HC Deb 24 June 1986 vol 100 cc194-237

[Relevant documents: First, second and third reports of the Employment Committee, House of Commons Papers 199 (1985–86), 265 (1985–86) and 435 (1985–86).]

Motion made, and Question proposed, That a further sum, not exceeding £27,735.000, be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1987 for expenditure by the Department of Employment on the administration of benefit services and on central and miscellaneous services.—[Mr. Kenneth Clarke.]

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

I commend to the House the two reports of the Select Committee on Employment, on special employment measures and the corporate plan of the Manpower Services Commission. The MSC has a budget of some £3 billion and the House should give it more detailed attention. We compliment the MSC upon the comprehensiveness of its corporate plan, which sets something of a standard to other public bodies in that regard. We were impressed by the enthusiasm of the MSC staff for the necessary work they do. I want to concentrate on our reports on special employment measures. The opening words of our first report were: We seek to attack a vicious paradox. Admitted needs in both the public and private sectors have increased, while the stock of unused resources, both human and material, has increased likewise. Why not bring the unmet needs and unused resources together more quickly? We believe that unemployment is increasingly becoming the main social, moral and economic problem facing the country. The cost of the dole queue to the Exchequer is about £20 billion. That must be bad economics. If those people were at work, they would produce some £35 billion worth of wealth. It is a failure of imagination to allow that to continue. The Committee's report stated: The costs of unemployment, including long-term unemployment, are not to be measured only in terms of benefit paid, taxes forgone and output lost. The associated increase of family breakdown, drug abuse, sickness, suicide and crime have a high economic and social cost.

Mr. Eric Forth (Mid-Worcestershire)

Will the hon. Gentleman give way?

Mr. Leighton

I hope that the hon. Gentleman will forgive me for not giving way.

Let the House consider the nature and scale of this tragedy and what has happened. In the year to October 1978 unemployment fell by 91,700. In the year to October 1979 it fell by a further 62,100. Then there was a change of Government and, with it, a change of policy. I do not want to be too partisan but perhaps it is as well to remind ourselves that the Conservative election manifesto in 1979 promised what was termed "more genuine new jobs". On 15 May 1979, the Gracious Speech stated: My Government will give priority in economic policy … and create a climate in which commerce and industry can flourish"— and lay the basis for increased employment in all parts of the United Kingdom." —[0fficial Report, 15 May 1979; Vol. 967, c. 48.] That was the promise and the prospectus. What happened? I want to give the facts. Anyone can have opinions; it is the facts that count.

By the next year, 1980, unemployment had rocketed by 670,200. By the following year, 1981, it had increased disastrously, by no less than 903,400—almost 1 million in one year. In contrast to the 1979 promise, unemployment has continued to increase every year since.

The Select Committee and, I am sure, the House are concerned about the dramatic increases, within those totals, of the numbers of the long-term unemployed—now more than 40 per cent. of the jobless, numbering 1 million. If we included those taken out by the Budget changes of 1983 for a real comparison, we get a true figure of some 1,430,000 unemployed for more than a year, compared with only a third of a million in 1979. There are now more long-term unemployed than the total out of work in 1979. Well over 500,000 have been out of work for more than three years — many for four or five years. This reflects the marked increase in the numbers of people thrown out of work in 1980, 1981 and 1982 and denied work ever since.

I put it to the House that the Government have a special responsibility to those of our people, because they are the victims of the Government's policies. Many of the younger generation have never known what it is to have a job. They have been brought up, and are now marrying and starting families, in an out-of-work society. It is impossible to overestimate the damage it is doing to our society and its cohesion. We are fashioning a time bomb for the future. It is not an adequate response to equip the police with CS gas and plastic bullets.

This is not just an economic problem; it is a moral problem. Recently, the Secretary of State for Employment, Lord Young, made a speech suggesting that 87 per cent. of our people had never had it so good. Does that mean that the millions of unemployed do not matter? That speech does not stand up to close scrutiny because the lower paid have seen their incomes decline in absolute terms. Those in receipt of state benefits, such as pensioners, have not shared in the increased standards of living.

But to the extent that that statement is true, if nationhood and common citizenship mean anything, do not those who have done well out of the past seven years owe a duty to those who have not—to those who have been shut out and allowed to rot on the dole? Are we to widen the gulfs and divisions in our country even more by spending what resources we have on tax cuts for the better off?

We all lose and are impoverished by mass unemployment. There is the monumental waste of £20 billion every year to finance the dole queue. There is the lost output. We all know of the things that our constituents lack, yet idle people are not allowed to produce them. Much of the country is crumbling to bits and becoming a slum and, in areas where almost half the population are idle, we see dramatic increases in crime and disturbances in our cities. We all lose by mass unemployment, in the quality of society and of our own lives.

Mr. Forth


Mr. Leighton

Ought the Government do something about it? Yes. Can they do something about it? Yes, of course. It would be a betrayal, a form of treason to democratic politics, to say that we can do nothing. If hon. Members say that we can do nothing, we should not be here. Yet the Government have virtually given up. We know that because their assumptions are fed into public expenditure plans which show an assumption of, and provision for, mass unemployment as far ahead as can be seen.

The Government's main policy is seeking to lower wages and, fancifully, to price people into jobs. Even here they have succeeded only in reducing the wages of the lower paid, yet their unemployment is already higher, and is increasing—disproving the notion that unemployment is caused by high wages. For the rest, there is just chatter about deregulation, jargon about improving the functioning of the labour market and the three Trade Union Acts —all aimed at lower wages.

Mr. Peter Thurnham (Bolton, North-East)


Mr. Leighton

However, it must be noted that, for the most part, real wages are not directly under Government control, nor are the long-term unemployed now any longer part of the labour market. As someone recently said, they might as well be in Australia for the effect they have on the level of wages. This failure has led the Government to a deafeatist, almost passive acceptance of continuing mass unemployment. We cannot endure this indefinitely, so what is to be done?

Even with the Government's tight overall fiscal-monetary stance, the Chancellor said in the 1985 Red Book that there was a £9.5 billion "fiscal adjustment" from 1986–87 to 1988–89. Therefore, that £9.5 billion of tax cuts or public expenditure increases would be consistent with the Government's public sector borrowing requirement objectives. Here we all have to make a choice of objectives. Here we all have to decide on what we should like this money to be spent. Surely this scope should be used, as far as possible, to create jobs quickly. That should be the priority. The Select Committee took evidence on the best and most cost-effective ways of doing that.

Of course, other things being equal, we should all like to see tax cuts. However, if we are interested in jobs, the evidence shows that tax cuts are the least effective, and most expensive, way of creating jobs, costing some £50,000 net for each person removed from the unemployment count. Some people would allege that income tax cuts unleash a surge of productive enterprise and incentives to work effort. The best that can be said for that is that it is completely unproven. The 1979 Budget, introduced by the former Chancellor, the present Foreign and Commonwealth Secretary, was based on that concept. It had the opposite effect and preceded a surge of unemployment.

Much of the proceeds of tax cuts goes into savings or is spent on imports, not domestic employment. It might be more honest to admit that income tax cuts are a straightforward bribe for electoral reasons than to pretend that they are for the good of the economy. Better and cheaper for job creation, although still relatively expensive, are increases in public expenditure, notably in public investment. They are considerably more cost-effective than income tax reductions. Here we should note that the direct and indirect job content of each unit of public expenditure differs considerably programme by programme and according to whether it is current or capital expenditure. This would have to be taken into account when designing the mix to create employment.

The third method of job creation——

Mr. Nigel Forman (Carshalton and Wallington)

I am sorry to interrupt the hon. Gentleman in the flow of his long speech, but does he not accept that any variable analysis of the impact of different forms of fiscal adjustment upon employment is bound to be suspect? About the only confident statement that one can make is that tax cuts may have a greater or lesser effect on unemployment than the other things he is discussing, such as public expenditure or national insurance. It is clear that it does not have a quick effect. Is it not a question of time scale?

Mr. Leighton

The hon. Gentleman is known in the House for his attention to these matters. He is right that the estimate cannot be exact. What he says about the speed at which the measures can be introduced is also right.

We are not suggesting that these are the main measures for the future of the whole economy. They are measures to be taken alongside an orthodox expansion of the economy. Whatever mix of measures that we have, the Select Committee proposes selective employment measures because they are targeted and quick acting, with an effect in the short term within the next two or three years. That is why we recommend them.

Therefore, I come to the third method — special employment measures. The evidence here is striking and very clear. It shows that they are far and away the most effective measures of all. They boost employment or cut unemployment far more than any other use of money.

The Government already have a range of special employment measures such as the community programme, the enterprise allowance scheme and the job release scheme. If we include the youth training scheme, although it is not strictly speaking a special employment measure, more than 600,000 people take part, taking over half a million out of the unemployment count. That is not at £50,000 a head, as with tax cuts, but at about £2,000 a head. That is spectacularly good value.

What the country needs now—I take the point of the hon. Member for Carshalton and Wallington (Mr. Forman) in relation to the short term—is a new deal. Alongside an orthodox revival of the economy we need, especially in the short term, a major expansion and upgrading of special employment measures to take up and reduce unemployment.

Of course, there are some criticisms of the measures. Some spending is on dead weight, that is, in financing jobs that would have existed anyway. Also there is displacement, displacing employment or output elsewhere. There is nothing new or unique in that. For example, regional development grants often go to firms that would have made the investment regardless of the availability of grants. There is already heavy dead weight on some of the Government's schemes. On the young workers scheme, which has been revamped into the new workers scheme, the dead weight is well over 75 per cent.

On the enterprise allowance scheme, of which the Government are so proud, the dead weight is about 50 per cent. But, even allowing for the dead weight and displacement, the expenditure on special employment measures is some 20 times more effective than tax cuts. It is certainly far quicker in removing people from unemployment.

On the inflation criterion, special employment measures are superior to other uses of money because they are targeted towards individuals, firms and areas where labour is in excess supply, and so they do not lead to inflation. Spending on the long-term unemployed is not inflationary. It is an investment in their future employability.

At present, 0.6 million people are on special employment measures. What is the optimum number? What is the optimum number with unemployment at over 4 million? Why is the figure 0.6 million rather than, say, 1.6 million? We had better realise that the measures will be a permanent feature of the labour market as far ahead as we can see, so let there be longer-term planning and evaluation.

Here I come to the details of our proposals. We concentrated on the long-term unemployed as a priority category. For them, privation and hardship is greatest. They are discriminated against as the only long-term claimants who cannot claim long-term benefit, however many years they have been out of work.

After a family has been without wages for a year or more, clothing, footwear and household goods wear out and cannot be replaced. Their children suffer, and in turn their life chances are affected. The longer that someone is without a job, the less likely he or she is to get a job. Unemployment is not an orderly queue, where those who have waited the longest come off first. The reverse is true. Successful applicants tend to be those who have recently joined the queue. The great advantage of special employment measures is that they can be targeted at specific groups.

Our original proposals recommended that, over three years, a job guarantee should be offered to all long-term unemployed who wanted one We wanted the new special measures to create additional jobs at the lowest feasible cost to the Exchequer. That would lead to regular jobs with regular employers, paying the rate for the job for a full week if required. We felt that 750,000 extra places, in addition to the 230,000 on the community programme at the peak of the scheme, would be sufficient to provide the guarantee. Clearly, it would not be possible to provide these jobs at once. We envisaged a build-up of the scheme over three years, with pilot schemes to test out the ideas in practice and learn from them. Where would the extra jobs be found? The first area was an urban rehabilitation and building improvement programme. Despite the enormous backlog in maintenance work, the construction industry is employing 500,000 fewer workers than a decade ago. We envisage 300,000 extra jobs at a net cost of £1.5 billion when the scheme is in full operation.

The second area is in health and personal social services. Both are highly labour-intensive. We suggested that 50,000 people should be employed in the personal social services and 50,000 people in the National Health Service.

Mr. Thurnham

I apologise to the hon. Gentleman for arriving a few moments after he started his speech. Could the hon. Gentleman say whether trade unions have suggested they would be able to support the initiative from the Select Committee? I have not heard of any response from the Trades Union Congress on the suggestions that the Committee has put forward.

Mr. Leighton

I have no knowledge of the trade union view of the schemes. Perhaps, if I may be allowed to call him my hon. Friend, the hon. Member for Bolton, North-East (Mr. Thurnham) and I might together seek evidence on this from the TUC.

I am putting this forward not as the view of the TUC, but as the view of the Select Committee. Indeed, I offer these views to the Government and the country, and that includes the TUC. I am as prepared to argue this case with the TUC as I am with anyone.

Mr. John Evans (St. Helens, North)

Would my hon. Friend accept from me, as someone who regularly meets senior members of the trade union movement, including members of the TUC general council, that they would accept any measures that would help to get the long-term unemployed back to work? The problem is in trying to get the Government to accept the measures.

Mr. Leighton

I hoped that that would be the view of the TUC. I certainly thought it might be. We need sensible and feasible ideas to tackle and remedy the problem of long-term unemployment. That is why we are putting them forward.

I hope that the House will come up with sensible, reasonable and practicable ideas and I am certain that we could discuss them with the TUC. I have no reason to suppose that the TUC would be anything other than co-operative in any measure that would increase employment.

I understand that it is public policy to move from institutional care to care in the community. We need more carers, and that is the area of our second proposal. The net cost would be about £0.4 billion.

The third area of our proposals involves a wage subsidy of £40 a week, which is the average benefit that a long-term unemployed person may expect to receive, and would be paid to the employers in the private sector who took on additional long-term unemployed people. Allowing for the maximum possible dead weight, we estimate that some 350,000 jobs could be created by that means at a cost of £1.4 billion. At the end of a three-year period, that would give us the additional jobs needed to constitute the guarantee to the long-term unemployed, at an eventual cost of £3.3 billion.

We studied the figures carefully, and we had our calculations double checked by the London Business School. Such a programme would transform the situation in this country. Everyone would know that a year would be the maximum period that he was idle and out of work. It would lift morale, and restore hope to our people. The report received a very good response in the country and in the press. The Government's reply was a long time in gestation. When it came, they did not fall over themselves in their eagerness to spend £3.3 billion in that way.

The Government claimed that we had underestimated the cost, which they said would be £4.3 billion at its peak —which is £1 billion more than our estimate. They also thought that it would produce fewer jobs. We do not accept the arithmetic of their calculations, and we would be pleased to discuss that. But even on their figures, we say that the proposal is well worth while and should be adopted. The main argument against seemed to be the cost, which the Government's reply said was "formidable". In the fifth paragraph, the Government said: The cost of attempting to implement the Committee's proposal would be prohibitive". In their very last paragraph, the Government said of the £3.3 billion cost: Additional spending on this scale would pre-empt the scope for tax reductions. So there is the choice. It is a question of priorities, and of what value one puts on dealing with unemployment. When considering the Government's reply, we were somewhat heartened that, although the Government did not agree with our figures, we were not all that far apart. We said £3.3 billion: they said £4.3 billion. At least we are in the same parish. We take the Government's reply as being in no way a rejection of the Committee's view that the long-term unemployed are a priority category.

We did not leave things there. The debate must continue. Consequently we have come back with a scaled-down version of our programme, and have suggested that our proposal for the job guarantee should be offered to the over 500,000 people who have been out of work for three years or more, at a cost of £1 billion, and that pilot projects should be used to test the feasibility of our original, more ambitious proposals. This much more modest proposal that we now put forward would involve less than one third of the original cost. We offer it in a constructive and helpful spirit. It is something that we can afford. The House will remember the billions found to defeat the miners' strike, and the billions spent in the Falklands. We can certainly spend £1 billion on fighting unemployment among our own people if the will and the desire are there. If we do not embark on that programme, or on one of a similar nature, we shall write off those fellow citizens.

Despite being told of the new jobs that have been created since 1983, the number of long-term unemployed has grown dramatically during that period, and the duration of their unemployment has likewise grown. Any general economic growth would help only the short-term jobless. Unless there are specific and targeted measures, those people will never work again. That would be unforgivable and a betrayal. If the Government want to help, it is perfectly possible for them to do so. We have pointed the way.

I am pleased to see that the Paymaster General is listening intently, although I am now drawing my speech to an end. I imagine that he will refer to the extra places on the community programme. We have included that in our calculations. I imagine that he will also refer to the restart programme as being the Government's way of tackling the problem. I should make it clear that the Select Committee fully supports the restart programme. However, it would be futile to suggest that it is a solution to the problem. As the Paymaster General knows very well, it has nothing to do with job creation. It does not create one single new job. The most that it can do is to seek to ensure that the long-term unemployed get a better share of the existing vacancies. But what if there are no vacancies, or too few? The six-month restart pilot projects started on 6 January. My researches show that on 9 May, five months later and five sixths of the way through the period of the project, 3,919 letters went out in Dundee, and, after five months, just 11 people got jobs.

Mr. John Prescott (Kingston upon Hull, East)

I think that my hon. Friend must have heard the exchanges during Question Time, which showed that the Government are concerned not about how many people obtain jobs, but about how many are offered jobs. Presumably, many people are offered the same job so that the Government can say that so many offers have been made, and do not have to state the number of real jobs available.

Mr. Leighton

It is not quite like that. People are offered a menu of opportunities. One offer may be to go to a job club, another may be to train, and yet another may be to join the community programme. There is no question of 90 per cent. being offered jobs. The Select Committee will try to monitor the restart programme, and lay the facts before the House. Indeed, such monitoring is a justification of the whole Select Committee system.

It could also be said that the task of the restart programme is not just to put people into jobs. I have travelled round the country with the MSC, and it is said that the main purpose is not to offer people jobs but to remotivate them, to train them, and so on. The Paymaster General must be careful about the language that he uses. The restart programme will not solve the problem. It will not create a single new job. It is not in the business of job creation.

Once I have given a few more figures for the restart programme, I shall outline how our proposals could help it. After all, we are in favour of the restart programme. In Billingham 941 letters were sent out, yet by 9 May only four people had got jobs. In Preston, 3,130 letters went out and nine people obtained jobs. In Huddersfield, 2,544 letters were sent out, but by 9 May—five months after the beginning of the six-month pilot project—15 people had been placed in jobs. In Stoke, 4,140 letters were sent out, and 23 people obtained jobs. In Port Talbot, 2,615 letters were sent out, and 53 people found jobs. In Plymouth, 2,537 letters were sent out, and seven obtained jobs. In Crawley — this looks as though it is the best result, and I know Crawley quite well—643 letters were sent out, and 53 were placed in jobs by 9 May. Lastly, in Ealing, 2,260 letters were sent out, and 38 were placed in jobs.

The pilot projects have another month to go. We shall then get a final assessment, and the effect of all this will continue. To use language such as the Paymaster General used at Question Time today misleads my hon. Friends into thinking 90 per cent. when it is a fraction of 1 per cent. ——

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

I am sure that the hon. Gentleman would not wish unintentionally to mislead the House in the use that he makes of the figures. He is talking about the number placed directly, on coming to interviews, in available jobs. He knows that he is leaving out all the figures for those placed in jobs on the community programme, all the figures of those referred to job clubs, where about two thirds will get jobs, and all those who will benefit from the restart courses, which will undoubtedly have an effect on people's ability to go into jobs. He is making a narrow and most misleading use of all the information that we are producing about the pilot schemes just as, a few moments ago, he completely misrepresented the Government's response to the report of the Select Committee by suggesting that we turned it down on cost alone. He knows perfectly well that it was the impracticability of what was proposed that led us reluctantly to reject it.

Mr. Leighton

I am pleased that I have flushed out the Paymaster General and got him to come and account for himself. Now we are beginning to get down to some of the nitty-gritty. It is frustrating at Question Time, when the Paymaster General comes back with his strange language giving everybody the impression that 90 per cent. are satisfied and happy. When we start probing, which is what a Select Committee can do—we can ask not just one question but 12 questions, and we can visit places and get to the facts—we find a different situation. Let us get to an area of agreement here.

Mr. Clarke

The hon. Gentleman, when he remembered that he was Chairman of the Select Committee, conceded that the report of the Select Committee was in favour of restart. He then launched into a great attack upon it. We have used consistent language throughout to the effect that 90 per cent. of those interviewed are made some sort of offer. The confusion is caused by the completely inaccurate quotation of what we are meant to have said by various right hon. and hon. Members of the Opposition.

Mr. Leighton

The right hon. and learned Gentleman must learn to relax and not get too excited about this. There is no need to worry because there is a lot of common ground here. We are in favour of the restart programme, make no mistake about that. We are putting forward proposals to make the restart programme more effective. I say again—I will give way if the Paymaster General thinks that I have this wrong — that the restart programme is not an exercise in job creation. It does not create one new job. It seeks to ensure that the long-term unemployed get a better share of the existing vacancies.

Mr. Clarke

As the hon. Gentleman knows, the community programme is a job creation programme, which is why we are doubling it at huge expense. It will provide jobs for over 300,000 in a year. When giving his figures, the hon. Gentleman leaves out all the community programme jobs, although earlier in his speech he was saying how cost effective the job creation measures were and that he supported them.

Mr. Leighton

There is hope for the Paymaster General after all—he is coming along.

The Select Committee recommended two years ago, before the right hon. and learned Gentleman's time, that the community programme should be doubled, and at long last we are managing to drag this out of the Government. I am certain that he will be obliged to carry out many of the ideas that we are putting forward, although he is not jumping at them now. We are the cutting edge—he will come along eventually.

We have included in our figure of 1 million the expansion of the community programme. We want the community programme to be upgraded. Even the Paymaster General has not read the report properly. He; rubbishes a report that he has not read. To constitute the job guarantee of 1 million, we proposed the 750,000, with the other 250,000 to come from the community programme. The Government do not even understand what we propose, yet they jump up and down trying to criticise us. Of course, if the Paymaster General likes to come back, I am always generous in giving way, as hon. Members know. Perhaps he will have a little read, I will continue for a few moments, and I am certain that eventually he will come back on this matter.

I want the community programme to be upgraded. I want the wage, which is a miserly £67, increased so that we can get a better community programme. The Government must pay a little more attention to the documents that we produce and the speeches that we make. It would he nice to have a competent Treasury Front Bench dealing with unemployment.

I repeat for the fourth time, so that the Paymaster General should not misunderstand, that we support the restart programme, and we support and congratulate the dedicated Manpower Services Commission staff operating it. However, as we say in the report, In fact, the programme is already beginning to reveal a desperate shortage of such jobs". What the restart programme needs, what it is crying out for, is some jobs for its participants who have been motivated to take them. If their hopes are raised and then dashed, it would be a scandal. I urge the Government to adopt our proposals to work in tandem, to complement and ensure the success of the restart programme, to provide the jobs that the participants of the restart programme, having had their training and their motivation, can take.

I conclude by emphasising that this is a moral, social and economic issue. There must be a response commensurate with the scale of the problem. It is our overwhelming duty to come up with a remedy to this tragedy, which is impoverishing and undermining our whole nation. The Select Committee will strive for it, and I urge the Government to do the same.

4.57 pm
Mr. David Howell (Guildford)

I think that the whole House admires the zeal and application with which the Select Committee on Employment looks at the question of job creation and the plight of the long-term unemployed, even if the whole House will not necessarily agree with every nuance of the speech that the Chairman of the Committee has just delivered, giving his own rather personal interpretation of the problem. While there was much in the early part of his speech with which I agreed, it is a pity that he got into a sort of rhythm of accusations about the Government virtually giving up and pushed aside the beginnings of a serious analysis and understanding of this highly emotive and central social problem. About that I was sorry. Nevertheless, I recognise that he feels strongly on these matters, and has done much work upon them.

I hope that, although I am not a member of the Select Committee, I will he forgiven for intruding on a debate and on an issue that obviously affects all of us. In particular, I will concentrate on the Manpower Services Commission's four-year forward corporate plan and report, 1986 to 1990. With that I associate another recently published report that is very germane to the issues under discussion today. That is a survey by the Institute of Manpower Studies which it undertook for the occupations study group on the pattern of employment as the institute sees it evolving over the same period, 1986 to 1990.

The MSC report, some of the comments of the hon. Member for Newham, North-East and the study by the Institute of Manpower Studies all have one central and very obvious message — that the employment and unemployment landscapes have totally changed; they have altered in their structure and shape and in the problems that they throw up. This is not futurology; it is not something that will happen in 10 years time — it has happened already. We are dealing with a new employment landscape and the MSC report is obviously attuned to that fact as it looks forward to 1990, as does the IMS report.

As the MSC report reminds us, we are now in the fifth year of uninterrupted growth in the United Kingdom economy, yet the prospects for employment are not good. The MSC chairman, Mr. Nicholson, said in the foreword to the report: Over the planning period unemployment, especially long-term unemployment, is likely to remain at historically high levels, though the rises of recent years are expected to cease. Elsewhere in the report is the marker that the most sensible and safe planning basis for the long-term unemployed is to assume that the problem will remain at roughly the same level—perhaps not very much worse, but not very much better either.

The IMS tried its hand at rather more precise forecasting and came up with a rather more depressing assessment. It suggests that 640,000 jobs will disappear from the production industries by 1990, with only 520,000 jobs appearing in other industries, notably in the service sector. We must add to that the increase in numbers entering the labour market, which on IMS figures gives an actual rise in the level of unemployment, especially long-term unemployment. As the hon. Member for Newham, North-East said, they are the ones who stay at the hack of the queue.

The beginning of wisdom in addressing this problem is to recognise something that, to be fair to the hon. Member for Newham, North-East, he, his party and the critics of the present position do not fully accept, which is that manufacturing employment—if we define that in the old form—will continue to shrink at a great rate. That is happening all over the world, and in British industry it is happening rather faster than in the past. There is a most basic technological reason for that—manufacturers find that their processes are better organised on very skilled manpower only and on a capital-intensive basis.

As the IMS reminds us, that is a process in which manufacturing is actually divesting itself of large numbers of people, not merely because they are not wanted but because the whole process with which they are associated is now subcontracted outside manufacturing. Therefore, when the pessimist sees that manufacturing employment is shrinking fast, he is actually looking at a process by which the very category of manufacturing is shrinking as more and more of the processes are sub-contracted out. Some of those processes are very close to the main stream of manufacturing production, but include accountancy, transportation, catering, all sorts of services and support to the processes within production. That sub-contracting is to industries and firms that may be classified as services. Thus, the whole pattern is bound to be one of shrinking manufacturing employment; that cannot be stopped. Indeed, if we are to have a flexible, competitive economy in the 1990s, it should not be stopped.

One of our difficulties is that, for emotive, noble but wrong-headed reasons, in the past we have stood in the way of the rapid shrinkage that was required in blue collar and traditional manufacturing jobs, a process that should have meant people becoming reskilled, re-educated and diverted into new activities that probably would not clearly fit the label of manufacturing or services.

Mr. Jim Craigen (Glasgow, Maryhill)

What does the right hon. Gentleman say to the pessimists who look for greater buoyancy in the growth of the service sector, but do not see it?

Mr. Howell

That will be dealt with in the remainder of my speech. I accept that the proposition that I have put so far, if left by itself, is gloomy and implies that a great many people will not find jobs in manufacturing. That applies throughout the world, not merely in the United Kingdom. Indeed, I was about to add a little more gloom before coming to a more optimistic line of thought.

It is not the slightest use saying that that process can be stopped by artificially resisting capital-intensive methods. I take strong exception to the line of thought, which has come even from some of my right hon. Friends on the Front Bench, that we should maintain a low-tech or no-tech world to ensure that a great many people continue to do jobs that both they and we know perfectly well can now be done by sophisticated machinery. It is a perfectly human reaction that people should object to being kept in production jobs — perhaps dull and diminishing work — even though it is known perfectly well that machines and capital equipment exist that can do the job far more accurately and quickly.

Keeping people employed by resisting capital-intensive methods and retaining labour-intensive methods is not the right way forward.

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

Even the newer industries are not immune to unemployment. For example, the offshore oil industry and its ancillary industries are suffering unemployment because of the very low price of oil. Similarly, in Scotland the electronics and information technology industries have not been immune to unemployment. Therefore, it is not simply the traditional manufacturing industries that have suffered.

Mr. Howell

I take the hon. Gentleman's point. Nor is it true that service industries have shown, are showing or will show growth in employment. A great many of the traditional service industries such as banking and insurance are due for, and are now experiencing, a gigantic diminution in labour needs and a huge increase in automation and computerisation.

So far I have struck a very pessimistic note by reminding the House that the position will become more difficult and that there is little chance of resisting that by maintaining labour-intensive industries or putting up a no-tech flag. That would be as absurd as the red flag that used to go before motor cars to keep them at four miles an hour, and will be about as effective in slowing down the trend in manufacturing world wide to grow without creating jobs—in other words, jobless growth.

I know that my right hon. Friends are greatly concerned about the very sharp wage increases for those in work. Whitehall has got itself into quite a state about high wage increases and rising unit labour costs. I suspect that at least part of that process reflects precisely what I am saying—that manufacturers are no longer interested in expanding employment and taking on new recruits, but want to concentrate on a core of highly skilled workers whom they know well, want to reward generously and are content to allow to work additional overtime and pay high rates. There is evidence that some of the large wage increases are a reflection of that—it is a technological change rather than an employer waking up one morning with a sudden surge of expansive generosity and deciding to give everyone huge increases for no reason.

Mr. Prescott

This is a serious point. Can the right hon. Member tell the House what kind of large wage increases he is talking about?

Mr. Howell

I am referring to the official statistics, which show that unit labour costs have been rising in engineering and manufacturing generally. A survey measured that at 7.2 per cent. According to the statistics, which I would advise the hon. Member for Kingston-upon-Hull, East (Mr. Prescott) to treat with great caution, in Japan the unit labour costs are zero or falling. That disparity must be worrying my right hon. Friends.

Mr. Prescott

How much money is the right hon. Gentleman talking about? Is he talking about £5,000 or £6,000 a year or the £30,000 or £100,000 being made in the City? What does he consider are the huge wage rates currently being paid?

Mr. Howell

I do not think that the hon. Gentleman can have followed my remarks. I have reflected a view which is heard in Whitehall and which has concerned some of my right hon. Friends. Unit labour cost increases of 8.2 per cent. in a nation which is competitive and which must sell to survive and create new employment are not terribly welcome if unit labour costs are zero or falling in Japan. If the hon. Gentleman finds that point difficult to understand, I am sorry; I should have thought that it was a simple point.

Having struck a note of gloom about the present position of manufacturing employment and long-term employment — a note of gloom that reflects what is stated in the Manpower Services Commission report and the Institute of Manpower Studies report — we trust build on that basis. The policies that are required to meet the social misery, ugliness and fear of being unemployed —and especially of being unemployed for a long tine and being unable to get back to the front of the queue —must relate to the new employment landscape that I have described.

Hon. Members — this view is expressed by hon. Members in all parties—who continue to argue that we can somehow return to the patterns of employment that existed in the 1960s and 1970s and that that can be done by pressing buttons and through deflationary programmes are perpetrating a cruel hoax. We will not return to that employment landscape. We need new policy responses to meet a new employment landscape.

A number of these policies have been developed by my right hon. Friends and many of them are set out in the enormous list of initiatives and programmes listed in the Manpower Services Commission report. There are so many initiatives that it might be a little hard for some people looking for work to find their way through that great variety of different programmes and initiatives, but certain major points can be extracted from the proposals.

The first point is obvious, but the IMS report makes it even more obvious. There will be very little place in the new employment landscape, whether we like it or not, for the unskilled. Everyone who wishes to participate in this new employment pattern in society will have to get a skill. In the rather brutal words of the IMS report, summed up in The Times: If you are an unskilled worker, get skilled. That is not a very warm and friendly message but it is filled with realism.

The second point revealed in the proposals is that self-employment, part-time work and work in small businesses will play a much bigger part in the work pattern. Indeed, they are already doing so. Many hon. Members, especially Opposition Members, have referred to part-time employment and have said that part-time employment does not represent "proper jobs." They have asked why we do not return to full-time employment. They have also asked what is wrong with full-time employment and why there must be a growth in part-time employment.

The MSC and IMS studies—which are objective—show that, whether it is thought to be good or bad, there will be more part-time work. The labour supply has been vastly increased by millions more married women coming into the labour market seeking part-time work. The numbers have increased from some 3.5 million married women participating in the labour market in 1960 to about 8.5 million or 9 million today. There are probably another 2 million who are not registered for work but who would like to work. The labour supply is therefore completely different. On the demand side, the pattern of business is such that people want part-time workers. Businesses want the kind of worker who can work flexible hours rather than someone who wishes to work a full-time, fixed-week year with a fixed career.

That is clearly a feature of the employment scene today. I am not indulging in futurology. The public policies that are required must facilitate and encourage that pattern rather than resist it, pretend that it does not exist or that it is a temporary aberration.

My next point is related to the language and presentation which my right hon. and hon. Friends sometimes use when addressing these problems. I know that one of the phrases that we hear from the policy makers is that people faced with the new conditions should "price themselves into jobs." I beg my right hon. and hon. Friends not to use that economic logician's phraseology. It is technically true that people are accepting lower wages in the form of part-time wages and are taking jobs. Hundreds of thousands of new jobs are emerging which are part-time jobs on part-time wages.

But pricing people into jobs sounds as if a lecture is being given and that people should accept a wage cut. That is a poor basis on which to persuade people that a new employment landscape exists under which different patterns of work will be required, and that people will have to look for their incomes and family living standards from different means rather than from one wage or salary from one job.

I also hope that we can move away from talk of work-sharing. That is a feeble and defeatist concept. There was talk about that, but it tends not to have found much of a place in policy thinking at present and I am glad about this. There is, of course, a kind of work sharing now, not as a result of Government policy but as a result of changing social patterns and attitudes. Women are rightly saying that they want to work outside the home for pay and that they are fed up with doing the hard work at home for no pay. The other partner in the marriage has to adjust. Some kind of work-sharing automatically exists in millions of homes as women take on paid work and the duties in the home are shared as are the duties outside the home. That is an inevitable and healthy development. That form of work-sharing is creating a new pattern of employment and new attitudes in the labour market.

The MSC and the IMS reports emphasised that that leaves the problem of the unskilled. There is a segmented labour market, with an increasing demand for skilled people. Skill shortages are already springing up while the long-term unemployed and unskilled remain left out. The bizarre position exists in some areas— for example, in my constituency — where there are real and urgent shortages of certain skills. We hear again the dismal talk from the past about skill bottlenecks. At the same time, we are left with appalling unemployment figures and high levels of unemployment among the unskilled.

The Government are responding to the new landscape. They are moving slightly patchily and haphazardly towards new policies to adjust to it, but more open recognition is required of where we are and of the real employment situation.

If more people are self-employed or employed part time, school leavers must be educated and prepared for such a pattern. They must be prepared to change their skills three, four or even five times during their working life. That suggests a rather different type of education from that which many children have received hitherto. It is quite different from the proposition that everybody must expect a full-time job which will come from somewhere and, if it does not—that is tragically common—that person is on the scrapheap. That is a hopeless and destructive line of thought which starts in school and it must be cut off by new patterns of education.

Tax policies are becoming more favourable to self-employment and people who start their own enterprises, but we still have a long way to go. I wonder whether we have reached the point at which we should take seriously the idea of the Institute of Directors, which is that almost anybody who wants to should be able to aquire self-employed or subcontract status. I am aware that that sounds radical and will arouse cries of horror in the Inland Revenue, but I wager that, 10 years from now, that is the type of pattern to which our tax system will have shaped itself.

We must have more of the deregulation policies which my right hon. and noble Friend the Secretary of State for Employment has put out in his two excellent White Papers to allow the development of a world in which own or home-based work and self-employed activity can prosper rather than be regulated or planned out of existence.

As for the social security reforms which my right hon. Friend the Secretary of State for Social Services is trying to put through, the Government must build more on the concept embodied in the enterprise allowance scheme. I refer to insulated benefit. It is based on the idea, which may be anathema to some, that benefits should be insulated up to a certain point, regardless of what work activity or other income the recipient gains. Followed through entirely, the idea flowers into the proposal for a guaranteed basic income, which is a nice idea but is ruled out because it is hopelessly expensive. With insulated benefits, people who want to earn more can, and do not get into one of the various poverty traps or find themselves unwillingly joining the illegal classes by being in the work and draw category.

A little more money will have to be spent on Government capital spending in inner cities, which my right hon. Friend the Member for Henley (Mr. Heseltine) has recommended with great vigour and panache. He speaks a great deal about seed money and pump priming. As I have said before, more should be done in that regard. I do not believe that the effects on employment will be dazzling or that jobs in the numbers that the hon. Member for Newham, North-East would like — he spoke of 50,000 jobs in health, for example — will appear, but such expenditure would help and would have the additional benefit of helping to clean up the country and improve our cities.

We must create a far more favourable climate for spreading capital and wider capital ownership as well as income. If Governments are honest enough to reckon that they cannot deliver a decent living standard to everybody through guaranteed full-time employment through income redistribution, it is through capital redistribution that some additional support at the edges—not a significant amount in the early years—can be developed. That is why I greatly welcome some of the Government's initiatives to encourage wider ownership among all income groups, including those on the lowest incomes.

We should examine more closely the bonus system of pay. Almost every job in Japan has an attached bonus arrangement. When people are taken on, they are taken on at the basic rate of pay without a bonus. The result is that there is far more encouragement for employers to hire more people than it' the newcomer had to be paid the same as everyone else. That system is one of the reasons why Japan has an unemployment rate of 2.8 per cent. and why it successfully absorbs would-be long-term unemployed people, giving them a continuing function, if not a full-time job.

I have outlined the changes of emphasis that we need and how existing policies must he pulled together to make a real push at the burning and unpleasant social problem of persistent long-term unemployment. They are somewhat different from the responses about which we have argued previously. They take us away from the idea that there is a general reflationary package which will miraculously reduce unemployment permanently. That cannot be done, and the suggestion that it can is a cruel hoax. We should concentrate instead on the policies that are outlined in the MSC report and which my right hon. and hon. Friends are beginning to gather from different Departments. They could take us not back to a fully employed society in the old sense but forward to a fully occupied society which will be both more satisfying and prosperous.

5.27 pm
Mr. Michael Hancock (Portsmouth, South)

Most hon. Members look beyond the unemployment statistics to the depressing and hideous statistic concerning the long-term unemployed. They present a bigger challenge than almost any other group. Although many could fall into a job tomorrow if one were available, there are some who have suffered from enforced unemployment who need the extra help which I hope will be forthcoming.

I support the proposal to start job clubs, but remain suspicious about what they will achieve. The Government seem to bring out at least one new scheme each year in an attempt to show that they are doing something about unemployment and the mess that the economy is in. It seems that job clubs are in front of the Government's shop window this year.

It is interesting to note that, in the section on the restart programme in the Government's glossy booklet "Action for Jobs", the first step is an offer of a suitable job. The next six steps merely represent what is already available — places on the community programme and training courses, for example. The final step is the Government's let-out. It is a new one or two-week restart course to help people assess what they are good at and to show them how to look for jobs more efficiently.

I do not deny that courses would be useful to many people, but if no more than that is offered to unemployed people they will feel cheated and let down once again. When the Minister replies to the debate, I hope that he will give an estimate of the number of people in the various categories described in the booklet. Regrettably, I suspect that many will end up in the final category.

I understand that the initial pilot schemes for job clubs has been successful in getting jobs for the participants. However, the Government's restart programme with its job clubs lacks sincerity and will not create a single job. As the Chairman of the Select Committee on Employment said, it simply shuffles the vacancies around and redistributes them to different categories of people who are unfortunate enough to be unemployed.

This scheme will lack credibility in the eyes of the unemployed because the Government have not created the incentive of jobs that the restart courses will show people they are good at and for which they will be qualified. Alternatives are suggested and, undoubtedly, the community programme is important. If the jobstart scheme is to be as successful as the Government predict, there will not be sufficient places on the community programme to cater for it.

In the alliance budget statement earlier this year, we said that the community programme should be brought up to at least 460,000 places. The latest unemployment figures show that 1,356,000 people have been unemployed for more than a year, and clearly the Government have considerably understated the requirements for their own programme.

The other avenue is training and, as has been said in debates over the last two years, in that we lag far behind our competitors. One of the most telling paragraphs in the MSC's corporate plan reads: Britain's performance on training is poor in comparison with that of our main competitors". The right hon. Member for Guildford (Mr. Howell) spoke about Japan and its ability to cope. We lag hopelessly behind Japan in the sort of initiatives that have been taken there. I doubt the ability even of the Japanese to absorb for much longer the continuing progress of new technology and I doubt their ability to continue to find jobs for everyone. The right hon. Gentleman will find that his predictions for the future of Japan will somewhat reflect our own situation in relation to the effects of new technology.

There are still not enough training opportunities. Training and education should be restructured. I hope to develop that point later. An important component of training facilities is the skillcentre. The one in my city has been badly hit by cuts. I shall demonstrate later to the Minister how it has been neglected. Schemes for training exist, but they are insufficient and insufficient resources are devoted to their valuable tasks. The current programmes are seriously underfunded and corners have been cut so that unemployed people can be taken off the dole list for as little money as the Treasury will allocate.

I hope that the Minister will develop the proposals about the MSC's corporate plan because the chairman's foreword predicts a chilly future. He says: Over the planning period unemployment, especially long term unemployment, is likely to remain at historically high levels. Clearly, the report was written within the constraints of the Government's straitjacket, but one can discern where the MSC would like to expand its activities. That is obviously in the training component of its work, and many of us have argued that this part of the MSC should come under the control of a Ministry of Education enlarged to cover training. It is a great pity that at one moment the Government appeared to be considering this option but then backed away from it.

Time after time the MSC document talks about close co-operation with the Department of Education and Science. Why do the Government not finally take the initiative and make the logical move to bring the two together? I know from experience in the city from which I come that many facilities are wasted. There is duplication of courses and insufficient flexibility. The skillcentre in Portsmouth illustrates the point that I am trying to make. Some of the courses there are under-subscribed but the machinery and the skilled teaching staff exist for those courses. Many schools in the area could benefit from using the skillcentre, with its modern equipment, to train youngsters at an earlier age. Regrettably, that cannot he done because of the constraints that are placed on the skillcentre.

The current structure of the MSC does not allow the person in charge of a skillcentre enough autonomy. He or she has to go through a long-winded process to get new courses off the ground, yet such people know from their experience of the areas in which they are operating that such courses are needed by the many employers who time and again try to negotiate with them for courses. We need a change in policy which will allow that autonomy to be given to the heads of skillcentres so that they can negotiate and immediately offer alternative courses for which there is a need.

There is almost a complete lack of market research and the staff at the centre do not always know the best courses to promote. That is because the placings for such things as job training schemes come through the jobcentre and the staff have no idea of what the public demands from job training schemes. The corporate plan recognises this, but insufficient emphasis is placed on that and existing projects are biased too much to the centre.

The local collaborative and responsive college projects must be expanded quickly. This is one area of the commission's work where the overall structure needs to be reviewed to improve training opportunities. The Government have used the poor structure as an excuse to cut back on the skillcentres. They are golden reservoirs and they are under-utilised. Schools should have better access than they have at present. I hope that the Minister will look at that and deal with it.

There is a great deal of complacency about the training undertaken by private companies. I see that in my constituency and I regret it. There is not enough in the plan to encourage private enterprise to take advantage of the various schemes that exist. Some employers are not aware of the benefits and, unfortunately, some are not interested in any of the schemes. We need to find ways of making the schemes more attractive and of keeping employers better informed, and making them more willing to take on their obligation to try to retrain the people whom they constantly say that they need.

The report also deals with the recent review of vocational qualifications. The need for a flexible qualification system is essential and it must be based on achievement, not on time served. Qualifications need to be designed to bridge the gap between academic and vocational awards. More modular courses should be offered to allow the individual and the employer to obtain exactly what they need. In addition, the courses should allow people the chance to interchange between subjects not traditionally related.

It would be impossible to cover all aspects of the report and in the time that I have available I shall not attempt to do so. However, I should like to speak about another measure specifically related to the long-term unemployed. The corporate plan mentions the jobstart scheme and the pilot schemes that have taken place, but it does not tell us how successful they have been. Perhaps the Government could enlighten the House about that, because I doubt whether the schemes will achieve much. I doubt whether six months is long enough. I phoned my local jobcentre this morning to discover whether anybody had shown any interest in them, and I was told that nobody had and that there was not one response, despite the fact that the schemes had received fairly widespread publicity.

The challenge for the MSC is clear but it remains to be seen whether the Government have the will power to provide the necessary resources. At this time of record unemployment there is a widespread shortage of skilled labour, and low skill levels may well explain why. Even in factories where the equipment is the same as that in similar factories abroad, productivity is lower than abroad. In order to encourage companies to use existing MSC training courses, tax incentives are desperately needed. The YTS and especially the qualification systems need to he strengthened.

I urge the Minister to read two quotations, one of which is from the Government's own report "Action for Jobs". On page 35 it says: Decisions about jobs, training and business are among the most important you're ever likely to take. But first you want to make sure you've got all the facts and are aware of all the opportunities. The Minister needs to know all the facts and to be aware of all the opportunities that he has at his disposal before he invites the unemployed to take seriously his comments in that document.

The second quotation comes from the chairman's foreword to the MSC report. He says: The Plan sets out challenging objectives which can only be attained with the support and co-operation of others. Surely, if unemployment is ever to be stopped, we must find that co-operation. I am sure that in his endeavours the Minister is, like every other hon. Member, trying to achieve something better. But that will be achieved only if there is a willingness to put in the sort of resources that are needed to make retraining programmes relate to the needs of industry.

We should not take the over-pessimistic view adopted by the right hon. Member for Guildford about our declining industrial base. We must find a way of using what we are good at. The one thing that British people have traditionally been good at is inventing and making things. We must find a way of bringing that expertise hack on the world stage and making ourselves once again attractive to the world as an industrial power.

When I recently visited Japan with other hon. Members I was not too impressed with its prospects. It will experience enormous problems over the commitment in various industries to provide jobs for life and the belief that jobs can be revamped. I saw golden opportunities for British industrialists to sell our products in Japan, but there was a great reluctance on the part of the embassy staff in Japan, and others representing Great Britain there, to sell Britain. It is depressing that in our major competitor in the far east no one is pushing hard for Britain and the people whom we represent.

I hope that when the Minister replies he will give the hope that is so desperately needed to so many of the millions of people in Britain who look for a lead and for help from the Government.

5.41 pm
Sir Philip Goodhart (Beckenham)

My right hon. Friend the Member for Guildford (Mr. Howell) delivered a masterly analysis of current employment prospects nationally and internationally. I agree with a great deal of what he said and I should like to discuss that with him. However, I am upset that he seems to have resigned from his earlier philosophical flirtation with work-sharing, and I was astonished to hear his proposals for work-sharing within the home. I can only hope that our wives never read today's Hansard. I am certain that they will not.

I see my brief role in the debate as rather more limited, and that is to urge my right hon. and learned Friend the Minister to look more favourably than he has in the past at two aspects of the report of the Select Committee on Employment. First, we made proposals for the creation of a substantial number of jobs on building schemes and environmental improvement projects in our inner cities. We have suggested that the way forward is to set up employment schemes.

I am happy to note that after the publicaton of that report the Government quickly announced that they would go ahead with environmental improvement programmes in selected target areas in our inner cities. They did not, as we suggested, go on to say that those jobs should be largely occupied by the long-term unemployed. But, as my right hon. and learned Friend the Minister has said on a number of occasions that many such jobs should be filled by local residents, that amounts to much the same thing. I am delighted that, at least in that respect, the Government are beginning to move down the road that we have signposted.

We also recommended that more money should be made available to promote employment opportunities in the social services and the NHS. We pointed out that the Government's policy of moving from institutional to community care inevitably means that there will be scope for more jobs. There is scope here for the development of a great many small local schemes.

Last week that admirable organisation, the Invalid Children's Aid Association, wrote to me as the Member for Beckenham saying that it would like to start a new scheme in Bromley to help families who are caring for severely disabled children. The scheme involves a person called a care attendant going into the home to help parents with tasks such as bathing, feeding, dressing and changing. That gives the parents some relief from the physical strain of looking after a severely disabled youngster. The Invalid Children's Aid association says: In our experience, several young people aged 16 to 19 have had to go into a residential establishment after leaving school, because there was inadequate community support to enable them to stay at home. The association has picked out the names of 15 adolescents whose families would benefit from such a scheme locally. They suffer from conditions such as muscular dystrophy, spina bifida and cerebral palsy. Now that the children are older they are hard to move and the association knows that there is often a high incidence of back problems among the mothers of such children.

If the provision of one or two paid carers recruited from the long-term unemployed delayed the institutionalisation of five or six of those 15 children, the taxpayer would save a lot of money and a dozen or more parents would receive a lot of help.

In response to our proposals, my right hon. and learned Friend the Minister suggested that the administrative costs of supporting that sort of scheme would be high. He has estimated them at about £2,000 per job. However, in this sort of project the administrative costs would be minimal and could often be carried by the voluntary agency concerned. There is substantial scope here for increased employment which would, in some instances, save the taxpayer money.

Finally, I note that almost all commentators agree with our comments in paragraph 7 of the report when we say: All the evidence is that, whereas a major fall in short-term unemployment would generate considerable upwards pressure on wages, a fall in long-term unemployment would not. Thus the Government's objective of growth without inflation would be well served by further measures directly aimed at the long-term unemployed. Indeed, some economists would go further than that and suggest that the rehabilitation of the long-term unemployed would, in certain instances, actually reduce the pressure on wages.

I do not expect the Government, during the course of the debate or in the next few weeks or months, to say that they will adopt all our proposals. However, common sense suggests that in the near future they should take some further steps down the path we have outlined.

5.50 pm
Mr. Ken Eastham (Manchester, Blackley)

We are all grateful to the House for the fact that at least we have been afforded some time to debate this important report. Very often, the Select Committee on Employment has been involved in long inquiries in great depth and, unfortunately, the Government have not found time to allow us to air these issues in public. Nevertheless, I am grateful that at least we can hang on to a peg in the Estimates to have our way today and indulge in this short debate.

I was rather encouraged when I read a report in one of the national newspapers about the pending debate. I felt that it gave credit to all members of the Select Committee, except one. It said that only one Member disagreed after the inquiry. Unfortunately, that Member is not present today. I would have liked to say one or two things to his face if it had been possible. He voted against every recommendation from the Committee. It is worth going on record to say that he had not really served to listen to the evidence which the rest of the Members had so meticulously investigated.

Mr. Don Dixon (Jarrow)

In fact, the person involved voted against our response to the Government's attitude to our original report. I do not think that the hon. Gentleman was on the Select Committee when it made the report and recommendations.

Mr. Eastham

I would not argue with my hon. Friend and I do not want to over-indulge and use my valuable time talking about the hon. Gentleman's reasons for voting against all the recommendations. I got the distinct feeling throughout our inquiries that there was a genuine desire to look at the problem in depth and at least try to persuade the Government to make some positive recommendations.

I believe that when we commenced the inquiry and asked the various people to give us evidence we were thinking, along with other factors, about the human cost. We are talking about the sheer desperation of so many people nowadays. The social and moral consequences of workless people and their families being decimated is of greater importance than any of the other evidence that came before us.

I am sure that we all recognise—I certainly do—that unemployment is destroying family life. It is dividing husbands and wives and there is family breakdown of a dimension and scale that has never been seen before in this country. We are seeing an excessively high divorce rate and, consequently, increasing burdens being placed on social services and on local education authorities, which have to provide children from workless homes with school meals and the necessary clothing because some children are not even dressed sufficiently to be able to attend their lessons.

We are seeing massive rent arrears and heavy debts being accumulated and we are also seeing complete mental breakdowns, wholesale suicides, drug abuse on a scale that has never been recognised before and abnormal sickness levels. That more or less sets the scene for some of the comments I should like to make. It is because of those factors that the Select Committee was making a special plea—more than a special plea, a just demand — that there should be changes in the Government's attitude to the problem.

Additionally, there is the cost to the taxpayer. The cost of unemployment is £5,000 per head per year on average. When we consider that there are about 3.25 million unemployed, we know that the cost is well in excess of £16 billion per year and some people say that it can be as much as £20 billion. That is without mentioning some of the additional burdens being faced by the Health Service because of additional hospitalisation, drugs being prescribed by general practitioners and many other spin-off consequences of the sheer human misery and desperation that people face. They feel that nobody cares and that the Government and politicians could not care less. That is not the case. The Opposition are saying quite clearly that it would be our highest priority at least to give people hope and the chance of a job.

As people become long-term unemployed, so the problem becomes greater. We should consistently remind ourselves of the scale of the workless figures today. People now become rather blasé when they say there are 3.25 million unemployed. We should also remind ourselves that of that number over 1.3 million are long-term unemployed — over a year without a job — plus another 200,000 under the age of 25 who have been workless for six to 12 months. Still more desperate, over 500,000 workless have not had a job for over three years.

However, the Government keep on telling us how successful they are. One Conservative Member went to great lengths to say that things will never change, that technology is here, we cannot provide jobs and nothing can be done. I contest that point of view. We are not Luddites. We are not saying that we resist change. We welcome change. However, if Conservative Members go to their local hospitals or social services departments to ask whether they could use additional people to help alleviate their burden, every area could tell the Government that that is the case.

Only last week I received a letter from a constitutent complaining about the care her husband was receiving in hospital. I made inquiries and the secretary at the hospital said that the complaint was true and apologised, saying that the hospital was undermanned. These are the areas where we contend that there are worthwhile jobs. Never mind the implication that we are talking about a periphery of worthless work: there are plenty of worthwhile jobs that could be done.

Not all the Government job schemes have been successful. I would also add — the Minister should recognise this when he replies — that we are strongly critical of the unrealistic rates of pay being offered in some of the Government schemes. Without doubt people are, rightly, refusing to accept poverty wages. We believe that realistic rates of pay could be offered. When one considers that it costs more than £5,000 a year to support a person without a job, it seems sensible to conclude that realistic rates of pay should be offered and should meet with the Government's approval.

The Select Committee in its recommendations seeks job guarantees for the long-term unemployed. If the Minister studies the report, he will see the type of worthwhile jobs that we consider could be tackled. It is ironic that the areas with the highest unemployment have the worst dereliction and the highest incidence of slums, inadequate housing, overcrowding and homelessness. Probably 1 million homes need modernisation and improvement, and at least 500,000 families are homeless. We have an enormous backlog of work which could be tackled through the creation of worthwhile jobs. The report also mentions maintenance, renovation and other useful jobs. I hope that the Minister will note in particular that we are seeking at least an average wage to enable a man to support his wife and family.

Several references have been made to social services. We suggested that 50,000 additional jobs should be created in the National Health Service. I am sure that they would he warmly welcomed, if the Government agreed to that modest proposal. We are not being unrealistic. The proposals could be phased in, and the chief officers of the Manpower Services Commission in their evidence gave us to understand that they could adopt some of our recommendations and employ the numbers we have in mind. Therefore, it is not good enough for Conservative Members to say, "We could never do this. It is too much and there are problems." We have already tested our recommendations and we have seen the people involved, who have assured us that our target of 750,000 extra jobs could be met.

I sincerely believe that the figure of £3.3 billion as the overall cost for the implementation of these proposals is justifiable. We make no apology for our recommendations. People are no longer giving greater priority to tax relief than to job opportunities, and it is about time that the Government took that on hoard. Wealthy, selfish people may always be interested in more money, but if the Government canvassed the nation for its choice between providing more jobs and giving some people 6p in the pound tax relief, the overwhelming mass would support more jobs.

I commend to the House the report which the Select Committee has worked so conscientiously to produce, and I hope that the Minister will yield, reconsider the position and implement all our recommendations, particularly those on behalf of the long-term unemployed.

6.4 pm

Mrs. Elizabeth Peacock (Batley and Spen)

Unemployment is a disease of society throughout the world, and that disease in this country was highlighted when my right hon. and learned Friend the Paymaster General gave us the present figures. Perhaps it would do no harm to repeat them. There are 3,325,000 people unemployed. 1,357,000 people have been unemployed for more than a year, 845,000 for more than two years, and 567,000 for more than three years. Long-term unemployment is becoming the cancer of our society, and we must spend some money to cure it.

Today's debate is about not whether we should cure the problem, but how to cure it. My right hon. and learned Friend and my hon. Friend the Minister have already talked about work sharing. Perhaps I should quietly send copies of the Official Report of our debate to their wives who can then see what they said. The debate is not about costs, although they must come into our discussions. We are talking about the principles that must be established and about the actions that need to be taken.

As a member of the Select Committee on Employment, I supported the report that we produced in April, not so much because of the detail, but because of the principle. Unemployment is a problem and long-term unemployment is a disaster. The percentage of those unemployed are irrelevant to those who are unemployed. To the person who is unemployed, unemployment is 100 per cent., whether he be a man or a woman.

The problem of the long-term unemployed is that the longer they are unemployed, the greater is their difficulty of ever finding a job. I recognise that some of the schemes which my right hon. and learned Friend has already introduced are helping that difficult position. It is a clearly established fact that at interviews employers prefer those who have been out of work for a short time to those who have been unemployed for a long time. All hon. Members know that from talking to employers in their constituency. Some people have the impression, wrongly, that if someone has been without work for months or years, he will probably not want to work or he will be incapable of adjusting to the disciplines of the workplace. That is nonsense.

We must take steps to aid the long-term unemployed, and I still believe that the proposals in our original report and our proposals in response to the Government's reply are basically along the right lines. Our three-part proposals remain relevant.

First, a new building projects programme, supported by local authorities, private agencies and private firms, agreed by the MSC and tendered for by private contractors, to provide 300,000 additional year-long jobs has merits still well worth discussing. The programme would be targeted specifically on housing renovation—many of us know from our constituencies how desperately we need that—and the renovation of schools and hospitals. Although much renovation is already taking place, more can be done. At present all those areas are demanding extra help.

I realise that we must consider the question of substitution of the community programme, but I have seen little evidence to date of the community programme targeting in on these specific areas. It is not proven that specific targeting as we propose would cause substitution of those at present employed in such work.

The question of cost is always at the back of everyone's mind, and we have been accused of underestimating the costs, especially those of management overheads and of sponsors for the MSC. Originally we proposed proceeding via a private tendering system which would have brought straightforward commercial pressures to hear and would have imposed the downward pressures of the market place. That is not such a bad idea. In this instance, the costs per job are somewhat higher than the £4,000 to £5,000 that we originally suggested, but not as high as the £9,500 suggested in the Government's reply.

Sometimes, we in the House underestimate the pressure of the market place, and we should not. I can give a simple example. We can think back to our arguments about the price of petrol after my right hon. Friend the Chancellor of the Exchequer made his Budget speech, and to the demands for action against the oil companies which wanted to recoup the increased tax. The market place sorted out that problem quite satisfactorily and quickly.

Our second proposal involved the social service; and the Health Service. We were looking for some 100,000 jobs, at an average maximum wage of £120, to be paid by the MSC for one year. In their reply, the Government have rightly pointed out the difficulties, particularly within hospitals, and we recognise them. There is always a danger of substitution in hospital jobs such as cleaning, laundry and catering.

However, one sector has not been adequately looked at by the Government, or if it has, that was not apparent in the Government's reply. I refer to community care. We have problems of inner city decay and of an increasingly elderly population. We have within our Health Service a policy to treat within our communities people with mental and medical problems. The Green Paper on the subject was called "Care in the Community". There is a demand within our society for special steps to help in these increasingly important sectors.

We might be criticised, and it might be suggested that this problem should be tackled by professional people and not by the long-term unemployed, but many among the long-term unemployed would be capable, with the correct amount of management and supervision, of helping in these critical sectors of community care. The Government and, if appropriate, the Select Committee should give further consideration to special action in the community care sector to provide some short-term employment Thirdly, the Select Committee's proposal of a wage subsidy to employers in the private sector who take on long-term unemployed people is a suggestion that has a part to play in the overall strategy. Again, subsidisation of those currently employed, or the short-term unemployed, has to be considered. The proposed subsidy of around £40 a week for a year would have significant attractions for a small employer.

We always want to encourage and develop the small businesses, as we rightly believe that new jobs are created in this sector. We offer encouragement to the small business man to employ more labour. The merit of the Select Committee's original proposal was that it targeted particularly the small business man, encouraging him to take on a long-term unemployed person who has much to offer.

In our latest report, we are calling on the Government to initiate pilot projects along these lines, to be applied to those who have been unemployed for over three years. We do this on a simple and logical basis. While we costed our original proposals at £3.3 billion, the Government replied by saying quite plainly that our proposals would cost £4.3 billion. We do not know that we are right, but equally the Government do not know that they are.

As the chairman of the MSC has already said that he is confident that he could provide a guarantee about the practicality and viability of such schemes, we must put them to the test. We have to ask ourselves what happens if we do nothing. We shall never overcome unemployment — short-term or long-term—no matter what the colour of the Government. We have to innovate, experiment, and manage change. Therefore, I implore the Government, and especially my right hon. and learned Friend the Paymaster General, to look favourably at some of these proposals and start measuring them by practical experience, not just by theory.

6.14 pm
Mr. Don Dixon (Jarrow)

I pay tribute to my hon. Friend the Member for Newham, North-East (Mr. Leighton), the Chairman of the Select Committee, who opened the debate and explained the proposals and the work of the Select Committee very well. It is a disgrace that, after the many months of taking evidence and interviewing people and the many hours of work that the Select Committee put into its report, the Paymaster General tried to rubbish the report even before it was published. We know that he claims to have been an industrial worker. He told us on the Second Reading of the Sex Discrimination Bill how he had worked in the bakery industry to raise a few pounds between leaving school and going to university. We do not want lessons on industry or unemployment from someone with such experience.

One of the dangers about debates such as this is that they seem to be an academic lecture to the people outside. We talk about "the long-term unemployed", but this sounds like some of the terminology that we get from the parliamentary word factory. We are talking about an individual who has been out of work for a year, or two or three years. Often, that individual is the wage earner, and a person who wants work and has been denied it. Thousands have been denied work because of the Government's policies.

There is an uncanny resemblance between the present day and the 1930s in my constituency. I was born in Jarrow in the 1930s, I was bred there and have lived there all my life. In 1930, the steelworks closed, throwing 3,000 men out of work in an area that already had high unemployment. In 1934, the shipyard was closed by an organisation called Shipbuilding Securities Ltd. It was made up of a combination of merchant bankers, shipowners and shipbuilders, who decided to rationalise the shipbuilding industry. The same sort of policy was carried out under Graham Day as chairman of British Shipbuilders.

The company closed the shipyard, and Jarrow was murdered. My father and grandfather were thrown on the streets. My grandfather was not required again, and my father did not work until the war started in 1939. My father was taken back into the shipyard and was told that if he did not work overtime to build and repair the ships that were required for war he would be fined, after he had been thrown on the scrapheap in 1934 with another 5,000 Jarrow people.

This is the 50th anniversary of the Jarrow march, when 200 men walked from Jarrow to the central Government to let them know what was happening in the region. It is somewhat ironic that the Government are cutting regional aid and development. At that time, a scheme called the Jarvis Fund was set up. In 1937–38, my father had one month's work—making a park—under the Jarvis Fund, which was the charity given to Jarrow because we were sorely pressed. To get work from the fund, one had to be unemployed for three years. We were over the moon because my father had got a job making a park in Jarrow. We have the same system now, with the community schemes, with the same requirement that one has to be out of work for a number of months before getting a bit of work. That is a resemblance to the days of 1930.

Since the Government were elected, the last pit in my constituency has been closed and the last part of our shipbuilding capacity. Palmer's at Hebburn, is now doing only care and maintenance. The last steel plant in my constituency, the Jarrow mill, will close next month. That is an uncanny resemblance to what happened in the 1930s, and it took a world war to get out of that mess.

The Government say that the Select Committee's recommendations will cost money. Of course they will. We were aware, when we went into the debate and the many hours of evidence, that, at the end of the day, the recommendations would cost money. However, we were concerned about human beings being put on the scrapheap. People in their fifties are being thrown out of work in the north of England and in Scotland and Wales. In the present economic climate they have no chance of working again.

In paragraph 28 of their reply to the Select Committee's report, the Government say: First, the Government's specific measures to assist long-term unemployed people are part of a wider economic strategy for encouraging enterprise and employment. They should have said that the reason for long-term unemployment is the Government's wider economic strategy of not encouraging enterprise and employment.

The Paymaster General said a great deal about the restart programme. Indeed, in paragraph 31 of their observations, the Government say: The aim will be to improve the skills, work experience and motivation of long-term unemployed people and help them get hack into jobs. Everyone who is interviewed will have the chance of one of eight ways towards finding work. But the Government do not say where those jobs are. They intend to send out thousands of letters to the long-term unemployed saying, "Come to the jobcentre and we will have a talk with you." But there are thousands of unemployed people and no job vacancies in my area, so what help will the restart programme be? What help will the job clubs be able to provide? These measures may pacify some of the long-term unemployed, but they will not provide jobs. The restart programme will create not one job. All that is happening is that very many letters are being sent out.

The Government say that they have increased the community programme. However, all that they have done is spread the margarine even more thinly. A few years ago, the Government said that jobs under the community programme must not pay over £60 a week. That resulted in the creation of part-time rather than full-time jobs under the community programme.

I pay tribute to both sides of the Select Committee. It contains a majority of Conservative Members of Parliament. They worked every bit as hard as Opposition Members. The Select Committee's recommendations are realistic_ constructive and necessary because of the length of time that people have been unemployed. It will be a disgrace if the Government do not accept the recommendations and try to get the long-term unemployed back to work and providing for their families.

The Prime Minister says that she is a family person. Therefore, she should say that the Government intend to provide finance to create jobs so that family people can provide for their families. I hope that the Government will accept the Select Committee's recommendations.

6.23 pm
Mr. John Maples (Lewisham, West)

The hon. Member for Jarrow (Mr. Dixon) speaks with great passion and personal experience of unemployment. I hope that he will forgive me if I do not follow him down that road. Instead, I want to make two specific points to the Under-Secretary of State, my hon. Friend the Member for Rossendale and Darwen (Mr. Trippier).

The underlying need is to create sufficient jobs to absorb unemployment, but all reasonable analyses show that this will take a considerable time. In the meantime, the range of schemes and alternatives that have been produced by the Manpower Services Commission is imaginative and extensive. The Government deserve to be congratulated. Those who have spent any time upon examining the problem of unemployment know that training a more highly skilled work force and encouraging new businesses and self-employment through the kind of enterprise schemes that are sponsored by the MSC are two of the ingredients in the long-term cure of the problem.

I want to deal briefly with one element of the third part of the MSC's package—the employment programmes. I refer to the restart programme, which has been unfairly derided by the Labour party. It attempts to bring back into touch with the world of employment those who have been out of work for so long that they have lost touch with it. In many cases these people were made unemployed by the recession and they have not got back into employment in the way in which people tend to do so now. If people are made redundant now, the odds are that in about 50 per cent. of cases they will have found a job within three months and that in about 80 per cent. of cases they will have found a job within a year.

Those people do not have a long-term unemployment problem. The problem affects those who have been unemployed for some time, and their problem regrettably grows worse. When an employer looks for a new employee, he is inclined to take somebody from the front of the shop, so to speak — that is, somebody who has been unemployed for a relatively short time. This puts the long-term unemployed out of touch. They give up. They lose contact with the world of work and even lose confidence in their ability to get a job.

The restart programme performs the very important function of bringing them back in to touch with the world of work and with the available options and opportunities. The restart programme does not necessarily guarantee a job, but it considerably improves one's chance of obtaining one.

One interesting aspect of the restart programme is that it was tried out in about eight localities before it went national. That is an excellent precedent. The concept of trying out ideas locally before they are brought into operation nationally is one that the Department of Employment—and the Treasury, for that matter—could extend. Frequently the reason for not putting programmes into operation nationally is that the Government do not know whether they will work and how much they will cost. If a programme is tried out first on a local basis and is found not to work, or not to be cost effective, or not to produce results, it can be dropped. However, if it works, it can be tried nationally. That concept should be exploited. It should be applied to many of the ideas that are being explored in an effort to do something about the problem.

My hon. Friend might care to try out more ambitiously, on a local scale, the concept of job subsidies. This principle has been accepted by the Government and the MSC through the enterprise allowance, the job start scheme and the new workers scheme. I suspect that one of the reasons for the job start and new workers schemes not doing better is that the subsidies are not large enough. However, with greater subsidies, the cost would he greater if the schemes were not successful. Therefore, it would be worth trying out a more generous scheme on a local basis—in, say, four or five areas.

The difference in cost to the Treasury of somebody being unemployed and somebody being employed is enormous. If somebody is employed and takes home an average wage, he pays about £4,000 a year in tax. If he becomes unemployed, he collects about £4,000 a year in benefits. This represents a difference of £8,000 to the Treasury between somebody being employed in the private sector—it is important that the employment should be in the private sector—and somebody being unemployed.

Not everybody, of course, is an average earner. However, even in the case of an unemployed 17-year-old who has never worked and who lives at home, that figure is £50 a week, or £2,500 a year. There is a large amount of money with which the Government can play and which they can use as a catalyst in the job creation process. It would be worth trying out a more generous job subsidy scheme in a few specific areas to discover whether it works. If it works and if it is cost effective in the way that I and a few other people think that it might be, it could be extended nationally. If, however, it did not work, it could be dropped. At least it would not have to be tried out on a national basis first, which would be very expensive and risky.

That leads me to the second point that I want to make to my hon. Friend the Minister. There should be a regional approach to the unemployment problem. Unemployment varies enormously from region to region. Unemployment in the south-east and London cannot be compared with the problem that is experienced in constituencies such as that of the hon. Member for Jarrow. Therefore, it is foolish to implement national schemes, which have a huge deadweight cost in the south-east, in order to try to create jobs in the north-east and in the midlands. Therefore, a more regional approach to the problem ought to be adopted.

I suggest three areas where that kind of approach might be adopted. First, we should target some of the specific measures that we know help to create jobs on a regional basis, instead of trying to implement them nationally. If there are to be national insurance reductions on employers' contributions, job subsidies and extended home improvement grants, there is a great deal to be said for targeting those subsidies in regions where there is high unemployment instead of spreading them over the whole country.

The second area where a regional approach might be adopted relates to public sector employment. The public sector employs a very large number of people. One of the main computer installations of the Department of Health and Social Security is in Reading. In the context of the Government trying to help to reduce unemployment in the regions, that does not seem to me to make very much sense. It would make much more sense to move that installation to the north-east where the Department's other main computer installation is sited. The Government employ a large number of people. For instance, many people are employed in the Ministry of Defence and the armed services. Whether or not we should deliberately adopt a policy of moving public sector employment away from the south-east and towards the north seems to bear serious examination.

My third point is that London has become an incredibly powerful magnet in the British economy. One could make speeches and write books on that, but I shall only touch on it now. London's influence as a magnet for industrial and political power, money, jobs, and industrial expansion is too powerful for the good of the country. It sucks in the nation's savings from all over the country. There is a concentration of industrial power and industrial decision-making in London in a way which operates beneficially for the south-east but not for the rest of the country.

It seems to me that an element of our regional policy should be not only to encourage the move towards and development of industry and commerce and economic activity generally in the non-south-east regions, but actively to discourage from locating there enterprise which does not need to be in the south-east. The French have such a scheme and I believe that it works quite well. The scheme involves setting up specific regional centres to attract industrial and commercial development to them, and giving them the infrastructure, communications, and so on, to do so. We should attempt to reverse the rather pernicious magnetic effect that London has on the nation's resources.

We should and can build on the excellent work that the MSC is doing. In doing that, we might look seriously at trying out some of the schemes on a local basis, so that we can test their effectiveness before they go national, and adopting a more regional approach to solving what is essentially a regional problem. Such policy initiatives might help to form part of the package which we are developing and are trying to continue to develop to help cure the awful problem of mass unemployment.

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

It is a depressing exercise to compare and contrast the reports of the Select Committee on Employment with the Government's response. I wholeheartedly welcome what the Committee said in paragraph 25 of its report on the Manpower Services Commission's corporate plan: With the Committee's recent Report on special employment measures in mind, we asked whether, if a political decision were taken to guarantee, for everyone out of work for three years, an occupation more profitable in cash terms than being on the dole, the MSC could deliver. The reply was a firm, 'absolutely'. I shall refer to the MSC's role, the community programme, training, and the massive problem of unemployment. Some people talk readily of the unemployment rate in Great Britain, but they choose to ignore the geography of unemployment. The unemployment rate in Great Britain as a whole is about 13.3 per cent. In Scotland, the figure is 15.6 per cent. In the Strathclyde regional authority area, the figure is about 18.5 per cent. In the Greenock travel-to-work area, the figure is 21.4 per cent. In Greenock and Port Glasgow, the male unemployment rate is a scandalously high 26 per cent. Those are the official statistics. According to the official statistics, there are approximately 359,000 people out of work in Scotland. In my constituency about 6,500 men and about 2,400 women are without work.

Given the extent in Scotland of what the right hon. Member for Guildford (Mr. Howell) called the ugly and nasty problem of unemployment, I welcome the Select Committee's reports on that vicious and nasty problem. In the few minutes remaining to me, I shall speak of my concern, naturally enough, about unemploment in Scotland. I shall refer to the measures needed to reduce the appallingly high Scottish unemployment figures. Much of that unemployment has been brought about by structural decline in Scottish manufacturing — for example, shipbuilding, steelmaking, textiles, and engineering. In addition, there has been a massive decline elsewhere. The coal mining industry is a sad case in point.

The west of Scotland is in a dreadful economic condition. As I mentioned earlier in an intervention in the speech of the right hon. Member for Guildford, the newer industries are not immune from the process of shedding labour. Already, the results of lower oil prices are coming through in employment prospects, especially in Scotland. Many of the onshore oil fabrication yards are running out of orders as new developments are being postponed. The British Indigenous Technology Group, which represents indigenous British companies working in that important industry, reports that its members expect to have lost some 15,000 jobs between February and the middle of this year. When we talk about the need to combat those problems, I suggest that in that industry there needs to be a modification to the petroleum revenue tax allowances and the payments schedules. In addition, I urge on the Government the need to offset expenditure on new field developments against income from producing fields. I think that there should be some kind of allowance for corporation tax to minimise the problems of unemployment in the industry.

Jobs are badly needed throughout Scotland. The Manpower Services Commission has an important role to play regarding training and the community programme. I have complained about the MSC in Scotland before, and I shall do so again tonight. The commission's officials must, at all times, react in a sympathetic and helpful way when dealing with applications for assistance from community groups. A number of complaints have been brought to me concerning the unhelpful attitude of the MSC. I believe that the MSC should be more sympathetic to individuals seeking assistance to enhance their job prospects.

I give an example that I come across in my constituency. It relates to unemployed welders in particular. Unemployed men seeking to find work offshore — God knows that it is difficult enough as it is — are frequently barred from employment because they lack a survival training certificate. The oil companies demand that any job applicant must have such a certificate before he is taken offshore. Many of those concerned work for contractors under a short-term period of employment. The contractors are not concerned with such training. Given that such a course of training lasts three or four days and costs about £300 to £400, in my view the MSC should help — the state should help such people who actively seek work in the offshore oil and gas industries. The MSC is failing those who seek help.

I refer to the growing trend of periods of short-term employment in many industries. I believe that Parliament must pay close attention to that growing phenomenon. It affects many skills. I know that the trend is found throughout the European Community, but I should like to know the Government's position on short-term employment.

Given the remorseless decline in recent years of the Scottish manufacturing base, it seems to me that people are not being trained or retrained to adapt to changing industrial needs. On the contrary, they are educated to accept unemployment. That unemployment has its own distinctive geography. The Government tinker with a massive problem—a problem which always generates poverty, misery, and deep distress. That is one of the reasons why the Conservative Administration are so thoroughly unpopular in Scotland.

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

The whole country is yearning for an end to unemployment. The Employment Committee did an excellent job in setting out the problem. It attempted a solution, and we all look to the Government to discover additional solutions if the Committee's report is not acceptable.

The figures in table 2 in the annex to the first report tell the story. For the past four years, the numbers of males unemployed for less than three years have decreased, but the numbers unemployed for more than three years have increased from 145,000 to 427,000. According to the latest figures for male and female unemployment, 560,000 have been unemployed for more than three years.

Beveridge said: The danger of providing benefits which are both adequate in amount and indefinite in duration is that men, as creatures who adapt themselves to circumstances, may settle down to them … Men and women in receipt of unemployment benefit cannot be allowed to hold out indefinitely for work of the type to which they are used or in their present places of residence, if there is work which they could do available at the standard wage for that work. Men and women who have been unemployed for a certain period should he required as a condition of continued benefit to attend a work or training centre … The period after which attendance should be required need not be the same at all or for all persons. It might be extended in times of high unemployment and reduced in times of good employment; six months for adults would perhaps be a reasonable average period of benefit without conditions. We have seen dole queues lengthen for six years and more.

If my right hon. and learned Friend the Paymaster General and Minister for Employment does not feel able to accept the proposition of a guarantee which is put forward in the Committee's report, I ask whether he can find a form of words which is almost tantamount to it to the effect that, in the work and training schemes which are available, increased priority will be given in proportion to the period of unemployment. If sufficient funds were available, he would come to almost the same answers as the Committee.

I remind my right hon. and learned Friend the Paymaster General of the schemes in Bolton. He has seen one of our schemes, and two others are coming forward. I ask my right hon. and learned Friend to reorient the priorities in that way on 1 July and to hire, in addition to the 2,000 magicians he already has, a sufficient number to ensure that we meet those priorities.

The community programme should be not just for the worthwhile jobs which would otherwise be done but for the worthwhile people who would not otherwise be employed. We are concerned about people. All people are worth while, and that is why we have to set certain priorities.

6.42 pm
Mr. John Prescott (Kingston upon Hull, East)

I should like to add my congratulations to the Select Committee on Employment which has done considerable work and analysed the problems of unemployment. I am especially pleased that most Committee members reached the same conclusions and came together to analyse a number of the Government's proposals and be critical of them.

I think that all hon. Members would congratulate those Select Committee members who can come together in a critical analysis. Presumably, the effectiveness of their analyses will be judged during the period of the next Administration. I hope that the Select Committees will continue their critical approach to the policies of the Government, whether Labour or Tory.

I especially congratulate my hon. Friend the Member for Newham, North-East (Mr. Leighton), the Chairman of the Employment Committee, and the other Committee members who have spoken in this debate. My hon. Friend analysed the problem well and made it clear that he was not challenging the Government on the basis of whether we could return to full employment. That would be a debate between both sides of the House. We believe that the Government can be challenged on that basis. Admittedly, the issue is not whether everyone can have a 40-hour-week job. Clearly, major changes are taking place in the employed labour force. There is no doubt that, to achieve full employment, we must deal with the radical changes in the distribution of wealth.

The issue is whether the Government can do more than they are doing, especially with employment schemes. The Committee made the sensible point that more can be done in the provision of jobs and training. That is similar to the Labour party's claim that we can get 1 million jobs in two years — from public expenditure programmes, schemes and the mixture of suggestions made in the report. We must, however, recognise the realities. Even when those 1 million jobs were being created, 3 million people would still be unemployed. We certainly have a long way to go to achieve full employment.

My hon. Friend the Member for Newham, North-East, and the Committee, in noting the Government's response — in which they churlishly rejected much of the Committee's analysis and suggested that it would cost more than the Committee thought to create new jobs — have said, "Fine, if the Government think that jobs will cost more than we have said, we are prepared to accept 500,000 jobs, instead of the 750,000 mentioned and the menu of proposed schemes." Can we create more training places and schemes in the way suggested in the report by extra expenditure? That is the real question. I shall not quibble about whether it is £3 billion or £4 billion. The question is whether the House is prepared to endorse such an approach.

The Government have made it clear that they dispute the amounts of money involved and the scale of jobs or placements which can be provided and are not prepared to accept the general argument to go further along the road in building upon existing schemes. That is an important decision which reflects the Government's total indifference to doing anything about long-term unemployment. I must justify that comment. It is argued that the Government are not doing enough. Since 1979, youth training schemes have trebled. Of course, this reflects what has happened to unemployment, which has trebled as well. I shall not argue about the various fiddled figures we have been given — 3 million unemployed is a very large number.

In earlier debates, we have laid the charge that much of the unemployment is brought about directly by the Government's policies. I should like to refer to the provision of "real" jobs. I do not like using that term, because, with the changes coming about in the labour market, we must recognise all the different descriptions of gainful occupations, whether part-time, full-time or any other employment. We readily recognise that.

The sole purpose of the Government's policy is to create part-time, low-paid, cheapie schemes. All the present schemes are geared to achieve that end. That is one of the criticisms of the Government. In looking at the way in which the Government have created unemployment, one begins to understand how some of their policies can be reversed. At the heart of the argument is the Government's response to the Select Committee's report on long-term unemployment. Paragraph 18 says: Additional spending on this scale would pre-empt the scope for tax reductions necessary to stimulate enterprise and employment. The Government choose to keep their money for tax reductions. Apparently, according to surveys in yesterday's newspapers and last night's "Panorama" programme, even the Tory party and Tory voters are asking whether the best priority is to give more money to those who have a lot while the low-paid and the unemployed pay the price. That is a central choice for the Government to make. We are challenging them, as did the Committee.

It is argued also that it costs far too much to create jobs. The Minister for Employment has talked about a cost of £8,000 or £9,000 per job. We have seen, in justification for proposals on enterprise zones, a cost of £70,000 to create each job. In defence, the cost is £45,000 or £50,000 a job. Even tax cuts create jobs only at a cost of about £46,000 a job.

In view of the present level of public expenditure, if the Government are subjected to a type of jobs audit, they may be able to screw an awful lot more jobs from public expenditure than they do under the present order of public expenditure priorities. If more is spent on education, defence and certain other services, more jobs can be created because of the nature of the activities involved.

The crucial question which we should begin to consider is not how many jobs are created by extra expenditure — although we argue that case — but the increased number of jobs that can be provided with a different order of priorities and different levels of expenditure. That is one of the significant differences between Britain and its competitors in the Organisation for Economic Cooperation and Development. Comparisons have been made between the way in which we use our public expenditure and the methods used in some OECD competitors. I was recently looking at Swedish public expenditure in local authorities. In Sweden the number of people employed in local authorities has doubled in the period from 1970 to 1984. That has happened under different administrations, but largely Labour authorities. In this country, from 1970 to 1984 there has been an increase of 10 per cent. But since 1979 there has been a reduction of more than 100,000 jobs in local authorities, because the Government have decided to reduce public expenditure.

When we consider the sort of jobs that have been thrown out, we begin to see some of the thinking behind the Government's strategy. For example, the recently-announced cleaners scheme with Virgin Airlines or Branston, or whoever he is, is apparently going to clean up our streets with 5,000 people on community programme schemes. Mind you, a lot of CP schemes are unfilled and no doubt 5,000 cleaners will be given £65 a week on this scheme. In reality, more than 5,000 cleaners from public health authorities have been sacked because of the squeeze on public expenditure.

There is an essential difference, quite apart from the privatisation point, in that the cleaner before probably cost £116 but now the cleaner will cost £65. That is part of the Government's strategy to force down wage rates and get it done more cheaply. We are paying people on the dole to do it, although in these circumstances the cleaner may have been employed by the local authority at £120 a week but may now be offered a job with Virgin Airlines, Branston, or whoever is running the system at £65 for doing the same job. They will feel aggrieved. They might not even accept the job.

The Government are waiting for them there. They have just moved an amendment to the Social Security Bill. If someone refuses one of these schemes, he is likely to face a 13-week suspension of benefit. That, of course, will not force anybody into a job on half pay. The suspension comes into operation when someone refuses to take work when it is offered. The Paymaster General derives great glee from the fact that people who do not accept a job at about half the rate of pay will be taken off the dole and taken off benefit. He wins all round and makes a profit out of it. It seems that the Paymaster General has learned a great deal from Murdoch and what he did to the printers.

Housing is another area of public expenditure that we should look at. We produce houses at a rate of 2,000 a week less than in a comparable period of the previous Labour Administration. There are half a million building workers on the dole, and it is costing £3 billion to keep them there, but that does not seem to worry the Government at all.

I have heard all this jargon about dead weight. It is not dead weight to pay people to do nothing when there are people desperate for houses and we are producing 2,000 fewer houses a week than under a Labour Administration. It seems crazy, particularly when some of the schemes talked about by the Select Committee are basically in the construction sector of the community programme. In those areas, the industry and the trade unions are becoming increasingly apprehensive as they watch the Government switching from proper construction programmes to these cheapie labour gang schemes that the Minister talks about. He will not he surprised that people become more apprehensive.

In transport, there was expansion in all the areas I was talking about in Sweden. Here, with the deregulation of transport services—the Minister was much involved in that —a further 9,000 bus men will be thrown on the dole by October. I assume that the Ryedale by-election has made no difference to that, but I expect that the news will shake up a few rural areas when they realise what is going to happen to their transport system.

There will he 9,000 people paid for on the dole, and they will be offered jobs on Branston's cleaning-the-streets schemes, for considerably less cash. The public expenditure profiles of our competitors show that they have done far better than us in growth and economy, with lower inflation rates, and done it very successfully. Those are not only Labour or Socialist Governments. Governments of the Right have been able to achieve more effective records than us.

A significant factor is the way in which other Governments use public expenditure as a means of creating jobs. That is the realistic difference. The Government believe that their arch policy is to reduce public expenditure in that sphere. Whatever the debate has been today on the provision of long-term employment schemes and the role of Government, that has not been at the heart of the debate.

At the heart of our debate are the schemes and the roles they play. In passing, it might be well said by some people — we have said it before in debate—that Labour will produce 1 million jobs in two years. Various schemes have been put forward by the CBI, the churches or the wets of the Tory party — all the various mixtures that can produce more jobs. I was interested to read in the Financial Times of 19 June 1986 a report headed "Labour's Plan for Jobs". A report by the City university business school says of Labour's proposals that they will need to he taken very seriously as a genuine alternative to the present Government's approach". The man who came to the conclusion that Labour's policy can actually produce 1 million jobs in two years is Professor Brian Griffiths, now the head of the Prime Minister's personal policy unit at 10 Downing street. Having fed Labour's plan into his employment models, and despite a fervent belief in the Government's policies, Professor Griffiths is now saying to everybody that it is possible to get 1 million jobs in two years. He says that a Labour Government could reduce unemployment by half according to their policies. That seems to be such an authoritative source that even the Paymaster General might accept it. I recommend that people read the Financial Times of 19 June 1986, instead of just slating the idea that Labour can produce its plans.

The debate in the Chamber has been largely about the provision of schemes through the delivery system of the Manpower Services Commission. In some of those schemes, the wage rates and productivity are considerations without a doubt. But the level of investment is also crucial to productivity, and the effeciency of our economic machinery. When one considers that we have totally failed to achieve a level of investment in our economy that is comparable to our competitors, we should ask ourselves whether the Government's policy of wholesale tax cuts for companies has been effective. They are making mass investment and profit, but they are not putting it into investment.

More important is the fact that the Government are making no input into training. Here I want to say something about training aspects of the programmes. The community programme schemes that have been talked about today have a role to play. Let me be clear about both youth training and community programme schemes. There is a role for them; I have always said that. But there is a place for great improvement. For example, I have seen some very good YTS schemes, which basically work with the industrial training boards that remained after the Government had abolished 16 out of 23 of them, the ones that even the Government claim, usually in construction and engineering, maintain some form of industrial training, but in reality we do not invest in training at anywhere near the level that we should.

Indeed, the report "Competition and Competence" shows that the level of investment in training in this country is equivalent to about 0.15 per cent. of turnover, whereas it says that our competitors are spending about 1 to 2 per cent. That is about £5 billion to £6 billion.

The Government are spending about £2 billion on the community programmes and YTS, but the trouble is that industry is offloading even the limited amount of investment in training and apprenticeships that it used to have. In fact, industry is now using YTS as the first part of apprenticeship schemes. It is making a profit out of it. Even in areas where industry should be training apprentices, it is even offloading it to YTS. It is a scandal that industry in this country ducks its responsibility and does not pay its fair share for training. Let me make it absolutely clear that if a Labour Government comes in industry will pay its fair share on the scale necessary to include adult training, not just training for our youngsters.

Even the resources that have been available under the MSC since 1979 are reducing. They are a quarter of the amount that goes to YTS schemes, when three times as many people are involved in adult training than in YTS. We have got it out of order, primarily because the Government are not prepared to force industry to pay its fair share towards training.

Even the CBI, in its evidence to the Employment Select Committee, said that it was all for training, but industry must not have any more of the cost of it. What a deplorable reply from industry, which does not invest in training and then tells Government how much they should put into programmes. Quite clearly, we need community training, but I have it firmly impressed on my mind that if we get money for training the delivery is important. No doubt the Manpower Services Commission will play a part.

Certain bodies such as British Rail Engineering Limited, York and Brough Aerospace could do considerably more. Indeed, I visited Brough Aerospace this week-end and looked at its schemes. Its training is very good, and is part of a modular system. We should consider such bodies as training agencies that can provide proper and adequate training. Perhaps we should even pay them out of those funds.

We must address ourselves to the problems that are outlined in the report. In view of the time, I shall conclude. The Minister seems to be moaning, but he should talk to his Back Benchers who sought to speak. I shall conclude by referring to the MSC. It was a good body, and was set up to do a good job. It is doing a difficult job, and has been sullied by doing much of the Government's dirty washing. I do not think that the MSC can continue to play that role. We are radically rethinking what the role of the MSC should be. I give those involved notice that we see a different role for it. Sweden has a similar body, but it plays a much more effective part in that economy's growth and in the quality of training.

In view of the time, and the few minutes left to the Minister, I shall end by saying that there is an alternative. But frankly this Government do not care a damn about that alternative. They are only playing around with community schemes, and tea and sympathy. They could do more, as the Committee has said. I should like to hear the Minister's reasons for rejecting that approach.

7.2 pm

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

I had thought that the hon. Member for Kingston upon Hull, East (Mr. Prescott) was about to conclude with some remarks on training. I agreed with part of his diagnosis of the problem, but not with his solutions. Indeed, my hon. Friend the Member for Carshalton and Wallington (Mr. Forman) slipped over to tell me that he intended to raise the same subject. I apologise to both hon. Members because time is pressing, but I certainly hope that we have an opportunity to discuss training policies on some future occasion.

I also apologise to my right hon. Friend the Member for Guildford (Mr. Howell), who produced a masterful analysis of the employment scene. He touched on several issues with which I have much sympathy, and I should have liked to debate them. I am very interested in one of the ideas, although he gave it a name that I have never heard of—insulated benefit—which sought to encourage the unemployed back into work. I hope that I shall have an opportunity to do justice to his speech on another occasion.

Obviously, the subject of the debate is the Estimate and, in particular, the Select Committee's reports. The hon. Member for Newham, North-East (Mr. Leighton) gave a somewhat partisan presentation of the Committee's report, although he retreated into agreement when I pressed him. But it was obvious from his speech and from the speeches of my hon. Friends the Members for Beckenham (Sir P. Goodhart) and for Batley and Spen (Mrs. Peacock) that there is a measure of agreement between the Government and the Select Committee, at least in our aims. We are undoubtedly coming closer to an agreement on measures, as the Select Committee modifies its proposals in the light of the Government's response.

There is no disagreement between us about the plight of long-term unemployed people — about the difficulties that they face in breaking back into the job market and how those difficulties increase, as my hon. Friend the Member for Batley and Spen underlined, as the period of unemployment lengthens.

There is no disagreement between us either about the need to focus urgent and specific help on long-term unemployed people. The Government have steadily increased the resources available for measures to help the long-term unemployed. This year we shall be spending £1.2 billion — an increase of 20 per cent. over the previous year—on programmes specifically for the long-term unemployed. We agree, too, that there must be some direct Government intervention to provide temporary jobs for long-term unemployed people. If we thought otherwise, we should not be providing jobs for more than 300,000 long-term unemployed people in a year on the community programme. At a later date, I shall take up the assertion of the hon. Member for Newham, North-East that the report calls for a further doubling. As far as I can see, it calls for no increase on the Government's present plans.

Mr. Leighton

Will the right hon. and learned Gentleman give way?

Mr. Clarke

I shall not give way as I have only half the time to speak that the hon. Gentleman had.

Our disagreement with the Select Committee, therefore, centres principally on what constitutes the most cost-effective and practical package of measures to provide the assistance that long-term unemployed people undoubtedly need. The Select Committee's approach, set out in its first report, involves an attempt at job creation measures on a truly gigantic scale — 350,000 extra temporary jobs in building and construction; 100,000 temporary jobs shared between the social services and the Health Service; and 350,000 additional jobs in normal employment achieved through a subsidy to employers.

I do not quarrel just with ambition; there are considerable financial and, more importantly, practical difficulties. On our calculations, the Select Committee's original package would require nearly £6 billion in gross expenditure and more than £4 billion net. That would be additional to the £3 billion that the Government are already spending on their employment and training measures. In addition, the cost of the individual proposals would be between £7,000 and £9,000 for each extra job created, or four to five times the average cost per job of the measures that we currently run. By any standards, this is a massive programme of expenditure, and it is incumbent on those who propose and support it to tell us where the extra money is to be found. That is obviously an important matter which goes beyond the remit of the Select Committee.

But we did not reject the plan on the ground of cost alone. There is an even more serious objection to what the Committee proposed, and it is one of practicality. Our view, based on our great and growing experience of both temporary employment programmes and employment subsidies, is that the Committee's proposals simply could not be achieved. It is with genuine reluctance that we have come to the conclusion that they would not work.

We are already supporting 300,000 long-term unemployed people this year in jobs under the community programme. Nearly 20 per cent. of the programme involves some building, construction or refurbishment work, and 30 per cent. involves jobs in personal and social services. I commend to the House and the Select Committee our recent efficiency scrutiny of the programme, which was designed to take stock of the situation and to discover how we can manage the programme most effectively for the benefit of the long-term unemployed. That scrutiny showed clearly that there are limits to how far and fast the programme could be expanded.

The danger of rapid expansion is that the quality of the work experience offered to long-term unemployed people may be reduced. I shall take an example that I have concentrated on before — the Select Committee's proposal for an extra 50,000 temporary jobs in each of the health and social services sectors. On the face of it, it is one of the most attractive of the Committee's proposals. I am most interested in it, because when I was Minister for Health, I was a genuine enthusiast about going over to a community-based model of care instead of having long-term stays in old institutions. But the important point is the reality of what is proposed.

It is a mistake for those outside the health and social services sector to look upon community care as some sort of unskilled cheap alternative to hospital-based services. Those who still abide by that idea, including my hon. Friends the Members for Beckenham and for Batley and Spen, who gave all the reasons for looking at the community model, should ask the management and—as my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) said — the trade unions what they would think about 100,000 untrained people who have been out of work for three years or more being given temporary contracts in order to provide that care.

Mr. Andrew Rowe (Mid-Kent)

Will my right hon. and learned Friend give way?

Mr. Clarke

I apologise for not giving way, but I am making one of the shorter speeches today.

Finally, there is the proposed employment subsidy. Our experience is that such subsidies must be carefully and specifically targeted if they are not simply to support jobs that would have existed anyway; and they must be associated with some wage limit if they are not to be inflationary. The Committee's proposals are defective on both of those counts. Our estimate is that it might be necessary to pay subsidies for 850,000 jobs to create the extra 350,000 which is the Committee's target. That is too expensive and unrealistic.

But the debate on this immensely serious matter—the problems of the long-term unemployed—has moved on. To the Committee's credit, it has responded to our arguments by scaling down the size of its proposals, so that it is now talking about a target group in the first place that is 40 per cent. of the original size. But that does not remove all the difficulties. There would be more than £1 billion of extra expenditure and an even greater net cost per job created. It would certainly be four to five times higher than the current measures, and it would still involve major practical problems. For example, the health and social services point is just waved away and glossed over in the third report, although the difficulties remain.

Thus, we continue to express reservations. However, we are at one with the Committee on the need to take quick and effective measures to tackle the problems that it has identified. The one thing that we are all agreed on tonight is that we must do something. There will be no answer to the problems of the long-term unemployed if we do nothing. The Government are acting on a similar but alternative course that is on an ambitious, imaginative and massive scale.

Next Tuesday, 1 July, we shall be embarking on the most ambitious and comprehensive programme yet attempted to assist the long-term unemployed. In contrast to the Committee's proposals, the programme will offer assistance to each and every person employed for more than 12 months, and will seek to identify in discussion with each individual concerned his or her particular needs and a practical way of meeting them. We have already tested this in nine areas around the country. Indeed, as my hon. Friend the Member for Lewisham, West (Mr. Maples) said, that was a good way of trying out the practicability of our proposal. We are hopeful that the restart programme will offer in the next nine months personal help to some 1.25 million people registered as long-term unemployed.

There has been some criticism about the jobs being offered. We have identified eight categories of opportunities that we can offer to those whom we approach. The full range is set out in our "Action for Jobs" leaflet. It is no good the hon. Member for Newham, North-East doing the knocking job that he tried to do at one point — before agreeing that he supported it, after all — by talking about the number of jobs in which people were directly placed. We are talking about placing people in jobs with private employers, placing them directly in jobs in the community programme and placing them in jobs clubs, which have a high success rate, about placing people in training, and in the enterprise allowance scheme, and about people taking advantage of the jobstart allowance.

I believe that this ambitious programme, unique in its scale of comprehensiveness, is an answer to many of the pleas that have come from both sides of the House this evening to have another go at the problem of the long-term unemployed.

The hon. Gentleman made references to the alternative that he would put forward. I have to say to the SDP and to the Labour spokesmen that, given that the Select Committee has revised its proposals in response to our reactions, they might well examine their own policies. The Labour party in particular relied heavily on the Select Committee proposal to justify its 1 million jobs claim. It has always reacted with cynicism and some suspicion to our restart programme, talking about tea and sympathy.

The first report of the Select Committee emerged at a time when the Labour party was making promises about jobs but had not, as it still has not, any clear policies. This was seized upon by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) in his speech on the Budget as an explanation. Professor Griffiths, it is claimed, shows that Government policies would reduce unemployment by the same amount, although over a little longer time. The same model says that our policy will reduce unemployment to a similar level a year later and that the Labour party's policies will push up inflation to three to five times higher in the next five years and increase the marginal tax burden by nearly one third.

Mr. Prescott

How much—what is the inflation rate?

Mr. Kenneth Clarke

It is three to five times higher—[Interruption.] If the hon. Gentleman is going to rely on Professor Griffiths' analysis, I rather welcome that.

I would like to know what the hon. Gentleman and his hon. Friends mean by the commitment that they keep giving, somewhat cynically, about the extent to which they have policies that would reduce unemployment—claims that are easily made to deceive those who hear them. One has to be clear about this. Two claims are made by the Labour party. One is that it will create 1 million new jobs. The other is that it will reduce unemployment by 1 million. The two are clearly different and they amount to quite different figures.

As the hon. Member for Kingston upon Hull, East knows, the Government have presided over the creation of 1 million additional new jobs since spring 1983, but demography means that unemployment remains high. The available labour force grew by 500,000 in 1984 alone. What Labour spokesmen plainly do not understand is the difference between the two claims and they use both formulations with reckless abandon. The fact that they keep changing shows that it is a bogus, irresponsible claim and in my opinion a cheat on the unemployed waiting for their share of economic recovery.

I tried to bring this out last week with the shadow Chancellor. I do not think the "Dear Roy, Dear Clarke," exchange will ever be published as a example of great literature, but it was an example of prevarication and bombast, something of which the right hon. Member for Sparkbrook was accusing the Prime Minister earlier today. Let me explain what lies behind this so that Labour can clarify its policies. I want to give some quotations of what has been said by shadow Cabinet members in the course of the last six months when they have repeatedly made this kind of claim. The hon. Member for Kingston upon Hull, East, in the Daily Telegraph of 14 August 1985, was quoted as having said, Altogether we can create 1,400,000 jobs at a cost of £3,800 million". That seems to bear no relation to current claims. Secondly, the right hon. Member for Islwyn (Mr. Kinnock), the leader of the Labour party, is reported in the Municipal Journal of 7 February 1986 as saying——

Mr. Leighton

On a point of order, Mr. Deputy Speaker. Is the debate not about the report of the Select Committee, not a knockabout in regard to the deputy leader of the Labour party?

Mr. Deputy Speaker (Mr. Ernest Armstrong)

I will decide whether the right hon. and learned Gentleman is out of order.

Mr. Clarke

The hon. Member for Kingston upon Hull, East took 20 of his 40 minutes bashing the Government. I am also referring to claims that are based, as the Budget speech of the right hon. Member for Sparkbrook shows, on this Select Committee report, which was clutched by the Labour party as a drowning man clutches a straw when it had already made these commitments to new jobs, but had no idea how to create them.

I am sure that people will want to be reminded of what the right hon. Member for Islwyn said on 7 February. He said: When we form the next Government our first priority will be jobs. We are going to work to generate one million in the first two years". That was the same occasion on which the hon. Member for Kingston upon Hull, East said in the same journal: How did we get this promise of one million jobs? Who worked on the programme? Promises such as these simply label us with targets we cannot achieve and expose our credibility". Then we had the Budget speech in which the right hon. Member for Sparkbrook claimed, in what was the only detailed analysis of the policy that we have had—and this is to be found at column 310 of Hansard, 19 March —that 750,000 came from the first report of the Select Committee. On went the right hon. Member for Kingston upon Hull, East. He said the next day: My right hon. Friend the Member for Sparkbrook pointed out how one million jobs could come in two years." — [Official Report, 20 March 1986; Vol. 94 c. 448.] This was repeated by the right hon. Member for Sparkbrook to the Union of Shop, Distributive and Allied Workers conference on 28 April when he said: This programme will produce one million jobs in something like two years". Today the leader of the Labour party has been speaking in Jersey—he has made a speech of which I have a copy — and he has altered the promise again. He said: By using the money that Nigel Lawson would fritter away in tax cuts and by putting it to productive use we can and will gain a million new jobs in our first years in office". As I have made clear, a million new jobs does not solve unemployment. As I understood the hon. Member for Kingston upon Hull, East earlier today, he committed himself again to the creation of 1 million jobs, and he admitted that would still leave 3 million unemployed. The fact is that the creation of those new jobs is merely matching what the Government have achieved. We are taking steps to try to speed up the process.

The claims of the Labour party are imprecise and insecure and do not amount to a row of beans. There is no solid policy behind them. I will take the hon. Gentleman's final words and go away and work on them. It seems that Professor Griffiths of University College is now the bedrock of Labour policy. I look forward to exposing——

The debate having continued for three hours, MR. DEPUTY SPEAKER interrupted the proceedings, pursuant to the Resolution [8 March].

Question deferred, pursuant to paragraph (2)(c) of Standing Order No. 19 (Consideration of Estimates).