HC Deb 12 March 1984 vol 56 cc239-54 7.44 am
Mr. Dave Nellist (Coventry, South-East)

Yesterday at the close of trading on the Stock Exchange, the Financial Times index rose by slightly over three points. It added about £500 million to the share values. Later this afternoon that may be taken as evidence that all is well in the economy and that a mini-boom might be under way and the recession might be over. This afternoon the Chancellor may go further and express optimism at the increase in the world economy. He may even boast that inflation in Britain has fallen under a Conservative Government, and he might even stand by his prediction of a 3 per cent. growth in the British economy this year.

I wonder whether the Chancellor will repeat the boast that he made nine months ago during the general election — that unemployment will begin to fall this year. I doubt it. The budgeting that is taking place within the Department of Employment, particularly the Manpower Services Commission, for the next three years is for no significant drop in unemployment, especially long-term unemployment. I do not believe that this afternoon's Budget with its fine tuning and possibly fine words will reflect the Government's hope that unemployment will fall.

The reality is that 5 million people are seeking work at the moment. It is hard to understand the effects of unemployment and being on the dole on the families of unemployed workers unless someone has suffered unemployment. It is not someting of which to be proud, but I spent nearly three years on the dole before I entered the House. When someone is on the dole for a long time, time stretches out so that there are only two days that count in a fortnight—the day one signs on and the day that the giro arrives.

Weekends become submerged by the fact that without money there is not much opportunity to enjoy a social life. Once one has paid the bills, set aside the money for the heating or fuel and sorted out the money for the food there is nothing left for any enjoyment of life. The hon. Member for Derbyshire, West (Mr. Parris) was play acting at being on the dole in Newcastle. He could not last one week on one week's supplementary benefit. On the sixth of the seven days he had been offered drinks at the working men's club, and he did not have 50p for the television, the electricity or the gas. He had no food for the seventh day. That is the reality for hundreds of thousands of families and millions of unemployed workers.

Suicide rates have climbed because of unemployment. Suicide is now the second most common cause of death for those under 25. Divorce rates and other stresses and strains within the family have risen as a result of unemployment. It is estimated that at least 40 per cent. of divorces can be traced to the problems caused by lack of money and unemployment.

Research now suggests that unemployment can be linked directly to the physical stature of youngsters in their most formative years. It can be shown that children of three and four were up to one inch shorter when they were born to parents without work compared with children born to parents who are working.

Those social conditions are never mentioned in budgetary contributions. We hear the fine talk about the public sector borrowing requirement and the fine tuning needed to produce a neutral Budget or to keep the economy on a straight and level path, but we do not hear about the social consequences of the policies followed by the Government.

In my region of the west midlands, particularly in my city of Coventry, we have much to learn from the past five years about mass unemployment. In the west midlands unemployment has gone above the national average for the first time in Britain's industrial history. We are now one of the poorest regions in the whole of the United Kingdom, a far cry from 10 or 15 years ago, when the west midlands was predominant in terms of wage rates and its contribution to manufacturing industry and other major sectors of the economy.

We have lost 358,000 jobs in the past five years. Half the unemployed in the west midlands have not worked for over one year. One in three of our households now lives on or below the official poverty line. Manufacturing industry is now at its lowest level since 1959. There is no doubt that in the Minister's reply, in other contributions, and in the Chancellor's speech we shall not hear much about the world recession and its effect on the British economy.

It should be explained how the rise in unemployment in the west midlands in the past five or six years has been three times the average rise in the world. There can be only one explanation—that while the world recession is the cause of the decline in the number of jobs and in employment, Britain in general and the west midlands have suffered higher unemployment than that throughout the rest of the world due to domestic causes. Governments, parties, bankers and industrialists have a responsibility for what has happened.

If one comes away from the casino economics of the Stock Exchange, the atmosphere of the rich and powerful, to those who have to live on the estates and under the consequences of the Government's policy — when one looks away from the comic book schemes of trying to take youngsters out of the monthly dole figures with the excuse of providing training, largely for jobs that do not exist —one finds that such is society that young workers are suffering tremendously under the Government.

In the past few weeks I have met youngsters who have come to lobby on youth unemployment. They say that they have been trained in the past couple of years and get more experience—some have been on three or four different training schemes—but they complain that they are still unemployed. That picture is reflected throughout Merseyside, in Scotland, the north and other areas.

Because of the status of the Minister who will reply, I shall reflect to some extent on youth unemployment, which is one of his responsibilities. I want to elicit from him not so much a catalogue of the amount of money that is being spent on training, the respectability of the courses, or the response that they have gained within the employers' or trade union organisations, but an explanation of when he expects unemployment, particularly youth unemployment, to be solved. Will it be in the 1980s, the 1990s, or the 21st century? What period do his Department and the Government plan for when they are training those youngsters and spending their money through the MSC? I cannot see unemployment generally, or youth unemployment in particular, being solved in the short term in a capitalist economy under a Conservative Government.

On 14 February in a written answer the Minister listed the number of vacancies at careers offices throughout the country. In Coventry there were 31 for the thousands of youngsters unemployed and the further thousands being trained with the expectation of finding a job at the end of their training. In Birmingham, the major city of the west midlands, there were about 80. In the country as a whole there were fewer than 6,000 vacancies for a third of a million school leavers. Even with the best training and by magically transforming the skills of school leavers into the highest possible calibre, where would they have the chance to use those skills?

The solution to unemployment is the provision of jobs. That is the subject that must tax the minds of those taking part in this debate. As a general yardstick to estimating how unemployment affects people in society, it is said that, if unemploymet generally rises by 50 per cent., youth unemployment will double and black youth unemployment will treble, as is clear in certain areas of London, the west midlands and Merseyside. One and a quarter million young people are on the dole and one third of a million young people have been unemployed for more than a year. The hopes of those youngsters have been destroyed by long-term unemployment.

That is not just the view of Labour Members. Surveys of young people themselves show that it is true. Just before Christmas the National Girobank's "Payday" magazine did a survey of 14 to 16-year-olds, asking how many thought that they would find a job when they finished their education. Only 16 per cent. of those about to leave school expected to find work straight away. One in six expected to wait at least a year or two and just over two-thirds expected a delay of between three months and a year. If that is the general mood of young people preparing to leave school without any prospect of employment, it is no surprise that in recent times frustration at seeing all their brothers and sisters unemployed and no prospect of employment themselves has sometimes led youngsters to challenge the situation in a most physical manner. As I have said before in relation to events in Toxteth, Brixton, Moss Side and elsewhere nearly three years ago, I do not condone the riots, but I believe that no one can now deny that unemployment is a major underlying cause. Rather than trying to increase social control at the sharp end with water cannon, plastic bullets, not equipment and the like, it behoves those who accept that explanation to recognise the underlying causes and to try to deal with unemployment itself.

In the west midlands, Coventry has suffered a tremendous decline. When I went there in the early 1970s as part of an apprenticeship, 67 per cent. of the work force was in manufacturing industry and it was reckoned to be the highest paid working-class city in Britain. Trade union membership was 75 per cent. of all those employed. Working conditions were better than the average in other cities and aspects such as the toolroom rate in the engineering industry were seen by workers throughout the country as the yardstick for their demands. They aimed for what Coventry had already achieved through trade union organisation.

Now there is 31.5 per cent. unemployment in one of the four wards that I represent. That is the highest level in any ward in the city. In my advice surgeries on Saturdays, I see that the problems are worst among those who are under 25 and among those who are at the other end of the age spectrum—those aged over 45. Older workers, too, are beginning to become demoralised and to believe that they have no future.

Some institutions such as the National Institute of Economic and Social Research, whose members may have close contacts with Conservative Members, try to rationalise the demoralisation of the young and the old and to produce a package by means of which to eliminate it. They seek to do so not by providing jobs — not by getting youngsters off the dole and finding gainful employment for older people — but by redefining the dole.

A couple of years ago I read a report produced by one of those bodies. It suggested re-categorising the unemployment figures so that the description "unemployed" could be applied only to someone who was aged between 25 and 55 and had been unemployed fog at least six months. If those at the top of society say that one can be 10 years away from school or retirement and not count in the unemployment statistics, the young and—in some cases — the older people can begin to feel like a forgotten generation.

The Minister of State, Department of Employment (Mr. Peter Morrison)

The hon. Gentleman will, I am sure, accept that the report to which he refers has no connection with the official unemployment statistics.

Mr. Nellist

The suggestion for altering the statistics was made by the National Institute of Economic and Social Research. The Government may not have accepted that particular suggestion, but, since that suggestion was made, there have been changes in the way in which statistics are presented. The definition of unemployment has been changed. According to the Government's monthly figures which we see on television, about 3 million people are on the dole. However, nearly 5 million people are seeking work. Now, it is those who receive supplementary benefit who are counted rather than those who sign on at the jobcentres.

Male workers over the age of 60 are encouraged to consider themselves as prematurely retired rather than unemployed. The 16 and 17-year-olds on training schemes are not counted now, and a third of a million of them have disappeared from the unemployment figures in the past two or three years. Women who were in part-time employment and who, because they were not paying the full national insurance stamp, are not entitled to receive full benefits are not counted now either at the DHSS offices. Under the present Government, unemployment has been redefined in various ways. Even if the suggestion made by the National Institute of Economic and Social Research has not yet been adopted, many other suggestions have been put into practice.

Talking to the workers in my area from day to day, I realise that generation has been set against generation. Older workers criticise the youth training scheme and the fact that, once a man has passed the age of 45 or 50, there is nothing to help him find a proper job again.

I believe that I have listened to every debate in which unemployment has been mentioned since last June. In that time, one solution to the problem of youth unemployment has shone out from the speeches of Conservative Members. The problem, they say, is not that there are too few jobs but that young workers have priced themselves out of jobs. I think that the Secretary of State for Trade and Industry, then the Secretary of State for Employment, said that the solution to youth unemployment lay in their pricing themselves back into work. I ask the Minister, without going through some of the cases that have been raised in recent debates about research paper No. 42 from the Department of Employment and its findings on the so-called correlation between youth wages and youth unemployment, to explain how low youth wages must go before young workers, as a section of a class in society, can achieve full employment.

Apparently six out of 10 people under 18 are on an average wage of slightly less than £60 a week and four out of 10 are on an average wage of slightly less than £40 a week. How low must those average wages go before similarly aged unemployed youngsters receive some form of gainful employment? I do not believe that driving down youth wages, or the wages of other groups, will increase employment. If people have less money in their pocket, how are they to buy manufactured goods? If workers have less and less money, how are they to maintain the jobs of those who are in work by buying the goods that they produce?

We should consider the young workers scheme and other means of reducing the cost of employing youngsters. Apparently only 6 per cent. of people covered by the young workers scheme are in new jobs that have been created by the scheme and just under 90 per cent. are in jobs that existed before. The only beneficiaries have been the employers who now receive a subsidy from the Government of £10 to £15 a week, depending on the age of the employee. I understand that 4 per cent. of jobs in the young workers scheme are the jobs of older workers who would still have jobs now if it were not for the scheme. That method of driving down youth wages has only a one-in-15 success rate. That will not solve the problems of the 333,000 youngsters who are long-term unemployed. Employers have merely used the scheme as a means of getting a little pocket money.

A few weeks ago the Minister told me from the Dispatch Box that the wages of youngsters, as compared with those of adults, had fallen in the past four years. He also told me in a written answer that whereas wages for boys had fallen by 8 per cent. against adult wages in the past four years, wages for girls had fallen by 12 per cent. I suggest that the main reason for that fall is the targets and the examples set by the youth opportunities programme and the youth training scheme. Employers have virtually acknowledged that if the allowance in those schemes is the going rate, there is no need to improve wages. We have witnessed many apprenticeship and trainee allowances being negotiated downwards to get them closer to the YTS rate of £25 a week.

The Minister has admitted that youth wages have fallen as compared with the adult rate and that, during the same period, unemployment has trebled. Where then is the connection between driving down wages and providing more jobs? I hesitate to suggest it, but, bearing in mind the publicity that the programme attracted and the creation of factories, envisaged by the former Secretary of State for Employment, that can undercut far eastern countries by using youngsters to produce goods more quickly and more cheaply, we are not far off exploiting youth to the extent that we saw in the "World in Action" programme about the Bangkok production of textiles and woollens. The Government's approach to unemployment affords no solutions to the problems of the young or other unemployed. The promise that we hear every time is that when the economy picks up things will get better. Depending on which financial newspaper one reads—the Financial Times, The Times, The Economist or the Wall Street Journal —the predictions that the world recession is over stretch back as far as two and a half years.

Yesterday the Financial Times index reached record heights again, with an increase of three points pushing it well above the 800 mark. However, the picture of a mini-boom at the end of a recession does not hold much weight with the unemployed, among the 6 million people who live in damp houses or among the 15 million people who live on or below the poverty line. Tell them that there is a boom, and they are likely to laugh.

During the past four years the wealth-creating sector of the economy — manufacturing industry — has been decimated, especially in the area that I represent. Almost one fifth of manufacturing industry has been destroyed. Investment in industry has fallen by one third. No doubt this afternoon the Chancellor of the Exchequer, as he has tried to do in the past few months, will claim that there has been a 4 per cent., 6 per cent. or 7 per cent.—I believe that the latest figure is 9 per cent. — increase in investment forecast for the year. But that starts from the base of a 36 per cent. reduction in investment between 1979 and 1983. Industrialists lost confidence in investing in domestic industry. The fact that investment has increased a little will not alter matters.

I can illustrate my point, again using Coventry, in case the Minister has similar figures and tries to refute my argument by claiming that during the past year there has been a decline in unemployment in Coventry. From October 1982 to October 1983, unemployment declined by about 298 people to about 28,000. However, when one considers the redundancies in the pipeline, a clear picture emerges that the horrendous level of unemployment has been maintained and might be increased further. The increase in redundancies notified between October 1982 and October 1983 was 41 per cent. higher than in the previous year. Yet that was the period when Government spokesmen on industry had latched on to the idea that the recovery was just around the corner or that it was beginning to happen. Of that total, 92 per cent. of redundancies were in manufacturing industry. Coventry was built on engineering, car production and electronics and, going further back, on bicycles.

From where will the new jobs come to solve the unemployment problems of Coventry and the west midlands? Will they come from the rise in productivity which working people have been asked to achieve during several years? We need look no further than the present dispute in the mining industry, where workers are asked to increase productivity. During the past four or five years, the miners have increased productivity, the output of coal per shift and the amount of coal that they have generated. The result of the increase is that 58 million tonnes of coal lies at the pit-heads and the power stations. There have been 11,000, 8,000 and 9,000 redundancies in each of the previous years, and according to the MacGregor plan at least 25,000 further redundancies have been demanded.

The result of increased productivity for the miners has been increased unemployment. Increased productivity of its own right will not solve the problem of unemployment. For the miners, it throws up a thousand and one contradictions. We hear spokesmen from the Department of Energy lambasting the miners for not protecting the industry's interests. What about the coal stocks, 22 million tonnes of which are at the pithead? It is costing the Government, again according to a written answer, through the Coal Board, over £100 million a year in interest charges to keep those coal stocks, and all that is paid for by the taxpayer.

In the four or five months of a particularly bad winter, up to 50,000 pensioners are expected to die from hypothermia. The statistics do not necessarily show this because hypothermia is often not shown on the death certificate as the cause of death. However, in the winter of 1981–82, there were 48,000 more deaths of pensioners recorded than there were in the summer months. The difference between the summer and the winter months is the cold, so that statistic shows how old people die of cold. We could kill two birds with one stone. There are huge surpluses of stored coal at the pithead, and we could give the pensioners free coal, thus reducing the drain on the Coal Board's finances.

Will the Minister say whether the recovery and the problems of unemployment will be solved by the small businesses? In the past year we have had a record number of bankruptcies.

Mr. Roger Gale (Thanet, North)

Does the hon. Gentleman agree that, although certain firms have gone out of business, there have been a record number of startups in the west midlands, which have infinitely outpaced the number of bankruptcies?

Mr. Nellist

If that were the case, we should expect to see a fall in the number of people suffering from poverty, or in the number of people unemployed, and a rise in the number of vacancies for young people from school. As none of those things has happened, I can only assume that one failed business changes its name and becomes the same business under a different name. Anybody who walks around the major cities of the midlands and sees the number of "For Sale" signs on industrial premises and shops will not have a believable picture of the corner being turned in the provision of employment through new businesses.

Mr. Gale

Perhaps the hon. Gentleman did not hear my question. I also know the west midlands quite well. I asked the hon. Gentleman whether it was not a fact that more new businesses have been starting in the past three years than there have been bankruptcies.

Mr. Nellist

The number of businesses starting may have increased, but I am challenging whether that has any relationship with the number of jobs available. I have not seen, as I assume that the hon. Gentleman has not seen, a significant fall in the number of unemployed in the cities of Birmingham and Coventry that could be attributable to the number of names on company registers or to extra businesses. I maintain that when I walk in Coventry the picture is still one of decline, with many "For Sale" notices on businesses that are going bust.

Where will jobs come from? We have been told a number of times by the Government that if workers are prepared to tighten their belts and make a few more sacrifices, become more productive, get rid of restrictive practices, improve working relations with the management and so on and so forth, these will all be panaceas for unemployment, but there is still no improvement in the unemployment problem.

We are told that the recession is coming to an end and that a new era of prosperity is round the corner. The rate of growth will not match that of the 1950s and 1960s in terms of increased wages and so on. That is not impossible to forecast. How will jobs be created in the coming better times? According to the deputy governor of the Bank of England, Mr. McMahon, when the rate of increase in demand from the low point of the recession up to the present time is analysed, an average of 9 per cent. is arrived at, and that accords with the figure given by Government economic spokesmen. On the other hand, in terms of the supply to meet that demand, whereas manufacturing output has increased by 4 per cent., the increase in imports during the same period has been a staggering 34 per cent. How, if Britain will be recovering in 1984–85, will more jobs be created?

Mr. Bill Walker (Tayside, North)

The hon. Gentleman, coming from Coventry, must know that if all the cars sold in Britain were manufactured by British car manufacturers, there would be no shortage of jobs in United Kingdom car factories. The problem is that our car factories priced themselves out of the markets.

Mr. Nellist

Having worked in that industry, I could answer the hon. Gentleman at length, but I must not branch out into too many issues. The car industry here is not owned by Britain in that Ford, General Motors and Vauxhall are multinationals. Whereas investment in the industry in the last 10 to 15 years has enabled the giants which straddle the world to develop in other countries, the same investment has not occurred here. For example, about four years ago there were about £7,000 worth of productive assets per worker in the British car industry, £23,000 per worker in Germany and £32,000 per worker in Japan. When comparing British output with that of Japan or Europe, one must take into account the investment that has been made in those countries and, therefore, how much productivity each worker can deliver. It is like telling two workers each to dig a field, giving one a spade and one a tractor, and then blaming the one with the spade for taking two days whereas the one with the tractor took two hours.

The blame for the rapid decline in employment in Britain must be laid at the door of those who own the wealth and the productive capacity in society. They have been responsible for the gap in investment between Britain and the countries of the OECD, in particular Japan, America and the countries of Europe. According to the National Westminster Bank, the figures having been calculated to take account of inflation, simply for British manufacturing industry to regain its own position—of 30 years ago, when we controlled about 25 per cent. of world trade compared with 6 per cent. to 8 per cent. today — in our own domestic market will require massive investment.

According to the National Westminster Bank, investment is required to the extent of £200,000 million. Investment in manufacturing industry is currently between £5,000 million and £6,000 million. On this basis it will take 35–40 years at the present rate of progress to catch up with the other countries of Europe, America and Japan. But during that period the investment programmes of other countries will enable them to edge even further away from Britain. Forty times more investment is required than industry invests in Britain in any one year. That is the root cause of our lack of competitiveness and the lack of productivity. It is not the workers who are at fault, and neither are our pricing policies. British industry cannot produce goods as cheaply and quickly as its competitors because historically it has not had sufficient investment.

Over the past four years, especially since the removal of exchange controls, £32 million a day has gone abroad to the far east, Argentina, Brazil, South Africa, That land and other countries whose wage rates are even lower than those of British workers. In many of these countries trade unions are illegal and military dictatorships ensure that unions are ineffective, if they are allowed to exist. It is estimated by the financial press that £90,000 million-worth of assets that are owned by Britain are now abroad. The value of British-owned assets abroad has trebled over the past four or five years. This is why Britain's unemployment is worse than that of other countries. We are suffering because of a failure to invest and the transfer of moneys abroad.

The present method of organising society—capitalism and a Tory Government — is incapable of coming to grips with mass unemployment. Attempts are made to hide the worst features of it. We have training schemes and other cosmetic measures that are designed to remove the unemployed from dole figures or from the streets. These measures do not cure the root causes of unemployment and they are incapable of providing jobs. But there is work to be done within society. There are 6 million people living in damp homes and nearly 400,000 building workers are unemployed. A sane society would match the skills of unemployed building workers to the needs that are expressed in society. They would be employed to build decent housing for workers. There are plenty of building materials. An oft-quoted example is the stockpile of bricks. The stockpile could be used to build a town the size of Derby. There is enough material there to build 50,000 houses.

The cost of nuclear defence is colossal. The money that is devoted to that programme would enable 500,000 to 1 million houses to be built a year. That corresponds to the targets that existed after the second world war and in the 1950s. Those targets could be realised if society had the will and the means to control and organise construction and a building programme that would give workers decent houses and take unemployed building workers off the dole.

In the construction industry, 20 per cent. of capacity is unused. In the ceramic and engineering industries and other forms of manufacture the rate varies between 15 per cent. and 40 per cent. Millions of pounds of wealth are being wasted. Instead of people being paid to sit at home to be idle and to remain unemployed, work should be given to provide an opportunity to create wealth within our society. If that were done, there would be a different form of society. A different form of ownership would require the planning of society itself.

The Government now spend £17,000 million a year on keeping people unemployed. The Government began their life by cutting £28 million off the youth opportunities programme. They realised that they would never solve mass youth unemployment. At present, they spend £700 million on YTS. That will probably double in the next three years. The amount of money that is being spent on keeping people unemployed is horrendous. What about the waste that there has been in North sea oil revenues, which could have been used for the regeneration of industry? There is also the wealth that could be created if industry were working at full-load capacity.

The solutions can be found, but not while society is based on production not for need but for profit, and not while it is based on providing people like the Duke of Westminster, with his £2,000 million worth of property within one and a half miles of this House, and the top people in society with estates, Rolls-Royces and all the other trappings of the high life. To pay for all that, society keeps young workers and unemployed workers of all ages idle, without a chance to use their skills. This capitalist society which the Conservative Government support and organise will not solve mass unemployment. To do that, we need a change of Government and a change in the control of the economy.

8.30 am
Mr. David Amess (Basildon)

I am grateful to the hon. Member for Coventry, South-East (Mr. Nellist) for allowing us to discuss these matters, although my approach to the creation of job opportunities is rather different from his — and, indeed, from that of the Government.

I want to say a brief word about unemployment in Basildon and, in particular, about the intended closure of the Carreras Rothmans factory. Five weeks before Christmas, I had the privilege to be invited to the factory. I was shown round, and I saw the goods that are made there. I met the work force and was given a warm welcome. I also met the management. The general atmosphere was one of great optimism. So when I was telephoned on 5 January to say that the company was to announce the closure of the factory, not only was I devastated but so were the many people who worked there.

I immediately made representations to the Government, and tabled early-day motion 443. I was rather saddened when a number of Opposition Members sought to amend my motion. I am well aware of how some hon. Members feel about smoking and the damage that it does to health. I am sure it was a brave action to amend my early-day motion, but I wonder whether those hon. Members, if they had joined me in the second week of January when I and the general secretary of the Tobacco Workers Union, Doug Grieve, addressed the 1,200 workers outside the factory gates in Basildon, would have been so brave in putting forward their view there. I doubt it very much.

I query the rational decision-making process in a company that decided that 832 million cigarettes should be delivered to Iraq by last month. A company which can allow a belligerent fighting a major war to have so much credit — the Iraqis are quite unable to pay cash at present, because of the war — must surely have its priorities wrong. Perhaps the Export Credits Guarantee Department is helping. What is relevant is the attitude of the company. If Rothmans International is prepared to risk the money involved in 832 million cigarettes, one feels that it might find the insubstantial risk of a fourth factory in the United Kingdom to be more profitable in the long run, more socially and morally respectable and far more likely to win friends and influence people.

Carreras came to Basildon 22 years ago, at an important time for the development of the new town. For some 12 years it was a star, both in Essex and in the company, which grew as a combination with Rothmans, and the subsequent international connections followed. The factory has been instrumental in the Carreras climb to the top. Over 500 of the 1,268 people due to be made redundant have been with the firm for over 10 years. They have naturally helped to put the company where it is today. What is their reward? What do their dedication and loyalty to the company count for?

I have always believed that loyalty works both ways —to the company and from the company. To show the kind of loyalty that the work force of Basildon has shown, let me take hon. Members back to 1981. It was a bad year for the industry. The massive problems inherited from the previous Labour Administration had still to work their way through the system. Carreras Rothmans' export sales dipped by nearly £2.5 billion and its home market by over half a billion cigarettes.

To help stabilise the company and place it in a position to increase its market share and sales, the Tobacco Workers Union agreed to voluntary redundancies. Since 1981, about 1,000 workers at Basildon have taken voluntary redundancy. The company's shares have gone up by 2.2 per cent. Last year its pre-tax profits were up 80 per cent. to £54 million. Exports rose by half a billion cigarettes—and Basildon, I emphasise, makes cigarettes for export. Home sales are up by 100 million—higher sales, greater profits and fewer workers. But then came the blow, delivered with the frantic haste of a company about to collapse.

The figures that I have given are those of Carreras. Do they sound like a falling giant? Does it sound like an occasion where a mere 90 days are required for consultation? Does it sound even remotely as if the official receiver is at the gate of the walled city of Rothmans, desperately trying one last charge to ward off the enemy? No, it does not. For 10 years Basildon has had no really new equipment. Cast-offs from other factories have been its lot. The Darlington factory of Carreras was opened in 1977 to meet increased export demands. The Spennymoor factory was opened in 1979. Massive doses of regional aid came from local councils. The Government and the EEC have allowed the company to install the latest machinery at a minute cost.

Basildon has received second-class treatment. Did that turn my constituents into whiners and whingers? Did it make them the sort of troublesome work force that anyone would be glad to get rid of? No, it did not. Even under those handicaps the people of the factory at Basildon received the Queen's award for export only last year, making Carreras Rothmans the only tobacco company ever to receive such an award. I trust that right hon. and hon. Members will agree that it is a fine record for any factory in the United Kingdom. I am proud to have these people in my constituency.

We are proud people in Basildon, and my constituents are now forced to go cap in hand to the company and plead for more money and aid to survive their early retirement. Carreras Rothmans commenced negotiations — if I can use the word so loosely—with an offer of an ex gratia payment of £2,500. It also demanded that everybody worked normally until the closing date on 6 April, including overtime. Reasonably, the work force refused to do overtime on the ground that if extra work were needed before 6 April, ordinary work would be needed after it. The company issued a verbal threat, amounting to blackmail, that any refusal to work as ordered would result in a review. I have spoken to the men there and they tell me that they feel humiliated. They have been treated like Oliver Twist, being asked for more every time they negotiate for help. There is no time to act or talk sensibly.

The law states that a firm must give 90 days' notice of redundancy. It was designed for companies in crises to protect the work force from consequential devastation. I have established that the company is not in crisis, yet it gave 91 days' notice.

That same law also states that companies must listen seriously to counter-proposals put forward by the union. We are talking here of a union not of the blinkered Left but so moderate that it has negotiated away thousands of jobs in the interest of industry and the long-term security of its members. Yet the company provides neither it nor me with any proper facts to see whether an alternative case can be made.

There were seven new jobs in the north-west, and now there are another 30—expansion at a time, according to Carreras Rothmans, of contraction in the industry. The local trade unions have had to fight to get those jobs advertised to the work force in Basildon. Tobacco jobs should be offered to experienced tobacco men. Since the news of the closure, the Northern Ireland factory has been put on overtime—enough to fuel 150 more jobs. In the north-west, 140 redundancy notices have been withdrawn.

As I said, the brunt has fallen entirely on my constituents, with the unemployment rate now unfortunately at 15.4 per cent. — the highest in southern England. We already have 8,000 people unemployed in my area. The addition of another 1,200 will take us into the 16 to 17 per cent. range—the equal of anywhere in the north or the north-west. In terms of numbers, Basildon contributes one-seventh of all Essex unemployment. With neighbouring Southend, over one quarter of Essex unemployment is concentrated on one small corner, close to London. We do not need the closure, and the company does not need the closure.

I know that the Government, whom I fully support, are not in the business of propping up lame ducks, and I know that it is rather difficult for my hon. Friend the Minister to intervene. However, I should be grateful if there could be one last attempt by Ministers to try to persuade the company to keep at least some of its jobs in Basildon.

8.41 am
Mr. Roger Gale (Thanet, North)

I have no prepared speech. The remarks I wish to make spring directly from those made by the hon. Member for Coventry, South-East (Mr. Nellist) in introducing the debate. It is incumbent upon some hon. Members, after that chapter of gloom, to offer some hope and some cheer to the young people of the country. This I should like to try to do in a couple of minutes.

I am glad that there was no industrialist sitting in the Strangers Gallery to listen to the catalogue of disasters, because any such person, having heard the picture painted of this country by the hon. Member for Coventry, South-East, would have run to some other country to. invest.

It is a fact that, for some 30 years, the country has seen a lack of investment, bad management and appalling trade union practice. As a direct result, the industries of the country found themselves five years ago in the situation that they undoubtedly were in. I heard no positive comment, no suggestion whatever, of any alternative, any real solution or any alleviation for the unemployment that faces many people in the country. No Conservative Member is complacent about that. Some of us have personal experience of the effects of unemployment on family and social life, and the social effects can be quite devastating.

What are Conservative Members trying to do about it? I suggest that we at least have some positive solutions. First, I wish to give some support to the youth training scheme, the scheme which has been so denigrated by Opposition Members time after time in the House and again today by the hon. Member for Coventry, South-East. Thousands of young people are now offered, for the first time in the history of the country, a genuine short-term apprenticeship. That, after a year of training and off-site training, will equip them with a genuine reference that will tell a potential and future employer exactly what they have done, what experience they have, and what they are capable of doing. There are thousands of young people benefiting from that scheme, taking advantage of it, enjoying it, and who, after only six months in it, are going out into the world and getting jobs.

Many of the training posts that have been created have now been turned into genuine full-time jobs for those young people. In my constituency, the Thanet youth training scheme is a shining example of exactly this. Now 52 per cent. of the people employed on that scheme are looking forward to full-time jobs as a direct result of it. There is every reason to suppose that the remaining 48 per cent. will, by the end of this year, be just as successful. That is immensely worthwhile. It should not be denigrated. The young people whom we on the Government Benches are trying to encourage to take part in next year's scheme, and the year after, employed and unemployed, should not be dissuaded by the hollow argument that this is in some way cheap labour. It is not cheap labour. It is a genuine training, a genuine apprenticeship and should be regarded as such, treated as such and respected.

Mr. Nellist

Does not the hon. Gentleman accept that since we are only six or seven months into the youth training scheme the only national figures we can go on are the previous three years of the governmental training scheme, each of which was described as having given excellent training to youth? Does he not further accept that nationally only 38 per cent. of those who left the youth opportunities programme got work? While I am, perhaps, the most persistent critic of the youth training scheme, I, too, have seen schemes from which youngsters have benefited. My main criticism has always been, what happens the day after the youngsters leave the scheme? Are there sufficient jobs to enable them to use their skills?

Mr. Gale

I am grateful to the hon. Gentleman for that intervention because it is at least a positive comment. I am grateful to him for recognising the value of the scheme. Of course we are all concerned about what happens to those young people when they leave the scheme. My constituency has one of the highest unemployment levels in the country, at around 20 per cent. I know that the southeast is not normally regarded as an area of high unemployment. We, too, face closures but are looking to the future. We are trying to attract new industry. That is where the jobs of the future lie.

With respect to the hon. Member for Coventry, South-East, it is no use saying that the midlands was the industrial base of the country. Yes, it was. It used to be said that they had metal in their fingers. They still do, but there is too much metal in too many fingers. The choice facing British Leyland three years ago was not between having 14,500 jobs or the 9,000 jobs that it now has. It was between having 9,000 jobs or none at all. We had to shed those jobs if we were to compete. The car industry is one example of how British industry must face the future. It has to slim down if it is to produce goods on time and of a quality that people want.

The hon. Member for Coventry, South-East has referred to the coal miners' strike. What kind of example does that set the world? We want people to come here and invest money. Even the hon. Member, capitalist though he is not, agreed that we wanted investment. If we want people to come, we have to show them that we can produce the right goods at the right time. I believe that we can compete on equal terms with anyone anywhere. That is what we are offering in my constituency. We are not offering regional aid. We do not have it. We are not offering an enterprise zone. We do not have that, and I do not believe that either of those things creates many new jobs. There is an argument that says that on occasions they cost jobs. I do not want to see either of those things. I want to see real, new investment. The way forward—here I agree with the hon. Gentleman—is to encourage new investment. We shall do it not by striking but by saying "We are here, we are the place of the future. Come to us." We shall do that best of all by training our young people, as we are, and equipping them for the future.

8.48 am
The Minister of State, Department of Employment (Mr. Peter Morrison)

I am greatful to the hon. Member for Coventry, South-East (Mr. Nellist) for raising again the matter of unemployment—something that he does regularly in this House. I know that he feels strongly about it. I hope he will give credit to my hon. Friends the Members for Basildon (Mr. Amess) and Thanet, North (Mr. Gale) for feeling equally strongly. I trust that he will also understand that I, too, feel strongly about this issue.

I hope that the hon. Gentleman will accept that my hon. Friend the Member for Thanet, North has put an alternative point of view, which I intend to support in my remarks. My hon. Friend the Member for Basildon will, I am sure, find a ready welcome in his constituency for the words he uttered on behalf of his constituents. Obviously the planned closure of the Carreras Rothman factory in his constituency is a matter of great concern to him and many of his constituents. If I may say so, he put the case on their behalf cogently and well.

The hon. Member for Coventry, South-East, introducing the debate, talked about the atmosphere of the rich and powerful on the Stock Exchange. My hon. Friend the Member for Thanet, North suggested that the hon. Gentleman was not a capitalist. I have to say that I would once have agreed with my hon. Friend, but the interesting thing is that the hon. Gentleman—and I have listened to many of his speeches since he was first elected— is turning into a capitalist. It is fascinating to see the way that he has been persuaded by debate in this House. He is beginning to understand — and I am sure that his constituents will be pleased to hear it — that, as he pointed out during his speech, a job exists when a company exists—when an entrepreneur is around. In answer to a question about how many company closures and company births there had been in his constituency, he found it difficult to counter the point put to him and actually accepted that if there were births of companies in his constituency that meant that jobs would arise. I congratulate the hon. Gentleman on beginning to understand that jobs exist only when a product is produced. I am sure that his general management committee will be very pleased to hear that the hon. Gentleman is turning into a quasi-capitalist. We hope, slowly but surely, to win him over even more.

We on the Government Benches feel strongly about unemployment, but there is no simple way out, as my hon. Friend the Member for Thanet, North pointed out. The hon. Gentleman pointed out how many people were unemployed in the United Kingdom, in the west midlands, in his constituency, but he did not provide us with any answer. Much as he would like to create jobs overnight —much as I would like to be able to do so—it is not so simple. Why? It is because, as the hon. Gentleman begins to understand, whether a person is employed in the public or the private sector, someone has to pay that person's wages. In the public sector, whether we are talking about nurses, hospital porters or teachers, the wages of such people are paid for by the taxpayer or the ratepayer or a combination of both.

Again, I was glad that we had begun to convert the hon. Gentleman, because he referred to taxpayers' money. When he was first elected to the House eight months ago he referred to Government money. Now he has an understanding that it is the money either of the ratepayer or the taxpayer. We are beginning to win the argument there. I hope that the hon. Gentleman will understand, perhaps because he is close to his colleagues in Sheffield or Lambeth, that, in boroughs where rates are disproportionately high, the willingness of the private sector to move into such boroughs, because of the burden of the rates, is that much less, which in turn means that the jobs will not be available.

Mr. Tony Baldry (Banbury)

Is it not significant that a number of companies in Liverpool are now dropping the word "Liverpool" from their business name, because they are so concerned at the effect the antics of Liverpool city council are having upon attempts to win orders for that city?

Mr. Morrison

My hon. Friend is an expert on different parts of the country, and I was interested to hear what he had to say. Potential investors do not move into cities such as Sheffield, which I must visit on several occasions because I am the Minister responsible for the Manpower Services Commission, where rates are very high. As my hon. Friend the Member for Thanet, North pointed out, the hon. Member for Coventry, South-East does a disservice to his area. The hon. Gentleman talked about outward investment. He wants inward investment into Coventry. I may be wrong, and could have overreacted to his speech, but the hon. Gentleman may be warning potential investors off with the type of rhetoric he uses on behalf of his constituency.

If it were not for the taxpayer and ratepayer—the hon. Gentleman accepts that either will pay—the public sector borrowing requirement could be widened. The higher the public sector borrowing requirement, the higher will be the level of interest rates. The higher the level of interest rates, the higher will be the overheads of industry. I am sure that the hon. Gentleman understands that, since the beginning of 1983, base lending rates have decreased by 2 per cent., which means an annual benefit to industry's financing costs of about £500 million, but the hon. Gentleman chose not to mention that point.

A job exists only—I am not sure that we have won the argument with the hon. Gentleman, but I hope we have —when a product or service is provided at a cost and of a quality that people wish to buy. I have said that before, and I shall say it again.

Let us go backwards before we go forwards. The hon. Gentleman and I do not agree about macro points. We are poles apart about the means to create employment. It is possible that we would agree that between 1974 and 1979 the economy was not managed in the best way. During that period, we lost productivity and competitiveness, and, therefore, jobs for the future. I hope that the hon. Gentleman will disown what happened during the period of the Labour Government.

Mr. Nellist

During the period of the Labour Government, I was critical of many of their actions. My record in the Coventry Labour party for opposing unnecessary rate rises is probably second to none. My position in Coventry cannot be compared with what is happening in Sheffield and elsewhere. The Minister tries to say that the five-year period of the Labour Government saw a poor record of productivity. His Department's analyses of industrial and economic life show that in the past 40 or 50 years in every aspect of productivity, capital formation and so on, Britain has been substantially less effective than its major competitors. That is especially true of circumstances in the 1960s and 1970s. The problems cannot be laid only at the door of the Labour Government.

Mr. Morrison

I am sure that the hon. Gentleman accepts that in the 1970s output rose by only 17 per cent., while wages rose by 350 per cent., primarily because of the Labour Government. That is the backdrop against which the Conservative Government came into power in 1979, and that, coupled with the world recession, meant that our problems in getting the United Kingdom into a more competitive position made life substantially more difficult.

Mr. Nellist

Will the hon. Gentleman give way'?

Mr. Morrison

The hon. Gentleman spoke for 45 minutes, as he well knows, so I shall not give way.

The hon. Gentleman suggests that the Government do not care, but he should look at what is happening. I draw a distinction between special employment measures and training measures. In Great Britain as a whole, there are 124,000 entrants on the community programme. On the enterprise allowance scheme, to which I imagine the hon. Gentleman is slowly being converted, there are about 26,400 people. There are 105,000 people on the young workers' scheme, which he decries. Thanks to the job release scheme, there are about 90,000 people involved and more than 250,000 have been involved since the scheme began in 1977. There are 7,000 taking part in community industry. On the special training measures, there are, as of today——

It being Nine o' clock on Tuesday morning, the motion for the Adjournment of the House lapsed, without Question put.