USE OF MANPOWER

HL Deb 11 May 1966 vol 274 cc662-780

3.6 p.m.

LORD BYERS rose to call attention to the need for increasing the efficiency of the use of manpower in Britain; and to move for Papers. The noble Lord said: My Lords. the recent Budget, with its emphasis on the use of manpower, has lent considerable topicality to the subject of to-day's debate and I am extremely appreciative of the number of distinguished and experienced noble Lords who have come here to-day and indicated their intention to take part. I believe that this problem is a serious one and an important one. Up to the beginning of the last war, this country, in common with many others, suffered from chronic unemployment. This is now recognised as a wicked waste in every sense. It is something which must never be repeated. But it has left a legacy of mental attitudes which are very deep-rooted indeed.

To-day we as a nation are suffering not from unemployment but from a serious misuse of manpower—and in this I include womanpower, too. It is this misuse which constantly deprives us of that rate of economic growth of which as a nation we are capable. I am glad to say that there is a slow but growing realisation that the wrong use, and particularly the under-employment, of manpower is at the root of many of our economic difficulties. Some progress has been made. To-day I shall concentrate mostly on the areas where insufficient progress has been made, but I do not want to imply that we have not made any progress in this country at all. We have indeed. At least we have identified the misuse of labour in some industries, and many of us believe that the instances which have been exposed are not untypical of what is happening over a much wider field.

I will refer briefly to a few of the industries where the misuse of manpower has been exposed. As early as 1963 a White Paper on B.O.A.C.'s financial problems compared B.O.A.C.'s performance with that of other international airlines, and on the manpower side it showed that Pan American had pushed up its revenue by 60 per cent. between 1958 and 1962 with an increase of only 8 per cent. in its total staff. B.O.A.C.'s revenue increased by just about the same amount, but the increase in staff was 14 per cent. B.O.A.C. came to the conclusion that if what they called "the traditions of the organisation" could be changed, and if they could use staff as they thought fit, the total staff could be cut over a period of one or two years by some 18 per cent. It was clear that the engineering departments, in particular, proved to be very heavily overstaffed. I know that a lot of progress has been made in this matter, and I do not know whether any more can be done in that field.

Then we had the Iron and Steel Board Report in 1964, which indicated that the productivity of the iron and steel industry in this country is probably only about 50 per cent. of the United States level and is lower than it is in Europe and Japan. A comparison between the United States and Britain shows that, while there is often comparability of staff employed on actual production, we use far more people on maintenance and administration than they do in a similar plant. This may to some extent be due to inefficiency of management, but it is also due to the attitudes of the trade unions. It is said that the Steel Company of Wales could manage with several thousand fewer men than they have at the present moment; and I believe that this is true of a number of large steel works in this country. The quotation has often been made of the difference between Stewarts and Lloyds employing 259 people to produce £1 million worth of steel compared with Youngstown Tube & Steel Co. in the United States of America employing only 95. This over-staffing on maintenance and administration, compared with North American firms, seems to me to be the common factor running through many of our industries.

Then we have the docks. I do not think that anybody is satisfied that we are getting the most efficient use of manpower in the docks. Rotterdam works round the clock, but I do not think this is common practice in this country. We have had the recent Geddes Report on shipbuilding. That pointed out very clearly indeed that "the use of labour in shipbuilding is wasteful" and that there was the need for an entirely new attitude to overtime work. On the railways, as recently as January of this year the National Board for Prices and Incomes, in a report on pay and conditions of service, advocated the establishment of pay and productivity councils which would have as their main objectives a more flexible and more economic use of manpower. A reduction of overtime was called for, too. It said, quite rightly, that management should seek the suggestions of the unions and the workers as to how these objectives could best be met, and it recommended negotiation of productivity agreements as a means of maintaining the earnings of railway workers who, it said, could perform the same amount of work with a shorter working week. The Report asked for extra pay in return for greater versatility and the elimination of demarcation lines, and pointed out specific places in which there could be a reduction of manpower and a redeployment of labour. I hope that this will lead to something useful in this field.

Where it is possible to make international comparisons—it is not always so—the indications are that we are lagging behind many other countries in this area. Volkswagen, in Germany, employ 75 men to produce £1 million-worth of vehicles; B.M.C. employs 82. A very useful report on the aircraft industry went into this matter very carefully and compared the British aircraft industry with the United States aircraft industry. It came to the conclusion that productivity in the United States was three times that of the industry in this country, and that the French productivity rate was 1½ times as much. I believe there is a tremendous amount of work still to be done on international comparisons of this sort. I believe that the Department of Economic Affairs, under Mr. George Brown, is already engaged on this. I hope that every possible support will be given to this type of research so that we can get proper comparisons with the various international companies— Britain versus U.S.A.; Britain versus Europe, and so on—as guide lines in looking for better use of manpower.

We know from a good deal of the evidence produced from these reports, which I think are pretty representative of many areas of British industry, that we have probably got 10 per cent, to 20 per cent. of our working population underemployed at the present time. It is very difficult to get accurate estimates; there have been estimates of 10 per cent., 15 per cent., 18 per cent., even as high as 20 per cent. But this means that there are between two million and four million people under-employed at the present moment. If these people were usefully organised the problem of the balance of payments, for instance, could, I believe, be solved overnight. The questions of the standard of living and the betterment of housing and more houses would fall into perspective if we could get real work from the people who, at the moment, perhaps through no fault of their own, are under-employed in British industry.

I think it must be clear to the majority of us that we have not got the rate of economic expansion that we could achieve in this country, and the reason is that we have not got the proper deployment of our manpower resources. The present Prime Minister pointed out in the 1964 General Election—he made a lot of play with it, and rightly—that from 1951 onwards the average growth per annum had been only 2.36 per cent. instead of the 4 per cent. on which the country had been planning; and that in fact if the national income between 1951 and 1964 had grown at that rate of 4 per cent.—which was less than the European rate—the gross national product, the national income, would have increased to £31,500 million instead of the £26,000 million that we had achieved. In other words, there was the possibility of increasing the gross national product by £5,500 million by extra productivity, better efficiency or, as I have said, by better deployment of manpower. This means that, at the present rate of tax, the Chancellor of the Exchequer—before doing anything he did in the Budget could have had extra revenue from taxes of £1,500 million without raising a single tax—if only we had got efficient and proper use of manpower in this country. It is a target well worth going for and something which I think is vitally important.

Our failure in this field—it is very difficult to attribute blame; I am not seeking to be too critical in this—is due first, I think, with few exceptions, to the inability of management to grasp the need for manpower planning; it is due to the continuation of restrictive practices and demarcation lines, and to the historical insistence on the craftsman's mate. I know that a number of craftsmen do require a mate, but an estimate has been made that we have 500,000 craftsmen's mates walking around carrying the bag for the man who has passed out and graduated in his craft. I cannot believe it is right to use all of these people in this way. It is also due, I think, to the insistence by the worker on overtime as an integral part of his earnings. This is something which really has to be tackled because it is another fundamental. It is due also, to a great extent, to the fact that the Government—I do not want to be misunderstood—seem to be mesmerised by the need for preserving employment at a level which precludes proper redundancy, retraining and redeployment of labour into the expanding industries. I think it is, above all, due to the fact that neither the machinery nor the system exists for intelligent manpower deployment.

One of the major problems is that it is relatively easy to preach about waste or misuse of manpower and to go in for exhortation; but when it comes to action or to proposing solutions there is in many places neither the enthusiasm nor the knowledge to take things much further. But let us reflect on the advances which have been made. Case histories are beginning to emerge. I will mention only two of them. There was the Fawley agreement, which is certainly a landmark, and this is being followed by studies which are being made by I.C.I. and British Oxygen—and we wish them luck.

There is also the B.P. agreement with the unions, which I believe could represent a very great step forward indeed. As I understand it, in their Isle of Grain refinery agreement was reached to give a basic weekly salary, and virtually no additional payment at all, to 500 craftsmen from nine craft unions. Overtime payment was eliminated and, instead, if they have to work overtime in an emergency they are given time off at some other convenient period. I think this is a great step forward. They have limited the number of craftsmen's mates; they have extended the field in which one craftsman can do the job of another, which again is a step forward. It is true this is not a labour-intensive industry, but nevertheless I believe that these ideas could be adopted much more widely, if there were the will to do so. The unions, in particular, are to be congratulated on the way in which they have accepted these proposals. They have played, as I understand, a very important part in reaching this agreement.

Unfortunately, my Lords, there are very few firms in this country—the oil industry is very much a notable exception—who seem to understand how to plan their manpower needs. Firms will plan their capital programmes. They will estimate profitability for five or ten years ahead—the estimate is never right, but they plan it. They will have monetary and production budgets; but very few of them will have a short-term and a long-term manpower budget and manpower plan. Yet the skill of our manpower is the basic, priceless asset which we possess in every country. It is true that some firms put work study to very good use. Others have been gone over by manpower consultants. A few have made comparisons with similar works overseas, In some cases (and I think this is an important channel for further investigation), they have deliberately redesigned whole parts of their production system, not only to economise in process labour but to eliminate some of the time-consuming tasks which are involved in maintenance and replacement. The phrase is coming in, "Let's design it out". That is the sort of attitude we want in many more industries and firms.

On the other hand, we still have the appalling hoarding of labour, for instance, in the motor car industry. At a time like this how do we justify men, usually skilled men, working only three or four days a week? I believe that the Government have to show that they are determined to help industry to get labour redeployed, so that the optimum use is made of skilled people. We have to think much more in terms of the efficient use of manpower resources and far less of employment for the sake of employment. I do not want to be misunderstood. Full employment is good, but full useful employment is what we have to go for. I believe that this is a new attitude which must be developed. The last thing we want in this country is direction of labour, or anything like it: we do not need that sort of thing. What we do need is much more accurate information about how manpower is actually used, and how it is misused. We ought to know how the use of manpower compares as between different units of the same industry, and how our own firms compare with similar firms overseas. At present we can hardly make a start on these comparisons because there is no uniformity of job description. The word "fitter" means twenty or thirty different things, depending on the factory or industry with which one is dealing.

The House will remember that the Robbins Committee on Higher Education said that it was not possible, in what they called the existing state of knowledge, to make reliable estimates of the need, particularly in industry, for qualified manpower. Before one can estimate the qualified manpower we may need in the future, it is essential to know how our qualified manpower is being used at the present time and whether it is deployed relatively efficiently. There is very little one can do, as the noble and gallant Viscount, Lord Montgomery of Alamein, knows, in war or in business, unless the best possible information is available. I was not at all surprised when, during the General Election, I challenged the Chancellor of the Exchequer on productivity, and he admitted that none of the statistics on productivity was really reliable. I believe it. This is because the information-gathering machinery is out of date, and the co-ordination of it is not so good as it should be.

I believe (I shall be corrected if I am wrong) that the Board of Trade section which collects economic data is not interested in the manpower aspects of the information which it receives. The section in the Ministry of Labour dealing with manpower statistics is not required to consider very deeply the economic aspects of the information which it is bringing in. In my view, there is here a tremendous scope for an improvement in the information-gathering machinery. The whole system ought to be overhauled, and we ought to find out whether we are asking the right questions of industry, or in the educational field. Are we asking the relevant questions, or are we just allowing people in different Ministries to send out questionnaires to be filled in without any real overall co-ordination of the whole thing? If we are to tackle the manpower question properly, this is the sort of coordination that is vital.

One idea which has been put forward, and which I think has a great deal to commend it, is a Central Manpower Planning Agency. This is not as dictatorial as it may seem; it is certainly not intended to be. But because manpower is the fundamental raw material of our society, it makes some sense to know what it consists of at any one time, and what it is doing. It is possible to do a great deal more planning and encouragement, and secure a great deal more intelligent recruitment into different fields, if one is working on up-to-date information which has been dealt with professionally and produced for the job. I am not suggesting a new Ministry or a vast body of civil servants—far from it. I am suggesting the reorganisation and the sensible redeployment of those now responsible, whether in the Board of Trade, the Ministry of Labour or anywhere else, into a properly co-ordinated body able to provide reliable information, without which well-informed policies for education, training, productivity and the better use of manpower simply cannot be made.

Ten years ago this task would have been not nearly so easy. But we are now in the computer age. We are already using computers and other techniques as a tool in business to provide model profiles of the problems which confront us; and given fairly accurate information in an understandable form, I believe that it is possible in business to-day to make far better judgments than we were able to make even ten years ago. In the manpower field what is lacking is a reasonable picture or model of the way in which manpower is used. Once that is built up, surplus labour can be identified, and negotiations can take place at the proper level to attract people into industries and regions and firms which are genuinely short.

If manpower and production can be intelligently analysed, it becomes far easier to produce productivity measurements and ratios which really mean something. I would recommend to your Lordships the work now being undertaken at the London School of Economics by Professor Moser and Mr. Michael Hall on the study of manpower use in the electrical engineering industry. This is an ambitious piece of research which could lay the foundations for a revolution in the attitudes to manpower; and not only in the electrical engineering industry: it could serve as a pace-setter for other industries.

Information, however, is not everything. There is still the lack of machinery, and I believe that once we get reasonable information it may be possible to help with the redeployment of manpower by making more use of the "little Neddies". I hope that this is something which the Government may have in mind. If we are to get the better use of manpower, I believe that we have to get away from the industry-wide system of wage negotiations, which is very much ingrained in our system and get down to the local level of bargaining, trading higher wages for higher efficiency. I am quite sure that this is the policy of the Department of Economic Affairs. It is certainly the policy of the Prices and Incomes Board, but in the so-called two sides of industry there is a great deal of conservatism which seems to be standing in the way.

I believe that there is a great deal to be said for setting up, for instance, works councils in firms of a certain size, so that there is constant discussion of these problems; and as better communications are established, so that leads to an understanding of manpower, overtime, efficiency and so on. Above all, I think that it needs a tremendous new mass educational programme to get people to see that we can solve our economic problems if we can get the people doing the right jobs more efficiently. One day we shall get a new and different attitude to work, and that is what we have to aim for. It is against this general background of over-manning right across the board, in services and manufacturing industries alike, that the new selective employment tax seems to me to be so very ill-conceived.

I am told that the Chancellor of the Exchequer thought this one up himself. If that is so, then I think the Treasury should have its head examined. I give the Chancellor full marks for his intentions, which I am sure were right. Manpower has to be encouraged, and the manpower that we have must be used most efficiently. On that, I entirely agree with him. My colleagues and I, over the last few months and years, have advocated a pay-roll tax with the object of making labour more expensive, in the hope that it would be used more wisely and more economically. This can be achieved, in our view, by a percentage tax on the wage or salary. This tax can be varied regionally; it can be varied industry by industry, or even, getting down to detail, firm by firm. A rebate can, I believe, without offending the rules of GATT, be given for exports in relation to the total production of the particular firm.

Part of the revenue of a tax like this could be used to increase investment grants or allowances, or even to reduce corporation tax. Eventually, it could be replaced by a social security tax, which would be paid partly by the employer and partly by the employee. This is something for the far future. But to choose three broad categories, and to place a 25s. a week tax on servicing, no matter what part the servicing industry plays in the economy, and then to give preferential treatment to manufacturing industry, no matter what is produced, cannot possibly, in my view, assist in the reduction and better use of manpower. A system which hands out money to the already overmanned manufacturing industries, provided that they do not reduce their numbers, must be wrong. I am sure that progressive firms like I.C.I. will go on increasing their numbers and increasing their productivity, but to grant them a per capita differential amounting to £2 ½ million a year is, with all respect to the Leader of the House, an Irishman's way of doing things. A measure which takes £100,000 per annum from Dr. Barnado's Homes and helps the manufacturer of "one-armed bandits" is something which one would have thought hilarious in a novel by Evelyn Waugh; but, coming from the Chancellor, it must be regarded as a fantastic state of affairs. Moreover, the method of collecting this tax and paying a refund is in itself a gross misuse of manpower. You take it in, and then you "dish" it out.

But the fact of the matter is that, from the point of view of overmanning, this tax is "haywire". There are productive industries where, as I have demonstrated in my speech, overmanning has been proved, without a doubt, after a public inquiry—shipbuilding and iron and steel—and these are the ones who are going to get a grant of nearly £20 a year for every employee they keep on their books. Transport, including railways, where overmanning has been exposed by Mr. Aubrey Jones, breaks even. To my mind, it is tragic that at a time when we should be making manpower expensive in order to make people think in terms of greater efficiency, automation, and providing new capital tools at the elbow of the worker, we offer inducements to further featherbedding.

With a tax such as this, geared to the National Insurance stamp—and it was attractive, in theory, to gear it to the National Insurance stamp—it is practically impossible to provide exemptions, for the simple reason that once the man is exempted he can go anywhere. If you are going to gear it to the National Insurance stamp, I do not think there is much hope of getting an exemption. The only thing you can hope for is to get a full repayment of the tax that you have already "coughed up". In the interests of the better use of manpower, I hope the Chancellor will think again about the favour that he has conferred indiscriminately on manufacturing industry.

What we need is some method of shaking out surplus manpower and encouraging its use in a more efficient and economical fashion. The efficient use of manpower is one of our major problems. We do not want to go back to the barbarous system of using unemployment and insecurity as a means to force men and women to give of their so-called best. This is what the French call the philosophy ofcitron press é. We now have the new techniques and new aids to make better judgments, and what we want to do is to harness these to see that we give our people the opportunity to make the maximum use of their natural skills. I hope that the Government will think again of the direction in which they are leading us on the selective employment tax. My Lords, I beg to move for Papers.

3.35 p.m.

LORD SHEPHERD

My Lords, I am sure the whole House will join with me in thanking the noble Lord, Lord Byers, for his constructive and, if I may say so, for him, rather more restrained speech than usual. Some weeks ago the noble Lord introduced a debate on computers, which I know, from the Government's point of view, was studied carefully. I may say to the House that we shall study with equal care the observations that will be made in this important debate. I have heard rumours that many savage attacks are likely to be launched upon this Bench in regard to the selective employment tax. We welcome them. But I hope that there will be a constructive element in the speeches. We have a problem, and it is easy to attack and criticise. What we now want is constructive assistance.

The noble Lord, Lord Byers, has referred to industry in a wide-ranging sense, not merely to manufacturing industry; and I could not help but feel that the noble Lord's stress on underemployment in some manufacturing industries might give the impression that that was the only element in British industry that is so under-employed. But we have also to face the fact—and there is now clear evidence of it—that we are going to have a shortage of labour generally. Therefore, I should like to deal with the whole field because I believe that to attain increased efficiency will take time, and we are now confronted with the stark fact of a labour shortage.

There is no doubt that in the years to come we shall have to invest increasing sums of money in machinery, because it will be the machines that will have to make up for the shortage of labour. I do not think we pay sufficient attention to modernisation, particularly of our factory lay-out. If one visited many British companies one would be appalled at the amount of handling of merchandise that takes place in the course of the manufacturing of goods. We have to redeploy our existing manpower. Here redeployment means something more than a man leaving one company in one road and moving to another company in the next road. We have to consider the redeployment of labour from one industry to another, and from one part of the country to another; and we must certainly develop our ability to train new entrants into industry, and our ability to retrain redundant and unskilled workers.

The basic requirement for all these things is an increasing number of highly qualified men in management and the speed with which we can get increased cooperation between Government and industry within industry itself, and, perhaps even more important, between industry and the universities and schools in the future. We must also bear in mind that we must create confidence in our workmen. Fear of the effects of unemployment still exists. We must make it absolutely clear to our workers that there need be no such fear now, subject of course to our keeping to a sound economic policy which will prevent long-term unemployment. In fact, the forecast for the years 1968–73 shows that there will be a slowing down of the growth of manpower in this country. The labour force is bound to change, and I think we should welcome it. I think we may see over the years an increasing number of men and women in the professional services, certainly within the service of local authorities, schools and hospitals, and perhaps a reduction in our manufacturing industry.

It will take time for us to produce the automation and machines, and we have an immediate problem to see that the machines we now have are fully manned. I do not believe we can possibly avoid that. In April, 1966, we had 432,000 vacancies in this country and the number of unemployed was 307,000. In the Midlands the position is perhaps more acute. In April there were 50,000 vacancies, with unemployment standing at only 16,000. And it varies from industry to industry. Let us take the machine tool industry, which we all regard as one of the key industries in our drive for exports. In the field of the lathe-setter and operator, we have 600 unemployed on our books to-day, and we have 6,700 unfilled vacancies. This is the starkness of the position of some of our industrial companies. I do not believe that in that type of industry there is the labour hoarding to which the noble Lord, Lord Byers, referred. Certainly in other spheres there are men who are capable of undertaking these jobs, and we must find a way of getting them to move.

The industrial plan indicated that if we were to achieve our 25 per cent. growth we should need 800,000 workers between now and 1970. Even if we were able fully to mobilise the workers in the less prosperous regions and were able to get the full resources of women and older workers, we should still be 200,000 workers short. In the field of the less prosperous regions, the regional planning councils and boards are doing a great deal of work, and now they have been joined by the "little Neddies", the economic development committees.

The House knows that the Government policy of giving special grants to industry to induce them to move into these areas will be before the House, and I believe that this will be a major stimulus in getting industry into those areas. As to the use of industrial development certificates, we have now increased the amount that has become available for new industrial building in these development areas, at the expense of other parts of the country. Those who know the task will recognise that we must move men and women from one part of the country to another, and it may seem strange that we have to think in terms of amenities, the livelihood, and the social resources of the area. Here we depend very much upon the regional councils.

The noble Lord, Lord Byers, stressed—I think quite rightly—the importance of shift working. We are asking industry and financiers to place more and more sums of money by investment into machines. Undoubtedly, if we could obtain a 24-hour shift working on these modern machines, much of the present position could be transformed. I was very interested in what the noble Lord said about management forecasting. One has only to read the City Press to see companies forecasting profits two, three or five years ahead. We all know that they think in terms of investing. But when we had the industrial survey for the preparation of the National Plan, out of 300 companies, the largest organisations in the country, only half did any form of forecasting of labour, and only one in four looked beyond two years ahead. It certainly raises a doubt whether managements are fully aware of the need for economising in labour. Many of their excuses for late delivery arise from the fact that they have not forecast for labour and have been caught short. But the initiative in introducing changes which will bring about an effective use of manpower must come from management. It is no good passing it over to the trade unions or the Government; it is the responsibility of management. The first need is for managers, with stimulus coming from those at the top, to look critically at their work organisation, their existing manpower utilisation, and their productive processes, to see whether they can identify the areas where improvements can be made.

Let us have no doubt that there will be complex problems to be met. But already, as the noble Lord, Lord Byers, has said, there have been a number of notable achievements. The noble Lord referred to workmates, the craftsman's mates, and he mentioned, I believe, the Steel Company of Wales. He may be aware that this company, together with the unions, have an agreement whereby 1,000 craftsmen are being transferred to full-time work in the company. But this takes time. I do not think we should underestimate what is going on, but clearly the restrictions and the demarcation lines will have to disappear. The economic development committees are giving serious attention to productivity. Within the distributive trades, anxious thought is now being given to the better training of staff and the establishment of a career structure. In the rubber industry, there is now inter-firm comparisons in productivity. I think this is a major achievement, by which companies are prepared to open their books to each other to see whether they could learn from their competitiors. In the chemical industry, a team will shortly be going to the United States to see how things are done there, and I hope that the information that comes back from one "Neddy" to another "Neddy" will be passed on. This is only the beginning.

The noble Lord, Lord Byers, mentioned the question of training. The Industrial Training Act, passed by noble Lords opposite, is now getting under way. Thirteen training boards have been set up, and it is quite clear that they have accepted their responsibilities with enthusiasm. Statutory authority is there. But we need—I will not say far greater co-operation, but great co-operation between both sides of industry if this Act is to work properly. We shall be watching very carefully, but it is too soon to say whether that Act will require some adjustment.

In the field of Government training centres—and I sometimes think we tend to overlook what the Ministry of Labour are doing in this area—we have 30 centres now open. Seventeen were opened in the last three years, and we have now a total capacity for training about 12,000 men or women each year. By the end of 1967 a further eight centres will be commissioned, which will increase our capacity to 15,000. We are training about 40 different trades under factory conditions. The business schools in Manchester and London are now getting under way. Eventually, we hope that there will be about 400 post-graduates in training each year. We must not forget the area of the technical schools and colleges, and I am glad that my noble friend Lord Bowden is here this afternoon to tell us what advances have been made in the technical field.

I said earlier that we must give confidence to the workers if we are to get their willingness to transfer and move to other positions. The House will remember that in the last Parliament we passed the Redundancy Payments Act, the National Insurance Act, and the legislation of the previous Administration, the Contracts of Employment Act. The Report of the National Joint Advisory Council on the Preservation of Pension Rights has been received by the Minister of Labour, and it is now being carefully considered. I am quite sure the House will agree that the preservation of pension rights is vital if we are to achieve mobility of labour.

The noble Lord, Lord Byers, mentioned docks. He knows as well as I do—I had experience of this when I was in business—that the docks are a continuing thorn in the exporters' side. No doubt the noble Lord will be pleased to know that a Bill will shortly be placed before the other place to put into effect the Devlin Report on the Docks. I hope the new system of employment, the new amenities that will be provided in the docks, and above all else the sense of security for the dockers will result in bringing the British docks up to the standard of those we see on the Continent.

The Government are already active in helping those companies which have moved to the development areas. I will not go into detail, in view of the time, but we are doing all we possibly can, by the provision of qualified instructors and lecturers and trained personnel, to assist new companies when they move their factories into the development areas.

In regard to the problem of saving manpower, clearly the biggest saving will come from larger industrial units. It is this type of unit which will be able to employ computers in order to reduce the administrative and secretarial work. They will have greater financial resources for investment, they will be able to employ more highly trained staff, and I think they will have a greater opportunity for the flexible use of workpeople. This is why the Government are determined to proceed with the Industrial Reorganisation Corporation. But clearly there is a role for the smaller companies. Noble Lords may be interested to know that the new University of Aston now has a small-business centre—by which I mean a centre relating to small business and not a small centre. This has been approved and is receiving the support of the Ministry of Labour, the Department of Econonomic Affairs and the West Midlands Economic Planning Council, in order to give guidance to smaller companies in regard to the improvement of productivity. The Government will be watching this experiment with considerable interest to see whether the service could not be extended.

I now turn to the selective employment tax. True we shall have an opportunity to debate the machinery of the Finance Bill when it comes before us in July, but it is relevant to to-day's debate. The Government had a vital issue before them. They had to deal with the balance of payments and, at the same time, to look to the longer-term modernisation of our industrial structure. A good many of the past measures have corrected the balance of payments for a temporary period, but have prejudiced the long-term development of industry because investment was held back. We were faced with rising consumer demand. There was pressure on our resources which had to be relieved.

As the House knows, the Chancellor of the Exchequer could have imposed an increase in income tax, or could have increased purchase tax, but clearly it was the view of the Chancellor that the rates of tax were already high enough and further increase would really have hit the manufacturing industries. The service industries have undoubtedly been expanding very fast and in the past have been little affected by taxation. It is true to say that manufacturing industry has borne more than its fair share of taxes. The aim is to depress the level of production in order to relieve the labour shortage, we seek a solution to deal with the balance of payments and with inflation without causing a major setback to industry. The House may be interested, and I was certainly surprised, to hear these figures: the traditional methods of deflation require a 5 per cent. cut in output in order to achieve 1 per cent. of unemployment. This is an interesting and startling figure. I believe that the selective employment tax will have a beneficial effect in encouraging economy in the use of manpower.

I should like to refer to some of the figures mentioned in the White Paper which the noble Lord, Lord Byers, did not mention. During the years 1960–65 the labour force that became available to the whole of industry was 1,330,000; of that number, the professions, scientific work, catering and the like took 714,000 workers, the distributive trades took 162,000, national and local government took 82,000, and power took 40,000. Of that figure of 1,330,000 new labour force, only 142,000 went into the manufacturing industry. The House knows that in The National Plan we forecast a natural increase in the labour force of 400,000. On that basis, between now and 1970 we should have 40,000 extra workers going into industry, and when one looks at the severe shortages that exist one recognises that if we fail to increase our production and the use of our machines exports will fall and imports will rise and we shall be in a serious balance-of-payments difficulty. Recognising this labour position, recognising the semi-privileged position of the distributive trades, and recognising the imposition of existing severe taxation on manufacturers, I believe that if further taxes had to be faced it was right to draw them from an area so that there would be the maximum effect upon the balance-of-payments position and a stimulus given to the manufacturing industry.

LORD BYERS

My Lords, before the noble Lord leaves that point will he say exactly how the Government see this grant to manufacturing industries achieving a better redeployment of labour, particularly in those industries which are over-manned?

LORD SHEPHERD

I will certainly come to that.

LORD STRATHCLYDE

My Lords, the noble Lord has given the House some most interesting figures as to the increase in the number of people employed in the various industries. I do not think he mentioned the agricultural industry. Could he tell us how many extra people have been taken on in that industry in recent years?

LORD SHEPHERD

I am afraid I could not give that figure. I just have here the figures in regard to the distributive trades, and they do not include agriculture. I will look it up and let the noble Lord know.

In the group to which the noble Lord, Lord Byers, referred, that is the group that will pay the tax and will not receive any refund, the number of workers involved is 9,848,000. In the manufacturing element, which will receive a premium, the number of workers is 8,846,000.

LORD BYERS

The noble Lord has been very good, but I did not ask for that information.

LORD SHEPHERD

No. I want to develop my argument, if I may. I must not be put off by the noble Lord.

LORD BYERS

Why not?

LORD SHEPHERD

All right, I will answer the noble Lord's question. The noble Lord wants to know in what way this giving of a premium to manufacturers will force out whatever hoarding there may be within the manufacturing industry. The noble Lord will appreciate that one of the basic reasons why there is hoarding in the manufacturing industry is that the manufacturer is anticipating an upsurge of his business and the need to retain workers in order to meet it. If you can remove the great fear of shortage of labour within the manufacturing industry I think you will remove the immediate impulse of a manufacturer to hoard labour. Inefficient management may be one of the causes of the hoarding of labour. Unless the inefficient managements become efficient they are not likely to realise they are hoarding labour, and one of the duties that have been accepted by the economic development committees is to go round the various managements to see what is going on and to give advice.

This is my own personal opinion. I should like to see more use made of the management consultative bodies, the private organisations that are available to give advice to management. I think the noble Lord, Lord Byers, was right when he said that many of our managements do not really appreciate what is going on. They may have difficulties in communicating with their own workpeople. I believe the management consultative bodies could play an important part in this field. The noble Lord, Lord Byers, was quite right: we do not live under a system of dictatorship; we are a democracy and we have to use influence and use the machinery which is available to us. This is a form of machinery which is being built up by the Government, and I would express a considerable word of satisfaction to both sides of industry who play a major part in the regional councils and the economic councils and boards.

There is much more that could be said about this selective employment tax. We shall have an opportunity of doing so on the Finance Bill. Noble Lords may chortle; it is easy to criticise what arises on a Budget Statement. I have heard many criticisms from noble Lords opposite during the last eighteen months, but when the facts eventually appeared they were not prepared to put on the red faces they should have done. I suggest that before noble Lords start criticising any particular point of detail they should wait until the Finance Bill has been printed and is available to Parliament. It is perfectly true that the tax in itself is a blunt instrument. Many other taxes in the past have been blunt instruments, but in the course of time—the noble Lord, Lord Byers, knows this applies very much to the corporation tax—we have had an element of refinement brought into it. It is easy to criticise, but what noble Lords opposite must say, if they disagree with this tax, is what they would put in its place.

The noble Lord, Lord Byers, agrees to a pay-roll tax. I should have thought that that would be infinitely more sweeping than what is being placed before Parliament to-day. It would certainly have an effect throughout the whole manufacturing industry, on top of the purchase tax and other forms of taxation. We take the view, and I believe it to be utterly right, that we had to give a stimulus to the manufacturing industry. We had to curtail a degree of consumption in this country, and this tax was the right method. We shall have plenty of opportunities to discuss it. Noble Lords never fail; they always enjoy debates on finance, even though it does not come within their terms, at least on the question of voting—there must be a degree of frustration. We look forward to this debate. There are many notable speakers who are going to take part. We shall watch and listen, and I will certainly see that the comments that are made, particularly if they are constructive, are put before my right honourable friends, the Minister of Labour and the First Secretary in the Department of Economic Affairs.

4.6 p.m.

LORD DRUMALBYN

My Lords, I should like first to echo what the noble Lord, Lord Shepherd, has said by way of gratitude to the noble Lord, Lord Byers, for having raised this subject today, which is of crucial importance to the country, and also for the very clear and vigorous way he set forward the issues. He saved us all a great deal of trouble by quoting many of the salient figures, which makes it unnecessary for us to go over them again. I would also say, at the outset, that I do not think that the noble Lord, Lord Shepherd, has sufficiently stressed the seriousness of the problem, and I propose to put to the House one or two figures which may be useful.

The National Plan, as the noble Lord said, indicated a manpower gap of 400,000, which might be halved if 50,000 unemployed men in the less prosperous regions were drawn back into employment, and if productivity rates in those regions could be raised to nearer the level of the more prosperous regions. The gap is due to the fact that for a number of reasons the working population is expected to increase between 1963 and 1973 by only 0 .3 to 0 .4 per cent., which is less fast than in the previous decade, when it increased at a rate of 0 .7 per cent., and less fast than the growth in the population.

But what highlights this problem, and emphasises and underlines it still further (perhaps I may relate my remarks to the March figures because these were the ones in the Ministry of Labour Gazette) is that in mid-March there were, in round figures, 300,000 wholly unemployed, of whom four-fifths were men. According to the survey of the Ministry of Labour given, in the same Gazette—related undoubtedly to an earlier time; but no doubt the figures in general are relevant—three out of five of those men were unlikely, on personal grounds, to be placed in jobs. The other two-fifths, plus the 67,000 women—that is to say, about 150.000 in all—represent the numbers available to fill the vacancies. As the noble Lord said, the unfilled vacancies notified by employers amount to 400,000. So there are 150,000 to fill unfilled vacancies of over 400,000 notified by employers. And, of course, there must be many other vacancies that have not been notified by employers simply because employers see no likelihood of their being filled. That is the measure of the problem.

The noble Lord has referred to the action of the Government and I think perhaps I ought to start my remarks by referring to the way in which the Government themselves are setting an example and the proposals they are making. So far as I can find out from Table 14 the Monthly Digest of Statistics, the numbers employed by Central Government fell between June, 1963, and June, 1964, by 18,000. There was then a reclassification, and from June, 1964, to February, 1966, they rose by 20,000; and there are more increases to come—in the Inland Revenue, the Land Commission, the Ministry of Technology, the Board of Trade, the Ministry of Labour and so forth. In The National Plan public administration is shown as receiving an increase of nearly 100,000 employees between 1964 and 1970. What are the Government doing to economise in their own use of manpower? There are two questions: are the employees they have fully employed? And is what they are doing worth while?

The Chancellor said in his Budget speech that our prime problem is to economise in the use of manpower. He said this on the subject of the selective employment tax, the purpose of which seems to be to reduce the amount of labour in services without increasing the cost of production in manufacturing industries. The premium to be paid per employee in the manufacturing industries is supposed to offset any increase in the charges made to it by service industries as a result of the tax. I believe that is so. The Chancellor produced this tax like a rabbit out of a hat, or it may have been a. mortarboard. But ought a tax embodying new principles to be introduced in this way?

When Mr. Selwyn Lloyd put his payroll tax on the Statute Book he did not immediately impose the tax; he left time for consideration and discussion. After Mr. Maudling had raised the possibility of a turnover tax in his 1963 Budget, he then passed the matter to a committee of three, which reported the following February. Here we have a new tax. Mr. Callaghan himself has been at pains to distinguish it from the payroll tax, which was earnings-related and non-discriminatory, while the selective employment tax is flat-rate in incidence and surely discriminatory in effect. Surely it would have been right to allow this proposal to be carefully considered before we had Budget Resolutions about it. What a topsy-turvy world we live in^a

The Chancellor gave long notice of an increase in income tax, which, after all, was "old hat", if I may stick to the hats. Admittedly, the notice was for the benefit of foreign bankers. But he refuses to give own economists the benefit of an opportunity to consider this new rabbit". Surely there is something wrong there.

LORD SHEPHERD

My Lords, can the noble Lord help me?—I ask merely for information. He quite rightly said that it might have been helpful if we had, shall we say, twelve months notice, such as we gave in regard to the corporation tax—although we got a great deal of abuse because we did it. Can the noble Lord say, if we had not used this method of raising this money, how we should have raised it? What was the alternative?

LORD DRUMALBYN

My Lords, the noble Lord is on a different point, but I am coming to that in a moment or two. The second objection to the tax is that, as it does not come into operation until later in the year, the Budget does not even try to do anything at all immediate to relieve the pressure in demand on goods, services, and particularly manpower; and what may happen between now and September is anyone's guess.

It is a pity the Chancellor has not responded to the call in The National Plan for a general attack on practices leading to under-employment, practices which are most notorious, as the noble Lord, Lord Byers, has pointed out, in some of the industries classified by the Chancellor as "manufacturing" and, being so classified, are entitled to the premium. Instead, he has given the inflationary spiral several sharp, but rather surreptitious twists. Perhaps the noble Lord can tell us how many people will be employed in collecting the money from those concerned and paying it back to them again. Some will have their contribution returned with a bonus. But if a firm is classified as a manufacturer, and hoarding labour, it will get a premium for every employee who ought to be released. The excuse for this manpower merry-go-round is that the National Insurance flat-rate system is there ready to act. All the employer has to do is to increase the value of the stamp, and hey presto^a the Chancellor has collected an undisclosed amount of hundreds of millions. The yield this year, he says, will be £315 million; but of course, he will be getting a forced loan considerably in excess of this.

I must concede that to make this tax more just and effective would have required more manpower. For example, the Chancellor is not going to return the tax to the farmers, although he knows he ought to do so; because I think I am right in saying that the farmers have economised to the extent of something like 200,000 in labour in recent years. He does not do it because it is too much trouble. Instead, he will take it into account in the Annual Price Review, which could mean that he will take it from the hill farmer and put it on wheat, or vice versa—manipulation and prestidigitation! It is one thing to play with grants and subsidies for farmers. Surely it is a different thing to play with the farmer's own money. The tax is bound to increase charges, mainly in areas, be it noted, that are not covered by the Incomes and Prices Board early-warning system. I have been told of a firm which will have to pay in tax almost exactly the equivalent of its present profits.

But the acid test is, will this tax achieve its purpose of getting greater efficiency in the use of manpower anywhere? I should like to give noble Lords an example of its operation. The Manpower Research Unit of the Ministry of Labour made computers in offices the subject of its Fourth Study. Of course, offices exist both in manufacturing and in service industries. Employers in service industries will pay a tax on their office staff, even if they are earning foreign exchange. Employers in manufacturing industries will receive a premium on their office staff, even if they do no exporting at all, either directly or indirectly. Nobody would deny the need to economise in office employment. I am told that comparisons have been made with the United States, and that in certain respects, in manufacturing, in particular, there are five times as many people employed in offices, doing comparable work, as there are in the United States, in certain circumstances. So no one will deny that there is room for economy in office employment, although this applies in manufacturing, as well as elsewhere.

Office jobs have been increasing at the rate of nearly 3 per cent. per year. As the Study points out, even if they were to increase by only 2 per cent. per year from now on, by 1974 there would be, but for computers, 700,000 more office jobs than there were in 1964. If, however, as the Study assumes, 6,000 computers are installed in offices by 1974, some 300,000 of the increase in employees which would otherwise take place could be dispensed with. This applies to manufacturing industries as well as to other parts of the economy. I may add, that at present the number of computers installed in Britain is estimated by Dr. Kendall, in an article in the March issue of the Three Banks, as 1,700, compared with 27,000 in the United States of America. Can the noble Lord tell me whether the manufacturers of computers are finding the manpower to train and employ, so as to keep up with this programme of expansion? This would seem to be extraordinarily important to enable us to economise in this startling amount of manpower. Presumably, they can afford to attract employees by good pay and conditions of work. If so, they will attract them in any case from other industries, service or otherwise, without the need for this tax.

The point I want to make is that firms can either install computers themselves—I understand that even quite small firms can install computers—or they can use computer facilities offered by service bureaux. As Dr. Kendall says, service bureaux accumulate a specialised knowledge which is not available inside the largest organisation. They possess trained staff with wide experience, system analysts, programmers and data processing managers, and such trained staff are scarce—in fact, I understand that they possess more than a quarter of the total supply. Yet they will have to pay the tax, whereas manufacturing companies which have computers in their offices will not. It is highly questionable whether computers are likely to be more fully and more efficiently used if the effect of the tax is to place service bureaux at a disadvantage.

The noble Lord questioned me as to what I would put in its place. When one reads carefully the Chancellor of the Exchequer's Budget speech, one finds that by implication his justification for the tax was that it took less preparation than would have been needed for a sales tax. A sales tax surely would have been more apt in present circumstances. That is the answer to the noble Lord.

LORD SHEPHERD

But, my Lords, we should need more staff to carry out a sales tax.

LORD DRUMALBYN

Heaven preserve us from allowing the Government to accumulate unnecessary staff! I quite agree with the noble Lord that one of the handicaps of a sales tax is the amount of staff it uses; but if it is true that you have under-employment in various parts, that also might help to meet the problem.

The snag about any rough and ready tax is that it interferes with the normal economic development of new labour saving services, such as computers. It interferes with normal economic developments in general. There are many examples one could quote of services afforded to manufacturing industry by organisations which, in Dr. Kendall's words, have accumulated a concentration of specialised knowledge. The danger of this tax is that it will tend to break down that kind of concentration of specialised knowledge. Perhaps chartered accountants are as good an example as any other. They can pass on their tax to the clients, and no doubt will. But is it sensible to tax employment in services that the Treasury itself regard as essential, especially when the Chancellor of the Exchequer himself has caused employment in them to be increased by his complicated tax provisions last year?

There are one or two points I should like to pick up from what the noble Lord said in his speech. I was very interested indeed in his remarks as to the need for information. He said that information-gathering, machinery is out of date, and he urged an overhaul of the machinery in the gathering of information as between the Board of Trade and the Ministry of Labour. I am sure that this would be very worth while. But there are dangers in over-simplifying this matter, and I hope that the noble Lord, Lord Winterbottom, who is to reply to-day—and I welcome him very much to the Front Bench—will be able to say something on this subject.

It is quite true that in some industries, even before the existence of the "little Neddies", methods had been developed for comparing costs anonymously as between different firms. This is extremely useful as a method of comparison. But I do not know the answer to this, and perhaps the noble Lord can tell me: how far is this kind of comparison useful as between industries? I ask this question because the noble Lord suggested that there should be, I think what he described as a Central Manpower Planning Agency which, among other things, would, I imagine, attempt to do this kind of comparison and arrange its availabilities of labour on that basis.

LORD BYERS

My Lords, is the noble Lord asking me?

LORD DRUMALBYN

No, I was not.

LORD BYERS

May I answer it? I would say that it is extremely useful to have international comparisons, industry with industry. It is also useful to have comparisons between firms. The problem arises of keeping the information completely confidential. This requires a good deal of thought. But with the computer you can get more confidentiality than you could in the past.

LORD DRUMALBYN

I am grateful to the noble Lord. I appreciate, as indeed I said, that this has very great use within industry, whether nationally or internationally. I see the point of view as to confidentiality, although I understand that this did not present a problem in the wool textile industry—at any rate, it was a problem which had been overcome. What I was saying was that the value was "across the board" as between industries. This is something which will have to be considered in assessing the relative value of industries where a crunch comes.

The central problems here—and I have not time to go into them in detail—are, first of all, existing over-manning on the basis of existing machinery, and, secondly, the redundancies which will arise out of new investment. On this I should like to say to the noble Lord, Lord Shepherd, that it is not only a question of giving confidence to workers. What also has to be done is to give confidence to employers; because unless an employer can see a return coming from the investment which he proposes to put in, he is not going to make that investment. Unless he can be sure that, having got an agreement, it will be kept, I do not think he is going to make the investment. I should like to say this because it is of the utmost importance. There is no doubt—one knows this from speaking to employers— that morale among employers can fall because of lack of confidence that an agreement, once made, will be carried out. I think the time has come—and I would ask the noble Lord, Lord Winterbottom, when he replies to deal with this—when there should be some means of ensuring that such contracts, once agreed, can be enforced by either party against the other. With respect, I do not think that we need to wait for the findings of the Royal Commission to provide for something which seems so absolutely elementary in a civilised society.

LORD SHEPHERD

My Lords, does the noble Lord mean against the unions?

LORD DRUMALBYN

I said either way.

LORD SHEPHERD

The workers themselves?

LORD DRUMALBYN

Whoever makes the agreement—it is an agreement between parties. All I am saying is that this is something which has been undermining confidence in the past. I am quite certain that any blame in this regard does not lie only one way, and I do not want to suggest that; but what also I am quite certain of is that in a matter of this kind you must get the rules of the game right and clearly understood. People will accept rules of the game so long as they are clearly laid down and understood, and I believe we are far too wary of changing the rules when almost everybody believes that the rules ought to be changed.

There are a number of other points which I wanted to make. I have mentioned the question of over-manning, and the need for more investment; also, the need for training is paramount. I am grateful to the noble Lord for the information which he has given regarding the developments under the Industrial Training Act and the further steps that are being taken in retraining, for both matters are extremely important. But it would be a mistake to assume that training should start only at the point where somebody enters into industry. A good deal of study requires to be done about fitting people to enter industry, about the training of young people, and about getting them into the right jobs to start with.

In this connection, I should like to mention that when I was at the Scottish Office I had a look at industrial training on the Continent, and I found that the French had what were called "orientation centres". The young people started at a fairly early age and these centres did a good deal more than the youth employment services. They tried to put the young people's feet on the right path to reach the jobs that really suited them. This is of great importance, and I would ask the noble Lord whether he would have a look at what might be described in general as "job orientation".

I was also much impressed by pre-apprenticeship training in engineering industries which I saw in Glasgow. This was originally designed to fill the gap between the school-leaving age and the age for entering industry. Now that gap of a year before apprenticeship age is going to be removed when the school-leaving age is raised. I think that this type of pre-apprenticeship training is something which ought, virtually, to be incorporated into the last year of education for the non-academically minded. I hope that that can be done. I cannot overstress the need for confidence on both sides, and I should like to end on this note. This is not only a question for management; it is a question of getting the rules of the game right. I believe that in Britain once the rules of the game are fixed people will play the game.

4.32 p.m.

LORD BOWDEN

My Lords, I should like to begin, if I may, by adding mine to the tributes which have been paid to the noble Lord, Lord Byers, for introducing this subject to us this afternoon. He displayed so many of our national shortcomings that much less is left for us to say. But there are some points, none the less, to which I would refer, and I hope to do so as briefly as possible because of the large number of speakers who wish to address your Lordships' House this afternoon.

The first thing which struck me is how apt we all are to regard manpower as other people, and efficiency as something with which other people should concern themselves. Manpower is all of us, and efficiency should be the problem of every one of us here this afternoon. The Government are, after all, probably the largest single employer in this country. The Civil Service, therefore, should be a model of efficiency and expedition and the envy of the world. I ask your Lordships: is it? Anyone who has wandered through Whitehall, as I have done, and has seen the filth of the buildings within which eminent men are housed, has penetrated within them and seen the tattiness of the curtains, the decrepitude of the carpets, the antiquity of the typewriters and the lack of any modern aids to office management, must marvel that any work is done at all. He must marvel that the morale of the Service is as high as it is, and he must compare it, to its enormous disadvantage, with the commonplaces of any modern office within a few hundred yards of this place.

I well remember, for example, that there was a time when the I.C.I. building on Millbank was taken over by a Government office. When the I.C.I. had it in the first instance it was splendid and clean and efficient, and a place into which one could enter with some sense of expectation, even of eagerness. Before the Government had had it for six years it was tatty, down at heel, the sort of place Professor Parkinson so aptly described as "suffering from the last stages of a mortal disease". There were notices all over the place, cups of tea here and there, no adequate equipment and no recent paint. How can staff maintain any sense of purpose, any sense of morale, in such circumstances? The Government then moved out, the I.C.I. moved back, and the place was cleaned immediately and transformed. It became its old self again. It may well be that the cost per employee was increased, but I cannot help thinking that the cost of each operation performed was spectacularly reduced when the I.C.I. moved back again.

VISCOUNT STUART OF FINDHORN

My Lords, the noble Lord would agree that it was in the war-time period that the Government occupied these premises.

LORD BOWDEN

It was, indeed, my Lords. This I remember only too well. But I believe, nevertheless, that much of the squalor in which the Civil Service had to live was unnecessary, and it is an extraordinary commentary on the way in which the Government conduct their affairs. I believe that much might be done to improve the efficiency of the Civil Service if the ordinary traditions of conventional business were applied to it, as they are in so many of the great firms of this country.

Then we might consider the efficiency of operations conducted even nearer home. What of the organisation of the vast enterprises which are conducted in this very Palace? Do we believe that either the operations of this House or the operations of another House are a model of efficiency which should inspire industry to emulate them? Exhortation will do little; example might do much. I believe that the Government have an extraordinary opportunity to transform themselves, and if they can do so by their own exertions I believe, verily, that they would inspire the country by their example.

Efficiency is a matter which concerns us all. The word "efficiency" should become known much more widely in the universities, in the schools, as well as in all other Government operations. Of course, it is difficult to know how universities can become more efficient. It is difficult to know how anything can become more efficient. But the problem must be studied, and I hope that in due course significant results will be achieved. For I believe that much of the overmanning to which the noble Lord, Lord Byers, referred—the fact that we need so many more men to make a ton of steel than the Americans do—is in large measure due to the fact that the Americans have educated their operatives so much better than we have.

I remember years ago discovering to my astonishment that the Americans produced, I think, three times as many metallurgists per ton of steel they make as we do, and the Russians produce something like five times as many metallurgists per ton of steel as we do. It is this kind of thing which, in the end, is responsible for overmanning and undermanning. If you contrast the operations in what we are pleased to call the backward or, perhaps, the underdeveloped countries, you find that they need even more men than we do. Our relative inefficiencies are in large measure an inevitable consequence of years of neglect of education, which has put us at a tremendous disadvantage compared with our industrial competitors.

It is more than sixty years since a delegation went to see the United States Steel Company and talked to Andrew Carnegie. They said to him: "It is not so much your extraordinary raw materials, your wonderful factories, which we have cause to envy; it is rather the young experts who man every department of your works. We have no such men in England." That was sixty years ago; the situation is much better to-day, but we are still, I fear, paying the price of the neglect of our forbears.

I have said that we are suffering from the results of educational neglect. Some years ago the Government accepted with pride, I think, the recommendations of Lord Robbins's Committee and commissioned the universities to engage in, and embark on, a major expansion programme. They have, as a result of their very considerable efforts at improving their own efficiency, done better than the Government asked them to do, and, as a result, the number of students in our universities this year is considerably greater than the number that was forecast a few years ago by Lord Robbins, who, after all, one must always remember, said when he drew up his plan that these were minimum figures rather than probable figures. The growth of the universities is, roughly speaking going along Lord Robbins's probable rather than his minimum curve.

As a consequence of this, it is very probable that in about three years' time the universities will achieve the student figures which were expected to be arrived at in 1971 or 1972—and here we come to what seems to me an administrative nonsense. I should like to read to your Lordships a paragraph from a letter which has been sent by the Chairman of the University Grants Committee to all English universities: It now looks as if the total student population in 1967–68 will be very significantly greater than the figure to which the Government are committed for that year. If so, it follows that the growth in the following period will not have to be as large as the 21,000 which have been proposed. In other words, because of the efficiency of the universities they are to be told to stop their expansion programme in two years' time. This, my Lords, is nonsense, and it follows from the simple fact that the Government have not reconsidered the Robbins forecasts in the light of the universities' achievements. I should like to ask the noble Lord who is to wind up whether this is, in fact, Government policy, and, if so, whether it is due to an oversight, whether it is deliberate or whether it is just a mistake.

My Lords, in what I can describe only as a rather unfelicitous phrase, my right honourable friend the Secretary of State referred to the "socially responsive sections of the educational world", implying thereby that the universities have not been as socially responsive as they should have been. I cannot believe that any institution could have done more in the circumstances, and I feel that if the public sector of the education system can do as well it may indeed be proud. In fact, it should try to emulate the achievements of the universities. If it can do as much, then we shall have cause to be thankful to it. I have often speculated whether the Secretary of State, when he made this curious remark, felt that the University of Oxford, from which I believe no fewer than twelve members of the Cabinet have come, was being "socially responsive" in educating these men at the time. This is a phrase which has rankled very greatly with the universities, and I hope that the Government will at some time take an opportunity of making the point that they, too, have a social conscience, and that they, too, can do more than they have yet been allowed to do to bring this country into the 20th century.

I wish, though, to follow up this point of inadequate education, for I believe that we are now beginning to feel the results of what I can only call the grand fallacy of education in this country, the great mistake—the failure of comprehension. It is a failure of comprehension, my Lords, which is in large measure responsible in this country for the rigidity of the trade union structure, for demar- cation disputes and for lack of opportunity in later life. On the Continent, and particularly in Germany, it has had a slightly different effect, and it is in my view capable of doing serious damage to the whole of the German university world. It is curious that all this should come about from a simple failure to understand a very obvious fact of the modern world. We seem to believe that a man can be completely educated at some particular period of his life, and that when he has been so educated he can let well alone and assume that all will always be well.

We are familiar with the fact—and we often bitterly complain of it—that a skilled man in this country is defined as a man who has served his time as an apprentice, usually for five years, and has completed his training before the age of 21. Nothing that he does thereafter counts; and even if he learns another trade later in life, he can never become a skilled man, in the conventional sense. If he has been unfortunate enough to learn a trade which ceases to be important, he has no opportunity of becoming a skilled man again. If the firm with whom he was apprenticed goes bankrupt and he loses his indentures, he may for ever remain a technically unskilled man. This is a social absurdity, a grave social evil, and I hope very much that the Industrial Training Bill will do something to remedy it.

But we are familiar with this, and I should like to consider the implications of this same error on the education of graduates and their preparation for industry. For, my Lords, it is only too common to assume that a man who has learnt what he can in a university, has taken his scroll and has shaken hands with his professor, can go into the world and be forgotten by his university. In fact, the problem of converting the college graduate, as the Americans put it, into an engineer or a scientist is the most complex, the most difficult and, in many ways, the most frustrating—and it is certainly the least understood—of all the educational tasks with which we have to wrestle to-day in this country.

For many years the electrical engineering industry in this country depended almost entirely on a postgraduate apprenticeship scheme which was organised at Trafford Park by Sir Arthur Fleming and run, after him, by Sir Willis Jackson, and which educated nearly all the engineers who dominated the electrical engineering industry for many years. In fact, in the 'twenties it was commonly said that all the electrical engineers in England could be divided into two classes—those who worked for Metropolitan Vickers and those who used to work there. This was an extraordinary social service performed by a great company for the benefit of the country at large. We are planning to increase our output of engineers, but we have made no appropriate and corresponding attempt to increase the facilities in industry—to give them what is now known, not as a graduate apprenticeship but a graduate training.

Furthermore, many trades have never had any such scheme, and it has never been possible for graduates to go into them with confidence or to provide any method of keeping themselves up to date and any method of giving themselves any understanding of the real problems of their firm. Here again, I think, is a great opportunity. Many industries have been rationalised in an extraordinary way in the last few years. If I may take the case of the textile trade, ten years ago one needed the Albert Hall to have a representative meeting of the trade. Last week, I had in my own office a group of a dozen men who, between them, control almost the whole of it; and we were able to discuss the idea of organising some kind of graduate apprenticeship scheme for the textile trade which will, I hope, be introduced before long, and may serve—I hope it will—as a method by which young men can go into a trade of great and growing importance, in the expectation that they will be able to come back from time to time for refresher courses and keep themselves up to date in the rapidly changing, capital-intensive industry which the textile industry has become in the last few years.

I hope that many other similar schemes will be organised; but the point I must make is that it is now a commonplace to say that knowledge is increasing at a spectacular rate; that a man who is up to date to-day is bound to be out of date ten years from to-day, and that the only hope that we have of keeping our staff up to date is to bring them back from time to time for a course lasting a day, a week, a year, or any length of time you care to mention, from industry into the academic world. This is well understood in the United States. I was told, when last I was there, that although it is difficult to compute the total cost to the community of this kind of postgraduate, post-experience, education, it is probably of the order of one-third of the total cost of all forms of education in America, which amounts to something like 10,000 million dollars a year—the total cost of education being about 34,000 million dollars. My Lords, we have nothing to compare with this, on even the remotest scale, in this country.

We have an opportunity to engage the universities in a joint enterprise with industry to bring men up to date, to keep them up to date and to make it possible for industry to apply the latest techniques from wheresoever they may come. Here we find ourselves in what I might describe as a demarcation dispute of great complexity in Whitehall. The Industrial Training Bill is to be administered by the Minister of Labour, and any courses of the kind I describe are the responsibility of the Department of Education and Science, and, ultimately, of the Universities Grant Committee acting for this purpose as the agent of the Department. As recently as yesterday, the Chairman of the University Grants Committee had had no contact at all with the Minister of Labour on the organisation of courses of this kind.

Furthermore, an extremely complex problem of finance is involved. Who is to pay for this kind of thing? Should it be the Industrial Training Act, as administered by the Minister of Labour or the Department of Education and Science? And this Department has never bothered about middle-aged people before on this scale. I should like the noble Lord who is to wind up to assure us that it is, in fact, true that any expenditure involved in training of this kind will be a proper charge on the levy to be raised by the Industrial Training Bill. There are those who say that it will; and there are those that say it will not. This is a matter of very great importance, and it should be clarified lest the demarcation dispute ultimately wrecks the system.

When I was last in the States I found that in the Harvard Medical School and the Johns Hopkins Medical School there were at any given moment twice as many people taking refresher courses as there were ordinary medical students. This is the kind of ratio with which we are utterly and completely unfamiliar; nevertheless, it is the proper ratio to find in the 20th century in an advanced country, and we must reconcile ourselves to it.

I should like to raise another administrative problem which bothers Whitehall. It is the question of bringing schoolmasters up to date. Science is changing, and schoolmasters must learn to teach new subjects. How are they to learn them? The Government are prepared to take enormous trouble and to bear the whole cost of the education of a schoolmaster up to his first degree. Thereafter, the Government are astonishingly uninterested in any enterprise required to keep him up to date. I believe that the Government must assume the same kind of responsibility for keeping schoolmasters up to date as they do for their initial university education. The transformation taking place in the teaching of science and in the teaching of mathematics, languages and other subjects is dramatic and extraordinarily exciting; and it should be known to the schoolmasters and to the children of the whole country. It will become known only if the opportunity is provided by the Government. I beg the Government to assume the kind of responsibility for refresher courses which 'they have always assumed for the first degree courses.

The Armed Services have always done this. The care with which the Staff College takes young men at various stages in their professional career and re-educates them should be a model to us all. I have learned in the course of the last few years to understand and enormously admire the educational achievements of the Services. The Army is capable of educating a butcher's boy to maintain a tank or an aeroplane: it does so with extraordinary efficiency. I believe that the techniques it has acquired could, with advantage, be learned, understood and copied by the rest of the educational world. Furthermore, the Army is capable of teaching a graduate engineer some extremely technical subjects which he would never encounter in the university; it does so with the same efficiency as it teaches the butcher's boy. Professional educationists have often looked askance at the educational efforts of the Army; but I think we have much to learn from them and I hope that the world will appreciate this.

While on the subject of efficient employment of manpower, I should like someone to explain to us why it is that in America the Army Engineers are able to undertake civil projects of immense complexity and cost, and to discharge them with great efficiency; whereas our own Army Engineers are never allowed to do this kind of thing. That seems to me to be extraordinary.

It has been well said by the noble Lord, Lord Robbins, that it is difficult, if not impossible, to make accurate forecasts of manpower. I am sure he was right. It is quite hopeless to decide now the type of work force we are going to need in ten to thirty years' time. No country has ever done this successfully. The Russians made a valiant attempt to do so some years ago, and I talked to Mr. Rudnev, who was in charge of this enterprise. He said, "We go to great trouble, but we always get the forecast wrong. Things always change faster than we expect. "In particular, they were completely thrown by the sudden introduction of electronics, which grew faster and was more important than they expected, and for which they were entirely unprepared.

Detailed manpower forecasting has defeated everyone who has studied it. Certain trends one can identify, and certain actions can be based on them; but detailed forecast is completely impossible. If we want our work force to be capable of applying modern ideas we must bring men up to date all the time: bring them back to school if need be, or take the school into the factory. For years this has been the tradition of America in industry, and of our own Armed Services.

My Lords, we are, as a nation, in a most difficult and, in some ways, frightening position. Nevertheless, anyone who has travelled the world and seen the problems which beset other countries must realise that they are usually worse than ours. One is reminded of Socrates' story that most men who brought their troubles and piled them in the market place to exchange for somebody else's would be glad to take their own pile home at the end of the day. We have our problems; but I think we are as well able as most people to solve them. I believe, in fact, that if we face the changing future we shall be able once again to set an example to the world.

4.58 p.m.

LORD SHAWCROSS

My Lords, in view of my interest in the universities and in educational matters, I should dearly have loved to follow the noble Lord who has just sat down into his interesting excursion into these subjects and, perhaps, pursue with him the effect of the selective employment tax on the universities and other independent organs of education. But on this occasion I think I must stick to a somewhat narrower interpretation of the Motion which the noble Lord, Lord Byers, has so well put before your Lordships' House.

I believe it is no exaggeration to say that this matter, the proper and efficient deployment of manpower, is one of the most important problems that our country has to face. Solve it—and with understanding and good will I believe it can be solved—and the rest of our economic problems, inflation, balance of payments, the bank rate and all the rest, will resolve themselves. Leave it unsolved, and no ingenuity in the manipulation of our monetary policy, no experimentation in new fiscal devices, will, in the end, save us from bankruptcy.

Is the problem, then, really one of immense difficulty? It is not. It is well, perhaps, to remember when considering it that on the ordinary trading account, taking both visibles and invisibles into our reckoning, we have for many years maintained a balance. What has put us in the red, of course, has been, in the main, Governmental expenditure abroad; not private investment, but Governmental expenditure largely on defence and on aid. I am not one of those who think that any significant reduction can be made in this expenditure without gravely harming this country's foreign policy and our international standing in the world. Indeed, in some areas I should like to see the expenditure actually increased. The problem we have to consider is whether we can build up our productive efficiency sufficiently to enable us to compete in price, in quality and in delivery dates so as to earn the balance which will put the country back into the black. The real question is not whether we can do it; of course we can do it. The real question is whether we will do it.

My Lords, I believe, as the noble Lord who opened this debate indicated was his belief, that the only real obstacle which stands in our way in dealing with this matter and in solving our problems is our gross inefficiency in the use of our available manpower. I think that this inefficiency stems from two main causes. One of them, not, I would have thought the most important, but one to which the noble Lord, Lord Shepherd, rightly referred, lies in the size of our industrial units. We in this country continue to do too much in penny numbers. We continue to have too many smallish concerns making similar products, working far under their factory capacity and competing with each other in a cut-throat way which leaves them with inefficient margins for further investment and insufficient output to employ the modern types of equipment which are increasingly becoming available for the larger units.

We should watch the great encouragement which is now being given on the Continent of Europe to large-scale mergers. The European Commission at this moment are considering the conception of what I think they are going to call the European Company; that is a company which is able to trade across the frontiers throughout the Community but which is subject to a single fiscal system. Our economy, too, ought to be based on industrial units large enough to operate with maximum efficiency in plant and manpower and to compete with the similar sized units which are increasingly coming into existence abroad.

For a long time bigness in industry has been considered— particularly, perhaps, among the Party to which I previously belonged—as rather indecent, and even last year the Monopolies and Mergers Act which we passed then, and which your Lordships will remember fixed an accession of capital of £5 million as the test of whether or not a merger should be subjected to the possibility of reference to the Monopolies Commission, set a totally wrong climate in regard to this matter. Of course that figure of £5 million, a capitalisation of £5 million, was far too low. It is good to know that wiser counsels are now prevailing. The Industrial Reorganisation Corporation which, as we know, is about to be set up by the Government, provided that it is not used as a sort of backdoor method of getting Governmental control over private enterprise, may well sometimes be able to act as a catalyst to bring about some of these larger-scale mergers which in my belief this country so badly needs. But important as this matter of bigness in industry is, important as it is for us to appreciate the great advantages, the great economic advantages, of scale, I think that more important are the restrictive practices to which the noble Lord. Lord Byers, referred in his opening speech.

The fact is that because of these restrictive practices British industry is really operating as if one hand were tied behind its back. These are practices which prevent, and it is notorious that they prevent, the full, competitive and efficient use of the manpower we possess. I do not for a moment say that it would not be possible for many employers to make better use of the manpower they have. I do not say for a moment that industry as a whole has reached anything like maximum efficiency even with the existing trade union rules and practices under which it has to operate. I agree that there is much that employers in industry could do to improve the existing situation. But, my Lords, while this is true and whilst it is true also that restrictive practices exist on both sides of industry, there really is, when one comes down to bedrock, a very basic difference between the two sides.

I agree that there are restrictive practices on the employers' side, just as there are on the trade union side. Nor are the trade unions alone to blame for the restrictive practices on their side. The continuance of some of them is, as I am quite sure, in many cases due to downright incompetence or sheer timidity on the part of the employers concerned. But there does remain this great difference. On the employers' side for some years now restrictive practices have been declared to be illegal by Statute. And quite rightly so. The result of that has been that in the vast majority of cases they have been abandoned. No doubt some continue—more or less secretly—to exist. That is a matter which I deplore.

But the Board of Trade, the Monopolies Commission and its Registrar, the Restrictive Trade Practices Court and its Registrar, indeed all the forces of the law are there to act as watchdogs to root out any remaining practices of a restrictive nature which may exist on the employers' side. There are no such watchdogs available on the trade union side. What is mainly—I do not say only but mainly—holding back our production, what is putting this country almost at the bottom of the league table in production per head among the industrialised countries of the world, what is keeping our unit costs at too high a figure to compete in the markets of the world, is the prevalence of restrictive practices on the labour side and perhaps, or so I think, to a much lesser extent the indiscipline which exists in carrying out procedural and other agreements.

As I have said, I am far from blaming the trade union leaders or the members of trade unions only for this state of affairs. As the noble Lord, Lord Shepherd, quite properly emphasised, the proper use of manpower is a function of management. Sometimes for reasons of complacency, sometimes for reasons of weakness, it is not always properly discharged. But we really must not exaggerate this suggestion that there is a great lack of management planning in manpower requirements. Certainly all managements of which I have knowledge do their best to attempt such forward planning as they can. Of coure, the assessment of manpower requirements in the future, and the cost of likely manpower requirements in the future, is an essential and basic part of every profit forecast which any company makes; and every company makes a profit forecast, often for a number of years ahead.

But one has to add this. How can any serious planning be attempted without the fullest co-operation with the trade unions and without the knowledge in advance of any investment that if investments are made in new types of machinery, perhaps requiring far less labour, that machinery will be used at once and with far less labour? That co-operation has not been forthcoming in the past as it should. In the absence of it managements do their best.

But perhaps there is not much advantage to be gained by trying to conduct an inquest into past causes. What I think one needs to ascertain is what are the present facts and what are the possibilities of future remedies. I ask at once whether it really is the fact, as the noble Lord, Lord Shepherd, stated, as so many others have said, and, indeed, as was indicated in the National Plan, that this country faces a grave shortage of manpower. That seems to me to put the whole matter in an entirely wrong light and to perpetuate something which is a complete myth. A great deal of study has been given to all this by many varied and independent institutions and individuals, and a great deal is known about it.

I agree with the noble Lord, Lord Byers, that it is true to say that, taking industry as a whole, we are employing to-day at least 10 per cent. more men and women than we need to employ in our existing productive activities. Those men and women, that 10 per cent., with proper organisation of industry, could be redeployed, most of them without any fresh training, into other jobs where there is a crying need for them. There is, putting it another way, a kind of concealed unemployment, for which, of course, industry is paying, of at least 2 million men and women; and that 10 per cent. figure, I believe, is an exceedingly conservative figure in this matter. If the redeployment of that 10 per cent. of men and women took place, and given the increasing use of new machinery, numerical controls automation, computers and all the rest, there would be ample manpower in this country, not only for our manufacturing industries, our productive industries, but also for the distribution and service industries, whose growth is, of course, a mark, and a proper mark, of a prosperous and progressive society.

One is always tempted to argue from one's own personal experience. I shall try not to draw too many general conclusions from particular examples. One industry which has not been mentioned, and which was until recently, I think, probably the worst offender in this field, is the print- ing industry. Some years ago a Royal Commission investigated its activities. It still remains a bad industry in this respect, but perhaps now not so untypical of industry generally. The Royal Commission, after hearing a vast amount of evidence, after getting the advice of management consultants and going to see for themselves, reached the firm, clear and unanimous conclusion that the newspaper printing industry was employing at least one-third too many people, and that this one-third could be dispensed with. One firm with a far-sighted and a firm management, that of the Daily Mirror,in time succeeded in doing just that: they dispensed with one-third of the employees that they had, and with the remainder they produced a significantly greater number of newspapers than they had ever produced before. Other employers were either not so tough or not so successful.

A few months ago we had the Report of the Prices and Incomes Board on the Printing Industry pointing out exactly the same restrictive practices that had been exposed by the Royal Commission three years before. Many of them were grotesque, and most of them will be familiar to your Lordships, but one, the overmanning of machines or the slow running of machines, is, I think, to be found almost throughout British industry to-day. In one concern with which I am connected the unions insist that each one of a particular class of machine which we have must be operated by a single male operator. In the United States, in an associated company, two similar machines are operated by one girl; and so easily does this one girl operate two machines that it is possible to take coffee breaks and tea breaks in rotation; when one girl goes out the remaining girls look after her two additional machines.

In another concern there is a machine which has a little button on it. You turn the button and the unit output per hour goes up from 70 to 90. There is no possible difficulty about it: it is just a question of turning the button. But the trade union concerned refuses to allow that button to be turned unless they are paid a clearly unjustifiable and, indeed, exorbitant increase in wages. So the button remains unturned and the machine does not function to its full and proper capacity.

One could multiply these examples indefinitely. One could deal with the steel industry, to which the noble Lord, Lord Byers, referred, and the shipbuilding industry. Almost every major industry in this country provides examples of machinery overmanned or underemployed, and very often both. One could refer to the racket—it is a racket, and a dishonest racket—of overtime. One could refer to the absurd apprenticeship practices under which in some crafts newcomers have to spend five years learning something which any intelligent boy scout could learn in five weeks. You can produce a doctor in five years; you can produce an air pilot in a fraction of that time.

It can be all summed up, I think, by saying that in our manufacturing industries it takes three British workmen to produce what one workman produces in the United States of America. Allow something for better machinery, allow something for more automation and more up-to-date plant, but still that 10 per cent. of concealed unemployment remains a modest figure. I might quote to your Lordships how this was summed up in a newspaper which notoriously supports the Labour Party. I am referring to the same paper that I mentioned before, the Daily Mirror. It said: Allowing for the rough edges and statistical incompatibles, who can deny that the showing of our nation against those foreign competitors is appalling? How can this appalling state of affairs be put right? I do not myself think that it can be done by taxation, however ingenious, and I doubt whether the selective employment tax can really have been intended to produce any particular result in this field at all. As has been pointed out, this tax will actually subsidise the manufacturing side of industry, which is, of course, the very side on which manpower is being inefficiently used and in which the great over-employment of labour is taking place. A tax premium on production may be positively harmful. What is needed is a tax premium on productivity, which is a very different thing.

I again go back to this courageous Left Wing organ to which I have referred. In their series of articles—and one must say they were a very factual and, at the same time, courageous series of articles—they warned the trade unions, and warned them plainly, that unless there was real co-operation in this field there would have to be legislation. Certainly it would not be beyond the wit of man, I suppose, to devise enforceable and practicable legislation to deal with some of these matters. But I hope it will not be required.

This old fear that the use of machines will cause permanent unemployment is something which dies very hard. It led to the machine wreckers in the early stages of the Industrial Revolution; it led to the consolidation of these restrictive practices at the time of mass unemployment in the 'thirties. But it was nonsense then and, as the noble Lord, Lord Shepherd, has so well said, it is nonsense to-day. What we must do is to try to convince the workers in industry not, as I think—and here again I agree with what was said by the noble Lord, Lord Byers—by long-drawn out negotiations at the national level, at the top of industry, remote from the places where these restrictive practices actually exist, but on each shop floor, with the branch trade union officials, with the shop stewards, with the men themselves demonstrating to the men on their own shop floor how in that particular shop the removal of these restrictive practices, these demarcation lines, and all the rest of it, will lead to the improvement of their own prospects.

This would show the men how the ultimate objective of all this is not merely to get this country out of the red into the black again, but that in our society the machine will work harder, will work all round the clock so as to earn interest on the capital, and that the operatives will work shorter hours and will gain more money for what they do. It is too early yet to form any judgment about what is going on in the Fairfield Shipyard, but it may well be that the experiment which is presently being conducted there will provide a dramatic demonstration of what can be done when understanding and goodwill on both sides are brought to bear on this matter.

I conclude by observing that in recent months, particularly in the last few days, we have heard a great many speeches from economic Ministers and from their shadow opposite numbers, and from other people, discussing our difficulties often in language quite incomprehensible to the ordinary man in the street. But in two recent speeches the Prime Minister, in two succinct and courageous sentences, put the whole of this matter in language which all of us ought to be able to understand. In the first, he sought, perhaps, to reintroduce to this country and to all of us, whether with management or on the shop floor, the habit which, I am afraid, had long since fallen into desuetude: "Give a good day's work for a good day's pay," he said. In the second sentence, in a speech just before the Budget, he admonished one of the greatest of our trade unions by saying: "Let the Rule Book be put in the museum." Those brave words, if—and I underline if—they were translated into action, would quickly achieve far more than any Budget, however ingenious, can possibly hope to do.

5.26 p.m.

THE LORD BISHOP OF LEICESTER

My Lords, your Lordships will not expect very profound wisdom or detailed knowledge on this highly technical subject to come from these Benches, and the speeches that have immediately preceded this one are particularly difficult to follow. But on the principle that nothing that is human is alien to us, I will venture to inflict upon your Lordships a few considerations.

The first is to ask a question which, I am afraid, may stamp me in all parts of the House as an economic heretic, but I ask myself whether we are developing a kind of neurosis in our country by assuming that regular and uninterrupted growth in production at all times is either feasible or possible. Of course, we all know that we must have increases of production, both to meet the social needs of our own nation and also to meet many commitments in other countries, but I think we and our people need to remember sometimes that there are other forms of improving the standard of living than just drawing on the general rise of production and prosperity in the country as a whole. There is, for instance, the natural and almost normal rise, as maturity and manhood follow youth and immaturity, and there are the special opportunities that come through the exercise of special gifts and enterprise.

However, if we look at human individual development—I know it is not a perfect analogy—it is very unusual for normal, personal development of powers and prosperity to go on uninterruptedly through life. There are phases of much greater increase in power and prosperity, and there are phases where everything is moving at a much smoother rate. There are steep assents, and there are plateaux. I think it might help our country if we relaxed a little the idea that you can always keep going at exactly the same rate of advance. I think we need to remember that the quality of life that is lived need not depend entirely upon the outward material circumstances in which it is lived, and it might help our people to remember that occasionally.

Then there comes the impact of the new selective employment tax, about which should like to say just a word, not of any political character. I found myself thinking that it was an unfortunate division that we have been contemplating ever since this tax was announced—the division between manufacturing and service industries. It is an unhappy division. Nobody for one moment thinks that manufacturing is not itself providing one of the most valuable services to the community, to the people who buy the goods as well as the people who work in firms, but by taking out a number of industries, calling them" service industries "and then taxing them as a particular class rather suggests that service industries have something of the nature of a luxury or an indulgence about them. We know that cannot possibly be intended, for many of these services are absolutely essential even to the processes of manufacturing, and I think the general effect in the minds of the people is a little unfortunate. We must not run the risk of letting the word "service" become a dirty word. Service is absolutely essential throughout the whole range of our community life.

I cannot myself think that this tax is likely to do very much in improving the supply of labour to the industries where it is specially needed. In the Churches, of course, we are thinking a good deal about the effect upon charities, and if the effect is as we fear at the moment, that there will have to be a considerable reduction in the staff of many of these charities, there will be a very curious army of recruits lining up for industry. There will be a number of "Mrs. Mops", Salvation Army lasses, matrons from Dr. Barnardo's Homes, old-age pensioner gardeners who can no longer be maintained, and I think it will be a long time before that kind of transfer is of the slightest value to the industrial world.

I should like to say a word about the place in all this of appeals to patriotism and loyalty. We were told, I am sure rightly, by the noble Lord, Lord Byers, that exhortation does not do very much. I am reluctantly coming to that conclusion, although a professional preacher myself. The Minister of Labour visited my diocese recently. I do not suppose he knew it was my diocese, but he was actually addressing a May Day rally in Loughborough, which one of the vigorous industrial towns in Leicester-shire, and there he made a typical appeal on a basis of patriotism, which of course one would naturally want to echo. He said: Surely this country has not reached a stage where we are unable to give, in terms of patriotism, those voluntary disciplines that will enable us to get out of our economic problems. I suppose patriotism' and 'loyalty' and 'honesty' are words which. when used so often, occasion the cynical and the contemptuous remark. I am old-fashioned enough to believe that they are as necessary now as ever in our history. Of course, one agrees with that, but I am afraid a hard-headed look at the situation suggests that appeals of that kind no longer have very much effect in the world of industry.

It seems very important to me, from the amateur angle, that the only cases where there is any clear improvement or alteration in the situation in industry is where there is some new plan in which the employers and the employed have both co-operated to bring it into existence, and where there are definite advantages for both sides in the scheme. We have heard of some of these from the noble Lord, Lord Byers, in his opening speech. I was going to mention a similar one at Milford Haven, the scheme in relation to the Esso refinery there. There was an interesting account of it, which I have no doubt many of your Lordships saw, in the Economist of November 19 last year, entitled "Practical Productivity".

This was one of the schemes where a firm agreement was given that almost all the craftsmen would be trained to do as many other things besides their original craft as was possible. This had the effect that men were able to turn from one job to another according to the need at the time. One of the principles was that there was to be no overtime worked at all under normal conditions. But then we come to the difficulties. The firm had to pay a rather high price for this great change in the situation, and had to increase the basic rate, as I understand it, by something like 20 per cent. If I have worked out the figures correctly, that basic rate now stands at £22 a week. I do not know whether that is a very high figure, but if one imagines a large number of firms moving up to that same level one begins to wonder how long industry will be able to produce goods at an economic price if it has to pay like that at the start of one of these arrangements. But here was at least one scheme where a new situation had been brought into effect, and I think that is far more valuable than any kind of exhortation or appeal.

Before I sit down I would echo the words of the noble and learned Lord, Lord Shawcross, in what he was saying about the use of language. I think we underrate the enormous harm done by the use of long, abstract words when we are trying to put across these matters to the ordinary members of our community. Many of these words have now become so familiar to us that we use them almost as though they were concrete terms and monosyllables. I am referring to words such as "productivity". As soon as you turn an idea into an abstract phrase of that sort you reduce the evocative power of it when it is used for those who are not used to that kind of language. Therefore I would echo entirely what the noble Lord, Lord Shawcross, said about the value of clear and concrete invitations and challenges to those whom we have to approach in these matters.

5.37 p.m.

LORD MCCORQUODALE OF NEWTON

My Lords, if it does not sound impertinent, I should like to say how much I have enjoyed the breath of fresh air and common sense which has been brought into this debate by the right reverend Prelate. I am sure we have very much enjoyed it. We are all indebted to the noble Lord, Lord Byers, for introducing the debate, and I have to apologise to him in advance, and also to the noble Lord, Lord Winterbottom, for the fact that, owing to a long-standing engagement, I may not be able to see the whole debate out if it runs very late. I hope that they will forgive me.

I should like to say one thing to the noble Lord, Lord Drumalbyn—I see he is not here at the moment. He quoted some figures that I cannot make out at all. He said there were five times as many office or service workers in this country, compared to manufacturing elements, as in America. I do not think he has his figures right. Actually, out of a total employment force in America, of men and women, 60 per cent. are used in the service industries, whereas in Britain only 48 per cent. are used in service industries, and in America only 40 per cent. are used in manufacturing while in Britain 52 per cent. are in manufacturing. Those appear to me to be rather different figures.

I would say also how very much I agree with the words the noble Lord, Lord Drumalbyn, used about the sanctity of agreements, once entered into, between management and the men. I was taught my industrial relations by no less a personage than my chief, Ernest Bevin, during the war, and Ernest Bevin's great instructions to everyone with whom he came into contact in the industrial world were: "If you make an agreement, stick to it." And it was his proud boast that in all his industrial life he had never made an agreement which he had been unable not only to keep himself but to make his men keep also. If we could get back to that position, I believe that a very great number of our industrial difficulties would immediately be solved.

To get to the subject of the debate (I apologise to the noble Lord, Lord Byers; I am afraid that I may have to leave before the end) we are all extremely grateful to the noble Lord, Lord Byers, for raising this vital subject at this time. The National Plan said some very wise words, if only in generalities, about the manpower in the country. I think it has been stated that the position at the moment is that there are some 435,000 notified vacancies and only 125,000 employable persons without a job who might fill them—and a great number of those are merely moving from job to job. The Plan suggests that this short- age is going to continue and that by 1970 we shall still be 200,000 or 400,000 short. Perhaps I may quote what The National Plan says on page 10, paragraphs 47 and 48: Britain's place in the world is going to rely increasingly on her technological skill. We cannot afford to have people working well below their capacities because of inadequate training and skill. The Industrial Inquiry revealed the rapidly growing demand for skills of many types. … The Industrial Inquiry also revealed the need for large movements of labour between industries. It is on those two items that I want to say a few words, and especially the first: training for skills. It is skilled manpower that we are most grievously short of in industry, and with modern technology waiting to be used, advance technology in all types of industry, more highly trained manpower becomes ever more the necessity.

I was privileged to be the first Chairman of the Industrial Training Council which trade unions and employers set up about 1957–58 to consider these matters, and its task at that time was to endeavour to persuade industry, on both sides, to make places for, and accept more apprentices for, skills, especially as "the bulge" period was developing and boys and girls were coming out of their schools. We were moderately successful in that task. Sir George Lothian, a great trade union leader, was Vice-Chairman and followed me. The noble Lord, Lord Williamson, was also a member. I think we made some impact.

We also endeavoured, so far as we could, to impress upon all the then very novel idea that everybody—not only apprentices; not only skilled labour, but every type of labour and management throughout industry—would be better for some training. I think we were the forerunners of the present system of training boards and the National Training Council and all the paraphernalia which was set up in the last months of the Conservative Government and, I am glad to say, has been carried on and intensified under this Government. I regard the setting up and work of the training boards throughout industry as possibly the most vital step we can take to deal with our manpower shortage. I would urge the Government to let nothing impede them in urging forward this matter of training, training for skills, and encouraging more and more and better and better training boards in the different industries.

But training and education go hand in hand, and we cannot have just training or just education; for it seems to me that in this connection education has a vital task: that of dispelling the Luddite fears of unemployment among the young which at present underlie the restrictive practices we hear so much about. This is largely the task of education, and I hope that our educational system will be able to face up to that problem. We need to give the opportunity of a skilled job to everyone who wishes for it and who is able to manage it. I trust that the Government will speed up, so far as practicable, the work now proceeding on the training front of industry, training at all levels—for management needs training just as much as an operative.

One of the objects of these training boards should be, as the noble Lord, Lord Shawcross, said, to cut down the abnormally and quite unnecessarily long periods of apprenticeship in many industries. I would say that industry wants on the shop floor boys and girls who have sensibly stopped on at school till 16 or 17 years of age. If, after that long period at school, they then have to take on apprenticeship running five or more years, they simply will not come to the shop floor: they will look for other employment. I should like to see the years spent at school after the age of 15 or 16, or whatever the age is, count for apprenticeship, and I want to see that everybody who comes into industry should at least be trained and a journeyman by the time he is 21.

If I may digress for a moment, I am certainly not against grammar schools, but one of the things we have been suffering from is the fact of the grammar schools in this country. In the old days, among the apprentices coming into a works there would always be perhaps 10 per cent. who were ambitious, able, anxious to get on; management material, able to rise to supervisor and foreman and works foreman, and then to manager and director. But these boys and girls, owing to the 11-plus examinations, have largely been creamed off in the last few years into the grammar schools. Then the grammar schools encourage them to stay on until they are 16 or 17, and to apply for scholarships—quite rightly—and have not encouraged them to go into industry. And even when they have gone into industry there is the obstacle of the five-years apprenticeship. Consequently, we have lacked on the shop floor quite a number of boys who have gone into black-coated employment, or other possibly valuable employment, when it might have been much better, and much more profitable for themselves, to come to the shop floor and rise through the ranks to the top echelon in industry. I hope that, by going in for comprehensive schools, we shall get more of these young men.

But the fault lies chiefly not in the schools but with industry, for having this long period of apprenticeship. That is all I wish to say about training, but it is of vital importance and there is much more I could say. I hope that at some time one of your Lordships will put down a Motion on training, so that we may have a full day's discussion on that subject. I believe that it would be most valuable.

The National Plan went on to say that the other leg of the two legs in this shortage of manpower was mobility of manpower. I should like to quote what was said about this matter on page 5 of The National Plan: The inquiry revealed the need for large movements of labour, with three major sectors —agriculture, mining and inland transport—requiring some 400,000 less workers; other industries, including aircraft, textiles, clothing and footwear, 200,000 less; while other sectors were estimated to require an extra 1,400,000 workers, the major claimants being mechanical and electrical engineering, construction, public administration, health, education and other services. I want to say just a word or two about that. Here is The National Plan saying what the nation requires and, let us face up to it, some people have tried to make fun of this, and even of of the term "National Plan" when it first came up. But it was a most admirable document for industry, and I am against those in industry who have made fun of it.

However, that is what The National Plan says. If it is so—and presumably, the Government believe it to be so, otherwise they would not have written it down—what an opportunity there was to do something about it in the Budget! The Chancellor thought he would do something about it in the Budget, and he thought of the selective employment tax. But it would seem to me, and to many others, that the Chancellor has gone out of his way to sabotage what the Plan said instead of working towards it.

Let me, if I may, just analyse this most important paragraph 20 of The National Plan. The nation requires some 400,000 less workers in agriculture, mining and inland transport. We do not quite know how agriculture is going to come out. It is a bit muddling. I believe they are going to be penalised and then be given some money back through the Annual Price Review—and most farmers know what that means. As to inland transport, one understands that they are going to have a lot taken away from them and then, in about six months' time, have just the same amount given back to them. Mining, which has got to give up all these men, is going to be bribed to keep on as many men as possible. This is just the opposite to what the Plan says ought to be done.

We come to the other sectors. Other industries, including aircraft, textiles, clothing and footwear should give up 200,000 workers. But the Chancellor bribes those people to keep on their workers. Firms in the sector which keep on their workers will get 7s. 6d. or 15s. a week, or whatever it may be, for each of them. The National Plan says that people should come out of these industries. The Chancellor is doing exactly the opposite to what The National Plan says. But then we go on further. One of the other sectors which require these extra people is engineering. That is quite all right. They want 285,000 men over the five years covered by the Plan, and they get the bribe, if I may so call it. But construction is going to have to pay. They are going to be penalised when they ought to have more people. I suppose that public administration is going to be all-square. Probably health and education are going to be all-square so far as the work is national; but anything of a voluntary character—the independent schools and voluntary hospitals and the like—is going to be penalised. The other services are all going to be penalised. Yet The National Plan says that the other major claimants require—I emphasise the word "require"—over 1,000,000 more men in the next five years. These are construction, public administration, health and other services. This is an extraordinary thing. It is a topsy-turvy idea that. When we need fewer men in the national interest, the Government bribe you to keep those you have. But when we need more in the national interest, the Government will do their best to penalise you for keeping them. It really seems to me, in the famous words of Mr. Neville Chamberlain, to be "midsummer madness".

It was asked from the Front Bench on the other side what would be done. It seems, at any rate to the Back Benchers, that if the Government really wanted the money it would be better to put on a universal employment tax of, say, 3s. or 4s. a week, which everybody would be willing to pay in the national interest. But this selective scheme, and these bribes, are surely not what are wanted. I would hope that the Chancellor will look at the whole position again.

There is just one other thing I want to say about it, because I think it is important. I happened to be listening to the radio at a quarter past six on Monday evening when I had come back from the office. I was listening to the local news. They were talking about strikes at Ford's and at Vauxhall's, and the spokesman for the men who are on strike, or threatening to go on strike about whether they would get 3d. an hour more, was asked by the B.B.C. commentator whether they thought that the firm could afford the extra £1½ million which it would cost them if they got their 3d. an hour and could sell their goods overseas; and he replied, "The employers can well afford it from what they are going to get in extra money out of the new tax scheme of the Minister." They are not going to get that until January or February of next year. Surely what the Chancellor has done is to issue an open invitation to the trade unions to say that if that money is going to be paid to the employers they are going to get it. I should believe the same myself if I were a good trade union leader. So much in respect of manpower tax, except that I hope that, if your Lordships have not already done so, you will spare a little time to look atThe Timesto-day and read Sir Geoffrey Crowther's letter on the subject. I am not going to quote it, but it is a little masterpiece.

Coming back to more serious things, I believe that what is needed, what we have to do, is to persevere in negotiations, both at national and at local level, between the employers and the unions, and not to bring down great weapons from Heaven, or wherever it may be, but to plot and endeavour to adjust the old ratios of craft and non-craft workmen; to adjust the manning of machines; to deal with the demarcation of jobs, and to negotiate about what is possibly the worst thing of the lot, which is the holding back of the production rate of men to that of the slowest worker or the slowest unit in the shop.

To do this will, in my belief, necessitate educating everyone to realise that discriminate and efficient use of manpower is greatly in everybody's interest; that unemployment is a thing of the past and, if we do become efficient, will never again recur; and that the standard of life of all the people in this country, and especially of the operatives, depends upon the success of this operation. If we can educate the people to recognise this, they will not be inclined to chase after the Jack Dashes and the other professional agitators who are always to be found in every large industrial establishment. If we can give them proper training, I believe a good deal may be done to solve these problems.

I was going to sit down at this point, but Lord Shawcross in his remarks (I am sorry he is not here at the moment) took up a question of the industry in which I have been engaged all my life, that of printing; and I cannot let him get away with all his remarks and let down my trade and industry. We have been much publicised—especially the newspaper side of the industry, of which I do not have any personal active experience—and have been criticised for "featherbedding", over-manning and all sorts of industrial vices. We have lately been investigated ad nauseam. We had the Royal Commission on the Press; we had an excellent little investigation by the Productivity, Prices and Incomes Board —and may I say, in passing, that I wish people would not leave out the word "Productivity"; I remember the noble Lord, Lord Byers, saying that it should be called the Productivity Council, and not the Prices and Incomes Council. We have a joint Manpower Commission, which we set up eighteen months ago, which was praised by the Productivity Council, and at last have an independent chairman. We have recently set up a "little Neddy", on which I have the honour to serve. Now, on top of all this, we have a wide inquiry by the Ministry of Labour.

Your Lordships will see that it is not for lack of advice from outside, and examination of what we do, that we have not yet solved all our problems; but we have some experience of these methods. In general, I do not think our trade is worse than any other. We are endeavouring to see that it is going to be better than a lot of others. Our training schemes are well ahead of many, and are being rapidly improved; and I hope that others will follow. We hope to have our Training Board running next year. We have for some time had an industry management ratio scheme, such as Lord Byers talked about, and we have consultation with our friends the printers on the continent to compare our output with theirs.

The printing trade, like so many other trades, is at the moment in the middle of technological revolution. This must mean —and we have to realise it—that the men's confidence in the future is bound to be somewhat shaken. Compositors, naturally, get rather worried when they hear the mostly wild, inaccurate stories about the wonders claimed for computer type-setting, and are anxious about what is going to happen. Understanding, education and training, and a patient and careful dealing with the relatively small frictions which so rapidly build up if they are not dealt with—these are the things that must be attended to. There is a whole lot to be done, but I believe that we are in an industry which is making progress, and really good progress, with our problems.

If I may express an opinion about industry as a whole in this country—because we are fond of running things down in this country; it is an unfortunate trait—I would say that I am quite sure that basically our industry is sound. Do not let us decry it, or run it down too much. This does not do any good for us at home, and it does a great deal of harm to our reputation abroad. While criticising—and criticism is necessary—I would urge that we should send a message of encouragement to industry, in spite of the Chancellor of the Exchequer, to say that we believe that they are, and will continue to be, on the whole good servants of this country.

6.4 p.m.

LORD SAINSBURY

My Lords, this Motion is certainly very topical, and I should like to congratulate the noble Lord, Lord Byers, on his fine sense of timing. I wish to concentrate my remarks on one aspect of the manpower problem —that related to the distributive trades, with which, as your Lordships know, I am closely associated. According to the Central Statistical Office, at the beginning of the year nearly 3 million people, over 13 per cent. of the total labour force, were employed in the distributive trades, a very large number indeed. But, as was so truly pointed out in The Times leader of last Wednesday to which the noble Lord, Lord Shawcross, has already referred: What has to be recognised is that every major industrial country reaches a point where its standard of living is reflected in the expansion in services of one kind or another. However, despite the rapid increase in the demand for services referred to by The Times, distribution has not increased its labour force as rapidly as other sectors of the service industries. This is borne out by official statistics. According to Annex I of Command Paper 2986 on the selective employment tax, between the years 1960 and 1965 distribution increased its labour force by only 5.8 per cent., compared with an increase of 15.9 per cent. in financial, professional and scientific service, hotels, catering and miscellaneous services.

May I suggest that the reason for this relatively slow increase in employment in the distributive sector of the economy is that, in conditions of full employment, distribution has found it impossible to recruit all the staff that it requires? Thus, distribution, and retailing in particular, has faced serious manpower shortages for the last few years. This has had some beneficial effects. For example, it gave a powerful stimulus to the development of labour-saving techniques, such as self-service methods and pre-packing.

There have also been some very significant changes in the composition of man- power in distribution in the fifteen years between 1951 and 1966. The number of female employees rose by 58 per cent., while the increase in male workers was only 24 per cent. In the same period the number of part-time workers grew rapidly, and it is estimated that nearly one in three employed in retail distribution is now on a part-time basis. The problem is that, despite all these developments, there is still a severe staff shortage in distribution, and in view of the general manpower gap forecast by the National Plan for 1970 it is likely that the shortage will continue. Therefore, the Chancellor of the Exchequer will be disappointed if he expects a positive transfer of labour from distribution to manufacturing as a result of his new selective employment tax.

The task before the distributive trades, therefore, is to try to make its existing labour force more productive and tap reserves of labour, such as married women who can work only part-time near their home, many of whom for domestic reasons would be unlikely to work in factories. Incidentally, there is a disincentive in the new tax, as it now stands, to the employment of part-timers. Increased labour productivity in retailing involves both training and more capital investment. In spite of some notable exceptions there has been very little systematic training, and, regrettably, some sections of retailing are very much opposed to the application to distribution of the Industrial Training Act. This is a point of view with which I personally profoundly disagree. The difficulties are obvious, but the need to overcome them is equally obvious.

The rapid development of new techniques in retailing has made training more important than ever before, in an industry increasingly reliant on part-time workers; and for the application of highly-sophisticated techniques it is essential to train a core of highly-qualified executives and managers. These must be given the opportunity to learn not only about the art of selling, but also about the art of personnel management, scientific stock control, store layout and administration, to name only a few of the requirements.

The Education Act of 1944, with which the name of the noble Lord, Lord Butler of Saffron Walden, will always be associated, introduced the conception of day release for young people in employment. I hope that when the training board for distribution is set up, there will be a vast increase in the number of those attending day release courses as well as in places available to those wishing to receive training on a higher level.

The other important condition of increasing productivity in distribution is investment. Despite the high level of capital formation in retailing in the past few years, the increasing complexity of new techniques means that investment will have to be maintained at a high level if distribution is to keep up with the new developments. Although I appreciate the reasons for discrimination in the new investment grants, I am bound to say that this will have an adverse effect on the distributive trades, and I would ask the Government to look at this matter again. It has been estimated that an investment grant of 20 per cent. for distribution would cost the Treasury some £30 million, as compared with the £120 million to £140 million that they will be receiving from retailers alone under the selective employment tax as it now stands.

The Economic Development Committee for the Distributive Trades, on which I have the honour to serve, recognised from the start that its most important objective was to increase the efficiency of manpower by encouraging training and investment. On the basis of my personal experience, I am convinced that it has done extremely useful work in bringing together employers, trade unionists and members of Government Departments, for the joint consideration of all the problems affecting this sector of the economy. It is only fair to say, however, that certain recent Government actions, such as the withdrawal of the investment allowances and the imposition of the selective employment tax, have had a disheartening effect on most members of the Committee. They feel that the role of distribution in a modern mass-production economy is not fully appreciated in Government circles, and that their efforts to encourage the more efficient use of manpower are not helped, for example, by the withdrawal of the investment allowances.

6.15 p.m.

LORD BALFOUR OF INCHRYE

My Lords, I share other noble Lords' gratitude to the noble Lord, Lord Byers, for giving us the opportunity of debating this subject to-day. It seems to me that the root of the matter is well defined in a report of a conference earlier this year of the British Employers' Federation, a paragraph of which reads: Serious shortages of labour for at least ten years are predicted by the Ministry of Labour's Manpower Research Unit. National need therefore demands, on this score alone, that we should use our labour force more efficiently. If this were achieved our labour force would be adequate to support a full measure of expansion. Those are heartening words, coupled with one point which I would ask your Lordships to bear in mind whenever we discuss questions which affect the economy of this country: that is, the bonanza which has come from heaven in the way of the North Sea gas development, which may well alter the whole economic picture of this country, which may well alter our Middle East and Far East strategy, and save us some of those millions that the noble Lord, Lord Shawcross, was saying we have at present so wisely to spend.

For the more efficient use of manpower the Government have introduced the selective employment tax. I must say that it has found very few friends in your Lordships' House to-day. The only point of the noble Lord, Lord Shawcross, at issue between us was when he expressed doubts that the purpose of this tax was the redeployment of manpower. It is true that there are several aims and purposes in the mind of the Government, but one purpose has been clearly stated by more than one Cabinet Minister. It is that purpose of altering our manpower balance. I quote Mr. Brown who said: We have framed these proposals with the manpower shortage and the need to obtain much greater productivity very much in mind. That being so, the Government can have no complaint when some noble Lords concentrate their remarks upon this tax and its effect, and I think we are entirely right this afternoon in examining how far this tax will go towards meeting the Government's aims.

The noble Lord, Lord Shepherd, said that he hoped there would be constructive criticism. I hope that was not a smokescreen for evasion of criticism, which is so easy to make in a destructive way and so difficult to make in a constructive way when one is faced with such a topsy-turvy affair as this tax. The Government's hope is that they will discourage labour where they think it should not be, and encourage labour where they think it should be, Both the noble Lord, Lord Byers, and the noble Lord, Lord Shepherd, rejected entirely, as I think we all do, direction of labour as a policy. But, surely, this is an attempt by the Government at the economic direction of labour in a community where physical direction would be entirely repugnant in times of peace.

The tax can be criticised on a wide landscape of anomaly and absurdity, and various instances have been given to-day. Let me take just one—the absurdity of subsidising to the extent of 7s. a week the employment of a gossip writer in a London picture paper, while taxing to the extent of £65 a year the employer of any person engaged in earning foreign currency in the "invisibles" of banking and insurance, upon which our balanceof-payments so much depends. I will not weary your Lordships by giving more instances of the absurdities which can be brought forward, but I do ask the Government: how is this really going to increase our national efficiency in the use of manpower?

Mr. Brown defends these absurdities by talking of "a measure of rough justice". I confess that those works, "rough justice", shocked me as a Parliamentarian. Surely Parliament's duty has always been, and is to-day, to see that real and not rough justice, true and not phoney justice, is dispensed to each individual citizen. Every individual constituent of all the Members of another place has a right to expect his representative to obtain for him fair and honest treatment, and every citizen is entitled to know how he stands in relation to the law. If he cannot get satisfaction from the Executive, he is entitled to go to the Judiciary. Really, to try to justify the absurdities by talking about "rough justice" is, I submit, a constitutional insult to Parliament; and if this crude doctrine—I repeat, this crude doctrine—is to be accepted by the Government and the Government's supporters, and railroaded through Parliament by use of a docile majority, I say it will be the worst day's work for Parliamentary government and democratic rights for many a day.

In my final word on this tax I will try to meet the wish of the noble Lord, Lord Shepherd, for constructive criticism by dealing with ways to remedy some of the weaknesses. My first constructive suggestion is that we should encourage, not discourage, in services of all kinds the use of those men over 65 and those women over 60 who have qualified for the contributory pension. If the Government at once announced an exemption of those people from the tax—it would not be administratively difficult—they might attract a great concentration of these older people. We should extend the exemption to those who are disabled or partially disabled, and we may get some releases. My second constructive suggestion is this. The noble Lord, Lord Shepherd, gave several figures of great increases in the numbers employed in what we term the service industries. Let the Government set an example by endeavouring to reduce the ever-growing Whitehall staffs, which increased by some 10,000 last year and are likely to go up still more. These are two possible ways in which the measure might be improved.

My last point is this. We have only a limited field of action, for in a highly competitive world it is quite wrong to think that Parliament can run industry. The noble Lord, Lord Shepherd, has rightly declared that manpower is essentially management's task, and I think we have to be careful about tendencies to lecture and heckle those who have spent their lives in management. What I believe we ought individually, as Members of your Lordships' House, to do—and the Ministers can do it even more so—is to help towards building one world in industry, not the three worlds of management, capital and labour. What we can do is to show sympathy and understanding in labour relations. My noble friend Lord McCorquodale of Newton spoke of restrictive practices. He and I were in Parliament in another place during the years of heavy unemployment, and I am quite sure that the bitterness of those years still remains in the memory of the older men in industry to-day. The lurking fear of unemployment, which all Parties admit must never come again, and which will never come again, is, I believe, the basic cause of a good deal of the trade union organisation's clinging to restrictive practices and its resistance to new methods and new machinery.

I was fascinated to read a lecture to the British Institute of Management, by the managing director for production of the United Steel Company, about what happened when they had to revolutionise entirely their furnace work, which brought with it redundancies and changes of employment. How they did it I will not enlarge upon, except to read the final sentence of that lecture: We thought we knew our industry, we thought we knew our workpeople and we thought that they and their leaders were at least as sensible as we were—and indeed they were. It was because there were great efforts of communication between humans that the United Steel reorganisation succeeded. Human relations really depend upon communications. I serve on the board of a large nationalised corporation employing many thousands of men. One problem that always worries me is the difficulty of getting into personal contact and personal touch with so many of our men. We tend to build up a great personnel department and, alongside it, a great trade union organisation, and both of them tend to take responsibility away from the man who is running the shop. They tend to systemise relations, and you cannot systemise human relations beyond a certain degree. They depend upon individual trust, individual like and individual taste.

My Lords, I believe that a simplification of the bargaining machinery between employer and employee is a necessity if we are to obtain maximum efficiency in the use of our manpower by the introduction of new methods and the abolition of restrictive practices. I believe that by such means we can create on the part of management and of labour that brotherhood in endeavour and that comradeship in achievement which are the essential features of industry if we in this country are ever going to succeed in the tasks ahead.

6.30 p.m.

LORD WYNNE-JONES

My Lords, I should like to say a few words about the technological aspect of the manpower problem. It was not my intention to say anything at all about the selective employment tax, but a number of people, both in your Lordships' House and elsewhere, seem to have made comments about it. I must say that I have yet to read any coherent, cogent criticism of the tax. I have read criticisms, but I have seen little cogency—or, where there has been any cogency, little coherence—over the whole field of taxation. It seems to me that it is not very sensible on the one hand to criticise the tax as a blunt instrument incapable of discrimination and, on the other, to say that it is far too discriminatory. It is one thing or the other.

I suggest that the reason why people do not like the tax is that it is too flexible in its possibilities; that it is capable of being used to do many things with the economy, and those who do not like interference with the economy do not like it. But if we are to deal with the correct use of manpower in the future we must be able to discriminate; we must be able to make attempts to get manpower where it is wanted. Obviously, when one makes attempts of this sort, mistakes will also be made; but I do not think there is the slightest evidence that a mistake is about to be committed. Until we know a good deal more about the exact details, I find it rather extraordinary that people should come out with such positive assertions about the ill-effects of the tax.

However, it is not my intention to go further in that direction. Rather, I should like to call attention to the problems with which we are faced in this country with regard to manpower fromthe technological side. We have in this country a total employed manpower of approximately 25 million. This number increases, and has been increasing, by less than 1 per cent. per annum, and the rate of increase is slowing down. I do not think we always appreciate that the rate of growth is in some ways more important than the total amount one has available. One of the reasons why an economy may expand rapidly is that its manpower is expanding rapidly; and one of the reasons why in the United States they are able to do many things that we do not do is that their manpower is increasing enormously the whole time. This means they are all the time getting a large reserve of young people, and are carrying a smaller percentage of the older people, like ourselves, on the national economy.

I think this also applies to much of the development that has taken place in Europe. You will find in most of the European countries that the pool of manpower has been increasing, and that very often great credit is given to these countries for the astuteness with which they have managed the economy. I would say that it is due far more to the birth rate and to the fact that they have had this pool of manpower coming along, which has no doubt helped to get the economy moving fast. I think that we should have been in a far worse state than we are if we had not been fortunate enough to get a large number of people coming into this country. It seems to me that those who have criticised the intake of immigrants into this country have not always understood the important part this immigration has played in accelerating the development of our economy.

My Lords, the next point of concern technologically is the distribution of the manpower. At this stage I should like to refer to some of the historical background contained in a book by J. D. Bernal on The Development of Civilisation. In it the author points out that prior to the year 3000 B.C. (plus or minus a few hundred years) the world economy was essentially one of hunting. It was about this time that it began to become agricultural, and in a very short time became predominantly agricultural. The interesting thing is that this agricultural predominance lasted until almost yesterday; that is to say, for a period of nearly 5,000 years the world was essentially agricultural.

Manufacturing began to take over and very rapidly displaced agriculture, so that we have now reached the point that in the developed countries of the world the number employed in agriculture is very small and is always diminishing. We are also reaching the point—I do not think we have yet reached it—where the actual number employed in manufacturing will begin to diminish, because we are getting more and more automation and more and more technology, and so will require fewer people to produce a far greater volume of goods.

What is now happening is an enormous increase in the number of people employed in the technological field. That is why we find, in the case of the professional and scientific services (and I am taking a similar figure to that taken by my noble friend Lord Sainsbury) that the increase in their number between 1953 and 1963 in this country was 38 per cent. We now have just over 2¼ million people employed in the professional and scientific services. This is an amazing figure; it is the most rapidly developing part of the whole of our manpower. That is why the problem of training, to which my noble friend Lord Bowden referred, becomes so important. I listened to him with interest. It is always fascinating to hear a gamekeeper turned poacher. He obviously enjoyed himself. But I agree very much with what he had to say and, as a born poacher myself, I am happy to carry on with the comments he was making.

We in this country have not yet begun to approach the position obtaining in a country like America, or in a country like the U.S.S.R., in regard to the percentage of the population given higher education. I am not now referring—and I do not want to cross swords with anyone over the question—to the differentiation between university education, technical education and other forms of education. Frankly, I regard them all as one, in the sense that they are all part of higher education—that is, education continued beyond the school age. In this country we have something like 11 per cent. of the students of any particular year going on for further education, for higher education. In the United States in 1962, 43 per cent. of all Americans in their age groups went to college.

The point at which I began to disagree with the noble Lord, Lord McCorquodale of Newton, was when he said that he felt that it was a disadvantage for industry that the bright boys were no longer leaving school and going on to the shop floor, but were going on to grammar schools and higher education. I would agree with him if one thinks of the higher education as a purely academic form of education, but there is no doubt that in this country we have not too many going on for further education, but far too few. I shall not be happy until 100 per cent. of the population are going on for higher education. Not only is this their right; in my view, it is an absolute necessity for the economy of the country that we have people trained in this way. Otherwise, the whole of our industry, the whole running of society, will fail to make the advance which we want it to do in the modern age.

The Americans, of course, have not solved all the problems. Although 43 per cent. of all their youth go on to college, they are worried that only 4½per cent. of those who do go to college study physical science. As a result, they are sadly deficient; and they recognise it. Although we may say how well off the Americans are, they themselves recognise that they are sadly deficient; and this is one of the reasons why there has been, for a number of years now, the so-called "brain-drain". It is because the Americans themselves fail to produce enough people in the field of technology and physical science that they are always wanting to attract the best they can from all over the world.

Even in the field of medicine it is shattering to find that in America they are producing now 4,000 fewer doctors a year than they need to keep their medical services going. To keep up their own medical strength they depend upon recruiting doctors from all over the world; and they are very alarmed about it. Of course, the medical profession in America is an even closer trade union than in this country, and they have partly themselves to blame for having kept up restrictive practices with regard to the production of doctors. But in this connection we have to remember that the problem with which we are faced, that of producing a greater number of well-trained people, also carries with it the further problem of retaining those people when we have trained them.

My Lords, I was looking only last week at some figures in an American journal devoted to technical chemistry. It was stated in this journal that in 1964 a young Ph.D just graduated in chemistry or chemical engineering could expect to get immediately on employment a salary of 11,000 dollars a year; and that after 20 years' employment he would be getting, on average, at least 50 per cent. more than that. The rate at which these salaries are increasing led the writer of the article to state that by 1968 the mean salary on entry of a Ph.D. into industry would be 13,000 dollars. and that by 1972 it would be 15,000 dollar. Whatever sort of rate of exchange one cares to adopt, even if one takes the figure of 5 dollars to the £ (which is possibly not inaccurate if one tries to take into account the different standard of living), that still means that at £3,000 a year a young Ph.D. is paid very much more in America than here. Consequently, we are faced with this problem. It is really one of pulling ourselves up by our shoestrings. We have to produce more and better-trained technical people, and we have also got to advance our industry sufficiently rapidly to have the standard of living that will retain them.

6.45 p.m.

VISCOUNT MILLS

My Lords, I am sure that we are all greatly indebted to the noble Lord, Lord Byers for introducing a debate on a subject of such importance to our economy. It is only by using manpower efficiently that we can hope to keep down our costs in handling the materials which we have to import from abroad. It is important, if we are producing things for our own consumption, and it is essential if we are producing them for sale abroad, to keep our balance of payments right. But, my Lords, manufacturing industry is the largest user of imported materials, and I am sure that it is to this section that we should first of all look for improved efficiency in the use of manpower.

Before I deal with some of the root causes of the inefficiency to be found in manufacturing industry in the use of manpower, I should like to make one general observation. The failure of men and women to give of their best is not confined to any particular sector: it is a human failing. It may be found in the board room, in the office, in the laboratory, and on the shop floor. Nor can it be dealt with by legislation; or simply by increasing pay packets. Exhortation, which was of such great importance in time of war, does not seem to succeed here, either. I am sure that to have good conditions surrounding the work, to which the noble Lord, Lord Bowden, referred, is very important. This state of affairs usually exists where there is good leadership. If the employer is doing his job and facing his responsibilities, it should, I suggest, be easier to deal with this problem in the units of private enterprise rather than in the nationalisation of whole industries.

The noble and learned Lord, Lord Shawcross, suggested that the units of industry in private enterprise were too small, or that many of them were; and I am sure that he is right. Much of the inefficient use of manpower arises from this fact. I believe that the chief obstacle to efficiency in the use of labour in factories lies in the word "redundancy". In spite of all that the Government have done in respect of redundancy, it is still a very dirty word. In consequence, the outlook of the trade unions, and of employers, too, prevents the redeployment of labour which can be so necessary to its efficient use. Change in requirements; lack of orders; the necessity for further automation or labour-saving machinery, could all give rise to redundancy in certain sectors. But before changes can be made, management must consult the trade unions, and/or the shop stewards, to discuss the problems which can arise from redundancy.

It is rarely that agreement can be reached without much argument, without long delays and, I am sorry to say, perhaps ill-feeling. A ban on overtime is by no means uncommon, though the overtime may be required in sections completely removed from those where the redundancies have arisen. A ban on the removal of obsolete and bad machinery and the introduction of new machinery, also, often arise in connection with redundancy problems. The employer is often at fault: rather than face the troubles which may be in store for him by a declaration of redundancy, he will hang on to his labour, hoping that time will solve the problem, and, in any event, knowing that under present high taxation the Government bear a good deal of the cost.

Opposition to the introduction of labour-saving machinery is still to be found. Such opposition arises from the fear that employment may be affected, that earnings may be affected, or that less skilled labour may be required. I think that in many cases the present earnings structure is at the base of many of these questions. A system has grown up whereby the basic wage is established as only part of a man's earnings, and to that is added overtime at plus rates, and a bonus which often has no logic behind it but is simply the result of bargaining between management and men, in dealing with the introduction of labour-saving machinery, I think more regard should be had to this earnings structure than is at present the case, or it may prove fatal to the plan to introduce machinery.

I believe that, in spite of the apparent shortages of labour, there is probably surplus labour in both the manufacturing industries and the service trades. The noble Lord, Lord Shawcross, was bold enough to put it at 10 per cent. I wonder whether he was bold enough, and whether in fact it is not greater than this. If there be this surplus labour—and I believe there is—an employment tax applied to all occupations might have much to commend it, both as some restraint on the wasteful use of labour and as an additional means of revenue necessitated by the balance-of-payment troubles with which we are confronted. But we should not forget that, if it were applied to all labour, it would be much less per man, per woman, per boy, per girl than it is under the present proposals.

A lot has been said about the selective employment tax. Perhaps it is not within the scope of this debate to deal with the selective employment tax, other than as to its effect on the efficiency in the use of manpower. On its general effects, therefore, I will content myself by saying that I am fearful of the problems raised by this discrimination against the service occupations. I should have thought that they are so intermingled with productive processes as to make the whole plan impracticable. With a flourishing society, the growth of the service trades is inevitable and can be expected. If the intention, to cause the transfer of men from service occupations to manufacturing industry, can be fulfilled—and there are many reasons to doubt it—is the worker in the manufacturing industry going to be more keen and contented if he is denied or inconvenienced by the services to which he thinks he is entitled? I think that is a point that should be borne in mind.

In my view, the incentive which the selective employment tax provides, to ensure a more efficient use of labour in the service trades, if successful, has to be set off against the encouragement given to manufacturing industry to be inefficient in their use of manpower by means of the premium they are promised. The more I study the matter, my Lords, the more I doubt the extent of the experience in industry, manufacturing and services on the part of the author or authors of the selective employment tax, because it does not appear to me that it will add to efficiency in the use of manpower, but rather the reverse.

6.57 p.m.

LORD HAIRE OF WHITEABBEY

My Lords, I, too, should like to congratulate the noble Lord, Lord Byers, for introducing this debate this afternoon in his usual dynamic manner. I found myself in agreement with much of what he said, but of course I could not agree with him when he hit out so severely at the selective employment tax; though I find many of your Lordships have been tempted to follow him, including the noble Viscount who has just sat down.

There can be no doubt that the Budget of last week has given a new urgency to our debate today. Every employer is bound to challenge his use of manpower. The selective employment tax has been based on the White Paper (Cmd. 2986), which gives the basis for the argument that there is too much scarce labour going into the service industries, however one breaks them down, and there is too little going into manufacturing. The figures quoted in this White Paper have focused the position clearly. In the last five years 1,330,000 workers became available, either by new intake or displaced workers, and of that number only 10.7 per cent. went into manufacturing industry and over 80 per cent. went into services, which includes building and distribution—and, as my noble friend Lord Sainsbury has said, distribution may be a very small part. But clearly, in the light of these figures, we must divert more labour into manufacturing. It seems to me that that is the basis of the selective employment tax.

Though many of your Lordships have been most contentious about the tax, I think we must acknowledge that we need more employees in the manufacturing industries, and more, particularly, should be channelled into the export industries, in my view, this is an important point in the White Paper—the direction of labour into export industries in order to boost our exports which, as we all know, are the basis of our balance of payments at the present time. So we need to swell our export output we need to keep our delivery dates; we need to maintain quality. Therefore we need good, well-trained labour, and we must use this labour economically to maintain our competitiveness and to be priceworthy. Yet the surprising thing is that during the last few years we have often heard that manufacturers have been hoarding labour—that there was much over-employment. We have heard of workers in the distributive and agricultural trades who have been going into factories because it is said they can get better wages, and because there are better conditions. Yet these figures do not prove that case.

It seems that the selective employment tax might well solve this imbalance to some extent, and certainly without going to the extent of the only other method which I believe could be adopted to achieve it: that is, directed labour. If I may refer to London, there is certainly a great deal of imbalance in the employment of labour here. Take such a simple thing as the employment of female secretarial labour. There is a growing struggle for secretaries between the secretarial agencies and the use of temporaries, and direct employment by a firm. It is now practically impossible to get a good secretary in London without going through a secretarial agency and probably employing a girl for many weeks at a time as a temporary, paying something like £20 to £25 per week. Of course, it often helps the secretary. She has better conditions; she works from ten o'clock until five o'clock or even less; she works part-time; she has the choice of how many days a week she works, and the cost to her employer can be more than her father is getting in a craftsman's job.

This seems to me to be quite wrong in the employment of female labour. How distorted the wane scale is in London, when we consider that this girl can frequently earn as much in half a year as a full-time, directly employed, secretary can earn in a full year! But, of course, faced with the loss of a proved secretary, which one of us will not allow our arms to be twisted? Yet this cannot be an efficient use of female labour in London. We have dictaphones, copying machines and addressographs. We can have the wide use of many of the machines which are now available through the very progressive office equipment industry in this country. There is a further point. Formerly, there was a useful market for the supply of secretarial labour in the Commonwealth, but now this is restricted, unfortunately, owing to the introduction of the Commonwealth Immigrants Act, which restricts immigrants to 8,500 a year. I know of a case of a young Canadian girl, a graduate, who has been waiting for eight months to get her labour permit to work in this country, yet she would be a most efficient girl.

This leads me to my main point. To get more efficient use of labour in this country, I believe we need better management. I have no doubt about that. Management is the key to efficiency in the employment of labour in this country's industry. Many industries suffer from indifferent, untrained, inefficient management. There are far too few firms who are conscious of the need for trained personnel management, who not only plan the jobs but who build morale, get the understanding of the workers, and lay down the objectives of the firm. Many firms could well use management consultants and proper work studies in pursuing this aim.

I must now say a word about nationalised industries, because I feel that they have a responsibility to give a lead. Just because they are nationalised they must be so much better than the average. Take, for example, the Gas Board. Many of us know that the Gas Board works at a profit. It is not because it is the most efficient industry of all. I had a case in my own home not long ago, when my wife reported a defective appliance, a water heater. After several weeks an inspector turned up. Following that, after a further few weeks a fitter came along who said that it was not his job. After a further few weeks another operative came along and brought a part which turned out to be the wrong one. Several more weeks went by, and another operative brought the correct part which worked the appliance correctly for two days. I suppose the answer is that we should get a new appliance. But that is what goes on, and it is only one example. It happened in another case in my home, but I will not go into that.

There is another nationalised industry which I think the noble Lord, Lord Byers, mentioned, and that is aviation. There is quite clearly a need for streamlining this industry and for less featherbedding of it. Every one of us knows that at all our airports we are in need of an improvement in the efficiency of the manpower used. May I finally mention another semi-nationalised industry which has been much in the news of late, the British Broadcasting Corporation? I think Parkinson's Law is much in evidence in the B.B.C. It seems that the administrative tail wags the production dog in the B.B.C. With 8,000-odd on production and programme staff, excluding performers and those under programme contract, there are 2,500 engaged in administration services, and 5,750 in catering and manual services. The Overseas News Service, which is pa id for almost entirely by the Foreign Office, recently had a reorganisation which resulted in a large increase of highly-paid staff without any corresponding increase in output, and at a time when we could well cut down on our overseas output.

Now I turn to female labour. It is not generally appreciated that there are working in this country just over 23 million fully employed men and 14½ million women. That is about three men to every two women. But women generally are not trained and not used efficiently. It is considered by manufacturers a poor investment to train women for only a few years before marriage and before a family appears. We should have retraining schemes after women have re-turned to employment, after their family has been launched or provided for, and we should make better use of part-time female labour under better shift-work schemes. Many women need to work to maintain a standard of living, and manufacturers and other employers should plan on fifteen to twenty years of work from each trained woman.

That leads me to a word about overtime. Without an income from his wife, many a man feels compelled to work overtime. Overtime can be the curse of industry in this country. I find from the figures in this month's Digest that at least one-tenth of our male employees in all industries in this country work overtime—just over 2½ million—and they do an average of 8 hours weekly. Most of these men have come to expect this overtime and they budget accordingly. Yet the Fawley experiment, which the noble Lord, Lord Byers, spoke about this afternoon, and the B.P. agreement, show that wages can be regulated to provide a decent income for the men without overtime; and the result is that there are better labour relations, there are no strikes, no demarcation problems, and inter-union agreements can be obtained.

The long-term prospects for labour in our industry are not good, as many noble Lords have mentioned. Manpower is likely to become the bottle-neck in our industry very soon. During the next ten years our manpower will increase much more slowly than in recent years, yet in the United States of America between 1953 and 1963 the working population increased twice as fast as in Great Britain, and it is estimated that during 1963 to 1973—that is, the ten years' span we are now in—it will increase four times as fast.

When one is in America one cannot fail to get the impression that in the United States labour in industry is used more efficiently than it is here. This may be due to better management, which I believe is so, or it may be due to a greater sense of job requirement, or to more disciplined work, which is partly true. But the noble Lord, Lord Byers, this afternoon mentioned that productivity in the United States of America was three times that in Great Britain, and certainly there is clearly an example in the United States for us. We can well study their methods by sending teams representing management and trade unions in this country. This might well be the fastest way to increase the efficiency in our industry which we all want and which the country certainly needs.

7.13 p.m.

BARONESS EMMET OF AMBERLEY

My Lords, I am sorry to detain you at this rather late hour, but, as you know, as a rule I am, and will be to-day, quite brief in making the points I feel have been left to me to make. I am grateful to the noble Lord, Lord Byers, for giving me the opportunity of speaking about a matter which is very close to my heart, and to the noble Lord, Lord Haire of Whiteabbey, who has given me a lead-in. I want to deal particularly with that part of the labour force in this country which is composed of women. It represents, as I think has been said, one-third of the labour force of this country. There is all the difference in economic survival between the efficient and the inefficient use of labour, and so far as the women are concerned I think a profound study should be made now of their contribution, because I do not feel that their work is either efficiently used or is as efficient as it might be if certain training schemes were available to them. I do not know whether we have any historians left in the Chamber, but it is an interesting historical fact that the emancipation of slaves and coloured people has been paralleled by and has gone on step by step with the so-called emancipation of women. I think this might make a really interesting study if somebody would take it up.

There are many problems affecting women's work, starting with education. I think everybody would concede that girls are still not treated on a par with boys. Parents and local education authorities and universities, if they are short of cash are inclined to pinch on the girls and not on the boys, and far fewer girls than boys start with a definite idea from the beginning of a professional training. This attitude was understandable in the old days, when the ultimate object of every woman was marriage. The expectation of life was much shorter, families were larger and the scope of work for women outside the home was really restricted to domestic service or nursing or teaching, all of which were at sweated labour prices. Now that marriage and child-bearing come at younger ages, children leave their homes much earlier and the years of expectation of life for women stretch out into the seventies, the eighties and the nineties, I feel that these middle and old age years should be years of personal fulfilment, whether the woman is married or not.

At the moment a professional woman contemplating marriage really faces great problems, and I want to give an illustration from my own personal experience. Some years ago I took a delegation to see a bachelor Economic Secretary in his room in the House of Commons, in good time before the setting up of the Budget. The Economic Secretary listened with great sympathy to our problems, but what really made the deepest impression was what was said by an extremely attractive and able woman consulting engineer. She said, "I am engaged to be married. My husband-to-be is a professional man earning a very reasonable income, and I have to make up my mind to one of three alternatives: I can marry and give up my job, which seems a pity because my sort of consultants are in short supply and I like my work; secondly, I can marry and go on with my work, but we must then face surtax, and after having paid out for extra labour in the house we shall both be worse off than we were before we married; or we can live in sin and enjoy both our incomes"—and this lady, fixing our bachelor Economic Secretary with a very charming smile, said, "That is what I think we are going to do."

Subsequently to this interview, the level at which surtax is paid was raised, not to help the rich, as I think some of the members of the Party opposite went round the country saying, but really just to meet this particular kind of professional case, because the idea was to encourage professional women to come back into work. I think they would do so if the basis of taxation were altered to the single tax, which was recommended by the United Nations Committee on the Status of Women as long ago as 1960. Some of us have pressed the Treasury on this matter, but it is the Treasury which is standing in the way and is encouraging an immoral way of life in consequence. I am all for having a woman at the Treasury, as a Member of our side said in the House the other day, because we might get a little sense then and we certainly should have some savings. After all, we have a woman housekeeper in every home in the country, and it might not be a bad plan to have one for the nation.

Apart from this method of taxation, which undoubtedly militates against the professional women coming back to work, the rate of pay for women really needs looking into. They are still, in too many trades, cheap labour, and the new selective employment tax has accentuated this point of view. I want to know why the noble Lord the Chief Whip for the Opposition should be rated at 7s. 6d. from the point of view of repayment, if he were employed, and I should be rated at only 3s. 9d.

LORD SHEPHERD

My Lords, I would only say to the noble Baroness that I am not the Chief Whip for the Opposition.

BARONESS EMMET OF AMBERLEY

I am sorry; the Chief Whip for the Government.

LORD SHEPHERD

But to answer the main part of the question I can only say that there is no justice.

BARONESS EMMET OF AMBER LEY

I wonder how he would feel if it were the other way round and he was rated at 3s. 9d. and I at 7s. 6d. This selective tax has been produced by a Party which, at the moment, is under pressure by the unions to bring in equal pay, and has also given a pledge in its Election Manifesto to do so. Certainly this extra tax, which will fall on anybody employing a domestic at home, will be another disincentive to professional women coming back into the market. There was a very good leter in to-day's Times which I recommend everybody to read. It says: It is particularly regrettable that the new tax should be introduced just when the Government is trying to encourage the return of married women in particular to teaching and nursing. The present rate of pay to women below the professional classes means that they cannot save for old age. I do not know whether that is why they are given their pensions earlier, or whether it is because people think they are worn out at 60; they certainly live a great deal longer than their menfolk. If they were paid at the higher rate it would allow them to save, and this would be ultimately to the great benefit of the nation.

There was a very thoughtful article in The Times on May 5 which I want to quote very shortly: It is estimated that…only one woman in 10 is receiving the rate for the job. Women are paid the same salary for doing the same work in medicine, dentistry, physiotherapy, radiography, teaching, journalism, broadcasting, architecture, and as Ministers of the Crown, Members of Parliament, salaried magistrates…civil servants and administrative, professional…workers in local government and…nationalised industries. In many other non-manual occupations, however, a woman…doing the same job as a man is paid less. The average hourly earnings at mid-1965 as published by the Ministry of Labour, were for male workers 7s. 11.5d., and for females only 4s. 0.5d. It may well be—I think it is probably true to a certain extent—that women's labour is less skilled or requires less training than men's, but until this can be established one way or another, and the position remedied where necessary, women will remain cheap labour and second-class citizens.

I believe that in this second half of of our century we need a completely new look at the status of women in our country, especially if we are going into Europe where equal pay is one of the regulations in the Treaty of Rome. I should like to see an investigation set up to go into the whole question. It would have to take into its outlook the completely changed position of married life so far as women are concerned, the population explosion, and the fact that brain and not brawn is now going to carry us through, that we have got to the age of mechanisation. I think this is one of the really important points of our time and it alters the whole position of women, because so long as brawn, or in other words physical strength from the muscular point of view, dominated the world women could not and did not want to compete. Now that every intelligence that contributes to the nation's welfare should come into its own, women have in that respect an increasing role to play.

I hope I can appeal to the Government or to the Prime Minister—who, to give him his due, though one does not agree with everything else he may have done, has seen the value of giving women a place in politics—to take the whole problem of the employment of women out of the realm of feminist wrangles, either pro or against, and examine the subject dispassionately in the interests of the nation as a whole. After all, one third of the labour force in this country must be of national and public interest. I am sure that in a small and over-crowded nation, as we are, if we are going to compete with some of the giant nations around us we must use every brain and every pair of hands we have available to the best advantage. Women have been discouraged and, metaphorically, have been sat upon for so long that they will really need every encouragement and incentive to go forward; but, given these conditions, I believe that their contribution could be enormous and of great help, especially at the present time.

7.26 p.m.

LORD SIEFF

My Lords, I should like to join in the congratulations to the noble Lord, Lord Byers, for his speech this afternoon on the use of manpower. I believe that we have a lot of manpower still to be used, and I thought it might be a good idea if I were to put down on paper, for myself at least, some of the ideas which I have in regard to the use of manpower. In my experience I have visited a very large number of factories, both new and old, and have been able to assess in some measure how much manpower is wasted in quite a large number of stores. Where a factory exists without modern machinery it must of necessity be utilising its labour uneconomically and badly. When we have the situation which exists to-day—as far back as 1964 nearly two-thirds of the unemployed were, according to the Ministry of Labour survey, unemployable, and we have had a credit squeeze imposed upon us since then—is it any wonder that firms compete with each other for labour, that trade unions seem to have no limit on the wages which they wish to receive, and in consequence thereof the policy of the Government with regard to prices and wages has so far failed to succeed?

I think we must take up a different attitude to this problem of manpower, because, unhappily, both in theoretical economics as well as in practical life we still maintain a great many thoughts and principles which existed in the Victorian era, and one of them is the limited amount of labour available in the country at any given time. I think that this attitude on manpower has a dangerous effect both upon management and upon trade unions; it is an attitude which is extremely inflexible and it brings with it a lack of imagination. Therefore, there is a tremendous amount of waste and inefficiency in the utilisation of workers. This restriction of opportunity for salary and wage earners, in human terms and in human satisfaction, presents development of the relations between the employer or management and the employee. There is not the urge to study the effects of science and technology on the business, because employers are running after each other, trying to snatch a man from here and a man from there, a woman from here and a woman from there, in order to make up what they believe is the necessary amount of labour to meet their obligations, in many cases to meet their future obligations.

I do not think this ought to be regarded as a theory. We have ample evidence of the great changes which have already been seen in our country, by the use of modern machinery and the manner in which we have, in many cases, become much more competitive as a result of our studies in technology and in science. We are able to turn out much larger quantities of goods than we could ten years ago. We have modern instrumentation, modern gadgets, modern techniques of production. Although I say that a great deal of labour is wasted and used inefficiently, I do not mean to suggest that there are not many corners of our country full of plants which produce an extremely good quality article, and which are able, as a result of the efficiency of the producer, the manager and the production engineer to compete with goods produced throughout the whole world.

The studies I have made, although few (because I have to earn my living, too), have convinced me that those who see the supply of labour as a fixed quantity take a most pessimistic and unimaginative view of the wish of management and workers to participate in the benefits which arise from modern production methods, and of the ability of most of the human factors in industry to rise to the challenge, when it is properly offered to them, to do a better job and to accept responsibility for it.

The important point in all this relationship is that the workers, whether on the shop floor or in the office, whether dealing with transport or with actual manufacture, feel that they must be trusted. The importance of the sense of trust which the worker feels determines, to a large extent, his attitude towards management and towards his job. I believe that in a good many places in this country—in some of the firms I know well—firms fall short in this regard. It is a great pity. Few of them provide adequate training and decent working conditions or take enough care to enable their people to retire in comfort, free from financial worries.

I cannot emphasise too highly the importance of the sense of security of people who work in the business. During the 19th century, when labour was much in abundance—or a certain type of labour was much in abundance—and when managements, many of them without a sense of civic responsibility cared only for their profits and not for their people, it was impossible for them to place trust in their people, because they knew that they had not created the conditions whereby that trust would be maintained and enjoyed and would pay its return in the form of devoted service. I have heard it myself in the factory. There is a division between labour and staff. Again, it is the problem of the white-collar worker and the man with the dirty hands. Even in the board room, between "us" and "them", there still exist these worlds. So long as they exist, such firms will have no understanding of how to deal with the problem of their labour and their manpower.

It is too easy for us to say that we have not sufficient manpower. People look for a ready excuse. Even the Government sometimes look for some ready excuse. The truth of the matter is that the Government are not ready, or prepared, to make such a study of the problems to break into the inside life of the people who are engaged in industry. When I say "inside life", T mean inside them: what are they thinking here? How are they approaching their problems? After all, manpower is our most precious asset. It is equallyas important as capital as all the other things that go to make industry. I was so taken up by the idea that I wrote this phrase: If we learn this, we may be surprised at the hidden treasure of ability which we shall unlock. Even in the traditional industries, where there are not the same opportunities for automation, much can be achieved by production engineers in streamlining the flow of work and by introducing better tools and gadgets. We can upgrade the quality of the product, and if we know how to use the best-quality raw materials, we get a bigger quantum as a result of their work.

Another point I want to make, which is little understood by manufacturers, is that a great deal of labour is wasted as a result of not exercising good quality control. In our business we have a production exhibition. Manufacturers, and even heads of production sections from other industries, such as the motor car industry and the engineering industry, come to have a look at it. The head of a production section of one of the most important transport manufacturers—car manufacturers, if you will—in this country, came down to see it. He said that 40 per cent. of the materials sent to him by the makers of the gadgets, clocks, pumps, wheels, et cetera had to be rejected by him. Just think of the waste that is involved. It is not only a waste of time and of money; it is also a waste of manpower. It is that which is the killing point, the waste of manpower.

I should like to tell your Lordships a little story. In 1956, we initiated in our business what we call "good housekeeping", a simplification of system. I will not describe to you all that went on, because it is not necessary, but two points emerged. One was that our workers, our salesgirls, the people in the office, all the employees, suddenly began to blossom out. I could see them blossoming out. They felt that we trusted them, because the systems we adopted gave them the freedom to do what they wanted in so far as goods were concerned. I remember going to a store and the manager saying to me, "I think that we have done a most wonderful thing. The girls are as happy as the clay is long. "That gave me great pleasure. We have a devoted staff; we have been able to deploy people to more productive work, which is most important for the soul of the person himself or herself. He or she is a worthwhile person and doing a worthwhile job, and that is tremendously important in the life of an individual.

Thus, in a short time, I have tried to point out what I think are the bases of my statement that we have not got a shortage of manpower. We can find it in the nooks and crannies, in the offices, and on the floors of many factories in this country. I say to the noble Lord, Lord Byers, that if he tries to discover them he will find them all easily. If we had an evangelising influence we should cry out to the manufacturers of the country. And it is not only a question of not having sufficient to pay our debts abroad. It is extremely important to save the people: that is the important thing. Then we shall begin to have a happy country, people will think it is worth while living, and perhaps delinquency will not be so prevalent as it is now, because there will be a different atmosphere.

Your Lordships may regard me as an idealist or a dreamer, but I have seen it happen and it is no longer a dream to me. I have seen people coming into the business who are aware only of what goes on outside, from what they have experienced, from what their fathers and mothers and brothers and sisters have experienced. They come in and see this different atmosphere. It is not that I am trying to be arrogant and blowing our own trumpet. It is simply that we have hit on a device which enables us to have a manpower problem in the sense that we have all the manpower we want and we can get all the manpower we want, because we treat our people with trust and confidence. I have a sentence in my notes here: "I am sure that this formula is right"—and it is right, too.

I should like to tell our Lordships a story of a building firm which has a great many difficult problems to solve, as most of its work has to be done outside, in the open-air. The rain comes down in torrents, and all the tarpaulins you put up cannot stand up to the force of the rain. The men have to work; they have to build. We went there, we saw the state of affairs, and we thought to ourselves, "This is the most primitive thing that one could possibly visualise. These men are working in pouring rain, and they look like drowned rats. It cannot be right; it must not be right. "We said to the builder," Why don't you put up a shed where the men can come in and take off their wet clothes? When they enter the site in the morning they can bring with them a spare cardigan and a pair of trousers, which they can change into if they get wet. "Then we discovered that they brought with them bread-and-cheese sandwiches, little things—I do not know how they could live on them when I saw them. We decided that there ought to be a dining room, and we decided that there had to be a lavatory—all they had was an ordinary tin bucket, a state of affairs which is a disgrace to any human being.

This builder, who happens to be a Member of Parliament, the chairman of the company, came to my office the other day and discussed this matter. He told me that the rate of increase in regard to speed of building had gone up enormously. What was even more important, the casual labour turnover had dropped immensely. That is the saving of manpower. What they were doing before was utilising their manpower badly, without thought, without any sense of responsibility. We gave them drying rooms and dining rooms, washing facilities and clothing rooms, and it generated a tremendous amount of good will among them. What was even more important, and what is always more important in these cases, is that they learned to have self-respect and self-esteem.

I want to say a word or two on the selective employment tax. It is something of the future. All that has been said today may be true or may be untrue, but I know one thing—this is my experience —that distribution cannot be regarded as something on its own, something that hangs in mid-air completely independently: it is the last link in the chain of production. If you do anything to the last link, if you change it in some form or other, you are going to have some kind of a discordant note when you begin to ring the other links—they will be a bit twisted.

I should not expect a man who has not gone through the experience of this chain of production and distribution to understand all this. But distribution is not a separate business, and if this system goes through as it stands to-day it will be a misfortune to this country. It will bring up prices very considerably, because I can assure your Lordships that the 1¼ per cent. by which the tax is supposed to increase prices will be not 1¼ per cent. in a year's time, but something like 5 to 10 per cent. I do not want this Government, or any Government that we might have, to have that as a responsibility. The tax is a very good tax-collector—it is very effective as that. But, if we are thinking in terms of making our country strong and competitive, and if there is not to be this continual yearning for more and more, which we see both with managers and with workers, we shall have to look at all these matters again and study them much more closely than we have done hitherto.

In all these things I believe that management, and only management, can take the lead. Management has to take the initiative, because power in industry, interpreted in modern terms, is capital, management and labour; and these three must have a common purpose and a common objective. If we, as managers, can find the language to explain these matters to the workers, which is one of the things we have to do, and say not "You, Bill", but just "Bill" (and by that I mean that one must show the man that one has respect for him), I think it will go a long way towards bringing this idea to fruition. I do not think I have spoken on this occasion as perhaps a Member of this great House should. I have spoken to your Lordships in the language of the ordinary individual on something that is so close to my heart, because I felt that fine language would spoil it. But for a great many people one of the verses of Shelley applies: We look before and after, And pine for what is not. It is in the life of all of us, and certainly it is in the life of the workers, on whose devotion, confidence and honesty we depend if we are going to become a strong nation.

7.53 p.m.

LORD AMPTHILL

My Lords, I apologise for rising so late in the evening to address your Lordships—in the Dog Watch, as is my usual form—but this time it is not my fault. I was higher on the list, but I surrendered my higher place in order that your Lordships might have the advantage of hearing one of my older colleagues who did not want to sit up too late.

I join with other noble Lords in thanking the noble Lord, Lord Byers, for putting this Motion on the Order Paper. I think he deserves our gratitude, and I am sure we all feel deep gratitude to him, because in my view—and I think it will be shared by those who have been here throughout the debate and by those who read Hansard to-morrow—we have had a remarkable debate, with outstanding and remarkable speeches. With many of the speeches I found myself in almost complete agreement. I do not want to hand out merit marks for speeches, because there were so many and it would be invidious to do so, but I must briefly refer to the speech of the noble Lord, Lord Sieff, who has just sat down, because the sentiments that he expressed are naturally very close to my own thinking, for, as many of your Lordships know, I am at the moment Chairman of the Industrial Society whose work in industry is entirely concerned with human relations.

The Motion of the noble Lord, Lord Byers, reads: To call attention to the need for increasing the efficiency of the use of manpower in Britain". This need has been with us for as long as I can remember, certainly all the years that I have worked in industry, and many of us have been trying to do this very thing for many years. We may not have been so successful as we hoped, and no doubt we failed in many respects, but not all. Nevertheless, I should have preferred the Motion to read: To call attention to the special need for further efforts to increase the efficiency of manpower in Great Britain". I think that this wording would be slightly more realistic. However, it is a small point.

As I said at the outset, these efforts have been going on for a very long time, and I can remember assisting at the introduction of a time and motion study in a chemical factory on the North-East coast. This was in the early 1930s, and your Lordships will appreciate that that was not an easy time to introduce what was then a completely novel thing, because the North-East coast was an area of very high unemployment. We all learned a lot from that operation, and when, a year or two later, I moved to work for my present company in Northern Ireland—another area of high unemployment—I endeavoured to apply the knowledge I had gained and to impart it to my colleagues and subordinates. This was in 1935, 1936 and 1937 and—I will be honest—one was regarded with considerable suspicion, not only by the workers but also by management at all levels. Then the war came and our work had to cease, although we had already had some successes. It was not until 1947–48, when I returned from my war service, that we were able to resume operations on a really planned scale, on a proper basis. But first of all we had to educate and train the men. These operations con- tinue to-day, and any factory with which I am concerned, or of which I have any knowledge, has its proper work study section which attends to all these matters, which are, of course, directly relevant to economy in the use of labour.

I have briefly recounted my own experiences because I think your Lordships should have some reason for my feeling justified in intervening in this debate. These experiences have taught me that this job simply cannot be done by chair-borne theorists, whether they be economists, whether they be civil servants, whether they be trade union officials or whether they be management. One has to get down to the brass roots on the factory floor, on to the construction side, just as the noble Lord, Lord Sieff, went down and cleared up a point which immediately had an effect on economy in the use of labour. Orations from political platforms, exhortations, appeals to the Dunkirk spirit, simply do not work in this matter. Anyway, Dunkirk was a smashing defeat, let us face it. I am sure that everybody in the country showed a wonderful spirit in the face of that defeat. But we are not facing a defeat now. We do not want to talk about the Dunkirk spirit.

This problem requires real hard work, application to detail, and—your Lordships will already appreciate this from what the noble Lord, Lord Sieff, has told us—great patience and great tolerance. But most of all it requires real understanding and real sympathy with the people employed, however they are employed, in whatever job they are employed, because it is people who determine the success of any enterprise. Without good human relations, which includes good leadership and good communications, it is impossible to gain the confidence of the people and their full co-operation, and without good leadership and good communications failure is inevitable.

There are many ways in which productivity (I use that word because that is a simpler expression than "efficiency in the use of manpower") can be improved, but few are easy and straightforward. In the forefront I put the steady or increasing rate of production. Violent fluctuations are most detrimental to productivity. Frequent Budgets, little Budgets", with alterations in purchase tax or Excise duties, or with general increases in taxation, are the most frequent causes of these violent fluctuations. In my experience these are the usual reasons for the so-called hoarding of labour. It is difficult enough to forecast consumer demand without the hazards caused by Government action of this sort. Lately, we have had all too much of this sort of thing.

Great increases in productivity can be achieved by what I call a simple rearrangement of the furniture. This work entails not stop-watches, not slide-rules and not high-powered consultants—just common sense. If your Lordships want to know what I mean, the next time you go to make your breakfast just look to see how many movements it takes you to boil an egg. There is a good deal of work that can be done towards what my family call, "Using your head to save your legs" —and these ideas can be applied to factories, not only to one's own kitchen. One example I remember very well, from long before the war, was that a simple rearrangement of the furniture just halved the numbers of a wrapping machine crew.

Further increases in productivity can frequently be made by increasing the speed of machines, and in many cases the speed of a machine can be increased quite easily and quite cheaply. It may not even require a new motor: it may be only a question of pulleys or belts. But here there is one word of caution, one word of warning: you must be sure, when you increase the speed of your machine, that quality will not suffer. From my own experience I could tell your Lordships of machines the speeds of which have been doubled within the last decade, but that was possible only because we undertook long, patient and difficult research into the raw product. Then, when that was successful, we were able to double the speeds and maintain the quality.

Then new types of machines can be invented, and this is something that is going on all the time in industry. Sometimes one can have a lucky break. I do not want to boast, but one morning before the war I had an idea when I was shaving. I cannot think why my brain worked so rapidly when I was shaving, but it did—for once, anyway. However, this idea took five to six years to develop, but when it was developed and the machine was put on the factory floor it enabled 2 men to do the work of 20. Sometimes you have a lucky break like that, but you cannot get to that position without long, patient and probably very expensive work on the development of the machine.

Schemes of this kind are going on in industry and in commerce all the time—many speakers this afternoon, and particularly the noble Lord, Lord Sieff, have instanced examples of it—but they largely go unrecorded. It is only the more spectacular achievements, such as those at the Fawley refinery, the United Steel works and such like that hit the headline news. This patient, zealous work of hundreds of people, men and women—managers, foremen, chargehands and, last but by no means least, many of the workpeople themselves—must go largely unrecorded except in the private annals of their own enterprise. It must be said here that this work could not take place, could not be going on as it is now, unless there was proper leadership from management—that, of course, is vital—co-operation from the trade unions, of course, and leadership by the trade unions within their own unions.

The people doing this work—and they were on the job this afternoon while we were sitting here, and in some cases they may still be on the job—need all the help and all the encouragement that we and the Government of the day can give them. These people, many of whom I know and count among my friends, take an enormous and justifiable pride in their job and in the achievements of their particular enterprise; but, human nature being what it is, they do need some incentives, and certainly proper encouragement. Our taxation system is such that most of the gilt is taken off the gingerbread of a merit bonus—I quote that as the simplest possible example—unless, of course, one gives an entirely disproportionate sum. Only last week I had a case—not in my manufacturing business—where a £25 merit bonus was recommended for many months of hard, additional work and special responsibility. But when tax was deducted, on a weekly basis, this did not make sense. In fact, it was derisory. I was instrumental in stepping it up to £50, which was a little better, although in my opinion still not enough. In any event much of it would go to the Chancellor.

In talking of increases in productivity, one must face the fact that more often than not they bring in their train redundancies. Redundancy payments have long been a practice in many firms which I know well; and now, of course, we have legislation on the subject. But redundancy payments in themselves, my Lords, are not enough to produce the increase in mobility of labour which we require if people who are no longer required in one industry are to move to another. In my view, there are two additional "musts": more houses of the right sort, in the right places; and a more rapid approach to the interchangeability of pension schemes. Mention of pension schemes brings me to the subject of pensioners. There is an enormous boom of labour in cases where pensioners can come in for half a day or a few hours, but at the moment, because of our taxation system, there is no incentive for them to do so.

The noble Lord, Lord Haire of White-abbey, and my noble friend Lady Emmet of Amberley mentioned women, and I should like briefly to refer to this subject. In my own concern we have found that married women whose families are not very small—they are grown up, or more or less grown up—are only too willing and ready to work an evening shift. In fact, we work such evening shifts in my own factory, from 6 to 10 o'clock—and very merry occasions they are. I have called in on them many times and I can tell the noble Lady that the husbands drive their wives to work in their cars and take them away when they are finished. They are very pleasant occasions, with music while you work, and they result in very efficient production.

To go back to my main theme, it is in these two matters, the universality of pension schemes (if that is the right description) and housing, that the Government can help by lower and more rational taxation, by incentives for local authorities and private enterprise to build houses quickly and in the right places, and by encouragement, probably fiscal, to enable these private pension schemes to have a wider application over the whole country. But instead of tacking these matters (and others that I have not time to mention) what have this Government done? In their first eighteen months in office they have increased taxation by £1,000 million. They have utterly failed to check inflation. As a result, prices have gone up, are still going up and, so far as I can see, will continue to go up.

Now they are about to bring in the Selective Employment Bill. This has been referred to by a number of speakers and I am only going to refer briefly to it. There is only one thing I wish to say about it. I think it is an unsavoury mess, an ill-prepared, ill-cooked, and ill-served Hungarian goulash. The Government have vastly increased the number of totally unproductive civil servants—other noble Lords have referred to this—and this Bill will undoubtedly even further increase the number of those in the Government service. Parkinson's Law reigns unchallenged in Whitehall. There were, I think I read, 10,000 new civil servants last year. Now, through this Bill, you can "bet your boots" there will be another 5,000.

This rotten Bill is a thinly-disguised measure of compulsory direction of labour. Let us face it: it will vastly increase the cost of many things. Some of these have been mentioned by other noble Lords; I shall mention only one—I was reinforced in my desire to mention it by the speech of the noble Lord, Lord Bowden, from the Benches opposite—and that is the effect it is going to have on the cost of education. I do not refer to the education of our children, although I know I am going to get bigger school bills. But that is not the point to-night. We are talking about economy in the use of labour, and a big factor in helping management to economise in the use of labour is the services of these many educational establishments. The noble Lord, Lord Bowden, mentioned some of them. I can add to the list. There is the Management Administrative Staff College at Henley and there are the courses run by the Industrial Society of the British Institute of Management. I do not want to go on wasting your Lordships' time, but there are also the business colleges and the technical schools. Well, this Bill will apply to the lot—and up will go the charges. Is that any help to increasing productivity? No, my Lords, in my submission, it is not.

LORD WYNNE-JONES

My Lords, is the noble Lord suggesting that the tax is going to apply to such institutions?

LORD AMPTHILL

Yes, my Lords, I am.

LORD WYNNE-JONES

That is not how it has been stated.

LORD AMPTHILL

I am coming to this point a little later. I believe it is going to apply, and this is creating great uncertainty. I understand from what the Government spokesman said in another place, and from what the noble Lord, Lord Shepherd, said here this afternoon, that the Selective Employment Bill is coming to us in July. I am sure that I am speaking for noble Lords on this side of the House when I predict for it here a very rough passage. However, I cannot think why this Bill has not been published earlier. There is uncertainty and confusion over its application. For example, the noble Lord opposite asked me if I knew whether the Bill would apply to the institutions I have mentioned. I can only guess from what has been published that they will be included. The uncertainty and confusion is merely creating one of those conditions in industry which are so obstructive to any improvements in efficiency. I suspect, of course, that the preliminary reactions to the Bill have caused the Government to have some pretty careful thoughts on it. What I think is much more likely (to use the metaphor I used earlier) is that the cook will have to send back to Budapest for another recipe.

LORD HILTON OF UPTON

Cheap!

LORD AMPTHILL

My Lords, in general terms I support the Motion of the noble Lord, Lord Byers although I should have preferred some slight leeway. I hope that as a result of this remarkable debate the Government will concentrate their attention more on the grass root problems (some of which I ventured to mention this afternoon and some of which other speakers mentioned), and on producing reasonable methods to assist industry and commerce to overcome the problems which face them.

Lastly, I must say, in a further reference to the Selective Employment Bill, that I cannot see how the grabbing of hundreds of thousands of pounds from charities such as Dr. Barnado's Homes and the Mission to Seamen, and others —about which I had a letter to-day—is really going to help industry and commerce. Of course it is not—your Lordships will forgive me for saying this, but I feel strongly about this matter. It may be sound practice in Budapest, or in some other Communist country—

LORD HILTON OF UPTON

Cheap!

LORD AMPTHILL

—but to impose this tax on the deacons, curates and priests of our churches, and on the vergers, seems to me an absolute nonsense; and, worse, it is evil.

8.18 p.m.

LORD COLLISON

My Lords, it was with great personal regret that I was unable to hear the whole of this debate. I should like to thank the noble Lord, Lord Byers, for giving us the opportunity of discussing this most important matter at this point in time which I think is relevant. It is obviously a fact that we in industry need to consider how we can make more efficient use of the manpower available to us. I think the problem falls into two parts. First, there is unquestionably a shortage of men where they are really needed. The National Plan indicates that by 1970 there will be quite a substantial shortage of manpower which will be made up only by increased efficiency. Therefore, it is a question of getting people into the right places. Secondly, there is the problem of using the men you have in the right places more efficiently in order to achieve greater productivity and a greater national product. The movement of manpower from production industries to service industries has, I think, gone on too rapidly. I am going to mention the selective employment tax later, but it is one means of bringing some of them to where we think they should be.

But I want to emphasise that, besides the need to reverse this trend, we also have to step up the effective employment of those who are in the right place, who are, in fact, going into productive industry. There is also the need, if we are to achieve this, to increase the pace of technological change. I think we should welcome the measures taken by the Minister of Technology especially regarding the tools of technological change; that is to say, the use of computers, machine tools, electronics and electrical engineering. I believe that these tools are very necessary and appropriate to the development of greater productivity and the better use of the men in these productive industries. I think, too, that there could be even more extensive application of work study and associated techniques, a relatively cheap way to improve productivity.

I wish to make clear that the trade unions know of this and that there is no dispute about it. We are not opposed to change as such. Although we sometimes probe management and employers, because we believe that increased productivity and efficiency will help us in addition to helping the nation, the truth remains—and it must be the truth—that in the last resort it is for management to take the initiative, because without the willingness of management you cannot achieve anything.

May I deal with another matter, which I know concerns many people and I believe is misunderstood? I speak of the so-called restrictive practices. We should, I think, remember that men in industry still look at changes in techiniques and production processes as they affect them. I think it is perfectly proper that we should persuade people that they have a responsibility to the nation. But we cannot really have great concern for the broader issues unless we are satisfied about personal issues which are very close to individuals; and therefore reassurances about the total national position will not be very effective in respect of a man who thinks that he is going to be worse off, or that he is not being treated properly in relation to the technological change which the management intends to put into effect. That is why the T.U.C. emphasised, in its Report on Automation and Technological Change, which was published last December, the need for manpower forecasting as an essential prerequisite for regional and industrial policies, in order to provide for specific measures to deal with, before it occurred, any short-term unemployment which might happen. Of course, we also want to facilitate training and mobility. We argued that the Government should introduce measures to cushion the blow to those who found themselves, it might be for a short time, unemployed and should find means whereby those people could be retrained.

I was glad to see how many noble Lords said the same thing, and I want to agree with them—the noble Lord, Lord McCorquodale of Newton, the noble Lord Lord Balfour of Inchrye, the noble Viscount, Lord Mills, and last but by no means least, the noble Lord, Lord Sieff. They all accepted that a sense of security is required to enable people to accept the challenge and the demands made by technological progress and change. Action along the lines of the T.U.C. policies has been taken by Government in the last two or three years, and I think that those policies are beginning to take effect. If industry is to build on the foundations already laid by legislation such as the Industrial Training Act and the Redundancy Payments Act, industry needs to tackle the basic causes of practices which impede efficiency.

Important among these, as I have said, is a sense of insecurity, and I wish to emphasise that here is a major factor in the so-called restrictive practices. The result is demarcation issues, ceilings on production and hanging on to jobs, overmanning, and all the rest of it. We should not forget that this is due to bad experiences in the past when there were long queues of unemployed, and men feared to lose their jobs; and a sense of comradeship made them unwilling to do rather more, as perhaps they might, so as to keep someone else in employment. If we approach the matter in this way I think we shall find the answer. It is not good enough simply to condemn; it is necessary to understand. Until one understands the problem it is impossible to find a solution to it.

I should like for a moment to turn to the question of the selective employment tax, the payroll tax. Among other things, it is aimed at reversing the trend from productive industry into the service industries. I think I can say, although the General Council of the T.U.C. has not yet discussed the payroll tax—it cannot do so as a Council until it meets—that I see no reason why it should oppose the principle of this tax, and I think that the Council will accept it. However, there will be a number of issues which will have to be raised, and I am quite sure that the T.U.C. would in no way wish to inhibit approaches made by unions to Government to get clarification and explanation, and perhaps to ask for changes in the details of the procedure.

I should like to deal with the position of agriculture. So far as I can see, there will be a number of questions to be answered; indeed, they are already being asked, both in the National Farmers' Unions and in my own union, the National Union of Agricultural Workers. In the first place, it is a little difficult to understand how agriculture can be classified as anything other than a productive industry. Yet agriculture has been placed in the neutral zone. It is true—we all accept it—that there is no shortage of manpower in agriculture, but that is something about which questions will be asked. It has also been stated that the method of refunding the tax to the agriculture industry will be through the machinery of the Price Review. The words used were: so far as practicable through the machinery of the Price Review. We find it difficult to understand how that can be made to operate. What will happen will be that individual farmers will pay the tax. Instead of getting it back in a lump sum payment, it is proposed to pay the tax back to them by a financial injection through the Price Review. I cannot see how this can be properly balanced between the people who deserve to have their money returned and those who do not.

May I remind the House that more than 50 per cent. of our farmers do not employ labour. They will not pay the tax. If the refund is made through the Price Review machinery, those farmers will benefit. They will get something back at the expense of other farmers. I am not saying whether this is a right or a wrong method of redistribution, but it is quite a different approach to the issue than applies in respect of other industries. I would also mention that horticulture is not dealt with in the Price Review. The products of horticulture are not Price Review products. Therefore, how can this method apply to farmers in the horticulture industry?

It seems to us that unless the money is to be made available to the right people in the form of a direct grant, in which case, it might just as well be paid back to agricultural employers in the same way as to other employers on a once a quarter basis, there is no way of ensuring that an individual employer who pays the tax on a given number of workers will receive a refund of an equivalent amount. Another point is that employers in agriculture would only receive their repayments, over a period of one year, having arrived at Price Review arrangements while other employers are going to get their return at quarterly intervals.

So I think the Government might well consider the points I have made in relation to agriculture. We are going to ask to be met by the Government in order to get clarification. I should like to make it clear, again speaking as a Trades Union Congress man, that this does not mean that the Trades Union Congress General Council is against this new taxation principle. We think it has a degree of flexibility contained within it which will enable the Government to redeploy labour and to redeploy other resources. We do not disapprove of it in principle. However, I believe that in certain industries, including my own, problems will arise which will deserve attention by the Government, and we shall be asking the Government to give particular problems in agriculture their attention.

8.32 p.m.

LORD ROCHESTER

My Lords, even at this late hour I should like, if I may, speaking as one who for a good many years now has been concerned with the management of people in large-scale industry, to mention a few of the major considerations influencing some of our manufacturing companies in their efforts to make manpower more effective, and to give some general indication as to how such firms are setting about the achievement of that objective. I do not propose to dwell on the political aspects of the problem; enough, I think, has been said about that already. However, I want to join with the critics in saying that whatever this selective employment tax may succeed in doing in increasing manpower in manufacturing industry, it seems to me most unlikely that it will do anything to increase efficiency in the use of that manpower.

I think it is now generally accepted that pious exhortations to greater productivity in industry are ineffective. If men are to accept improvements in the utilisation of manpower, and the consequent redeployment which it is the aim of such improvements to effect, then management I must be prepared to strike a bargain which will give the men a worthwhile return. It follows that it is necessary for employers, in making their plans, to take trade unions into their confidence and, so far as possible, tackle the problem jointly with them. That is why all the major advances in productivity which have been made in the last few years are, in effect, package agreements in which a series of specified changes in working practices have been linked with substantial improvements in pay and conditions.

It is sometimes said that such agreements have unfortunate repercussions in bringing pressure to bear on other employers to grant wage increases that are not matched by improvements in productivity. But, as Mr. Allan Flanders has recently remarked, why should it be taken for granted that employers have no option but to concede increases in rates to match productivity bargains when they are not being offered a return in terms of improved productivity? If, on the other hand, the wage pressure that arises from such bargains spurs other employers to find out how they can make improved use of their manpower, so much the better. It is surely for the critics of these package deals to tell us how productivity is to be improved if it is not by bargains of this kind.

In my view, British industry will increasingly have to act on these lines during the coming years, and there are a number of reasons why this is so. Enormous sums of money are being spent on plants which are continually becoming more instrumented and larger in scale, and causing significant changes in the nature of the work of the people manning them. At the same time, manufacturing industry is operating under increasingly competitive conditions in which there is a shortage of manpower of the required calibre. I emphasise the phrase "of the required calibre", because, like other speakers, I do not believe that there is an overall shortage of manpower in manufacturing industry. This factor, together with the rapidly increasing costs of employment, makes it essential that the contribution of each individual should be as full as possible.

Not all the obstacles in the way of the optimum use of manpower are imposed by trade union demarcations and restrictive practices. A great many are, but some arise from restrictions created by management through the form of organisation it has developed and maintained. Others result from narrow and defensive attitudes among the men themselves. Then, again, social changes, among them the rise in the general standard of living and the level of education, have led to a situation in which individual potential is nowadays much greater. If only we could harness this potential, it would meet the needs of both management and men; but to achieve such a desirable end, our traditional methods of close supervision need considerable modification.

A further factor influencing the position is the increasing awareness that the present division of industrial employees into monthly paid staff and weekly wage-earners is inconsistent with current social and economic conditions, and also militates against maximum flexibility in the use of manpower. This has led a number of large organisations to make changes in the conditions of weekly wage-earners aimed at the gradual elimination of such distinctions.

These, then, are some of the factors that have resulted in the making of the productivity bargains that we have observed in the last few years. I do not propose at this time to weary your Lordships with tedious instances of the efficient use of manpower which have given rise to the present situation. We have already heard a good many of those today, and many examples are all too readily apparent. Nor shall I offer suggestions as to detailed ways in which the utilisation of manpower can be improved. For these will vary so much with a particular organisation.

There are one or two general points that I should like to make. Reference has already been made to the desirability of sending teams from this country to American to study on a comparable basis the utilisation of manpower over there. I very much welcome this suggestion. My own firm has recently sent some teams over there, and it may interest your Lordships to know that membership of those teams is not confined to management, but includes also representatives of the men themselves. I think this can only help in giving those men a clearer understanding of the problems involved, and in gaining their co-operation in the solution of the problems.

Another general point I should like to make is that the first essential in any examination of the manning of industrial plants must be a study of the whole management structure of the particular working unit, because some of the existing organisation and manning will arise from separation of function at comparatively senior levels of management, possibly on a basis of technical disciplines rather than the overall needs of the company concerned. It is possible for management to make improvements in this field without reference to trade unions, and a willingness to reorganise on these lines is an essential preliminary to the negotiation of improved manning arrangements with the unions.

But, my Lords, it will not be sufficient for management then merely to offer more money in return for specified changes in working practices. Everything possible needs to be done to afford the men concerned safeguards against loss of employment. Moreover, effective improvements in manning can be achieved only with the right calibre of man, adequately trained for his task. This means that a major training effort is needed; and if that fails to achieve the required results there will have to be an improvement in the quality of recruitment, which in turn implies making use of the products of more advanced education in our schools and colleges.

Further, if men are to be more fully developed so that they can adequately operate and maintain the more complex plants of the future, they will largely supervise themselves. The most suitable form of payment for them will not be a basic weekly wage, supplemented by bonuses varying with the rate of work achieved over a limited period, but a stable salary graded according to overall performance in the job, and affording greater security of earnings during authorised absence from work. If such a stable salary is adopted, it follows that the financial incentive to maintain a satisfactory working rate, which has hitherto been provided by bonus payments varying directly with output or the rate of work, will no longer be available. Management will therefore have to find and make use of other forms of motivation that will enable continued improvements in productivity to be made. And this is indeed a formidable task. Fortunately, at just the time when the considerations I have mentioned are emphasising the need for men increasingly to supervise and develop themselves, current sociological thinking and experiment are pointing in precisely the same direction.

My Lords, it appears that management has for too long acted on the assumption that the average man is indolent, lacking in ambition, self-centred, resistant to change and passive; that he must have his thinking done for him; that he is indifferent to organizational needs, and that his activities must be controlled and supervised at every point. Modern sociologists remind us, however, that needs which have been satisfied are no longer motivators of behaviour, and that improved education, full employment and the affluence of present-day society have produced a situation where higher needs than basic physiological, safety and social requirements must now be satisfied if men are to give of their best. They suggest that people are not by nature passive or resistant to organisational needs: they have become so as a result of experience in organisations which insist that authority shall not be delegated, that decisions must invariably be taken by superiors, and that every operation should be standardised and each part of it specialised.

The truth is that the potential for development and the capacity for assuming responsibility are latent in all of us. But it has to be made possible for people to recognise and develop these human characteristics for themselves. Today, the essential task of management is so to arrange organisational conditions and methods of operation that people can achieve their own goals best by directing their own efforts towards the objectives of the organisation. This is a process of creating opportunities, releasing potential, removing obstacles, encouraging growth and providing guidance.

From the time of the renowned "Hawthorne Experiments", nearly forty years ago, it has been recognised that management concern and interest have an effect on output, and that there is a correlation between output and the satisfaction a man finds in his job. More recently, it has been demonstrated clearly enough that concentration by management on factors such as pay and working conditions do not give rise to positive satisfaction, though lack of attention to such items may well result in dissatisfaction. Rather, it is work itself, and factors such as achievement and its recognition, the possibility of personal growth and self-development, that have been shown to produce positive satisfaction. It is therefore to the creation of conditions in which factors such as these will thrive that management must increasingly direct its attention if work in industry is to prove satisfying and productivity is to advance.

My Lords, I apologise if, for the last few minutes, your Lordships have been treated to an unwanted lecture in the behavioural sciences. It has happened only because, in my view, this problem of how, under conditions of full employment, men can be motivated to give of their best is paramount in debating the need to improve efficiency in the use of manpower in British industry to-day.

8.46 p.m.

LORD ARWYN

My Lords, we are all grateful to the noble Lord, Lord Byers, for the opportunity to discuss one of our greatest problems. He and other noble Lords have covered so much ground in their speeches that I have had to scrap most of mine, which will probably be a source of comfort to those who remain. The noble Lord, Lord Byers, referred to a legacy of mental attitudes. I would use the word "fears". However thorough the time and motion studies and the analyses of manpower, these in themselves do not get rid of fear. Neither will the pet theories of all the economists. My noble friend Lord Shepherd said that the fear of unemployment has disappeared. We are short of labour, but the attitudes and fears still remain. There is always the lurking fear, "Will it last?" It is asking too much of human nature to adjust itself completely to new attitudes and new patterns of thinking without preparing the ground which will enable a change to take place.

There has been an appeal to trade unions to modernise their outlook. If I held a key position in a trade union I should be better encouraged to respond if I were convinced that management was taking definite, realistic steps in the same direction. Co-ordination of effort is impossible without the elimination of fear and suspicion. The noble Lord, Lord Byers, referred with regret to the reluctance in industry to encourage the development of works councils. Employers are largely responsible for this. Our ingrained fears of being exposed to criticism have proved too hard to master.

If we are to get the fullest co-operation between management and labour, we should start with the composition of boards. There is still far too much nepotism. There are too many directors of quite important companies who are not even able to understand the technical terms used in the production of their own products. Their appointments are often made in order to shelter other members of the board from any challenge to them or their authority.

It might be necessary, in the interests of the country, as well as that of shareholders, to require candidates for seats on boards to satisfy some authority that they are competent to sit on the board of any one company. We demand a master's certificate before a man can command a ship, and a certificate of competency before a man can be appointed as a colliery manager. The one is from the Board of Trade, and the other from the Home Office. Each profession has its own stringent examinations. But a fellowship of the Institute of Directors is not a certificate of competency, a master's ticket, or a professional qualification. It is more of an acknowledgment of a subscription to a nebulous trade union, and to ensure receipt of the monthly magazine, which is probably one of the best in the world. It is a mine of information to those who want to study the many subjects a director is supposed to understand.

In this much shortened version of the speech I intended to make I should not like to miss out another important point made by the noble Lord, Lord Byers, namely under-employment. This is a result of incompetent management—nothing else but that. If the figures given by the noble Lord were only halved the difference in the economy would be spectacular. We are in a fight for survival, and as each new nation takes its place in the industrial world we shall be faced with competition which we cannot yet assess. All we have to do in order to visualise what could happen to us is to study the rate of growth in productivity and in quality in Japan over the last twenty years.

My Lords, the formula for industrial efficiency is quite simple. Management in all its stages must respect labour and be respected by labour. It is difficult to expect highly skilled labour, especially, to respect incompetent, guinea-pig directors who do not understand the technical problems either in administration, production or sales. The second part of the problem is that management must at all times be continually aware of the value of communication lines and realise the value of consultation. With consultation and the bringing of everyone into the picture co-operation is established and mutual problems understood and solved. All this sounds much like a hotch-potch of platitudes, or too simple a solution, but once one has realised the truth in the formula and established the principles as the backbone of one's thinking and policy, the results can be astonishing. This is the trust to which my noble friend. Lord Sieff, referred. We have to establish that trust.

Ask any industrial consultant—I have been one myself—and he will tell you that very often 90 per cent. of the answers he is being asked to find have been gathered from within the firms which are the subject of investigation. The answers have always been there, but no one has had the sense to ask the right people, or they have been afraid to do so for fear of a loss of dignity, or some other excuse. This ludicrous idea that a barrier of total secrecy must always exist between management and labour has existed for too long. The basis of business philosophy has been altered. Until fairly recently directors were loath to part with much information, even to shareholders, until they were forced to do so by law. This is a case of fear masquerading as prudence.

In conclusion, I should like to say a few words on the new tax. I feel very hot about this, because I am involved. To ask the extractive productive industries to bear the maximum rate of this tax is a highly dangerous experiment, especially where exports are concerned. Having "blown my top" on that, I will now conclude. We should first be concerned with increasing efficiency in existing undertakings, with the existing labour force, before we consider the uprooting of people from their old homes. The determination we exercise in doing just that will decide the chances of success we shall have in the next five years.

8.55 p.m.

THE PARLIAMENTARY UNDERSECRETARY OF STATE FOR THE ROYAL NAVY (LORD WINTER-BOTTOM)

My Lords, one thing is certain, following this debate; and that is that the noble Lord, Lord Byers, must be pleased with the response which his Motion has awakened in this House. I have sat through most of the debate and have found it illuminating and educative. But I am certain also that the House is grateful to my noble friend Lord Shepherd for setting the framework of facts to help us in our discussion. Before I plunge into my speech I would also thank the noble Lord, Lord Drumalbyn, for his kind welcome to me at this Box, speaking in an economic debate for the first time.

Before I start answering various points arising from the debate I should like to clear this selective employment tax out of the way, in a brief paragraph or two. I think the noble Lord, Lord Byers, will not object to this, because his Motion was put on the Order Paper before the tax was born; so the issues which he was asking us to discuss exist well outside any potential impact which this new tax may have on the problems of manpower.

When we talk about the selective employment tax we should not forget that it has more than one purpose. The purpose may be, and in part is, to ensure a shift to a certain degree from the distributive industries to the productive industries. But, perhaps most important of all, its main purpose is to broaden the basis of tax collection, to prevent us from overloading certain existing taxes with even higher tax, and to enable us to spread the tax load over a wider basis of our economy. Listening to noble Lords to-day, I think that no one will disagree that some lowering of the pressure of steam within our economy is necessary. Figures have been given showing the great excess of demand over the supply of labour, but I must say that it is those economists who argue that these two factors should, in fact, be in pretty close balance who receive my support.

I believe that at the moment the demand for labour is somewhat too high for safety, and this particular new tax is a useful method of reducing this pressure, which I think we all agree has to be done, while spreading it very wide over the economy. In the past, when we altered the purchase tax on motor cars and semi-durables we hit key factors in our economic system unnecessarily hard. This particular reduction of pressure within our economy will reduce the pressure without particularly damaging key factors in our productive system. It will also, of course, enable us to draw some taxation from various services which, although making life more pleasant, are things for which, if we really want them, we shall be willing to pay some more money.

Nevertheless, I think we should not become unduly upset by the fact that the tax itself has arrived in a somewhat surprising manner, and that it may not seem to be as selective as its title suggests. We shall have plenty of time to discuss this measure. It will be discussed in another place when the tax is imposed, in the Finance Bill, and when the actual Refund Bill, which I think will be presented by the Minister of Labour, goes through the Houses, we shall have a good opportunity to discuss all the anomalies that various noble Lords have mentioned in the debate.

This is not being sprung on the country; we have plenty of time to consider the problems that it creates. I am certain —the Chancellor said it and the Prime Minister said it—that these representations will be listened to with care. We must be careful not to let the best be the enemy of the good. We have got to do something and this is what we are doing and we shall have plenty of time to discuss it. This is, after all, what this House is for.

I will try to touch on various points mentioned in the debate. I took as the central point in the speech of the noble Lord, Lord Byers, his concept of a central manpower agency, that in fact we should take all these bodies that are doing research into these problems and some- where, presumably within the Department of Economic Affairs, bring them into closer correlation and co-operation. I think it is sound sense and I am certain it will be studied with interest by my colleagues in the Department of Economic Affairs. Like the noble Lord's Party in this House, I recommended a straight payroll tax because I hoped a payroll tax would be used to give rebates to exporters, as I believe it can be used in the future. However, we have no alternative, and I am certain that he and his colleagues will use their critical abilities to see whether the existing substitute tax, which is what this is, can be improved when we come to put it on the Statute Book.

The noble Lord, Lord Drumalbyn, raised one of the questions that exercise us all: what are the Government doing about their own growing payroll? All I can say is that the Government are acutely conscious of this. We publish our figures; everybody knows the numbers who work for the central and local governments. As we demand more services from Central Government and local authorities we must expect more people to work for those authorities to provide the services demanded, and we must not be surprised if over the years employment by Central Government and local authorities rises. Nevertheless, it has to be watched, because Professor Parkinson is right on this subject, and we will keep a pretty close watch on this.

The point made about computer centres is, I think, of interest and I am certain will be studied by my colleagues. The question of job orientation and pre-apprenticeship training is very important. The idea of enabling a young man's apprenticeship to start in his last years at school is an idea which attracts me personally. The noble Lord, Lord Bowden, made, I thought, an excellent speech. He asked two rather difficult questions and I will arrange for the Departments concerned to send him answers in writing. The noble Lord, Lord Shawcross, made a very interesting speech. He raised a question, which I think must exercise us all, on the size of units in industry and in distribution. This matter is, of course, evolving anyway; the large are swallowing the small, though probably not fast enough for the need of growth in our country. The selective employment tax will, I think, help this.

I also think that the various other measures of rationalisation which this Government are producing will help to speed this necessary evolution.

LORD DRUMALBYN

My Lords, if I may intervene, I am not quite clear how the selective employment tax will help that. Could the noble Lord explain it?

LORD WINTERBOTTOM

I think there must be some small businesses which are on a margin of productivity. If in the field of distribution the cost of their wages rises then it is more than probable, in my opinion, that they will have to go out of business and their business will be taken over by the large, highly capitalised and efficient multiple stores which are growing throughout the country. This is a natural evolution which will be speeded up by the new tax.

LORD AMPTHILL

My Lords, before the noble Lord leaves that point of size, there are great advantages in increasing the size of units; I accept that. There is, however, an optimum size of unit for which you can find a competent man to manage it. This is a matter which my colleagues in business and I have discussed a lot. When we arrive at a figure it might be right or wrong, but the problem is to find the man who can run the show, and, in passing, it seems to me that this is the big problem of nationalisation.

LORD WINTERBOTTOM

I would agree with the noble Lord and it is also partly a problem of education, training. The man of normal intelligence when properly trained can manage a bigger set-up than a man who has not had that training. The right reverend Prelate, the Bishop of Leicester, produced a slightly different slant on this problem. Unfortunately those of us in industry have to run just to stand where we are, and therefore we tend perhaps to take growth a little too seriously. However, this question of the impact of the selective employment tax on charities is something which I am certain must receive the consideration of the Government, and I am certain it will be raised by many charities during the Bill's gestation period before it becomes an Act.

The noble Lord, Lord McCorquodale of Newton, warmed my heart. I think he is entirely right when he says that we must not try to talk down our own industry too much. After all, there is a great deal of industry in this country that is in the first rank of industry in the world. What we are trying to do is to bring the below average or average industries up to a much higher level. I think the noble Lord was right to try to balance the general impression of howling incompetence which this debate might awaken in some uninformed minds if listened to by people who did not know the true facts.

I thought that the noble Lord, Lord Sainsbury, made an extremely interesting contribution. Probably he would agree with me that size, again, is a problem of the distributive industry. I was reading this morning what the Chairman of Unilever was saying on this subject. And we have had the figure that 40 per cent. of the groceries of this country are sold from multiple stores and self-service stores, whereas in the United States, where pressures of high wages and so on are much greater, 90 per cent. are sold in that way. This is the direction which we have to travel in the distributive trades.

The noble Lord made a point which I thought was valid. He complained that the Government, having made it more difficult for the industry to recruit labour, are at the same time making it more difficult for them to introduce the modern capital equipment required to replace that labour; and he argues that withdrawal of investment allowances in the distributive industry is a double blow which ought to be reconsidered. I am certain that my colleagues will listen to what he has to say. Lord Balfour of Inchrye was upset somewhat by my right honourable friend's remark "rough justice". This was only a speech, probably in the open air.

LORD BALFOUR OF INCHRYE

It was in Parliament. I have it here.

LORD WINTERBOTTOM

I beg the noble Lord's pardon, and I stand corrected. Nevertheless, this was poetry; it was not a statement of policy. This is an Act operating over a wide field. At the moment it has not been polished and refined, but I am reasonably certain that these selective elements will come.

Then my noble friend Lord Wynne-Jones, much more than the noble Lord, Lord Collison, gave a modified blessing to this selective employment tax. This cheered me up a great deal. I think they are right, and that the majority of this House, as is so often the case in all communities, is wrong. It is the creative minority that is right. Again, I thought the point that he made was of extreme importance, when we are talking of matching ourselves up, if we want to play in the first league in the world of industry: the fact that only 11 per cent. of our young men and women in this country are having a higher education, as opposed to 43 per cent. in the United States. I am in full agreement with him that education is a form of investment which we cannot scamp. This is something that we must approach with the utmost seriousness. I think that what he said supported what Lord Bowden said earlier in the debate. This point, again, cannot escape the attention of my colleagues.

I greatly regret that I was out of the Chamber when the noble Baroness, Lady Emmet of Amberley, was speaking. I have, however, received notes from my colleagues of what she said. I agree with her completely, that the most unused natural resource we have is our women. I am fairly certain that my noble friend Lady Summerskill will, when she returns, agree that the point of view of women has been properly presented in this Chamber. In point of fact she had some words on this subject with the Party meeting before she went away.

The noble Lord, Lord Sieff (he is, unfortunately, not here), made a speech which impressed me enormously. It was, I thought, a speech of deep humanity. He made a point which I believe in strongly. Again, from this debate one might gather that management and trade unions were constantly at loggerheads. This is far from the truth. My own experience has been that, on balance, enlightened management and enlightened trade union leaders work in harmony in carrying out the important job of educating the members of the industrial undertaking which both are operating; so both sides are giving leadership. People do not always want to follow leadership. I have always found that it is management and the trade unions together who are giving leadership to the community as a whole.

The noble Lord, Lord Ampthill, was most forthright, though I must say that in the middle of his remarks he spoiled what had been a good speech, by an attack of xenophobia. Quite frankly, the policies as described are not the policies of some obscure gentlemen: they are the policies of Her Majesty's Government, and Her Majesty's Government stand by them. Because their parentage is not quite certain—and who does know the parentage of ideas?—It is no good making xenophobic remarks about individuals who are not here to defend themselves.

Then I was glad to hear from the noble Lord, Lord Collison, his own assessment that the future attitude of the General Council of the T.U.C. would be, on balance, favourable; but again questions have to be asked and will be answered. This we all understand. The noble Lord, Lord Rochester, apologised for speaking late in the debate. I do not know why he did this, because in my opinion I think he made a most important contribution to our discussion. Money is not the only thing in life. Many other things determine where men work and whether they enjoy their work. This question of motivation and, more important, study as to how to develop in ordinary men the latent gifts which they all possess is something to which we must give increasing attention. This is the difference between good and bad leadership—the capacity to pick on the gifts we all have and bring them out into the open and into their proper use.

Then the noble Lord, Lord Arwyn, winding up, had a good swipe at the wrong type of director. I have a good deal of sympathy with him on that point. The Manchester textile industry, which I know intimately, had, when I was young, too many grandsons of their grandfathers running its affairs. Thank goodness! this is a phase that is now behind us, but this situation did not do the industry any good. I have tried to answer everybody, but if I have missed anybody out I hope that they will forgive me.

My own feeling arising from this debate is that, basically, we are all agreed on our diagnosis and our objectives. What happens about the cure is the next question. Again, there is a broad measure of agreement. What it boils down to is a change of attitude throughout the whole of industry, in management and trade unions, with everyone working together and changing the attitudes from what they are to-day. These attitudes are changed primarily by better information. Comparing ourselves with Europe, how good are we? How good is firm A compared with firm B? If we know these things we are on the way to being able to produce solutions to our problems. The noble Lord, Lord Drumalbyn, raised a point about comparative information. He understood what the point was of comparing firm A with firm B in this country, and firm A in this country with firm Y abroad, but what was the point of comparing industry with industry? I am not a trained economist, but I should have thought that the answer was this. In order to produce £1 million of produce—

LORD DRUMALBYN

My Lords, if I may interrupt the noble Lord, may I say that I did not ask what was the point of it. I asked whether it was possible, and whether it was worth while in that sense.

LORD WINTERBOTTOM

My Lords, this is a difficult point. It is difficult to know, when one is seeking for information, whether it will be worth while or not. I should have thought that at the end of the day if you knew that it took 1,000 men and £100,000 of capital to produce £1 million of goods in one industry and twice as much in another, that would be helpful as information. I am all in favour of collecting facts. Some are useful and some are useless, but you have to have the facts and the knowledge before you can decide whether they are useful or not. They are very often useful, provided that one does not burden one's colleagues with them too much. A little pre-selection is important.

The removal of anxiety is something which was touched upon, I think either by the noble Viscount, Lord Mills, or by the noble Lord, Lord Collison. Everybody agrees that the memories of the 'twenties and the 'thirties still haunt and plague our industry. One noble Lord suggested that this fear was being handed on to the children. I think this is true. It is something which must be removed by education. At the same time, when we are talking about education I would never say that this cannot come back. If we do not solve the problems which we are now facing we may have to face unemployment and economic disruption. There is no absolute certainty that we are going to win. That is why this debate is so important. Although we want to try to remove unnecessary anxiety from the minds of our young people, nevertherless we have to inculcate in those minds their responsibility for finding a solution.

Arising from this is the question of a spirit of co-operation on both sides of industry. I have touched on that matter in reference to Lord Sieff's speech, and I consider it is of the first importance. I believe, however, that this is something which is growing, and as both sides of industry come together, in the "little Neddies" and in the wide fields of joint endeavours which are growing up, I think that this co-operation will grow and become a mellowing factor in the relationships within industry.

Finally, we come to this question of education in the widest sense. Here, again, everybody is agreed. Education for management, education for foremen, education for professionals, post-graduate training, better apprenticeship schemes and encouragement to children to stay at school and yet not lose the advantages of an apprenticeship, and so on—all these are matters which are under study, which we agree have to be dealt with, and we are starting to do so. This has been going on in this country for a number of years, and we have pinpointed the problems, made our diagnosis, and are starting to apply the cures which we believe are necessary.

LORD DRUMALBYN

My Lords, I am sorry to interrupt the noble Lord again, but he is making such a good and informative speech that one is encouraged to do so. The noble Lord, Lord Bowden, laid very great stress on the retraining and the refresher courses. I am sure that every noble Lord would like to know what the noble Lord, Lord Winterbottom, can tell us about that. Is he able to give any information to the House about what can be done in future?

LORD WINTERBOTTOM

My Lords, I wish I could. I am afraid that I have no exact knowledge on this question that would be of value to this House at this moment. The noble Lord, Lord McCorquodale of Newton, suggested that this was a subject on which we might have a debate, and perhaps I might suggest to the noble Lord that a debate when exact information could be given to the House might be welcomed if a Motion were brought forward at an appropriate time.

As I said, I think that there is a growing consensus of opinion in this country as to what our problem is and as to what should be done about it. Her Majesty's Government have done what they can to keep the momentum moving and growing. We are, after all, trying to do something, and in the process of trying to do something new we are from time to time going to make mistakes. But this will not deter us. I think that the whole range of legislation that has been brought in to underpin the National Plan, and the steadily improved applications of the techniques which are being developed, will enable us in due course to play our proper rôle—the rôle that all want this country to play—in the world. My Lords, I myself am in no way despondent. I have every faith in the capacity of this country to solve these problems, and to play the part that we all want to see us play in a difficult and dangerous world.

9.23 p.m.

LORD BYERS

My Lords, on behalf of myself and my noble friend Lord Rochester, I should like to thank the Government for the full, courteous and painstaking replies which they have given to this very important debate, from the noble Lord, Lord Shepherd, and the noble Lord, Lord Winterbottom. I would congratulate the noble Lord, Lord Winterbottom, on the admirable way in which he has discharged his responsibilities in speaking from the Front Bench for the first time. I should also like to commiserate with him upon having had, on this first occasion, to defend such a bad tax. But I can assure him that if he remains a member of the Government, as I am sure he will, this will not be the last time that he will have that sort of responsibility.

I should like to say how extremely pleased I am at the course which this debate has taken. I think we have had some very notable contributions and a very high general standard throughout the whole debate. It would be invidious of me to comment on any individual noble Lord's speech, because we have had so many useful and important contributions. I could, perhaps, say that they will all be noted down and action will be taken as soon as a Liberal Government is returned. In the meantime we have to rely on the present Government to do something. I think we have exposed a difference of view, in that there are many of us who are convinced that there are something in the region of 2 million people so badly under-employed that they must come out of the jobs they have now and be properly redeployed. I do not believe we should then be faced with a labour shortage of 800,000 or anything like it, as envisaged in the National Plan.

Finally, may I say that I do not think we have had a convincing answer as to how the new employment tax will manage to get people out of the over-manned industries by giving those industries a premium of £20 per head on every worker they employ. No doubt we shall have other opportunities, as the noble Lord said, of going into that matter in more detail. In the meantime, with your Lordships' permission, I would ask leave to withdraw this Motion.

Motion for Papers, by leave, withdrawn.