Employment Growth (Hansard, 23 November 1995)

§ 6. Mr. Kevin Hughes
To ask the Chancellor of the Exchequer what has been the United Kingdom's employment growth since 1979; and what have been the equivalent figures for other EU countries. [695]

§ The Chancellor of the Exchequer (Mr. Kenneth Clarke)
Between 1979 and 1990, which were comparable years in the United Kingdom business cycle, civilian employment in the UK grew somewhat faster than the average for other European Union countries.

§ Mr. Hughes
Is it true that since 1979 there has been only a 0.3 per cent. increase and that the European average is 5 per cent? Is it true also that we are 22nd out of the 24 Organisation for Economic Co-operation and Development countries? Is that the best that the Government can do after 16 years, or is their ambition to be bottom of every league table?

§ Mr. Clarke
I do not recognise any of the points that the hon. Gentleman makes. We are talking here about employment and unemployment. I gave the figures peak to peak—5.7 per cent. growth in the UK and 4.9 per cent. in the rest of Europe. Trough to trough, they are roughly comparable. A higher proportion of our work force is in employment than in any other major economy. In this recovery, our unemployment is going down and more full-time jobs are being created because we have a more flexible labour market than the rest of Europe, which is in danger of having a jobless recovery.

§ Mr. John Townend
My right hon. and learned Friend will appreciate that I represent a constituency in which tourism is most important, and I also have an interest in a family hotel. Does my right hon. and learned Friend agree that since 1979 the hotel and hospitality industry has played a major part in creating jobs? Does he further agree that if there were a minimum wage at anything like the level requested by the unions and by many Opposition Members, it would undermine the viability of many businesses in the tourist industry and result in thousands of jobs being lost?

§ Mr. Clarke
Tourism is a key source of employment in this country. Only 10 years ago, the Opposition jeered 784 at the very mention of the industry, saying that it did not create real jobs. In fact, it creates hundreds of thousands of jobs in this country. My hon. Friend is right to say that tourism is one industry that would be damaged by minimum wage legislation and the social chapter. The rest of Europe has job markets that are over-regulated, over cost and inflexible. Labour wants to bring that regime to this country, and jobs would be destroyed if it were ever allowed to do so.

§ Mr. Skinner
Why does not the Chancellor of the Exchequer start explaining to the British people the real effects of unemployment? When the Tories got into power in 1979, 1.25 million people were out of work. After 31 fiddles of the job figures, more than 4 million people do not have a job now. [HON. MEMBERS: "Question."] Half a million women who are unemployed do not register. Half a million young people—

§ Madam Speaker
Order. It is about time that I heard a question from the hon. Gentleman.

§ Mr. Skinner
He will get one soon enough.

§ Madam Speaker
Order. I expect one right away. The hon. Gentleman has made his point.

§ Mr. Skinner
When will the Chancellor and the Government start telling the truth about the figures? More than 4 million casualties do not have a job, which is three times more than in 1979. The wheels have come off the economy.

§ Mr. Clarke
That is a bit of tired old mythology. In 1979 there was rapidly rising unemployment and the employment of a lot of people was completely insecure because they worked in overmanned, loss-making nationalised industries and were on the brink of losing their jobs. The figures on which I rely are in labour force surveys made to International Labour Organisation standards. They show that in this recovery, we have already created more than half a million real jobs—the majority of them full time. The hon. Gentleman is peddling mythology and particularly dangerous remedies for unemployment. His policies would take us back to higher unemployment.

§ Mr. Deva
Will my right hon. and learned Friend confirm that this so-called endogenous growth theory is but another fancy name for state interference? If that crackpot theory were ever put into practice it would mean putting a civil servant in every boardroom in the country to manage relations.

§ Mr. Clarke
Of late we have not heard so much about the post-classical endogenous growth theory from the Labour party. No doubt the ratings of the shadow Chancellor with his leader would drop from 101 per cent. to 95 per cent. were he to return to that theory. Perhaps he would even be described as indispensable or unassailable—I think that is the word—in the defensive briefings emerging from the Leader of the Opposition. Crackpot theories are no substitute for policy. There is a serious endogenous growth theory, but it is not the one proposed by the shadow Chancellor, who used it as a pseudonym for state interference. He must find a policy soon otherwise he will be seen as a threat to the recovery, the new jobs and other matters that we are talking about this afternoon.

§ Mr. Gordon Brown
Will the Chancellor return to the question? Will he confirm that we are 20th out of 24 in 785 the OECD league for employment creation since 1979? Instead of being complacent, will he apologise for the fact that more than 1 million more people are out of work now than in 1979 when the Government came to power? Will he also confirm that a 10p starting rate for income tax is not only fairer and more moral, but will do more to create jobs than the abolition of capital gains or inheritance tax, which can benefit only a few?

§ Mr. Clarke
In 1979 there would have been fewer people unofficially out of work if they had not been on strike and not working at all. We were in the middle of a deep, diving recession, which cost many people their jobs and was due to Labour policies, which the Conservative Government then reversed. There is currently growth in employment, falling unemployment and we have introduced a flexible labour market—the hon. Gentleman knows that those factors are admired by the OECD and are being followed by the G7 countries and the European Union. Other western economies had better follow in a hurry if they want to be as good at creating jobs as we are in this country.
As for the 10p theory, the hon. Gentleman must not try to reduce policy to farce. I shall not counter him with 5p—we are not having a silly auction; we are seriously ambitious for a low tax economy in this country. I shall not criticise him too much—we back him as much as his leader does. We are anxious to protect him against the shadow Foreign Secretary and anyone else who wants to take him on. We want to keep the shadow Home Secretary and the shadow Chancellor as we like them both, and we shall do our best to keep them in their current positions.