HC Deb 30 October 1984 vol 65 cc1171-250

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Neubert.]

4.8 pm

Mr. Neil Kinnock (Islwyn)

Today we debate unemployment. It is wider than it has ever been before, for it now stands at 3,248,000. It is deeper than it has ever been before. for 369,000 people have been unemployed for more than three years, nearly 700,000 people have been unemployed for over two years, and 1,047,000 people have been unemployed for more than a year.

As the Prime Minister told the Conservative party conference, unemployment is the "scourge of our times". It is, indeed, an affliction and a plague. It is the dominant issue in the minds of the people, and we are told that it is a matter of major concern to the Government.

As we debate unemployment today, we have first to ask why the Prime Minister has chosen to absent herself from participation in the debate. We have had one response — the explanation offered by senior Ministers that custom and practice at Westminster mean that Prime Ministers involve themselves in such debates only if they are central to Government policy. With more than 3 million of our fellow citizens out of work, just what issue is more central to Government policy than unemployment? When unemployment has increased by 116,000 during the past 12 months and by more than 2 million since the Government first took office in 1979, I say that unemployment is not only central to Government policy; it is Government policy.

On previous occasions the Tory party has attracted the title of the party of unemployment. Today's Tory party is even worse—it has a Government with a policy of deliberate unemployment; the Government's record since 1979 proves that conclusively. Of course, they cannot afford to admit that. During the Tory party conference at Brighton the Prime Minister was emphatic in her commitment to the unemployed. She said about unemployment: Of course we know. Of course we see, of course we care". Yet 18 days later the right hon. Lady does not know, see or care enough to speak in an unemployment debate in the House. She merely sits there, the proud possessor of a signed copy of the 1944 White Paper on unemployment. Her lips are as tightly clipped as her handbag.

Staying out of the debate is bad enough, but for the Prime Minister to send, of all people, the Chancellor of the Exchequer to speak for the Government is much worse. We do not get the organ grinder, we do not even get the monkey—all we get is the barrel organ. I wonder which of the tunes we will hear. Will he repeat his refrain from the last debate on 31 July that the £2,000 million cost of the mining dispute, even in narrow financial terms, represented a worthwhile investment for the nation? Perhaps we will have his magnum opus from the Tory party conference — the speech that swept the whole conference into a stupor and made the right hon. Member for Old Bexley and Sidcup (Mr. Heath) say that he was not applauding the Chancellor but moving his hands in a gesture of despair.

We might have the Chancellor's IMF theme, when he said that many of the jobs of the future will be in labour-intensive service industries that are not so much low-tech as no-tech. His international audience must have loved that. The House can picture them — the French, Germans, Japanese and Americans, with observers from Taiwan and Korea, listening to the British Chancellor saying, "Not high-tech or low-tech, but no-tech." They would have said to themselves in a rich diversity of international languages, "What a wally."

Not high-tech or low-tech, but no-tech—that is how we are supposed to greet the new dawn; that is the future that we are to offer to our children. All our competitors are moving into new industries, but the British Chancellor wants his country to become a shoe-shine economy. He has put that proposition continually—not high-tech or low-tech, but no-tech.

On 21 October, during an interview on "Weekend World", the right hon. Gentleman made it clear that he had nothing else to offer. He said: We have always made this clear, what the Government can do to create jobs … is very, very little indeed. That was the theme that he used then, which he has used repeatedly. But have the Government really made that clear? Did the Government, who were elected on the slogan, "Labour isn't working," make it clear that they were going to do very, very little?

Last year—election year—we heard about recovery. The Chancellor was then saying on "Weekend World": There is every prospect that by next year we will see the start of a fall in the level of unemployment … My guess—best guess—is that unemployment may well start to fall next year, but that is my own opinion, and you can judge it, and take it for what it's worth. Quite so—we now know what it is worth and we know what to think of his judgment on other matters.

We know what to think of what the Chancellor said in July, that nothing was going wrong. That was a great success in comparison with the present time. He said that nothing was going wrong on the day that the pound dipped to below $1.30. I suppose that everything is relevant, as we now have a pound that is significantly lower on the international exchanges.

Only six weeks ago, the Chancellor said: Crisis? What crisis? There is no crisis. We know all about the Chancellor's judgment. I can tell him about the crisis, in the midst of the huge total of unemployment. It is the anxiety of parents, the hopelessness of children, the graduates taking temporary clerking jobs, the families being split and scattered as they search for work around the country—and all because of the level of unemployment. Yet the Chancellor said: Crisis? What crisis? There is no crisis. There is a crisis in the poverty of an unemployed man with a wife and two children living on £61.80 a week and a housing allowance for month after month and year after year. That man and his wife know the meaning of crisis. There is a crisis when careful studies show that the death rate among jobless men is 21 per cent. higher than among their contemporaries of working age. There is a crisis when the suicide rate among unemployed men is more than twice that among employed men.

Those crises can be studied, measured and attended to academically. But there are other crises directly experienced by hon. Members. A crisis is the 17-year-old boy who said to me as he was leaving a youth training scheme, "Do you think I will ever get a job, Mr. Kinnock?" That is Britain in 1984. There is a crisis for the million 18 to 24-year-olds for whom the Government make absolutely no provision for training or employment. A crisis is the 40-year-old miner's wife in my constituency —a responsible and highly respected woman, someone upon whom everyone in the village depends, a calm and decent woman — who a couple of months ago said something that I never thought to hear from her. She said, "We have got to fight, Neil, to the bitter end. If the pit goes, David" — her 42-year-old husband —"will never work again." That is a crisis.

I recognised a crisis when a 54-year-old man walked into my constituency surgery earlier this year. He was a smart, intelligent, strong man who asked me to help him obtain an urban aid grant for a youth football club that he was helping to run. He put the case intelligently and fluently and with a great deal of commitment, as one would expect. In passing, I asked him what his job was. He broke down in front of me and wept. He wept, as only a man who is not used to weeping can weep. Anyone who has ever seen it knows what crisis is.

The Prime Minister says that she sees, knows and cares. If she saw that, knew that, or cared about that she would be about the business of generating work for that man. That man of 54, that miner's wife, and millions like them, are the backbone of the nation. If those people are not given an opportunity, if they are refused help in their efforts to achieve security, the Prime Minister will be breaking the backbone of the nation. It is dreadful when she cannot give support and succour to such people, who do not want to be wrapped in cotton wool or taken by the hand. They are the cream of our people. They just want a fair chance. They feel that they are being crushed and deprived of a fair chance. Conservative Members know as well as I do that the consequences can be horrific, and the costs appalling, if those people feel forsaken.

Of course, it can be said that one relates such stories and puts forward such arguments emotionally, and that it is wrong to argue from the particular to the general. I argue from emotion, but I argue from reason too. If those people feel neglected, left out and abandoned, the effect on the fabric of our society, as everyone here must know and as some Conservative Members have said, will be truly terrible. It is only reasonable to put those matters, but there is emotion as well. The House should not be embarrassed by emotion. The House of Commons is not a laboratory for clinical examination; it is the forum of this democracy. We must be analytical in our assessment of policy. We can afford to be forensic in our exchanges, yes, but in addition we must be the advocates of the people.

We must be the authentic voice of the people. That voice, against the background of unemployment, the reduction of industries and the affliction of communities, is saying to us all here, regardless of party, "We want to work. Help us so to do. You have the power. Give us the means to work."

Even if their demand is ignored, those people will not erupt with resentment. Those are not the people who will be taking to the streets. That is not their tradition or their temperament and that fact alone about the British people should attract the Government's commitment. Instead, that reasonableness and moderation receive the Government's scornful complacency. The Government show contempt for the millions of individual crises, just a few of which I have reported to the House this afternoon, and which must be familiar to almost every Member in his constituency.

Mr. Robert Jackson (Wantage)

The right hon. Gentleman is correct. The position for many individuals is desperate. It is true that unemployment has doubled since 1979, but it doubled during the previous five years under a Labour Government. If it is so easy to deal with the matter, why was it not dealt with then?

Mr. Kinnock

I remember the woman who is now the Prime Minister saying in a Tory party television broadcast in 1977 when unemployment reached 1.3 million that the Labour party was the national party of unemployment. She said that if her party ever let unemployment get to that total it would be drummed out of office. If the hon. Gentleman is so worried about the matter, why is he not helping to drum her out of office?

The crises are not recognised by the Chancellor of the Exchequer. They do not impress him. He goes around in a kind of coma of complacency about the country's assorted crises. In his recent Mansion house speech he said that he looked forward to next year with confidence. He said: I see a further good year for output in 1985. I do not know which country the Chancellor was talking about at the Mansion house. With a "further good year" like 1984, we should be able to get back to the output growth trend for 1974–79 in 60 years. With a "further good year" such as this one, the deficit on manufactured trade will be £6,000 million next year. In 1982, as in every previous year, we did not have a deficit on manufactured trade. With a "further good year" like this one—the sooner we have television in here to see the Chancellor of the Exchequer, the better—we shall get back to the 1979 levels of employment in the year 2000. That is how long it will take us with another "good year" like 1984.

Of course, the Government have really the excuses for postponement. The Chancellor goes around carrying a quiverful of excuses. He and his colleagues told us at the outset— in 1979 —that the problems were caused by their inheritance. That was the excuse for a season or so. The next excuse was the effects of North sea oil, which disadvantaged us by overvaluing the currency. Then it was the world recession, followed by the United States economy. That was until July.

We now have two new excuses. One is the inconsiderate desire of married women who wish to work and the other is workers' wage demands.

Mr. Robert N. Wareing (Liverpool, West Derby)

Like her.

Mr. Kinnock

From what my hon. Friend says, I might be committed to selective disemployment, but I would not do it, even for the sake of removing the right hon. Lady, although we look forward to the first opportunity of doing that.

The Chancellor, in the true tradition of the Conservative party, says that the problem of our economy can be resolved if the increase in real wages is cut. That is what he has said repeatedly in his last four or five appearances. He wants people to price themselves into jobs. That is the phrase of the moment. The reality of that is plain and will be familiar. The only way that people can price themselves into jobs is by pricing others out of jobs. That might be a formula that commends itself to the right hon. Gentleman, but it does not commend itself to the majority in this country.

With that argument, the Government are telling people, especially the young, to accept the fate of being a coolie generation. They are demanding that people perform computer-age tasks for steam-age wages. That would be an obnoxious attitude to take at any time, but when the Chancellor advocates tax cuts for the rich and wage cuts for the rest he is saying that the rich will work only if they are made richer and the poor will work only if they are willing to become poorer. That is particularly repellent.

The "jobs for wage cuts" argument does not stand up. It is not substantiated by the international and domestic facts about wages in any case. In Germany, real wages have gone down by 2 per cent. since 1979 while over the same period the increase in the unemployment rate in Germany has been only slightly less than ours. In Japan, workers have had a 5.9 per cent. rise in real wages over that period and an employment increase of 33 per cent. Labour costs in the United Kingdom are lower than in all major industrial countries except Spain. In July the average rate of unemployment in the Organisation for Economic Co-operation and Development was 8.2 per cent. In Britain it was 13.1 per cent.

Since 1980, unemployment has doubled in Britain. Real labour costs have gone down by 4 per cent. Unemployment among young people has increased by twice as much as among adult workers, yet the average wages of young people have risen by 5 per cent. less than average adult wages. In parts of Britain where wages have risen faster than the national average, unemployment has risen less, and in parts of the country, notably the west midlands, where wages have risen least, unemployment has risen most.

We are readily told by the Chancellor that the United States economy is thriving currently because of low wages and an enterprise culture. The facts are that, from 1980 to 1982, when the American economy was being squeezed and bankruptcies were epidemic and President Reagan followed Thatcherite policies, 600,000 jobs were created. In the two years of expansionary policies from 1982 to 1984, 6 million jobs have been created. Those facts about the United States speak for themselves.

We can gain recovery by policies of stimulation backed by public expenditure. We do not have to spend proportionately as much as has been spent in the United States. We do not have to spend the money on the same things. We do not have to release demand into the economy by cutting the tax rates for the rich and cutting welfare benefits for the poor. We do not have to follow those examples, but we must expand investment and consumption, as the Prime Minister's favourite, John Maynard Keynes, wisely counselled. The Government have a duty to do just that. I do not expect them to do it with great enthusiasm or with the speed or on the scale of the strategic objectives that I would choose and that the Labour party would implement as soon as it was in government.

However, even the Government can sponsor; even they can spend sums of money; even they can undertake a basic recovery programme for this country. They can initiate a major increase in the construction and improvement of housing. That is a desperate necessity after five years in which total housing starts are 40 per cent. lower than in the previous five years and council housing starts are 65 per cent. lower than in the previous five years. The Government can make an effective commitment to renovating our blighted and decaying inner cities. They can invest in energy conservation and undertake a programme of transport development such as rail renewal, with electrification, new track and improved construction on a larger and more systematic scale. The hon. Member for Rugby and Kenilworth (Mr. Pawsey) is not without interest—rightly so—in these matters. If he wants to join us in encouraging the Government, we shall welcome his support. I know that it will be substantial, indeed even multiple.

Many other activities that are necessary in the national interest will be cheaper the quicker a start is made. I refer particularly to the comprehensive renovation of our aging and potentially dangerous sewerage system. It would be extraordinary for us to advocate a national economic recovery based on the sewerage system, but that proposition, like all the others relating to housing, transport and energy, could be started for a net expenditure no greater than last year's overshoot on Government borrowing of £2.3 billion. That is the sort of sum that I am asking for from the Government. Our commitment would be substantially more generous. Our use of that sum would be more strategically responsive and our purposes would be more adventurous, but I realise that I am talking to a Tory Government and asking them to wean themselves away from the policies of constriction, closure and slump. I am asking for what I think is reasonable from them, not necessarily what I think is necessary for the welfare of the nation.

I commend those proposals to the Government on the ground that, in the very act of generating employment and turning claimants into taxpayers, they would make our economic infrastructure more efficient and initiate a new impetus for technological development. Under every one of my proposals they could invest in new systems of design, communication and operation, which would give a real boost to advanced engineering and scientific industry.

Mr. Tim Eggar (Enfield, North)

If I understand the right hon. Gentleman correctly, he is arguing that the Government should spend about £2.3 billion extra on capital infrastructure projects. How many jobs would that create?

Mr. Kinnock

There would be a significant increase in employment——

Mr. Eggar

But how many jobs would there be?

Mr. Kinnock

That increase in employment would be accompanied by an improvement in our technology——

Mr. Eggar

The right hon. Gentleman does not know how many jobs.

Mr. Kinnock

If the hon. Gentleman wants an answer to his question, he had better shut his mouth for a moment.

There would be a substantial increase in the number of jobs, accompanied by the sponsorship of technology and the improvement of our infrastructure. The hon. Gentleman should respond to this and explain why he does not want to adopt my proposals. Every single job created would turn a net dependant on our national resources into a net subscriber to our national resources. I do not expect miracles. I am not talking about a huge shower of jobs on our community and our economy. I am saying that the Government must now start on that basic recovery programme or condemn the people to a further period of decay and decline as the economy gets more tawdry, our infrastructure more tatty and our economy becomes less competitive than the Tories have made it.

I further appeal to a Government who are supposed to know, see and care about unemployment to help those most afflicted and affected by mass unemployment—the long-term unemployed. Their unemployment begets further unemployment. The longer that they are out of work, the more difficult they find it to get work. Not only does their confidence rot away but employers, for reasons that in many ways can be understood, are more likely to give preference to workers with recent work experience. Why do not a Government who know, see and care offer new training programmes for the long-term unemployed? Why do they not offer incentives through tax concessions or cash grants to employers for taking on the long-term unemployed?

I ask the Government particularly to stop more young people falling into the abyss of becoming the long-term unemployed. They should double the length and enrich the content of the youth training scheme so that youngsters have time to secure additional qualifications, a longer opportunity to experience work and the facilities to develop their scholastic and manual skills in a way that cannot be achieved in just one year, especially when they face the complex jobs market and the complex tasks of our economic future. By investing in the training of those young people, the Government would give them a better chance of securing jobs. They would also give our country a greater body of trained and educated abilities of the kind that we shall so desperately need if we are to prevail against the competition of other economies that are making a greater commitment to young people.

Why do not the Government attend to the realities of our society and accept that many older workers, if they could be assured of a decent standard of living, would gladly extend their retirement and relinquish their jobs to younger workers — without coercion, compulsion or pressure; just a straight, sensible deal between those who look to extend their active leisure and those who seek the activity of work.

Why do not the Government understand that the withdrawal of funds from local government and health services is a costly folly when minor disabilities that can and should be treated at home are turned into major illnessess needing long-stay hospital care simply because local facilities have been reduced or withdrawn?

As we have seen, the Government will respond to propositions of that kind by saying that they cannot afford them. It is not "can't" but "won't". The Government could retain a substantial part of the £11,000 million which leaves the country annually in investment capital to strengthen the economies and finance the technological revolutions of competitor countries. They could use the £10,000 million annual revenue from North sea oil to sponsor production and development. North sea oil provided a unique opportunity for improvement of our infrastructure in preparation for the future, but, as the right hon. Member for Chesham and Amersham (Sir I. Gilmour) has said, it has been used to finance not convalescence but euthanasia. The Government could give vitality to the economy. They could attract funds by sponsoring the productiveness of our country. They should be playing to our strengths—stability, hard work and inventiveness—instead of wearing the country down by policies of constant slump.

Those are the alternatives, the real choices facing the Government. The choice is not between cost-free idleness for millions of people and an expensive system of making work. It is not between spending and not spending but between spending on development, production and training and spending on idleness, decay and decline. It is a tragedy that the Government have chosen the last, negative, retarding course. It is an outrage that they prefer unemployment with all the weakness and obedience that goes with it to sponsoring employment and strengthening the confidence of our people through sponsorship of employment and growth.

In making that negative choice, the Government evade the central challenge to modern Governments and especially to modern democratic Governments. They dodge the duty of combining the advance of efficiency with the values of humanity. Rule by efficiency without humanity is horrific. Rule by kindness without efficiency is torpid and doomed. But rule without either efficiency or humanity is what we have from the Tory Government now; and that is why they should go.

4.43 pm
The Chancellor of the Exchequer (Mr. Nigel Lawson)

There is a familiar pattern to events in this House. Just three months ago we debated an Opposition motion on unemployment and the economy——

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

On a point of order, Mr. Speaker.

Mr. Speaker

I hope that it is indeed a point of order.

Mr. Campbell-Savours

I have been a Member of the House for five and a half years. Throughout that period it has always been the custom on a day such as this for the Prime Minister to reply on behalf of the Government.

Mr. Speaker

Order. I appeal to the House to give the Chancellor a fair hearing, just as the right hon. Member for Islwyn (Mr. Kinnock) had a fair hearing. Points of order of the type raised by the hon. Gentleman merely take time from other Back Benchers.

Mr. Lawson

I advise the Opposition to wait for the speech of my right hon. Friend the Prime Minister during the debate on the Address. It will be well worth waiting for.

Just three months ago the Leader of the Opposition proposed a motion very similar to this one. He spoke at considerable length and said practically nothing. Today we have re-enacted those events. The right hon. Gentleman has taken the same role and delivered much the same script.

The one thing that seems to emerge from the right hon. Gentleman's prescription is that we should expand demand by some £2.3 billion. I am astonished at his new-found modesty, although the list that he gave came to many times that amount. One thing must be absolutely clear. There is a real problem, but the problem is not lack of demand. Allowing for the coal strike, money demand is rising by about 8 per cent. per year. The object of economic policy is to achieve the most favourable division of that money demand between rising real output on the one hand and rising prices on the other. That is the whole purpose of the strategy that we have been following. But look what happened under the Labour Government — [Interruption.] The Opposition are frightened now. They cannot take this! Money demand was indeed boosted under the Labour Government. It rose not by 8 per cent. per year, as now, but by 18 per cent. per year. Moreover, more than 16 per cent. of that was dissipated in higher prices and less than 2 per cent. was left for higher output. There can be nothing worse for jobs than to retrace that rake's progress.

The right hon. Gentleman has, however, done us two services. He has provided the opportunity for this debate, which the Government welcome, and he has eloquently expressed the concern of the House about unemployment. Large-scale unemployment is indeed one of the curses of our time. The Government would like nothing better than to see it come down and stay down, and the sooner the better. Each of us, in every part of the House, is aware from constituency experience of frustration felt by those unable to find work and the despair of the long-term unemployed. [Interruption.] This is no laughing matter. It will be noted that the Opposition are laughing at the level of unemployment.

Every one of us is aware of the despair of the long-term unemployed, to which the right hon. Gentleman alluded, of the strain on their families and of the feeling among too many of the young that society has little to offer them. We are aware of the hopelessness and the sense of rejection felt by the family man made jobless in the prime of life and unable to find new work. It is right that we should be debating this subject today, but I hope that we shall do so in a manner that befits the occasion.

The British people know full well that there is no quick or easy solution. They know that if there had been such a solution we should have implemented it long ago. They know, too, that had there been a quick and easy solution the Labour Government would never have allowed unemployment to more than double during their five years in office. The British people know, too, that unemployment has been on a rising trend for decades, not just in this country, but throughout most of the world. For example, since 1979, throughout the whole period of office of this Government, unemployment has risen faster in Germany — the strongest of all the European economies—than in Britain. Over the last year, unemployment here has increased considerably less than the European Community average. That is a fact. It is small comfort, because the number of people out of work is far too high and is still rising, but it underlines the need to see the problem in perspective and to abjure the language of slogans and political point-scoring. Anything less will do little credit to the House and will be of little service to those whom we represent.

We must understand the cause of unemployment in order to identify what the Government can do about it, and do it. Ever since we first took office in 1979 we have consistently pursued a wide range of policies, the aim of which was to enable the economy to generate new jobs. We have brought down the rate of inflation dramatically. The notion that there is a choice between fighting inflation and fighting unemployment is the reverse of the truth.

Mr. Frank Cook (Stockton, North)


Mr. Lawson

I remind the hon. Member for Stockton, North (Mr. Cook) that one of my predecessors, the right hon. Member for Leeds, East (Mr. Healey), observed that inflation was the mother and father of unemployment. The record levels of inflation over which he had the misfortune to preside under the Labour Government are reflected in the record level of unemployment today.

The scourge of high inflation has been conquered and its defeat has been followed by a period of sustained economic growth, as we always said it would be. At the same time, we have made steady progress with the other arm of our policy, which is to remove the impediments to the efficient working of the economy by allowing markets to work better and by the creation of conditions conducive to growth and employment. We achieved that through taxation, by improving incentives by cutting income lax, especially the high marginal rates, by abolishing the national insurance surcharge—the Labour party's tax on jobs — and by reforming corporation tax so that the system no longer discriminates against the employment of labour rather than of capital.

Where appropriate we have pursued our policies through public expenditure. We created the youth training scheme, at the cost of the best part of £1 billion a year. This year about 70 per cent. of youngsters leaving the scheme have gone straight into work or further training —most have gone into work. We set up the enterprise allowance scheme to encourage people without jobs to set up their own businesses, and we created the young workers scheme, which encourages employers to take on 17-yearolds at realistic wage rates.

We have encouraged the growth of new jobs by deregulation and by stimulating competition. We have reformed trade union law and removed the legal protection for the closed shop unless it is approved by a work force ballot. That comes into force this week. We have embarked on a massive and unprecedented programme of privatisation, the biggest of which, British Telecom, will be implemented in a few weeks. [Interruption.]

Mr. Speaker

Order. The Leader of the Opposition was given a fair hearing. It is unworthy of Opposition Members to deny an equally fair hearing to the Chancellor of the Exchequer.

Mr. Dennis Skinner (Bolsover)


Mr. Lawson

I shall give way in a moment. We have provided the most attractive package of any European country to stimulate new businesses.

We shall continue with these supply side policies within the overall framework of tight control of public expenditure so that we can cut taxes while stimulating new enterprises and new jobs. Inevitably, these measures will take time to have their full effect. It takes time to revive the spirit of enterprise, which is the only way to better economic performance.

Mr. Skinner

With regard to the privatisation of British Telecom, will the Chancellor of the Exchequer guarantee that, because of the Government's anxiety about blood money in Libya, they will amend the legislation to ensure that no Libyan money is invested in the shares of British Telecom?

Mr. Lawson

When the hon. Member for Bolsover (Mr. Skinner) condemns the president of the National Union of Mineworkers for sending an emissary to Libya for help, I shall answer that question.

Our policies are already bearing fruit. We are now in the fourth year of a steady economic recovery, and I see no sign of its faltering. Despite the unwelcome trend of unemployment, new jobs are being created. Between the middle of last year and the middle of this year, the number of people in work rose by 250,000. That is in sharp contrast to the figures for France and Germany, where the numbers in work have continued to fall. It is fully in line with the rate of increase in previous economic recoveries, but this time it has occurred without any resurgence of inflation. That is good, but it is not good enough. New jobs are not being created fast enough to keep pace with the rising numbers who either want to stay in or enter the work force.

There is a way of creating new jobs on the scale which our people need, if only we as a nation are prepared to take it. The effects of the coal strike apart, the continuing rise in unemployment is to a considerable extent the temporary consequence of cutting out overmanning, which all hon. Members have long recognised to be widespread in British industry.

That does not explain why the substantial number of new jobs that are being created has had so little effect on the numbers unemployed. The explanation of that paradox provides an important insight into the nature of the problem and of the only practical solution to it. The new jobs are overwhelmingly going to the self-employed and to part-time workers, many of whom are women who have never been part of the work force. In other words, it is the most flexible and least unionised who are getting jobs.

Mr. Wareing

The right hon. Gentleman said that married women who had never' had jobs are now getting them. Will he tell the House about the effect of the new regulations introduced by his right hon. Friend the Secretary of State for Employment in relation to the community programme, which makes it even more difficult for married women to take jobs within the community programme and which has been condemned as discriminatory by the Equal Opportunities Commission?

Mr. Lawson

The scheme applies only to recipients of state benefits. I am sure that all hon. Members will agree that it is those people who should be helped by that scheme.

The problem is that monopolistic trade union behaviour leads to the benefits of the recovery not being shared by everyone. The overwhelming majority who remain in work have seen their living standards rise steadily, no matter which measure one cares to use, but a minority are suffering because they want to work and cannot.

It must be said, quite bluntly, that those two matters are linked. The general level of pay is too high for employers to wish to employ people in anything like the numbers needed to reduce unemployment as we would all wish. That is why I said in my International Monetary Fund speech in Washington last month that the heart of the problem was the level of real wages. Other things being equal, the more that people are paid, the lower the number who will be employed. [Interruption.] I hear some disagreement from the Opposition, but the whole House must know, as does the country, that there is a link between pay and jobs. There is nothing new about it. Even Lord Wilson of Rievaulx knew it, when he said: One man's pay rise is not only another man's price rise: it might also cost him his job or his neighbour's job. He thought that that was so important that he published a pamphlet and put copies of it through every letter box that he could.

Even the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) knows it, because he said only this month: Unless we are both courageous and careful, wage inflation will hold back our progress towards full employment. That is what he said, and the only person who does not know it is the Leader of the Opposition.

Dr. Jeremy Bray (Motherwell, South)

Is the Chancellor saying that if wages are reduced in one industry it will gain jobs while other industries will lose them, or that if one country reduces wages it will gain jobs while other countries lose them? What gain is there to the world or to Britain from such a policy?

Mr. Lawson

The gain is a gain to the unemployed who find themselves in work, and that is what the debate is about.

The question is not whether there is a trade-off between pay and jobs—that much is common ground—but what it is and how much it matters. The answer can be found by looking across the Atlantic, which the right hon. Gentleman did, although he seemed to have something wrong with his bifocals. In the United Kingdom, and indeed in western Europe as a whole, real earnings have increased significantly during the past 10 years and total employment has decreased, whereas during the same period in the United States exactly the opposite has happened: real earnings have fallen slightly and employment has increased impressively.

Of course, there are some who, notwithstanding our disastrous experience of excessive Government borrowing under previous Governments, like to imagine that America's success in job creation is a consequence of its present massive budget deficit, but the evidence is against them. Employment in the United States has been growing during the past decade, with 15 million new jobs being created in that time. However, of those 15 million jobs, 13 million were created during the first half of the period at a time when United States fiscal policy was becoming more, not less, restrictive. So much for the view that the extra jobs are due to America's budget deficit, or that we should follow that example.

Mr. Jack Straw (Blackburn)

Will the Minister give way?

Mr. Lawson

I have already given way several times. The true secret of America's success in creating new jobs lies in an environment that leads people——

Mr. Straw


Mr. Lawson

—to price themselves into jobs rather than out of them.

Mr. Straw


Mr. Lawson

I have already given way several times.

Mr. Straw


Mr. Speaker

Order. The Chancellor is clearly not giving way. May I tell the House that every day I receive many letters from people referring to noise in the Chamber. I always defend robust debate, but this sort of interruption is not robust debate.

Mr. Lawson

I am always happy to give way, and I have already done so more times than the Leader of the Opposition did, so I should continue my remarks.

The lesson from America is the lesson for us in Britain. The figures speak for themselves. The evidence suggests that in Britain—[Interruption.]—I should like the House to listen to this——

Mr. Frank Cook

On a point of order, Mr. Speaker.

Mr. Speaker

Is it a point of order?

Mr. Cook

I seek your guidance, Mr. Speaker. Are we here to discuss the problems of this nation, or those of another? I am fed up with hearing about the United States.

Mr. Speaker

If the hon. Gentleman listened to what was said rather than shouted from a sedentary position, we would all be better off.

Mr. Lawson

The evidence suggests that, in Britain, a 1 per cent. change in the average level of real earnings will, in time, make a difference of between 0.5 per cent. and 1 per cent. to the level of employment—that will mean, in all probability, between 150,000 and 200,000 jobs. Over the past two years average earnings in Britain have increased by nearly 3 per cent. more than prices, and it looks as though this year will see much the same. If, instead, average earnings had merely kept pace with prices, the number of extra jobs created would have been about 500,000 a year. Of course, the effect will not be instantaneous. It takes perhaps a few years for pay levels to have their full effect on employment levels, but once embarked on the process is cumulative. If one year of pay in line with prices, instead of rising 3 per cent. ahead of prices, eventually means an extra 500,000 jobs, two years of the same would mean an extra 1 million jobs, and three years — we have had three years of 3 per cent. real growth in earnings—would mean an extra 1.5 million jobs. That is on top of the new jobs being created as the economy expands.

The figures show merely broad orders of magnitude, but they are based on a careful investigation of the evidence. Moreover, I have not been talking about cuts in pay, merely about pay rising in line with prices instead of much faster. I have necessarily been talking in terms of averages, which in any event should be helped down by the fact that many of those who take new jobs —especially school leavers—are likely to take them at the lower end of the pay spectrum.

Even with gross pay remaining flat in real terms, take-home pay should gradually increase as taxation is reduced.

Mr. Donald Stewart (Western Isles)

The Chancellor has given evidence of the correlation between low wages and unemployment, but is he aware that the Low Pay Unit, which conducted extensive investigations throughout the United Kingdom, found that the areas in which wages are lower than average are exactly those areas where unemployment is highest?

Mr. Lawson

That is because of the special factors that affect industries in those areas. The evidence is as I have given it to the House; if the House does not wish to accept it, it will not understand the only way in which we can reduce unemployment.

There is still one sure way to arrest our progress towards new jobs, and that is to succumb again to the British disease of futile, self-destructive strike action, which the Leader of the Opposition supports wherever it occurs. He is the striker's friend—the man responsible for creating unemployment. The current coal dispute has been expensive in terms of cash and output. Total national output—GDP—is currently about 1¼ per cent. below what it would otherwise be, largely because of the sharp loss of coal output. That means that growth this year will be below the 3 per cent. that I forecast at the time of the Budget, with a corresponding bounce back next year to the 3 per cent. or so that was achieved in 1983. The balance of trade has also inevitably been adversely affected on both the oil and coal accounts, to the tune of over £1½ billion so far. However, once again, the bulk of the deterioration will be of a strictly temporary nature.

Then there is public expenditure, for which the Leader of the Opposition gave a completely false figure. The public expenditure cost of Mr. Scargill's strike now amounts to a very considerable sum. The sooner the strike ends the better but if it were to continue until Christmas it would add about £1½ billion to the PSBR for 1984–85, which is well in excess of normal contingency margins. That means that the PSBR for the current year is likely to be much higher than I expected at the time of the Budget —perhaps in the region of £8½ billion. This would, of course, still be well below last year's PSBR and, as a proportion of GDP, comfortably the smallest for well over a decade. Moreover, the overwhelming bulk of this borrowing has already occurred, and, unwelcome though the addition is, it has been successfully funded. Monetary growth remains on track and I confidently expect to meet the targets that I set at the time of the Budget.

The House should be in no doubt whatever but that the Government are prepared to pay the cost of resisting this strike, however long it lasts. That makes sense in economic terms, but, more important still, no nation can ever afford to give in to violence and lawlessness, or to an attack on democracy itself.

Mr. Campbell-Savours


Mr. Lawson

We regret the economic cost. We regret the human and social costs too, but they are not of our making. The strike has cost jobs as well. There can be little doubt that as a result of the coal strike unemployment today is higher than it would otherwise be. Shops and services in the strikebound areas have inevitably been affected, as have a number of suppliers to the Coal Board. All this means fewer jobs, without taking into account the indirect impact on jobs as interest rates are kept higher than they would otherwise be.

I believe that anyone—any political party—who was really sincere about wishing to reduce unemployment would point out to the striking miners that, while Mr. Scargill claims that the strike is in defence of jobs, it is actually destroying jobs. The Leader of the Opposition has boldly and rightly condemned the activities of Mr. Scargill overseas. I now ask the right hon. Gentleman at this late hour to turn his attention to home, to the jobs being lost while Mr. Scargill refuses to contemplate a settlement.

We heard nothing at all new from the Leader of the Opposition today. He has offered no solutions and proposed no measures that have not been tried before and failed. The Labour party mouths concern—indeed, I admit that it feels concern—but it has no policies for, no answers to, or no concept of, the causes of unemployment. Nor has it a coherent strategy for dealing with it.

By contrast, the Government have. Our answer is to continue the fight against inflation, to create an enterprise economy which will produce the jobs for tomorrow and to spend public money judiciously on training for the unemployed and on helping them to help themselves. We must present those in work with the choices that they must make if we are to bring unemployment down.

As a nation we have it in our power to see unemployment fall in the years ahead as rapidly as it has recently risen.

Mr. Campbell-Savours


Mr. Lawson

The Government will play their part in keeping inflation on a downward path and in creating the conditions which will help to bring about the sort of behaviour by management, unions and workers alike which alone can exorcise the spectre of high and rising unemployment, with all its human suffering and social hazards. But in a free society the Government alone cannot determine the outcome. There is no crueller deception than pretending to the people that a government can, yet that is the deception which the Leader of the Opposition was practising today.

5.13 pm
Dr David Owen (Plymouth, Devonport)

The Leader of the Opposition spoke in moving terms about the situation that faced him at his constituency advice bureau. I suspect that at their advice bureaux very few hon. Members have not, over the last few years, increasingly heard of similar distressing circumstances. Indeed, on rare occasions, I am sure that they have witnessed the distress, so eloquently described by the right hon. Gentleman, of an adult man breaking down in tears at the consequences of unemployment.

Few of us have not heard distraught mothers who have been anxious about their children, either because of an incident involving crime or drug addiction, all of whom will relate many of these social problems back to the frustration, alienation and depression of their youngsters. Some of those young people have been out of a job for five years since they left school at 16. Some have gone through a couple of youth training schemes, yet have still been unable to use the skills acquired and to get a job.

No one can be under any doubt that the issue we are discussing is central to the nation's cohesion. It is sad that the Prime Minister has immediately left the debate. After all, only last week she said: If the hon. Gentleman were fully familiar with the 1944 White Paper on employment I am sure that he would agree that it has a great deal in common with the policies that the Government are pursuing". — [Official Report, 23 October 1984; Vol. 65, c. 552.] In common with this Government? The right hon. Lady quoted from the foreword of tha: White Paper and from the last paragraph. It was a pity that the House was not made aware of the first sentence, which states: The Government accept as one of their primary aims and responsibilities the maintenance of a high and stable level of employment". The second sentence stated: A country will not suffer from mass unemployment so long as the total demand for its goods and services is maintained at a high level". That White Paper was presented to the House by the Minister of Reconstruction of the then coalition Government in May 1944. The Prime Minister owes it to the House to say whether she now accepts what all her post-war Conservative predecessors accepted—the first sentence of that White Paper.

Many people, including some Conservative Members, believe that the Prime Minister no longer accepts that obligation and responsibility of Government. Because of the rejection of that central part—that it is the task and role of Government to seek to alleviate the problems of unemployment — many Conservative Members believe that this Government are doing what Tory Governments did in the 1920s and 1930s, hanging around their neck the millstone of a party which is unconcerned about, and insensitive to, unemployment.

Mr. Tony Marlow (Northampton, North)


Dr. Owen

It would be safer if I continued for a while. I shall give way when I have dealt with demand in more detail.

It is rich for the Chancellor to tell us of the consequences of the coal industry dispute when some months back he said that the costs were a good investment. It is also rich of him to do so when, as recently as 2 December 1983, in a speech to the Enderby and district young farmers club, he predicted that unemployment would fall during the general election. He said: I was lambasted for my 'optimism'. The bringer of good news is scarcely better treated than the bringer of bad. But the critics must be beginning to worry … In short, it looks as though unemployment is now levelling off'. Since then unemployment, on a seasonally adjusted basis, has risen by 153,300, and it is still rising. The right hon. Gentleman knows that, yet there was not a scintilla of hope in his speech. We saw the fatalism and the government of despair which believes that there is no other alternative.

The Chancellor spoke of "the only way". I shall address myself to some of the ways in which he could change the policy. There has been much discussion about the United States. The Leader of the Labour party was right to introduce that, because there are some lessons to be learned. That type of high-tech, entrepreneurial, market-oriented economy is something to which we must aspire a good deal more than we have done hitherto. It is important to recognise that we can achieve that market orientation. But for five years this Government have consistently squeezed the British economy. One of the lessons of the American experience is that in the first two years they squeezed their economy and unemployment rose, whereas in the last two years they relaxed the squeeze and unemployment has fallen.

Mr. Straw


Dr. Owen

I shall not give way for the moment.

I have just returned from California, where people are adapting to the change extremely rapidly and are absorbing the high technologies at an impressive and rapid rate. They see the challenge of Japan and the newly industrialised countries. It is to our shame that we are still resisting the inevitability of industrial change.

United States experience has shown that tight money and a relaxed fiscal policy can lead to economic expansion even with high interest rates. The United States has achieved that by fiscal tax cuts — too much for my liking—on the rich, and by increased defence spending. What of this Government? They have tight money and a tight fiscal response. That is the party that spent the 1979 election campaign promising reduced taxes.

What have the Government done? They increased taxes from 40 per cent. to 45 per cent. of national income between 1979 and 1983. They have a tight fiscal stance as well as a tight monetary stance and they refuse to recognise that demand can be expanded while still holding a reasonably firm control of monetary policy. Somehow we have to persuade the Chancellor that there is an alternative.

In the 10 years between 1973 and 1983, British industrial workers' real hourly earnings went up by 10 per cent. and total British employment went down by 7 per cent. Over the same period in the United States industrial workers' real hourly earnings went up by 2 per cent. while total American employment went up by 16 per cent. We can learn lessons from that economy, although it is not always easy automatically to adopt the same policies here because we are more vulnerable to changes in overseas markets.

The Chancellor makes much of saying that people should price themselves into work. People do not price themselves into work, but the Chancellor can and should price people back into work by reducing labour costs to employers so that they have the incentives to take on more people. The present Chancellor and his predecessor have priced people out of work and produced few new labour market measures to cut labour costs.

One of three options can be adopted to reduce labour costs. The first, and by far the best, is to reduce taxes on jobs by restructuring national insurance contributions. The second—easily the worst and most indefensible option—is to reduce benefits. I am afraid that the Government are even now thinking of not fully indexing supplementary benefit. I hope that we can persuade the Chancellor not to take that option. The third and least effective option is to reduce wages.

I have doubts about the Chancellor's figures. No proven link exists between a fall in real wages and new job creation. Since 1980 real product wages in Britain have fallen by 6.3 per cent. even though unemployment has risen. Yet real product wages have risen by 6.1 per cent. in Japan and by 6.4 per cent. in Italy, even though unemployment has also risen.

The London Business School calculated last July that a cut of 0.5 per cent. a year in real wages in the United Kingdom would lower unemployment by only 22,000 over four years. That is a small number. There is no magic cure in that.

Mr. Bryan Gould (Dagenham)

I am grateful to the right hon. Gentleman for giving the House the relevant American figures, which the Chancellor of the Exchequer declined to give. In addition to a modest increase in real wages in recent years, American workers have experienced not only vastly improved job prospects but a rise in living standards which they could not have expected if the job prospects had been removed. With the benefit of tax cuts as well as improved job prospects, the Americans have had a sharply different experience from that of British workers.

Dr. Owen

Increasing demand and activity has led to greater prosperity in America. American workers in industries needing lay-offs have been prepared to negotiate the holding of wages to keep up employment levels. Adjustment in America has been more flexible than here, although that flexibility is occurring here and is a welcome development.

It would be deeply damaging to cut benefits, as I fear the Chancellor intends. I have two objections. First, it would hit the poor savagely. The Supplementary Benefits Commission's latest report shows that 1.4 million families have incomes below the supplementary benefit line and that 3.2 million people are on low wages only 40 per cent. above the supplementary benefit line—that is, about £60 a week or less. Real poverty exists in Britain. It would be indefensible if the Government were to try to solve their unemployment problems by cutting benefits.

Such a cut would not create jobs. The Supplementary Benefits Commission report said that only 5 per cent. of the unemployed were receiving more in benefits than they would in earnings if they were in work. They were primarily single men who had been unemployed for six to 12 months or more and who had low incomes and large families.

The gap between benefits and earnings has increased since 1980 owing to a fall in the real value of some benefits and the abolition of others such as earnings-related unemployment benefit.

Only 7 per cent. of those who became unemployed in 1983–84 received as much as 90 per cent. of their former earnings. The numbers who might return to work because of any cut in benefits are likely, therefore, to be very small. Unemployment would not be reduced by more than 100,000 over two years — that is an optimistic assumption—at a savage cost elsewhere.

I hope that the Chancellor will not refuse to adopt the third and best option. Total national insurance contributions for employers and employees have increased from 7 per cent. of national income in 1978–79 to 8.5 per cent. in 1984–85. That breaks down to a 1 per cent. rise for employees and a 0.5 per cent rise for employers and takes account of the abolition of the national insurance surcharge, for which the Chancellor rightly claims some credit. If one deducts the value of the surcharge, employers' net national insurance burden has risen by £700 million since 1979, adding significantly to the cost of hiring additional labour.

All that money should be used to restructure national insurance contributions so that they bear less heavily on the low paid and eliminate national insurance contributions on new jobs, particularly for the long-term unemployed. If that were accompanied by a 1 per cent. overall cut to smooth out anomalies, at a total cost of only £600 million over two years, it could create 220,000 jobs. That is the best way to deal with the Chancellor's problem which he highlighted.

We must also deal with capital expenditure. The CBI, hardly an irresponsible source of fiscal information, is demanding a £1 billion increase in capital expenditure That has to be set against what has happened in the last 10 years. The public sector share of total investment in Britain has fallen from 44 per cent. to 26 per cent. Capital spending cuts have consistently been preferred to revenue cuts by successive Governments.

The position is now bad. This year's planned total public sector spending will be £400 million less in cash terms that it was the year before. In 1986–87 the Government's planned total public sector capital spending will be $1.4 billion less. If £1 billion were spent over two years, it would create 150,000 jobs.

Capital injection does not create as many jobs as many other schemes. The alliance would like a much more ambitious scheme to be launched. We believe that if we were to invest heavily in the community programme by about £970 million, about 500,000 jobs could be created. I realise that the Chancellor does not intend to do that.

Mr. Lawson

What about the public sector borrowing requirement?

Dr. Owen

Whenever we talk about expansion, Ministers always say that we have to borrow, as if that were a great sin. Not an hon. Member has not borrowed, either to buy a house or to invest to help expansion in industry or commerce. The Chancellor is wrong to claim——

Mr. Straw

Will the right hon. Gentleman give way?

Dr. Owen

No, I shall not give way. The Chancellor is wrong——

Mr. Straw

The figures are wrong.

Dr. Owen

I have given the figures as I see them. They may be wrong, but let us wait to hear what others say.

I have advocated an overall expansion of the PSBR in a comprehensive programme over two years of £2.9 billion—that is, £1.5 billion a year. The Chancellor looks at me in shocked horror. He has already announced a substantial overshoot on the PSBR estimate for this year. That only adds to the overshoot that we have had in 1980–81 of £0.4 billion, in 1981–82 of £0.9 billion, in 1982–83 of £1 billion, and in 1983–84 of nearly £2 billion. The PSBR has been set by the Chancellor but it has not been met on a single occasion since the Government made it into such a totem pole.

Moreover, the Chancellor refuses to face the fact that in 1983 the nominal target of £11.5 billion without asset sales—we must remember that the Government are always taking in asset sales to reduce the figure—would, if it were adjusted to inflation, come down to £8.9 billion. Whenever we look at the asset sales we see a farce. In some tables, asset sales are assumed to reduce public expenditure. That is nonsense. They do not reduce spending, although they help to finance it. In other tables, asset sales are assumed not to reduce capital expenditure, which the Government are trying to prove is being kept high. That is nonsense. By definition, asset sales reduce the stock of public capital. We are now talking not about small sums of money. The figure for British Telecom is possibly £3.5 billion. Will such figures just be subsumed into the general Government expenditure or shall we see a conscious effort to reinvest in Britain's wealth to recreate over the next few years some of the assets which have now been sold? If there is any justification for such sales, it must be to reinvest in capital and new industries, in innovation and in areas where the country would be able to obtain a return in 15 or 20 years' time, as industrialists are already urging the Government to do.

The Chancellor owes it to any successor Chancellor in 20 or 30 years time to use the revenue from assets that he wishes to sell now in order to build up assets for the future. Nothing could be worse than to sell off the assets and just allow them to be lost in the way that we are already losing the revenues from North sea oil. It is now time to tell the Chancellor that we will not accept that there is no other way. We will not accept, and nor do many Conservative Members, that there is no other policy. There are prudent policies that would not trigger off inflation in Britain.

The Chancellor is right to be proud of the reduction in inflation, but at what a savage price. It is perfectly possible for a more relaxed fiscal posture to inject more activity and demand into the economy without bringing on inflation. If the Government were to risk inflation, two things have to be done. Employers and trade unions have to recognise that if we are to take some risks with expansion and increased demand, they must show some restraint on wages. If it were necessary—I hope that it would not be—it would be sensible to hold in reserve an inflation tax as the final act. The Chancellor laughs, but the consequence of not doing so would be to go on watching unemployment rise. That is now unacceptable to many millions of people in Britain. They would be prepared to put up with some of the inconveniences and difficulties of a form of incomes policy. I suspect that they would feel that an inflation tax would have the least damaging impact in causing arbitrary pay difficulties which we know come from almost all centralised incomes policies.

Some restraint might well be necessary. The Chancellor knows already that the private sector is now beginning to see a pick-up in wages. He has held back the public sector, again at a savage price, and trouble is brewing there for him. It is not good enough just to talk about increasing demand if we are not prepared to face up to the necessity of some form of incomes policy. I beg the Chancellor not to scoff. He may well have to explain to us why he has had to introduce some freeze at some subsequent time. Most Chancellors have had to resort to something like that.

Alternatively, will the Chancellor allow unemployment to rise to 4 million? What figure will he accept? That is no longer a route that is open to him. The Social Democrats and Liberals believe that the Government deserve the most savage censure for the way in which they have handled the present unemployment problem. We do not presume to say that a magic wand can suddenly be waved, but if unemployment were not to rise each month, what a lift it would give to morale in Britain. If unemployment were to fall by, say, 10,000 a month for a few months, what an incredible boost that would give to the morale of the British people. The relentless increase in unemployment and the pessimism and fatalism of the Government deserve to be rejected.

5.35 pm
Mr. David Howell (Guildford)

The right hon. Member for Plymouth, Devonport (Dr. Owen) made an interesting speech, in which he told us about his experiences on his return from California. I do not disagree with a number of the points that he made, although he seemed to get a little bogged down at the end. And I do not agree with his last remarks. Furthermore, the latest unemployment figures in the United States show him to be a little out of date because some of the most recent statistics demonstrate that once again unemployment in America is beginning to rise, thereby bringing home to hon. Members the danger of advancing any general assumptions or theories about the link between budget deficits and unemployment. America faces its difficulties and we must be a little careful in drawing too many lessons from such a different economy.

My right hon. Friend the Chancellor has been attacked again in the House this afternoon for not producing instant answers to unemployment. I am glad that we have a Chancellor who does not resort to attempting to cook up instant answers to unemployment, which requires a far deeper, longer-term and calmer approach than some easy armchair critics would suggest. I am also glad that my right hon. Friend did not take the advice of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) during the recent currency volatility, when he demanded radical policy changes. It was such radical panic policy changes in the middle of currency volatility that caused such chaos in the past. At such a time it is not complacent but courageous and wise to adhere to the main components of a policy and not to rush off in circles trying, as people say, to "do something". That would have been wrong, and I am glad that my right hon. Friend set his face robustly against such pressures.

My right hon. Friend has been criticised for adhering to the basic point that the Government have adhered to throughout their five years of office—the belief, which has been wholly justified by events, that if one seeks to lift activity by a substantial increase in Government spending and borrowing, the effect, through inflation and interest rates, will kill more jobs than it creates. That is the experience of the past. Obviously, the same experience does not apply in every age, but that is still valid and still of fundamental importance. Therefore, in that sense, there is no trade-off between inflation and unemployment.

There is no easy table of figures by which one can say that a little more inflation will create more jobs. On the contrary, a little more inflation will almost certainly kill off more jobs than it creates. Those who like to sit back on macro-economic theories and say that they can achieve what they want by giving a little boost to demand through good sharp shock reflation are asking not for more employment but, alas, for more unemployment. There is a growing view and general understanding even on the Opposition Front Bench, and I suspect certainly among the most general and disinterested critics, that those truths hold and should be observed. To undermine such a strategy now would be fatal.

The difficulty about discussing the issue, as we are doing this afternoon, in economic and financial terms—perhaps it has been the difficulty of my right hon. Friend who has been looking after the economic and financial policy front and who has then been asked to produce policies for a much wider area—is that the unemployment issue that we face in this society is not confined to economics and finance. The same goes for some of our neighbours, but it is particularly true here.

My right hon. Friend has been criticised, but he was right, candid and courageous to say that the origins of today's unemployment do not lie primarily in the economic sphere. It therefore follows that there is no economic policy adjustment—a little turn here or a little twist there—that can restore the job-creating machinery.

The origins and the cure of our unemployment lie outside economics and finance. The House will have to face these realities, which lie outside party politics. The origins and the cure lie in the entirely new social circumstances that are emerging as a result of an industrial and commercial revolution which almost dwarfs the industrial and agricultural revolutions of earlier centuries. We now face conditions that demand a much deeper and more imaginative approach and a fuller range of policies and changes in attitude in industry and employer practices than we have previously experienced. We need radicalism in order to move away from the stale remedies of reflating and seeing what happens.

We need to move, too, away from the dispiriting approach that everything will come all right because it did in the 1930s and the 1880s. We face wholly new circumstances. As Balfour said, history does not repeat itself—historians repeat each other. Believing that everything will be all right because it was in the 1930s is no reassurance and does not reflect an understanding of what is happening to the pattern of work.

How do we address ourselves to this entirely new set of problems and an entirely new framework of employment? How do we create the right policy framework to meet them? Various strategies have been advanced, but I fear that many of them would cause a loss rather than a creation of jobs. The best recent document from the political forum that addresses itself to the policy makers is that written by my hon. Friend the Member for Beckenham (Sir P. Goodhart), with the help and on behalf of the One Nation group of Members of Parliament. I believe that he addresses the problem in the right terms for the future. Some people might mutter that I have singled out that document called "Jobs Ahead", because I am a member of the One Nation group. I admit it. But another and stronger reason is that it recognises that the framework of employment is changing and that the type of work being done now is entirely different from that done even five years ago.

"Jobs Ahead" draws attention to the fact that one in five people in work are in part-time work. Such work is growing enormously, and faster than any other form of employment. The latest edition of Social Trends emphasises that one in five people who go to work are employed part time. People ask whether that is because full-time work is not available. The evidence suggests that it is not the case that part-time work fits into the pattern of what the other half of the marriage partnership is doing and that people are increasingly looking for flexible working hours. That accords closely with the growth of the personal services sector throughout the industrialised world. Some might argue that such work is still on the fringe, but it is a big and growing fringe. Social, tax and employment policy must adapt to the growing army who want to work part-time. It is quite different from the standard career pattern of 4'7 hours a week, 47 weeks a year and 47 years of a life. The typical "100,000 hours" career is passing away.

The second new demand that we must recognise is for a pattern of retraining, or education in new techniques, more frequently during a career. People will increasingly seek retraining in new technologies during their lifetime. Already, the new information techniques present us with a vocabulary which 16-year-olds use and 40-year-olds do not understand. People will want a substantial amount of time, during which they will need an income, for retraining at various points in their lives. That is a wholly new condition, which we ignore at our peril. If we brush it aside and say that we must merely try to create jobs, we shall ignore the real needs of a new industrial society.

The economic fundamentals to which my right hon. Friend the Chancellor is sticking are the foundation on which new economic and financial policies will rest. If the foundation is weak or if the inflationary job-killing machine starts up again, nothing will succeed and our power to adapt will be undermined. But the new policies will cost money. We must think carefully about how we fit the resource demand in with available resources. "Jobs Ahead" says that it would be sensible to go further than removing the surcharge on national insurance contributions. Thank heavens we have at least done that. It was a dreadful tax and I do not know how the Government of which the right hon. Member for Sparkbrook was a member ever devised such bizarre fiscal legislation. "Jobs Ahead" suggests that we should consider removing the contribution paid by employers for those aged under 20. That costs money. Knocking off the gains made from no longer paying unemployment pay, my hon. Friend the Member for Beckenham suggests a cost of £325 million. It costs a lot to lower the cost of employment and to help price people into jobs. It would also take substantial Government action. I suspect that it would be welcomed generally, but it would not come cheaply.

There again, both sides of the House agree that we must reduce taxes on low wages. An amazing disincentive pattern exists which the world just cannot believe. When the marginal rate of tax in the pound earned by someone on one third average wages, taking into account loss of rebate and other entitlements, is calculated, people overseas cannot believe the size of the contribution for tax and national insurance. They also cannot believe that such a low incentive is allowed to operate. But reducing taxes on low wages will involve colossal sums of money if we are to make a substantial long-term impact. I know that my right hon. Friend wants to advance on that front, because of his remarks about tax reduction as well as tax reform.

Next, we must also phase education into work much more slowly. That means that the educational part of a career might extend into the early or mid-twenties. The period of training will certainly be extended. My right hon. Friend the Prime Minister has said that her ambition is that people under 18 should face no likelihood of being out of work. She wants unemployment not to be an option for them because there should always be training opportunities and skill training. That is the right ambition, but I suspect that it must be extended. Some continental countries face exactly the same problems as a result of the same longer-term non-economic forces.

Attention is also given in "Jobs Ahead" to the other end of the career. It is proposed that we move away from the absurd idea that, at 60 or 65, a person's career is chopped off and he or she is no longer one of the employed. That is absurd, because people are living longer and they are anxious to play a substantial part in society long after they are 60 to 65 years old. In many instances they wish to have a role in society until they are in their 70s, and that is often possible on a part-time basis. That means that a pattern of part-time work can begin much earlier and perhaps as early as 50 years of age, as in Japan. Many Japanese people retire at 50 and take up part-time work such as consultancy, contract work or fee work that is related to their previous employment.

Contrary to what the Leader of the Opposition appears to believe, the Japanese do not have a wonderful set of employment statistics. When I told a Japanese audience recently that I admired Japan for having 2.8 per cent. unemployment, I was told that I was wrong and that that was not the correct statistic. If unemployment in Japan is considered in a manner comparable to United Kingdom unemployment the result might be 9 per cent. or 10 per cent. unemployment. It seems that a great deal of unemployment is disguised in Japan because, after a certain time, the unemployed do not feature in the statistics. A great deal more unemployment is disguised by early retirement and the gradual movement from full-time work to part-time that I have described.

Early retirement and part-time work cost money and working people will not take up those options if their pension opportunities are damaged and there is thus a constraint on their enjoyment of resources in older age. When the time comes, they may well want to give more time to voluntary work, for example.

Any changes of the sort that I have described are expensive. "Jobs Ahead" proposes a national voluntary early retirement scheme. In effect, it would be a vast expansion of the existing job release scheme, which has faced a number of difficulties, with the result that the take-up has not been dramatic. It must be conceded that I am talking about substantial sums. It is estimated in "Jobs Ahead" that if the proposed scheme attracted a massive take-up—for example, 500,000—the cost would be more than £1 billion.

Next, we must remove some of the disincentives to the pattern of part-time work and shape the social security and tax systems to enable the disincentives to be removed. I should be failing to face the truth if I suggested that that could be done without a substantial effect both on the revenue and expenditure sides of the Budget arithmetic of my right hon. Friend the Chancellor of the Exchequer.

Capital spending has also caused a good deal of passion and excitement in the debate so far. It must be conceded, even by the greatest enthusiasts for greater employment in the construction industry, that the immediate effect on jobs of increasing Government capital spending, which I have advocated in the past, would not be especially great; but there is a case for some further movement on Government capital spending, although the figures that have been floated this afternoon are absurd and spurious in their precision. The right hon. Member for Devonport talked about £2.9 billion and we had £2.3 billion from the Leader of the Opposition. These are absurdly precise figures in an uncertain area. None the less, there is a case for more capital spending to help provide jobs and to demonstrate that all avenues and all forms of remedy are being mobilised in the face of unemployment, which is not one issue but a set of difficulties. Unemployment represents a component set of problems requiring a variety of different remedies. I urge the Government, for the psychological and employment reasons that I have described, to consider whether they can move on capital spending. I think that the construction industry argument has some validity although I hold no special brief for it.

No one has the right to say that the Government should make all the moves to which I have referred unless he can also say where the necessary resources should come from. We must be aware of our limitations and the pace at which we can move.

I rather doubt whether it is possible to separate macroeconomic policy from micro-economic policy, although I know that my right hon. Friend the Chancellor of the Exchequer has sought to do so on one or two occasions. There is a school of thought which says that we must get macro-economic policy right and aim it predominantly at curbing inflation. It is said that the route to higher employment is to be found in micro-ecomomic changes, which are described in the current and awful American jargon as supply side changes.

If half of the micro-changes I have enumerated were to be contemplated, we would be dealing with sums that would burst into macro-economics. Their sheer size would challenge some macro-economic figures. They would have an impact on the figuring which has lain at the heart of the medium-term financial strategy. We are in a phase in which there needs to be some revision of the figures in the MTFS. That is almost inevitable and it would be wise for the Government to consider such a revision.

The heart of the issue is whether a more flexible stance can be achieved in our economic policy without degenerating into a crude dash for growth which in the end would destroy many more jobs and undermine the prospects for many more teenagers than even the policies of the past. The issue does not turn on whether we should go for £2.3 billion-worth of inflation or £2.9 billion. A flexible stance must avoid destabilising financial markets. If the markets are destabilised, we shall end up with higher interest rates and we shall be considerably worse off.

I am glad to note that some of the economic and financial pundits in the press are stating that it is possible to introduce some fiscal relaxation. That has been obvious to some of us for quite a long time. That relaxation should be over and above what I hope my right hon. Friend the Chancellor will achieve, and what I know is the Government's aim, which is to secure a pattern of lower interest rates in future. I hope that that will be achieved, but it will be difficult to do so in the climate that is developing in the American economy for 1985.

Certain advisers and those who understand the importance of my right hon. Friend's stance against inflation and the importance of having a flexible medium-term financial strategy are now urging some fiscal relaxation. I do not know how my right hon. Friend will put all the sums together for his spring Budget and I know that he will not tell us now. We have heard rumours about new sources of taxation from value added tax and they have not been greeted with unanimous enthusiasm. The Budget will also be helped considerably by the receipts from oil taxation that are to be measured in dollars. The gross tax receipts in dollar terms that flow from the taxation of the oil companies have soared and produced some Budget leeway.

Against that, my right hon. Friend has told us of the difficulties that this year's borrowing strategy faces when having to cope with the costs of the strike by the minority of miners against their fellow miners, against the rest of the trade union movement and against the country. That strike will cause further difficulties. However, the case for some fiscal relaxation and some flexibility and change in the medium-term financial strategy is strong. I advise the Government strongly to think aloud and positively about these matters rather than fighting a series of bloody battles before finding that they have to move in any event. The second course would cause the maximum damage to confidence, which is a fragile thing.

The financial markets admire what my right hon. Friend the Chancellor of the Exchequer has done and they are now prepared to lend to the Government in ways which they would not have considered in the past. It is vital that we maintain the reputation that the nation has painfully reestablished after the bizarre and casual profligacy of previous Labour Governments. Within the limits of which I have spoken, something can be done to ease economic conditions and create support for recovery in Europe and in the United Kingdom that we need. That will avoid the strange phenomenon of jobless growth, and produce a movement towards the creation of jobs of the sort that will fit into the society that I have described, which is emerging outside this place far faster than most right hon. and hon. Members realise.

Several Hon. Members


Mr. Deputy Speaker (Mr. Harold Walker)

Order. Nearly 40 hon. Members have indicated their wish to participate in the debate. The shorter the speeches, the fewer the hon. Members who will be disappointed at the end of the evening.

6 pm

Mr. Eric S. Heffer (Liverpool, Walton)

I agree with one point made by the right hon. Member for Guildford (Mr. Howell)—that we clearly need a more radical approach to unemployment problems. The right hon. Gentleman's approach was not particularly radical, but it was slightly better than the approach of the Government Front Bench. The fact is that the crisis of the capitalist system in which we live is getting deeper, and it is therefore clear that the old shibboleths are no longer satisfactory to deal with it. We need an immediate programme to put people back to work, such as the one put forward by the Labour party. We need a clear analysis of the long-term crisis and the measures to deal with it. That means that we need a new approach to work, working hours, the development of technology and ways of ensuring that with a smaller work force there is a greater distribution of wealth throughout Britain, the Western world and, ultimately, the world. We need a radical approach.

When I was younger, I listened to some of the old Socialists who argued that we would ultimately live in a society in which only two or three hours' work would be necessary for all of us. I thought that was going a bit far, but, provided that society is properly organised, that can become a reality. It will require a radical change in the organisation of society, and we shall certainly not get that from this Government.

The Government have been totally consistent, because they are ideological. They have a philosophy. It has been said—as was said by the right hon. Member for Plymouth, Devonport (Dr. Owen) at the alliance party conference—that the Government should be accused of incompetence. I do not think that that is a real accusation to make against the Government. Of course the Government show a measure of incompetence. The accusation involves not the Government's incompetence in reality, but their philosophy of monetarism. They think ite andthat the market philosophy is the be-all and end-all. We must charge the Government with that philosophy, not incompetence. The Government's basic concept is competition. They put profits before the interests of the people and espouse the so-called Victorian values for which the Prime Minister is so interested in arguing.

There is, on the one hand, a steady growth of wealth among a small elite and, on the other hand, a rapid development of poverty, low pay, despair and misery among the unemployed and the low paid. The Government carry out blatant class politics. They have abandoned the concept put forward by the right hon. Member for Guildford, the idea of One Nation, and the Macmillan concept of "The Middle Way", which I invite all Conservative Members to read carefully. The Government have brought in the policies of the class struggle. They accuse the Labour party and movement of being concerned with class. No section of this community is more concerned with the preservation and success of their class at the expense of the majority of the people than Government Front Benchers.

Unemployment continues to rise. The increased unemployment that was announced at the beginning of October was dramatic. About 13.6 per cent. of the work force are unemployed. That is an indictment of Government policy. I have said before, and I say again, that unemployment is a crime against individuals who are unemployed, their families and society as a whole. All previous Governments—even the Heath Government—believed in the concept of full employment.

Mr. Marlow

Will the hon. Gentleman give way?

Mr. Heffer

Not just now.

It is an achievement for me to say that the Heath Government had some merit, because I spent much of my time in the House fighting the Heath Government on all sorts of issues.

At the end of the second world war, every politician in the House accepted the concept of full employment because of the experience of the 1930s. Everyone hoped that we would never return to that position. We have returned to the 1930s. In some areas, such as the one from which I come, whole streets of people are unemployed. The only difference between now and the 1930s is that, until now, benefits for the unemployed have not been drastically cut, although they have been cut to some extent. Some people argue that the problem may be dealt with by cutting benefits, and then cutting them further.

Mr. Marlow

Will the hon. Gentleman give way?

Mr. Heffer

I am sorry; I shall not give way. I hope that the hon. Gentleman will forgive me. This is the first speech that I have made on the Back Benches for three years. I shall be happy to give way on other occasions, as I have done in the past.

I want to make it clear that, where there are high levels of unemployment, there is an increase in mugging, break-ins, the use of drugs and alcoholism—all manner of social evils. It is no good suggesting that unemployment and those social evils are not related. They are. One affects the other. We on Merseyside understand those problems very well because of the levels of unemployment. It was announced in September that in Merseyside county 141,482 people were out of work—21.3 per cent. of the working population. In my constituency, 10,340 people were out of work in September, 5,318 of them for more than a year. Those are the figures from one employment office. Imagine the misery that means to those people's families. I know youngsters who have not worked for four or five years and have no prospect of work. They have no opportunities, no chances. That is a great indictment of the Government. Unemployment is being used to depress the living standards, wages and security of the people.

About 250,000 Merseysiders are on poverty wages. They form a substantial proportion of the many Merseysiders who live on the margins of poverty. In just four years—in the period since February 1980—the number of those totally dependent on supplementary benefit has risen by almost 68,000 to a record 205,541. That is an increase of more than 49 per cent. Poverty wages are now being paid on Merseyside because of the high unemployment. Wherever high unemployment is to be found, the workers' wages are depressed.

An interesting document concerning Merseyside, which was issued by the Low Pay Unit, states: The overall proportion of low paid workers on Merseyside mirrors the national picture—indeed indeed the extent of low pay amongst men is more than the national average. This is because of a particularly acute problem of low pay amongst non manual workers. As the table shows, non manual men on Merseyside are 50 per cent. more likely to be be low paid than their counterparts nationally. Non manual women on Merseyside are nearly twice as likely to be earning very low wages (£50 gross per week or less) compared to in the country as a whole. That is what is happening to our people. Unemployment leads not to more employment, but to low wages and further unemployment. That is the lesson that we must learn from this Government's policy.

Mr. Robert Parry (Liverpool, Riverside)

My hon. Friend's point about low pay is quite correct. Only last week, the National Union of Public Employees gave evidence that dental assistants on Merseyside receive less than £32 for a full week's work.

Mr. Heffer

I thank my hon. Friend for making that point.

The Government are obsessed with the law, and with regulating industrial relations. They have enacted three pieces of legislation which add up to much worse industrial relations legislation than the Heath Government brought in. It is designed to weaken and ultimately destroy the trade union movement. It is interesting that at the same time as that law is being imposed on the trade unions there is a law and order problem relating to illegal underpayment of wages on a fairly large scale. The Department of Employment has the wages inspectorate, which is responsible for policing the system of wages under the wages councils. Of course, we hear that the wages councils are likely to be abolished, because they keep wages too high for workers.

Ms. Clare Short (Birmingham, Ladywood)


Mr. Heffer

I agree with my hon. Friend that that is absolutely shameful.

It is clear that nationally the number of outdoor inspectors was reduced from 177 in May 1979 to 119 in March 1983. In the north-west, the number was reduced by one third, leaving nine outdoor inspectors, supported by six indoor staff. The incidence of illegal underpayment is extremely high on Merseyside, and it is estimated that 55.7 per cent. of those in the industries concerned receive lower wages than they should. If Conservative Members are so keen about law and order, they should use the law to deal with those who do not pay working people proper wages or provide decent conditions, according to the law of the land.

Obviously, I should like to say much more, but many hon. Members wish to speak, and it is not right to take up too much time. However, I must mention the construction industry. Today, the construction committee of the TUC lobbied the House, asking hon. Members to press the Government to ensure that something positive is done to get those 500,000 workers in the construction industry and allied trades back to work as quickly as possible. We should be doing that. The construction industry, which is labour-intensive, can put the workers back to work by putting into operation, for example, the plans of local authorities. It should not be said that there is no need for housing and for people to have decent homes in which to live. Every hon. Member who is honest with himself knows that he has people coming to his surgery saying that they live in overcrowded conditions, cannot afford to buy a house and cannot rent any accommodation. That is certainly true of the large industrial conurbations. It means that positive Government policy is needed to deal with the problem, and that money must be put into the construction industry so that we can begin to rebuild it.

The Labour party has put forward a pamphlet entitled "A Future That Works". I hope that Conservative Members will not just dismiss it as another example of the Labour party putting forward plans that have no reality. These have real reality—[Laughter.] They are the plans that can put our people back to work. Hon. Members may laugh because I used two words wrongly. But it does not matter. I do not give a damn. The fact that I might utter a phrase wrongly here or there does not concern me in the slightest. I am speaking for working people who, under this Government, suffer. I want them, the construction workers and those in my industry to be fully employed. That is what is important to me, not whether someone has made a slight slip in his speech. That is trivial and the sort of thing that happens in Oxford and Cambridge university debates. It is not funny; it is ridiculous.

We must deal with reality, and the reality is that there is mass unemployment and we must begin to put people back to work. I believe that our document forms the basis upon which we can do that. It is the immediate step that needs to be taken.

Conservative Members constantly pick out one person when talking about the miners' dispute, as though he had horns or wanted to undermine our British democratic system and to bring in an east European state. I have had more arguments, and possibly, in a sense, more important arguments, on serious issues within our movement with the leader of the NUM than any Conservative Member has had. But I know that Arthur Scargill speaks for his executive and was elected by his membership. The fact is that the Government are determined to crush the NUM. That is why they brought in MacGregor, who had a record of smashing a section of the mineworkers' union in America. After he had done that, he opened 12 pits, and the workers' wages were reduced and their pension rights were lost. He is trying to do the same thing here. That is why, at great cost to this nation and for a huge transfer fee, the Prime Minister invited him to Britain. I do not know exactly where the NUM is looking for money or why, but, if the union is in that situation, it is because of this Government's policy and legislation. I do not blame those workers.

Incidentally, are hon. Members aware that the Lord Mayor of Dublin instituted a fund for the miners? Would anyone suggest that the Lord Mayor of Dublin is other than an upright and undoubtedly good Catholic politician? The miners are getting money from all sections of working people in every part of the world.

Before we rush in to condemn Arthur Scargill, we should bear in mind that some Conservative Members are doing their best to put the trade union movement back into the position in which it was before the beginning of the century. They will not get away with it. Trade unionists may be pushed back from time to time, but in the end we shall have a free and independent trade union movement. [Interruption.] There is no need to mention Libya. What about Poland? Every hon. Member in this House knows that I have consistently argued for Solidarity. I have consistently argued for a free and independent trade union movement in Poland—[Interruption.]—and in Russia and every east European country. [Interruption.] The trouble with you is that you do not listen to what other people say. You are so prejudiced——

Mr. Speaker


Mr. Heffer

I certainly was not referring to you, Mr. Speaker.

If Conservative Members are so deeply concerned with supporting a free and independent Polish trade union movement, why are the Government importing coal from Poland to use in the fight against our miners who are members of an independent trade union?

6.22 pm
Mr. Peter Thurnham (Bolton, North-East)

I suggest to the hon. Member for Liverpool, Walton (Mr. Heffer) that what we want are responsible trade unions.

The tragic rise in unemployment is the most important reason why I am here, and why I have come into politics. The present level of unemployment is an enormous tragedy which could have been avoided if previous Labour Governments had followed wiser policies. The 364 economists are wrong. It is the inflationary policies of previous Governments that are the principal cause of the present unemployment crisis.

It is hard to remember it now, but unemployment was only 1½ per cent., rising to 2 per cent., when in January 1958 the then Prime Minister, Harold Macmillan, lost his entire Treasury team, including the right hon. Member for South Down (Mr. Powell), because they would not agree to inflate the economy in a vain attempt to hold down unemployment to less than 2 per cent. That was the start of a slippery slope which led to ever-increasing inflation and unemployment.

Now we are faced with over 3 million unemployed, with over 17,000 in my constituency of Bolton. There is a forecast in today's Financial Times of 5 million unemployed in three years' time if world trade peters out. I do not accept that we should tolerate such a possibility. If the forecast proved to be correct, it would mean having more than 30,000 people jobless in Bolton—a rise from 17.4 per cent. on the latest travel-to-work statistics to over 25 per cent. That is a totally unacceptable level. We must act with greater speed and vigour to counter any such threat, so that job opportunities for everyone—including my right hon. Friend and myself—do not peter out in 1987–88.

Being a firm believer in full employment, I have in my inside jacket pocket my copy of Beveridge's 1944 book, "Full Employment in a Free Society". He says that the successful working of a full employment policy depends ultimately on the degree of responsibility with which (union) bargaining is conducted". He goes on to say that the Government's policy must be one of maintaining a stable value of money". We now have a Government with a successful record of restoring the value of money. I regret that, despite not just one, not two, but three trade union Bills, we still have trade unions which act irresponsibly, causing Britain to have more strikes than our international competitors. From 1981 to 1983 Britain averaged nearly 300 days lost in strikes per year per 1,000 workers, compared with only 18 in Japan and only two in Germany. Despite our three trade union Bills, the position today is still unsatisfactory.

On Friday the CBI reported that one in 12 of current pay negotiations now involve strikes or industrial action, compared with only one in 18 two years ago. Management still has to spend too much time dealing with militant unions. A manager in the shipbuilding industry that I met recently said that he had had to spend 80 per cent. of his time dealing with unions when he had no orders left.

We are faced with union militancy not only in the pits but in our car factories, and even in town halls. In Bolton, nursery nurses have been called out on strike by irresponsible leaders of the National and Local Government Officers Association in a futile five-month strike over pay, in which it is the mothers and children—and handicapped children at that—who suffer. Such strikes only destroy jobs. There are five applicants for every vacancy for training courses for nursery nurses. More pay would only mean fewer job opportunities, and fewer places for children in nursery schools.

The results of union militancy can be seen in the woefully inadequate profits of much of British industry. British industry is constantly exhorted to do more training, but the Bank of England's recent report shows that the profitability of most of manufacturing industry is only one third of what it needs to be if industry is to afford proper training. Protected home market sectors such as retailing are profitable enough to afford training because they do not have to face foreign competition.

The results of Japanese electronic companies, published last week, show that there are sufficient worldwide profit opportunties which British companies could take if the Government would act now to cut employers' costs and reduce union pressures.

I call on the Government to consider three points to reduce unemployment, while maintaining their financial policy. First, employers' national insurance contributions should be lightened. I am glad that we have abolished the notorious jobs tax, but we should go further so that the taxes bear less heavily on the low-paid. The present £34 weekly earnings limit should not be the start of a sudden jump in costs. If earnings rise above £34, the NIC should be paid only on the excess and not on the whole. The upper weekly limit of £250 should be abolished. I speak as someone who has built up a business employing more than 500 people in saying that that measure alone would encourage employers to take on lower paid workers and encourage part-time workers to increase their output.

The shortfall in revenue should be made up by a lower level of more broadly based expenditure taxes. The change in taxes from employers to purchasers would help United Kingdom manufacturers to be more competitive, both at home and abroad, while the reduction in industry's costs would offset the imposition of expenditure taxes, so as to leave net prices stable in the shops.

Secondly, the welfare system and the personal tax system should be integrated and the unemployed given every encouragement to start earning. The present £4 earnings disregard is a disincentive and should be changed to a graduated offset. We need not only an enterprise allowance scheme but an earnings allowance scheme, so that the unemployed can seek part-time work as a way back to full-time work. The 300,000 who have been unemployed for over three years should be guaranteed a place on training schemes to help them sensibly re-enter the labour market.

Thirdly, the Government should bring forward further legislation to control the monopoly power of the unions. Must we wait until 1986 for the next trade union Bill? Much more needs to be done. The working miners committee has asked for legislation to enable members of a union to oust union leaders who are breaking union rules. If we are to have true democracy in the unions, the new register of names and addresses should be open to all members and not just to the union hierarchy. Even after 1 November, we should ensure that no one who works during a strike should risk losing his job.

Social security benefits paid to striking union members and their families should be reclaimed from union funds. Why should taxpayers who have to work for a living fund benefits for striking miners, when the National Union of Mineworkers has hidden its millions away? The sequestrators should be looking not for only £200,000, but for millions of pounds to cover the supplementary benefits paid to striking miners. We recently heard on the BBC "Panorama" programme of the mortgage interest payments from the DHSS going direct to the miners. I do not mind miners profiting from the rise in the value of their homes, but not at the expense of other taxpayers.

There should be no-strike agreements throughout industry. If there are no-strike agreements in Japanese factories, surely we could have them in essential services and other industries.

Such measures would lead to a reduction in unemployment of about 500,000, as was estimated by Matthew Symonds in yesterday's the Daily Telegraph. That will provide the profitable conditions in which industry can play its proper part in creating wealth and in training its employees to achieve higher productivity. That will ensure that we never see the day when 5 million are unemployed.

6.30 pm
Mr. Ted Leadbitter (Hartlepool)

During the 20 years that I have been a Member of the House I have not learnt a great deal from debates on unemployment when they have been confined to comparative studies either of time or between regions or countries. No doubt it is an interesting academic exercise, but it does not put bread and butter on the plates of the unemployed. No one outside the House is interested in who did what and why five years ago. The subject of the debate is the social and economic consequences of unemployment today. The House must rid itself of its customary exercise of looking backwards rather than forwards.

All hon. Members have certain things in common. I do not believe that any hon. Member is happy with the social and economic consequences of unemployment. If we genuinely have that in common, we are not assisting what we want to do by making charges against each other. That deprives us of the opportunity to say something real to the country. Whether an hon. Member is a member of the Conservative, Liberal, Social Democratic or any other party, the experiences we face in our surgeries create a response. What is more awful than listening to a woman saying that her husband, sons and daughters are out of work? We have all experienced such families, living off and with each other. That causes frustrations, illnesses and neuroses.

Is it not of some significance that we live in a society that is building law courts and houses for battered wives? Is there not something wrong in the way in which we handle our affairs? It costs £7,000 a year to administer and pay benefits to each person out of work. Is there not something wrong with our national book-keeping? Do we not have the ingenuity to break through the straitjacket of past years and honestly admit that there is something wrong with the way in which we use our resources?

The right hon. Member for Guildford (Mr. Howell) said that he was pleased that the Chancellor did not attempt to produce instant answers to unemployment. He should analyse the position carefully. We complain that unemployment persists, that it has been prolonged and is deeply embedded in our infrastructure. After five years, the Government have failed to convince the country that they have an answer. Indeed, many people believe that they do not want to find an answer. The problem has been faced by all Governments since the war. We have looked for answers, but never quite found them because we have been inhibited by the traditional way of dealing with our resources. If it is more costly to keep a human being idle than in work—and we freely admit that—how do we break the pattern?

Another important question is that of attitude. Does anyone believe that the Chancellor is moved by the despair and anguish of any man, woman or youngster in continuing unemployment, by the hardship and deprivation that that has brought to them and by the fact that they have no prospect of any improvement? The Chancellor may not know it—and I do not wish to accuse him—but he gives the impression that emotion is foreign to him. More than that, he gives the impression that he has a cold disregard for anything that differs from his own rigid reasoning processes. I do not say that as a criticism of the Chancellor. We are all aware of his gifts. He may be satisfied that he is meeting his obligations as a Member of Parliament and as the Chancellor of the Exchequer. Nevertheless, the impression that he conveys causes us concern.

In Hartlepool, 35 per cent. of men are out of work. It is a region of high unemployment. There are certain things that the Government could do to help that region. They should stop insisting on not dealing directly with the problems of unemployment in the regions, and intervene directly. On many occasions my hon. Friend the Member for Easington (Mr. Dormand) has suggested transferring Civil Service offices and jobs to the regions, yet not a single office or job has been transferred since 1979.

The Northern group of Labour Members of Parliament—and I believe Conservative Members also—is anxious that the region should have a development agency. The Government are obviously satisfied with the Scottish and Welsh Development Agencies because they have increased their financial support for them. Our region needs an agency to promote further injections of investment.

I have some proposals to make, each of which is debatable. I believe that we should consider a scrap-and-build policy for the shipbuilding industry. We should have a substantial increase in housebuilding. There should be an investment programme to meet the needs of British Rail. We should avoid the considerable waste of public money already spent on the training of doctors, teachers and nurses and let them work where they are needed. We should provide a substantial programme of energy conservation. We should let the Leeds scheme of combined heat and power and district heating projects go forward. Our North sea oil revenues should be directed more to industrial revival. We should move away from cosmetic occupation schemes that merely postpone for young people the heartbreak that they face at the end of a year or a few months' training. We should establish genuine training programmes to open up real job opportunities.

We should monitor more stringently the abuse of some of the schemes that provide cheap labour. We should encourage local authorities to embark upon a vigorous policy of environmental improvement. We should examine more pertinently early retirement and the shorter working week. Those objectives should be not inhibited by economic argument, but vitalised by political will.

We have a problem in the north-east which causes some anxiety. My hon. Friends the Members for Sunderland, North (Mr. Clay) and for Sunderland, South (Mr. Bagier) are currently interested with the rest of the region's Labour Members in the future of Coles Cranes, a substantial employer. They have now been told by the receiver that there is to be a sell-out to a company called Grove Allan of America. I and my colleagues find that surprising. A considerable consortium was formed to take over this company. It was made up of the local authorities, the county council, the directors of the company and the employees. The Department of Trade and Industry was to inject £ 1 million. We wonder whether the receiver's change of mind will affect the national and local interests of the area. Early-day motion 1047 outlines the points clearly and succinctly. We should like the matter referred to the Office of Fair Trading and the Monopolies and Mergers Commission.

Let us be objective. Let us not look behind. Let us keep our eye on the future.

6.42 pm
Mr. Michael Latham (Rutland and Melton)

I intend this to be one of the briefest speeches in the debate, but it will be no less heartfelt for that.

I believe that unemployment is the gravest social evil facing this country. It is clearly not improving. Indeed, it is becoming worse. Reference has been made to the admirable pamphlet of my hon. Friend the Member for Beckenham (Sir P. Goodhart) called "Jobs Ahead". That title is the only part of the pamphlet with which I disagree. It would be difficult to envisage achieving enough "jobs ahead", although his proposals would undoubtedly help. He made the point that we need to create half a million jobs by the end of this decade simply to stand still—to stand still at 3.2 million. We all know from our constituency experience that we are not standing still.

I believe that it should now be the job of Lord Young—and my right hon. Friend—to use his considerable practical experience and the expertise of his task force to bring forward effective remedies to alleviate those fearful unemployment figures. No option should be discarded without the fullest examination, however often they have been examined in the past. Those in the Cabinet who frame policy should start from the premise that unemployment must be reduced, that there must be a specific plan to do so and time scales within which it should be achieved, that no single domestic activity can be more important, and that it will not be tolerable for the Conservative party, still less for the country, if such reductions are not achieved and if the Government are not seen to put their full weight behind this policy.

In that regard, I ask my right hon. Friends to bear in mind three major considerations. The first is the 1 million-plus adults who have been unemployed for more than a year. That is a giant social evil and completely disruptive of family and personal morale. Secondly, people who become redundant after the age of 55 stand little current chance of obtaining another job. Worse, if they have been thrifty all their working lives and saved over £3,000 they may face literally years of no work, no pension and no supplementary benefit. Such thrifty people have in the past tended to be the natural supporters of the Conservative party. They bitterly resent the "Catch-22 " position of no help when they most need it. We ignore that point at our peril. Thirdly, while doing anything to alleviate unemployment will cost money, so does doing nothing and watching it rise still further.

I favour, as did my hon. Friend the Member for Beckenham, four specific steps, three of which are designed to share jobs better and the fourth to create more. I do not support massive reflationary measures or wasteful make-work schemes.

First, I believe that the job release scheme should be given a major impetus at once. Persons who wish to retire at 62 should be encouraged to do so with the full job release allowance. I understand that some Ministers regard that as non-cost effective, but nothing is less cost-effective than young people being unemployed while persons of 63 have to continue to work when they would prefer to retire. The basis of the scheme is that they should be replaced by someone currently unemployed.

Secondly, I believe that the time has come to override the cost objections to early retirement on full pension. I know that that is expensive, but so are all such changes. The pension age was 70 once and people worked 55 hours a week. When we reduced them, the economy did not collapse.

The speedy rate of technological change suggests that we should act in the summer of 1985—that means at once in legislative terms—to reduce the male pension age to 64 and to try to bring it down to 60 by the end of the decade. There is widespread support for that proposal. I used to resist it in constituency discussions and surgeries on the ground of cost, but I believe that the time to accept it has now come.

Thirdly, work sharing should be pursued much more energetically. That again has a great deal of public backing and Government support, in principle, since the 1982 Budget subsidy for it. How can employers be expected to take it seriously when the Government have done nothing to adopt the scheme within their own employment? We should set a better example and give a stronger lead.

Finally, there are improvement grants. I agree with the hon. Member for Liverpool, Walton (Mr. Heffer) on this. They are the main spheres of construction nowadays which remain heavily labour intensive. I pressed strongly in the House in 1981, with many other hon. Members, for a major programme of improvement grants to help the housing stock, to take the construction industry off the floor and to prevent unemployment. My right hon. and learned Friend the Foreign Secretary, when Chancellor of -the Exchequer, produced an excellent scheme in his 1982 Budget which assisted all those aims. Grants are now much harder to come by. They are dropping off alarmingly in numbers, and there are rumours of further action to reduce them. House improvement received a severe blow from the VAT imposition last March.

I favour a substantial expansion of grants over the next two years, with 90 per cent. ceilings again, but with fairly severe restrictions on rateable value qualifications to prevent unnecessary subsidies to well-off householders.

I believe that the best way to avoid the bureaucratic difficulties which arise for local government because of its financial years, threats of grant penalties, holdbacks, and so on, is to transfer the administration of improvement grants forthwith to the building societies. The value of the work—some £400 million this year—is about the average monthly flow of the societies. As 75 to 90 per cent. of the expenditure is reimbursed by the Government anyway, and as the building societies have now largely taken over mortgage advances—including support lending for inner city areas—from local authorities, they could perfectly well handle the improvement grant programme as agents for the Government, and do so with fewer staffing and bureaucratic traumas than the local authorities have at present.

None of those four proposals is enough to measure up to the scale of the unemployment problem, but they would all help and I believe that they are vital now. The opinion polls and the results of two general elections show that there is a great deal of public support for the Government, but Conservative Members know that their constituents, including their key party supporters, want to see the full weight of the Government placed behind a forceful and urgent programme to reduce unemployment. We look to Ministers to respond urgently and favourably tonight.

6.50 pm
Mr. Ron Leighton (Newham, North-East)

It is a great pleasure to be called after such a thoughtful speech from the Conservative Benches. The hon. Member for Rutland and Melton (Mr. Latham) mentioned four points; I shall mention three.

It is high time that the House, and particularly the Government, took notice of the scourge of unemployment. If I understand them aright, the Government admit no responsibility for unemployment. They say that it has nothing to do with them and that it is not within their power. They virtually wash their hands of the problem and say that it is a matter for the markets to deal with, not the Government. In the debate we might be told whether the Government admit any responsibility for unemployment and have a policy for alleviating it.

Do the Government agree with the Beveridge principle that it should be a matter of public policy to attain a high and stable level of employment? After all, if there is good news, the Government are quite pleased to take credit for it; but if there is bad news on the unemployment front, they say that it is nothing to do with them and that it is not their fault. They did not say such things at election time, for example, in 1979 when they were seeking office. The present Secretary of State for Energy, at Harrow on 17 April 1979, said: The incoming Tory Government must dedicate itself to abolishing unemployment by the creation of a competitive and expanding economy. Many other Ministers, including the Prime Minister, said similar things. Such things were also said in the Queen's Speech in 1979.

We all know that the economy is not expanding. We know that manufacturing output has fallen by about 15 per cent. since 1979. We are importing more manufactured goods than we are exporting. Even with North sea oil we have a huge balance of payments deficit. Therefore, I contend that the Government's record has been a disaster. The deficit on trade is resulting in the export of jobs. That is the Government's main export. The charge against the Government—particularly the Prime Minister—is that they do not care. They do not care that there is unemployment. The proof of that charge is the way in which the right hon. Lady ignores the long-term unemployed.

The corrosive curse of unemployment is the main cause of pain and misery in this country. The middle-aged are being told that they are too old, that they are finished. They are humiliated as they contemplate life on the dole until they reach retirement. The hopes of the young are blighted, and many of them become anti-social. Is that surprising? If society tells them that they are not wanted, why should they want society?

There is no sign from the Government that they are in any way concerned or that they care. I do not think that the Prime Minister really regards unemployment as a problem. I suspect that she thinks of it as a solution. It is a way of weakening the trade unions.

The Government have an incomes policy. It is called unemployment. When the policy of monetarism was introduced, we were told that it would cause unemployment. Everyone admitted that. One Minister told us that unemployment was the proof that the policy was working. It was a necessary consequence, but it would be only temporary. We just had to endure it for a short while and then we would have a leaner and fitter economy that would produce jobs. I think that that is a fair summary of what we were told. Is it not clear that the policy has failed? What we now call Thatcherism has been given an exhaustive real-world test, a laboratory experiment. It is noble of us to offer this country for a laboratory test of Thatcherism. We now know that it does not work.

Unemployment is now three times higher than it was in 1979. We were told then that Labour was not working. What has happened to the promise made by the Secretary of State for Trade and Industry in 1982 that unemployment was "near the plateau", or to the Chancellor's pre-election promise that unemployment would fall this year? Obviously, they were wrong. Unemployment is getting worse.

In 1979, unemployment had been falling for two years. The Labour Government had created more jobs. In March 1974, there were 22,704,000 in employment; in 1979 the figure was 23,087,000. In other words, during the period of office of the Labour Government, when things were not perfect by any manner of means, 383,000 jobs were created. I know that the hon. Member for Horsham (Mr. Hordern) would admit that.

Mrs. Edwina Currie (Derbyshire, South)

Will the hon. Gentleman give way?

Mr. Leighton

I would prefer to continue because——

Mrs. Currie


Mr. Leighton

I do not want to take time from other Back-Bench speakers.

The truth is, as the hon. Lady will know, that the figures for June this year show that there are 20,889,000 in employment. Therefore, the Government have destroyed 2,198,000 jobs. Surely that is an appalling record——

Mrs. Currie

Will the hon. Gentleman give way?

Mr. Leighton

It is an indictment of the Government.

Mrs. Currie


Mr. Speaker


Mr. Leighton

It would help if there were some contrition on the Treasury Bench. I welcome to the Treasury Bench the new Parliamentary Under-Secretary of State for Employment, the hon. Member for Eltham (Mr. Bottornley). I hope that he will show some contrition and understanding. He has a reputation in the House for showing some human understanding. I hope that he will realise that there can be no sense of nationhood, of one people, in this country if a substantial section is ignored by the rest, shut out of society and left to rot on the dole. It must be understood that that will damage the fabric and cohesion of society.

The House cannot tolerate that situation. There must: be a new approach. The Government must attempt to think new thoughts because unemployment will not be short-term. One thing is for sure: it will last for the lifetime of the Government. While the Government exist, there will be mass unemployment. No one on either side of the Chamber can say that unemployment is the fault of the unemployed. Whatever the cause—whether the Government's policies or other factors—no one can blame the nearly 4 million people who are unemployed. Something must be done. Parliament must show that it cares. If, as I believe, this is a national emergency, emergency action must be taken. I make three suggestions.

First, the present youth training scheme is utterly inadequate. More successful competitor nations provide a far better system of education and vocational training. In Germany and the United States, young people enter the labour market at the age of 18. In Japan, they enter the labour market at the age of 20. We should do something similar. We should improve and upgrade the youth training scheme to make it a two-year course, taking people to the age of 18 and paying a realistic allowance.

Secondly, there should be a vast expansion of the community programme—the MSC's only really popular programme. With 4 million unemployed, that scheme takes a mere 160,000. It scarcely scratches the surface of the problem. Yet there is plenty of work to be done. It is absurd to suggest that nothing needs doing. I invite the new Minister to visit my constituency—indeed, the situation may be similar in his own—where a large part of the housing stock is 100 years old and falling into disrepair. As my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) said, it is absurd that hundreds of thousands of building workers are unemployed when our housing stock is falling into disrepair. We have unused resources, skills and people, and vast unmet needs, both public and private. Is it really beyond the wit of our society, of Parliament, or even of the Government, to put the two together? We already have a community programme. Let us build upon that.

Thirdly, the most worrying aspect of all is the relentless growth in the number of long-term unemployed. They now account for 40 per cent. of the unemployed—about 1,250,000. The prime injustice is that these unfortunate victims of the Government's policy or of the situation, however one cares to put it, are actually discriminated against. They are the only long-term claimants on short-term benefit. That cannot possibly be right. An increasing number have now been unemployed not just for more than a year but for two or three years. However long they remain unemployed, they cannot claim long-term benefit. This group suffers the greatest hardship, because, after a family has been without wages for a year or more, clothes, boots and shoes and household consumer durables begin to wear out and cannot be replaced. The families of the long-term unemployed are vulnerable not just to poverty, but to the transmission of deprivation across the generations. The children suffer and their life chances in turn are affected. The House should give serious attention to that.

Research shows that the living standards of the long-term unemployed are worse than those of the short-term unemployed and that the living standards of both are worse than those of the lowest paid in work. It is harder to exist for a long time on a low income than for a short time on a high income. That may seem to be stating the obvious, but the situation is the more absurd in that the Government have already exempted the unemployed over the age of 60 from this regime. If the over-60s come off the register, they receive the long-term benefit.

Why have the Government refused this elementary claim of justice to give long-term benefit to the long-term unemployed? The Secretary of State will no doubt say that it is because of the cost. If there is some other reason, perhaps he will explain it. The cost is about £500 million. If cost is the Government's only reason for refusing justice, that is shameful. If the Government cannot or will not act to prevent long-term employment increasing, they have a duty to ease the awful burden borne by the people involved.

The situation is the more intolerable in that the Government are now taxing unemployment benefit. The Secretary of State will correct me if I am wrong, but I believe that this year taxation of unemployment benefit will raise about £725 million. When he appeared before the Select Committee, he could not answer the question, but no doubt he can now confirm that that is the revenue that the Government will obtain through taxing unemployment benefit for the first time. The Secretary of State, or at any rate the Chancellor, will thus have £725 million that he did not have before. What is wrong with using a fraction of that money to give elementary justice to the long-term unemployed? I will gladly give way if the Secretary of State will explain his policy on this. If not, perhaps he will answer the question at the end of the debate. Certainly I believe that the taxation will yield more than enough to cover the modest concession that I advocate. It is the least that the Government can do to help those suffering the greatest hardship with the smallest resources. We may have to call the Secretary of State before the Select Committee again. I hope, however, that he will give us an answer in the Chamber today, because the long-term unemployed cannot wait much longer. If there is a test of whether the Government care, this is it. If they cannot do this, it will confirm how callous and uncaring they are.

7.8 pm

Mr. Ralph Howell (Norfolk, North)

Like many others who have spoken, I believe that unemployment is the most serious problem facing this country and, indeed, the Western world. If we do not find a solution, I believe that democracy will be in great danger.

My right hon. Friend the Chancellor was correct to say in a recent television broadcast that he now accepted that unemployment would remain high for some time. That is realism, and it is an important move, because we had been deceiving ourselves that unemployment would fall. We must recognise the seriousness of the problem from the outset.

I agree with my right hon. Friend the Chancellor, too, when he says that unemployment has been rising for decades. It began to rise slowly in the 1950s and it has been rising more rapidly in the past 10 years. The House has not really addressed itself to the reason for the problem. In my view, it has nothing to do with the present Government or the Labour Government. Every gadget, every piece of modern technology, is designed to save labour. That is why the problem has arisen, and why it will continue. It is foolish for the two sides of the House to continue to blame each other for the level of unemployment. Technology is the cause of unemployment in the Western world.

However, I disagree with the Chancellor when he said in the interview that there was no solution to the problem. There is a solution. It is work fare. It has been practised in some states in America. If we had put the Beveridge report into operation, we would have work fare in this country now. There would be no long-term unemployed, because after six months unemployment benefit would cease and work would be offered. Beveridge foresaw all the problems that would develop if we did not institute that measure. All hon. Members should re-read his report, especially pages 130 and 131.

If the Beveridge report had been put into operation in full, we would not have jobcentres. They have not achieved very much. Indeed, ever since we have had them unemployment has increased. We would have work centres instead. Fewer than 1 million people would be unemployed under the six-month rule. He said that that period might be reduced at times of economic difficulty. If we operated a limit of three months, there would be fewer than 500,000 unemployed.

Beveridge also said that young people should never leave school immediately to join the dole queue and that there should be an overall system of training for them. We must take that on board. If it is right to have compulsory education, it is equally sensible to have compulsory training. Despite what the Government have tried to do with such measures as the youth training scheme, the scheme is successful only in those areas where young people, or their parents, are properly motivated. There are areas where young people are locked into idleness and do not take advantage of the voluntary youth training scheme. I urge the Government to rethink the problem radically.

To that end, some of my friends outside the House and I have established the Employment Research Centre at the University of Buckingham. Although I think that I know the answer to the problem, the centre is designed to examine the entire spectrum and find solutions to the overriding problem of unemployment. We are currently researching into the methods used in Switzerland, where there has been less than 1 per cent. unemployment since 1950. It would be a good thing if the Government took advantage of the facilities set up by the Employment Research Centre to find an answer to this major problem.

I listened to the contributions from the main political parties, none of which had anything fresh to offer. It is time that we found a new answer. There could he an answer if only we would take up the idea of work fare. As the hon. Member for Newham, North-East (Mr. Leighton) said, there is plenty of work to be done, it is staring us in the face, the country is getting scruffier and scruffier, and work could be offered to all the unemployed for less money than we are throwing at the problem now. I urge the Government to consider radical steps to solve the problem of unemployment.

7.14 pm
Mr. Gordon Wilson (Dundee, East)

If it had not been for the unfortunate and tragic events at Brighton, the subject of unemployment might have been treated with greater seriousness by the Government. Over the past seven or eight years one of the strange paradoxes of political life has been that unemployment has not seemed to have the political punch that many people believed it might have had. One cause may be that unemployment has, until recently, been concentrated on certain areas and has tended to breed a degree of passivity caused by depression. We must address the subject with more seriousness and ingenuity than we have in the past.

The House must accept that the British economy has been declining, that there is an imbalance in relation to manufactured products and that the protection, albeit temporary, given by the substantial production of oil from the North sea is about to be breached. Regardless of the volume of oil produced, if in future the balance of payments moves totally into the red, there will be a tax on the currency and instability in the economy such as we have not experienced since 1976. The problem of efficiency must be dealt with.

One reason why I was depressed by the Chancellor's contribution to the debate was that he did not appear to have listened to and understood the clear cries for help from many communities. Over the past quarter of a century my constituency has been ravaged by both unemployment and emigration. A test of the effectiveness of an economy is whether a country can maintain and expand its population. Between 1971 and 1981, when it was hoped that Scotland would gain great advantages from North sea oil, there was a net outflow of 100,000 people from Scotland. In 1983 the figure was 15,000, and it is estimated in the latest figures that by 2021 there will be a loss of 350,000 people. That is a scandal. I do not wish to repeat my arguments about where the guilt lies. I tend to place the guilt, and rightly so, not just on both major parties, but on the Union which affects the way in which economic policy is applied in Scotland.

In Dundee there is one vacancy for every 14 people unemployed. Between 1979 and 1983 we lost 24 manufacturing firms, 24 service industry firms and six construction firms. Although we have had some better and more encouraging news for the city recently, a great amount of activity needs to be created to replace those lost jobs.

It is clear from current reports that the climate for the Scottish economy is poor. Unlike the United Kingdom as a whole, which has experienced an upturn during the past two years, the Scottish economy does not seem to have recovered from the depression with the same speed. People are worried about a slowing down in the construction industry and further loss of employment.

It is a pity that the Government have not suggested any proposals which might change what has been happening during the past five years. I am especially worried that, at a time when we are beginning to admit that unemployment is a serious malaise which affects the whole of the United Kingdom, the Government are on the point of making changes in industrial regional aid which could be harmful to Scotland. In an excellent article in The Scotsman, on 3 October, Alf Young points out that already a substantial amount of regional aid is going to the south of England under section 8 of the Industrial Development Act 1932, whereas under section 7 the sums coming to Scotland have declined sharply. The policy might be institutionalised when the Department of Trade and Industry makes its long-awaited and long-feared announcement.

I pay tribute to the hon. Member for Dunfermline, East (Mr. Brown), who spotlighted some of the fears that arise, and congratulate him, as a Labour Member, on hav ing spoken out. I am horrified by the silence that seems to have developed in the Scottish community during the past six months, for we know that behind the scenes in Cabinet Sub-Committees decisions have been taken that will be extremely damaging to Scotland. Any strategy relating to electronics, or other industries, that may have put a salve on some of the gaping wounds would be shattered completely by the removal of the regional development grants.

The Leader of the Opposition mentioned oil revenues, but he underestimated them. He put the revenue at about £10 billion, but it is expected to be more than £11.5 billion this year. In Scottish terms, for every £50 that we give in revenue from oil produced off the Scottish coast, only £1 comes back in industrial development grants, and, if the Government had their way, it might be reduced to 60p.

Scotland has severe unemployment problems. Despite all the optimism and the economic necromancy that seems to be practised by the Treasury, there is no recovery. Scotland is not leading the United Kingdom out of recession—indeed, it might be dragging its feet. Nor is it any comfort to us to be told that other parts of the United Kingdom suffer from increased unemployment. The Scottish National party will not accept that as the yardstick by which Scottish industrial aid should be cut.

If the problem in other areas is becoming worse, there must be change in macro-economic policy, which I would recommend, and there should be an increase in the amount of money made available for industrial development. I am talking not just about the attraction of industry from overseas, although we are in competition internationally, but about small engineering firms being given the means to get rid of old-fashioned machinery and to introduce computerised numerically controlled machines, which will provide greater flexibility and efficiency and allow those firms to expand or simply to remain in business, which is the objective of many these days.

Both in Scottish and United Kingdom terms, much more emphasis must be placed by the Government on exporting. In the 1940s, 1950s and even into the 1960s, we heard the phrase, "Export or die". If one considers that the United Kingdom's increase in exports during a five-year period is a miserable 4 per cent., and that during that time—even in a period of recession—exports from the Netherlands increased by 13 per cent., from Sweden by 24 per cent. and from Japan by 37 per cent., to take just a few figures, Britain is lagging far behind.

If we can sell more abroad, we shall automatically create more jobs here. That is why the SNP says—we are willing to accept ideas from other parties as well—that an export unit should be set up in Scotland so that we encourage small and middle-sized firms to become involved in exporting. The multinational companies in Scotland—especially the whisky industry—know how to sell, although the whisky industry has suffered because of changes in fashion in recent years. The small firms do not know how to become involved in exporting and they fear the jungle of shipping forms that are beyond their understanding.

The Scottish National party firmly believes that the Scottish economy will improve only when we have our own Government in full charge of economic policy. Nevertheless, I must tell this Government that they should take on board the greater importance of curing unemployment and put much more effort into exporting. If they do something to encourage an expansion of demand at home, and combine it with selling goods abroad—the decline in the value of the currency should help in that direction—they may be able to make some impression on the statistics of unemployment, which each of us knows represent individuals who must suffer conditions that each of us would not wish upon himself or his family.

7.25 pm
Mr. Piers Merchant (Newcastle upon Tyne, Central)

In my constituency there is a polling district where unemployment reaches 50 per cent. so I know from personal contact the misery that flows from unemployment. In Newcastle, unemployment is 18 per cent.; in the county it is nearer 19 per cent.; and the entire north-east region is racked by high unemployment and the structural decline that is an underlying cause of it.

The burden of high unemployment has become intolerable, leaving an area devastated industrially, but far worse, an area where thousands of people are without hope and where families live at clearly lower standards than they did a decade ago. Unemployment drains the area of public wealth and brings behind this regional tragedy a wake of wasted human resources, environmental decay, disorder, lawlessness and despair.

What those thousands of people want is not a debate to lay blame, but action to end their misery. However, it would be facile not to observe that the process of growing unemployment has continued for two decades; that the structural decline of heavy industry is not the result of Government policy but the inevitable result of world and regional economic factors, and is a phenomenon witnessed under Labour and Conservative Governments alike; that nothing was done to halt the process—indeed, it speeded up under the Labour Government; and that an area overwhelmingly represented by Labour Members of Parliament and Labour councils has shown no prospect of growth under their stewardship. The Opposition Members who represent the north-east have done precious little, and have little to show for their unrealistic policies and even more incoherent rhetoric.

The people of my constituency and the Northern region understood that the first priority in the battle against decline, and thus rising unemployment, was the control of inflation. Therefore, they were prepared to accept recession in order to halt inflation. That was achieved, and the Government were applauded for it, as the results of the general election in the north-east demonstrated. However, job creation must now be placed at the top of the political agenda and must be directed especially at depressed areas, not just for economic but for social reasons.

Job creation can be achieved without reversing or abandoning our long-term or short-term economic strategies. There need be no heresy in a limited and directed pump-priming of the economy by placing some Government capital orders, which are needed in any case, in a way that will benefit depressed areas. I refer to such projects in my region as rail electrification, which has already begun with an announcement on the electrification of the east coast line, and which is warmly welcomed in the region. New power stations will clearly be needed as the economy grows, and orders would benefit the large firms involved in power station manufacture, such as Northern Engineering Industries in Newcastle. A major road-building programme is needed in the north-east; the Government could provide defence orders for the shipyards; and we need major construction projects, as the hon. Member for Liverpool, Walton (Mr. Heffer) rightly said.

My proposals do not mean the invention of work simply to create jobs, but would be a sensible use of ordering policy to sustain and expand jobs where they are badly needed. This is practical support. We do not need new structures or new bureaucracies such as a northern development agency.

The hon. Member for Hartlepool (Mr. Leadbitter) seemed to think that he had the support of northern Conservative Members when he said that his group supported a northern development agency. He believed that we did as well. We do not support such an agency. Instead, we support practical help, but not new structures of government, either regionally or nationally, which are supposed to help but would not.

Mr. Nicholas Brown (Newcastle upon Tyne, East)

Does the Conservative party support the creation of a new regional industrial executive designed to draw together the regional TUC, the CBI and others with an interest in the development of the Northern region's economy? Is he able to support that?

Mr. Merchant

I know that some discussions have taken place about the setting up of such a structure, but I have not been informed of the progress in detail. Indeed, neither I nor my colleagues in the region have received sufficient information to form a clear opinion about whether such a project would be a viable and good operation. That can certainly be considered, but at this stage at least it does not have my support.

In any case Government can do only a certain amount. We also need new investment. On that note I welcome yesterday's decision by the Grove Allan company of the United States to buy the Coles Crane company of Sunderland. That substantial United States investment will save 1,000 jobs. It beats me why Opposition Members have condemned that. By opposing it, they are threatening a formula which has saved jobs and brought investment. In fact, they are perpetuating an image which in the past has harmed the region so much.

New investment can come only if the area is seen to be attractive, and investment should be attracted from anywhere and everywhere. Nothing could make it less attractive than the bitter, outdated 1920s image of the region, beloved and perpetuated by so many Labour Members. Their reaction to the Grove purchase is typical.

In the light of what the hon. Member for Hartlepool said, let us be quite clear what we are talking about, because it clearly illustrates a common idiosyncrasy displayed by Labour Members. Two options existed. The first was that a booming and successful American crane company would buy up a failed British company which has just made 1,000 men redundant. It would thereby create a company ready to seize massive export opportunities and which would become a full part of a powerful international company with ready access to world markets. By doing so, it would guarantee a long-term future for the jobs involved and for the plant that already exists.

Option 2 is a so-called management buy-out, sustained only by £3 million of public money that has been pledged towards the project. That money is effectively being hijacked through rates and high taxation from profitable companies in the region and elsewhere. It is a co-operative which at this stage has little credibility and no proven track record as a company and which is probably too small to compete effectively in world markets.

Given those two options, one would automatically have thought that the better choice would have been the first, but instead Labour Members appear to have gone for the second—a madness which will put another completely unnecessary burden of £3 million on the taxpayers and ratepayers of the region.

High rates are another major disincentive to genuine job creation. If my hon. Friends want to see the effect which high rates have on jobs, they should look at the sterile economy of Tyneside and at the level of rates there, particularly in Newcastle upon Tyne, which in 1983–84 raised the highest rates anywhere in the country.

The other major policy sustaining high unemployment is that contributed mainly by the trade union movement—the inflexibility and immobility imposed on the labour market by the trade unions. Thousands of jobs in the north have been lost because of the selfishness of those trade unionists in work who have used their industrial muscle to force through high wage rises even today, the direct effect of which has been major job losses elsewhere.

Mr. Nicholas Brown

Will the hon. Gentleman give a couple of examples of that, particularly in Newcastle or the Northern region? I believe that what he has said about trade union involvement in the region is wholly wrong.

Mr. Merchant

I take it that the hon. Gentleman intends me to give examples of loss of jobs through high rates—[HON. MEMBERS: "No, high wages."] In that case——

Mr. Tony Baldry (Banbury)

Perhaps I can give my hon. Friend an example. Have not the mine unions in the United States accepted a pay increase over the next 39 months which averages out at 3 per cent. a year, whereas in this country the NUM has rejected a pay increase of 5.2 per cent? Therefore, it is not surprising that American coal is much more competitive than British coal. That is but one example of the way in which trade union intransigence is pricing British commodities out of world markets.

Mr. Merchant

I am grateful to my hon. Friend. That is indeed the case. Another example in Newcastle is the present strike at the DHSS complex which is directly linked to this issue.

Mr. Nicholas Brown

With the greatest respect, my question arose directly from what the right hon. Gentleman said—that trade union bargaining and the use of trade union power in the north-east had driven up wages and created unemploymemt. I asked the hon. Gentleman for an example of that in Newcastle upon Tyne, because it has not.

Mr. Merchant

I do not intend to detain the House by giving a whole series of examples. However, I shall give the hon. Gentleman an excellent example from the heart of his own constituency. Time after time in the last 10 years in the Northern Engineering Industries company there have been examples of high wage demands which were eventually granted by the company but swiftly followed by a pruning of the labour force as it struggled to keep its wages bill down. I do not know why Labour Members are asking for examples, because the logic is so clear.

This is the "I'm all right, Jack" attitude of such trade unionists. It may be perfectly familiar, but Opposition Members would do well to reflect on the fact that every time they support another wild and unrestrained pay battle they are supporting a move which will directly throw others on to the dole. Instead of blaming my right hon. Friend the Chancellor, they would do well to look at their own friends.

Anyone who pretends that he will sweep away unemployment overnight must live in a fantasy world. Conversely, anyone who believes that nothing can be done, or that salvation lies simply with rigid economic theory, is equally wrong. That is why tonight I ask my right hon. Friend to remain consistent with his policies but also to remain flexible and, above all, to follow sympathy with action which demonstrates that sympathy.

7.39 pm
Mr. Terry Patchett (Barnsley, East)

I am grateful for this opportunity to participate in the debate. I promise that I shall not make a long contribution. I have heard many long speeches on unemployment from the Conservative Benches, and we are all aware of the result.

The Government are more interested in finding ploys to disguise the unemployment problem than they are in facing it. I have in mind their revamping of the statistics and the method by which they are arrived at. The Government are happy with the publicity about other industrial problems, which has deliberately been prolonged to keep public attention away from the country's most serious problem and the Government's failure to deal with it.

Regardless of oratory in the House or of the Government's election pledges, the facts are there for all to see. The Government were elected on the promise that reducing inflation would result in a drop in unemployment. They must now accept that although inflation has been reduced unemployment has risen. Surely that is a clear sign of the failure of the Government's employment policies.

Many excuses have been made by Conservative Members, including the traditional Tory excuse, which now unfortunately is being repeated, that wages are too high. The Government would take great delight in reestablishing child labour as a cheap labour force for their friends and supporters in industry. The Government's mania for low wages is, I believe, the real reason for the slow recovery of British industry from the recession. The Government are happy with high unemployment levels, because they bring fear to those in work and present the ideal opportunity for the Government to weaken trade union influence. The Government make no secret of that.

I put it to the Government that their friends in private industry have failed them. A heavy profit incentive holds no loyalty or patriotism. Various regional policies have been misused. I refer to assistance with rates and so on. Firms flit in and out of the regions as the benefits start and finish. Accountants find ways of getting European assistance which appears merely to contribute to their profits. That does not take into account the youth training scheme, which in many instances has cut labour costs.

In parts of my constituency, for example in the Dearne area of the Barnsley metropolitan authority, in mining villages such as Goldthorpe, unemployment figures are already high and 124 people are seeking every available job. The Government must understand the grave concern in my constituency. I have not yet taken into account the Government's energy policy, which supports the National Coal Board's closure programme to put four pits in the area at risk.

When the Government realise the evil that they have created, they will understand the strong feelings of miners in my constituency who are attempting to safeguard future employment for their children.

I could continue, but I shall conclude so that other hon. Members might have the opportunity to speak out against unemployment as it affects their constituents.

I await anxiously the Government's response to the debate. What justification is there for the Government's policies on unemployment? They must know that their policies are an abysmal failure. I call upon them to consider the alternatives suggested today from the Opposition Benches.

7.43 pm
Mr. J. F. Pawsey (Rugby and Kenilworth)

I agree with the hon. Member for Barnsley, East (Mr. Patchett) in his criticism of regional policy and when he says that firms are flitting in and out of the regions.

I am sorry that the hon. Member for Newham, North-East (Mr. Leighton) is not in the Chamber, because his attack on the Government was completely unjustified. I contrasted what he said with the thoughtful comments of the hon. Member for Hartlepool (Mr. Leadbitter). He said that no one in the House wanted unemployment and that it was a problem that had faced all Governments since the war.

I shall identify the three principal reasons for unemployment. The first is the world recession, the second the new industrial revolution and the third the lack of competitiveness in the United Kingdom.

Between 1972 and 1982 oil prices increased sixteenfold. That single basic fact fuelled the world recession. Most countries in western Europe and in the West generally are suffering from the scourge of unemployment.

The new industrial revolution is based on the microchip, computers, information technology, robotics and plastics. That matter was dealt with well by my hon. Friend the Member for Norfolk, North (Mr. Howell). He was right to stress that machines are taking over and that there will be fewer unskilled jobs. The items to which I have referred will be in the vanguard of the new industrial revolution. The old metal industries which served the nation so well are in decline. One set of figures illustrates the decline—the figures for the steel industry.

Steel production in 1970 was 27.7 million tonnes. By 1983 it had been reduced by almost half to 14.9 million tonnes. That is just one example of the new industrial revolution. It shows that we are moving from the old methods to new technology. We are living in a period of rapid change, of painful adjustment, and considerable resentment is generated. All this is understandable because the old skills are no longer required. The old labour-intensive industries are clearly in decline. Everywhere the new technology advances and the old technology is in retreat.

We have to face the lack of competitiveness in the United Kingdom. For example, the motor cycle industry was once a major employer, but now the only motor cycles produced in the United Kingdom are intended for the museums. That is the problem. The motor industry itself is in decline. In 1970, 1,367,000 cars were produced. By 1983, production had shrunk to 870,000. That illustrates the magnitude of the problem of competitiveness.

Some of the nation's industries and factories are frankly uncompetitive. It may be useful to examine some of the reasons for that. There is too much Government interference. The motor industry was bedevilled by purchase tax changes. Purchase tax was used as a regulator, to the motor industry's disadvantage.

Regional policy does not create jobs. All that it does is shuffle them around. It is a type of musical chairs played with jobs and people. Linwood is the best illustration of the failure of regional policy. Rootes, based in my constituency, built a new factory at Linwood which did not survive. It did not create real jobs. That weakened the parent company situated outside Coventry in my constituency.

Mr. Allen Adams (Paisley, North)

The investment at Linwood was originally £20 million. To compete effectively in the motor industry at that time required an investment of about £100 million. The problems reflect the lack of trust that British investors have in Britain. In the Clyde valley the shipbuilding industry also declined. Yet there was a shipbuilding boom after the war, from which people made millions of pounds, but they did not reinvest in British factories. They exported the money abroad, and the factories and shipyards on the Clyde could not compete.

Mr. Pawsey

The hon. Gentleman has raised several topics and he will forgive me if I do not pursue them all. How can one have a production line that is 500 miles long, which is the distance between Linwood and Coventry? That is why it failed. Moreover, the components industry is centred on the midlands, not Scotland. Another factor was the poor labour relations at Linwood. The hon. Gentleman must take all those issues into account when he argues any case for Linwood.

Mr. George Park (Coventry, North-East)

I am surprised at the hon. Gentleman. He should not say that the failure was caused because Linwood was 500 miles from Coventry. Let me put him right. The equipment on which Linwood was asked to produce cars had already been worn out in Coventry. I know that because I worked on it. The men were asked to make bricks without straw. Please accept that from me.

Mr. Pawsey

I recognise the hon. Gentleman's expertise—he was a convenor at the Rootes group, which provided the Linwood factory—but he will agree with me that if that factory had been built alongside the one at Ryton it would still be functioning today and his constituents and mine would have additional work. I doubt whether he will argue with that.

Other examples of Government interference are health and safety at work legislation, job protection legislation, and the former selective employment tax. Those are the ways in which the Government grossly interfered with industry.

I return to the point made by the hon. Member for Coventry, North-East (Mr. Park). There was too little investment, but the reason for that was the high rate of company taxation. Companies could not generate profit to re-engineer themselves.

Moreover, there was too much trade union bloodymindedness—a point well made by my hon. Friend the Member for Bolton, North-East (Mr. Thurnham). We all know about the strikes and overmanning and the outdated methods that the unions insisted on retaining. We know the figures for the days lost in strikes, but I shall repeat them for the benefit of the House. In 1950, Britain lost over 1 million days in strikes. By 1970, it was almost 11 million days. By 1980, it was almost 12 million days. From January to September 1984—less than a year—almost 16 million days were lost in strikes.

Mr. David Winnick (Walsall, North)

There was the miners' strike at that time.

Mr. Pawsey

My attention is drawn to the miners' strike. If ever there was a good example of a political, bloody-minded strike, it is that. Those are the problems that industry has to face.

Another reason for the lack of competitiveness in the United Kingdom was touched on by my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Merchant) when he referred to wages. It is a fact that wages in the United Kingdom went up by 2 per cent. per annum—faster than in Germany and France—between 1960 and 1980. There was a fivefold increase in wages between 1960 and 1980. But during the same period productivity rose half as fast as that of our major competitors. That is part of the problem.

Mr. Gordon Brown (Dunfermline, East)


Mr. Pawsey

No, I shall not give way.

I do not support the call from the Opposition Benches for major Government spending. The right hon. Member for Cardiff, South and Penarth (Mr. Callaghan) said that we cannot spend our way out of a recession. That is a lesson that some Labour Members have evidently learnt, but it would be good to hear more of such views coining from the Opposition Benches. Spending on sewers does not create long-term jobs, which the Leader of the Opposition was trying to argue. Spending on capital programmes must be paid for out of taxes which are paid by companies which are fighting for survival. Funds are raised by borrowing, with the penalty of higher inflation and higher interest rates. In the long term the spend, spend policy costs, not creates, jobs.

Let me give the House some of my solution:3 to unemployment. I hope that my hon. Friend the Minister will take note of at least my first point. We should amend section 8 of the Employment Act 1980 so that its conditions will apply to companies employing 50, not 20, people. That would undoubtedly help the small firms to take on additional labour. Many small companies do not have the professional expertise locked into them and they are worried that, having taken on additional labour, they may later face problems and have to shed that labour.

We should be encouraging more early retirement. The points made by my hon. Friend the Member for Rutland and Melton (Mr. Latham) were particularly well made. I agree with every word that he said. He argued that we should be increasing the funding available for early job release and that we should be going back to the old system of job release where men could retire between the ages of 62 and 64. That is much more sensible than the present situation.

We should reintroduce the small engineering firms investment scheme. That did much for engineering companies, and assisted them to buy new machine tools. It meant that their productivity increased and that they were more competitive. The sooner we reintroduce it, the better.

We should re-rate industry and discount the industrial rate by 50 per cent. I appreciate that that would be an expensive step. According to a parliamentary answer that I received last week, it would cost about £1 billion, but that could be partly funded by money from regional aid. Regional aid currently costs £715 million. It would be far better to help industry by moving some of that £715 million to halve rating for industry. Those measures would all help to set industry back on its feet and to create real jobs.

Finally, I ask my hon. Friend the Minister to persuade as many members of the British public as he can reach to be as chauvinistic as the French and to think British and buy British goods, certainly where they are as good as comparable goods from abroad.

Mr. Gordon Brown


Mr. Pawsey

No, I shall not give way.

Furthermore, we should step up labelling regulations so that one can see at a glance the country of origin of any item that one is thinking of buying. If British industry secured just 1 per cent. extra of the home market, that would mean an additional 80,000 jobs. That is the scale of the problem before us, and that is the scale of the challenge that I ask my hon. Friend to take up.

I support Government action on training, particularly the youth training scheme. It was recently announced, at the Conservative party conference in Brighton, that we are now spending four times as much on adult training as in 1979 and that, not content with that, it is to be doubled next year. That is clearly good news, and I welcome it.

Conservative Members are concerned about unemployment. We deplore it just as much as anybody sitting on the Opposition Benches. We understand the misery of unemployment just as much as they do. We have surgeries in which we see our constituents, and therefore we clearly understand the problems. But it must be remembered that unemployment did not start in 1979. The Government are taking positive action, but real jobs come from industry, not from the Government. Unless that is understood, unemployment will continue to rise.

7.59 pm
Mr. George Park (Coventry, North-East)

I am glad of the opportunity to follow the hon. Member for Rugby and Kenilworth (Mr. Pawsey) as he was guilty of giving us some of the formula replies. The first is strikes. Such an apportionment of blame falls easily from the lips of Conservative Members but, to show that they should examine the matter more closely, I ask the hon. Gentleman to make inquiries at the factory that he talked about. He will discover that, for the five years during which I was the senior convenor, there was not one strike. He should have a thought before blindly blaming strikes for unemployment. They are much more rare than would be imagined from listening to the Government's supporters.

Mr. Pawsey

Has the hon. Gentleman seen today's issue of The Times which says of a car strike call: leaders of 28,000 Austin Rover car workers rejected an improved pay offer and urged their members to strike from Monday."?

Mr. Park

I thought that the hon. Gentleman might raise that one. Perhaps I might remind him of a statement made by a previous secretary of the National Union of Railwaymen. It was typically blunt and offended many people. He said that if the Government believed in the philosophy of the pig trough they must not be surprised if the workers wanted to get their snouts in the trough as well.

I welcome the opportunity to speak about unemployment in the heart of England. It took some time to convince the House that we are not in a little dip out of which we will climb quickly but that we are in deep structural trouble. In case anyone still harbours such notions, I should like to draw attention to the fact that, in the county of West Midlands, unemployment increased by 11,000 to 225,000 between August and September this year. At 17 per cent., that is 3.5 per cent. above the national average. Job vacancies fall, redundancies continue and time out of work increases from one year to three years and beyond. In parts of my constituency, unemployment is as high as 35 per cent., in spite of falling wage levels. To walk around my constituency and to see factories that once gave employment to thousands reduced to rubble is like walking around Coventry after the blitz, but this time it is the result not of bombs but of Government economic policy, which is not concerned with the social consequences.

In every recession, one of the first casualties is training for skill. It is the seedcorn of the future, yet apprenticeships have been slashed. As we heard on Friday, thousands of young people with qualifications have been denied entry to higher and further education, and universities such as Aston in Birmingham have had their grants from the University Grants Committee cut by nearly 40 per cent. in the past four years. Lanchester polytechnic in Coventry has been told that it must have fewer lecturers. It estimates that it needs £3.5 million for developments that it has in hand but, because of Government policy, the local authority can allocate less than £1 million. The skills shortages committee, which is chaired by the Minister who has responsibility for the west midlands, agreed that there is a shortage of thousands of graduates in information technology. Hundreds of places on Manpower Services Commission schemes in the west midlands have been cut. It is no surprise, therefore, that employers are now saying that they cannot get people with the requisite skills.

Coventry and West Midlands county have taken many initiatives in the search for jobs, but 500 jobs in small businesses make little impact when we have lost 20 times that number from major factories.

Mr. Winnick

I am aware of the devastation in many parts of the west midlands. Does my hon. Friend agree that all the publicity that surrounded the appointment of the Under-Secretary of State for Trade and Industry as the so-called Minister for the west midlands has not produced any jobs? During the two years of his new appointment, unemployment has continued substantially to increase in the area. Was not his appointment just a gimmick?

Mr. Park

As I said, just from August to September 11,000 more people became unemployed in my area. I have some sympathy for the Minister with responsibility for the west midlands, as he has been asked to make bricks without straw. He has no money. What money have the Government given him to take initiatives? Such initiatives as he has been able to take have had to be assisted by chambers of commerce and local authorities.

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

The hon. Gentleman said that MSC schemes—the youth training scheme and adult training schemes—have been slashed in the west midlands. Can he give some evidence of that?

Mr. Park

The evidence that I have been given shows that we have lost 745 places in the MSC's TOPS shops scheme.

Mr. Morrison

The what scheme?

Mr. Park

TOPS shops.

Mr. Morrison

Does the hon. Gentleman mean TOPS?

Mr. Park

Yes. Does the Minister not know the names of schemes? If the figures that I have given are wrong, they are wrong.

In addition to the lack of initiatives to provide skills training in the west midlands of the necessary depth, quality and quantity, the Government do not show much imagination in their policies. For example, my local authority applied to the Department of the Environment for derelict land clearance status to clear an old gasworks site. It is an eyesore and would provide an excellent industrial site in a badly hit part of the city. That application has been turned down flat. No grant is forthcoming because, says the Department of the Environment, looking at the city as a whole the site is not warranted. We are not asking the Department to look at the city as a whole. We are asking it to look at the bad bits. We do not want it to look at the Conservative bits where the Minister who has responsibility for the west midlands gets his votes.

The Government are proposing to abolish the West Midlands county council. People are worried that the enterprise board will disappear as well. It has taken some valuable initiatives and has provided jobs much more economically than the Government's schemes. Investment is always necessary if industry is to remain competitive. It has been sadly lacking in the west midlands for many years. Another vital ingredient is confidence. I am not sure how confidence can be generated when the majority of young people know that there is no job for them when they leave school and when, at ever earlier ages, men and women are told that they are too old. Some are now told that they are too old at 40.

How can parents motivate their children when they can see no future for them? There is work to be done in the country and the longer we leave it the more expensive it will be. It merely requires a different attitude from the Government. As my right hon. Friend the Leader of the Opposition said, the Government could initiate carefully costed schemes to regenerate our infrastructure. I am talking not about throwing money at a problem but about putting schemes out to tender, perhaps accepting the lowest and getting the job done. When the hon. Member for Rugby and Kenilworth says that such schemes would not create long-term jobs, he is merely showing that he has not been to the black country and seen the hundreds of miles of sewers that need replacing. There are jobs there for years.

The Government could abandon their attempts to drive trade unions into the wilderness, sit down with them and management and work out what can and should be done. When the unions approach management for a shorter working week, the immediate reaction should not be one of horror. There should be a recognition that advancing technology makes a shorter working week possible and that we cannot continue to have a nation of haves and have-nots. Such initiatives could generate the necessary confidence and provide hope where at present there is none.

8.10 pm
Mr. Richard Holt (Langbaurgh)

I cannot believe that any hon. Member enjoys participating in a debate on unemployment. None of us likes unemployment, and neither side of the House has a monopoly of care for the unemployed.

Mr. Roy Hattersley (Birmingham, Sparkbrook)

Do the Government care enough?

Mr. Holt

Does the right hon. Gentleman wish to intervene?

Mr. Hattersley

I was merely observing that the Conservative Government clearly do not care enough about unemployment. That, I fear, is obvious. If they did care enough, they would do something about it.

Mr. Holt

There do not appear to be many Labour Members who care either at this moment. There are not many in their places.

Two weeks ago, millions of people were starving in Ethiopia. That fact must have been known to some in the Government and to one or two journalists, yet nothing very much was done or said about it. There was a harrowing situation in Ethiopia, yet only when the BBC reported it, and the stark reality appeared on our television screens, did the country rise and say as one, "Something must be done about it."

There is a massive job famine in my constituency. Like Ethiopia and its famine, the job famine in my constituency would make a good television programme. I hope that it will not be necessary for that programme to be made before sufficient action is taken to enable the unemployment to be reduced.

If we were to have a television programme on unemployment, the scenario would be that which has been outlined in the contributions to the debate from Members on both sides of the House. We would be shown the young disillusioned, the middle-aged struggling for a year or two after becoming unemployed and the desolation of those aged 50 or more who know that they will never find employment again. We would recognise throughout that programme that in the north of Britain, as in Ethiopia, there is a real problem with which we must deal.

The creation of jobs for the future is not the only problem. I do not think that it has been said so far in the debate that there are many jobs in the south and south-east of England. I was the leader of Wycombe council in Buckinghamshire until I came to this place in 1983. Last week I read the local Wycombe newspaper and found eight pages of job advertisements. That employment was being offered in one town in the Thames valley. It is a town and a region which I know well. I am now learning that there is a difference between the north and the south and that it is not properly recognised by the Government. The Government have not taken on board the necessity to try to assist those who are out of work in the north by enabling them to take some of the jobs that are offered in and around the London conurbation and the Thames valley area.

It is not good enough to say, "On your bike". There are few who are snails and can take their homes with them. There is a major problem. Earlier this afternoon, a ten-minute Bill was introduced to try to deal with problems affecting the green belt. The council which I led could not build any more houses in and around the Thames valley area because of green belt constraints, and there are jobs galore which cannot be taken up because of a lack of housing. Nearly 400 jobs were advertised last week in one local newspaper that appears in the Thames valley area.

The number of vacancies registered in the three unemployment offices in my constituency on the last occasion were 26, 13 and 62. If the Minister of State's staff took the trouble to read one local newspaper in the Thames valley area, they could extract many more jobs and place them on boards in jobcentres in the hope that some people would be able to travel. Our jobcentres are not geared to arrangements whereby people can move around the country and to carry out liaison between local authorities and builders, for example. Only 10 families managed to move from Langbaurgh by means of the mutual exchange of council houses.

Cleveland has the highest unemployment rate. According to Tyne-Tees television, Loftus in my constituency has the highest concentration of unemployment in the United Kingdom, apart from Strabane. Unemployment in Loftus has reached 45 to 50 per cent. My surgery is constantly full of constituents who ask, "What do the Government intend to do about it?" After five years of Conservative Government, we should be biting into the problem. I commend some of the views which have been expressed by my hon. Friends in outlining ways in which something could be done to alleviate unemployment.

Many are to blame for the unemployment. I agree with the hon. Member for Hartlepool (Mr. Leadbetter) that it does no good throwing brickbats at each other while observing who did what historically. Apart from demonstrating who has the best memory, that does not prove very much. That sort of conduct creates no jobs, does not assist in increasing mobility of labour and will provide no assistance in future.

Governments have created many employment problems, and my hon. Friend the Member for Rugby and Kenilworth (Mr. Pawsey) and others have outlined some of them. If an employer wants to take someone on he has to complete far too many forms, and he has too many forms to complete once he has taken someone on. There are far too many forms to complete when employers want to get rid of employees. We have not tackled the employment bottlenecks that have been caused by Government intervention.

When I was a practising personnel officer, every year I had to obtain a certificate of exemption because my company, along with almost every other company in the country, did not employ sufficient registered disabled to meet the quota. There are not enough registered disabled to meet the quota overall if every one of them is in a job, yet every year I and others had to go through the task of completing a form and sending it to the Department. When it reached the Department, a worthy civil servant would take time to read the form and would send me a certificate stating that my company was exempted from employing the requisite number of registered disabled. It would be so much better to have a real figure and to stop the exemption procedure. Such a system would boost employment for the disabled and give some meaning to the various forms and certificates.

I do not believe that there is very much liaison between the Department of the Environment and the Department of Employment when it comes to jobs and housing. If there is liaison between the two, I cannot understand how some policies have evolved. It seems that there are many individuals in many different offices going about their own affairs and failing to realise where the winning post is which so many are trying to reach.

A similar charge can be laid against those who are responsible for training people adequately and properly for jobs now and in future. I have yet to find evidence that there is any groundswell of change within the education system that will change outlooks and bring technician training into schools instead of leaving it until those who receive that sort of training are well beyond the optimum age for it. I do not believe that we have put those two things together.

I appreciate having caught your eye, Mr. Deputy Speaker, and I know that you are seeking to give every hon. Member a fair crack of the whip. I suggest to my right hon. and hon. Friends that we in the north want a commitment by the Government. Time and again since I became a Member of Parliament I have asked for the A1 to be uprated to an M1 motorway all the way to the north of England. I have to say to many people, "If you are coming to the north, I apologise for the fact that we do not have a motorway all the way to the north-east of England."

The A1 is being resurfaced at Dishforth. It takes between one and one and a half hours to drive 1½ miles. That is the sort of problem that industry in the north-east has to circumvent, simply because there has not been sufficient capital investment in the infrastructure for that road to be completed to a proper standard.

Why was Teesside not made a free port when all the goodies were handed out? That is the region with the highest unemployment in the country. When free port status for airports was decided, Teesside was overlooked once again. There is a crying need to accelerate the hospital building programme in the north-east of England, but the programme has been decelerated. The programme should be brought forward more urgently than almost anything else.

Threats have been made to take the Sleipner oil line from Teesside and give it to Scotland. For more than 12 months we have had the festering sore of the possibility of nuclear waste being dumped at Billingham. I and Opposition Members have been seeking to persuade the Government to remove that blot so that firms are induced to go to the north-east and builders such as Barratts, which ceased building an estate of houses, go back to build houses and give some life to the area.

I began by saying that no one had a monopoly on compassion. That is right. I listened attentively to hear whether the Socialists could put forward anything that would be in any way a gem to which we could listen. Regrettably, they looked only backwards in everything that they said today. We refought the class war with the hon. Member for Liverpool, Walton (Mr. Heffer). We refought all sorts of nonsenses. The people of Cleveland look to the Conservatives to assist them in alleviating the problems. Only last week at a by-election for Cleveland county council the Conservative candidate took the seat from the Labour party and thereby increased our position on the council. That shows where the people up there have their hearts—in the Conservative party. Please do something to assist them in return.

Several hon. Members


Mr. Deputy Speaker (Mr. Paul Dean)

It might help the House if I say that the Front Bench speakers hope to catch my eye at 9 pm. I appeal for even more brevity from subsequent speakers.

8.23 pm
Dr. Jeremy Bray (Motherwell, South)

I know the constituency represented by the hon. Member for Langbaurgh (Mr. Holt), as I used to live and work next door. I know Loftus. I believe that the hon. Gentleman has some thinking to do. If he thinks that he can run away from all the mainstream issues in the Government's economic policy and take refuge in the trivia about which he talked in his speech, he will not represent his constituency for much longer.

The Chancellor of the Exchequer commits three cardinal errors. First, he tries to stabilise the money supply, with the consequence of destablising the exchange rate and competitiveness. That is the most important price in the economy. The aim of monetary policy is to stabilise prices and so make them predictable, make transactions calculable, and make trade possible. By destabilising the exchange rate, the Chancellor destroys the whole objective of his monetary policy. In case the Chancellor tries to flannel his way out of this, I shall quote the Governor of the Bank of England. Last Friday, during a lecture delivered at the University of Kent, he said: There are even those who still insist that we have some kind of exchange rate target. How they can still think this after the exchange rate movements in both directions which have occurred in recent years and months—not only against the dollar but also against the generality of currencies—defeats me. Let me repeat without qualification that we do not have an exchange rate target. Secondly, the Chancellor pursues the single objective of stable prices, instead of a balanced pursuit of stable prices, full employment and the growth of real incomes. There is no guarantee that even if the Chancellor succeeded in his objective of achieving stable prices that would provide growth in real incomes or the jobs that we need to return to full employment. That does not depend on whether there is a simple trade-off between inflation and unemployment. It would be even more true if there were no relationship beftween them.

The third cardinal error that the Chancellor commits is that he pursues an autarchic national economic policy with no search for international economic co-operation or any concept of what it means. If Britain leads in the world today, it leads the collapse into torpid international anarchy.

The Opposition have a constructive set of proposals. During the summer my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley)—I am glad that he is present to hear me say this—made a series of agenda-setting speeches. They meant that the Chancellor, when speaking today, could not allege that the Opposition have a vacuum of policy. My right hon. Friend grasped the nettles. He set out the problems, and therefore put us in a position to take advantage of the mainstream developments of present economic thinking and planning—whether in the research department of the Federal Reserve Board in Washington or in the University of Warwick macro-economic centre which was created by the Research Council which is headed by the former economic adviser to No.10, Sir Douglas Hague.

My right hon. Friend the Member for Sparkbrook—I hope that he will forgive me if I anticipate his speech, but perhaps he has to knock the Government about a bit—has set himself several causes. Let me commit some of my hon. Friends to those causes. My right hon. Friend set out a greater concern with the exchange rate. It is not all one way. It is possible to go too far. It is necessary to find the right level consistent with the fundamentals and sustainable by reasonable expectations. He accorded public expenditure its proper economic and social role. He supported the adoption of indicative planning—not with the Government doing all the indicating, but with industry and the unions doing their share. My right hon. Friend fostered social enterprise not only with the Morrisonian corporation but with the development of civic and cooperative enterprise. He called for the operation of an effective competition and prices policy, and recognised the extra benefits of a national agreement on incomes, if it can be obtained.

Some Conservative Members who think more deeply about this matter than the hon. Members for Langbaurgh and for Rugby and Kenilworth (Mr. Pawsey) feel that there is something too good to be true about that combination of economic policies of the Opposition because they contain no constraint. I believe that they are mistaken. There is constraint. The constraint is the maintenance of balance in the pursuit of objectives—that course which will achieve the fastest possible return to full employment. Constraint is imposed upon the things that can be clone today. It is an effective constraint in all the aspects that I mentioned, where we would like to move faster, if it were not for the fact that, as a consequence of that faster movement, we would face disaster round the corner. That concept of balance is foreign to the Government. It is a restoring and healing concept which the country sorely needs and to which it will respond.

8.28 pm
Mr. David Amess (Basildon)

The constituency that I represent is potentially one of the most exciting towns in the country. It is the largest new town, and has excellent communications, such as the M25. It also has a loyal, hard-working and dedicated work force. Many of them are east enders like me. However, there is one human tragedy that blights our town—unemployment. It is spread fairly evenly throughout the age groups. Thus, we have a large potential work force, yet not enough jobs for all those viho wish to work. At present, 7,043 people are without jobs and of them 2,694 are called the long-term unemployed. That is the highest figure in Essex, if not in the south-east of England. However, I have only given numbers, and they fail to convey the full tale of human discomfort and misery.

The town was originally built with the intention of people being able, by and large, to work locally. However, the very nature of the type of employment has changed and during that transitional period unemployment has grown. It is not very funny when someone loses his job. A. job represents not only someone's livelihood, but also his pride and self-respect. Indeed, some people live for their jobs.

I have listened to many speeches on this subject today from Opposition Members. I do not for one minute doubt their sincerity but I detect a certain smugness or detachment. The message from Opposition Members is clear. They say that unemployment is our fault, or the Government's fault, and that we do not really care. I would not be standing here as the Member of Parliament for Basildon if all those people without jobs blamed me or the Government. I have a totally different reaction from my constituents. They refuse to be used as a political football to score party political points. Instead, they genuinely seem to appreciate the problems and to support the Government in their attempt to restore prosperity to the nation.

Our low point in Basildon came at the beginning of the year when the closure of Carreras Rothman was announced, with the loss of 1,100 jobs. That was a devastating blow to Basildon. However, since then the Government have taken several initiatives which have considerably helped the situation. The youth training scheme has proved most successful in Basildon, and I have been round to meet the young people on that scheme. Local employers offered 839 mode A places, and the total of those receiving training is almost 700. A further 91 are expected to start training in November. So all the young people who left school last summer are guaranteed a place on the youth training scheme.

Last year's entrants have nearly completed their training. More than three quarters of them—76 per cent.—have now obtained jobs, nearly all with local employers. Some local employers who ran schemes have achieved a 90 per cent. success rate. I am particularly pleased with the news that I have been given tonight by the MSC concerning a number of local initiatives that will affect my constituency. It has been decided to set up a local collaborative project to examine local training needs for the new Basildon shopping centre, which will be the largest covered shopping centre in Europe; to establish a new adult training strategy with specific grants to local employees in order to improve training for existing employees; to aid the recruitment and training of new employees; and to increase the provision for information technology.

In Basildon there will be an expansion of the skillcentre training provision for the unemployed which is designed to meet the need for the new skills that are required. There is to be a new type of training programme for new technology and high-level technician training for 18-yearolds. It will be the only one in Essex. There is to be a new course—called a wider opportunities course for the development of women—to enable women to return to work more easily. A new pilot programme—again, the only one in Essex—to examine how to improve the skills of those undertaking a community programme, in order to develop them and help them gain valuable jobs, has also been agreed locally. The Government, via the MSC and the Department of Trade and Industry, have financed an information technology centre to a very high level.

Further good news is the announcement that Access is expanding its operation in Southend and is taking over the old Ilford Films building in Basildon. That will eventually create 1,100 jobs. Some firms, although wishing to come to Basildon, have been put off by the high rates that they would have to pay. Indeed, some firms have left the area because of the high rates. High rates destroy jobs and that is why so many people welcome the rates Act, the fact that Basildon's rates will be capped next year and the fact that the business ratepayer will now be consulted before any rates are set. That is excellent news for Basildon and for future job prospects.

Only last week I visited the unemployed workers centre in Basildon, which was built by the development corporation and is now staffed by MSC placements on the community programme. I listened to various people telling me about their difficulties in finding employment, and I pay tribute to those dedicated people who run the centre trying to help people to regain their confidence to obtain another job.

My constituents have faith in the Government's economic policies to create greater and more equal prosperity. The Government, I believe, will not break that faith.

8.35 pm
Mr. David Penhaligon (Truro)

One of the disadvantages of being second in line to speak after the leader of the SDP is that one is called much later than usual. However, one of the advantages is that one is forced to listen to the entire debate. Perhaps all Members should have to experience that. It has been rather good and I have been more encouraged than I ever dreamt I would be.

With one exception, no hon. Member has behaved as if he had a complete solution to the problem. The exception was the hon. Member for Rugby and Kenilworth (Mr. Pawsey) who seemed to think that he had a solution, but when he came up with that devastating idea of reforming section 8 of the Employment Act we all knew how much weight to put on it.

There are 3 million unemployed people, but on the old criteria the figure would probably be 3.75 million. Clearly, the situation is becoming worse on two fronts. First, every month the number of unemployed increases. Secondly, the period during which the least fortunate have been unemployed becomes longer and longer. The number of those unemployed for more than a year is now registered as 1.25 million. It is worth remembering that only those who have succeeded in claiming benefits and who have been unemployed for more than a year are registered in the current statistics.

I have mentioned before the plight of those in their fifties who have been unemployed for more than a year, who may have run a small business, have accumulated £2,000 or £3,000 and who see the fruits of their lifetime's efforts being eroded until they eventually succeed in claiming supplementary benefit. The situation was bad before, but it is now becoming worse. Therefore, we look to the Government for a solution, or at least to tell us what will be done to prevent things becoming even worse.

The Chancellor of the Exchequer's presentation to the House was weak and offered those seeking employment little more than despair. There is constant talk of recovery. I accept that there has been some recovery, but, given the magnitude of the recession in 1980–81, some recovery is not all that surprising. Indeed, that recovery does not take us anywhere near the levels of 1974 or 1979.

The latest line from the Treasury concerns pay settlements in the private sector. There is an element of truth in the allegation that they are part of the problem, but I do not know that I would go as far as the Chancellor, who argues that they are a prime cause of the rise in unemployment. It would be interesting if the Chancellor would tell us whether he believes that such pay settlements prove that monetarism does not work. After all, monetarism was supposed to solve the problem of pay rises in the private sector without having a pay policy. On the other hand, perhaps it is his view that his policy has not yet worked. Clearly, he must believe in one or the other. If it is the latter, when does he believe the policy will start to work? If it is the former, what does he intend to do?

Pay policy is the long-term key to the levels of employment in the past, now and in the future. Hon. Members must find a satisfactory way of persuading those in work not to demand and obtain a little more than the real increase in their output justifies. Somehow we have to persuade them that that tendency, which has existed for many years, is a cause of unemployment within our society. It should be noted that I was referring to the increase in their income. I do not believe that low pay as such will solve unemployment. For proof of that one has only to look at my own county, which has the lowest pay in the United Kingdom. It is clear from the figures that low pay has not solved our unemployment problem in Cornwall. The present figure of 18 per cent. will probably grow to 25 per cent. by January.

What are we to do? To a very large extent, it is easier to say what not to do than what to do. I do not believe that there is any future for Britain in allowing overmanning. That is not the solution to our unemployment. I do not believe that there is any point in refusing modern work practices. I accept the Government's view that in the long-term modern work practices create employment; they do not destroy it. There is no future for us in propping up inefficient industry, or parts of inefficient industry, because in the long term that policy destroys more jobs than it creates.

Britain, in splendid isolation, probably has no complete answer within its own powers, but clearly we can do more to solve the problem than we are doing now. In part, the solution must be investment in the infrastructure of our society. On the subject of roads, one hon. Member complained that he did not have a motorway going right to his constituency in Cleveland. I live 91 miles from the nearest motorway, and to me it is a considerable improvement to have a motorway coming into the next county.

Clearly, our railways need investment, as do our water and sewerage services. The point hardly needs making. Obviously, we must have decent water and sewerage systems if we are to live in a civilised society. There can be no future for any part of the country which cannot supply itself with water throughout the year.

We need to invest in housing. I recognise that there are some limits to the money available to the Government, but they do some very peculiar things. One of the local authorities in my area has, with great enthusiasm, sold its council houses and now has million in the bank. That council wanted to use £2 million of its money to build some houses this year, but the Government stopped it doing so. I cannot imagine what lunatic contribution the Government believe that is making to our infrastructure, our employment and our housing. How can it help our recovery to prevent that council from spending money that it has in the bank?

We must, of course, invest in training, and I am glad to hear the general view developing in all parts of the House that the youth training scheme needs extending and building into a two-year programme. Those who have helped to build the YTS and have supported it must find that encouraging. If people want more of it, that must be some indication that it is useful.

We have to consider our general approach to the social services. The elderly in our community represent one of the greatest growth areas. They will need more and more care as the years go by. The size of the Government's budget for keeping people in old people's homes is frightening. Indeed, I understand that the DHSS is reviewing the position. Money can never be wasted on home helps, because the use of home support can keep people out of old people's homes, which are largely financed by the Government. A massive use of extra labour could be deployed in that area.

There is a limit to what Britain can do on its own. Many hon. Members have mentioned the United States. One of the obvious differences between our economy and that of the United States is that the United States' economy is much bigger than ours. Our dependence on imports is also much greater than that of the United States. It is true that if we stimulate our economy imports begin to be a problem. Sometimes we forget that we are part of the European Community, and the EC's economy is roughly the size of that of the United States. What we can do on our own is part of the solution, but a second and important part is what we could do in co-operation with our European partners. I say "could" because it would take a conversion equivalent to that of Paul on the road to Damascus to see our Prime Minister going to Europe and looking for cooperation in solving our unemployment problem.

Other areas requiring our urgent attention are working hours, retirement and the number of people in training. All of us, as time goes on, will have more leisure time, but the progress towards it must be slow and sensible. It would be catastrophic to try to do it overnight, but a drift in that direction would not be a bad thing.

The alliance believes that the Government could do better. There are plenty of jobs to be done, and plenty of people wishing to do them. It is a matter of the Government organising our economy and their own affairs rather better than they have done so far.

I recognise that there will not be a general election for at least two years, but the single most encouraging feature to me is that, as an Opposition Member, I can detect, on the fringes of the Conservative party, a realisation of the seriousness of the problem. It is beginning to get through to some Conservative Members. It is the duty of those Members—some of them have a great deal of unemployment among their constituents—to put pressure on the Chancellor of the Exchequer, and the Secretary of State for Employment and other Ministers to do rather better than they have done hitherto.

I plead with those on the periphery not to let the Government scrap development aid. That would be an unmitigated disaster. Without any development assistance to Scotland, Wales or the far south-west, it would be easier for the south-east to solve some of its employment problems, but the unemployment problems in the southeast are minor in relation to those in the peripheral areas, which deserve greater assistance than they are getting. I look to Conservative Members in those areas to ensure that the coming review does not result in a substantial reduction in aid. That would leave the remote areas of Britain even more exposed, and even more forgotten and ignored, than they are now. There can be no future in encouraging such sentiments in parts of our nation.

8.48 pm
Mr. Bill Walker (Tayside, North)

With regard to regional aid, the hon. Member for Truro (Mr. Penhaligon) will, I am sure, accept that I represent 2,000 square miles of what can only be described as Scottish highland area. I see very little help and assistance coming into that area through the regional aid policies. In fact, the bulk of my constituency is excluded altogether from aid. The question of aid has to be examined very carefully.

The Select Committee on Scottish Affairs, in the course of a recent investigation of the Highlands and Islands Development Board, visited Norway to see how the Norwegians were dealing with unemployment in the northern part of their country. As hon. Members will be aware, the northern part of Norway is very far north, so the problems are unique. We were surprised to find that unemployment there was very low. We discovered that in what we in Scotland would call the crofts—the very small farms—the people had their income supplemented by central funds to bring it up to the national average wage of the industrial worker.

In Scotland we have an entirely different, and a very clever and cunning, way of arriving at the same answer. We pay unemployment benefit to the crofters in the Western Isles. They live on their crofts, they work their crofts, they do not look for work anywhere else, and at the same time they are paid unemployment benefit. If we do that, we produce horrendous statistics, yet Norway produces statistics that look encouraging. That is not the answer to unemployment, but we must be careful to compare like with like.

I agree with my right hon. Friend the Chancellor on an important and fundamental factor. I do not believe that Governments create many jobs. However, they can create some jobs. I also accept that customers create jobs. If we are to encourage the sale of our goods, both abroad and at home, we must be price competitive. To do that requires a compound of many things—unit labour costs, rates, interest on borrowing and many other variable factors. We must persuade the Government to control certain areas, but to leave the market, the British people and management free to compete.

An earlier speaker drew attention to the many factors that had bedevilled the car industry. In the past, Governments used the hire purchase regulations to govern car and furniture production. I have experience of that because I have run department stores, and we regularly had to revise our projections for sales with the changes in hire purchase regulations.

I was surprised when my district council told me that, because of its aggressive and progressive view on the sale of council houses, it had sold more than £5 million worth. That is quite something in a highland area. I then discovered that the council could spend that money only in the year that it sold the houses because there was no rollover provision. That authority is sensible in its approach and would like to use the money to update its existing properties and add to its stock.

I was also surprised to learn that, during the last four months of the year, the Strathclyde direct labour organisation had £14 million available to spend, but could not spend it because it was not geared to do so in that time scale. It could not organise the architects, planners and others to decide what was required in Strathclyde. Very little, if any, forward planning has occurred. Consequently, it is not allowed to spend that £14 million. The Government should adopt the same business approach in that area as they have adopted in other areas and recognise the benefits of allowing a roll-over of money that has not been spent. That would help to deal with the unemployment problem. There is no simple answer, but there are ways in which the Government can approach the problem in a positive manner.

I care deeply about youth training, having spent most of my adult life in the training machine. I care deeply about the way in which we prepare our youngsters for their future careers. I was very encouraged when the Government introduced the youth training scheme because, at long last, they grasped the nettle that had eluded us since Bismark when he introduced training for German youths. We must consider how to make the one-year scheme a two-year scheme and, eventually, a three-year scheme. We must prepare our youngsters for the real world of tomorrow—not the airy-fairy world of theory and academia, but the world where job opportunities will be created by having the right people in the right place producing the right goods at the right price. That task will not be easy, but I have every confidence in the Government's approach to training. It is the beginning of the long road towards making Britain as competitive now as it was in the last century.

8.55 pm
Mr. Robert Parry (Liverpool, Riverside)

I had wished to speak for 10 minutes, but I see from the clock that I now have less than five minutes.

I support the remarks made by my hon. Friend the Member for Liverpool, Walton (Mr. Heffer), who put a good case on behalf of Liverpool and Merseyside. Can the Minister give any reason why there are such shocking levels of unemployment in the inner city areas and regions, but little or no unemployment in the salubrious south-east? The figures issued by the Library show that, after the redistribution before the last election, unemployment in my constituency was 36.4 per cent. I know that in other areas such as Toxteth and Vauxhall unemployment is between 55 and 60 per cent. That is intolerable.

My constituency has an unemployment level of 36.4 per cent., while the bottom of the league is Wokingham, with 3.8 per cent. My area has 10 times the unemployment of the affluent south-east. I live in my constituency and hold surgeries every week. Since the redistribution I now represent Toxteth. Does the Minister want to see more violence on our streets as our people search for jobs? Tens of thousands of youngsters in Liverpool roam the streets without any possibility of finding work. They are involved in all kinds of crime such as muggings and burglary. There has been a tremendous increase in the abuse of drugs, especially hard drugs such as heroin. A previous Home Secretary, Lord Whitelaw, agreed that rising crime was linked with high unemployment. I recently met the Merseyside chief constable and discussed heroin addiction on Merseyside, and he agreed that it was caused partly by the massive unemployment.

In Liverpool and Merseyside during the past few weeks 37 working-class men went to gaol for fighting for their jobs. They wanted to protect them for future generations—[Interruption.] The Minister knows nothing about unemployment. For a short time he was the Minister with responsibility for Merseyside, so he should have some idea of what is happening there.

I am sick and tired of trying to fight for jobs. I shall defend and support any workers who take any industrial action. I shall be involved in any extra-parliamentary campaigns to save jobs in Liverpool and on Merseyside.

8.58 pm
Mr. Roy Hattersley (Birmingham, Sparkbrook)

I suppose that a man of more compassion would not mention the Chancellor of the Exchequer's speech at all, but since the Prime Minister lacks sufficient courage to defend her record or policies it is his response to the unemployment crisis that I must examine.

Let me make this clear to the Chancellor, even in his absence. [HON. MEMBERS: "Where is he?"] The Chancellor is behaving with his usual courtesy. There is a growing sense of outrage in the country that the unemployment level is the highest in history and seems certain to rise even further. More than that, there is growing anger that the party which came to office promising to cut unemployment from 1.25 million increased it to 3.25 million, even on its own doctored figures. On the more honest calculation, the calculation that the Government abandoned because it was inconvenient, there are 3.75 million men and women now out of work. When we include those unemployed who so despair of ever finding a job that they do not even register as unemployed, the total figure for men and women out of work is now over 4 million.

The unemployment crisis is now so widespread and prolonged that even the conscience of the Tory party is beginning to stir. Some honest and honourable souls managed to mention it during the Tory conference and the right hon. Member for Guildford (Mr. Howell), having spoken for half an hour, concluded with one or two looping runs which enabled him to utter the magic but terrible words that there needed to be a measure of reflation in the economy.

The Prime Minister chooses not to speak on this subject and the Chancellor—[HON. MEMBERS: "There he is."]—chooses to respond to the crisis with second-rate party polemics.

I have watched seven Chancellors of different parties and persuasions in the House. Not one of them would have demeaned himself as the Chancellor constantly demeans himself by exhibiting a frenzied determination to talk about anything except his own policies. Hansard will confirm tomorrow that within two minutes of the opening of the Chancellor's speech he had abandoned any attempt to defend what he had done or to describe what he was going to do, and had begun to discuss the Labour Government's record.

Since that is what the Chancellor wants, let us at least for a moment bow to his wishes and consider the comparative records on unemployment of the previous Labour Government and the present Government. That is what the Chancellor asked me to do, and to that request I respond at once. In our five years we increased national output by 12 per cent.; in the five Tory years national output has increased by 0.28 per cent. Under the Tories, despite all the talk about job creation, the total number of men and women employed in this country has fallen by 2 million; under Labour it rose.

It was not the Labour party that created the record number of company liquidations; it was the Conservative party. It was not the Labour party that created the first deficit on our manufactured balance of payments since the industrial revolution; it was the Conservative party. Under this Government, the annual tax bill has risen by £22.5 billion and the level of unemployment has risen by over 2 million. I have given the record of the Government in which I had the honour to serve. As the Chancellor is so determined not to put those facts on the record, I am delighted to do it for him.

I spoke a moment ago of two achievements—tax up by £22.5 billion and unemployment up by 2 million. I wish to examine each of them. The massive tax increase is the result of incompetence. The massive rise in unemployment is the direct, intentional, premeditated product of Tory policy. That is why we in the Opposition are sceptical to the point of anger. When we spend an afternoon listening to the laments of Conservative Members that they care too and they too have compassion and concern, we know that the simple truth is that they have neither sufficient care nor sufficient compassion to press their Government into taking the action that would reduce unemployment.

If we did not already know that unemployment would get worse, and even if the Government's friends, the London Business School, were not telling us that, we would know from the Chancellor's statement this afternoon that the rate of unemployment will continue to increase. We are back on the old merry-go-round. We are £1.5 billion off course. We warned the Chancellor about that in the summer. In June I asked the Prime Minister about demands on the contingency fund. She did not know what I meant. When her spokesmen spoke to the press about it later in the afternoon, they said that there was no pressure, no risk, no concern and no problem. Now, that all amounts to £1.5 billion, which will be followed by the same dreary formula—another round of public expenditure cuts already being leaked to the newspapers, further deepening of the depression and even more unemployment.

That is what the Chancellor prophesied this afternoon, and I fear that it is what will happen—for this simple reason. For all the high-falutin' language, bogus philosophy and elevated talk about limitations in the growth of money supply, M3 to M0" depending on the calculations, and despite all the calculations about the public sector borrowing requirement and all the new economics, the Government's economic policy has done no more than constantly deepen the depression and prolong the slump.

I hope that it is parliamentary language to say that any fool can hold down inflation by collapsing the economy. In 1933, the year that I was born, there was zero inflation because there was virtually no economic activity. The Government have created that situation again. That is why, under this Government, unemployment has risen by 1,940,000 to 3,280,000, according to the Government's own figures. That is an increase of 144 per cent., which has taken place under the party that produced a poster saying, "Labour isn't working", and promised that it would put Britain back to work.

We are required to address the following question: Who is to blame? The Prime Minister changes her mind from time to time. Sometimes it is the world recession, sometimes it is the local councils and sometimes it is the trade unions. There was one moment of hysteria when the Prime Minister blamed President Reagan, but that heresy was quickly recanted. If we go on like this, it looks as if the Prime Minister will be the first party leader to stand for re-election on the slogan, "Don't blame me, it all seemed a good idea at the time."

Of course, the Chancellor has taken similar refuge behind whatever cover he can find. But being the man he is, he has invented a bizarre variation on the Prime Minister's abdication of responsibility. When unemployment seems likely to fall, he claims the credit, thus accepting, by clear implication, that the Government can influence the level of unemployment. However, when unemployment starts to rise again, he rejects all the blame and insists that putting Britain back to work is beyond the power of any Government. Therefore, I should like to ask the Secretary of State for Employment a simple question to which I hope he will give me a simple and categoric answer: Do the Government believe that a reduction in unemployment is within their power?

I intend to give the Chancellor the opportunity to comment on some of his published utterances about whether it is within the Government's power to solve the crisis that we are now debating. The Secretary of State for employment will then have to tell us whether we are to believe the Chancellor in his manic or in his depressive mood.

The Chancellor's manic mood was best represented by his speech to the young farmers of Leicestershire last December. If the Secretary of State would like the full text I will let him have it. I quote one of the better passages: At the time of the General Election Campaign the recovery had not yet been reflected in the unemployment figures, which were still rising. Nonetheless I predicted that in 1984 they might begin to turn. I was lambasted for my optimism … But the critics must be beginning to worry … It looks as if unemployment is now levelling off. The punchline—the opinion for which the whole buildup had been prepared—was as follows: There is one main reason. We have held firmly to our policies. The strategy is on course. In one particular, the Chancellor was right. In 1984 the unemployment figures indeed began to turn—sharply upwards. They increased by 200,000 in nine months.

Ingenious as ever, therefore, the right hon. Gentleman revised his whole economic philosophy. Two weeks ago he told Mr. Brian Walden on "Weekend World": What the Government can do to create jobs is very little, very little indeed … to fall into the error of thinking that the government can determine the level of employment is totally false". Which is the truth? Which is the tablet of stone brought down from the Spectator magazine? Is it the truth as revealed to the young farmers of Leicestershire or the truth as revealed to Mr. Brian Walden? I will tell the Chancellor the answer. The truth is what he said in Leicester.

The lie to the assertion that the Government cannot influence the level of employment is given by their own record. When in 1982 it was convenient for them to do so, the Government stimulated demand, increased economic activity and thus reduced unemployment in the following year. In anticipation of the general election which they rightly thought would follow, they relaxed consumer credit, increased Government spending, intentionally overshot their public sector borrowing requirement targets and for one brief moment genuinely reduced unemployment. In five and a half years, the Government's only success in fighting unemployment was the brief moment when they abandoned Tory party policy and began to operate the policy of the Labour party.

I see the Secretary of State studying his official text. I ask him once again, is it or is it not his view that the Government can influence the level of unemployment? If they cannot, why does the Chancellor continue to hint, as he did this afternoon, that good times are just round the corner? We have been approaching that corner for five and a half years. If the Secretary of State echoed the Chancellor's view that we have only to wait a little longer and everything will turn out all right, will he tell us how long that little longer will be and when the end will be in sight? If the Government can influence the level of employment, why do they not do so? If they cannot, why did they pretend that they could during two successive general election campaigns?

If the Chancellor's words are true and the Government cannot create jobs, why have they appointed Lord Young? When the Prime Minister appointed him, she announced that his job was job creation. I have not had the privilege to meet the noble Lord, so I cannot even guess whether he realises his true purpose. He is a gimmick made flesh. His real responsibility is the creation of smokescreens, the invention of diversions and the construction of lame excuses. That is not a wholly honourable role for a peer to undertake.

I understand that even now he is negotiating a new and spurious scheme with the Manpower Services Commission, under which men and women will be given bogus jobs and paid subsistence or lower than subsistence wages simply to remove them numerically from the unemployment statistics. [Interruption.] Is that not true? I hope that it will not come as a shock to the noble Lord when I say that, in the lifetime of this Parliament, he will not create sufficient genuine jobs to compensate for the loss of employment in the single month which was reported to us three weeks ago. He will not create 168,000 new jobs. He will not make up that one month's economic deficiency in terms of policy and effective demand.

However, Lord Young may contribute to this Government's great growth industry—the statisticians who manipulate and polish the figures, change the calculation of unemployment to make it look slightly better than it is, make the guesstimates about the number of people in work to make them look better than the position is, and help the Chancellor of the Exchequer in that earlier dispensation to create a new prices index to make prices look better than they are. The idea that new jobs will be created in anything like significant numbers is part of a dream world unless there is a radical alteration to the basis of Government policy.

Nevertheless, we can create real jobs. Because the Labour party knows that to be possible, we resent the crocodile tears which have been shed this afternoon. Conservative Members such as the hon. Member for Langbaurgh (Mr. Holt), who is entering the Chamber now, have constituency interests which they must defend. I understand the difficulties that they face when, having been elected on a promise to reduce unemployment, they discover that unemployment in their constituencies is rising faster than ever. Their duty is not to come to the House and wring their hands with counterfeit concern. Their duty is to put pressure on the Government which will force them to change their policy. The people of Cleveland or the north-east will not be impressed by the fact that the hon. Member for Langbaurgh said how much he worries about their future. They would be more impressed if he were prepared to vote with his feet and demonstrate his concern for the future. They would be a little more impressed if he and people like him would bring the pressure to bear, which Back-Bench Members can bring, to require the Government to change course.

I shall give two examples of how that can be done—examples related to the speech and the analysis given by my right hon. Friend the Leader of the Opposition earlier today. When the Labour Government are elected in two or two and a half years' time, there will be once more in Britain 1 million families who need decent houses but who do not have them. They will be living with in-laws, in multi-occupation dwellings, in single rooms and in unfit houses.

Mr. Wilson

Yes, the ones who were disappointed by the previous Labour Government.

Mr. Hattersley

When the previous Labour Government were defeated, there were just more than 200,000 such families—[Interruption.]

Mr. Kinnock

We got a Tory Government because of the hon. Gentleman.

Mr. Wilson

On a point of order, Mr. Speaker. Is it in order for the Leader of the Opposition to accept responsibility for the breakdown of the previous Labour Government which he destroyed when he opposed devolution for Scotland?

Mr. Speaker

That is not a matter for me.

Mr. Hattersley

I shall try once more to interest the Scottish National party in unemployment. By the time of the next general election, 1 million families who need decent housing will not have it, yet more than 350,000 construction workers will be on the dole. Does it not make elementary common sense to point those construction workers at the homeless families, simultaneously end a social crisis of proportions that we have not seen for 20 years, and put a quarter of a million men and women back to work?

We all know that the Chancellor's great ambition is to cut taxes. If the Government had to choose between lower taxes and more jobs, which would they choose? The Institute of Fiscal Studies, backed by the London Business School, has demonstrated that £1 billion spent on tax cuts produces 30,000 new jobs; £1 billion invested in public expenditure produces 185,000 new jobs. Which would the Chancellor choose? We know which we would choose, and we have made it clear. My right hon. Friend, in his package of reflation, could not have been more precise when talking about such expenditure. I ask the Chancellor again to say, through the Secretary of State for Employment, which he would choose, which the Government would choose and, for that matter, which alternative all the shedders of crocodile tears on the Back Benches would choose. Would they vote for reduced unemployment or for something different, or would they do what we know them to be doing today?

The Government's policy in this area is easily described: they are looking for excuses and attempting to avoid the blame. Their frenzied desire to blame someone else was typified by the Chancellor on television about 10 days ago. He was asked by Mr. Brian Walden about Government responsibility—about the duties of Government and the Administration's obligations under the constitution to do what they can about unemployment—and the Chancellor offered this noble sentiment, this edifying comment, that typifies his sincerity and the dignity of the entire Government: I don't think that we should carry the can and I don't think that we will". What a sentiment for a Chancellor of the Exchequer who ought to be less concerned about his personal reputation, or at least what is left of it after the Tory party conference, than about the 4 million men and women who are now on the dole.

I end with a final point—a confession which I unashamedly make to my right hon. and hon. Friends. In my inner city constituency, in the Sparkbrook Division of Birmingham, the northern wards have tonight officially registered male unemployment of 49 per cent. It is expected that when Thursday's figures are announced, unemployment in the Sparkbrook and Sparkhill wards in my constituency will rise to more than half of the total male population. Every other man will be on the dole. We thought that such a situation was inconceivable five, six or seven years ago. The nature of my confession is that when I see that constituency and the deprivation and suffering which has been caused by public expenditure cuts, the humiliation of the black British and Asian British and, above all, the unemployment that they now face in both wards, I feel ashamed that the Labour party allowed the Tory party to operate its heartless incompetence. Tonight, as well as exposing the weaknesses of their policies and offering a real alternative, we are promising that what has happened in wards, constituencies and cities throughout the country will never be allowed to happen again.

9.27 pm
The Secretary of State for Employment (Mr. Tom King)

We have listened to two similar speeches from the Leader of the Opposition and the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). In fact, certain identical lines reappeared, not least from the speech of my right hon. Friend to the Leicestershire young farmers. The House will have judged whether two speeches which consisted in large measure of a number of jokes and a certain amount of windy emotion at the end was the correct response of an Opposition. I wonder whether that is what the House and the country would have expected in a debate of this seriousness and importance.

I enjoyed the speech of the right hon. Member for Sparkbrook, and some of his jokes were very funny indeed. However, I wonder whether on reflection he thinks it was the proper time to make that sort of speech. He was unable to appreciate the biggest joke of all. When he made what I assumed was meant to be a joke about the Labour party being elected in two and a half year's time, he was unable to see the funniest part—the look of absolute horror and amazement on the faces behind him.

Most of us have been able to attend most of the debate, but I appreciate that the right hon. Gentleman has many responsibilities and may have missed it. We heard speeches from the hon. Members for Truro (Mr. Penhaligon) and for Hartlepool (Mr. Leadbitter), from my right hon. Friend the Member for Guildford (Mr. Howell), and from my hon. Friends the Members for Rutland and Melton (Mr. Latham), for Basildon (Mr. Amess), for Langbaurgh (Mr. Holt) and for Bolton, North-East (Mr. Thurnham). The debate was characterised by a seriousness and real concern with which the Opposition Front Bench speeches were in stark contrast.

I hope that I shall carry the House with me when I say that the issue affects every constituency in the country. Not one right hon. or hon. Member, no matter how lush the pasture may appear to be, has escaped the problem. My right hon. Friend the Prime Minister, in her memorable speech at Brighton, referred to unemployment as the scourge of our times. I endorse that sentiment. There is no doubt that unemployment is the most serious of problems and that it deserves a serious approach.

I have an advantage over some right hon. and hon. Members, in that I sit on the Council of Ministers dealing with social affairs in the European Community. That Council consists of Socialist, Liberal, Christian-Democrat and Conservative Ministers. In private discussions I notice that Socialist Ministers, faced with the responsibility of government and with the difficulties of tackling the problems, do not talk with the facile ease of Opposition spokesmen in the House.

We shall not tackle the problem in the way everyone expects unless we understand some of the reasons why we have reached the present position and the background to the problems. The industrial decline was referred to by the hon. Member for Hartlepool. I do not think that the Leader of the Opposition can have heard him. He talked honestly about the problem which Governments of all parties had failed to tackle in the last 30 years and about the particular problems in his part of the country.

Let us examine the decline of the great industries. I have the production figures for our car industry. In 1960 Britain was producing 1,350,000 cars a year. Twenty years later, how far forward have we gone? We have gone backwards. Now we produce barely more than 1 million cars a year. The Labour party shares full responsibility for that. In France, car production in 1960 was 1.1 million. Twenty years later the French were producing 3 million cars a year.

I have referred to my first experience in the House as Parliamentary Private Secretary to Chris Chataway at the time of the decline and collapse of the British motorcycle industry. We used to lead the world, but competitive production declined. The same applies to shipbuilding and steel.

Let us consider the background and the disease that Britain faced. Between 1970 and 1980 we paid ourselves 320 per cent. more to produce 17 per cent. more. We became steadily less competitive and jobs were lost in their hundreds of thousands. We were slow to change and slow to adapt to the challenge.

My hon. Friend the Member for Rugby and Kenilworth (Mr. Pawsey) referred to the challenge of technological change. I recalled in particular the steel industry when I listened to Opposition Members trying to put all the blame on the Government. I recalled the plan in the 1973 White Paper. The Opposition went forth to campaign against that White Paper which was intended to give a chance while there was still time to restructure that steel industry.

What happened? The Opposition used every device that they could to prevent that reorganisation until it was far too late, and when the change came it was traumatic in the extreme. The Leader of the Opposition is starting to talk to his neighbour because he knows that I am going to quote to him his own words. He said: We did not avoid the responsibility of acknowledging the unavoidable need for manpower reductions … Those outside the industry who pretend that steel can survive without very major changes are indulging in the most callous falsehood in the hope of instant popularity. In that condemnation he neatly packages his right hon. Friend the Member for Chesterfield (Mr. Benn) and his noble Friend Lord Beswick who with the full support of the Labour party campaigned up and down the country. That was the most callous falsehood in the hope of instant popularity. We reached the position where so uncompetitive was the steel industry that we were producing 14 million tonnes of steel in 1979, with 166,000 people. That is the amount of steel that we are now producing with a work force of 71,000. The steel industry is now competitive and offers some prospect of jobs in the future. The deceit of the Labour party did nothing to help that transformation.

Of course, I could point to the problems that we face. We were slow to change. Other countries face the same problems. The unemployment figures——

Mr. Straw


Mr. King

I just want to finish the point.

I could quote the unemployment figures, but, as has been said, they are of little comfort. In Spain, Belgium, Holland and Ireland, unemployment is a lot higher than it is here. It is bad for all, but in some ways it has been worse for us because of the uncompetitive position in which we found ourselves at the start of this most difficult period.

The Leader of the Opposition said that creating unemployment was the object of the Government's policy, but in the past year unemployment in Britain has increased by 4 per cent. over the previous year. In Italy it has increased by 7 per cent., in Ireland by 9 per cent., in Spain by 12 per cent. and in France by 16 per cent. The House may have noticed that those four Governments are all Socialist Governments. Did the right hon. Gentleman say that creating unemployment was the Government's policy when he spoke to Signor Craxi? Is that what he said to Dr. FitzGerald? Is that what he said to Senor Gonzalez? Is that what he said to President Mitterrand?

Mr. Straw


Mr. King

Mr. Speaker——

Mr. Straw


Mr. Speaker

Order. If the right hon. Gentleman does not give way, it is no good persisting.

Mr. King

I shall give way.

Mr. Straw

The Secretary of State knows very well that, despite those rises, unemployment in Britain is by far and away the highest of any major industrialised country and has been so since 1979. When the right hon. Gentleman has finished this unctuous catalogue of hand-washing and of blaming others for Britain's ills, will he address the central question put to him by my right hon. Friend the Shadow Chancellor, which is: what responsibility do the Government accept for the present levels of unemployment, and is he responsible for getting them down? When will he answer that question?

Mr. King

As I said at the beginning, it is important to understand the background. It does not help the House or the country not to recognise the problem in its true perspective. I have discussed the problem, some of the background and the circumstances in other countries. It is important to recognise the progress that we have made as well as the seriousness of the difficulties. Between 1979 and 1983 we suffered a huge haemorrhage of job losses. The House will have noticed that last year that haemorrhage was stopped. For the first time since 1979, the trend has been reversed. Whereas 1.5 million jobs were lost in the four years to 1983, 250,000 jobs were created last year.

The right hon. Member for Birmingham, Small Heath (Mr. Howell) might be puzzled, but others have identified the problem that, although there are more jobs, we still have a slightly rising level of unemployment. The problems of demography meant that we had to accommodate an extra 400,000 people in the four years after 1979. In. addition to the creation of new jobs, the House will have noticed that we now have the highest level of vacancies for the past four and a half years. That shows that matters are improving. We can take some encouragement from that.

Britain's economy is now stronger and more competitive.[Laughter.] As I am about to answer some of the questions posed by the right hon. Member for Sparkbrook, I am not sure that laughter is the appropriate response to the anxieties of millions of citizens. Inflation is also down. I hope that nobody will criticise the importance of reducing inflation. My right hon. Friend the Chancellor quoted what the Labour party said in 1975. Its proudest hope was to get inflation down to 10 per cent. I am proud that we have reduced it to 4.7 per cent. Productivity, output, investment and inward investment have all increased. When searching for a solution to unemployment, it is important that we do not throw away the gains that we have made.

I am sure that the House shares my pleasure at our having attracted inward investment. A list of companies have determined that Britain is their favourite location for investment in the European Community. That means many jobs. The House should be aware that 1983 was the best year for inward investment for seven years—it was 60 per cent. up on the previous year. As regards high tech, low tech, no tech—attracting Mitel, Hewlett-Packard, Wang, Commodore, Hyster, Nissan, Sharp, Nippon Electric, National Semiconductors, Parrot, Shin Etsu Handotai, Acrian Corporation, Tatung and Alps Electric, all of which offer thousands of jobs, is not exactly low tech. It is extremely encouraging high-tech investment.

Dr. David Clark (South Shields)

I represent the constituency with the highest level of unemployment in England and the Northern region has recently lost some of its most advanced high technology firms. Will the right hon. Gentleman tell the House how many of those firms have come to the regions of England other than the golden triangle? Can he give a message of hope to the one in four in my constituency who do not have a job and who seem not to have benefited from the economic bonanza about which I am hearing for the first time?

Mr. King

I am the first to accept that the inward investment of high technology companies on its own will not be a pervasive and complete answer to the problems of unemployment. The hon. Gentleman will know that much of the high technology investment in "silicon glen" has made a significant contribution to the Scottish economy, which was one of the more depressed economies. With the support of North sea oil it is now one of the more successful. I understand that there is a high level of unemployment in the hon. Gentleman's constituency and I think that everyone in the House appreciates something of the difficulties of South Shields and the problem that it faces.

Against the background of the gains that we have made, I hope that the House will not seek to criticise inward investment and the jobs that it represents. Secondly, I hope that it will not criticise the more competitive nature of the British economy and industry, which is extremely important. We must build on the jobs that we have and then consider how we can produce the resources to try to establish a higher level of employment.

I come now to the measures that we are taking and the further steps that we shall be taking. The House is aware of the programme of special training and employment measures on which we have embarked. The right hon. Member for Sparkbrook wants to see the greater use of resources. I can tell the House that we have quadrupled the resources that we devote to those measures. There are slightly fewer than 700,000 who are covered by the various training and employment measures. I am grateful to the hon. Member for Truro——

Ms Clare Short (Birmingham, Ladywood)


Mr. King

No, I shall not give way. I must go on.

I am grateful to the hon. Member for Truro for his implicit support for the youth training scheme. There is no doubt that the 350,000 youngsters who have entered the scheme in the past year have appreciated the benefit of it. I am encouraged above all by the increase in the number of youngsters coming on to the scheme this year. That is the clearest possible testimonial to the quality of the scheme.

Many young people are undoubtedly joining the scheme because of the good reports of the number who are getting full-time jobs after leaving it. About three quarters of the youngsters go into full-time jobs or further education and training after leaving the scheme. We hope that the figure will improve, but it is encouraging as it stands. Slightly more than 60 per cent. go into full-time jobs, 13 per cent. move on into further education and training, and we intend to build on that. We intend to build on the best schemes, some of which have been putting 90 to 95 per cent. of their youngsters into full-time jobs. We can take great satisfaction from that.

There is a need for improved training. I am keenly aware that, even at the present level of unemployment, it is an appalling fact that we still face serious skill shortages. Those shortages are increasing in some of the new technologies. It is appalling that there should be still shortages when 3 million are unemployed. There is every sign that they are holding back the expansion of some of the firms in the newest technologies.

We are about to launch a major new training campaign. I hope that we shall work closely and in co-operation with the CBI and the TUC. The MSC under its new chairman will be leading that campaign. We need to unlock the resources of everyone in industry involved with training. One of the most recent studies by the NEDC shows that, whereas the Government's contribution to training compares favourably with what happens in other counties, in recent years we have lost the amount of investment that came from companies. I hope—I trust that the House will support this—that when companies examine capital investment they will not think only in terms of plant and machinery. That is easy to do. We must increasingly recognise that the most important investment is in the people who will operate the new technologies. We intend to work closely with industry to develop training in those technologies.

We shall develop our own adult training campaign. We intend to double—I hope that the Opposition will appreciate this—the number of people who can receive adult training. We are building up the Open Tech, which we expect to handle 50,000 people in the coming year—twice as many in the previous year. We shall develop the community programme, which is specially designed to help the long-term unemployed. For the first time, we shall incorporate a training component so that those who have been unemployed for some time are given help to return to work.

Ms. Clare Short


Mr. King

We intend to build on the enterprise allowance scheme. A considerable number of the people who take advantage of that most successful scheme come from the ranks of the long-term unemployed.

As I said recently in my speech at Brighton, we shall put jobs first. We must look hard at the range of protections, restrictions and procedures. We must look again at the balance of advantage between the 87 per cent. who are in work and the 13 per cent. who are not not. There is a real problem, in that it is understandable that management will negotiate for those in their employment and unions will negotiate for their members. There is a real risk that, as a result of those negotiations, the balance will be tilted in favour of those in employment, to the disadvantage of those who are unemployed. That raises some difficult issues for trade unions, which negotiate continually for higher increases than may be justified, greater employment protection, wages council protection, closed shops and restraints on productivity. In many ways, the unions may be blocking new opportunities to get people into jobs. As a Socialist Minister in Europe said to me, if we continue to increase the obligations on employers, we may in a real sense be driving up unemployment.

I am not surprised at the reaction of the Opposition. The Leader of the Opposition said, "Price people into jobs and you price other people out of jobs." Does he really believe that that is true? I give him one illustration. We would all like more training. We would all like more apprenticeships, whether under the old or new style of apprenticeship. The starting rate for an electrical contracting apprentice is £41.63 a week. In 1982–83, there were 850 apprentices. The union went to the employers and said that there were not enough apprentices, to which the employers replied that with a starting rate like that for the first year they would not take them on. That union agreed to reduce the starting rate for new apprentices to £27.88 and this year there are 2,650 apprentices in that industry instead of 850.

The right hon. Gentleman must ask himself whether he wants to keep these wages at a level that satisfies his conscience and ensures that there is the minimum number of apprentices, or to put them at a level that will ensure that the maximum number of young people obtain training. The House and the Government must look at the ways in which they can challenge some of those established prejudices and genuinely put jobs first.

Several of my right hon. and hon. Friends have given us suggestions. They spoke about the national insurance contribution and ways in which that could be adjusted to help either the long-term unemployed or young people. Others have talked about the job release scheme, the part-time job release scheme, the job-splitting scheme and ways in which we could give such schemes a more effective punch. I think that it was only two days ago that my right hon. Friend the Prime Minister spoke about unemployment not being an option for the under-18s. r j 10–1Faced with the gravity of the problems that exist over unemployment, we must be prepared to consider all those possibilities——

Mr. Hattersley


Mr. King

I am——

Mr. Hattersley


Mr. Speaker

Order. There are five minutes left for the debate, and I appeal to hon. Members to allow the Minister to continue his speech.

Mr. Hattersley


Mr. King

I am sorry, but if the right hon. Gentleman had risen earlier, I should have given way to him.

My right hon. Friend the Member for Guildford rightly said that we must see how we can combat this situation with measures that do not lead to an acceleration of inflation or to a further rise in interest rates, otherwise every step that we take will be self-defeating. I stand here as the Secretary of State for Employment—[Interruption.]—and I and the Government recognise quite clearly the responsibility that we have to play our part. But everybody in the country can make a contribution, whether they be employers, trade unionists or Opposition Members, who can play a bigger part than just baying like banshees——

Mr. Straw


Mr. King

What we need is not baying and shouting but an intelligent and constructive approach. No one can opt out of the problem. It is a responsibility that we have. It is a duty that we will not duck. It is no good hon. Members pretending that there is some easy solution or simple wand that can be waved. We all face the challenge. It will not be easy, to quote the right hon. Member for Sparkbrook, to tackle these problems.

I was asked by the right hon. Member for Plymouth, Devonport (Dr. Owen) whether we had noted the first sentence in the 1944 White Paper. We have noted it, and I assure the House that we certainly want to see the highest possible employment level in this country, and that that will be our clear determination.

Question put:

The House divided: Ayes 189, Noes 264.

Division No. 478] [10.00 p.m.
Adams, Allen (Paisley N) Clarke, Thomas
Alton, David Clay, Robert
Anderson, Donald Clwyd, Mrs Ann
Archer, Rt Hon Peter Cocks, Rt Hon M. (Bristol S.)
Ashdown, Paddy Cohen, Harry
Ashley, Rt Hon Jack Concannon, Rt Hon J. D.
Atkinson, N. (Tottenham) Conlan, Bernard
Bagier, Gordon A. T. Cook, Frank (Stockton North)
Banks, Tony (Newham NW) Cook, Robin F. (Livingston)
Barnett, Guy Corbett, Robin
Barron, Kevin Corbyn, Jeremy
Beckett, Mrs Margaret Cowans, Harry
Beith, A. J. Craigen, J. M.
Benn, Tony Crowther, Stan
Bennett, A. (Dent'n & Red'sh) Cunliffe, Lawrence
Bidwell, Sydney Cunningham, Dr John
Blair, Anthony Dalyell, Tam
Boothroyd, Miss Betty Davies, Rt Hon Denzil (L'lli)
Boyes, Roland Davies, Ronald (Caerphilly)
Bray, Dr Jeremy Davis, Terry (B'ham, H'ge H'l)
Brown, Gordon (D'f'mline E) Deakins, Eric
Brown, Hugh D. (Provan) Dewar, Donald
Brown, N. (N'c'tle-u-Tyne E) Dobson, Frank
Brown, R. (N'c'tle-u-Tyne N) Dormand, Jack
Brown, Ron (E'burgh, Leith) Douglas, Dick
Bruce, Malcolm Duffy, A. E. P.
Buchan, Norman Dunwoody, Hon Mrs G.
Callaghan, Jim (Heyw'd & M) Eadie, Alex
Campbell, Ian Eastham, Ken
Campbell-Savours, Dale Ellis, Raymond
Carter-Jones, Lewis Evans, John (St. Helens N)
Cartwright, John Ewing, Harry
Clark, Dr David (S Shields) Fatchett, Derek
Fields, T. (L'pool Broad Gn) Oakes, Rt Hon Gordon
Fisher, Mark O'Brien, William
Flannery, Martin O'Neill, Martin
Foot, Rt Hon Michael Orme, Rt Hon Stanley
Foster, Derek Owen, Rt Hon Dr David
Fraser, J. (Norwood) Park, George
Freeson, Rt Hon Reginald Parry, Robert
Gilbert, Rt Hon Dr John Patchett, Terry
Godman, Dr Norman A. Pavitt, Laurie
Golding, John Pendry, Tom
Gould, Bryan Penhaligon, David
Gourlay, Harry Pike, Peter
Hamilton, W. W. (Central Fife) Powell, Raymond (Ogmore)
Hancock, Mr. Michael Prescott, John
Hardy, Peter Radice, Giles
Harman, Ms Harriet Randall, Stuart
Harrison, Rt Hon Walter Redmond, M.
Hart, Rt Hon Dame Judith Rees, Rt Hon M, (Leeds S)
Hattersley, Rt Hon Roy Richardson, Ms Jo
Heffer, Eric S. Roberts, Allan (Bootle)
Hogg, N. (C'nauld & Kilsyth) Roberts, Ernest (Hackney N)
Home Robertson, John Robertson, George
Howell, Rt Hon D. (S'heath) Robinson, G. (Coventry NW)
Hoyle, Douglas Rooker, J. W.
Hughes, Roy (Newport East) Ross, Ernest (Dundee W)
Hughes, Sean (Knowsley S) Rowlands, Ted
Janner, Hon Greville Sedgemore, Brian
Jenkins, Rt Hon Roy (Hillh'd) Sheerman, Barry
John, Brynmor Shore, Rt Hon Peter
Jones, Barry (Alyn & Deeside) Short, Ms Clare (Ladywood)
Kaufman, Rt Hon Gerald Short, Mrs R.(W'hampt'n NE)
Kennedy, Charles Silkin, Rt Hon J.
Kilroy-Silk, Robert Skinner, Dennis
Kinnock, Rt Hon Neil Smith, C.(Isl'ton S & F'bury)
Kirkwood, Archy Snape, Peter
Lamond, James Soley, Clive
Leadbitter, Ted Steel, Rt Hon David
Leighton, Ronald Stewart, Rt Hon D. (W Isles)
Lewis, Ron (Carlisle) Stott, Roger
Lewis, Terence (Worsley) Straw, Jack
Litherland, Robert Thomas, Dafydd (Merioneth)
Lloyd, Tony (Stretford) Thomas, Dr R. (Carmarthen)
Lofthouse, Geoffrey Thompson, J. (Wansbeck)
Loyden, Edward Thorne, Stan (Preston)
McCartney, Hugh Tinn, James
McDonald, Dr Oonagh Torney, Tom
McKay, Allen (Penistone) Wainwright, R.
McKelvey, William Wallace, James
Maclennan, Robert Wardell, Gareth (Gower)
McNamara, Kevin Wareing, Robert
McTaggart, Robert Weetch, Ken
McWilliam, John Welsh, Michael
Madden, Max Wigley, Dafydd
Marek, Dr John Williams, Rt Hon A.
Maxton, John Wilson, Gordon
Maynard, Miss Joan Winnick, David
Meacher, Michael Woodall, Alec
Meadowcroft, Michael Wrigglesworth, Ian
Michie, William
Mikardo, Ian Tellers for the Ayes:
Morris, Rt Hon J. (Aberavon) Mr. James Hamilton and
Nellist, David Mr. Frank Haynes.
Adley, Robert Best, Keith
Aitken, Jonathan Bevan, David Gilroy
Alexander, Richard Biffen, Rt Hon John
Alison, Rt Hon Michael Biggs-Davison, Sir John
Amess, David Blackburn, John
Arnold, Tom Blaker, Rt Hon Sir Peter
Aspinwall, Jack Bonsor, Sir Nicholas
Atkins, Rt Hon Sir H. Boscawen, Hon Robert
Atkins, Robert (South Ribble) Bottomley, Peter
Baker, Rt Hon K. (Mole Vall'y) Bottomley, Mrs Virginia
Baker, Nicholas (N Dorset) Bowden, A. (Brighton K'to'n)
Baldry, Tony Bowden, Gerald (Dulwich)
Banks, Robert (Harrogate) Boyson, Dr Rhodes
Batiste, Spencer Braine, Sir Bernard
Bendall, Vivian Brandon-Bravo, Martin
Benyon, William Bright, Graham
Brinton, Tim Key, Robert
Brittan, Rt Hon Leon King, Roger (B'ham N'field)
Brooke, Hon Peter King, Rt Hon Tom
Brown, M. (Brigg & Cl'thpes) Lamont, Norman
Browne, John Latham, Michael
Bruinvels, Peter Lawrence, Ivan
Bryan, Sir Paul Lawson, Rt Hon Nigel
Buck, Sir Antony Leigh, Edward (Gainsbor'gh)
Budgen, Nick Lennox-Boyd, Hon Mark
Bulmer, Esmond Lester, Jim
Burt, Alistair Lewis, Sir Kenneth (Stamf'd)
Butler, Hon Adam Lightbown, David
Butterfill, John Lilley, Peter
Carlisle, John (N Luton) Lloyd, Ian (Havant)
Carlisle, Kenneth (Lincoln) Lloyd, Peter, (Fareham)
Carlisle, Rt Hon M. (W'ton S) Lord, Michael
Carttiss, Michael Luce, Richard
Cash, William McCrindle, Robert
Chalker, Mrs Lynda MacGregor, John
Channon, Rt Hon Paul MacKay, Andrew (Berkshire)
Chapman, Sydney MacKay, John .(Argyll & Bute)
Chope, Christopher Maclean, David John
Clark, Dr Michael (Rochford) McNair-Wilson, P. (New F'st)
Clark, Sir W. (Croydon S) Malins, Humfrey
Clarke, Rt Hon K. (Rushcliffe) Maples, John
Cockeram, Eric Marland, Paul
Colvin, Michael Marlow, Antony
Conway, Derek Mates, Michael
Coombs, Simon Mather, Carol
Cope, John Maude, Hon Francis
Corbyn, Jeremy Mawhinney, Dr Brian
Corrie, John Mayhew, Sir Patrick
Couchman, James Merchant, Piers
Critchley, Julian Meyer, Sir Anthony
Crouch, David Miller, Hal (B'grove)
Currie, Mrs Edwina Mills, Iain (Meriden)
Dickens, Geoffrey Mills, Sir Peter (West Devon)
Dicks, Terry Miscampbell, Norman
Dorrell, Stephen Mitchell, David (NW Hants)
Douglas-Hamilton, Lord J. Moate, Roger
Dover, Den Montgomery, Fergus
du Cann, Rt Hon Edward Moore, John
Dunn, Robert Morris, M. (N'hampton, S)
Durant, Tony Morrison, Hon C. (Devizes)
Edwards, Rt Hon N. (P'broke) Morrison, Hon P. (Chester)
Eggar, Tim Moynihan, Hon C.
Emery, Sir Peter Mudd, David
Evennett, David Neale, Gerrard
Eyre, Sir Reginald Needham, Richard
Fallon, Michael Nelson, Anthony
Flannery, Martin Neubert, Michael
Forman, Nigel Newton, Tony
Fox, Marcus Nicholls, Patrick
Franks, Cecil Norris, Steven
Galley, Roy Onslow, Cranley
Gardner, Sir Edward (Fylde) Oppenheim, Phillip
Glyn, Dr Alan Oppenheim, Rt Hon Mrs S,
Gorst, John Page, Sir John (Harrow W)
Gower, Sir Raymond Page, Richard (Herts SW)
Grist, Ian Patten, John (Oxford)
Grylls, Michael Pattie, Geoffrey
Gummer, John Selwyn Pawsey, James
Hamilton, Neil (Tatton) Peacock, Mrs Elizabeth
Hannam, John Percival, Rt Hon Sir Ian
Hargreaves, Kenneth Pollock, Alexander
Hawkins, C. (High Peak) Porter, Barry
Hayhoe, Barney Powell, William (Corby)
Heathcoat-Amory, David Powley, John
Heddle, John Prentice, Rt Hon Reg
Hickmet, Richard Price, Sir David
Hill, James Prior, Rt Hon James
Hogg, Hon Douglas (Gr'th'm) Proctor, K. Harvey
Holland, Sir Philip (Gedling) Pym, Rt Hon Francis
Holt, Richard Raffan, Keith
Hordern, Peter Rathbone, Tim
Howarth, Gerald (Cannock) Rees, Rt Hon Peter (Dover)
Howell, Rt Hon D. (G'ldford) Renton, Tim
Howell, Ralph (N Norfolk) Rhodes James, Robert
Jopling, Rt Hon Michael Rhys Williams, Sir Brandon
Kellett-Bowman, Mrs Elaine Ridley, Rt Hon Nicholas
Ridsdale, Sir Julian Stevens, Martin (Fulham)
Rippon, Rt Hon Geoffrey Stewart, Allan (Eastwood)
Robinson, Mark (N'port W) Stewart, Andrew (Sherwood)
Rossi, Sir Hugh Stradling Thomas, J.
Rowe, Andrew Sumberg, David
Ryder, Richard Tapsell, Peter
Sackville, Hon Thomas Taylor, John (Solihull)
Sainsbury, Hon Timothy Taylor, Teddy (S'end E)
St. John-Stevas, Rt Hon N. Temple-Morris, Peter
Shaw, Sir Michael (Scarb') Thatcher, Rt Hon Mrs M.
Shelton, William (Streatham) Thomas, Rt Hon Peter
Shepherd, Colin (Hereford) Thompson, Donald (Calder V)
Shepherd, Richard (Aldridge) Thompson, Patrick (N'ich N)
Shersby, Michael Thome, Neil (Ilford S)
Silvester, Fred Thurnham, Peter
Sims, Roger Townend, John (Bridlington)
Skeet, T. H. H. Townsend, Cyril D. (B'heath)
Smith, Sir Dudley (Warwick) Tracey, Richard
Smith, Tim (Beaconsfield) Twinn, Dr Ian
Soames, Hon Nicholas van Straubenzee, Sir W.
Speed, Keith Vaughan, Sir Gerard
Speller, Tony Viggers, Peter
Spencer, Derek Waddington, David
Squire, Robin Walden, George
Stanbrook, Ivor Walker, Bill (T'side N)
Steen, Anthony Walker, Rt Hon P. (W'cester)
Stern, Michael Waller, Gary
Stevens, Lewis (Nuneaton) Walters, Dennis
Wardle, C. (Bexhill) Wolfson, Mark
Warren, Kenneth Wood, Timothy
Watson, John Woodcock, Michael
Watts, John Yeo, Tim
Wells, Sir John (Maidstone) Young, Sir George (Acton)
Whitfield, John Younger, Rt Hon George
Whitney, Raymond
Wiggin, Jerry Tellers for the Noes:
Wilkinson, John Mr. Tristan Garel-Jones and
Winterton, Mrs Ann Mr. Archie Hamilton.

Question accordingly negatived.