HC Deb 04 February 1993 vol 218 cc465-6
6. Ms. Short

To ask the Chancellor of the Exchequer what assessment he has made of the causes of the increase in unemployment since 1979; and whether he will make a statement.

The Economic Secretary to the Treasury (Mr. Anthony Nelson)

The level of unemployment since 1979 has been influenced by a number of factors, including the cyclical performance of the economy, the growth in the size of the labour market and the competitiveness of British industry. Government policy is to create the conditions for sustained growth in output and jobs, and to make the labour market work efficiently.

Ms. Short

Is not the truth that in the 14 years during which the Government have been in power unemployment has risen from slightly more than 1 million to 4 million on the old method of counting and that that is a disastrous record for people who are unemployed? It is disastrous also because it leads to massive Government borrowing and it partly explains our balance of payments crisis. We need an apology, a U-turn and a Government who get unemployment down and investment up. Otherwise, the long-term future of our economy is deeply worrying.

Mr. Nelson

The Government are, of course, concerned about the hardship and uncertainty which unemployment visits on individuals and families, but 1.3 million people more are employed now than 10 years ago. Unemployment has been rising in all the EC countries and all the G7 countries during the years in question. It remains a fact that a higher proportion of our adult population is employed than in any other EC country except Luxembourg and Denmark.

Mr. Mans

Does my hon. Friend agree that the Prime Minister's recent success in the middle east in selling Tornados to Saudi Arabia has resulted in 12,000 extra jobs in Lancashire and that Lancashire now has a lower unemployment rate than Hampshire, Kent, Essex or Hertfordshire?

Mr. Nelson

My hon. Friend is right. The very important deals concluded by my right hon. Friend both with the sultanate of Oman and with Saudi Arabia have major employment implications nationally and regionally and should be welcomed by the whole House.

Mr. Beith

Has the Treasury made an examination of the likely costs of a workfare programme and, if so, have the results been communicated to the Prime Minister?

Mr. Nelson

I acknowledge that there is, rightly, growing public interest in the remarks of the Prime Minister last night. My right hon. Friend opened the debate and it is for Lord Wakeham, who is chairing a committee looking into various aspects of the matter, to produce some conclusions. It is important to remember that my right hon. Friend was not referring to workfare. That has been added to his remarks subsequently—[Interruption.] Those who examine his words will see that my right hon. Friend talked about offering or requiring some activity from unemployed people in return for benefit. That already happens to some extent, and there is no reason why we should not consider ways of building on that.

Mr. John Marshall

Has the Minister made a survey of the impact of inward investment on the level of unemployment, and has he made a survey of what would happen to inward investment if we adopted the social chapter?

Mr. Nelson

My hon. Friend rightly draws attention to the important impact of inward investment on employment in the United Kingdom. It is a matter of congratulation for the policies of this country and the attractions of our regions that we have taken the lion's share of inward investment, certainly from Japan. My hon. Friend is right to point out that that has implications for employment and to draw attention to the fact that much of that would not have happened if we had imposed labour costs required by the social charter which have proved such a disadvantage to others and an attraction towards ourselves.

Ms. Harman

Is the Minister now distancing himself from the Prime Minister and—we want to be clear about this—are the Government now in favour of workfare?

Mr. Nelson

Obviously, as I said, the Government are conscious of the growing public interest in the matter and, in particular, the question raised by the Prime Minister about whether paying benefit to the unemployed without requiring any activity in return is helpful to the unemployed or to society as a whole, but no decisions have been taken and I cannot anticipate whether any new measures will be introduced.

Mr. Streeter

Does the Minister agree that the best and perhaps the only way to create new jobs is to put in place the right conditions for economic growth, which are low inflation and low interest rates? Does he agree that those are precisely the conditions that the Government have now put in place?

Mr. Nelson

My hon. Friend is spot on. Nobody can deny that low inflation and low interest rates are a pre-condition for a return of confidence, but it is important also to contain wage settlements and labour costs, both of which have been falling sharply.