Motion made, and Question proposed,
That a further sum, not exceeding £1,150,731,000, and including a Supplementary Sum of £90,392,000, be granted to Her Majesty out of the Consolidated Fund to defray the charges that will come in course of payment during the year ending on 31st March 1992 for expenditure by the Department of Employment, including expenditure via Training and Enterprise Councils, on training, including the provision of training programmes for young people and adults and initiatives within education; on the promotion of enterprise and the encouragement of self-employment and small firms; on help for unemployed people; the improvement of industrial relations; industrial tribunals; compensation for persons disabled by certain industrial diseases; payments towards expenses of trade union ballots; on residual liabilities and disposal of the remaining assets of the former National Dock Labour Board; on the costs of maintaining and disposing of the former Skills Training Agency; administration, central and miscellaneous services including assistance on employment issues to eastern Europe in co-operation with the Foreign and Commonwealth Office—[Mr. Jackson.]
§ Mr. Ron Leighton (Newham, North-East)
The Select Commmittee on Employment wanted to study the prospect of employment and unemployment in the United Kingdom. Although the Government make assumptions about future levels of unemployment for planning public expenditure, they always decline to make a public forecast. Therefore, the Committee decided, according to the Confederation of British Industry, the Institute of Directors and the Trades Union Congress, to give evidence on their forecast for future levels of employment and unemployment, the causes of the present situation and the factors that will affect future levels.
We published the report for the information of the House and to give the House the opportunity to debate a matter of the utmost importance. I intend to introduce the subject, to cite some of the evidence given to us and then to comment on it. Doubtless other members of the Select Committee will do the same.
Large-scale unemployment represents a failure of policy and of performance. It is not just a waste of resources; every statistic of involuntary idleness is a personal tragedy. Some people can overcome redundancy, but others trapped in long-term unemployment remain stuck in grief, prolonged distress and despair and cannot find an alternative meaning or purpose in life. That in turn leads to ill health and family breakdown.
Anyone who doubts the grief involved in losing a job might care to read the moving interview in Vanity Fair given by the right hon. Member for Finchley (Mrs. Thatcher).
Ministers, including the Prime Minister and the Chancellor of the Exchequer, were originally reluctant to use the "R" word. They said that there would be no recession, and when it came they said that it would be short and shallow. Since then they have consistently said that good times—and "vague stirrings"—are just around 382 the corner. In March this year we took evidence from the CBI and the Institute of Directors, who told us about the depth, the seriousness and the pain of the recession. The memorandum from the CBI said:Since the middle of last year, output has tumbled across the economy, falling most sharply in manufacturing, as orders have dried up.The CBI also told us that its survey suggested that retailers, wholesalers and financial services will, if current trends continue, also shed labour. It told us that because of improvements in productivity disappearing employers had to contain labour costs by shedding staff.
In answer to a question the CBI said:In manufacturing … business optimism is at its lowest for nearly 10 yearsand companies have been responding to more difficult circumstances by cutting back on employment for more than a year. By contrast, the CBI told us that there are no signs of an outright recession in the European economy —it is in this country that the disaster is occurring.
The memorandum from the Institute of Directors stated, without beating about the bush:Since 1984 IOD has done its own bi-monthly survey of member opinion, including asking members what their expectations are about economic developments. The February 1991 results are the worst in the life of the survey.Why has this disaster occurred? Who is responsible for it? Mr. Morgan of the IOD, a blunt speaker, said:In the last four years we have had a failure of economic management.We shall see later in the debate whether Treasury Ministers express their regret for all this and apologise to the unemployed who are paying for Ministers' failures and mistakes—or whether they repeat that mass unemployment is a price well worth paying. The CBI told us that unemployment would continue to rise this year and next. The recession is going to get far worse in the foreseeable future, certainly until the next election—
§ Mr. Leighton
The hon. Gentleman has a bad habit of interrupting my speeches after one or two sentences. This is a short debate and I intend to adopt a self-denying ordinance so that I do not hog too much time. I shall therefore not give way.
Both the TUC and the CBI said that unemployment would reach at least 2.25 million this year. The TUC said that more pessimistic forecasts predicted that it would rise to 3 million in 1992–93. Since we took that evidence, unemployment has exploded even more devastatingly. It has already reached 2.25 million, although we are only half way through the year. In the six months to November 1990 the average increase in unemployment was 25,400 per month. In the past six months it has averaged 80,200 per month. Unemployment has increased for 14 consecutive months and the trend is accelerating and is set to continue.
Not only does this cause a huge pool of human misery, but recession is expensive for the public finances. The Select Committee on Treasury and Civil Service has estimated that each additional 100,000 unemployed people cost the Exchequer a further £300 million in benefit payments—and that does not include the taxes forgone. It is no wonder that the Government's books do not balance and they are being forced to borrow billions of pounds this year and even more next year.
383 Unemployment is a lagging indicator; it is a considerable time after the economy picks up before employment improves. So when will the recession end? The Government have been claiming to see vague stirrings. They claimed that there would be a recovery in the second half of this year, but we are already in July and it is not happening. The CBI and the IOD pointed out that not only manufacturing suffers; so do clerical jobs, advertising, retailing and financial services. Only this week we learnt that disastrous conditions in the high street forced the Burton group to close 100 shops and sack 1,600 staff after making losses that will amount to £177 million in the year to August. The number of companies that have collapsed in the first half of this year has risen by 66 per cent.
The IOD told us that the housing market is important. The total number of people living in homes on whose payments they are in arrears is now just under two million —equivalent to a population double the size of Birmingham's. The number of households more than six months in arrears rose from 87,360 in March 1990 to 209,620 in March of this year—it doubled. Property repossessions are outstripping the number of homes being built to meet social needs—primarily homelessness.
My conclusion is that there is little comfort in prospect in the medium term. As the recession is strong in the service industries, London and the south-east are in its grip and are bearing the brunt. In London there are more than 26 people chasing every notified vacancy, unemployment in London was more than 50 per cent. higher in April this year than it was a year before, and the rate of corporate bankruptcies has tripled. The Evening Standard Investors in Industry survey for April 1991 found that 94 per cent. of companies in the capital are likely to reduce or at best maintain their work force in the coming year. The outlook is bleak and many people will suffer.
The Committee looked into the exchange rate mechanism—
§ Mr. Leighton
We asked each of the witnesses their estimate of the effects on employment of entry into the ERM. We were astonished that none of them had made such an estimate. There was a time when full employment was a national aim and when policies would be evailuated, among other things, for their effect on it. No more, apparently. One TUC witness said that the TUC did not have a forecast of the impact of entry on employment. Later he said:What impact ERM will have on the economy I am afraid I do not know.Many might find it surprising that, despite that, the TUC was all in favour of entry, although it believed that we joined at the wrong rate—we should have joined at DM2.70 instead of DM2.95.
Neither the CBI nor the IOD had calculated the effects of entry on employment. Although the IOD had not been in favour of entry, however, it had studied its baneful effects on Ireland and France. Our report states:We believe that the full implications on employment levels of joining the ERM were not sufficiently discussed or understood before entry, and even now are not widely recognised.The Department of Employment does not make estimates of the effects of ERM either, but we asked the Department whether it had made any studies of ERM's effect on France and Italy. We received a letter from the 384 Secretary of State in which he quoted a memorandum from the director general of the National Economic Development Council and the November 1990 issue of the National Institute Economic Review. That was worrying because it told us that ERM membership had cost France 700,000 jobs and Italy a million jobs.
The March issue of CBI News included an article by Professor Douglas McWilliams, the CBI's chief economic adviser. Speaking of the effect on the French economy, he said:How has the French economy performed since the start of serious EMF membership of 1983? The initial effect was slow growth. French GNP rose by below trend for five consecutive years from 1983–87 with a cumulative shortfall of 4.5 per cent. of growth compared with productive potential. The main feature of this recession was that output was depressed for an unusually long period".The article went on to say that wages were reduced. It continued:Nevertheless, reducing inflation still required rather slow growth associated with rising unemploymenta rise in the number of jobs lost of approximately half a million. His last paragraph is extremely revealing and worrying. He says thatthe French experience suggests that if British membership of the ERM is successful in reducing inflation it is likely that unemployment will rise to about 500,000 above its 1990 level at some time before 1994. And if Britain is unsuccessful the rise in unemployment could be substantially more than this —perhaps as many as a million or more.If the French experience is anything to go by, membership of the ERM could add an extra million to the dole queue, unemployment could be very much higher over the period of the next Parliament and economic growth would be slower. That is worrying because the parties seek to finance their programmes from economic growth.
After speaking about the DTI's 1992 awareness campaign, Mr. Morgan of the IOD said:The ERM situation poses a bigger problem than 1992 did, in terms of adjustments required and the awareness required.Why have we not had an explanation or a debate about the matter. On the day when we interviewed the CBI, on 13 March, an article in the Financial Times said that ERM entry meant that we hadto change our whole way of life.If that is to happen, there should be an explanation. Commenting on the French experience the CBI said:The French economy has been slow in responding to the discipline that ERM membership brought to French firms.Can we be any quicker, and what exactly is it that we have to do?
The normal way for divergent economies to adjust to each other is by changes in their exchange rates. If that is ruled out by the ERM, the IOD told us that if Britain's inflation was higher our competitive position would deteriorate from the day after we joined. It said that British companieshad to start at high speed to make up for any lack of investment, and any lack of training and skill, if they are to control their unit labour costs, and stay competitive in the traded sector".Tying the pound to the deutschmark means that Germany is the benchmark country. If our inflation is higher than that of Germany, as it is, if our productivity is lower, as it is, if our costs rise faster, as they do, we lose competitiveness from day one and cause higher unemployment. To survive we would need, at double quick speed, German levels of inflation, investment, productivity and unit costs.
385 What is happening in the real world? Everyone says that investment, the seed corn, is vital, but investment is in reverse. In his Budget statement the Chancellor said that investment across the whole economy would fall by 10 per cent. In the key manufacturing centre it fell 20 per cent. between the first quarter of 1990 and the first quarter of 1991. All our witnesses said that productivity was the crucial deciding factor—but it is in reverse. The Department of Employment figures show that output per head in March was 1.9 per cent., nearly 2 percentage points down on the previous year and the largest decline since 1981. While we were going backwards, German productivity rose by 4.5 per cent. in the same period.
What about wage costs? The June issue of the Employment Gazette reported that wages and salaries in the three months to March 1991 were 11 per cent. higher than in the same period last year. Average earnings in manufacturing during the same period were 9 per cent. higher than last year. It is fair enough to have a rise of 9 per cent. when productivity is rising by the same percentage, but it went down by 2 per cent. That means a unit wage cost rise of 11 per cent. How does that compare with our competitors? The CBI told us:Our unit labour costs at the moment are going up … probably twice as fast as the best of our European competitors. That is not sustainable.Not sustainable means that British firms lose market share, factories close down, more workers are thrown on the dole, and Britain is blighted and becomes a depressed area with chronic mass unemployment. It also means that the pound cannot be maintained at DM2.95. The high interest rates required by the vain attempt to keep it there further reinforce the recession and push investment and productivity into a downward spiral. Pressure on the pound then leads to a sterling crisis which blows the pound out of its unrealistic ERM parity—but only after great damage has been caused to British industry.
A successful ERM would mean some sort of speedy structural revolution in the British labour market, a major change in the behaviour of wage bargainers. It would also mean a cut in the real wages of British workers. According to the TUC spokesman, that is unlikely because he said that that would be,unrealistic, not to say immoral.The pattern in Britian is for wages to shadow and compensate for the previous year's inflation. To be competitive in the ERM, however, wages would have to be linked to German—not British—inflation. That means that the real wages of British workers would have to come down. Do they know that? Have they been told? Do they agree? The future is likely to contain a great deal of industrial conflict as the attempt is made to force British wages down. We shall see many more incidents such as that at Rolls-Royce with employers unilaterally seeking to enforce a pay freeze.
What sort of lead are British workers receiving? I asked the IOD whether it thought that the spirit on a ship was the responsibility of those on the upper deck and it said yes. I asked whether it thought that directors should set an example and again it said yes. What kind of example is being set by those at the top? We are currently witnessing a wave of blatant corporate greed with those at the top agreeing to pay each other in telephone numbers with increases of 20, 30, 40, 50, 60, 70, 80 or more per cent. 386 —one of them even gave himself a rise of 160 per cent. Those who run the privatised monopolies are leading the way.
This week we heard about Robert Evans, the chairman of British Gas. He is not content with a 66 per cent. pay increase because in his £500,000 four-bathroom house he has had installed £28,000 worth of gas fittings, showers, dishwashers, gas fires, kitchen appliances and gas street lights, and all for free. Apparently he is testing them. Everyone would like to conduct tests like that. What is sauce for the plutocratic goose must be sauce for the low-paid gander. If the captains of industry can help themselves and fill their pockets with gold, how can they argue that their foot soldiers should take pay cuts? It is likely that those at the bottom will want to take their lead from those at the top.
It is plain that the baneful effect of the ERM is to deepen and lengthen the recession. All the domestic arguments and the requirements of our economy cry out for a cut in interest rates and all our witnesses asked for that. The Institute of Directors wanted a 4 per cent. cut this year. However, membership of the ERM means that interest rates can no longer be used for the benefit of the domestic economy. As the Chancellor said, the overriding purpose of interest rates is to secure the pound in its ERM band. That means that interest rates stay higher than would otherwise be the case, the recession is deepened and prolonged and the unemployed pay the price.
Since we joined the ERM in October, unemployment has risen by well over 600,000. Fixed parities can work only if economic convergence comes first. A strong currency is the reward for economic success and performance. That cannot be achieved by fiat or passing a resolution.
The Institute of Directors drew our attention to monetary union and the introduction of a single currency before convergence in Germany. That led to the shutdown of the east German economy and the creation of mass unemployment. The same pressure, in a more modified form, would operate here.
All the witnesses agreed that skills and training were the key to success. The CBI said:We cannot get away from the fact that the UK produces fewer 16 year old school leavers with sensible qualifications, we keep fewer of our school children on beyond the age of 16 than most of our industrial competitors, we produce fewer engineers and vocationally qualified people at graduate level than most of our competitor nations. It is that sort of skills revolution which we have to make work this time before we try anything else.The Institute of Directors likewise said that itbelieved that skills and training are the key factors in determining prosperity.The nation has to invest in its human capital. There is no representative body at national level to set targets for vocational qualifications and to oversee and monitor progress in their implementation. Here, the Committee makes a major recommendation. We believe that, in consultation with the training and enterprise councils, the local enterprise companies in Scotland, and other relevant bodies, the Government of the day should set national targets for improvements in levels of skill and qualifications. We hope that the Government will accept that recommendation and that responsibility on behalf of the nation.
I thank hon. Members for listening so patiently and I commend our report to the House.
§ 8.1 pm
§ Mr. Andrew Rowe (Mid-Kent)
I hesitate to follow the economic guru, the hon. Member for Newham, North-East (Mr. Leighton), in the more arcane arguments on the economic basis of the present situation, because I do not have anything like his expertise in the subject. However, when he claimed that we were looking for a change in our way of life, 1 could not help feeling, as he piled gloom on gloom, that we were listening to an east London way of death. I thought that he claimed that there was no serious recession on the continent. Whether that is true or not, a number of countries on the mainland of Europe have unemployment rates that are not only a great deal higher than ours but have remained consistently higher over a number of years. France is a notable example.
When we are talking about new ways to change our attitudes, it is encouraging to hear such a spirited defence of keeping wages and inflation under control. I will leave it to those of my hon. Friends who I know wish to follow me in the debate, and who are better qualified than Ito do so, to explore further the likely impact of the proposals for a minimum wage linked to the average wage. That fits uneasily with the hon. Gentleman's argument that we should keep wages under strict control.
I thought that I heard the hon. Gentleman say that the Institute of Directors was looking for a 4 per cent. reduction in interest rates in a year. It is still July, and since October our interest rates have come down by 3.5 per cent., so I am not discouraged.
§ Mr. Rowe
The hon. Gentleman is correcting me. Apparently the Institute of Directors wants interest rates to come down by 4 per cent. this year. I view with some reserve this headlong rush to cut interest rates—a policy which I know is much beloved by Labour Members. Most of our present troubles stem from the over-cutting of interest rates that we went into because we were afraid of a worldwide recession. I vividly remember that the Labour party clamoured for a much bigger cut in interest rates. If we had followed that siren voice, we would be even further on the rocks than we are now.
We are at the beginning, but far enough along the path to see that it is a solid beginning, of a serious change of climate. In 1979, there was a strong belief that training was something that one did only in the employer's time, only at the employer's expense and, best of all, if the employer could persuade the Government to pay for it. That attitude has changed for the better. We now have an understanding that training is a shared responsibility. Few people in employment today believe that what they know now will be sufficient for what they have to do for the rest of their employed life. They are aware of the need to retrain several times during their working life. They see it as a shared responsibility between the individual, the employer and the Government.
The Government have been imaginative in, for example, the introduction of training credits. Nothing makes it clearer for an individual that he shall have control over the sort of training that he wants and the quality for which he is looking than the knowledge that he has in his hand the finance to pay for the training that he needs. I hope that, as the CBI said to the Select Committee, a will 388 be possible to enlarge the scheme rapidly. It is a good scheme which I should like to see tested, although not for so long that it cannot be expanded if it shows promise.
The Government have been extremely imaginative in their policy of allowing people access to courses and other forms of higher and further education at a much later stage than simply that of leaving school. I share the anxiety expressed by the hon. Member for Newham, North-East. Too many youngsters still leave school inadequately educated to go straight into a job. I derive great comfort from the fact that many of them rapidly realise that they are banging their heads on a ceiling of inadequate qualifications, and take the advantage that we have provided of going into further and higher education at a later stage.
There is a marked change of climate within universities and colleges. They are now far more entrepreneurial because they realise that if they are to survive, they will have to sell a product that students want. When I taught at a university, we taught what we were interested in and if the students did not bother to come, we went on teaching it nevertheless. Now, if the students do not come, the department closes, so departments are becoming more aware of the need to tailor what they teach to what the students want. I can give an example from my area. Few students at Kent university do not learn a foreign language at some stage, because they realise how vital that will be in the European Community.
The hon. Member for Newham, North-East and his Committee were anxious about quality control in training. That is another aspiration which I share with the Committee, but I should not like the hon. Gentleman to underestimate the crucial significance of the national vocational qualification. As that operation spreads its net and becomes more widely used and known, it will make it much easier for individuals who may not have had a formal education to get credit for what they can do practically. Furthermore, it will show them when they get to a certain level that they have the same access to higher education that they would have had through the more traditional book learning that used to be the only way in. That is enormously important and we should not underestimate it.
Anything that my hon. Friend the Minister can do to diminish the bureaucracy of those national vocational qualifications would be welcome. I have seen some of those NVQ demands and they extend to many pages. They have been refined and re-refined for the highest possible motives, but they do not half make it difficult for people to extract the best that they can from the system.
There is a growing understanding among employers. The Select Committee's report suggests that employers now reckon to provide £20 billion worth of training. To give an example from my county, in Thanet the Kent training and enterprise council has helped to put together the Thanet skills initiative whereby more than 20 employers are coming together to try to influence the training that is available locally so that they get what they need rather than what the training institutions choose to provide.
Employers are showing far more interest in anticipating needs. For example, in Dover the district council, the training and enterprise council, the chamber of commerce and other local groups are coming together to make it possible for the 2,000 or so international freight forwarders who will become redundant as a result of the 389 1992 single market to discuss and work out the sort of training that they need. We have achieved an enormous amount. The Government are right to try to create the climate and to improve the information system. They have put forward a whole range of imaginative programmes.
I conclude by making one plea to my hon. Friend the Minister. There is a mass of evidence, which I shall be happy to provide him with if he has not already seen it, that employers are completely lunatic about the age requirement that they attach to various jobs. For example, they expect secretaries to be under 30. They are extremely reluctant to employ older people. They frequently will not even give an older person an interview. They will put up all kinds of smokescreens, the commonest one being that older people are not a good investment because they do not stay long. All the evidence that I have seen suggests that older men and women stay longer in employment than their younger counterparts. They say that older men and women are too inflexible to learn. That is rubbish and it can be demonstrated again and again.
I know that my hon. Friend and our right hon. and learned Friend the Secretary of State believe that to some extent the market will take care of that. The market may do so up to a point but, as in many markets when there is an information gap, the Government need to take an initiative, along with employers' organisations and trade unions, to break down the walls of prejudice against the employment of the older worker. If we do not do that, how in heaven's name will older people be able to finance the 30, 40 or, in some cases, 50 years that they will have outside the labour market? That will become an enormous charge on our children and our grandchildren.
I commend the Government for a number of imaginative initiatives. I detect a major change in Britain in the climate towards employment training and I ask the Government to take a serious look at the obstacles against the employment of older people.
§ Mr. James Wallace (Orkney and Shetland)
Once again, the House is indebted to the hon. Member for Newham, North-East (Mr. Leighton) and his Select Committee for producing a report which I am sure will give rise to some interesting debate. However, if I may be allowed to introduce a note of disappointment, the report is in some respects inconclusive. It has done the House a service in bringing together clearly the views of different bodies from which the Committee took evidence, but it is clear that it had some difficulties in coming to conclusions and making recommendations. That is no doubt because, as the hon. Gentleman said, this is an issue which gives rise to considerably heated debate and passions on both sides of the argument.
Few if any of those who gave evidence to the Committee, and, I think, few in the House, would dispute that unemployment is rising. The Government for some time took solace from or hid behind the figleaf of the fact that the rate of unemployment in the United Kingdom was much less than that of a number of our European competitors. But they can no longer deny that the rate of increase in unemployment in Britain is faster than most, if not all, of our European competitors.
390 It is important that we regularly return to address this matter. When we hear the statistics and the monthly unemployment figures, we should not lose sight of the fact that we are dealing with people and families who are suffering the frustrations and, people often feel, the indignity of unemployment. In addition, there are those who have the threat of unemployment hanging over them, not knowing whether next week their job or the job of a member of their family will be on the line.
The hon. Member for Newham, North-East spent some time dealing with the impact of the exchange rate mechanism on employment levels. He drew attention to the fact that there had been few if any studies of what the impact would be in the United Kingdom. It is important to remember that the current trend of increase in unemployment in Britain long pre-dates Britain's entry into the ERM. In April last year, the tables were turned and we no longer had reports of monthly decreases in unemployment but, sadly, monthly increases. That was some six months before our entry into the ERM.
If we are looking for the causes of the current rise in unemployment to unacceptable rates, we should look to the unsustainable boom that was created by the Government not only just before the previous election but after it. Had we joined the ERM much earlier, when my right hon. and hon. Friends were advocating entry, we would not have had the high interest rates that were ultimately necessary to contain the boom created by the Government, and the problems created by that boom would have been tackled earlier within the discipline of the ERM.
§ Mr. Janman
Does the hon. Gentleman agree that the main reason for interest rates being low during 1987–88 was the fact that my right hon. Friend the Member for Blaby (Mr. Lawson) was tracking the pound to the deutschmark because of his predilection, shared by the hon. Gentleman, to join the ERM sooner rather than later? It was, therefore, a desire to peg sterling to the deutschmark—a quasi-ERM environment—that caused interest rates to be reduced and the inflation which the hon. Gentleman has accepted in his analysis.
§ Mr. Wallace
I could not wholly accept that argument. An important reason for the high interest rates was that the Government, through a number of measures, not least those introduced in the 1988 Budget, brought about a huge expansion in credit which they simply could not sustain. Therefore, they had to have high interest rates to bring that under control. Had we joined the ERM much earlier, in the mid-1980s, I doubt whether we would have got into the position from which we are now trying to pick up the pieces.
What would happen if we were to leave the ERM and allow the pound to devalue? I have no doubt that initially there might well be a small boost to exports, although I fear that that would soon be eaten up by subsequent inflation. Ultimately, interest rates would go up rather than down, because the markets would have no faith in the Government's willingness to tackle inflation and maintain the value of the currency. Investors would require higher interest rates to reflect the increase in the perceived risk involved in holding sterling. I am not sure that I understood the implications of what was said by the hon. Member for Newham, North-East; I believe, however, 391 that if we came out of the exchange rate mechanism, economic policy would lose credibility and unemployment would continue to rise rather than fall.
Politicians can no longer choose the soft option. Companies will have to face up to disciplines that will not allow the politicians to go on pretending that miracles can be worked through no more than a change in the currency. I doubt whether such pretences were effective in the past, over the long term; they are even less likely to succeed now, when economies are so closely integrated on an international basis.
If Britain sticks by its ERM commitments—if, as the Prime Minister suggested in a recent answer to my right hon. Friend the Member for Yeovil (Mr. Ashdown), there is a move to enter the narrow currency band and to make the Bank of England independent—investors, companies and employees will know that the Government mean business. Once that is understood we shall be able to embark on a path of sustainable growth, with greater economic stability, and to generate circumstances in which unemployment can not only fall but, with any luck, remain at a lower level.
Not surprisingly, the Select Committee was unable to reach a conclusion on the subject of the statutory minimum wage. As its report states, the TUC advocated such a system, but conceded that it was not'the perfect and only answer' to the problem of low pay".It is also not surprising that the Institute of Directors opposed the idea. My party, too, is on record as opposing it: we do not consider that it is the right way to tackle the problem of low pay.
In trying to rubbish the arguments for a minimum wage, the Secretary of State for Employment has said that 2 million people would lose their jobs. As can be seen from recent newspaper analysis—not least in the columns of The Independent—his figure is based on a series of flawed hypotheses. By "hyping up" the true position, the right hon. and learned Gentleman has to some extent destroyed what should have been a serious debate.
The issue between the hon. Member for Fife, Central (Mr. McLeish) and me—and, I assume, between the Opposition and the Government—is not whether people should be condemned to low wages; we all accept that a high-wage, high-productivity economy brings benefits. The issue is the way in which that is to be achieved. My party strongly believes that the statutory minimum wage, by introducing a degree of "leap-frogging", could destroy jobs and, thus, lose the second or third income of a household, if not the first. Households could be pushed into poverty, while the objective is to free them from it.
By all means let us strengthen the wages councils in areas of employment where there is not much international competition. Let us also, however, embark on a process of integrating the tax and benefit systems, to produce a national minimum income for households. That, surely, is a much better way of targeting the problem of poverty. I fear that, if the statutory minimum wage were introduced, thousands would lose their jobs; and, tragically, unemployment is one of the main causes of domestic poverty.
The Select Committee agreed about the importance of skills and training. As has often been pointed out, 38 per cent. of the United Kingdom's industrial work force has received some skilled vocational training, compared with 67 per cent. in the Lander that make up what was formerly West Germany. The figure is 79 per cent. in Italy, and 80 392 per cent. in France. There is an obvious gulf between us and the countries that we shall shortly join in a single market, and with which we shall soon compete even more keenly.
Over the years, successive Governments and employers have placed us at a competitive disadvantage by not taking training seriously enough. The hon. Member for Mid-Kent (Mr. Rowe) thinks that the climate may be changing, but I feel that the Government have their own role to play. Even after last month's announcement by the Secretary of State of further measures to promote training, including increased funding, the Government—as the Secretary of State did not deny on that occasion—are spending less on training than they were when unemployment stood at 2 million and was falling. Now it stands at 2.25 million, and is rising. That strikes me as unbelievably shortsighted.
Earlier today, my party published its proposals for tackling unemployment. Those proposals do not shrink from the need to provide additional funding for employment training—so that we can improve quality as well as increasing the number of places—and to ensure that those who find themselves unemployed are given an opportunity to retrain and to learn new skills. We also want to give women a chance to return to work and to make a worthwhile contribution.
We are talking about an investment in people—an investment to which the present Government have not been prepared to commit themselves wholeheartedly. The Minister says, "Tut, tut", but he knows full well that the Government's contribution is declining when it should be increasing. I know that he has a brief from which to argue, but surely, in his heart of hearts, he knows that at a time of rising unemployment the Government should be spending far more on training.
Much, if not all, of the youth training system is now administered through training and local enterprise councils—TECs and LECs. May I give an example from my constituency? A young girl there, who was about to embark on a training course arranged through the Training Agency in Inverness, now finds that she cannot do so because the LEC that is now responsible claims that it cannot afford to pay. On further examination, I discovered that the previous arrangements for the Training Agency involved swings and roundabouts.
In my constituency, as the Minister will appreciate, the cost of board and lodging for a young person going away to train can be considerable; the circumstances are different when the training takes place virtually on the person's doorstep. Given the geographical character of LECs, which operate in areas that are remote from the national training centres, they are bound to incur a heavy burden in funding board and lodging.
I hope that the Minister will appreciate the difficulties in these early days. When training is provided on a national and regional basis the costs can be equalised, but that will not always be possible with LECs. The Minister may not be able to give me an answer immediately, but. I trust that he will look into the matter, because it may recur increasingly as the TECs and the LECs bed down.
We should not merely bemoan unemployment. There seems little point in comparing the numbers who are unemployed in the various constituencies with the Conservative majorities there unless we are also prepared to say what we are going to do about the problem. My hon. Friends and I have tried to do something. I do not 393 pretend that ours is the complete answer; indeed, we believe that the recession is too deep for it to be possible to wave a magic wand overnight and achieve full employment. We believe, however, that the Government have a duty to make an effort.
We have identified, for instance, the capital funds that are locked up in local authority bank accounts as a result of council house sales. We believe that those accounts could be unlocked to fund a housing programme involving not only new build but renovation. School buildings could also be improved. I am sure that many of us have been asked why a local school has a leaking roof when people are on the dole. The hon. Member for Newham, North-East cited the company bankruptcy ligures; they show that, in recent months, the construction industry above all has suffered, and needs a boost.
We have also targeted energy efficiency. We believe that that is worthwhile because it leads to proper stewardship of resources. Also, if people improve the efficiency and insulation of their houses, there will be lower fuel bills which will particularly help those on lower incomes. That sort of work tends to be job intensive and more emphasis and resources should be devoted to an energy efficiency scheme.
We also believe that more should be done to try to stimulate small businesses. Nine out of 10 businesses going out of business employ fewer than 100 people. It is always the large redundancies that hit the headlines on "News at Ten", but the cumulative effect comes from small businesses which have to make people redundant as they go to the wall.
The 10.9 per cent. increase in the uniform business rate this year—the maximum by which the Government could have increased it—was a criminal blow to small businesses. The Chancellor did some things in his Budget to help small businesses, but those things have been swamped by the additional revenue that businesses up and down the country will have to pay in UBR. We propose more help with the administrative costs of setting up new ventures. We should try to devise ways in which to bridge the traditional gap that has been identified in this country between those with good ideas and those who convert them into further development and production. Assistance should be given through seedcorn enterprise initiatives. We want to help businesses that suffer from the late payment of debts. That would be done by a statutory right to charge interest on outstanding debt.
Some six weeks ago, the Chancellor said that rising unemployment was a price worth paying. I do not accept that and neither do the British people. There is a high cost of unemployment in terms of people's income, homes—there is an increased number of repossessions—and health and well-being. That is certainly not a price worth paying. The Government have to pay a crude price in terms of increased benefit. It is estimated that it costs £300 million for every 100,000 extra unemployed. There is a duty on the Government to try to do more than they have done up to now to reduce the impact of the recession. Mass unemployment is not inevitable. Other economies such as Japan, the United States, France and Germany have succeeded in having lower unemployment and lower inflation. The Government lack the political will to achieve a similar end.
§ Mr. Tim Janman (Thurrock)
The hon. Member for Orkney and Shetland (Mr. Wallace) said that Germany has had lower unemployment than Britain. For much of the past few years Germany has had higher unemployment than Britain and the new united Germany has considerably higher unemployent. Because of the existence of minimum wages in some parts of the German economy —there is not an across-the-board national minimum wage as the Labour party tries to suggest—there is a particularly acute problem with youth unemployment in Germany, which is far worse than in Britain. The hon. Member for Orkney and Shetland should do his homework before making gauche statements about German employment.
We are debating future levels of employment and unemployment. I do not wish to discuss in great detail what was said in the Select Committee because many of those in the Chamber are members of the Select Committee and it would be somewhat incestuous to go over what we have already debated. If we are to make assessments about the future level of employment and unemployment, we must look at the factors that will affect the statistics. We have to ask who will be in government, what will be their monetary policy and will we stay in the exchange rate mechanism?
The hon. Member for Newham, North-East (Mr. Leighton) and I are such good companions on the Select Committee that I nearly called him my hon. Friend. The fact that he would not give way to me earlier was a break in a great custom. I think that the hon. Member for Newham, North-East was exaggerating slightly when he talked about ERM membership in that—he said as much later in his speech—to all intents and purposes the die is cast for unemployment trends in the next 12 months. Membership of the ERM may mean that unemployment is slightly higher than it would otherwise have been because the Government lose a degree of economic and political freedom in how they manage the squeezing of inflation out of the system.
The hon. Member for Orkney and Shetland did not really contradict my intervention during his speech because the credit boom that he mentioned was due to the low interest rates, which were in turn due to the desire of the then Chancellor to peg the pound to the deutschmark. He had to lower interest rates to keep the 3:1 ratio. He wanted to take us into the ERM sooner rather than later.
I agree with the hon. Member for Newham, North-East that membership of the ERM will probably mean that for the time between entry and the next year or so unemployment will be higher than it would otherwise have been. However, I do not think that it will be much higher. It is a matter of degree and I do not think that it will make any fundamental difference to the general trend that we shall see.
The important issue is what sort of Government we will have in the future, what monetary policy they will pursue, what the consequent level of inflation will be, and how much intervention and renationalisation of industries will occur. Will we have a Government, such as that we have now, who are making the right decisions about the fundamental structural issues in the economy and who have implemented the correct policies and philosophies over the past 10 years, or will we have a Government who go back to the bad old habits of saying that politicians and 395 bureaucrats know best and know more about how to run businesses than business men or more about running industry than industrialists? We would inevitably return to that scenario if there were a Labour Government after the next election. We would then see the distortion of resource allocation in the economy that we saw in the 1960s and 1970s. At that time one man's job may have been lost in order to keep somebody else in a job which, in any real economy, would have disappeared because of technological change or because such over-manning would not be allowed.
What will happen in the future about the attitudes and activities of trade unions? To some extent, that will depend upon the Government. Will we return to the good old corporatist days of the 1960s and 1970s? I am not making a purely party political point because, even when my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) was running the country, we had the corporatist beer and sandwiches at No. 10 just as we did under a Labour Government. We do not want to return to that, but I fear that under a Labour Government we would.
As I have said, the crucial questions involve who will be in power, what will be their monetary policy, whether they will be determined to get inflation down and keep it down and whether they will be prepared to discipline themselves not to intervene in the economy to distort where resources go. It all boils down to whether we will have stability.
The speech of the hon. Member for Newham, North-East was one of unmitigated gloom. At least the speech of the hon. Member for Orkney and Shetland contained one optimistic phrase. I think that he understands the need to achieve, in the near future, the important objective of stability. I believe that we are well on the way to achieving that with a halving of inflation during the past six months. Then, with the discipline of the ERM or the self-imposed discipline from the Bank of England and Treasury, if we keep our monetary policy tight and ensure that people pay themselves only in line with what is being produced and keep unit labour costs competitive with Germany, the United States, Japan and our other main competitors, we will see a golden decade for Britain in manufacturing and service industries. That is how we shall return to rising employment and growth.
Before returning to those fundamentals, a word about unemployment in my constituency. In July 1986, unemployment in the Thurrock constituency was 5,723. In June 1987, it had fallen to 4,965. In May this year, it had fallen to 3,879—21.9 per cent less than in June 1987. That is the biggest fall since June 1987 in any Essex constituency, and the 17th biggest fall among the 182 constituencies in London and the south-east. I do not pretend that things are not difficult and I hope that my hon. Friend the Minister will recognise that that is so, but I want him to know that business in my constituency is bearing up well.
There are several reasons for that. Two or three years ago, the then Secretary of State for Employment, my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler), took the imaginative and courageous step of abolishing the dock labour scheme. Would a future Labour Government return to the bad old days of the dock labour scheme? My Labour opponent is always going on about bringing back the scheme, but I have not noticed the same enthusiasm among Labour's employment spokesmen. Perhaps he was trying to persuade my constituents to vote for him by making false promises.
396 The dock labour scheme has gone, and good riddance to it. The port of Tilbury is now competitive and in the latest financial year made a profit of £3 million. It is attracting new business and even surprises itself by continually breaking productivity records. Once the ports legislation being considered by the other place is given Royal Assent it will become a plc and more real jobs will be created.
Lakeside shopping centre, which attracted a third of a billion pounds of private sector investment, has been completed and is the largest retail shopping centre in Europe. Once it is up and running—it takes four or five years for turnover to reach its peak in such enterprises —it will provide about 5,000 jobs.
I say that it will provide 5,000 jobs, but that will depend who is governing the country. If a socialist Government enact phase two of their minimum wage proposals, whereby the minimum wage will be 66 per cent. of average wages, I suspect that considerably fewer than 5,000 jobs will be created. Many industrial sectors, particularly the retail sector, will employ fewer people because of the minimum wage. I see the hon. Member for Fife, Central (Mr. McLeish) squirming, so I will return to that subject later.
The Government set only the overall environment For employment, but local authorities can make a difference to employment. Grays, which is the biggest town in my constituency, is only 23 miles from London and three miles from the M25. Sadly, unlike many other south-east councils, the local council has been in the grip of socialist control for much of the past 20 years. It has not had the imagination and vision to attract the private sector office development that many other south-east towns have been able to attract. Employment is affected not only by what is going on nationally but by what is going on locally.
Only recently, the local council, in its wisdom, turned down planning permission for a Hilton hotel, which would have created 150 jobs. I am supporting the appeal against that decision to the Secretary of State for the Environment in order to secure those jobs.
What will happen if the national environment changes? Every Labour Government since the mid-1920s have increased unemployment. I see no evidence to convince me, the House or the public that the track record of a future Labour Government would do any better than their predecessors. Why should a future Labour Government be different, especially as in its policy documents the Labour party of 1991 has proposed a minimum wage, which was wisely discarded in 1969 by the former Labour Secretary of State, Barbara Castle? She described a report of an inter-departmental working party on the national minimum wage as essential reading. Page 43 of the report concluded:The greater cost to the national minimum, the greater the consequent adjustment in the level of employment is likely to be. Any consequential unemployment would tend to affect development areas in particular.The Labour party's proposals for a minimum wage are madness; it is an economic cloud cuckoo land. I have some sympathy with the suggestion of the hon. Member for Orkney and Shetland that an increase in unemployment of 2 million is an exaggeration, but it is not clear that it is definitely an exaggeration. The consequences of phase two of the Labour party's proposals, which would impose a national minimum wage not at 50 per cent. but at two thirds of the median wage, are clear. It is clear from the 397 comments of the TUC's general economic committee and of trade unionists such as Gavin Laird, Eric Hammond and Bill Jordan—I do not have time to give the many quotes to support what I am saying, but we all accept that it is true—that, all other things being equal and constant, phase two of its proposals and the full restoration of differentials would lead to a large increase in unemployment. One million jobs, 2 million jobs or more may be lost, but whatever the figure, a heck of a lot of jobs will be lost and a heck of a lot of lives will be affected and inconvenienced by the dogmatic and ideological policies of the Labour party.
The trends for unemployment and employment in the next 12 to 18 months are already set. We have seen the unfortunate incursion of inflation into our economy, but the Government are successfully squeezing it out. We hope that that process will be over as soon as possible and that it will be as effective as possible so that we can get our economy back on an even keel and can begin to achieve the growth that we enjoyed in the mid-1980s. I believe that once the economy is stabilised, the increase in unemployment will reach a plateau and will then decrease. It is important that we have zero inflation and that unit labour costs can compete with those of our competitors. If we can achieve that—as I believe that the Government will after they are re-elected—we shall have a fine future.
The alternative is the same as that which the electorate dismissed at the previous three general elections—a party whose polices are wholly contradictory and which involve high taxation, high public spending, high borrowing, or all three. It is a party that cannot resist the temptation to intervene, to meddle in industry and to cause resources to be wasted. It is a party that cannot resist giving in to and being governed by its paymasters, the trade unions. Its policies are a recipe for very high unemployment for a very long time.
§ Mr. Ray Powell (Ogmore)
I have sat in the Chamber on many occasions to listen to debates about employment and employment training. I listened to the hon. Member for Thurrock (Mr. Janman) who is a member of a party which since 1979 has created the highest recorded level of unemployment. I wonder whether we should be allowed —in parliamentary terms—to call members of that party the names that we should like to call them instead of having to talk to the press as happened a week or so ago when the right hon. Member for Old Bexley and Sidcup (Mr. Heath) called the right hon. Member for Finchley (Mrs. Thatcher) a liar. We are not allowed to say such things in the Chamber without being challenged, but we can say them outside. The people to whom I refer are strangers to the truth and they throw around their statistics in their replies to questions and in their arguments. Perhaps those people should sit back and listen for a little while and I shall tell them what has happened in my constituency.
The facts are impressed on my mind because they affect my constituents who have been thrown out of work. If one reads the book by Nye Bevan called "In Place of Fear" —and I recommend that Conservative Members read it —one learns that he was blacklisted by employers in his constituency of Ebbw Vale because of his stammering and 398 because of his actions as a mineworkers' leader. He had to roam the mountains because he could not get a job. One of Nye's ideas was that if as politicians we do only one thing, it should be to ensure that everyone has a job.
Before you call me to order, Madam Deputy Speaker, I shall refer to the supply estimates and the Department of Employment. I thought that I had better check some of the Department's figures to see whether their suggestions given in replies to questions are correct. However, page 1 of the document entitled "Supply Estimates 1991–92" states blatantly that the Government will reduce the amount of funding by more than £400 million. Therefore, when talking about employment it is no good their arguing that they will try to get us out of the present grim situation —they have no intention of doing so, as their own figures show.
I said that I would mention my constituency and what has happened to it since 1979 because that is relevant to the debate. In 1979, my constituency had an unemployment rate of 3.7 per cent. When that figure was analysed, the Department of Employment informed me that 2 per cent. of those registered were unemployable because they were silicotic or pneumoconiotic. At that time, my constituency contained seven collieries and there were 6,500 miners. It also had 12,000 steelworkers, but within two years the Government had decided to de-man the steelworks on the ground that they were not making a profit. However, only last week we found that they are not making a profit now, despite all the cuts that the Government have made. Because of the 12,000 redundant and unemployed steelworkers and the 6,500 unemployed miners, the unemployment rate in my constituency increased within those two years to 35 per cent. Therefore, in an electorate of about 83,000, 30 per cent. became unemployed.
As a result, some members of the Trades Union Congress in Mid Glamorgan and officers of my constituency party decided to accept the Government's proposals for unemployment training or, as it was at that time, the community programme, and to introduce an employment training scheme. We did so and it was very successful. During its 10 years, it trained 4,000 people. In fact, it not only trained them but got them jobs. However, overnight the Government decided that they would revoke employment training and introduce the training and enterprise councils. That was the biggest disaster that has ever happened in Mid Glamorgan and especially in my constituency.
I mention that for the benefit of my hon. Friends on the Front Bench who will deal with employment when we have the next Labour Government—that will probably be in November if the Prime Minister so decides, or perhaps in June. However, the next Labour Government will in all probability also have to deal with the contentious issue of how to get people back to work. I am sure that their efforts will be sincere and that they will be directed towards getting the people who are currently out of work back into employment.
We have listened to ex-Ministers telling people to get on their bikes. If my constituents had done so in 1981 and if they had come to the east coast, they might have found a job. They could now get on their bikes or their roller skates or start to walk—I doubt whether they would be able to afford roller skates because of the cuts in unemployment benefit. If they came on their roller skates or by foot to the east coast, there would be no chance of their finding a job.
399 I have made an effort as the chairman of an organisation called Cato—community activities and training in Ogmore. Despite the arguments used by my colleagues in the Labour party and in the trade unions, we decided to set up an organisation to train people. We not only trained people, but combined with that training a programme of community enterprise in Ogmore to ensure that we were doing something of benefit for the area. We provided training in catering and at the same time provided meals on wheels, which had been axed because of Government cuts in funding to local government. We provided a service and trained people at the same time. That went on for 10 years. However, overnight we found out that the TEC in Mid Glamorgan had decided to cut our programme, and told us that our contract would not be renewed in March. That meant immediate unemployment for 45 qualified and experienced trainers who had given 10 years of service to an organisation whose aim was to train people desperate for a job. In addition, 210 trainees were immediately put out of a training programme. They were promised that they would have a programme and a job, but 12 months after the TEC's decision to close down Cato, those trainees are still looking for a place in Ogmore in which to be trained.
Two hours and 22 minutes is not a lot of time for the House to debate the contentious issue of unemployment. I do not want continually to bandy statistics with Conservative Members. However, I am sure that people who may be listening or who may read the report of this unemployment debate are not especially interested in statistics if they are unemployed. If one tells anyone in my constituency that more than 2 million people are unemployed, he is not especially concerned or interested —people are interested in the fact that they are unemployed and that there is no chance of a job for them. There is no mine for them to go to now. People only went down the mine in desperation, and not through choice.
My father was a miner. The last thing he said to me was, "Whatever you do, don't go down the mine." If there were no jobs or if a person was not qualified, there was no alternative but to go down the mine. As the seven mines in my constituency have been closed, there is now no chance of a mining job. If the Government had decided to provide factories or to help the existing factories in my constituency, that might have been a help, but they did not. A number of us had to persuade foreign companies to come to the Ogmore constituency. Sony provided us with 3,000 jobs and we persuaded the Ford engine plant in Bridgend to expand its programme so that more people could be employed.
In my constituency, and in Mid Glamorgan in general, there has been a considerable reduction in employment. With the advent of unemployment in my constituency, I decided to introduce a ten-minute Bill about the TEC in Mid Glamorgan. Having read the document that was sent to all TEC chairmen on 12 December 1990 about the first internal audit of training and enterprise councils, and as we are dealing with billions of pounds of public money, it may be of interest again to put this important matter on the record.
The permanent secretary at the Department of Employment—Sir Geoffrey Holland KCB—sent a letter to all chairmen of the TECs asking them to ensure that they had an internal audit. One of the paragraphs of that letter explained: 400I do so because of the weaknesses in financial management they reveal, and the disquieting overall pictureThe Public Accounts Committee would not regard such a situation as satisfactory. I write primarily because I am anxious that you should be able to defend yourself before the Public Accounts Committee should they call you at any time.Sir Geoffrey continued on the subject of the weaknesses discovered by the audit in some TECs at that time:Needless to say, my first action was to ask for an internal audit of the Mid Glamorgan TECs. I am still waiting for a reply from the Secretary of State for Wales on when he will have an internal audit conducted.
It is very probable that these same issues are occurring at other operational councils which have not yet received a visit from my internal auditors.
- "(a) Claims made by the council which could not be supported by adequate documetary evidence.
- (b) Claims overstated by the inclusion of expenditure which was outside the terms of the contract.
- (c) Attendance records not being properly maintained by training providers.
- (d) Financial appraisal and monitoring of providers not being carried out, and
- (e) Excessive working capital loans and substantial cash balances being held.
I have here the Secretary of State's answers to the numerous parliamentary questions that I have tabled. There is plenty of documentary evidence, but I have been told not to speak for too long. Some Conservative Members may wish to speak, so I shall not refer to all the documents that I have, but I would have liked to have the opportunity to support my case even more thoroughly. In his replies to my questions about how many places have been cut in Mid Glamorgan, the Secretary of State says that the information is not available. When I ask why, I am given to understand that it is because the Mid Glamorgan TEC is now a public limited company and we cannot get the information direct. It is high time that that was changed. When we table questions we should be able to find out the information that we require.
I have a lot to say, but I shall conclude by referring to the TEC operating agreement—a document of great importance to my constituents and myself in explaining to 45 trainers, some 200 trainees and some 350 people on a youth scheme why the TEC decided not to continue our agreement.
Our agreement was concluded in a single month. The Government say that training organisations have to accept a contract with such terms before they can be registered and operate as trainers. However, the operating agreement between the Secretary of State for Employment and a training and enterprise council affords a TEC the opportunity of affecting the agreement. If the Government wish to withdraw from an agreement with a TEC six months notice must be given, yet they compel training organisations to sign contracts specifying only one month's notice.
I have been told by the Whip that it is time to finish my speech. I am a Whip myself, so I shall do so, but I should like to have been given the opportunity to continue for some time, because I have been trying to explain to the House how the country is being deluded into accepting some of the statistics that the Government portray as representing the level of unemployment. They should have a look at the real world. They should come down to my surgery on a Saturday and speak to people who have no chance of a job and who are trying to exist on their meagre 401 unemployment benefits. They find that their houses are to be repossessed because they cannot make their mortgage payments, that they cannot continue payments on their car and that they cannot furnish their tables as they furnished them when they were in full employment. Yet we are told that the Government are making every effort to ensure that people are back in work. All I can say is that that is not happening in Ogwr, in Mid Glamorgan or in Wales generally. I do not know what is happening elsewhere, but in any case it is high time that the Government were thrown out of office to enable a Labour Government to take control and try to remedy the situation. Such a remedy is long overdue.
§ Mr. Chris Butler (Warrington)
People come to my surgeries, too. One of them, Mrs. Lynne Fleming, came along to say that, although she was happy with her status as a self-employed secretary, as were her clients and the Inland Revenue, the Department of Social Security had intervened to classify her as employed on the basis that she did not carry her heavy word processing equipment around from job to job. As a result, she lost her clients because they were not prepared to pay the costs of her full-time employment, and she had to close her business.
Further investigation revealed that both the Inland Revenue and the Department of Social Security were reclassifying as employed whole groups of people previously classified as self-employed on the basis of absurd and biased tests to determine their relative status. I have written evidence from many accountants that numerous people have lost their jobs as a result. One accountant writes:I have countless examples in my files of the Revenue using dubious requirements to force people out of business.When their businesses close, we as taxpayers face a hefty bill for their state benefits—all for the sake of identifying amounts of back tax and advancing the careers of some income tax inspectors.
I accept that, under this Government, self-employment has grown by 65 per cent., but I contend that the figure would be higher still, and that unemployment would be lower, if we revised these absurd tests, perhaps moving to some kind of self-certification system for the self-employed. That really would be the mark of a radical, free-enterprise Government.
In the arcane jargon of the Civil Service, employment budgets are based not on forecasts of unemployment but on Treasury "assumptions" of unemployment. In the autumn statement, £305 million was cut from the employment training budget. That cut was based on the Treasury's assumption that unemployment would be at 1.75 million throughout this year—a flat figure to apply right through the year. Flatly, that was wrong.
Unemployment began rising in April 1990 and the trend in our economy and in unemployment should have been clear by the time of the autumn statement. We entered the exchange rate mechanism in October 1990 and, as hon. Members have shown, it must have been known by then that entry would have a significant upward effect on unemployment.
The response from the Department of Employment—in February 1991—was to put £120 million back into the employment training budget. In March 1991, the 402 Department put £38 million back in to expanding job clubs, and in June 1991 it put a further £35 million into employment training. It appears that unrealistic assumptions were made about unemployment, and that there was an apparent disregard for the effect of our membership of the ERM. I am arguing for the process of reaction to trends in unemployment to be telescoped so that we can avoid the nonsense of increasing expenditure on unemployment when it is falling and decreasing expenditure when it is rising.
In the 1980s, it gradually became accepted among the chattering classes and the major political parties that we should join the exchange rate mechanism "when the time was right". That last phrase, which was consensual and diplomatic, even managed to keep some of the doubters on board on the basis that perhaps the time never would be right. However, no one publicised in advance the likely effects on unemployment of joining the ERM.
The Confederation of British Industry and the TUC were great enthusiasts of the idea, but they sheepishly had to admit to us that they had made no calculations. If the major political parties knew the cost, they were not saying. It is possible that, somewhere in the bowels of the Treasury, some Gollum-like civil servant egested some gloomy predictions, but he and his figures, in advance of our joining the ERM, were not allowed to see the light of day.
It is strange that the major organisations representing the employers and the employees could be all atwitter about the particular policies without considering the fundamental consequences. The Secretary of State for Employment made no prediction about the effect on unemployment of our joining the ERM. However, it is clear from the National Institute Economic Review that unemployment rose by 700,000 in France and by 1 million in Italy as a result of their joining the ERM.
The hon. Member for Newham, North-East (Mr. Leighton) has already referred to the evidence of the chief economic adviser to the CBI, which was published rather late in the day in March 1991. That showed that Britain would probably suffer an extra 500,000 unemployed as a result of the ERM membership—if it works.
I am not necessarily attacking the ERM. I voted for it as an experiment. However, at least we now know the price tag involved. In addition, some people would argue that, with the monetary indicators as they are and with unemployment as it is, we would have been able to reduce interest rates rather more quickly and more easily than we have done in the ERM. That may be the other part of the price tag.
What is scandalous, and what beggars belief, is that the Government, the Opposition and the so-called social partners could all be gung-ho about a particular policy without telling the public about its likely effects. If we embark on other European adventures, I trust that we will have the common sense to look at the downside as well as the upside of those policies, and that we will have the guts to be open about them.
Although I may be wrong, it appears to me that there has been a conspiracy of silence enrobing us as we have drifted gently towards the holy grail of ever closer European monetary union. But now I think at least one person may jerk us back to reality, much as that may annoy the nodding boatmen.
§ Mr. Ron Brown (Edinburgh, Leith)
Let us be clear about unemployment. It is not an act of God. It does not just happen; it is made to happen. In fact, it is a direct result of the so-called market economy—in other words, of the capitalist system.1 am not talking about Adam Smith's capitalism; I am talking about monopoly capitalism and the capitalism of big business represented by the Conservative party. The Government must accept responsibility for the present situation. They must accept the blame for the fact that so many people have lost out in this country.
Of course, the Government will no doubt protest their innocence and say, "Judge us on our overall record." I suppose that that is fair enough. Let us consider what has happened in our constituencies as plants have closed down. In my constituency, we have lost Robbs shipyard, Raimes Clark manufacturing chemists, Motherwell Bridge, the Victoria Rubber Company and, more recently, Caledonia Flour Mills and SAI. SA1 was closed down deliberately because the Government were opposed to its takeover by Kemira. Why? Because Kemira is a Finnish state-owned organisation. The Government speak about market forces, yet they allowed blind party dogma to interfere with those forces.
There are also problems at other plants in the Leith area. Although Ferranti and NEI are still producing goods, their work forces have been much reduced. People have been paid off thanks to the so-called "recession" which the Government claim is now about to be resolved and will quickly disappear. I doubt that. Too often, people in Britain have been told to get on their bikes and to look for another job. I suppose that that explains what one sees in various parts of London. There are many Scots around Victoria. Indeed, many people from my constituency are living in cardboard city because they have nowhere else to go. They came here believing that they would get a job in this great city of London, but they could not. This country has economic refugees. They are the people who have lost because of the Government. In the past, Scotland had the highland clearances; today we have the lowland clearances, as my hon. Friends could testify.
Unemployment is not unique to Britain, but it is rising fast here. By next year, it is estimated that 3 million people or more will be unemployed. However, that is only part of the story, because many other people will be on short time. It is estimated that 5 million people will be working part-time. In the past, the excuse always used to be, "It is the unions' fault." That was the message given out by the Conservatives. However, that is a bogus argument, because there have been very few disputes in recent years, and, sadly, union membership has declined.
The other reason the Tories gave for things going wrong was that wage rates were too high. They do not say that to Sir Ian MacLaurin of Tesco, who gets £1.5 million a year, or to the other bigwigs, such as the judges, the generals, the police chiefs and the bosses. But that is what they say to the young lasses and laddies who work for Tesco and who receive only £5,000 per year instead of the huge sums of money that their bosses get from the exploitation of both young and older workers.
The Tories always argued in the past that one could price oneself into or out of a job. The Tories are strong on the law, but they have ignored the wages councils. There have been repeated cases of both young and older workers 404 being underpaid simply because the number of wages council inspectors has been reduced. In 1978, there were 171 inspectors, but today there are only 71 inspectors to check on the Scrooge employers. That explains why, although the Low Pay Unit has made it clear that one third of the firms checked underpaid their employees—that is just the tip of the iceberg—there have been very few prosecutions. In 1988, only 10 firms were prosecuted, but more than 5,000 were breaking the law. That explains a lot about the Government. It explains that they are a Government of low wages and cheap labour. Their youth training scheme conscripted young workers to do menial tasks for little money. Training schemes indeed!
If the Government could justify low wages by proving that the economy would take off, they might be acceptable, but India has not become a booming economy on the basis of low wages. Low wages are not a panacea. Unemployemnt is rising because Britain has not invested in new equipment, ideas or technology. Part of the cause is the exchange rate mechanism and the overvalued pound. Anyone who looks back to the 1920s when Britain was on the gold standard will understand the lessons of that period. We must invest in new machines, people, training, skills and education, and we can afford to do so. Despite the Government's mismanagement of the economy, we have many resources, including the talents of the people and oil. It is simply a question of using our talents and wealth to good effect. That is why we speak of a citizens' charter.
We also need a workers' charter which will guarantee real jobs—jobs with a future, jobs that will sort out the economic mess, and jobs that will provide homes, hospitals and roads and rebuild and regenerate the economy. We need a statutory minimum wage, a 35-hour week and equal pay for equal work. However, we shall not get those unless we have a Labour Government. We need socialist policies, which will extend democracy and give power to the people who produce our wealth. The sooner we have a general election the better, because the people back home are desperate for one.
§ Mr. Henry McLeish (Fife, Central)
I am not sure whether I can rise to the expectations of my hon. Friend the Member for Edinburgh, Leith (Mr. Brown) but I shall try to deal with the key issues that have emerged this evening. I congratulate the Chairman of the Select Committee on Employment on the report that his Committee has prepared. Although its conclusions may not have led us to a definitive debate, the issues are important and have formed the backdrop to our debate.
It is important to appreciate that we are debating this issue against the background of some sombre forecasts which have been made in Europe and this country. The report of the Organisation for Economic Co-operation and Development suggests that our investment possibilities in the next year are extremely gloomy. We have the worst forecast for business investment next year compared with the United States at 6.4 per cent., Japan at 4.4 per cent., Germany at 4.8 per cent.—the United Kingdom rate is forecast at only 0.6 per cent. No other EC country is likely to do so badly. That is important to the long-term aspirations of the next Labour Government and it is extremely depressing that the present Government will leave such a legacy to us.
405 The City and academic institutions have forecast the levels of unemployment that lie ahead in 1992. It is clear from those forecasts that the much hoped for reduction in unemployment will simply not emerge next year. The forecasts are extremely gloomy and range from more than 3 million to 2.3 million. The Select Committee report states in paragraph 4 that the CBIexpected the turning point in unemployment to arise between six and 12 months after the turning point in economic activity.It is salutary to remember that unemployment in that last Conservative recession started to rise in November 1979 and did not stop rising until July 1986—it rose for nearly seven years. It would be complacent to think that a short-term consumer boom such as the one being devised by the Government will have any immediate impact on rising unemployment.
This debate is essentially about the Government's economic record—about 12 years of wasted opportunity for millions of people. It is about the Government's failure to deal with the deep-seated structural problems that were with us in 1979 and are still with us in 1991. It is also about the Government's failure to deal with unemployment as a serious economic issue. In Britain there are 2.2 million unemployed but they also have 1.8 million dependants, so unemployment is blighting the lives of almost 4 million men, women and children. That is a sad reflection on a Government who are supposed to have engineered economic miracles.
The statistics of Government failure are stark and worth repeating. A further 10,000 people have been added to the dole queue every month since 1979—and the Government talk about economic success and lecture the Labour party about policies designed to bring down unemployment. Great claims are made about jobs. The most serious claim made by Ministers is that 1.3 million more people are in work now than in 1979. That is just not true; 460,000 of them are people with extra jobs, not more people in jobs; 411,000 training places are described as jobs. So after 12 years of Conservative Government 165,000 full-time jobs have been created—the worst employment record in Europe. That is the reality behind the rhetoric.
Conservative Members representing the north-west must ask the Secretary of State for Employment why fewer people there and in the north are in jobs in 1991 than in June 1979. For them, the economic miracle does not stand up to objective scrutiny.
Vacancies are also a key indicator. In January 1980, when statistics were first compiled, 193,400 vacancies were recorded at job centres, a number that slumped to 106,000 in May this year.
Skills are another key labour market indicator. Every objective criterion shows that the skills crisis is deepening and that the skills gap between Britain and its major competitors is widening.
If we want evidence about unemployment we need look no further than the Government's record. They have failed on the four key labour market indicators. I challenge the Minister to wish away this doubling of unemployment, this almost complete failure to create jobs, this skills crisis and this slump in vacancies.
The labour market is singularly ill equipped to deal with the problems that lie ahead, partly because of de-skilling, 406 partly because of massive de-regulation and partly because of the destabilisation caused by so many people looking for a job. Jobs are still the fulcrum of our culture, but people are denied the chance to have one.
I charge the Government with three accusations. First, they are the party of mass unemployment and have been instrumental in its creation by using it as a weapon of economic management. They have been indifferent to its effects and they have been instinctively unable to take unemployment seriously or to provide the positive action that the unemployed and the nation require.
Secondly, the Tories are exacting a high price from individuals, the economy and, in particular, from taxpayers for the high level of unemployment. The Chancellor said that it was a price well worth paying. That is certainly true if the Government want to waste taxpayers' money and lives, and remove skills and capacity from an economy that badly needs them.
Thirdly, it is quite clear that the Government knew that unemployment would rise sharply, and I shall provide evidence about that. Even though the Government were aware of that, they failed to take positive action.
§ Mr. McLeish
The hon. Gentleman says nonsense, but the only action was a statement a few weeks ago by the Secretary of State for Employment in which he introduced more job clubs and some employment action. I shall deal with that later.
I shall start unfolding this shabby tale by looking at a key minute which has been raised in the House before but which is worth mentioning again. It is a memorandum dated 15 May of a meeting between the G10 chairman and Sir Geoffrey Holland. For the first time there is documented evidence of a Government prediction about employment in the following year. It states:In both London and Sheffield the forecast for the period October 90 to October 91 was for a 50 per cent. rise in the levels of unemployment. Any arguments that the Treasury therefore had for a reduction in funding were now completely eroded and in fact there was a demonstrable justification for further funds.Was that a minute of what the permanent secretary in the Department said at the meeting or was it the G10 chairman making a forecast that had emanated from Sheffield and London? It is clear that the Government were able to forecast in October 1990 that employment would rise by 50 per cent.—an increase of 860,000 in 12 months.
Why was there no action in January, February, March, April or May? In June, the Secretary of State for Employment made a statement in which he unfolded some new initiatives to tackle a problem that was evident in March last year when unemployment started to rise and which was crystal clear by October when forecasts were made. Do 2.2 million people have to be unemployed before the Government find it sensible and prudent to act?
History has a habit of repeating itself. I shall quote from a press notice dated 3 February 1983 issued by the then Secretary of State for Employment, the right hon. Member for Chingford (Mr. Tebbit). Dealing with rising unemployment, the press notice stated:In the meantime the Government is already helping about 650,000 people avoid unemployment through a range of special measures costing about £1,500,000".That shows that unemployment is not a new issue for the Government. They must be masters at dealing with it, 407 although the outcome of their actions does not confirm that judgment. It is interesting to compare that press notice with the statement by the Secretary of State for Employment on 19 June this year. He said:The Government is already providing a wide range of employment and training programmes helping 650,000 unemployed people this year".In both 1983 and 1991, 650,000 people were being helped and unemployment was over 2 million. If the country had done so well, why have the unemployed done so badly? Why is it that, after nearly a decade of booms and busts, we are back to the position that existed in 1983?
§ Mr. Janman
Given that a future Labour Government would not take us out of the exchange rate mechanism, and that the Shadow Chancellor has said that the only public spending priorities of a future Labour Government would be child benefit and pensions because that would not create a false boom, what difference would a Labour Government make, and what would they do to change the situation?
§ Mr. McLeish
I wish that I had more time to address the serious issues that the hon. Gentleman has raised. The Government do not want to give us more time to discuss unemployment because of the difficulties that they are in, but it is an important subject. If the Government persist in creating another consumer boom that is not investment led, we shall end up with the same problems that we have endured for the past 12 years. The Government have not addressed the important agenda of regional policy, industrial strategy and the supply side initiative. However, a Labour Government will address it, with resulting benefits.
In their statement on 19 June, the Government said that they wanted to address a particular problem. It is instructive to look briefly at their response after unemployment hit 2.2 million. First, we shall have an unemployment action programme to create 30,000 jobs this year and 30,000 next year, so that by the end of next year 60,000 will have been created. The problem is that this will serve in this financial year only 30,000 people so it is a pity that the 960,000 people who have been unemployed for more than six months will not benefit. Some would describe that as a drop in the ocean, but I shall not be so uncharitable. That means that 50 people in each constituency may be helped by this dramatic new measure to tackle rising unemployment.
Secondly, the Secretary of State now wants to give 15,000 places back to the employment training programme. It is unfortunate that he took away 80,000 places. We have heard hon. Members talk about the cuts of £360 million earlier this year. Some £120 million has been reinstated, and now those 15,000 jobs will be reinstated at a cost of £34.9 million. However, we are not back to the level of funding that we had before the cuts were instigated.
Thirdly, we now have the greatest innovation in the Department of Employment since Lord Young of Graffham introduced Restart—executive job clubs. The Government have realised that it is not just Scotland, the north and the north-west which suffer from unemployment, and that the executive masses in the south-east are also suffering. I do not know what an executive job club will be, but I hope that it is more successful than job clubs have so far proved.
408 If there were one single issue that should excite those on the Government Benches, it is the cost of unemployment. The public know full well that the Government are not interested in unemployment as a social or regional issue, nor in its dramatic impact on the individual. This is supposed to be the Government of economic competence and sound money. If that is the case, why are they willing to spend £16.5 billion supporting unemployment? There is no dispute about the fact that £7 billion is paid out in benefits because we know it from the Government's sources and £9.5 billion is the cost of lost national insurance, income tax and indirect taxes. Are the Government seriously telling the country that they are willing to sustain 2.2 million people out of work at a cost of £16.5 billion? If they are, then they are obviously willing to play havoc with the public sector borrowing requirement as well.
The other tragedy is that in one year the Government added £4.7 billion to the cost of keeping people out of work. And that is the party of sound money—the economically competent party which threatens Britain by saying that if a Labour Government came in jobs would be lost, unemployment would be rife and employment growth would be affected. It is stunning hypocrisy that the Government can make such comments against their own record of abject failure on every key economic issue.
I want to give the Minister, whom I see smiling at me across the Dispatch Box, his allotted 15 minutes, so I will finish on this point. There is a yawning gap between the scale of the unemployment crisis facing Britain and the Government's pathetic response to it. When we win the next general election, we shall act; until then, it is time that the Government took unemployment seriously. If they did that, they would get more support in the country and some support in the House.
§ The Parliamentary Under-Secretary of State for Employment (Mr. Robert Jackson)
I join the hon. Member for Fife, Central (Mr. McLeish) in the congratulations that he offered to the hon. Member for Newham, North-East (Mr. Leighton), the Chairman of the Select Committee, on the way in which he introduced the report. It is always a pleasure to respond to the hon. Gentleman. He is always well informed and constructive, even when he is in a critical vein, as he was tonight.
I particularly agree with the hon. Gentleman and my hon. Friend the Member for Mid-Kent (Mr. Rowe) about the importance of training in the formation of skills. That is why the Government have increased spending on training and enterprise councils threefold in real terms during the past 10 years. We believe in training and we have been putting our money where our mouth is with our commitment.
On behalf of the Select Committee the hon. Member for Newham, North-East challenged the Government on the question of training targets, one of the three principal recommendations of the report. The Government believe in targets. It would be fair to say that we were responsible for the introduction of targets as an important managerial tool within Government. It is important to quantify the objectives of the organisations which work for the Government and within the Government.
But we do not believe in targets simply as a matter of gesture politics, to feel good by saying the right thing. We 409 take targets seriously. We believe that they must reflect a real commitment and responsibility, that they should be capable of being attained, and that the people for whom the targets are being set can attain them and will have the commitment to deliver them.
That means that the targets must be set by those who have a responsibility for fulfilling them. That causes a problem for the Government when it comes to setting targets for training. As the hon. Gentleman will know, most of the training done in Britain is not done by the Government, as is true in other countries. Employers are, generally speaking, the main sponsors of training. Therefore, it is employers rather than the Government who must take the responsibility for fulfilling training targets.
The Government welcome the fact that the CBI has taken that point. It has been looking at the question of targets and is making an effort to set realistic, attainable but stretching targets on behalf of employers which employers will be able to take responsibility for meeting. We await what the CBI has to say and what targets it sets, but the Government are pleased that, on behalf of employers, the CBI has responded to that challenge. The debate is not yet concluded, so I say to the hon. Gentleman —watch this space.
The hon. Gentleman talked about the report's second recommendation on the exchange rate mechanism. He was pessimistic about the implications of the ERM for unemployment and he was joined in that by my hon. Friends the Members for Thurrock (Mr. Janman) and for Warrington, South (Mr. Butler). As the hon. Member for Newham, North-East noted—in passing, it must be said— there is agreement between all the parties about the desirability of our membership of the ERM. It is supported by the trade unions and by business. That support includes the parity—if we are to understand accurately what has been said by the shadow Chancellor —of £1 to DM2.95.
Nevertheless, the hon. Gentleman and my hon. Friends are perfectly entitled to reflect on the possible consequences of the policy for unemployment. It may enjoy a sustainable consensus, but it may still have consequences to which my right hon. Friends are right to refer and to be concerned about. This is a large subject, so let me simply offer a few thoughts about the experience of France, to which the hon. Member for Newham, North-East particularly referred.
I do not necessarily agree with the basis of the hon. Gentleman's pessimism—the idea that Britain's experience of the exchange rate mechanism will parallel that of France. When we joined the ERM, inflation was lower, both in absolute terms and relative to that in the rest of Europe, than it was in France when that country joined in the early 1980s. Besides, our supply-side reforms and the labour market legislation that we have introduced have made our economy a great deal more flexible than France's economy was then.
Moreover, in the early 1980s France had devalued its currency several times to maintain competitiveness; or, at least, that was its intention. When it committed itself to the ERM, no one believed that devaluation had been ruled out, which increased the cost of getting inflation down.
410 There is a moral in that. We must maintain the credibility of our commitment to the ERM, with the parity that we have chosen. In that regard, I strongly agree with the hon. Member for Orkney and Shetland (Mr. Wallace).
I also agree with my hon. Friend the Member for Mid-Kent about the importance of training. He described very well the growing recognition that a sea change has taken place in that important part of our national life. One of the signs is the success of the training and enterprise councils. A huge voluntary commitment has been made by thousands of business people all over the country.
Over the decade, the Government have substantially increased the resources devoted to training; even more important, so have employers. As I have said, they are very much in the lead in that regard. The Government should also take credit for clarifying the system of qualifications, through the National Council for Vocational Qualifications.
As my hon. Friend the Member for Mid-Kent pointed out, a large amount of bumf seems to be inseparable from each of our education and training reforms. I shall refer what he said to the National Council for Vocational Qualifications. I think that the House will agree, however, that there has been an important breakthrough, and that we now have a coherent vocational framework—not before time.
There have also been substantial policy innovations. I was pleased to hear what my hon. Friend said about training credits, an important development for which, again, the Government should take credit. My hon. Friend asked us to commit ourselves to spreading the system more widely across the country. I remind him that, in the White Paper that we published only a few weeks ago, we committed ourselves to the principle of a national extension of training credits from April 1993, and to completing the process during the next Parliament. We must, of course, learn from pilot schemes, but we consider that principle sound. In our view, it has already proved itself.
§ Mr. Leighton
Many weeks ago, I told the Minister that hundreds of young people in the borough of Newham had no jobs or places on youth training schemes. Initially, the Minister said that I was ill informed; having re-examined the position, I discovered that I was not. Then the Minister promised to write to me. I am still waiting for his reply. When will I receive it? Why on earth does he not answer? Is it because he was embarrassed to find that what I had said was correct, and that I was not ill informed after all?
§ Mr. Jackson
I am not sure that I said that the hon. Gentleman was not well informed, but, if I did, let me not compound my error.
It is difficult to establish the position relating to a youth training guarantee in a particular part of London. I signed a letter to the hon. Gentleman today, but I do not want to arouse false expectations: it does not solve the problem. Guarantees can be delivered by a number of providers, not necessarily located in the borough of Newham. However, we are taking the hon. Gentleman's point seriously, as he would expect us to. I can give him the basic assurance that he seeks: we are entirely committed to the youth training guarantee.
My hon. Friend the Member for Thurrock was right to argue against the establishment of a minimum wage. He was right to say that a minimum wage would not be an 411 effective weapon against poverty and that it would destroy jobs. The hon. Member for Sedgefield (Mr. Blair) is being tutored in verbosity by the Leader of the Opposition. In his latest euphemism he has conceded:econometric models indicate a potential jobs impact.We shall continue pressing the hon. Member for Sedgefield about his "econometric models" until he comes clean with the truth to which the hon. Member for Orkney and Shetland was right to refer.
If the hon. Member for Orkney and Shetland gets in touch with me about the constituency case involving the young lady in Inverness, I shall look at it with him and do my best to help sort it out.
My hon. Friend the Member for Thurrock was right to remind the House of what euphemisms such as econometric models having a jobs impact might mean for job opportunities in his constituency.
I congratulate the hon. Member for Orkney and Shetland on his willingness to make suggestions about how to handle the problem of unemployment. That is something we look for in these debates. His ideas about more spending on housing construction, education construction and energy efficiency are all worthy causes, but they all have substantial implications for public expenditure. The hon. Gentleman should consider the relationship between those proposals and his commitment to the stabilisation of exchange rates in the exchange rate mechanism. There is a tension there which I fear that the hon. Gentleman was not addressing. I draw his attention to the package of measures announced by my right hon. and learned Friend the Secretary of State—an additional £110 million this year and £230 million next year. That is a substantial addition to public expenditure to deaf with unemployment. It is in the spirit of the hon. Gentleman's suggestion. He must recognise that there are constraints on what we can do.
§ Mr. Jackson
I shall not give way because I want to continue to answer the debate.
I was concerned by what the hon. Member for Ogmore (Mr. Powell) had to say about the training provider organisation in his constituency with which he is associated and the decision that has been made by Mid Glamorgan TEC. The local TEC is much better placed than either I or my officials in Whitehall to make judgments about value for money and quality of different training providers. The hon. Gentleman must accept that. He implied that trainees who had been displaced from that provider were not being found alternatives. I shall take that seriously and I should like to discuss it with him afterwards. We must try to ensure that that does not happen.
My hon. Friend the Member for Warrington, South spoke about the rules defining self-employment. I have had similar experiences in my constituency and I share his concern. However, it is a matter for our honourable colleagues in the Treasury and I shall draw their attention to his remarks.
Unemployment is serious. It is serious for the country and the individuals concerned and there is no dispute about that between the Opposition and ourselves. We are equally concerned. However, the hon. Member for Fife, Central should not be allowed to get away with exaggerating. He said—I took down his words—that we have the worst employment record in Europe. That is not 412 true. In May unemployment in Britain was 7.9 per cent. In Spain it is 15.8 per cent., in Ireland it is 15.5 per cent., in Canada it is 10.1 per cent., in Italy it is 10 per cent., in Australia it is 9.8 per cent. and in socialist France it is 9.3 per cent. Our record on unemployment is not as bad as others in the Community and the hon. Member for Fife, Central should recognise that.
The rhetoric of the hon. Member for Fife, Central was admirably punctured by an intervention from my hon. Friend the Member for Thurrock who asked him a simple and straightforward question. He asked what the Labour party would do about unemployment within the parameters of the policies that it has promulgated on the exchange rate and public expenditure. The hon. Gentleman's rhetoric is bankrupt. I see that the hon.
Member for Orkney and Shetland is nodding in agreement, but the same stricture applies to him, because he, too, must live within the parameters of his policy.
There is general recognition in the House that there are no miracle cures for unemployment. We did not even hear a miracle cure from the hon. Member for Edinburgh, Leith (Mr. Brown), who gave us a mantra about socialism. No miracle cures were suggested in the report of the Select Committee and none has been advanced in the debate.
There is much agreement between the parties that inflation must be reduced, but we must recognise that the implication of doing that is a slow down in economic activity, which can translate into rising unemployment if wages are not flexible and if they do not reflect the decline in inflation. Our problem has been that wage settlements continue to run ahead of inflation.
§ It being Ten o'clock, MR. SPEAKER interrupted the proceedings, and the Question necessary to dispose of the proceedings was deferred, pursuant to paragraph (4) of Standing Order No. 52 (Consideration of estimates).
§ MR. SPEAKER, pursuant to paragraph 5 of Standing Order No. 52 (Consideration of Estimates), put the deferred Questions on Estimates and Supplementary Estimates, 1991–92 (Class II, Vote 5 and Class VI, Vote 1) and the Question necessary to dispose of proceedings on the other estimate appointed for consideration this day.