HC Deb 13 December 1984 vol 69 cc1191-3
1. Mr. Knox

asked the Chancellor of the Exchequer what new fiscal and monetary measures he plans to achieve a higher level of employment.

The Chief Secretary to the Treasury (Mr. Peter Rees)

Employment is already rising. Our policies offer the best chance of sustained growth of output and employment.

Mr. Knox

Does my right hon. and learned Friend agree with the statement in the 1944 White Paper on employment that a country will not suffer from mass unemployment as long as total demand for its goods and services is maintained at a high level?

Mr. Rees

I prefer to direct my hon. Friend to the measures introduced by this Government to improve the supply side of the economy, which will make a more lasting impact on this problem.

Mr. Loyden

What evidence is there that the Government's economic policies are working, when unemployment is rising, and all the signs are that it will continue to rise in the coming years?

Mr. Rees

The hon. Gentleman is taking counsel of his fears. I can cheer him up by reminding him that the number of people in work has increased by 250,000 over the year to June 1984.

Sir Brandon Rhys Williams

Would it not be constructive to encourage a reduction in interest rates in London, which would have the effect of reducing the exchange rate, thereby making our goods more competitive overseas and imports more expensive, and putting us on purchasing power parity with the Common Market?

Mr. Rees

My hon. Friend, with his knowledge of these matters, will know not only that interest rates have come down, but that the policies of my right hon. Friend the Chancellor of the Exchequer are designed to reduce interest rates. Therefore, I am sure that my hon. Friend will support the Government's policies to contain public expenditure.

Mr. Terry Davis

Do Treasury Ministers repudiate the Treasury's economic model, which shows that increasing public expenditure by £1.5 billion would generate more jobs than using the same amount of money to reduce income tax? Will the Chief Secretary come clean and tell the House that the Government care more about cutting income tax than about cutting unemployment?

Mr. Rees

The hon. Gentleman is obviously referring to some assumptions fed into the Treasury model by various commentators with whom he is in sympathy. Therefore, I do not necessarily accept that conclusion. If the hon. Gentleman will reflect a little, he will realise that cutting taxes by raising thresholds could make a considerable impact on the labour market. Therefore, I hope that we shall have his support for any measures that we wish to carry out in that direction.

2. Mr. John Browne

asked the Chancellor of the Exchequer if he will make a statement on the impact of current economic trends upon the creation of new jobs.

The Chancellor of the Exchequer (Mr. Nigel Lawson)

The number of people in work has risen by about a quarter of a million in the year to June 1984. Growth in employment is set to continue in 1985.

Mr. Browne

I thank my right hon. Friend for that most heartening of replies. Does he feel that, to an important extent, this rise in employment is due to the growth of new and smaller businesses, which in itself is a reflection of the Government's introduction of policies for enterprise?

Mr. Lawson

My hon. Friend is right. Self-employment, for example, has increased by some 400,000 between the middle of 1979 and the middle of last year, and the recent CBI survey suggests that prospects are best in the small firms and services sectors. The importance of small firms was marked by the reduction in the small firms rate of corporation tax, which was reduced substantially in this year's Budget. I hope that there will be further progress in the small firms sector next year.

Mr. Wainwright

Is the Chancellor of the Exchequer aware that many of those new jobs are part-time only and involve relatively low skills? What will he do to enhance public demand for the skilled labour that is now on the scrap-heap because of his policies? Will he give those people a chance to get back into the labour market, by Government investment in public works?

Mr. Lawson

I do not think that many of the self-employed are part-time, as they are working full-time and very hard indeed. Of course there is a need to create more jobs, and that is why I am determined to find room within the scope of our public expenditure policy to reduce taxation in such a way that it will create greatly increased job opportunities in the years ahead.

Mr. Gerald Howarth

Does my right hon. Friend agree that abolition of the wages councils would do a tremendous amount to increase employment opportunities? Is he aware that the electricians' union has already slashed the rate of pay for apprentices from 37 per cent. of adult wages to 23 per cent., and that, as a result, the number of apprentices has doubled?

Mr. Lawson

My hon. Friend's example is correct and important. Clearly, the Government will have to consider the question of wages councils very seriously.

Dr. McDonald

Is the Chancellor of the Exchequer aware that he has failed to convince even business economists that his policies are working? They do not believe his forecasts for inflation—they think that it will be higher — or for the rate of growth — which they believe will be lower—and they say that the outlook is depressing, as unemployment will continue to rise.

Mr. Lawson

The hon. Lady always finds everything very depressing — and I am not surprised, given the company she keeps. But the CBI forecasts are very much in line with those of the Treasury.