Economic Policies and Unemployment

HC Deb 03 June 1986 vol 98 cc751-92

Mr. Speaker

I must announce to the House that I have selected the amendment in the name of the Prime Minister. I must also tell the House that many hon. Gentlemen wish to take part in the debate, and I appeal for brief contributions.

4.30 pm

Mr. Roy Hattersley (Birmingham, Sparkbrook)

I beg to move, That this House strongly condemns this Government's economic policies which have led to the highest ever level of unemployment. Almost exactly three years ago today, the Chancellor of the Exchequer forecast the date on which unemployment would start to fall. At a Conservative party election press conference, he said that the reduction would begin in early 1984. His forecast that the reduction would begin in the early days of that year was qualified by only one reservation: the estimate was, he said, his own. He added: Take it or leave it for what it is worth. Today we know exactly the value of the Chancellor's judgment. We know exactly what that was worth. Far from falling, unemployment has remorselessly increased. It has increased by 300,000 since the Chancellor predicted his reduction, by 200,000 since the date when the reduction was supposed to begin and by 2 million since the Government were elected in 1979. I ought to make it clear that the figure of 2 million is the record according to the Government's massaged figures. On the honest calculations, the seven-year increase since 1979 is 2.5 million.

Day after day the bad news grows. There is bad news for tin miners on Monday and for shipyard workers on Tuesday. The numbers of redundancies pile up day after day. Under the Government, unemployment has risen to higher levels than ever. Unemployment here is now worse than in Germany, France, America, Japan, Sweden, Norway, Canada, Denmark, Greece, Switzerland, Australia and many other countries. Seven years ago we were told that the effects of the international recession would be the same for those countries as it would be here.

The excuse that we suffer as the rest of the world suffers is patently false. So is the absurd notion, which no doubt we shall hear from the Chancellor this afternoon, that were we to improve employment, we would have to sacrifice improved inflation. That is no more sensible that to say that we should or could bring unemployment down by allowing inflation to rise. The two factors essentially have to go hand in hand.

Mr. Tony Marlow (Northampton, North)

Will the right hon. Gentleman give way?

Mr. Hattersley

No, I will not give way. The debate began very late. It is a brief debate and I shall obey Mr. Speaker's injunction.

The disgrace that we are debating today is not just the tragedy of the past seven years. We are discussing a continuation of the catastrophe. We are discussing it because the Government have no strategy for the reduce ion of unemployment and, I fear, precious little concern for the unemployed.

Budget after Budget, all we receive are diversions and distractions—profit sharing, job starts and job clubs. We receive nothing but gimmicks and exhortations to be patient, and the pretence that the Government are creating the conditions in which unemployment will naturally fall. We have heard that now for seven years. I must ask the Chancellor again the question which, on the record, he only answers at election time and then gets grotesquely wrong: when will a sustained reduction in unemployment begin?

The question is all the more relevant today in the light of the Chancellor's boast last week about the strength of the economy. If the economy is so strong, what is the Chancellor's excuse for saying that there is nothing that he can offer the unemployed? What sort of recovery is it that leaves almost 4 million men and women out of work? How long will they have to wait before they can enjoy some of the advantages that the Chancellor attempted to describe last week?

An answer of sorts was given last week by the Secretary of State for Employment acting in his capacity as Minister for Irrelevant Gimmicks. The noble Lord is clearly destined to play a crucial part in the future of the Government. He is to occupy the role so recently vacated by the right hon. Member for Leeds, North-East (Sir K. Joseph). He is to be the court jester. He will be what in King Lear was called the Fool but he will be the Fool in reverse. He will be the man who dresses up nonsense and pretends that it is wisdom. The noble Lord's speech last week was an example of that. Had I not seen that speech reported in every reputable newspaper I would not have believed that it had been made by a member of a responsible Administration. Seven years after the Government were elected, the Secretary of State for Employment announced how he would change the prospects for the unemployed. He said that he would organise a profound change in British culture.

We will recognise the new renaissance when it comes—this profound change in culture—because there will be a relaxation of hire car regulations and an abolition of licences for anti-shop lifting devices. In the new Conservative Camelot, private nursing homes will no longer be licensed. That is a strange industry around which to build our economic regeneration. However, this new unregulated Eldorado is not an immediate prospect. The Secretary of State for Employment is issuing a consultative statement and that will be followed by a definitive White Paper. When all that happens, the absence of regulations will slowly create the conditions in which job growth will begin.

If the noble Lord's ideas were simply silly, neither they nor he would matter, nor would they need to detain us now. However, some of the ideas related to reducing unemployment are positively pernicious. It is pernicious to restrict the rights to maternity benefit. It is pernicious to limit the right to appeal against unfair dismissal. And it is especially pernicious to pretend that the unemployment figures can be reduced by penalising those already in work.

Unemployment has not risen during the past seven years because of regulations within the economy or restrictions within the labour market. It has risen because of the Government's policy. Seven years ago we were told that reductions in Government borrowing and cuts in public spending, a tight grip on the money supply and the consequent high interest rates and over-valued sterling would create the conditions in which employment would increase and unemployment would fall. In both particulars exactly the opposite has happened.

Despite the bogus claims about job creation, the counting of part-time jobs as if they were full-time, the intentional over-estimation of the number of people in self-employment, the truth is not in doubt. The Bank of England states that the real record of job creation between June 1983 and June 1985 is the equivalent of 24,000 employees in full time jobs, not the 250,000 which the Government fraudulently calculated. The Government's figure was almost 10 times greater than the real figure.

The Government's claims grow more bizarre day by day. This morning on the radio in one of those performances which lose his party so many votes, in one of the performances against which the Leader of the House and the Home Secretary have warned him, the chairman of the Conservative party claimed that the Government had created 1 million jobs since 1983. I must tell the Chancellor that I cannot imagine anybody buying a second hand political party from that man.

The truth is that even on the Government's own figures we have lost 1 million jobs since 1979. The Chancellor shakes his head but I have no doubt that one of the civil servants in the Box will provide him with the proper abstract of statistics. On the OECD figures, to which the Government contribute, it is clear that we have lost more jobs since 1979 than all the rest of the EEC put together. We have lost them largely because of Government policy — interest rates higher than the rest of Europe, an exchange rate which subsidises imports and penalises exports, and the Government's short-sighted refusal to invest resources in jobs and people.

One of the reasons given by the Government for ever-rising unemployment is earnings increases which outstrip inflation. I dare say that we shall hear something about that this afternoon. However, when it is convenient—for example, in party political broadcasts—the Government boast about earnings increases which outstrip inflation. So I ask the Chancellor again a question which he has failed to answer before and which the Chief Secretary has similarly failed to answer: Are the Government pleased or sorry that wage increases have bounded away over the past two years in the way that the figures demonstrate?

Mr. Timothy Wood (Stevenage)

Will the right hon. Gentleman give way?

Mr. Hattersley

No. I have made it clear that I think it right to make my speech as quickly as possible and allow other hon. Members to do the same. I am doing the hon. Gentleman a favour because I am helping him to catch Mr. Speaker's eye as the afternoon wears on. The Chancellor's Parliamentary Private Secretary is saying something, but whether it is to me or to the Chancellor, I am not clear.

It was the people who received those extra wage increases of whom I assume the Secretary of State for Employment was speaking when he said last week We have never had it so good for the 87 per cent. who are in work. That comment combines ignorance, callousness, cynicism and stupidity in equal measure.

First, that comment is ignorant because it is statistically untrue. The lowest paid 10 per cent. of men and women in work are worse off than they were seven years ago. The Institute for Fiscal Studies tells us that since the cost of living rises at a different speed and in a different way for pensioners and the other recipients of benefit, any benefit scheme which has increased only according to the official RPI results in the pensioners and the other recipients of benefit being worse off than they were seven years ago. Gallup tells us that over the past seven years 30 per cent. of the population has been directly affected by unemployment. All those people are worse off materially than they were seven years ago.

But the statement of the Secretary of State for Employment is wrong and ignorant in particular because it disregards the millions of families who are worse off because of the deterioration in the services on which their comfort and security depends. Perhaps more important, the noble Lord's statement was callous because it urged the prosperous to forget the disadvantaged. It was cynical because it hoped to construct a party political majority of the selfish and the uncaring.

Most important of all, and the point that I want to make to some extent, was that the idea that the 87 per cent.—a figure conjured out of statistical ignorance by the Secretary of State—had never had it so good was stupid because it did not recognise, and he did not understand, that even the prosperous cannot enjoy the full fruits of their prosperity in a society which is cruelly divided between employed and unemployed, between rich and poor, because most of the families who are still in work, even the families which have not been touched by unemployment over the past seven years, rely on public services for their health care and for the education of their children.

The families still in work, to whom the Secretary of State for Employment was presumably referring, are concerned about the physical conditions of their environment. All of them know that the National Health Service, the education service and the environment have deteriorated over the past seven years and they know that unless we begin to spend money on rebuilding dilapidated Britain now, in five, 10 or 20 years the nation will not be able to afford the cost of escalating deprivation. [Interruption.] If hon. Members believe that that is not true, they do not inhabit the real world of Britain since 1979 where schools and hospitals are in physical decay and where even according to the Government's National Economic Development Office the decay now runs at such a rate that, unless we try to arrest it soon, there will be no hope of rebuilding Britain into a decently equipped society.

What is more, the people who suffer from the lack of services, the people who want to see the building programmes and the environment improved with new schools and hospitals, know that by putting the unemployed back to work their public services and environment could be improved.

Men and women in secure employment know that a society that accepts permanent unemployment breeds despair, and they know, too, that that society which breeds despair breeds crime. The claim that they have never had it so good rings very hollow indeed to those families who have seen violent crime rise by 40 per cent., burglaries by 54 per cent. and vandalism and criminal damage by 76 per cent. All those deteriorations in law and order have come about since the Government were elected and since unemployment escalated and brought with it the despair that brings violence. That is why a concentrated campaign to put Britain back to work is not just the compassionate option; it is the sensible option. It is the option dictated by the self-interest of us all, for it is to the direct material advantage of men and women now at work; men and women who want and need better housing, roads, hospitals and transport. The truth — I repeat it again — is that without adequate public services it is impossible for most families fully to enjoy their private earnings.

I give a fashionable example. It is an example so fashionable that it appeals to the new Secretary of State for Education and Science—the concern about litter, which I recognise, and I am glad to see that he has recognised, as something which affects Britain. I tell the Secretary of State for Education and Science and the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley) who has inherited his initiative that litter in Britain will not be cleared by Mr. Richard Branson. It might be cleared if unemployed youths no longer stood on street corners in all our cities, and it might he cleared if councillors were allowed to finance adequate street cleaning. It might be cleared if the Government had the sense to realise that it is absurd to spend £6,000 a year on keeping a man or woman out of work when there are urgent tasks for those men and women to do.

Mr. Ralph Howell (Norfolk, North)

Will the right hon. Gentleman give way?

Mr. Hattersley

No, I have made it clear that I shall press on, and that will allow the hon. Gentleman to speak if he catches Mr. Speaker's eye.

The position is clear. The Chancellor talks persistently, and will no doubt do so this afternoon, as if unemployment costs Britain nothing and as if putting Britain back to work is the expensive option. In fact, unemployment costs Britain £20 billion a year in benefits paid and taxes forgone. Unemployment costs Britain another £30 billion a year in lost production. It is simple lunacy, no less for those in work than for those who are unemployed, to allow money to be wasted and to allow the waste to continue when the money now spent on unemployment and the workers could combine to build a better Britain.

I ask the Chancellor a simple question and I shall keep on asking it until he has the courtesy to answer. I know graciousness is not a characteristic that is most noticeable — [Interruption.] Somebody from the Front Bench shouted, "It takes one to know one." We do need to improve the education system, do we not? How does the Chancellor justify a policy which leaves Britain short of houses, hospitals and schools and at the same time keeps 400,000 construction workers on the dole? It does not make sense because those people could be put back to work, thus reducing unemployment and making an important contribution to the quality of life and the prosperity of Britain.

Putting Britain back to work is an urgent necessity for all our people, employed and unemployed alike. Reducing unemployment, initially by about 1 million in two years, is the policy to which the next Labour Government will give overall priority. It is a policy to which everything else must take second place. To achieve that aim — and achieve it we shall—we will specify firm targets for borrowing and spending and will make sure that spending remains within those targets and is concentrated on job creation.

The Prime Minister spoke movingly to one of her Back Benchers today and said she was always prepared to listen to suggestions for extra expenditure if they were matched by ideas about where the money could come from. Let me give her one suggestion. It is right economically, socially and morally to use available resources for investment in public sector capital to reduce unemployment rather than use them to reduce the standard rate of income tax to 25p. It may not appeal to those small groups of cynics and self-interested people whom the Secretary of State for Employment tells us have never had it so good. Those are the people who have already enjoyed the tax cuts from Government. What I have suggested is right for Britain and it is what most of our people want.

To achieve the reduction in unemployment that we intend I concede at once that the next Labour Government will have to postpone some policies which are desirable and necessary in themselves. I say and I shall continue to say that it is our overwhelming intention to make every other objective secondary to a reduction in unemployment. If resources are concentrated on that overwhelming necessity, it will be possible to begin putting Britain back to work. We shall begin to put Britain back to work. That is what our people want and that is what the Labour Government will do.

4.53 pm

The Chancellor of the Exchequer (Mr. Nigel Lawson)

I beg to move, to leave out from 'House' to the end of the Question and to add instead thereof, 'congratulates Her Majesty's Government on the success of its economic policies in securing the lowest rate of inflation for over 18 years and steadily rising employment.' The House is united in its concern to see an end to the prolonged rise in unemployment and a steady reduction in the numbers out of work. What divides us is how that can be achieved. This debate is taking place on what is virtually the third anniversary of the general election of 1983, and I am delighted that the Opposition wish to commemorate that historic event. It is worth recalling what the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) had to say in the moment of truth in the aftermath of that massive defeat for his party. He said: Our economic policy—the promise to put Britain back to work—was a net vote loser. Our vague hopes of achieving growth through Government spending were barely understood and rarely believed". Three years later the right hon. Gentleman is again peddling the same economic panaceas that were so rightly rejected in 1983. A massive increase in public expenditure—no less than an extra £24 billion, as my right hon. Friend the Chief Secretary has said — is once again paraded as the answer to unemployment. It was wrong when it was put into practice in 1974, it was wrong when it was so decisively rejected by the British people in 1983, and it is wrong today. The only consequence of a policy of massive spending by a Labour Government would be a massive increase in public borrowing, a massive increase in taxation and a massive increase in inflation, leading to financial collapse and the inevitable recourse to the International Monetary Fund.

The right hon. Gentleman is right about one thing. The solution to unemployment must lie in large measure in enabling the economy to generate faster growth for a sustained period. Whatever the arguments for higher public expenditure, the creation of a more efficient and more competitive economy is not one of them. Indeed, if anything the reverse is the case. It is no coincidence that the two most successful economies in the world, those of the United States and of Japan, have a markedly lower level of public expenditure and taxation in relation to their gross domestic product than we have in this country.

There is no pseudo-Keynesian short cut to a better performing economy. It requires entrepreneurs prepared to seize opportunities and take risks, high quality management, with a firm grip on costs, and high quality investment—not least in research and development. It requires a well-trained and well-motivated work force and a market economy free of unnecessary interference and restrictions of all kinds. Starting from where we were in the United Kingdom after years, indeed decades, of movement away from the market economy, it is inevitably a long and slow process, but let there be no doubt about the progress that we have already made.

In the latter part of his speech the right hon. Gentleman made a number of somewhat selective statistical comparisons between now and 1979. We all remember, especially those of us on the Government side, the critical situation that the Government inherited in 1979, the aftermath of the winter of discontent. There was rampant inflation, public expenditure out of control, widespread and unsustainable overmanning in most of British industry, grossly excessive public sector borrowing and untrammelled trade union power, and business morale was at rock bottom. I have no wish to look back to that, though perhaps the public do need to be reminded from time to time.

The British people delivered their verdict on the first four years of this Government, and they did so in no uncertain manner, in June 1983. That argument is now over, and in the most decisive way it could be.

There is no point in the right hon. Gentleman or the Opposition trying to have a replay of the 1983 general election. The question now is what has happened since June 1983. Since then our economy has been growing at 3 per cent. a year, the fastest rate of growth in the European Community. By June 1983 inflation had already fallen to its lowest level since the 1960s, and has now fallen still further to 3 per cent. Despite what the right hon. Member for Sparkbrook said, the number of jobs has risen by almost a million, industrial investment is up by 32 per cent., manufacturing productivity is up by 8½ per cent., manufacturing exports are up by 19 per cent., and manufacturing investment is up by 31 per cent.

Moreover, all this has been achieved despite the twin traumas of a year-long coal strike and an oil price that has fallen from $30 a barrel in June 1983 to less than $13 a barrel today — two storms that we have successfully weathered in a way that would simply not have been possible had we taken the advice of our critics and abandoned the prudent economic policy we have been consistently pursuing and will continue to pursue.

Indeed, figures published today show that since the turn of the year, while the oil price has tumbled, our foreign exchange reserves have actually risen by very nearly $1 billion. In all this progress the achievement of low inflation has been the cornerstone. When my right hon. Friend the Prime Minister was bold enough to say, a little over a year ago, that she could foresee inflation down to 3 per cent. by the end of this Parliament, this was widely derided as an impossible dream, yet it is now a fact, well ahead of schedule, with the prospect of continued low inflation in the months and years ahead.

Of course, inflation has come down virtually worldwide — not surprisingly, since all the major economies have been pursuing much the same anti-inflation policies as ourselves. It is only the Opposition who are out of step—still trapped in the malign time-warp of the 1970s.

The fall in inflation has been considerably greater here than in most other countries. During the last Labour Government, when the right hon. Gentleman was Minister with responsibility for prices, inflation in the United Kingdom was 5½ per cent. more than the average of the European Community as a whole. Today our rate of inflation is, if anything, below the European Community average.

It is, of course, perfectly true that over the past six months or so there has been something of a pause in worldwide economic growth. In Germany, as well as in Britain, industrial production has been pretty flat, while in both France and Japan it has actually fallen. Even in the United States the rise during that period has been very modest. But this is no cause for alarm. As the Organisation for Economic Co-operation and Development put it in its economic outlook that was published last week: Economic conditions in the OECD area have changed to an unusual degree over the past six months or so, and very largely for the better … These developments have significantly improved the near-term prospects for OECD inflation and growth. What seems to be happening is in a sense the mirror image of what happened during the two great oil price hikes of 1973 and 1979, when there was a delay of several months before output was decisively affected. Not surprisingly, oil producers tend perforce to be prompter in cutting back their spending than oil consumers are in increasing theirs, and the initial effect of the industrialised world of higher disposable incomes as inflation comes down tends to be on saving rather than on spending.

I would still expect the gains to the United Kingdom from lower oil prices, in terms of economic activity, and therefore employment, to exceed the losses over the months ahead, and for world growth to resume as vigorously as ever, so this is no time for a change of policy, least of all for a massive increase in public expenditure, as the Opposition parties advocate.

If increased public expenditure were the remedy for our ills, then indeed the voters might be tempted to support those who have always maintained this to be so, but it is not so, as bitter experience should have taught us. Of course, we need to have a keen sense of priorities within public expenditure, and we also need to find ways of securing better—much better—value for money for the vast sums that national and local government spend.

Take education, for example, which was mentioned by the right hon. Member for Sparkbrook, and about which there is widespread and understandable concern. The latest available figures show that the taxpayer and the ratepayer in this country spend roughly the same per pupil in school as Germany does, some 20 per cent. more than Japan does and as much as 50 per cent. more than France. Yet this is manifestly not reflected in what parents rightly care about: standards and values and the child's preparation for the real world of tomorrow. These are the problems that we have to grapple with. At the same time, we need to continue the process of reducing the burden of taxation, not as a social service but as both a moral duty and as an essential means of improving our national economic performance.

A new study by the Institute for Fiscal Studies has shown that since we have been in office we have lightened the burden of taxation on those both at the top of the income scale, where tax rates approached the point of confiscation, and at the bottom of the income scale, where the hardship was greatest. But ordinary people, on middle incomes still pay, altogether, 38 per cent. of every extra pound that they earn. That is too much.

Let no one take tax cuts for granted. If we fail to control public expenditure, it will not be a question of how much the burden of taxation on ordinary families can be reduced; it will be a question of how much it has to go up, and if the right hon. Gentleman were ever to resume office it would go up massively, for the idea that Labour's programme could be paid for simply by taxing the so-called rich is manifest nonsense. The sums simply do not add up.

As the Engineering Employers Federation has recently pointed out, this is a moment of opportunity for British industry. Inflation has come down sharply, as have, even more sharply. industry's non-pay costs. Interest rates, both short term and long term, are some 2½ points lower than they were a year ago and the pattern of exchange rates is also considerably more favourable than it was a year ago.

World markets are about to expand again as the benefits of the oil price fall flow through. Whether that opportunity is successfully grasped, or largely dissipated, will depend on management's determination to control its unit labour costs, the Achilles heel of the British economy.

There is a further bonus to British industry from greater success on this front, where so far we have been doing conspicuously less well than our principal competitors, at the expense of jobs in particular, for a marked improvement in the trend of British unit labour costs would do more than anything else to improve sentiment in the financial markets, thus facilitating further reductions in interest rates. It was above all in this context, the context of our rigid and malfunctioning labour market, with its damaging consequences for jobs, that I put forward in the Budget my proposal for a possible tax incentive for a switch to profit-related pay, on which I am now engaged in consultation with industry.

The purpose of encouraging workers to have part of their remuneration directly linked to profits is twofold. The first purpose is to create a greater sense of identity of interest between the employee and the firm in which he works. It has been a constant refrain of Government policies ever since we took office—particularly through the steps that we have taken to encourage wider share ownership, in particular employee share ownership—to narrow the gap between "them" and "us" in British industry.

The second purpose of my Budget and subsequent proposals is to enable there to be a greater degree of flexibility in overall pay so that the strain of hardship and difficulties in any particular market for any particular company falls not only on the numbers of workers employed, but on the level of pay. I am pleased with the widespread welcome that the concept has received in principle, and of course I shall take fully into account points made by industry during the consultation process. A more detailed consultative paper will be published next month.

I say to those who have commented on the proposal so far that the quest for perfection is the bugbear of improvement, and anyone who fails to see that some improvement in the nature of wage bargaining is possible is living in an unreal world. Our proposal would lead to a much better position for companies, their work forces and, above all, for the unemployed.

Characteristically, the right hon. Gentleman has waded in, with all the delicacy and sensitivity of a hippopotamus, seeking to rubbish the concept. According to today's newspapers, he believes that it would imply employees shouldering too much financial risk. For heaven's sake, which world is the right hon. Gentleman living in? Does he imagine that there is no risk in the world? Is he aware that the fact that we are debating the motion is a reflection that people's livelihoods are at risk?

It is far better when a company is having a difficult time that some of the risk should be that of losing an element of the profit-related pay than a risk of losing jobs, with a corresponding benefit when the company is doing better. It is better, too, that companies should be encouraged to take on more people. To say that we are living in a world of no risk is a fantasy that only the right hon. Gentleman could perpetuate.

Mr. Hattersley

I notice that the Chancellor is on the last half page of his speech. Does he propose to deal with unemployment, or, having deceived the country three years ago, does he not have the courage to tell the truth this afternoon?

Mr. Lawson

My entire speech has been about the root causes of unemployment, instead of the bogus panacea of more public expenditure, more deficits and more inflation which the right hon. Gentleman believes will lead to more jobs. It is clear that the Opposition are as hostile to new thinking as they are envious of success, whether it is individual or national success. They cling to the policies of the 1970s as the drug addict clings to his addiction, and the remedy that they ultimately peddle is as illusory as the drug addict's, and every bit as dangerous.

5.12 pm

Mr. Richard Wainwright (Colne Valley)

The drubbing that the Government received at Ryedale and West Derbyshire and in the local council polls has not only cut by half the Chancellor's usual eloquence, but has led to Ministers consoling themselves that the private sector is, mercifully for them, ignoring their repeated sermons against increasing unit labour costs. A substantial number of people are still in work with substantial pay packets. It was summed up for them by the Secretary of State for Employment when he said recently, The country has never had as good a time as it has today. That remark blatantly ignored not only the fact that there are 1 million fewer jobs than there were in 1979 but the real—in many constituencies, obvious—concern and sense of deprivation even among those with substantial pay packets. Not only do they have in their families or in the same street people who are out of work or on a temporary scheme which will soon come to an end, but they are aware that being employed by a large, prestigious company is no guarantee against a redundancy notice coming out of the blue.

In recent weeks, firms with the highest reputation and good management have declared substantial redundancies and the trend is far from exhausted. Those redundancies were not predicted. Many of them have taken the commentators as well as the workers by surprise and have struck terror into the hearts of many people who thought that they at least had secure jobs.

Worst of all for the fairly well-paid is the cruel paradox that they can now afford to take their children on a foreign family holiday, but are unable to secure for those youngsters the adequate schooling to which they attach infinitely more importance. Well-paid workers with aged parents who can provide the old lady with a stylish winter coat cannot get that old lady a hip replacement in a reasonable time to save her much pain and dangerous immobility. All this is happening under the eyes of frustrated people, who know that there are vast human resources made idle by the Government's policies. People who could ensure better public services are forbidden to do so. Often at the workplace, when a worker is considering a possible opening for his child who is approaching school or college leaving age, he sees a dearth of private sector investment, which is all set this year to record a very low rate of growth, and probably an even lower rate next year due to the hamfisted combination by the Chancellor of simultaneously abolishing all the investment allowances for new plant and equipment while real interest rates are so high as to be an additional discouragement to the private sector to invest.

The dismal story of public sector investment is all too well known. Not only since this Government came to office in 1979, but since 1970 under Governments of both parties, our rate of public capital investment has fallen sharply, nowhere more heavily than in construction.

Mr. Barry Porter (Wirral, South)

The hon. Gentleman's speech is interesting, but fairly repetitive. We have heard much of this before. What level of public spending and borrowing would he accept, how would he finance the public borrowing, and would he accept an increase in inflation? Having reached those conclusions, would he say whether he is supported in those views by the economic spokesman for the SDP, who is not present?

Mr. Wainwright

I regret that I gave way because the hon. Gentleman showed a notable lack of patience in realising that analysis must precede prescription. I shall come to that point.

In recent years, expenditure on construction work has been only about one third that of Japan, about one third that of West Germany, 37 per cent. of that of France and 51 per cent. that of Italy. The idea that we are worsted in competition with our trade rivals because we spend far too much on personal comforts and personal housing is a complete chimera. The opposite is the case. The Government show no sign of realising the need to step up construction for the purpose of taking people out of long-term unemployment and providing Britain with the public assets that it needs.

The hon. Member for Wirral, South (Mr. Porter) was correct to say that we have all heard the dismal story before. We must continue to talk about it until it is reversed. It calls for a combined national assault on unemployment under sincere national leadership involving the trade unions, the employers and central and local government in a willingness to accept the necessary disciplines—disciplines of which we heard nothing from the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), who opened for the Labour segment of the Opposition. It means that all these bodies will have to accept the disciplines necessary for expansion without inflation to which, indeed, the alliance parties are pledged. The various privileges in law and by custom that are enjoyed by the separate sectors will have to be moderated and controlled if we are to make a successful national assault on unemployment in order to have a substantial effect on the figures. To ask the present Government under the present Prime Minister to embark upon a huge enterprise of that kind is as realistic as asking a giraffe to swim the Channel. It is no good wasting breath in the House trying to get that sort of reversal.

With this Parliament only three years old, realism demands, unfortunately, that the Opposition have to look at much more modest proposals in the hope—and hope springs eternal in my breast—that Government Back Benchers of experience, and some of great seniority, will prevail on their colleagues in Government to introduce some proposals, with a modest start no doubt and with pilot schemes—there is quite a lot to be said for pilot schemes — to begin to have an effect on the unemployment figures.

In that connection, I wish briefly to refer to the proposals of the Select Committee on Employment published at the end of January, nem. con. at least among Committee members, with the Committee very properly, of course, having a majority of Conservative MPs. The Committee was dealing, in my view quite rightly, with the special problems of the growing number of long-term unemployed, especially those unemployed for more than 12 months. It took account of the fact that somebody made unemployed today has a 40 per cent. chance in the ensuing three months of getting another job. Somebody who has already been unemployed for 12 months has on past history a 22 per cent. chance only of getting another job. After two years' unemployment that probability has dropped to a mere 6 per cent.

Furthermore, the Committee, I think, was shrewd in selecting this distressing category of the unemployed because most of them in effect have been compelled by force of circumstance to withdraw from the labour market. Therefore, getting them re-employed runs very little risk of stoking up wage growth about which the Government take no action but continually show great anxiety. This is, therefore, a valuable sector of the unemployed on which to concentrate attention.

There are Committee proposals for a building improvement scheme to provide some 300,000 extra jobs for the long-term unemployed, the Committee's proposal for 100,000 long-term unemployed to be used in the social services and the National Health Service and, most valuable of all—and the alliance has been propounding this for the last four years — the introduction of a subsidy to private employers to take on long-term unemployed in addition to their present labour force to an overall total of 350,000 additional jobs.

What is the Government's response to these relatively modest but carefully argued proposals from an all-party Committee? The Government certainly did not have in mind the very appropriate words of the Chancellor of the Exchequer a few moments ago when, so rightly, he reminded the House: the quest for perfection is the bugbear of improvement". Quite so, but in trying to rebut—I think vainly trying to rebut — the Select Committee's proposals the Government were all the time making comparisons against a backdrop of perfection. They were pointing out detailed difficulties, but ignored the fact that the Committee agreed that there must be pilot schemes. The Government ignored the fact that in every Government scheme there are manifold difficulties and anomalies, and it would be absurd to expect anything else. The main thrust and purpose can come through satisfactorily.

The fact was also paraded—and it is not something that I want to denigrate—that the Government are now offering interviews and serious and, no doubt, valuable counselling to all long-term unemployed. How much more effective this intensive counselling and attempt to give advice to the long-term unemployed would be if the Manpower Services Commission, which is doing that work, could point to real opportunities of genuine jobs for very large numbers of the long-term unemployed.

The Government in my view are overlooking the fact that a person who receives a lot of intensive counselling in a difficult part of his or her life and finds weeks afterwards that nothing had come of it is likely to be in a worse state than before he or she was called to interview. If the Government scheme for interviewing the long-term unemployed and giving them intensive counselling could be married up with the Select Committee proposals, or some version of them, it would indeed have some effect. All that would be a useful precursor to a new Government's much more massive assault on long-term unemployment using the undoubted credit of the British Government to extend the public sector borrowing requirement to bring it a little nearer the general level prevailing in the industrialised world, but in no way approaching the extravagant, astronomical figures put before the country by the Labour party at the last election.

Also—and this is where I can join forces with the Labour Front Bench spokesman——

Mr. John Prescott (Kingston upon Hull, East)

Do not bother.

Mr. Wainwright

The Labour party spokesman on employment may want to eat those words after the general election result.

Some of the resources that the Government unhappily still declare they want to use for cuts in income tax would be better used to get the long-term unemployed back to work.

Finally, there is the question of timing. The Government have the responsibility of presiding over our affairs in those few years when there may still be time to make a real attack on the problem because, when the moment comes when in addition to the falling world oil price there is the marked falling off of British production, we are, alas, likely to be faced with the old balance of payments problem that some Members of the House, myself included, remember all too well. That, I admit, would inhibit massive attempts to tackle unemployment. There is, therefore, all the more need to start now.

If we go on with the present policies, which God forbid, there will come a time when the Government will find themselves boxed in. They will be subject to severe balance of payment constraints and to keep up the pound and to maintain some control over inflation we shall have to go through the whole wretched business of panic expenditure cuts and a return to astronomical interest rates. Before we run unnecessarily into such a deplorable situation, the Government should start tackling unemployment and also bring about a selective and controlled reflation of the economy. Because the Labour Opposition on this occasion have been good enough to give us a simple, straightforward and direct motion of one sentence only, we shall be with them in the Lobby tonight.

5.29 pm

Mr. Ralph Howell (Norfolk, North)

One wonders how the deputy Leader of the Opposition. the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), had the nerve to come to the House and trot out the same old rubbish that has failed the Opposition in the past and will fail them again. I am not over-pleased with what I have heard in the debate so far. We have heard from the Government, from the official Opposition and from one of the other two Socialist parties, but none of them has put forward any positive, original ideas for dealing with rising unemployment.

There is no conventional cure for unemployment. I beg the Government to take note of the proposals that I shall put forward yet again. For some years I have been trying to persuade the Government to substitute work-fare for welfare. It is a system that has been used in the United States for a number of years and will soon be universal in all states. By this method they are able to keep unemployment at a lower level than the level in this country.

The Opposition suggest more spending, the Liberal party suggests more spending, and so do some members of the Conservative party. That is unacceptable, bearing in mind the appalling taxation which bears more heavily on the low paid than on any other section of the community. There is no room for increased taxation. We must find a way of reducing unemployment and reducing taxation at the same time.

The scheme that I shall put forward could lead to a tax cut of £10 billion. I urge the Government to set up a pilot work-fare scheme. By work-fare, I mean that work should be offered to all people without a normal job at £2 or even £2.50 an hour, so that those who availed themselves of the scheme could earn £100 a week, or £5,000 a year. If all the unemployed turned up at work centres to do the work that was provided, as Beveridge intended, the cost would be £16.5 billion a year. It is said that currently we are spending £20 billion in support for the unemployed plus regional aid schemes, aid to industry and all the training and start-up schemes which are aimed at reducing unemployment.

If we were to offer work, I do not think that 3.3 million would turn up to do it. The schemes which the noble Lord the Secretary of State for Employment has introduced over the last few months have proved that. Many people are so busy in the black economy that they would not have time to turn up at work centres. So I would be surprised if more than 1 million took advantage of the scheme.

Let us assume, as a conservative estimate, that half of the unemployed actually took up this work. If 1.5 million came along, that would cost about £9 billion. That would mean that there could be a large tax cut to remove the weight of taxation from the lower paid. Every penny that was saved could be used to raise tax thresholds se that the taxation of the low paid and pensioners who are living on modest incomes of less than £100 a week would cease.

If such a scheme were put into operation, we would have established the right to work and no one need be afraid of being unemployed ever again. Of course, the scheme could not be successful in five minutes. The Government might start by offering work to those who had been unemployed for more than two years. When they had been absorbed into the work-fare system, work could be offered to those who had been unemployed for one and a half years. Gradually we would get to the point where anyone who had been unemployed for more than six months would automatically be offered work but no social security benefit. That is a crucial point.

I want to draw attention to three side effects of the proposal. The Prime Minister has recently visited Israel, where she was impressed by the cleanliness she saw there. As a result, Mr. Richard Branson is likely to put 5,000 people to work on clearing litter. Why not link that to a nationwide work-fare scheme? Within a year we could have a tidy Britain. Secondly, there is the question of the hippy convoy. Those people might not present a problem if there was a work-fare scheme.

The third side effect relates to foreign visitors who are told that all they have to do to get social security is to book into a hotel and then report to the local DHSS office, saying that they have no money to pay the bills. We are told that automatically the DHSS shells out about £78 a week to such visitors. That would stop because we would not be offering benefits, only work.

I urge the Chancellor of the Exchequer to persuade the Prime Minister to institute a pilot work-fare scheme. I should be happy to have such a scheme in my constituency. The result might be the same as with the nine pilot schemes set up by the Secretary of State for Employment when letters were sent to various people who had been unemployed for more than two years. We might find that the problem was not as big as we thought it was. If the work-fare scheme was successful, there could be a very large tax cut into the bargain.

5.37 pm

Mr. Jack Dormand (Easington)

By any criteria the Chancellor's speech was deeply disappointing. As unemployment continues to rise, his speeches become more and more complacent. My right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) was justified in intervening towards the end of his speech to ask when he intended to talk about unemployment. That was the great omission from the right hon. Gentleman's speech.

The question that the Government have consistently refused to answer is when we can expect unemployment to come down. In the early years of their period of office it was legitimate for the Government to ask us to give their policies a chance to work, but that is not legitimate after seven years of unrestrained power. The Government made much of Labour's record on unemployment when in office. They have referred constantly to the fact that when we left office 1.3 million people were out of work. Seven years on, the official total is 3.4 million, and the actual figure is nearer 4 million. It is particularly significant that there are now more long-term unemployed than the total unemployed when the Government took office.

The Government blame everyone but themselves for such a devastating situation. Of course, we are repeatedly told that the economy is getting stronger every day. I want to ask the Paymaster General how they come to that conclusion. All the evidence suggests otherwise. I shall give three written examples. The figures produced by the Central Statistical Office only two weeks ago show that in the first quarter of this year the economy recorded its slowest underlying growth rate for four years. An underlying growth rate of 1.6 per cent., which is what it is, means that there is no prospect of substantial cuts in unemployment in the near future or in the medium term.

The figures issued by the Department of Trade and Industry, again only two weeks ago, tell the same gloomy story. Industrial investment, which is critical to the unemployment position, showed a fall of 1.7 per cent. in the first quarter of this year compared with the first quarter of 1985.

In its quarterly report the Association of British Chambers of Commerce says: The prospects for employment remain dismal. It says that a balance of only 11 per cent. of its companies, even fewer than at the end of 1985, are predicting an increase in their work forces. Therefore, where is the evidence for the Government's view? We certainly did not hear any from the Chancellor. Perhaps the Paymaster General will give some of the facts when he replies.

One thing is certain. Members of the Government do not have the faintest notion of what unemployment means to an individual. It means losing one's self-respect, a lack of confidence, deep worry for one's family, hopelessness, misery and, very often, sheer despair. On a personal note, I have been unemployed only once in my life, for the short time of four months. With that memory constantly in my mind, I think of the tragedy of those 4 million souls, some of whom have no prospect of being employed again.

The Prime Minister never ceases to tell us that the Government's policies are successful because of the reduction in the rate of inflation. Thousands of people, in the House and outside, have said that to get inflation down to 3 per cent. at a cost of 4 million unemployed is not only too big a price to pay but is a fundamental mistake of policy. I shall not argue the case concerning the fall in inflation, but, in spite of the Government's claim, it is clear that the present low level, particularly the recent fall, is largely a direct result of falling commodity prices helped by a pound which, as my right hon. Friend the Member for Sparkbrook said, is stronger than is necessary.

In spite of what the Chancellor and some of his hon. Friends have said, nothing less than a fundamental change in policies is required if we are to stop the continuing rise in the number of people out of work. The Government's obsession with monetarism has done immense damage to the economy, not only by depressing demand but by making our industry uncompetitive. Their determination to keep the public sector borrowing requirement as low as possible has had the most dire consequences for output and employment.

Dr. Norman A. Godman (Greenock and Port Glasgow)

The Government are not altogether against job creation. This afternoon the Under-Secretary of State for Health and Social Security announced 5,000 new jobs for local offices of the Department of Health and Social Security. About 800 of those jobs, some 16 per cent. of the total, are to come to Scotland. They are to deal with the remorseless increase in the number of supplementary' benefit claimants and those claiming unemployment benefit.

Mr. Dormand

That is an interesting point, and I hope that my hon. Friend catches your eye, Mr. Deputy Speaker, in order to develop it.

The theory was — I hope that it is still not the position—that the private sector would take over the necessary economic action. It simply has not happened. There has been no sustained capital investment. The level of manufacturing investment is still 17 per cent. below what it was in 1979 when the Government came to office. I add my voice to the many who are advising caution on the Government who are presently placing so much importance on investment in the service industries. Certainly tourism and so on have a role to play, but to make the service industries our major sector would be dangerous and, in my view, a fundamental error of policy.

There must be a major increase in public sector investment if we are to have economic recovery and reduce the army of the unemployed. The Labour party has spelt it out many times, my right hon. Friend the Member for Sparkbrook said it today and we repeat with all the force at our command that there is a need for spending on schools, roads, hospitals and railways, to say nothing of the crisis in housing.

Last week I was re-reading the first book by my distinguished predecessor in the House, Manny Shinwell, to whom the nation paid justifiable and proper tribute recently. He was writing about unemployment, which he called "The scourge of idleness". He was speaking of Glasgow where he lived for so many years when he wrote: Think of the whole absurd situation. Thousands of men normally engaged in the building trades are almost permanently unemployed, yet there is a crying demand for houses for the people, an obligation of human decency to clear our great industrial cities of acres upon acres of insufferable, rat-warren slums. That was written in 1943. Here we are 43 years later with 400,000 building workers unemployed and the same crying and desperate need for houses and all of the other projects which I and others have mentioned.

The region which has been hardest hit by the Government's policies is my own, the north. Apart from Northern Ireland, we continue to have the country's highest percentage of unemployment. One person in five is out of work, making 240,000 people. The recent decisions on shipbuilding, engineering and pit closures will considerably add to the devastation. One third of manufacturing industry in the north has disappeared in the past seven years.

Those of us who have the honour to represent the northern region have known for some time that we have a branch factory economy. That is confirmed in Newcastle university's recent regional development study, in which it says: The north has one of the weakest indigenous manufacturing sectors of any region in the United Kingdom. That requires the most urgent attention by the Government. It is an aspect of the north's problems which the newly formed Northern Development Company will be looking at. I hope that the Government will give an assurance that they will be supporting the company. The Paymaster General probably knows that it was formed by the trade unions, the northern Confederation of British Industry, local authorities and some individual companies. Such co-operation shows how widespread is the concern in the north.

For many years I have called for a northern development agency. The development company is the nearest thing we are likely to get to such an agency in present circumstances, and I welcome the fact that the present Secretary of State for Trade and Industry recently met senior members of the company to discuss its role and its future. He and the Ministers present today should be under no illusion that if the chronic unemployment in the northern region is to be effectively tackled its resources ought to match those of the Scottish Development Agency and the Welsh Development Agency; nothing less than that will do the job. The help which the company is to receive will be a measure of the interest and support which the Government are likely to show for the north and its unemployment.

Draconian measures have been taken in the coal industry, on which the northern region has depended for many years. As an afterthought, in November, during the coal strike, the Government decided to establish NCB (Enterprise) Ltd. Its purpose is to create alternative employment in the mining areas now that the pits are being closed without any regard to the catastrophic social consequences. The impact of NCB (Enterprise) Ltd. on the north, particularly on my constituency, has been negligible. We are told that more money is available if and when necessary, but the conditions imposed on applying for that help constitute a straitjacket. I hope that the Paymaster General will pay attention to that because it is important. The scheme is being referred to as the "last stop" because an applicant must first have applied and been refused by every other agency empowered to help.

Another important factor is that loans only can be made. Grants cannot be made, and partnership with local authorities is not permitted, despite the fact that many councils are doing fine work in that area. Partnership or co-operation with the NCB (Enterprise) Ltd. would be a big step forward.

Those are just three examples of the difficulties that beset the scheme. No wonder that some applicants describe it as an obstacle race. Its inanity is matched only by the Government's proposal to abolish the three new town corporations in the north-east. In 1985 Peterlee, in my constituency, brought in no fewer than 1,050 new jobs. and during the past six years it has brought 8,000 jobs to the area. The corporations are the only job-finding agencies that we have, yet the Government propose to abolish them. The Tory chairman of the Peterlee development corporation, who has done an excellent job, has been driven to criticise the Government publicly for that proposed act of vandalism.

I beg the Government to reconsider the future of the new town corporations. Their record in finding new jobs speaks for itself. If the Government persist with this doctrinaire attitude and in not recognising the facts of life, they will deal a serious blow to employment in the areas which the corporations serve.

I do not say that there are any easy solutions to the problem of unemployment. During the debate the Labour party has been criticised, but we are merely saying that in government we will reduce the number of unemployed by 1 million in two years. No one can say that that is other than a modest objective. It is realistic and the British people will realise that. The Government should be honest with themselves and with the British people. They should say that their economic policies have failed, and recognise that the lives of millions of people have been ruined. Nothing less than a fundamental change in policy is necessary if the horror of mass unemployment is to be brought to an end.

5.52 pm

Mr. Nicholas Baker (Dorset, North)

During the past seven years I have listened to a good many debates on this subject, and certainly the message from the Opposition does not change. They seem to be infected by amnesia about unemployment before 1979, including its existence. [Interruption.] They are long on lamentation, short on analysis and bereft of any constructive proposals other than the usual custard pie approach with the taxpayers' money. [Interruption.] I shall concentrate on one or two constructive points rather than bewail the position as the Opposition have again done.

There are understandable short-term political reasons for harping on the high number of unemployed, and 3.3 million is a large number. However, it seems extraordinary that we do not know who those people are and what they are doing. [Interruption.] If we want to help people we must find out exactly what they are doing. I welcome the fact that the Secretary of State has started work to find answers to some of those questions, and the job start programme which will carry that process forward. The Department of Employment says that just under 1 million of those people are not actively seeking work. If that is right, we should be sure of it and do more to direct and help people into work. It is not to the credit of either side of the House that we do not know the answers to some basic questions.

Observation of people in the south of England confirms an impression that some claimants are working the black economy—part of the best job start scheme there is. It is a sign of the civilised nature of our society that concern about the high level of unemployment is felt not only by people in the north where the problems are perhaps worse — [Interruption.] — but by people in areas which are least affected by unemployment. I have in mind the serious state of the tin mining industry in Cornwall. I hope that my right hon. and hon. Friends in government will realise that the international tin crisis——

Dr. Godman

Will the hon. Gentleman give way?

Mr. Baker

I am under such pressure of time that I am already cutting my speech short, and I do not wish to give way.

The international tin crisis will pass, and there will continue to be a market for Cornish tin in the years ahead. I hope that the Government will consider the problems of the Cornish tin industry in that light.

Unemployment has been branded evil and I have heard hon. Members describe it as obscene. Both the state of being unemployed and the threat of losing a job are dreadful, and are just as hard to bear for people in comfortable executive jobs as for those in manual work. But we should be wary of exaggerating the impact generally as we have the highest percentage of our work force in work compared with our European competitors.

What is so dangerous and socially explosive and corrosive is obvious to a visitor to our northern cities. It is not the grinding mass poverty that we once saw and can still see in too many other countries. We can and generally do prevent that through our benefit system. But it is the other much more serious evil of inactivity—of having nothing to do. If we cannot engage the minds and bodies of our people, especially our young, and give them the opportunity to develop their talents, we can expect social, personal and national decline with much worse to follow. As the natural condition of man is to be active, so man's proper condition is to be engaged in constructive activity.

It follows from that that certainly employment but also training, providing it is constructive and has a job or wealth-creating activity in view, and education, even if it is only for leisure, should all be objectives for those of us who are anxious to alleviate unemployment and who are concerned about people who would otherwise be inactive. In other words, proper training and further education are worthwhile objectives, and not something to be sneered at as mere palliatives for unemployment. It follows that £2.5 billion of taxpayers' money spent on training is substantial evidence of a determination that this nation's talent should not be wasted.

There is plenty of evidence that good training leads to jobs. I shall look at one small programme which is doing that now. The Genesis programme within the training workshop resource unit of the Manpower Services Commission is engaged in training YTS trainees into jobs and is achieving considerable success. It has attracted the interest and support of my hon. Friend the Parliamentary Under-Secretary of State for Employment. Would that it had attracted a bit more attention from other hon. Members. It provides enterprise training for young people by developing appropriate skills and attitudes. They are learning to create and use opportunities and are acquiring wealth-creating skills. They have the self-confidence to use them, to rely on their initiative and to take advantage of changing economic circumstances. The schemes are particularly important because they are operating precisely in the areas that are worst hit by the departure of older manufacturing businesses and where young people have, perhaps, least confidence that they have the remedies in their hands.

The Genesis programme, under its director, Mr. Timothy Finn, has been in existence for 15 months, and 21 YTS schemes have been involved with 120 young people engaged. Forty-five products have been identified for development, of which 32 have completed live market trials, and 20 have now entered their market place. Schemes are under way in Bristol, East Lothian, Livingston, Solihull, Newcastle-under-Lyme, Liverpool and Durham. Products and services include computers, knitwear, wooden games, road traffic signs, biorhythm charts, trees, wrought iron and clocks. To date, they have produced a revenue of about £401,000. The average revenue per participant on revenue-earning projects is running at an annual rate of over £5,000.

It is a small programme, but already its success is striking. I congratulate its director and the small team involved. Young people are being trained in enterprise. They are being trained into jobs. I urge the MSC, which has been slow in the past, and the Government to give the programme all possible support, both in its present and—if that is the way forward—future independent state. I should like to see the Genesis programme expanded until it is country-wide.

My right hon. and learned Friend, in his enthusiasm for new jobs, will undoubtedly be looking to the expansion of the private sector and moving away from Government-created short-term jobs. In his enthusiasm, I hope that he will not allow the environment, which is an irreplaceable asset of this country, to be over-developed. An understandable reluctance to permit the growth of new businesses in villages and towns, especially in rural areas, must be overcome. I accept that, as people in the south of England must do.

The wholesale conversion of the green fields of southern England into large housing estates or unwanted development is neither necessary nor desirable. Let us, correspondingly, do all we can to encourage development in those city centres and parts of the country which desperately want more development. If the price to be paid is that the south of England will, as a result, be less prosperous in cash than it otherwise would be, while northern cities are more prosperous, that is a price that we should gladly pay.

6.2pm

Mr. Brian Sedgemore (Hackney, South and Shoreditch)

The Prime Minister, Lord Young and the chairman of the Conservative party tell us constantly that it is business and industry which count. However, a number of recent takeover bids and the Government's merger policy suggest that the Government have anything but the interests of business and industry in mind. In a recent takeover hid, we witnessed power struggles which would make "Dallas" and "Dynasty" look like some form of social realism. Ministers, administrators and regulators have behaved badly as the business men themselves. We have seen activities that are an affront to popular capitalism, as perceived by Conservative Members, and an affront to the interests of consumers and workers, as perceived by Labour Members.

I shall examine one takeover bid, without taking sides, to show that a bizarre business culture is being created by the Conservative party. The takeover bid to which I shall refer—I have no interest in either side winning—is that of the purchase of the House of Fraser by the Al-Fayed brothers. For a long time, Lonrho was bidding for the firm. Its bid was held up by the Office of Fair Trading, the Monopolies and Mergers Commission and, eventually, the Department of Trade and Industry. In the space of 10 clays, to 14 March 1985, that famous company, the House of Fraser, which runs Harrods and 110 distinguished stores in the country, was handed over, with Government help, to three Arab brothers, the Al-Fayeds. A total of 30,000 British shareholders were wiped out at a stroke. A total of 55,000 Lonrho shareholders were kicked in the teeth. Lonrho, as a company, was turned over by the Government.

Mr. Albert McQuarrie (Banff and Buchan)

The hon. Gentleman should get his facts right.

Mr. Sedgemore

I can see that the cultural climate which the Government have created is causing a bit of aggravation.

The Paymaster General and Minister for Employment (Mr. Kenneth Clarke)

Is the hon. Gentleman acting for Tiny Rowland?

Mr. Sedgemore

The right hon. and learned Gentleman asks me whether I am acting for Tiny Rowland. If he casts his mind back 10 years, he will recall that there has been no bigger critic of Lonrho than myself. He will have witnessed an incident which involved Tiny Rowland and my wife. Let the hon. Gentleman not tell me that I am carrying a brief for Lonrho, but I am prepared to say that it has been turned over by the British Government. The story is quite fantastic. It involves an extraordinary business culture.

Over the past few weeks, Mr. Tiny Rowland has been sending four dozen yellow roses—an extraordinary act—to Mr. Hawkes, the chairman of Kleinwort, Benson, one of Britain's most distinguished merchant banks. He says that he has been sending the roses because Mr. Hawkes is a "yellow-belly". He says that Kleinwort, Benson has misled Sir Gordon Borrie, of the Office of Fair Trading, and the Department of Trade and Industry.

Mr. Robert Atkins (South Ribble)

On a point of order, Mr. Speaker. Is this relevant to the motion under discussion?

Mr. Speaker

It is a preamble. I should not imagine that it will continue for much longer.

Mr. Sedgemore

I am referring to the Government's merger policy, which comes well within the debate. There will be pertinent questions to Ministers and Labour Members at the end. I will not be put off, Mr. Speaker.

Mr. Speaker

Order. The motion relates to the Government's economic policies and the level of unemployment. The hon. Gentleman should speak on that subject, and to the amendment.

Mr. Sedgemore

I am talking about merger policies and business culture, which is an affront to the unemployed. I am making a contrast. I do not have to go down a narrow track on the basis of some kind of filibuster from the Government.

Mr. Conal Gregory (York)

On a point of order, Mr. Speaker. You have given clear guidance that the hon. Gentleman must address his remarks to the motion and the amendment. The hon. Member has said that he wants to talk on merger policy, which is not the subject before the House. Therefore, I invite you to rule accordingly.

Mr. Speaker

I have already done so. The hon. Member, who is an experienced Member, must stick to the motion and the amendment. That is not too difficult.

Mr. Sedgemore

I am riot sticking to the motion and the amendment. I am asking how the Government's merger policy is helping the unemployed. It is setting an obscene example of the kind of business culture which the Government seek to create. I intend to talk about that. If you rule me out of order, Mr. Speaker, I shall sit down.

There is an astonishing tale in the incident. There has been inexplicable behaviour by the Office of Fair Trading and the Department of Trade and Industry. A leading Conservative Back-Bencher and ex-chairman of the 1922 Committee, the right hon. Member for Taunton (Sir E. du Cann), has been locked in a bitter struggle with the Prime Minister, the Bank of England and the stock exchange, as evidenced by letters dated 19 March, 2 April and 17 May'. There have been allegations that the Prime Minister sought to prefer the bid of the Al-Fayed brothers in relation to some £5 billion which was allegedly deposited in this country during the financial crisis in early January last year. There have been allegations about the Prime Minister's son and there has been extraordinary conduct on the part of a journalist. I submit to you, Mr. Speaker—[Interruption.]

Mr. Speaker

Order. It is difficult to relate to the motion what the hon. Gentleman has just said. His remarks are wide of the motion. I ask him to stick to it.

Mr. Sedgemore

I shall speak about the Government's merger policy. If I cannot talk in an economic debate because I would embarrass the Prime Minister and Conservative Members——

Mr. Speaker

Order. That is not the point. The hon. Member knows that he must speak to the motion on the Order Paper. If he relates his remarks to unemployment — if he seeks to prove that mergers are helpful or unhelpful to unemployment—that is a different matter, but he must stick to the motion before the House.

Mr. Sedgemore

I wish to speak about the Government's merger policy and to make serious points which should be of interest to the House. I wish to talk about the business culture being created by the Government, which is damaging employment.

6.9 pm

Sir Peter Tapsell (East Lindsey)

I was interested in the brief comments of the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore), but as I do not feel that either Mr. Tiny Rowland or the Fayed brothers are in any great danger of becoming unemployed, I hope that I shall be allowed to return to the very important subject under debate.

I strongly believe that the present high level of unemployment is the gravest problem facing this country. The Government should give overriding priority to grappling with the serious social and economic problems that arise from it. If they are left unsolved for many more years, they will lead to such great social bitterness that it will take a generation to cure it. I am sure that the great majority of my right hon. and hon. Friends share my view about the seriousness of unemployment and my wish to reduce it as much as possible. Put at its lowest, we are all politicians who hope to be re-elected in about two years' time. It is not in any Conservative Member's interest to fight a general election at a time of high unemployment. We must take it for granted, therefore, that every Conservative Member is as convinced as I am that we must try to reduce the level of unemployment.

But I am worried that in the sympathetic rhetoric of Treasury Ministers there is an underlying sense of hopelessness. They seem to have a feeling they they are in the grip of forces over which they have little control. I do not believe that that is so. I believe that during the next few years we could make a significant reduction in the number of those unemployed without taking the sort of foolish action that would have a catastrophic effect on the Government's capacity to borrow, or that would plunge us back into double digit inflation, or something approaching it. Thus, I shall briefly challenge some of the statements that are perpetually made not only by Ministers but by distinguished commentators.

It would seem to me—and I have been making this speech both inside and outside the House for seven years now—that two mistakes have been made. For some years there was an excessive belief in a Government's capacity to measure and control the money supply. Until only a short time ago, many distinguished people thought that, if the money supply could be controlled and reduced steadily year by year, many of our economic problems would be automatically solved. I always disputed that thesis, although I have always accepted that the money supply is an important factor in economic management. However, I always gave it much less emphasis than the Government did. When the medium-term financial strategy was published, it was quite unrealistic about the money supply.

The most comforting aspect of this debate is that my right hon. Friend the Chancellor made a long and interesting speech without once mentioning the money supply. That is an advance. The fact that the money supply has risen by 16 per cent. in the past year, and is way outside all targets at a time when inflation has been falling nicely, speaks for itself. Broad money is now largely discredited as an accurate measure of what is happening in the economy, and no Government now think that they can effectively measure or control it.

In view of the passionate commitment of some of my right hon. Friends to the money supply theory a few years ago, one might think that they would at least have an open mind and a little modesty about some of their other economic dogmas. After all, it is just possible that they might be as mistaken about the overriding importance of the public sector borrowing requirement as events proved them to be about the money supply. It is all a matter of relativity. I am not suggesting that the PSBR or the budgetary deficit is an unimportant factor in the calculations of any Chancellor of the Exchequer. But from the recent local government elections and by-elections, and from conversations with our constituents, we know that there is now a realisation that we badly need an increase in capital investment. One needs only to look at our schools, hospitals and roads. One does not even have to call in aid the litter on the way to the centre of town from London airport. It is obvious to all that we badly need an increase in capital investment.

The recent report of Her Majesty's Inspectorate of Schools pointed out that the state of our schools has deteriorated greatly since 1981, and that if it is allowed to deteriorate further the cost of putting those schools into effective order will be prohibitive. The longer we delay a capital investment programme for our schools, housing and so on, the more expensive it will prove to be. If we do not take action soon, this country will become a slum. We must do something about that.

It is argued that the Government could not raise the necessary capital because that would mean increasing the PSBR, which would mean that interest rates would soar, which would be inflationary and would also damp down investment by big business, and make it very difficult for the Government to raise money in the gilt-edged market. I dispute that. I have managed to scrape a living in the gilt-edged market for more than 30 years so I cannot always have been wrong about my hunches. At present, Britain's PSBR runs at about 1.5 per cent. in relation to the gross domestic product. Last year we significantly underspent. In the last financial year, my right hon. Friend the Chancellor budgeted for a PSBR of £7 billion, but about a fortnight ago we at last got the actual figure for that financial year, and discovered that the PSBR was only £5.9 billion.

Thus, although my right hon. Friend already had an extraordinarily low PSBR, he actually undershot it by over £1 billion. With a PSBR of 1.5 per cent, we are equivalent to West Germany. We have only one third the PSBR of the United States, which has created 10 million new jobs in the past few years, which has a lower inflation rate than us and which has significantly lower interest rates than us. Our PSBR is less than that of Japan and is lower than that of France.

Mr. Lawson

I do not wish to argue with my hon. Friend on any of his points, but it would be helpful to get the facts straight. He should be aware—I am sure that he is—that, of the three major economies in the world, only the United States has a higher borrowing requirement than we have, and it is anxiously trying, as it accepts that is necessary, to get its budget down. Both Japan and Germany have significantly lower borrowing requirements as a proportion of GDP than we have.

Sir Peter Tapsell

That is not correct, but we cannot argue the point now. It is extremely difficult to calculate the Japanese PSBR, as my right hon. Friend knows, but the best advice that I have, and I have an office in Tokyo, is that the Japanese PSBR is running at about 2 per cent. Like us, West Germany has a PSBR of 1.5 per cent., but because of the big expenditure of its Länder — its provinces — because of it having a federal system, its PSBR figures are understated when they are set out only in federal terms. The United States, with a 4.5 per cent. PSBR, is doing extremely well by comparison with us. Its unemployment levels are half ours, it has a lower inflation rate, and it is on the way to solving its problems with its budgetary and trade deficits.

I shall tell the House what I should like to see the Government doing. The country could well afford to budget now for a PSBR of 2.5 per cent. rather than 1.5 per cent. If we did that, it would mean that we would be budgeting on a PSBR of about £10 billion to £10.5 billion instead of the present level of £5.9 billion, as it has turned out. That would be an extra £4 billion, with which one could begin to make a useful start in the re-equipment of our infrastructure and in particular housing, which would provide useful employment. There is no doubt that we need to spend money on housing. There are about 400,000 construction workers out of work and investment in housing would be a form of capital investment that would bring many people into work, and would not suck in imports.

Mr. Allen McKay (Barnsley, West and Penistone)

If the Government would allow local authorities to release capital receipts for use, would that not be a start to developing the infrastructure?

Sir Peter Tapsell

I agree with the hon. Gentleman, and some of my right hon. and hon. Friends have voted in that way, as have I.

The technical gilt-edged point is often talked about when we are discussing the PSBR. It is sometimes suggested that, if my right hon. Friend the Chancellor were to allow the PSBR to go up instead of always going down, that would lead to a strike in the gilt markets, but I do not believe that that is true. My thinking on this is as follows. Of course, there is a certain schizophrenia in the gilt market because, other things being equal, dealers and potential investors in the market like the PSBR to be as low as possible because that means that there are fewer gilts to be sold. However, the market is now increasingly dominated by political considerations and will increasingly be so, not just by investors in this country, such as the pension funds, but by big holders of gilts and sterling throughout the world.

Increasingly, holders are thinking about what will happen in the next general election. If they think that the Labour party will come to power, they will start sealing gilts and sterling and I can say that as a matter of absolute certainty. They are already beginning to be worried. If that happens, interest rates will rise. On the other hand, if the Government were to announce a moderate but sensible increase in capital investment programmes, far from being frightened, the market which knows that the Conservatives cannot win the next election without substantially increasing the capital investment programmes, will take heart. Ironically, my right hon. Friend the Chancellor will have a better chance of keeping interest rates down if he increases the PSBR and capital investment than if he does not.

Even within the existing levels of public expenditure, there has been an unsatisfactory move, ever since 1979, towards an increase in current expenditure at the cost of capital investment. Although the overall real figure of public expenditure has gone up since 1979, the proportion of capital investment within that public expenditure figure has fallen from 11.6 per cent. to 10 per cent. of the total. To put the proportion of capital investment back to the 1979 level of 11.6 per cent. of public expenditure would cost £4 billion. That is, just to get back to the ratio of capital investment within the general public expenditure of 1979 would not necessarily cost extra money but would require a shift in resources back from current expenditure to capital investment. Even in 1979, I was arguing that the proportion of capital investment within the overall public expenditure was inadequately low.

Putting all that into the international context, we now have in Mr. James Baker, the United States Secretary for the Treasury, the international economic statesman for which the world has been crying out for years. He has been trying to fulfil the role that I have urged on my right hon. Friends for some years. On interest rates, on exchange rates, on trading policies, on Third world debt and, above all, in urging the whole of the OECD to expand, Mr. Baker is saying, from a position of great power and influence, what some of us have been urging from the political wilderness for some years. I hope that my right hon. Friends will listen to what Mr. James Baker is saying and will act upon it.

6.27 pm

Dr. Norman A. Godman (Greenock and Port Glasgow)

I am glad that the Paymaster General is here, because I want to put a couple of questions to him about constituency matters. Up to now, this has been an English debate, but Scotland has increasingly suffered through growing unemployment. Nowhere is that more evident than in my constituency. I put down a question to the Secretary of State for Scotland and received an answer from the Under-Secretary, the hon. Member for Eastwood (Mr. Stewart), saying that, as of 10 April this year, 8,800 people are unemployed in my constituency.

There are one or two bright spots amidst this appalling gloom. For example, IBM employs 2,900 people at its plant in my constituency. Every day I say, "Thank God for that." However, there is a dreadful economic and social backcloth for the approximately 33,000 people in my constituency who are living on or below the supplementary benefit level. That is an appalling statistic.

A number of community groups in my constituency are anxious to create employment, admittedly for a small number of people. They have brought a number of allegations to meetings that they have had with me concerning the less than helpful attitude of the Manpower Services Commission officials when applications for grants and assistance for community businesses are made. I welcome the Paymaster General's assurances that these allegations will be investigated because these community groups — amidst all this gloom — are doing splendid work. I think that there is some truth in the allegations, and I want them to be investigated.

The traditional industries of shipbuilding and marine engineering, based on the lower Clyde, have suffered grievously. The Scottish Office could offer help by ensuring that the orders for two vessels to be announced by the Scottish Office — one for a fisheries protection vessel for the Department of Agriculture, Fisheries and Food (Scotland) and the other for a passenger ferry for Caledonian MacBrayne—should be given to the lower Clyde. That would give some help to the beleaguered economy of a constituency north of the border.

6.30 pm

Mr. John Prescott (Kingston upon Hull, East)

This debate has demonstrated the wide range of thinking on the controversial issue of unemployment. I am bound to say that the one man who was totally consistent in his speech was the Chancellor of the Exchequer. I think that his speech was the most deplorable speech on unemployment that the House has ever heard. It confirmed what we believe and what the electorate suspect and are beginning to believe—that it is deliberate Government policy to maintain a high level of unemployment in this country.

Before the Chancellor can say "Rubbish", let me refer to some of the evidence from his own publications and the Department of Employment which will justify what I have said. The Chancellor made no reference in his speech to unemployment. Instead he pointed out that the levels of employment are increasing, and indeed that is mentioned in the Government amendment. We wish to take this opportunity of a debate on unemployment to set the record straight, yet again, but according to the Government's statistics.

A comparison has been made with the Labour Government, yet there were more people in work when Labour left office in 1979—nearly 500,000 more—than when we came to office in 1974. That cannot be claimed by the Government. The Government statistics refer to 1983, but the Conservative Government came to power before 1983. The reality is that there are now 1.8 million fewer people in work than when the Government came to office. My right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) was far too generous when he suggested that the figure was about 1 million people. Although we cannot always rely on Government statistics, I have the answer to a private notice question from the Paymaster General which states how many people are in work at present. I will not bore the House with the details, but it boils down to the fact that there are now 1.8 million fewer people in work than in 1979.

A substantial number of people are out of work, and I suggest that more people are out of work in this country than in most of our competitors. If we consider the average unemployment levels for the OECD countries, Britain's unemployment level, under previous Tory and Labour Governments, was always equal to the average for OECD countries. Since 1979, unemployment in Britain has been 2 per cent. higher than the OECD average. I asked the Library to work out that percentage. It effectively means that there are about 1 million more unemployed in this country than in other countries which have seen unemployment rise due to varying world demand.

I accept that the effects of world demand will increase unemployment, but it has had a far greater effect in this country. If one considers the OECD analysis or the National Economic Development Council report on our economy, it is clear that the levels of public expenditure—a point powerfully made by the hon. Member for East Lindsey (Sir P. Tapsell) — have been reduced proportionately in this country in hospitals, education and especially housing, which are important to job creation. Other countries have maintained public expenditure in such areas, but in Britain, because of Government policy, such expenditure has been cut. Unemployment in Britain is higher than the average for Europe and flows directly from Government policy.

In the debate the Chancellor has argued that employment is increasing. We heard the black propagandist, the right hon. Member for Chingford (Mr. Tebbit), on the radio this morning saying that 1 million jobs have been created. One would expect that they were in full-time work, but the full-time equivalent of that 1 million jobs is made up largely of an estimate based on a 5 per cent. survey of the self-employed.

The figures have been continually fiddled over the past few years. The Minister's answer to me on 18 March confirms that. It stated that the number of self-employed had increased from 1.9 million to 2.5 million—500,000 of the jobs created. The judgments made by the Government and their statisticians are based on a "guesstimate". It has to be a "guesstimate" because it is based on a sample survey. The Paymaster General makes an estimate or judgment about the self-employed and then projects the figure of 1 million jobs created. That is another fiddle of the figures.

The Government have carried out 18 fiddles on the unemployment figures to get them to move downwards and now they are fiddling the employment figures upwards. The only policy we see from the Government is a policy for massaging the figures.

The record of the arch-propagandist, the right hon. Member for Chingford, is deplorable. He was the man who told us that trade union legislation would reduce the amount of working days lost. The Government's figures, again issued by the Paymaster General, show that more working days have been lost in disputes in six years under the Government compared with the previous period of Labour Government. That is the reality. The same man told us that we had to get training going in this country. The training and quality of our people is an important factor in the productivity and growth of our economy. Training has collapsed in this country. Employers spend less on training than do those of any of our competitors.

Mr. Lawson

indicated dissent.

Mr. Prescott

The Chancellor does not have to shake his head at me. I think it was the chairman of the Manpower Services Commission who said that Britain was a load of "thickies". That is not a word I would have chosen, but what he was suggesting was that the quality of training is lower in this country than it is in any of our competitors. It is no coincidence that in this country we devote only one-fifteenth of 1 per cent. of turnover to training. Most of our competitors spend 2 or 3 per cent. of turnover on training.

If one wishes to improve productivity, one improves investment. I thought I heard the Chancellor say that investment in manufacturing had increased by 31 per cent. but, in fact, he said, investment productivity. He should have mentioned that investment in manufacturing is now lower than it was in 1979. The quality of investment is as important as the quantity, but in both areas the Government have failed. Despite an increase of £30 billion in company profits, that has not been put into investment or training. They are the two crucial areas to which the Chancellor should address his remarks when he discusses improving pay or relating profits to wages.

The arch-propagandist, the right hon. Member for Chingford, believes that the people's attitude to the Government is caused by the Timpson and Redhead programme on Radio Four. He argues that the inflation record would be worse if a Labour Government were elected. I shall refer to the Department of Employment figures—I hope we can trust them—on inflation. It is clear from the figures that from 1975 to 1979 — the period of the Labour Government — inflation was halved. I shall give the figures if the Chancellor is in doubt, but I do not suppose that he spends much time studying these figures.

It is true that there has been a reduction in the inflation rate under the Government. If one is claiming that something specific has happened, a fair measure would be to take the inflation rate of Britain expressed as a proportion of the OECD average. The relationship of that proportion to the OECD average is no different from what it was when Labour were in office. There are many reasons why inflation has fallen in this period, but there is no specific evidence for the Government claim that their policies have played a significant part in reducing inflation.

There is one significant difference between Britain and the other OECD countries: none of them has experienced the high unemployment which has been maintained in this country. That is because the Government are completely indifferent to unemployment. If we want proof of that, we have only to recall the Chancellor of the Exchequer mithering on in his Budget statement about a 1p in the pound reduction in income tax. As Professor Galbraith said over the weekend, that would give the wealthy £1,000 million. If the Government want to bribe Tory voters who have high incomes, why do they not come out with that instead of masking their intentions by talking about public expenditure or the money supply? The realities are the Government's priorities.

The issue is how we use public expenditure and whether we can use it to create jobs, account having been taken of what the consequences might be. I do not think that the Government doubt that public expenditure can be used to create jobs. Presumably they would argue that the effects on inflation, the borrowing requirement and interest rates—these are important matters and I do not dismiss them—would be too great to risk the possibility of reducing unemployment. It is clear that there is a difference between us.

There are many references in debates in this place and on television, for example, to redundancies and whether a plateau has been reached. We have seen a massive increase in unemployment. Unemployment, in both proportionate and absolute terms, is higher than that of the 1930s and it has been sustained for a lot longer than in the 1930s. Unemployment increased each year for four years in the 1930s and it has increased every year since the Government came to power, even since the magical figures of 1983 were introduced. Against that background, one would think that the plateau had been reached, but I do not think that it has.

We know that the rate of redundancy is continuing to increase. I have a document which was sent to me mistakenly by the Department of Employment. It is a copy of a confidential document that was given to the Paymaster General to brief him. On some questions it advises him what to say "If asked." Against others it tells him what not to say. In other sections he is told what he can say if he is required to say anything.

The Department's document reveals that redundancies are increasing and that they have increased to 10,000 a month. Apparently there would have been a greater increase if account had not been taken of community programmes. There are various projections and it was forecast that March should see a substantial fall in the figures of unemployment. I think that it projected a fall of 50,000, but unemployment increased by 40,000. The statisticians got it wrong again. Even the confidential advice that the Paymaster General receives from his civil servants is not very good. We must bear that in mind when the right hon. and learned Gentleman replies.

Redundancy levels have been increasing tremendously. In 1978, there were 34,000 redundancies for every three months. They increased to 148,000 by 1981 for three months. They decreased to 50,000 in 1985, and they are now increasing again. If anyone doubts that there has been an increase of 20,000 a month, he should think about the shipbuilding industry where 4,000 redundancies have been announced. There have been 3,000 in the coal industry; and this afternoon we heard about redundancies in the tin mines. There have been redundancies in the airlines, the engineering section of British Rail and Kodak. There have been 9,000 redundancies in the bus industry.

With the exception of the tin mines, the redundancies are the direct result of Government policy, including deregulation and the removal of public subsidies, that are maintained at different levels elsewhere in Europe. A significant part of Government policy is to deregulate or to privatise. In other words, there is a Government policy directly to create unemployment. It is clear that the Government are continuing the level of redundancies. I have that on good authority because it is part of the Department's advice.

When listening to some of the arguments about redundancies, I am reminded of the deplorable statement which was made by the Secretary of State for Employment, Lord Young, on a Sunday television programme at 8 am, during, which he declared that we had never had it so good.

Mrs. Elaine Kellett-Bowman (Lancaster)

He did not.

Mr. Prescott

Anyone who read the Daily Mirror the following day would know that Lord Young really meant that he had never had it so good. I am sick to death of wealthy Tory Ministers and millionaires telling the unemployed what they should be doing about getting a job. Lord Young has more responsibility for ruining training and MSC policies than anyone else, and he is now telling us that the way to create work is by removing the barriers to growth. He talks about business and not barriers. That means denying benefits to pregnant women and charging individuals £25 to go before an unfair dismissal tribunal.

What does Lord Young tell us about jobs? He argues that Socialist Governments in France and Italy——

Mrs. Kellett-Bowman

And Australia.

Mr. Prescott

And Australia, yes. The hon. Lady should wait to hear what I have to say. Lord Young contends that Socialist Governments have not performed as well as Conservative or Right-wing Governments. I can tell the Paymaster General that the Department of Employment has provided the information for him. There are 18 countries in the OECD, and I have worked out the figures for the Labour Governments and the other Governments. The document that the Department provided tells us that Britain has the second highest level of unemployment in the OECD. Above that it gives this advice: (League Table) (Do not give). Of the countries with below-average levels of unemployment, five are Socialist and three are Tory or of the Right. Of those with above average levels of unemployment, only three are Socialist. If anyone wants to play the silly game of comparing countries in that way, the figures show that Socialist Governments, who believe in public expenditure on housing, education, health and infrastructure, have performed extremely well. The Labour party has said that it would use public expenditure in precisely that way at a cost of £6 billion, which the Government would accept would be the cost of our programme to get people back to work. We will get people back to work. The country believes that to be so, and the Government will surely pay the price by being put out of office. We know that we can return our people to work.

6.46 pm

The Paymaster General and Minister for Employment (Mr. Kenneth Clarke)

I do not want to engage in an argument with the hon. Member for Kingston upon Hull, East (Mr. Prescott) about statistics this evening. He and I usually get side-tracked into arguments of that sort. I am glad to see that he is making more generous use of Government statistics, both those he is supposed to have and those he is not. If he starts to place more reliance on our statisticians and the figures that we can provide him with, we shall have a better factual basis for our debates.

I think that the political basis of the debate is accepted on both sides of the House, but not by the hon. Member for Kingston upon Hull, East, who alone persists in the theory that somehow the Government are deliberately creating unemployment.

Mr. Prescott

They are.

Mr. Clarke

We all accept that the level of unemployment remains excessively high. A principal economic and social objective is to reduce it.

Mr. John Evans (St. Helens, North)

Is unemployment too high?

Mr. Clarke

The increase in jobs that we have been seeing in the economy since early in 1983 — [Interruption.] In answer to the hon. Member for St. Helens, North (Mr. Evans), of course unemployment is too high. The increase in jobs that we have been seeing since 1983 must be sustained and, if possible, improved upon. It is no good dismissing the increase in jobs by saying that they are all part-time jobs. Many of the unemployed who are looking for work are seeking part-time jobs. There is a growing amount of part-time work, and in all the other figures that the hon. Member for Kingston upon Hull, East uses he includes part-time workers. The total number of net additional jobs, taking account of those that have been lost since the spring of 1983, is 1 million. There was a 269,000 increase in 1985 alone. We must sustain the recovery in the economy that has been taking place since 1983 and, if possible, improve upon it.

I accept that for no section of the population has the growth yet proved adequate to deal entirely with the problem. The most encouraging figures are those for youth unemployment, which causes justifiable concern in all sections of the population. Fortunately, the level of youth unemployment has been falling steadily. In the three years to January 1986 unemployment has fallen by 35,000, or over 15 per cent., for the under-18s, and by 63,000, or over 10 per cent., for the under 20-year-olds.

Ms. Clare Short (Birmingham, Ladywood)

It is not only the young who are unemployed.

Mr. Clarke

I agree with the hon. Lady that that is an improvement that we wish to see across all sections of the population if we are to sustain the recovery of the economy, which my right hon. Friend the Secretary of State and I keep illustrating has undoubtedly taken place since early 1983. Further progress will depend, first, on maintaining the record of growth of the economy which we have been achieving for successive years, which is the best in western Europe.

It is, of course, possible to improve upon that record. We should all acknowledge that we must achieve greater success in keeping down unit wage costs and in linking payment more closely to performance. The Opposition should not dismiss that. They must realise that the majority of commentators have said that it is worrying that we are the only major developed country which does not have the general level of earnings increases falling with inflation to the extent achieved by most of our competitors.

On top of that sustained growth and greater success in keeping down our unit wage costs, we must continue to intervene and make improvements in the labour market. The improvements that we strive to achieve should further encourage small businesses, new businesses, self-employment and enterprise of all kinds. This is where the bulk of new jobs come from in this country and in the successful economies abroad.

My hon. Friend the Member for Dorset, North (Mr. Baker) gave a valuable example of the work of the Genesis group, which is being supported by the Government through the highly successful youth training scheme.

The hon. Member for Greenock and Port Glasgow (Dr. Godman) raised the problems faced by community groups in his constituency in participating in Government programmes. If the hon. Gentleman writes to me with the details, I shall take up with the Manpower Services Commission the problems that he describes.

We must intervene in the labour market and improve our record on training, which is now very good compared with what it was for youth training. It must be improved for adult training, and industry's performance must also continue to improve. We must provide the long-term unemployed with work experience and job search skills.

That is a fair and reasonable analysis of the position. We must strive to maintain growth, we must improve the position on unit wage costs. and we must continue to improve our extremely rigid and inflexible labour market. That analysis is crucial for us to continue to tackle the problem.

Having listened to the debate initiated by the Opposition, I believe that it is clear that the Labour party continues to be extremely unreliable and positively dangerous in its views on all of the three areas that I have mentioned in my analysis. Our growth will undoubtedly be jeopardised by the kind of spending programmes envisaged by the Labour party. These will undoubtedly affect inflation.

I shall return in a moment to the speech by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), because he gave less detail today about his policies than he gave at the time of the Budget debate. The right hon. Gentleman tried to explain that he was proposing to spend only an extra £7 billion, but he has never adequately answered the Government's total of £24 billion. The right hon. Gentleman declined the opportunity to say which of the Labour party's policies will be postponed if he is to reach his spending target.

The Labour party is also completely unreliable about pay. The hon. Member for Kingston upon Hull, East said the most extraordinary things about pay levels. On 14 May, at Conway Hall, the hon. Gentleman said: Eight million people in Britain get poverty wages. Many more are paid less than the value of the jobs they do. The hon. Gentleman is advocating substantial real wage increases for well over 8 million of the working population. He is advocating that at the expense of those who are currently unemployed, because he would damage the competitive position of the economy.

The Labour party remains completely unreliable about improving the working of the labour market. It is completely dominated by the trades union movement in its interest in so-called employment protection for those currently in work, which would impose rigidities and costs at the expense of those out of work. The Labour party's bill of rights, on which it is working, seems largely to comprise of the right to strike and the right to win union recognition.

Mr. Peter Thurnham (Bolton, North-East)

Will my right hon. and learned Friend give way?

Mr. Clarke

I am sorry, but I shall not give way. No one has given way, as this is a short debate, and I apologise to my hon. Friend.

If the hon. Member for Kingston upon Hull, East will not accept my analysis of the factors on which we must concentrate, I would ask him to look at the policy document that we are tabling for the European Council of Ministers on Thursday. A copy of that document should have reached the hon. Gentleman today. It has been compiled by the Minister of Labour for Italy, the Minister of Labour for Ireland and myself as a basis for discussion. The idea is to have a discussion in the EEC about unemployment prospects and to approve the agenda of the Council.

The analysis is the same in that document. It stresses agreement on the need for continued growth and the importance of getting wage costs under control. It specifically concentrates on a need for greater flexibility in the labour market, and especially on improving the climate for small businesses, self-employment, part-time working and short-term contracts. It concentrates on all the issues that were resisted by the hon. Member for Kingston upon Hull. East.

If the hon. Gentleman considers the three Ministers who have compiled the document, if he examines my collaborators, he will discover that they are the Socialist Minister for Labour in Italy and the Irish Minister for Labour, who is a member of the Irish Labour party. If the Labour party ever turned up at the Council of Ministers of the EEC, it would find itself surrounded by 11 other member states which would dismiss out of hand the remedies and approach put forward by the British Labour party in this House.

The document also considers training and concentrates on the worst social problem in this country and in the rest of western Europe, which is the growth in the number of long-term unemployed. We all argue about the figure of the long-term unemployed. Is it 3 million, less than 3 million or more than 3 million? Many of those unemployed people are flowing through the unemployment figures, as they are changing jobs. There are 30,000 leaving jobs and 30,000 entering jobs almost every day. Of those who become unemployed, 25 per cent. have jobs within six weeks, and half of them will get jobs within 12 weeks. The problem lies with the long-term unemployed, the 41 per cent. of all claimants — a little under 1.4 million—in April of this year.

The Government have concentrated on the restart programme, which is giving attention to the needs of almost 1.4 million people who are the long-term unemployed. When the Government embark upon an ambitious, expensive programme, mounted in order to bring help to the long-term unemployed, the hon. Member for Kingston upon Hull, East describes that as tea and sympathy, and the right hon. Member for Sparkbrook describes it as a gimmick. The truth is that we have embarked on a major programme to bring help to 1.4 million people. So far, of those who have been interviewed in the nine cities where the scheme is being tried, 90 per cent. have been offered a positive opportunity to take up from the menu that we have offered. I remind the House that 1,296 people have been placed in work in those nine cities and that many more have gone into training or found jobs for themselves after attending restart courses or job clubs.

The right hon. Member for Sparkbrook still makes rude remarks about job clubs because, as in the previous debate that we had on these matters, he still does not know what these clubs are. There are now 44 job clubs, placing two thirds of those in the clubs in jobs within a reasonable time, and the job start allowance is going well.

The right hon. Member for Sparkbrook did not set out a solitary detail of Labour's policy today. He repeated his claim for 1 million new jobs, but it is still unclear, and I challenge the right hon. Gentleman to write to me about this, whether he is talking about 1 million new jobs over two years. If he is, that merely matches this Government's record over the past two years. Or is the right hon. Gentleman talking, as he did today, about 1 million off the unemployment total? He does not appreciate the demographic trends against him. In some speeches he uses one phrase, and in others he uses another. He has never given the slightest hint of the policies that will add up to 1 million off the unemployment figure. That is a tall order.

The details that the right hon. Gentleman gave during the debate on the Budget were scandalous in their scantiness. He has not added to them today. He had three proposals. He said that the Labour party would spend £1 billion on public sector capital programmes and a further £1 billion on public sector service employment. The reduction in national insurance contributions would cost another £1.5 billion. The right hon. Gentleman then seized on the Select Committee report, which he costed at £3.3 billion. He said that that would provide 750,000 of the jobs that he required. However, he does not realise that the Select Committee report contains two of the items that he has already listed. He has double counted them.

Professor Layard must be astonished, after helping the Select Committee to produce the report, to know that he was writing the entire policy of the Labour party, and apparently of the Liberal party, as the hon. Member for Colne Valley (Mr. Wainwright) adopted the report heavily today.

Most of the so-called temporary jobs in the Health Service and social services would not exist. The other remedies would be hugely expensive and would cost some £6 billion or £7 billion. Their main effect would be to displace people from other jobs.

My hon. Friend the Member for East Lindsey (Sir P. Tapsell) was the only hon. Member to tackle the argument about infrastructure spending. He held out the enticing prospect of a pre-election boom that would pay for itself by restoring confidence in the City. I hope he will accept that we have an excellent record on infrastructure spending, and there are serious doubts whether spending £4 billion on housing, which he recommended, would create the jobs that he described.

The Government's record is good. Most of the alternative remedies would threaten the growth, low inflation and creation of new jobs which the Government's policies are steadily producing.

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

The House divided: Ayes 200, Noes 323.

Division No. 195]	[7 pm
AYES
Abse, Leo	Barron, Kevin
Adams, Allen (Paisley N)	Beckett, Mrs Margaret
Alton, David	Beith, A. J.
Anderson, Donald	Bell, Stuart
Archer, Rt Hon Peter	Benn, Rt Hon Tony
Ashdown, Paddy	Bennett, A. (Dent'n & Red'sh)
Ashley, Rt Hon Jack	Bermingham, Gerald
Ashton, Joe	Bidwell, Sydney
Atkinson, N. (Tottenham)	Blair, Anthony
Bagier, Gordon A. T,	Boyes, Roland
Banks, Tony (Newham NW)	Brown, Gordon (D'f'mline E)
Barnett, Guy	Brown, Hugh D. (Provan)

Brown, Ron (E'burgh, Leith)	John, Brynmor
Bruce, Malcolm	Jones, Barry (Alyn & Deeside)
Buchan, Norman	Kennedy, Charles
Caborn, Richard	Kilroy-Silk, Robert
Callaghan, Rt Hon J.	Kirkwood, Archy
Callaghan, Jim (Heyw'd & M)	Lambie, David
Campbell, Ian	Leadbitter, Ted
Campbell-Savours, Dale	Leighton, Ronald
Canavan, Dennis	Lewis, Ron (Carlisle)
Carlile, Alexander (Montg'y)	Lewis, Terence (Worsley)
Cartwright, John	Litherland, Robert
Clark, Dr David (S Shields)	Livsey, Richard
Clarke, Thomas	Lloyd, Tony (Stretford)
Clay, Robert	Lofthouse, Geoffrey
Clelland, David Gordon	McCartney, Hugh
Clwyd, Mrs Ann	McDonald, Dr Oonagh
Cocks, Rt Hon M. (Bristol S)	McKelvey, William
Cohen, Harry	MacKenzie, Rt Hon Gregor
Concannon, Rt Hon J. D.	Maclennan, Robert
Conlan, Bernard	McNamara, Kevin
Cook, Frank (Stockton North)	McTaggart, Robert
Cook, Robin F. (Livingston)	McWilliam, John
Corbett, Robin	Mallon, Seamus
Corbyn, Jeremy	Marek, Dr John
Craigen, J. M.	Marshall, David (Shettleston)
Crowther, Stan	Martin, Michael
Cunningham, Dr John	Mason, Rt Hon Roy
Dalyell, Tarn	Maxton, John
Davies, Rt Hon Denzil (L'lli)	Maynard, Miss Joan
Davies, Ronald (Caerphilly)	Meacher, Michael
Davis, Terry (B'ham, H'ge H'l)	Michie, William
Deakins, Eric	Mikardo, Ian
Dewar, Donald	Mitchell, Austin (G't Grimsby)
Dixon, Donald	Morris, Rt Hon A. (W'shawe)
Dobson, Frank	Morris, Rt Hon J. (Aberavon)
Dormand, Jack	Nellist, David
Douglas, Dick	Oakes, Rt Hon Gordon
Dubs, Alfred	O'Brien, William
Dunwoody, Hon Mrs G.	Orme, Rt Hon Stanley
Eadie, Alex	Owen, Rt Hon Dr David
Eastham, Ken	Park, George
Ellis, Raymond	Patchett, Terry
Evans, John (St. Helens N)	Pendry, Tom
Ewing, Harry	Penhaligon, David
Fatchett, Derek	Pike, Peter
Faulds, Andrew	Prescott, John
Field, Frank (Birkenhead)	Radice, Giles
Fields, T. (L'pool Broad Gn)	Randall, Stuart
Flannery, Martin	Raynsford, Nick
Foot, Rt Hon Michael	Redmond, Martin
Forrester, John	Rees, Rt Hon M. (Leeds S)
Foster, Derek	Richardson, Ms Jo
Foulkes, George	Roberts, Ernest (Hackney N)
Fraser, J. (Norwood)	Robinson, G. (Coventry NW)
Freud, Clement	Rogers, Allan
Garrett, W. E.	Rooker, J. W.
George, Bruce	Ross, Ernest (Dundee W)
Gilbert, Rt Hon Dr John	Ross, Stephen (Isle of Wight)
Godman, Dr Norman	Rowlands, Ted
Gould, Bryan	Ryman, John
Gourlay, Harry	Sedgemore, Brian
Hamilton, James (M'well N)	Sheerman, Barry
Hamilton, W. W, (Fife Central)	Sheldon, Rt Hon R.
Hancock, Michael	Shields, Mrs Elizabeth
Harrison, Rt Hon Walter	Shore, Rt Hon Peter
Hattersley, Rt Hon Roy	Short, Ms Clare (Ladywood)
Haynes, Frank	Silkin, Rt Hon J.
Healey, Rt Hon Denis	Skinner, Dennis
Heffer, Eric S.	Smith, Cyril (Rochdale)
Hogg, N. (C'nauld & Kilsyth)	Smith, Rt Hon J. (M'ds E)
Holland, Stuart (Vauxhall)	Snape, Peter
Home Robertson, John	Soley, Clive
Howells, Geraint	Spearing, Nigel
Hoyle, Douglas	Steel, Rt Hon David
Hughes, Dr Mark (Durham)	Stewart, Rt Hon D. (W Isles)
Hughes, Robert (Aberdeen N)	Stott, Roger
Hughes, Roy (Newport East)	Strang, Gavin
Hughes, Simon (Southwark)	Straw, Jack
Hume, John	Thomas, Dafydd (Merioneth)
Janner, Hon Greville	Thomas, Dr R, (Carmarthen)

Thompson, J. (Wansbeck)	White, James
Thorne, Stan (Preston)	Williams, Rt Hon A.
Tinn, James	Wilson, Gordon
Torney, Tom	Winnick, David
Wainwright, R.	Wrigglesworth, Ian
Wallace, James	Young, David (Bolton SE)
Wardell, Gareth (Gower)
Wareing, Robert	Tellers for the Ayes:
Weetch, Ken	Mr. Allen McKay and Mr. Mark Fisher.
Welsh, Michael

NOES
Adley, Robert	Couchman, James
Aitken, Jonathan	Cranborne, Viscount
Alison, Rt Hon Michael	Critchley, Julian
Amery, Rt Hon Julian	Crouch, David
Amess, David	Currie, Mrs Edwina
Ancram, Michael	Dickens, Geoffrey
Arnold, Tom	Dorrell, Stephen
Ashby, David	Douglas-Hamilton, Lord J.
Aspinwall, Jack	Dover, Den
Atkins, Rt Hon Sir H.	du Cann, Rt Hon Sir Edward
Atkins, Robert (South Ribble)	Dunn, Robert
Atkinson, David (B'm'th E)	Durant, Tony
Baker, Rt Hon K. (Mole Vall'y)	Edwards, Rt Hon N. (P'broke)
Baker, Nicholas (Dorset N)	Emery, Sir Peter
Baldry, Tony	Evennett, David
Banks, Robert (Harrogate)	Eyre, Sir Reginald
Batiste, Spencer	Fairbairn, Nicholas
Beaumont-Dark, Anthony	Fallon, Michael
Bellingham, Henry	Farr, Sir John
Bendall, Vivian	Favell, Anthony
Benyon, William	Fletcher, Alexander
Best, Keith	Fookes, Miss Janet
Bevan, David Gilroy	Forman, Nigel
Biffen, Rt Hon John	Forsyth, Michael (Stirling)
Biggs-Davison, Sir John	Forth, Eric
Blackburn, John	Fowler, Rt Hon Norman
Blaker, Rt Hon Sir Peter	Fox, Marcus
Body, Sir Richard	Franks, Cecil
Bonsor, Sir Nicholas	Fraser, Peter (Angus East)
Boscawen, Hon Robert	Freeman, Roger
Bottomley, Mrs Virginia	Fry, Peter
Bowden, A. (Brighton K'to'n)	Gale, Roger
Bowden, Gerald (Dulwich)	Galley, Roy
Boyson, Dr Rhodes	Gardner, Sir Edward (Fylde)
Braine, Rt Hon Sir Bernard	Garel-Jones, Tristan
Brandon-Bravo, Martin	Gilmour, Rt Hon Sir Ian
Bright, Graham	Glyn, Dr Alan
Brinton, Tim	Goodhart, Sir Philip
Brittan, Rt Hon Leon	Gow, Ian
Brooke, Hon Peter	Gower, Sir Raymond
Brown, M. (Brigg & Cl'thpes)	Greenway, Harry
Browne, John	Gregory, Conal
Bruinvels, Peter	Griffiths, Sir Eldon
Buchanan-Smith, Rt Hon A.	Griffiths, Peter (Portsm'th N)
Buck, Sir Antony	Grist, Ian
Bulmer, Esmond	Ground, Patrick
Burt, Alistair	Grylls, Michael
Butcher, John	Gummer, Rt Hon John S
Butler, Rt Hon Sir Adam	Hamilton, Hon A. (Epsom)
Butterfill, John	Hamilton, Neil (Tatton)
Carlisle, John (Luton N)	Hampson, Dr Keith
Carlisle, Kenneth (Lincoln)	Hanley, Jeremy
Carlisle, Rt Hon M. (W'ton S)	Hannam, John
Cash, William	Hargreaves, Kenneth
Channon, Rt Hon Paul	Harris, David
Chope, Christopher	Haselhurst, Alan
Churchill, W. S.	Havers, Rt Hon Sir Michael
Clark, Hon A. (Plym'th S'n)	Hawkins, C. (High Peak)
Clark, Dr Michael (Rochford)	Hawksley, Warren
Clark, Sir W. (Croydon S)	Hayes, J.
Clarke, Rt Hon K. (Rushcliffe)	Hayhoe, Rt Hon Barney
Clegg, Sir Walter	Hayward, Robert
Cockeram, Eric	Heathcoat-Amory, David
Colvin, Michael	Heddle, John
Conway, Derek	Henderson, Barry
Coombs, Simon	Heseltine, Rt Hon Michael
Cope, John	Hickmet, Richard
Cormack, Patrick	Hicks, Robert

Higgins, Rt Hon Terence L.	Nelson, Anthony
Hind, Kenneth	Newton, Tony
Hogg, Hon Douglas (Gr'th'm)	Nicholls, Patrick
Holland, Sir Philip (Gedling)	Normanton, Tom
Howard, Michael	Norris, Steven
Howarth, Gerald (Cannock)	Oppenheim, Rt Hon Mrs S.
Howell, Rt Hon D. (G'ldford)	Page, Richard (Herts SW)
Howell, Ralph (Norfolk, N)	Patten, Christopher (Bath)
Hubbard-Miles, Peter	Patten, J. (Oxf W & Abgdn)
Hunt, David (Wirral W)	Pawsey, James
Hunt, John (Ravensbourne)	Peacock, Mrs Elizabeth
Hunter, Andrew	Percival, Rt Hon Sir Ian
Hurd, Rt Hon Douglas	Pollock, Alexander
Irving, Charles	Porter, Barry
Jackson, Robert	Portillo, Michael
Jenkin, Rt Hon Patrick	Powell, Rt Hon J. E.
Johnson Smith, Sir Geoffrey	Powell, William (Corby)
Jones, Gwilym (Cardiff N)	Powley, John
Jones, Robert (Herts W)	Prentice, Rt Hon Reg
Joseph, Rt Hon Sir Keith	Price, Sir David
Kellett-Bowman, Mrs Elaine	Prior, Rt Hon James
Kershaw, Sir Anthony	Proctor, K. Harvey
Key, Robert	Pym, Rt Hon Francis
King, Roger (B'ham N'field)	Raison, Rt Hon Timothy
Knight, Greg (Derby N)	Rathbone, Tim
Knowles, Michael	Renton, Tim
Knox, David	Rhodes James, Robert
Lamont, Norman	Rhys Williams, Sir Brandon
Lang, Ian	Ridley, Rt Hon Nicholas
Latham, Michael	Ridsdale, Sir Julian
Lawler, Geoffrey	Rifkind, Rt Hon Malcolm
Lawrence, Ivan	Roberts, Wyn (Conwy)
Lawson, Rt Hon Nigel	Robinson, Mark (N'port W)
Leigh, Edward (Gainsbor'gh)	Roe, Mrs Marion
Lennox-Boyd, Hon Mark	Rost, Peter
Lester, Jim	Rowe, Andrew
Lewis, Sir Kenneth (Stamf'd)	Rumbold, Mrs Angela
Lightbown, David	Ryder, Richard
Lilley, Peter	Sainsbury, Hon Timothy
Lloyd, Ian (Havant)	Sayeed, Jonathan
Lloyd, Peter (Fareham)	Shaw, Giles (Pudsey)
Lord, Michael	Shaw, Sir Michael (Scarb')
Luce, Rt Hon Richard	Shelton, William (Streatham)
Lyell, Nicholas	Shepherd, Colin (Hereford)
McCrindle, Robert	Shepherd, Richard (Aldridge)
McCurley, Mrs Anna	Shersby, Michael
MacGregor, Rt Hon John	Sims, Roger
MacKay, Andrew (Berkshire)	Skeet, Sir Trevor
MacKay, John (Argyll & Bute)	Smith, Tim (Beaconsfield)
Maclean, David John	Soames, Hon Nicholas
McLoughlin, Patrick	Speed, Keith
McNair-Wilson, M. (N'bury)	Speller, Tony
McNair-Wilson, P. (New F'st)	Spencer, Derek
McQuarrie, Albert	Spicer, Jim (Dorset W)
Madel, David	Spicer, Michael (S Worcs)
Major, John	Squire, Robin
Malins, Humfrey	Stanbrook, Ivor
Malone, Gerald	Stanley, Rt Hon John
Maples, John	Steen, Anthony
Marlow, Antony	Stern, Michael
Marshall, Michael (Arundel)	Stevens, Lewis (Nuneaton)
Mates, Michael	Stewart, Andrew (Sherwood)
Mawhinney, Dr Brian	Stewart, Ian (Hertf'dshire N)
Maxwell-Hyslop, Robin	Stradling Thomas, Sir John
Mayhew, Sir Patrick	Sumberg, David
Mellor, David	Tapsell, Sir Peter
Merchant, Piers	Taylor, Teddy (S'end E)
Meyer, Sir Anthony	Tebbit, Rt Hon Norman
Miller, Hal (B'grove)	Temple-Morris, Peter
Mills, Iain (Meriden)	Thatcher, Rt Hon Mrs M.
Mills, Sir Peter (West Devon)	Thomas, Rt Hon Peter
Mitchell, David (Hants NW)	Thompson, Donald (Calder V)
Moate, Roger	Thornton, Malcolm
Montgomery, Sir Fergus	Thurnham, Peter
Moore, Rt Hon John	Townend, John (Bridlington)
Morrison, Hon C, (Devizes)	Townsend, Cyril D. (B'heath)
Morrison, Hon P. (Chester)	Tracey, Richard
Moynihan, Hon C.	Trippier, David
Neale, Gerrard	Trotter, Neville
Needham, Richard	Twinn, Dr Ian

van Straubenzee, Sir W.	Wheeler, John
Vaughan, Sir Gerard	Whitfield, John
Viggers, Peter	Whitney, Raymond
Waddington, David	Wiggin, Jerry
Wakeham, Rt Hon John	Winterton, Mrs Ann
Walden, George	Winterton, Nicholas
Walker, Bill (T'side N)	Wolfson, Mark
Wall, Sir Patrick	Wood, Timothy
Waller, Gary	Woodcock, Michael
Walters, Dennis	Yeo, Tim
Wardle, C. (Bexhill)	Young, Sir George (Acton)
Warren, Kenneth
Watson, John	Tellers for the Noes:
Watts, John	Mr. Carol Mather and Mr. Francis Maude.
Wells, Bowen (Hertford)
Wells, Sir John (Maidstone)

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith purstant to Standing Order No. 33 (Questions on amendents):—

The House Divided: Ayes 312, Noes 193

Division No. 196]	[7.15 pm
AYES
Adley, Robert	Channon, Rt Hon Paul
Aitken, Jonathan	Chope, Christopher
Alison, Rt Hon Michael	Churchill, W. S.
Amery, Rt Hon Julian	Clark, Hon A. (Plym'th S'n)
Amess, David	Clark, Dr Michael (Rochford)
Ancram, Michael	Clark, Sir W. (Croydon S)
Arnold, Tom	Clarke, Rt Hon K. (Rushcliffe)
Ashby, David	Clegg, Sir Walter
Aspinwall, Jack	Cockeram, Eric
Atkins, Rt Hon Sir H.	Colvin, Michael
Atkins, Robert (South Ribble)	Conway, Derek
Atkinson, David (B'm'th E)	Coombs, Simon
Baker, Rt Hon K. (Mole Vall'y)	Cope, John
Baker, Nicholas (Dorset N)	Cormack, Patrick
Baldry, Tony	Couchman, James
Banks, Robert (Harrogate)	Cranborne, Viscount
Batiste, Spencer	Crouch, David
Beaumont-Dark, Anthony	Currie, Mrs Edwina
Bellingham, Henry	Dickens, Geoffrey
Bendall, Vivian	Dorrell, Stephen
Benyon, William	Douglas-Hamilton, Lord J.
Best, Keith	Dover, Den
Bevan, David Gilroy	du Cann, Rt Hon Sir Edward
Biffen, Rt Hon John	Dunn, Robert
Biggs-Davison, Sir John	Durant, Tony
Blackburn, John	Edwards, Rt Hon N. (P'broke)
Blaker, Rt Hon Sir Peter	Emery, Sir Peter
Body, Sir Richard	Evennett, David
Bonsor, Sir Nicholas	Eyre, Sir Reginald
Bottomley, Mrs Virginia	Fairbairn, Nicholas
Bowden, A. (Brighton K'to'n)	Fallon, Michael
Bowden, Gerald (Dulwich)	Farr, Sir John
Boyson, Dr Rhodes	Favell, Anthony
Braine, Rt Hon Sir Bernard	Fletcher, Alexander
Brandon-Bravo, Martin	Fookes, Miss Janet
Bright, Graham	Forman, Nigel
Brinton, Tim	Forsyth, Michael (Stirling)
Brittan, Rt Hon Leon	Forth, Eric
Brooke, Hon Peter	Fowler, Rt Hon Norman
Brown, M. (Brigg & Cl'thpes)	Fox, Marcus
Browne, John	Franks, Cecil
Bruinveis, Peter	Fraser, Peter (Angus East)
Buchanan-Smith, Rt Hon A.	Freeman, Roger
Buck, Sir Antony	Fry, Peter
Bulmer, Esmond	Gale, Roger
Burt, Alistair	Galley, Roy
Butcher, John	Gardner, Sir Edward (Fylde)
Butler, Rt Hon Sir Adam	Garel-Jones, Tristan
Butterfill, John	Glyn, Dr Alan
Carlisle, John (Luton N)	Gow, Ian
Carlisle, Kenneth (Lincoln)	Gower, Sir Raymond
Carlisle, Rt Hon M. (W'ton S)	Greenway, Harry
Cash, William	Gregory, Conal

Griffiths, Sir Eldon	Malins, Humfrey
Griffiths, Peter (Portsm'th N)	Malone, Gerald
Grist, Ian	Maples, John
Ground, Patrick	Marshall, Michael (Arundel)
Grylls, Michael	Mates, Michael
Gummer, Rt Hon John S	Maude, Hon Francis
Hamilton, Hon A. (Epsom)	Mawhinney, Dr Brian
Hamilton, Neil (Tatton)	Maxwell-Hyslop, Robin
Hampson, Dr Keith	Mayhew, Sir Patrick
Hanley, Jeremy	Mellor, David
Hannam, John	Merchant, Piers
Hargreaves, Kenneth	Meyer, Sir Anthony
Harris, David	Miller, Hal (B'grove)
Haselhurst, Alan	Mills, lain (Meriden)
Havers, Rt Hon Sir Michael	Mitchell, David (Hants NW)
Hawkins, C. (High Peak)	Moate, Roger
Hawksley, Warren	Montgomery, Sir Fergus
Hayes, J.	Moore, Rt Hon John
Hayhoe, Rt Hon Barney	Morrison, Hon P. (Chester)
Hayward, Robert	Moynihan, Hon C.
Heathcoat-Amory, David	Neale, Gerrard
Heddle, John	Needham, Richard
Henderson, Barry	Nelson, Anthony
Heseltine, Rt Hon Michael	Newton, Tony
Hickmet, Richard	Nicholls, Patrick
Hicks, Robert	Normanton, Tom
Higgins, Rt Hon Terence L.	Norris, Steven
Hind, Kenneth	Oppenheim, Rt Hon Mrs S.
Hogg, Hon Douglas (Gr'th'm)	Page, Richard (Herts SW)
Holland, Sir Philip (Gedling)	Patten, Christopher (Bath)
Howard, Michael	Patten, J. (Oxf W & Abgdn)
Howarth, Gerald (Cannock)	Pawsey, James
Howell, Rt Hon D. (G'ldford)	Peacock, Mrs Elizabeth
Howell, Ralph (Norfolk, N)	Percival, Rt Hon Sir Ian
Hubbard-Miles, Peter	Pollock, Alexander
Hunt, David (Wirral W)	Porter, Barry
Hunt, John (Ravensboume)	Portillo, Michael
Hunter, Andrew	Powell, William (Corby)
Hurd, Rt Hon Douglas	Powley, John
Irving, Charles	Prentice, Rt Hon Reg
Jackson, Robert	Price, Sir David
Jenkin, Rt Hon Patrick	Prior, Rt Hon James
Johnson Smith, Sir Geoffrey	Proctor, K. Harvey
Jones, Gwilym (Cardiff N)	Pym, Rt Hon Francis
Jones, Robert (Herts W)	Raison, Rt Hon Timothy
Joseph, Rt Hon Sir Keith	Rathbone, Tim
Kellett-Bowman, Mrs Elaine	Renton, Tim
Key, Robert	Rhodes James, Robert
King, Roger (B'ham N'field)	Rhys Williams, Sir Brandon
Knight, Greg (Derby N)	Ridley, Rt Hon Nicholas
Knowles, Michael	Ridsdale, Sir Julian
Lamont, Norman	Rifkind, Rt Hon Malcolm
Lang, Ian	Roberts, Wyn (Conwy)
Latham, Michael	Robinson, Mark (N'port W)
Lawler, Geoffrey	Roe, Mrs Marion
Lawrence, Ivan	Rost, Peter
Lawson, Rt Hon Nigel	Rowe, Andrew
Leigh, Edward (Gainsbor'gh)	Rumbold, Mrs Angela
Lennox-Boyd, Hon Mark	Ryder, Richard
Lester, Jim	Sainsbury, Hon Timothy
Lewis, Sir Kenneth (Stamf'd)	Sayeed, Jonathan
Lightbown, David	Scott, Nicholas
Lilley, Peter	Shaw, Giles (Pudsey)
Lloyd, Ian (Havant)	Shaw, Sir Michael (Scarb')
Lloyd, Peter (Fareham)	Shelton, William (Streatham)
Lord, Michael	Shepherd, Colin (Hereford)
Luce, Rt Hon Richard	Shepherd, Richard (Aldridge)
Lyell, Nicholas	Shersby, Michael
McCrindle, Robert	Sims, Roger
McCurley, Mrs Anna	Skeet, Sir Trevor
MacGregor, Rt Hon John	Smith, Tim (Beaconsfield)
MacKay, Andrew (Berkshire)	Soames, Hon Nicholas
MacKay, John (Argyll & Bute)	Speed, Keith
Maclean, David John	Speller, Tony
McLoughlin, Patrick	Spencer, Derek
McNair-Wilson, M. (N'bury)	Spicer, Jim (Dorset W)
McNair-Wilson, P. (New F'st)	Spicer, Michael (S Worcs)
McQuarrie, Albert	Squire, Robin
Madel, David	Stanbrook, Ivor
Major, John	Stanley, Rt Hon John

Steen, Anthony	Wakeham, Rt Hon John
Stern, Michael	Walker, Bill (Tside N)
Stevens, Lewis (Nuneaton)	Wall, Sir Patrick
Stewart, Andrew (Sherwood)	Waller, Gary
Stewart, Ian (Hertf'dshire N)	Walters, Dennis
Stradling Thomas, Sir John	Wardle, C. (Bexhill)
Sumberg, David	Warren, Kenneth
Tapsell, Sir Peter	Watson, John
Taylor, Teddy (S'end E)	Watts, John
Temple-Morris, Peter	Wells, Bowen (Hertford)
Thatcher, Rt Hon Mrs M.	Wells, Sir John (Maidstone)
Thomas, Rt Hon Peter	Wheeler, John
Thompson, Donald (Calder V)	Whitfield, John
Thornton, Malcolm	Whitney, Raymond
Thurnham, Peter	Wiggin, Jerry
Townend, John (Bridlington)	Winterton, Nicholas
Townsend, Cyril D. (B'heath)	Wolfson, Mark
Tracey, Richard	Wood, Timothy
Trippier, David	Woodcock, Michael
Trotter, Neville	Yeo, Tim
Twinn, Dr Ian	Young, Sir George (Acton)
van Straubenzee, Sir W.
Vaughan, Sir Gerard	Tellers for the Ayes:
Viggers, Peter	Mr. Carol Mather and Mr. Robert Boscawen.
Waddington, David

NOES
Abse, Leo	Conlan, Bernard
Adams, Allen (Paisley N)	Cook, Frank (Stockton North)
Alton, David	Cook, Robin F. (Livingston)
Anderson, Donald	Corbett, Robin
Archer, Rt Hon Peter	Corbyn, Jeremy
Ashdown, Paddy	Craigen, J. M.
Ashley, Rt Hon Jack	Crowther, Stan
Ashton, Joe	Cunningham, Dr John
Atkinson, N. (Tottenham)	Dalyell, Tam
Bagier, Gordon A. T.	Davies, Rt Hon Denzil (L'lli)
Banks, Tony (Newham NW)	Davies, Ronald (Caerphilly)
Barnett, Guy	Davis, Terry (B'ham, H'ge H'l)
Barron, Kevin	Deakins, Eric
Beckett, Mrs Margaret	Dewar, Donald
Beith, A. J.	Dixon, Donald
Bell, Stuart	Dobson, Frank
Benn, Rt Hon Tony	Dormand, Jack
Bennett, A. (Dent'n & Red'sh)	Douglas, Dick
Bermingham, Gerald	Dubs, Alfred
Bidwell, Sydney	Dunwoody, Hon Mrs G.
Blair, Anthony	Eadie, Alex
Boyes, Roland	Eastham, Ken
Brown, Gordon (D'f'mline E)	Ellis, Raymond
Brown, Hugh D. (Provan)	Evans, John (St. Helens N)
Brown, Ron (E'burgh, Leith)	Ewing, Harry
Bruce, Malcolm	Fatchett, Derek
Buchan, Norman	Faulds, Andrew
Caborn, Richard	Field, Frank (Birkenhead)
Callaghan, Rt Hon J.	Fields, T. (L'pool Broad Gn)
Callaghan, Jim (Heyw'd & M)	Flannery, Martin
Campbell, Ian	Foot, Rt Hon Michael
Campbell-Savours, Dale	Forrester, John
Canavan, Dennis	Foster, Derek
Carlile, Alexander (Montg'y)	Foulkes, George
Cartwright, John	Fraser, J. (Norwood)
Clark, Dr David (S Shields)	Freud, Clement
Clarke, Thomas	Garrett, W. E.
Clay, Robert	George, Bruce
Clelland, David Gordon	Gilbert, Rt Hon Dr John
Clwyd, Mrs Ann	Godman, Dr Norman
Cohen, Harry	Gould, Bryan

Gourlay, Harry	Park, George
Hamilton, James (M'well N)	Patchett, Terry
Hancock, Michael	Pendry, Tom
Harrison, Rt Hon Walter	Penhaligon, David
Hattersley, Rt Hon Roy	Pike, Peter
Haynes, Frank	Prescott, John
Heffer, Eric S.	Radice, Giles
Hogg, N. (C'nauld & Kilsyth)	Randall, Stuart
Holland, Stuart (Vauxhall)	Raynsford, Nick
Home Robertson, John	Redmond, Martin
Howells, Geraint	Rees, Rt Hon M. (Leeds S)
Hoyle, Douglas	Richardson, Ms Jo
Hughes, Dr Mark (Durham)	Roberts, Ernest (Hackney N)
Hughes, Robert (Aberdeen N)	Robinson, G. (Coventry NW)
Hughes, Roy (Newport East)	Rogers, Allan
Hughes, Simon (Southward)	Rooker, J. W.
Hume, John	Ross, Ernest (Dundee W)
Janner, Hon Greville	Ross, Stephen (Isle of Wight)
John, Brynmor	Rowlands, Ted
Jones, Barry (Alyn & Deeside)	Ryman, John
Kennedy, Charles	Sedgemore, Brian
Kilroy-Silk, Robert	Sheerman, Barry
Kirkwood, Archy	Sheldon, Rt Hon R.
Lambie, David	Shields, Mrs Elizabeth
Leadbitter, Ted	Shore, Rt Hon Peter
Leighton, Ronald	Short, Ms Clare (Ladywood)
Lewis, Ron (Carlisle)	Silkin, Rt Hon J.
Lewis, Terence (Worsley)	Skinner, Dennis
Litherland, Robert	Snape, Peter
Livsey, Richard	Soley, Clive
Lloyd, Tony (Stretford)	Spearing, Nigel
Lofthouse, Geoffrey	Steel, Rt Hon David
McCartney, Hugh	Stewart, Rt Hon D. (W Isles)
McDonald, Dr Oonagh	Stott, Roger
McKelvey, William	Strang, Gavin
MacKenzie, Rt Hon Gregor	Straw, Jack
Maclennan, Robert	Thomas, Dafydd (Merioneth)
McNamara, Kevin	Thomas, Dr R. (Carmarthen)
McTaggart, Robert	Thompson, J. (Wansbeck)
McWilliam, John	Thorne, Stan (Preston)
Mallon, Seamus	Tinn, James
Marek, Dr John	Torney, Tom
Marshall, David (Shettleston)	Wainwright, R.
Martin, Michael	Wallace, James
Mason, Rt Hon Roy	Wareing, Robert
Maxton, John	Weetch, Ken
Maynard, Miss Joan	Welsh, Michael
Meacher, Michael	White, James
Michie, William	Williams, Rt Hon A.
Mikardo, Ian	Wilson, Gordon
Mitchell, Austin (G't Grimsby)	Winnick, David
Morris, Rt Hon A. (W'shawe)	Wrigglesworth, Ian
Morris, Rt Hon J. (Aberavon)	Young, David (Bolton, SE)
Nellist, David
Oakes, Rt Hon Gordon	Tellers for the Noes:
O'Brien, William	Mr. Allen McKay and Mr. Mark Fisher.
Orme, Rt Hon Stanley
Owen, Rt Hon Dr David

Question accordingly agreed to.

Mr.Speaker

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

Resolved That this House congradulates Hrer Majesty's Government on the success of its economic policies in securing the lowest rate of inflation for over 18 years and steadily rising employment.