UNEMPLOYMENT

HL Deb 19 February 1963 vol 246 cc1267-364

3.50 p.m.

Debate resumed.

VISCOUNT HAILSHAM rose to move, as an Amendment to the Motion, to leave out all the words after "That" and insert "this House resolves that it has full confidence in the policies being pursued by Her Majesty's Government in order to develop and stimulate the growth of the national economy and to secure a high level of employment." The noble Viscount said: My Lords, the noble Earl who leads the Opposition is of course a great Biblical scholar who delights us all. On this occasion, however, he claimed, I thought on somewhat inadequate grounds, referring to the Apocrypha rather than to the Canon, to be a Daniel come to judgment. In his speeches on economic affairs the noble Earl always seems to me to model himself more completely on the prophet Jeremiah and the Lamentations, rather than on Daniel. For myself I could wish that he had chosen the Deutero-Isaiah and selected as his text Comfort ye, comfort ye my people". I shall endeavour with what wisdom I may to pursue the course which I myself would have preferred him to adopt.

EARL ALEXANDER OF HILLS-BOROUGH

My Lords, may I interrupt the noble Viscount? If he is going to recommend to me what I should say on these matters at such times, I would not have taken Comfort ye, comfort ye my people". I should have taken the 22nd Chapter and what was said about the city of Jerusalem when under siege by Sennacherib.

VISCOUNT HAILSHAM

I hope that we are not going to be under siege by Sennacherib. I seem to remember that Sennacherib came to a remarkably bad end in that siege, so I am even taking comfort from the 22nd Chapter, too.

It seems to me that the noble Earl has up to a point misunderstood the significance of the present situation. He was at great pains to try to establish that what we were in the presence of was the failure of a policy. I believe, and I shall endeavour to show, that that is false. What we are indeed, I believe, in the presence of is the end of an epoch, the end of the post-war epoch which began in 1945 and ended perhaps, if one is to choose a date, two or three weeks ago with the breaking off of the Brussels talks. What the new epoch will bring it is impossible to say. But there is one thing which it has not brought, at any rate, so far; and that is the automatic full employment of the post-war epoch which was a continuing characteristic of the whole period.

It began in 1945 with shortage. It carried on with one relatively short exception until 1963, with recurrent danger of inflation. Both the political Parties talked and often acted—and probably believed—as if it were a policy, but it was better than a policy; it was a fact. The fact is no longer with us. For the future, full employment will have to be a conscious policy if it is to continue to be a fact. For, I believe, the first time since the 1944 White Paper, which was not, as I thought the noble Earl sought to imply, the exclusive policy of the Labour Party but the considered policy of the Coalition Government of that day, to promote and maintain by conscious Government effort a high and stable level of employment, that policy is going to be put to the test at present. That I believe to be the true signficance of what is taking place to-day.

I cannot accept the suggestion which the noble Earl made at any rate during some part of his remarks, that the present situation has been brought about in any way by Government financial policy, or in particular, as I thought he somewhat strangely suggested, by the removal of controls which took place some years ago, or that the present situation has been brought about by the absence of a plan. I believe both those assumptions to be wholly false. I wish the first were true. If it were true it would be comparatively easy to remedy the situation, and in particular one could be absolutely certain that the very considerable measures which my right honorable friend the Chancellor of the Exchequer has taken, and is continuing to take, to restore demand into the economy would be wholly successful; although I must say in passing that I thought I detected a certain inconsistency in the noble Earl's speech when he said at the beginning of it that he wished we would do much more but appeared to refer in scorn, and even perhaps with a degree of apprehension, to the possibility that the Budget, when it came, would be popular with the people.

But the truth of the matter is, my Lords, that we are not in the presence of the results of a financial policy. I believe the noble Earl would have seen that very clearly had he been with me two weeks ago in the North-East. Shipbuilding is going through a very thin time. It is at the heart of the problem of unemployment in the North-East, as it is in Northern Ireland; as it is on the Clyde; as it is in other parts of the country where ships are built. This is not due, and cannot be said to be due, in any degree to any form of financial policy. We are in the presence of a world recession in shipping, and we are also in the presence probably of a change in the methods and future of the building of ships. Unless we realise that, we are not going to be able to solve the problem.

Or take again the coal industry in which the North-East and other areas of high unemployment, except perhaps Northern Ireland, are concerned. The situation facing the coal industry has nothing to do with Government financial policy. The pits are not being run down because of something the Chancellor of the Exchequer is doing. One must face those facts. These are the facts, and if one wants to deal with them one must face them as the real facts. So far from being a result of Government financial policy, the changeover from coal to oil is something in which the strongest supporter of the coal industry (apart from the noble Lord, Lord Robens, himself, to whom I am sure the House would wish to pay its tribute) is the Minister of Power. Take chemicals: the change which is part of the change from coal to oil with which the North-East is faced—that is, the change from the coking process for producing plastics and other chemicals to an oil-based process—is not due to any financial policy of the Chancellor of the Exchequer. It is not due to the bank rate, or to the events of 1957, 1958, 1959, 1960, 1961 in respect of which Daniel came to judgment. It is due to a change in the technical processes upon which our industry is based which happens to employ far less labour.

Take steel. It is true, of course, that when there was a great shortage of steel not long ago the Government encouraged as an alternative the use of pre-stressed concrete; and it may be that some of the steel manufacturers feel that we should have published the fact that steel has since become a far more competitive material. If so, I am glad to give publicity to their claim at this moment. But the change from steel to pre-stressed concrete is not due to any Government financial policy, and much of the steel depression is closely associated with the depression in shipbuilding. We must, I think, look at what is happening in the light of the really important changes which are in fact coming across the face of industry, and not pretend that this is some kind of economic phenomenon which could be altered or could be brought about by a wave of the financial wand emerging annually from Mr. Gladstone's outworn box. May I therefore venture one or two thoughts of my own?

Since the war we have been living, although not universally—and it is right that we should remember that—in a state of full employment. The 3 per cent. unemployment concept which the late Mr. Gaitskell chose while he was in office was, of course, an arbitrary one, and in itself has no magical significance. The original Beveridge Report counted, I think, on about 10 per cent., and in his later work Lord Beveridge referred to 3 per cent. as a minimum. But in the main our national average has kept within it. Other nations have been less fortunate. Only last month I was in the United States, and I found that their unemployment was running at 6 per cent. or thereabouts as a national average, over their much larger economy; and they seemed, perhaps, to be much less concerned than they ought to have been—certainly much less concerned than we are at our lower figure. We now have an average of just over 3 per cent. I think it is fair to say—though I do not want to over-stress the point—that probably between 100,000 and 200,000 of those are quite certainly due to the weather, and more are seasonal. Still, for this reason it may be that we are still within the limit; and I am certain, as I am sure noble Lords are certain, that the situation will improve as the year goes on.

I emphasise this for only one and, I think, sufficient, reason; and it is not in any sense a criticism of the noble Earl opposite, whose speech was absolutely free from any reproach in this respect. But I think it is worth emphasising that there is no chance that I can see of a 1930-like situation developing. I feel that it is worth saying this, because it is natural that in places like Jarrow, where they suffered through the 'thirties, fear should exist; and I think we owe it to people who are undergoing not merely the physical hardships but the anxieties of unemployment, to reassure them, if we can. I would not offer this reassurance if I did not sincerely believe what I was saying, but I think there are good reasons for my conviction. Now, in 1963, the Government's annual expenditure is running at about £6,000 million. The noble Earl thinks it will be more soon—he may be right. In the 'thirties, it was something like £800 million, unless I am mistaken. Clearly, a much higher and more stable level of demand is created by the recurrent Government expenditure of the 'sixties. A great deal of this Government expenditure is devoted to social security payments, whose increase we discussed this afternoon before we embarked on this debate. A great deal more is investment in the future. This must encourage demand for those particular items of heavy equipment which will most help the high unemployment areas.

Lastly, I would say that not only is the international picture quite different from that of the 'thirties but, as I hope to convince the House this afternoon, we in the Government intend to give a lead in the matter which will convert what began, and begins, as a misfortune, into a challenge that must be faced and, finally, an opportunity which we must surely grasp. Whatever we may think about the recent increase in the Budget Estimates to which the noble Earl referred, one thing is clear: the Chancellor of the Exchequer is applying boldly, and I am sure we all hope effectively, the doctrine of the late Lord Keynes and the doctrine of the 1944 White Paper to which noble Lords opposite subscribed no less than we did.

My Lords, that does not mean that I am trying in any way to underestimate the situation. I began by pointing out that the national level of unemployment will correspond, in the main, to Mr. Gaitskell's criterion. But of course we all know that that is not the whole picture. In Northern Ireland, in the North-East, in Scotland and in some other places, to many of which the noble Earl referred, unemployment is much higher. Although this is altogether deplorable, it nevertheless means that we have at last the industrial capacity necessary to rebuild and remodel Britain on the lines we should like to see it take in the next thirty years. I do not share the noble Earl's apparent contempt that we should be thinking that long ahead. What we do now will, in fact, determine the shape of the Britain (by which I mean the physical shape and the moral shape) which will exist at the beginning of the twenty-first century. The roads, the railways, the airports, the docks and ports, houses, the new towns (about which we have just heard a statement), the hospitals and the schools are being laid down now for the twenty-first century.

What I am saying is that, with unemployment running at 2 per cent. or less, it might be possible, though difficult, to expand, and I think successive Administrations did so, but not to redesign. This, I think, is the first time since the war when we have just enough spare labour and plant to take a thorough look at the roads, the railways, the docks, the houses, the schools and the universities of our land and to rebuild them—and they need rebuilding—according to the needs and requirements of the twentieth century. This is no system of relief work I am contemplating. It is something which I have been longing for years to say and to do, and it is the answer, or it may be part of the answer, to the recession in our heavy industries to which I drew attention and which is fundamentally what we are discussing to-day.

I must ask the indulgence of the House if I should fail a little in my voice on this occasion. I must apologise if I take as my examples more from the North-East than from any other area. But the more I thought about the North-East, although the particular applications are different in other places, the more certain I was, and am, that we are dealing fundamentally with the same problem. I may say that I did not myself undertake responsibility for the North-East in order to take bread out of the mouths of any of the other high unemployment areas. It seems to me that the areas of high unemployment have basically a common interest with one another, and they ought to make common cause together, perhaps even more than they do. Their treatment must, of course, be different because they are different; but the underlying questions are the same and must depend on similar decisions of policy.

Secondly, I think that in making common cause together the areas of high unemployment need to make it plain that they are not making war on the South and the Midlands. We are one nation, not two, and by solving the problems of the North and the West and of Northern Ireland we are helping to solve the problems of the South. Problems of home-lessness in London and of high land values in the South-East, to which the noble Lord, Lord Silkin, referred a moment ago, may well be solved, at least in part, in Middlesbrough and in Glasgow, not just in London or Brighton. It may be that these are the places where they can best: be solved, and it may well be that this is the clue to the whole matter. So long as we go on treating both halves of the country alike it may well be that the Metropolis will continue to act as a magnet, creating more homelessness, land values in Kent and Sussex will continue to soar, and offices will continue to create traffic congestion. Surely we must look for a way of creating a complementary conception of policy, a way of making the North use its resources to the full without creating inflation in the South. We have to find a way to expand the North without damaging the prospering and expanding South.

Thirdly, although industry is the key and although the exercise is economic, I came to realise very soon that an exercise based solely on economics and industry was too narrowly based and would almost certainly fail. I think we talk too much about the problem of unemployment. If you went into a room and found it was too dark to see, you would not talk about the problem of darkness; you would talk about installing a lighting system. Our object, therefore, is to create viable economic activity. This is the only cure for unemployment. If there is enough economic activity there will be no unemployment. Moreover, if we are to set about the problem in the way I have described, it is not enough to confine ourselves to purely economic or industrial facets of policy. We have to set about nothing less than lifting the whole quality of life in the regions we are seeking to treat. It is not enough simply to get light industries to move North or to channel Government orders to areas of high unemployment—although both of these may be important elements in what we must seek to do. What is needed is a much more radical experiment in social engineering. Schools and universities, harbours, docks, roads, railways, airports, hospitals, houses, shopping centres, hotels, sports grounds, conference centres and banqueting rooms, each in its own way is just as important.

My Lords, it was because I took this wide conception of the necessary policies that I ventured to consult, and was helped very much in my consultations by the two Bishops of the dioceses there and the representatives of all the Christian Churches to be found there. In the slowly dawning age of automation it is important to remember that services will be as important as manufacture, and lightness, culture, even a certain degree of frivolousness and entertainment, must be part of the life which we are setting about to create. I approached the North-East region with these thoughts in my mind, and I carried with me a range of different officials from a whole spectrum of different Ministries in what was, I believe, an exciting—and what will, I hope and pray, prove a successful—essay in Government organisation. My experience has strengthened me in this conviction.

May I, at this stage, pause to add a footnote about my own appointment? The Prime Minister asked me, in effect, to do two things. He asked me to undertake in respect of the North-East the kind of moral and personal responsibility that the Secretary of State for Scotland undertakes in relation to that country, or the Home Secretary in relation to Northern Ireland, or the Minister for Welsh affairs in relation to Wales. Being of that professional cloth, I liked to regard myself as being appointed the advocate of that region in Government circles. He also asked me to produce what he called a definite plan. At any rate, I hope to indicate a strategy.

But, my Lords, it seems to me a condition of any success in these two functions that I should not in any sense seek to create the impression that decisions of policy which are made are otherwise than decisions of the Government as a whole. This is not simply a piece of self-effacement on my part, nor, as one newspaper generously asserted last week, is it an attempt on the part of my colleagues to muzzle me. It is the only logical conclusion to draw from the premise that the cure for our economic evils in areas of high unemployment lies in an attempt to lift the total quality of life there, and not simply to deal with any narrow economic question.

It follows, of course, that those announcements of policy will be made to Parliament by Ministers executively responsible. Since the time factor in reaching decisions will obviously vary from project to project, they will not all come out at once. Credit or criticism, after all, must belong to the Government as a whole, not to any individual member of it. But I shall be deeply disappointed if we do not record at any rate a substantial success in our whole venture.

I therefore started with an attempt to analyse what would create economic and other activities in a whole area of our country. I am not one of those who think it cannot be done, as many people thought, as the noble Earl reminded us, until very recently. First of all, I looked at the communications, the roads, the railways, the airports and the docks, because I am convinced that the most superficial examination of economic history proves that economic activity has in fact followed the communications, natural and artificial, of a country.

I therefore looked to see whether Government plans for road building should be accelerated—and, my Lords, the Government are in fact accelerating their plans for road building. Over the past two and a half months the Government have allocated additional road works to the value of £5½ million in order to speed up necessary development in our road programmes, and, incidentally, to relieve unemployment directly. The preparatory work on these schemes of works is well advanced, and the local authorities have been urged to begin constructional work as soon as possible. This is additional to the Government's existing programme for the major development of our roads system. We are pressing forward with this, and substantially increased expenditure will be incurred in the forthcoming financial year—close on £20 million more than we expect to spend in the current year.

From the point of view of the North-East it is particularly encouraging to note the progress made on the M.1 motorway extension, which will provide a much needed first-class link between the North-East and the Midlands. I do not wish to look in detail into this particular problem. It is quite clear that the first priority must be communications with London and the Midlands and communications within the area itself, with special attention in the region of the A.19 and the approaches to and from the entrances to the Tyne Tunnel.

The state of affairs about airports is being carefully examined. Tyneside already has Woolsington Airport, which is conveniently close. Traffic has been increasing regularly in recent years and there is no doubt in my mind that the facilities there should be improved. The management of the airport is to be taken over by a consortium of the corporations of Newcastle and Gateshead and the counties of Northumberland and Durham, and a start is to be made this year in improving the airport facilities by the provision of new terminal buildings, improved run-ways and so on. The Government are making a grant towards the cost of this work. Although it is well suited for the Tyne and Newcastle, it is considered to be too far from Tees-side to be adequate for them. One way of meeting their needs would be to open the R.A.F. airfield at Middleton St. George, near Darlington, for scheduled civilian services. This is not an easy problem, but my right honourable friends are looking into the possibility of making arrangements in one way or other which will be consonant with the needs of the Royal Air Force and of the traffic requirements of the North-Eastern region as a whole.

My Lords, may I say in passing—and I have little to say about the railways at this stage—that although it has been quite impossible to reverse or postpone the decision to close the Darlington workshops, it will be necessary to pay particular attention to the needs of that town until the injury to the employment situation there has been made up. As Darlington is almost ideally situated as regards communications, it qualifies for Board of Trade Advisory Committee assistance, and as the works, as they become empty constitute in effect advance factories fully available and ready for use, belonging to the Corporation, I should imagine that industrialists will be eager to avail themselves of the opportunities provided.

I think I should say something about docks. Ships are getting larger, and to enable steel works and chemical works to compete—to compete, if I may say so, with their Continental competitors—heavy ore carriers must be able to come alongside, and big and medium-sized tankers must be able to discharge. This means that before long 40 feet of water must be available in the North-East and the Tees and in whatever port is chosen for oil, and the various schemes afoot both in the Tees and elsewhere to improve harbours and docks, require particular attention. In the wake of the docks and the chemicals, a new oil refinery would be welcome in the Tees area. I am quite confident that if it could be found, there would be work for it to do. Then, my Lords, there are hotels, which I do not regard as merely frivolous appendages to any development scheme, though local authorities must look to independent sources for finance and management. Modern hotels equipped to contemporary standards and built to modern designs are an essential feature of modern industrial life. It is essential that the high unemployment areas get such hotels, with showers and baths, conference rooms and banqueting rooms up to date throughout. There is room for new tourist and sporting facilities—perhaps even for motels and holiday camps—since, at least in the North-East the countryside is exceptionally beautiful.

My Lords, I turn now to industry—existing industry which it is important to revive, new industry because it is vital to diversify. The shipbuilding industry, which also employs part of the heavy steel industry, is having a bad time. This is due at least in part to an increase in world capacity as well, I think, as a decline in freights. Our thoughts clearly turn to accelerated naval construction. Clearly there are limits to this, and the criterion must be requirement. But something is already being done along these lines. Let us never allow that shipbuilding itself is to be regarded as expendible. So long as we can see into the future the world's goods and the world's oil will be carried by sea and not by air; and there is no reason in the world why the ships should not be built on the Clyde, or the Tyne, Wear and Tees, or at Harland and Wolff's at Belfast. But they will not of course be the same ships. There will be unconventional propulsion, automated engine room control, other novel features. Hence the importance of the nuclear submarine programe, the announcement regarding a nuclear merchant ship, the new Shipbuilding Research Association assisted by the Department of Scientific and Industrial Research, which has just recruited a distinguished scientist from Dounreay.

Of course an order from Russia would be of great help to us. But the Russians are shrewd dealers, and I think we must be certain that any bargain we make benefits us as well as them. Certainly our philosophy is not inhibited in this respect by any hatred or fear of Communism. Our belief is that East—West trade itself on mutually advantageous terms is positively a contribution to world stability and not a compromise with our principles or disloyalty to our Allies, who themselves are sometimes somewhat chary to order British ships and aeroplanes. So much of shipbuilding is in the areas which are hardest hit, that it would be hard to justify measures which were specially designed to help industry being confined to a particular area. But my honourable and gallant friend the Parliamentary Secretary to the Ministry of Transport has said in another place that the Government are considering whether a scrap-and-build scheme of any kind could possibly prove of benefit at the present time.

My Lords, I think too that we must not underestimate the future of the coal industry. Obviously, it has suffered in the great structural change in the changeover to oil, but I am confident myself that it has a great future, tied perhaps more closely than hitherto to electricity generation, and perhaps to gas. But it is the policy of the Government to protect it in this way, and, in particular, the announcement which was made by my right honourable friend in another place last week or the week before about two-thirds of the generating capacity of the new Kingsnorth station in the Thames Estuary, ought to guarantee the future of employment in the Durham area.

The steel industry, of course, is on the way up if the "Neddy" target is to be reached, but it will be greatly assisted by Government orders. While I was up in the North-East, the Tay Bridge and the Victoria Tube orders were announced. Obviously, to-day the very great new series of orders for the generating plant of the Central Electricity Generating Board is very much in our minds. It is clear, too, that even in the field of consumer goods an acceleration of Government and private orders would provide useful work. In one of the worst hit areas, for example, there were firms making telephones, cranes, and switch-gear, oven glassware and other articles. Clearly we must look very closely, also, to export orders. In addition to the existing industries it is clearly necessary for areas of high unemployment to diversify. In the North-East prima facie the natural growth points (apart from Darlington, which I have mentioned) clearly include the trading estates and their neighbouring towns. I have asked my right honourable friend to study all the areas and working of the Local Employment Act, and the need for new factories ready and available for occupation.

There is one point which I should make here. The existence of growth points, and the frequent discussion about them which takes place in the Press, must not blind us to the needs of existing communities. It is simply not good enough to say, for instance, to a town suffering from 11 per cent. unemployment, "Let your people travel to a growth point somewhere else"—even if it is in the same region. The growth point must, of course, be allowed and encouraged to flourish, but we must surely also give something special, if we can, to hard hit communities. We are not simply coldly calculating economists; we must act in a way to win the hearts as well as the intellects of those we are working with. My Lords, I do not believe these two aspects are incompatible.

LORD LAWSON

My Lords, may I ask the noble and learned Viscount this: would he include in that statement the right to advertise for people to come down South? Does he adopt the philosophy of, "Go South, my boy. Go South"?

VISCOUNT HAILSHAM

No, my Lords. I was rather adopting for the moment the opposite philosophy. What I had in mind, if the noble Lord will follow me, was the existence of growth points in the North-East and in high unemployment areas, of which there are many. Newton Aycliffe, for example, left to itself, would probably increase at the rate of 10 per cent. per year. I said they ought to be encouraged. I also pointed out that there were other parts of the area with high unemployment, and that it was not enough for the economists simply to tell us to encourage the growth points and to leave the hard-hit communities already existing to their own fate, whatever it might be. I think we must do better than that, and the Government certainly want to try to do better than that.

My Lords, clearly there must be help, therefore, for those specially in need, as well as encouragement to those places which are growing naturally and fast. If I may say so, the important thing to be realised by an industrialist who wants to expand is that this is an opportunity to secure grants for extensions in that part of the world. If we can possibly avoid it, he will not be encouraged—indeed, he will be prevented—from extending in the overcrowded South: but he will not merely be allowed but will be encouraged by financial inducements of the most solid kind if he will go to the development districts.

My Lords, this brings me to the local authorities, with whom I had the most friendly consultations, and with whom I would hope to continue to have the warmest and closest relations. One of the objects of my journey was to bring with me officials from all the Departments in close touch with the local authorities, and every time I visited town or county councils they made it their business to hold a session with their opposite numbers. This alone will bring more work, and I hope quickly, because it will remove administrative blocks to work which can be begun fairly quickly, and even to larger plans. I said earlier that I had set my face against relief work of any kind, and I think this is right, though in my view there is one qualification to this—the clearing of sites. There is, I think, no excuse for retaining derelict buildings near centres which must be cleared anyway. They only keep visitors away. They must, therefore, cost both the economy and local inhabitants more to keep untidy than to clear. Already, the clearance will rank for Government assistance within development districts; and even where this is not so, I am quite sure that the local authorities would be well advised to push on.

My Lords, the Government have already announced that the only limit on housebuilding by local authorities in the North-East in 1963 will be the authorities' own capacity. Not many have yet informed the Minister what they intend to do, but it is already clear that some of them expect to increase their whole housebuilding very substantially this year. Newcastle, Gateshead, Sunderland, and Middlesbrough County Boroughs, among the larger authorities, and Bishop Auckland Urban District Council, Chester-le-Street Urban District Council and Eston Urban District Council, among the smaller, all expect to put many more houses into contract this year than last—in some cases several times as many. All of them are authorities with large programmes of slum clearance; so, apart from housing their people more satisfactorily, they will be improving their districts by getting rid of their slums more quickly as well as providing extra employment for building workmen.

Behind this, there must be the more ambitious schemes of development. I am quite sure that we must at last grasp the nettle of redeveloping our city centres. It will, of course, be long, difficult and expensive, and I shall be asked, as I have been asked, where the money is coming from. Obviously, both Government and local authorities must think hard about this; but there is one vital point that I think I should make—that there is money in development.

EARL ALEXANDER OF HILLSBOROUGH

My Lords, before the noble Viscount the Leader of the House leaves the point, may I say how very concerned many British firms are about this city development in different places? It is being done in such a way as to make a lot of money for big developers, who are not always local. They produce a general city scheme, and then charge the most enormous prices for land and for buildings to such firms as Boots and even, I dare say Lord Marks of Broughton would agree, his sort of firm. That makes it, in the end, a quite undue burden to bear. I hope that the Government are not going to encourage too much of that.

VISCOUNT HAILSHAM

I do not think the noble Earl was quite following me. I was saying, and I think quite plainly, that not only in the North-East but over the whole country the time is now ripe for the redevelopment of the centres of our existing cities. Obviously, the provision of money is a difficult matter. But, if I may say so to the noble Earl quite frankly, if the individual speculator or investor, for whom I have no particular brief, can borrow money at bank rate or over, can put up a structure, can let it or sell it and can leave a million or two pounds in his own pocket, surely the Government and local authorities can realise that there is money to be made by the proper use of public funds in the development of our existing cities, and surely it is mean-spirited and weak for them simply to say, "We cannot force any money out of our taxpayers or our ratepayers". There is, in fact, taxable capacity and rateable value to be won.

My Lords, this leads me to one more industrial point. We simply must expand the capacity of the construction industries if we are to achieve our target. This, I am afraid, means a revolution in building techniques; a vast expansion in training in industrial skills; a standardisation of components; a clubbing together of local authorities; and a new programme of technical education and professional training. But, my Lords, with these things, and confidence and drive, there is, I am convinced, work for the construction industries for another thirty years to come; and if some shipbuilding firms have to shut down, as well they may, there will be scope for the men, and perhaps for management, in other fields as well.

I have, I am afraid, taken a very long time to develop this case, but when one comes to discuss the question of unemployment one cannot do so constructively unless one paints in a big picture covering the whole range of social and economic policy. I have not so far dealt with industrial training, because we discussed it last week, but I should just like to say what importance I attach to it. Nor have I dealt with the question of education, the universities and the Youth Service. These, too, are of vital importance in providing the considerable manpower which will be needed for the work which I have been trying to describe, and I feel certain that the universities will have an important part—indeed a vital part—in promoting research into social studies for developing the details of the plan as it goes along.

My Lords, the point I have been making is that we are at the end of one era and the beginning of another. What it calls for, I am certain, is a concerted communal effort. This does not mean, of course, that Party politics need be less robust than they have been in the past, but I am quite certain that both political Parties, both management and industry, and both the educational and the social services must join together in a communal effort if we are to deal with the matter on the scale which I am quite certain it requires. My Lords, I beg to move the Amendment standing in my name.

Moved, as an Amendment to the Motion, to leave out all the words after "That" and insert: this House resolves that it has full confidence in the policies being pursued by Her Majesty's Government in order to develop and stimulate the growth of the national economy and to secure a high level of employment."—(Viscount Hailsham.)

4.39 p.m.

LORD PLOWDEN

My Lords, your Lordships are only too familiar with the present economic situation underlying the unemployment figures. As the noble Viscount the Leader of the House pointed out, the figures for January and February, when they come out, will show a very large number of people put out of work because of the weather. But when we come to the figures for March, I think we shall find that the underlying trend which has been going on during the last few months will continue.

Against the background of the target of a 4 per cent. a year growth set by N.E.D.C. and its acceptance by the Government, there is a great deal of leeway to make up. We have been passing through a period of rather high industrial investment, and it is not at all surprising that there should be a great deal of spare capacity; but what is new about the present situation, as compared to the period of slackness of the past, is that there is also a great deal of spare labour. No one should underestimate the difficulty of making accurate forecasts a year ahead. Having spent several years of my life in the Treasury, I certainly do not.

The art of managing the economy requires that those in charge should be constantly on the watch in order to correct the errors that will inevitably arise and to adjust to new factors which perhaps could not have been foreseen earlier. But I suggest that we have become mesmerised by the phrase "Stop and Go". If we are to attempt to manage the economy—and I think the need for this is recognised by people of all Parties—we must have both an accelerator and a brake. Delay in applying the brake leads to the need to stamp on it, with disastrous results to industry. That, in its turn requires hard pressure on the accelerator, with the danger of going too fast and then further heavy braking, and so on. If this is what we mean by "Stop and Go" then we must avoid it, but there is a danger that the whole country—politicians, officials and Press—have come to believe that changes from the brake to the accelerator, and vice versa are wrong and a sign of incompetence. This is not so. Gentle application of the brake at the right time would demonstrate that an effort is being made to avoid violent fluctuations of the economy. This is most difficult, and none of us can yet claim that we know how to do it properly or perfectly. No political Party has a monopoly of wisdom in this field.

I was interested to hear the noble Earl, Lord Alexander of Hillsborough, describe the way in which his Party managed the economy when they were in office. I am bound to say, from my recollection, that I thought it a somewhat idealistic description. To-day, unemployment is the worst we have had since 1940, if we leave out the brief period due to the coal crisis in 1947. This is due partly to the failure of the economy to grow, and partly to the natural growth of the employable population, which is rather large this year because of the high birthrates immediately after the war.

Another important and, perhaps, rather novel factor is that a large number of firms could, judging by recent industrial surveys—and I would confirm this out of my own experience—get quite a substantial increase in production without taking any more labour at all. Broadly this is due to two reasons: first, great efforts have been made to improve productivity by the installation of more and better plant, by the re-deployment of labour and by better planning of its use; second, most firms are ceasing to hoard labour. This, as the noble Viscount pointed out, they tended to do during the long period of inflation. I agree with him that we are entering a period of rapid technological change of the kind that has taken place in the United States, whereby you continue to get increased production and, with it, large-scale unemployment. No sensible person would wish to deny that the ending of the long period of inflation has stimulated many firms to greater efforts to get lower costs and greater efficiency. But while a cold bath may stimulate, prolonged immersion in cold water may kill.

My Lords, I am bound to say that I think the Government must accept a great deal of responsibility for the present unsatisfactory situation. In my view, they have consistently overestimated the strength of the forces for expansion. This was evident from the Budget speech of the former Chancellor of Exchequer, who drew attention to the danger that by the end of 1962 there might be too great a call on our resources. His Budget was, on the whole, a somewhat deflationary one, not only in the sense that it did nothing to check any other deflationary forces, but also because he budgeted for a smaller overall deficit than had been realised in the previous year. It seems to me that the Government have been almost perverse in their unwillingness, for most of last year, to admit that things were not going as well as they had expected and in their refusal to recognise what a great many businessmen could have told them was happening. Indeed, some did tell them. Since the Autumn, the Government have taken several steps in the direction of expansion. The question is whether anything more needs to be done. In deciding how much to expand or contract the economy, a Chancellor of the Exchequer must pay particular regard to the balance of payments and the effect it would have on incomes policy—or, in plain language, what will happen to wages and salaries.

When the economy is near full employment, an excessive demand is likely to hold back exports and bring in imports. I do not think there is much danger of that at the present time. Certainly an increase in our output will mean increased imports of raw materials, but, apart from this, we are a long way from the position where the home market will either hold back exports or suck in finished or semi-finished goods from abroad. We have too much room, too much necessity to make them ourselves; and, generally, our prices are fully competitive with those of our competitors abroad. Indeed, I should expect in these circumstances that an increase in output would lead to an actual fall in the unit costs, thus improving our competitive position abroad. So far as wages and salary increases are concerned, it is easier to contain the price level if productivity rises. That we have room for more productivity, as well as higher production, is a fact of which we should take advantage at the present time.

I would say at this point that I feel it is of the greatest importance that we should have a successful incomes policy. The wiser trade union leaders know and recognise this. I think it is most regret table that the unions have refused to co-operate with the National Incomes Commission. If they consider it is likely to be an ineffective body, there is all the more reason for working with it and trying to improve it. If we are to believe the stories in the Press that we may reach this goal through N.E.D.C., then let us hope so. The Government have applied some stimulus to the economy, but what I fear about the measures already announced is that they will not produce the immediate effect on the position which is needed if business confidence is to be restored. Many of them will be slow to operate. This is true particularly of bank rate reductions and the easing in credit and monetary restrictions. Cheap credit is no help when there is a short and declining order book. It is like a fuel that will catch fire only when the fire is already burning well.

The increases in Government expenditure and investment are less uncertain, but it is notoriously difficult to time them correctly. When I was chairman of the Committee on the Control of Public Expenditure we received a lot of evidence suggesting that the long lead times made them somewhat dangerous as short-term expedients. They can easily get out of phase and work in the wrong direction, so that the money is actually being spent when there is no longer need for it. Likewise, cuts in Government expenditure and investment begin to bite when the economy is on the way down. Increased investment allowances and quicker write-off for heavy plant are excellent in the long run, but in the short run, when existing plant is not fully occupied, they have little effect.

The other measures—post-war credits, purchase tax reductions, the increase in National Insurance benefits and unemployment benefits and the increase in contributions—are all very well in their way, but I submit that they are not yet adequate to the situation. I suggest that what is needed is a substantial increase in consumers' expenditure. We have made a bad start towards avoiding violent swings in the economy by imposing the worst stop since the war and delaying too long in reversing it. Now we need hard pressure on the accelerator, and in order to avoid heavy braking after that, I suggest that it would be wise to give a considerable part of any new stimulus to increases in forms which could easily be withdrawn again. This is particularly important, I think, having regard to the large increases in the Estimates recently announced. Taxes, once removed, are extremely difficult to put back again, unless it is made clear at the time that they will be put back automatically when the signs change.

Two opportunities have been missed. The Government could have returned all the post-war credits, instead of only those for a few years to those people least likely to spend them. The return of postwar credits is an ideal example of a once-for-all concession. Again, the Government might have announced, when they decided to put up National Insurance benefits, that the increased contributions would not be levied until a time to be decided upon, when the economic situation required it. Finally, there is Mr. Selwyn Lloyd's "regulator". As I understand it, this was explicitly introduced as something which could be put on and off as need be, so as to give us a necessary weapon to reduce the likelihood of violent swings in the economy. This was used quickly enough when it was decided that it was time to stop. Now that it is time to go, it has not yet been used.

My Lords, I see no reason to disbelieve the estimates of the National Institute of Economic and Social Research: that, if nothing more is done by the Chancellor, output will increase by the autumn by something of the order of 3 to 3½ per cent., but that that will still leave with us substantial unemployment, perhaps of over half a million. It is suggested that to reduce this to acceptable figures an expansion of the order of 5 per cent. is necessary. That this is well within the capacity of industry, I would confirm from my own experience. To achieve this, the Institute calculates that it would be necessary to inject into the economy something of the order of £400 million of additional purchasing power, and that this might raise the overall true deficit on the balance of payments to about £150 million. If we are to get out of the strait-jacket in which we are now, we must get a rapid increase in industrial activity. This, by lowering unit costs, should lead to greater efficiency and greater competitive power. If this means some risks to the balance of payments, well, let us take them. After all, this is why we have reserves.

4.55 p.m.

BARONESS SUMMERSKILL

My Lords, I have listened to a remarkable speech by the noble Viscount the Leader of the House this afternoon. If that speech had been made by a Socialist in another place—I say in another place, because I must admit that your Lordships are perhaps more courteous than the Members of another place—the noble Viscount would have been jeered and hooted and charged with being a visionary. What the noble Viscount did was to explain to us that the Government had a plan. But planning has been regarded as taboo in the Conservative Party. It has been regarded as the kind of activity in which only Socialists indulge. The noble Viscount has told us of a gigantic plan which would cover 30 years. As my noble friend Lord Alexander of Hillsborough said, he would be 85 before it was finished, and the Prime Minister, I calculate, 100. Perhaps we can invite the noble Viscount over to this side of the House. However, of course, we welcome this plan. But would say to the noble Viscount that it would have sounded much better, if he had made this speech twelve years ago.

I suppose it may be because of my sex, but I could not indulge in a philosophic dissertation on unemployment. My approach is more pragmatic, more personal. I am thinking of the 2½ million people listening in to the radio to-night and wondering whether there is a gleam of hope for them for next week. I am sorry that the noble Viscount did not give one sentence in the whole of his speech to the immediate problem. It is the immediate problem that is tragic to the people who are suffering. Indeed, I was prompted to take part in this debate because I heard that clubs were being opened during the day for unemployed adolescents. These are very necessary, of course, but those of us who believe that work is an acquired habit, which should be inculcated in youth, must be deeply concerned with the effect of prolonged unemployment on youth now. I should hasten to add that my definition of work is the application of effort to some purpose. I am not thinking of any kind of labour for labour's sake which might imperil the health and destroy the spirit.

I was shocked when I heard the noble Viscount say that the unemployment situation to-day, taking the country as a whole, shows on an average only 3 per cent. unemployment. Does he think that the unemployed in the North-East to-night—

VISCOUNT HAILSHAM

My Lords, the noble Lady really must not misrepresent what I said. I did not say that, and I specifically drew attention to the high unemployment in particular areas of the country. That is a false point.

BARONESS SUMMERSKILL

My Lords, I would ask the noble Viscount please to contain himself. He made a very long speech and was not interrupted once, although many of us would have liked to do so. The noble Viscount said, and he has not contradicted it now, that the average of unemployment for the whole country was 3 per cent. If he looks at the OFFICIAL REPORT tomorrow, he will see that I have quoted him accurately. I am saying that that is no comfort to those people who live in an area where there is high unemployment.

The noble Viscount reminded us of Jarrow in the 'thirties, when something like 70 per cent. were unemployed, but I am saying to him that we must not underestimate the effects of localised unemployment. In the 'thirties, the misery of unemployment might have been easier to bear, because that misery was shared by 70 per cent. of the workers in the town: it was the common lot. In South Wales, unemployment was the rule and not the exception. I say that the effect on a limited number of workers classified as redundant (a repellant term), whose lot contrasts sharply with that of their affluent neighbours, can only be one of cruel humiliation. That is why I come to some detail, which I should like answered by the noble Earl who is to wind up the debate.

I was shocked, on reading an article in The Times yesterday which revealed that there are families who do not receive the social benefit rate because the wage-earner received less than the rate he was earning. This is known as the "wage-stop operation". This writer spoke of the deliberate impoverishment of these people, with the result that some of the men became physically and mentally unemployable. I should like to know whether this is an accurate picture. I would remind your Lordships that it was on the leader page of The Times and occupied two columns. How can this niggardly treatment of the unemployed be justified in present circumstances? I would argue that, as it is localised, therefore we should be generous. Clearly, from the last speech of the noble Lord, Lord Plowden, the Government have been guilty. Should we not, because of that professed guilt, do something more generous for these people?

I am also concerned with the plight of the unemployed man with hire-purchase commitments. I would ask noble Lords to consider this carefully. The National Insurance and Assistance benefits are based on the cost of food, plus basic necessities. But many families seem to have hire-purchase commitments, which have been encouraged by the Government, and these consume a comparatively large portion of their benefit. What is done in these cases to prevent malnutrition? I want to emphasise the point that the scales are related to food and basic necessities; yet families have something like £2 a week to pay for hire-purchase commitments. Could there not be—and this is my personal suggestion—a suspension of these payments during unemployment? I would say that this might serve as a warning to those engaged in present hire-purchase agreements with the workers.

What I have to say concerns the young man, particularly, because young men have no record of years of employment to sustain them, and the prospect of prolonged unemployment is a bleak and demoralising one. Although private enterprise controls four-fifths of industry and most of the commanding heights, it is clear that only the State can produce an overall programme to meet the needs of the development areas; and the Leader of the House has made that clear. He has not gone into the finances of his plan at all. It is clear that this great plan of his is to be paid for by the State. Although I have not had his advisers, I have arrived at some similar conclusions to his. So far as heavy industries are concerned, nearly one-fifth of the labour force in the North-East is still employed in coal, shipbuilding and steel. I do not think that in his speech the noble Viscount was optimistic about the future. Could anybody make an optimistic prediction regarding the recovery of these industries?

Furthermore, can the drift to the South be stopped simply by providing more factories; or are the long-neglected industrial areas of the North undergoing a profound social change which prompts youth to go South in search of work and an unexpressed spiritual fulfilment? The Government have known this for years. The Prime Minister himself was the Member for a constituency in the North-East for 23 years. The conditions which the noble Viscount described are not new. But what everybody will ask, after reading his amazing speech to-morrow, is: why, after being 12 years in office, and with power, have the Government only now learned that these great changes must be made?

Again, why does the noble Viscount mention thirty years? Why does he not say that many of these things could start immediately?

VISCOUNT HAILSHAM

I said that many of them had started.

BARONESS SUMMERSKILL

I am glad to hear that. Unfortunately, the noble Viscount has mentioned thirty years, which rather damns his whole plan. Why should they not start work now on making their home towns brighter and attractive? He said just now that he was not anxious to introduce relief work. But some of these factories and works have not been redesigned and decorated for a quarter of a century: many, indeed, are slum factories. Let them have the concert hall; let them have all these wonderful cultural additions mentioned by the noble Viscount. But tonight, on hearing this on the radio, the 2½ million will want to know what work they can be given in the next few weeks and months. Perhaps in the winding-up speech this evening this important addendum to the noble Viscount's speech will be given.

I would say—and I am glad to see that the Church has been so well represented here to-day—that many of the misdemeanours of youth to-day may well stem from the desire for fulfilment. This improvement of these dark towns is long overdue. None of us has taken action; and there have not been sufficient pronouncements (I say this to the Church as well) condemning these conditions from which the delinquency of our youth often stems. Furthermore, boys are too often condemned to a limited choice in a factory or works. They search restlessly for a different world in which their special aptitudes might be recognised. Therefore the crucial need is to supply a fuller life, in order that these communities will not be disrupted by the loss of their young people.

While the training in various skills is important, there are other sources of work which call for examination; and I am sorry the noble Viscount did not examine these more when he went to the North-East. The technological revolution and the social revolution have developed pari passu. Again, the noble Viscount turned to us all, in a rather querulous manner, in his speech and said: "You must not blame us if oil replaces coal: that is not our fault. You must not blame us if the kind of ship has changed: that is not our fault." But the noble Viscount knew this years ago. What we are blaming him for is that it has taken twelve years to discover what has not come overnight but what everybody else knew.

I want to draw this to the attention of the noble Viscount and to make a practical suggestion. Is he aware that £1,000 million a year is spent on our hospital and welfare services, and that in this field there are a variety of jobs which are suited to young able-bodied men who are adaptable and receptive to new ideas and which do not call for special educational qualifications? The adolescent boy or young man in an industrial area is often shy of revealing any sense of vocation, and there exist only limited means of assessing his aptitude.

I would remind noble Lords of this—it is a most curious thing in this context. If a boy goes into the Army a personnel selection officer (I think that is his title) immediately looks after the boy and finds out precisely what his aptitudes are. If a boy commits an offence and is sent to borstal, again somebody finds out what his aptitudes are. And yet in ordinary civil life in these industrial areas people often say, "Well, let us get a new job going and put him into it". I am going to suggest that in the last school year facilities should be provided for girls to work for two or three weeks in factories, hospitals and welfare institutions, and for boys, under careful protection, in our borstal institutions. There is a desperate shortage of staff, male and female, in the whole of our welfare and prison services. A scheme of this kind operates in Sweden, where they have established a National Board of Vocational Schools. I would suggest that the Swedish methods should be carefully examined, and that we might do well to emulate them.

The noble Lord, Lord Amulree, was to have been here to support me on my next point, but he had an appointment at half-past four. This is my suggestion (I have to say that, not like the noble Viscount, who has to say that a suggestion is the Government's), and I do not want anybody to feel that I have compromised my Party in any way, although I am sure no member of the Labour Party would object to the suggestion I am going to make. There is one important field of social work in every town which is desperately short of workers, and that is the geriatric service. It is generally agreed that the increasing expectation of life and the consequent care of the aged present the most important social problem to-day. The plight of the elderly man is particularly poignant when he is left to fend for himself, for it generally calls for a man's strength to assist him. We could utilise immediately the services of suitable young men for establishing a geriatric service for the care of aged men in their own homes. A corps could be formed in every area and given the name, a high-sounding name, of geriatric auxiliaries.

As noble Lords know, the noble Lord, Lord Amulree, has in his care the geriatric clinic of the University College Hospital. He has 100 people there; 20 have stayed (one for as long as 22 months) because there is nobody to look after them in their homes, and this is costing the nation £40 a week for each one. The costs of the teaching hospitals are very high and in the general hospitals throughout the country the same conditions exist. Very often it costs £20 a week to keep in hospital people who have homes but have nobody to look after them. The North-East can provide a prototype for the rest of the country. The local authority machinery is there, and the need is certainly there. In case your Lordships think that this is a problem which cannot be grasped now, may I give these figures, although figures are rather boring? The first article in the Lancet this week is by the Professor of Physiology of Cambridge. He said: This is a major social problem. Men over 65 and women over 60 in 1901 comprised 6 per cent. of the population. In 1941 they comprised 12 per cent. of the population; and in 1971 it is likely to amount to 20 per cent. of the population. Therefore, my Lords, this social problem cannot be ignored. It is costing the country a great deal of money and, of course, in terms of human misery and unhappiness the conditions beggar description. If we ensure that the aged men, at least, are cared for in these areas where there are unemployed young men, some good can come out of much evil.

Of course, to make this suggestion successful we need good public relations. It may be said that it wants "selling" to the country. In Sweden it has been "sold" to the country, and why should we not follow suit? I speak about good public relations, and these are certainly not lacking in other fields. I understand that a course of training in how to be a successful bookmaker is now given to grammar school boys in one region. This is not surprising as 10,000 betting shops were opened in this country in 1961. If the Government had applied themselves to training our youth with the same energy as that with which they have encouraged betting and gambling, we should not be faced with these problems to-day.

Noble Lords heard the speeches made by Ministers of the Government at the weekend. One Minister asked the country for moral responsibility. My Lords, that was sheer humbug. The betting shops are a monument to this Government. Now, after twelve years of office, the Government are realising that this country can be powerful in the world of trade only if it has well-trained and contented workers. They have failed the youth of the country, and they have lost the confidence of youth. They appear even to have lost the confidence of their own Tory youth. The only answer is to resign and to make way for a Government which understands the needs of the people.

5.17 p.m.

THE EARL OF KILMUIR

My Lords, anyone whose political life goes back over the last 35 years, and particularly anyone like myself who was born and bred in Scotland and has a long connection with Merseyside and some knowledge of the North-East coast, must approach the problem which we are discussing to-day with a deep stirring of the feelings. I am very glad, I want to say at once, that my noble and learned friend the Leader of the House has said that, from the best of his knowledge and inquiry, he does not fear a repetition of what some of us remember of 1929–32. But the noble Lady who has just sat down has asked that we should apply our consideration more to the actual things that are being done to deal with the immediate position than to the long-term view.

I should like to say to your Lordships that I approach this problem—I think a great many people do—from the standpoint that there is some unemployment due to what I call some general depression. Various reasons have been given for it. There is another section of unemployment which is connected with the decline in particular traditional industries such as shipbuilding, coal, steel and textiles, about which my noble and learned friend the Lord President spoke a short while ago. I believe that the way to consider one's reaction to the Motion and the Amendment this afternoon is to consider both of these aspects and also what has been done from the point of view of method, amount and timing.

My Lords, 40 years in politics has taught me that men and women of all Parties are very ready to assume the mantle of Elijah when it is a question of looking back and being wise after the event. I remind your Lordships of these indisputable facts: that in October, 1962, for two-thirds of the country the figure of unemployment was 1.9 per cent.; for London it was 1.4 per cent.; and, therefore, the measures that have been taken from the point of view of timing must be considered with these facts in mind. I want to say this to my noble friend Lord Plowden: that while each individual section of measures can be criticised, he would, I think, agree that one has to consider them all together when one deals with the effect of general economic measures. But I want to emphasise the timing. In October and again in December there was easing of credit by the releasing of special deposits; the bank rate is now the lowest since 1958. I did not understand my noble friend Lord Plowden to be arguing that it was a bad thing to ease credit. I think he would agree with me that it is one essential, although it is not everything.

Having considered that there has been an easing of credit, one then has to consider what are the other things that are necessary. The noble Lord, Lord Plowden, certainly argued—and this was the burden of his song—about an increase in purchasing power. In November, there was the largest repayment of post-war credits that has ever been made, and since then pensions, unemployment benefits and other benefits have been increased. Again, I do not think that anyone has argued that an increase of purchasing power is wrong. The noble Lord, Lord Plowden, has said that it is a good thing, and I agree.

LORD PLOWDEN

My Lords, I was not arguing against what had been done. What I was complaining about, if that is the right word, was that not enough had been done, and that those measures to which the noble Earl has referred, the increase in credit, would take effect very slowly because people do not need it. And the new benefits to the unemployed, and so on, are offset by increased contributions.

THE EARL OF KILMUIR

Only in part.

LORD PLOWDEN

Yes, only in part.

THE EARL OF KILMUIR

The Government, of course, contribute. The noble Lord ought to state that accurately, otherwise it might go out from him in an inaccurate form. What I wanted to say was that one must consider not only these two points with which I have dealt and of which the noble Lord approves pro tanto, if I understand him correctly. There has been at the same time—and I do not think the noble Lord mentioned this—the improving of conditions for the sale of products, in that in November purchase tax on cars was almost halved, and in December there were further reductions. There have also been large improvements in tax allowances for industrial investment. There is the third point: with the improvement in the conditions of sale and industrial investment—and again I do not remember that the noble Lord mentioned this—we have had the greatest increase in public investment that has ever been known in time of peace.

LORD PLOWDEN

My Lords, I did mention that, but I said it would take longer to take effect.

THE EARL OF KILMUIR

That is what I should like to investigate, because I do not think the noble Lord gave any reasons for that argument and I hope to advance reasons to the contrary. But the points I want to make clear are these. We must not only consider these various classes of action together but—and the noble Lord, I am sure, will agree with this—have in mind the timing and the proximity to that month of October for which I have already given the figures. I say, with all deference, that the methods are none the worse because they are methods universally advocated. The amounts that I have mentioned are anything but niggardly, and, as I have just said again, they commenced in October.

The next question for us to consider is whether the Government have made clear their intention that public investment should be concentrated in the areas that need extra jobs and whose amenities and attractiveness should be increased. If anything is clear beyond a peradventure from the speech of my noble and learned friend the Leader of the House, that is. In 1963, as I understand it, £2,000 million will be spent in public investment; and this is the point I should like to bring to the consideration of my noble friend Lord Plowden. To help the immediate situation, road, school and hospital programmes are being brought forward, local authorities in the North-East are authorised to build as many houses as they can, and work such as that on the Tay Bridge in Scotland will be started in the spring. Again, rightly, orders for the three new ships have been given, and the two training centres in Scotland and one in Durham—I am sure the noble Baroness was pleased to have that information—and we have just had the Electricity Generating Board's £100 million programme.

There are only two matters of which I should like to remind the noble Lord, Lord Plowden, because I am sure he always suspects optimism and fears it is complacency. I have nothing to be complacent about now and I hope I am not being over-optimistic, but in two periods of my political life, first, in 1931 to 1935—the first Parliament in which I sat in another place—we had a demonstration of the rapid effect of house building, because of all the other trades which are involved in it, on a very difficult employment situation. Second, if the noble Lord, Lord Plowden, is too young to remember that first situation he is not too young to remember the one in 1958 and 1959, when the increase of the house building programme had an immediate effect on the economy, as I think was recognised by everyone at the time. Therefore I would respectfully answer him, because I know how much consideration he has given to this matter, that on the public investment programme as proposed there is a sound opportunity of immediate results.

On the other hand, one is bound to keep in mind two points. One is that the Chancellor of the Exchequer must consider the danger of the creation of a balance of payments difficulty; and it would be ridiculous if he had not got it in mind—he has far too much experience on that point. The second, as my noble and learned friend the Lord President of the Council pointed out, is that there are limits to the capacity of the building industry, though I agree with him that if one can hope for increases in productivity and employment, in methods and in training, it can do a great deal on that point. But having put in that caveat, I would ask my noble friends to consider my hopes on two matters which I understand my right honourable friend the Chancellor of the Exchequer is considering. I hope that they will be resolved in favour of the areas of high unemployment. One is whether the 75 per cent. grant to help clear derelict areas can be increased, because that is necessary both for the attraction of industries and for industrial efficiency; secondly, whether ships can be provided as part of the overseas aid programme and whether my right honourable friend will give even more consideration to the effect of a scrap-and-build programme in regard to shipping.

In my view, a good beginning has been made on the short-term problem, but that must not allow us to forget the long-term problems. To try to solve the long-term problems in the next week would be dangerous, but to forget them would be unforgivable. I was delighted to hear my noble and learned friend the Lord President give us his ideas with regard to a solution of the long-term problem. Like myself, I am sure he read with great interest and pleasure an article on this problem by William Rees-Mogg in the Sunday Times on January 6. There are three points which I want to make, because I think they require even more consideration than the noble and learned Viscount the Lord President has obviously given them. The first is with regard to slum clearances. It is calculated, said Mr. Rees-Mogg, that of 50 black spots 45 are in the North. I have said that we advanced the programmes. I think that is most important from the point of view of employment. But I think that my noble and learned friend will have to consider—I am not sure that he has not already done so, if I understood him correctly—whether these immense slum clearance problems are really within the power of the local authorities and local towns, or whether some special action will have to be taken. I do not want to occupy your Lordships' time by going into possibilities to-day.

The second point which I feel we ought to make perfectly clear is the position of the ports. My noble friend mentioned certain aspects of this question, but it is true that many of the worst hit areas depend on ports. The Rochdale Report showed the obsolescence of the great majority of the ports. What are the prospects (I think it is most important to what we are discussing to-day) of some implementation of the recommendations of the Rochdale Report? The third point which I had made I need hardly stress, because the noble and learned Viscount the Lord President has already accepted it, namely, that the road programme must be continually accelerated, with a view not only to providing work but to improving the industrial communications, so reducing the cost of the places in the areas of high unemployment.

Your Lordships have been as kind as you always are, and I have only two general points to which I wish to refer, without any controversy, I hope every one will understand, because I do not introduce them in that way. A distinguished trade unionist said that as a result of unemployment the unions are not as receptive as usual to new methods and equipment. I understand that being said, but I do earnestly beseech noble Lords who have influence in the trade union movement not to let us drift into that position. This is National Productivity Year. A great many of us have taken part in the activities. I myself took part in the meeting at Swindon, and I had the honour of following Sir William Carron in speaking for the objects of the Year. It would be an extremely bad thing if there were to creep in a resistance to higher productivity to threaten our productive position. It would also be a bad thing if there were to be any resistance to retraining, where this is necessary. Your Lordships appreciate that was not controversial at all. It is a matter which I think we have to consider, and I ask for general help.

EARL ALEXANDER OF HILLSBOROUGH

My Lords, we sympathise very much with what the noble and learned Earl has said. But we have also to consider the attitude of men in certain respects if there is a Government policy that says, for example, you must close down railways and make a large number of men redundant because there is a change of policy; that you must have not a national service but a profit-making service. That is bound to set up pockets of grouses. There is that attitude to consider, and we have to get over it. We all want the greatest modernisation and efficiency we can get, but please do not drive us too far.

THE EARL OF KILMUIR

The noble Earl has said that it has to be got over. That is what I am saying, and I tried to say it in the most sympathetic and non-controversial way I could.

The other point is on the question of growth. My noble friend Lord Plowden has mentioned the point, and he has mentioned that the accepted current growth figure is 3 to 3½ per cent. Obviously, it is of vital importance that we should reach the 4 to 5 per cent. at the earliest time. Again I am being optimistic and not complacent. I should have thought that it was within the bounds of possibility that early next year we should reach the 4 to 5 per cent. figure. But I think it is most important that the Government should secure, not only in ministerial statements but in every part of the exhibition of their policy, that they are absolutely, as the Minister of Labour has said, accepting the aim of the 4 per cent. in the hope of reaching the higher growth target. I know that that is not a matter only for the Government: it is a matter for each one of us and our individual responsibility. I believe that we can do it, and I believe that by these methods we can restore the position on employment which means so much to us all.

5.42 p.m.

LORD LAWSON

My Lords, the noble Viscount, Lord Hailsham, knows quite well that I regard him as a man of independent views and of considerable courage. I want to know what has happened since he came home from the North-East and reported. The North-East will be deeply disappointed at his lack of any contribution at all to-day. I had a speech prepared. I would not make it. I had it prepared with a view to saying "Thank you" for something. I have to say "Thank you for nothing". The North-East is in a woeful condition. It was quite clear some time ago that it was going in that direction. Mechanical coal cutting and all the rest of it uses I fewer miners. The smaller pits are not economic at all. There they are; the Minister goes among them, and they will be disappointed with the reports of his speech. What has happened since he came home?

BARONESS SUMMERSKILL

He has taken his cap off.

LORD LAWSON

Has there been some disagreement? What has the Prime Minister been saying to him? It is altogether contrary to the reports, and to things that I have heard myself. When you have lived among people for the whole of your life, when you have worked in the pits with a great many or the men of long-standing, when you have, had experience of death and disaster and explosions in the pits, and then you have a situation like this—the noble Viscount is sent to investigate and he tells us nothing—I can only say that, from what I have heard and from what I saw in the Press of the reports of his visit, I felt he must have had other things in mind when he came away from the North-East. Now I do not intend to make a speech at all; I have scrapped what I had to say. But the North-East of England will be deeply disappointed with the attitude and the speech of the noble Viscount this afternoon.

There is a general view in the country—I had to meet it when I was Lord Lieutenant of the county—that, somehow or other, there is either something the matter with the work there or they do not stand out for helping incoming firms. I am sure the noble Viscount must have met that feeling when he was there. I remember once when I opened a great factory for Ransome and Marles. Before the opening I heard one company representative say to another, "What a beautiful county this is. I never knew it was like this". Had the noble Viscount not something of that kind to tell the House—

VISCOUNT HAILSHAM

My Lords, I am puzzled about what this is all about. Now that the noble Lord has said that, I would tell him that if he will read my speech in Hansard he will see that I used exactly those words: that the region is exceptionally beautiful. I do not know what more he wants. He kept on saying that I said nothing about the North-East. I said a great deal about the North-East.

LORD LAWSON

My Lords, I daresay I shall find it, as the noble Viscount says, but it did not stand out in his speech.

VISCOUNT HAILSHAM

I am sorry about that.

LORD LAWSON

I am sure he is taking care to see that there was a change made in the outlook so far as the North-East is concerned. At any rate, it is quite easy to say a few words to cheer the people up; but the noble Viscount said nothing. I say again that I wonder just what has happened since he came home.

5.48 p.m.

LORD BALFOUR OF INCHRYE

My Lords, unlike my old friend and colleague the noble Lord, Lord Lawson, I was not disappointed about the speech of the Lord President, because it gave a wide survey and, to me, a new and somewhat fascinating thesis that we are now at an end of an epoch. The Lord President said that there was no comparison with the 'thirties. He said that he thought there was no chance of the situation of the 'thirties recurring. And, indeed, the Chancellor of the Exchequer said in another place that it was absolute nonsense to compare the unemployment position of to-day with that of the 'thirties. That may be true. No doubt it is true statistically; and it is probably true as regards the difference in the economy of the country to-day as compared with that of the 'thirties. But I must remind myself and your Lordships that statistics do not comfort or help the individual man out of work. To that extent, I think there is a true comparison with the 'thirties.

It is true that our more enlightened social conscience has lifted men from the material poverty line which existed in the 'thirties, for which we must all be grateful. But, as in the 'thirties, if 830,000 men now—and it may be 1 million men soon—lose dignity to themselves and their families, statistics do not aid them in their struggle to regain their full rights and feelings as citizens. My Lords, if I dwell on this for a moment it is because I feel, as other noble Lords in this House may feel, vulnerable and guilty for what happened in the 'thirties. Looking back—with certain exceptions, the Prime Minister being one of them—I think we were ignorant. It was not that we did not care. We did not realise the "two nations" from our secure and relatively prosperous Southern constituency bases and the more agricultural divisions of the country. It is not going to happen again, because now all Parties combine in a refusal to contemplate a return to mass unemployment. It is as to the methods of achieving full employment that there may be differences; but as to the object there can be no differences.

Accepting the thesis of the noble Viscount, Lord Hailsham, we are at the end of an epoch. The Government have now deployed new steps—and they tell us that there will be further steps—to cope with the double problem of unemployment and industrial difficulties over the nation as a whole and the special problems of the areas in which unemployment is high. This is where I would differ slightly from my noble friend Lord Kilmuir, who acquitted the Government of any lack of foresight, saying that last October all was well and then, suddenly, the storm sails had to be hoisted. That may be so as to the general position, but in relation to the special areas misgivings have been expressed in the Press and by responsible organisations, and for many months past there have been pressures brought upon the Government to take action. I cannot help asking the question—which perhaps the noble Earl, Lord Dundee, will deal with in his reply—why the Government did not act sooner in respect of these particular areas. For it is the job of Government to foretell and to forestall, rather than seem to be fighting a rearguard action when the crisis has arrived. However, whether late or not, there is no reason to deny the merits of, or to refuse to support in the Lobby, the right steps which the Government are taking.

My Lords, one point I should like to submit to your Lordships is that all men's actions in life spring from impulses of mind, and those impulses are, in turn, governed by some moral intent. Hence in the art of government leadership must rally men's minds towards the right enthusiasms and the right intentions. That must be the foundation of any great national effort. I believe that this is the first task of the Government as the foundation of any policies for economic recovery. As a nation we still live in divided camps. Employer, management, labour, are all at times—and far too often—suspicious one of another. One of the many reasons why I welcome the breakdown of the Common Market negotiations is that this gives a dramatic chance of welding the divisions which exist in our nation into one single force, and to get a measure of agreement between parties who are at present far too often in conflict. Leadership must make clear that in this country to-day we are on our own; that we face the world naked of all material reserves and resources beyond our skills and our determination to succeed in competition with the rest of the world. If we do not do that, there is nothing which can sustain our daily standards of life. It seems to me that it is the task of the Government to bring that home to the people at the present time.

My Lords, new and exciting policies will have to be introduced. These will be frowned upon by traditionalists, and no doubt will be resisted by Treasury pundits; but they will evoke a response and enthusiasm in quarters where enthusiasm is required. I believe that for the special areas we must make the carrot much sweeter than it is at present. The North must be made far more attractive and the South far less attractive. The Lord President sketched some of the proposals which he has in mind for making the North more attractive. It may be that he will have to go beyond that. It may be that we shall have to consider dividing the country into tax areas, with tax incentives for industrial purposes in the North; with rating reliefs, made good by the Government, for industry which goes to the North; with substantial aids for those industries in the North which are engaged mainly in the export trade. It may be that we could locate Government scientific establishments in these areas, and even contemplate moving some Ministries there. All these things, coupled with the overhaul of the transport system—upon which the Lord President touched—will help, as well as social improvements in the field of housing, recreation, public works. But, my Lords, all will count as nothing if we do not have co-operation and trust, one with another, in every section of our community.

5.56 p.m.

THE LORD BISHOP OF MAN CHESTER

My Lords, I should like to express my gratitude to the noble Earl who introduced this Motion for the moderate way and persuasive way in which he did so. I would express my gratitude, too, to the Lord President for his speech, which was a really panoramic effort. I cannot agree with the noble Lord, Lord Lawson, that he told us nothing: he seems to me to have told us a very great deal. With the speech to which we have just listened, that of the noble Lord, Lord Balfour of Inchrye, I find myself in almost complete agreement. I should make it clear at the outset that the Church has a deep concern in this problem of unemployment—the most human, in many ways, of all problems. There is a fair turn-out on the Bishops' Bench to-day, and I may say that it would have been larger still had not so many of us been confined to our domestic duties across the road at Church Assembly.

My Lords, old Bishop Gore used to say that statistics should be read by Christian men with compassion, and I think if our unemployment statistics are so read they will then spur us to action. Not that the Church, much less the Bishops, have any answer or policy to propound to this House or to the country on the matter of unemployment. The issue is far too complicated. It has ramifications which reach all over the globe. But unemployment is something which endangers the human spirit. There are few things which so demoralise a man as being unemployed. There are few things which so embitter a man as being unemployed. There are few things, too, which disrupt and put tensions into family life, as when the father of the family is unemployed, or, indeed, some of the children. The ordinary man feels that if he has no work he has no significance; that he is not wanted.

The truly awful effect of unemployment was driven in upon me when I served a curacy and an incumbency on Tyneside from 1929 to 1935. Most of my time then was spent in carting mince and rice puddings around the streets to help feed the people, in setting up unemployment clubs which were regarded as putting a roof over the street corner, or ambulance work—but very necessary. How well I remember (the figure has always stuck with me) that for a man, his wife and child their unemployment pay, or dole, in those days was 23s. 6d. a week. If a man paid anything from 10s. to 12s. a week for his house, it did not leave him very much for food, clothes, and nothing at all for entertainment, or for the doctor's bills. It drove men into debility, into apathy and into bitterness, and it drove young people that way, too. And I saw that again and again in my experience. It is this recollection that has ever since bedevilled industrial relations. It has again and again embittered the political scene. It is true to-day that for long we have not experienced serious unemployment, but the fathers have eaten sour grapes and the children's teeth are set on edge.

In the distant 1930's unemployment was seen as an economic problem, sometimes as an industrial problem; but not, as one speaker has already admitted, as a human problem with which all Christian men and women of good will were concerned. Let me illustrate that. In 1934 a small surplus in the Budget was seen to be likely, and William Temple, who was then Archbishop of York, sent a letter to The Times saying that if there was a surplus he hoped that he expressed the opinion of all Christian people in saying that it should be devoted to the relief in some way of those who were unemployed. The editor of The Times refused to publish the letter, and I remember William Temple telling me that he told the editor of The Times: "If you do not publish it, I shall have it published in every other paper in England, with a note to that effect." It was published the next day. But what happened? Neville Chamberlain, who was Chancellor of the Exchequer at that time, publicly rebuked the Archbishop for interfering in what was purely a political problem. Thank God those days are past! There has been a conversion on this matter, and unemployment is seen as a human problem; and, since Keynes, as a political problem which is, at any rate in part, controllable. But the gospel of Keynes made slow progress in the 1930's, and what delivered us from the scourge of unemployment prior to the war was the war itself—and a costly deliverance it was!

Now again we see the beginnings of this evil, and people take fright at it, because so many remember the 1930's. It was hoped that the challenge of the Common Market would spur us on and, though it might prove rough medicine, would compel us to put our house in order. That spur has gone and we are now left to our own resources. It is particularly unfortunate that this recession has come at a time when the largest number of school-leavers are on their way into industry. There are, I understand, at the present moment over 40,000 boys and over 26,000 girls under the age of 18, who are unemployed, a total of over 67,000. That is a grim figure, and it is partly masked because I believe it would be much bigger were it not for the fact that many boys and girls who have not found work have returned to school. Now this was all, in part at any rate, foreseen; it was foreseen in the Carr Report of 1958. But action on the part of the Government has, I regret to say, been too little and too late.

We have recently had in this House a debate on the White Paper on Industrial Training. In that debate I noticed that the noble Lord. Lord Eccles, said [OFFICIAL REPORT, Vol. 246 (No. 37), col. 787]: I missed in the White Paper any reference to the ambitions, the difficulties and the human predicament of the young. I wanted the Government to appeal … for support for a policy that was at once efficient, sympathetic, human and patriotic. But in the White Paper their appeal is based wholly on economics. That is well said. It may be that a White Paper is not the place to make such an appeal. Yet that appeal should be made lucidly clear, and the partnership between Government and industry in responsibility for training should have been implemented earlier. Surely provision must be made for something between "never having had it so good" and "never having had it so bad".

As the Church has said, in many pamphlets and in the speeches of many of its leaders, here we have among the young people not a great problem but a great opportunity. Courses to teach skills to young people should be arranged by people with imagination. Taking down, let us say, a motor-bicycle engine, putting in a ring main; the forestry camp, such as has been organised in a small way by the London County Council, would help to develop interest so that larger courses could be run later. Not every lad is attracted by what is called further education. A scheme like the Kennedy Peace Corps would give many of our young people a vision of a world larger than themselves.

But unemployment among youth, of course, is all of a piece with the general problem of unemployment. Here I cannot help but feel that the Government have been waiting for something to turn up. The possibility of the Common Market has gone. Now is the time to appeal not to self-interest and economics, but to motives of patriotism and of humanity. When we see a slagheap in the North-East, it is not enough to say: "Here is a likely lad who is handy with the shovel: let us send him up there." The "likely lad who is handy with the shovel" went up there, and I think his visit was a very courageous visit and well worth while.

On this subject, I fear that I do not agree with what the noble Lord, Lord Lawson, has said. Indeed I should like to say, on behalf of the Church in the North-East (although my own bailiwick does not run there now), that I have heard from the Bishops of Durham and Newcastle how grateful they were for the time which the noble Viscount gave to the clergy in discussing the general problem with them. As an ordinary citizen I would say that we are sick and tired of seeing on television employers who explain why they cannot meet the trade union, and trade unionists, a few moments afterwards, who say why they cannot come nearer to the employer: The secretary of the potmakers one minute, and the managing director of the company the next. We are tired of seeing trade unions give reluctant, if temporary, cover to Communist saboteurs.

I do not pretend to know precisely what economic steps should be taken to halt the present trend, but one thing is clear: in a country such as ours, which depends upon foreign trade, there must be a great leap forward in productivity, and productivity not only in quantity but in quality, which is almost equally important. This, it seems to me, can come about only by some fairly long-term agreement between employers and the trade unions. We achieved that, did we not, in the war? Can we not again achieve it in the dangerous days of what one might call warlike peace?

As I have said, I do not pretend to know what precise economic steps should be taken, but if it means increased taxation, let there be increased taxation; if it means a limitation of restrictive practices, let restrictive practices be limited; if it means the direction of industry, let industry be directed; if it means, as someone has suggested, differential taxation, then let us have that; if it means a shortage of luxury articles in our shops, let us do without them. But none of these possible remedies can come about unless a real lead is given and an appeal made beyond sectional interests to the country and to the ordinary citizen. It should be made clear by the Government beyond doubt that they simply will not tolerate unemployment, and that they regard its control and its abolition as priority number one in their programme.

6.12 p.m.

LORD HUGHES

My Lords, as recently as the 23rd of last month we had a very full and useful debate on the Scottish economy, in which the unemployment situation in Scotland naturally figured very largely. I took part in that debate, I fear (as I saw when looking at Hansard later) for much longer than I had intended. I do not intend to repeat that mistake to-day, and in fact I would not have spoken this evening but for the fact that, Scotland being one of the hardest-hit parts of the country, it would be wrong if in a debate on unemployment in general we were merely to rest on what was said on January 23.

I believe that in that debate many useful suggestions were made by Scottish Members of your Lordships' House. Following on that, the Prime Minister has met representatives of the Scottish Trades Union Congress and the Scottish Council (Development and Industry); and we are led to believe that in the near future some action will be announced on the proposals which were put to the Prime Minister. I am, therefore, to a certain extent, content to wait and see what is announced, in the hope that it will be announced soon. I agree with those who have said that the Government have been guilty of doing too little. I hope that the addition, which has been made more than once this afternoon, of the words "and too late" will, in fact, prove to be wrong. What they have done certainly is belated, but if there were to be brisk and radical action now it might not yet prove to be too late.

The points I intend to make will be of a general nature, and more directed to the frame of mind in which the Government are approaching this. When I spoke in the debate on January 23 the noble Viscount who leads the House was elsewhere on Government business. I had occasion to quote him then, and I want to beg your Lordships' pardon if I repeat once again what I said, because I want to relate what the noble Viscount said in Glasgow on December 12 to what he said in Glasgow on Saturday, and what he has said in the House to-day. They have not been exactly the same sentiments which have been expressed on each occasion, although it was the same man who was speaking. I had the pleasure of listening to him on December 12, and, as always, I admired the beauty of his language and the felicity of his phrase although I did not like in all respects the contents of his speech. What I did not like was this particular section: Strange movements of population are taking place within this island—movements not fully understood, and, not being fully understood, very difficult to control. If the population chooses to regard the invasion of Surbiton as preferable to remaining in the Highlands or in Newcastle-on-Tyne, it is difficult to say, unless we are able to offer alternatives actually more attractive to them, that either the Highlands or the population are worse off, or that the people who vote in this way with their feet (which is the most effective way of voting) are wrong. I am a United Kingdom Minister and must hold no special brief for Scotland over and above any other part of the Kingdom similarly placed. Although that speech was made only two months ago, it is almost as if it had been made in another age, and the situation has been altered very largely by the fact that the noble Viscount who leads the House would appear to have become, in addition to his many other duties, the Government's Minister for unemployment.

On Saturday, he said this—and again I have a certain amount of difficulty in following his reasoning: When we have 1 or 2 per cent. unemployment and very nearly full capacity we cannot redevelop. We could extend and then only with difficulty. Now we have the means and the opportunity. The recession has given us, possibly for the first time since the war, a beginning of the construction of the Britain we wanted to see in thirty years' time". Comparing the speech which the noble Viscount made in December (when, as I said on January 23. the impression which he left with us in Scotland was that it was a rather polite way of telling us that we had to "stew in our own juice") with what he said in Glasgow when speaking to Unionist women on Saturday, we see that while his statements are quite different, the one made on Saturday is just about as difficult to understand.

The noble Earl, Lord Kilmuir, said that in October, in three-quarters of the country, unemployment was less than 2 per cent., and in London it was less than 1 per cent. In three-quarters of the country to-day the figures are not so very different from that. It is in the other quarter of the country that the figures have moved from being bad to being very bad; and if we look at what the figures were in Scotland in October, or on December 12, at what they were in the North-East, and at what they were on Merseyside, it will be seen that they were bad. They were not of the 1 or 2 per cent. order which the noble Viscount seemed to think would inhibit the development of the country. Now, because they have grown worse in these areas, and have had added to them a slight increase in unemployment in the other parts of the country, he seems to imagine that something completely new has taken place.

VISCOUNT HAILSHAM

I really must try and correct the false impression which the noble Lord has, quite unwittingly, made. He says he was present when I made the speech on December 12. In point of fact, he cannot have attended to the passages immediately following the passage he read out, because what I said in my speech of December 12 was exactly the same as I have said to-day, and I used the same words. I said, having dealt with this question of movement from North to South, that laissez-faire was utterly unacceptable; and I used the phrase, which I used again to-day, that the solution of the problems of the South may very well lie in Glasgow or in Middlesbrough". If he would read more carefully the passage which he read giving full weight to the phrase unless we are able to offer alternatives actually more attractive to them, he will see he was giving it exactly the opposite sense it bore in context. The whole burthen of my speech on December 12, and to-day and on Saturday, was that we must offer more attractive alternatives.

LORD HUGHES

My Lords, I am sorry, but I cannot agree. I cannot contradict, from the notes I have with me, what the noble Viscount the Leader of the House has said, because he will recall that on the occasion of December 12 he departed radically in the beginning from the speech he had prepared. He made an impromptu speech instead of the written speech and then, in very large measure, added the written speech to the impromptu one. Because of the length of the speech the only access I had to what he said were the reports in the Press, and I have quoted from what was reported. If the Press thought the parts he added were so unimportant as not to be worth publishing, then unfortunately I am quoting from inadequate sources. If I have done him injustice I will apologise.

VISCOUNT HAILSHAM

My Lords, I must correct this impression, for my good name for consistency matters to me. The portion added to my speech related solely to Dean Acheson's speech about Britain. The part which I said he omitted to notice, and which formed part both of the published report in the Glasgow Herald and the printed copy which is available, was certainly delivered, and certainly said exactly the same—indeed that was the whole point of the speech. I am sorry the noble Lord missed it. It must be that I expressed myself badly.

LORD HUGHES

My Lords, that may be so; or it may be that on that occasion I was lulled by Sir Hugh Fraser's excellent hospitality into a state of somnolence in which I missed the point of the speech. In that case I must apologise. I suggest that the quotations I have made do indicate a different attitude on December 12 from the attitude stated in January and the attitude stated to-day. The phrase used: that if people choose to vote with their feet by going to Surbiton they are voting in the best possible way …

VISCOUNT HAILSHAM

Unless a more attractive alternative is offered to them.

LORD HUGHES

And on that occasion no alternative was offered; and no alternative at the moment has been offered. When my noble friend Lady Summerskill was speaking she said that the noble Viscount had spoken without interruption. She was not quite correct, because he was interrupted by my noble friend Lord Lawson, who asked him if he were subscribing to the doctrine "Go South, young man". I noted the reply which the noble Viscount gave; and I was surprised at one particular set of words included in it. It bears out the point I have just made. He said "No, I was adopting for the moment the opposite philosophy". I wondered why he chose to include the three words "for the moment".

VISCOUNT HAILSHAM

My Lords, since the noble Lord asks, I will tell him. It was because the noble Lord, Lord Lawson, was asking about a particular passage of my speech and I was replying in relation to that passage. It never occurred to me that my words would be twisted and taken out of context, as the noble Lord is now seeking to do.

LORD HUGHES

My Lords, I object to the suggestion that I am twisting the words or taking them out of context. The noble Viscount said that he was adopting this "for the moment", and that is my argument against the Government. What is being done are policies for the moment and not policies of consistency.

VISCOUNT HAILSHAM

My Lords, what the noble Lord is charging me with is that when I said I was at that moment adopting the opposite policy, the opposite point of view, to that of the noble Lord, Lord Lawson, I was saying something utterly different from what I meant. I resist and resent the charge. I presented on all three occasions a long and considered argument for rehabilitating the whole Northern half of the country in order to solve the problems of both the North and South. I resent the use made of my words, because it is wholly illegitimate. If the noble Lord cares I will send him a copy of all three speeches.

LORD HUGHES

My Lords, I shall be happy to read them and if I am wrong I will apologise. At the moment I am not convinced that I am wrong. I do not consider I am making any unfair or illegitimate accusation against the noble Viscount. I am pointing out that, like the rest of the Government, his attitude to this matter has changed as the unemployment figures have risen and as the Gallup Polls have shown that support for the Government is going down.

I said that I was not going to speak very long. I have been longer than intended, but during that period the noble Viscount, the Leader of the House, has been speaking for as long as I have. What I wanted to say is this: that the impression I had was at least shared by one of the noble Viscount's colleagues, because, at the same meeting on Saturday, the Secretary of State for Scotland used these words which are quoted in the Glasgow Herald: Recently there had been a real change of opinion in the Government and Civil Service about the country's economic policy. There was a real change in the climate of Government thinking—a change for the better so far as Scotland and the other difficult areas of the country are concerned. I agree with the Secretary of State for Scotland and, in so far as he is accurately reflecting, from inside knowledge, what I can only gather from what I read, I commend that change of thinking. I commend that change in the climate of opinion; but it must be reflected in actions. Beautiful language is no solution for the problems of the unemployed man.

In the many fine speeches made here to-day what impressed me most was what was said by my noble friend Lady Summerskill when she reduced this problem to the effect of unemployment on the individual. The Chancellor of the Exchequer told the Young Conservatives not to worry about next week's figures or next month's statistics. If we can regard them as figures or as statistics it is easy not to worry about them. But your Lordships must remember that every one of the people in these figures represents a family or a member of a family living under conditions which most of us would not like to have, and which I personally should not like to repeat. In 1931 I was a member of a family where both my father and I were unemployed and undergoing the hardships of the means test. I know what it is to try to live on unemployment benefit. It is no joke. You do not regard yourself as merely one in a set of figures. It was also said by my noble friend that at that time, in the 1930's, when there were so many people unemployed, the miseries were shared. I do not agree with that at all. It was no consolation if you had not enough to eat that two-thirds of the people in the same street were in the same position—your stomach, if partly empty, was no easier to rest with; your bed was no easier to lie on.

Although unemployment benefit is higher to-day, the cost of living is also higher. I would say the unemployed man is relatively very little better off in the 1960's than he was in the 1930's, and the best contribution we can make to the problem is to see that as many individuals and families as possible are removed from it. I have complimented the noble Viscount, the Leader of the House, on the beauty of his language. One newspaper—I have forgotten which—wrote about the fine peroration he made, presumably at the time when he was in the North-East: I offer you faith and courage. What more do you want? These words were again used by him in a later speech, either in Glasgow or to-day, I am not sure which. I am told that a man in the audience brought that down to the real fundamental point of the debate we are having here, by answering, "I want a ruddy job." That is what it comes back to: the steps by which the Government can translate their policy into giving individuals "ruddy jobs".

I do not feel that it would be other than wasting your Lordships' time if were to repeat what was said in relation to Scotland on January 23, but, as I said, many useful suggestions were made then. However, in view of the fact that Newcastle and that part of the world figure so prominently in the debate today, let me remind your Lordships of one example of directing employment to a bad area—the setting up of the Ministry of Pensions and National Insurance in the Newcastle area. I read yesterday that new buildings were just being started at a cast of £800,000. That must make a very useful contribution to employment of a particular kind which is not always so easy to get in the Provinces as it is in London.

We have heard in this House so many times in the last year of the difficulties created by the enormous expansion of office space in London. I would suggest to Her Majesty's Government for their earnest consideration—though there are no new Ministries being set up at the present time, as was the situation when the Ministry was created in Newcastle—the question of taking some of the existing Ministeries out of London. It might be quite salutary, for example, if the Ministry of Labour had its headquarters in one of the areas which is particularly scourged by unemployment, rather than in London. I think that the Ministry of Labour could be more usefully located in Liverpool, Manchester or Glasgow, or in one of the smaller centres in the Provinces, and it may be that other Ministeries could be taken out of London. I am not putting up a rehash of the suggestion that the capital of the country should be rebuilt in Yorkshire, but I think that, without interfering with the general purposes of Government, the Government could usefully direct some of their activities to other parts of the country.

I am very sorry that what I had intended to be a helpful and brief contribution should have turned into something which the noble Viscount the Leader of the House should have resented very much. It was not my intention in any way that that should be so, but if in the result it has impressed, either for better or for worse, anything I have said on his mind, as Minister for unemployment, I do not think that in the end it will have been wasted.

6.34 p.m.

LORD ECCLES

My Lords, I should like to assure the noble Lord, Lord Hughes, that every one of us who has a chance of intervening in this debate does so fully realising what unemployment means to a family. I am sure that we could have a full day's debate on how one should treat an unemployed family in modern conditions—the form of relief, the grants for resettlement and for training, and so on. But the general tenor of this debate has turned on the economic factors which affect employment and the possibility of curing it. I rise merely to reinforce what I thought to be the underlying argument of my noble and learned friend's excellent opening speech—namely, that in a technical age unemployment requires radically different treatment than it did in pre-war slumps.

Here I shall part company with my noble friend Lord Plowden in saying that in these days, instead of trying to put men back into their old jobs by occasional and considerable releases of purchasing power, a modern Government ought to be deliberately and continuously planning to create the conditions in which new jobs can be found. In other words, I believe that growth should take the place of relief. My mind goes back to a meeting called just after the war to discuss the housing shortage, when many suggestions were made for short-term remedies—billeting, crowding up, a "crash" programme of war-damage repairs. At the end of the day my noble friend Lord Woolton, who was in the chair, delivered himself of the judgment that the only way to solve the housing problem was to build more houses. That may sound like a platitude, but, as always, the noble Earl went right to the heart of the matter. And we have to follow this simple rule in dealing with technological unemployment.

There is no cure but to create more jobs. So I hope that I may be wrong in fearing that the Government may try to do too much in spending themselves out of unemployment in the manner that would have been appropriate before the war, when there was a yawning gap in general demand. After the measures which the Chancellor of the Exchequer has already taken and which my noble friend Lord Kilmuir very properly put before the House, I doubt whether deficit financing in order to add to consumer purchasing power is right. I believe that it would soon come up against the barrier of the balance of payments and the whole process might have to be put into reverse, as has happened before.

Unfortunately, the risk to sterling has been greatly aggravated by the changed attitude towards incomes. Since the war pretty well everybody, except right reverend Prelates, Her Majesty's Judges and Ministers of the Crown, have got into the habit of claiming an annual increase in income, whether it is earned or not, with results debilitating and harmful to the economy. In the hope of checking this particular habit the Government have set up the National Incomes Commission, and I should be very sorry if general releases of purchasing power were now to be made on a scale that inevitably removed the hope of persuading employers and employees to accept a sensible incomes policy. And I should like to say, with great respect, to the noble Lord, Lord Plowden, that his suggestion that the Government should add £200 million to £300 million, or whatever figure he had in mind, to purchasing power, fails to emphasise the multiplier effect of the extra money on salary and wage claims and profits that would so soon follow, as we know from past experience.

I would also say to the noble Lord that there is another reason for not adopting his suggestion of making a large release of purchasing power at this time. The new money would not spread itself evenly over the economy. The first impact would be felt in increased sales of consumer goods, and quite apart from the effect upon the import bill—and surely the noble Lord is wrong in thinking there would not be a very quick effect upon the import bill—the domestic firms manufacturing these goods are mostly situated in the areas which are already doing better than the national average. In fact, they are mostly within the areas of 1 and 2 per cent. unemployment, rather than in the areas of 6 per cent., or higher. So that the result of doing this would be to increase the pull from the areas not doing so well, where we should like to see employment picking up, towards the areas which are already doing rather well. I do not think that that is a sound policy to adopt, if we can find something better to put in its place.

Some economists are saying that only by stimulating consumer demand will the orders seep through to the capital goods industries where the orders are most wanted. We have been told that we can secure greater investment only in this roundabout way, as if we were playing billiards and had first to hit the white in order afterwards to pocket the red. I do not believe in that indirect method as being appropriate at the present time. It certainly does not apply to investment in the huge public sector, where the Government can turn the tap on or off as they like. I think it would be safer and sounder to go directly for further investment, and then the increased consumer demand would come through from the increased employment in the capital goods industry.

It is perhaps worth observing that it by no means always follows that if you increase consumer demand you increase employment in the consumer goods industries. The other day I asked a chemical engineer what he would do if the results of Mr. Maudling's serialised budgeting were to double the demand for his product, which is an article of everyday consumption. A light came into his eye, and he said: "Then I could scrap this plant and build another one that would produce twice as much with less than half the labour." I think that example is perhaps more typical of modern industry than is generally realised, and the rough and ready conclusion is that when an obsolete plant is scrapped, both the plant that replaces it and another one making something else are required to absorb the labour. Therefore, the really important thing is to create the conditions in which new industries can grow and old ones be modernised at the same time.

Your Lordships will be only too familiar with the reasons why expansion of the kind I am thinking of depends on exports, on training more skilled manpower and on getting rid of restrictive practices. I take that as accepted. But I should like to draw the attention of your Lordships to a new and complicating factor and that is the challenge that comes from the growing scale on which science can both cause and cure unemployment. This double function, where the same agent strikes the blow and heals the wound, is quite common in human history. If I may say so with respect to the fair sex, they have been at that game ever since the Garden of Eden. But this afternoon I am talking about technological unemployment, and in technological unemployment the real difficulty is that the acts of the scientists which dislocate established patterns of employment are not co-ordinated with the acts of other scientists who can, given the resources, create the fresh jobs. Therefore, it seems to me common sense that we should plan a persistently high level of investment: for it must be wrong to leave men and women who want to do a good day's work to the mercies of the blinkered army of scientists and technologists.

Somehow, then, as fast as jobs disappear in the declining industries and in industries where new techniques are displacing labour, we have to find out how to create new jobs. How is that to be done? Before Christmas I ventured to suggest to your Lordships that the planned encouragement of growth in selected areas was at any rate a good line of advance. Since then there has been a considerable public reaction to that and to many other interesting suggestions on how to deal with unemployment to-day. But I have not changed my view; I still think that is the right way to set about it.

There are just one or two further considerations that I should like to offer. New employment being the child of investment, the problem is how to increase the total of investment and to guide it into projects of really high value. It is no good saying, as I fear too many people are content to say, that all the Government have to do is to authorise more roads, schools, power stations and so on. It is nothing like as simple as that, because one must always hold in view the danger of inflation. If inflation is to be avoided while investment is to be raised and held at a level consistent with the 5 per cent. growth figure, or whatever it is we aim at, at a rate to achieve a lower total of unemployment than we have now, then consumption has to be restrained. I do not say that consumption has to be cut back; but I do say it must not be allowed to advance as fast as investment.

This problem of restraint is one to be faced, because it is really the core of the difficulty. People will not readily accept a brake on what they can enjoy to-day unless they have a real, strong belief in the greater satisfactions that they can see coming to them to-morrow. Here I agree with the right reverend Prelate, that this is a political question of leadership: because the willingness to prefer the future to the present—and if we are not able to do that we are not going to cure technological unemployment—can be grounded only on the unity of the people and an understanding of the common objects for which the nearby restraint is being called for. I suppose a stock example of how this can happen is the great effort put out by a country after a defeat in war. We admire Germany's recovery. There is a spirit of expansion in Italy, and no doubt in the other members of the Six, as well. After all, every one of them was either defeated or occupied by the enemy. In defeat you learn a certain delicate wisdom denied, I think, to the victor. They have found that by coming together and raising their whole scale of objectives they have recovered their self-confidence.

When I listened to my noble and learned friend's speech, I thought that at last the same sort of spirit was going to be recaptured in this country and a confidence that better prospects in the future are worth some sacrifices to-day. Is it going to be possible to persuade the people to accept this increased investment at the price of some restraint?—because, while I favour entirely the Government's plans for the development of these regions, the pace at which the development can take place is going to be strictly governed, no matter how ambitious the plans may be, by the degree to which the nation as a whole will prefer exports and investments to adding to the things that would turn up in their weekly shopping list. This is a difficult problem of leadership. I believe that the Government would have a better chance of persuading the public on this question if they could explain more clearly and more wholeheartedly why this shift in spending is so necessary.

I do not think it should be very difficult to put across the proposition that you cannot eat your cake and invest it. If a family save enough money this summer to install central heating in their house they will be warmer next winter—not a very difficult proposition to get across. Surely the argument, if we can make it full-heartedly, that we are building a better world for our children is one which every woman would understand and, I venture to say, quite a lot of men, too, now that they take more interest in their children's education and careers.

I am very glad that the Government are going to plan growth in the North-East and, I hope, in other selected areas, with the approval of "Neddy" or without it—and I hope with it. They are going to win widespread support in the country just as soon as they are seen to be in earnest. But they could spoil their own chances if, through a desire to improve consumption in the immediate future, they frittered away the resources that are needed for investment. My noble friend, by the matter and tone of the speech which he addressed to your Lordships this afternoon, has done a great deal to relieve my anxiety on this score, and I shall vote for the Government this evening with a good deal more enthusiasm than I had when I came to the House.

LORD SHEPHERD

My Lords, may I ask one question on a speech which was, I think, very well received? The noble Lord has asked for restraint in spending and in consumption in the hope that we could have increased investment. Would he believe still that there should be free investment—investment wherever the individual may wish to place it—or would he advocate or have sympathy with the concentration of investment where it would have the maximum advantage to the country as a whole?

LORD ECCLES

My Lords, in answer to the noble Lord, I think that the public sector of investment must take an ever-larger share of the total, because it seems to me—this has been mentioned by some other noble Lord previously—that such services as transport, power, docks and, I say very firmly, education, must be provided through public means in advance of securing growth in the economy. Therefore I would very much support a strong and large increase in selected public investment; and that is indeed happening, as my noble friend Lord Kilmuir said. It might perhaps have been put into operation a little earlier, but it will come through all right. Having created those conditions in which production will be more economic, and where the areas where we wish it to go will be made more attractive, I am bound to say I believe in private enterprise, and I think the choice of what goods to sell to the foreigner had better be left to the businessman.

EARL ALEXANDER OF HILLSBOROUGH

My Lords, I have two reservations on what was a well-presented speech with regard to income policy and the like. It seems fairly clear to some of us that the Government still intend to change their whole basis of food control and the price of food. If you are going to increase the general prices to consumers, you will not get that measure of investment. I think you will have to watch that, and I hope that the noble Lord will take some note of it.

LORD ECCLES

I hope the noble Earl will excuse me. I had not thought of going into the question of food control.

6.55 p.m.

LORD HENLEY

My Lords, I listened, but was not wholly convinced when the noble Viscount the Leader of the House told us that it was the situation, and not lack of a plan, or wrong financial policy, which was the cause of our troubles. This is good dialectical materialism, and I was interested and took note, but it is not wholly convincing. Some parts of it, I think, are true, but I feel that we could have done more to ride the situation rather than let it ride us. In spite of what the Chancellor of the Exchequer said, I believe that this is a collapse of confidence that we have here, and that this collapse could quite easily grow into a crisis of unemployment. It follows that expansion has become a social and economic necessity. If we can get expansion, then we get recovery of confidence, and then we can end unemployment.

It seems to me that there are two points here. The first is the question of long-term strategic planning. I think we have all come to the conclusion that short-term planning is no good. If there is one thing on which economists appear to be in agreement, it is that although they are far from agreeing as to how we should put this right, they are agreed that these short-term expedients are no good. The second major point seems to me the question of regional unbalance. This appears to me to be central to the whole problem. We have rapidly growing chaos in the South and East, and stagnation in the North. We had a most interesting debate on this in November on the location of industry, and I feel that it is this unbalance which more than anything else is causing this crisis of confidence. If we can tackle this boldly, imaginatively and radically, it not only solves the central problem on the strategic level, but it seems to me also that it provides in the short-term a tactical attack in the best Keynsian manner.

So far as strategic planning is concerned, I feel that "Neddy" must become the hub of the Government's economic policy. The Government must take responsibility for "Neddy's" plans, which should be published and debated in Parliament, and should bend their policy to carry out "Neddy's" plans. This might mean a certain amount of reform of administration. One might reduce the Treasury to being merely an instrument for carrying out the Budget, and the Board of Trade to dealing with export promotion and trade negotiation. Possibly both of these might go under a Ministry of Expansion. The central organ of this Ministry of Expansion would be the planning authority which would analyse resources, make estimates of possible alternative courses and ultimately, we hope, co-ordinate with the Common Market; and advise the Minister.

Now as to regional development, which is the second of my points, I think the noble Lord, Lord Eccles, in his speech on the location of industry pointed out that he no longer felt that the Local Employment Act, 1960, was enough. What we want now, it seems to me, is a new development Act; something to set up regional planning authorities, strategic planning and research; something to build up magnet areas to draw the population away from the South and East and get it back into the North. Transport, housing and education would all be co-ordinated within the framework of this, rather on the lines of new urban complexes (as opposed to just new towns) which is the extraordinarily good idea of the architect, Mr. Rigby Childs.

In order to promote this, I think you would need regional incentives: regional tax variations, for example; regional investment allowances and regional National Insurance rates. You would have grants and loans under this new development Act. To some extent you could have public enterprises, but I think this must be entered into with a certain amount of caution. The noble Lord, Lord Hughes, suggested that we might make a start—and I think this has already been suggested—by moving a few Government offices into the North.

So far as taxation is concerned, I think one can do a great deal to promote expansion. Clearly, one cannot cut taxes very much, but is it not possible 10 redeploy them somehow or other to get better results and to give incentives where one can? I think it is possible to substitute an added value tax, as the E.E.C. have, for purchase tax; or, if one feels this is too complex, by having a uniform sales tax. One could merge company profits tax and income tax into one general corporation tax which would apply to companies. I think it is possible that we shall have to have a tax on wealth. I do not quite know how this would work, and I think the suggestion of an expenditure tax rather sends shivers down one's spine, and might, in fact, inhibit expansion rather than promote it.

Nevertheless, I think we shall have increasingly to try to devise some means of taxing capital wealth. In these days when income and capital cease to have the separate appearance they had in Victorian times, I think one has to devise new means of taxation which will, in fact, take something from capital rather than from income. I think one can also, as a start, reform our terribly cumbrous system of income tax which is based on the 1918 Acts. I consider the present tax cuts which the Government have offered are too late and too spread-out to have been very effective, and, so far as the incomes policy is concerned, as one noble Lord put it, it really has not been "sold" to the public. I see no reason why that should not, in fact, happen.

Tariffs are another aspect in which one can promote expansion. Bearing in mind that any form of expansion implies a certain degree of inflation, we must make every effort to keep down costs and prices. But there is no reason why, within GATT, one should not bargain for tariff reductions, so long as GATT targets are in themselves realistic. Could one not call straightaway for a 50 per cent. cut in the tariffs of the major Western Powers? Very likely one would have to do this in two stages, but in any case, that would probably be too slow for what we want at this moment. But there is no reason why we should not now unilaterally cut some of our tariffs; at any rate to the E.E.C. Outer Tariff. One would have to do that provisionally at first, to make sure that we got concessions from America and Europe.

I think that resale price maintenance must be looked into a good deal more closely. Certainly we must have safeguards in certain industries, of which books is a notable example. There is no reason why we should not try to tighten restrictive practices and also scrutinise take-over bids rather more closely. So far as the pound is concerned, there have been inhibitions and exaggerated reverence for some of the myths about the pound which have strangled expansion, and we from these Benches have always in the past advocated an international pooling of reserves. As Europe is blocked to us for the moment, I dare say these could be negotiated on an Atlantic level for the time being; or, alternatively, that the United States and the International Monetary Fund should give us the backing for an exchange guarantee of the pound. At any rate, we can widen the exchange margins, and in the last resort we must remember that we must not allow the pound to become a sacred cow which one cannot touch in any way.

I think there is a good deal that can be done in order to promote expansion by public works, particularly roads and housing in the North, and a good deal which can be done so far as docks are concerned. As far as the export drive goes, I think considerable tax incentives are still open to us. I feel that the most important part of what I have said is the tying of "Neddy" to the Government's economic policy. I know that it is some time before "Neddy" is going to produce a Report. I do not think this matters. At any rate this is not a criticism of "Neddy" but of the fact that it has not been put into motion before. I cannot say that I feel at all convinced by the noble Viscount's defence, and I, for one, feel that no very good case has been made out by the Government. A great deal more will have to be done to cure the crisis of unemployment which may well be upon us.

7.6 p.m.

LORD MARKS OF BROUGHTON

My Lords, I was fascinated by the speech which was delivered to us this afternoon by the Lord President of the Council, to such an extent that anything which I may say in my few words will come as an anticlimax. To launch a colossal modernisation programme to prepare Britain for the twenty-first century is surely a clarion call. He looked forward to an amazing reconstruction of industry, housing, roads, railways, hospitals, schools and universities over a period of 30 years.

I think we are all concerned with the plight of the unemployed, for whom the prospects are rather bleak. I do not think that this is entirely a Party problem: I think it is a national and a human problem, and I could wish that something had been said about the interim period. I think that the way is opened a little by what the Chancellor of the Exchequer had to say in another place when he said that under the Local Employment Act, local authorities have power to do work in areas of high unemployment to improve the position, clear up derelict areas, get rid of pit-heaps, and so on. I feel that he could have said it a little better. I think that under this Act it might be possible to give some immediate employment to some of the men and women who have skills, and who could have done something towards repairing the ravages in their little towns; something that would perhaps bring with it a certain civic pride, and give them a little enthusiasm and just a little comfort for the time being.

I had thought of discussing problems that affect the relationship between business and the trade unions, but I fear again that at this late hour it would be an anti-climax. I believe very much in the programme which the Government have set for the Party. I believe that when that programme is carried out, as I hope it will be carried out under the next Government, we shall be well on the way to creating that England, that Britain, about which the noble Viscount the Lord President spoke.

7.10 p.m.

LORD PEDDIE

My Lords, my noble friends and other Members of this House have already drawn attention to the human tragedy that is involved in unemployment, and I am sure that all would agree that no words could possibly express in clear form precisely what unemployment means to those who have to experience it. Unemployment to-day is higher than at any time since 1947, and if we take the numbers of wholly unemployed the figures to-day are indeed worse than they were in 1947. A regrettable feature of the situation to-day is that this is part of a progressive decline. Recent surveys have demonstrated that this decline is stimulating and increasing depression and a state of pessimism, and. this unemployment that we are experiencing is a symptom of an increasingly serious economic situation. We on this side of the House at least have no illusions of grandeur so far as this country is concerned, but we are impelled to believe that we are capable of great things. We also believe that neglect and misguided adherence to outworn economic notions is doing much to undermine the basis of our economic strength. There is a mood of inertia and frustration throughout the community—and I would agree that it is not confined to one section of the community—and this at a time when potential world trade is probably greater than it has ever been.

The figures of unemployment which have been quoted in this debate highlight an imbalance in our economy. We have had reference to the distribution of population. We realise that 40 per cent. of our population is in six great conurbations. The trend and tendency to-day is to increase the concentration of popula tion and the figures of regional unemployment in particular areas in this country. I believe that a policy of drift over the years has helped to bring this about. It is interesting to note that it is not until the situation becomes utterly desperate that the noble Viscount is sent to the North-East, an action probably calculated to soothe, as well as to save.

It is also interesting to note that the lack of labour mobility which is often referred to (and I have heard it commented upon in this House) is not a contributory factor to this regional unemployment. Indeed, a recent Treasury bulletin for industry shows that nearly a quarter of the male population moved from one region to another between 1951 and 1961. But this increasing migration from the North and West, I sincerely believe, is a measure of the failure of Government policy over past years. We had a barren decade of planning when the granting of industrial development certificates became a complete formality and the distribution of industry policy was in abeyance.

I was interested to read quite recently an article by Mr. Anthony Gass, who is a very well-known town planner and a university lecturer. He made a statement that by the year 2000 there will be 20 million people living in South-East England; he emphasised the danger of encouraging this drift, pointing out that the economic consequences could be crippling for Britain. We had an immensely interesting statement from the noble Viscount. It is a pity that that same programme was not put into operation ten years ago. What is needed is drastic action to produce more balanced regions throughout Britain. Someone said, "Let us make the South less attractive". I do not agree with that, but I would certainly say, "Let us make the North more attractive."

The whole problem needs tackling from many different angles. I agree with the noble Viscount that improved communications, better roads, educational and cultural facilities; better housing and regional planning are needed. Better housing! One-third of all Lancashire people to day live in sub-standard houses; 1 in 5 in classified slums. There was reference to the fact that local authorities are to be stimulated to build more houses. The town of Oldham alone has declared that it would require £40 million to clear its slums—and this after ten years of Conservative Government! I am amazed that a Conservative Government, which quite legitimately claims close affinity with big business, which is supposed to know the art of large-scale operation, has, at least up to now, lived almost from day to day in its economic planning.

I would remind noble Lords opposite that it is not long ago that the Conservative Party treated the idea of planning, as suggested by the Labour Government, with derision and extolled free enterprise as a master solution. I would agree that every large-scale business has a need to plan, and so it does; but I do not believe that it is possible to depend exclusively upon the planning of large private enterprise organisations to provide a solution for our national problems: because all private enterprise planning must be conditioned, quite legitimately, by the motive of personal profit, and personal profit secured within the lifetime of the existing shareholders. I need not remind you, my Lords, that the North and the North-West are grim monuments to the dark memory of unrestricted private enterprise. I was interested to read the comments of Mr. Maudling at the weekend, in which he said: Watching trade figures becomes a form of economic hypochondria. What is needed is long-term planning. We spend too much time chasing confidence. What we need is determination. I agree that we are spending too much time chasing confidence. But that would indicate that confidence has been on the run; and that is the situation to-day.

I believe that we have all our priorities wrong to-day. I need only make the comparison, and ask your Lordships to make the comparison, between our expenditure over the past few years on education, housing or unemployment pay and that on armaments. I know that it is easy to criticise, and I am criticising at this moment. I agree that solutions cannot be found overnight. I believe, too, that the threat to our economic life to-day is as great as the threat to freedom was twenty-five years ago. I believe there is a need for urgency, and I believe there is a need to give people an objective which is not provided at this particular moment. There is a desperate anxiety for the provision of an overall long-period plan that will take into account the trends in world trade and development. There is a need to facilitate the growth of new industries and, in addition—a factor which is often overlooked—for an ability to deal smoothly with the problems of economic obsolescence that are inevitable in a changing world.

There are bound to be changes in the structure of employment. We can see a strong example in textiles, one of the first of our growth industries and at one time providing half of our total exports. You must have the ability to recognise a declining industry and provide the means whereby there can be an easy transition of labour from the dying industries into ones that are coming up in accordance with the demands of this particular moment. It needs a national operation to avoid an imbalance in development. This involves action on a wide front, as has already been stated, including roads, railways, the planning of new towns (I was pleased to hear the statement in that connection in the House this afternoon), the development of research, a major attack on housing and the treatment of education as a vital factor in the development of our nation. These master plans must be laid down, but in addition there is the necessity for immediate operations which fall within the compass of the master plan.

May I, without taking up too much of your Lordships' time, attempt to enumerate a few of the things which I believe should be done? There is first a need to apply greater incentives to bring about increased efficiency in both management and on the shop floor; there is a need for stimulating technical training and linking it more closely with industry and the education authorities. I can remember an incident more than twenty-five years ago when I was a teacher in a technical college. In my town at that time there was a great effort by a great man who was the principal of that college to bring together industry and education. In that particular field he was a pioneer. He gave me a demonstration of what could be done to increase enormously the efficiency of operators within industry.

There is a need to deal with the question of obsolete plant. Some 60 per cent.

of our machine tools are over ten years old, and recently we have had a statement given to the Board of Trade, as the result of their regular inquiries into fixed capital, that there is an indication that industry looks upon fixed capital as likely to suffer a severe fall over the forthcoming year. In the past the excuse has been given that demand has been so great that obsolete plant cannot be taken out without lengthening delivery dates. Capital development is essential to productivity, and I do not believe that it can be left entirely to private enterprise to do this without Government urge. Why? When profits are good and business is booming there is a general idea that existing plant is adequate. Then, when times are bad, confidence is reduced and there is no action.

Another point—and it is well to bear it in mind, whether it be a good or a bad thing—is that half the jobs in Britain are in the service industries. I think there is a strong case for carrying the distribution of industry policy into the service sector and to control regional growth, such as new office buildings. In that regard, I think that companies should be required to obtain office development certificates equivalent to the I.D. certificates. The noble Viscount himself made reference to the fact that if attention were given to this particular point of service industries being brought into these areas, it could also make for a richer and more varied life.

Then there is the question of marketing. I was glad indeed that the noble Viscount made reference to his belief in the need for stimulation of East-West trade. I think we have too great a concentration upon traditional markets, and too fixed an idea that goods will sell themselves. What is needed is an aggressive pursuit of new markets and exhaustive market research. In this particular regard the Government could do a great deal. I know that many facilities are already provided, because I have had the need to use them on occasion, but I think there could be a great deal more done by the provision of highly-developed market research, available to all sections of industry, so that every industrialist, no matter how small he might be, would have detailed information concerning any and every market in the world. That is a job which the Government could do. They could do it either directly or by encouraging effort among industries.

Then, labour relations. I know that this matter demands a combined effort of the trade unions and employers. It may be necessary—and I would share the view that has been expressed—that even present traditional trade demarcations should go. In that regard, I might say that in my own capacity in the organisation that I serve I am responsible for conducting negotiations with trade unions on wage agreements. It covers 55,000 employees, but we deal with seventy trade unions—rather too many, in my opinion. What is the position in regard to what is happening to-day? It is my honest view that there is little coordination between Government Department and Government Department, and I doubt whether they are harnessed to one overall plan. I would ask: do Ministers make decisions without reference to each other? I ask that because there is evidence that the Ministry of Transport is basing decisions on existing traffic and not on possible future needs. As an illustration, Dr. Beeching is ruthlessly pursuing a policy of making a profit, presumably regardless of regional planning, economic needs and social requirements. He may be doing his job efficiently, but at least Dr. Beeching and everybody else should know that what is being done is in keeping with some master plan laid down by the Government.

Perhaps, in passing, I may just quote a case which was referred to in the Guardian. An article on unemployment in Cumberland made reference to local fears that Windscale may decline and cease in its volume of employment. They felt that they were exposed to the threat that, so far as the Government were concerned, the Home Counties would prove a better area for scientists to work in. A journalist went up there and, in travelling from London to the North, found himself turned out of his sleeper at Barrow-in-Furness, and he had to travel in an unheated carriage for two hours to Whitehaven. How is it possible for an area of that kind to develop without proper and adequate transport facilities? I would urge that we should seek to bring about development in those areas. This is a matter of paramount importance in this area.

In conclusion—and this may be considered revolutionary—I believe that the whole pattern of Government control needs revision. Over the years we have exalted the Chancellor of the Exchequer, or the office of Chancellor of the Exchequer, and in theory have centred the power of economic incentive and deterrent in his hands. This attitude of mind stems from the time when the Government had neither the power nor the desire to exercise any influence upon the economy. To-day, I think it is an anachronism, and I believe it is ludicrous to have each year the sight of the Chancellor holding aloft a black box which contains the nation's hopes and fears—and, like Pandora's Box, with hope generally at the bottom of it—and coming along with efforts that would indicate, on occasion, that a purchase tax reduction on cosmetics or toilet preparations or babies' dusting powder (there is no tax on babies' dusting powder if there is no scent in it) makes some real contribution to the development of the economy. Revenue we must have, but I believe that we should bring about a form and rate that could be set for far longer periods than is the case to-day. If the economy is developed at the rate it should be, the revenue itself will increase with it, and, in consequence, develop the national income, without any violent changes in taxation.

My Lords, I believe that we need a big-scale planning authority with power—because I do not think that a part-time "Neddy" is adequate in the circumstances of to-day. Such is the problem. As a result of this debate, I hope that there will be a clearer indication not only of the problem but of the necessity for radical, if not revolutionary, ideas to deal with the situation.

7.22 p.m.

LORD HAWKE

My Lords, unemployment is such a tragic personal problem that it tends to lead to treatment on the emotional scale; whereas, to do any good, one has probably to treat it as a scientific problem. Since the war we have had a managed currency, and though we are learning we still have a great deal left to learn. To-day we have reached conditions which have not prevailed before—that we have to manage the currency in conditions of surplus commodity supply and surplus conversion capacity. In these problems of managing the cur rency, the Chancellor of the Exchequer is, of course, dependent on his technicians.

LORD SHACICLETON

My Lords, will the noble Lord forgive me? Did he say "a surplus of conversion capacity"?

LORD HAWKE

Capacity in factories to convert commodities for consumer goods. The Chancellor of the Exchequer has to rely on his technicians who lurk in and around the Treasury, and by the long traditions of Government service advice is not given until there is a reason for it on the file. The unfortunate part in these vital economic decisions is that only too often the situation has changed by the time the figures percolate to the file and the minute gets through to the Minister. In fact, it is only too easy to catch trains—by last year's Bradshaw. The deflationary policies of the former Chancellor of the Exchequer were, in my humble opinion, absolutely correct, but they were applied too late and kept on too long. Eventually they had to be much stronger than they need have been; if applied earlier they could have been much more gentle.

My Lords, before one condemns him, one must consider the background against which he had to work. He is trying to maintain an international currency with utterly inadequate reserves. Therefore he is dependent on the confidence of the central bankers of the world and requires their co-operation in all major steps he takes. Their cooperation depends on Britain's following a policy which they regard as wise and acceptable. And the central bankers of the world suffer from the same difficulties as our Chancellor of the Exchequer—too slow diagnosis through statistics, and so on. Moreover, at present they tend to be rather suspicious of Keynesian solutions. In fact, the President of the International Monetary Fund not very long ago had to warn the central bankers of the world that he thought they were barking up the wrong tree: in other words, fighting the battle of inflation when they should have been fighting the battle of deflation. In fact, our Chancellor is a prisoner of the convertibility of the pound. Nevertheless, the steps Mr. Selwyn Lloyd took had some results which were badly needed by British industry. By destroying confidence in the future and checking expansion he put an end to a great deal of concealed unemployment whereby employers were hoarding labour; and by creating an atmosphere of increased competition and pressure on profit margins he led to economy in the use of labour and increased efficiency. That, of course, led to unemployment to a degree

What are the lessons to be learned from these happenings. First of all, that for years every monetary step we have taken has always been too late—both the application of the brake and the application of the accelerator. Secondly, it has been proved wrong to rely on monetary means to check a wage inflation. What are we to do now? The Liberal Party's solution, so far as I can understand it, was to apply a wealth tax and reform the income tax. I am not sure about its relevance to the unemployment problems. As a consumer, I welcome the large concessions to the consumer which the Chancellor of the Exchequer has made, but I share the misgivings of the noble Lord, Lord Eccles, in this matter. I am distinctly nervous that we shall get an inflationary boom in Birmingham before we get unemployment down to a reasonable figure in the black areas.

I feel that the other side of Government action is the more promising. At the moment people, I presume rather nervous about the future, are doing much more saving than they have been of late. The building society deposits are high, small savings are high, the gilt-edged markets are not bad, and so on. I should have said that there is large scope for Government spending, which has been greatly neglected in the past, for whenever anything like an inflationary situation arose in this country and the brake had to be applied there were always very strong cries from all banking and business interests that Government expenditure must be cut. The result is that there is a great deal of Government expenditure which should have gone on in the past but which never took place. I am glad to see that the power industry is making up for lost time by placing orders now.

A great deal of Government spending of course takes place in effect as building and construction of one sort or another. That industry, at any rate in the South, is definitely over-employed. If Government spending of this nature is to be effective in the North and do good there, some of the capacity in the South must somehow or other be released from use. For that reason I feel certain the Government ought to take some steps to stop the redevelopment of London which is now going on. One could say that there is not sufficient mobility of labour for that capacity to be available in the North. That does not apply quite so much to the big contractors, who enjoy considerable mobility of labour. A reduction of their work in London would enable some additional work to be undertaken in the North.

Private investment has been on a very big scale, and I do not think, however much the Chancellor of the Exchequer tries to instil confidence into the economy, that he is likely to get a very large increase in private investment at the moment. So Government expenditure must make the running, and there is a wide enough field, because there is not only the schools, hospitals, prisons, et cetera, but also communications and defence. Experts on defence keep on telling us that various of the weapons and equipment of our Forces are quite out of date. Now is the chance to replace them. There is not the slightest doubt that, in what remains of the Colonial Empire, a great many capital projects could be brought forward more quickly if the finance were available.

In fact, to-day is the Government's golden opportunity, because for the first time for very many years people are crying out for the Government to spend. Usually it is the very reverse; people cry out for the Government to reduce their expenditure. So now the Government should go in and make hay while the sun shines, and get moving a lot of these schemes which ought to have been done a long time ago. They can be selective geographically in a policy of this nature, with the result that the benefit will be much more accurately targeted than if they rely merely on general tax concessions.

That, of course, is for the short term, but for the long term I think the imaginative proposals of my noble Leader are most encouraging. One of the most important of those is the retraining of men for the new skills, instead of for the old ones. But, generally, I would agree with all those noble Lords who were saying that the country is longing to be given a lead in these matters, particularly the youth in the country. They are disillusioned and lack purpose. They want a clarion call to go out to build a newer and better Britain, and I hope the Conservative Party leaders will be able to give that call.

7.43 p.m.

VISCOUNT MASSEREENE AND FERRARD

My Lords, I intend to speak chiefly about the economy of the North of Ireland as regards unemployment. But, first of all, I should like to say that I consider that the Opposition have been rather unfair to Her Majesty's Government. One cannot put the whole blame for the recent rise in unemployment on the Government. The rise is, in fact, a result of economic forces over which neither the Government nor management have any direct control. We have heard to-day how there is growing surplus capacity throughout the whole world. For instance, the under-developed countries, such as India, are producing steel plants, and our textile industries have to compete with low-cost Asiatic labour, while our shipbuilding industry has to compete with an abundance of foreign yards, notably in Japan, where labour costs are far lower than ours. You could, in fact, have the whole world merchant fleet rebuilt in ten years if all the yards were working to capacity; but, if you consider that the economic life of a ship is 20 years, that is enough to make you think.

But, my Lords, you cannot ask the Government to shore up a whole industry against the tides of world economic forces. You can ask them to help the more efficient firms to cope with the growing competition in the world, and I consider that Her Majesty's Government are doing that. Of course, we also have the issue of unemployment further bedevilled by the ever-growing population. Nobody has brought out in favour of the Government that, in spite of the recent rise in unemployment to 814,000, there are 2½ million more people employed to-day than at the end of the 1940's, when there was hardly any unemployment at all. So you cannot accuse the Government of being futile about this, and I think it is extra o ordinary that nobody brought that out.

Party politics being what they are, I agree that it is extremely tempting to introduce measures that will reduce unemployment quickly, rather than to increase the efficiency of industry, as the noble Lord, Lord Eccles, said. But the only long-term cure for unemployment is, of course, to increase the efficiency of industry and therefore the production of wealth, because it is only by producing wealth that you can maintain the standard of living of your people. Therefore I would say to Her Majesty's Government: Do not be panicked into too vast a programme of public works, such as roads, houses, schools, and so on. I agree that these things are extremely necessary, and they are also an indirect way of producing wealth, as they attract industry to the area where you have good communications and social amenities. But I really cannot see how we can attain the annual growth rate of 4 per cent. for the economy laid down by "Neddy", if the Government embark on a vast programme of public works expansion.

The important point, as I see it (and I think the noble Lord, Lord Eccles, also brought this out), is the efficiency of investment, rather than the quantity. That has to be borne in mind for the long-term view. Of course, we all deplore unemployment, but I feel that certain noble Lords opposite have rather overplayed it emotionally. After all, now that we have the Welfare State, unemployment is not the misery that it used to be fifty years ago. I know some families who are now out of a job, and I am extremely sorry for them: they cannot run their car, perhaps. But it honestly is not the terrible privation that some noble Lords have made out. I sometimes apply to a labour exchange, when I ask for an odd-job man or a manual worker. The exchange have plenty of unemployed, but you can hardly ever get anyone: either the job is not well enough paid or the house is not large enough. Unemployed people are quite choosy, sometimes, so it cannot be such a tragedy. Then take domestic service: even with this unemployment you cannot get domestic staff in this country. It has all to come from the South of Ireland, Portugal or Spain. Personally, I think that the parity of wage rates, which we have to a great extent, owing to the unions, irrespective of the ability of a man, is rather pricing a lot of people out of jobs.

My Lords, perhaps I may now turn to the North of Ireland, from which I have just returned. As your Lordships probably know, the North of Ireland has had the highest rate of unemployment in the United Kingdom for many years, even before the war. We have to remember that unemployment in the North-East of England is comparatively recent. I agree that it is extremely regrettable, but it is recent. I have actually heard of one or two shipowners who have had their ships built abroad, rather than have them built in the North-East, because they were frightened about delivery dates. But in the North of Ireland, on the whole, there has been a very good record from the labour force; there have not been restrictive practices and unofficial strikes in the North of Ireland to such an extent as in other parts of the United Kingdom.

My Lords, the high unemployment rate in the North of Ireland is due to a variety of factors quite beyond their control. Your Lordships all know her geographical position. Freight rates across the Irish Channel can add up to one-seventh to the price of an article exported. Northern Ireland has also no natural mineral resources to support her home market; and she has, of course, an extremely small home market. She has one-third of the population of the whole of Ireland, 1,400,000, but she cannot find any outlet for her goods in the South of Ireland, which has two-thirds of the population, because the Eire Government is building up its industries behind a high wall of tariffs and import restrictions. On the other hand, the North of Ireland has to allow in Southern Irish goods and English goods free of duty. It is an extremely one-sided arrangement.

Her industries, too, are at a great disadvantage compared to those in Great Britain, owing to her remoteness and small home market. But the other great disadvantage that she has is that the majority of her employment is in contracting industries, old industries such as shipbuilding, the linen industry and, of course, agriculture. The linen industry has contracted by two-thirds during the last two years. The shipbuilding labour force has almost halved since 1961. Agriculture has declined for a generation in regard to the number employed: it has fallen, in fact, by 28,000 in the last seven years. Again, in Northern Ireland, as in England, there is the problem of a population increase. There is an annual population increase of about 15,000. There is, it is true, a certain amount of migration—it is sometimes as high as 9,000—but we do not want people to have to leave their homes through force of economic circumstances. As in England you find more people employed over the last ten years, but, of course, the numbers of people demanding employment, owing to the population increase, are greater than the numbers of jobs available.

I agree, my Lords, that Great Britain has done a great deal for the North of Ireland. It has had parity of benefits. The British Government provides, I think, about £40 million annually to ensure that the North of Ireland has the equivalent agricultural subsidies to those in England: she has old-age pensions, National Assistance—all those social benefits. But, the same is true of the Highlands of Scotland and other areas where the incomes are lower than the general average and, therefore, the tax capacity is not sufficient to provide those benefits.

The North of Ireland industry also has the advantage of derating, which we do not have in England now. In April, 1963, this benefit will further increase, which will be a great help to Northern Irish industry. I think it is equal to about half a million pounds at the moment, and it is going to increase. We have also had the coal subsidy extended to oil; we have had the agreement between the two Governments to provide finance up to £10 million to Short Brothers for the completion of the ten Belfast freighters, and, of course, we also have the aid by the Northern Ireland Government to expand new industries. This has proved successful; but, here again, the success has been hidden and it has been to a great extent nullified by the declining employment in the old industries, for example, shipbuilding.

Also, the problem in Northern Ireland is not helped by the fact that the North Irish workers belong to English unions, unions based in Great Britain. The majority of the workers' unions are not based in Northern Ireland. Therefore there is a parity of wage rates between the two countries. I am all for Northern Irish workers having the same wage rates as in England, but the trouble is that the net output per operative in the North of Ireland is lower than in the United Kingdom. Mr. Dennison, the economist, said in 1957 that it went down to 68 per cent. compared to that in England.

Of course, the North Ireland labour force in zeal and discipline is every bit as good, and personally I think better, than the average over Great Britain, but the trouble is that in the North of Ireland the cost of materials, components and fuel is greater than in England. Therefore you have lower productivity, which is not the fault of the labour force. To put it plainly, if the labour costs in the North of Ireland were correspondingly lower than in England, if you could have the same costs of production—in other words, the same costs of production in England and in Northern Ireland—then the lower productivity of the North of Ireland would not matter.

LORD SHEPHERD

My Lords, would the noble Viscount allow me to interrupt? Would the noble Lord not agree that in Southern Ireland, where there are new modern industries, these are able to compete very favourably with the industries in the United Kingdom and on the Continent? That is the reason that those factories have gone there. If that type of industry were brought to Northern Ireland they would be in a position to compete. The question of the cost of raw materials would not arise.

VISCOUNT MASSEREENE AND FERRARD

I quite agree. The noble Lord has, forgotten, I think, that in the South of Ireland wages are far less. The agricultural wage is only £6. But that is what I am trying to say. If you can bring the labour cost in the North of Ireland down—I do not want to bring it down by paying the North Ireland labourer less, but if you could bring it down—you would attract a great deal more industry to Northern Ireland, as has happened in the South.

LORD SHEPHERD

My Lords, what is really needed are modern factories and modern machinery in Northern Ireland, and therefore higher productivity.

LORD AMPTHILL

My Lords, before the noble Viscount gets up again, I can tell him that recently I was engaged in a manufacturing enterprise in Northern Ireland which employed some 3,000 to 4,000 people, and our manufacturing costs—and we paid the same wages as in the United Kingdom—were, if anything, slightly lower than at our factory in Manchester. In fact, I started with an entirely new enterprise in Northern Ireland manufacturing small cigars. I sent a foreman and six girls to Cardiff. After six months we brought them back to Northern Ireland on January 1 and started them up. Here I must speak up for Northern Ireland. By the 31st March their quality was up to the Cardiff standard and our cost was lower than in Cardiff.

A NOBLE LORD

It was a modern factory?

LORD AMPTHILL

Actually it was a shed—but a new shed. But one of our factories in Northern Ireland is very modern. The other factory is not so modern. But what I have said about costs applies to them all.

VISCOUNT MASSEREENE AND FERRARD

I quite agree with the noble Lord as regards new factories. A new factory has just been started at the back of my house in Northern Ireland. But I am talking about Northern Irish industry as a whole. What I am driving at is that I should like the Government to look again at the proposal of the Northern Ireland Government for an employment subsidy. Your Lordships have not understood me. I do not want Northern Irish workers to have lower wages—I want them to have more. I am saying that owing to extra costs of fuel and transport it is harder for the older industries to compete. They have this lower productivity.

As this Government have turned down the proposal of the Northern Ireland Government for an employment subsidy, I ask them to look at it again. They turned it down chiefly because they thought that indiscriminate application of an employment subsidy to all productive industries would inhibit the healthy process of change and the development of new industry. But why cannot they grant employment subsidy for new growth industry? There again, they probably object on the ground that while wages in the United Kingdom are on the same level as in Northern Ireland objection can, I suppose, be raised in principle to subsidising the prime costs of production in any given area. But the point I want to make is that one cannot count Northern Ireland as "any given area". The Government are always inclined to class Northern Ireland as part of the United Kingdom, but, of course, it is not. It is the United Kingdom and Northern Ireland. So the Government are probably afraid of setting a precedent by helping Northern Ireland when other districts in England and Scotland are not helped to the same extent. But I maintain that, owing to her geographical position and her other disadvantages, Northern Ireland has every reason to be classed as an entity on her own. We ought not to class her along with England, Scotland and Wales.

Therefore I would ask Her Majesty's Government to try to make special provision for Northern Ireland. I should also like the Government to bring all possible pressure to bear on the Eire Government to lower the tariffs against Northern Ireland, because it seems absurd that there should be these high tariffs in that country. I hope one day to see the tariffs between North and South completely abolished. I would say again, before I end, that Northern Ireland is a particular area which requires particular policies for particular problems. The Northern Ireland Government on its own has not the jurisdiction or the mandate to do all these things. It must have the help of Her Majesty's Government to cure these ills.

8.13 p.m.

LORD SHACKLETON

My Lords, I had never expected, even in the lifetime of the present Government, to take part in a debate on unemployment with the figure at the level of 800,000. I think that the facts have come out clearly and I do not think that the extent of unemployment, or the fact that its seriousness is in particular areas rather than in the country as a whole, is in dispute. A number of noble Lords on this side of the House have made powerful, indeed almost heated, speeches, as did my noble friends Lord Hughes, Lord Peddie and Lord Lawson. I think that the House generally appreciates what a ghastly disaster unemployment is to the family of an unemployed man, though I am not sure that the noble Viscount who has just spoken appreciates it.

My noble friend Lady Summerskill drew attention to a peculiar thing, on which perhaps the noble Earl would say a few words. This matter was referred to in an article in The Times either yesterday or to-day. It is called the wage stop. I will not waste the time of the House by trying to explain what it is, but it is a type of restriction on the amount of assistance an individual may get which is related to his previous wages. Obviously this was an authoritative article, and I would not expect The Times to devote so much space to it if it was not felt to be a serious hardship, and perhaps the noble Earl could answer that.

The main criticism from this side of the House—and certain noble Lords on the other side have advanced towards it—has been the failure of the Government to foresee this situation, of which they have had considerable warning certainly from the Opposition, and their failure to use the machinery at their disposal with determination. I do not need to go again into the costs of unemployment. We know that the cost in unemployment pay alone has been estimated at £150 million over the year, which is pure waste in productive terms.

I think that it showed a certain amount of frivolity on the part of the Prime Minister to attribute the figure of unemployment to uncertainty about the date of the next Election. This does not make one think that the Government are taking unemployment very seriously, even allowing for the enthusiasm with which the Prime Minister is greeted on certain occasions when he talks about laying sound foundations. This does not conceal the fact that there is an innate lack of seriousness in regard to this problem. I would emphasise one point, which has been made in another place and developed outside; that is what is sometimes referred to as the local multiplier effect. This is a different multiplier from the one to which I think the noble Lord, Lord Eccles, was referring. It is that for every man who becomes unemployed, unemployment is created for another man. And the reverse is true in areas where there is excess employment. For every job which is created, there is a pull for more people to come in and take employment there.

It is against this background that I should like to discuss the speech of the noble Viscount, Lord Hailsham, which either fascinated, or—I will not say, repelled, but certainly led to some confusion. And I feel very nervous about trying to interpret what the noble Viscount said, for fear that I, too, shall fall into error and attribute to him something which is the reverse of what he intended. What is certain is that he so greatly impressed the noble Lord, Lord Marks of Broughton, that the noble Lord decided not to deliver his speech at all, but preferred to call it a clarion call and happily go off to dinner. I think that this is an achievement for which the noble Viscount, Lord Hailsham, can claim some credit. However, I do not think that he impressed either the noble Lord, Lord Eccles, or the noble Lord, Lord Balfour of Inchrye, quite so much.

What is so endearing about the noble Viscount is his fresh discovery of truths which have been known to others for some time. It seems that to-day we have reached the end of an epoch. On an earlier occasion, in 1959, the noble Viscount said that unemployment was due to eighteen months of world recession. But this is the beginning of what one might call the new Hailsham epoch. The new discovery, which will be marked in economic textbooks, is that from 1945 to 1963 full employment was there without effort—just one of nature's laws. But from 1963 on—and this is what was so ominous in the speech of the noble Viscount—full employment is no longer with us. This, I think, is apparent to us all. But what I regard as depressing is the fact that he firmly repudiated the idea that Government policy or Government financial policy was in any way responsible for this.

I do not wish to bore the House, or the noble Viscount, by going back again over all the different kinds of unemployment. But if I remember my theory there is something called general unemployment; there is also something called frictional unemployment (which we need not bother about, to-day); there is strictural unemployment and structural unemployment—namely, unemployment in industries where world demand had fallen, or home demand had fallen, or technological change had led to a decline. That was with us very much before the war, as it is now in certain areas of this country. This was the very thing that we were talking about earlier this week, in the debate on industrial training—the danger of technological unemployment. But, having said that, I would add that I do not know why the noble Viscount suggested that the situation will improve as the year goes on. He then threw out, as a great source of wisdom and encouragement to us, that in fact the Government would apply Keynes, and that Government expenditure was now proudly running at a level so great that we had no more to fear. It is against this background that he obviously offered the people of the North-East face, faith and courage.

The noble Viscount then had a blinding flash of inspiration. He said that if we go on treating two halves of the country alike—I will not go further because I may have the words wrong, but he implied that disaster would follow. Ever since planners have been trying to plan and certainly since the period, not merely at the beginning of the Labour Government, but during the war, in the days of the Coalition Government, it has been recognised that it would be necessary to apply certain incentives and certain sanctions in order to prevent the whole of the population of this country from going to live in the London area. This is really fundamental to Government policy, and our complaint. In the days immediately after the war, the Labour Government applied much more strongly the powers contained in the Distribution of Industry Act, and we used much more freely the incentives which were available.

The noble Viscount then journeyed to the North-East—and this, I should have thought, would have been a journey into reality. But it has here, too, a certain fairy-tale quality. He met some good fairies; indeed, he consulted the Churches, and I admire this thought of his that he wants to create not just full employment, but the good life as well. But this is really not going to arouse very much enthusiasm unless some immediate strong action follows. The noble Lord, Lord Lawson, who may have misunderstood some aspect, was fundamentally right in saying that, despite all the things the noble Viscount said he was interested in—docks, hotels, sports fields, communications, airfields (incidentally, he did not quite tell us how he was going to finance all these) he did not give us the evidence of real achievement. It may well be that it is not within his power, and that the noble Viscourn role as a stimulator is 'the most the Government can do. I fully accept that wherever the noble Viscount goes, something happens; and I am inclined to think that something happens for the good and that he has a stimulating effect on people. But how is he going to do this? Where is the money coming from for this development?

Here I should like to ask a question—and again perhaps we may have an answer. The Government propose to spend certain monies under the Local Employment Act, an Act which we have criticised and of which I have some other criticisms. Presumably, in the present situation they expect to put up their expenditure. Yet when we look at the Vote on account the figure for 1962–63 to be spent for promotion of local employment under the Local Employment Act by the Board of Trade is £41 million, and in 1963–64 it is £24 million. So all we know is that the Government are going to spend less money on this matter than in the previous year. There may be a simple explanation, and I hope that the noble Earl will be able to obtain it by the time he conies to reply.

I should also like to ask what is happening about the Teme Valley Company, which has now been changed into some other and rather more high-sounding name and which is referred to in the Local Employment Act. One of the troubles of the Local Employment Act is that it reduced certain powers, and what used to be called the Teme Valley Corporation or Company is now the Industrial Estates Management Corporation for England. Here is a body which had the "know-how", the policy and the desire to promote action. How is this going to be used? Did the noble Viscount have dis:ussions with the Teme Valley team? This seems to me to be one of the first things that he would have done when he went up there. I do not ask the noble Viscount to make another speech, but perhaps the noble Earl could reply to this.

VISCOUNT HAILSHAM

My Lords, perhaps, in order not to embarrass my noble friend, I can tell the noble Lord that I did see the senior officials there, and I am lunching with the rest of them to-morrow.

LORD SHACKLETON

I am delighted to hear that. I think it is rather surprising that the noble Viscount has left his lunch quite so late. He might have come back with some definite answers on this point. I should like to recommend to him, in all seriousness, that he should seek to give them more power to promote industrial activity in the area. They have been turned much more into a sort of property management team. I think they ought to be enabled to promote and develop in a way that recently they have not been able to do. I am sure the noble Viscount will bear this in mind over lunch to-morrow.

One thing is quite clear. This is not just a natural phenomenon of a kind that man is incapable of meeting. The noble Lord, Lord Plowden, showed clearly that it was to a large extent the result of the miscalculations of the Government in the Budget last April. There are cures which the Government have still not fully used. I personally would support the Government on the things they are doing; I think they are desirable and that they will have some effect. In particular, I should like them to bear in mind this possibility of a further increase, to which I think one noble Lord referred, in the 75 per cent. grant in relation to derelict land. But it is important that the noble Viscount should approve what I think my noble friend Lord Peddie advocated—namely, more balanced regions in regard to development activities. It was as a result of the Government's decision and the Local Employment Act that they broke up areas for development into little penny packets, instead of looking at the whole area. This is a criticism that the Opposition have made, and we still maintain, and I hope that the noble Viscount's support for balanced regions will bear fruit.

I should like to turn briefly to the speech of the noble Lord, Lord Eccles, because I think he touched on a fundamental point, one on which there is real division in the country to-day among politicians and economists. I am quite sure that, irrespective of the need for developing specialised drives in certain areas, there is a need to increase consumption and, indeed, to increase the flow of money to make up the deficiency which the Government failed to foresee. This is something which I hope the noble Viscount will also take seriously.

I think the noble Lord, Lord Balfour of Inchrye, would not have gone the whole way with the noble Lord, Lord Eccles, in this. It is essential that we should increase demand and that we should not rely, as, contrary to what the noble Lord said to-day, we have relied in the past, on the type of monetary policy that has been applied. I think it was in 1960 that the noble Viscount, Lord Hailsham, said: We applied the monetary remedy and by and large our prescription has succeeded. Unfortunately, as the noble Lord, Lord Hawke, said, this particular medicine went on being used a great deal too long, and in the end the patient had built up a resistance until it was positively poisoning him. I think the time has come when there has to be a further injection into the economy in order to increase demand.

As the noble Lord, Lord Eccles, said, the danger is the danger to our balance-of-payments situation, and the danger of increasing inflation. In a debate in another place, the Prime Minister, who shied rather nervously away from the discussion of increasing demand, said something to the effect that he would not go into the question of achieving expansion without inflation. This is understandable, because the Government have notably achieved inflation without getting expansion; and it is precisely because this particular policy over the years has failed that we urge the Government now to go into a much more expansionist policy. There will certainly be a risk to the balance of payments, but I would urge that international banking techniques, as we have them now, have improved to a point that the risks are less. We were confronted with a potential, seri- ous balance-of-payments crisis not long ago, and by borrowing from the International Monetary Fund and by the action of the international bankers we got through without any trouble at all.

I am sure that the figure of 3½ per cent. increase is not enough. I should like again to refer to the speech of the noble Lord, Lord Plowden, who mentioned the review of the National Institute of Economic and Social Affairs. The figure is as good a guess as we can get, but it would be interesting to know whether the National Economic Development Council and the Government would agree with it. They reckon that a 3½ per cent. increase would not be enough this year to reduce unemployment at all, because the productive capacity within industry—the unused capacity—is quite sufficient, and more, to increase production by 3½ per cent. without employing another single man. It is urged that we should inject some £400 million of purchasing power into the economy and raise the rate of expansion this year from 3½ to 5 per cent. Clearly, we could argue at length about this aspect of it, but we urge that the Government should follow a more expansionist policy. If we do follow that policy it is only going to bring us up anyway to the level of expansion which is going on in the European Economic Community. We hope, however, that we can get sufficient co-operation, if enough countries are expanding at the same rate, for us to avoid a balance-of-payments crisis. In any case, this is a risk I think we must take.

I shall not go more fully into the dangers and the action that might have to be taken if we were confronted with a more serious balance-of-payments crisis, because that would raise a much wider question. On the one hand, we are asking the Government to make more use of their negative powers of control, in particular in regard to industrial development certificates, which were used much more strongly in the days of the Labour Government. I know it has been argued that they are only of limited effect. You cannot make somebody go somewhere by merely preventing them from putting up a factory somewhere else. But there was a good deal of success, and we look to the Government to see whether they can use this power more seriously.

Finally, we hope to see a further report from the noble Viscount as to his many specialised Ministerial activities. I wonder why they chose the North-East and not Cornwall for him? There, after all, is another area with the most acute and chronic unemployment, for which there appears to be no relief at all. We are not satisfied that the Government are yet taking this matter as seriously as they should. If they would only show some sign of repentance for the errors of judgment which they showed earlier in the year, we should be more inclined to believe that they now mean business.

8.37 p.m.

THE EARL OF DUNDEE

My Lords, before I say anything about the general debate, the noble Lord, Lord Shackleton, in a very entertaining and interesting speech, particularly asked me to reply to a question about the wage stop which was raised earlier by the noble Baroness, Lady Summerskill. I must say that I did not know there was any misunderstanding or difficulty about this wage stop. I sent for the article in The Times to which noble Lords referred, and I have it here. It is so long that if I had tried to read it I should not have had time to listen to the equally interesting things which the noble Lord, Lord Shackleton, and others were saying.

However, this wage stop, as probably the noble Lord, Lord Shackleton, and the noble Lady will remember, was introduced by the Labour Government in 1948. At that time it was felt—and it is felt still—that it would not be appropriate that a man should be better off without any work than when he was working. For that reason, the Labour Government in 1948 introduced this wage stop into the National Assistance (Determination of Need) Regulations, 1948. Section 9 of the National Assistance Act from which it derives says: An assistance grant shall not be made to meet the requirements of a person (including requirements to provide for any other person) for any period during which that person is engaged in remunerative full-time work…". The Regulation was designed to implement that.

I would mention to your Lordships that this provision does not prevent the Board from meeting cases of exceptional need. The Board estimate that about one in eight of those who were unemployed at the December count were affected by the wage stop, and of this number about half were receiving small amounts of supplemen- tation. The wage stop does not necessarily mean that it is limited by the last amount of wage which a man was receiving. My right honourable friend the Minister of Pensions and National Insurance stated the other day that a man is prevented by the wage stop from receiving more in assistance than he would have been earning in his usual occupation at present. And he stressed the words "at present" for he is not held down to what he was earning when he was last in employment. It is what he would now be earning if he were in employment in his usual occupation. I am sorry I have not had time to read the newspaper article, but that I think, is the fullest answer I can give.

I have often noticed in your Lordships' House, even on a debate of censure, that most of your Lordships are more inclined to be constructive than to be polemical. I have listened to the whole of this debate since five minutes to three without leaving the House, and although there have naturally been some polemics I feel justified in saying that, on the whole, this debate has been very constructive and that its constructive features have easily prevailed. Having lived in the 'thirties near Dundee, which was an area of heavy unemployment—I sat for West Renfrew where unemployment was sometimes as high as 46 per cent., and in one town at one time it went as high as 70 per cent., and that was my constituency—I know as well as any of your Lordships how we all felt about it in the 1930s and how those of us who can remember it feel about it now. I think, therefore, my Lords, that we can always excuse deep feeling, and even heat, when the subject is being discussed; and I think it is impressive how objective and constructive your Lordships' criticisms have been all through the debate.

Whether you agree with the arguments of my noble friend the Lord President of the Council and Leader of the House or not, I think your Lordships on all sides of the House will welcome a speech which not only was a remarkably valuable analysis of the situation but adumbrated a very imaginative and constructive policy. I think it was one of the most interesting and remarkable speeches which I have ever heard my noble friend make, on this or any other subject, and I have very little of my own to add to it.

The debate began with the 1944 White Paper, to which the noble Earl, the Leader of the Opposition, referred, and since it was produced by the Coalition Government of Sir Winston Churchill in the war it has been the basis of employment policy accepted by all Parties, although they have sometimes disagreed about its application. We are all agreed that when the economy becomes too slack and when there are signs of unemployment rising—the figure is not significant in any particular way but it was usually agreed that 3 per cent. was the figure above which unemployment should never be allowed to go—monetary and fiscal steps should be taken to stimulate the economy together with certain measures of physical control about whose desirable extent we may differ; but none of us are against the principle of using certain controls like the industrial development certificates.

One thing the 1944 White Paper mentions as a necessary condition of the success of the policy it recommends is that personal incomes should not rise too fast in advance of production and investment; and it is in that respect that I think all Governments, or perhaps I should say the country under all Governments, over the last eighteen years has not succeeded in carrying out the principles of this White Paper. What has happened is that production has increased and our economy has greatly improved; but not quite so fast as it ought to have done, and we have not had enough surplus to do what we ought to do or want to do for foreign countries because of these continual balance-of-payments crises, the recurring shortages in the balance of payments which are normally traceable to what is called the wage-price spiral.

THE EARL OF LISTOWEL

My Lords, may I interrupt the noble Earl? Does he mean foreign or Commonwealth countries? I am sure he does not want to go on record as having said something he did not mean to say.

THE EARL OF DUNDEE

Did I say foreign countries? I meant underdeveloped countries, and I am grateful to the noble Earl for making that correction. To say aid to foreign countries might have been misleading, but I think it is generally known that our aid is for underdeveloped countries, some of which are foreign and some Commonwealth.

The noble Lord, Lord Shackleton, was good enough to say that he agreed with a great deal of what the Government are doing, and while I equally agree with a great deal of what the noble Lord said, I would not agree with his statement that over the last few years we have achieved inflation without expansion. If you look at the industrial production figures (I will go back only to 1958, because that is the last time when they were rearranged on the basis of 100), you will see that they were 100 at the end of 1958; 105 at the end of 1959; 112 in 1960; 113 in 1961; 116 in 1962. Of course we should have liked the growth to be quicker than that, but it is sixteen points in four years. Admittedly there was more in one year than another, but that is a thing that one would expect. One would not expect it to be even all the way through. It is not true to say that our economy has stagnated.

So far as the employment position is concerned, the total number of persons employed at the end of December, 1959, was 23,300,000; in December, 1960, the next year, it was 23,700,000; in December, 1961, 23,900,000; last December 24,040,000–70,000 more than the year before, although unemployment had increased. I do not think that any of your Lordships said anything about the weather, but the noble Lord, Lord Shackleton, said that he never expected to debate unemployment in this House when unemployment was over 800,000. I remember that in February, 1947, for a short period it was 1,800,000; and although I have no idea of what the February unemployment figures are going to be for this year I do have some idea what the weather is like. I do not think we can reasonably expect that the figures will be reduced this month; they may be increased. But there is one difference between 1947 and now; that a much larger proportion of the snowstorm unemployed in 1947 were temporarily stopped, whereas now, in February, 1963, a higher proportion are out of work for reasons which are not connected with the weather.

EARL ALEXANDER OF HILLSBOROUGH

My Lords, I think my honourable friend in another place made it fairly clear on February 4 that when you take the figures for 1947 and those for 1963, if you cut out those persons who arise in their place in the unemployment figures because of the weather—that is, temporarily stopped, school-leavers, and so on—it leaves 605,000 people totally unemployed, which is the largest total unemployed net figure since 1940.

THE EARL OF DUNDEE

My Lords, I am grateful to the noble Earl for amplifying my point. He has said in about 500 words what I think I said in about 50, but I am very glad he has agreed with me about that. The reasons, in our view, for this tendency to have more permanently out of work now are partly the difficulties of the shipbuilding and the coalmining industries, the temporary slackness in engineering, and also what was described in the other place—and I dare say it is quite an acceptable term—as the "hake out", which several of your Lordships have mentioned in this debate; that is to say, employers are no longer so inclined as they were to keep on unnecessary labour during a period of slackness in order to make sure of having labour when the next period of activity comes. That has had the effect of making our permanently out-of-work figures, or wholly unemployed figures, I should say, tend to increase.

There are two things which everybody would agree that any Government must do in the present circumstances: one is action to stimulate the economy, which always has been taken by every Government in similar circumstances since the end of the war; and the other is action to develop Scotland, North-East England, Ulster and other development areas. That, again, has been the policy of all Governments since the war. The noble Lord, Lord Sackleton, said that industrial development certificates had been enforced much more ruthlessly in the 'forties than they are now. I would agree that there was a period from 1956 to 1958 when very little was done, as part of the measures taken to slop inflation, which I think personally was regrettable, but I do not think it is correct to say that the Government twelve years ago were less tough about industrial development certificates than the Government are now. We scrutinise every application very carefully indeed and we create a lot of discontent, not unnaturally, by refusing these certificates. The noble Lord, Lord Peddie, whose speech I enjoyed very much, in a debate not long ago was rather critical because we had refused an industrial development certificate to a firm in his own part of the country where he thought we ought not to have done so.

As for the action to stimulate the economy, I should like to say a few words about that first, and then come again to our whole policy to reconstruct the development areas. As for action to stimulate the economy, that is to say monetary or fiscal action, I am sure your Lordships were all particularly interested to hear the speech of the noble Lord, Lord Plowden, who has sent an apology for his inability to stay until the end of the debate. He pointed out how very difficult it was to judge exactly how much you should spend or how much you should sometimes contract, in order to avoid the extreme dangers of depression, on the one hand, and inflation, on the other. He did not attack the Government on the ground which is very usual among many of their critics, because of what is called their "Stop and Go" policy. He said he thought the gentle application sometimes of the brake and sometimes of the accelerator prevents much more violent fluctuations. But he did criticise the Government for not having taken action earlier to inject more into the economy. As he said, we are all learning how to carry out these very difficult economic manæuvres successfully in the best interests of the country, and I think he was probably right in saying that in the spring of 1962 the Government did not sufficiently estimate the failure of the economy to expand in the latter half of 1962; they thought it did not need so much stimulation as in fact it was found to do.

I would just remind your Lordships of the measures which were taken from September onwards. I am not going to discuss the question, which is a matter of opinion, whether they were too little or too late. I am inclined to admit that they ought perhaps to have been taken a little earlier, but they do amount to a very formidable total. There were two remissions of special bank deposits amounting to £160 million between them. Then there was the reduction of purchase tax on cars, from 45 per cent. to 25 per cent.; then the reduction of all the 45 per cent. class purchase tax articles to 25 per cent. Those measures, between them, cost £30 million. Then there was the Post-War Credit repayment of £42 million, which the noble Lord, Lord Plowdon, did not think was enough; but it all adds up. There was the reduction of the bank rate from 4½ to 4 per cent. There were private investment allowances last November in anticipation of the Budget; and then there was the £70 million increase undertaken in public investment. And in January, when the Chancellor of the Exchequer met the T.U.C., he told them that £200 million more was going to be spent on public investment during the next financial year.

Whether these measures are too little is a very difficult question. But we must take account of the opposite danger, which was stressed so well, I thought, by my noble friend Lord Eccles, and also by some of your Lordships opposite who have spoken, Lord Shackleton and one noble Lord who interrupted. We have continuously to be careful not to do things which we shall soon have to undo. We have to guard against the danger that if too much money is pumped into the economy there may be another balance-of-payments crisis and the very distasteful necessity of having to take restrictive measures.

I come to the question of long-term policy, which is different from the comparatively short-term matter of stimulating the economy of the country as a whole. On the question of long-term policy in these development areas, particularly North-East England and Scotland, I would remind your Lordships that we had a debate on Scotland rather more than a fortnight ago. My noble friend Lord Polwarth who moved the Motion, said that he was looking forward to the twenty-first century; that the policy which he and the Scottish Development Council were recommending had the twenty-first century in view. I thought it was a little hard when my noble friend the Leader of the House was taken to task for looking only thirty years ahead, not nearly so far as the twenty-first century, which was generally approved of in the Scottish debate. My noble friend did not mean to say that nothing was going to be done for thirty years. I rather got the impression from some of your Lordships' speeches that that was what he intended to mean. Of course not.

There is the Local Employment Act—and we have gone over the figures so often that I am almost reluctant to quote them to your Lordships again. I think that most of your Lordships are familiar with them. The gross figures are £77 million spent on helping to build new factories which have provided over 80,000 new jobs. The noble Lord, Lord Shackleton, particularly asked me to deal with another question on the Vote on account. I think the noble Lord ought to know that the sums voted and the sums spent are not always The same in the annual Votes on account. A number of applications last year under the Local Employment Act, which had been approved or were under consideration a year ago, have not been proceeded with and some projects have gone ahead much more slowly than expected. As a result, the £40 million in the current year will be substantially underspent, and that is the reason why the Estimate is less this year.

Besides the assistance to factories under the Local Employment Act there are also the advance factories. I dealt with advance factories in Scotland on January 23, and I am not going to deal with Scotland again. But there are five factories which have been approved this year, and two which were approved last year, for the North-East, most of which are of 50,000 square feet or more. These are new factories. I do not want to go back to the origins of advance factory policy, the reasons for and against. In present circumstances we think it is most important to build more of these factories than we have been doing lately, and we expect confidently that before long they will be rented and occupied.

As for short-term construction, some of your Lordships wanted to know what is being done to help the North-East now, in this immediate emergency. The Government work which has been announced in the North-East amounts to £400,000 being spent on hospitals, £215,000 on roads, £550,000 on schools and £330,000 on Board of Trade estates and other work, making a total of £1,765,000. That is the short-term work now. On a longer- term, the road programme has been increased for the North-East. Again I will not go into the Scottish figures; I think I gave them to your Lordships before—£12 million on roads this year, and £14 million next year. I tried to describe the road system which we were aiming at in Scotland. Since then, the beginning of the Tay Bridge in the spring has been announced. I am not sure whether the noble Lord, Lord Hughes, is in the House. I always associated him with this Tay Bridge project because, when he was Lord Provost of Dundee, he, in my view, did more than anybody else, as chairman of the Tay Bridge Joint Committee, to get agreement about it and to further this most desirable project.

Then I was glad that one or two of your Lordships mentioned the subject of training, upon which we had a debate the other day. The White Paper announced a proposal of the Minister of Labour to seek statutory powers to set up boards to be responsible for all aspects of training. Those proposals are in line with the National Economic Development Council's belief that these arrangements have a vital part to play in developing economic efficiency. May I on behalf of your Lordships congratulate my noble friend Lord Kilmuir on his first speech as a Back-Bencher for twenty-one years? I thought it was an extraordinarily good one, and typical of his careful thought and conscientious industry which he always places at our service in debates. He asked a question about the clearance of derelict sites—whether we could give more than 75 per cent. I do not think I can do more than repeat what my right honourable friend the Chancellor of the Exchequer said a fortnight ago in another place—namely: I am told that the grant of 75 per cent. paid by the Government to local authorities is not large enough, and I am considering whether we should increase the level of the grant. I think we should not make it 100 per cent But he said he was considering whether he might make it more than 75 per cent. Then my noble friend asked about aid to underdeveloped countries—whether they could be tied to United Kingdom surplus capacity. The Chancellor also said on January 17 that the question of giving aid from United Kingdom surplus capacity up to £10 million was being looked into.

The other question which many of your Lordships—Lord Plowden, Lord Eccles and others—have dwelt on is incomes policy, which I began with because I think it is fundamental to all these questions of full employment and economic growth. It has always been the curse and bane of our economic policy since the war. Our great difficulty has been that economic progress has always been hampered, delayed and frustrated—not stopped by any means, but reduced in speed—by this universal disposition (I think it was Lord Eccles who described it as a mental habit which everybody has got into, except schoolteachers and clergymen who cannot get into it) to expect a regular increase in pay. These increases in pay and other forms of income have, as Lord Eccles said, tended to run ahead of investment. This means inflation; it means balance-of-payment crises; it means that our exports are uncompetitive and cannot be sold; it means that our economy does not grow fast enough. That is why we believe that an incomes policy is essential to the future growth of our economy.

I, and the Government, agree with Lord Plowden in regretting that the trade unions have not seen their way to cooperate with the National Incomes Commission. It is sometimes said that the reason is that the National Incomes Commission is believed to be concerned only with wages. But it is not. The White Paper issued when it was set up (Cmnd. 1844) states quite clearly that the policies and practices in the service, industry or employment concerned in such matters… as pricing, profit margins, dividends… shall be one of the matters which must be taken into consideration and on which it can receive representations. It may perhaps be that the National Economic Development Council, which does enjoy the support of the trade unions, can help about this matter of incomes, too. But it is a great pity that the National Incomes Commission cannot have more support.

If we are to have a national incomes policy, how are we to get people to help in applying it? I have not heard any of your Lordships suggest—I do not think anybody would suggest at present—that there ought to be compulsion. It would be an interference with freedom, which I do not think the people would tolerate, that the Government should take power to control wages and other incomes. If we cannot do it by compulsion, we must do it by voluntary co-operation. And surely we must have some kind of body which we must all do our best to endow with the necessary attributes to deserve the confidence of the public, that will help with advice on this most difficult and important matter. My Lords, it is because we believe that a generally agreed method of preventing excessive personal incomes is so important, that we are appealing to all sections of the community to help whatever Government is in power in applying a policy of incomes restraint so that incomes shall not run in front of investment but keep a little behind it. If they do that, then, of course, the capacity to have more income will increase much more quickly. We appeal to all sections of the country to support us in this, because we believe that it is essential, both to the development of our economy and to the security of full employment in this country.

9.10 p.m.

EARL ALEXANDER OF HILLSBOROUGH

My Lords, I do not rise

Resolved in the affirmative, and Amendment agreed to accordingly

to continue debating, otherwise I should be very tempted to ask a lot of questions. However, I am most grateful to all those who have joined in the debate from all parts of the House. I am grateful to my own noble friends. I rather liked the sharp passage of arms between the Leader of the House and the gallant Scot behind me. I think my noble friend is going to make an even greater mark on the House. I was most grateful to the Lord Bishop of Manchester for his speech of a very high level. May I say to the noble Lord, Lord Balfour of Inchrye, how greatly I enjoyed his speech? It is a pity I cannot persuade him to be a little more disloyal to his Government. He said so much tonight with which I agree that I should like to see him in my own Lobby. So, my Lords, we come to the end of an important debate. We shall certainly have to come back to this subject again, but now I think it would be wiser for all of us to go to the Division Lobby as early as possible.

On Question, Whether the said Amendment shall be agreed to?

Their Lordships divided:—

Contents 58; Not-Contents, 23.

CONTENTS
Ampthill, L.	Dulverton, L.	Kilmuir, E.
Atholl, D.	Dundee, E.	Long, V.
Auckland, L.	Eccles, L.	Lothian, M.
Balfour of Inchrye, L.	Exeter, M.	Mar and Kellie, E.
Boston, L.	Falmouth, V.	Marks of Broughton, L.
Carrington, L.	Ferrers, E.	Massereene and Ferrard, V.
Chelmer, L.	Ferrier, L.	Merrivale, L.
Chesham, L.	Fortescue, E.	Milverton, L.
Colville of Culross, V.	Furness, V.	Newall, L.
Conesford, L.	Goschen, V. [Teller.]	Newton, L.
Cowley, E.	Hailsham, V. (L. President.)	Reading, M.
Craigton, L.	Hampden, V.	St. Oswald, L.
Crathorne, L.	Hastings, L.	Somers, L.
Croft, L.	Hawke, L.	Strang, L.
Davidson, V.	Hertford, M.	Stuart of Findhorn, V.
Denham, L. [Teller.]	Horsbrugh, B.	Swansea, L.
Derwent, L.	Howard of Glossop, L.	Swinton, E.
Devonport, V.	Jellicoe, E.	Tweedsmuir, L.
Devonshire, D.	Jessel, L.	Wigram, L.
Dilhorne, L. (L. Chancellor.)

NOT-CONTENTS
Airedale, L.	Henley, L.	Shepherd, L.
Alexander of Hillsborough, E.	Kenswood, L.	Stonham, L.
Archibald, L.	Lawson, L.	Summerskill, B.
Attlee, E.	Listowel, E.	Taylor, L.
Burden, L. [Teller.]	Longford, E.	Walston, L.
Burton of Coventry, B.	Lucan, E. [Teller.]	Williams of Barnburgh, L.
Champion, L.	Peddie, L.	Wilmot of Selmeston, L.
Henderson, L.	Shackletoin, L.

On Question, Motion, as amended, agreed to.