that I put forward my economic proposals in the week immediately preceding this year's Budget.

Mr. Tim Eggar (Enfield, North)

How much would they have cost?

Mr. Shore

The amount appeared in print. It was £9 billion with an increase in the PSBR of about half that amount. The proposals were published.

Mr. Arthur Lewis

rose—

Mr. Shore

My hon. Friend the Member for Newham, North-East knows that if I give way to him I shall only infringe on the Secretary of State's time.

Some of the measures could be undertaken straight away. Others will need an autumn Budget, which should be the central focus of Government activity during the next three months.

The Prime Minister, the Chancellor and the now cowed Cabinet that they command are presiding over a tragedy for the British people and a disaster for the country. In three short years, they have turned a national performance that many of us considered to be inadequate into absolute decline. They have squandered opportunity and ruined hope. That is why we condemn them and that is why we shall vote against them tonight.

9.30 pm

The Secretary of State for Employment (Mr. Norman Tebbit)

We should congratulate the right hon. Member for Stepney and Poplar (Mr. Shore)—

Mr. Arthur Lewis

Is the right hon. Gentleman aware that we all agree that unemployment is a terrible problem? Whatever our views, we agree that something must be done about it. Does the right hon. Gentleman agree that it is terrible that we are debating this important subject and yet the former leader of the SDP is reported to have gone away on a six-week holiday to America with his family in addition to the long holiday that we are about to have? Why should not the former leader of the SDP be working now?

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

On a point of order, Mr. Speaker. It is unfair to attack the leader of the SDP. He is having port and cigars in the Dining Room.

Mr. Speaker

Order. We are here, so let the debate continue.

Mr. Tebbit

I am sorry that the House is not in a more serious mood for a debate that takes place against a grim background of world unemployment.

It is only right to congratulate the right hon. Member for Stepney and Poplar on reading stalwartly through his script and refusing to give way at any point to answer questions, even from his hon. Friends. It is no wonder that the right hon. Gentleman did not wish to give way because he spent 27 minutes on a standard whine and less than three minutes telling us what his right hon. Friend the Leader of the Opposition so recently described as a detailed blueprint for the return to full employment. All that we heard on the subject was that there should be a strong stimulus and that nationalised industries should be allowed to invest more.

Is the right hon. Member for Stepney and Poplar aware that this year nationalised industries are programmed to spend about 26 per cent. more on capital expenditure than they spent last year? Last year British Telecom, which he singled out for special mention, could not spend the sums of money that were allocated to it. He must do much better than that. I shall return later to that detailed blueprint and the missing ingredient that the right hon. Gentleman again failed to mention—the incomes policy. Does he need an incomes policy or not? I am willing to give way to the right hon. Gentleman. He gave his recipe for the restoration of full employment. Does it include an incomes policy?

Mr. Shore

I am not prepared to use unemployment as a scourge and whip to force people to accept coercive wage settlements.

Mr. Tebbit

The right hon. Gentleman knows that that will not do. He cannot fool anyone with that. Does the right hon. Gentleman include an incomes policy in his programme for full employment?

Mrs. Elaine Kellett-Bowman (Lancaster)

Answer.

Mr. Tebbit

The incredible response of the right hon. Gentleman and his party to the problem is shown clearly by the fact that this is the most basic problem that has been seen by everyone to be at the heart of the detailed blueprint and he cannot answer the question.

Sir Geoffrey Howe

He will not answer it.

Mr. Ennals

rose—

Mr. Tebbit

My right hon. and learned Friend says that he will not answer it. The point is that he dare not, because he and his right hon. Friend the Member for Chesterfield (Mr. Varley) wish to have an incomes policy but the national executive committee of the Labour Party will not let them have one.

Mr. Ennals

rose—

Mr. Speaker

Order. It is quite clear that the Secretary of State is not giving way. As with the other hon. Members who have addressed the House, he is entitled to be heard. The right hon. Member for Stepney and Poplar (Mr. Shore) was heard, so the Secretary of State must also be heard.

Mr. Tebbit

I am trying to deal with the sedentary interruptions that one can scarcely avoid from the less well mannered Members.

The Government have never indulged in a formal incomes policy. Like any employer, the Government must have in mind the maximum that they can afford to pay their employees, but we do not subscribe to incomes policies. We are clear about that, but the right hon. Member for Stepney and Poplar could not answer the question.

We have discussed unemployment statistics today. Whatever statistics we use, we can see that in the free industrialised world, perhaps with the exception of Japan, there has been a huge increase in unemployment. Britain's historic problem of overmanning has been exacerbated by the appalling inflation of the past decade and its accompanying loss of competitiveness in British industry, which left us far more vulnerable than our rivals to the world recession. There are no statistics of any value from the State Socialist regimes of Eastern Europe, but the collapse of the Polish economy and the severe recession in other Eastern European countries have no doubt brought them problems of surplus labour and further problems to the Western world, which has for long supported the Socialist economies that cannot even feed their own populations.

None of that can be disputed and should form part of the common ground on which we base our debate. Nor can there be any hiding from the extent of our unemployment problem. However, following the shake-outs of labour that commenced in 1979 and reached a peak in mid-1981, the rate of increase in unemployment has been slowing almost without interruption.

Mr. Radice

Oh!

Mr. Tebbit

I suggest that if the parrot of the hon Member for Chester-le-Street (Mr. Radice) reads the statistics properly, he too could get them right.

Since September last year the annual increase in unemployment has been lower in each succesive month. Even so, the total has climbed to its present 3,200,000 and seasonal factors alone will take that to a new peak during the next few months. However, in many other countries the rate of increase is still accelerating. Notable examples are Germany, the Netherlands, Canada and the United States of America. In Germany, unemployment increased by 46 per cent. during the past 12 months and short-time working rose by one-third, while in Britain unemployment rose by 12 per cent and short-time working fell by 4 per cent.

Mr. Ron Leighton (Newham, North-East)

The Secretary of State talked about the shake-outs of labour since 1979. Is he saying that that was deliberate Government policy and that the figure of 3½ million unemployed is deliberate or that that was a mistake and an indictment of Government policy?

Mr. Tebbit

It is an indictment of the past, which allowed overmanning to grow. There is no one better equipped to talk about the extent of overmanning in some industries than the hon. Gentleman, with his intimate experience of the practices of Fleet Street.

There has been discussion about unemployment in France. The right hon. Member for Stepney and Poplar and his hon. Friends cannot get the figures right. Unemployment in France, on the unadjusted figure, taking no account of seasonal influences, has fallen, not in each of the past four months, as the right hon. Gentleman said, but in each of the past five months. However, as the right hon. Gentleman should know, we need to look more closely at the seasonally adjusted figures. They tell a slightly different story.

If the right hon. Gentleman wants to take a stand on the unadjusted figures, I am blessed if I know why he did not congratulate the Government on the fact that in Britain there have been six falls in unadjusted employment in the past 10 months. He was so proud of the French figure of a fall of 18,000 that he forgot to mention that there was a fall of 38,000 in the comparable figure in Britain in May. Therefore, I suggest that he should not spend too much time playing with statistics.

Whatever the statistics say, they do not always compare like with like because there are factors such as the guest workers in Germany and national military service in both France and Germany. There are lessons to be learnt from the French experience. Inflation is rising in France. To be sure, unemployment does not present a happy picture. There is a massive balance of payments problem. There has been an enormous increase in unit costs of French products, all of which is bad news for their workers and good news for their competitors over the months ahead.

Whatever the statistics say, and however we count the toll of the jobless who are actively seeking work, the House agrees that that represents a tragic waste of resources, skills and talents and a personal tragedy for the great mass of the unemployed and their families. Those of us who are old enough to have even childhood memories of pre-war unemployment—[Interruption.] I notice that the biggest mouths are those of Members who are too young to remember that. Those who can remember pre-war unemployment know that there is a vast difference between the degree of hardship and distress then and now.

However, none of us would wish the return to full employment to be delayed a day longer than need be. In the meantime, to deal with the problems of the unemployed, we have devised and developed—[Interruption.] I do not think that the hon. Member for West Bromwich, West (Miss Boothroyd) wishes to listen to the debate.

Miss Betty Boothroyd (West Bromwich, West)

rose—

Mr. Tebbit

After her rudeness, I shall not give way to her.

In the meantime, we have developed a range of measures and we shall continue to do so. In particular, today we have announced that the Manpower Services Commission has been able to take advantage of the £150 million of extra public expenditure that my right hon. and learned Friend said in the Budget speech he would make available for additional help to the long-term unemployed. Opposition Members have constantly asked me to do more to assist the long-term unemployed through programmes of that type. It comes ill from those who asked for such measures now to be so mealy-mouthed and hypocritical in their reception of them.

Miss Boothroyd

Will the right hon. Gentleman give way?

Mr. Tebbit

I have too much to tell the House. The MSC scheme goes beyond even what my right hon. and learned Friend the Chancellor was initially prepared to offer. Bringing jobs to 100,000 of the long-term unemployed through the new community programme will necessitate a net extra expenditure of £185 million. There is a limit to the expenditure that can be made on that type of scheme without damaging the economy. Special measures are now costing well in excess of £l½ billion. Together with the scheme that was announced today, we have done more than any of our predecessors would have done to deal with the problem. I am aware that some problems remain.

Mr. Alexander W. Lyon (York)

rose—

Mr. Tebbit

For example, there are still problems for some trade unions in the public sector in the implementation of the new community programme scheme. Nevertheless, I believe that those problems will be resolved with the help of the MSC. Those problems are common in many respects to both trade unions and employers.

Mr. Lyon

Will the right hon. Gentleman give way?

Mr. Tebbit

I am sorry but I shall not. When I consider the measures that the Government have advanced, especially in the past year, to deal with the problems, I find the tone and content of some hon. Members' speeches offensive, not to mention their pretty depressing level of economic illiteracy.

Miss Boothroyd

rose—

Mr. Tebbit

Nothing will change the laws of economics since the right hon. Member for Cardiff, South-East (Mr. Callaghan)—

Mr. Ennals

On a point of order, Mr. Speaker Is it not a tradition that the House—[Interruption.]—

Mr. Speaker

Order. The House is debating an extremely serious issue.

Mr. Winnick

rose—

Mr. Speaker

Order. I hope that for the remaining quarter of an hour we shall hear what is being said.

Mr. Tebbit

I started my speech by giving way to a Labour Back Bencher to whom the Front Bench Opposition spokesman would not give way. I cannot give way again. As I was saying, nothing has changed the laws of economics since the right hon. Member for Cardiff, South-East made that classic statement: We used to think that you could just spend your way out of a recession and increase employment by cutting taxes and boosting Government spending. I tell you in all candour that that option no longer exists. We must repeat that statement in every debate as Opposition Members have forgotten it.

Perhaps the tone for the debate was set by a statement that the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) made outside the House. He was unable to be present today. He made a major policy statement in last Sunday's News of the World. He wrote: The SDP's unique contribution is that we have the determination and the realistic non-dogmatic policies Britain needs to turn the tide of unemployment. Eagerly, my eye continued down the page. Alas, that was the end of the policy statement. I therefore searched earlier columns. [Laughter.] The right hon. Member for Stepney and Poplar may laugh but his speech was no better. The right hon. Member for Hillhead said: We can start by putting to more sensible use the taxpayers' money now spent on dole payments to people who would much rather have jobs. Well, yes, amen to that. But somewhere, something is still missing.

For all that, however, search as one might, the right hon. Member for Hillhead could only offer contempt for those who poison business confidence with a massive dose of nationalisation"— a clear dig at his hon. Friends—and a commitment to get Britain's economy moving again by working with the grain of industry and not against". Never mind—he had something positive to say about SDP policy on nationalisation, although it goes ill with the fact that he voted for massive extensions of nationalisation until he was whisked off to Brussels.

Let us turn to the policies of the official Opposition—

Mr. George Foulkes (South Ayrshire)

What about your policies?

Miss Boothroyd

rose—

Mr. Tebbit

My right hon. and learned Friend the Chancellor has been dealing with the Government's policies today.

Miss Boothroyd

Will the Minister give way?

Mr. Speaker

Order. The hon. Lady must resume her seat. The Minister has said that he is not giving way.

Mr. Foulkes

She is on the national executive.

Mr. Speaker

Order. Mr. Tebbit.

Mr. Tebbit

rose—

Mr. Shore

Will the right hon. Gentleman give way?

Mr. Tebbit

I give way to the right hon. Member for Stepney and Poplar.

Mr. Shore

Very briefly, it is now 9.50 pm and the right hon. Gentleman has not said a word about what he, with the power and authority of Government, intends to do to reduce unemployment.

Mr. Tebbit

As the right hon. Gentleman himself devoted only three minutes to his policy, I thought that I might devote twice as much time to my own at the end of my speech. I gave way because I thought that the right hon. Gentleman was about to tell us whether he had an incomes policy. I am not surprised that he has problems.

Hon. Members

Look who's here!

Mr. Speaker

Order.

Mr. Tebbit

It is difficult to make oneself heard—[Interruption.] There seems to be a somewhat unnatural—[Interruption.]

Mr. Speaker

Order. The House has given its welcome to the right hon. Member for Glasgow, Hillhead (Mr. Jenkins). Now it really must listen to the Minister.

Mr. Eric S. Heffer (Liverpool, Walton)

There are 3½ million unemployed and the Minister talks about inflation.

Mr. Speaker

Order.

Mr. Tebbit

The hon. Member for Liverpool, Walton (Mr. Heifer) must not get over-excited. He was not here to listen to the debate. Perhaps he will start now.

My hon. Friend the Member for Mitcham and Morden (Mrs. Rumbold) made what I am told was an excellent maiden speech. I was unfortunately not able to hear it as I was talking to members of the Manpower Services Commission and discussing with some of the commissioners the very problems that we are dealing with today. I was glad to hear of my hon. Friend's welcome for enterprise zones, for lower interest rates and for the youth training scheme. I also welcome what she said about the need for colleges of further education to meet the needs of industry and young workers rather than merely continuing to offer courses that they had offered in the past.

I am sorry that the hon. Member for Rochdale (Mr. Smith) could not to be more enthusiastic about the Government's problems. He pointed out the problems of achieving useful investment in the public sector. That is clearly right, as we see the problems of using the investment already made in British Rail. I am glad that the hon. Gentleman was able to welcome the job-splitting initiative, which was the other part of the Government's initiative today to help more people to find jobs in these difficult times.

I should also comment on the remarkable speech of my right hon. Friend the Member for Taunton (Mr. du Cann), Although I did not hear it, I have been told—

Mr. Foulkes

This is the listening Government.

Mr. Tebbit

I was told of my right hon. Friend's strong and forthright support for the thrust of Government policies. As my right hon. Friend pointed out, and as the right hon. Member for Chesterfield used to point out but no longer does, airing inflation is the key to combating unemployment. The right hon. Member for Chesterfield said: Financial stability and low inflation are the first two necessary conditions for industrial regeneration. I hope that in view of the progress we have made on those fronts he will give at least two cheers.

Mr. Varley

If the right hon. Gentleman is to be fair, he should point out that when I used those words unemployment was going down.

Mr. Tebbit

The right hon. Gentleman will surely be even keener now to see lower inflation and greater financial stability, and even more keen to give the two cheers.

I agree with my right hon. Friend the Member for Taunton. It is right to emphasise our progress on inflation, unit costs, competitiveness, the strong balance of payments and the confidence in sterling abroad. None of those improvements was mentioned by the right hon. Gentleman.

Of course we all want lower interest rates. My right hon. Friend was absolutely right to say that there is no magic wand or formula and that we need to change the balance between current and capital expenditure. That means we need to hold back labour costs. As my right hon. Friend suggested, it would be instructive to get some of his friends from the City, with the skills that City bankers have, to take a sober assessment of some of the plans as they come forward.

The right hon. Member for Houghton-le-Spring (Mr. Urwin) was, as always, sober and concerned. We share his concern about the "Atlantic Conveyor" contract. However, it is important to recollect that even after a substantial subsidy of 30 per cent. on British Shipbuilders' price there is still a wide gap between its price and that of the foreign yards. Three parties are involved—Cunard, the Government and British Shipbuilders. All have a role in bridging that gap but they are all limited in what they can do. The Government will certainly do their part.

The hon. Member for Tottenham (Mr. Atkinson) was typical of his colleagues in showing a contempt for small businesses. No doubt he would have despised Morris when he started his engineering business. No doubt he would have had nothing but contempt for Marks and Spencer when they had a market stall, even if his class consciousness causes him to touch his cap to Lord Sieff now that he is a big employer.

My hon. Friend the Member for Kidderminster (Mr. Bulmer) had the realism of an employer in supporting the Government, as did my hon. Friends the Members for Aberdeenshire, West (Sir R. Fairgrieve) and for Edinburgh, South (Mr. Ancram).

Of all the speeches from the Opposition Benches below the Gangway, the one that stood out was that of the hon. Member for Edinburgh, Leith (Mr. Brown). He had some difficulty in seeing the truth in the unemployment statistics. However, I believe he had some difficulty in seeing Russian tanks in Afghanistan, so I recommend an optician for him.

For the reasons I have given, all our energies must be turned to how we can deal with the problem of unemployment. The first steps in the process of combating unemployment must be to restore profitability to industry, restore the stability of money, control inflation, reduce the cost of investment by lowering interest rates and improve the yield of wealth from our investments.

Tax policies are, of course, important. A percentage point off the national insurance surcharge is important, but a 1 per cent. lower wage settlement is even more important. To reach competitive manning levels is of the greatest importance of all.

The key factor has been neglected today. Unemployment is a problem of poor countries, not of rich countries. Our problem is that we have not been sufficiently good at producing wealth, but we have made good progress in laying the foundation for that wealth production. We shall not put another inflationary time bomb in those foundations to blow them up. For that reason I commend the amendment to the House and ask it to reject the motion.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 257, Noes 311.

Division 294]	[10 pm
AYES
Adams, Allen	Brocklebank-Fowler, C.
Allaun, Frank	Brown, Hugh D. (Provan)
Alton, David	Brown, R.C. (N'castle W)
Anderson, Donald	Brown, Ronald W. (H'ckn'y S)
Archer, Rt Hon Peter	Brown, Ron (E'burgh, Leith)
Ashley, Rt Hon Jack	Buchan, Norman
Ashton, Joe	Callaghan, Rt Hon J.
Atkinson, N. (H'gey,)	Callaghan, Jim (Mldd't'n & P)
Bagier, Gordon A.T.	Campbell, Ian
Barnett, Guy (Greenwich)	Campbell-Savours, Dale
Barnett, Rt Hon Joel (H'wd)	Cant, R. B.
Benn, Rt Hon Tony	Carmichael, Neil
Bennett, Andrew (St'kp't N)	Carter-Jones, Lewis
Bidwell, Sydney	Cartwright, John
Booth, Rt Hon Albert	Clark, Dr David (S Shields)
Boothroyd, Miss Betty	Clarke, Thomas C'b'dge,
Bottomley, Rt Hon A. (M'b'ro)	A'drie
Bradley, Tom	Cocks, Rt Hon M. (B'stol S)
Bray, Dr Jeremy	Cohen, Stanley

Coleman, Donald	Jay, Rt Hon Douglas
Concannon, Rt Hon J. D.	Jenkins, Rt Hon Roy (Hillhead)
Conlan, Bernard
Cook, Robin F.	John, Brynmor
Cowans, Harry	Johnson, James (Hull West)
Cox, T. (W'dsw'th, Toot'g)	Johnson, Walter (Derby S)
Craigen, J. M. (G'gow, M'hill)	Jones, Rt Hon Alec (Rh'dda)
Crawshaw, Richard	Jones, Barry (East Flint)
Crowther, Stan	Kaufman, Rt Hon Gerald
Cryer, Bob	Kerr, Russell
Cunningham, Dr J. (W'h'n)	Kilfedder, James A.
Dalyell, Tam	Kilroy-Silk, Robert
Davidson, Arthur	Kinnock, Neil
Davies, Rt Hon Denzil (L'lli)	Lamond, James
Davis, Clinton (Hackney C)	Leadbitter, Ted
Davis, Terry (B'ham, Stechf'd)	Leighton, Ronald
Deakins, Eric	Lestor, Miss Joan
Dean, Joseph (Leeds West)	Lewis, Arthur (N'ham NW)
Dewar, Donald	Lewis, Ron (Carlisle)
Dixon, Donald	Litherland, Robert
Dobson, Frank	Lofthouse, Geoffrey
Dormand, Jack	Lyon, Alexander (York)
Douglas, Dick	Lyons, Edward (Bradf'd W)
Dubs, Alfred	Mabon, Rt Hon Dr J. Dickson
Duffy, A. E. P.	McCartney, Hugh
Dunlop, John	McDonald, Dr Oonagh
Dunn, James A.	McElhone, Frank
Dunwoody, Hon Mrs G.	McKay, Allen (Penistone)
Eadie, Alex	McKelvey, William
Eastham, Ken	MacKenzie, Rt Hon Gregor
Edwards, R. (W'hampt'n S E)	Maclennan, Robert
Ellis, R. (NE D'bysh're)	McMahon, Andrew
Ellis, Tom (Wrexham)	McNally, Thomas
English, Michael	McNamara, Kevin
Ennals, Rt Hon David	McWilliam, John
Evans, loan (Aberdare)	Magee, Bryan
Evans, John (Newton)	Marks, Kenneth
Ewing, Harry	Marshall, D (G'gow S'ton)
Faulds, Andrew	Marshall, Dr Edmund (Goole)
Field, Frank	Marshall, Jim (Leicester S)
Fitch, Alan	Martin, M (G'gow S'burn)
Flannery, Martin	Mason, Rt Hon Roy
Foot, Rt Hon Michael	Maynard, Miss Joan
Ford, Ben	Meacher, Michael
Forrester, John	Mellish, Rt Hon Robert
Foster, Derek	Mikardo, Ian
Foulkes, George	Millan, Rt Hon Bruce
Fraser, J. (Lamb'th, N'w'd)	Miller, Dr M. S. (E Kilbride)
Freud, Clement	Mitchell, Austin (Grimsby)
Garrett, John (Norwich S)	Mitchell, R. C. (Soton Itchen)
Garrett, W. E. (Wallsend)	Morris, Rt Hon A. (W'shawe)
George, Bruce	Morris, Rt Hon C. (O'shaw)
Gilbert, Rt Hon Dr John	Morris, Rt Hon J. (Aberavon)
Ginsburg, David	Moyle, Rt Hon Roland
Golding, John	Mulley, Rt Hon Frederick
Gourlay, Harry	Newens, Stanley
Graham, Ted	Oakes, Rt Hon Gordon
Grimond, Rt Hon J.	O'Halloran, Michael
Hamilton, James (Bothwell)	O'Neill, Martin
Hamilton, W. W. (C'tral Fife)	Orme, Rt Hon Stanley
Hardy, Peter	Palmer, Arthur
Harrison, Rt Hon Walter	Park, George
Hart, Rt Hon Dame Judith	Parker, John
Haynes, Frank	Pavitt, Laurie
Healey, Rt Hon Denis	Pendry, Tom
Heffer, Eric S.	Penhaligon, David
Hogg, N. (E Dunb't'nshire)	Pitt, William Henry
Holland, S. (L'b'th, Vauxh'll)	Powell, Raymond (Ogmore)
Home Robertson, John	Prescott, John
Homewood, William	Price, C. (Lewisham W)
Hooley, Frank	Race, Reg
Horam, John	Radice, Giles
Howell, Rt Hon D.	Rees, Rt Hon M (Leeds S)
Hoyle, Douglas	Richardson, Jo
Huckfield, Les	Roberts, Albert (Normanton)
Hudson Davies, Gwilym E.	Roberts, Allan (Bootle)
Hughes, Mark (Durham)	Roberts, Ernest (Hackney N)
Hughes, Robert (Aberdeen N)	Roberts, Gwilym (Cannock)
Hughes, Roy (Newport)	Robinson, G. (Coventry NW)
Janner, Hon Greville	Robinson, P. (Belfast E)

Rooker, J. W.	Thorne, Stan (Preston South)
Roper, John	Tilley, John
Ross, Ernest (Dundee West)	Tinn, James
Ross, Stephen (Isle of Wight)	Torney, Tom
Rowlands, Ted	Urwin, Rt Hon Tom
Ryman, John	Varley, Rt Hon Eric G.
Sandelson, Neville	Wainwright, E. (Dearne V)
Sever, John	Wainwright, R. (Colne V)
Sheerman, Barry	Walker, Rt Hon H. (D'caster)
Sheldon, Rt Hon R.	Watkins, David
Shore, Rt Hon Peter	Weetch, Ken
Short, Mrs Renée	Wellbeloved, James
Silkin, Rt Hon J. (Deptford)	Welsh, Michael
Silkin, Rt Hon S. C. (Dulwich)	White, Frank R.
Silverman, Julius	White, J. (G'gow Pollok)
Skinner, Dennis	Whitehead, Phillip
Smith, Cyril (Rochdale)	Willey, Rt Hon Frederick
Snape, Peter	Williams, Rt Hon A. (S'sea W)
Soley, Clive	Williams, Rt Hon Mrs (Crosby)
Spearing, Nigel
Spriggs, Leslie	Wilson, Gordon (Dundee E)
Stallard, A. W.	Wilson, Rt Hon Sir H. (H'ton)
Steel, Rt Hon David	Wilson, William (C'try SE)
Stewart, Rt Hon D. (W Isles)	Winnick, David
Stoddart, David	Woodall, Alec
Stott, Roger	Woolmer, Kenneth
Strang, Gavin	Wrigglesworth, Ian
Straw, Jack	Wright, Sheila
Summerskill, Hon Dr Shirley	Young, David (Bolton E)
Thomas, Dafydd (Merioneth)
Thomas, Jeffrey (Abertillery)	Tellers for the Ayes:
Thomas, Mike (Newcastle E)	Mr. George Morton and
Thomas, Dr R. (Carmarthen)	Mr. Lawrence Cunliffe.
NOES
Adley, Robert	Carlisle, Kenneth (Lincoln)
Aitken, Jonathan	Chalker, Mrs. Lynda
Alexander, Richard	Chapman, Sydney
Alison, Rt Hon Michael	Churchill, W. S.
Amery, Rt Hon Julian	Clark, Hon A. (Plym'th, S'n)
Ancram, Michael	Clark, Sir W. (Croydon S)
Arnold, Tom	Clarke, Kenneth (Rushcliffe)
Aspinwall, Jack	Clegg, Sir Walter
Atkins, Rt Hon H. (S'thorne)	Cockeram, Eric
Atkins, Robert (Preston N)	Colvin, Michael
Atkinson, David (B'm'th,E)	Cope, John
Baker, Kenneth (St.M'bone)	Cormack, Patrick
Baker, Nicholas (N Dorset)	Corrie, John
Banks, Robert	Costain, Sir Albert
Beaumont-Dark, Anthony	Cranborne, Viscount
Bendall, Vivian	Critchley, Julian
Benyon, Thomas (A'don)	Crouch, David
Benyon, W. (Buckingham)	Dickens, Geoffrey
Best, Keith	Dorrell, Stephen
Bevan, David Gilroy	Douglas-Hamilton, Lord J.
Biffen, Rt Hon John	Dover, Denshore
Biggs-Davison, Sir John	du Cann, Rt Hon Edward
Blackburn, John	Dunn, Robert (Dartford)
Blaker, Peter	Durant, Tony
Body, Richard	Dykes, Hugh
Bonsor, Sir Nicholas	Eden, Rt Hon Sir John
Boscawen, Hon Robert	Edwards, Rt Hon N. (P'broke)
Bottomley, Peter (W'wich W)	Eggar, Tim
Bowden, Andrew	Elliott, Sir William
Boyson, Dr Rhodes	Emery, Sir Peter
Braine, Sir Bernard	Eyre, Reginald
Brinton, Tim	Fairbairn, Nicholas
Brittan, Rt. Hon. Leon	Fairgrieve, Sir Russell
Brooke, Hon Peter	Faith, Mrs Sheila
Brown, Michael (Brigg & Sc'n)	Farr, John
Browne, John (Winchester)	Fell, Sir Anthony
Bruce-Gardyne, John	Fenner, Mrs Peggy
Bryan, Sir Paul	Fisher, Sir Nigel
Buchanan-Smith, Rt. Hon. A.	Fletcher, A. (Ed'nb'gh N)
Buck, Antony	Fletcher-Cooke, Sir Charles
Budgen, Nick	Fookes, Miss Janet
Bulmer, Esmond	Forman, Nigel
Butcher, John	Fowler, Rt Hon Norman
Cadbury, Jocelyn	Fox, Marcus
Carlisle, John (Luton West)	Fraser, Rt Hon Sir Hugh

Fraser, Peter (South Angus)	Macmillan, Rt Hon M.
Fry, Peter	McNair-Wilson, M. (N'bury)
Gardner, Edward (S Fylde)	McNair-Wilson, P. (New F'st)
Garel-Jones, Tristan	Madel, David
Gilmour, Rt Hon Sir Ian	Major, John
Glyn, Dr Alan	Marland, Paul
Goodhart, Sir Philip	Marlow, Antony
Goodhew, Sir Victor	Marshall, Michael (Arundel)
Goodlad, Alastair	Marten, Rt Hon Neil
Gorst, John	Mates, Michael
Gow, Ian	Maude, Rt Hon Sir Angus
Gower, Sir Raymond	Mawby, Ray
Grant, Anthony (Harrow C)	Mawhinney, Dr Brian
Gray, Hamish	Maxwell-Hyslop, Robin
Greenway, Harry	Mayhew, Patrick
Griffiths, E. (B'y St. Edm'ds)	Mellor, David
Griffiths, Peter Portsm'th N)	Meyer, Sir Anthony
Grist, Ian	Miller, Hal (B'grove)
Grylls, Michael	Mills, Iain (Meriden)
Gummer, John Selwyn	Mills, Sir Peter (West Devon)
Hamilton, Hon A.	Miscampbell, Norman
Hamilton, Michael (Salisbury)	Moate, Roger
Hampson, Dr Keith	Monro, Sir Hector
Hannam, John	Montgomery, Fergus
Haselhurst, Alan	Moore, John
Hastings, Stephen	Morgan, Geraint
Havers, Rt Hon Sir Michael	Morrison, Hon C. (Devizes)
Hawkins, Sir Paul	Morrison, Hon P. (Chester)
Hawksley, Warren	Mudd, David
Hayhoe, Barney	Murphy, Christopher
Heath, Rt Hon Edward	Myles, David
Heddle, John	Neale, Gerrard
Henderson, Barry	Needham, Richard
Heseltine, Rt Hon Michael	Nelson, Anthony
Hicks, Robert	Neubert, Michael
Hill, James	Newton, Tony
Hogg, Hon Douglas (Gr'th'm)	Normanton, Tom
Holland, Philip (Carlton)	Nott, Rt Hon John
Hooson, Tom	Onslow, Cranley
Hordern, Peter	Oppenheim, Rt Hon Mrs S.
Howe, Rt Hon Sir Geoffrey	Osborn, John
Howell, Rt Hon D. (G'ldf'd)	Page, John (Harrow, West)
Howell, Ralph (N Norfolk)	Parkinson, Rt Hon Cecil
Hunt, David (Wirral)	Parris, Matthew
Hunt, John (Ravensbourne)	Patten, John (Oxford)
Hurd, Rt Hon Douglas	Pattie, Geoffrey
Irvine, Rt Hon Bryant Godman	Pawsey, James
Irving, Charles (Cheltenham)	Percival, Sir Ian
Jenkin, Rt Hon Patrick	Peyton, Rt Hon John
Jessel, Toby	Pink, R. Bonner
Johnson Smith, Sir Geoffrey	Porter, Barry
Jopling, Rt Hon Michael	Prentice, Rt Hon Reg
Joseph, Rt Hon Sir Keith	Price, Sir David (Eastleigh)
Kaberry, Sir Donald	Proctor, K. Harvey
Kellett-Bowman, Mrs Elaine	Pym, Rt Hon Francis
Kershaw, Sir Anthony	Raison, Rt Hon Timothy
Kimball, Sir Marcus	Rathbone, Tim
King, Rt Hon Tom	Rees, Peter (Dover and Deal)
Kitson, Sir Timothy	Rees-Davies, W. R.
Knight, Mrs Jill	Renton, Tim
Knox, David	Rhodes James, Robert
Lamont, Norman	Rhys Williams, Sir Brandon
Lang, Ian	Ridsdale, Sir Julian
Langford-Holt, Sir John	Rifkind, Malcolm
Latham, Michael	Rippon, Rt Hon Geoffrey
Lawrence, Ivan	Roberts, M. (Cardiff NW)
Lawson, Rt Hon Nigel	Roberts, Wyn (Conway)
Lee, John	Rossi, Hugh
Lennox-Boyd, Hon Mark	Rost, Peter
Lester, Jim (Beeston)	Royle, Sir Anthony
Lewis, Kenneth (Rutland)	Rumbold, Mrs A. C. R.
Lloyd, Ian (Havant & W'loo)	Sainsbury, Hon Timothy
Lloyd, Peter (Fareham)	St. John-Stevas, Rt Hon N.
Loveridge, John	Scott, Nicholas
Luce, Richard	Shaw, Giles (Pudsey)
Lyell, Nicholas	Shaw, Sir Michael (Scarb')
McCrindle, Robert	Shelton, William (Streatham)
Macfarlane, Neil	Shepherd, Colin (Hereford)
MacGregor, John	Shepherd, Richard
MacKay, John (Argyll)	Shersby, Michael

Silvester, Fred	Trotter, Neville
Sims, Roger	van Straubenzee, Sir W.
Skeet, T. H. H.	Vaughan, Dr Gerard
Smith, Dudley	Viggers, Peter
Smith, Tim (Beaconsfield)	Waddington, David
Speed, Keith	Wakeham, John
Speller, Tony	Waldegrave, Hon William
Spence, John	Walker, Rt Hon P.(W'cester)
Spicer, Jim (West Dorset)	Walker, B. (Perth)
Spicer, Michael (S Worcs)	Walker-Smith, Rt Hon Sir D.
Sproat, Iain	Wall, Sir Patrick
Squire, Robin	Waller, Gary
Stainton, Keith	Walters, Dennis
Stanbrook, Ivor	Ward, John
Stanley, John	Warren, Kenneth
Steen, Anthony	Watson, John
Stevens, Martin	Wells, Bowen
Stewart, A. (E Renfrewshire)	Wells, John (Maidstone)
Stewart, Ian (Hitchin)	Wheeler, John
Stokes, John	Whitelaw, Rt Hon William
Stradling Thomas, J.	Whitney, Raymond
Tapsell, Peter	Wickenden, Keith
Taylor, Teddy (S'end E)	Wiggin, Jerry
Tebbit, Rt Hon Norman	Wilkinson, John
Temple-Morris, Peter	Williams, D. (Montgomery)
Thatcher, Rt Hon Mrs M.	Wolfson, Mark
Thomas, Rt Hon Peter	Young, Sir George (Acton)
Thompson, Donald	Younger, Rt Hon George
Thorne, Neil (Ilford South)
Thornton, Malcolm	Tellers for the Noes:
Townend, John (Bridlington)	Mr. Anthony Berry and
Townsend, Cyril D, (B'heath)	Mr. Carol Mather.
Trippier, David

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 32 (Questions on amendments):—

The House divided: Ayes 311, Noes 257.

Division No. 295]	[10.14 pm
AYES
Adley, Robert	Bryan, Sir Paul
Aitken, Jonathan	Buchanan-Smith, Rt. Hon. A.
Alexander, Richard	Buck, Antony
Alison, Rt Hon Michael	Budgen, Nick
Amery, Rt Hon Julian	Bulmer, Esmond
Ancram, Michael	Butcher, John
Arnold, Tom	Cadbury, Jocelyn
Aspinwall, Jack	Carlisle, John (Luton West)
Atkins, Rt Hon H. (S'thorne)	Carlisle, Kenneth (Lincoln)
Atkins, Robert (Preston N)	Chalker, Mrs. Lynda
Atkinson, David (B'm'th,E)	Chapman, Sydney
Baker, Kenneth (St. M'bone)	Churchill, W. S.
Baker, Nicholas (N Dorset)	Clark, Hon A. (Plym'th, S'n)
Banks, Robert	Clark, Sir W. (Croydon S)
Beaumont-Dark, Anthony	Clarke, Kenneth (Rushcliffe)
Bendall, Vivian	Clegg, Sir Walter
Benyon, Thomas (A'don)	Cockeram, Eric
Benyon, W. (Buckingham)	Colvin, Michael
Best, Keith	Cope, John
Bevan, David Gilroy	Cormack, Patrick
Biffen, Rt Hon John	Corrie, John
Biggs-Davison, Sir John	Costain, Sir Albert
Blackburn, John	Cranborne, Viscount
Blaker, Peter	Critchley, Julian
Body, Richard	Crouch, David
Bonsor, Sir Nicholas	Dickens, Geoffrey
Boscawen, Hon Robert	Dorrell, Stephen
Bottomley, Peter (W'wich W)	Douglas-Hamilton, Lord J.
Bowden, Andrew	Dover, Denshore
Boyson, Dr Rhodes	du Cann, Rt Hon Edward
Braine, Sir Bernard	Dunn, Robert (Dartford)
Brinton, Tim	Durant, Tony
Brittan, Rt. Hon. Leon	Dykes, Hugh
Brooke, Hon Peter	Eden, Rt Hon Sir John
Brown, Michael (Brigg & Sc'n)	Edwards, Rt Hon N. (P'broke)
Browne, John (Winchester)	Eggar, Tim
Bruce-Gardyne, John	Elliott, Sir William

Emery, Sir Peter	Latham, Michael
Eyre, Reginald	Lawrence, Ivan
Fairbairn, Nicholas	Lawson, Rt Hon Nigel
Fairgrieve, Sir Russell	Lee, John
Faith, Mrs Sheila	Lennox-Boyd, Hon Mark
Farr, John	Lester, Jim (Beeston)
Fell, Sir Anthony	Lewis, Kenneth (Rutland)
Fenner, Mrs Peggy	Lloyd, Ian (Havant & W'loo)
Fisher, Sir Nigel	Lloyd, Peter (Fareham)
Fletcher, A. (Ed'nb'gh N)	Loveridge, John
Fletcher-Cooke, Sir Charles	Luce, Richard
Fookes, Miss Janet	Lyell, Nicholas
Forman, Nigel	McCrindle, Robert
Fowler, Rt Hon Norman	Macfarlane, Neil
Fox, Marcus	MacGregor, John
Fraser, Rt Hon Sir Hugh	MacKay, John (Argyll)
Fraser, Peter (South Angus)	Macmillan, Rt Hon M.
Fry, Peter	McNair-Wilson, M. (N'bury)
Gardner, Edward (S Fylde)	McNair-Wilson, P. (New F'st)
Garel-Jones, Tristan	Madel, David
Gilmour, Rt Hon Sir Ian	Major, John
Glyn, Dr Alan	Marland, Paul
Goodhart, Sir Philip	Marlow, Antony
Goodhew, Sir Victor	Marshall, Michael (Arundel)
Goodlad, Alastair	Marten, Rt Hon Neil
Gorst, John	Mates, Michael
Gow, Ian	Maude, Rt Hon Sir Angus
Gower, Sir Raymond	Mawby, Ray
Grant, Anthony (Harrow C)	Mawhinney, Dr Brian
Gray, Hamish	Maxwell-Hyslop, Robin
Greenway, Harry	Mayhew, Patrick
Griffiths, E. (B'y St. Edm'ds)	Mellor, David
Griffiths, Peter Portsm'th N)	Meyer, Sir Anthony
Grist, Ian	Miller, Hal (B'grove)
Grylls, Michael	Mills, Iain (Meriden)
Gummer, John Selwyn	Mills, Sir Peter (West Devon)
Hamilton, Hon A.	Miscampbell, Norman
Hamilton, Michael (Salisbury)	Moate, Roger
Hampson, Dr Keith	Monro, Sir Hector
Hannam, John	Montgomery, Fergus
Haselhurst, Alan	Moore, John
Hastings, Stephen	Morgan, Geraint
Havers, Rt Hon Sir Michael	Morrison, Hon C. (Devizes)
Hawkins, Sir Paul	Morrison, Hon P. (Chester)
Hawksley, Warren	Mudd, David
Hayhoe, Barney	Murphy, Christopher
Heath, Rt Hon Edward	Myles, David
Heddle, John	Neale, Gerrard
Henderson, Barry	Needham, Richard
Heseltine, Rt Hon Michael	Nelson, Anthony
Hicks, Robert	Neubert, Michael
Hill, James	Newton, Tony
Hogg, Hon Douglas (Gr'th'm)	Normanton, Tom
Holland, Philip (Carlton)	Nott, Rt Hon John
Hooson, Tom	Onslow, Cranley
Hordern, Peter	Oppenheim, Rt Hon Mrs S.
Howe, Rt Hon Sir Geoffrey	Osborn, John
Howell, Rt Hon D. (G'ldf'd)	Page, John (Harrow, West)
Howell, Ralph (N Norfolk)	Parkinson, Rt Hon Cecil
Hunt, David (Wirral)	Parris, Matthew
Hunt, John (Ravensbourne)	Patten, John (Oxford)
Hurd, Rt Hon Douglas	Pattie, Geoffrey
Irvine, Bryant Godman	Pawsey, James
Irving, Charles (Cheltenham)	Percival, Sir Ian
Jenkin, Rt Hon Patrick	Peyton, Rt Hon John
Jessel, Toby	Pink, R. Bonner
Johnson Smith, Sir Geoffrey	Porter, Barry
Jopling, Rt Hon Michael	Prentice, Rt Hon Reg
Joseph, Rt Hon Sir Keith	Price, Sir David (Eastleigh)
Kaberry, Sir Donald	Proctor, K. Harvey
Kellett-Bowman, Mrs Elaine	Pym, Rt Hon Francis
Kershaw, Sir Anthony	Raison, Rt Hon Timothy
Kimball, Sir Marcus	Rathbone, Tim
King, Rt Hon Tom	Rees, Peter (Dover and Deal)
Kitson, Sir Timothy	Rees-Davies, W. R.
Knight, Mrs Jill	Ronton, Tim
Knox, David	Rhodes James, Robert
Lamont, Norman	Rhys Williams, Sir Brandon
Lang, Ian	Ridsdale, Sir Julian
Langford-Holt, Sir John	Rifkind, Malcolm

Rippon, Rt Hon Geoffrey	Thatcher, Rt Hon Mrs M.
Roberts, M. (Cardiff NW)	Thomas, Rt Hon Peter
Roberts, Wyn (Conway)	Thompson, Donald
Rossi, Hugh	Thorne, Neil (Ilford South)
Rost, Peter	Thornton, Malcolm
Royle, Sir Anthony	Townend, John (Bridlington)
Rumbold, Mrs A. C. R.	Townsend, Cyril D, (B'heath)
Sainsbury, Hon Timothy	Trippier, David
St. John-Stevas, Rt Hon N.	Trotter, Neville
Scott, Nicholas	van Straubenzee, Sir W.
Shaw, Giles (Pudsey)	Vaughan, Dr Gerard
Shaw, Sir Michael (Scarb')	Viggers, Peter
Shelton, William (Streatham)	Waddington, David
Shepherd, Colin (Hereford)	Wakeham, John
Shepherd, Richard	Waldegrave, Hon William
Shersby, Michael	Walker, Rt Hon P. (W'cester)
Silvester, Fred	Walker, B. (Perth)
Sims, Roger	Walker-Smith, Rt Hon Sir D.
Skeet, T. H. H.	Wall, Sir Patrick
Smith, Dudley	Waller, Gary
Smith, Tim (Beaconsfield)	Walters, Dennis
Speed, Keith	Ward, John
Speller, Tony	Warren, Kenneth
Spence, John	Watson, John
Spicer, Jim (West Dorset)	Wells, Bowen
Spicer, Michael (S Worcs)	Wells, John (Maidstone)
Sproat, Iain	Wheeler, John
Squire, Robin	Whitelaw, Rt Hon William
Stainton, Keith	Whitney, Raymond
Stanbrook, Ivor	Wickenden, Keith
Stanley, John	Wiggin, Jerry
Steen, Anthony	Wilkinson, John
Stevens, Martin	Williams, D. (Montgomery)
Stewart, A. (E Renfrewshire)	Wolfson, Mark
Stewart, Ian (Hitchin)	Young, Sir George (Acton)
Stokes, John	Younger, Rt Hon George
Stradling Thomas, J.
Tapsell, Peter	Tellers for the Ayes:
Taylor, Teddy (S'end E)	Mr. Carol Mather and
Tebbit, Rt Hon Norman	Mr. Anthony Berry.
Temple-Morris, Peter
NOES
Adams, Allen	Cohen, Stanley
Allaun, Frank	Coleman, Donald
Alton, David	Concannon, Rt Hon J. D.
Anderson, Donald	Conlan, Bernard
Archer, Rt Hon Peter	Cook, Robin F.
Ashley, Rt Hon Jack	Cowans, Harry
Ashton, Joe	Cox, T. (W'dsw'th, Toot'g)
Atkinson, H. (H'gey,)	Craigen, J. M. (G'gow, M'hill)
Bagier, Gordon A.T.	Crawshaw, Richard
Barnett, Guy (Greenwich)	Crowther, Stan
Barnett, Rt Hon Joel (H'wd)	Cryer, Bob
Benn, Rt Hon Tony	Cunningham, Dr J. (W'h'n)
Bennett, Andrew (St'kp't N)	Dalyell, Tam
Bidwell, Sydney	Davidson, Arthur
Booth, Rt Hon Albert	Davies, Rt Hon Denzil (L'lli)
Boothroyd, Miss Betty	Davis, Clinton (Hackney C)
Bottomley, Rt Hon A. (M'b'ro)	Davis, Terry (B'ham, Stechf'd)
Bradley, Tom	Deakins, Eric
Bray, Dr Jeremy	Dean, Joseph (Leeds West)
Brocklebank-Fowler, C.	Dewar, Donald
Brown, Hugh D. (Provan)	Dixon, Donald
Brown, R. C. (N'castle W)	Dobson, Frank
Brown, Ronald W. (H'ckn'y S)	Dormand, Jack
Brown, Ron (E'burgh, Leith)	Douglas, Dick
Buchan, Norman	Dubs, Alfred
Callaghan, Rt Hon J.	Duffy, A. E. P.
Callaghan, Jim (Midd't'n & P)	Dunlop, John
Campbell, Ian	Dunn, James A.
Campbell-Savours, Dale	Dunwoody, Hon Mrs G.
Cant, R. B.	Eadie, Alex
Carmichael, Neil	Eastham, Ken
Carter-Jones, Lewis	Edwards, R. (W'hampt'n S E)
Cartwright, John	Ellis, R. (NE D'bysh're)
Clark, Dr David (S Shields)	Ellis, Tom (Wrexham)
Clarke, Thomas C'b'dge,	English, Michael
A'drie	Ennals, Rt Hon David
Cocks, Rt Hon M. (B'stol S)	Evans, Ioan (Aberdare)

Evans, John (Newton)	Marshall, D (G'gow S'ton)
Ewing, Harry	Marshall, Dr Edmund (Goole)
Faulds, Andrew	Marshall, Jim (Leicester S)
Field, Frank	Martin, M (G'gow S'burn)
Fitch, Alan	Mason, Rt Hon Roy
Flannery, Martin	Maynard, Miss Joan
Foot, Rt Hon Michael	Meacher, Michael
Ford, Ben	Mellish, Rt Hon Robert
Forrester, John	Mikardo, Ian
Foster, Derek	Millan, Rt Hon Bruce
Foulkes, George	Miller, Dr M. S. (E Kilbride)
Fraser, J. (Lamb'th, N'w'd)	Mitchell, Austin (Grimsby)
Freud, Clement	Mitchell, R. C. (Soton Itchen)
Garrett, John (Norwich S)	Morris, Rt Hon A. (W'shawe)
Garrett, W. E. (Wallsend)	Morris, Rt Hon C. (O'shaw)
George, Bruce	Morris, Rt Hon J. (Aberavon)
Gilbert, Rt Hon Dr John	Morton, George
Ginsburg, David	Moyle, Rt Hon Roland
Golding, John	Mulley, Rt Hon Frederick
Gourlay, Harry	Newens, Stanley
Graham, Ted	Oakes, Rt Hon Gordon
Grimond, Rt Hon J.	O'Halloran, Michael
Hamilton, James (Bothwell)	O'Neill, Martin
Hamilton, W. W. (C'tral Fife)	Orme, Rt Hon Stanley
Hardy, Peter	Palmer, Arthur
Harrison, Rt Hon Walter	Park, George
Hart, Rt Hon Dame Judith	Parker, John
Healey, Rt Hon Denis	Pavitt, Laurie
Heffer, Eric S.	Pendry, Tom
Hogg, N. (E Dunb't'nshire)	Penhaligon, David
Holland, S. (L'b'th, Vauxh'll)	Pitt, William Henry
Home Robertson, John	Powell, Raymond (Ogmore)
Homewood, William	Prescott, John
Hooley, Frank	Price, C. (Lewisham W)
Horam, John	Race, Reg
Howell, Rt Hon D.	Radice, Giles
Hoyle, Douglas	Rees, Rt Hon M (Leeds S)
Huckfield, Les	Richardson, Jo
Hudson Davies, Gwilym E.	Roberts, Albert (Normanton)
Hughes, Mark (Durham)	Roberts, Allan (Bootle)
Hughes, Robert (Aberdeen N)	Roberts, Ernest (Hackney N)
Hughes, Roy (Newport)	Roberts, Gwilym (Cannock)
Janner, Hon Greville	Robinson, G. (Coventry NW)
Jay, Rt Hon Douglas	Robinson, P. (Belfast E)
Jenkins, Rt Hon Roy	Rooker, J. W.
(Hillhead)	Roper, John
John, Brynmor	Ross, Ernest (Dundee West)
Johnson, James (Hull West)	Ross, Stephen (Isle of Wight)
Johnson, Walter (Derby S)	Rowlands, Ted
Jones, Rt Hon Alec (Rh'dda)	Ryman, John
Jones, Barry (East Flint)	Sandelson, Neville
Kaufman, Rt Hon Gerald	Sever, John
Kerr, Russell	Sheerman, Barry
Kilfedder, James A.	Sheldon, Rt Hon R.
Kilroy-Silk, Robert	Shore, Rt Hon Peter
Kinnock, Neil	Short, Mrs Renée
Lamond, James	Silkin, Rt Hon J. (Deptford)
Leadbitter, Ted	Silkin, Rt Hon S. C. (Dulwich)
Leighton, Ronald	Silverman, Julius
Lestor, Miss Joan	Skinner, Dennis
Lewis, Arthur (N'ham NW)	Smith, Cyril (Rochdale)
Lewis, Ron (Carlisle)	Snape, Peter
Litherland, Robert	Soley, Clive
Lofthouse, Geoffrey	Spearing, Nigel
Lyon, Alexander (York)	Spriggs, Leslie
Lyons, Edward (Bradf'd W)	Stallard, A. W.
Mabon, Rt Hon Dr J. Dickson	Steel, Rt Hon David
McCartney, Hugh	Stewart, Rt Hon D. (W Isles)
McDonald, Dr Oonagh	Stoddart, David
McElhone, Frank	Stott, Roger
McKay, Allen (Penistone)	Strang, Gavin
McKelvey, William	Straw, Jack
MacKenzie, Rt Hon Gregor	Summerskill, Hon Dr Shirley
Maclennan, Robert	Thomas, Dafydd (Merioneth)
McMahon, Andrew	Thomas, Jeffrey (Abertillery)
McNally, Thomas	Thomas, Mike (Newcastle E)
McNamara, Kevin	Thomas, Dr R.(Carmarthen)
McWilliam, John	Thorne, Stan (Preston South)
Magee, Bryan	Tilley, John
Marks, Kenneth	Tinn, James

Torney, Tom	Williams, Rt Hon A.(S'sea W)
Urwin, Rt Hon Tom	Williams, Rt Hon Mrs (Crosby)
Varley, Rt Hon Eric G.
Wainwright, E. (Dearne V)	Wilson, Gordon (Dundee E)
Wainwright, R. (Colne V)	Wilson, Rt Hon Sir H. (H'ton)
Walker, Rt Hon H. (D'caster)	Wilson, William (C'try SE)
Watkins, David	Winnick, David
Weetch, Ken	Woodall, Alec
Wellbeloved, James	Woolmer, Kenneth
Welsh, Michael	Wrigglesworth, Ian
White, Frank R.	Wright, Sheila
White, J. (G'gow Pollok)	Young, David (Bolton E)
Whitehead, Phillip
Willey, Rt Hon Frederick	Tellers for the Noes:

Question accordingly agreed to.

MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved, That this House, recognising that the problem of rising unemployment is world-wide, supports the policies of Her Majesty's Government, which offer more realistic prospects of economic recovery and secure employment than the failed Socialist policies of the past.

It being after Ten o'clock, MR. SPEAKER proceeded to put forthwith the Question which he was directed by paragraphs (8) and (11) of Standing Order No. 18 (Business of Supply) to put at that hour.