UNEMPLOYMENT AND MANPOWER IN INDUSTRY

HL Deb 14 December 1966 vol 278 cc1675-748

3.48 p.m.

Debate resumed.

THE EARL OF DUNDEE

My Lords, the noble Lord, Lord Byers, to whom we are indebted for this debate on unemployment, devoted the latter part of his speech to the industrial re-training of men who had become redundant in their own trades to fit them for some other trade where there may be more vacancies, or which may be of greater value to our economy. I think the noble Lord did right to stress the importance of this. I believe the Government are alive to its importance, and I am sure they will give close attention to what the noble Lord has said. But, like the noble Lord, Lord Shepherd, when he interrupted, I do not think the noble Lord, Lord Byers, gave perhaps quite enough attention to the industrial training centres run by private industry, with the supervision and financial assistance of the industrial training boards, which operate on a far greater scale, numerically at least, than the Government training centres. I think I am right in saying that at the present moment the Government training centres are providing places for a little over 6,000 jobs; and that has risen in the last year or two from 4,000 to 6,000.

If I may give one example, take the engineering industry alone. The Engineering Industrial Training Board is now financing job training schemes which amount to no fewer than 24,000, and which have increased in the last year or two from 16,000 to that figure. So this one single industry is at present doing exactly four times as much as all the Government training centres in the country. Of course, no doubt the number of Government training centres will increase from the figures the noble Lord gave. I think he was referring exclusively to those figures, but the private industrial training centres may increase also.

In the debate in another place on redeployment, on October 24 last, I thought the Minister of Labour paid a generous tribute to the work of the late Government on this matter which we appreciate very much, coming from an opponent. He said: The Industrial Training Act, 1964, introduced by the Conservative Administration in 1963, is a good Act, and upon it we base great hopes of getting the skilled manpower we want. We all made a conscious effort…to direct a major element of industrial training along this path, and we were right to do so. There is inevitably the greatest need for Government training centres but no honourable Members should start to argue in this debate that G.T.C.s can, even if we multiply them forty times, be a substitute for the great work that is emerging from the Conservative Act of 1964."—[OFFICIAL REPORT, Commons, Vol. 734 (No. 80), col. 682; 24/10/66.] That was what the Minister of Labour said about the industrial training centres which are run in conjunction with the Government through the industrial training boards.

I welcome most warmly the Government's decision which was announced, I think, less than a fortnight ago, to provide a sum of £2 million for a period of twelve months, beginning next January, to finance these "off-the-job" schemes for re-training adult workers. I understand that the rate of grant will be 70 per cent. of the cost in development areas and 60 per cent. elsewhere. The scope of the Government training centres of which the Conservative Government set up a considerable number, and which the present Government are increasing, is only a small fraction of what is being done by private industry under the 1964 Act. But it is of great value, and I am glad that the Government are increasing the number of these centres. The noble Lord, Lord Byers, may be right in suggesting that not enough progress has been made. It seldom happens that enough progress is being made in anything, but I think we must always remember that the rapid expansion of Government training centres is rather like the rapid extension of State education: you must train the trainers before they can train their pupils, and if you rush the thing too fast then you may lose in quality more than you gain in quantity.

LORD BYERS

My Lords, might I put this point to the noble Earl, which I think is very important? I think that what he has said has been conditioning our thinking far too much in the past. In fact, out of the 500,000 or 600,000 people who are now being shaken out, there are any number of skilled people who could act as instructors for others. I think this is a point which the Government might bear in mind.

THE EARL OF DUNDEE

My Lords, I quite agree with the noble Lord on that, and also, if I may say so, with his remarks about the Ministry of Labour. I do not know whether your Lordships will all agree with me, but I have always thought that the Ministry of Labour is the most human and least bureaucratic of all Government Departments, and is often more in touch with modern change than some others.

There are still a good many people in this country who talk about the problem of unemployment in pre-war terms, which are long out of date. Before the war we had both a national problem and a regional problem, which were both very acute, and our chief concern was to find any kind of economically useful work for hundreds of thousands of people whose lives were being wasted. Now the problem is regional only, and even the region whose plight is worst—that is, Northern Ireland, whom we are all most anxious to help because their need is greatest—has an unemployment percentage which any pre-war Minister of Labour would have found fairly low.

Nationally our post-war problem has always been over-full employment, with too many vacancies chasing too few men, causing almost continuous inflation. Before the war we set up a great number of wage councils, wage boards and other arbitration machinery, to enable the weakest bargainers to have a better chance of securing a fair wage. Now we often see that many of these arbitration bodies are sometimes apt to concur in the comfortable and popular fiction that anyone who works reasonably well in any job has some kind of natural right to an annual increase in his income. I think every Government since the war has earnestly tried to combine full employment, economic growth and stable prices and, at the same time, to induce—some might perhaps want to compel—new industry to go to development areas instead of swelling the great sprawling conurbations of the Midlands and the South-East.

Except for one period of about two years from 1958 to 1960, we have never succeeded in attaining all these objects at the same time. I am not attacking or criticising the present Government for their rather conspicuous failure to attain any of them—or, at least, I am not blaming them yet—because the present Government have been in office for only two years, and they still have a lot to learn. But I think it is rather a pity that they should have begun by boasting that they were the only Government who could manage the economy without "Stop-Go", and then, when they had to impose the most sudden and stunning "stop" in all our history, they boasted that they were the only Government who could do this without hurting in any way the development areas. The wider the gap between your professions and your performance, the less confidence you are likely to inspire both at home and abroad.

What I want to ask the Government in this debate is to tell us about the future. The Prime Minister said on July 20 last, as we all remember, that after the present period of severe restraint is over and the reorientation has been finished, he thought that an unemployment percentage of 1½ or 2 per cent. might be acceptable. I suppose 2 per cent. would be about 470,000. I do not think we need see anything to complain of in that statement, although perhaps he would have criticised us if he had been in Opposition and we had made it.

Last January your Lordships may have noticed that the Ministry of Labour, after what I think was a careful and thorough survey of unemployed people in the country, issued a Press release stating that about 180,000 unemployed people are likely to have difficulty in finding employment at all, on account of serious personal handicaps. I suppose that means either that they are unemployable or perhaps in need more of rehabilitation than of ordinary re-employment. If we were to subtract this figure of 180,000 from almost any post-war total, the remainder of the national figure would be very small. In the United States of America, where they seem to manage their economy rather better than we manage ours, the usual unemployment rate is something like 5 per cent., although, of course, they have a good deal more mobility than we have, and a good deal more room to move about in. Therefore I do not think we need cavil at anyone who talks about a possible future national figure of 2 per cent. The point I want to make to the Government is that I hope no Government will plan for a much higher rate in the development areas, or accept the inevitability of a higher rate than 2 per cent. in these development areas.

The best-known development area, which published a regional adjunct to the National Plan in January, 1966, was Scotland, in Command Paper 2864. It is all based on the National Plan. The preface says that: the Government's plans for the expansion of the Scottish economy, within the framework of the National Plan was based on similar assumptions. I gave notice to the noble Earl that I would quote this extract from the first paragraph, which gives the theme of the whole document: The increase"— that means the net increase— in the number of jobs contemplated by 1970 is of the order of 50–60,000; this would be accompanied by a reduction in net loss of population to about 20,000 a year. Since substantial losses in some of the older industries can be expected,"— that, of course, is going on all over the country— this would involve the creation of at least 130,000 new jobs. I would like the Government to pay particular attention to the sub-division of this— Of these, some 50,000 might be in manufacturing industry, 20,000 in the construction industry and 60,000 in the service industries. I always thought this was rather an unambitious target, especially when we consider that in the four years from 1960 to 1964 the actual increase of these new jobs in Scotland was 157,000. Your Lordships may remember that in the United Kingdom National Plan a target of 25 per cent. growth in the six years from 1965 to 1970 was set, whereas the actual growth for the previous six years had been just over 25 per cent. Many people wondered what was the good of having a National Plan if the progress which it contemplated was less than the actual progress in preceding years.

Although this target of 130,000 new jobs was modest, I think it was respectable, and after the "stop-go" freeze was imposed on July 20 last, I was very glad to read (I was not able to be here at the time) that the Secretary of State for Scotland had stated, in reply to a Parliamentary Question, that he saw no need to depart from the strategy of development outlined in the White Paper and that the objects and targets which we hope to achieve under the Scottish National Plan remain as they are."—[OFFICIAL. REPORT, Commons, Vol. 732 (No. 63), col 1710: 27/7/66.] That was about 3 o'clock in the afternoon on July 27, but a few hours later in the same afternoon, in the debate on Economic Affairs, Mr. George Brown, when he was asked about the National Plan, said (col. 1849): One thing I am constantly asked about…is: how does this affect the National Plan? I will be absolutely frank with the House. It means that the rate of growth we intended to get, and were set to get, and on the basis of which we predicted all other things for 1970, is no longer available. Therefore, I must sit down again with my advisers…". I am quoting only from Ministers in another place, of course, as it is still the same Session.

But a few days later, in a debate on regional development, the Secretary of State for Scotland was questioned about this, and again he replied quite specifically: Last week it was suggested that we should scrap the Plan and write a new one. I resisted that. I continue to resist it, because the targets for Scotland remain the same, and must do so if we are to bring prosperity to Scotland. There may well be changes in relation to timing…".—[OFFICIAL REPORT, Commons, Vol. 733 (No. 67), col. 375; 2/8/66] I should be grateful if the noble Earl or the noble Lord could try to clarify the position, because I am still rather puzzled by it. Either the Scottish National Plan and the United Kingdom National Plan are based on completely different assumptions, or there is a disagreement in the Government on the question of whether the Plan can or cannot be carried out. If the answer is that the Scottish Plan is to remain the same but is to begin later, then I would say that it has, in effect, been abandoned, because the whole point of these plans is the timetable. They are relating our industrial activities to a timetable, and it makes nonsense of the Plan to say: "We find we cannot carry it out after all. Therefore, instead of beginning it in 1965 we shall begin it in 1970 and finish in 1975."I think we are entitled to get clarification of this point, because we should like to know whether it is the aim of the Government to create these 130,000 new jobs by 1970 or at some much later date which is not yet specified.

One reason why I am anxious to have this question cleared up is that I find it difficult to understand how the target of 60,000 in service industries and only 50,000 in manufacturing industries for Scotland can be reconciled with the selective employment tax, which penalises service occupations of every kind, although in Scotland (and I have no doubt elsewhere) those occupations in science, in transport, in tourism and in distribution are doing such good work for our economy and for our balance of payments, while at the same time premiums are given to at least some manufacturing industries in which restrictive practices and uneconomic use of labour and manpower are very considerable. I would put it to the Government that this Scottish unemployment problem is all the more significant to the United Kingdom as a whole because it has been so intractable all through the middle of this century until a few years ago, and it will be a major tragedy if the success which was gained after the Local Employment Act 1960 is not continued.

The free depreciation and the other fiscal advantages in Mr. Maudling's Budget, which were timed just at the moment when a boom was beginning, led to a large influx of new industry and new investment capital in the year 1963, followed in 1964 by a Scottish industrial production rise of 8 points from 116 to 124. Last year the momentum continued, at a slower rate but still pretty good: the index 5 points up again to 129, and the rate of investment continued fairly high. This year the industrial production increase is slowing down. Whether it will reach the near stagnation of the United Kingdom rate I do not know. I hope it will not.

As for capital investment, that is also declining in the first half of the year and the prospects do not appear to be at all good for the bi-annual Report of the Confederation of British Industry states that in Scotland their estimate is that investment next year will be less than in any year since they began their surveys in 1959. When I told the noble Lord, Lord Shepherd, the other day at Question Time that the Government's new investment grants are substantially less valuable to industry, both in development areas and elsewhere, than the depreciation allowances which they have replaced and which were such an immediate and valuable inducement to bring industry into Scotland and, I have no doubt, other development areas, too, the noble Lord did not seem to agree with me. But I think he was mistaken. I think the investment grants are of less value, and they take much longer to be paid. I saw a written Parliamentary reply, I think on October 26, which stated that the amounts paid out in all these incentives, investment allowances and everything else, that were abolished by the investment grants Act, amounted in the last year to £265 million, and that if the new investment grant Act had been in existence instead of that they would have come to about £200 million. I think that the change has been a severe disincentive to investment in those areas where we want new industry to settle.

It is supposed to be the function of the Opposition to criticise and not to advise the Government. But I am sure that it is the Government's aim and desire to establish full employment in all the development areas. What I mean by full employment is that the number of vacancies should be roughly equal to, but not much greater than, the number of unemployed people who are capable of applying for them. I want to see this policy or this aim succeed, or at any rate I want to make sure that the progress that has been made so far will not be reversed. And please remember that in these matters we have to look a long way ahead, perhaps years ahead, because the interval between cause and effect in economic matters may be six months, twelve months, eighteen months. The cuts and freeze in July, 1966, may not produce a reduction of investment until 1967, and that may not produce a falling off of production and unemployment until the following year. We must look ahead.

We ought to be planning now for what we are going to do to affect 1968, and so on year after year, and I think that to restore the momentum of our regional policy, which I hope will not be lost, one thing you will have to do is to remove nearly every tax increase, about £1,000 million, which has been imposed since the Autumn of 1964. Direct taxation has now reached a figure at which both enterprise and investment are heavily discouraged so that industrial growth may be unlikely to revive and the emigration of skilled professional men may rise sharply in Scotland. I am afraid it has indeed begun to do so already. Next I think you will have very soon to reform trade union laws, and if we wait for the Royal Commission's Report it may be too late for us to recover the ground that we are losing now. Restrictive practices, in my belief, should be prohibited, and I think that would cause less hostility than compulsory control of wages; and I believe that contracts on both sides should be made legally enforceable.

Finally, I wonder whether it would not be possible for Her Majesty's Government to find some sound and sensible economist to advise them. The Government must surely be growing dimly aware by now that no one is really impressed by their quickness in anticipating and comprehending the consequences of their own actions. The unerring consistency with which the Chancellor of the Exchequer for two whole years has misjudged every situation and mistimed every move makes it a little difficult to believe that he could score such a wonderful record of errors off his own bat. Is it not more probable that he is perhaps being helped by some tutor who is congenitally unlucky in his prognostications? I have often told noble Lords opposite that I am in favour of planning, and I would say to them, let us have a new national plan which is thought out before it actually begins, and which proceeds to a graceful and orderly conclusion, like a symphony by Mozart, not like a Hungarian Rhapsody which starts a year after it is meant to begin and dies ignominiously four years before its appointed end.

4.20 p.m.

THE EARL OF LONGFORD

My Lords, there are many respects in which the two sides of the House agree, but I wish I could bring home to the noble Earl how ineffably cheap his final smear of the Hungarian advisers of the present Government appears to those on this side of the House. He will go on laughing. So will others. It is the same as if it was about Semitic advisers or Irish; perhaps it would amuse him equally. But this ghastly xenophobic crack, worn past all belief over the last two years, depresses me. What depresses me more is that the noble Earl really finds it funny.

THE EARL OF DUNDEE

My Lords, may I assure the noble Earl that I am very fond of Hungarians. I like them.

THE EARL OF LONGFORD

The noble Earl disguises his fondness. It is like people who say, "Some of my best friends are Jews". One takes it in equally poor spirit. Really we are shocked by all this xenophobia and, above all, the boredom of it—day after day, speech after speech; and the noble Earl finished up with a Cheshire cat smile all over his face as though he had just said something new. It is appalling. However, in many other ways the noble Earl made a most interesting speech, as always, and I will try to reply to some of the serious points that he certainly has brought forward.

I am, and I am sure we are all, grateful to the noble Lord, Lord Byers, for introducing this grave subject in a speech which, after the opening remarks, could not have aroused any irritation even among the most testy of us. He started off by one or two remarks, such as "strength through misery" or words to that effect. I pass over those observations. I had the great honour of helping, in a most humble way (the noble Baroness who is going to speak helped him in a much more exalted way), the noble Lord, Lord Beveridge, the most famous Liberal, with the possible exception of the noble Viscount, Lord Samuel, who has sat on those Benches since the war, at a time when he was drawing up his plans for full employment. Though I do not think we could say he committed himself to any hard and fast figure, he certainly thought that 3 per cent. would be the kind of minimum figure of unemployment in most years; and, of course, unemployment in recent times has been far less than that. So I hope that the noble Lord, Lord Byers, does not take too seriously those rather partisan remarks about using "the sack" as a method of social progress.

The House will expect a number of figures from me, and even if it does not expect them I am afraid that it will receive them. None of us welcomes the recent increase in the unemployment figures. The figures published in November showed that the total number registered as unemployed was 542,000, which is 2.3 per cent. The percentage wholly unemployed was, in fact, 1.8 per cent. The noble Lord, Lord Byers, I think, asked me whether we had any more recent figures. Those are the most recent figures available to me, and therefore to the House.

I do not dispute the increase in unemployment in recent times. We are all aware that a year earlier the figure was 321,000, as compared with the 542,000 now. So we are talking of a moment or a period when unemployment has increased sharply. The unemployment figures are certainly higher than any of us would wish, but in order to give some perspective it is perhaps worth making a comparison between recent years and the position before the war. When I am talking of "recent years" I am not picking out one Government more than another; I am talking of the British achievement since the war. Average unemployment in the post-war years has been somewhere between 1½ and 2 per cent. During the 'twenties and 'thirties, as many of us recall only too well, and I think it would be completely true of some who lived in the worst areas during that time, the average for the country as a whole was between 10 and 20 per cent., as against 1½ and 2 per cent. in these post-war years. At the worst point of the depression the number of unemployed rose to something approaching 3 million, so we are not talking of that situation, and I quite agree with the noble Earl in drawing a sharp distinction.

These high levels went on year after year, whereas nowadays not only are the peaks much lower but they disappear much more rapidly. Therefore, all of us, whether we give special credit, as we may, among thinkers, to the noble Lord, Lord Keynes, or just to the progress of our times, but certainly irrespective of Party, can all take some pride that the post-war record has been so much better in these respects. Whatever may be said—and the House may feel that I am not going to be very bold in prognostication this afternoon—one thing I can guarantee on behalf of the Government is that, while this Government are in power—and perhaps this could be the view of any Government that we can conceive of here—there will be no mass unemployment of the kind we saw before the war.

Another instructive comparison is that between the assistance available to-day to anyone who has the misfortune to be unemployed and what was available in the pre-war days. We have recently introduced two major measures of assistance, the Redundancy Payments Act and the earnings-related unemployment benefit. If we take the example of a man who has been working in the car industry (admittedly, a rather highly paid industry, but we must take an example from somewhere), and who has three children, assuming that his wage was £30 a week his earnings-related benefit will come to £16 a week. This is quite different from anything which existed before the war. It helps considerably to relieve the financial anxiety of unemployment.

In addition, in that particular case the man would get a lump-sum redundancy payment, amounting to £60 if he had been with his firm for only two years, and to £300 if he had been with it ten years; and he would get still more than that if he were an older worker. As against this, even two years ago a man in the same situation would have got only £7 13s. in unemployment benefit, and no redundancy payment. That is to say, he now gets twice as much benefit, plus the redundancy payment, as he would have got even two years ago, or before we came into power; while in 1934 he would have got only 32s. Even if you treble that, or slightly more than treble it and call it £5, it would of course compare unfavourably with £16 plus the redundancy payment. So we must agree that we as a nation—and I think the Government are entitled to take credit for this, but it has been supported by all sides—are looking after these unfortunate people considerably better than was the case pre-war.

I have heard it suggested in some quarters—not in this House; at least, not to-day—that we might even be going too far, making it too attractive to be unemployed. That has certainly not been argued to-day. Of course you could argue that in theory. You could say that an unemployed car worker, if he was not getting quite so much, would be rather readier to take a lower-paid job. That sort of argument has a certain plausibility. But even if an unemployed car worker, for example, does pause a little, that is not necessarily a bad thing; it may lead him into a job which is a better job, or more valuable from the point of view of the country; and in that case the object of the redeployment is served. But looking at the matter a little more deeply and widely, from the humanitarian point of view, we must all applaud this attempt to treat every human being in this country, whether he is employed or unemployed, as deserving of proper care. Further, I would submit (though perhaps one needs to put this carefully) that if the working people in this country are clear that we are trying to give them a fair deal when they become unemployed, they will be the more ready to co-operate in the measures producing the greatest productivity.

That reference to productivity brings us back to the whole point which underlay the speech of the noble Lord, Lord Byers, and which prompted him to put down the Motion, as I understand it, and was in the mind of the noble Earl, Lord Dundee, also. The object of all this current redeployment, and in that sense of the unemployment which has been its temporary consequence, is to get our labour force employed to the best effect in the interests of a stronger and growing economy. We want men in the jobs where they can be most useful to the nation, and we want them used there as effectively as possible.

I need not dwell at length on the reasons for these economic measures; on the crisis which occurred last summer. We have discussed those matters only too often. I realise that the noble Earl, Lord Dundee, interprets the duties of Opposition in a most austere way. He said that they were to criticise rather than to advise. Certainly the idea of encouraging the Government does not come within his philosophy of Opposition. No one would have imagined from his remarks that the Financial Times to-day was able to head its main story Record trade surplus of £80 million. Exports at peak—£458 million. In other words, only this morning we are told that not only the exports but the trade surplus is at a record in this country.

Hearing that melancholy tale produced by the noble Earl, Lord Dundee, one would have thought things were going downhill. Perhaps the noble Earl has not read the Financial Times or the other papers to-day, but if he has I am frankly surprised that he did not feel able to give us at least a gentle pat in passing. Perhaps if he reads the Financial Times after this debate he will read the first sentence of the leading article, which begins If the October trade figures were excellent, there is almost no adjective strong enough to describe the November figures. Again, I submit to the noble Earl, Lord Dundee, that even the harshest critic—

THE EARL OF DUNDEE

Supercalifragilisticexpialidocious!

THE EARL OF LONGFORD

If the noble Lord quotes Latin at me, I hope he will quote it on his feet!

LORD SHAWCROSS

Would the noble Earl allow me to intervene. Did not the article go on to say that two swallows do not make a summer?

THE EARL OF LONGFORD

If the noble Lord wishes to read the whole article to the House, he will have the opportunity to do so. But I do not honestly think that the noble Lord can put me off as easily as that. The truth is that this is a great success story, the best news British industry has had for years. And to try to pick out some sentence of qualification seems to me to be rather below the standard which we shall, I have no doubt, expect and receive when the noble Lord comes to address us. I wish we had heard that Latin. It might have been helpful, or again it might not.

THE EARL OF DUNDEE

My Lords, I am delighted about the trade figures, and I should like to congratulate the Government on them. But I was talking about the future of employment in Scotland. I rather wanted to warn the noble Earl about the dangers of that situation and to ask him for some assurances about it. Incidentally, my remark was not Latin, but a quotation from "Mary Poppins". I am sorry.

THE EARL OF LONGFORD

I did not hear it in any case, but if it was as irrelevant as what the noble Earl has just said I am not so sure it would have helped; but later on perhaps we shall be guided by the noble Viscount, Lord Eccles, along the same lines. I am coming to Scotland, but really this is not a Scottish debate. I am sorry to say this to Scottish Lords, who are entitled to their share. The noble Earl, Lord Dundee, said that the Government's economic advisers were hopeless and he did not say only in relation to Scotland; he implied that they were hopeless altogether. I was pointing out that the latest economic news is quite brilliant, and I was pained that the noble Earl, with all his quotations, did not quote those figures, because they would have been very helpful to the House. However, we all have our own duties.

I will not go into the details of the successful developments which have taken place, because the House has already studied those. I should like to come back to the main topic of the debate, which is unemployment. It is essential to indicate that we do not welcome unemployment; we regard it as a painful price to pay for these necessary economic steps. I must repeat yet again that at any rate it is gratifying that these unpleasant measures are bringing some reward.

I think that it would be very unwise to attempt a forecast about unemployment in the future, but I must say one thing in case it gets lost sight of in all these interchanges. One cannot make a firm forecast on behalf of the Government even with the best advice in the world, but I must make it plain that we do not consider that this is a moment at which we can go in for hasty measures of reflation. It could be argued, of course, but it is the considered view of the Government that we would disturb the growing confidence which is beginning to show itself if we were simply to renounce the policy on which we had embarked. I hope that the House as a whole will not urge us to adopt any such course.

I should like to refer to some of the other criticisms which have been raised. (I will be coming to Scotland. The noble Earl was courteous enough to give me some advance notice, and where I fail to deal with any of his points because I run out of time my noble friend Lord Shepherd will do so later on.) It was suggested that the facilities at employment exchanges might not be altogether adequate. Nobody would say that facilities are perfect, but we all appreciate the generous tribute paid by the noble Earl to the Ministry of Labour staffs. That was very well said, and everybody will be duly grateful. The noble Earl is aware, as I am sure is the noble Lord, Lord Byers, that where large scale redundancies occur in an area the Ministry of Labour strengthens its staff to meet that situation. It brings in extra people from other areas and sets up special teams inside the factory itself where unemployment is threatened.

LORD BYERS

My Lords, this is an important point. This has been done, with particular success, in the case of the B.M.C. redundancies. But if unemployment gets to 600,000 or 700,000, is that not going to overstrain the resources of the Ministry of Labour so that there will not be sufficient people to cope with it? This is the point I was trying to make.

THE EARL OF LONGFORD

In the extreme case that could arise. But I have not been advised that that is likely to happen. I am told that they are strengthening the Ministry staffs in total. In other words, there is an increase in total staffs, and, as I expect the noble Lord appreciates, not only are regional offices being expanded but area offices or sub-regional offices are being created, so that in any particular town—which might be Oxford, which I happen to know well, as does the noble Lord—there would be this contact not just in the immediate area, but over a much wider locality.

It is also suggested that the Ministry of Labour do not know enough of the vacancies which exist. It is inevitable that they should not know of every vacancy so long as we do not return to compulsory notification of vacancies by employers. There seems to be no disposition to return to it; the noble Lord renounced the idea of returning. It was the noble Earl's Government which some ten years ago abandoned the idea of compulsory notification, and the Government are not intending to restore it immediately. But I do not want to commit the Government to rejecting that solution in all circumstances. It is obviously not one to be adopted unless one is forced to it, and there is no sign of its being adopted immediately. It is, I suppose, something which, in theory, one could be forced to.

Another question is how far it is possible in seeking out and filling vacancies to discriminate between those that are important for the economy and those that are less important. It is not very hard for the Ministry or, on paper at least, for the offices to set out to apply the criteria. As the House is no doubt aware, priorities are to be given, according to instructions from the Government, to exports, to import savings, to rapidly increasing productivity and to firms which are technologically advanced. Those, on paper, are fairly clear priorities, but of course this is a free country and we wish it to remain so. The employment exchange managers—I have discussed with one employment exchange manager quite recently how all this would actually work—have a duty to inform the unemployed man of other jobs. They are not allowed, as it were, to conceal from him the jobs of less national value, and they must hope that he will decide to choose the kind of job to which the highest priority attaches. It can be argued, if you present a choice to an unemployed worker, that the export trades and trades of technological innovation would be the kind of trades which were going to expand and which would give him security and promising opportunities in the future. But we must accept the fact that so long as we remain, as we all wish to remain, a free country there can be no possibility of direction of labour, so there is a limit to the effectiveness of this process.

A question was raised by the noble Lord, Lord Byers, about the accuracy of the statistics. It is, of course, true that these unemployment figures are taken only once a month, and it can be argued—indeed, it has been argued—that perhaps a count ought to be taken more frequently, perhaps once a week. This could be done; but the real question is whether this would not use up so much time that the result would be worse. The pursuit of this statistical exercise would divert officials from their primary task of finding jobs for the workers, and in the view of the Government—which I think is widely shared—the value to be derived from all these additional counts would not be worth the time used up in doing them.

Then it is said—and, naturally, there was a good deal of discussion of this point in both of the speeches to which we have listened—that the training facilities are not adequate. I quite agree with anyone who says that the training facilities are not adequate, and they never will be fully adequate. But, certainly, we are doing much more in the field of training than we were even a year or two ago, and expansion is still going on. The Industrial Training Act 1964, passed during the noble Earl's period of office, is a most valuable charter for expansion, and I hope he will allow me to join the Minister of Labour in another place in paying tribute to those who framed that Act. But, certainly, we are now pressing ahead, and we are setting up the Industrial Training Boards provided for in the Act. At the moment 17 Boards have been established covering industries in which there are something like 10 million employees, and we hope to see several more Boards set up in the near future. But I am going to leave my noble friend Lord Shepherd to go into all of that in greater detail.

Finally, on the subject of training I should say a word about the Government training centres. As the House is aware these are being expanded fairly rapidly. Only two years ago there were 4,000 training places in 26 centres. At present there are 6,400 places in 32 centres. When the programme which has already been announced is completed—that is, by the end of 1968—there will be nearly 10,000 places, which means, on the basis of a six-months' course 20,000 trainees a year. One has a lot of sympathy with anybody who says, "Why not expand more rapidly?" But the real bottleneck here is the shortage of managers and instructors. I do not want to hit back at any predecessors, but we have been left with a situation in which there is a great shortage and it takes a considerable time to bring about this expansion. If there were no shortage of managers and instructors for these centres, of course the number of places could be increased much more rapidly.

Before I close, I should like to say a few words about the regional aspect of these problems, which the noble Earl, Lord Dundee, dwelt on. We have to accept the fact that we are carrying through a national policy which limits financial demand, but which undoubtedly has a very beneficial and highly necessary effect on the balance of payments. But, of course, the question arises: what incidental effect does this have on the less prosperous regions? I would remind the House, although some of these facts, at least, are already well known, that the Government have made special attempts throughout their period of office to help the development areas. They have discriminated in favour of those areas in the controls over private sector building and investment, and the President of the Board of Trade announced on November 30 that the launching of public investment schemes in development areas will be accelerated in 1967 wherever possible.

The location of new office development is now strictly controlled throughout the Midlands and the South-East of England, but not elsewhere. Industrial development certificates are given much more freely for schemes in the less prosperous areas. From January to the end of October, 1966, the less prosperous areas obtained 63 per cent.—that is, roughly two-thirds—of the new approvals for the whole country, although they have only a third of the whole population. So on that side—what one might call the negative side—the Government have certainly done a good deal to steer activity towards the areas in greater need. On the positive side, I can point to the investment grants. I am not going to become involved at this stage in an argument with the noble Earl about their total value, but I will point out that they were initially 40 per cent. for development areas and are now to be 45 per cent., as against 20 per cent. and 25 per cent. for the rest of the country. These are positive and very concrete steps in favour of the development areas.

The programme of advance factories was started—less energetically than in our time—by the Government of the noble Lords opposite, and we now have our own programme by which we encourage new industrial development in these areas. The programmes in the areas total 94 factories, and perhaps I might here address myself to the figures for the noble Earl's own country of Scotland, leaving some more detailed treatment, if necessary, to my noble friend Lord Shepherd.

In the last two years since October, 1964, 34 advance factories have been authorised in Scotland, as compared with 24 factories authorised by the previous Government throughout their whole term of office. The total area was slightly larger in all those years of Conservative Government though the difference is not very great—666,000 against 614,000 sq. feet. But, taking the fact that this has all been done in two years and the noble Earl's Government had thirteen years, I think one must agree that this Government have been much more energetic in starting advance factories in the noble Earl's own country than was the case when the noble Earl himself was guiding our destinies.

It is also worth taking a look at the regional unemployment figures. I give these quite dispassionately, because I do not think they prove any great point in favour of the Government, but the House should have them in front of it. If you compare the November figures with those of twelve months earlier, you find that the national figure has gone up by 69 per cent. We do not try to dismiss that lightly, but that is the background. Against this, the increase in Scotland over the year has been 27 per cent. against the national increase of 69 per cent. In the North-West of England the increase was 32 per cent. and for the North-East and Wales it was 42 per cent. So, relatively speaking, and I say this without trying to blow any trumpet because these are matters which affect human lives too intimately for any premature glorification, these areas have certainly not been hit as hard as the more prosperous areas.

However, that is only part of a truth, and I am most anxious not to use it to make some great claim. Unemployment in the three worst affected regions is between 3.5 per cent. and 4 per cent.; half as much again as the national rate. That is the position to-day. But there was a very similar differential when we came to power, and so it was for a long while before that. That is the chronic condition. These regions fell behind many years ago and we cannot correct the balance in two years. Unfortunately, the neglect of many years cannot be set right overnight. But I hope the House will realise that in the end we shall hope to be judged, though it may be some way on, by the success we have in securing a much better balance of industry in the country.

I must close now as there are very eminent speakers to follow and my noble friend Lord Shepherd is to wind up at the end—I was not distinguishing between eminent speakers and Lord Shepherd; he will be the most eminent of them all. We are discussing to-day a problem which is of tremendous human significance and which at the same time baffles the finest technical and economic intelligences. Here we have all agreed, for some years at any rate, on full employment, economic growth and a sound balance of payments. We want all three. It seems fantastic that we cannot get all three, at any rate in some reasonable measure. Yet hitherto, neither in this country nor in any other modern industrial country, has it been possible to achieve all three for very long. We are not being defeated by that past history of the question, but that is what has occurred, or has failed to occur, up till now. We are convinced that the measures and the policies which we are now carrying through will help us a long way forward, so that eventually all three objectives will be attained. That may be quite a while hence; but, meanwhile, we are convinced that very large efforts must be made by all (and, I should think, are beginning to be made by all) if we are to give ourselves a chance of success. We are most grateful to the noble Lord, Lord Byers, for introducing this debate.

4.51 p.m.

THE LORD ARCHBISHOP OF YORK

My Lords, the noble Earl, Lord Longford, referred in his concluding sentences to the fact that we are dealing here with an essentially human problem. No one who is over fifty can view with feelings other than of grave anxiety the prospect of a steady rise in the figure of the unemployed. That figure we have heard stands at somewhere round the half-a-million mark, and is a steadily rising one; and though, again, we have been warned that we cannot prophesy to what height that figure will rise, one has heard it said by someone eminently responsible that it may reach the million mark before we are through.

My own recollections of unemployment in the mid-thirties are still very vivid in my mind. I saw it in Manchester, in the cotton area, and at very close quarters in London. No one, thank Heavens!, expects a repetition of the conditions which the unemployed of those days were forced to endure. Their material circumstances are cushioned in these days of a Welfare State in a way that they were not then. Why, then, do I refer to the unemployment of the thirties as I address myself to this question to-day? Let me say at once that I am no economist, and I am not concerned to argue (even if I were competent to do so) the complex question of the peak to which the figure of unemployed must rise before we can reap the benefits which we all desire. That is not my task. What I am concerned to do is to ask that when we use abstract nouns like "unemployment", or its cousin "redeployment", we remember that in hard fact we are talking about men—men who have families; men who can be degraded when they feel that they are unwanted; men who have a right to be treated for what they are, human beings, and not merely as instruments of service, as tools of labour.

Perhaps the gravest moral issue facing those in whose hands lies the power to put out of work a vast army of men—some for short periods, some for long—is, if I may use the phrase of Norbert Wiener, the man who invented the word "cybernetics", "the human use of human beings". Labour is not a commodity to be bought; it is human beings who want to earn their bread. It is men and women with self-respect; not pawns to be moved around the chessboard of our economic system, but persons. Without work a man deteriorates, and his family with him; and to deprive him of it is necessarily to involve him in frustration and acute anxiety. I noticed the words used by the noble Lord, Lord Byers, in introducing this Motion. "It is a question", he said, "of human dignity being at stake", and he referred to the psychological shock which can come to a man when he finds himself in any sense redundant.

It must be a terrifying thing, my Lords, to possess the power of redeploying (I use the current jargon) hundreds of thousands of human beings. For, before any responsible Minister can set about such a task, he must, it seems to me, ask such questions as these: what will the uprooting of his children from their schools mean to the man who is being redeployed? Suppose they are at the "O" level stage, or at the "A" level stage? What effect will this have on their examination results and so, in the long run, on the careers of a lifetime? What will the break in the affiliations of the family mean—their church connections, their club connections, and so on? What happens—and as yet I have not heard this question asked in the course of the debate this afternoon—if a worker is saddled, as thousands of them are, with hire-purchase payments or a mortgage, and then has to move?

It is easy to uproot: it is much harder to put down new roots. Money grants during the period of unemployment (of which, I am glad to say, we have heard a good deal) do not begin to answer these basic questions. Or, again, what of the man over fifty who will find it desperately hard, if not impossible, to learn new skills—a gardener, for example, who at the age of 55 finds himself redundant, having exercised a highly technical skill for forty years in one branch of labour? He finds himself out of a job at 55—what happens to him?

The modern State wields enormous power, and it bodes ill for that State, it seems to me if those who exercise the power do so without concerning themselves with the ultimate nature of man. If they do not face this question, there must needs follow a debasement of the human currency, a devaluation of men and women. We could—I do not say that we are doing so, but we could—get our balance of payments right at the cost of the long-term welfare of the human material which makes that possible. It would be a terrible price to pay. These, then, are the basic principles which, as your Lordships will agree, we neglect at our peril.

I turn now to certain other points which I believe call for our attention. First, very briefly (for the matter has already come before us in some detail this afternoon), a word about re-training. It is good news that Mr. Gunter gave us recently, that £2 million is to be spent on re-training and that our present 6,400 places are to rise to 10,000 by the end of 1968; that is to say, the affecting of 20,000 re-trained persons. But one may be allowed to ask whether this figure is anything like high enough. Re-training is a very valuable investment in a country whose major natural resource is human skill. Not only do we need the new centres which the Government have promised and of which we have heard again to-day—and perhaps more of them than the Government have promised—but we need, it seems to me, to pursue vigorously the re-training of men and women within their own works. Could not redundant skilled men be used as apprentice-trainers within firms to a greater degree than they are being used at present?

Secondly, I wish to pay tribute to Government measures which in the last four years or so have attracted new light industry to the North-East—one of the areas in which I myself am particularly concerned. Every effort needs to be made to keep work coming North. Thirdly, I hope that nothing that I have already said about the dangers of redeployment for the welfare of the redeployed will make anyone think that I am against mobility and change. Far from it. But I would emphasise that mobility raises other issues of far-reaching importance. For example, is our educational system sufficiently flexible to permit the interchange of pupils when a man has to move with his family at an educationally-critical stage?

Then there is the problem of housing, acutely short in many parts of the country and especially short in the North-East. The recent Review of Yorkshire and Humberside, the report of the Economic Planning Council, of which the Vice-Chancellor of Leeds University, Sir Roger Stevens, was the Chairman, includes these words. I quote from Section 344: The present conditions are so bad, and the legacy from the past so appalling, that the Council feels justified in calling for the maximum housing programme without delay. The Council then spells out that need in terms of a programme of 45,700 houses a year, and calls that high figure less than the regions' share (by proportion of population) of the national target of 500,000 houses per year by 1970… Against that background of housing I ask this question: can the nation's housing accommodate the redistribution of families? This is an important question, for if the answer is negative, then separation of the breadwinner from the rest of the family will take place, with resultant ill-effects on family life. Then, is adequate assistance being given to people who are ready to move from one area to another? I think, for example, of organised visits on the part of man and wife to the new area to see housing, schools, shops and so on, as well as grants for removal and settling in. I am given to understand that the National Coal Board have done excellent work in this field, and the results are seen in the smooth process of mobility of tens of thousands of miners. Perhaps we could take a leaf from their copy book.

My Lords, 1967 and 1968 are bound to be years of very considerable anxiety in the sphere of redeployment. Change is to be welcomed; mobility is to be encouraged as part of the dynamic of a vigorous society. But the health of the nation will be achieved only if meticulous care is taken at every step to see that men and women are treated as beings of infinite value, never to be trampled underfoot by the demands of impersonal economic forces.

5.2 p.m.

BARONESS WOOTTON OF ABINGER

My Lords, I am grateful to the noble Lord, Lord Byers, for having initiated this debate, if only because it gives the opportunity to some of us on these Benches, who do not see the present situation in quite so rosy a light as does my noble friend Lord Longford, to express our doubts, and possibly even to make some constructive suggestions. In the past forty years there have been in this country three major balance-of-payments crises, and at least four minor crises of the same kind. They have all been different, and they have all been treated with a good dose of the same medicine. It seems as if we have come to look on this medicine, the name of which is "general deflation", as a universal panacea, as though we had something parallel to a medicine which, in another world, would cure rheumatism, tuberculosis and cancer. I think we put more trust in this medicine because, in our masochistic way, we appreciate that it has a very bitter taste and must there for be efficacious.

The first of these crises occurred in 1925, at the time when the Government of the day decided to restore the convertibility of the pound at a level which was quite artificial. Some of your Lordships will remember that this caused the late Lord Keynes to write that witty and instructive pamphlet under the title, The Economic Consequences of Mr. Churchill. I think there are those who feel that perhaps this pamphlet ought to be kept permanently in print, with suitable changes of name during the reign of every Chancellor of the Exchequer, of every party, who has held office since that date. The second major crisis occurred in 1931. At that time we had already heavy unemployment which we succeeded in raising to nearly 3 million by drastic cuts in wages and salaries at a time when it was obvious that our human resources were grossly under-used. If history roundly endorsed the pamphlet, The Economic Consequences of Mr. Churchill, history has roundly condemned the deflationary policy produced in 1931. I do not know a single voice to-day which is raised in support of it.

We come then to the crisis of 1964 to 1966. This one is entirely different, inasmuch as it occurred in a period of full employment; and it was, I think, obvious to quite ordinary people that we were trying to pay ourselves money which was losing value because we were not producing at home enough commodities for that money to buy. Certainly, anyone with a fixed income, or a small income, was extremely and acutely conscious that there was a steady and continuing inflation in progress. For that reason, I am certain that the policy of the present Government in introducing their Prices and Incomes Act was entirely to be commended, and I am extremely glad that it has passed into law.

It is, I think, the one case in which we have availed ourselves of a different type of medicine, and one that is proving itself to be very effective. I only regret that we did not apply it a little earlier, because if we had done so, we might have got away only with "severe restraint" and should not have been obliged also to have "complete standstill"; because as we all know, a standstill in wages necessarily means a standstill at a point at which injustice is inevitably caused. I am quite sure that this was the right policy, but I think there were other alternative remedies that we might have used.

I should like to refer your Lordships to an article in the Sunday Times published on February 18, 1966, by Andrew Shonfield, under the engaging title of "How to be rich and bankrupt". Mr. Shonfield pointed out, very cogently, that a bankrupt is a person who lives beyond his income and who has no assets. At the time of that article we were living beyond our income, so far as the overseas balance of payments was concerned, to the tune of £104 million not a very large excess, when one takes into account that our total earnings were of the order of £7,600 million. Nevertheless, we were living beyond our income—although was delighted to be told yesterday that we are no longer doing so. But we were not bankrupt and never have been bankrupt, in the sense that we have not got assets.

Mr. Shonfield also pointed out that we have very substantial assets in the form of overseas private investment amounting to something of the order of £7,600 million; and certainly not less than £3,500 million of those investments are in a form in which they could be liquidated if we wanted. Moreover, those investments during the period 1962 to 1964 were appreciating sweetly in value, and we could have paid back out of those investments all that we borrowed from the International Monetary Fund and still had at the end of the period a greater value invested abroad than we had at the beginning of the period. We have, in fact, larger overseas investments than any other country except the United States of America. But I suppose we are such Puritans that we should regard it as spendthrift to use even a small part of our assets to meet what was, after all, a deficit on current account.

I think, however, there is some force in the comment of the distinguished American economist, Professor Robert La Kachman, who remarked that sometimes it seems that the spectre of Lord Norman walks the Westminster battlements, tediously lecturing his countrymen on the need to create as much unemployment and as much business recession as might be required to check and reverse adverse balances in Britain's trading accounts. I think that Professor La Kachman is right, too, when he remarks that the "Treasury knights" have not yet been completely vanquished.

My Lords, we could have used alternative medicines, but the temptation was too strong; we reached for the old bottle and started general deflation. Here I must say that I never thought to live to see the day when a Labour Government would be deliberately creating unemployment. I know we changed the name—this is the age of name-changing. Once we had "unemployment"; we then had "redundancy"; now we have "redeployment"—just as once we had plain honest "tramps" but now we have "persons in need of a settled way of living". Redeployment, if taken seriously, is a two-sided process: it means leaving one place and turning up in another. One of our weaknesses has been that we have paid too much attention to the first half of the process and not nearly enough attention to the second. We have not really been told where we are to go. It is true, as we were told by the noble Earl, Lord Longford, that lists of priorities have been issued to employment exchanges, but they are in very general terms. So far as I know, they have never been put in quantitative terms, and they have never been sufficiently widely publicised. If we were really aiming at people arriving at places just as much as we are aiming at people leaving their jobs, I would expect to see all over the country posters telling us where the urgent needs were and urging us to go to the jobs which we describe as of national importance, or to the major export industries.

We were not told clearly enough where to go and, as every speaker except the noble Earl, Lord Longford, has indicated, we were not given sufficient inducement for the necessary upheavals. What has been the result? The result has been that unemployment has happened first and most conspicuously in some of our major export industries. It hit the motor trade, and, as the noble Lord, Lord Byers, pointed out, the people who left the motor trade have gone all over the place and have not necessarily gone into the industries which have high priority. Very naturally also, their colleagues, wishing to share misfortune, pressed strongly that instead of having total unemployment there should be short-time working, which would entirely nullify any attempt at redeployment. Surely, if we really want people to arrive at the right destination, we ought to put a great deal more emphasis on that side of the process.

I do not know why we are so apologetic about the proposal to reintroduce compulsory notification of vacancies. This seems to me an elementary and sensible step. I know that the positive direction of labour is not to be contemplated, but I sometimes wonder whether we could not introduce what I should call a negative direction of labour in the form in which it has been used very effectively at various times by the National Coal Board. In areas where the pits are closing down the Board has made a rule that no one shall enter the industry who has not previously been associated with it. Indeed, I think we might study very widely the measures which have already been referred to to-day; all the measures which the National Coal Board has taken to encourage mobility of labour and which have been remarkably successful.

So, my Lords, I would argue that in this situation we were quite right to stop giving ourselves spending money, but it was unfortunate that, in addition to doing that, we found it necessary to embark upon general deflation. The general deflation had the effect of discouraging investment just at a time when I should have thought we needed every scrap of investment we could get to expand and to modernise the development of our industry.

Lastly, I should like to ask your Lordships to look at the effect of all this on public opinion. The last balance-of-payment crisis was a very curious one, because unless we had been told it had happened no one would have known. It happened at a time when the vast mass of the population of this country was earning more money and had more secure prospects of employment than ever before: at a time when we were getting into the habit of referring to ourselves as "the affluent society". We were then told that there was a terrible crisis in the form of the balance of payments being out of balance. The balance of payments is not a thing which people take into their own homes or which affects their private living, and statements of this kind have little meaning unless we can be told what will happen if we do not restore the balance. I think that our public relations were very deficient in that we never told people what disasters were around the corner if they did not accept the Draconian measures which the Government, quite rightly, felt obliged to enforce.

So how are we now to make sense of the present situation? My Lords, we have been constantly exhorted to work harder. We are told that the test of our success is increasing productivity, and if there is to be more relaxation of severe restraint during the next period the cases in which productivity is improved will be given relatively favourable consideration. So we are all to work harder, but at the same time we are to take medicine which prevents 2 per cent. of us from working at all. I do not see how the man-in-the-street can possibly ever make sense of that. It is now two centuries since Edmund Burke lamented that the age of chivalry had gone and the age of the sophisters, economists and calculators had come. And the glory of Europe, he added, had perished forever. In the present age of economists, my Lords, I do not think it is the glory of Europe which is the casualty, but it does look as if it is simple common sense.

5.19 p.m.

LORD SHAWCROSS

My Lords, when, about a fortnight ago, we discussed economic questions in your Lordships' House the noble Lord, Lord Shepherd, rather invited me to take some part in to-day's debate. In view of his courtesy I thought I ought to face, not the challenge, but the comment which the noble Lord made in suggesting, if I recall his language, that the present situation demonstrated the failure of private enterprise to nurture and develop what is our greatest asset, the use of our manpower. I do not entirely disagree with the noble Lord. Although I am against socialism. I am far from being. as the noble Lord suggested I was, one of those who think that the private enterprise system is, to use his words, "all virtue and no vice". It is for that reason that I happen to sit now on the Cross Benches and not on the opposite side of the House to the noble Lord.

But I am not going to take up your Lordships' time now in arguing about whose fault all this is. On some other occasion I should be delighted to discuss with the noble Lord how for many years past, on trading account, taking visible sand invisibles together, this country has been in balance, and that it is because of Government expenditure abroad that we have been in the red. I am not for a moment saying that by way of criticism. I am no Little Englander who thinks that we can quickly or significantly cut down our foreign expenditure. But private enterprise cannot be wholly blamed for the fact that that expenditure has put us so seriously in the red, or that to-day we have to face these massive measures of redeployment.

This is not the time for a partisan speech, and I am not going to make one. I think that all Members, on both sides of the House, are anxious to approach this problem in as dispassionate a way as possible; for it is a human problem of the greatest significance. I find myself, if the noble Baroness will allow me to say so, with great respect, in agreement with a great deal of what she said to your Lordships. I shall not attempt to follow her in discussing whether a real policy for incentives for personal savings rather than the existing policy of strong disincentives might not have been a more acceptable method of curbing inflation than the prices and incomes policy. As for her suggestion, if I understood it aright, that we might have liquidated our foreign investments, I would point out that in that famous speech which the Prime Minister made, eighteen months ago now, to the Economic Club in New York, it was precisely to our foreign investments that he referred as forming the real and ultimate support for the pound sterling.

BARONESS WOOTTON OF ABINGER

My Lords, the noble Lord will agree, I am sure, that I did not suggest that we should liquidate our foreign investments, but only that we might liquidate a small part of the capital gains on our foreign investments.

LORD SHAWCROSS

I cannot think of any policy which would have been more calculated to destroy the invisible earnings on which this country so greatly depends or which would have been more calculated to result in the ultimate devaluation of the pound. I rejoice that Her Majesty's Government have not been induced to follow any policy of that kind.

Where now do we go from here? It is easy enough to exploit this present situation, as is sometimes done outside, and to base a political attack upon it. That is not helpful. I myself have always been an expansionist. Like the noble Baroness, I had the gravest doubts about the somewhat crude deflationary measures which were taken in July. I have no doubt now that we should be in even graver difficulty, if at this time we took equally haphazard measures to reverse them. Certainly we must not allow the excellent and encouraging trade figures that were announced last night to lead us into thinking that the dangers are yet past, and I was glad that the noble Earl, Lord Longford, never made any suggestion of that kind. We have got to look, I think, at the volume rather than the value figures. We have got to consider the effect of the improvement in the terms of trade upon these value figures, and we have got to realise that our performance must he very much better than it has been, even in the last two months, and that it has to be maintained consistently for a considerable period before our present dangers have been overcome. This is certainly not a moment to relax, or we shall get the worst of both worlds.

In saying that, I do not for a moment disregard the bitter human problem, the great personal suffering, to which the most reverend Primate so movingly referred. We have to look on this, I suppose, as a kind of surgical operation, imposing a temporary hurt, but one imposed in order to achieve, as we hope, a lasting benefit. For it is certain that unless we do face the present situation with cold realism, as Her Majesty's Government have invited us to do, we shall find ourselves with a long-term mass unemployment situation comparable to that which so disgraced this country in the 1930s. Meanwhile, we must rejoice that the unemployment that exists to-day is, at all events for the most part, transitional in character and that, in spite of the human suffering that it certainly involves, compared with the unemployment in the 1930s, as the noble Earl said, it is largely cushioned, as we hope, by the earnings-related benefits and by the redundancy payments—both, incidentally, provided out of the earnings of private enterprise.

But the measures taken in July made it perfectly obvious that for a time there would be, compared with our post-war experience, substantial unemployment. Of course, the measures were in a sense crude, and to some extent they are operating in a crude way. Thus the decline in employment is rather more than is represented by the official figures. This is partly because some married women have decided, on being declared redundant in their existing jobs, not to seek other employment. Some men, too, are content to try to make their own arrangements without registering at the employment exchange, a thing which, fortunately, they are much better able to do nowadays than in the 'thirties, because they have more savings behind them.

There is also the fact that a good deal of part-time work has been discontinued. We all know factories which were hitherto working two 12-hour shifts—and paying 50 per cent. overtime in order so to do—but which have now reduced their working to two 8-hour shifts, thereby saving some labour costs, but, of course, reducing the earning on their capital equipment. Again, the "first in, last out" principle is sometimes operating in an unfortunate way. It is resulting in many firms losing their younger and better employees and being left with the old dodderers, like myself. This is an unfortunate but, I suppose, unavoidable consequence.

I agree that it is difficult to prophesy exactly how high these figures will go. I should not myself be surprised if, in the course of next year, they reached a figure of 700,000 or 750,000; but merely to complain about that is simply to misunderstand what this is all about. I think that everybody in your Lordhips' House understands it, but a great many people outside have not yet appreciated what it is all about. The object, of course, as the noble Lord, Lord Byers, said, and as indeed the Prime Minister has frequently and courageously said, is to shake out our labour force; to weed out the surplus labour which has been, or is still being, employed in many sections of industry, and to redistribute it to those sections in which there is a genuine shortage.

It is a complete misconception—and I believe this must be repeated in the country over and over again—to suggest that there is an overall shortage of labour in this country. The truth is that something over 20 per cent. of our total labour force has been employed in the past in circumstances where they were in fact surplus to the requirements of an efficiently run industry. Private enterprise certainly bears a large share of the blame for that. The efficient employment of labour is a function of capital and the concern of management. I pause for a moment to say that it is the efficient employment of labour. It is not at all a question, as the noble Baroness suggested, of people working harder. The whole point is that the machines must work harder. The future of this country is people not working so hard, but working more efficiently, and making the machines turn round more quickly, without the over manning which exists at present, often on obsolete plant.

While some managements have deliberately hoarded labour against anticipated future needs, it must, I think, be frankly accepted that far more have weakly acquiesced in the restrictive practices imposed by trade unions. There is currently at this time a particular example of that which is very much in the minds of all of us. I refer to the position of the Press, and, in particular, of The Guardian. I do not know how many years ago it is—four years, I think—since the Royal Commission on the Press said that in the newspaper industry over one-third of those employed were in fact redundant. One proprietor alone had the firmness and courage to act on that advice. The Daily Mirror reduced their staff by 34 per cent. They are now producing more papers than they produced before, and they still have too many staff. Now this great paper, The Guardian, affected by the falling off in advertising revenue, which is itself the result of the present down-turn in our economy, are saying that they can, and they wish to, reduce their staff by 20 per cent., and that if the unions will not agree to this, then they will have to give up printing in London altogether. What a tragedy such a blow to this great newspaper would be! That is what this deflation is about. Industry can no longer afford to hoard labour. Industry can no long afford to submit to restrictive practices.

I believe there are two things which have contributed to the fact that, broadly speaking, in this country it takes three men to produce what one man produces in the United States; and both of them are inter-related. One is the gross over manning of machinery; the other is under-investment in modern plant. As to the first, some firms are still trying, under pressure, to shelter themselves against the winds of realism by work-sharing or part-time working. Not always, of course, but as a rule, part-time working with the same labour force is less economic than full-time working with a reduced labour force. It hinders redeployment and, as the Prime Minister has said, again I think more than once, it ought to be discouraged. If managements are not firm now in pressing trade unions to discard restrictive practices, to give up their pressure for part-time working rather than for outright redundancy and redeployment, then this miserable period in our economic life will have been in vain and the future will be bleak indeed.

I would venture to suggest three lines on which the Government should now exert themselves. I believe that they should bring the strongest pressure to bear, day after day and in the most public way, on both sides of industry to get down to efficient and realistic manning standards. I think they should greatly increase the retraining facilities, which are, in spite of what has been done both by industry and by the Government Department, still quite inadequate to our existing needs; they should secure, too, a drastic reduction in the sometimes almost ludicrous periods required for apprenticeship by some of the unions; and they should offer greater incentives—perhaps removal grants, perhaps encouraging crash housing programmes in the areas to which it is desired that labour should go—to encourage mobility of labour from those areas where it is no longer required to those in which there is a genuine shortage.

Redeployment is simply not taking place at the present time on the scale which is necessary to secure the result that I believe we all wish. And, of course, some Government policies, particularly the selective employment tax, are positively inimical to redeployment. But redeployment alone is not enough. Capital investment in private industry at this time is lower than in any other industrialised country in the world, and, largely because of Government policies, is steadily falling. The first move in any reflation when the time comes for it—and I believe it should accompany the process of redeployment when redeployment is really under way, and it is not yet—should be to encourage new investment in the private sector. But how? The truth is that the decline in investment in the private sector is largely due to a complete destruction of confidence in Government policies, and what is needed now is a twofold policy to recreate that confidence.

First, I believe that not only should there be bigger and quicker investment grants—I mean bigger and quicker than those announced a fortnight or so ago—but there should be, also, the allowance, on a selective basis, to those industries which it is most important in the national interest to encourage, of arrangements for free depreciation. Secondly, we must have much more tangible assurances, not only that there will be markets available—because nobody is going to invest in new capital equipment unless he thinks he will be able to sell the goods which he produces with the new equipment—but that those who invest their capital in the hope of developing these new markets, or exploiting existing ones, will be allowed a fair return.

The fact is that we need to have a drastic revision of our taxation policy, covering both taxation on corporations and direct personal taxation. There is not the slightest doubt that to-day our existing taxation arrangements are a grave disincentive to corporate activity and also, I am afraid, to personal endeavour. I believe it is only by concentrating on these two basic problems of over manning and under-investment that this distressing period through which the country is now having to pass can be turned to our eventual advantage.

5.40 p.m.

LORD POPPLEWELL

My Lords, this debate has indicated that we are all considerably interested in this question of unemployment. The extent of our interest may vary. To some it is an academic interest as it affects our national life. To others, as witnessed by the closing remarks of the noble Lord, Lord Shawcross, it is a question of the profit motive and the profit incentive, and what is to be got out of it. In that case the deciding factor is where unemployment should develop, or where productivity should be increased. To others, as represented more forcefully by the most reverend Primate the Archbishop of York, it is interest in the human values. Within these three spheres lies the extent of our interests.

I was interested to hear deployed once again the question of private profit and industrial discipline, which was one of the main themes of the noble Lord, Lord Shawcross. We have had discipline in the industrial field far too often in the past, and where has it got us? It has landed us in the deplorable mess to which the noble Lord, Lord Shawcross, and others have referred. In the past we have had as the main incentive personal profit in the industrial field, whether production should increase or not, and what has happened? We have had the recurring crises taking place all along the line. This is inevitable in a free-for-all society embracing supply and demand, with the profit motive as the incentive for production.

Changes in either supply and demand or in the profit motive have led inevitably in the past to "Stop-Go" policies being introduced—inflation and expansion, followed by deflation and retraction. This is the pattern that has been interwoven in our national life for a considerable period of time, and it is only now that an alternative to "Stop-Go" is being attempted. It is true that we are not entirely the masters of our own destiny in the change of direction that may be necessary. Our physical needs in world trade and our international role in financial matters make us extremely vulnerable to factors not within our control, and these have been referred to more than once during this debate. The financial mess that we had drifted into by 1964 highlights forcefully the situation that I have enumerated; it indicated once more the break-down of a free-for-all society to deal effectively with the situation except by the usual "Stop-Go" methods.

It is to the credit of the Government that they have faced up to these facts of life and have taken measures, many of which are extremely unpopular, in an endeavour to put our economy on more balanced lines. Unfortunately, only the old traditional methods were available at the time of the crisis, and much as we realised the weakness of these as long-term curative methods, they had to be adopted, although on a much more selective basis than previously, until our new method of deployment could become operative. These, of course, involve a big shake-out in our industrial production, in both its pattern and its location, and also in the requirements of our service undertakings as distinct from those of production.

We know—and this has been referred to on more than one occasion—that both under-employment and over-employment of our manpower are taking place. We know that many of our eminent scientists and technical people are employed on projects not entirely essential to our national requirements. Short of a dictatorship, which of course none of us will accept, it is not possible to eliminate entirely this gross wastage of manpower, but steps must be taken to ensure that it is kept to an absolute minimum. The change of pattern required is not easy to accomplish. It cannot be quickly achieved; it must be long term in its objective. In many ways it must be revolutionary in its outlook, because it means a complete break with old traditional methods. Social as well as economic circumstances must be kept in mind in securing these changes. Solvency in our balance of payments must of necessity be our first priority. Repayment of much of our outstanding loans must be made. The Chancellor of the Exchequer rightly continues to remind us that we cannot live indefinitely "on tick", as the Tories have repeatedly done before an Election, going to the country with an entirely false prospectus, and then after the Election re-imposed "Stop" methods. This is the pattern that has gone on for a considerable period of time.

This Government are pledged to solve the recurring crises of unemployment that have so bedevilled us in the past. In particular, those of us who have been among its victims will ensure that that pledge is honoured to the full in this Parliament. We are watching with great interest the pattern of the present increase of unemployment. Much has been said about it, but it is as well to analyse where and how it is taking place. In the main, the unemployment is in areas where a good deal of alternative work is available, and where an adjustment of manpower is required. Previously the pattern has been that it has fallen most heavily on the development areas where there was little or no alternative employment. These areas certainly are being affected now, but to a smaller degree than previously, and I speak from many years' personal knowledge of the industrial field in these areas.

The enlightened policy of the Board of Trade in extending the scope of the industrial estates corporations and increasing its new factory building programme is very welcome. The Board of Trade's wider approach to this is most helpful to a general pattern. Of course there are some isolated areas that will not be touched, such as, probably, East Anglia and the more agricultural areas, where there is a continuing difficulty; but, generally speaking, the policy is to be welcomed.

The further limitation of extension space in areas of full employment and the operation of the I.D.C.s is having, and will continue to have, a considerable influence in this readjustment. The establishment of National and Regional Economic Development Boards and Councils is a step in the right direction, with a view to spreading more evenly the work load throughout the country. These are new ventures, and it will take some considerable time before their influence is fully felt. But there is a pattern of planning, a pattern of development that is attempting to deal with, and to put alternative proposals to, the ordinary "Stop-Go" of the past. The considerable development of commercial and technical libraries throughout the various centres in the country will help to provide information on economic trends, on market techniques (referred to by the noble Lord, Lord Shawcross), on tariffs, on trade regulations and a wide variety of subjects that will be of great help to would-be exporters, and, in particular, to smaller firms—and we want to see smaller firms embraced in the export field.

Again, we see that this is a pattern developing which will be of considerable influencein this new type of alignment. The yellow book which has just been published by the Board of Trade, containing full information of the new investment grants, the type of machinery and productive effort that is covered, is going to be of considerable assistance to the smaller firms, in particular, to enable them to know on what lines it is advisable for them to develop, and the financial assistance that can and will be given to them after next July. On the question of investment grants—20 per cent. throughout the country generally and 40 per cent. for the development areas—with due deference to what was said by the noble Earl, Lord Dundee, I think they would be much more beneficial than the old depreciation grants of the past. It is an arguable point, but I think that with the passage of time they will provide a far more lasting solution to our difficulties.

These are some—and there are many others—of the measures which are being introduced in order to assist us to become solvent. We talk about doing sufficient; we forget that many of these measures are long term in their effect. Equally essential, if we want to get this changed pattern, these long-term measures must be implemented in order to end the recurring crises which have bedevilled us for so long. In our opinion, there is no short-term measure that will help to provide a solution. When we are talking about the increase in unemployment, one can appreciate that if we adopted the "Stop-Go" policy, as in the past, it would have a salutary effect on the increase in unemployment for a short period, but then, given the easement of expansion as in the past, we should have the recurring cycle that has taken place previously. This increase which has taken place is on a much more selective basis, and chiefly it is concentrated in the areas in which we have abundant proof of over-employment.

One speaks feelingly of our friends in the Midlands, where the motor-car industry is so greatly affected. Human values are involved, but from what we can see and hear of the motor-car industry most certainly over-employment is taking place there, and if we increase the national pattern, if we seek to increase the number of motor cars on our roads, we also increase the congestion and the general difficulties involved. In these times of crisis through which we are going it is much better to deal with the situation in those particular areas where there is some alternative work available, to get us to the pattern we so desire.

Alongside all this on the industrial front, many measures have been undertaken to ease the burden of those who will be made redundant or who will be unemployed. This is again a pattern which is developing. Previously these people were summarily dismissed, and I can remember in my industrial life having to deal with these problems times out of number, with no alternative. The difference to-day is that the Contracts of Employment Act is a valuable asset because it ensures that a workman must be given adequate notice, based upon length of service, if he is to be dismissed. This, in turn, enables him to look round and to obtain a job before the one in which he is at present engaged ultimately folds up. This is a big advantage, as is appreciated by those of us in the industrial field who have known the times when men came home at two or three hours' notice when their employment was terminated.

Here, again, we have the Redundancy Payments Act, also based on length of service. This is not the "golden handshake" which is experienced at the managerial level, but it is at least an acknowledgement and some compensation to employees for the service they have given. Only recently in the area where I live a factory has had to dispense with a hundred people, many of them with a record of long service. Previously when that has happened I knew the feelings that existed in that particular village, but these men have received quite a reasonable sum of money which has helped to tide them over until they could get alternative work. This is a much more humane approach. We know that in this transfer of labour all kinds of difficulties are involved, but where this redeployment has to take place it is well that this Redundancy Payments Act is in force, and this Government are to be given the utmost credit for facing up to all these circumstances.

To turn to the earnings-related unemployment benefit, now in operation, which ensures that for the unemployed person the fall in living standards is not nearly so great as it used to be, this is a big advance and is to the everlasting credit of the Government. It is of outstanding importance to those who lose their jobs and must be of considerable help in overcoming that feeling of despondency which these men have to endure and the lowering of the morale that takes place. There are human problems involved in overcoming the feeling of these individuals that they are just expendable units, which has been the position in the past.

The prices and incomes policy is, in my opinion, a welcome step forward in an attempt to break the vicious wages and prices spiral and the anarchy that has gone with this in the past. I know that many of my trade union colleagues look upon this with great suspicion, but it is to the overwhelming credit of the Government and indicates the great advance in thought which has taken place. The noble Lord, Lord Shawcross, and many other people are inclined to condemn the trade unions with their restrictive practices. It is very popular on the other side of the House always to be condemning the trade unions on their restrictive practices, but, on the other hand, this prices and incomes policy is a difficult one to get the trade unions to accept, and it is to the lasting credit of the majority of the trade unions that they are facing up even to Part IV, containing the compulsory provisions; and I strongly object to and regret, if I may say so, the attitude of Mr. Jenkins and also Frank Cousins in that they are really missing the boat. They are not leading their trade union colleagues on the path which will ultimately get them away from that anarchy of free-for-all bargaining which has been referred to as bedevilling our economy in the past. In contrast to this I would point out the co-operative effort of the trade unions. I do not think you can have a finer example than that of the railwaymen—150,000 fewer railwaymen's jobs in these 3½ years or so. And it has been accomplished without any trouble, without any real strife, without any unofficial disputes, because there has been co-operation between the unions and management concerned, with reasonable transfer allowances and arrangements for elderly people to be retired.

We also have the outstanding example, referred to by the most reverend Primate, of the National Coal Board, in the closing down of all these many pits; the transfer of workmen; the taking of workmen and their wives and children to the scenes of activity, bringing the men from Durham to coalfields in Yorkshire to have a look at the surroundings. All this has been accomplished with the absolute minimum of trouble. This is a real cooperative effort that the trade unions are making, and will make when they are dealt with on proper lines. And this is the essential aspect of the whole matter.

An extremely difficult problem presents itself in the re-training of labour, particularly the middle-aged and the elderly person. Local education authorities, colleges of technology and further educational schemes are providing more opportunity for the younger generation. A greater opportunity is being given to them for training for the City and Guilds, and for the National, Higher National certificate and diploma level. These are excellent steps forward, and there have been some very good steps forward in recent years in this particular direction.

The Industrial Training Act 1964 can be of considerable assistance in the retraining of more adult labour. The levy grants system can be of great help in bringing smaller firms within the orbit of these re-training schemes. Many of us who deal with big firms, and with small firms heard complaints from the larger firms that they encourage their apprentices to take this part-time course, liberate them from employment during the day to go to technical college, only to find that, as soon as they become 20,or finish their time, a slight inducement is offered by the smaller firms, and that manpower is lost. The smaller firms, of necessity, have not been able to liberate their manpower to the degree the larger firms have done. But the Industrial Training Act now gives considerable assistance, in the levy grants system, under which the employers pay so much, and are then reimbursed for their people to go to further education.

Responsibility for ensuring the correct type of training must be in the joint partnership between management and trade unions concerned. It is very easy indeed to ask: "What are the Government doing about training? What types of jobs are they providing?" It is not possible for the Government, short of a dictatorship that is going to control direction of labour in industry altogether, to decide exactly what type of jobs will be available. The Government can only plan. It is the joint partnership between management and men which knows best the type of skills in which redeployment is necessary.

The setting up of the Central Training Council, with representatives of both sides of industry, public and private, together with representatives of education authorities at all levels from university downwards, is a big step forward. In reply to the noble Lord, Lord Byers, I may say that something like seventeen of these boards have already been established. They are dealing not with 10,000 or 20,000 training under the Government scheme; these boards, with the respective industries which they cover, are dealing with nearly 12 million people.

LORD BYERS

The noble Lord, I think, has probably got that wrong. The 12 million is the number of people employed in the industries concerned, not the number of training facilities.

LORD POPPLEWELL

If the noble Lord will control himself a moment, they are dealing with 12 million people engaged in the various types of industry, and a look at the aide-memoire will indicate the type of industries in which these training schemes are in operation. And who knows better than the management engaged on the job and the trade unionists, who together form this partnership, the type of skills in which re-training must take place? This is a step in the right direction. It indicates the far-seeing thought of the Government in this redeployment plan that it is taking place, and I welcome it very much indeed.

It is easy to say that crash programmes should be put into force to get this type of training going. But first there must be training officers; there must be officers trained to tutor in this particular direction. You might use a four-weeks' or a six-weeks' period with some of the more elderly people who are skilled, in order to equip them in the essential characteristics of training others. But there is a genuine shortage of these officers, and technical colleges are being encouraged to include in their syllabuses courses to assist in this direction. It is easy to say—and we have heard it said from time to time—"Establish these crash programmes"; akin, as it were, to the necessity of war. Can we really do this? First, we have to know the jobs in which we want to train men. If we want to establish crash programmes, we must have complete control of manpower as exercised during the war years. I suggest that those people who talk so much about this would cry out aloud if the direction of labour and industry were enforced in this particular direction.

Again, one faces up to the very real difficulties of the training of elderly manpower; and it is here, where the Government training schemes are in being, that over fifty different trades are being taught. In 1963 there were only thirteen of these centres. It is to the credit of the Government that there are now 31, providing 6,000 places for a six-months training—12,000 a year. And we know that by the end of 1967 the number of these training centres will be in the region of 40; and they will deal with some 15,000 to 20,000 people a year. These are real steps forward, but these are not things that can be accomplished overnight. It takes a long time to get these centres into operation.

Then there are the occupational guidance services, on a regional basis, that are giving such useful help to those who seek a change of employment. How can this Government be accused of not facing up to the realities of life in this particular direction? They are not dealing in short-term measures. They are risking unpopularity in some of the measures they are taking, but I am absolutely convinced that the line they are taking is right, and I have no fear at all of the contrast between the free-for-all society beloved by so many and the more orderly planning we believe in whereby the ability and skills of our people may be utilised to the full.

So I think to-day that we are living in a challenging period. I believe that the Government are right to face up to certain measures of unpopularity in the next two Nears or so. They are right to seek a long-term solution, with a view to preventing the constant crises that I have known in my industrial life. I do not want to go back to the days that I remember so well in between the wars. No one thinks in that direction now. This, again, is a big step forward on the welcome developments that have taken place in the post-war years. The Government are of the Party that has brought about these political developments, and 1 am convinced that, given the right and opportunity, they will continue to go forward from strength to strength and prevent in the future the recurring crises of the past.

6.11 p.m.

VISCOUNT ECCLES

My Lords, I always admired the genuine sincerity of the noble Lord, Lord Popplewell, in another place, and certainly we have had a fine example of it this evening. I should like to go with him in that I think he is quite right in saying that there are no short-term remedies for a situation which has daunted one Government after another.

I am grateful to the noble Lord, Lord Byers, for giving us an opportunity to consider this subject as we come to the holiday season, which will be shadowed by the largest number of unemployed we have had for a long time. I intervene to make only two points. One concerns this problem of re-training, about which so many noble Lords have spoken, and the other raises the question whether structural changes in the economy are the most essential steps, as it is now the fashion to say among our leaders in another place, towards a solution of the threefold problem of employment, growth and the balance of payments.

As to unemployment, the numbers are rising, and, as the noble Baroness, Lady Wootton of Abinger, said, the Government are responsible for the rise; and therefore it is no wonder that the Government are called upon to heal the wounds which they have had to inflict. This is the reason why a crash programme of re-training, or a substantially larger one than we have now, is widely demanded. In some ways, this is unfortunate, because as a consequence of this emergency the idea is getting about that re-training is a remedy for a special situation. That idea is not entirely new. In fact, it was implicit in the manner in which retraining is organised under the 1964 Act, which noble Lords have praised but which I hope to show is not all that satisfactory. Surely the greatest care ought to be taken to see that re-training appears to be something more than treatment for a casualty in industry—I mean, something handed out to soften the blow of unemployment.

We ought to do everything we can to present this case the other way round, insisting that if in the past more men and women had had a better opportunity, and more encouragement either to improve the skills they started with or to learn a new skill, there would not now be so many out of work. This is not a method of presentation; it is absolute fact. For some time it has been obvious in the swiftly moving current of technical change that one skill will seldom last a lifetime. In each decade the machines and techniques become obsolete more rapidly, and an important conclusion follows: that re-training should be accepted, welcomed and organised as a normal activity. This can be done in several ways: either by individual firms, where the firm is large and enterprising enough to offer a really wide range of re-training inside its own organisation; or—and this is going to be overwhelmingly the more common case—where the re-training has to he organised outside a particular firm, either by the Government, through Government centres where financial assistance is direct, or in co-operation with industry in their own industrial training establishments.

Training organised outside industry in either of the second or third methods can be satisfactory only if it is accepted by those in work and out of work as something quite normal; as something which men can take in their stride, like the upheaval of moving from an inconvenient house to a better situated house. We are not going to achieve this sense of there being nothing awkward or unusual about re-training, nothing slightly damaging to the man himself, unless the re-training courses are integrated into the educational system. But this is not what is being done. Instead, the courses are being organised in special establishments which easily look like special hospitals for special diseases; and these centres, in greater or less degree, are under the wing of the Ministry of Labour. Whatever nice things have been said about that odd Department this afternoon, it is certainly true that it is closely identified with everything that goes wrong in industry, and that is not good for the atmosphere of re-training.

It was not necessary to organise re-training in this way. Professional people, like doctors, teachers and business executives, treat their refresher courses as quite normal. They compete for the places in the courses because they are well aware of the benefit to their careers. It these professional men and women, who in their youth received a lengthy education, need and welcome this kind of re-training as a continuance of their education, how much more should similar help be provided for those who left school early and, through no fault of their own, learned little and are so easily overtaken by the peremptory demands of technical change!

We are not going to get the attitude to re-training right unless it is organised as part of the education system. All industrial countries, whether in Europe or in America, are faced with exactly the same demand, to expand the provision for industrial training; and all of them, so far as I know, use their education system for this purpose to a much greater extent than we do. They educate their apprentices in educational establishments, and we lag behind.

Why have we taken so long in making this obvious reform? I suppose the answer is that the Ministry of Labour are wedded to the traditional habits of industry and the trade unions, particularly in the matter of apprenticeship. But surely it is quite time that we realised that a boy of sixteen, unless he is exceptionally lucky and joins a firm which can offer him a well-developed apprenticeship training inside the firm, would do better to stay on at his secondary school for as long as he can, and then go direct to a technical college and take a full-time course. There he would get a general broad introduction to electrical engineering, or building, or whatever career he has chosen. That is what happens in other modern industrial countries.

What is right for that boy of 16 when starting his life in industry is right for the same boy when he is an adult. He finds that if he is not to be left behind, or be out of work, he has to go somewhere and learn the new techniques in his own trade, or learn a new trade altogether. In either event we want him to feel that re-training is normal and natural. I submit that this is most likely to happen if he can be offered the chance and can be persuaded to go cheerfully back into the education system to acquire fresh knowledge.

But we have failed to grasp the common-sense and human motives for giving re-training a firm basis in education. In days gone by I fought to get re-training away from the Ministry of Labour. I wanted to do this on two grounds: first, for the psychological reasons that I have already mentioned; secondly, for the practical reason that the Ministry of Education were rapidly building up a national network of technical colleges, and it would have been far quicker, cheaper and more efficient to add re-training to the functions of these colleges, rather than spend huge sums of money—and spend them very slowly, because if we have nothing to build on we cannot spend money very fast—on widely spaced special training centres. The Ministry of Labour won the Whitehall battle, and we had the 1964 Industrial Training Act. The present Government will say that the Government and industrial training centres are doing good work; and I do not for a moment deny it. But there are far too few of them; they are far too scattered; they are too far from the homes of many of the unemployed—it is difficult to get people to travel very far for re-training. And, above all, they cannot provide that atmosphere of normality and diversified progress which the technical colleges can provide.

Fortunately, there is at last a ray of hope. The Minister of Labour has announced that he is exploring the possibilities of transferring from the Government training centres to technical colleges 650 boys now taking first-year apprenticeship courses in those centres. This will release places for the adult unemployed. These boys, unless I am much mistaken, will get a better education in the technical colleges. But what about the unemployed adults who fill their places in the training centres? The Minister of Labour is known to be a man of courage. He has now taken the first step to make use of the technical college plant (he also does it for training his instructors in his training centres; he could not do it in any other way), so why does he not go the whole way and turn over these centres to be managed for him by the education departments, through the technical college system? That, incidentally, would have the excellent result of involving industry much more closely with the whole system of technical education.

Although this co-operation is much better than it was five or six years ago, it is nothing like good enough yet—I think particularly of apprenticeship training. Once the large sums of money collected by this levy were directed by industry towards the technical education system as a whole, there would be a really live partnership between the two; and that would be infinitely better, both for young and for old, when they go to acquire knowledge in these centres. I do not ask the Government to give any kind of answer to this proposal tonight, but I hope they will carefully consider the relationship between re-training and the education system, because, unless we get re-training looked upon as a normal occurrence in our working lives, it will not yield anything like the benefits we all hoped to have from it.

I turn to my second point. Whatever aspect of unemployment we are thinking about, we cannot get much further, we cannot frame policy, without estimates of the number of men and women likely to be out of work. In other words, we need to ask where the economy is going and, in particular, what will happen after the period of severe restraint ends next June. As the noble Earl the Leader of the House said—and I quite agree with him—reliable answers to these questions are not to be had. About a fortnight ago in another place there was a debate on economic affairs which was dominated by the uncertainty in the prospects for employment, growth and the balance of payments. Both Front Benches recognised that quite new policies were required—untried and unknown policies. The Minister of Labour was very frank about this. He admitted that he did not know what to do about the incomes policy after June 30. Indeed, forgetting that only last spring his colleagues had told the electors they knew all about economics, he appealed, with endearing charm, to Mr. Heath for some fresh ideas.

The Leader of the Opposition responded to that appeal. He told the House of Commons that the most essential step was to restore confidence in industry. How was that to be done? Well, Mr. Heath rather surprised me, and he said (column 657 of Hansard of December 1) that confidence would depend on structural changes in the economy. And he went on to enumerate many structural changes which he considered vital to the restoration of confidence and growth. Winding up the debate for the Government, Mr. Michael Stewart fully endorsed Mr. Heath's choice of the first priority—and I quote: I turn to the structural changes which the Leader of the Opposition mentioned and which, in my judgment as in his, lie at the heart of the problem."—[OFFICIAL REPORT, Commons, Vol. 737 (No. 108), col. 757; 1/12/66.] The problem which Mr. Stewart was discussing was precisely the future of employment, growth and the balance of payments. That these two right honourable gentlemen should agree on structural changes as the overriding priority is novel and interesting. If we accept this view, clearly it will have a decisive effect on the estimates and treatment of future unemployment.

What were the structural changes to which Mr. Heath and Mr. Stewart attached such prime importance? Mr. Heath's list began with industrial retraining, which I have already discussed, followed by a shake-out of surplus labour, concentration of regional development on schemes which promise the best growth, more incentives to private industry and, most important, trade union reform. When Mr. Stewart came to speak, he did not object to any of these changes, but added to them a list of this own—a better pattern of firms, with the "Little Neddies" seen as the chief agents for bringing about this rationalisation (I should think that the Industrial Reorganisation Corporation would be a much more effective instrument), and then he spoke of more grants to the regions and to private investment; and, finally, entry into Europe.

These lists are lone and this is not the occasion to discuss them in detail. Sooner or later all these proposals would affect the number or the treatment of the unemployed. But one thing about them which is pretty certain is that they are all long-term. I suppose you could give some immediate incentives to private industry, but in fact there is not a single one of them that is likely before the end of June next to bring any comfort to candid, bewildered Mr. Gunter.

I found one feature of these lists extremely puzzling, and from what the noble Lord, Lord Shawcross, said in his admirable speech I think he would have, too. Among all these structural changes advocated by these right honourable gentlemen there was hardly any mention of the level of Government expenditure, though it is true that Mr. Nigel Birch and Sir Cyril Osborne had some pretty trenchant things to say about the growth in public spending. One does not expect Ministers to mention the awkward fact that all the growth targets in the National Plan have had to be abandoned except one. There is one target which is expected to be exceeded next year, and that is Government spending.

When Ministers call on all of us for restraint, they have got into the habit of covering up their own lack of it in spending by pointing out that the investment of public money in the basic services of the economy helps redeployment and structural change. And so it does, but only if a number of other things are happening at the same time. Among those other things, I suppose nothing is more important than a high and steady level of investment in the private sector, and this is exactly what is not happening now. We are now going into a sharp decline in manufacturing investment. Let your Lordships ask any heavy engineering firm, from the North to the South, what their domestic order book looks like after the completions of next spring and the summer, and you will find how extremely sharp the decline is going to be.

There are two things to be said about a fall-away in private investment. One is that it takes time to show its bad effects, and still more time to reverse; and the other is that it cannot be made good by any kind of public spending. It is, I think, one of the illusions of the Labour Party that if enough money is not being spent or invested in the private sector, then in some extraordinary way you can make it good by spending in the public sector. As things are to-day, to meet the present level of Government expenditure we have very high taxation and it may even go higher.

I agree with those who hold that the burden of taxation is now so great—and I am thinking particularly of productive industry—that by itself it prevents us from risking a respectable rate of growth. That is to say, by taxing ourselves so heavily and in the manner in which we do it now, we deny ourselves the flexibility for dealing smoothly with technical change and its consequential transitional unemployment. If that view is right, and I think it is, then unless the rise in Government expenditure is halted and taxation on production—on both industry and the men in industry—is reduced, almost all the structural changes advocated by the Party leaders in another place will prove extremely disappointing. I go further. However excellent we think all these structural changes would be, would they really solve the problems of growth, employment and the balance of payments? I can hardly believe this.

I cannot agree, to use Mr. Stewart's phrase, that structural changes lie at the heart of the problem. Whatever may be the shape of the human society at which we aim, we shall find that it is always a compound, an indissoluble compound, of the structures within which people live and work and are governed, and of the attitudes, the vigour and the spirit which they display inside those structures. I can illustrate what I mean by taking a primary school as a paradigm of society as a whole. We know only too well that the well-designed and equipped building does not of itself guarantee that the life and work of the school will be satisfactory. Teachers, children and parents count. Most people would say that they count more than the building. Nevertheless, the building also counts and the quality of the school is always a compound of the physical assets or the structure, and the attitudes and skill of those who contribute to its work.

This is equally true of society. In Britain to-day we are neglecting in an astonishing manner the more important side of the compound of our society. For this reason, I doubt whether the economic policies at present in vogue will succeed. Just think of it. In our postwar economic troubles, casting round for new and adequate policies, what have we not tried?—nationalisation,competition, productivity, incomes policy, national planning, and now we have structural changes. None of these ideas, good or bad as we may think them, will work by itself any more than a building by itself makes a good school.

Of course, I agree that we need substantial structural changes in the economy. Good planning will always have my vote. But changing the structures is not going to be enough. Let us admit—and let us discuss it as often as we discuss economics—that if we were all doing our best, exercising more restraint and showing more regard for others, our present structures would look marvellous. If our attitudes to work—of course, I mean to efficient work, not longer work—and our attitudes to society as a whole were right, we should not hear anything about the weakness of the pound or the necessity for the Government deliberately to create unemployment. Given a united will and a common purpose, we can easily tip the narrow deficit on overseas account permanently in the right direction and grow rapidly at the same time. Now this is not happening, and what really lies at the heart of our problem is this failure in attitudes or morals, or call it what you like.

For the subject which we are discussing to-day, the alleviation of unemployment—and a very serious problem it is—large structural changes are to be welcomed. But I consider these to he the less important element in that duality which makes up human society. Parliament does not yet discuss the more fundamental half of the compound, but one day it will and that is a day to look forward to.

6.39 p.m.

BARONESS BURTON OF COVENTRY

My Lords, in common with the rest of your Lordships I, too, should like to thank the noble Lord, Lord Byers, for putting this Motion on the Order Paper. I should also like to thank him for his speech and for raising the problems which he mentioned. At the beginning, I think he asked, quite rightly, what benefit can it be to the country to have people out of work, and went on toimply that this time which has been so dearly bought must be used to produce a better system for the future. The noble Lord then talked about the machinery and the administration to help people to move to new jobs, and dealt with the problem as to how efficient that was, and he followed that by asking whether the Government know where the vacancies are. If I may say so, I agree with what the noble Lord said, and during the latter part of my remarks to-night I hope to deal with those points in detail, because I think they are fundamental to the Motion which the noble Lord has put on the Order Paper.

My Lords, even at this late hour I have three particular reasons for being glad to take part in to-day's debate. First, in the 1930s I worked in the Rhondda Valley, where I lived with an unemployed miner and his wife. The man was 42. He was perfectly fit, and he had been out of work for twelve years. I learned a great deal about the effects of long-term unemployment during my time in South Wales. Secondly, a few years later that understanding was considerably deepened when I found myself unemployed and on the dole. Thirdly, there was my experience in Coventry in the mid or late 1950s—Coventry, which has always experienced the cyclical ups and downs of the motor car industry. During this particular recession in the car industry in Coventry, obviously, as Member for Coventry South, I learned much about hire-purchase problems and about accepting lower wages, and I was involved in discussions with the then Government about the whole question of travelling allowances when work was found away from the city.

My Lords, men working in this industry have always had two problems—one pleasant, one not pleasant. The pleasant one is high wages, the unpleasant one is that other employers have not been anxious to employ men who would leave them to return to the car industry when prosperity returned to it. I remember the difficulty this presented in Coventry during my ten years as Member. For example, to take the well-paid municipal bus service, if my memory serves me aright this service was even better paid than in London—it was certainly as well paid—but it was with the greatest difficulty that a full complement of personnel was possible; and, of course, it was most possible when the motor industry fell on bad times. Now I am not blaming anyone for seeking high wages. The motorcar industry employers are not philanthropists, and if the men got high wages it was because their work was worth it. I think, however, that all of us in this House would agree that this is a real social problem, although it is one which we are not able to discuss to-day.

Many of your Lordships must have seen on television relatively recently interviews in which redundant car workers, particularly in the Midlands, were quizzed or questioned as to what they thought about all this. My Lords, I do not remember when I have been more impressed. It is one thing to take a balanced view when you yourself are not affected; it is totally different to take one when you are the person who has been thrown out of work. I do not know what other noble Lords felt, but, quite honestly, in all the interviews that I myself saw—and there were a great many at that time—and in spite of some quite tendentious questions, each person expressed an understanding that something had to be done. They felt, of course, that this must be fair, but they saw that it was time to cry, "Halt!" I watched them, knowing something of what this means, and I felt that people like this merited the best that any Government could offer them.

What has happened to those declared redundant in this redeployment? Obviously, those of us without official information can base our opinion only on generalities and on such inquiries as we have been able to make. My small inquiries have led me to three conclusions—three, I am afraid, very simple ones, and my Front Bench will have better information. First of all, some of these have found work elsewhere; others have gone from basic export industries—and, of course, I choose the motor car industry—into fringe industries, which could be hit later on. Others have gone out of industry altogether into what I would call highly vulnerable retail work—greatly aided, I am afraid, by the demands at Christmastime. We hear that some have been fussy about the jobs they have taken. I am sure they have been; I am equally sure we should have been, too. Others have accepted lower-paid work, in some cases much lower paid. A few minutes ago I mentioned high wages in the car industry, and one of the problems here is that other employers do not offer such wages for work of corresponding skill. This is one of the problems we have in the Midlands. Some, of course, have been unable to find work at all. Most are "feeling the pinch", and some are already in debt, as was the case with those constituents of mine in the mid and late 1950s.

The measures taken by this Government have been tough and harsh: drastic measures to deal with a grave situation; measures intended to take effect quickly. And this they have done. Measures, I suggest to your Lordships, which should never have been necessary. If we look back over the last few years, to just prior to the 1964 General Election, I want to suggest that even to people who are as unskilled as economists as I am—and I have no pretentions in that direction—the background was there to be seen. Earnings were rising much more rapidly than productivity; costs and prices were under pressure; serious shortages of manpower delayed the delivery of goods against export orders; and firms were hanging on to their skilled labour—as I saw, of course, in the motor car firms in my former constituency in Coventry. In short, in the memorable phrase of Mr. Macmillan, "We never had it so good"—an attitude of which everyone became slightly ashamed, even those who sponsored it. I suggest that this is the price we are paying for those years: the price that Conservative Governments just had not got the courage to pay.

I should like to suggest to the House that if the background to-day had been less sombre, and if the sole problem had been to secure a redeployment of labour to secure the transfer of workers from one job to another without any increase in the level of unemployment, the approach might have well been different. But it was more urgent than that. We had to have a breathing space, an opportunity to enable us to reshape our economy and to make it more competitive. Government training centres, industrial training boards, length of apprenticeships—these are all facets of our problem. Other Members have spoken of them, and I will not waste your Lordships' time to-night, but I do remember much work on the whole problem of apprenticeships when I was in another place. There were difficulties, of course, but these were not confined to one side of industry. To-day, with support from both sides of industry, a number of industrial training boards are putting forward basic training programmes involving a considerable drop in the length and period of apprenticeships.

Many years ago most of us—and I am afraid I must include myself in this—believed not only that one had a right to work but that that work must be where one lived. I will not go into the reasons for that but they were obvious. I think now that the first contention holds good but not the second, and herein I believe lies one of the basic problems of this Government. Going back to the 1950s in Coventry, I remember being infuriated when, complaining about my constituents being out of work, I was given figures of vacancies in distant towns. What use were these? There were no houses available. To-day the House will know that local authority associations are supporting the Government in making clear to authorities that, so far as possible, a residential qualification shall not be treated as the sole requirement for housing. But there is an additional side to this, the private ownership sector. As the House knows, at present local authorities build only about one-third of the total stock of housing in this country. The Government have decided that the category of people to whom local authorities can make loans for house purchase is now to include workers moving to new districts. Can anything more be done on this vital aspect?—because, as many speakers have stressed, mobility of labour is obviously essential, both now and in the future.

It seems to me that industry in general, and the Government, could learn much from what has been done by the National Coal Board. I choose the coal industry for three reasons: the Rhondda and from my own experience there; my great admiration for what Lord Robens has done at the National Coal Board; the excellence of the coal industry scheme. I am going into a certain amount of detail here because I think this ought to be on the record. The National Coal Board have a first-class record of success in moving miners from the coalfields that are contracting to those with an assured future. Noble Lords may be, and I hope will be, interested to know that during the first seven months of the current financial year 30 collieries were closed or merged with others. During the same seven months 21,000 men moved from one colliery to another, and of these about 1,000 moved quite a long distance to other coalfields.

As my noble friend Lord Popplewell and others certainly know, the Board's scheme for transferring men from one division to another was introduced in April, 1962. Since then, 8,290 men have moved to another job under the scheme. I suggest that if we add to that number the wives, children and other dependants, it means a total of approximately 33,000 human beings. In addition, the National Coal Board offer to ex-miners in the contracting coalfields jobs in the central coalfields; and this has meant that each year the skill and experience of several hundred trained miners who had left the industry are redeployed in pits with an assured future. Obviously all this has been an enormous undertaking, and it is to the credit of the local authorities concerned as well as to the National Coal Board that houses, schools and other facilities, as well as jobs, have been found for the incomers.

The job of building houses, as your Lordships may know, is tackled by the local authorities and (in cases where they are unwilling or unable to build on the necessary scale) by the Coal Industry Housing Association. During 1965 and 1966 nearly 1,000 houses for miners were completed by the local authorities and another 13,000 were in various stages of negotiation or construction. The Coal Industry Housing Association in the same period finished just over 1,000 and had started or planned for another 700.

But, apart from housing, what other attractions have there been to persuade men to move in such remarkable numbers? I listened to the most reverend Primate the Lord Archbishop of York when he spoke, and I want to say the same thing. I remember these problems in Coventry in the mid-1950s when men just would not move, even if jobs were available. What was the secret of the National Coal Board? I think undoubtedly that one answer is to be found in the fine and comprehensive scheme of transfer benefits and allowances administered with imagination and understanding. In my opinion these qualities have been Lord Robens of Woldingham's great gift to the industry.

To be really practical, perhaps I could take one example from the Midlands, starting—my noble friend Lord Popplewell will be pleased to hear—in Durham. This miner had been a fairly highly paid face-worker in Durham. When he moved he had to accept a temporary downgrading to day-wage work for a few weeks. This was not a great problem because his earnings were protected for up to two years. It meant that he was guaranteed at least £15 for a five-day week or 75 per cent. of his previous average earnings, if that was higher. In his case it was the latter. Also he had any wages lost in travelling made up to him at the rate for his old job. Fares and travelling subsistence were paid for his initial journey to his new district, and, as he had to spend some time in lodgings, he got an assisted return fare home every month. It was eight weeks before he got a house. For the first four weeks he received a settling-in allowance of £6 per week and a lodging allowance of 84s. for the rest of the time he was in lodgings. Finally, when he had a house to move his family into the fares and travelling subsistence for all his dependants were provided. The National Coal Board paid the cost of his household removal and in fact actually organised it for him. Furthermore there was a household settlement grant of £50 as soon as the family moved into the house and another £50 when they had settled in.

As the miner in my story—and he was no exceptional miner and this is no exceptional case; this is so wonderful a thing that the Coal Board has done that one does not have to take exceptional cases: this was an ordinary case—had to pay more rent in his new district than in his old, the Coal Board paid the whole of the difference in the first year, they will pay 75 per cent. in the second year, 50 per cent. in the third year and 25 per cent. in the fourth. In the case of this family they had no continuing liabilities for rent or storage of furniture in the area they had left; but if they had had such liabilities then the National Coal Board would have contributed up to 70s. a week towards that cost.

Is there any reason why such schemes should be confined to the coal industry? Your Lordships will be glad to know that time does not allow for further development here, but I asked the National Coal Board to let me have information as to how this background information was conveyed, or got over, in the first place to redundant or soon-to-be redundant miners. How did the National Coal Board arouse interest in the first place? How were they able to answer the obvious, vital, personal queries?—because without this there would have been no transfers. I know this and I have seen it. I am convinced of this, and everyone with experience in this matter would agree with me.

So, my Lords, I come to my own Front Bench. While the Government may plan along the lines of what has been done by the National Coal Board, it means something else. It means the last point I have been making, without which I believe none of the others will be effective and without which we shall remain in our vicious circle. It means having the answers to questions and getting these over to those concerned. Have the Government got those answers? For example, what skills are required by firms? Are these skills available among redundant workers? Do the firms know of the workers or does the Ministry of Labour? If not, why not? If the firms and the workers are known one to the other, why do the workers not want to move? Do they not want to; can they not get a house? Do they not know about schooling for their children? How can training centres or industrial training boards expand fruitfully until it is known what skills should be given priority in re-training programmes? I ask this in the full knowledge of the statement made recently by the Minister of Labour—on November 30—that he is making available to industrial training boards for a period of twelve months starting in the new year the sum of £2 million to assist in the provision of off-the-job schemes of re-training for adult workers.

My Lords, I listened very hard to my noble friend, the Lord Privy Seal, and I am going to listen very hard to my noble friend, Lord Shepherd. Honestly, I should be very glad if he could tell me that I am wrong. I do not believe that this information is available, and I do not believe that it can be made available under our system as at present. Industries as widespread and as socially conscious as coal can do it; others cannot. Hence, my Lords, I am sorry to tell my noble friend, Lord Shepherd, in view of his interruption earlier in the day, that I believe that we should have compulsory notification of vacancies. This does not mean compulsory direction of labour. I think the arguments are very finely balanced for and against, but I think that this is something we can no longer close our eyes to. Of anyone who disagrees with the compulsory notification of vacancies I would ask one simple question: how are firms and workers and the Ministry of Labour to co-operate to the full without this information?

I have an admiration and a respect for the Minister of Labour and for his Parliamentary Secretary which I think is shared by most people in Parliament and outside. Apart from being able, I believe everyone understands that they care deeply about these issues. To that tribute I should like to add those in the local offices of the Ministry of Labour. During my ten years in Coventry I had the most wonderful and heartening co-operation from the local officials and staff. My Lords, they cared too. Now, in conclusion, I would say that I think that this Government are facing their hardest and most distasteful problem. To a Labour Administration the deliberate creating of unemployment is a terrible action. I do not believe that any Administration would enjoy creating unemployment, of course—that is not the point I am making—but I do believe it is worse for a Labour Government than for a Conservative one. Many of us on these Benches, in both Houses, know what this means, and personal experience can be very vivid. My Lords, because I have some small experience of all this, I should like to go on record as saying that I admire the courage and the guts of this Government in this most personal and bitter experience, and that I believe that one day the country will pay tribute to what they have done.

7.2 p.m.

LORD MOYNIHAN

My Lords, I shall not detain the House long. I should like, first, to apologise most sincerely to the noble Earl the Leader of the House and to the noble Earl, Lord Dundee, because owing to a very pressing engagement outside I was unable to be here during their speeches, and I appreciate that it is probably very rude of me to speak on a Motion like this when I have been unable to listen to two of the major speakers.

THE EARL OF LONGFORD

My Lords, I can assure the noble Lord, Lord Moynihan, and I am sure that I speak for the noble Earl, Lord Dundee, that we know the noble Lord would not wish to be rude, and in the circumstances we fully understand the way in which he was placed.

LORD MOYNIHAN

My Lords, I thank the noble Earl.

It is my simple, if painful, purpose to show how lamentably the Government's own declarations are being belied by the facts. On July 20 in another place, in answer to a question by my right honourable friend the Leader of the Liberal Party, the Prime Minister said: …we have exempted, as the Tories never exempted, from the necessary steps which have had to be taken, all the development areas, instead of driving these areas into an intolerable level of unemployment and causing a deep gap between the more prosperous parts of the country and the areas of unemployment. What we have done is to bring the unemployment figures of the two parts of the country much closer together and our policies will ensure that the policies that we have been following for the development areas will continue."—[OFFICIAL REPORT. Commons, Vol. 731 (No. 695), col. 642; 20/7/66.] Well, my Lords, that seems to be clear enough, even if it is full of rather wordy tautologies. But, like so many of the Prime Minister's assurances, the actual facts have belied the pious aspirations. As your Lordships know, Northern Ireland is a part of the United Kingdom where unemployment is worst; where the waste of human energies and, far worse, of human hopes is most severe. On the other hand, here in London and in the South-East there is overcrowding and the inflationary pressure of over-employment. According to the latest figures, unemployment in Northern Ireland has risen by 2.1 per cent. of the working population, compared with the same time in 1965. In London and the South-East it has risen by only 0.4 per cent. The weakest part of the national economy is the hardest hit while the feverish heat of the swollen South-East has hardly cooled at all.

These are the most dramatic examples, but most of the other figures tell the same dismal story. Wales, for instance, has suffered more sharply than most of much more prosperous England. In Scotland, where it is true the general increase in unemployment is relatively low, the local figures are shocking evidence of the failure of Government policy. The Highlands and the Islands, long the victims of Conservative complacency, are now the sufferers from Socialist slump. Before July 20 unemployment there was 5.3 per cent. By November it was 8.3 per cent.; a 3 per cent. rise in little over three months.

These are the immediate results of the Labour Government's policy of deliberately creating unemployment; of the infliction on the poorest parts of the nation of medicine denounced by Mr. Wilson when in Opposition and prescribed by Mr. Wilson when in Office. But the long-term effects are likely to be even more serious. The hope these regions had of escaping from the vicious circle of under-employment, depopulation and decay lay in investment. Who will willingly invest now, when the shadow of depression is spreading over the country? Where economic development at the best of times needs stimulation, what hope is there of progress in bad times which are now getting worse? The international pundits prophesy stagnation for Britain as a whole. For the poorest parts of the country, blest by Mr. Wilson's words but penalised by Mr. Wilson's deeds—and Mr. Callaghan's follies, like the selective employment tax—stagnation does not equal standstill; it equals decline.

My Lords, nobody on these Benches doubts the difficulties of the economic situation; but it is clear from the facts, which no number of personal television appearances by the Prime Minister can alter, however much they may obscure them, the Government's freeze is hardening the frost in what were already cold economic climates. This, as Mr. Wilson once never tired of pointing out, is wasteful of money and wasteful of people. It promotes defeatism and damages efficiency. Above all, in view of the Prime Minister's own assurances it casts deep doubt on the competence of the Government and on the sincerity of its Leader. Such suspicions must be fatal to any policy based as much on exhortation as this one is. Severe restraint on the whole community is one thing; but, my Lords, harsh restrictions on the weakest parts of the nation is quite another. That is what we have now.

7.9 p.m.

LORD SHEPHERD

My Lords, the last speaker from the Liberal Benches has been short, brief but extremely pungent. I shall not follow him immediately, but, if I may, I shall devote my remarks to the early part of the debate which unfortunately, and we fully understand why, the noble Lord, Lord Moynihan, missed. I would just say that perhaps the noble Lord might have smoothed out his speech a little if he had taken note of a number of statistics that my noble friend gave when he spoke to the House earlier.

I share with the rest of the House a sense of gratitude to the noble Lord, Lord Byers, for introducing this Motion. It was last May that he drew the attention of the House to basically the same problem, but in different circumstances. Then it was a question in some minds of a shortage of labour, in others of unemployment of labour; whereas to-day we speak in terms of growing unemployment which stem from the measures of July 20. I am pleased that my noble friend Lady Wootton of Abinger has once more intervened in an economic debate. My noble friend Lord Longford and I have tried on many occasions to persuade her to take part in our general economic debates, but she thought that she was slightly out of touch and should not take part. I hope that, having broken the ice, she will continue to take part in these debates.

I am also glad that the noble Lord, Lord Shawcross, took part, and that to a certain extent it was my provocation in the debate on the Industrial Reorganisation Corporation that induced him to do so. At one time he was a distinguished member of my Party. The fact that he has left it does not mean that we do not enjoy, and usefully take note of, the points he makes in our debates. I hope the noble Lord does not feel that he has to be provoked by any noble Lord on these Benches to take part in our debates in future.

My Lords, some weeks ago we had a debate on the economic situation, when we had a number of what I might call academic speeches on the amount of unemployment that we should have in order to maintain stability. I could not help but feel, when I heard noble Lords suggesting that we need 1½, 2 or 21½ per cent. of unemployment, that perhaps we were forgetting what the most reverend Primate the Archbishop of York emphasised this afternoon—what unemployment meant in human terms. Shortly after that debate, I read a novel about the Battle of Arnhem in which, at the height of the battle, a soldier turned to his officer and said: Well, sir, today, we are bloody heroes. Five years hence we shall be statistics, and 25 years later we shall be forgotten. I suppose that we have to talk of this problem in terms of statistics, figures and trends; but we should not forget the human factors. We should not forget what it means to the man himself—the loss of dignity, and particularly his relationship with his wife, when he ceases to be the breadwinner and has to go to the exchange to receive his benefit.

I must correct one misconception. The measures of July 20 were not specifically to create unemployment. They were to correct the balance of payments; and this we are achieving. The Government recognised that to a degree unemployment would flow from these measures, but with increased unemployment we have to-day an increase in exports and a curb on imports. We feel, in all the circumstances—and in spite of what my noble friend Lady Wootton of Abinger said (and I do not think I can argue with her on the general economic situation)—that the measures taken on July 20 were right and necessary. I believe that noble Lords who have spoken in this debate will agree that they are necessary. I am pleased that there has been no pressure to-day to deflect the course of the economy too quickly. We must make the best use of the period we are now—I will not say enjoying, but going through, by making sure that we are creating a proper basis for growth, when that becomes possible.

Unemployment must be dealt with in two ways. First of all, we must have immediate relief to the men and women affected. The Government took action beforehand by the increases in National Insurance benefits, which my noble friend the Leader of the House indicated earlier, and by which, for instance, a man earning £30 a week would receive about £16 in benefit, and by the redundancy payments scheme. This scheme has been to many a substantial relief from the impact of losing the weekly wage packet. But the Government's responsibility goes further. It is to see that the services of the State, through the Ministry of Labour, are adequate to provide employment, and if necessary the re-training of individuals; and, further, that there will be a climate of industry which will eventually reemploy the redundant workers.

The Ministry of Labour have made a major, if not a massive, effort to bring their schemes up to their present standards. They are infinitely better than they were when this Government took office. Although then the approach was very good and sympathetic, to-day it is much more efficient and effective. When they had to face the sudden and major increases of unemployment through the cancellation of TSR 2 and the trouble at B.M.C., the Ministry of Labour were able to send skilled men and women into the factories to explain opportunities of employment, not only in their areas but elsewhere, to the workers who were faced with redundancy. I do not say that what we have now is as good as we should like it to be, but there are limitations, not so much in the field of finance as in the lack of trained men and women for this task. We cannot put any Tom, Dick or Harry into an office and ask him to carry out interviews with redundant workers and make inquiries. He must be trained; and that takes time. But the Government are determined, as is my right honourable friend Mr. Gunter, to see that this service is increased.

Apart from this short-term scheme, we have started an occupational guidance service. I think the noble Lord, Lord Byers, will be happy to hear about this. A pilot scheme has been started in ten of the Ministry's major offices. I believe that this will transform the whole work of the Ministry of Labour. What we should like to see and what we hope to achieve through this service, is that workers will come to the exchanges not merely as places to which they go if they are unemployed, but as offices to which they go to see whether there are offers and opportunities for their advancement. We should like to see the old labour exchange transformed from an unemployment office to a wide-ranging employment office. We are doing a great deal in providing information to redundant workers. It is not possible to provide in, say, Manchester, on a week-to-week basis, information as to what skilled work is available in a place like Cardiff. But we have been able, through our new appointment of area managers and area offices, to increase the speed at which such information is made available. I understand that a special effort will be made during the coming months to see that a greater amount of information (and this is what I believe my noble friend Lady Burton of Coventry wished to see) is made available in the area offices.

The schemes for assisting workers to move from one area to another must depend to a great extent on the housing available, and in most cases this is the responsibility of the local authority. But my right honourable friend the Minister of Housing and Local Government is now in close contact with my right honourable friend the Minister of Labour to see whether we can increase the number of local authorities who are prepared to put transferred workers at a higher position on the list, instead of, as in the past, placing them at the bottom.

I agree with my noble friend that we have a great deal to learn from the National Coal Board. The National Coal Board, of course, were in the fortunate position of having available fairly sizeable sums, through the National Coal Act of (I think it was) 1965, and earlier legislation, which placed them in the position of being able to make contributions to the local authorities. So that they were, to a certain extent, in a privileged position with them. I would assure the House that it is my right honourable friend's intention to do everything possible to increase the service of the Ministry of Labour in finding employment.

When we come to training, I agree with what the noble Viscount, Lord Eccles, said about training being a normal feature of our life and I remember his saying this also when we had before us the Industrial Training Bill of 1964. He then regretted that this training scheme would be in the hands of the Ministry of Labour and not the Ministry of Education. I will certainly see that the point he made is conveyed to my right honourable friend, although I am sure he is well aware of the noble Viscount's views. I would say to the noble Viscount that I believe the technical training colleges will be more and more brought into the field of industrial training, because many of the members of the industrial boards of the various industries are part and parcel of the technical colleges. I believe that the influence of these persons will be such that we shall see the industrial training colleges being more and more brought into the field of company training.

I noted the rather patronising attitude of the noble Earl, Lord Dundee, and his various comments about Government action so far as Scotland is concerned. He spoke of the Government training centres. Perhaps the noble Earl might like to be reminded that when his Government left office there was only one training centre in Scotland.

THE EARL OF DUNDEE

My Lords, could the noble Lord tell me how many were under construction?

LORD SHEPHERD

My Lords, I am not now concerned with the number that were under construction. I was drawing the noble Earl's attention to those that are in being to-day. I do not wish to take any credit from the noble Earl. We have in Scotland—

THE EARL OF DUNDEE

Six of them were started by us.

LORD SHEPHERD

That may well be. But the noble Earl will recognise that nationally we had a decline in the number of centres from the date when the noble Earl's Party took office to the date when they left. When they left office, there were thirteen training centres throughout the country.

THE EARL OF DUNDEE

I do not want to interrupt and argue about this, but the biggest climb in training centres took place at the end of the war, under the first Labour Government. The centres were not at that time considered to be a major instrument in peace time.

LORD SHEPHERD

I would correct the noble Earl. Most of these training centres were started during the war, for war purposes.

THE EARL OF DUNDEE

Yes.

LORD SHEPHERD

My information is that when the noble Earl's Party came into power there were something like 25 centres, and that during the period when they were in office, when we had varying degrees of unemployment, with an increasing necessity for trained skilled operatives, the number of places declined. This has now been corrected. Of course, as my noble friend Lord Longford pointed out in reply to the noble Lord, Lord Byers, we should like to see more centres. The governing factor is not the amount of finance which the Government can make available, but the problem of finding the skilled instructors for these centres. It may well be that from some of the redundant workers a number of skilled instructors could be found, but as the industrial training boards develop (and I will give some interesting figures in this field), it will be found that the men coming within this class will be required more and more by the industrial training boards themselves.

The noble Lord, Lord Byers, must, I think, make up his mind as to what should be the direction of training. The previous Administration took the view—which the present Government share—that the main responsibility for training lies with industry itself. They introduced the Industrial Training Act. Since then some seventeen boards have been set up, representing some 10 million workers. Most of those are relatively new boards. They are now in close consultation with their constituents as to what is the best method of training and what sort of sums are needed. The House will be interested to know that the Engineering Board has recently raised a levy of some £75 million. The number of places for training under that Board will increase during the next twelve months—or over some such period—from some 14,000 to 24,000 places. That is bound to have a significant effect upon the structure and development of the engineering industry.

VISCOUNT ECCLES

My Lords, may I intervene for one moment? I am most interested in what the noble Lord, Lord Shepherd, has just said. Surely this proves exactly the point I was making: that if you have £75 million in an industry which is really in every town in the United Kingdom, you must have a widely based plant. These people cannot do this. They can put up, perhaps, only 50 centres. Surely it would be better if they built on to the existing technical colleges, where ever they are.

LORD SHEPHERD

The training boards, as I understand it, will be doing two typos of training. They will be doing training on the factory floor; and no doubt, as in the case of my son, who has just started a training course, the trainees will spend some part of the week in a technical school. I was interested—and I am quite sure the House also will be interested—to see that the Construction Industry Training Board in its first year proposes to raise some £6 million, but in the second year the figure will be in the region of some £15 million. Therefore, from the two training boards substantial sums will be available for industry.

Of course, the question is not so much the sums which will be available, but the manner in which the board applies the money in producing quality or quantity. I do not know which to stress. I think I should prefer to stress the quality of the training more than the quantity, because from my experience in industry we need far more skilled labour. In some papers that were given to me the other day I saw some interesting figures with regard to the shortage of skilled labour and the degree of unemployment. The position in the skilled industries is much the same as I indicated to the noble Lord, Lord Byers, in May of this year—a slight easing of the pressure.

The noble Lord, Lord Byers, referred to draughts men. According to the figures available in October, 1966, the number of wholly unemployed draughts men was 512, whereas the unfilled vacancies numbered 1,571. The number of toolmakers and precision workers wholly unemployed was 1,260, whereas the unfilled vacancies numbered 4,225. The noble Lord asked to what extent our statistics were accurate. We have seen the figures of unfilled vacancies from the various offices. When there was pressure of unemployment in the district and the offices went out to see what vacancies were available. the number of vacancies that had not been notified to the Ministry of Labour was surprising. The question of compulsory notification has been actively and seriously considered by the Minister. But in view of the problems of staff and of finding out this information and, above all perhaps, the problem of causing difficulty on both sides of industry the Minister has rejected it.

I do not believe that we should go back to the situation up to 1956, when that Statutory Order was rescinded. But I am quite sure that industry could help if it would do two things: first of all, if it would undertake real budgeting of labour, not only as to the labour it now needs to carry out its present function but as to the type of labour and the number of people it may need in (shall we say?) twelve months or two years; and. secondly, if it would convey that budget forecast to the Ministry of Labour. I am glad that the noble Lord, Lord Shawcross, agrees with me. When we were carrying out the survey and preparing the National Plan, the Government and the civil servants were horrified to find the small number of companies that carried out any form of budgeting of labour. I would hope that industry, particularly the large employers, would start to carry out a proper form of budgeting.

I seem to have been on my feet a good time, and I see there are a large number of notes that I have not answered. I hope I may be forgiven if I do not reply to these further questions this evening, but if there are any special points I will certainly write to noble Lords. I do not think we should cause despondency by talking in terms of mammoth unemployment next year or the following year. None of us, particularly those who are very close to the economy, and even the economists in the newspaper world, agree as to what the unemployment figure will be next year. Much may well depend upon the time at which you can reflate the economy, and the manner in which you reflate it. I cannot believe that, in our present circumstances, when we start to reflate we can do other than to reflate in the form of assistance of investment for new machinery. I cannot conceive that, as in the past. we can reflate the purchasing power as a stimulus to investment and production.

We must see that we use this period, whether it is six months or twelve months, to strike away any of the restrictive practices that still abound in industry; to strike away some of the old forms of management and to seek new ways within companies of making those companies more efficient. We should do our best to relieve the burden that falls upon those men and women who temporarily—and I believe it is temporarily—will be without work. This is an opportunity which the Prime Minister said we must seize. The Government cannot do everything. It rests, I think, primarily upon management and trade unions to see that their own organisations, the organisations in which men work and in which goods are produced, are such that when we are able to reflate, when we are able to provide growth, we are able to export far more things than in the past, and able to supply our own people with far more of our own goods and cease being dependent upon overseas countries; because if we are to avoid unemployment in the future, even at our present rate, we can do it only by establishing a sound economy. That is the result to which the Government are dedicated.

7.38 p.m.

LORD BYERS

My Lords, we have had a good debate, and it only remains for me to thank the two noble Baronesses and the noble Lords who have contributed speeches of such high standard to it. I also thank the Government for the information which they have provided, particularly about the occupational employment services and the figures that we were given. No matter what the Leader of the House may feel about the Government Chief Whip, I think he has been both distinguished and eminent in the contribution he has made.

I was glad that the noble Lord referred to the need for manpower budgeting in this country, and 1 believe the day will come when we shall have a real manpower budget for the nation as a whole, based on the statistics compiled by the industries of this country. I do not think it is a question of choice between quality and quantity in training facilities. I am pleading for more facilities, greater quantity, with higher quality if we can achieve it. The theme of this debate, which has been accepted by all of us, is that we have an opportunity here to foster a better use of manpower in the interests of both the individual and the nation, and we must not "muff" it. I think we all accept that as a considered view. My Lords, I beg leave to withdraw my Motion.

Motion for Papers, by leave, withdrawn.