HL Deb 09 November 1971 vol 325 cc257-365

3.41 p.m.


My Lords, with your Lordships' permission, I should like to repeat a Statement that is being made in another place by my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs. Following is the Statement: The purpose of the exchanges which have been taking place over the last year with the Rhodesian authorities has been to establish whether there is a basis for negotiation of a settlement within the framework of the Five Principles. The discussions conducted by Lord Goodman, to whom I am greatly indebted, have made considerable progress. But there remain several crucial points which present real difficulty. I have therefore decided to go to Salisbury for discussions with Mr. Smith to see whether these matters can be resolved. I shall leave on the 14th of November for this purpose and shall be accompanied by my right honourable and learned friend the Attorney General and by Lord Goodman. I do not underestimate the difficulty of the task but if there is a will to succeed on both sides, there are grounds for hope. If a suitable basis for an agreement is found, it will be consistent with the Five Principles to all of which Her Majesty's Government attach importance. If agreement is reached we would then have to satisfy ourselves that its terms were fully understood by the Rhodesian people as a whole and acceptable to them. The present situation benefits no-one, least of all the Africans, and everyone must hope for a just and reasonable settlement to this unhappy story. After all these years of frustration I suffer from no illusions that my task will be easy; but that the effort is, in the widest sense, in the public interest, I have no doubt at all.

3.43 p.m.


My Lords, I am grateful to the noble Earl for repeating this Statement. I would say at the outset that we on this side of the House support and welcome the decision made by the Foreign and Commonwealth Secretary to visit Rhodesia to see whether a satisfactory settlement can be arrived at and whether Rhodesia can quickly return to legality. I wonder whether the noble Earl will agree that the most significant words in this Statement are those words dealing with a suitable basis for agreement: that it must be consistent with the Five Principles to all of which Her Majesty's Government attach importance. If agreement is reached we would then have to satisfy ourselves that its terms were fully understood by the Rhodesian people as a whole and acceptable to them. We on this side of the House find this to be the most significant and welcome part of the Statement. I wonder if the noble Earl can say whether the Common-wealth countries have been consulted, and whether it is the intention of Her Majesty's Government to report to the Commonwealth Governments after the Foreign Secretary has completed his negotiations in Salisbury. I think it is clear from the Statement that the Foreign and Commonwealth Secretary, while he has great determination, feels that a solution will be hard to find. I think we all recognise that to be the case, but we hope that it will be possible for him to succeed, as I say again, within these Five Principles.

My only other comment is in regard to the debate to-morrow on the Rhodesian Sanctions Order. I, for one, should hesitate to express any views which would make the task of the Foreign and Commonwealth Secretary more difficult. I do not know in the end what would be the wish of the House: whether it would wish to have a debate, or whether it would be prepared to see the Order go through on a formal basis. The latter would certainly be my view. If the noble Earl the Leader of the House could undertake that, when the Foreign and Commonwealth Secretary returns to London and has made a Statement, the Government would provide time for a full debate, then I would certainly recommend that we do not say anything to-morrow that would in any way make the task of the Foreign and Commonwealth Secretary more difficult.


My Lords, I, too, should like to thank the noble Lord for repeating this Statement. We on these Benches should like to consider the point which has just been made by the noble Lard, Lord Shepherd. In the meantime, perhaps I might ask the noble Earl one or two questions. Would he agree that Mr. Smith is on record as saying that he does not believe in the Five Principles, whereas the British Government are, I hope, honourably bound by them? Therefore we must look with some caution at the prospect that a settlement will be reached.

The other two questions I would ask are these. Has there been any marked change in the views of Mr. Smith to justify this visit, particularly having regard to the words "considerable progress"? Could a little further light be thrown on that expression? Lastly, is it intended that the Foreign Secretary should have consultations with others than the members of the regime in Rhodesia, in order to ascertain the views of the Rhodesian people as a whole? I suggest that it would be helpful if the Foreign Secretary, when he is in Salisbury, consulted others than spokesmen for the illegal regime.


My Lords, I should like to acknowledge straight away the restraint and statesmanlike responses of the noble Lords, Lord Shepherd and Lord Wade, to this Statement. I appreciate their attitudes. I am sure that they for their part, will appreciate that at this stage it would be sensible for me, in the light of the forthcoming discussions in Salisbury, to be as restrained in comment on the position as may be. For those two reasons, I should not wish to be drawn, if the noble Lord, Lord Wade, will forgive me, into trying to answer in any depth the first two questions he posed, although I think the fact that there has been considerable progress in the preliminary discussions which the noble Lord, Lord Goodman, and officials have been conducting indicates, by implication, that there has been a shift in the Rhodesian position.

In answer to the noble Lord, Lord Shepherd, again I should not wish to be drawn into particularising any part of the Statement. The Statement that I have repeated hangs together, and I should not wish to attribute any more importance to one part of this comparatively short Statement than to any other pant, although I do not underestimate the importance of those parts of the Statement to which the noble Lord drew attention. In answer to his specific questions, the Commonwealth have been informed of the position, and I am sure that it is the intention to keep the Commonwealth informed.

So far as to-morrow's debate is concerned, this of course rests with your Lordships, and my noble friend Lord Lothian and I will abide by whatever your Lordships consider to be appropriate. But what I can assure the noble Lord is that as soon as my learned friend returns from Salisbury both Houses of Parliament will be informed of the position which has by then been reached, and I have no doubt whatsoever that, although our programme between now and Christmas is fairly crowded, arrangements can and will be made through the usual channels for the subject to be debated, if that is the wish of noble Lords opposite and of those behind me.

Referring to the third question which the noble Lord, Lord Wade, put to me, I can assure him that it is the intention of my right honourable friend to seek a wide range of representative African opinion during his stay in Salisbury. Perhaps I might add that, in addition, Rhodesian Africans will have every opportunity to express their views cn the proposed terms during the test of accept-ability, if we get as far as that, along the road towards settlement. I can give the noble Lord, Lord Wade, both those assurances.


My Lords, just to get a little further information, am I to understand from the noble Earl that there would be a test of acceptability apart from the discussions which the Foreign and Commonwealth Secretary will have in Rhodesia next week?


My Lords, if we get as far as that, that would be the intention: yes.


My Lords, is the Minister aware that a large number of us on these Benches do not regard this visit as of value?


My Lords, I am afraid I could not quite catch what the noble Lord, Lord Brockway, said in his first question.


My Lords, is the Minister aware that a large number of us on these Benches do not regard this visit as of value? Is he aware that while these discussions are to take place racial discrimination is now being practised in Rhodesia more severely than it ever has been, and particularly against the Anglican and Roman Catholic Churches? May I ask him this further question'? When the Minister says that African opinion is to be consulted, is the Foreign and Commonwealth Secretary going to demand an opportunity to meet the African leaders who are now in detention, and will they be able to express to him the views of the majorities of the African peoples?


My Lords, I wonder whether I might deal with these questions one by one. I apologise to the noble Baroness.


My Lords, what I have to say has very much to do with the question asked by my noble friend, which is: is the noble Earl aware that, whatever the result of these discussions may be, we shall look with great concern not only at whether any agreement is consonant with the Five or the Six Principles but also at the method chosen to ascertain the real views of the peoples of Rhodesia in their entirety? Hitherto, the Smith Government has normally chosen the Chiefs, who are paid officials, to be regarded as the mouthpieces of African opinion; and this is regarded by many of us as unsatisfactory.


My Lords, again I do not think it would be right for me, on the eve of vitally important negotiations, to be drawn too far into the substance of the issues. The noble Lord, Lord Brockway—and I was glad to see him restored to his normal full audibility —is entitled to his opinion about the value of these proposed negotiations. I am entitled to my opinion, and the noble Lord, Lord Shepherd, speaking with the authority of the Front Bench, is entitled to his. All I can say is that I note the opinion of the noble Lord, Lord Brockway. On the question of discrimination to which the noble Lord has referred, I think that he may well have had in mind the recent evictions and I should like to make it clear both to the noble Lord and to your noble Lordships as a whole that my right honourable friend is as concerned as anyone by any proposals to move, for racial reasons, African peoples from the mission lands which they have long occupied. Perhaps I should also make it clear that the Rhodesian authorities have agreed to suspend any such evictions.

In answer to the third question of the noble Lord, Lord Brockway, which bore on the question which the noble Baroness, Lady White, put to me, I do not think it would be possible for me to state definitely at this stage whether my right honourable friend will be seeing any African leaders who may be in detention at the present time. But Ican assure the noble Lord, Lord Brockway, that my right honourable friend will be taking this matter up in Salisbury when he gets there.




3.56 p.m.

Debate resumed.


My Lords, economic debates in this House over the last 25 years have been dominated for the most part by the same problems in one form or another—unemployment and regional disparities; the low levels of British investment, growth and productivity; industrial relations; the cost of living; exports and the balance of payments; and the value of the pound. Sometimes the spotlight has been directed particularly at one of these problems, sometimes at another. What is particularly disturbing at the present time, and what we all very much deplore, is that we have a quite unacceptable level of unemployment together with a high rate of inflation and a rate of growth inadequate to sustain the steady rise in the standard of living that our people have come to expect. Nobody will complain about the Opposition's drawing attention to this situation. I hope, how-ever, to convince your Lordships that the policies of the Government are the right ones to remedy it.

I shall deal first with the situation, then with the aim of the Government to create a new climate with a view to resuming the increase in the standard of living this country enjoyed in the fifteen years to 1966 and to reducing the rate of unemployment, and then with the steps the Government are taking to achieve that aim. The economic situation today has its positive and its negative aspects. On the negative side, unemployment and inflation are much too high, and investment and industrial activity much too low. These negative aspects were already deep-seated when the present Government took office in June, 1970. While a record balance of payments was achieved by the previous Administration—and I noticed the fixation by the noble Lord, Lord Delacourt-Smith, on the balance of payments in his opening speech—this achievement was purchased at the expense of an economy in sharp decline. The growth rate had fallen hack from an average of 3.5 per cent. for the five years 1959-64 to an average of 2.4 per cent. for the years 1965-69 and declined to 1 per cent. during 1969-70.

In the period ending in 1970, the United Kingdom had the lowest growth rate of all advanced O.E.C.D. countries. Company profits (from which resources are found for modernisation, development and new employment) slumped from 15.6 per cent. as a proportion of total domestic incomes in 1964, to 11.7 per cent. in 1970. As a result of this deepening industrial depression, actual unemployment rose from 261,000 in June, 1966, to 547,000 in June, 1970. On top of this, powerful inflationary forces were unleashed by the failure of the previous Administration to stand firm when their statutory prices and incomes policy collapsed. Between December, 1969, and December, 1970, average earnings rose by 14 per cent. and prices by 8 percent. The combination of industrial stagnation and rising inflation was something entirely new, and we are now reaping the bitter harvest of this end product of "six years of Socialism" in terms of unemployment and the cost of living.


My Lords, may I interrupt the noble Lord? Is he saying that the Government, when they were in Opposition, were wrong to oppose the previous Government in their prices and incomes policy?


My Lords, I shall come to that point in due course. I am quite certain that we were not wrong in what we did at that time in the light of the circumstances of that time.

The change of Government in June, 1970, could not have been expected to change the state of the economy over-night. But it did lead to a radical change in economic policies. Instead of allowing inflation to proceed unhindered, the Government used their influence to resist excessive wage and price settlements where they could. Instead of still further increasing the burden of taxation on goods and services, the Government reduced S.E.T. and purchase tax. Instead of rushing in a statutory wages and prices freeze—with all the inequities and inhibitions of its chilly grip and its dangers when the thaw comes—the Government have encouraged those directly responsible for decisions on the level of wages and prices to exercise judgment, foresight and self-restraint. The Government have not only welcomed the C.B.I. initiative for limiting price increases to 5 per cent. up to April, 1972, but have given support to it by underwriting its acceptance by nationalised industries. Particularly since the spring of this year the Government have consistently gone for reflation and greater growth. I entirely agree with the noble Baroness, Lady Seear. The noble Baroness "lammed out" at both the previous Government and the present one, and I agree with her on the need for greater growth. I do not know why she felt that she had to defend herself in calling for greater growth.

The Amendment regrets that our policies have failed to provide the economic conditions necessary to ensure a better and more equitable standard of living for the people of this country. What is abundantly clear is that the policies of our predecessors had failed to do so. Our task in our first year of office was to set the stage to enable us to succeed where they had failed. Since October, 1970, the Government have been constructing a new economic industrial and commercial framework to overcome the various obstacles which have prevented this country from obtaining the steady industrial expansion achieved by the majority of our competitors. Noble Lords on the other side of the House took the view, when in office, that the long-term needs of this country required a change in the structure of our industrial relations, new commercial alignments with Europe, and changes to enhance the competitiveness and efficiency of British industry. Our policies have been directed to meeting these needs by putting on the Statute Book the Industrial Relations Act, completing successfully our negotiations to enter the E.E.C., and introducing a greater degree of cost effectiveness when considering Government support for industry.

The gracious Speech refers to proposals to promote competition and fair trading. We on this side of the House have long regarded the promotion of genuine and effective competition as an essential part of the Government's task of creating an industrial and economic climate conducive to the efficient allocation of resources; and an essential part also of providing the means by which the interests of the individual consumer are protected. Previous Conservative Governments were responsible for the Restrictive Trade Practices Act 1956 and the Resale Prices Act 1964. The time has now come to look again in particular at the institutional framework, the procedure for initiating inquiries, and the need to end discrimination between private and nationalised industry.

Our approach to Government policies for supporting industry has been widely misunderstood. It has been alleged that in our determination to improve viability we have shown a disregard of the human and social problems involved. This is quite false. We feel as deeply as noble Lords opposite. But we believe that the cure lies in greater efficiency, in ensuring a better return to the nation for the use of public funds, and in promoting a greater sense of cost effectiveness within industry. The previous Administration's attempts to promote investment through grants involved a high cost in public expenditure, but did little to improve managerial efficiency or profitability. Between 1966 and 1970, £1,691 million were disbursed in gross terms on investment grants, and investment over the period increased by 19.4 per cent. In the period 1959-1965, where direct support was less, investment rose by 26.5 per cent.

What do we deduce from this? It is clear that the size of financial inducements is not so significant a factor as the overall economic climate. The level of investment is crucial—I agree with the noble Baroness, Lady Seear. It is our view that a higher level of investment in the development areas can only be expected with a higher rate of growth in the country as a whole. Our new investment incentives, taken together with the reduction in corporation tax and other measures to promote economic growth, are geared towards stimulating more profitable in-vestment and improving company liquidity. While investment has not yet started to recover, there are encouraging signs that it will do so in 1972. There is no substance in the charge that we have created higher unemployment by pursuing insensitive industrial policies. Where we are faced with industrial failures or contractions we have shown that we fully recognise the wider social implications of industrial failures and do all we can to alleviate them. But where public funds are deployed, as in the case of Rolls-Royce and U.C.S.—which the noble Lord, Lord Delacourt-Smith, men-tioned—it is only right to insist that the companies should be so reconstructed that they will be able to offer employment on a secure and lasting basis with-out having to come back from time to time for still more assistance.

The noble Lord, Lord Delacourt-Smith. asked me about U.C.S. As my right honourable friend the Secretary of State has said in another place, Govan Shipbuilders are at present making a feasibility study as to whether there should be a two or three yard project. As to Clydebank, P.A. Management Consultants have been commissioned, I understand, with the support of the Con-federation of Shipbuilding and Engineering Unions, to carry out a professional study into the resources of the Clyde-bank yard, and talks are going on between Govan Shipbuilders and the unions concerned with a view to putting to the Government a proposition which would justify the support which my right honourable friend has conditionally promised. It is this kind of proposition that has to be put, a proposition that will ensure proper working conditions in Govan Shipbuilders from the start.

The second part of the Amendment deals with unemployment. I am sure we all agree that unemployment is a human tragedy. We on this side of the House are just as conscious as noble Lords on the Opposition Benches of the disaster that unemployment can spell for whole families and regions. The noble Lord asks what priority the Government are giving to unemployment. As the gracious Speech makes clear, the Government's first care—as the noble Lord noted—in their domestic policies will be to increase employment by strengthening the economy and promoting the sound growth of output. In formulating both the long-term policies and the short-term measures the Government are giving—not for the first time—a primary and continuing emphasis on the need to reduce unemployed. No Government deliberately chooses to increase unemployment. But powerful economic and technological forces are at work altering the industrial structure of this country. Certain basic industries are contracting. Over the years 1960-1970, employment in the primary sector—mining, agriculture and so on—declined by 600,000, or 40 per cent. Sixty-three per cent. of this reduction was concentrated in Scotland, South Wales and the Northern Regions of England. Others of our older industries, such as textiles, clothing and foot-wear, railway equipment and shipbuilding, experienced heavy declines, much of this concentrated in the development areas. At the same time, productivity is lower in the United Kingdom than in most other advanced industrial countries. While other countries have been improving their economic performance and increasing their share of growing world trade, we have been gradually losing out in some of our markets and have not been able to expand our industrial base to the same extent as our competitors.

To compensate for these structural trends and catch up on our competitors we shall need to do what we have not been able to do for the last 25 years—achieve a period of high and sustained growth in all sectors of the economy. It was this failure of the previous Administration to meet the growth target set out in the national plan that has accentuated the unemployment problem. During the post-war period national un-employment has tended to fluctuate. In 1963 unemployment in Great Britain rose to a peak of 560,000; by the end of 1964 we had reduced this to 324,000 as a result of the exceptional rate of economic growth achieved that year-5-8 per cent—a rate which incidentally resulted in the heavy balance-of-payments deficit of 1964. The rise in industrial activity started in 1963 and carried over to the first half of 1966 when unemployment was around 280,000. Since July, 1966, unemployment has kept on an upward path; throughout the period 1967 to 1969 the monthly count of unemployment was generally over half a million. The upswing in unemployment that started in the autumn of 1969 has continued throughout 1971.

A further major cause of unemployment has been the very sharp increase in wages. In 1969 and 1970, unemployment rose more slowly that would have been normal given the level of output. This year the reverse has occurred, as employers have been forced to shed some of their surplus labour. We have to face the fact that greater efficiency in the use of labour, as the noble Baroness, Lady Seear, said, was needed if British competitiveness in the face of international challenge was to be improved. Productivity has improved, and so has company liquidity.

My Lords, there are two classical ways open to the Government to stimulate the economy and so alleviate unemployment. The first is to stimulate demand by reducing taxation and interest rates; the second is to bring forward public sector programmes. Bank rate has been reduced to 5 per cent. My right honourable friend the Chancellor of the Exchequer has introduced a series of tax reductions amounting in all to £1,400 million a year—


My Lords, may I ask the noble Lord—


I have not quite finished my sentence—the cumulative effect of which should raise the growth rate to between 4 and 42 per cent. between the first half of 1971 and the first half of 1972. The noble Lord wishes to intervene.


My Lords, I am most grateful to the noble Lord for giving way. It was good of him to give us the figure of tax reduction. Could he now translate that into increased demand?


My Lords, this of course is the problem. We expect that tax reduction will result in increased demand because people will have more money in their hands to spend. I can-not quantify that because it will depend upon how much will go to savings and how much will go into consumption. I have merely given the noble Lord the end figure of the calculations. He himself knows how these things are done. The end figure of the calculations is between 4 and 4½ per cent. between the first half of 1971—this concerns growth rate—and the first half of 1972. In addition, special measures have been introduced to accelerate infrastructure expenditure in the development and intermediate areas. This is not inconsiderable. Over £160 million has been made available in these areas for infrastructure projects which can be brought forward for substantial completion by March, 1973. And a further £46 million is being made available for higher house improvement grants over the next two years. This will not only provide valuable employment over the coming months but will permanently improve the attractiveness of these areas to the people who live and work there and to incoming industry. Also, over £70 million worth of shipbuilding for the Royal Navy has been brought for-ward; that should help shipyards in the development areas.

Alongside the national measures to set the economy on a new path of higher growth, greater job opportunities and higher profits, the Government have taken steps to relate regional policy measures more directly to the needs of the less prosperous areas of the country. My Lords, it is to the service industries that we must look in large measure for the growth of employment in the future. Discrimination against the service sector has been reduced by the halving of S.E.T. and by extending free depreciation on plant and machinery to service industries in the development areas. In designating the wider special development areas, the Government have given priority to the older industrial parts of the development areas (in particular West Central Scot-

land and the North-East) where the situation has been deteriorating since 1966.

Next, we have to see that men are trained or retrained for and placed in the jobs available and to become available. Our manpower policies and the employment and training services cannot them-selves create jobs, but they can help in keeping down the numbers unemployed at any one time and in shortening the duration of unemployment. The Secretary of State for Employment has been carrying out a fundamental review of all manpower policies and services in relation to present and future needs. He expects to announce his future plans quite soon. Meantime, improvements have gone on apace. Employment information centres have been established in every region; the use of electronic equipment, already in operation in the Greater London Area, for circulation of vacancies is to be extended to 10 or 12 of the largest conurbations outside London and also to provide national lists of vacancies in certain skilled occupations; occupational guidance services are now available in 44 places—these are particularly useful to people who have made a false start in their career or wish to change their occupation for any other reasons. The Department of Employment have also increased the scale of assistance under their Resettlement Transfer Scheme. They are doing all they can to encourage firms faced with the prospect of redundancies to plan ahead and take all possible steps to minimise their adverse effects.

Training facilities are also being expanded to equip those displaced from overmanned or declining industries for jobs that will last. We are carrying on with the previous Government's programme of expansion and we aim to extend it much further. We now have 52 Government training centres, seven of them opened since June, 1970. We have authorised the construction of a further three centres and have other centres under consideration. A year ago there were 7,500 people actually in training and now the figure has gone up to well over 9,000. I understand it is expected that by next spring there will be about 14,000 people under training. To encourage the unemployed to take up courses the Government have raised the training allowances. New forms of retraining are being introduced not only in training centers but in employers' establishments and in colleges of further education, including courses specially designed for young people. The Government intend to publish a consultative document on industrial training before the end of the year.

Indeed, there is little in our short-term and long-term measures which is not directed towards the reduction of unemployment. But while we have taken major steps to improve the overall package of regional incentives and to bring the pattern of assisted area coverage into line with current needs, we recognise the need to assess the impact of our measures on the areas, each of which has its own particular problems. We are at present studying the alternative options that may be open. To take advantage of the recovery in investment in development areas when it starts, there is no lack of factory accommodation. Ninety-one advance factories are available for occupation, and 32 other factories belonging to the Department of Trade and Industry. Fourteen factories have been authorised since June, 1970. Consideration has been given to building further factories as existing factories are taken up.

My Lords, over the last year, as I have said, tile Government have taken the recognised remedies 'to deal with the underuse of resources, to increase the level of effective demand by an expansion of purchasing power, and to compensate so far as possible for lack of employment opportunities by the use of public finance for the improvement of the environment. This is bound to take time to work through the economy and it cannot be expected to reverse the upward swing in unemployment all at once. All the same, the economy is at last showing signs of improvement. There is now evidence that demand is picking up on the consumer side: the index of retail sales was 24- per cent. higher in the third quarter than in the first half of the year; the volume of exports was about 7 per cent. higher in the third quarter of 1971 than the average for the first six months of the year. There has been an improvement in company liquidity, largely due to tax reductions, and the best companies should now be financially better placed to meet investment requirements predominantly from their own resources. The September trends survey of the C.B.I. gave some indication of improvement in orders coming forward. The rise of the retail price index shows signs of being checked—it rose only three-quarters of 1 per cent. in the third quarter. There was a very small rise of 0.2 per cent. between July and September, even allowing for the seasonal factors which are favourable at this time of the year, and the increase was only about half of that for the same period in 1970. In the field of home sales of manufactures, wholesale prices rose by only 0.3 per cent. between July and September, compared with 1.1 per cent. during the same period last year. This is only the beginning. Our immediate aim is a year of steady and sustainable growth.


My Lords, I am sorry to interrupt tile noble Lord, but I wonder whether he would comment on the September retail figures, if he has them. I understand that there has been a drop in September.


My Lords, is the noble Lord referring to the rise in retail prices?


No, my Lords, the actual sales.


My Lords, I am afraid I have not got those figures before me.


My Lords, they have dropped.


My Lords, one cannot take any one month: I was taking the three months, which is a little safer than taking one month at a time.

The noble Lord. Lord DelaeourtSmith, argued that the policy of selective help for those in greatest need. through income-related benefits, imposes a high marginal tax rate on lower wage earners with families. I do not deny that there is at least in theory a disincentive problem whenever one has a system of selective social benefits. We have never tried to conceal this, but we have undertaken to do what we can to reduce the problem, and we shall continue to work for this. We have the problem very much in mind that the new rent rebates will gradually taper off a considerable way up the incomes scale; but do not let us forget that this is not really new. The noble Lord, Lord Diamond, said, for the Government of which he was a member in another place on April 21, 1969: … it is a complete myth that we are unselective".—[OFFICIAL REPORT, Commons, 21/4/1969; col. 55.] and he went on to refer to over thirty incomes-related benefits which he claimed had either been brought in or carried on under a Labour Government. To a large extent, then, the only offence of the present Government has been to make this system more effective by giving publicity to people's rights and thus considerably improving the take-up. I do not apologise for this: I am more impressed by the real help we are thereby giving to poor families than by the theoretical and largely speculative disincentive effect.


My Lords, I am grateful to the noble Lord, and indeed I am always grateful to him, for quoting my words. I never thought they were worth that trouble, but as he has mentioned what I said he will realise that our point is that this is a matter of degree. That is the point which is being made by all of us. It is obviously the case that there were many examples. The noble Lord has said that at that time there were 32. Is it now correct to say that there arc 44 cases, as a result of additional arrangements made under the present Government, in which there are means tested benefits of one kind or another?


My Lords, the noble Lord has asked a question to which he has obviously prepared the answer. He is a very good statistician and accountant. Of course I am not in a position at the moment to answer the question that he has put, but if it is so, does it matter if it gives help where help is most needed? That is exactly what we want to achieve.

I have outlined what the Government are doing to promote industrial expansion. There is, however, a limit to what any Government can do. It is private firms that have to produce the goods, sell them and make the decisions which will determine the levels of future production and sales. It is on these decisions that the level of future investment depends. The short-term prospects for the economy are visibly improving, but the longer-term opportunities—particularly in Europe—depend in no small measure on how resolutely industrialists act now to exploit the investment opportunities which the reduction in taxation and the improvement in investment incentives have made more attractive.

The importance of joining the European Community becomes more evident when we consider the turmoil in the outside world. The United States, having made generous provision for the restoration of the shattered economies of Europe and Japan, has now adopted an economic policy which has as its aim to curtail imports from these and other countries and to strengthen the competitiveness of the dollar. The repercusssions of the measures taken by President Nixon on August 15 are still working through on the world trade and monetary fronts. The new restrictions which our exporters face in the United States market are of particular significance to our own prospects. The United States is our biggest single overseas market and in the 1960s it was one of the fastest growing. United States imports from the United Kingdom increased by more than 21 times. The new measures in the United States threaten the growth of our exports, and we must hope that the United States authorities will abandon the restrictive trade measures and that we shall be able to return to the legitimate development of our trade. Meanwhile, our prospective entry into an enlarged Community provides us with a securer base to face economic challenges from the United States of America and from Japan. Moreover, as prospective members of the E.E.C. we can put forward proposals for resolving the monetary crisis and speak with a more influential voice. My right honourable friend the Chancellor of the Exchequer recently put forward to the proposals for replacing the dollar as the main reserve asset with special drawing rights to be created in amounts determined by international agreement through the I.M.F. to meet the need for liquidity. The proposals made by the Chancellor of the Exchequer received a large measure of support. Agreement along the lines he suggested would provide a means of solving the main problems of international liquidity and adjustment in a way which would enable all countries to pursue a policy of economic growth without undue destruction.

My Lords, let me conclude. While the economic problems which we face as a country are not new, the opportunities for overcoming them are indeed new. As a member of the E.E.C. we have a chance of setting the economy en a new and sustainable growth path. Both the latest C.B.I. and the D.T.I. surveys suggest that a recovery of industrial confidence is now on the way, and this will have been reinforced by the vote in both Houses of Parliament on October 28 for E.E.C. entry. However, this confidence has still to be translated into firm investment decisions that are needed to stimulate demand with employment.

Perhaps at this moment I may give the noble Lord the answer to the question that he put a short time ago. He asked about jobs reported to be in prospect in the development areas over the next four years and how these would compare with the figure of 142,000 quoted by my noble friend Lord Sandford in July, 1970. The present figure of new industrial buildings and those taken over by manufacturers totals 83,000. These figures of course make no allowance for expansion in existing establishments or new jobs in the service sector, and indeed the very nature of jobs in prospect makes such comparisons misleading, so wide is the range of factors contributing to them. I am not for a moment suggesting that we are complacent about the situation and the figures; but the noble Lord will realise that a major factor is the extent to which depressed economic activity, and until recently the prospect of continued inflation, combined to sap the industrial confidence necessary for expansion and development, and that it is the development areas that bear the brunt of this. The measures we have taken this summer are designed to tackle these problems at the roots. It must also be assumed that because of the economic situation some of the jobs in prospect in July, 1970, may now no longer be in prospect. It is always difficult to give an estimate of this kind, but we have done our best to meet the question of which the noble Lord gave me notice.

What is needed above all at the moment is a stabilisation of the investment climate and an end to the nagging uncertainties of the past two years. There was the uncertainty about our going into Europe. There was the uncertainty to which the advent of a new Government with new policies inevitably gives rise. There was the uncertainty about liquidity, and even solvency. And there was the uncertainty born of excessive rise in costs and the high level of industrial disruption. Liquidity is improving, so is productivity; the rise in prices is modifying, greatly helped by the C.B.I. initiative; so, too, is the level of wage increases; days lost in strikes in the six months to September are only half of what they were in the comparable six months last year. These are reasons why, despite the present uncertainty in the international monetary sphere, business confidence is recovering—because those who make the investment decisions are coming to believe that the country is on the right course.

The great majority in this country know very well that the standard of living of the people as a whole depends on the value for money of the goods our work force produces and of the services they provide—that is, on productivity. They know very well that the standards of living of the country as a whole will not be raised by indiscriminate subsidy, or for that matter by discriminating subsidy to one set of people at the expense of another set whose incomes are no greater.

As to the problems of unemployment and of regional disparities, they cannot be solved in isolation. They can only be solved if the economic climate is right. Experience shows that British investment in the development regions has taken place on a considerable scale only when the economy of the country as a whole was buoyant. The key to a buoyant economy is sound investment, and the prerequisite of sound investment is confidence, and confidence can only be based upon a co-operative effort. The Government are playing their part in establishing confidence by their steady and resolute pursuit of the policies which I have outlined. I hope and believe that they will have the support of your Lordships.


My Lords, may I put one question to the noble Lord? I did not do so before because I thought he might deal with the point in his concluding remarks. Can he, even in the broadest terms, give some estimate of when the country can expect to see the results of the policies pursued in the last 15 months, which he has been describing? For example, when in the very broadest terms may we hope to see unemployment down to the figure at which it stood when the Labour Government left office?


My Lords, the noble Lord is inviting me to enter into the realms of prophecy. I was looking at some of the estimates made by the previous Chancellor of the Exchequer, and seeing how widely wrong they were I think I should be very ill-advised indeed to make any prophecies.

4.35 p.m.


My Lords, I cannot speak as an economist; I can speak only as a politician. I cannot speak, either, with the knowledge and the authority of the only other noble Baroness who has spoken so far, Lady Secar, who made a most interesting speech. I shall not repeat the figures and percentages already given. Despite the protestations of the noble Lord, Lord Drumalbyn, I believe that Conservative Governments have always been less sensitive to unemployment than Labour Governments. Full employment is the linchpin of Labour philosophy, but it is regardedin one aspect by Conservatives as a brake on competition. I well remember that during the 1945–51 Labour Government Ministers would judge every single measure or change proposed by the effect it would have on employment.

In Britain, the South is always more affluent than the North, and to-day things look busy and bright in the South despite inflation and high prices, while unemployment is rising to alarming proportions in the North. I said that I would not repeat any of the figures, but I shall hang on to one figure only; that there are nearly 1 million unemployed at present in this country. It is not easy for ordinary mortals to understand the economic reasons for this. Economics I regard not as a science, nor as an art, but as some mysterious cult. In the last few years every condition asked for by different Governments which they said would give us prosperity has been contradicted in practice. For instance, doubts are being expressed to-day that only growth in the economy will give us pros- perity and employment. Anyone who studies the way this theory has worked out in developing countries will discover that growth and productivity are often achieved at the cost of high unemployment and very unpleasant social results. Often it is only the rich who get richer; the dispossessed get poorer, with fewer jobs open to them.

In Britain to-day we seem to have low growth, inflation, high prices and high unemployment—a remarkable achievement. One whole year of a Government with this situation maintained is surely a very black mark. The various Budgets and mini-Budgets to deal with the situation have been. I think, derisory, but they have managed to produce a worse relationship between the Government and the working people than has existed for many years in this country. We are told, or we have been told, that a good balance of payments is essential to keep down unemployment. Unlike the experience of the previous Labour Government, this Government inherited a good balance of payments. Has this brought unemployment down from the Labour Government's figure? What have this Government done with the good balance of payments? Unemployment, which was rising under Labour, has soared under the present Government. The balance of payments has not melted away, as Mr. Heath, I believe, suggested during one of his Election speeches. The balance of payments is healthy, and the Tories have not used it to create jobs. They have given tax relief to the better-off people in the community, but the unemployed have no spending capacity. Therefore it simply has not worked out.

There is nothing so dispiriting, demoralising and frustrating as to be unemployed. In these days, such frustrations may even have dangerous conscquencies: they produce irresponsibility. My noble friend Lord Brown, in the debate last Thursday, made a very original and deeply serious contribution, maintaining that there was a link between frustration and irresponsibility, and also that there could be a link between irresponsibility and the crime rate. With nearly a million unemployed, the optimistic noises made by the Government, such as the forecasts of "a steady upturn" or "things are improving", really sound like television commercials. In any case, for an unemployed man what is the use of a promise of "jam to-morrow"? What he needs is a promise of bread and butter to-day, and this is what he is asking for.

All Governments, when they win an Election, go through the ritual dance of blaming all their difficulties on the previous Government; and we all know that. But this does not excuse the Government from their political song and dance about the "benefits of private enterprise", and condemnation of "lame duck industries", without examining the circumstances that lead to these difficulties. They are very quick to appoint liquidators or assessors for an industry in difficulties. Has there been one case in which an advisory body has been appointed at the same time as the assessors and the liquidators have been put in, to examine what should be done with the men thrown out of work? There has not. Surely, when there is a decline in traditional British industries such as coal, shipbuilding, or the docks, a little humanity might be allowed to have a place in the reorganisation. Recently I watched a film on television showing the rigorous retraining of redundant miners in Belgium. We could take a leaf out of their book.


My Lords, I wonder whether the noble Baroness would forgive me for intervening for one second. I am sure she is aware that under both the previous Government and the present Government the Department of Employment have done a very great deal whenever redundancies have arisen. Indeed, the O.E.C.D. paid tribute to the work that had been done, and endorsed the efforts of the National Economic Development Council (which came up from both sides), saying that the handling of redundancies was one of the things that was perhaps best done in this country.


My Lords, I agree that they have done a certain amount; I do not think they have done enough: this is the point. Perhaps neither Government have done enough. It is ironic that the Government have had to rethink their instant reaction to the financial difficulties. In the case of the Mersey Docks crisis, in the case of the Rolls-Royce crisis, and even in the Upper Clyde Shipbuilders crisis, I believe that it would have cost the Government less if they had not been so doctrinaire and had stepped in with help at the beginning, as they have had to do later.

In this advanced technological age, when industrial units tend to become bigger and bigger, it is completely unimaginative and retrograde to deify only private enterprise, and denigrate public enterprise. For years Tory Governments have attacked nationalised industries and criticised their productivity performance. The noble Lord, Lord Drumalbyn, read out a certain number of statistics. I get confused by statistics, but to-day Professor Richard Pryke, of Manchester University, has a book coming out which really throws a hand grenade into the biased statistics about nationalised industries that have been produced continuously by Conservative Governments. How many times have we been told that our productivity does not match up to the performance of the Common Market countries and Japan, and that we are bottom of the League? But there are a few statistics here from Richard Pryke. It seems that in the 10 years from 1958 to 1968 our nationalised industries have come out as follows: railways, third; airlines, fourth; electricity, second coal, second. But manufacturing, where private enterprise stands supreme, is thirteenth down the table. It seems to me that Richard Pryke really knows something about these things; he is a great expert. All the Conservative Government can think of about the nationalised industries is to hive off the profitable bits.

The Government started by looking upon a dose of unemployment for this country as a kind of shock treatment for the trade unions, but the Government had their eyes shut to what is happening to-day, not only in this country but also in the world outside. A growing number of working people in this country have discovered bargaining power. I am not suggesting that they have always used it responsibly, but a sense of responsibility is not engendered when the workers have no confidence in the Government dealing with unemployment. We often hear that confidence in the City is an essential requirement for prosperity for business people. Management and labour can co-operate only when there is a high level of employment. The Conservative Government have a great deal to forget, and a great deal to learn, before they can launch this country on the road to prosperity.

4.48 p.m.


My Lords, it is always a pleasure to listen to the noble Baroness, even if one finds oneself unable to agree with every sentiment she utters. She is always clear, and she is always thought-provoking. On this occasion at. least I am sure that we all agree that the centre of gravity of this discussion this afternoon is the level of unemployment. However, I would submit that near the centre of gravity is also the problem of the value of money still falling, prices still rising—even though less rapidly—at what at any other time in our political history would have been regarded as a deplorable rate.

I wonder whether it is sufficiently realised in this connection that we are faced with a problem which has not, to my knowledge, confronted any Government in this country at any previous time in our history? Rising prices and rising unemployment are an extremely unusual combination. Usually, falling unemployment goes with rising prices. Usually, falling prices produce unemployment. But here, apparently, the reverse is the case. This, I suggest, should induce in noble Lords on the Opposition Benches some degree of charity in considering the problems with which they and the present Government have been confronted. For I venture to submit that these two evils—unemployment and the disturbing decline in the value of money—are not altogether unconnected. This is not a mere coincidence of misfortune in my submission. there is some connection between what has been happening. If your Lordships will bear with what to some of you may well seem to be a rather bleak and austere spelling out of the reasons why, I should like to dwell a little on this point.

The debate to-day has been more on Party lines than earlier debates on the gracious Speech, but to my way of thinking the subject of debate to-day is not in the last analysis a Party subject. It is essentially an intellectual problem, and I suggest that any solution thereof will present difficulties to either Party. Let us suppose, for a moment, conditions rather more ideal than we are likely to see in the next few months or perhaps in the next few, years. Let us suppose, for a moment, that there has been a period of stable prices and of incomes rising not more than the general rise in productivity. Clearly, we are a thousand miles away from that, but I ask your Lordships to forgive me, for the moment, if I dwell on such a situation. I think the contrast between that and the situation with which we are confronted to-day is instructive.

In such circumstances, if you had a stable price level and the level of incomes had not been rising more than productivity, and if unemployment at such a time were greater than what could be considered to be the irresistible norm due to change and friction and so on. then I should certainly say that the Government of the day were severely to blame. I can conceive that years ago, if there were unemployment in such circumstances, it might have been argued that for some reason or other incomes were still too high. But that is a point of view which I think has been generally abandoned. At the present day, surely we should ask in those circumstances, "Why put the burden of adjustment on incomes? Why not attack the cause of unemployment at its source?" And we should know what to do, for this is the paradox of the last 40 years of history. In the intervening period, I remember we used to say. "Well, we all know how to deal with inflation, but the problem of dealing with deflation is much more difficult and it escapes us." I have certainly said this in the past, but nothing could have been more completely wrong, because the fact is that we do know how to deal with unemployment due to deflation, in the sense of falling prices: you simply ladle out purchasing power until the situation turns round. Our failure since the war in the sphere of macro-economics has not been in regard to deflation; it has been in regard to inflation.

Let me now come a little nearer to reality. Let us suppose. just for the sake of argument, that you have a situation in which prices are rising—that is to say, where the value of money is falling—and at about 8 per cent. per annum, which is not at all a satisfactory position. Just think, my Lords, of the position of all cultural institutions in such circumstances. Just think of the position of those living on pensions which are adjusted only at longish periods. At the same time, the incomes of those employed —wage earners, salary earners and so on —are rising more than that, at 12 per cent. What happens? I shall not talk about what will happen to the balance of payments, because that depends so much on the rate of exchange and what is happening elsewhere; and you get into trouble with the balance of payments only if other people are not inflating as fast as you are. That is a danger which is not absolutely negligible, but it is not one upon which I wish to expatiate this afternoon.

But what will happen to employment in the circumstances that I have mentioned? What will be the effect on unemployment if the incomes of those employed are rising faster than the rise in prices? I confess that, on general grounds, I should expect more unemployment to occur. Outside comparatively narrow limits. I should not expect the difference to be made good out of profit margins. I should expect business, first, to try to redress the situation by raising prices to keep up with the rise in costs. Then, if there were restraints, if there were exhortations, if there were agreements to keep prices from rising so rapidly, I should expect business to react by trying to keep costs down by reducing the scale of their operations. And that, I suspect—to descend down to earth to what I believe to be reality; I may be wrong—is one of the things which has been happening to this country lately. Undoubtedly, prices have been rising, and undoubtedly the rise in prices has been due to inflation of some sort or another.

I listened last Thursday to a notable speech by the noble Lord, Lord Garnsworthy, on the rocketing of prices in the market for houses. It was a splendid speech, inspired by true humanitarian feelings, and the examples that he gave of hardship were such as to touch the hearts of all but the most stony-hearted. But the noble Lord seemed to think that this phenomenon of the housing market was a sort of spontaneous evil; something which was perhaps due to the machinations of a few evil-minded men, or something which had just hit us out of the blue. But the fact, surely, is that what is happening in the market for real estate is what always has happened throughout history when you have had an absence of confidence in the future value of money. I have no doubt at all, my Lords, that the rise in prices recently has been the result mainly of inflation, and I equally have no doubt that the proximate cause of the inflation has been the rise of costs. Inflation can be of different kinds. You can have demand inflation, as exemplified par excellenceby war finance, when Budgets are deliberately unbalanced, unlimited credit is created and a large flood of new purchasing power impinges on the volume of production which has not been correspondingly enhanced. You can have the same thing on a smaller scale after war, when the purchasing power which in one way or another has been pent up by rationing and scarcity, and all that sort of thing, impinges on the flow of goods and services.

As regards our own history in this respect, I think that a candid economist would admit that legitimate differences of opinion can arise as to what has happened at different times in the last 25 years. But I have no doubt that what has been happening recently has been a cost inflation; and although, as the noble Baroness who has now left her place hinted, economists do not always agree upon everything, I do not know that there would be many economists who would deny that some of our trouble, at any rate, has been due to cost inflation and that some of the trouble has been due to the fact that costs have been rising even more than prices. No one, I think, looking at the graphs in yesterday's Financial Times(with which I have no more connection) can doubt the squeeze on profits which has taken place in the last few years, and no one, surely, can deny—and I am not saying this in any tone of reproach at all; I am trying to be as subjective as I can—that the wage settlements of recent years have involved rises more than any corresponding rise in productivity.

Now, my Lords, who is to blame? I personally do not feel disposed to make accusations. I am rather out of harmony with the temper of your Lordships' House this afternoon. In my judgment, what we need at this critical juncture in our economic history is more understanding rather than more recriminations. But I am bound to say in all candour to my noble friends on the Opposition Benches that I cannot understand the attitude of those who say that this Government, and this Government only, are wholly to blame. Surely what we are suffering from is a problem which began before that; a problem which began under the last Government. The noble Lord, Lord Delacourt-Smith, in a speech of beautiful lucidity and moderation of tone, almost seemed to suggest at one stage of his speech that in 1970 the outgoing Government handed to the incoming Government a situation which was extremely easy to handle, and that if they had been sufficiently endowed with wisdom, which no doubt would have been forthcoming from his side of the House, everything would have been lovely. I find it extraordinarily difficult to believe that, great as is my respect for the intellect concentrated on the Opposition Front Bench, and indeed behind it.

I would say, not making recriminations, that what we are suffering from, both by way of unemployment and by way of the decline in the value of money, can be described in less personal terms, in more objective terms: the results, if you like, of the present institutional structure in the labour market the by-product of certain habits which have developed in collective bargaining; the by-product of an increase in the volume of credit more than what was ideally desirable in the circumstances; the result of wage settlements by arbitrators taking too much notice of minute problems of relativity and too little notice of the effects of the settlements that they awarded on the economy as a whole. I would say that what we are suffering from at the moment in the last analysis, and what is intractable for the present Government—and what would be intractable for Her Majesty's Opposition if they were to come into power—is the general state of bewilderment among the public generally; the general state of bewilderment among people of good will concerning what is happening to us and the relationship between prices, incomes and employment, and so on and so forth.


My Lords, I wonder whether I may interrupt the noble Lord in his very interesting speech. He is asking why this is a Party political issue. May I remind him that there was a General Election, and although I will not quote that terrible statement about "at a stroke", it was applied to measures that a Conservative Government would take to deal with employment and unemployment.


My Lords, I thank the noble Lord very much indeed for recalling to my attention that extremely unfortunate phrase. I never believed it when it was uttered. I am sure it was uttered in good faith, because I have the greatest belief in the impeccable integrity of our present Prime Minister, but I always thought that he was being over-optimistic in that respect, and it has sometimes passed through my mind in more recent months that his eyes are so set on the distant peaks of achievement that perhaps he has not always paid as much attention to what was going on under his nose as might have been wished.

Now, my Lords, what is to be done about all this? I think I know the solution of the stabilisation problem which would be most congenial to me in tranquil and ideal conditions. I formulate the ideal stabilisation policy as one which involves a control by the Government of aggregate expenditures such as to keep the value of money constant with reasonably full employment and wages and other incomes rising not faster than productivity. Whether this is done by financial means or whether it is done by fiscal means is to me a secondary matter. I am eclectic about this; I am open to argument about it. One can talk about it a great deal, but that is a technical matter. The norm seems to me to be a reasonable one: that the aggregate expenditure should not be such as to bring about inflation, but should be such as to permit a rise in the level of incomes, especially wages, equal to productivity or, if you are willing to put up with a little inflation, not more than 11 or 2 per cent. more than that. If that policy were adopted in normal and tranquil conditions, I would say that what happened after that would be up to the employers and the trade unions, and if they chose to exceed that norm then they would be answerable for the consequences.

We are miles away from normal conditions, and the application of that particular prescription assumes starting from an even level, a level where unemployment is in some sense or other normal, however you may define that. And, lamentably, that is not our position at all. Our position at the present time, despite the reassuring remarks of the noble Lord speaking from the Government Benches earlier, is still one of continuing inflation, slowing down perhaps but still inflation; and at the same time the volume of unemployment now is such as to mean a most substantial waste of productive resources not lo mention human anxiety and suffering. In such circumstances, I would freely admit that to put the brakes on so as to secure immediately a slowing down of the rate of aggregate expenditure in order 10 match exactly the rise in productivity would certainly intensify depression and unemployment. I suggest that no responsible person would advocate so sudden an application of the brakes as all that.

Our problem is rather the problem of slowing down the rise of prices and at the same time of increasing the volume of employment. It is clear (is it not?) that if incomes were to cease to rise more than productivity this problem would be nearly solved. I will not say that it would be entirely solved because there are deep problems of regional unemployment (on which the noble Lord, Lord Delacourt-Smith, spoke so eloquently) which would not be solved directly by these aggregate measures: lint I think that the noble Lord, Lord Drumalbyn, was right when he said that if you have a buoyant economy, the regional problems are ipso factoeasier to solve. I am quite sure that if the rise of incomes were more related to the rise of productivity, the whole situation would become more manageable. Then concessions on the part of the Chancellor in regard to taxation, innovations in Government expenditure and so on, designed to relieve unemployment, could be carried out without the lurking fear that the inflation will persist. I do not believe that in those circumstances the rise in incomes would be zero: on the contrary, I am inclined to think that in recent months productivity per bead has risen so considerably that the economy could look forward to a level of productivity per head larger than in recent years and consequently capable of sustaining without inflation a more substantial rise of wages without producing unemployment.

It is considerations of that sort which lead to the search for an incomes policy on the part of so many men of good will. I have said in this House before, and I should like to say it again, that much as I have disagreed with many of those who have advocated an incomes policy, and sceptical as I remain of the availability of a cut-and-dried solution in this connection, I honour those—and especially those on the Opposition Benches—who, running the risk of incurring unpopularity among their own fellows, have insisted on the point that I am trying to make. If there were available some incomes policy, some method of disciplining the rise in incomes so that aggregate expenditure can be let out without giving rise to inflation and perhaps to unemployment, we should all surely be able to go home much happier. I say that I respect this point of view; but I must confess that I am still a little sceptical about such expedients as long-term policies. I confess that I see tremendous difficulties in the control of wage relativities from year to year from any central authority. I see great possibilities of cumulative evasion. I think that both employers and employed would know all sorts of ways round it. I confess that in the long run, once the present difficulties were over, I would prefer to trust to macro-economic control of aggregate expenditure and a greater public understanding of the issues involved than at present exists. But, certainly in present circumstances, I would not rule out on principle any expedient which would stop the inflation and help employment.


My Lords, would the noble Lord include price control in "not ruling out" any expedient?


My Lords, I am much more sceptical of the efficiency of price control in solving the unemployment problem than I should be of the efficacy of incomes control; because price control by squeezing still further the profit margins might easily induce individual corporations, whether private or public, to seek to economise still further on manpower. If the noble Lord can show me cases of monopolistic price extortions which need to be controlled he will not find me doctrinaire in refusing to accept.

I say that I do not see an easy way by the traditional methods. The control of prices and incomes under the Labour Government was not stupendously successful. If it were re-imposed I think it might work for a time, but I should fear that after a time it would break down and that there might be pent up behind this temporary stoppage demands greater than they might have been in the absence of it. But I am not sure. If the Government were to introduce that sort of measure as an emergency in one of the unforeseen contingencies which may arise in this difficult situation with which we are faced, I am not sure that I should do very much eyebrow-raising at that stage.

Let me turn to other ideas which are prevalent and which are also open to some objection. I read with great interest the other day the Wincott Lecture by my great friend Professor James Meade in which, arguing with his accustomed persuasiveness and lucidity, he recommended that there should be a suspension of certain privileges regarding Supplementary Benefits and so on in the event of strikes which are due to unagreed claims exceeding certain norms laid down by the Government. One must treat with great respect the point of view of a man who, behind the scenes, certainly did more than anyone except Maynard Keynes in inducing the Coalition Government to accept the present pledges with regard to employment policies. But, having said that, I must say that I see great and obvious difficulties, loopholes, in Professor Meade's suggestions. What if employers and employed agreed to exceed his stated norms? Then none of his sanctions come into operation and we are off again. Personally, I have played about with the idea of some sort of tax on employers who make agreements exceeding norms of a certain average income per head, but I find it difficult to believe that it would be politically acceptable. There are also some quite formidable administrative difficulties, although I do not think that they would be insurmountable. In any case, I would think of such a thing only as an emergency measure; in the long run it would be possible to shoot holes through it with a very inaccurate gun.

Thus, my Lords, I confess that I must end on a sober note. I find it very hard to take as optimistic a view of the present position as did the noble Lord, Lord Drumalbyn, and other members of the Government. Certainly I think that the measures which the Chancellor of the Exchequer and the Government have taken could produce—and I stress "could produce "—some upturn, provided that confidence is restored; provided that there exists a confidence that the future is going to be better, that inflationary wage claims are not going further to deplete cash flows and diminish incentives to investment. But that restoration of confidence depends on a state of affairs on all sides which has yet to be established. It is difficult to be sanguine that people at large are yet persuaded of the necessary relationships between prices. incomes, production, and so on, which must obtain if our way is to be smooth both in regard to employment and also in regard to the value of money. I say, therefore, that a heavy responsibility rests upon all concerned; upon Government and Opposition; upon both parties to collective bargaining and to those responsible for the formation of public opinion in regard to these vitally important matters.

5.22 p.m.


My Lords, this is a good Government and I shall support them in the Lobby if there is a Division. But that does not mean that friends of the Government cannot be outspoken, and each one of us must say what he, or she, thinks. I regret —and I think that my regret may be shared by others—that in the gracious Speech unemployment was referred to only in the words: At home my Government's first care will be to increase employment by strengthening the economy and promoting the sound growth of output. My Lords, the Government must be seen to be tackling unemployment now to a greater degree than at present, as well as placing reliance on the long-term policies that have been so ably deployed this afternoon by my noble friend Lord Drumalbyn. To-day we have nearly a million unemployed. I believe in those long-term policies that have been spoken about by Lord Drumalbyn, and most learnedly by Lord Robbins, in that fascinating speech to which we have just listened. I believe in all those, but I would plead for more to be done now for the immediate position. Those standing in the queue cannot wait for longterm policies to mature. Those standing in the queue need the fillip and the hope of a "crash" programme to assist and to relieve. I know that such a programme cannot solve—as was said by the noble Lord, Lord Drumalbyn—but at least it can ease the lot of those who are unemployed.

I believe that a million unemployed is a figure quite unacceptable in to-day's social structure. We know that there must be a pool of from 21 to 3 per cent.; but a million reminds me far too much of the failures in the 'twenties and the 'thirties to deal with unemployment as the biggest blot in our political history in the last fifty years. I speak as one of the "ancient Britons" if you like. When I look round your Lordships' House I see very few who were in another place in the 'twenties, as I was, and right through the 'thirties. It is my regret, and I think the regret of many of us who were in Parliament at that time, that the National Government did so little and were so inadequate in their measures. Each one of us who has survived those days must carry with him his responsibility for that failure which goes into history. In so many prosperous and comfortable parts of Britain we were ignorant of the misery; we were complacent about what we did not see, and what we only read about, in the distressed areas. I was a Member for a South of England constituency and had a very comfortable majority. I worried about the minor problems of seasonal unemployment in the holiday resorts, but I forgot, as did many of my friends, about the rotting centres. Away in the Midlands, in Wales and in the North whole families were on the breadline and children were under-fed. Luxuries were unheard of; Christmas was passed by without gifts and with only pathetic coloured decorations. Looking back on those days, I marvel at the bravery and patience of the men and women, and I feel ashamed of those days.

To-day, my Lords, social security, quite rightly, guards against anything like that want and poverty of the 1920s and the 1930s. But there is more than satisfaction of material wants to the human spirit, to human dignity and to a man responsible for a family. That is why I appeal to the Government, of which I am a loyal supporter, not to let us revive the memories of the 'thirties, but boldly to devise some form of emergency "crash" programme. I have not the ability nor the knowledge to say what that programme should be: it would be for the Government to bring it forward. But let determination and sympathy be seen to be inspiring Ministers with a sense of urgency. I read recently in the Press that one of the Ministers of Her Majesty's Government said a think I am paraphrasing him correctly) that employment must be seen in its right perspective. That is true; but that sort of hard, stone-cold view alienates the Governnment from the ordinary folk in the country. Take the question of the U.C.S. I am sure that Mr. Davies is right in his policy, but the announcement in your Lordships' House was bold and cold. It needed supplementary questions from both sides of the House to draw out words of sympathy and understanding to be added to the cold announcement—sympathy and understanding of the effect of the policy on thousands of families.

I think it was the last Conservative Government who sent various Ministers to distressed areas. The noble and learned Lord on the Woolsack went. I remember very well the photograph—it was on television—of the noble and learned Lord, with a workman's cap on his head, going down a pit or being engaged in some such occupation. It was good and sound; it showed that human sympathy which 1 want to see shown in a greater degree than is being shown at the present time. I would ask: who is explaining to-day to the men of the U.C.S. and of B.S.A., to the 35,000 men who are going to be made redundant in the Post Office, to firms who are contracting and peeling off, rightly, the surplus of manpower in order to be more competitive in a competitive world, the Government's programme and how and when it will work to their individual benefit? I have listened to a lot of most learned speeches, and economics and figures have been bandied around your Lordships' House. But that is not going to help the man in the queue. What he wants to know is: "Where am I going to get work?" My Lords, I believe that in the short term the Government face a social emergency. I am reminded of a Prime Minister in whose Government I had the privilege of serving, Mr. Churchill, and of the notes that we used to get from No. 10. They just said: "Action this day!". That is what I hope we shall see from this Government, of which I am a loyal supporter.

5.32 p.m.


My Lords, it is a special pleasure for me to follow two most serious speeches—not the only two —which have this in common: that they have, in the first case, remarked upon the somewhat partisan spirit of the debate this afternoon; and, in the second case, a Government loyal supporter has drawn attention to a tragedy which we are all witnessing and all wish to see relieved. It is not an idle compliment that I am going to pay to those two speakers. I am going to do what a speaker rarely does, and that is to eliminate a large section of my own speech which was going to make fun of the Government (and they are extremely vulnerable to this at the present time), in the hope that the two noble Lords who have just honoured us with their sympathetic and helpful speeches will share with me the feeling that the Government ought to recognise that there must be a response to the widely expressed anxiety about the future rate of unemployment.

I have not heard from the Government what their view is. I well understand their reasons for not wishing, with Government responsibility, to talk about future figures of unemployment. You can say what you like about what has contributed to the present position, but the situation twelve months from now will be laid on the necks of the Conservative Government, and on nobody else. And twelve months from now, my Lords, in my own objective and informed view, so far as I am able to inform myself, by the end of the next calendar year, unless the Government do something more, the level of unemployment will remain the same as it is to-day. That is my view. I do not want to trouble the House with lengthy reasons why I arrive at that view, but I do so on figures, including last month's released statistics. The Government may he more up to date than I am as to the general trends, but I doubt it. I therefore say to them that there is a clear view being expressed in your Lordships' House that more must be done than is at the moment being done, unless the Government are prepared to say, "We are satisfied that twelve months from now we shall have brought the unemployment figure down by one-third of a million, one-half of a million", or whatever they think is a reasonable figure to be achieved in the course of the next twelve months. My own view is that they are incapable of saying that. My view, based on some of the things the noble Lord, Lord Drumalbyn, said, is that the Government are working on a misapprehension—and I shall come to that in more detail. I hope therefore that the Government are going to accept the need to do more than has so far been done. That relieves us all of the responsibility of saying how we got here.

The noble Lord, Lord Robbins, made a persuasive point on that. How we got here is capable of being answered in many ways, and it would be likely to be answered in different ways according to which Despatch Box one was speaking from. But I imagine that we all feel that where we are is important, and that even more important is where we shall be in twelve months' time. I suggest to the noble Lord, Lord Robbins, that the speech he made was most constructive, but that the task of Government is not to find the ideal solution but to find the best practicable answer: one in which the advantages will be as great as possible, and the disadvantages, as little as possible. Therefore one is forced to make suggestions, even though there are difficulties about all of them. I agree completely with the noble Lord, Lord Balfour of Inchrye, that there are people in the queue to whom it is impossible to explain that it is going to be to the advantage of their grandchildren that they should remain in the queue year after year: they want to come out of that queue within six months, three months, or even less than that. We all know that the hard core of unemployment has increased most distressingly in the past year.

I suggest that the present Government are in a position in which restraints from which previous Governments have suffered no longer exist. I may be over-concentrating on the anguish of having to cope in an unimportant way with a balance-of-payments crisis for nearly six years; but when one has been in that position, when one has recognised daily how one's attempts to deal with the economy have been hamstrung by the straitjacket of a continuing balance-ofpayments crisis, one is bound to say that if you are freed from that, you are freed from a considerable restraint. My Lords, we are completely freed from that. Never mind what the figure was in 1964. The figure in 1969 was a surplus of £440 million; in 1970, it was £620 million; in 1971, in only nine months, it was t:624 million; and to-day it is running at something over £1,000 million a year. That is the present balance-of-payments surplus on current account, visibles and invisibles together. I suggest that that is embarrassingly large. It is embarrassingly large in our negotiations for the settlement of international rates of exchange, because it will be quite impossible to satisfy others that this is merely the result of some curious attempt on the part of the Government to run the economy at such a low level and subject to 11 million unemployed. So I am saying that that restraint is no longer there.

Secondly, the restraint of lack of competitive prices is no longer there. The last published figures indicate that we are not out of place in terms of keeping our prices competitive in the world at large. We are broadly the same as the United States, France and Italy; we are a little more than Western Germany, but much less than Japan. And the recent developments to which the noble Lord, Lord Robbins, referred, indicate that our position is improving and that we arc getting nearer to holding our own in the international price competition. Therefore, I am saying to the Government that that restraint is for all practical purposes not with us. With these two restraints removed, what practical thing can the Government do now to avoid Lord Balfour's queue continuing for ever and ever? I hope that I do not embarrass the noble Lord Partywise by being sympathetic to his point of view. I am sure I do not: he is much too big a man for that. My Lords, we all accept that the level of growth in the economy is low, much too low, and whatever views we may have as to the ultimate cause of inflation, of how to stop it and how to remove this most curious anomaly which has crept in in recent years and from which we have all suffered—whatever view we may have as to that and the possibility of some kind of prices and incomes policy, I should have thought that everyone in your Lordships' House who has turned his mind to the subject would agree that the first condition for getting people to accept any kind (I repeat "any kind") of prices and incomes policy, is economic growth. You cannot get people into the frame of mind of even starting to discuss matters unless there is something to share. To devise methods of sharing nothing is not an appetising invitation to any group of persons. So whichever way you look upon it we must increase the level of economic activity, and by doing so we shall of course reduce the numbers of unemployed.

I am sure that we should be wise to get well into our minds that the figure of unemployed is upwards of 1¼ million. All the work has been done and there is no longer any reason to challenge it. Certainly registered unemployment is less than that and certainly large numbers of women and fairly large numbers of men do not register; so if we are really concerned with the human tragedy of unemployment, as I am sure we all are, the figure in our minds should be the best figure we can honestly believe in, which is about 1¼ million. That is the size of the problem-5 ½- per cent. of the working population—and I am suggesting to the Government that what we must do, and do immediately, is to take steps which will increase the level of activity in the economy so as to give an opportunity of additional growth and of reducing unemployment, and also to give the only stimulus which is now known to exist to greater investment—because without greater investment our future remains bleak or black, whichever way you want to look at it.

I now want, if I may, to say a word or two about investment, because the noble Lord, Lord Drumablyn, said that the key to investment is a sense of confidence. With the greatest respect to him, that may be right, but it gets us nowhere. How does a businessman get confidence so that he makes investments? This has been argued about almost endlessly, but I should have thought that by now one knows the answer. The work has been done: it has been done by the National Institute and by the C.B.I. They have both arrived at the same answer and neither source will be regarded as being in the pocket of the Labour Party. Both have come to the same conclusion, that it is profits—profits which stem from increased economic activity—which make a businessman decide on increased investment. I do not want to fall out with any of my noble friends who have marked philsophical views, and if the word "surplus" is preferred to the word "profit" I do not mind in the slightest. It comes to the same answer; it is that margin without which additional investment does not take place, and that margin—be it a "profit" or a Marxist "surplus"—is needed and it cannot be provided unless there is greater level of economic activity.

The noble Lord was referring to the confidence which must be felt, and the F.T. index stands at 400. That is a pretty good public opinion poll which will be recognised by everybody on that side of the House as well as on this side. That confidence has not yet been restored, and the Government know it; and when they make speeches about the boom which is coming it is most incredible that you can have a situation in which the Prime Minister and the Chancellor of the Exchequer both makes speeches about a boom which is coming—and the Stock Exchange falls slightly as a result. That is of course what has happened, because we have heard it all before. So I say to the noble Lord that we must for Heaven's sake increase the level of economic activity and we must increase investment, because otherwise we shall be having the same level of unemployment not merely for one year but for year after year after year.

As the noble Lord was unable to give me the figure, may I give it to him?—because it was issued by the Treasury and mine was not a "catch" question. He was talking about £1,000 million of additional tax relief, and the Treasury has said that that amounted. at that time and in the form in which it was given, to about £250 million worth of additional demand; and that is at a time when the additional demand required to set the economy going, in the view of the National Institute, was £1,000 million. So the Government have gone one-quarter of the way and, therefore, nobody should he surprised if the level of economic activity has not risen as much as it should rise in order to mop up part of this unemployment. And of course, as one knows—the figures are all there and in the long run this is necessary—fortunately, productivity has increased. This means that you will need all the more increase in demand to get the same effect as you previously got on the level of unemployment; and as we are talking to-day about the human tragedy of unemployment and as we are all placing that ahead of other difficulties which we may have to put up with because we shall never get the ideal solution, then I hope the Government will realise that we are going to need very much more than the £250 million additional demand which they have so far pumped into the economy and which is producing totally inadequate results.

What I have said bears no resemblance whatever to the speech I was going to make or to my notes; but it is none the worse for that! I hope that noble Lords have felt that the occasion rises above preconceived notes and preconceived notions. I hope that the noble Lord. Lord Robbins, will feel that have listened to him and been persuaded by him as to the excessively partisan nature of the speeches that might have been made. I hope that the noble Lord, Lord Balfour of Inchrye, will accept my willing support in recommending to his Government that steps should be taken as early as possible to' prevent the tragedy of unemployment continuing at its present rate for at least a full year.

5.49 p.m.


My Lords, we have heard the tragedy of unemployment most ably expressed, and I do not feel that I can usefully add anything on that subject although I most deeply appreciate the concern and distress which we all feel on a subject that naturally tends to overshadow all others. But may I, for one, express regret—and I suspect that there are others who also regret that the most gracious Speech did not include at this impending critical time any direct reference to the stimulation of technology in British industry. I appreciate that there was a general reference to encouraging increased efficiency, and I can only hope that this will cover my anxiety in this respect. I think my interest in industrial research is known to your Lordships but I must, as tradition requires, declare it again. Technology is not a subject which attracts votes, so perhaps it is something which is played sotto voceby the politicians. Also, it is something which is now the new dirty word of the 20th century, in that technology is used by unsel upulous industrialists to pollute our environment and, as the more romantic complain, it allows half the world to over-eat, while the other half is on the verge of starvation. They omit to state the obvious alternative, which is that without technology both halves would be in a similar plight.

In his recent speech the noble Lord, Lord Zuckerman, reminded your Lordships that our scientific and technological resources, while exceptional in themselves, have not recently had significant, comparable impact upon our industry. If we are to accept that the price per ton of products is an indication of the degree of sophistication of those products, then we must realise that somewhere along the line we are failing badly; for the average price per ton of our exports of engineering products is under 2,000 dollars, while the average price for our imports of similar products is in excess of 3,000 dollars. From this one can only deduce that we are still manufacturing machinery dependent on last generation technology, while importing that employing the new.

The danger of continuing in such a manner is that we can easily be supplanted by the developing countries with their lower labour rates, and so we shall cease to be suppliers to the underdeveloped countries who still purchase such machinery. This is surely the lack of competitiveness in certain markets just recently referred to by the noble Baroness, Ladv Seear, and the noble Lord, Lord Drumalbyn. We have also been told that we are just holding our own. But, in this respect, for how long can we do so? The noble Lord, Lord Zuckerman, went on to emphasise the enormous amount which Britain has to contribute technologically to the European Community, and I am sure that we all agree with him entirely. But I think your Lordships will also agree that in many fields we should do well to consider carefully the implementation of much of our technological capability within our own industry instead of continuing to act mostly as a supplier of advanced ideas from which the industries of other nations may benefit.

At one time our gross national product per head of the population was vastly in excess of that of any other country in the world, but since those days we have suffered a century of steady decline. We were passed in this respect by the United States in the 1890s, by Germany in 1949, by France recently, and Japan and Italy will, if they have not already done so, pass us shortly.

While appreciating that many of the larger, more ambitious projects require an industry capability and market such as we cannot by ourselves produce, it is interesting to note how recently we have apportioned our research and development resources in industry. We expend some 75 per cent. of our effort in this field into industries which produce only 20 per cent. of our gross national product. Out of this, some 7 per cent. is produced by the electronics, telecommunications and aerospace industries which themselves absorb 48 per cent. of the national effort in research and development. One might excuse oneself by saying that these are the extremely high growth rate industries; but this is not the case where the growth rate of our exports is around a quarter of the growth rate of our imports in these same industries.


My Lords, if I may intervene, is not one of the reasons for this that the industries which the noble Lord has mentioned have been important to the defence capability of this country, and that much of the research and development which has been financed out of public funds has been orientated towards defence? We have only recently begun to cut down on that and redirect our efforts in the direction of civil research and development, which is more concentrated in other industries.


My Lords, I agree entirely with the noble Lord's point that much of this enhanced expenditure in the past has probably been for a defence requirement with, as one so often finds, little or no spin off or slop over for any other valuable use at all. It is a defence requirement and, as such, I agree with him. The figures, even after making allowances—and I do not think I would be able to obtain the exact figures for the allowances—would not alter the overall picture. However, the noble Lord may have better figures than I, and I should be pleased if he would let me know about that matter.

It is all very well for a rich, philanthropic world Power to supply research results to the world at large while making little use of them for its own industry, but it is sheer lunacy for ourselves in our present position. We must direct our R. and D. resources into our bread-and-butter earning industries. Unfortunately, rather than setting a good example by intensifying joint Government-laboratory industry projects, one is led to believe that Government are seriously considering even further disengaging themselves from this field. I sincerely hope that this is not the case; but when one considers the recent Government vagueness on this subject, one can be excused for entertaining anxiety. Bankers also, by past injudicious investment, are beginning to consider research to be more of a money spender than a wealth creator. Government must have a continuing role in supporting advanced technology, not only for national security and economic reasons, but also for social and environmental purposes. Furthermore, arising from this is a partial responsibility for assisting in the implementation of the results of such research to the benefit of the nation, rather than letting those results remain just as brilliant papers in some learned journal. If industry wants something it should be prepared to pay for it, runs the "true blue" philosophy. By the same parameter, if Government want a healthy, competitive national industry they must not begrudge its share of the food for the goose of whose golden eggs they intend to appropriate a share.

Government have during recent months been carrying out surveys of some of the national research facilities, and I understand that reports have been made, although not yet published, on Government research establishments and the National Research Development Corporation. Admirable I am sure these reports are, but would it not have been better to hold a comprehensive stocktaking of all the national resources including universities, research associations, research institutes and others, rather than settle for one segment only? By such ad hocsurveys in isolation we have been left with a legacy of duplication, competition and waste of effort.

Government must evaluate the efficiency and appropriateness of various forms of research and where it is done. Universities have a prime mission which is educational, and of this they should not lose sight. They are also the most appropriate centres for the conducting of long-term pure research. Government research establishments, apart from Government requirements, are strongly orientated towards the more sophisticated fields and are therefore of assistance only towards the technologically advanced industries; and here they are making a very significant contribution.

Research associations, with their close links with industry and their multidisciplinary approach, are in a valuable and unequalled position as a buffer between the small to medium businessmen and the top scientists, and between whom there could be otherwise little or no constructive dialogue. They are therefore a useful catalyst for industry with research establishments, universities and consultants. In their own right, research associations not only act as technological centres for their industries but also raise the general technological plateau within the industry by their general programmes of co-operative research. Such research, however, is rarely the subject of a startling break-through, being more concened with the complementary but vital areas of information, testing, evaluation and processing, as well as changing the scientific outlook within their industries. Commercially sensitive projects are not usually amenable to co-operative research; and here both research associations and research institutes are equipped to undertake privately sponsored research contracts.

With regard to Government assistance, Articles 92 to 94 of the Treaty of Rome do not forbid Government participation in assisting industrial research and development, but merely require that such support should not unduly distort competition. As an example, the French Government, by means of levies and duties, support the equivalent of our industrial research associations; and Holland almost entirely supports T.N.O., the Netherlands organisation for applied scientific research, out of public funds. The West German Government have announced a 35 per cent. annual growth in R. and D. expenditure over a four-year period. So one can see what we are up against if we join the Community.

In conclusion, may I ask Her Majesty's Government to confirm that they do not intend to disengage from their important role in this field: that they will consider a comprehensive survey of all the national research resources, their interactions and the possible integration of some of their activities, and, above all, that they encourage the deployment of our resources into the areas shown to be the most cost effective and whence we can earn our national bread and butter, and not into those fields which, however prestigious, show little or no return in hard cash.


My Lords, before the echo of the noble Earl's speech dies away, would he join with me in urging the Government and others who use research workers in R. and D., that first-class graduates, Ph. Ds. and others, who have sometimes spent a lifetime in a special area of work, should not be held when all they are doing is occasionally to use a hydrometer to measure specific gravity, when they could be doing first-class research? How much manpower and research power is wasted by firms hogging first-class men and not passing them on to industry?


My Lords, I would agree entirely with the noble Lord. Unfortunately, in the past in British industry there has grown up a feeling that if you can keep one "boffin" in a back room he will one day discover something wonderful that will be an absolute world beater. One must think of what is a viable R. and D. effort. There are too many differences of industry and product for one to lay down a definite size, but I think it is usually agreed that something in the area of 2½ per cent. of turnover is an appropriate amount in an average industry to put into R. and D. effort.

When one considers the cost of a good graduate or Ph.D., and the supporting services which one must give him, one realises that very few companies can support even one, or possibly even a viable group of ten or twenty scientists, of such a level. Therefore it is, as the noble Lord suggested, all too regrettable that these highly qualified scientists are hogged by small companies who think they are going to get something which will be a world heater, whereas in fact they are not mounting any form of effort which could be considered worth while.

6.8 p.m.


My Lords, I want to say only a very short word about this Opposition Amendment regretting that the Government's policies will not provide an equitable standard of life for the people and deploring the absence from the gracious Speech of specific proposals to deal with unemployment. It would perhaps not be entirely unreasonable if one were to argue that this gracious Speech, which I would describe as a commendably short and unusually concise statement of Government policy, is mostly about those very things the omission of which the Opposition Amendment is seeking to deplore. But I am not going to spend time arguing about the difference between a specific remedy and a general remedy. The fact is that, according to post-war standards, unemployment is at this moment very high. It may be higher next February, which is usually the worst month in the year for employment, and any Parliamentary Opposition which failed to call attention to these facts would not be doing its job. My noble friend Lord Balfour of Inchrye, who is a private Member supporting the Government, has also done his job inpressing the subject upon them; indeed, it is the duty of every Member of Parliament, private or otherwise, to do so and to give what solution he can.

I think it has generally been agreed that since the war unemployment in Britain has been a regional rather than a national problem, and I think that that is still so now. It is in the development areas, one of which is Scotland, that the unemployment figures are most serious and are causing constant anxiety. I should like to assure noble Lords opposite that if I thought that the Government were neglecting to do anything which they ought to do about the unemployment situation, I should most certainly say so, but it seems to me—and I am very glad indeed, if I understood him rightly on this point, that the noble Lord, Lord Diamond, was expressing the view which I now wish to express—that one can only have full employment in this modern age under modern social and industrial conditions if there is constant economic growth. I do not think there can be full employment without economic growth. I do not expect for a moment that the noble Lord, Lord Diamond, will agree with me in what I am going to say next, but I do sincerely think that the policies of the present Government are rather more likely to achieve economic growth than the policies of any Government of any Party which this country has had in my lifetime.

Of course, as some noble Lords have said, it is quite possible to have both unemployment and growth at the same time. If a great many more goods are being produced by many fewer men you may have temporary unemployment, but I am sure noble Lords opposite will agree that it is much easier to guide new industry into those regions where we want it to go, which we do by means of regulating industrial development certificates, when your economy is expanding, and it is little use saying that you are going to refuse I.D.C.s to people who want to build a new factory in London or in the Midlands if hardly anybody wants to build any new factories anywhere.

The periods in the development areas (in one of which I have always lived) when employment has sometimes flourished, or at least unemployment has become less serious, have more or less always coincided with those periods in which economic growth has been proceeding most quickly, like 1963 to 1965; but over the years this economic growth has been much too inconstant. There have been far too few periods of rapid growth and far too many periods of near stagnation. It so happens that the last four or five years leading up to 1970 formed one of the slower periods of general economic growth. When you have, as you did last year, an almost stationary economy combined with a roaring wage inflation and with very high penal taxation, and with a rather low level of investment, it seems to me to be entirely inevitable that you must have in front of you a considerable period of serious unemployment. I doubt whether the best friends of the late Government could entirely absolve them from all blame in this matter. Indeed, one of the things which I like best about the Labour Party is that their leading members arc always so candid in saying what they think about each other.

At the present time, my Lords, I am not blaming anybody for anything. Even if I were a member of the Opposition I could not conscientiously blame the present Government for the present unemployment—or at least, not quite yet. Conversely, I am not yet seeking or proposing to congratulate the Government on the very welcome signs—and they arc very welcome indeed—of greater economic growth which are now beginning to appear, because we have all learnt by experience to be cautious. These are matters which ought to be judged, and which I think will he judged, not in the context of a few months but in the context of several years. I am sure that the Government would agree that it is not enough to slow down inflation, which they claim to have done. Inflation must be stopped and it must not be allowed to come back again, so that wages and prices will not have to engage in a continual sprint in the endeavour to overtake each other. I am sure the Government themselves would also agree that if we are to get the 4 ½ per cent. rate of growth which some are hoping for, that will not achieve its object unless it lasts for considerably longer than most of these short production booms which we have had occasionally, but not for very long, over the last twenty years. It must be more permanent than that.

My Lords, I shall vote against this Amendment because I think it misses the mark and because I think the future full employment and balanced regional development urgently require radical changes in taxation and in incentives to saving, which the Government are bringing into effect but which no previous Government had the courage to do. I wish the Government would do it more quickly—if they think it right, by using a few more "strokes" every now and again—but at least they are doing it.

World trade, which is mentioned in the gracious Speech and which is far more important to employment here than to employment in any other industrial country because we depend so much on international trade, I think will be made much stronger and steadier if the proposals in the gracious Speech to substitute special drawing rights for the unsatisfactory practice of using dollar and sterling deficits as the principal means of international exchange are carried out. I hope the Government will agree with this. I must add, and I hope the Government will realise, that the special drawing rights, in order to make this a success, must be much greater than the fiddling little amounts which were contemplated by the International Monetary Fund nations two years ago at the conferences at Stockholm and Buenos Aires.

As for an equitable standard of life, I think the Government have made not a bad advance towards that by providing the additional cash which they have done for lower income families, for aged people and for the chronically sick, and by the large additional expenditure which the Government are undertaking both on hospitals and on primary schools. On housing, some time ago I had come to the conclusion that we should never solve our housing and our slum clearance problems in Britain unless we did what the Government are now proposing to do: that is, impose a realistic system of rents with generous allowances for lower paid or large families. I do not think I am putting it too strongly. I do not believe we shall ever solve the housing problem, either in England or in Scotland, unless we do just that; and I know it is going to be a very controversial measure.

Finally, my noble friend the Leader of the House has asked us particularly not to talk about the Common Market, although it is of the highest relevance to this debate and to this Amendment, for the very sensible reason that 194 of your Lordships have already done so; but as I was not one of the 194 perhaps I may be allowed to conclude by saying that I have never fully understood why this country cold-shouldered the movement for European unity in the early 1950s, and I am very glad that we are now belatedly joining an organisation which we could, and should, have initiated and led nearly twenty years ago.

6.22 p.m.


My Lords, before I turn to my notes, may I congratulate the noble Earl, Lord Dundee, on having at one stroke involved himself in at least two problems of the hen and the egg, not knowing whether growth causes employment or employment growth, and seemingly oblivious that decreased taxation on profits—therefore, a heavy increase in profits retained—will obviously lead to very vigorous and successful claims for higher wages, which he also wanted at a stroke to abolish. I also want to say something to the noble Earl, Lord Shannon. He seemed to regard the rather lesser growth in this country as some sort of national shame. I was not born in this country, and I did not hear tales at my grandfather's knee about the old times. But I think I know enough of the social history of this country (I taught it for a long time —though that is, of course, no argument) to know that this is a much pleasanter country than David Copperfield's, when we were so very well advanced on all other countries. I do assure him that he ought, as Cromwell once said, to consider deeply whether growth is not sometimes too costly. This does not mean that we do not want to have growth: but we want a certain type of growth and not just growth at random.

Having said this, and I beg your Lordships' pardon, I should like to say something which I am sure will astonish your Lordships; that is, that I very much agree with a fellow economist this afternoons Lord Robbins, in his diagnosis of the evils of the day. I agree with him very much on the diagnosis, but not on the therapy. The therapy is a difficult political matter on which we may well differ, even if our diagnosis is very similar. I also agree with him that it is a matter of long standing. If I may be forgiven for following political habit, may I repeat what I said in 1943, in saying that full employment is not compatible with the sort of bargaining processes that grew up when the economy was freely competing, on the one hand, and when there was at times heavy unemployment, as well as very hefty fluctuations in economic activity. Because, of course, the historical processes by which these institutions grew up were inextricably connected with the conditions to which they were a response, and therefore in all parts of this bargaining process I think that new ideas are needed.

But surely the civilised way of dealing with this matter depends on good will all round. The noble Lord, Lord Robbins, spoke of somehow or other limiting expenditure. Whether we limit expenditure in the Keynesian way, by waggling around with the Budget, or whether we do it in the monetary way, by waggling around with the quantity of money, does not matter. I do not believe that either can be successful: it can be done only by good will all round; and good will depends on civilised approaches to one another. It is the fact that the present Government have done everything to exacerbate and made impossible a civilised solution, that is the reason for my criticism, and my hostility to their policies. No doubt Lord Robbins is quite right in thinking that it would be very difficult to tread the civilised way. There are cave men all round—and rogue elephants to boot. But without a certain amount of good will all round, it is absolutely certain that we shall not succeed; and the only alternative is unemployment. It is for this reason, for the reason that the problem is really psychological and political, that I am partisan; and quite unashamedly so, I may say, to my friend Lord Diamond. because I think that my case is the moral one and I also think that the Government's case is the immoral one. No doubt the noble and learned Lord on the Woolsack will, with his usual vigorous sentences, demolish and build up my confidence again.

I dissent from the attitudes of the Government not merely on economic grounds but also on moral grounds. When I listened to the noble Earl, Lord Jellicoe—who I am sorry to say is not here, though I am not going to criticise but to laud him, poor man!—I thought that he seemed to be going soft, in Conservative terms. He defended entry into the Common Market by reference to better possibility of dealing with the regions, giving new employment, restructuring industry, and dealing with the problem of the Third World by larger amounts of aid. More especially he said that he was in favour of the Common Market because the Common Market would bring about greater equality. The poorest are dear to his heart. When I closed my eyes, hearing the limpid sentences of the noble Earl, I almost thought that perhaps he was standing for the Parliamentary Committee of the Labour Party, or perhaps even for the Deputy Leadership. It quite shook me. It took the noble Baroness, Lady Macleod of Borve, and that inimitable Minister for Education, Mrs. Thatcher, to restore my righteousness by their excursions into penology and education which, as I shall show, are much to the point in this debate on unemployment.

The Chancellor of the Exchequer and the Prime Minister have really qualified now for the world record race with the President and his economic adviser in making optimistic forecasts which backfire. As my noble friend Lord Diamond pointed out, whenever Mr. Nixon or Professor McCracken, or the Chancellor, Mr. Barber, open their mouths, the Stock Exchange promptly falls and certain investment programmes are postponed. I do not want to imply that the toil and labour which the Chancellor has expended on four. five or six mini-Budgets was all in vain: I would not claim that at all. It may well be that these mini-Budgets will give some relief. I think that my noble friend Lord Diamond forgot that the very fact that we have an export surplus of prodigious dimensions was about the same thing as if we had a reduction of taxation. This is so, I fear. So I do not think it necessarily follows that these Budgets will continue to be as ineffectual as they have proved to be for the moment. Not at all.

I must say, however, that the sort of boom which the Prime Minister and the Chancellor of the Exchequer predicted, would be the sort of boom the instability of which has been proven over the whole post-war period. It will be again a consumer boom. It was mainly caused not by decreases in taxation, as my noble friend Lord Diamond has demonstrated, but by changing the hire-purchase rules. This is a once-for-all shock, and if it is not succeeded by either a very hefty increase in exports or, somehow or other, investment, we shall run out of steam and we shall be, on the whole, worse off than we have been. It is pretty clear, therefore, that the abolition of investment grants, the abolition of the special rates for less favoured regions, will twist such a structure of production against investment. I should not have thought that Ministers can be proud of the way these Budgets have been managed. They were clumsy and ineffectual from a cyclical point of view, and immoral from any other point of view. This means that if, and when, the Maudling type of expansion gets under way we shall bump into shortages—again shortages of plant and equipment—underlined by the lack of skilled manpower as the boom changes the total pattern of the economy. It is the old tale of stop and go, and at a time when the Government have inherited a vast surplus.

The plea of the noble Baroness, Lady Seear—who I see has left—for highly capitalised industries is entirely justified, but to believe that it can be put into effect without large-scale State initiative and sustained reorganisation of industry is naïve in the extreme. Therefore the abolition of the Industrial Reorganisation Corporation is just about as intelligent as breaking the spade before the gardening work begins. The Liberal Party hoped for this in the inter-war period, because they were at that point very much more"liberal"even than now. But still they were frustrated and disappointed, and I am sure that the Government will be frustrated and disappointed in future. Therefore assurances of the Government on employment in the gracious Speech strain credulity to the utmost, or beyond it.

It is almost as bad as, on the political level, their assertion that internment has decreased violence in Ireland, or that it was the Secretary's special care for relations with Russia that caused him to expel 104 diplomats, or so-called diplomats, instead of sending them packing in penny packets. The noble Lord, Lord Drumalbyn, has given a good old Government version of the history of the past few years, but he forgot to mention that the dates he chose for his demonstra- tion began with a slump and ended with a boom. Therefore, of course, the whole recovery was included in this little, impartial, objective statistical exercise. Moreover, he did not mention that the boom which he included in the figures caused the Maudling affair, with its well-known £800 million deficit. It is too boring to go over that figure again.

This is not the worst, my Lords. Despite some mention in this debate of the international aspect, I think we have been concentrating on what one might call"provincial narcissism". We have not really discussed in any depth the problem that is facing us internationally. There is no doubt that the international monetary system, as it emerged from the Marshall Plan, in 1952, 1953 or 1954, has broken down. It has broken down as much as the Bretton Woods Agreement and plan broke down in 1947. The great difference is that in 1947 Russia was suspected of aggression in Europe and there was a supremely powerful America which was willing, because of the Russian menace, to help, and there was a reconstruction which was not based at all on the Bretton Woods Agreement but created a new tradition of international help which I hope, despite some recent difficulties in the United States Congress will last for a long time. The American willingness to provide aid gradually vanished, but it was replaced by the vast American military expenditure which nobody could have foreseen. Nobody could have foreseen that the Budget of the United States of America on defence alone would be 80 billion dollars.

The present crisis has arisen for very different reasons and, unfortunately, as it is a multi-centred crisis, not a one-centred crisis, it is far more dangerous and intractable. It has arisen because the continentals want two completely incompatible things. They do not want to hold dollars and they are unwilling to see the turn-round in the American balance of payments which is required to eliminate the U.S. deficit. They are unwilling to revalue sufficiently and, on the other hand, they are unwilling to hold dollars. Obviously, in the second respect they are quite justified because, with the enormous increase in unemployment in the United States of America, the export surplus which would be required to carry the American military expenditure and the American direct investment abroad would, on the whole, menace employment in all countries. Certainly it is menacing it now in Japan and it is menacing it even in Germany; and obviously we are going to get a side swipe from it. The Japanese and the French are now so anxious that they might cause a world slump, more or less on the pattern of the pre-war slumps. The opponents in Germany of Mr. Schiller are also anxious, and there is growing resistance to any further up-valuation there, too. This has created an enormously difficult and dangerous situation.

Some of my friends, and most of the noble Lords opposite, hoped that by voting for entry into the Common Market our influence would grow greater, and believe that the existence of the Common Market has created an alternative centre of power and initiative. I fear that they are doomed to disappointment, and I am sorry about this. It is because the Common Market exists, because there is a common agricultural price; because they are trying to have complete convertibility of their currencies without any sort of margin that they are unable to act. That is the reason why the Germans and the French cannot agree on a common policy. If the French up-valued with the Germans to within 3 per cent. of the German up-valuation, this would spell doom for the French boom, and of course Pompidou is not willing to do it.

On the other hand, it is obvious that if any solution comes in the end it will be by way of higher prices for food, because up to now the solution in the Common Market has always been an increase in food prices. One can agree on that much easier than one can agree on cuts in prices, especially when the menaced region, Bavaria, is really the balancing item in the German political situation. If that is so, there is no question that we are going to pay again and this will further aggravate inequality beyond V.A.T. and charges on education and on other social services which we have already had to pay. It will also aggravate the political tension in this country and thereby make the stopping of inflation that much more difficult. If as is only too likely, the consumer boom catches on, while the protectionism abroad gains ground, we shall either have to devalue again or deflate even before entry into the Common Market. This has all been foreseeable and it was all foreseen.

With your Lordships' permission, may I quote part of the last paragraph of a speech I made in this House in June. Mr. Heath, by his class-warfare, his attack on the unions and his Budget, has destroyed the possibility of a consensus and produced a situation in which a favourable and civilised solution of our economic problems and of our wages problems is impossible. Whatever might be the advantages of a large market to the strong, the weak and the divided cannot expect to inherit this new earth. Those noble Lords who, with great sincerity, hope to derive strength and prestige for this country from membership will soon be cruelly undeceived. This Government has forfeited all claims to leadership. The sooner it exhausts its ill-gotten majority in Parliament, the better. It was conceived in a lie, born into deceit and bids fair to end in a catastrophe."—[OFFICIAL REPORT, 23/6/71; col. 899.]

6.45 p.m.


My Lords, one of the difficulties of the gracious Speech is that a vast number of topics are covered over a certain number of days, and it is often difficult for those who specialise in a certain topic to be available on the requisite day. Therefore, the Ministers who initiate and wind up the debates, and the Shadow Ministers and Front Bench spokesmen opposite have a very difficult task. Trade and employment are to-day's subjects and a large number of issues hinge on them both. I should first like to say a few words about unemployment in, I hope, a non-partisan text, because I think we are all agreed that the figures are alarming.

The thousands of people who are unemployed represent an equal number of human beings. It may be argued that some people are unemployed when they need not be, but it would not be appropriate to pursue that argument to-day. We can all look at this problem in a partisan way, but in this House, at any rate, we try to analyse constructively. It is alarming to analyse who is unemployed. It seems, to a large extent, to be the school-leaver or the university graduate who finds it difficult to get a job. And the executive, who may have worked for many years in various organisations, suddenly finds himself redundant and faces a very difficult time in getting re-absorbed. This is clearly something which this Government, and indeed any Government, must look at.

If I may take the Hospital Service, which is a Service in which my family and I, and indeed the families of many noble Lords and Members of another place, have had an interest over the years, there can be very few hospitals, whether a teaching hospital, a general hospital in the Midlands or nearer London, or a cottage hospital, which have their full complement of nurses, not to mention radiographers, physiotherapists and others in the nursing profession. Even porters and other hospital workers are not always easy to find. Similarly, if one looks at the transport industry, whether it is the trains, the buses or other forms of transportation, there is a dire shortage of labour.

But so far as the hospitals are concerned, it is a fact that in years gone by nursing was—and in fact it still is—a vocation rather than a profession. The general rates of pay in nursing, as well as in the field of rail transport, are certainly not up to the standards of many professions. It would hardly be fair to compare driving a train with the role of a nursing sister, except that both suffer from this problem of inadequate remuneration, and this may be part of the answer. But something which worries many people in this country is that we are verging on the one million unemployed and yet in these key professions it is extremely difficult to find sufficient labour.

My Lords, may I turn for one moment to a Report on small industries by Mr. Bolton, which has just been published. This will clearly be the subject of a separate debate in your Lordships' House in the future, so it would not be opportune for me or, I imagine, anybody else here to go into it in any depth at the present time. It is a Report which has been brought out very quickly, considering its length. It was initiated by Mr. Crosland just over two years ago and has, I think, some valuable recommendations in it, although some must also be treated with reserve. As a director of a small firm of management consultants, I must, I suppose, declare a very small interest in this subject, because it is the small business. the small industry, which is suffering badly at the present time, as I know well and as I am sure other noble Lords know well from personal experience.

What I am rather concerned about is the recommendation in the Report that there should be a separate Minister for the small industries. I really wonder whether this is a viable proposition. In the first place, how is one going to calculate a small industry or a small company? Is it to be on the number of employees in the company, the number of directors, the turnover, the profit margin and so on? What is surely needed is more joint representation with the large industries, on such bodies as the C.B.I. and the chambers of commerce, rather than having a Minister in charge, no matter how able he may be, because there are so many small companies, and so many people employed in small companies, that he is going to have a gargantuan task. I do not want to pursue this point any further at this stage because it clearly will be the subject of future debate, but I hope my noble friend who is in charge of these matters here will take note of it. It is a point, I think, of some substance.

With the winding up of the British National Export Council we have the new British Export Board, and I am sure that the chairmanship of this Board by my noble friend Lord Thorneycroft will receive a general welcome in your Lordships' House. He and those who will be appointed with him face a challenging, interesting but not always easy task. On this question of exports, too, I hope that more small companies and more small businesses will be able to send representatives on trade missions, be they British Weeks or be they spread over the period of a year, as in Finland last year and as in Denmark next year. I instance only two countries which I happen to know and where, despite the fact that their economies are not at the moment in the easiest of situations, I believe there is a very big potential. A British Year, preceded by exhaustive market research, can do a great deal of good and can, in the long run if not in the short, make a favourable difference to the balance-of-payments situation and the kind of problems which we and other nations face at the present time.

I should like finally to say a word about the Amendment. My Lords, it is understandable that with any Government facing unemployment reaching a million a Motion of Censure should be put down. I do not necessarily quarrel with that, but I do quarrel with its terms, and particularly on the question involved in the words"equitable standard of living". I think my noble friend Lord Dundee made the very cogent point about £110 million extra being spent on the hospital services in the current year. That is a relatively small sum for what is needed, but I believe it is a start; and there are other measures outlined in the gracious Speech, which is a crisp summary of what the Government intend to do. It may be argued that it is an over-ambitious programme, and certainly there will be a great deal of work to do. But I would just say this finally: that an"equitable standard of living"is not dependent on Government alone; it is dependent upon relations between management and union. We spent a long time in the last Session debating this issue on the Industrial Relations Bill, and the code which is mentioned in the gracious Speech will, I am sure, be fully debated. But this is one of the main criteria. If we can get better communication between Government and industry, and management and the shop floor, we shall increase our prosperity, we shall increase our happiness and, in the long run, we shall get that equitable society which, whatever differences we may have, this whole House endorses as an aim.

6.57 p.m.


My Lords, I shall come down from the heights of the theoretical economist—not that I accuse my noble friend Lord Auckland of being a then. retical economist; but as a small employer in light industry and agriculture I should like to make a few points about unemployment. First, I should like to draw the attention of the House to the Amendment set down by the noble Lord, Lord Shackleton. I will not read the whole Amendment, but it regrets the Government's failure, …to provide the economic conditions necessary to ensure a better and more equitable standard of living for the people of this country … If we take the number of unemployed in this country, I quite agree that it is most unfortunate that we have this registered number of unemployed. I understand that it is now 930,000: I think the noble Lord, Lord Delacourt-Smith, gave that figure. But if we take into consideration the fact that, on the whole, the unemployed have an income of about £1,000 a year, through social security benefit, if they are married with two or three children, it is rather exaggerated, I think, to say that the Government have failed to provide an"equitable standard of living". Because, my Lords, two-thirds of the population of the world would give their eyes to have that standard. True enough, we have 930,000 registered unemployed, but Italy, for instance, with about the same population, has a million and a half unemployed. I agree that comparisons are odious, but I would point out that fact.

I was rather surprised to hear the noble Lord. Lord Delacourt-Smith, say when opening the debate that in his opinion there were, in addition to the 930,000 registered unemployed, probably a further 25 per cent. of that figure who had not registered. I find that very difficult to believe. I rather thought that the shoe was on the other foot. Let us look at this figure of registered unemployed. How many of them are genuine unemployed? Among their number are, for instance, retired executives who have not yet reached the age of entitlement to an old-age pension. There are also retired bank managers who draw the dole. I know a few people like that. I even know some civil servants who have retired and who draw the dole. I know another who used to be a permanent high official who draws the dole because he was retired before he was able to claim an old-age pension. I also know a few people on the dole who do odd jobs. I know three people of that category; and if I know of three then it is probable that there exist tens and tens of thousands of such people.

There are people who are unemployed because they are to all intents and purposes unemployable—perhaps through their bad health. But it may be that they are too fond of the bottle; or perhaps, to put it politely, that they have the wrong temperament, or, to put it impolitely, that they are bloody-minded. I have had experience of these people. I am an employer, though in a small way, and I have direct contact with the human element in this problem. Some noble Lords who may have been ex-Ministers and who may have been appointed to the board of some great concern employing 20,000 people may perhaps not have that human contact; but I have had it. Therefore to the contention of the noble Lord, Lord Delacourt-Smith, that there were probably 25 per cent. more unemployed than is suggested by the official figures, I would say that it is the other way round; that the genuine unemployed are probably 25 per cent. less than the figures state. I cannot agree with the noble Lord on that point. There are factors that have contributed to the present high unemployment figure. I agree that for a man who genuinely wants to work, unemployment is a tragedy. It is deplorable; it is one of the greatest issues of our age. But there are factors such as the disturbances in Northern Ireland that have contributed to the large unemployment figure.

But, my Lords, there is one extraordinary thing about the present high unemployment rate. It is that if you want to employ labour, you find it extremely difficult to get. I know of firms who have been advertising for labour and who have had an extremely unsatisfactory response. Perhaps it is rather flippant to mention it, but I myself for the last four weeks have been advertising for a gardener. I have been advertising in the Thanet area, which is an area of high unemployment. I believe that the figure is 6 per cent.. but it may be more. The only answer I got to my advertisement was from a man in Sheffield. How a man in Sheffield comes to read the East Kent papers I do not know; but I got no response from the local area. And I advertised under a box number; so there could be no objection to me personally. It really is an extraordinary thing. I could get a gardener at £2,000 a year, I agree, but one cannot afford that: perhaps £1,000, but certainly not £2,000.

So I have come to the conclusion, through my practical experience in this matter, that a great number of people have priced themselves out of a job. I believe that to be perfectly true. For example, we have the absurd position of the Upper Clyde shipbuilding workers. Unfortunately their industry is in great disarray, which is very distressing. But you have them coming out on strike, marching in the streets under banners proclaiming their right to work. You cannot force an employer to employ you if by so doing he is going to lose money. He can employ you only if the wages he pays will produce sufficient, or at least enough, to pay those wages. If you, in effect, put £10 into the mouth of a cow to draw only £5 at the other end, you are going to be in bad odour with your bank manager. There seem to be a great number of people to-day who cannot understand this—though for that I suppose one should blame their shop stewards. But the trouble is that a great many of these people who want the right to work (I did not know there was such a right or not) want the right to work in their hours, the right to work when they like, the right to work irrespective of their productivity, and the right to strike when they like and to resist any improved methods of production. Clearly, one cannot go on like that.

My Lords, I have pointed out these human facts that I have come across because theoretical economics skates over all this. We really must get down to the practical level. Another thing that people seem to forget is that the object of production is to produce wealth; it is not to produce jobs. I agree that if you can produce wealth you may then, through legislation, see that this wealth is fairly distributed. I quite agree with that. But if firms arc cluttered up with over-manning or restrictive practices, that wealth cannot be produced. I think we have to organise our whole thinking on unemployment and modern industry in the light of automation and the fact that we are in a technological age. In entering the age of technology there is bound to be a certain amount of unemployment, simply through the advance of technology. For example, I know of factories which formerly employed 500 people but which now employ only 50 or 60. I know of farms which twenty years ago employed twenty people and now employ three or four. We must take these facts into consideration.

Any Government, if they wished, could cure unemployment at a stroke. They could cure it artificially. They could embark on great public works; or they could, by subsidising industry to go to certain areas of the country where it does not want to go, establish artificial areas of employment. But if they do so, they will eventually destroy the balance of payments and reduce the standard of 1iving.

The noble Baroness, Lady Seear, quoted from her experience in Sweden and I agree with what she had to say. The noble Baroness asked why factory workers could not work shorter shifts, and she even mentioned two-hour shifts which would enable factories to employ more people. If a factory started to introduce two-hour shifts for the workers it would be possible for three times as many people to be employed, but the factory to-day would have to be subsidised. I agree that with the great advance in technology, which presumably will continue, eventually, and not so far into the future, it may be possible to work two-hour shifts and pay the workers a good wage for so doing.

We have to realise that the day of the unskilled manual worker is drawing to a close, and in some ways that is a good thing. Before the war, as a young man, I once out of curiosity went down a mine. I have not been down a modern mine, and so I do not know what the conditions are now. But I came to the conclusion that to crawl along a tunnel only three and a half feet, or four feet, high to the coal face and then have to hew coal by hand was not a dignified form of labour. I think, therefore, that in some ways the fact that the day of the unskilled manual worker is coming to an end is a good thing.

My Lords, we must reorganise our thinking about unemployment. I object to the use of the word"unemployed". Why should these people be described as"unemployed"? Why not call them the reserve labour force or reserve employment force? After a man has been unemployed for a certain time, probably through no fault of his own, it may imply a slight stigma, and so I should like to do away with the word"unemployed."Although I do not wish to emphasise it, I should like to refer to my experience in light industry. Sometimes we would telephone the local employment exchange and ask for men to work as machine operators. They would be required to

supervise automatic machines and therefore no skill is required. The job was worth about £26 a week and a number of people who were sent from the employment exchange would not accept this work. Their attitude was,"why should we accept it if we are going to get only £26 a week, which is only a few pounds more than we are receiving already? If you can guarantee us £35 a week we will come along."I wonder whether the officials at some employment exchanges should not be a little more firm with the people who register there for unemployment—that is just a thought that I am throwing out. There is also the question of overtime. It seems to me rather unfair that one man may be able to take home £50 or £60 a week by working overtime, when, if he did not work the overtime, it might be possible for another man to be employed; although of cource one does not always know when there will be overtime to be worked. However, it seems rather unequitable.

I hope, my Lords, that when we go into the Common Market full advantage of the opportunity provided will be taken by our work force and that we shall knuckle down to it. A great opportunity will be provided to enter this big market. Some noble Lords would like what I would call a closed economy for this country, with an incomes policy. I suppose that the noble Lord, Lord Balogh, would like that. But we are a great trading nation and I cannot visualise a closed economy succeeding in this country.


My Lords, may I interrupt the noble Viscount? He must not say that my noble friend Lord Balogh wants a closed economy. I have never heard such nonsense.


My Lords, I thought from the things I have read that the noble Lord, Lord Balogh, actually wanted a closed economy—but perhaps he has changed his mind now. I will certainly support the Government in the Division Lobby. By improving the incentives and by lowering bank rate and taxation they have laid the foundation for an improved economy. The effect of these things cannot be seen in a day, but I am sure that within the next year we shall see a great improvement.

7.18 p.m.


My Lords, it is a great pleasure to me to follow the noble Viscount, Lord Massereene and Ferrard. He said that he had spent one day down a coalmine before the First World War —


No, my Lords, before the last war.


My Lords, I began to think that the noble Viscount must have been a"Bevin Boy". Your Lordships will remember the system set up by the late Ernest Bevin when he was Minister of Labour. The Bevin Boys"came from all classes of society. There experiences as such made them better members of the community than might otherwise have been the case. We were grateful for that. The noble Viscount is being followed by an ex-miner, one who spent 30 years in the pits and who is able to say that, to a miner a tunnel three or four feet high would be one of a tremendous size. In my opinion, it is unfortunate that the noble Viscount did not over many years spend some time down a mine, because the edification and enlightenment which would have resulted would have been of tremendous advantage to him in later life.

I am pleased that we are having this debate. I am particularly pleased with the Amendment. The noble Viscount took exception to the Amendment; but I agree with it, arising as it does from the proposals set out in the gracious Speech. No one coming from a development area, as I do, can overlook the fact that on taking office the present Government stated that in their policy they would attach the greatest importance to providing full employment and an effective regional development policy. I was in no way surprised to read those words, in view of the constant attack made by them in opposition to the previous Administration in relation to the rise in unemployment and to rising prices. There is evidence of this in Hansard of the other place. Some of us sat there and listened to many forms of criticism and to those who urged the Government to call a General Election. Eventually that General Election took place, and a new Administration took over. The electorate of this country really believed that by such a change in Government the promises made at that Election, supported by the violent criticism of the Tory Party when in opposition, would come to pass; that unemployment would fall, and the cost of living would come down. One would have expected, at least after a period of 15 months, that in view of the grandiose schemes that they talked about when in opposition to curb inflation, the bringing in of new legislation would have had this effect. But this has not happened. Unemployment is still rising, and prices are still going up. This has been repeatedly said in the course of this debate. The electorate have been let down.

In the gracious Speech the question of unemployment is referred to in the following terms: At home my Government's first care will be to increase employment by strengthening the economy … When one is confronted by repetition of such a promise, and when, to date, nothing has accrued from similar promises, small wonder that the door of criticism is being opened wider against the Administration responsible for such promises. By way of illustration, it is like the case of a person holding an office of trust who, in a moment of weakness, falsifies the accounts, and in so doing believes that he will get away with it; yet, when he is found out, he cannot understand because he really thought that the method he had adopted was perfect and that he would"get away with it". The Government must realise that they cannot"kid"the general public all the time. Ministers have expressed concern about the high level of unemployment during the last 12 months, and particularly in the development areas. But such concern has in no way redeemed the position; nor, in view of their regional policy, could it be expected that it would do so. Any student of politics who is interested in the economy of this country knows full well that the strength of the economy lies in the strength of its industry, its services, and the building up of its export industries.

I say to noble Lords that many of the problems that we are faced with to-day spring from the complacent attitude of certain industrialists over the last generation. Unfortunately, there are in this country industrialists who have not yet caught up with the new techniques and ideas emanating from modern research and development. It may be that the present Government, through some of their younger Ministers, are beginning to take note of these things; but it is as well that they should be reminded that if, when they held office for that long period prior to 1964, they had gone out for what we, as the Opposition, agitated for; namely, an expansionist policy, in February, 1963, there would not have been in this country 900,000 unemployed. Noble Lords—even the noble Lord, Lord Drumalbyn—have forgotten about that particular position, when there were 900,000 unemployed. So the pledges have resulted in the state of unemployment that we have to-day, and this situation is a reflection upon that period back in 1963 and upon the Government then in office. There were not only 900,000 unemployed in this country at that time, but there were over 2 million people living at national assistance level: and there were areas like the North-East, with its heavy unemployment. This state of affairs need not have happened. Unfortunately, we seem to have drifted back to square one, with almost one million unemployed.

The sooner this Government realise that our economic problems will never be solved by letting some areas race ahead, prosperous and over-employed, while other areas, particularly our old industrial areas such as the North-East, Scotland and Wales, decline and stagnate, the better. I believe that this country will never be strong economically without the combined efforts of its regions. What amount of money did the Tory Government provide to the development areas? During the period of the Labour Government it rose to over £300 million—ten times what it was when we came into office. That indicates the amount of money that the Tory Party directed into the development areas. If anyone thinks that the policies of the Labour Government, as a result of which that amount of money was injected into the economy of our development areas, received the plaudits of the Tory Opposition, it would be very educational to read some of the speeches made in the other place.

What was the essence of those speeches? It was that the development areas should stand on their own feet. That is what they were saying. To provide for these areas a Labour Government formulated its policy by cutting back their building work, both private and public, in the most prosperous areas, to provide for the factories to be built in the areas where work was most urgently needed—areas that were hard hit, just as my own area and as Scotland and Wales were hard hit by the pit closures that took place, and not only by pit closures but by the streamlining of the shipbuilding industry and even of engineering. New hope was given through those new factories which were brought into the development areas, with more training centres being set up to retrain the unskilled manpower for the new types of industries which were being introduced.

Investment grants were abolished by this Government on October 27 of last year, and the result was a feeling of resentment inside industry. Why?—because the system of allowances was being replaced with that of investment grants based upon profitability. I say to noble Lords that it has resulted in businessmen saying that this policy of the Government is a negative one and has driven them into a position of unprofitability. Profitability has increased by only 4 per cent. within the past year. Many small firms which would otherwise have been helped by investment grants face serious difficulties, and many firms are deterred from coming into such areas as mine and setting up in business because of the fact that grants are no longer available, so they are effectively barred from expanding their present business premises and increasing their development. Rather strange—was it not'? —to have a report from the Chairman of the Tory Party at the Tory Party Annual Conference this year, stating that the Party were failing to get their message across? You know, my Lords, that an essential ingredient in such a statement is a failure of the Government's policies. There is an old saying that"Nothing succeeds like success", and, unfortunately for this Government, it appears that in view of such statements from their own ranks it is being recognised that a change in their policies is urgently necessary.

In the past week I, with many more, saw on television in the North East young school-leavers being interviewed and being asked how successful they had been in finding employment. I touched as I listened to the was deeply answers that were given. Unemployment is extremely serious for the adult population, but it is infinitely more serious for young people, both socially and economically, for it involves the awful frustration of the inevitable failure to secure employment. If investment falls, employment will be reduced, and if the pattern is to be followed during this next year there will be less hope for new entrants into industry. The hopes and aspirations of these young people to take up certain forms of employment on leaving school with their"0"and"A"levels will be frustrated.

As a nation we have always taken pride in the fact that we were a forerunner in availing ourselves of new techniques and new ideas. I appreciate that we cannot live in the past, but anyone who has travelled round some of our most industrial centres, as I have done and have been fortunate to do, must have noticed how the majority of our technicians are straining at the leash and wanting to go ahead and inject their ability and know-how into new types of operations. They are waiting most anxiously for the word"Go". Some of our biggest industries have positive research sections operating. The restriction of capital has been a basic deterrent to much of the implementation of that research. Has that research seen the light of day? I have always held the view that as a nation we have some of the best scientists and technicians throughout the world, and what a boon it would be to the economy of this country if more freedom were given and supplemented by financial aid to their types of industry!

Every one of us wants to see a strong economy in this country but, my Lords, such will not come to pass unless some managements—and I hope the noble Viscount, Lord Massereene and Ferrard, will take note of this, now that he is an industrialist—will take a greater pride in their work. What I should like to see is top management laying down the dictum that every manager must spend at least one day a week visiting the shop floor. If this were done, I am convinced that it would lead to better industrial relations and would improve the education of those managers for the responsibility that they carry. Let me submit to noble Lords that it is not something new that I am advo eating on this occasion. The noble Viscount—and I come back to him again—made a remark about going down a mine. Take the case of a colliery manager. A colliery manager, by legislation within the Coal Mines Acts, is responsible in many cases for two or three thousand people. He probably has two under-managers assisting him on the managerial set-up. In accordance with the Act, he must spend at least one day a week underground. That is part of his responsibility as the manager for that particular undertaking, with the office that he holds. I believe that if industrialists would give more thought to such ideas and would allow their managers to get out of their offices and on to the shop floor, to mix and see what is really happening instead of having to depend on the reports of their subordinates, it would improve the situation inside industry between management and employees. As a matter of fact, I feel sorry for the manager who finds himself tied, as it were, to his office desk. Perhaps the Department of the Environment may take a keener interest in what I am putting forward.

My Lords, whatever Government is in power it cannot run away from its responsibilities. Nothing has been more nauseating to me than to see able-bodied men out of work. I know that where unemployment raises its ugly head it is like a canker; it can spread through the whole system of the individual, and he begins to lose faith and trust in humanity. After careful thought and study I am convinced that the steps taken by the Government to date, if not changed by something more positive will leave a stigma which will take a long time to eliminate. They are the Government, and do not let us have such questions posed as,"what are your alternatives?". If such were asked, I would respond in similar terms to those used by that great statesman of the past, Sir Winston Churchill, when he was Leader of the Tory Opposition. When that question was directed to him, his reply was: You are the Government and not us. Have a General Election and then you will he told. The sooner the electorate of this country are given that privilege again the better, and then we shall be able to pronounce upon what the policies of the Labour Party shall be against the policies now pursued by the present Government.

7.41 p.m.


My Lords, far the most constructive allusion in the speech of the noble Lord, Lord Slater (whom I am happy to follow because he was a miner and I once represented miners in another place), was his reference to regional policy in which my interest lies. For, as my noble friend Lord Dundee pointed out, it is in the development areas that the unemployment policies of any Government are really put to the test. I find some solace in the gracious Speech in that it speaks of"developing"regional policies, and that can only imply their re-thinking. The danger of much of what we have heard to-day is pressure simply to pump more and more subsidies into old and declining areas, to prop up what is already in decay, whereas the time must surely come for a long-term strategy to be devised which would revert to the established Tory philosophy of developing the under-active areas through the selection of growth points and the pumping of investment into them by way of infrastructure. The selection of growth points is not simply a matter of finding convenient places for housing like Milton Keynes, Bracknell, Peterlee, or East Kilbride; it is a question of making up our minds on what are West Europe's basic growth industries to-morrow. What are their likely space and location needs'? Do we have sites to offer? Over the next decade and a half what could this mean in new employment terms? That is why we should look, as the noble Baroness, Lady Seear, looked, at the capital intensive side of the picture.

The Bredero Industrial Group of Utrecht, using O.E.C.D. and other reputable data, have forecast a major and rising West European demand for basic products through the next 15 years whether in power, oil, petrochemicals, steel or aluminium. They have shown that the pressures for their location are going to be, very largely, by coastal deep water sites of which Europe has few and we have many. Despite the recent cutback both in production and in investment, they believe that between now and 1985 West Europe as a whole is going to need somewhere between 24 and 65 new oil refineries and about the same number of new petrochemical establishments. They believe that between now and 1985 West Europe is going to need not fewer than eight vertically integrated bulk steel plants based on the L.D. oxygen process, and they believe that not fewer than 14 and maybe 35 new aluminium plants are going to be required over the same period.

I will not weary you, my Lords, with the relevant figures, but in terms of direct employment plus the indirect service employment which is inevitably sparked off by any such major new industrial development, this is looking at a growth in new employment of somewhere between 300,000 and 450,000 in basic industries in Western Europe over the next 15 years. It is also looking in space terms at requirements somewhere between 100,00 and 180,000 new, flat acres. My first question to the Government of course they cannot answer it now, but I hope they will write to me—is to ask what they make of these projections which have been published in the Scottish Council's document recently, called Eurospan? Largely these new investments are going to seek deep water sites. Surely we in Britain, devising a long-term strategy for regional development to tackle basic unemployment, could win at least 20 per cent. of that new investment and bring it to our deep water estuaries.

I take comfort from the fact that somewhere in the Government machine someone seems to have spotted this, for the English Local Government Reform Bill forecast in the Queen's Speech, and which is now available, shows that the importance of our estuaries has largely been understood. For single strategic planning authorities are now proposed for the principal estuaries: the Stour-Orwell estuary, Humberside, Tees-side. Merseyside and the Lune estuary in Lancashire, all this matching the Scottish pattern of local government reform which plans the same treatment for the Tay estuary, the Forth and the Clyde. Alas! national sentiment is too strong to bridge Severnside.

As for the Thames, we know that what is good for the Colonials is not always acceptable to their benefactors, and so in the greatest estuarial problem of all, plumb in the heart of industrial Western Europe, this remains the victim of a geographic schizophrenia, with Kent and Essex face to face on their own. when in planning terms we should be looking at the whole Thames estuary. This is all the more strange when the Burns Report on South-East Strategy—which has a considerable bearing on the relief of unemployment in South-East Essex—the South-East Planning Council, the Standing Conference of South-East Planning Authorities all together pressed for a second crossing of the Thames below Tilbury. Yet when the Secretary of State's elaborate and pontifical approval of the Burns study was made public the other day, it omitted any reference pro or con to this critical line of communications.

As growth point candidates in the revision of regional strategy, the estuaries speak for themselves. But to win a 20 per cent.—and I put the target no higher than that—share of the major new investment which is predicted in Western Europe, gigantic development and reclamation plans will be needed. So I ask the Government to-night—and no doubt in due time they can reply to me in writing—whether in re-thinking their regional policy they will look at two proposals now. First, to set the estuary-minded Central Environmental Planning Unit—lately somewhat underemployed I fancy—to work on outline plans for the reclamation and the infrastructure needed to welcome these opportunities. Second, to consider setting up at the right time estuarial development corporations, with powers akin to the new town development corporations, for all the estuaries in question to develop their growth-point potential.

To reply, as has been done by letter and in public, that the Government await private enterprise proposals, is to put the cart before the horse—if we still believe that infrastructure needs to be provided for the growth points of to-morrow. It contradicts the consistent behaviour of both Governments in regard to New Towns, where money is spent as if the Government were a drunken sailor with endless supplies of"booze"; money is poured out on New Town infrastructure without any demand from private enterprise whatever. Then what if private enterprise does come forward with a scheme? May I just remind the Government that the Port of London Authority and the Thames Estuary Develop- ment Company are still awaiting the Government's view on the port and related industrial development proposed in regard to Foulness—something that would aid South-East Essex unemployment and the reconstruction of the East End of London. May I say that it is rumoured, contrary to all sense either of space or of noise or of environment or indeed of the shared economies of scale, that the third London Airport is to go to Foulness Isle, instead of to Maplin Sands reclaimed off-shore? When, my Lords, are we to know? Perhaps we can have at least an answer on that point from my noble and learned friend tonight.

However, whether it is oil, petrochemicals or alumina smelting that we shall hope to get to Britain, these are not under our control, whereas to a certain extent the steel industry is. In that regard ugly rumours are afloat at the present time. It is said that, despite the dynamic effects officially predicted for the Common Market—a prediction, my Lords, never knowingly understated—the bulk steel investment programme review by the Joint Steering Committee between the Government and the British Steel Corporation now ignores O.E.C.D. estimates of world steel demand predicting a 1975 output at about 25 per cent. above last year's and a 1980 output at 50 per cent. up, or a total of 900 million tons a year.

It is said—and I ask the Government to clarify this as soon as possible, if not to-night, then shortly by letter—that this review is being based on a growth rate assumption of no more than 3; per cent. That would contrast strangely with the hopes we listened to, and were stirred by, from my noble friend Lord Drumalbyn to-night and a week or so ago from the Chancellor of the Exchequer, who were pointing to 4 or 41 per cent. It is being widely said that as a result of this deliberate selection of a lower growth rate than is now ministerially predicted—indeed, asserted to be here; and I hope that the Government will be able to clear up these sad and disappointing rumours soon—the British Steel Corporation's project for two new bulk steel plants on green-field sites within the next decade has now been ruled out; that, as a result, expansion is to be held down to an extra 13 million tons of output a year on brown-field sites, and that this of course knocks out the Hunterstown project as a British enterprise for a very long time. Will the Government say, now, or as soon as possible, what is the growth rate over the next decade at which the steel investment programme is being reviewed and, in the light of that, how a policy of closing old plants can possibly be carried through unless there is visible new sign of investment? In this matter, my Lords, parsimony is the very worst profusion.

Nor is it a sufficient answer simply to say that European investment will be welcomed, because everybody who has been in touch with the steel industry in Europe knows that such investment is not willing to come to Britain until it is seen that steel has been removed from the shuttlecock of politics. Nobody wants to invest in Britain with the fear of some new kind of nationalisation, or renationalisation, or denationalisation in the next Election's political programme from one side or the other. And so why, when the period to E.E.C.-Day is so short, have we no promise in the Queen's Speech of a Bill for the financial reconstruction of this nationalised industry on the B.P. model—something that the British Steel Corporation itself has apparently proposed? So I beg the Government, when the Steel Borrowing Bill comes up later on this Session, to consider broadening that to provide for that financial restructuring of our nationalised steel industry that will take it out of politics, put it beyond the argument of either side, and bring about that liberation from ministerial control which the European Communities will in any case require.

My Lords, what conclusion, then, do I reach on the Amendment? I believe that the Government are rethinking their regional policies in strategic growth point terms. This, as I see it, is their long-term approach, their long-term and fundamental approach, to unemployment. I shall therefore support the Government in the Lobby, but in doing so I beg of them to be bold, to balance fortune by a just expense, with economy join magnificence.

7.56 p.m.


My Lords, in looking round your Lordships' House I see present many of my colleagues from another place. I remember the hour. I remember, too, a letter that I received, on the day we nationalised coal, from a constituent in Ashton-under-Lyne who I thought was sending me a nice box of biscuits, until I read his letter and the diatribe in it. At the end of his letter he said,"I don't suppose that this letter will have any practical result whatever, but I have been able to let off steam, which is more than my boiler will do with your bloody coal."Well, in one way and another we have heard a lot of letting off steam this afternoon and many thoughts crowd into one's mind at this stage of the proceedings. It seems to me that the reason the large reflationary packages both of last October and of June or July of this year have been so ineffective is that they were for the benefit of companies; the large mass of earners were left out; the rich benefited—and so did the very poor; there was a reduction in purchase tax and a reduction in S.E.T. Where have all the employees gone from S.E.T.? Still some are about. This all leads to the conclusion to which some of the best brains in this House have given speech this afternoon: that lack of confidence is largely responsible for the state of affairs. Investment has not matched the reflationary packages which have been offered.

So there is an Amendment in front of the House on this business of the unemployed. I stake my claim here. When I was 16 I walked with my father from where I live now and called at every mill on the way to Huddersfield. When we arrived on the station at Huddersfield my father had tears running down his face, and he turned to me and said,"Nobody seems to want us, lad."That was just before World War I. After World War I, and after two and a half years in hospital, having been severely wounded, I came back again and I had another dose. I went round on two sticks looking for work, and I have unemployment to thank for making me a capitalist. It was force majeure. People speak of lack of confidence on the employers' side, but nobody mentions anything about lack of confidence on the workers' side. Nobody thinks that they have any reason to have any lack of confidence. But, my word! have they not? They have a lack of confidence in the ability of Governments to hold prices so that their wives can go each week and know that the money they have will go as far as it did the previous week. When they see that it does not, they come to the conclusion that a few wild claims and a few"mad cat"sort of gestures to get some more money into their pockets is the way to go about it. It is not the same world as it was when I was unemployed; it is not the same world, either, that it used to be when people came up to me in the street to ask me for work in between the wars. It is a different world. If you think you are going to subject the working population of this country to the same sort of treatment that I had, or my father had, or the people who came to the mill looking for work had, I say:"Forget it! You will be hung on trees!".

With this lack of confidence, the extraordinary exaggeration in claims and the extraordinarily foolish giving in to claims which in many cases are never expected to be met, I agree with the noble Lord, Lord Robbins, when he speaks about cost inflation, and I agree (as did the noble Lord, Lord Balogh) with his analysis, But the noble Lord, Lord Robbins, takes us, as so many other economists do, to the point where he will, not go any further; and, indeed, most other people will not go any further. Of course there are people who do not know how to go any further. But what is necessary, in order to secure confidence on both sides, is that at some point—as the noble Lord, Lord Robbins, was hinting—there should be a straight edge to which one could pin the argument. The noble Lord, Lord Robbins, was speaking about the one to 2 per cent. productivity, a modest increase in inflation, and all the rest of it, that we have all been talking and arguing about for the last 25 years. But if we are not careful, and if we do not act quickly now, the situation will become chronic, because it will get to the point when the country will need to be told in no uncertain manner what to do. In fact, it is building up to this at the present time: it can be seen all round us. We do not want the same sort of rule that exists in other places in the world. We want to have rule with reason, and with toleration, as the noble Lord, Lord Balogh, said; and that was good sense.

We are getting to the point when the old-fashioned remedies which are really outdated have no imaginative response from the people who matter. The managerial side and the capital side of industry at the moment is comparatively negligible, in terms of importance, when we consider it in pure power terms. The power is on the shop floor. But I reckon from what I have seen over these last three years, when I have been going into factories many times a week, that there is a spirit of reasonableness which, if it is tapped, and tapped properly, will lead to a better understanding than we have had at any time since the war.

But, my Lords, there are certain conditions for this, and one of those conditions is that you do not mess about with the workers' livelihood. Pick up any newspaper of any consequence on any day of the week and look on the business page, when you will see something like this. Let us look at the Guardian of to-day's date. It says: But the new market knew about it earlier-45 minutes after trading opened yesterday. From a steady quotation of around 183p the shares started moving up to 186p, 190p, and so on till they reached a peak of 232p. Then at 2.45"— and so on. In the next column it says The City's total losses from the Autonomies fiasco may prove to be higher than expected, although there is still confusion about the exact position of the accounts. Miles Roman, Autonomies' parent company which yesterday appointed a liquidator, has a deficiency of rather more than:E4 million … Later on. that same article says that some of the directors are to have a rescue operation for a hundred men. It is time we legislated to stop this sort of thing. It is time we had a revision of our company law to prevent this sort of thing from impinging on people's livelihoods to-day. It is an absolute scandal to read this sort of thing in a paper when up and down the country people arc being declared redundant. It is time we applied ourselves to it, and if we do not do so we shall regret it.

I have spoken long enough, my Lords, but I feel very deeply about this. This situation, this spiv, gimmicky, smart alick attitude on one side of this great industrial country of ours cannot be tolerated. From the time when the Americans started with legislation in regard to monopolies, in 1897, exactly fifty years elapsed before we produced our Monopolies Bill, in 1947. They produced their Mergers Bill in 1914, and we produced ours in 1965, almost fifty years afterwards. We must not be as slow in the bringing in of legislation for the next lap. It may be too late to stop much of this, and I am minded to reply to the noble Lord, Lord Robbins, who spoke about real estate having nothing to do with cost inflation. I will refer to it briefly.

You must have a straight edge with that. Which comes first, the chicken or the egg? If you have cost inflation, say, on St. Luke's old Mint in Covent Garden sold to Oddenino's by the Bank of England for £900,000, and within a few weeks sold to the L.C.C. for £1½million, what does that mean? It means that somewhere the price of what is going on on that site is going to rise. That is the effect. The man who does that—Oddenino's, the private firm in the City may think he has done extremely well with it; but in the long run events are going to catch up because everybody else is going to have a slice out of this cake. And so it goes on.

In conclusion, I want to appeal to the Government to do something about the things they can do something about and do it at once, and I say to them now, prepare your way for a price control. The more your measures are effective and the more you are suited, the more you will spark off increased cost inflation by the demands that will be made for more wages in consequence. You must hold it somewhere, and it cannot be held by any sort of remedy that I have heard espoused this afternoon. I am sorry if I have been a little serious about this question of what they are doing to ordinary folks, and how little they care about them, with the sort of things that are going on on the Stock Market and behind it to-day, and if I have spoken too long I apologise.


My Lords, may I make one comment on the noble Lord's speech? He said that no one had spoken of the fact that the workers have no confidence in the Government's ability to create jobs. Very immodestly, may I point out that I did so?


My Lords, may apologise to the noble Baroness? Hers was the only speech I missed.

8.12 p.m.


My Lords, I am honoured to follow the noble Lord, Lord Rhodes, because I respected everything he said and I listened attentively to his remarks to your Lordships. I know that his speeches are just as greatly appreciated here as they were in another place, as was his great success as a Minister at the Board of Trade. He always spoke from his heart and with considerable knowledge of the problem. My Lords, quite understandably, in the opening speech from Lord DelacourtSmith, as in the wording of the Amendment, we had a concentration on the question of unemployment. ' May I say, first and foremost, that there cannot be one person on these Benches who does not deplore the fact that so far the economy has not reacted to the measures taken and reduced unemployment. We all recognise this as a disaster for the people, particularly the young and the old, who are not employed and who wish to be so employed. Therefore there cannot be one person in the Government who takes unemployment in anything, else but a very serious vein indeed.

But there are other factors in the economy. I always felt, during our thirteen years in office, that there were four major factors to be dealt with: there was unemployment, there was inflation, there was investment and the growth that goes with it, and there was the balance of payments. I readily concede that at the end of their six years the Labour Government got the balance of payments right, but they did not really to their own satisfaction get unemployment right: there were two-thirds of a million unemployed, and they cannot have been happy about that. I think, broadly, that in our thirteen years we managed to get three out of four of those important variables about right, though never perfectly so.

I do not think it is right to say that had the Labour Government been returned to power there would not be an unemployment problem to-day. They consciously decided, against much advice, to turn the voluntary wage and salary freeze into a statutory freeze. We used often to hear said by Mr. Harold Wilson, then in Opposition, that Scandinavia was a wonderful example to follow. Scandinavia refused to bring in a prices and wages freeze, because they said, and quite rightly, that, first, it would be very difficult to find the right moment to take it off, and, secondly, the pent up demands then would quickly make up for the freeze and produce disaster. That is always the difficulty. If you have a voluntary or statutory wages and prices freeze, when is the moment to take it off, and what happens then? I respect the then Prime Minister's judgment—Mr. Wilson's judgment—enough to say that his timing in selecting June, 1970, for the Election, when he could have gone on till May 8, 1971, had he wished to, was exactly right. He knew that having released this demand, the water behind the dam—and it was somewhat leaky, as Lord Robbins said; it was not altogether a success—would have the effect of making inflation really serious and would bring a lot of other problems with it.

If I may answer one point made by the noble Baroness, Lady Gaitskell, she quite rightly said,"What has happened to the surpluses which we have earned?"I should point out that of course those surpluses have gone to paying the short term debts which when we came to power were nearly £3,000 million. There is still £400 million outstanding; we should like to repay that, but the International Monetary Fund do not want it back yet; they have kept us on the hook. We could have paid it back, and that is a reflection of the strength of the economy.

Taxes are down. They went up £3,000 million in six years of Labour Government and they have been reduced £1,400 million in our 18 months. Industry has benefited from the reduction in income tax, the reduction in corporation tax, the halving of selective employment tax, the lower bank rates and the much easier borrowing now possible; and it has benefited from the easement of hire purchase restrictions. But so far we have not got the cash resources, the liquid resources in industry, to allow us to invest as we wish to do, to modernise our plant and processes and buy new machine tools. This will take time; we need to charge up our financial accumulators. It is this shortage of cash and the steep cost of manpower that is forcing so many firms —and all the four firms I am associated with are in the capital goods market—against their will to get rid of expensive manpower. We do not wish to do this. The Government do not wish to see unemployment; we in industry do not wish to see unemployment. But we are forced to do this because our liquid resources arc not what we wish them to be. I have to say (I know I should not get agreement on the other side, but perhaps they would agree) that some of this is a result of Labour policy—their financial policy.

I want to turn to an important side of our economy which has not been mentioned during the debate on the gracious Speech. I am not sure that your Lordships will have read every page of the Bolton Report on Small Firms; there are 436 pages. I would recommend it as weekend reading. If you do not read it all, perhaps you could read the summary. Small firms are a very important sector of the British economy. In fact the small firms are as important as all the public firms and nationalised firms in our industry. In parenthesis, it so often happens that Labour Governments set up what one would expect to be Tory inquiries, and Tory Governments start Labour type inquiries. Mr. Crosland started an inquiry into the wellbeing of small firms, which one would have thought was a Tory interest and philosophy. It has produced a most admirable Report, and I congratulate Mr. Bolton and the very good committee which published it. It is published in very readable and pithy language. Unfortunately, the statistics all date from two years ago, and I believe they probably underestimate the difficulty of the small firm in our economy to-day. One thing which emerges is that, somewhat surprisingly for a nation which was once dubbed"a nation of shopkeepers", we are in fact not a nation of shopkeepers and small firms but a nation of big businesses. In Italy, the small business is twice as important to their economy as it is to ours here. Even in the United States of America, which most people would visualise as an enormous firm economy, the small firm is substantially more important. Small firms employ 6 million people; that is 25 per cent. of the employment in this country, and they produce nearly 20 per cent. of our gross national product.

I am not going to list the eight reasons summarised at page 343 of this Report as to why small firms are so essential, but there is one sentence which I think is appropriate, and I hope that your Lordships will bear with me if I repeat it. It says: If small firms did not exist, it would be necessary to invent them. This is absolutely true. If I had to select two reasons why I particularly wish to see any Government encourage the growth of small firms, the first would be their record of innovation, which is unique. A big firm always has reasons for not introducing some new technique, or producing some new instrument. In a small firm there is nothing to be lost, and they will often venture and do it cheaply and succeed. Secondly, the very important fields of measurement control and test gear are areas which big firms simply cannot undertake, either in the time or at an economic price. For both these reasons, I would especially wish to see small firms prosper.

I applaud the action announced in another place by the Secretary of State for Trade and Industry when he stated that he would make a Minister responsible for small firms. But there are two areas which are not covered. First, I should like to see, as is done in the United States, personal sponsoring. This is done under the United States Tax Regulations, Section 1244, and it is quoted at page 224 of this Report. Here is an arrangement whereby rich men can form a partnership with young technologists and can start an enterprise. If they make a loss they can set it off against tax; and if they make a success they will derive benefit. This seems to me equivalent to the Middle Ages, when rich men sponsored artists with great advantage to our artistic world to-day. I can see no disadvantage in it. It seems to me very sensible, and it has worked admirably in the United States. Secondly, I should like to see small firms—and there has been no statement on this yet —relieved of the Industrial Training Levy. It is really not appropriate to a firm of 25 people that they should have a large levy put on them, when young men trained under this scheme are really not suitable for their own employment.

I would have wished, if it was not so late and if there had not been a Procedure Committee which advocated not more than 15-minute speeches from Back Benchers, to touch on shipbuilding, because here is an area which perhaps would occupy many hours of debate in your Lordships' House. It is certainly a real problem for the whole of British industry, and especially the development areas. But I should like to turn to another area which I feel merits some attention; that is, aerospace and electronics. The Minister, in introducing in another place this part of their debate, said: … would have liked to report to the House, including action in hand in relation to the steel and aircraft industries …"[OFFICIAL REPORT, Commons, 3/11/71; col. 190.] Unfortunately, he was interrupted 16 times during his speech, and I am sorry that perhaps the interruptions stopped his telling us just what the Government had in hand and in mind for the aircraft industry. I am sure your Lordships will agree that there is a considerable problem here. It has been the concept of successive Governments to back international projects. We had the Anglo/French Variable Geometry aircraft, which was to be the core of our defence and industrial policy under the previous Government, and which was cancelled by the French. We had the Anglo/U.S. TriStar. which itself ran into some difficulty owing to Rolls-Royce. We have now the M.R.C.A. (multi-role combat aircraft), to which four nations are to contribute, with the design leadership resting with Germany. We have the Concorde, which has slipped some five years. I believe it to be an admirable aircraft, but it has its problems, although I believe that it will eventually pay a handsome dividend. Clearly there are problems in the international sphere and at home, and I hope your Lordships' House will find time to debate this and hear from the Government a Statement of policy for this industry.

I want to turn for the few minutes that remain to me to another threat on the horizon. This is not a cloud the size of a man's hand, but the Rising Sun, and the threat which the Japanese expansion involves not only for ourselves but for the whole of Western Europe trade, and even for the United States of America. This threat has been made much greater by the fact that the United States of America has put a 10 per cent. surcharge on Japanese imports, so they are therefore deploying much more of their effort to compete in Western Europe.

I want to give an example to show what other nations are doing to protect themselves from Japanese aggression in important markets. I want to take, in two minutes, an example from an area with which I have been concerned all my life; that is, the electronic area, and an example from electronic components of the manner in which one of our competitor countries, France, protects and supports its own component industry; and I want to ask the Government whether we ought not to look at what France is doing to see whether we ought to do the same here. I would concede that, as a nation so utterly dependent on international trade, only in extremes, or when an industry is tender and needs support, should we raise tariff barriers or impose quotas. I realise that this is undesirable for a nation such as ours. In the last year, the price of integrated circuits and of active and passive electronic components has fallen disastrously. We have had the example of one of our most advanced factories, the Marconi factory at Witham, having to close down in the face of competition from Japan and the United States of America. Prices fall not only because techniques improve but because the United States space and defence programmes have been run down, and the Japanese have increased their exports to a tremendous extent. I think in fact they are going to continue this aggression. We see it, by the way, in consumer markets, in television and other things, but I am talking about the component market as an example.

Some time ago a commercial agreement was reached between the French and Japanese industry. This is one of those unofficial agreements, and I am told that it was made with the knowledge of the French Government, although they would deny any knowledge of it at all. This agreement, it is reported, is due for renewal on January 1, 1973, and it operates on a quota basis. French industry regulates this quota through the C.L.C.—that is, their joint committee on the control of imports—and it covers active and passive electronic components. Of course it must be on an industry to industry basis and not on a government to government basis, because the latter would be against the General Agreement on Tariffs and Trade, and, I think, on a long-term basis would be against E.E.C. agreements as well.

I believe that an exactly similar agreement on an industry to industry basis, has grown up between the Benelux countries and Japan. Through this and other arrangements, I think that the total import into France of all foreign-made components, whether they come from Japan or from the U.S.A., has been kept down to between 5 and 7 per cent. It is a very rigorous control. Of course, there is already provision in the Treaty of Rome, and members can introduce protective import restrictions on a temporary basis; but this is unregistered and somewhat clandestine. The United Kingdom Government, for reasons I have explained, seem firmly against component quotas and tariffs on all counts, but I ask my noble friend on the Front Bench to take note of what is going on in Europe. We are dedicated to going into Europe, and the more we know about the tactics of our partners in the E.E.C., the better, and the better we can educate our civil servants, and our international civil servants, about the threat which exists.

I have mentioned only the one area of electronic components, but it is an important area because if you do not have a components industry you do not have an electronics industry, you do not have a communications industry, you do not have a computer industry and you do not have an avionic industry; and these together produce in capital goods between £1,000 million and £1,200 million of output every year. So this is an important area. It is one of our advanced industries and we would neglect it at our peril in the future. I have tried to draw attention to some of the challenges which exist.

For the reasons I have given, I believe that the economy will be stimulated by the actions taken by the Government. I think that growth will increase; it is already increasing in the consumer market but not, unfortunately, yet—I wish it were—in the capital goods market. I believe that investment will increase as liquidity improves in industry, and then I believe unemployment will fall.

May I end as I began? It really is not sensible 'to say that this Government have consciously created unemployment. All Governments wish to be popular. All politicians—and, after all, they make up a Government—love to be popular; they used to kiss babies in the olden days, but now babies have become too fussy. So we like to be popular, and it therefore cannot be a logical argument to say that we have consciously created unemployment. This is a problem which was already there, and we are doing our best to cope with it. I hope, therefore, that this House will reject the Amendment.

8.32 p.m.


My Lords, it now falls to me to offer some remarks by way of summing up the debate. I shall begin by thanking those who have taken part in it; in particular, those of my noble friends who have made the contributions from the Conservative and Government side of the House so very constructively. I shall not deal with some of the specialised points which were made, but I know that my noble friend Lord Drumalbyn will have noted them and will wish to communicate with noble friends, and noble Lords and Baronesses, who raised specific points.

My Lords, in many ways, this has been a very curious debate. It was obviously conceived by the Opposition Front Bench as a sort of cannibal feast, with roasted Tory as the principal item on the menu. Improbable as it may seem, the noble Lord, Lord DelacourtSmith, was obviously cast for the role of the cannibal chief and, true to the part which he was destined to play, he made one or two ritual circuits around the camp fire and one or two genteel gestures with his tomahawk. But this conception of the debate really broke down with the speech of the noble Lord, Lord Robbins, from the Cross-Benches, because he spoke to the Amendment and in about five minutes, in his opening phrases, completely disposed of its intellectual credibility by pointing out that the assumptions upon which the Amendment proceeded were wholly false. This so devastated the second member of the cannibal tribe designed to eat us up, that the noble Lord, Lord Diamond, who was to have driven the knife into the sacrificial victim, abandoned all his notes in deference to the speech which the noble Lord, Lord Robbins, had made, and proceeded to make a relatively constructive private enterprise speech, in which he pointed out the necessity for increased profits in order to establish business confidence, which 1 am bound to say I thought was a very proper response to what the noble Lord, Lord Robbins. had said.

But ally credibility which this Amendment could ever have had was fundamentally destroyed by the noble Lord, Lord Balogh, who not merely, to everyone's surprise, accepted the damaging analysis and diagnosis of the noble Lord. Lord Robbins, but actually reminded us at the end of his speech—except for the last few sentences in which he quoted verbatim from one of his less effective perorations—that this was in a sense an international problem, and that there were certain factors operating in the economic world with which Governments of both political persuasions might have to deal and face with intellectual candour and honesty. In those circumstances, I shall follow the excellent example of the noble Lord, Lord Diamond, so far as my rather more limited capacity in economic affairs allows me, and I shall try to start by putting the record straight, so far as I can, about the Government's intentions and about their specific proposals.

I suppose it is not an undue simplification to say that when we came into power, in the summer of 1970, we came in with three principal objectives. The first was that our experience in the years 1931 to 1964 had led us to believe that there were a number of radical changes which had to be carried out in our approach to economic problems, and to some social problems, if we were to break out of the vicious circle which had attended the life of this country since the end of the war. They were of course, we knew, controversial, but there is no reason at all to misrepresent them for that reason, and I shall come back to them, if I may, rather shortly in a moment.

The second objective we faced concerned the two problems with which, basically, this debate and the Amendment that we have been discussing have been concerned—rising prices and unemployment. We regarded those, and we still do, as trends which had begun in their present form somewhere about the summer of 1969, during the time of the Labour Government, and which had been going on ever since; and we regard them now as, to some extent at any rate, the inevitable consequence of policy decisions taken by that Government. The rising prices and the wage demands, of which the noble Lord, Lord Robbins, reminded us, were due to the breakdown of that Government's prices and incomes policy, and to what I believe to have been a conscious mood of despair in the months preceding the General Election, in which they deliberately let the reins down on the horse's neck and let wage demands rip as fast as they would do, without any kind of check at all. And that, I believe, with the noble Lord, Lord Robbins, is one of the main causes of unemployment at the moment. This is what rather takes my breath away about the audacity of the present Amendment, on which we shall shortly be asked to vote.

But there was more to it than that. As I think the noble Lord, Lord Delacourt-Smith, pointed out, that part, at any rate, of the unemployment which had begun in the summer of 1969 was due to a more creditable reason. That was the fact that Mr. Jenkins had deliberately inaugurated one of the most savage deflations of recent times by a system of, among other things, extreme credit restrictions, high interest rates and enormous surplus Budgets. Now I do not reproach him for that. I think that in the circumstances (which I should be fully willing to enter into if I thought it was relevant to the speech I am trying to make) there were reasons in the previous Chancellorship which had made it inevitable for him to take that course. I also give him credit, which I hope will not embarrass him unduly, for having prepared a balance-of-payments surplus preparatory to entry into the Common Market, against which his Party have now set their face. At any rate, for whatever reason, that was the policy which created the effects for which the Conservative Government are now being blamed; and it has been going on very considerably ever since.

I fully accept it from my noble friend who made the speech last preceding my present remarks when he says that there could be nobody on either side of this

House or the other place who did not regret that the counteracting measures which we took had not operated as rapidly as we had hoped, and as we had all hoped. But that is the highest that it can be put against us. We were coping with a situation which we inherited and which was directly the result of policies which were imposed on us in advance. My Lords, may I just say this, because it is directly relevant to the Amendment which we are discussing? Almost every Government, of any complexion, spend their first two years grappling with problems which were imposed upon them by their predecessors, and spend their last two years in initiating policies for which their successors will take the credit. Now what is wrong with this Amendment is that it has gone off at half-cock. I quite understand the noble Lord, Lord Diamond, when he said, rather shamefacedly, I think, that next year, of course, if things are no better, then perhaps they will be able to catch us; but it is too soon yet to see. I am now going to deal, if I may, in my own way, with some of the things which we have done and some of the reasons why we have done them. But may I say, in passing, that what I desire to do is to put, in the context of our longer-term convictions about the state of this country, the more immediate policies which we are pursuing in order to combat the particular evils of high prices and unemployment, because, important as these are, they must be seen in the context of general policy, and they must not run counter to major social and economic objectives.

When we were beaten in 1964 we had, of course, a certain amount of experience in Government. I was one of the newcomers, and I had been concerned in it since 1956. Many of my colleagues had served continuously since 1951. We had come to the conclusion that we had learnt one or two lessons about the state of affairs which lay at the bottom of many of our economic disadvantages and which have shown themselves under successive Governments since the war. Take, for instance, to begin with, the social security system. It is of course quite false to represent anything that we have done as a reversion (as the noble Lord, Lord Delacourt-Smith, put it) to the policies or the attitudes of the 'twenties or the 'thirties. That would be impossible even if it were desirable, and if it were possible it would not be desirable. But we could not help pointing out to one another that the whole of the structure on which these services were financed, based as it is upon, first, the Beveridge Report and then the 1944 White Papers, was founded upon planning on the basis of 10 per cent. unemployment, which was both impossibly high even by present rates and, of course, wholly false in relation to fact.


My Lords, I am sorry, but the noble and learned Lord will have to learn. The average unemployment figure on the basis of which the Beveridge Report was written was 3 per cent.


That is not my recollection, my Lords. But I do not want to quarrel with the noble Lord upon questions of figures. It was based on a level of unemployment which all of us would I think have recognised as unacceptable, and, much more important for the purpose of this argument, upon a basis of under-employment in the economy as a whole which affected the reward of the worker in work. This created, as he believed—and I am describing what he believed, not what the noble Lord, Lord Balogh, believes, which no doubt is something very different—a number of what I have always referred to as the vulnerable classes left behind by the Beveridge Report: the chronic sick, the very old, the large-child family and what I might call the fixed-income people, who form a heterogeneous class equally affected. When we decided, as we did, to concentrate on need in a great sector of our social security policies, we were trying to identify and correct that imbalance. To call that a means test State is a complete travesty of the truth. The means test, as those of us will remember who are old enough to have lived during that time, was a test imposed upon the individual to ensure that he spent his own resources and, at its worst phase, the resources of his family as well before he received the benefits, other than the covenanted benefits, under the old unemployment scheme. What is now proposed is to concentrate on need by identifying vulnerable classes—the large family with its low income, the very old, the chronic sick, the handicapped and the fixed-income people. To refer to that as a means test State because it in fact bears relation to people's means is, as I submit, a travesty of the truth.

Secondly, we had come to the conclusion that the taxation system had become so complex, and, in the higher ranges of personal taxation, the rates so penal, that they were actually holding back the progress of this country as well as constituting a serious social injustice, not merely to those who received the incomes which were taxed but to the firms which employed them, which had to pay very much more to obtain their executives and also that nothing short of a complete simplification of the tax structure and a reduction of many of the rates would do. We also came to see—and this is equally important, though I shall pass from it quickly—that, following the war, we had come to regard subsidy as such a normal weapon of policy that we no longer had any reserve spending capacity in public expenditure to give us any reasonable flexibility of manoeuvre. What the Government have done in one range of policies, to which I shall come in a moment, is to seek to carry out those long-term objectives. What the Labour Government did in 1964 was to get in on the slogan of"Let's go with Labour". They did not say where. In principle what that meant was,"We can spend our way out of our difficulties; we can buy schools, hospitals, roads, pensions, anything we like, and everything will be all right because it is only the wicked Tories who are holding us back."None of this really important long-range activity was undertaken during the entire six or seven years of Labour Government which followed, and that is my principal charge against them. The only thing they did which was worth doing was to renew the negotiations for entry into the Common Market, and those they have now abandoned. Those were our objectives when we got in just over a year ago.

Now, what have we done in order to deal with the short-range problems, the immediate problems, with which this Amendment is particularly concerned? In the first place we have lowered taxes—not only direct personal taxation but purchase tax as well—to the tune of £1,400 million in a full year. The noble Lord, Lord Diamond, asks what effect that has on demand. He spoke of a figure of £250 million which he said was a quarter of what was proposed. Naturally, being a simple-minded man, I inquired of the mysterious entities who inhabit the Box as to where he had got this figure of £250 million. They did not know; although the noble Lord said that it was a Treasury figure. They said that that figure had never been given as such. They thought that it was a figure of £250 million of demand, referring to the 6d. reduction in income tax which was announced in the autumn of 1970—since when there has been a whole range of further tax reductions. What we have said and what we believe to be true is that the result of this and other measures will be to increase the growth rate by the figure given by my noble friend Lord Drumalbyn to somewhere between 4 per cent. and 44 per cent. which is a creditable improvement on what the Labour Government were able to do.

That is the first thing we have done: to lower taxes. The Amendment says that we have done nothing specific. This is something specific. We think that it will improve employment. We think that it must help to reduce rises in the price of goods and services. We think it must increase demand, we believe that it will increase profitability and so stimulate investment. The next thing is that we have reduced interest rates. Bank rate is now, I think, 5 per cent.—or, at any rate, the lowest since 1964 when the Labour Government came into office. Of course, these things will take time to work through into jobs.

I take the point that was made by my noble friend Lord Balfour of Inchrye, that what the man in the queue wants to know is when he is going to get a job. It is no good telling an untruth about it: if you reduce interest rates, if you take these steps, it will take time; and even if (which I will try to persuade him we are doing) you undertake some kind of crash programme which he recommended, the jobs will not take place at once. It will take time to work its way through the economy and for the programme to develop. The fact is that there, again, is something specific that we have done. There are some welcome signs that this is beginning to work its way through. I will not repeat those signs; my noble friend Lord Drumalbyn gave them earlier. These are specific measures. They are designed to deal with unemployment, not by maintaining workers in unviable units, doing unprofitable jobs, but by tackling the problem at its roots. I humbly submit that that is the right way to do it.

That brings me to the question of the regions. It is wholly incorrect to suggest, as did Lord Delacourt-Smith, that our attitude to the regions is largely negative. We have given help in the shape of free depreciation, grants and loans for factory building, the construction of advance factories, training grants and retraining facilities (outlined at greater length by my right honourable friend, the Secretary of State in the other place) and by the infrastructure programme of £160 million which has been committed in the past few months. We have continued the regional employment premium until 1974, and we have extended free depreciation to include immobile plant and machinery in development areas. These are all specific policies, all specific proposals, and all have to do with unemployment. My reckoning is, if my calculations are not incorrect, that they will inject into the economy and particularly into those areas something like £420 million over the coming months—I think about 24 months—the investment incentives something like £190 million; infrastructure, something like £160 million and the naval building programme acceleration, something like £70 million; all before, let us say, April, 1973. And that is without including housing modernisation which is another £46 million.

To call that "largely negative "is, to my mind, as near to nonsense as the noble Lord can get. It has no relation at all to the true attitude of the Government to the regions. But there is no concealing the fact—indeed, I should like to emphasise it—that the basic problem of the regions is undoubtedly structural: the undue dependence on certain basic industries, some, like shipbuilding, liable to violent cyclical fluctuations; some contracting (coal has been an instance) and certain other types of heavy engineering. Of course, in the short term by far the greatest boost to employment in the regions must come from the general improvement in production which will give a stimulus to those industries. That is why my argument about the Common Market was right when I referred to the regions a week ago, and that of the noble Lord, Lord Hughes, who sought to reply to it, was misguided. In the long run, nothing will improve things for the regions except diversification having for its effect the correction of the imbalance created by excessive dependence on a few industries which are so cyclical and some of them contracting. That will take a longer time; but we are fully appraised of it and are fully determined to deal with it by the methods which I have been trying to outline.

Then we come to the social services because they have a direct effect on employment. One of the great developments since the 1930s has been the development of our social services. This has provided a stability of employment unknown when my father was a member of the Government and we have there—not for that reason, but with that effect—substantially increased the real value of the retirement pension, eased the earnings rule, improved the widow's pension, provided pensions for those of the over-eighties who were not entitled to one and improved still further the pensions of those who were. We have improved benefits for the chronic sick and disabled. We have introduced dependants' allowances, we have introduced family incomes supplements and are about to reconstruct National Insurance. If these are not specific measures, if they do not have the effect of stimulating and stabilising the economy, then I do not know how you differentiate specific from general measures.

Let us take the health and social services. There one has the same tendency. Last year another £110 million, to be spent over the next four years. was allocated, earmarked for the elderly, the mentally ill and the handicapped. Is that to be said to be purely negative? Is that to be said not to be specific? Is it suggested that that is the kind of thing which constitutes a return to the 1920s and 1930s? I would suggest that it is compassionate, and that it is compassion combined with a certain amount of common sense and intelligence. Its justification is based on need, and the means adopted are justified by utility.

On housing, £46 million is involved on modernisation in the development areas, with a 40 per cent. increase in the take-up of grants. The starts are up by 20 per cent. on the Labour Government total and we are, in fact, reorganising housing finance to deal with the longterm problem. Ever since I have been in politics—a depressingly long time—there have been too few houses in this country. There has been too little modernisation and too much gradual obsolescence of our stock of houses. If I am not mistaken, we have had rent control since 1915. Since about 1915 we have had this appalling disparity between privately-rented houses and publicly-rented houses which people represent to be discrimination against the private landlord, but which is discrimination against the private tenant. We are spending money on the people. We are providing rent allowances for the private tenant and we are going to provide rent rebates on a vastly improved scale for the public tenant. We are dealing with these problems at their roots. You will never get it right so long as one-third of the population of this Island is living in subsidised housing, subsidised either at the public expense or at the expense of private landlords. You will find, as a matter of fact, if and in so far as we achieve or maintain full employment, that these subsidies, although they are relished by the tenant, falsely, as a subsidy to himself, are really only an old-fashioned subsidy to wages in industry. This is not the way to handle the problem which has baffled our predecessors since before the First World War.

My Lords, the same is true in the. primary school building programme. The last thing I would do, of course, is to suggest that the raising of the school. leaving age is designed to cure unemployment; that is the last thing we want for it. But it will have a beneficial effect on the school-leavers who were referred to by the noble Lord, Lord Delacourt-Smith. And we achieved that; we did not have to postpone it—if I may remind the noble Lords on the Opposition Front Bench of the painful facts of the last Government.

No one will doubt, I think, that the last Session was the most strenuous and the Parliamentary programme among the most radical in recent years. The coming Session will if anything, as adumbrated by the Queen's Speech. be still more strenuous. A Session which includes, as this will do, the Common Market legislation and the reform of local government would, I should have thought, have provided enough pabulum for the Government legislative monster to feed it for more than one Session in most Parliaments and under most Governments. But we are not stopping there. We are not only going to carry out these major reforms; we are also going to start the reorganisation of the whole taxation system direct and indirect; to substitute a single personal tax for the indefensible anomalies of income tax and surtax, and a value added tax for purchase tax and S.E.T.

We are going to reform the Sale of Goods Act; reorganise the monopolies and restrictive practices legislation; reform housing, finance and the health services in Scotland; provide new training facilities; add a measure of legal advice to the Legal Aid Scheme; extend the shipbuilding credit scheme; raise the school-leaving age; bring in a new Criminal Justice Act and bring in new legislation to explore mineral resources. The main burden of this Amendment appears to be that we are doing too little, But, my Lords, the economic conditions and unequitable standard of life to which the Motion refers are themselves the product of fiscal and social policy. The Queen's Speech stated in terms that our first care will be to increase employment, and the measures that I have outlined are all specific. They were all adumbrated in one way or another in our Election Manifesto.

The noble Lord, Lord Robbins, complained of the element of partisanship which has entered into this debate. It was not we who initiated this debate.




It was a "cannibal feast "prepared for us by the Labour Party Front Bench. And still lurking in the undergrowth is the noble Lord the Leader of the Opposition. I cannot say what he will tell us, but I must tell him, incidentally, that I do not regard it as in the best tradition of modern Parliamentary debate, when you move a Motion of Censure, to ensure that your own major speeches come at the end of the debate, and I shall be raising this question with him through the usual channels. If not successful then, I shall raise it in the Procedure Committee. But what is hardest to bear about this extraordinary Amendment is the extent to which it illustrates the absolute incapacity of the Labour Party to measure the extent of its own failure to diagnose its causes, The Amendment is purely negative in context; it proposes no concrete or constructive policy of any kind. One supposes, from the transactions of the Labour Party Conference, that what the noble Lord is really going to say is a specific measure to cure unemployment is the nationalisation of all the banks and insurance companies. We shall await that part of his speech with great interest, but so far he has kept remarkably quiet about these proposals.

My Lords, the Party which came into power in 1964 on the doctrine that all Britain had to do was to spend its way out of its difficulties; which first conceived, and then abandoned the National Plan, the Declaration of Intent, the Ministry of Technology and the pamphlet In Place of Strife,and which has now turned its back on the Common Market and is halfway to deposing Mr. Jenkins in favour of the calamitous Mr. Benn, is in no positon to criticise us; and I ask the House to reject the Amendment.

9.5 p.m.


My Lords, if I may come out of the undergrowth, I am bound to say to the noble and learned Lord the Lord Chancellor that his remarks about the order of speaking are inclined to suggest that he is about to say, "We wuz robbed." We shall discuss this on another occasion, but I am bound to say that the uniform advice I have had from the officials of the House is that this is the right order. I see some advantage, very occasionally, in speaking after the noble and learned Lord. I am rather inclined to think that the kindest thing we might do would be to draw a veil over the performance that we have just had and for me to sit down and let us go to a Division—


Hear, hear!


—but the noble and learned Lord has gone in for so many astonishing inaccuracies that, although there is not enough time for me to educate him, I might be able to correct any false impression he may have caused among his supporters who perhaps even believe some of the noble and learned Lord's wilder fantasies.

He started off with these fantasies when he talked about cannibals and tomahawks. As he capered like a Red Indian round the fire in which he hoped to place the Opposition Front Bench I am bound to say that he would not have been a cannibal, because Red Indians are not cannibals. This led him on to a series of mis-statements which I have never heard equalled, even by the noble and learned Lord himself. The first and the greatest of these was his reference to Beveridge and 10 per cent. unemployment. No wonder the Government are complacent about the present level of unemployment because it is, in total, just over 3 per cent.—3½ per cent. but, 10 per cent.! What does it matter? Last summer the noble and learned Lord misjudged the debate. My noble friend Lord Beswick sought to introduce a serious discussion. We had from the noble and learned Lord the Lord Chancellor the usual rather excitable speech in reply, but on that occasion he did not caper quite so much. We wanted to discuss an acute problem: a problem that is growing; one that the noble Lord, Lord Robbins, my noble friends who have spoken and others have tried to face, as Lord Robbins suggested, seriously and intellectually. But to say that we can discuss it without Party politics when we have a Lord Chancellor who makes a speech like that seems to me to be a total impossibility.

The purpose of this Amendment on this occasion has been not just to discuss—although we have had some free and well-balanced speeches from both sides of the House—but to draw attention to the appalling consequences of Government policy, or lack of policy, on employment, the fate of the regions and life in the depressed areas. On the last occasion we were told by the noble and learned Lord that we could not judge their policy over a period of twelve months; that it was a policy for a Parliament. I really do not know how long we have to wait before unemployment figures come down, but the noble and learned Lord having heard, as I hope he did, my noble friend Lord Rhodes on the consequences of that unemployment, I hope the frivolity of his approach to this matter will be subject to some reconsideration on his part.


My Lords, I greatly resent the suggestion of frivolity. I have every bit as much feeling for social justice as the noble Lord. I was a little contemptuous of his Amendment, but that is not the same thing as being frivolous about unemployment.


The noble and learned Lord may well be very serious, but I can only say that his demeanour did not give that impression. I naturally accept that he is concerned, but the content of his speech was not serious. I do not know where he gets his facts from. He obviously does not interpret what is given to him by his advisers, to whom, contrary to practice, he referred. The noble and learned Lord referred to the speech of my noble friend Lord Diamond and the effect on demand. It was obvious that the noble and learned Lord did not know what the demand element in this issue was. The figure of £250 million related to the October mini-Budget and the April Budget, and the information was given at a Treasury Press conference. If my noble friend Lord Diamond and I are wrong, then we will withdraw and apologise. Otherwise, I hope that the noble and learned Lord will check these figures and we can give him the references.


My Lords, of course I shall check the information again in the light of what the noble Lord has said, and I will give him what I believe to be the correct figure. The reason why I referred to the source from which I got the information was that I did not want the noble Lord to think that I was in a position to give him the figure from my own research on the subject, because my Department is far removed from that kind of economic question.


We are well aware that the Department is far removed from economic questions. But I am bound to say that this is part of this unserious approach to a matter that is extremely serious.

I will now attempt to restate, quite briefly, some of the arguments that have already been put forward by my noble friend. The simple fact is that during this period of the Government, whether it was their fault or the previous Government's fault, or whether it was Mr. Maudling in 1964 (and it was Mr. Maudling's spending spree that we had to cut back on; that is another correction) the simple fact is that much larger numbers than any noble Lord who sits on the Government Front Bench, or the noble and learned Lord who sits on the Woolsack, believed was likely are to-day unemployed. The consequences have been most serious and they are leading—I say this with all the seriousness that I can—to a degree of bitterness in this country. One noble Lord who spoke (I cannot remember who it was, but it may have been the noble Lord, Lord Slater) pointed out that the people of this country, having known full employment, having known better conditions and known less division within the community, are less likely to tolerate this sort of situation. The marches that are taking place, and the fact that the General Secretary of the T.U.C. gets shouted down, show the seriousness of the situation.

I warn the Government that this is a serious matter. It is no use meeting these difficulties with arguments such as those used, I admit, quite seriously, by the noble Lord, Lord Drumalbyn. He said: "The policy of the Government is to set the stage. What we need is judgment, foresight and restraint."What we need is some action to deal with this problem, and at the moment the Government are responsible. Incidentally, the noble Lord, Lord Orr-Ewing, was guilty of a slightly "smearing "remark, and I hope he will bear this in mind. He said that my right honourable friend Mr. Wilson decided to call the Election in June because he saw the pent-up demand and did not want to wait. I will tell him that that is totally untrue. Mr. Wilson was not influenced by this, and I happen to know that both he and the Chancellor would have been very content to go on to the autumn. I may say that the reason he chose June was probably equally mistaken—


He thought he could win.


—namely, that he thought he was going to win the Election. But it was nothing to do with a pent-up demand, and I resent assumptions of the kind that have been made.

We were told on the last occasion that the increase in unemployment which occurred in the last days of the Labour Government was very astonishing—this is what the Lord Chancellor said. I should like to know how he described the increase from something over 500,000 to something over 900,000, and the fact that there is plenty of evidence (and I do not think anyone would dispute it) that to-day there are probably something over one million unemployed. Last June, when we debated this subject the noble Lord, Lord Aberdare, said: We believe our economic policies are precisely those which will lead to full employment. And he said that the recent figures were more helpful. He said that the rise in the numbers was smaller in May, and referred to a check in the fall in the number of adult vacancies. Yet we know that adult vacancies have now gone down from over 200,000 to 118,000.

My Lords, so much has been published in the papers, and in the leaders of The Times,the Financial Timesand other papers, that I do not think I need to rub into the Government just how serious are the consequences of this situation. But there is little doubt that the loss in production from half a million unemployed is something equivalent to £2,500 million a year. This is as much as we spend on defence; and it is money, furthermore, which could have been made available for making our contribution to the underdeveloped world. The Government have been pinning their hopes upon a revival of demand, but my noble friend has explained that the measures already taken yield very little in the way of increased stimulus of demand.

When we look at the actual measures the Government have taken, we are told that, as a result of their actions, there is a consumer boom. We are also told that there is going to be an increase in output of about 4½, per cent., and about the optimism in the C.B.I. But the sad thing is that this optimism does not seem to be translated into action by the firms concerned in the matter of investment, where there arc no real signs of an increase. We know perfectly well that the recovery of employment and the gaining of prosperity in this country will come from further investment. There is no expansion in the machine tools industry. We have heard no details of how this has affected industry. There is little in the way of an export-led boom; there is very little going out in the way of long-term credits for the export of capital goods; and the only thing that the noble Lord, Lord Drumalbyn—whom we on this side of the House like very much—had to offer was an increase in the number of retraining places, from 7,000 to 9,000. I find it very difficult to believe that the Government are facing this problem very seriously.

I wonder whether some noble Lords (though I do not doubt they have warm hearts and do not like unemployment) really appreciate how serious the situation is in certain areas. The noble and learned Lord who sits on the Woolsack strove very hard when he was the Minister responsible for the Northern Region, and we give him full credit for the efforts he made at that time. He was deeply involved, and indeed achieved some success. He must be bitterly sad to know that in the Northern Region the figure of unemployment is now 8 per cent., and in Hartlepool to-day something like one in ten of all men is out of work. This is also true of Scotand. In Hartlepool to-day there are something like 69 men or boys after one vacancy. This is the measure of the seriousness of the problem, my Lords. It is no good saying that the Government are taking stock; it is no good saying that this is something they have inherited. Even if they had inherited it—which I do not accept—it is their duty to take stronger measures now. Noble Lords speaking from the other side of the House, showing loyalty and some patience—the noble Lord, Lord Balfour of Inchrye, and others—have indicated that they expect the Government to take more action than they have done so far.

My Lords, I do not wish to-day to reopen the discussion on whether or not we should enter the Common Market, but the noble and learned Lord, and other noble Lords, on a previous occasion have pointed out the fact that the Common Market proposals, and entry into the Common Market, are part of their econo mic policy. The House knows my position on the Common Market and my reasons for desiring to enter it, which remain unchanged. But I have never claimed, and do not claim now, that in the short run, least of all before we enter the Market, there is going to be any economic advantage to this country. Even after we have gone into the Market, as my noble friend Lord Balogh explained, it may well be that there will be disadvantages. Every time a supporter of the Government argues that entry into Europe is a panacea for our economic problems he weakens the Government's case and strengthens the anxieties not only of those who are opposed in principle but of those who are beginning seriously to doubt the capacity of this Government to play their role in a wider field when they so demonstrably cannot do so in this country.

To conclude, while I do not accuse noble Lords of deliberately willing unemployment—and I do not know of any noble Lord who has done so, although it has been put forward that we had suggested that the Government were willing unemployment—either the Government have pursued a policy, knowing the results, or have grossly miscalculated. It must be one or the other. I prefer to believe that it is a gross miscalculation. In either case, they stand condemned, and it is right that we should go into the Division Lobby to-night against a Government who are demonstrably failing in their duties to the people of this country.


My Lords, the original Question was that an humble Address be presented to Her Majesty as follows: Most Gracious Sovereign, We, Your Majesty's most dutiful and loyal subjects, the Lords Spiritual and Temporal in Parliament assembled, beg leave to thank Your Majesty for the most gracious Speech which Your Majesty has addressed to both Houses of Parliament. since when an Amendment has been moved to add at the end of the proposed Address: but humbly regret that the policies of Your Majesty's Government fail to provide the economic conditions necessary to ensure a better and more equitable standard of living for the people of this country and deplore the absence from the gracious Speech of specific proposals for dealing with the human tragedy of unemployment.

9.24 p.m.

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

Their Lordships divided: Contents, 58; Not-Contents, 100.

Ardwick, L. Fletcher, L. Rhodes, L.
Arwyn, L. Gaitskell, Bs. Ritchie-Calder, L.
Bacon, Bs. Gardiner, L. Royle, L.
Balogh, L. Geddes of Epsom, L. Sainsbury, L.
Beswick, L. George-Brown, L. St. Davids, V.
Blackett, L. Greenwood of Rossendale, L. Seear, Bs.
Blyton, L. Henderson, L. Segal, L.
Brockway, L. Hoy, L. Shackleton, L.
Buckinghamshire, E. Jacques, L. Shepherd, L.
Burntwood, L. Janner, L. Slater, L.
Byers, L. Lee of Asheridge, Bs. Stocks, Bs.
Champion, L. Llewelyn-Davies of Hastoe, Bs. [Teller.] Strabolgi, L.
Chorley, L. Summerskili, Bs.
Crook, L. Lloyd of Hampstead, L. Taylor of Mansfield, L.
Davies of Leek, L. Maelor, L. Wade, L.
Delacourt-Smith, L. Milner of Leeds, L. [Teller.] Walston, L.
Diamond, L. Nunburnholme, L. White, Bs.
Donaldson of Kingsbridge, L. Phillips, Bs. Williamson, L.
Evans of Hungershall, L. Platt, L. Wright of Ashton under Lyne,
Fiske, L. Popplewell, L. L.
Ailwyn, L. Erroll of Hale, L. Monsell, V.
Albemarle, E. Exeter, M. Mowbray and Stourton, L.
Aldenham, L. Ferrers, E. Northchurch, Bs.
Alexander of Tunis, E. Fortescue, E. Nugent of Guildford, L.
Amory, V. Fraser of Lonsdale, L. Onslow, E.
Astor of Hever, L. Glasgow, E. Orr-Ewing, L.
Auckland, L. Glendevon, L. Polwarth, L.
Balerno, L. Goschen, V. [Teller.] Rankeillour, L.
Balfour, E. Gray, L. Reay, L.
Balfour of Inchrye, L. Gridley, L. Rhyl, L.
Beauchamp, E. Grimston of Westbury, L. Ruthven of Freeland, Ly.
Belhaven and Stenton, L. Hailes, L. St. Aldwyn, E.
Belstead, L. Hailsham of St. Marylebone, L. (L. Chancellor.) St. Helens, L.
Berkeley, Bs. St. Just, L.
Bessborough, E. Harvey of Prestbury, L. St. Oswald, L.
Birdwood, L. Harvey of Tasburgh, L. Sandford, L.
Brooke of Cumnor, L. Hertford, M. Savile, L.
Brooke of Ystradfellte, Bs. Hood, V. Selsdon, L.
Clitheroe, L. Howard of Glossop, L. Sempill, Ly.
Colwyn, L. Hylton-Foster, Bs. Shannon, E.
Conesford, L. Jellicoe, E. (L. Privy Seal.) Somers, L
Cottesloe, L. Kemsley, V. Stonehaven, V.
Craigavon, V. Killearn, L. Strathclyde, L.
Craiemyle, L. Kilmany, L. Sudeley, L.
Crathorne, L. Lauderdale, E. Swansea, L.
Daventry, V. Lothian, M. Terrington, L.
Denham', L. [Teller.] Loudoun, C. Thorneycroft, L.
Digby, L. Macleod of Borve, Bs. Tweedsmuir, L.
Drumalbyn, L. Margadale, L. Tweedsmuir of Belhelvie, Bs.
Dudley, E. Massereene and Ferrard, V. Vivian, L.
Dundee, E. Mersey, V. Wakefield of Kendal, L.
Eccles, V. Milverton, L. Windlesham, L.
Elliot of Harwood, Bs. Monckton of Brenchley, V. Wolverton, L.
Emmet of Amberley, Bs. Monk Bretton, L.

Resolved in the negative, and Amendment disagreed to accordingly.

On Question, Motion agreed to: the said Address to be presented to Her Majesty by the Lords with White Staves.