UNEMPLOYMENT AND ECONOMIC POLICY

HL Deb 16 February 1972 vol 328 cc153-295

2.45 p.m.

LORD BESWICK rose to move, That this House notes with dismay the rising level of unemployment; it deplores the economic waste and human misery involved; it believes that the remedies applied by Her Majesty's Government so far have been inadequate and asks for a more radical approach to what is a new situation. The noble Lord said: My Lords, since I first tabled this Motion there have been considerable developments, but it is not that events have overtaken it as much as underlined the sense of what my Motion says.

I am not one of those who say that the Tories want a measure of unemployment, and I certainly do not claim that Labour had all the answers or were without mistakes when they held office. What I do claim, however, is that the whole attitude and purpose of the present Administration has been mistaken. Their special blend of laissez-faire economics and elaborately means-tested social policies has worsened our basic problems and brought us, almost inevitably, to the present industrial and social tragedy.

Let me just indicate the landmarks that we have passed on the way to the present position. The Conservative Party sought power at the last Election—some would say won power—with extravagant promises about reducing price increases and reducing the level of unemployment. They were to cut Government spending, cut taxation and with reduced State intervention we were to see private enterprise deliver the goods. All this at a stroke. When they assumed power after the Election, the Conservative Government embroidered this theme of the creativity of market forces. We were all to stand on our own two feet, and if we did not then God help us! for the Government would not. The day of the "lame duck". we were told in graphic terms, was over. If they could not swim then they would sink. After which initial verbal extravagance the Government attempted to put principles into practice—mixing it more recently, as the Prime Minister delicately put it the other week, with a degree of ingenuity.

They cut taxation; and how loud and hopeful were the cheers we heard at the time! They cut out investment grants, free school milk, the Consumer Council, and the I.R.C. They imposed, against all responsible trade union opinion, an Act of Parliament which they claimed would herald in a new era of industrial peace. Those were the principles put into practice. The ingenuity was exercised to counter immediate consequences. They panicked over "Operation Lame, Duck", they nationalised Rolls-Royce and have parleyed with the communards on the. Upper Clyde. They have reflated on a quite significant scale. They have improved certain pensions and they have thrown a number of crumbs to the T.U.C. in the way of social benefits.

What is the net effect of all this? First, they have put up prices to an unprecedented level: the highest inflationary rate in Europe we were told last week. Secondly, we have the highest unemployment figure for 30 years—and I am excluding the crisis figures. Thirdly, and I suggest probably most important of all in the long run, because it is a cause as well as an effect of other troubles, they have widened both the material and psychological gap between the poorer and wealthier sections of our nation.

Let us look more closely at the unemployment figures. The official figures are 1,023,000. They are registered. Most people agree that unregistered are another 300,000 or 400,000 or more. No doubt the noble Viscount, Lord Massereene and Ferrard, who is to speak later, will have stories to tell of men drawing unemployment pay and earning much besides. Maybe he will tell us again about how they drive up in taxis to draw supplementary benefit. But most noble Lords, I suspect, will agree with the Motion, that lack of work means waste and misery. The waste is running now—apart, again, from the last week or so—at the rate of 300 million man days a year. Yet we were told what a terrible waste there was when disputes led to a loss of something around 20–25 million man days a year. There is waste, and I think we all agree that that is so. I shall not enlarge on the misery. I have my own personal memories, and even 40 years later they are still painful, physically painful; so much so that I should not wish to dwell upon them. But I draw attention to the fact that there are some young people who left school last Easter—probably 10,000 of them, we are told—who do not yet know what it is like to earn a week's wage. And I read that 10 per cent. of those who so hopefully graduated last July have still to find an opportunity to use their training. Furthermore, in parts of this Kingdom, as I have no doubt my noble friend Lord Hoy will tell us later, one out of ten adults is unable to find a job. Surely, we should all accept the first two parts of the Motion and deplore the economic waste and human misery involved.

What about the third part, that measures so far have been inadequate? Surely, the figures alone are proof enough of that. On all available evidence, they are inadequate not only to stop the rise to the present peak, but to offer any hope of real improvement in the immediate or near future. And I am still leaving aside for the moment the immensely aggravating additional effects of the present shut-down. But if we take such indicators as the Survey, published a fortnight ago, 27 per cent. of the firms expect numbers employed to go down still further in the next four months. The Financial Times Monthly Survey indicates much the same: for the next 12 months to July/October they found that 22 per cent. of firms questioned expect labour requirements to increase, but 27 per cent. expect them to decrease. The truth, surely, is that unless something radically different is done we shall find ourselves in the same position as that paragon of capitalist virtue, the United States of America, where unemployment has ranged from 3.5 per cent. to 5.4 per cent. in the last eight years, and at the present time is running at the rate of 5.9 per cent.

The Prime Minister has asked for more investment and apparently hopes for the investment-led boom. But he was put firmly in his place by the formidable seventeen industrialists of the Industrial Policy Group; and I look forward to hearing from one of them, my noble friend, if I may call an old opponent my noble friend—

VISCOUNT WATKINSON

Certainly.

LORD BESWICK

—Lord Watkinson, later in the debate. They say that little purpose is served by general exhortation, and they assert that: if and when trade revives there is no reason to suppose that revival would be checked by a shortage of capital equipment I imagine that there are few of the seventeen who share my political affiliations, but I am with them on that point. Many industrialists will say, or can show—and the national figures support this—that they have in the last year or two produced more with fewer men, and that in the next year or two they could produce still more with the same men. The evidence suggests that improved equipment could increase productivity, but that alone will not lower the unemployment level.

There is the school of thought, of which Professor Kaldor appears to be a very active member, which believe that it is all a question of demand—of "demand management", as the term goes. Presumably, they mean even more reflation. I want us to agree that this is only a half-truth. It is a question not simply of demand, but of what kind of demand. It is not simply a matter of a given total sum being injected into the economy, but of into whose pockets it actually goes. Income tax cuts, by definition, mean that most goes back to those who have most to start with. They are less likely to stimulate demand, for they already spend as much as they need on clothes and food and they probably already have a car, or maybe two. They are more likely to save—and the figures show that this is in fact what has happened to a large extent, with Mr. Barber's reflation so far.

I was brought up to encourage saving, but the truth is that much of recent saving is not healthy at all. It has gone into shares, it has pushed up share prices, but it has not bought new equipment. It has bought property, bidding up prices, one buyer against another, but it is doubtful whether it has replaced a single slum dwelling. One of the sickly sights of the present scene is the appeal to greed in extravagant advertisements for property bonds. And one of the most unhealthy phenomena of all is the use of building skills and material to put up property not for use, not to sell or to let, but unashamedly for capital appreciation. Old-time reflation, therefore, I ask the House to agree, is not enough: we need a radically new, planned and selective expansion of purchasing power.

One colleague with whom I discussed this subject the other day sought to prove me wrong by pointing to the success of the capitalist system in Europe and the reduction in unemployment in the United States of America during a period around 1965/1966. It is true that Europe got going on post-war reconstruction rather later than we in the United Kingdom, and for a time there were areas of over-full employment, as well as areas of serious unemployment, as bad or worse than ours. It is also true that, after a 5.2 per cent. figure in 1964, the American unemployment figures dipped—not to acceptable levels, but they dipped. I suggest that they dipped because of massive State intervention. The American State directly stimulated employment, on the Apollo programme and for waging a war. I want us to use our manpower rather more constructively than on the scorched-earth operation in Vietnam. I want our own version of the Apollo programme in an operation for urban renewal and developing science, including aerospace, to the utmost in the fight against pollution. I want Government intervention in training, retraining and, where necessary, direct employment of labour.

This is going to need a radically new attitude to incomes, and not least—let us face it—from the currently conservative trade unions. With trade union leadership reluctant to develop a constructive policy on incomes, and with the Government endeavouring to impose their flat-rate 7 per cent. to 8 per cent. limit on the public sector, we see the most glaring inequalities. When the underground collier—the man upon whom our entire industrial structure is now seen to be based—was being offered £1.90 extra, the Chrysler workers at Linwood were guaranteed an across-the-board rise of £6 a week, making a basic rate of £37 to £38 for a 40-hour week. Meanwhile, we see that the lower-paid man at the pit, taking home less than £16 or £17 a week, could actually be worse off if he takes the increase so far offered and forfeits those means-tested benefits on milk, school meals, rates or the family income supplement. In 1926, as I recall—and there are others who will recall it with me—there was the soup kitchen. In 1972, with all the marvels of modern science, for poverty we have this computerised version of the soup kitchen—the family income supplement scheme.

I was greatly impressed by an article in the Financial Times on February 8 by Mr. Rogaly. It was a balanced article and not unsympathetic to the Government. He quoted from the Prime Minister's recent speech at Harrogate, in which Mr. Heath had claimed that his Government had achieved—and I quote— a reputation for persistence and determinartion—and when the occasion demanded, for ingenuity". Mr. Rogaly commented that, so, far as it went, this description was correct, but he went on to say—and I quote again: There is, however, something missing from Mr. Heath's list of abstract nouns. The closest approximation to it is perhaps 'fairness' … My Lords, what a difference we could make to our society if we tried a little harder to be fair! Reflation then would not simply be a matter of tax cuts. Stimulating production would have some regard to the purpose which the product served. When we considered wage claims, we might well find that increased purchasing power should be given to people like nurses, postmen, prison warders, probation officers, teachers or the man who works way underground in hot dust and cold water to get us coal.

My Lords, if I could go back to those gentlemen of the Industrial Policy Group, I would agree with them on one other point. They said that prosperity could only be attained—and, by that, full employment—if there was "business confidence". I agree with them; but confidence will only take root in a stable society, and a truly stable society is only attainable if there is a sense of fairness between one section of that society and another. That is the element which is missing, and which has been shown to be missing by recent events. My Lords, I would say one thing of the Government. One thing they have done in the last few days is they have recreated in certain parts of the country the old blitz spirit. There has been a neighbourliness in the mining areas which we sadly need throughout the country. My Lords, this industrial chaos could prove a watershed. On the one side of the divide is a society in which each section seeks to grab what it can. In that society, a 10 per cent. or 15 per cent. increase for the miners would be a signal, an incitement, to every other section to get what it can. Or, on the further side of the divide, is a society in which a Government tries, honestly, fairly and firmly, not only to share out available employment but to share out the rewards of that full use of labour. It is because I believe that Britain should make an attempt to win over to that further side that I ask support of the Motion which I beg to move.

Moved, That this House notes with dismay the rising level of unemployment; it deplores the economic waste and human misery involved; it believes that the remedies applied by Her Majesty's Government so far have been inadequate and asks for a more radical approach to what is a new situation.—(Lord Beswick.)

3.6 p.m.

LORD GLADWYN

My Lords, though I notice that the Motion proposed by the noble Lord, Lord Beswick, seems to have been slightly "hotted up", as it were, in the last few days, perhaps as a result of recent events, the debate to-day is, of course, technically limited to the rising level of unemployment and the remedies applied by the Government. Whatever their "remedies" have been—and, as we all know, and as was said by the noble Lord, Lord Beswick, they have included many tax remissions and other measures designed to increase consumption, and thus presumably to induce industry to take on more men—the fact is that they have not worked as yet. At the beginning of the year the number of unemployed topped the million; that is to say, my Lords, before the miners' strike began. But the principal "remedy" of the Government, if such it can be called, during the 18 months of their existence has been an attempt to restrict wage increases to an average of, shall we say, 7 per cent. to 8 per cent. a year on the ground that to grant the demands would result in grave and uncontrolled inflation that would, in its turn, result in even greater unemployment than that which they believed was anyhow inherent in their efforts to increase production in a non-inflationary way.

Now whether it was sensible or whether it was misguided, this policy is now evidently bankrupt, in that it has already resulted in unemployment of the order of well over 2 million, which seems likely to rise to 4 million or so next week even if the strike is settled over the weekend, which at the moment, unfortunately, seems rather unlikely. So I feel—and I hope your Lordships will agree—that it is inevitable that our present debate should cover the present crisis and thus, in effect, continue the debate which we had yesterday on the emergency powers. Indeed, the two subjects can scarcely now be separated. Even Lord Beswick, in his speech, with a great deal of which I personally agreed, raised the miners' strike and its possible consequences. I myself, my Lords, am also, as you may well imagine, largely concerned with a particular aspect of the present industrial crisis; that is to say, its possible effect on our becoming full members of the European Economic Community at the end of the present year. But before commenting on that, I should like very briefly to make a few general remarks in the light of our debate yesterday and in the light of the debate last Monday in another place.

It is evident, as we on these Benches think, that the Government have badly miscalculated the determination of the miners to place themselves on the same sort of level, financially speaking, as their more fortunate brethren in certain other great industries. It is evident, too, that they miscalculated the length of time for which reserves of coal could last out given effective, even if on the face of it occasionally illegal, picketing by the miners and their friends. It is all very well for Mr. Ezra to say that there is no more money in the till; it is all very well for Mr. Carr to say that to grant a large increase to the miners, thus bringing them more into line (but not yet fully into line), for instance, with the motor car workers, would raise the price of coal enormously and, in the absence of a general desire to avoid such a development—and I repeat: in the absence of a general desire to avoid such a development—give the green light for a process of wage inflation that could gravely impede our economic recovery, cause great distress among those less able to bear it and result, after a year or so, in all workers, including the miners, probably receiving less real wages than they would enjoy even if they got a large increase. It would thus obviously be in the general interest, were it possible, if the miners were induced to accept an increase not substantially in excess of the 7 per cent. to 8 per cent. envisaged by the Government.

All these things seem to us to be true; but, unfortunately, they are hardly now the point. For what is the all-too-probable result of the continuance of such an inflexible, even if logical line? As things are, it looks as if the result would be the continuance of the present emergency until such time as stocks have declined to the point at which the Army have to be recalled from Northern Ireland in order to help the police break the picket lines; until most of our labour force is out of work and subsidised at vast expense by supplementary benefits; and, presumably, until some special measures are taken to force the miners to return to the pits on the basis of some only slightly improved pay offer, supported though it might be by public opinion in general in the country.

If all this is even a fair possibility, then the alternative to some inflation is worse than some inflation. The cure, in other words, is demonstrably more dreadful than the disease. Nor is such a cure now possible. We can in fact hardly abandon our responsibilities in Northern Ireland at this critical moment. And if we did the troops would probably refuse to take part in the equivalent of what might be another Peterloo. Besides, Parliament would not pass the necessary legislation for dragooning the miners. A totally unrelenting line is no longer practical politics.

So we are left with inflation of some kind. How to mitigate this? Well, as it seems to us, I think the Government, or better still somebody whom the bulk of the workers dislike rather less than the present Administration—could it be Lord Wilberforce?—should try to persuade the T.U.C. that the miners by general agreement should be regarded as a special case, and that some considerably increased pay offer to them should not be seized upon by the other unions in order to push a similar percentage claim under the threat of yet another general industrial hold-up: the equivalent, even if it is not so called, of a general strike. After all, as I think the noble Lord, Lord Beswick, hinted, there is much to be said for the proposition that in equity it is ludicrous for a lavatory attendant at, say, Rootes in Scotland to be paid more in take-home money than the average toiler on the coal face who risks his health and sometimes his life in order that the wheels of industry should go round at all. And, after all, the I.U.C. is composed, for by far the greater part, of responsible patriotic men who are not unconcerned with the welfare of the nation.

But if some indication of an inflationary settlement is not forthcoming—to-morrow, I would say—may not the anti-European troublemakers, in spite of the fact that 42 per cent. of our people are now in favour of joining the E.E.C. and only 39 per cent. against, be able to cash in on the general unpopularity of the Government in order to mobilise the maximum opposition to such legislation on Second Reading? Of course they will! And although it is still difficult to imagine that enough Tories will cut off their noses to spite their faces, it may be that in a general atmosphere of crisis and near hysteria the legislation will be rejected and the Government will resign—of course they will resign, in spite of what was said this morning by Mr. Enoch Powell—leaving us to face the miners' strike and general economic paralysis with no effective Government for a period of at least three weeks.

As a European, and in spite of the fact that as a Liberal I believe that the present Government are far too unimaginative and ought in the general interest to be replaced as soon as possible, or practicable, by one which might be described as "Left of Centre", I would regard this as disastrous. For either the General Election would produce a feeble Labour Government torn by internal dissentions and committed to re-negotiating our entry into the E.E.C. on terms which would obviously be unacceptable to the latter as well as to a large section of their own supporters; or Mr. Heath will re-emerge as the leader of a deeply-divided and weakened nation: so greately weakened, I am afraid, that there would be a fair chance—and, my Lords, this is a real point—that, whatever happens in Westminster to-morrow, the Parliaments of the Six may not ratify the Treaty of Accession—and notably the National Assembly of France, which might well argue that such a country, whatever its engagements, would simply not be able to afford the subscription to the Common Market, which rightly or wrongly the French have always insisted upon as a necessary condition of our joining the Market at all.

As one who, rightly or wrongly, identifies the national interest with our entry in the Common Market, it is obvious that such risks, even if noble Lords should think they are exaggerated, are not ones which I believe ought to be run. For if by any chance the "European idea" collapses and we are really left on our own on a deeply divided island, confronted by inflation, class hatred and even, if the Irish question is insoluble, with a potential civil war, then one thing is certain: the free institutions of this country will not survive. We shall eventually have some sort of directed economy of which the main feature will be a prohibition, or at any rate an effective limitation, of the right to strike. Such a directed economy could be of the Right. something not too far distant from a Fascist solution; or it could be of the Left, in which case we should become the equivalent of Poland or Czechoslovakia. Neither possibility is very alluring. We must therefore still hope and believe that the basic common sense of the British people will in the end prevail.

For my own part, therefore, I can only hope that Lord Wilberforce, in his estimate of the increase of pay which should immediately be offered to the miners, will take all these grim possibilities into account when forming his judgment; and that even before tomorrow's debate the Government will make much more forthcoming noises than those uttered by Mr. Carr in his broadcast last Saturday when he seemed to suggest that no substantial increase in the wages of the miners should be contemplated, at any rate during the coming year. Perhaps some acceptable solution could be found in a very considerable increase on the present offer for this year coupled with another increase for next year. But that some major increase must now be offered seems to be inevitable if chaos is to be avoided with all that that would entail.

Also, as I say, the Government, or someone more in the workers' confidence, should try to persuade the T.U.C. as a whole to admit that the miners do con stitute a special case, and that further wage claims in many other branches of industry should be restricted more or less to the norms which most economists would recognise as desirable and, if possible, be in some way related to productivity as a whole. It may be, I freely admit, that such a solution would not be practicable. In that case we must prepare for the worst. In that case, too, the Government, which we must all hope will survive the crucial test on Europe, would whatever its faults, at least have the sympathy of a majority of the nation and thus somehow be able to weather the storm.

But the dangers are great, and the time in which some new note can be struck which could rally our distracted country is limited. It is the will of the people as a whole that we now have a Tory Government; but if our free institutions are to continue to function it should, as under Baldwin, at least be Toryism with a human face.

3.22 p.m.

THE MINISTER WITHOUT PORTFOLIO (LORD DRUMALBYN)

My Lords, the noble Lord, Lord Beswick, opened this debate with a very thoughtful and obviously profoundly felt speech which certainly deserved and received the most careful attention of the House. It was followed by the speech of the noble Lord, Lord Gladwyn, who covered a good deal of ground in speculating about the current situation which I do not think was in the mind of the noble Lord, Lord Beswick, when he first put down this Motion. For my part, we have two quite separate considerations confronting us: the first, a higher level of wholly unemployed than we have experienced since the war; and the second, which has supervened on the first, that in consequence of the strike we are likely to have a large number of employees temporarily stopped from work. There is also a risk that some of their employers may be unable to carry on or to restart after the present emergency ends.

This second situation is a special one which will require special consideration in the light of the magnitude of the adverse legacy which the miners' strike will leave behind it. Your Lordships will not expect me to deal with that to-day. I propose to deal with the strategy for the future rather than the mopping-up operations that will have first to be undertaken. The Motion speaks of a new situation. The new situation that we have been faced with for some years now is a combination of inflation and rising unemployment. The first phase was characterised by rapidly increasing inflation and reduction in available jobs; the second by a moderation in the rate of inflation coupled with a more rapid increase in unemployment.

We are all agreed on two things: first, that the present rate of unemployment is unacceptably high and that it is the duty of the Government to take all possible steps towards reducing the human misery and economic waste that it involves. Secondly, we are agreed that it is the duty of the Government to direct their policies towards the containment and reduction of inflation, which not only undermines confidence in our economy but also sets up strains in our social structure and results in real hardship for a large section of our people. Obviously I could not agree with the noble Lord, Lord Beswick, in everything he said; but I think he left out of his calculation of where fairness lies the immense difficulty of maintaining fairness in an inflationary situation. It is very hard to do, and if we are going to have fairness the Government are right to put as one of their first priorities the containment and reduction of inflation.

In the late 1960s and in 1970 the British economy encountered setbacks from which it is only now recovering. There were three salient phenomena: first, a steady fall in employment and an accompanying rise in unemployment, associated with slow growth; and in the past year this steady rise in unemployment accelerated sharply. The unemployment figures are well known. Registered seasonally-adjusted unemployed increased by 95 per cent. from June, 1966, to June, 1970, and have since risen by 54 per cent. What is less well known is that between June, 1966, and June, 1970, estimated employment in all industries and services fell by nearly 900,000 and it has continued to fall since. These were: a decline of 150,000 in manufacturing industries; 159,000 in mining and quarrying; 94,000 in agriculture, forestry and fishing; 314,000 in the construction industries and 323,000 in the distribution trades.

A second and related issue has been the marked rise in inflationary pressures. Beginning in 1969, prices and wage increases, the latter in many instances quite unrelated to rises in productivity, have chased each other up in a vicious spiral. The ill-effects of inflation are by no means confined to the situation being discussed in this debate, but one very obvious effect of the massive price and wage rises has been that more and more industries have been forced by inflated wage bills to look very carefully at their real labour requirements, with the result that there has been a shakeout in jobs.

Thirdly, to add to the business uncertainties caused by rising unemployment and inflation there has been a world monetary crisis. In August last, after a period of speculation against the dollar, President Nixon suspended dollar convertibility, imposed an import surcharge and introduced other measures which, had they been followed by America's trading partners, could have led to a trade war. The immediate effect was to add to the prevailing uncertainty, indeed the anxiety, about future prospects for industry, with misgivings about further moves to cut back output and employment, and to delay the massive investment on which future prosperity and employment so largely depends.

That the situation has signally improved in two of the three areas of difficulty can scarcely be denied. Inflation has been moderated, but of course the battle has not been won—in our kind of free society it is a continuing and unending struggle. But there Are growing signs of success. The figures speak for themselves. Retail prices rose at an annual rate of 5¾ per cent. in the six months to December, almost half the rate for the previous six months. On the wages side the rate of increase of average earnings was over 13 per cent. in November: 6 months later it was still running at about 10–10½ per cent.: but in the 6 months after that an annual rate of 8 per cent.

On the international financial side the December agreement was reached of the Group of Ten in Washington involving the realignment of exchange rates and the withdrawal of the discriminatory measures by the U.S. Government—a settlement which incidentally owed a great deal to the efforts of the Chancellor of the Exchequer. This restored confidence in large measure in the international financial front. And not the least important result of the settlement is that the exporting success of British industry has continued—and that is the best possible augury for success in reducing unemployment. Our balance of trade, including invisibles, remains at a healthy level of about £50 million a month. Our reserves at the end of January stood at over £2,679 million, and we are now ready to pay back the last £415 million of £1,500 million debt we inherited from the last Government.

It is in this context that we must consider the January count of 977,600 registered unemployed in Great Britain—4.3 per cent.—including about 49,000 temporarily stopped plus about 46,000 in Northern Ireland. I do not of course dispute what the noble Lord said: that the figure of registered unemployed understates the full extent of people seeking employment. This is always so, if only because those married women who do not pay National Insurance contributions do not generally register. I would only say that there is good reason to believe that some of the estimates made of workless who want work seem to be too high. They are based on the Census returns, and it cannot be assumed that all who declare in the Census that they are available for work would take jobs if they were offered to them. The General Household Survey strongly suggests that the proportion of unemployed who do not register is much lower than it was in 1966 when jobs were easier to get and therefore there was less inducement to register.

LORD DIAMOND

My Lords, I am grateful to the noble Lord for allowing me to interrupt. I hope he is going on to say what his figure is, as he is casting doubt on the figures that have been put forward. Would he at the same time, as he has referred to the strong export position, say a word about competitive prices?

LORD DRUMALBYN

My Lords, I shall come to competitive prices later on. It is in this field of course that it is extremely difficult to calculate what the real figure is. All I am saying is that a mere projection from the Census is unlikely to be correct and is likely to exaggerate the figure. It is also as well to remember that this country is by no means alone in having acute unemployment problems. In France, for example, unemployment in November, 1971, was nearly 75 per cent. higher than in November, 1969. In Sweden, unemployment in November, 1971, was twice as high as it was twelve months before.

LORD BALOGH

My Lords, would the noble Lord—

LORD DRUMALBYN

If the noble Lord will forgive me. Percentage comparisons are notoriously misleading—

LORD BALOGH

That is the point.

LORD DRUMALBYN

If only the noble Lord will wait, I will come to it. Percentage comparisons are notoriously misleading, but in the United States of America and Canada unemployment stood at over 6 per cent.: indeed, in Canada it rose to over 7.1 per cent. last October but has since declined somewhat. Even in the Federal German Republic, though still at a much lower percentage level, it rose rapidly at the end of last year, and the Federal Labour Institute has forecast a further increase of about 50 per cent. in unemployment in the current half year. There is really no point in giving absolute figures, because there are no absolute comparable figures; they are almost all taken on a different basis. So the noble Lord need not press that point.

LORD BALOGH

My Lords, does the Minister realise that the figures that he quoted, and especially the percentage figures from Canada and America, are exactly the Census figures on which he cast doubt just a minute before? In that they cannot be compared with ours. 6 per cent. in America is about 31½ per cent. to 3¾ per cent. in this country.

LORD DRUMALBYN

Again the noble Lord is ranking ex cathedra statements, if I may put it that way. The point is, as I understand it, that these figures are taken on the basis of sample surveys, which is quite different from our system. I have said that the comparisons are different. All I am trying to show is that we are not alone in having experienced this increase in unemployment.

I suppose it could be said that all Governments are to blame. After all, I was told in one East European country that there was no unemployment at all. The price that has to be paid for that, however, is that people have to do the job they are told to do, to work as many hours a week as they are required to work, and to accept without comment the wages that are determined for them. But their right to work is guaranteed. I do not mean to imply that a more even sharing out of work can only be done in a society that is subjected to complete central control. On the other hand, sharing out is bound to involve some sacrifice of earnings on the part of those who have at present the opportunity of working overtime in favour of those who have no opportunity of working at all. In a free society this is not something which Government can unilaterally impose. The object of Government policy, of course, is steady and sustainable growth. In some areas of employment this may be attained by increasing productivity; and where that is so it will be for industries themselves to decide how much of the improvement should be devoted to higher earnings and how much to more leisure. But in most areas it is likely to mean more work available, and in some of the services it should mean more money to give employment.

This, then, is the background to the Motion to-day. Two of the three factors have got much better; the other has got much worse. So one is bound to be asked: Could not the Government have taken steps that would have achieved improvements in all three factors simultaneously? What are the steps the Government have taken to reverse the unemployment trend that they inherited? And what more should be done? To deal with the first question, the point is that the time scales are different for each of the three factors. I have already shown that, despite the previous Government's efforts to stimulate investment, there was a massive decline in employment and the numbers registered as unemployed nearly doubled. If we were not to have steadily increasing unemployment, it was at that period that the steps needed to be taken. If the rate of investment was to be increased, it was at that time that business confidence should have been restored. But not only was demand held back, but, as the Industrial Policy Group's Study on Economic Growth, Profits and Investment has pointed out: When profits are calculated on a rational economic basis (i.e., after calculating depreciation on a replacement basis) in a significant part of British industry profits have been nonexistent in recent years". No matter what investment incentives a Government may offer, as the late Lord Chandos used to say, you cannot invest a deficit. You are not even likely to be able to borrow if your profit prospects are non-existent. The noble Lard, Lord Diamond, drew attention in our last economic debate to the role the expectation of profit plays in investment. In the period 1960 to 1970 net profits rose by 20 per cent. in money terms, while the purchasing power of the pound fell by 46 per cent. There is a lesson here for all to learn. Unless there is fairness in all respects you will not get the stability that the noble Lord, Lord Beswick, sought.

What steps have the Government taken? The steps the Government have been taking have accordingly been directed towards increasing demand, moderating wage settlements, stimulating investment in private industry, and, since that will take some little time to show effects in employment, having projects which are ready to be put into effect started in order to provide as much immediate employment as possible, while keeping our eyes firmly on the medium and long term objective of steady and sustained growth. These steps are well known, but I think I should remind your Lordships of what they have been. We have increased incentives at both corporate and private level by tax reductions: £350 million on income tax and £200 million on corporation tax. This also serves to stimulate demand Without the prospect of steadily rising demand there will continue to be inadequate investment. I am bound to say to the noble Lord, Lord Beswick, that you cannot disregard the incentive to invest: you cannot expect investment unless a fair return and reduction of taxation to give that fair return is available.

LORD BESWICK

My Lords, I accept what the noble Lord says in regard to the investment of a surplus within a company; but he is not answering my point when I said that individual savings are not being invested to any good purpose.

LORD DRUMALBYN

My Lords, individual savings are bound to go into those growth areas. There are, of course, limitations there. I noted what the noble Lord said. He said that he doubted whether any at all of this money had gone into the replacement of slum dwellings—and why is that? It is because in the past the treatment of slum dwellings, from the point of view of rent, has been so manifestly unfair that nobody is prepared to put that investment in. So one cannot take an over-simplified view of this matter. All I have done so far is to state the first steps which the Government have taken.

Part of the tax decreases, such as the halving of S.E.T. and the reduction in purchase tax helped to keep the level of prices down. Another part was directed towards helping families, through the increase in children's allowances. I am not going into the detail of the argument here (which the noble Lord outlined in one brief sentence) of family income supplements, but certainly these make the poorest families better off. Last September, the retired, the sick, the unemployed and the disabled received the largest increases in benefits that have ever been provided. In addition, there were new initiatives—benefits for the over-80s, the new attendance allowance, extra provision for the chronic sick and the family income supplement. All these gave relief where relief was badly needed and at the same time helped to raise the level of demand. To improve employment prospects and at the same time to improve the whole environment and infrastructure, public expenditure has been stepped up or brought forward. In the end, these measures will cost over £1,000 million, nearly two-thirds of which will be on projects to be mainly completed in the next two years. This figure incudes £164 million on infrastructure in the regions.

Finally, to give direct encouragement to investment, we have increased depreciation allowances on plant and machinery from 60 to 80 per cent. on expenditure incurred between July 19, 1971, and August, 1973. It is of great importance that investment decisions on the modernisation of plants should be taken soon. At present there is still spare capacity—the point to which the noble Lord referred—but there is a real danger that home demand will outstrip existing capacity to supply. If this were to happen, the excess demand would have to be met from imports, and this would once again put our balance of payments at risk and force us to reimpose restrictions with, in all probability, a consequent adverse effect on employment. It is to be hoped that the Prime Minister's appeal to industry will be heeded. Now is the time for industry to invest, before order books for capital plant lengthen and delays in delivery become prolonged. Industry may fear a recurrence of "Stop-Go". If they allow themselves to be dominated by their fears, they will themselves provoke "Stop-Go."

It was clear that not enough was being done to tackle the worst problems of the older industrial centres—areas which have experienced persistently high levels of unemployment. The Government considered whether the priorities were right and the measures were effective. As a result, we greatly enlarged the Special Development Areas to include West Central Scotland, the Tyneside-Wearside area and parts of the South Wales valleys. Previously, the Special Development Areas accounted for 1.7 per cent. of the country's insured population. They now include nearly 9 per cent. Our purpose was to give the older industrial areas first call on mobile industrial expansion and development. We also made substantial improvements in assistance linked with employment provision under the Local Employment Acts. We have increased building grants in the development areas by 10 percentage points (they can now be up to 45 per cent.); loans are now available at lower rates of interest; and we increased expenditure on basic services.

It is of course true that to the extent depreciation allowances generally are improved, the relative attraction of free depreciation for plant and machinery in development areas is diminished. On the other hand, firms may now claim depreciation against trading profits in the previous three years if there are insufficient current profits to set against the depreciation. This can mean an actual payback of cash. The service industries now benefit from free depreciation and so do not suffer from the discrimination inherent in the previous Administration's system.

In any case, special incentives for development areas, whatever their form, can make their full impact only in an atmosphere of national expansion. I think this was inherent in the noble Lord's speech and I do not criticise him in any way for not mentioning regional development, which is very important to the restoration of employment. I do not criticise him, because I do not think it was based on an appreciation of what I have just said: that these measures can only make their full impact in an atmosphere of national expansion. When the national economy is buoyant and industrial confidence is high, there are much better prospects for assisted areas to attract industrial development. The Government are determined to bring about a healthy, expanding economy, which is the only sound foundation for regional policies and for achieving prosperity in the development and intermediate areas based on efficient and progressive industries

We believe that it is also right to place greater emphasis on giving preferential treatment to development and intermediate areas in making them more attractive and improving their infrastructure. We have accordingly announced that works such as schools, hospitals and roads in the assisted areas will have an extra £164 million spent on them by March 1973. In addition, there is increased financial assistance for house improvements in local government areas which are wholly or partly within development or intermediate areas. Besides making the assisted areas better places to live in, these programmes will also give additional employment. So will the decision to bring forward the naval shipbuilding programme and investment by nationalised industries. Firms in development areas also receive preference in Government purchasing under the Contracts Preference and Special Preference Schemes.

I do not wish to suggest that these advantages available to assisted areas, substantial though they are, constitute all that can possibly be devised. Alternative options by which they can be improved are being studied, and the Government are trying to work out a more direct means of tackling the individual problems of particular areas, as my right honourable friend the Secretary of State for Trade and Industry has said. The Government claim no monopoly of wisdom, and the suggestions put forward by noble Lords in this debate will be most carefully examined.

The shake-out of employment was not only inevitable, it has been going on for longer than people think. For as long as I have been in your Lordships' House—not much more than 8 years, I admit—I have heard noble Lords complain of the low productivity of British workers in comparison not only with the United States but with other Western countries. The recent O.E.C.D. Report shows that the wage cost per unit of output has been rising much faster in Great Britain than in other Western countries and Japan, while output per man-hour has not been rising nearly so fast. The main cure for steady growth and for unemployment in this country in the long run lies in our becoming more competitive. As the O.E.C.D. Report says: If a satisfactory current account surplus is to be achieved, the United Kingdom's competitive position will need to improve, particularly under conditions of higher growth. Since mid-1970 one of the most marked features of British industry has been the higher rate of productivity. In consequence, industry is more efficient. As the Prime Minister said in another place a fortnight ago, we are securing to-day the same production—in fact slightly more—as two years ago using 400,000 fewer people to do it. The problem is to find work for not only those 400,000 but for the others who are in search of work, whether they are in the employment register or not. We cannot do this all at once. We can do it by aiming at, and achieving, steady and sustainable growth on the basis of initiative and competitive industry. Meanwhile we can press on, as my right honourable friend the Secretary of State for Employment is doing with the plans, not only for improving the employment services but vastly expanding the Government training facilities and reorganising our system of industrial training.

Certainly there are signs of improvements in the economy—or at least there were until the mineworkers put industry on half-time.

SEVERAL NOBLE LORDS

Oh!

LORD DRUMALBYN

Following the tax cuts and the greater freedom in credit controls there has been a marked recovery in demand for consumer goods, starting with cars and to a lesser extent other durable goods. By the fourth quarter this had spread to affect non-durables as well. This recovery, taken together with the continued success of British exports, is one of the most helpful signs for the future and future employment.

The stage is set for taking up the spare capacity and at the same time creating new jobs and training those who have been displaced from other industries in them. The economy is now expanding at the rate of 4 to 4½ per cent. per annum—or was until this week—as forecast by the Chancellor last July: about twice what we were achieving in the 1960s. Provided we keep our heads and pull together, there is no reason why domestic demand cannot be maintained at a growth rate of 4 to 5 per cent. accompanied by a substantial reduction in unemployment. As the Prime Minister and the Chancellor have made clear, we shall take any further steps necessary to achieve that objective.

My Lords, what we need is confidence and courage, with faith in ourselves, free from all complacency. We need the determination to take all possible well-considered steps to reduce the scourge of unemployment. I ask your Lordships to give support to the steps that the Government have taken in the knowledge that those steps could not work through the economy all at once but that they have laid a sound foundation.

3.52 p.m.

LORD BALOGH

My Lords, I rise to support the Motion of my noble friend Lord Beswick, and more especially his wise words and penetrating observations about the situation. I would not have chosen the particular words that he has used in his Motion. I would have given a much more positive and lengthier exposition. If we are to come out of our tribulations we must face with much greater candour—indeed intellectual ruthlessness—the causes of our troubles and devise new methods for their mitigation. I do not believe that any of the three parties concerned in industrial and economic managements are free of fault: the Government, the trade unions and the management. I hope to point to a constructive solution. Before I do so, however, I shall have to reflect on some of the things which have been said.

The noble Lord, Lord Drumalbyn, made an effort to put the blame on international economic affairs for part of our troubles. He should be congratulated upon the ability of his statistical clerk rather than on his own arguments. International trade expanded rather faster than ours, and if there is any trouble from international trade it is that we were not able to take a full part in the expansion, rather than that we have been retarded by its slowing down. His endeavour to claim a success in curbing inflation was merely an acknowledgment of the obverse effect of the great unemployment problem that we are facing. The noble Lord cannot have it both ways. His effort to claim that the Government have been giving support and incentives to investment leads me to the conclusion that they were hopelessly wrong in choosing the incentives, because not only did they fail to increase investment, they did not even prevent a fall in investment. His effort to say that the regional policy has been strengthened runs contrary to the most elementary calculations which have been made in every newspaper, and which show clearly that the gradual phasing out of jobs, and the phasing out of the regional employment premium, very much diminishes the incentive to invest in these areas just at the moment when we need much more investment. His claim that the abolition of S.E.T. mitigated the rise in prices is contrary to the Cambridge Report, which showed that S.E.T. was 'never transmitted to prices; and the figures show that the abolition of S.E.T. has not resulted in any diminution of the increase in prices. I can hardly follow him in congratulating the Government on their prowess, ingenuity and earnestness, although I would not wish to doubt that they had all the best intentions.

There is one more thing that I want to say before I try to put my case before your Lordships. I see that my noble friend Lord Diamond is to wind up for our side. I shall be especially interested in how he reconciles his approval of the entry into the Common Market with his sponsoring of to-day's Motion. Our entry into the Common Market, especially if the Werner proposals are carried through—and I see from the papers that there has been an agreement between M. Pompidou and Herr Brandt—will make any defence of our economic health if not impossible,at any rate extremely difficult except for those who believe in the automatism of the Market. I shall listen eagerly to the noble Lord's explanations of his particular stand. There is little pleasure and less personal advantage in saying, "I told you so." In this case, however, it must be done, for otherwise we shall get the crows' cry, "Hindsight, hindsight!" and the self-exculpatory remark which we heard from the Minister, that there is no possible way in which the causal concatenation could have been interrupted; that all was done that could have been done, and nothing was undone that ought to have been done.

The Prime Minister, in his obdurate ignorance, believed that he merely had to wave the wand of first-year economics, of laissez faire, cutting expenditure—yes, including expenditure on electricity generating plant—and, "Hopla!" all would be well again. He was to have no incomes policy. General pressures were to establish a balance and would get rid of inflation. The dustmen, the postmen, the hated public sector, would pay the price so that the millionaire tycoon, the judges, the civil servants, the Ministers, and all, would increase their take home pay by 30, 40, 50, 60 or 70 per cent. We now suffer from this pressurisation in the reverse from the miners, and the impartial judges in the Cabinet and in Parliament scream, "Fault!" Why did they not whimper before?

The social system can be run by consensus or violence. Do not let us be mealy-mouthed: the State is violence-organised violence, licensed violence, but violence it is, unless it is based on willing compliance. The combination laws, the Riot Act, Peterloo—was not that violence? If you want to rely on violence then you must be prepared for massacre, as the Government in the early 19th century were and no longer are. It is evident that the Government in this part of the United Kingdom are not prepared for that. In that case they had better retrace their steps towards consensus. We had hoped to have done with all that; that slowly but surely we had secured some understanding of these fundamental matters. How wrong I was! I was misled by our success in maintaining since the war, if not full at least a very high level of employment. Full employment is not merely a means to an end; it is an end in itself. It is the bas s for the transformation of a quasi-feudal and strictly hierarchical society to a better, more compassionate and tolerant one. If Britain has been a quieter, better and nicer country to live in than most other industrialised countries it was because of this fact.

I now perceive a deadly threat to our social peace and fabric in the elephantine policies of the Prime Minister in a situation calling for the utmost delicacy. A fortnight ago his reaction to the rise in unemployment in the House of Commons was reminiscent of MacDonald in his later years. He said that the high level was mainly due to regional and structural causes (as if they had not existed before) and, in the face of non-existent jobs, he suggested a retraining programme. He ignored the social disunity which he created and which is at the back of wage demands and strikes. He ignored the property boom, which he created, and was unable to gibe a programme beyond a recitation, like the Minister here, of fiscal and monetary measures which fail so dismally to secure either harmony or economic stability. It is this failure which had practically paralysed the economy already be fore the miners' strike. Do not let us mealy-mouth about it. We were 15 per cent. under-employed, at least.

Full employment fundamentally alters the relative power of classes, unfortunately without any change in the class stratification. If there is no industrial reserve army, the power and privilege of the employer is weakened. Suddenly an overwhelming increase in bargaining strength is conferred to the unions. At first the system works not too badly—it did not work too badly for ten years or more; and it did not work badly in America between 1960 and 1966—but after a time the change in the balance of social power, since it is unaccompanied by a change in social attitudes and institutions, leads to inflation and, through inflation, to lack of business confidence and to political unrest. This is the direct consequence of the increase in concentration of economic power on both sides when combined with full employment. The outcome of collective bargaining is then no longer affected by the available reserves of the community.

If all employers expect the same wage demands all employers can grant them, because they can confidently expect to shift the cost of the increase in wages on to prices, since purchasing power increases pari possu with wages and costs. They have relatively little to fear from increased competition but everything to dread from a strike, even if unsuccessful. This the Government have not understood; otherwise they would not have taken measures such as abolition of the Prices and Incomes Board or concentration on public sector wages which they have done. The prevalence of market power which results from having only few competitors in the field who are able to adjust their behaviour to one another gives overwhelming force to this tendency. Look at the Rootes and Ford agreements. The whole balancing mechanism of the economy is paralysed. The irrepressible increase in prices, even in periods of relatively stagnant demand, testifies to the basic character of the change in the economic and social systems. Only a catastrophic slump could change this.

The troubles of the world, particularly our troubles and the American troubles, spring from the fact that this obvious truth has not yet penetrated. The first reaction of the friends of the noble Lord opposite was to become increasingly Whiggish, of all things—not Tory; Whiggish. They hoped against all evidence that the market could restore the balance through a slight increase in unemployment. Since 1970 they have been cruelly undeceived. Yet they have learnt nothing. We have heard again from Mr. Vic. Feather and others asseverations from the trade unions to leave it all to collective bargaining. I submit very humbly that this is a basic fallacy and likely to lead to chaos. Unrestrained industrial action is quite incompatible with long-term stability; it is incompatible with social justice. It is a revision to the laws of the jungle. There, the tigers and the leopards rule and gain, and the weak and the defenceless fall as victims. It is certainly not Socialism. It is not even social conscience.

It seems to me that a new effort is needed to establish methods and modalities of an alternative system. Twenty-five years of obstinately recurring crises should have demonstrated to the union leaders and, what is more important, to their members that they cannot gain by the rat-race they are now engaged on. They can only lose, and with them the nation. Their failure to back and discuss the conditions of their compliance was to a very large extent responsble for the calamity we are experiencing now of having a Tory Government in this country at this juncture. Having said this, I can only express my amazement, amounting to incredulity, at the memorandum prepared by the Confederation of British Industry for the Chancellor of the Exchequer, which was published on Tuesday. It is a piece of foolish lack of sensibility without parallel. It is also a piece of political criminal folly, at a time when we are hoping that the miners will accept less than they feel is their due. How low can stupidity sink, that some people of reputation should have put their names to that ghastly document!

Even after the shocking failure of the neo-Keynesian brand of soothsayers, I see that they are at it again. That is another of the silent voices. Unbalance the Budget, devalue a bit, and all will be well! This is the modified cry. To think that flexible exchanges and a vague programme of social reform will allow a combination of stability and progress and full employment is extraordinarily too optimistic. Incomes policies such as we had last time just will not do. They must be much more egalitarian. Devaluation and depreciation would shift distribution towards profits by rising prices. Its purposive and repeated use to maintain international competitiveness (even if that were feasible within the Common Market) will blunt its effectiveness, because it will be anticipated and costs will rise that much faster. What will happen is that inflation will be speeded up and will become even more difficult to control, except through really catastrophic levels of unemployment. I very much suspect that the devotion of some of our liberal Keynesians to our entry into the Market is largely motivated by their hone that this basic dilemma between full employment and stability will be resolved by the rules of the Market. They may be right; but I very much fear that, contrary to their hopes, the dilemma will be resolved to the detriment of the workers and the poor.

In my opinion the achievement of a balanced and steady but more intense expansion depends on the deliberate creation of a national consensus, not merely on incomes but on social ambience in general. The wish of the workers, unfortunately for noble Lords on the opposite side of the House, can no longer be disregarded. I will not now make a detailed statement of what I believe to be the necessary conditions. Only a broadly balanced programme can have a chance of success, and the elements of such a programme cannot be explored too soon. In the end it must include a re-creation of some sort of board on wages and incomes which can he accepted by both sides as being impartial. In short, we need to return to the post-war policies of moderation, conciliation, kindness, compassion and understanding which were so successful in maintaining social harmony in this country until recently. These are all qualities which I fear Mr. Heath so sadly lacks.

4.11 p.m.

VISCOUNT WATKINSON

My Lords, I listened carefully to the noble Lord's interesting remarks and I hope he will forgive me if I come back to some rather practical points, which are all that I want to inflict upon your Lordships' House at this point. I, too, have memories of the 'thirties, and in that regard I would certainly say that the noble Lord who opened this debate is a noble friend so far as I am concerned. I do not see—and I never have done—any incompatibility in personal friendship and political differences. That is perhaps something that this country may have to learn again if we continue on the course on which we now seem to be set. I agree that it is certainly a new situation, as the noble Lord said, but the noble Lords who have preceded me have all referred to our present industrial difficulties and, of course, it is quite unrealistic to look at what I, too, claim to be a new situation in unemployment without wondering what distortions and quite disastrous additions may be made to our problems by current events. I do not think any of us know, but in my opinion it is right that at this stage somebody should speak who at least as chairman of a company has responsibility (which he willingly accepts) for trying to keep 30,000 people in work. I must say that if matters go on as they are—and I am not attacking the coalminers; I will come to them in a moment—this country will face something like industrial disaster next week. How long it will take us to recover from that is anybody's guess, but it will certainly damage the quite proper hopes of this Government of leading the country into a revival during the next months, at least, of this year.

I will say only one thing about the dispute—and I do not wish to follow the noble Lord, Lord Gladwyn, who I think very unwisely gave advice to the impartial Court of Inquiry. It is an impartial Inquiry and we all recognise that those who form it are totally and utterly impartial, and they should be allowed to get on with their work. I think that sometimes in a mature democracy those of us who have a genuine affection for coalminers as individuals—as I certainly do—have occasionally, at the right moment, to say, "Enough is enough". I hope that moment will come immediately the Court of Inquiry repot the, and I hope then that the miners and all concerned will feel a sense of national responsibility. They will then, I am quite sure, be faced with the fair and impartial judgment of three men who have no axe to grind in this issue at all, and I hope that the miners will find it possible to accept that judgment and so enable the country to get back to work again. If they do not, I must repeat that I see complete industrial disaster for our nation—and I mean all of it and not any particular part of it—in the following week or weeks.

Coming back to the longer term, I believe it is a new situation and I think that all Governments, in a strange way and in a very honourable way, arc responsible for it. I am an old enough politician to remember Sir Stafford Cripps and his very sensible and honourable initiatives about productivity—and we all preach productivity. My noble friend Lord Drumalbyn and all of us did so from time to time. Also we all preached greater technological investment, technological improvement, the better use of assets and the better use of labour, which we all recognised should mean workers receiving higher pay for higher output. All this has suddenly come home to roost, and therefore we are faced with a quite new level of unemployment for reasons which, in a way, one could say were almost desirable if it were not for the human problems and the fact that there are one million people out of work, which is obviously wrong from every point of view. In many ways they are good reasons; they are reasons that make us more efficient, more productive, more competitive—all the things we are going to need when we go into the Common Market.

I believe, too, that there is a new stratification in the problem. For example, I believe that there are going to be more graduates unemployed, as mentioned by the noble Lord; there are certainly going to be more middle managers unemployed, and indeed that is true today. So the stratification is different, although to some extent still unknown. It was with this in mind that, together with my colleagues on the small informal discussion group called the I.P.G., we tried to produce a kind of "think piece". We are not really very fitted to produce blue prints for action. As we saw it, our job was to try to question certain assumptions and to put forward certain facts, and all I can say is that this "think piece" has certainly tended to make people think because the amount of discussion and mention it has had has exceeded our wildest expectations. We never knew we were so good at it.

Leaving that on one side, I certainly stand by what we said, and I want to go on to develop it a little because again I think the causes are different. I believe the causes are managerial, technical and structural rather than some sudden drop in activity or some sudden world picture. My noble friend is perfectly entitled to say that almost every other country has a problem, too, but I do not think we can get out of it without analysing our own problem and trying to see exactly where the truth lies, because if the causes are different then, surely, the solutions will have to be different, too.

What we tried to say in our small paper, for example, was that because of the great technological improvement that has taken place and because of the increased productivity; the better use of manpower (partly because it is more expensive) and all the rest, we felt that there was still a considerable slack in the economy. Of course, I am now referring to the position pre-coal strike. Until that slack was taken up we felt that we would not see either a decrease in unemployment or a large increase in investment. In other words, in this country a few weeks ago we were in the phase of trying to make the most of what we had got, which is a quite proper phase to go through before one comes to the phase of re-investment and expansion, and that in its turn is a cyclical thing which follows the phase of driving for greater productivity and all the rest, to which all Governments have contributed. So had it not been for our present troubles, I would have said that maybe this present cycle would have played its part towards the end of this year and then one could confidently have hoped for a renewal of investment, but I do not think necessarily a decrease in unemployment.

I think it is conceivable—and the noble Lord with his wide experience of industry knows this as well as I do—that if we move into a phase of higher technological investment we may in fact displace more men rather than necessarily providing more jobs. I do not say that this is true, but it is something that at least men of good will have to think about. So if one tries to look at the facts and not the politics, so to speak, I think it is fair to say that this may well be a new situation, may well be a different build-up of the figure, which I personally think will stay for some time at a hard core of three-quarters of a million rather than anything like the full employment total, which I suppose was 200,000 to 300,000, which means inevitably a peak over 1 million.

So what ought we to do about it? I think in this House in particular, if I may say so, we are usually rather better at talking about facts than wringing our hands, and I should like in my short contribution to try to suggest to the Government one or two matters they might consider. I am not for a moment saying that my noble friends and their friends in the Government are not doing their best; I think that they are in the situation as they see it. And I think they are equally entitled to say that much of the causation of this lay before they had the responsibility of government. I could go on with many other things, but I do not want to go into that. I merely wanted to put before your Lordships the belief that this is a new problem, and it may not reverse itself by priming the pump, increasing the money in circulation, increasing consumer purchasing power and all the rest.

I should first like to propose that, when the present troubles are out of the way—and it might be a good discipline for other reasons—the Government should formally ask the Confederation of British Industry and the Trades Union Congress to set up an impartial examination of the size and stratification of the present unemployment problem, to try to get it out of the immediate arena of Party politics, to try to bring the maximum wisdom to bear from both sides of industry, to see whether what I have said this afternoon and what the I.P.G. have said is true or false. I think we ought to be entitled to know. If this wisdom already lies within Government Departments it can be communicated to this body, who can bring it forward, I hope in fairly impartial terms, with the support of both sides of industry. So I hope the Government will really give some thought to that.

If it is shown to be a new problem and a greater problem that we may have to live with for some years, there are other things that the Government or perhaps this kind of body could look at; a much greater incentive to get retirement at sixty rather than sixty-five. This has to come in the end, so we might as well begin to face it now. Several noble Lords, and the noble Lord who opened this debate, talked about improvements to the environment. I have noticed what the Secretary of State for the Environment has recently announced in grants to improve local environment. This again, I think, could be increased. I wonder whether it would be worth while offering every university student another year's grant if he was willing to volunteer for that year to make some contribution either to the environment or the hospital service or to some cause. It would do him perhaps more good than National Service ever did. It would not be compulsory and it would take a large number of young men for a year into practical useful employment instead of hanging about at the university or on street corners, because if what I have said is true, they will find it very difficult to get work. There are many other things one could consider.

I would end by saying that somebody has to decide, when the sad present tragic crisis is out of the way, whether we face a totally new situation. In that I support the noble Lord's words, although I certainly do not support him in imputing blame to this Government. It is as much his Government, but I would prefer to say that it is all our responsibility. Let us look at it as a national problem and try to see whether it is a different kind of problem, as I believe and some of my colleagues on the I.P.G. believe, and, if so, try to bring national will and co-operation to finding solutions for it, and perhaps in that might be some balm for a lot of hurt feelings and jagged edges and unpleasant tensions which may also be the legacy of our present difficulties. So I hope my noble friends will at least give what is intended to be a small but practical idea some consideration.

4.25 p.m.

THE LORD BISHOP OF COVENTRY

My Lords, I venture to come into this debate not to enter into the realm of politics and economics—I leave that to those far better qualified than I—but rather to touch on some rather more humanitarian and sociological aspects and to dot the i's of one or two things the last speaker touched on towards the end of a most valuable speech.

Those who have spoken have touched for the most part, probably rightly, on what one might call the short-term aspects of this great unemployment problem. I propose to deal with matters from a rather longer term aspect. It seems to me, as to many other people, that this problem of unemployment may be with us for a very long time to come. I doubt very much whether any Government or change of Government can, as it were, wave a wand and say, "That is the end of this problem". Indeed, it is reliably forecast by the Department of Employment that by 1980 nearly 25 per cent. of the working population at the lower end of the I.Q. scale will no t be wanted for jobs. Unemployment is likely to be with us for a very long time, and therefore we must look hard into the future to discover how we can adapt society to an era in which recreation will be longer, retirement earlier and full-time employment more hard to obtain. I hasten to add that this need not be viewed entirely in terms of gloom and frustration and depression, provided we adapt ourselves to an entirely new situation, created, of course, to no small extent by technological innovation.

The first point I would make (I want briefly to make five) is that the concept of work must be considerably broadened. Too much in the past people have bought high wages at the expense of gross depersonalization. High wages have tended to be paid to people who have allowed themselves to be tied to machines or assembly lines as adjuncts of those machines or assembly lines. The result has been that an increasing number of young people, quite rightly, have shunned such employment, preferring the right to be idle against the right to work. Sir Robert Birley, former headmaster of Eton, has said, ironically, that the masses have achieved political freedom during the 19th century only to find themselves enslaved by the cogwheel. Work must be seen as a part of life and not merely as a way of providing people with a means to live. Every possible attempt must be made to develop what has come to be called "job enrichment". I am told that the great firm of Philips in Holland has been a pioneer in this field, by attempting to ensure that a worker does not become merely a cog in the technological process but rather a person who has been trained, so far as possible, to do a process of jobs, thereby not losing interest but developing skill. The challenge of unemployment should be the challenge to all of us to ensure that work should not be merely a process whereby high wages are received, but rather a process through which character is developed and self-respect is maintained.

From these I pass to a matter closely related to this concept of work. This phase of unemployment, whether short-term or long-term, should be a challenge to this country to develop in a big way the whole field of training and retraining. I am profoundly grateful to this Government who have produced within the last three or four days the pamphlet Training for the Future. I have read it with very great interest and admiration. Nevertheless, other countries like Sweden have deliberately attempted for a long time past to use training as an economic tool in times of recession, giving people a chance to educate and equip themselves. We need, I would think, still greater Government pressure on firms to set aside money for the retraining of the work-people in their firm. If this pressure is not forthcoming, then in a time of recession such as this firms will cut down first on their programmes of retraining. That will be a disaster as great and grave as the disaster of unemployment itself.

The whole matter of retraining in a situation of "no levy grant" is very forcefully argued in this pamphlet and, as I said, I am grateful to the Government for looking into and trying to overhaul the whole system and process of retraining. But could not some thought be given to the use of the Redundancy Fund in this connection? A contribution to retraining must surely be better for a man than money and no work. Nevertheless, though I am grateful to the Minister for what he has produced, the fact remains that we are far behind other countries in this matter of retraining. In my own City of Coventry, so far as I can ascertain—and I have done a good deal of inquiring into this matter—there is only one retraining establishment, and this is full to overflowing. Workers should be paid adequately in this process of retraining, so that they receive an incentive to make use of such schemes during their period of unemployment. It is a hopeful sign that two large firms in my city have undertaken schemes for the retraining of unemployed. Could not more do so? At the moment these schemes appear to appeal mostly to the young. Surely everything possible should be done to urge men in the thirties and forties to respond?

That brings me to another matter of sociological and humanitarian importance relating to the two ends of the age scale. First, I should like to say a word about the transition period of school to work. I feel that this needs considerably greater thought than it has yet been given. Representatives from industry, education and Government, need to co-operate far more closely than hitherto if a young citizen is to be placed into the kind of niche which encourages him to be a person fully alive, rather than one who comes alive only when he leaves the factory gate.

A vital question arises as to what kind of education he requires. In recent years much secondary modern schooling has been geared to craft apprenticeships. While good and very important, this has two potentially dangerous results. First, great opposition has developed in those young people who have been taught to believe that the industrial system is anxious to have them, but who are rejected immediately they leave school because there does not appear to be any opening for them. Secondly, this rather limited or specialised form of education does not equip them for a wider knowledge of how to live. This is very clearly exemplified, if I may say so, in men who, in latter years, have offered themselves for the Ministry of the Church, but who, because they left school early and received specialised training for apprenticeship, were not trained for wider leadership or for other aspects of life. They have therefore developed in a somewhat limited way and have felt grievously the loss of what could be called a wider education.

However, on the other hand, we must not fall into the trap of giving these young people such a wide cultural education that they are unfitted for the down-to-earth practicalities of industry and commerce. It seems to me that it is not a question of either/or but of both/and. Surely now, in this moment of acute unemployment, is the time for this matter to be looked into very carefully. I was delighted to hear the other day of an interesting experiment in my city, whereby six training officers spent three months in Coventry schools and six school teachers spent three months in different industries in order to get into the "feel" of the different media. I believe that other cities are doing the same, and groups of industries are combining not as a recruiting campaign but as a means to achieve wider usefulness.

To turn to the other end of the age scale, could we not give still more thought than has been given in the past to the questions of an earlier retirement age; to the question of a preliminary period of earlier retirement and, thirdly, to the question of further employment of a different kind for those who have prematurely retired from industry and commerce? Looking more deeply into these three concepts I feel that, as a nation, we should recognise, as the previous speaker suggested, that the age of retirement might well come down rather swiftly from 65 or 60 to something in the nature of 55 and even earlier, in order to allow the younger people to obtain work from which they are being excluded by older men. Should we not look very carefully into the possibility of an earlier semi-retirement, during which period a man works three or, at the most, four days a week? Surely this is not quite so impossible as it sounds. Many married women are doing precisely this and are of great value to the world of industry and commerce.

Thirdly, should we not give some hard thinking to the matter of further employment for men on pension, making it possible for them to obtain other work of a different kind in addition to their pension? It seems to me that the existing policy is still most unsatisfactory whereby a man or a woman is only paid a most insufficient salary per week over and above his or her pension. This serious limitation prevents people from doing all manner of pieces of work which need to be done. In this connection l would plead that we should give very serious thought to the question of employing men and women and paying them adequately in fields which, at the moment, are seriously ill-equipped. I refer to the world of education and of the social services. It could be said of course that these are not immediately materially beneficial to the country. But might it not be said that in our nation cur scale of values has gone grievously wrong? We have bowed low before the god of material growth. There is to-day a vast amount of untapped resources which are not being adequately used and which, if used, could bring great new and vibrant life to the world of social welfare and to the training, in particular, of young people.

My fourth point relates to the matter of regional development. Others have touched on this, and still others will touch on it in the course of this debate. Here again, I believe that the Government have done much in this respect, as was pointed out by the noble Lord, Lord Drumalbyn. But could not still more be done to bring a greater pal tern of variety to areas which have hitherto tended to deal for the most part with one or, at the most, two heavy industries? I realise the difficulty of retraining men, whose skills have been effective in one kind of heavy industry only, into an industry concerned, shall we say, with consumer goods. But is not training for this, however costly and difficult, better than the tragic uprooting of home, with the loss of friends, necessitated by a move into some other part of the country in order to obtain work? Incidentally, in these hard hit areas there is, I would feel, a very real impoverishment caused by the lack of an adequate number of teachers, doctors and nurses. Is there not justification for selective action in such areas, which acts upon unemployment directly and which also stabilises and improves the underdeveloped areas?

My Lords, my final point relates to unemployment and the quality of living. I am sure that the attention of your Lordships must have been drawn, on several occasions during recent weeks, to the January issue of The Ecologist, with its sombre title "A Blue Print for Survival". With many thousands of others, I have been deeply moved and challenged by this blue print, which was drawn up by a large number of distinguished scientists. The purpose of the articles in that issue of the magazine was to draw the attention of this nation to the drift towards world disruption which is so manifest to-day, and to provide a strategy for change towards a stable society. One of the principal conditions of a stable society is a population which is stable. If a population does not stabilise of its own volition, it will be cut down by famine, epidemic or war. Surely, any thinking man looking at this grim spectre of unemployment in this country must be forced to think in two directions.

First, young men and women should be urged seriously to think of a vocation which takes them to those parts of the world which are grievously underdeveloped. Their work would be of great value in those underdeveloped countries and, in the long run, its effect would be felt not only by those countries, but by ours as well. And, secondly, any serious-thinking man must surely consider ways and means whereby this nation—this highly populated, perhaps even over-populated country—shall stablise its population. Our task is to end excessive population growth by methods such as family planning. The Government should really be bold enough to acknowledge this problem of overpopulation and declare their commitment to ending it. This is certainly not the moment at which to develop this subject, but I should have thought that no serious study of unemployment could be allowed to leave out this all-important matter.

I may seem to have touched on a number of issues to-day which perhaps do not appear immediately to affect the subject that we are discussing. But I believe, with all my heart, that it would be the height of folly only to think of the solution of unemployment in terms of political and economic issues, and to omit those deeper basic matters of human development in the affairs of society and in the quality of living, without the consideration of which the study of the problem of unemployment will be sterile and ineffective.

4.42 p.m.

LORD POLWARTH

My Lords, we are all deeply indebted to the noble Lord, Lord Beswick, for raising this subject to-day. It is one of great concern to all of us, not least to those of us from Scotland and the other development areas where the problem has assumed such acute proportions. It is one of grave concern to those of us who have been occupied over the years in trying to create more jobs in those parts. There are moments when one is perhaps tempted to despair about those efforts and their results, but I believe that we must with fortitude cast despair aside and have faith that, when we have come through this present very dark patch, we shall in the end be in a stronger position than before.

Without going over the ground which, in the Scottish context, we debated very thoroughly last November, I think we should take note of the concern of the country that was strongly expressed in Edinburgh two days ago, when a meeting called by the Scottish Trades Union Congress drew an attendance of 1,300 people from a wide variety of walks of life, political Parties and occupations. Perhaps the depressing aspect of this meeting was that, almost in an attitude of despair, so many speakers from different backgrounds came back in the end to the view that Scotland would never solve its problems without a greater degree of self-government, or of nationalism. That is a counsel of despair and one which we should do everything to refute.

The noble Lord's Motion criticises the inadequacy of the Government's actions to deal with this problem, but we should be clear about the very definite limits to what any Government can do about this problem. In this country we have an immensely complex industrial and economic set-up. It is not self-contained. It is more dependent than most on the trends and forces of overseas trade and overseas economies, and the balance of payments problem is always with us. It is all very well to say that if we are to achieve the goal of prosperity and full employment all that is needed is for the politicians to set the sails correctly, steer the right compass course and all will be well. I think that shows an assumption of omniscience and omnipotence on the part of politicians and administrators which is really quite unwarranted. The whole situation is far too complicated for that. The most they can do is to hoist what, in their opinion, is an approximate sufficiency of canvas, give a good hard shove on the tiller in what they conceive to be the right direction, and then hope for the best.

I agree with the noble Viscount, Lord Watkinson, that all Governments must share responsibility for the position in which we find ourselves to-day, and I support most warmly the very practical proposals which he incorporated in his speech. I also support what was said by the right reverend Prelate who spoke before me. In the short run, the Government have given a shove to the tiller with, as the noble Lord, Lord Drumalbyn, said, a pretty massive infusion of funds into the economy—into the hands, ultimately, of consumers. This will take time to work. There is much spare capacity in manufacturing industry and the effect on employment will come, though it will take time. And let us remember that we are in a time of general slackness in world trade, which does not make the position any easier.

The development areas are still enormously dependent upon the production of capital goods, in spite of all the efforts to diversify production in those areas. There is still a reluctance to invest in new capital equipment. The noble Lord, Lord Drumalbyn, said that industry should now be getting down to its plans for investing. My Lords, you cannot blame industry for not investing until it sees that the prospect for increased demand is really genuine and not just a flash in the pan. Confidence must be regenerated in the first place. At the same time, I do not belittle the need for, or the effect of, incentives to, capital investment and I hope that they are being very thoroughly thought out in the Government's present review of regional policy.

As I have said before, I believe that cash grants should be reintroduced for new plant and equipment, and that we may have to take a very bold and unorthodox view of the question of depreciation. With the present rise in costs due to inflation, we should even think of a rate of depreciation in excess of 100 per cent. This might be given for industry throughout the country—not only for the development areas—for a specific limited period. It might give the much-needed boost to the producers of capital goods, and would redound especially to the help and benefit of the development areas. It would also help to achieve some of the very much-needed modernisation and re-equipment of industry throughout the country to keep us competitive in the world.

As other speakers have said, I believe that we are faced with a more fundamental position and with a very new state of affairs. As the noble Viscount, Lord Watkinson, said, ever since the war Governments have encouraged in people the goal of increased material prosperity. Of course at the same time they have spoken of the need to earn that prosperity, but have more spoken of it than driven it home. That was all right in the post-war years when there were conditions of scarcity here in tie home market, and when there was little competition from overseas. But that state of increasing prosperity without matching production could not last and, as the noble Lord, Lord Drumalbyn, said we now have the position where wage rates have run riot ahead of production. To take only one example, between 1963 and 1970—a period of seven years—wage rates in this country went up by some 46 per cent., while industrial production with the same level of work force went up by only 24 per cent.

My Lords, this is a very poor performance in relation to most of the other industrial countries of the world, and the inflation of the last few years has brought home the unpalatable truth that there is a limit to the time for which one can live beyond one's means. We have sown the wind and we are reaping the whirlwind. In many cases, labour has become so expensive that industry has had to discover that it can manage with a smaller pay-roll. Some great companies have even found themselves in financial straits; and many companies, though without declaring redundancies, have cut back very drastically on their recruitment programme. This has most serious implications, particularly for the younger people.

Now, my Lords, genuine efforts are being made to contain inflation and to stop the rat race of regular, increasing wage rises. We are having a temporary backlash (I hope it is a temporary one) of a mood of frustration, almost of petulance, and an attitude of selfishness and of "the devil take the hindmost". It is the weakest that suffer. It is this attitude, above all, that I think we must cure. We must realise, all of us—and that means management, labour, the Government—that we shall never go back in industry, and in much of commerce, to the same scale of employment in relation to our activities as previously. Some fundamental rethinking must be done; and here I welcome most warmly the constructive thoughts of the two previous speakers. The raising of the school-leaving age initially is going to help at the younger end. I support the suggestion of earlier retirement, and possibly preparation for it.

I wonder whether we are right to encourage in some jobs in industry so much regular over-time working, to the detriment of others who might be employed in those industries. Of course it is sometimes necessary, but it should not become a part of the regular pattern. I wonder whether we have been right to encourage quite so many married women to go into full-time employment. Would they not perhaps be better employed in their homes? And could it be, possibly, that the introduction of equal pay may make it less attractive to industry to employ so many married women? That is a thought. And would it be very illiberal to query with your Lordships the wisdom of allowing such a continuous flow of immigrants into this country at a time when work is hard to find?

I think we have also to achieve much greater flexibility in our ideas about employment and its nature. We are a very conservative people, and there are very definite views, firmly and sincerely held views, as to who can do what and who may do what. It is a paradox that at the same time as there is unemployment there are many jobs which it is still impossible to fill. This is so on the skilled front, and I, too, greatly welcome the new proposals, or outline of proposals, for increased retraining, which is so necessary to fill these vacancies for skilled men. But there are many jobs of a less skilled nature, and your Lordships will all know how difficult it is to get, for instance, certain forms of building work done, or repairs and services carried out; and of the shortages of shop assistants, hospital workers, postmen, railway porters and even (dare one mention it?) domestic workers. To a large extent labour has priced itself out of the ability of many people to pay for these jobs and services. Can we not somehow encourage a greater flexibility of attitude towards changing jobs; towards moving, if need be temporarily even, to marginally lower-paid work, rather than remaining in hopeless search for a job similar to that which one did before? Can we not encourage the realisation that the right to work does not mean the freehold to a particular job in a particular industry? Can we get rid of the idea that it is an indignity to change one's profession or job?

My Lords, in conclusion, can we not resolve to stop the mud-slinging which we have tended to indulge in, blaming everybody else for the situation with which we are faced? I know that slanging the other chap is a good old British pastime. There is no harm in it in moderation, but I do not think we can afford to indulge in it just now if we are to stop this rot of inflation and the consequent misery of those affected and put out of work, in many cases by the greed of their fellow workers. We must somehow get home the fact that the excess unemployment in the development areas—and I say this with no disrespect to the right reverend Prelate who spoke before me—is to a large extent due to the excessive demands of labour in what were previously the more favoured areas of the country from an employment point of view. Labour rates were forced up, particularly in the Midlands, to levels where they spilt over to other parts of the country. I think of the motor industry in Scotland, which was established with enthusiasm a number of years ago. Now, because of the demands being made for parity of wages, that industry is in grave danger as to its future. Somehow we have got to get it clear.

We have at least made a start on containing inflation. Let us press on with it, and try to desist from too much special pleading for one interest or another for special treatment, because this will spoil the effects of the campaign. Governments of both complexions have for long enough been crying, "Wolf! Wolf!" on the dangers of inflation, without being heeded by the country. Now that the wolf is very near the door. I hope, and indeed I believe, that at last the British people are going to see sense and exchange the selfishness and the self-interest of recent years for an attitude of responsibility. My Lords, if inflation is contained successfully, if a firm regional policy is applied and maintained, and if a sense of responsibility can be regained, then, and only then, shall we get rid of that economic waste and human misery which we all so much deplore—none of us more so than those of us in Scotland and the development areas, who believe that we have such a great contribution to make to the country's prosperity in the future.

4.58 p.m.

BARONESS WOOTTON OF ABINGER

My Lords, I propose to address myself to the situation as it was before the exacerbation of the past few days; and particularly to the concluding phrases of the Motion which my noble friend Lord Beswick has put before this House, and in which he refers to the inadequacy of the remedies and the need for radical new solutions to the problems of unemployment. There is at the moment, my Lords, obviously a quite new situation—new even in a lifetime as long as my own. The outstanding features of that situation are, first, that there is very high and rising unemployment, accompanied by rising wages and rising prices and—possibly even more oddly—an all-time high in the Stock Exchange boom. It is from these facts that we must start.

There seem to be current in the community two alternative explanations of these phenomena. There is one which I think underlies to some extent the arguments of the right reverend Prelate when he was trying, as it seemed to me, to divert young people out of what we might call the main stream of economic development into rather fringe activities, or activities overseas. Certainly, it also underlay the argument of the noble Lord, Lord Polwarth, when he was proposing that we should have earlier retirement and when he said he was relieved that the raising of the school-leaving age would take people out of the labour market in their youth for a short time. I have lived for a long time with these theories, all of which presume that there is a sort of solid block of jobs to be filled; and that when there are more people there is no room for the extra people or that the expandability of the solid block of jobs will not keep pace with the growth of the population. There may he something in this view in the short run, especially when new technological inventions are apparently getting machines to do the work previously done by the human hand. But it only in the short run.

The underlying fallacy of these arguments is that they assume that the standard of living of the various classes in our community should remain in more or less its present relationship and, therefore, that the volume of goods we can consume is roughly limited to de volume of goods—a little more each year—to which we are accustomed. There are people in our community who are determined to break the existing pattern, the pattern in which middle-class professional people talk about very high wages in, say, the motor industry—meaning wage figures which they would regard as derisory salaries if they themselves earned them. There are people—notably people (if I may mention names) lice Hugh Scanlon and Jack Jones—who have virtually said that they are working for an age in which all classes, the working classes as much as the middle classes, will live on a middle-class standard. We shall then need every pair of hands that we can find.

All my life I have been told that we should be presently entering into the age of leisure when we can get all our work done in perhaps 30 hours, and retire at 50; and then we shall have to train ourselves for the reaction to that. I still hear this said to-day. But I am inclined to agree with J. S. Mill, who said that no labour-saving machine that has ever been invented has ever saved any labour. In fact, we keep on working at just about the same rate all the time. The actual hours worked by men in industry—not the official working week, but the actual hours, including overtime—were in 1970 just under 46 per week. This figure fluctuates very much from time to time, according to the state of the economy; but in 1950, twenty years before, there was an average of 47 hours a week. So we have cut down by (shall we say?) a little more than one hour a week in twenty years. At that rate, to get a reduction of 16 hours, to get down to our 30-hour week, would take about 300 years; so I do not think we need worry about that.

That is one theory. The other theory has something to do with something called "inflation" or "reflation" about which I have never heard more confused arguments than are heard to-day. A large part of the opening of Lord Drumalbyn's speech was spent in pointing out how earnestly the Government attack the problem of inflation. He went right round the whole circle. He began by praising the Government for their attack on inflation—and for the moment we may say that they have perhaps had some small success. Let us anyway accept his hypothesis that they have. The noble Lord then spoke proudly of what a later speaker, I think the noble Lord, Lord Polwarth, called the massive infusion of money into the economy—which in old-fashioned economics used to be called "inflation" He then came right round the circle again and said that having got the massive infusion, he was now rather frightened that the demand created would exceed the capacity to supply.

I should like for a moment to direct your Lordships' attention to the history of this word "reflation" which is now regarded as extremely respectable and even regarded as one possible solution to the problem of unemployment. The word was invented, and I well remember when and why, in the 1930s, when we had had a period of severe deflation with falling prices and falling wages—I repeat, "falling". It was desired to create a demand inflation, in order to restore the previous position. Consistently with that interpretation, the Oxford English Dictionary dates the word to 1932 and defines it as, inflation undertaken after a period of deflation to restore the previous position ". That means that we are going to use inflation to cure inflation. But we cannot really use reflation because it has not followed a period of deflation. There has not been such a period. The word was invented to get round the fact that "inflation" was a dirty word even in the 'thirties, because there were people old enough to remember the inflation of the early 'twenties. So we are completely confused about this.

Let us take the argument that the Government have tried, let us call it, to reflate. They have put a certain amount of extra money into the economy; they have reduced taxes, as the noble Lord, Lord Drumalbyn, proudly boasted. My Lords, what has happened to all that lovely money?—that lovely money that we could have used. We could do with it now; it would have been enough to pay the miners a decent wage for a good many years to come. What has happened to it?

Let us now look at the other curious features of the present time: the property boom, the all-time high on the Stock Exchange and the record volume of National Savings. The truth of the matter is that it has all been put away in various forms of "stockings". The "stockings" might be made of bricks and mortar, but nevertheless it has been put away in various forms of "stockings". Why? I think I now come to the one point where I find myself in total agreement with the noble Lord, Lord Drumalbyn, and, I think, with most of the speakers who have spoken from the Benches opposite. It has all been put in stockings because there is a crisis of confidence, because the world of business, understandably, faced with the inflation which the Government have failed to control effectively, faced with continuing inflation and a cost inflation is afraid to put the money into opening new businesses and creating new products. That crisis of confidence is a fact. The noble Lord, Lord Drumalbyn, I think, referred to the fact that many businesses were making no profit at all. That is a good enough ground on which to lose confidence. I think also that it is now being said that the profits of 1971 are going to turn out to be a little better than were the profits of 1970. So perhaps some little confidence will begin to peep up again. But it is a fact that there is a crisis of confidence. The world of enterprise has got the jitters or the sulks; and as long as it has the jitters or the sulks it puts its money into stockings and there is no further employment for the people who could be used if we were increasing our productivity.

What ought we to do? I think that we ought to do two things, both of which were indicated in the speech of my noble friend Lord Balogh. First, we ought to have a real incomes policy. I cannot now give a speech about incomes policy; it would weary your Lordships, for at present we are talking about unemployment. But I will say this. An incomes policy needs certain qualities. It needs to be enforceable. You cannot have a voluntary incomes policy. It is exactly like disarmament. Nobody will "play" because nobody dares to be first. If everybody could go at once, then O.K.; but, as with disarmament, somebody must start. As I have said, an incomes policy must be enforceable. It must take account of the idea of equity. It must look after the low-paid people and it must also apply to all incomes and not merely the incomes of wage earners. One of the nicest pieces of hypocrisy of recent years is that we have given up talking about a wages policy. We now talk about an incomes policy and we mean exactly the same thing: a policy which will hold down wages and do nothing about other income. It is possible to make such policies. The National Institute of Economic and Social Research organised a conference last month in which a number of fruitful ideas were put forward about an incomes policy. Professor Hugh Clegg, in his paperback, has put forward very constructive ideas. Professor Elliott Jaques has been planning a rather more far-reaching and long term policy for many years, and even I myself have put one proposal on paper, published, I suppose rather appropriately in The Listener on April Fool's Day last year. That is the first thing we have to do.

The second thing we have to do, if the world of private enterprise has the jitters or the sulks, is to expand the world of public enterprise—and there is plenty of it to be expanded. The noble Lord, Lord Drumalbyn, mentioned some incidentals, but they are all always in the future; it is always "jam yesterday and jam tomorrow and we do so hope soon we shall have jam to-day. Nevertheless, he mentioned some, and they represent a certain reversal of Government policy. For a long time there has been an extraordinary idea prevailing in this country that when Government spend money it is something entirely different from when private people spend money; When Government spend money it is wicked and wasteful—even when they invest money it is wasteful—but when private people spend money it stimulates consumer demand and that is good because it creates reflation; and when they invest it that is even better, because t creates new products. But it is exactly the same whoever does it, and the vacuum left by private enterprise must be filled by public enterprise.

There is a great deal of public enterprise and there are a great many needs. There are needs in the nationalised industries—urgent needs. I think all of us who are commuters think that British Rail could do with a bit of a face lift, which we hope it will get under its new chairman. We know the urgent needs for the improvement of schools, for the building of new hospitals, for all manner of local authority services. I here are plenty of things to be done. If we were to attack even one of these problems, let us say the housing problem, with anything like the drive we should put into it if houses were munitions to be used in a war, we should make tremendous inroads, directly and indirectly, into the problem of unemployment.

My Lords, I know I try to make it all sound a great deal simpler than it is. I know that there are great difficulties and that these are very broad, outline proposals. I leave it in this simple form only because I do not want to take too much of your Lordships' time. I am prepared to meet a number of difficulties if opportunity offers. I do not say I shall solve them all, but I will say that there is a great deal of thought which lies behind them. So, my Lords, I submit to you that the theories about inflation and reflation are hopelessly confused; that the money which has been put into the economy has been locked up in stockings. People put it into National Savings because they are frightened that the rates will be so high and they will not have it when the rates come round—our thrifty and careful debt-paying population. That is what has happened to the money. We have to create confidence and to create equity by an incomes policy, and create investment by letting public enterprise fill the vacuum which private enterprise has created; and possibly this will induce private enterprise to enter and take its share also.

5.15 p.m.

LORD ST. OSWALD

My Lords, it is always a pleasure to listen to the noble Baroness and to follow her to-day in her quietly reasoned, teasing and, as always, engaging speech. I want to assure her that the only even faintly combative remarks I shall utter will be at the beginning of my speech, and will then be put behind me.

This Motion has three components. The first two are statements of the undeniably obvious and the third is misconceived. If it comes to a vote I shall vote against, but without any exultation. It seems to me axiomatic that at this time there should be deliberate avoidance of any hostile confrontation, either between political Parties or between workers and management, or between one industry and the nation. We are heading towards that latter kind of disaster at the moment, and I believe that those who call, from one side or another, for such confrontation are doing active harm to this country. Once we delude ourselves that the interests are inimical, we can tear the economy of this country apart.

At least there is mutual recognition that mass unemployment is a terrible thing, and no archaic epithets are being bandied about, at any rate in this House, asserting that Tories regard it as a good thing and only Socialists condemn it. Your Lordships will be aware that this is not my normal area of Parliamentary engagement, but I hope that my reason for joining in will become apparent and that my intervention will be tolerated. Although the debate in this House and in the country at large stems from the startling figure of one million unemployed at the turn of the year, the effects are known to all of us to be far wider than that. At a time of massive unemployment an underlying nervousness appears throughout the whole of industry: tremors affect workers and management in every quarter. At such a time the country will be entitled to lose patience with squabbling politicians, blaming each other.

As I read it, the reality of the present baneful situation follows not from the sins of the previous Administration, but from those virtues of their policy which remain unexploited—unexploited, that is, either by the Labour Government while in power or, so far successfully, by the Conservative Government. I recall a speech made by Mr. Harold Wilson, I think in the Mansion House, while he was Prime Minister, calling for British industry to "make itself lean and fit", and he won some ungrudged acclaim for this line of exhortation. There was also a famous speech to the Trades Union Congress on September 5, 1966, in which Mr. Wilson said: Our measures have been severe, tough: they have administered a shock, as they were meant to, to the economy and the whole British people. They involve compulsion as well as a call for voluntary action … Though they are necessary for securing a shake-out and a redeployment of labour, particularly in our exporting and basic industries, these measures do not, of themselves, provide any lasting solution … Our measures are not aimed at unemployment but at redeployment … At this time, hoarding of labour. Work-sharing, must be scheduled as practices totally inimical to our national recovery. In another part of the same speech he said: The restrictive practices that are still too prevalent today amount simply to a means of laying claim to a full clay's pay for less than a full day's work. Those were incisive and trenchant words, my Lords, and industry responded. "Shake-out" was an "in" word in those days, and the Redundancy Payments Act made redundancy respectable for the first time. The process of making British industry "lean and fit" began to happen with the co-operation of industry and the unions. Translated through consistent policy into industrial effect, this would have meant either making 2½ million workers redundant and unemployed or providing new jobs for those 2½ million, if possible, and ideally, before they became redundant. The mathematics are mine, rough and most probably over-simplified. But British industry at that time was conservatively reckoned to be at least 10 per cent. over-manned. A shake-out of 10 per cent. of a total work force of 25 million is 2½ million.

It may be that Mr. Wilson and the noble Lord, Lord George-Brown, who had been the founder of the D.E.A. and the main author of the National Plan, were in no way perturbed by this prospect. As part of that National Plan, described in the White Paper, visualising a massive growth in national production they also foresaw a shortfall, a manpower gap of 200,000 to 400,000—so far as I know taking into account the shake-out. This was an over-optimistic, honourable miscalculation. But in the light of it, it does not seem unreasonable to suggest that, since the planned shake-out, beneficial in its way, was not matched or compensated by a provision of new jobs through planned and predicted growth, at least a substantial part of to-day's agonising problem could also have been predicted.

I think it behoves noble Lords opposite to concede, if they concede nothing else, that the half-achievement of their own positive plans for the refinement and sharpening of British industry has gone into the making of this truly national jeopardy. This is not, as I hope noble Lords will recognise, an antagonistic observation. To concede that does not preclude them from reminding us that the present Government, equally, have so far failed to create the expansion needed to promote new employment, and to absorb, rewardingly, those "shaken out" in the first phase of their forward-looking design. It has been unemployment instead of redeployment.

What are the remedies? The air is rich with proposals. The industrial field is dangerous ground, especially at a time like this, for all but the expert, and I am no expert. But to live, as I do, in an industrial community in a traditionally industrial area, is to be aware, among other things, of the bewildered pain and shame of good men out of work. It is not in their nature to have idle hands or inactive limbs. It is visibly harmful to their spirit. To see that, and to stand by treating it as none of my business, beyond my competence, would have, I think, an equally bad effect on my spirit.

If my suggestions appear amateurish, as well they may, noble and specialised Lords may yet find some particle of originality and practicality in them. Our industrial and trading situation seems to me to be affected by two major influences to-day. One is the rising industrial output and capacity of the developing nations in particular fields and a proportionate shrinking of the markets that they have heretofore offered. The other is the new, exhilarating opportunity of the Common Market. There are certain industries in which the developing countries are already exerting their efforts and competing with us in their own regions and even beyond. Textiles are an example. Except in very high quality or specialised products, I cannot see us supplying a widening market in such products in those areas. For this reason, industrial grants to these sectors of industry does not seem to me to be the way to ring the prosperity bell for the country. To create greater efficiency here would be to reduce manpower without obtaining a wider foreign market. But those areas that I have mentioned are the very areas, the groups of nations, which will probably take many years, perhaps two or three generations, to achieve our standards in the more sophisticated products, saleable to them and across the world. Is it not possible for us to set up new technical industries, related to those we already have, but still more enterprising, for which our national skills are uniquely appropriate? It may be that incentive to set up such new industries has been insufficient in a home market of 50 million; but in a home market of 250 million they may become dramatically viable.

This is where my lack of knowledge of the industrial scene begins to manifest itself even more clearly, but to my untutored eye it seems that some kinds of highly specialised equipment which so far we buy perforce from America would be open to our skills if a European market made it worth while. I am thinking of oil-drilling and gas-drilling equipment, and the oil rigs themselves. Could not our under-employed shipbuilding industry turn its hand to that? Seeking for advice, I am told that the construction of heavy rolling mills is something that we have so far left to the United States, as are power presses and the heaviest of earth-moving equipment. Most scientific data equipment is now brought across the Atlantic, and I cannot imagine that there is no opening for us here. What I am suggesting is new industries which are extensions of our existing industries to employ existing skills and to provide employment; that is, to create employment.

Less enterprisingly, road-building is often mentioned as a means of mopping up unemployment, in the mistaken belief that large work forces are engaged, which is not the case. But the eventual purpose of roads is not to employ these gangs in the short term; it is to open up areas of industrial potential, to improve their competitive status in the long term. My own county of the West Riding of Yorkshire cannot complain in this respect. With the M.1 and the M.18 already completed, and the M.62 forging ahead, we are well provided for. But Wales and Scotland suffer from far more difficult access and egress, and roads bring hope to industrial communities.

My Lords, there were more suggestions in my mind, but I wish to pass for the remainder of my speech to an issue on which I feel a compulsive obligation to speak. I wish to touch, for a particular reason, on one particular section of industry which was given a long hard scrutiny in this House two weeks ago and again yesterday. The coal strike has lately created a great new surge of general unemployment, ephemeral and artificial, but drastic for the nation, and directly disrupting the daily life of the consumers as well as the producers. There is no individual in the nation who is not directly concerned. The ending of this strike is the first key to the first lock of the first door which must open the way to re-expanding employment. At this moment it looks like a stiff lock and a heavy door.

I am personally, and even emotionally, concerned near the centre of this, due to what might be termed an accident of birth. I live in, and very much as part of, a mining community in Yorkshire. A few hundred yards from my house is a pit which not very many years ago was owned by my family. I have derived the considerable and somewhat unusual privilege, as a former coal-owner with declared Tory convictions, of being made warmly welcome in that pit, and especially in the miners' club whenever I go. I must say, with some conscious boast-fulness, that it is a very special pit and recognised as such throughout the whole of the South Yorkshire coalfield. It was known throughout that coalfield while my family owned it as "Harmony Pit", because labour relations, rooted in mutual respect, were outstandingly good. I once remarked to the noble Lord, Lord Robens, in one of the corridors of this House how much satisfaction it gave me that this name and this reputation should remain. The noble Lord told me that any alteration whatever would have surprised him: that he knew of no instance whatever of such a change; that where labour relations were good under private ownership they remained good under nationalisation, and where they were bad under private ownership, they remained bad under nationalisation.

This particular personal opportunity should have brought me into the debate on January 31, but I stood aside for two reasons on that day. I could not have stayed for the whole debate, and I had not clarified my ideas sufficiently. But that same privilege took me for four hours on last Saturday night into the Nostell Miners' Club to talk to union officials and other union members on their home ground about this strike. I have some fear of sounding over-presumptuous in this, but the opportunity for a Tory peer to be able to join that particular company at this particular time, to talk on the subject and to be received as a friend—not an uncritical friend, but certainly an attentive friend—is an opportunity too valuable to keep to myself. It is a privilege, I appreciate, which is not due to me but to the tradition of "Harmony Pit".

What I have to say is that by half-past eleven on Saturday night I came out of that club deeply disturbed, and that mood has not yet been dispelled. The men who spoke to me were all either union officials or pickets. They spoke in a tone of calm, sad intensity. I doubt my ability to convey what they said and how they said it but, without reflecting on their judgment, I must declare that I came out aware beyond any admittance of doubt that they were sincere and utterly determined. They were the very reverse of revolutionaries. The root of their obstinacy is that, as they explained, they feel they have been "conned" by successive Governments and successive administrators of the Coal Board. They have been caught in a pincer movement, being, on the one hand, told that their patriotic duty to the economy was to restrain their demands and, on the other hand, by the warning that further strikes or wage concessions would lead to pit closures. They feel that the intention in the past has been to frighten them, and they are through with being frightened. They feel that they are being attacked or undermined by an appeal through the public on the grounds of national interest. They are through with footing the bill, as they see it, through wage restraint which others do not observe.

In all this I am not trying to question or to underestimate the figures, the forecasts and analyses which my noble friends and my right honourable friends within the Government have given us as to the dangers to the life of the nation. What I am saying is that, sitting as a known and undisguised Tory in a miners' club, I was told with infinite courtesy that they have all heard this story many times before and they are no longer listening. In some respects I found areas of wishful thinking and self-deception. They affirmed that the forecast of pit closures was exaggerated, because coal must always be the staple fuel in this country. Nuclear power had failed, natural gas was a disappointment, not a substitute (so they argued), while the suppliers of oil were not to be trusted.

However mistaken the miners may be in these assessments, I do not expect them to be convinced of this in the next few weeks. They told me soberly that they were prepared for pit closures as a consequence of the strike. They told me soberly and deliberately that they were prepared for the loss of major customers for coal as a fuel. They told me sadly that they were prepared for a stage in which public opinion had turned angrily against them. None of these prospects could deter them. They spoke quietly of "a siege mentality"—and this was some what ironic, since they are now imposing a "siege economy" on the nation. There was indeed the kind of gaiety of a besieged garrison—with nothing to lose, as they saw it. What stood out was that, in their words, for too long they had been "too patriotic", they had stood by under successive Governments while the interests of workers in other industries were advanced beyond theirs.

There was a most distressing disbelief in the sincerity or the true concern of the leaders of the country in their feelings, their fears, their reasons and their attitudes. A "Whitehall Wall" has grown up between us. The only individual exception they allowed was my right honourable friend Mr. Robert Carr, who I must believe is a very great asset to the country at this moment. They blamed equally a succession of Governments and of Coal Board officials. There was no violence of speech, there was no expressed animosity in their attitude. Even the vernacular they used was euphemistic for what it expressed—some of the lads were growing "more and more alert", and in one or two places the police "had been a bit sturdy". My Lords, that is not the language of revolution. Those I spoke to were specifically and unequivocally opposed to the miners' wage claim being treated as a "special case". They claimed that the failure had been to treat it on its merits. There was no hatred: there was total disenchantment.

It may well be that some noble Lords may consider that I have been more gullible than is strictly excusable I have not mentioned—and my companions tended to avoid—the issue of differentials within a pit; that is, between the coalface workers and the lower paid workers, mostly on the surface but also some of them underground who are not only on the lower scales (and many are as low as £18) but for whom no overtime is available. The coal-face workers, understandably, have always been an aristocracy within the pit, and the union has fought for their interests and has tended to leave the others behind. Therefore, it is not only "wage comparisons" as between industries which need to be taken into account, but also differentials within a given pit.

The views which I have obtained and which are reflected in this speech were not obtained solely from that four-hour discussion in a union climate. Some other views were in contradiction to what was said to me in that miners' club, which I have to concede was not typical of all mining gatherings in Yorkshire. The mood round that table, though well short of conciliatory, was quieter and more open to discussion than it would have been at some other tables. I have been told elsewhere in the industry and in the same neighbourhood of anxiety that new methods had crept into the South Yorkshire coalfield that were never there before—objectives and practices, including forms of intimidation, which have always been out of character. Despite what my companions told me (and no doubt wished to believe themselves), not all the picketing, as we know, has been peaceful or civilised. To them this is "foreign" behaviour in the pejorative sense, and secretly they feel embarrassed and tainted by it, even though they take no personal part in it. Their standards and their well-deserved reputations are perhaps the most immediate victims of such conduct, introduced from outside and, perhaps most ominously, from above.

It seems to me that both they in the mining areas and we in Westminster have to examine now whether a few individuals have brought pressure to bear on a select few of the Executive Council of the National Union of Mineworkers, who in turn have been able to dominate the majority of that otherwise sturdy union. It is difficult for us to appreciate the pressures being put on men I know to be realistic and reasonable by the tightly knit group of politically motivated men who, as the last General Election showed, utterly failed to secure acceptance of their views by the British electorate, but who are now determined to exercise back-stage pressures. The House will recognise that those are not my original words. They were spoken by the present Leader of the Opposition, when he was Prime Minister, and the single one-word transposition that I have made is to say the "National Union of Mineworkers" in place of the "National Union of Seamen". I would not myself use the word "dominate" in this case, because miners do not lend themselves to domination. On the other hand, I think it is at least possible that a sincere and cumulative sense of grievance and victimisation—a sense which I know exists—has been worked upon and harmfully misused for the purposes of those who have no such feeling for the national interests as have the miners themselves.

I would prefer not to comment here and now on the degree of justification, or lack of justification, for this sense of grievance. But I submit to your Lord- ships, first, that it would be unwise to avert our minds from its palpable existence, and, secondly, that it is vulnerable to misuse, misapplication and misguidance. In any event, Mr. Harold Wilson can hardly believe that that "tightly knit group of politically motivated men" which so understandably incensed him when he was Prime Minister, has since been dispersed; nor can he assume that they are playing no part in present events. Yet he felt able last Saturday to make what he must have known was a damaging and unjustified assertion, that the present situation was "a scheduled confrontation" deliberately wished upon the country by Mr. Heath. Some people—not many, I hope—may have believed those words, but in their utterance they knowingly distorted and aggravated the situation; and that takes a great deal of excusing. Indeed, there is more evidence to show the boot as being on the other foot. Banners borne in demonstrations proclaiming, "Stay out and get the Tories out" have little to do with democratic process, and less to do with the miners' interest. Whoever may have plotted the present state of affairs, it was not Ministers of the Crown. It seems more possible that Ministers and miners have ridden unwarily, from different ends, into the same ambush.

A good pit is like a good regiment. It has the same spirit and the same determination, the same tradition and the same pride; even the same tacit acceptance of sensible discipline. It knows little of the major strategy of the campaign—and I am thinking now of the campaign which this country is waging to maintain its peaceful and prosperous place in the world. What echoes in my mind now, as it has done during the days since that intensive discussion in a miners' club, are those words quietly, stubbornly reiterated time and again, "We have to win". Here enters tragedy. I believe that we have passed the point where anyone can "win" in any clash. I count, as we all do, on Lord Wilberforce's Court of Inquiry providing a formula, un-damaging to the nation, which the miners can and will accept. But by then the economy will have suffered a punishing blow from within, and the fruits for the coal industry itself could be bitter indeed. I see some pit closures as being inevitable, perhaps on a greater scale than any of us visualise to-day. I see the coal industry's major customers demanding alternative fuels. This adds up to a shrinking market and a shrinking coal industry, with a public no longer sentimentally disposed to take the miners' part, as they are in this crisis. It has been said of Nostell Pit, to which my thoughts compulsively return, that so closely knit is that working community that "when one bleeds they all bleed". They will feel no inclination to mock, I believe, when I say that I bleed with them.

The only appeal I can make to Government and industry in the dark uncertain days which will follow this strike is to avoid all temptation to say to the miners, "You have destroyed your own nest—now make the best of it by yourselves". Diversification of industry in the mining areas, which has been neglected since time immemorial, must be given a new impetus. There will be rancour as the economy is licking its wounds, and calling the roll, inspecting the depleted ranks. Blame will be directed, then, at the miners. Recrimination will be expressed, and that will be harmful. It is then as much as now that an understanding of their attitude will be required. The miners have felt isolated—and now they are compounding that isolation. It is not greed which is driving them now to these extremities. In their own conception it is a sense of dignity ignored, and even defiled, it is a sense of being goaded over the years by inequitable treatment. For some—and this is surely to be admired—hardship is easier to bear than injustice. Whatever misjudgments the miners are making to-day, and I do not acquit them of misjudgment, there is nothing malevolent about it, at least among those I know: it is entirely human. The lesson, or so I affirm in these closing words, is that as the rundown of this historic industry takes place, and is hastened, as I believe it must be, by present events, the dignity which is inseparable from work and work as something inseparable from dignity must be given priority. The "Whitehall Wall" must be dismantled by collaboration.

This strike, my Lords, is a combination of two elements which together are formidable. There is the mass of mainly innocent, entirely well-meaning strikers, totally convinced of the rectitude of their cause and of their conduct. They are in some cases permeated and to some extent manipulated by a far more sophisticated and infamous element, having no interest in this country's survival and nothing in common with the miners themselves. What causes me pain is my belief that by being utterly obdurate the miners are sowing the dragon's teeth of their own annihilation. They are hastening the eclipse and emasculation of their industry. The greater their apparent victory a few days from now, the greater and closer might be their eventual defeat. This present collision course must end with as good a grace as possible in some kind of handclasp.

5.45 p.m.

LORD ARWYN

My Lords, it would be ungracious of me not to congratulate the noble Lord, Lord St. Oswald, for his sympathetic remarks with regard to the miners in Yorkshire. His speech had that ring of sincerity which I hope will not be lost in the annals of your Lordships' House.

The problem of unemployment is universal and its solution is made more difficult in democratic countries, as the noble Lord, Lord Drumalbyn inferred in his speech, which was a masterly postmortem report. The ability of a democratic Government to minimise unemployment is the criteria of its efficiency. Is it beyond us to set a pattern to other countries with the same problems? We are now in our own period of crisis. The effect of this is going to be very serious and it will be beyond the reach of any political magic to solve the problem in the near future. It is the duty of all of us who have experience and industrial responsibility to offer suggestions.

The first step is to take action to improve morale and prove to our people that unemployment has become a top priority problem. I suggest that the following steps should be taken immediately. First, in fairness to all concerned, we should stop all immigration of white, black and coloured people until we regain far more stable conditions. This is not racial prejudice. It is plainly unfair to impose on them the uncertainty of employment in a strange country. Secondly, we should re-introduce investment grants for wider areas than the previous limitations and for a minimum period of five years. Also the I.R.C. should be reconstituted. Thirdly, we should re-introduce National Service with an option to serve in the Armed Forces, or a National Social Service Force devoted to improving a wide range of amenities, welfare problems, reclamation of waste land to increase our agricultural production, and other social developments such as fighting pollution. This would enable existing volunteer organisations to participate to a far greater extent than is now possible and help to alter the whole attitude of our young people and restore their faith in the future.

Fourthly, far wider publicity is required than at present to inform the unemployed of vacancies in non-productive industries and services. The lists in Labour Exchanges are far too restricted in the range of their publicity. The Government should take up regular space in the national Press at least once a week giving a list of vacancies with rates of pay, conditions of work and prospects; also giving additional information about available accommodation. Fifthly, a crash programme for hospital building is overdue. The stresses of modern industrial life have resulted in an enormous increase in mental diseases, and a serious reduction in the number of beds available to cope with other illnesses which are curable and restore the health and efficiency of a patient. Sixthly, a far wider conception of retraining is required to develop skills in more than one craft. Trade union co-operation and experience would be invaluable in achieving the maximum versatility to enable men to switch into other industries where there is a scarcity of skilled labour and no question of the unemployed worker endangering another man's job. A readjustment of attitudes is required on both sides of industry.

My Lords, we are told that we must concentrate on an ever-increasing economic growth and provide for a population of 70 million by the end of this century. This means a 25 per cent. to 30 per cent. increase in imports of food unless we can maximise our own agricultural production, after the reclamation of land which I referred to earlier. The utilisation of every possible acre of waste land has now become an urgent matter. Has any study been made of our requirements by the end of the century? This is another aspect of long-term policy affecting employment. We must also ask to what degree have the Government discouraged emigration by our young people, especially those who have acquired higher education and been trained in crafts and professions at our expense. They are welcomed in Australia, New Zealand and Canada, and have to be replaced here by West Indians, Pakistanis and Indians. I refer to hospital staffs as a well-known example. This crisis forces us to think in patterns we would not consider under less pressure.

The time is also coming when the whole concept of family allowances will need drastic re-examination. We may have to discourage the increase in birth rate sooner than we now realise, the allowance to be paid only to families with not more than two children, and increased where there is only one child. "What has this to do with unemployment?" one might ask. The reply is that modern techniques of automated production will require increasingly fewer operatives per unit of production. The emphasis will be on the quality and skill of the craftsman and his ability to operate and control sophisticated processes, whether it is a mechanised coal face or in the manufacture of advanced systems of instrumentation, in which I have had experience. We are already requiring much higher degrees of skill than we visualised even ten years ago. Our requirements will be for even higher skills which can be achieved only by higher education designed to develop latent or inherited aptitudes in our children. We tend to neglect the value of inherited skills by failing to recognise them and encourage their development early enough. The smaller the family, the better is the child's opportunity, and the less the strain on parents.

The present crisis, as before, is largely due to a failure to assess the future intelligently. We may also be suffering from an inability to face hard facts. There is no short cut to solving to-day's problem, but we can take steps to ensure that it does not go on recurring as much as it has done in the past. The time has come for the Government to declare a full-scale war on unemployment. If our lives were in danger there would be no shortage of money, personal sacrifice or capacity for dedication; no class distinctions, no squandering of money on projects which are of doubtful benefit. The total of millions of unemployed in the 'thirties vanished when war was imminent. We want to restore that which my noble friend Lord Beswick described as the old blitz neighbourliness. If we can at least realise the consequences of the catastrophe which now faces us, we must resolve to declare total war on unemployment. It requires mobilisation of every means at our disposal. I therefore suggest that we set up regional committees to cover all the country, to report on the pattern of industry and plans for selective expansion, and the reasons for inadequate employment in each region. Such committees are better composed of responsible industrialists, responsible members of the general public, and experienced trade union representatives. Such Government Departmental assistance as may be needed could be invited in accordance with requirements. If the analysis we require were left to the Department-conscious officials we would soon become bogged down by protocol because of the limitations of Departmental philosophy and policy.

My Lords, we need to declare war on unemployment. I keep on repeating this; I hope it sinks in. It is war. And everyone must be involved in the operation in order that we shall win. It means an entirely new attitude. The furies generated by accusations, the exchange of epithets and bombastic declarations are all negative exercises and a complete waste of time. Positive action involving everyone in seeking a lasting solution is the only way to relieve the tensions now building up to crisis levels. If they are not released very soon an ugly word—"revolution"—which is gaining currency insidiously, will be used openly and become accepted currency. There are forces the strengths of which have not yet been shown openly, who do not belong to any of the three established political Parties, which are nevertheless waiting to be unleashed. Warnings have been given from time to time in the Press. As a nation we like burying our heads in the sand. The exercise is a form of conceit or boast not to "get the wind up" easily. We like it to be referred to as "British phlegm". Many times in history this attitude has cost us dearly, and unless we now alter it the cost might be greater than we can imagine. If we take the old adage, "Prepare for the worst and then it does not happen" as a clinical exercise, we shall be far better equipped to face the stress of the computer age, and to restore confidence in our people, especially the young.

5.58 p.m.

VISCOUNT CALDECOTE

My Lords, all who work in industry must inevitably be involved in this terrible situation of unemployment, but because some of the things I may say later might be taken to apply particularly to the part of industry in which I work I should like to declare an interest. I agree with a great deal of what the noble Lord, Lord Beswick, has said. I am glad he did not claim that unemployment was a Tory plot. Neither is it a capitalist managers' plot to bring the unions to heel. Many of us who have been involved in closing factories or sacking large numbers of men know too well what an incredibly distasteful and unpleasant task that is to want to bring it about. But long-term unemployment is a terrible disease in an industrial society. I do not believe there is any need to go into great detail in analysing figures. They are too high and the trend is very bad indeed. I think that that is enough to say on that subject. Much of industry is working below capacity, as other noble Lords have pointed out, and a very large increase in demand for the products of manufacturing industry is going to be needed before there will be a big change in unemployment. So I do not believe that this present situation of unemployment is a transitory one.

Therefore, we must try to diagnose the cause. First of all, there has been a world recession in trade. It has led to pressure to reduce numbers employed, owing to falling orders. The big increase in wage rates which has occurred over the past few years has intensified the pressure to reduce the numbers employed in order to keep costs within bounds. Unfortunately these high wage rates have come in the absence of adequate past investment and therefore they have caused unit costs to rise, made us less competitive and brought further pressure on order books. That cannot be denied. The figures support that for the latest period that I have been able to check, from 1964 to 1970. Just to take two comparisons: the average annual increase in wage costs per unit output in the manufacturing industry in the United States of America and Japan was about 2 per cent. per year over that period—a total of 12½ per cent. over those six years. In Britain the increase in wage costs per unit output was 44 per cent. per annum, a total of 31 per cent. over that six-year period and about 2¼ times as much as in, for instance, Japan.

The noble Lord, Lord Beswick, and yesterday, I believe, the noble Lord, Lord Shinwell, and perhaps to-day the noble Baroness, Lady Wootton, seemed to suggest that everyone ought to get an increase in pay on the grounds of equity. The noble Lord, Lord Beswick, put great emphasis on fairness. I respect him tremendously for his integrity, his honesty and his sincerity and I know what he means by "fairness", but I do not believe that a policy based on something so subjective as fairness can really be soundly based. There are surely two crucial factors: the big increase in wage rates relative to productivity—although I know productivity is improving—and secondly, the low investment in British industry in past years. Again I will give one example. In the United States of America and in Japan there are £9,000 to £10,000 of capital assets behind each employee; in Britain, in the biggest, most capital-intensive companies, there is between £2,500 and £3,500, or in other words two and a half to three times as much in Japan, one of our greatest competitors; and Japanese wage rates are about the same as ours are now. In America they are about three times as much, so we can compete; but in Japan the figures are about the same and yet they have about two and a half times to three times as much capital behind each employee. This means that they are very much more competitive, and this has had serious results in, for instance, parts of the electronic industry, where factories have been closed down and therefore there has been increased unemployment.

My Lords, that is a brief sketch of the diagnosis, but what is the cure? First we must ask why such a big increase in wages was conceded in the past? In the first place it was conceded because it could be—the money supply was there and the increased costs could be passed on to the consumer in higher prices. That led to inflation, which was accepted, sadly, by the last Government. It was conceded because, as I have said before in your Lordships' House, the pendulum had swung too far and had given too much power to the unions in negotiation. In the years gone by, as I have said before, the pendulum had swung too far in the opposite direction and this Government have been trying to do something to bring that pendulum back to a more reasonable central position. We are now seeing the results of those happenings in the years that have gone by; the results of increased costs which are bound to be harmful in the long term.

Secondly, why has investment been too small? There are two kinds of investment, one for profit and one for social welfare, but too often we confuse the two, especially in nationalised industry. Investment must have a clear objective, and I am glad to say that at long last, in the railways, for instance, the Government give subsidy payments to the railways to keep open lines which it is necessary to keep open for social purposes, so that the rest of the industry may work on a proper economic basis. However I believe we still confuse ourselves on these points, and we have had confusion in other industries. It might well be that the present tragic dispute in the coalmining industry would have been avoided if a clearer distinction had been made between social policies and economic policies.

Incentive to investment must also have the desired effect. I believe it is commonly agreed that our development area policy has fallen far below our expectations. Unemployment is desperately patchy. I know a factory in the London area where one cannot recruit a single man, whereas we all know the great problem of the North-East and elsewhere. Incentives to investment have been concentrated on fixed assets in the past, for buildings and plant. This has meant that very often new industries have been set up in the development areas which were capital intensive and not labour intensive, which does not help the problem of unemployment. The regional employment premium was supposed to counter that situation, but it has been relatively unsatisfactory and ineffective. I believe the reason is that an effort has been made to tackle symptoms and not causes. Surely we ought to look more carefully at what the root causes are that inhibit people or companies from investing in development areas. Are those causes housing, schools, the general environment, communications or the need for retraining? Perhaps it is something else. We do not really know what the root causes are; all we do is to say, "This is a horrid area so we will try to bribe industry into it".

The reason for investment is normally because one wants to make more profit, but sadly the attitude to profits in Britain has been ambivalent. Even now Government-controlled purchasing emphasises the need for controlling the profit and ensuring fairly low profits rather than value for money. The last Government had a disastrous policy in regard to profits. I remember so well the last Chancellor of the Exchequer saying that if profits increased unduly he would "siphon them off". What a splendid way to encourage industry! What a splendid way to encourage investment in industry! You cannot have investment without a fair reward for it, and all the figures indicate that the profits from investment in Britain are far too low. I believe the last Government did a great disservice and made a great contribution to the unemployment problem in these ways by their attitude to profit and by the implication that they would prop up any big firm, even with incompetent management or un-co-operative and idle employees. That undermined the confidence of industry in investment. Again I will give two quick figures: in the United States of America and Japan the profits earned per employee are between £500 and £600 per annum, whereas in this country they are between £200 and £300 per annum.

My Lords, the other great misjudgment of the last Government was the discrimination against the service industries. This was a very real tragedy, because in my view it is unlikely that manufacturing industry will ever again be able to employ the numbers of employees that we were employing six years ago, for reasons given by several noble Lords—improved productivity technical advances and the like. So where are these people to find jobs? I believe many of them would like to find jobs in the service industries, but the pressures of selective employment tax have been very damaging to many industries.

It is important to diagnose, to look to the past and to try to learn lessons for the future, but it is all water under the bridge; and the real question is, what do we do now? Of course investment is important, and the Government are putting great emphasis on it. Of course it can help capital industries to expand and employ more people, but, as other speakers have said, it needs the restoration of confidence. I believe it will be very slow in its effect on increasing employment, and we have to look for a much quicker solution than that. I do not believe we want a shorter working week. We do not want longer holidays, or earlier retirement in general, for there is work to be done, and here I very much agree with the noble Baroness. Lady Woolton; it may not be perhaps a very conservative approach, but I believe it is a practical one. We have to build the houses, knock down the shims, build hospitals, modernise the primary schools, construct sewage works, improve the environment, perhaps even bury the power lines that go galloping across the national parks. Concentrate the work where unemployment is high and it will have a twin effect of providing employment in those areas and improving the environment, and perhaps it will encourage people to go and work there. Surely that is possible now in a way that has not been possible for years. We have got the labour, we have the money available and our balance of payments and the currency reserves are strong.

I believe that one difficulty in the building and construction industry is shortage of trained labour. Surely we ought to put priority in intensifying the training activity there. But do not let us have great long courses, courses which sometimes seem designed to keep people out of the employment exchanges simply because they have a long training course. Let us have short, sharp, effective training courses and get people on to the job of improving housing and improving the environment. Finally let us encourage the service industries to expand again, so that we can get people to do the jobs that we want to see carried out. We can afford to do that now also.

To sum up, of course in the long term the Government are right to put such emphasis on investment and also on controlling inflation, but in the short term I believe we must devote our efforts to putting work in hand as quickly as we can on the housing, slums, hospitals and other things I have mentioned, and encourage the service industries. This unemployment is a great and tragic disease. It will need great determination and self-discipline to cure. We have the resources. Surely we do not lack the determination and the self-discipline.

6.13 p.m.

LORD HOY

My Lords, I rise to say something particularly about Scotland, but may I first be permitted a word or two on the general debate? Like my noble friend Lady Wootton of Abinger, I feel that a noticeable feature of the debate has been the mention from nearly every noble Lord opposite of wages as being one of the great causes of our economic troubles. Hardly a noble Lord has spoken who has not raised this particular item. There has not been a single word about dividends; there has not been a single word about salaries inside directors' offices—not a word of this kind. It has been all about the workers, and this is what disturbs them.

Think of a miner going home from his work; he has done his day's "darg", and at the end of the week he takes home £18—possibly less. He does not like to be accused of really stultifying the economic efforts of this country. But when he gets home he picks up his newspaper and reads all about battles that arc going on, not between the employers and employees but between the different companies inside this country. He reads of one set of tycoons trying to wrest power from another set, and about millions of pounds apparently being produced to win over the shareholders of one company as against another. And he does not understand why, when all this money is apparently there, he should have to carry the burden of the accusation that by asking for some increase in wage he is going to wreck the whole economic output or life of this country.

Then the workers are told that they have to produce a little more. I am all for output; I have argued all my life that people cannot enjoy what has not been earned. But I think of an industry with which I was associated, in a paid capacity, as a Parliamentary Secretary; I mean the agricultural industry. No industry that I know of in this country has a greater record, from the output point of view, a greater record of productivity, than the agricultural industry. But I am bound to say that that record is not reflected in the wages that the farm-worker takes home at the end of the week. So all I am saying to your Lordships to-night is that sometimes we find answers to our problems that are just a little too trite; the problems are not as easy as they appear to be.

VISCOUNT CALDECOTE

My Lords, is the noble Lord denying that the increase in wage and salary rates (I include salaries with wages, of course) has had an effect on unemployment, because anyone who works in industry must know that it has had an effect. One has had to take very stringent steps to keep one's head above water at all; a factory employing 1,000 has had to employ 800, so that they do not go out of business completely because of the competitive position.

LORD HOY

My Lords, I cannot understand why the noble Viscount should get into this position. First of all, I never said it, and he must not put words into my mouth and then ask me to deny them. If I wanted to, I would take up the noble Viscount on the argument he is putting to-night; I do not altogether agree with it. What I am arguing, if I am arguing anything, is that there are far too many people who seek to place the whole responsibility on the wage-earners of this country. Let those people now have a look at their own performance inside industry. May I return to what I said before and then I have finished with this point? Let them also think of the effect on workers when they read about one company battling with another and about millions of pounds being involved in the takeover. The workers do not understand it, and certainly they do not like it. And at the same time they are accused of having a wage demand which is inflationary. They simply do not understand it. I have given way to the noble Viscount, but he had better not continue, because I want to get on with what I am here for, and that is to put the Scottish viewpoint. But before I forget, I want to say how much I enjoyed what I thought was the outstanding speech made by my noble friend Lord Beswick in opening this debate. It was one of the finest speeches that I have listened to, and I want to put that on record.

In Scotland we have for a great number of years had a very troublesome time with unemployment, and economically we have not done well. We are faced to-day with this appalling problem, and I put the figures on record simply to make the comparison of how things have worsened. In June, 1970, we had roughly 80,000 unemployed; to-night we have about 150,000. So for every unemployed person we had 18 months ago, we have two to-night. That is the problem which confronts us. But these figures reflect what are supposed to be the normal trading relations of the country; they take no heed of what has been happening in the past ten days or few weeks with the mining strike.

I should have liked tonight to spend some time on the long-term prospects for Scotland and the Scottish economy. At present, Scotland has 150,000 people out of work, with all the poverty and misery that that situation brings about. I only wish that noble Lords could appreciate what it means that one in ten of all the men in Scotland tonight are unemployed, one-tenth of the total male registered unemployed. It is a shocking figure, and it means poverty and misery for thousands of people, their wives and their families. It is to that point that I want to draw the attention of your Lordships' House. I ask the Government what specific proposals they have for tackling the problem.

First of all, let us consider the position of the development areas—and in this respect development areas in all parts of the country as well as in Scotland, because in every one of them there has been a continued deterioration so far as employment is concerned. A recent study has been undertaken by H. H. Scholefield and J. R. Franks which was the subject of an editorial in the Scotsman on Monday of this week, and there was one paragraph which I will quote and which puts the matter very succinctly and the case I should like to make. The editorial says: Particularly timely are the findings of H. H. Scholefield and J. R. Franks, based on their study of investment incentives and regional policy, published in the current issue of the quarterly review of the National Westminster Bank. They make an objective assessment of the value of Labour's investment grants and of the changes introduced by the Government. Their central finding is that 'the recent changes have virtually eradicated the advantages of investing in development areas, as compared with similar investment in non-development areas, for plant and machinery. Since plant and machinery constitute a significant part of total manufacturing investment, the investment opportunities of development areas may have been seriously affected.' The Scotsman then comments: They stress that if the Government want to reduce unemployment significantly—and of this there can be no doubt—they will have to increase the level of investment in the development areas. In their view the changes they have made are not consistent with this objective. If the results of this study are correct, what action do the Government propose to take to rectify the present position? We are entitled to know from the Government, if they have been giving this long consideration to this problem, whether they will reintroduce investment grants. I say to them that if they come to the conclusion that investment grant is the correct way of dealing with the matter, let them not be deterred by the fact that it was a Labour Government who did it first. It may have been that when they thought out the alternatives they thought that their policy was better than ours, but I think it is proved beyond any shadow of a doubt that the Labour Government's proposal was a much better one. The reintroduction of investment grants is now supported by a large cross-section of public opinion in Scotland and elsewhere. They see in it the one good way of encouraging industry to come back. The importance of investment grants cannot be overstressed with regard to the shipbuilding and engineering industries.

LORD DRUMALBYN

My Lords, if the noble Lord will allow me to interrupt just for clarification here, is he suggesting the reintroduction of investment grants only for the development areas?

LORD HOY

No, my Lords, what I am saying is—and if the noble Lord will wait a little I shall have another proposal to make which will link these things up—that they are one way of doing it. If the Government are going to withdraw investment grants in 1974, then obviously it is no inducement to anybody to invest if they know that two years ahead it is going to be taken from them.

I would also ask the Government to have another look at their policy on regional employment premiums. I am told that the value of these premiums has fallen by about 25 per cent. since their inception. This is a device which gives assistance not only to incoming industry but to the industries already in the areas, so by this one method you can in fact aid both. I would ask the Minister to have another look at these matters and see whether they will change their policy with regard to both of them, because I think that that would make a distinct contribution to economic progress in Scotland.

I do not intend to detain your Lordships very long, but there is one smaller matter I should like to raise in this connection. The whole of Scotland to-day is treated as a development area, with a section of it described as a special development area, but at the other end of the scale there is a part which is not called anything at all except a "grey area" or an "intermediate area". As the noble Lord knows, I refer to Edinburgh and Leith. When this decision was made there may have been a case for it, because, as anybody who knows anything about industry and employment in Scotland knows, the unemployment total in that area at that time was very small compared with the figures in the rest of the country, but the investment grants and the R.E.P. on top of it made the position of industry inside Edinburgh and Leith quite intolerable. I raised this point even with my own Government. Indeed, on one occasion I got my colleagues at the Treasury—I will not say with wholehearted approval, but at least we got a result at the end of the day—to differentiate between Leith and Edinburgh and create an intermediate area.

One has only to look at the figures, and I ask the Minister to do so. If you look at the figures to-day you will see that the position in Edinburgh and Leith has got progressively worse. It seems to me to be foolish that this one part of Scotland should be left out of development area status. Indeed, as I sought to convince my own Government, if you except one dock authority—that is, Leith Docks, which comes under the Forth Port Authority—every single dock from the North of Scotland down to Hull qualifies for grants but this one particular dock. It is just a nonsense in itself. I said it before in the days when our Party were the Government. I simply repeat to-night what I said then, and hope that the Minister will be able to take some action on it.

We all welcomed the British Steel Corporation's decision regarding Hunters-ton, announced by the Secretary of State for Scotland. We welcome this, but we all know, and nobody better than the noble Lord, Lord Polwarth, that this decision, although we welcome it, we regard as merely a preliminary. There is a much greater consideration at stake at Hunterston, and whether the Steel Corporation, or someone else, is holding up the decision I do not know. I think we have exercised great patience in this respect—and here I talk about Scotland as a whole. I hope it is not asking too much of the Minister to say, when he replies to-night, when we can expect a decision with regard to this proposal.

May I also ask about another part of the country? When are we going to have a decision on the proposed nuclear generating station at Stake Ness, Banffshire? In January, 1971, as I understand it, tenders were invited for its construction. It is a construction of a special kind. Since then we have not heard anything about it. Apparently once more we have to await the decision of the Government. I am told that in the year or two that lie ahead the margin between supply and peak demand will I indeed be in a very dangerous situation, and that if we do not do something very soon we shall not be able to meet the demands of industry in these areas. If we are to get a decision, it is essential that we get it quickly. I should like to know from the Minister just how many jobs may be involved in the construction of this particular station, and indeed how many during its ultimate operation.

Finally, there is one matter that really is of outstanding importance, and that is the question of the oil finds in Scotland. I do not think that we have paid sufficient tribute to a certain Government Department, which in fact had a considerable amount to do with the exploring of those areas. Indeed, one of the most satisfactory committees on which I sat during the course of my six years in the Ministry was the one concerned with this subject. We are indebted to them for the job they did, and as a result of that these explorations are being made. But we should like to know a little more about the decision announced at a meeting on Monday by the Parliamentary Secretary at the Scottish Office.

I am not quarrelling with the reason for the meeting, which was apparently held between local authorities, oil firms and Government Departments to plan the production and use of oil, but I want to know what the Government decided to do, because this oil will be of tremendous value, not only to Scotland but to the country as a whole. The labour will be employed on the manufacturing and refining side, and we should like to know who was represented at the meeting. If this committee is to be permanent, and I am told that it is, I should like to think that the workers will be represented on it. It may well be that the Scottish Trades Union Congress should be represented. In view of what is happening in Scotland, the Minister can see that most speedy action is called for if we are to stop the poverty and considerable misery which to-night exists in that country.

6.32 p.m.

VISCOUNT AMORY

My Lords, it is always a great pleasure to find myself following the noble Lord, Lord Hoy. I do so to-night in a state of great trepidation, because I am still a director, though in extenuation I must say that I am very rapidly being phased out. I remember that 15 years ago, when the noble Lord and I sometimes found ourselves arguing in another place, we were always glad when we could find some common ground between us, as we often did. I should like to say straight away that I agreed entirely with what he said about the productivity of the agricultural industry, of which it has every reason to feel very proud. I entirely agreed with him also, about the deplorable effect of take-over bids on the morale within industrial concerns.

I find very little to quarrel with in the terms of this Motion, but the reason I cannot vote for it is because I do not agree with the allocation of blame. The present state of unemployment is deplorable, and I believe that more action than the Government have yet taken will prove necessary. I should like to apologise to the noble Lord, Lord Beswick, for the fact that because of another engagement I could not hear his speech to-day I hate speaking when I have not heard the first important speech, but I shall certainly read the report of it in Hansard. It must be extremely embarrassing for any Member of the Opposition to criticise the Government's general handling of the economy, in the light of their own Party's sad record when they were in Office. However, I do not want to argue that point to-day, because I think noble Lords who know me are aware that I am what might be called a "consensus man", since I believe that so far as possible consensus solutions have to be found to our problems, including our economic problems. I do not see the noble Lord, Lord Balogh, here, but he might jump with surprise if I said that I entirely agreed with that point which he made, though not perhaps with all his other points.

I am going to say nothing about the present emergency, because I can think of no words of mine that can be helpful. We listened to the speech of my noble friend Lord St. Oswald with deep interest and deep sympathy. At the risk of tedious repetition, we should do well in these debates to remind ourselves of the four main aims of any Government's economic policies: a high level of employment; a price level which is as stable as one can get; a sound balance of payments; and a sustainable rate of expansion. The emphasis put on each of those is bound to vary from time to time, according to the current condition of the nation and according to which ill is felt to be most painful at a particular time. There is only one bright point at the present moment, and that is the very big gain in productivity which has been achieved in the last few years. That was badly needed and is therefore a gain, but because it has come rather suddenly and later than we hoped we are now paying a very high price in human terms for that advantage. But it was an essential piece of progress that had to be achieved.

At the present moment, when we are all deeply concerned about the level of unemployment, there is a temptation to say, "Let us not worry about the other factors". Some people are saying that we should let inflation and balance of payments problems go, and should concentrate on the cure of unemployment. On that I would say only that we must be clear that devaluation—referring to the balance of payments again—is not a painless alternative to internal deflation. After all, it is a deliberate way of lowering the nation's standard of living relative to other nations. So do not let us look on that as something which we can just take in our stride without worrying about, because in itself it is not a good or helpful thing. Anyway, I think we all accept, as the Secretary of State, Mr. Carr, himself said, that the present level of unemployment is quite unacceptable and that policies must be urgently directed to its reduction. It is unnecessary to say that we must steer clear of ill-considered action, which would again put the nation back on the course of violent inflation, because that would be the worst service we could render to those in the country who need help most, including the unemployed themselves.

What are the factors that must be taken into consideration at the present time? First, as my noble friend Lord Drumalbyn pointed out, we must remember that in 1971 the Government initiated the largest measure of reflation that we have yet experienced. Other things being equal, that will unquestionably have some effect on the expansion of consumer demand during the current year; how much we cannot be sure. Ten years ago it would have had a dramatic effect, but many factors are now present which were not present then. So that is an irrelevant consideration, and it is no good comparing to-day's figures with the figures of 10 years ago. Unfortunately, I am afraid that there are some factors that are now standing in the way, and that will continue to stand in the way, of any quick or assured reaction to reflationary measures. First of all, as the O.E.C.D. Report reminded us, the growth of demand in the United Kingdom over the past few years has fallen short of the growth in productivity. The result of that, quite clearly, is that in much of industry there is spare capacity which, in the judgment of the managements concerned, is sufficient to meet any foreseeable increase in demand over the next year or two; hence, their reluctance to rush into additional new investment expenditure. This attitude could change quickly, but I am not sure that it will.

Another factor is that the rapid rise in the cost of employing manpower at all levels has undoubtedly priced certain jobs out of the market, probably permanently. We just have to accept that and think of new jobs to take their place. As noble Lords have pointed out, the present bout of unemployment is in some ways of a different structure from the others we have experienced since the War. When we look back at the previous recessions and increases in unemployment, we see that the unemployed were fairly quickly re-absorbed when things turned up again. But I am afraid that this time that re-absorption will require far more massive action. One inherent difficulty is that by far the most cogent incentive for industrial investment is the pressure of clearly foreseeable increases in demand. I am afraid that industrialists do not take as long a view, and peer ahead into the future as far when they decide their investment plans as they would sometimes give us to believe. Economists, I think, would probably agree that the multiplier effect, as it is called, can be most cogent if it started at the consumer demand end; but against this we have got the experience of the past 25 years that a consumer boom can very easily and quickly become excessive and out of hand—and that leads, surely, to "Stop-Go" again.

So, my Lords, what can be done? Should the Government rest on the substantial reflationary measures which have already been put in hand, and hope that in time they may prove sufficient? Nothing that they can do now, I fear, can produce an effect in terms of greater employment over-night. Nevertheless, I am pretty sure that more must be done, even at some risk. If our national standard of living resumes its rise, with a corresponding increase in consumer expenditure, I feel sure, as some noble Lords have said, that it is the service industries more than the productive industries that are going to have to absorb, and can and will be able to absorb, many of the unemployed. Productive industry is presumably going to continue to replace manpower by machines. I thought my noble friend Lord Caldecote put this point very clearly.

It is therefore to the service industries, I think, that we must look for the major re-absorption over the next five years; and, if that is true, then I think it shows the extreme stupidity of S.E.T. As has been said, the service industries are much more labour-intensive than are the productive industries. This conclusion, if true, carries with it, I think, one perhaps not very welcome consequential for the Government; namely, that because so many services are sponsored financially by the public purse, it is going to mean enormous calls on public investment and Government expenditure, which are bound to increase. I can see no alternative to this; and I think the Government must be prepared for perhaps massive increases in public investment in a variety of fields. A reminder must be given here, I think, that changes in public investment programmes (as I am sure the noble Lord, Lord Diamond, will remember) take a very long time to turn themselves into actual cash expenditure, and no changes in programme now are likely to yield results in actual cash expenditure in shorter time than 12 months or even 18 months. So allowance has to be made for that.

The second thing, I think, is that the Government must be right in expanding training and re-training, as they are proposing. The difficulty here, it seems to me, nowadays, is to decide precisely on the content. It is easy to talk in very big terms of numbers for training and retraining, but it is very difficult to decide on the content of the training programmes. I think the building industry is a clear case for expansion; and, again, I liked what my noble friend Lord Caldecote said when he suggested, "Let us have short brisk courses rather than very prolonged ones". We should have short courses for certain purposes, and long ones, of course, for others. Thirdly, the expected rise in consumer spending appears to be held back at present by a very large (an unexpectedly large) rise in personal savings. Whether that is going to continue or not, we do not know; but it is a factor that must be allowed for, because it has been one of the reasons, I think, why estimates as to the likely effect of consumer spending have proved wrong.

Saving, of course, is a first-rate thing in itself, but you cannot have it both ways: its effects have to be allowed for. I think, therefore, my Lords, that unless by the time of the Budget—and the Budget is getting fairly close now—there are clear signs of a rise in consumer demand, the Chancellor of the Exchequer will have to release still more resources, even at some risk. I do not imagine, my Lords, that he will listen to what I say at this stage. I will not go into the reasons why, but I had the honour of having him as my Economic Secretary at one time, and I should like to pay a warm tribute to him as Economic Secretary and as Chancellor of the Exchequer, too.

The next point I should like to make is that I think the Government, the C.B.I. and the T.U.C. must really get together and explore common ground. I support what my noble friend Lord Watkinson said about a joint inquiry into the nature of unemployment. As my noble friend will agree, that will not produce immediate effects, but it would be a sound thing to do. But the welfare of the national economy can only be achieved if all these three—the Government, the C.B.I. and the T.U.C.—are pulling in the same strategic irection, whatever tactical differences there may be between them from day to day. I should like to say that I was one on this side of the House who regretted the complete closing down of the Prices and Incomes Board. I do not think it was achieving a lot in its later stages—you can riddle it with criticism—but I think it achieved something. I think I would have put it by and kept it ready, because I believe that something of that sort will have to be used, with rather different terms of reference and for different purposes. I should like to prophesy with absolute confidence that we must come back to that, among other instruments, for use in the future.

Finally, my Lords, what in any case is going to be needed is some hard and deep thinking about some of the economic assumptions which we have accepted in this post-war period. As an example, and in passing, I will mention only the sacred cow (if I may refer to it in that undignified way) the g.n.p.—the gross national product. I believe the time has come to question the validity of the gross national product and the domestic national product as a selfsufficient measurement of the nation's economic welfare. I think that any given increase in the d.n.p., for instance, which on balance is a good thing, may relieve some problems, but when we look at it closely I think we shall see that such an increase almost certainly aggravates other problems. So, by itself, it is not a completely comprehensive simple measurement of the nation's economic welfare. I think that when you look at Japan you see that some of the problems which have been generated in that country by a very rapid increase in their g.n.p. are going to produce the most appalling social problems for Japan in two or three decades' time, if not before.

I think, my Lords, we need a new Lord Keynes to re-interpret economic problems for us in the light of our search for a fuller and more satisfying pattern of life. As we sort out our ideas we might find that some of the efforts that we are putting into the maximising of production of physical goods may be based on a false perspective and could bring greater happiness and welfare if otherwise deployed. Meantime, in the shorter term it must be right to treat the unemployment problem, as it is at present, as a most urgent one, and apply every remedy that can be contrived, short of those that must be counter-productive in intensifying the fever of inflation, with all the social injustices which go with that.

On the broader problem of containing inflation and making the best uses of our national resources, I should like, finally, to record my personal view that, in our modern society, power bargaining by groups or industries must eventually be replaced by more sensible and civilised means. I agree, again—this is a surprising day for me—with the noble Lord, Lord Balogh (he is not here to sustain these shocks) on that particular point; and I should also like to say (and he is not here, either) that the noble Lord, Lord Brown, has often reminded us that in this field the crux is differentials. I believe that it is in settlement of differentials, that sooner or later we must come to a system more sensible and civilised than "power scrapping", if I may so call it. The road to devising such a system will be long and arduous; but I am convinced that in the long term it is only thus that we shall find the answer to some of our besetting problems.

6.51 p.m.

LORD RHODES

My Lords, I am delighted to follow my old friend Lord Amory. I remember him as one of the best give-away Chancellors in another place—far better than the noble Lord who is going to speak in a few minutes, Lord Thorneycroft. I think the noble Viscount was Chancellor in 1959. It was most interesting to hear him talking today. He gave a lot of very good advice as he always does. The opening speech to this debate by the noble Lord, Lord Beswick, was first-class. It was couched in very tolerant and steady terms and my noble friend accepted the blame for some of the things that have happened on this side as well as accusing the other side of misbehaviour.

But this is indeed a new situation. In my long life I have never known anything quite like it. The sentiments that are being expressed now are quite different from those expressed between the wars, and some of us had the experience of very heartbreaking unemployment then. Anybody who experienced it personally cannot be but emotional when this subject is debated. Now it is a different world altogether. It has been said so often this afternoon. The last remarks of the noble Viscount were absolutely bang on the mark when he talked about the need for consideration of the differential wage problem. It is the differential wage war in all classes of society which is undermining and upsetting the stability that we once knew. What is worrying me is that nobody has the courage to get down to this problem and think it through and be honest about it.

The other day I stood by the cabin of an engine driver coming down from Manchester as I sometimes do. He had driven a locomotive down from Manchester in two hours and forty minutes. There were 500 people on the train. Who is going to say what value that man is to the community? This is what we are fundamentally talking about to-day: what value to the community in which they live are people in all walks of life? This man had driven 500 people from Manchester by train. He said, "Where do I stand? My basic wage is approximately £1,450 a year. Two people doing a quarter of my work, coming down from Ringway as pilots get £9,000 apiece. There are others on the plane. What should I do, Lord Rhodes? Should I agitate? Should I claim that the differential here is all wrong? What should I do?"

My Lords, sooner or later this differential wage war will have to be dealt with whether by the unions or the property manipulators. This is inevitable or we shall be destroyed. There is no doubt about that. We want to get that right into our heads. I did not agree with what the noble Lord, Lord Drumalbyn, said about the reflation, as they call it, and what they are trying to do with it and what has been done with it. Is there any doubt about the reason why people are saving their money out of the reflation? The answer is that reflation is given to the wrong people. I should like this question answered. Is it not a fact that since 1970 people with incomes of up to £22 a week received tax relief of £1 a week, while those with incomes of £1,500 a year received relief of £25 a week?

VISCOUNT AMORY

My Lords, if the noble Lord will allow me to say so, when I was talking about savings I was thinking of national savings which, as the noble Lord knows, are extremely broadly based. It is the fantastic improvement in the national savings figure to which I was drawing attention.

LORD RHODES

My Lords, I accept that and I accept that my speech will be made briefer by many things which have been said this afternoon on both sides of the House. The old orthodox remedies that up to now have been regarded as sufficient are not working. The greatest inflation that I remember has been taking place. During the last few years from 1970, and under the most generous of estimates, according to my figures, it shows not more than 1 per cent. on the true growth rate. This is accompanied by an increasing number of people out of work. This vast increase in unemployment has made little contribution to curbing our inflation. I should not put it at more than 1 per cent. It is all very well for people to dissociate themselves from the old idea that there was a relationship between the level of those out of work and the speed of wage inflation. There used to be a relationship between the two because it made those in employment reticent about asking for more for themselves. They were safeguarding their own particular positions inside their own companies. But it does not count at all any more—that is finished. At this time of tremendous unemployment we have a record balance of payments surplus in British history and a record rise in the nation's currency reserves. Yet have they had any real influence on this position of unemployment? No!

It is plain to see that both sides of the House need to have more common understanding about some of the problems with which we are faced. I always remember the importance that was attached by our Government to the fact that more people were wanted in productive industry and should be winkled out of the distributive trades. The idea was that if you could put them into the productive trades the balance of payments, we always used to be told, would be secure. That is quite ridiculous. We paid people large premiums to go into productive manufacture. The paradox of this situation is that as soon as another Government come in they say: "All right, this is nonsense"—and I agree with that. You should not get money for taking people on when you do not need them. A false situation was built up, and of course as soon as the cold wind blew in the economy, employees started being put on the dole. There is no doubt that the growth rate of our economy at the moment is no more than half that of the productivity rate, and if the real growth rate is low and you are not consuming more, the productivity rate will go up and you have more unemployment. It is happening now. The noble Baroness, Lady Wootton of Abinger, made this clear in a magnificent speech; I agree with all of it.

This situation is aggravated by two elements in our population: those who are over 65, and those at the bottom of the wages scale. There are 35 million adults in this country and seven million of those are old-age pensioners; and there are a good seven million at the bottom of the scale who do not get more than £22 a week. A number of the poorly paid miners are in that category. You cannot have that kind of disparity. You cannot let the "spivs" cream off income at one end, and the unions brutally saying that they are going to have more at the expense of everybody else.

Surely we are not so immature that we are going to lapse into the degrading position of accepting defeat on this matter. I am with the noble Viscount, Lord Amory, who regretted the passing of the Prices and Incomes Board. We need a Prices and Incomes Board now to deal with this next round of trouble on the basis of the differential. Not only that; we need to introduce price control, a suggestion which horrifies some people. It makes them believe that the tenets they have stuck to all their lives are disappearing. They really need not be afraid. If four items were selected out of the cost of living index and stabilised, even if we had to pay through the nose for them, it would save the day in one aspect that is at the moment receiving criticism from everybody in the country. Start and get just a few items stabilised.

The noble Viscount, Lord Watkinson, mentioned something that I have been thinking about lately, that is a reduction in the age of retirement. I do not really want to see it, but I think it is something for which we ought not to be unprepared. We should think in terms of a reduction to 62, which would mop up the legitimate unemployed. But do not let us imagine that the present machinery for assessing the unemployed is inviolate. It is hopelessly wrong and has been for years, but nobody has had the courage to alter it. Any Government coming cut of Office or nearing an Election which said, "There are 340,000 on the unemployment register who will never work again", would be accused at the Election of being afraid to stand up to criticism. I have been amazed that this Government did not see sense at the beginning of their term of Office; that they did not have a genuine inquiry such as Lord Watkinson wanted, to see if there was not a real reason why there should be a proper assessment of the unemployed. If there are people on the unemployed register who through no fault of their own are unable to work they should be put on a special register and specially considered. In my opinion that is one of the things that should be considered when the review of the situation takes place. As I said earlier, I am sorry and I think it is stupid that there are not more instances of common ground between the two sides of the House, in particular on taxation.

If I may say a word about the present dreadful situation, where we are blundering about trying to bulldoze everybody into doing what we want, I do not know how we ever arrived at the situation where fine men are now standing in picket lines, at the bottom of our industrial structure—where we and the great patriots of the past are now estranged. It is time somebody started to consider what can be done to heal this breach. Let us get down to this matter with a sense of fairness, as the noble Lord who opened this debate suggested. Everybody needs to have a re-think.

7.10 p.m.

VISCOUNT RIDLEY

My Lords, I think it will be generally agreed that this has been a most instructive and interesting debate, one of the best I have heard in this House, and I would not wish that anything I said might lower the standard of this debate. I should like first to say, without otherwise mentioning the current coal situation, how much I personally was moved by the emotional and deeply felt words of the noble Lord, Lord St. Oswald. I should like to see everything he said in his magnificent speech printed in every newspaper in the land.

There can be few people in this country, and none I think in your Lordships' House, who would not agree wholeheartedly with the first half of Lord Eeswick's Motion. There are maybe those enemies within or without this country who are delighting in the dismay which we are experiencing at this time. But I do not think any of us can fail to deplore the waste, the misery and the human unhappiness. The hour is late, and I will not elaborate on this matter.

This debate has shown, I believe, that concern for the unemployed is by no means confined to one side of the House or the other. Living, as I do, in the North of England, I would only add that we have had to accept this situation for many years as a chronic disease. As other noble Lords have said, it is far too serious a matter for it to be a Party political issue, as the latter part of Lord Beswick's Motion would have it. It is too serious because the savage attacks that each of these two great Parties are making on each other at the moment can do only one thing, and that is, in the long run, to destroy the confidence which industry and the country must have if we are to have any hope of solving the problem. It is too serious because the rising number of unemployed presents a threat to the very existence of our Parliamentary system, our democracy and our way of life. If we do not find common ground between the two Parties on which to solve this problem, then the whole country will perish, and the Labour Party will be just as much destroyed as the Tory Party.

My Lords, I submit that neither Party have had any success in the work of increasing employment. The regional problem has got steadily worse since the war. I do not think that one can accept the Censure Motion on the Government, if only because the remedies that the present Government are applying are (with some relatively minor differences, to which I shall refer in a few minutes) the same as we had during the six years of Mr. Harold Wilson's Government. The noble Lord, Lord Drumalbyn, has mentioned the relative figures. There is no point in denying that there has recently been a sharp increase in the unemployment figures. We must examine why this is so, but at the same time let us realise, and let the Opposition admit, that there was an inexorable rise in the figures of unemployment throughout their six years of office. Furthermore, I believe that they must privately admit, even if publicly they would not like to do so, that had they won the Election in 1970 the figures for the unemployed would not have been any different from what they are to-day.

LORD DIAMOND

My Lords, as the noble Viscount had made those two grossly inaccurate statements (and I am sorry he did so, because he knows that I have considerable respect for him personally), may I deny both of them?

VISCOUNT RIDLEY

My Lords, the noble Lord is entitled to his opinion, and I am entitled to mine. It is not possible as a fact to say that if the Party opposite had won the Election they would not have similar figures; and I say that they would.

LORD DIAMOND

I am grateful to the noble Lord for giving way again. The noble Viscount said that unemployment rose throughout the term of the Labour Government. I do not want to make the noble Lord embarrassed, but that is just nonsense.

VISCOUNT RIDLEY

In October, 1964, there were 341,000 wholly unemployed; in June, 1970, there were 546,000. That is a rise, if my arithmetic is correct. Perhaps I may leave that subject for the moment—having of course lost my place. I would say that had there been the same figures of unemployment, we on these Benches should have been moving a Censure Motion, but probably a good deal earlier than to-day.

I want to look more closely at the policies adopted by both Parties, and where they differ. There is a great deal of common ground, I am glad to say, and many of the Labour Government's policies have been unchanged, and even strengthened. In the field of national policy there does, however, remain one outstanding action which they took and which had the effect of creating unemployment, and that was the imposition of the selective employment tax. They must now be amazed at the effectiveness of this weapon—the massive shake-out that it precipitated. This Government have halved that tax. I think this is right, and I hope that in the Budget next month they will be able to remove the other half, and will not wait until 1973.

One of the 12 points that Mr. Wilson made in another place on January 20 was the re-establishment of the I.R.C., which has already been mentioned to-day. As this body was, I understand (and I do not claim any specialised knowledge of it), set up to assist industry to rationalise itself and shake out surplus labour, it does seem to me an odd thing to suggest at the moment; but, in any case, S.E.T. has done this very effectively indeed in the service industries, and in the productive industry not covered by S.E.T. the same process has been happening. So much so, indeed, that, in Mr. Heath's words: We are seeing to-day the same production—in fact slightly more—as two years ago, using 403,000 men fewer to do it. This is the extent of the problem we have, and this is one reason why the number of unemployed persons has risen so fast in the two years. This increase in productivity would have been a magnificent achievement if we could have found work for the displaced 400,000; and this is what we must do.

The other main reason for the increase in unemployment, I believe, is the unprecedented inflation of the last two years, a point which has been made by almost every speaker to-day. I do not think it can be denied that this is a root cause of our problems. Both public and private employers have said to themselves that where wage costs have risen higher than the price at which their product sells, then the only way of remaining in business is to reduce the labour force. In particular, as has again been mentioned, this applies to agriculture where the output prices have been decided for a long time by Government, with the result that British agriculture is more highly efficient and highly mechanised than any other nation but employs fewer and fewer men every year.

The Opposition, by their support of each and every wage claim, whether justified or not, have done their best to destroy what incomes policy this Government have. We have heard in moving terms and excellent words from the noble Lord, Lord Balogh, and the noble Baroness, Lady Wootton, of the need for an incomes policy. I think that most noble Lords would agree with this, at least privately. But we must ask what exactly this means. In the six years of the Labour Government they failed to achieve one. I only hope that between us we can somehow get together and find an answer. But there must be a common approach to the problem. We must somehow solve inflation before we can solve the unemployment situation. I have no other authority again to quote but Mr. Wilson, who said in October, 1966: Restraint in income is our only guarantee against unemployment. No one, I am afraid, can deny the truth of those words.

My Lords I should like to turn from the national scene to the regional one. Incentives have been adopted, and in this field the differences in policies between the two Parties are much less. I think that we must solve the regional problems at the same time as we deal with the national problems. The present Government have carried on the policies of their predecessors in many respects. In some ways they have improved upon the policies—as, for example, in extending the special development areas—and they have made larger sums available for all aspects of regional improvement. They cannot escape the falsehood common to all Governments when they talk of increase in public expenditure on the infrastructure. What in fact they mean, very often, is that they have urged local government to borrow and spend more money, thus resulting in increases in the rates which to some extent offset the important reductions in taxation.

There is much common ground, but one thing which this Government did on entering office and which is a great mistake—and I support noble Lords opposite who have already referred to this point—was to replace investment grants by investment allowances. I believe that, on reflection, this change is bound to be admitted as having been a failure. On the other hand, in a situation where we have absolutely no inquiries whatever for new industry in the new development areas, it is unlikely to make any short-term difference. Nevertheless, I hope that the decision will be changed in due course. I would further add that these grants, such as they may be, should be available to existing industry expanding within a development area just as much as to new industry coming from some other part of the country, or from some other country. I know of one small firm who found it necessary to move their head office from Newcastle to Manchester and then back to Newcastle in order to qualify for grant. This seems to me to be a waste of everybody's time.

The other half of Mr. Wilson's sixth point concerns regional employment pre miums. This is a cherished piece of holy dogma to the Labour party, as the noble Lord, Lord Balogh, made clear. I do not think it is possible to say that its intended removal in over two and a half years' time has so far had any notable effect on the situation. But there is still a long time to go, and its removal will, I hope and believe, make available a large sum of money which can be spent much more effectively in other ways to achieve the same object.

In another respect the Government have made a drastic long-term improvement to the situation in the increase in retraining facilities. I hope that all Members of your Lordships' House will accept that this is an improvement, even if it is a long-term objective. It is of crucial importance; and I am afraid that I find depressing, and indeed almost unintelligible, the fact that this new programme has received a very lukewarm reception from the T.U.C. I know their view that there is no point in retraining people until there are jobs available in development areas, but it is constantly being said in development areas that there is a grave shortage of skilled men in the building trade. I do not know whether that is true, but I have heard it so often that I feel there is something in it. This massive retraining programme should be put into effect as quickly as possible.

The Opposition Motion speaks of a new situation and indeed this is the case. But I am left wondering, if this is so, and if the Opposition believe this to be so, why Mr. Wilson has put forward such a curious rag-bag of suggestions in another place, none of them really new or original, except his fourth point, where he speaks of "nationalisation of the investment responsibility, public and private". No one that I have spoken to seems to know what this means. If it is purely giving vent to his illogical hatred of the City of London it can be ignored; but if it means what it says it could hardly be more damaging to business confidence, when a return of such confidence is what we must look for. It seems in any case only to imply massive increases in taxation.

The real point is that unless businessmen from within or without this country can plan their expansion with confidence—and that is something that we all want to see—then there will be no such plans made. Inflation and industrial unrest are widely reported abroad. International capital is now scared of investing in this country: even our own industries are looking very carefully at it. Whatever the outcome of this coal industry dispute—and I have no intention whatever of mentioning it—confidence in business has been one of the casualties we have suffered already. In this grave situation there should be measures adopted, in the regional policy at least, which can be agreed by all parties so that people can plan ahead with real confidence. Is it not possible to build on the measures that we have, to strengthen them, or to compromise?

Finally, I would make—I must apologise for speaking so long—what I feel to be a constructive suggestion in the matter of attracting new industry to the regions where unemployment is so persistently high. I do not claim it to be an original suggestion: indeed it is one which is not unrelated to a Private Member's Bill which received a Second Reading in another place last Friday. It is one, however, which I think deserves careful study. The idea is that we should have a regional development bank, for lack of a better word, and that there should be one for each region or possibly for each sub-region. The bank's directors—or if "directors" is a dirty word, "operators"—could be appointed from all walks of life in the region, including members of all Parties and everybody else concerned, and should be empowered to give grants or loans to industrialists working in the area or even perhaps to local authorities, who could so often do a great deal if they could get money without so many strings attached. There must be far wider powers of discretion than ever before; red tape must disappear. Experience shows that some firms prefer loans, while others prefer grants; others want reductions in taxation; some want to rent factories, and others want to buy land and build their own; some would like a subsidy for cheap land, and so on and so forth. There are innumerable variants. Each firm is a special case. This bank could do all these things, and more, taking all the risks which a businessman or banker would do and perhaps occasionally incurring bad debts. It might make losses.

The Government should channel a great deal, if not all, of the money which it is able to make available for regional development through this bank, and the bank would also be able to attract private capital to help it. It might, for instance, choose to use its Government grants to offer an attractive interest rate to local investors. The savings which the noble Lord, Lord Beswick, seemed to find so distressing in this situation could in fact be turned to a noble use. The bank should issue its own shares, if necessary, and raise capital from the market in that way. Each bank would thus be competing with others for new industry and new ideas. It must be essential to the idea that both political Parties would support it for a long period so that all knew it to be a long-term project which could take long-term decisions without fear of being destroyed after a General Election. It would clearly be agreed that any Government would have the right to decide in any one year what sums were available at any time. What Governments would be less able to do than they are now would be to interfere in decisions as to how this money should be spent. Certain safeguards would, of course, be needed—perhaps fewer than the civil servants would like to agree to—but this regional development authority would replace a great deal of the cumbersome and overlapping machinery which we have to-day within the regions.

My Lords, I conclude by saying that the first essential in this terrifying and still worsening situation is to reduce and control inflation, and the second is to find a solution to the regional problems which are above Party politics. Without achieving either of these, I think we are a nation on the brink of disaster.

7.25 p.m.

LORD SOPER

My Lords, this has hitherto been a useful debate, impeccably introduced and admirably sustained. Unlike Gaul, and most sermons (which are tripartite), there are four propositions, or at least this Motion is divisible into four separate ideas. Some noble Lords have used this composite gate into the field to range very widely. The debate has not been impoverished thereby, for we should not otherwise have heard the moving words of the noble Lord, Lord St. Oswald, or the humanitarian ventures into the future of my noble friend the Bishop of Coventry. But I should prefer for a very short time to seek to explicate the text.

The first proposition to which we are invited to give our assent is that we are confronted with a situation of unemployment which should cause this House dismay. Obviously unemployment in any community will provoke a range of reactions, from concern to trepidation and from trepidation to anxiety and, as this Motion suggests, from an anxiety which has been drained of its blood supply to what we call "dismay". I find this a not inappropriate word, in the light of the immensity of the problem and the prevailing sense that it has got out of hand and we are not competent enough to find fingers with which to bring it back under control.

I am well aware of the fact that a number of propositions have been advanced in your Lordships' House to-day and I shall refer to some of them later on. But if I am to reflect in any way the attitude of people outside this House, it is increasingly one not of anxiety but of dismay. Any civilised community would be concerned if there were but a few who were forcibly denied the opportunity of contribution to the wellbeing of the community itself. When that particular level of unemployment becomes a marked feature of the economic system, then intelligent politicians and others will become concerned to the point of trepidation. I have long since reached the point of anxiety at the inoperative efforts that have been made to contain it, and I am reluctantly brought to the position tonight of feeling that unless an entirely radical approach is made to the problem it will remain out of hand.

I will now come to the second of the points raised in the Motion: that we should deplore the economic waste and the human misery. I have no stomach for dwelling on this but I feel I must, for a little. When I was in theological seminary, I was invited to believe that I could regret my imperfections without being called upon to do much about them; but if I deplored my sins I was under a peremptory obligation to get rid of them. I believe we have reached a point with unemployment, as it now stands in the community, when there is a peremptory need to regard it—as my noble friend Lord Arwyn regarded it—as a battle for which we have to fight to the end because it is of the very life of the community itself, and the economic considerations will become secondary rather than primary. I base that contention, extravagant though it may seem to be, on some little knowledge of the misery which has now been produced not only in the lives and homes of simple people who have been regrettably accustomed to this for many years, but a new cadre of unemployed, those with excellent qualifications; those who have built up a stable domestic life, and those who are now not only impoverished by unemployment but condemned to acrimony and misery within their own homes. This is not a matter upon which I can speak lightly. If any of your Lordships have personal knowledge of Ph.D.s, and others, who are now on the scrap heap, you will know what that kind of misery is like and how absolutely intolerable it must be in any civilised community whatever the cost required to abate it, and, sooner or later, to abolish it.

It is not only this personal misery, of which I have some knowledge, as have many of your Lordships—it is the increased division, to which my noble friend Lord Balogh referred, that has once again appeared in the community separating those who appear to be secure from that increasing number of those who are apparently not wanted and have the dreadful obligation of reminding themselves day after day that there is nothing that they can contribute or do except watch their children perhaps earning money and tolerate the situation in which their wives go out to work. This is a personal problem of supreme importance, and it is for that reason that I deplore it and principally would regard it as of such significance as to demand the most radical action in order to remove it.

So I come to the third of the propositions included in this Motion, which is the inadequacy of the present programme for the relief and the treatment of this disease. As I listen to the various recommendations and programmes advanced to-day, I am irresistibly reminded of the quack whose advice to a possible patient was, "I have no idea what is wrong with you. Take these pills. They will give you fits and I cure fits." That is a little savage, but it has a modicum of truth in it. It does not seem to me that the Government understand what the true position is; and it is certainly true that the paroxisms that they have helped to produce have certainly not been cured and are not in the process of recuperative therapy. It is true that there are programmes to which your Lordships have been invited to listen to-day which contain immediate possibilities of superficial or more long-term remedy; but in so large a measure do they touch but the periphery of this problem that I believe that even without a radical approach, a new approach to a new situation, there is much more that they could do, and I earnestly invite them to try to do it.

How agreeable am I to the proposition that there is ample need, there is tremendous and immediate need, that this Government should put into the housing industry such large sums of money as will relieve the intolerable conditions under which so many people are trying to live, not only in the cities, but also now in the rural areas. This would be a crash programme; but the injection of public money would go far if it were sufficiently large to deal at least with this Ministry which, alongside the Ministry of Education and the Ministry which deals with welfare, can be regarded as the Tripartite expression of a civilised society. It has always been to me an anachronism that we regard the education of children as a service ministry and the relief of those who are ill as a service ministry, and still leave housing halfway between a service ministry and a profit-making enterprise on private lines.

There are other ways in which a vast injection of public money could immediately relieve something of the acerbity of the present situation. I would refer to another proposition which has been widely canvassed outside this House but has not been mentioned to-day. It is that we should as soon as possible advance the school-leaving age. This would depend for its efficacy on the provision of an adequate supply of trained teachers in the training and retraining schemes of the Government. Surely this could be an important part of the programme. It is true that for many in the approximate future who are children desk education will probably continue up to the age of 16 and no further. But that is not the end of education, and a vast extension of vocational education beyond the range of 16, going on from 16 to 18, would relieve many youngsters of the cynicism which now oppresses them at their complete inability to find a work-place in the community and would at the same time equip many of those youngsters for the kind of work which is now becoming more difficult to fill, and yet will be more imperative as the days go by.

I am shocked at the amount of overtime worked which puts other people out of work. I wish that an adequate wage could so be paid to the worker that he would not be under the strong incentive to work overtime and, by so doing, prevent others who might on a shift basis accommodate a much larger work force. These are suggestions within the framework of the present society and within the competence of the ideology and the programme of the Government.

As I come to the last of these elements in this composite Motion, I am compelled to feel that what we have in the word "radical" is a challenge to an entirely different society. I may cross a gentle sword with my noble friend the noble Baroness who spoke so eloquently and impeccably. Probably there is an argument, which I have felt to be sustainable, that whatever is done, a great deal of what is now regarded as work will in the days to come have to be regarded as creative leisure. I am impressed by the figures. For instance, Mr. Heath has said that there was a 5½ per cent. increase in productivity last year accompanied by a 4½per cent. fall in the figures of those employed in manufacturing industry—the 400,000 to which reference has already been made. Whatever is done, the old 19th century conception of full employment will become otiose and, sooner or later, quite irrelevant. What will take its place is a less arduous and less menial task which will be available for those who are qualified to utilise it, and a much more creative leisure time in which those who are not at work will no longer feel the old non-conformist or economic repulsion as if they are doing something wrong, but will feel that they are still members of the community because they are incorporated within the general field of creative leisure.

This is a long-term programme, one which immediately suggests to me—and maybe also to other Members of your Lordships' House—that without a radical change in the whole structure of the society in which we live, this ambition will not be realised. To put it another way, much has been said to-day of the necessity for an incomes policy. I am entirely in agreement with that, with the reservation that, so far as I can see, a Tory Government will never be whole-heartedly able either to promote or sustain that kind of policy with the required discipline and teeth. It seems equally true that the previous Government, because it preferred a mixed economy to a full Socialist programme, fell into the same trap of assuming that it is possible to have a viable economic policy of incomes without a structure of society in which the community takes charge of these matters.

I am one of these "square", old-fashioned Socialists, and from time to time I am delighted when I hear the word "Socialism" mentioned in your Lordships' House, which is quite infrequently. I believe in it; I have been brought up on it; I sustain it. I find it the core of the religious faith I have, and the only hope which reduces my dismay to a sense of anxiety which is still contained within the fragments of hope. I believe in Socialism, and I believe that we are now seeing the end of the capitalist system. The only thing that can finally satisfy that which is contained within this Motion is the sort of society in which—heaven forfend!—we do not move to a State capitalism, but in which the peaks of industry and public concern, and private concern, it may well be, are held within the framework of a society which itself can take responsibility intelligently and forcefully. This is, as it seems to me again, an issue from which there is no evasion.

It is an issue which demands the transfer of power from a Government which is committed sincerely enough to laissez-faire, to the various impulses and incentives of that system, to a Government which will, I hope, next time they come into office, have the courage to put into effect what their Manifestos have at least persuaded many of those who voted for them to believe would happen. And the risks we should take in such a society, in my judgment, would not be comparable with, but infinitely less than, the risks we run in this dismaying condition in which the situation is out of hand. I, for one, have heard nothing in your Lordships' House this afternoon which comforts me with the thought that it will be put in hand. It is for that reason that I support this very modest Motion; and I believe that the programme to which we should be sooner or later committed, necessarily, is a programme of Socialism in its true, Christian non-Marxist and, as I believe, universal sense.

7.43 p.m.

VISCOUNT MASSEREENE AND FERRARD

My Lords, I can follow the noble Lord, Lord Soper, some of the way, because, with due respect, he appears to have cribbed some of the speech I made on this subject on November 9. I drew attention to several subjects the noble Lord has mentioned. I said that this problem of unemployment in a technological age is one to which we must have a completely new approach, and I suggested that we should call our unemployed the "reserve labour force" and it should not be thought of as any disgrace to be unemployed—which of course it is not, if it is not one's fault. There are other points made by the noble Lord who has just sat down with which I quite agree and which I also made in my speech. On this question of overtime, it seems illogical that one man can earn £50 or £60 a week with overtime—and I know several who are doing so—while another man with the same skill is unemployed. It would be far better, I agree, if instead of employing one man at £60 a week one employed two men at £30 a week each. But it is not quite as easy as that because so often there is overtime because of a rush job. I quite agree with the noble Lord that if only we could do away with a certain amount of overtime—you sometimes do know quite far ahead when it is going to be necessary—so that you could employ two men where otherwise only one would be employed, it would be far better.

I should like not to over-congratulate the noble Lord, Lord Beswick, but to say that he made a good speech. It was quite good. When the noble Lord, Lord Shackleton, the Leader of the Opposition, had an Amendment down to the gracious Speech he described unemployment as a human tragedy. Indeed, it is a tragedy, but I would far rather call it the greatest problem of this modern age. The noble Lord, Lord Beswick, calls attention to the "human misery involved". Two-thirds of the population of the world would give their eyes, as I have said before, to exist on the income of our Welfare State. It all depends on what you call misery. I have seen the most appalling misery abroad, and thank God we do not have it here! The word "misery" in this context is perhaps a slightly strong description.

The other point that worries me about the noble Lord's Motion is that it "deplores the economic waste and human misery involved". We all deplore the economic waste and the tragedy of unemployment, but we do not agree that the remedies applied by Her Majesty's Government have been inadequate. True enough, they have not taken root yet. After all, if you put a bull in a field with a herd of cows overnight you do not have a lot of calves in the morning. We must give the Government time. I understand that the noble Lord, Lord Beswick, put this Motion down before the miners were on strike so I will not refer to that, but I should like to make ore point concerning it. Although—I may be wrong; I am speaking from memory—about 12 or 14 years ago the then Government, I think a Conservative Government, made a decision that we were going to have all power stations oil fired; but in order to help the miners, quite rightly we decided to put them on coal. That has now put us in a very awkward position because when we join the Common Market, as I presume we shall, we shall find, I understand, that 75 per cent. of the power stations on the continent are run in fact on oil, and only 25 per cent. of our power stations are run on oil or hydro-electric or nuclear power. I rather feel that the miners, because of this—although I not qualified to speak on whether or not they should have higher wages—ought to treat the Government a bit more sympathetically.

The other point about this debate which rather surprises me is that whenever we hear the miners' wage rates quoted we always hear quoted the lowest basic wage for the man on top of the ground. I was under the impression that the coal face worker, whom I call the real miner and for whom I have a high regard, was earning £32 a week basic, and of course he can earn a lot more on overtime. It may not be nearly enough for him—I am not qualified to speak on that—but it always amuses me that when people are speaking of the coal mines they always speak of the basic minimum of the man above ground who is cleaning or oiling machinery or doing something of that kind.

The other point I would make again, which I also made on November 9, is that I do not agree that the number of registered unemployed is the number of genuine unemployed, although everybody seems against me on this. I gave a number of reasons for this in my last speech on this subject. The noble Lord. Lord Delacourt-Smith, who moved the Amendment for the noble Lord, Lord Shackleton, on that occasion, said that in his opinion 25 per cent. more people were unemployed than were in fact registered. I said that in fact it was the other way round: there were 25 per cent. less, and I gave many reasons for that. I was rather pleased the other day to read one of my reasons in a newspaper. On Friday, February 4, in the Daily Mail the manager of the Southend Labour Exchange was quoted as saying: A purge in the Southend area revealed about 70 people claiming unemployment benefit who had no right to it. The manager said that the campaign against it had entailed a saving of £7,000 a month. If one had the same story throughout all the labour exchanges in the country it would amount to a great number of people—probably some tens of thousands—who are claiming unemployment benefit but who have no right to it. The manager of the Southend Labour Exchange went on to say that what surprised him was that some people who were sent to apply for jobs never seemed to get them, and it was quite amazing how bus conductors were refused because they could not read or write. They became illiterate between the employment exchange and the bus depot. That was the gist of the remarks made by the manager but I am afraid I cannot read them to your Lordships in this light.

LORD WYNNE-JONES

My Lords, would the noble Viscount like a torch to help him out of his darkness?

VISCOUNT MASSEREENE AND FERRARD

My Lords, that is most kind of the noble Lord, but I have finished now. The noble Lord, Lord Beswick, quite rightly deplores the economic waste, and of course the economic waste in having a large number of unemployed is very serious; but we must remember that it would be more wasteful if we were to employ those people making goods that nobody would buy or performing services that nobody wants. One might as well make them dig a hole in the ground and then fill it in again.

The noble Viscount, Lord Watkinson, quite rightly said—as I did on November 9 last, but of course I would not accuse him of cribbing my speech—that this is a new problem and we have to look at it in a completely new light. Normally I would not quote from one of my own speeches, but I should like to quote a few lines from the speech that I made in that debate. I then said: 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 are cluttered up with over-manning or restrictive practices, that wealth cannot be produced."—[OFFICIAL REPORT, 9/11/71; col. 320.] I do not think any businessman would argue with me over that. We all know the Keynes theorem that if you have more automation and more efficient machinery, by increasing output per worker you produce more growth—that is, wealth—and therefore the spending power of the community is increased, which in turn increases the demand for goods and services and again, in turn, produces more jobs. That has been the doctrine for a long time, but I rather wonder whether it is still correct. Supposing, as is possible, one produces a machine that can do the work of a thousand people, I do not really think that the extra wealth produced by that machine will produce, through demand, jobs for another thousand people. I really think that we shall have to reconsider this theory.

It is true that Germany has upheld it so far because the value of output per worker is twice as high in Germany as it is in the United Kingdom, and again manufacturing employment in Germany has risen by 10 per cent. in the last four years whereas it has fallen by 6 per cent. in the United Kingdom. Why is this? I am not an economist, but I can only assume that it is because we are under-capitalised in machinery. We have not got the most up-to-date machinery, and that I must partly blame on the last Government for their heavy taxation, which did not enable all firms to have the most up-to-date machinery. Also restrictive practices have been rife in this country, although I do not want to stress that point to-night. The noble Baroness, Lady Wootton, seemed to think that the problem can be solved by vast capital expenditure on the part of the State. I quite agree that probably now some capital expenditure by the Government is required in order to produce jobs, but I should like to remind the noble Baroness that in the case of the railways, for instance, we have written off £12,000 million. In the case of the mines we have written off £400 million. If we go on pouring money into enterprises that do not pay we shall destroy the balance of payments, cause a run on the pound and eventually depress the standard of living of the people of this country. It is true that they will have very big paper wage packets, but they will not be able to buy anything with them. We must bear in mind the balance of payments.

My Lords, I think it is most unfair to blame Her Majesty's Government. We all heard my noble friend Lord Drumalbyn say what the Government have done: they have offered vast fiscal incentives to industry. They have launched a great re-training scheme. What more can they do? I agree that they can engage in some more public works, but, as I have already said, if they do that too much it will probably upset the balance of payments and we shall therefore be far worse off than before. I do not know what the Opposition would do, although I suspect they would plough in thousands of millions of pounds in order to subsidise wages and firms; but where would that get us? It is a short-term policy but in the end it would ruin the country.

When we had the last debate in your Lordships' House the question of shorter shifts in factories was mentioned, and of course it is quite a nice idea; but if we had shorter shifts in factories, say of three or four hours, we should then reduce the output per worker. I do not know whether it is really practical. It may be, and it probably would be, more healthy for society if we had shorter shifts and thereby had few unemployed, apart from unemployables. But if you did that, and if you did not subsidise wages, the wage standard would have to go down, because if you are employing two men where you were formerly employing one you could hardly pay the two men each a wage equal to that which the one was getting; otherwise you would go broke. But it would certainly be healthier for society.

I should like to remark on the question of the service industries. I was extremely pleased to hear several noble Lords say that the Government ought to try to encourage employment in these industries in every way possible, and one of the first ways would be to abolish the remains of S.E.T. The service industries are growing industries because people have more leisure and more money. Tourism is a vastly growing industry now. Of course we are not a nation of waiters, but the Highland Development Board, for instance, built a hotel which if know well, and it is a great pity that the majority of the staff appear to be foreigners, Spanish or Portuguese. If only we could train our people in this country to do some of the work that a lot of aliens do! But that may not be practical.

Regarding young people, I think it is very disheartening for them if they cannot get a job, and especially disheartening for graduates. I am wondering whether some form of national service could not be introduced, not in the Force necessarily, but some form of national service such as helping with the harvest, doing good works, helping to build hospitals, because it would give young people a little discipline, and I think the country certainly lacks discipline. I would also agree that it would be a good idea if the retirement age could be reduced. It could be optional, but if it could be reduced to age 60 I think it would help a lot.

To conclude, I do not really see what the Government can do. Without becoming a Communist Government and taking autocratic powers to direct labour and freeze wages, what can you do? We are a democracy and we cannot do that. I only hope that we are not emulating the end of the Roman Empire because at the end of the Roman Empire the Roman citizen got what amounted to a free State wage, free entertainment, free everything, for doing nothing, and of course he was enabled to have that because of the millions of slaves the Roman Empire had. Now the machine is becoming our slave. We may be going that way, but I only hope we do not repeat history. I would end by saying that I really do not think it has been fair to blame Her Majesty's Government for this great problem of unemployment, because it is quite a new problem that has arisen through the technological age, and to a certain extent it is allied to over-population.

8.5 p.m.

LORD MILFORD

My Lords, this indeed is a unique period, as I think the noble Viscount, Lord Watkinson, said this afternoon. We have the highest unemployment figure for 30 years in this country. To-day, when unemployment is over one million, Government policy has brought about a lockout of millions of workers and brought an alienation between the working class and the Government such as there has never been since 1926. And yet, on the clay one million unemployment was announced, the Financial Times Ordinary Share Index broke the 500 point mark from the 340 point mark a year before.

It has always been openly admitted in Tory circles that the capitalist system needs unemployment to keep down the trade unions' bargaining power. In its February, 1971, issue the Banker, which is a monthly City paper, carried the following: More demand, faster growth, less unemployment would surely intensify the militant union pressure for an evergrowing share of wages in the national income. And this is the fundamental view of the Tory Government on which its whole policy is based. It is only the loud public outcry which has forced this Government to appear alarmed, and they immediately blame the unions.

In The Times on April 20, 1971, Mr. Heath is quoted as saying: I am in no doubt whatever that the major cause of the increase in unemployment is the absurdly high level of many of the pay settlements which we have experienced since the Autumn of 1969. By obtaining these absurdly high wage increases workers are pricing themselves out of a job. Absolute nonsense! Huge unemployment and big rises in profits are a result of rationalisation and redundancy with massive shake-out of employment. Between the third quarter of 1970 and the third quarter of 1971 production rose by 1.6 per cent. while employment fell by 4.4 per cent. Therefore, output per person rose by 6.1 per cent. Meanwhile, 400,000 jobs disappeared, while production had gone up by one and a half per cent. In engineering, production had gone up by 7 per cent., in public utilities by 14 per cent. It does not make sense to put the whole blame on increased wages. Wages and salaries are the biggest component of total demand. An increase in wages and salaries will tend to create more jobs, because it will put more money into the hands of the public. Yet the aim of this Tory Government is to cut down the purchasing power of the millions of wage-earners; and in doing this, as I have said before, never have a British Government so alienated the whole working class.

During 1970 wages did succeed in obtaining a slightly bigger slice of the cake at the expense of profits. Profits declined by nearly 2 per cent. between 1968 and 1970, and wages rose in proportion. But in 1970 there was in fact economic expansion. In February, 1971, the National Institute Economic Review decided that the rise in consumer spending resulting from the bigger wage and salary increases of 1969 and 1970 was the main factor which stimulated such economic expansion as did take place in 1970. But profits are the sacred cow; hence the ferocity of the Tory Government propaganda against the trade unions and against wages, and the introduction of the Industrial Relations Act to get profits up and wages down; hence the Tory Government's refusal of any price control.

The crucial cause of inflation and unemployment, as I see it, is the very slow rate of growth in the British economy from 1965. It never exceeded 2 per cent. a year except during the year of devaluation in 1968. Compare this with Western Europe with a 7 per cent. growth rate in 1969 and 5½ per cent. in 1970. As Mr. Vic Feather said in the pre-budget letter to the Chancellor of the Exchequer: It is not wages that are too high, but output too low; therefore demand too low. The Government immediately came back with Mr. Heath saying: We are committed to growth as an object of policy, and we see it frustrated by cost inflation. Mr. Davies, the Minister of Trade and Industry, on March 31, 1971, in the Budget debate said: The pursuit of profit is the primary stimulus of industry, and the absence of an expectation of it is the primary cause of stagnation and decline. Well, profits have gone up but so has unemployment. The biggest companies, those which are employing 5,000 employees or more, expect a further increase in unemployment. In the Financial Times of January 13 this year, the Director General of the C.B.I., Mr. Campbell Adamson, says: Even if the economy expands to 4 or 5 per cent. I do not personally believe that unemployment will get back to the sort of levels we were used to in the 1960s. We have got to think in terms of new policies. This Government are showing no signs of producing new policies. Their handling of the miners and their production of this national lockout show this. There have been desperate little patches here and there, but no new thinking whatever, Mr. Carr, in January of this year said: If we are to get a climate for stimulating new investment, we must get industry in a situation in which it can rely on a higher degree of profitability. This Government simply talk about profits, profits, profits. And who are those profits for? For a handful of people who control our economy and the destiny of this country. Profits at the expense of wages. And for this policy the Government are producing mass unemployment, the Industrial Relations Act, and the Common Market.

What we have had this afternoon, except for the noble Lords, Lord Soper and Lord Beswick, and the noble Baroness, Lady Wootton of Abinger, is talk about unemployment in abstract. The noble Viscount seems to have no feelings at all as to what it is like to be unemployed. Just imagine what it can be like not to be needed by society.

VISCOUNT MASSEREENE AND FERRARD

My Lords, I know several people who are unemployed and who have no wish to be employed I can tell you of one man who lives not very far away from me who, every time he is offered a job, puts on an old pair of boots with holes in them and an old raincoat, shuffles along, and of course he is never employed, and in a short time he is in a brand new suit back in a pub enjoying himself.

LORD MILFORD

My Lords, I am so glad to have drawn such a statement from a Tory Peer opposite. In this country to-day there are 129,000 people who have been unemployed for 52 weeks or more; there are 108,000 who have been unemployed for between 26 and 52 weeks. Therefore there are nearly a quarter of a million people in this country who are unemployed and have to go through a means test to get help. Many people do not know what a means test means. In fact, a local Tory M.P. the other day said publicly, "What is all this fuss about the means test? I have to fill in my income tax form every year." If that is the mentality of a Tory Member of Parliament about the means test—well, I will say no more on that point.

Just think of the youth of this country—and the noble Lord, Lord Soper, has touched on this aspect. They leave school and find they cannot get a job; they are not wanted. Some noble Lords this afternoon have put forward the idea that the youngsters should go and do menial tasks until they finally get a job. But if those young people have been brought up in society, and realise that society does not need them and has not got jobs for them, do your Lordships think they will be willing to go off and work in a hospital or a post office, or whatever it may be? Are they not going to be terribly embittered? Then think what kind of society is this, and what kind of society are we producing. And yet some people complain about the youth to-day being anarchistic!

The noble Viscount, Lord Watkinson, sees three quarters of a million unemployed as quite a natural thing for the future, and talks about a new age. A new age of what? A new age of three quarters of a million unemployed? I absolutely agree with the noble Lord, Lord Balogh, that full employment should be the aim of the whole society. We have to produce a society where there is no unemployment at all. We have to cut out this cancer in our society. What are some of the new policies that could be brought in? They will not be brought in by the Tory Government, because they are against all their philosophy. I suggest that there should be cuts in taxation for the public, not for the rich people, not for the companies, but for the people of this country; an increase in public expenditure which would give more jobs and more purchasing power. I agree with Vic. Feather when he demanded on January 21, 1971: Raise considerably old-age pensions and family allowances. Reduce purchase tax. Raise the starting point of income tax to exempt the lowest paid. Increase redundancy payments in line with earnings, and expand public housing programmes, school buildings, and all the things we so greatly need in this country. Then there must be a great expansion of State intervention in industry, especially in the depressed areas. There should be big cuts in indirect taxes, which would stimulate the economy and reduce prices. The reduction in indirect taxation could be even larger if it were accompanied by an increase in taxation of the rich. There should also be a wealth tax, as was proposed by the T.U.C., on the 10 per cent. of the adult population of this country who own 75 per cent. of all property. Finally, there should be a big expansion of public ownership, as was demanded last year at the Labour Party Conference. We know that a Tory Government will never do any of these things. Only Socialism will bring them about.

8.21 p.m.

LORD BROWN

My Lords, before I make my contribution I should like to pay tribute to the speech of the noble Lord, Lord St. Oswald. He displayed a humanity and understanding of the attitude of the miners to-day which would stand us in good stead in the aftermath of the present miners' strike, because there is a danger that the anger created by the stand they are taking may have very serious repercussions later. I also want to pay tribute to the speeches of my noble friends Lord Balogh and Lady Wootton of Abinger. They talked economics to this House, and I believe that economics must he talked about if we are to seek long-term solutions to the problem of unemployment. Every Government since the War, and for that matter before it, have assumed that it is full employment which is the main stimulant of wage and general inflation, and that underemployment curbs it. So far as one can see, none hold this view more trenchantly than the present Government. That is a fundamental fault in thinking, which to-day imposes a mental blockage on the more radical types of approach to the solution of unemployment called for in the Motion before this House.

It is surely clear by now that the market theory on wages, which asserts that the cost of labour behaves like a commodity in the market, is largely ceasing to operate. The evidence has been referred to by other speakers, and it lies in the current coincidence of massive unemployment and extremely high rates of wage inflation, a feature of recent years which has now become glaringly obvious. Surely the time has come for the Government, for the Treasury, for our economists and, particularly, for the economic men in our mass media to say out, loud and clear, that the market theory on wages has become a false doctrine. I know that many of them, sotto voce, will agree with this in private conversation, but I do not hear the public statements which would put the mind of this nation to right on that score.

So long as this false theory lurks in our minds, two damaging assumptions follow in its train: first, that if we stimulate our economy to its maximum potential so that everybody is employed, then general inflation will follow as night follows day; secondly, that the resultant rise in wages would so increase the price of our potential exports as to cause severe balance of payments problems. That is false, if one can get control of wage inflation. Thus are we dissuaded by this false theory from pursuing policies which will eventually rid us of this evil of unemployment. We are inhibited from doing so by these theories. We require an incomes and prices policy which will ensure full employment and optimum production and not result in price and wage inflation. If means can be adopted to bring about that situation, then we can achieve long-term full employment, optimum standards of living and freedom from deficit balance of payments on external account. Means are available to achieve that situation, but they require radical changes in thinking and in practice.

What are those changes? First there must be an appreciation of the fact that trade union power renders free bargaining over wages and salaries between employer and employee no longer a viable procedure. I think we all recognise that relative earnings between one occupation and another are steadily becoming increasingly inequitable: highest earnings going to the strong, with the weak going to the wall and, in addition, paying higher prices resulting from the success of the strong. Is that not precisely the personal ethos of the Prime Minister to-day, with his insistence on the virtues of untrammelled competition? Maybe I am being unfair, because his current posture seems to be undergoing some wobbling. Maybe he is changing his mind. But, be that as it may, the fact remains that if this tendency towards increasingly inequitable differential earnings is not reversed, it will in the long-term wreck our society not only because of the unemployment which that ethos brings about, but also because of the despair and the greed and, yes, the crime which I believe it engenders. We must somehow evolve an incomes policy, coupled with a policy on prices, which begins to shift us towards a situation where the differential wages and salaries of all occupations, from top to bottom, become more consistent with the value which the consensus of opinion in society places upon the work done by those different occupations. Next, we must accept that un-coordinated bargaining between employer and trade union not only produces inequitable wage differentials, but also inhibits Governments from following full employment policies. We must, as a matter of logic, recognise that if the market theory on wages is no longer operating, then employer/union bargaining over national wage scales must cease.

What then is to take its place? We lack a national institution of a novel kind. I would call it the National Council for the Regulation of Differential Wages—N.C.R.D. for short. I have talked earlier about that in this House. Elected representatives of every occupation in the land would form such a Council. Mechanisms would have to he used to keep their numbers small, and they would be full-time paid people. Employers, as such, would not be represented. The Council would be given the task of dividing up, between all occupations, the total percentage addition to the national wage bill which would be decided each year by the Government, and the Council would have to decide how much of it went to each occupation in differential terms. The trade union representatives on the Council would have to agree each year, within the total limit set, the percentage addition by which the wages and salaries of each occupation should be increased or, perhaps, not increased. If they could not agree, then all wages and salaries would be frozen until they could agree. It would not be a great hardship to anybody. If Parliament accepted the recommendations of that Council it would make those recommendations law, accompanied by sanctions consisting of deprivation of all income of those who took strike action to breach that differential wage law.

I claim that that would be a perfectly moral procedure. To use sanctions against strikers to-day, when one is worshipping free bargaining, is immoral because one cannot use a sanction to come down on one or other side of a free bargain. But to use sanctions against strikers against a pattern of wage differentials, agreed by their own representatives and supported by the law, would be perfectly moral. Such a proposal deals only with the differential wage and salary levels between total occupations. The equally important differential earnings of all those working within a single employment institution or company would be left to negotiation between employer and employee representatives. They would be free to increase earnings above the limits imposed by Parliament on the basis of the recommendations of the N.C.R.D. The differential wage adjustments agreed by Parliament would have to be implemented by every employer, but employers would be permitted to pay above those levels in order to deal with the problem of internal earning differentials among their employees. In negotiation over such internal differentials, they would not, because of the law, be subjected to the sort of power bargaining current to-day, because strikes to force employers' hands above the legal awards would be subject to the same sanctions.

My Lords, on the face of it these proposals bristle with difficulties, but in my own humble experience the difficulties are all answerable. I cannot explore them now; time is too limited, so I am driven to say something which embarrasses me and to which noble Lords will, I suspect, object—and it is certainly egotistic. I have explored the solution to these difficulties in a recently published book entitled, Organisation. My answers are therefore available. I apologise to the House for this rather gross piece of self-advertising, but my justification is that I sincerely believe that solutions to unemployment and to other grave economic problems, however difficult, are available. I have written them. I cannot rest content to see us plunged further into trouble without full advocacy of what I believe could be a solution. I might have chosen to explain my ideas in a much longer speech, instead of advertising my own writings. Both courses seem objectionable; I hope that I have chosen the lesser evil.

My Lords, in conclusion, perhaps these ideas, which I have sketched out very briefly, may be impossible of implementation; or indeed they may have faults within them. But of one thing I am certain: we shall have to examine the problems of unemployment and the problems of under-employment of the potential capacity in our society at a much deeper level, or, if you like, at a much higher level of abstraction, than is currently being done to-day in our society. We are not thinking at a sufficiently sophisticated level about these things. We are accepting economic theories which have been rendered invalid by changes in society since they were first established. If I have done nothing more this evening, I hope that I may have stimulated just a few noble Lords to think that perhaps we ought to re-examine many of the assumptions which we hold dear to our hearts but which, in my humble opinion, happen to be faulty.

8.33 p.m.

LORD THORNEYCROFT

My Lords, it is a pleasure to follow Lord Brown. Whether we agree or disagree with his techniques for a wages policy, I think your Lordships' House will admire his technique for abbreviating speeches. If all of us would only issue a report in advance and then comment briefly on it afterwards, I think it would be a very acceptable procedure.

My Lords, I am an employer, and therefore I am, I think, relevant to this debate. I plainly have a vested interest—an interest as vested as any trade unionist in this House—for ensuring the employment of labour; and, after all, this is what the debate is about. The Motion talks about a "radical approach". I do not know when it was drafted, but of course the most radical approach in the part of the world where I have been working would be a return of the miners to the pits. My noble friend Lord St. Oswald, in a speech of great eloquence, spoke of the fund of good will that exists for the mining community. That has been true all my life; but I am bound to say to my noble friend that in the areas where I am working the fund of good will is running out—running out almost as fast as the coal at the generating stations. It is a tragic thing, my Lords, to see great factories grinding to a halt, and to see men who could never command as big an increase as that demanded by the miners being turned aside. And it is a sad thing to see old and lonely people suffering. I want to say no more about that, because this debate is wider and deeper than the current crisis.

It is, as my noble friend Lord Watkinson said, a national problem which confronts us; and I am not critical of the approach of the Government at all. In my judgment, the Government's policies have been well designed to deal with the problems that have confronted us. They have been tackling inflation, slowly but surely; they have reduced taxation; and they have abolished the selective employment tax—and I think the Labour Party must be deeply grateful for that, for a tax more wildly irrelevant or more damaging to our present situation than the selective employment tax it would be hard to imagine; but it is now, at least, decently buried. The Government are pursuing our entry into Europe, which will widen enormously the markets which are open to British industry. Wages have gone up—and I put that as a plus: it would be a sorry state of affairs where wages did not go up—but they have been moving up at a slower rate of increase than previously, and this has certainly enabled factories to catch up with the production which must be made to match those wages. All these factors arc good; all of them have made a contribution to our national fortunes. It is my hope—and I do not wish to pursue it further—that the present emergency will not too gravely damage (damage it certainly will, but will not too gravely damage) for too long the successes which the Government have so far achieved.

But now the background is a million unemployed, and I would agree with many noble Lords—Lord Watkinson among them, Lord Rhodes, and others—who say, "What is this million unemployed?". Let someone, somewhere, have a really close investigation of the make-up of this figure. To say that is not to represent it as insignificant. It is a major factor in this country, to pass the figure of a million unemployed; but if there is a problem to be solved it is at least of some advantage to understand the problem which you seek to solve—and this is a complex thing. It is made up, as Lord Rhodes said, in part of people who, alas!, are unemployable; it is made up in part of people who are immobile; it is made up in part of people whose patterns of work envisage, for a period of the year, that they are unemployed; and it is made up in part of men and women who could at this moment be making a highly successful and useful contribution to the goods and services required in the world to-day. If we are going to try to solve the problem, then let us at least examine it calmly and dispassionately, to see what it really consists of. If we do that, we shall not have solved the problem but we shall have taken the first step towards a solution of it.

At the end of any such examination, your Lordships will find that to-day there is a hard core of unemployed who could usefully be employed. It is not, in fact, a new factor: it is not really a factor. For many years in this country there have been thousands of people who have been under-employed. We have over some years been employing more people than was necessary to get the production out of the factories of the country. Our productivity has been solidly and steadily below that of the U.S.A., no matter how you measure it, whether in output per man, added value or what you will. It has been below many comparable activities in other parts of Europe and it was a dangerous situation which was bound at some time to be remedied. Managers were seeking to remedy it, consultants were called in, experts examined the situation; but very little was done. I think it was the noble Baroness, Lady Wootton, who referred to Mr. Jones and Mr. Scanlon. Mr. Jones and Mr. Scanlon did more to the solution of this problem than any consultant or Chancellor of the Exchequer. They came in and shoved the wages up. It became quite impossible for the factories of this country to continue to employ men as expensive as that in those numbers in the factories which we arc operating here. As a result, by brute necessity large-scale redundancies were created. Those are the facts of the situation.

It has happened in other countries. I well remember as a young man seeing the great trade union leader, the miners' leader in America, Mr. Lewis. As a naïve young politician, I listened to Mr. Lewis. He was a very tough gentleman indeed. I said to him, "If you ask for these great wages, will it not mean unemployment for many?" "Yes," he said, "for many!" He was completely ruthless. He did not mind how many men were chucked out so long as those left were paid the biggest wages in American industry. He was prepared to face that situation. New machinery?—certainly! But up with the wages at the same time. It is possible to produce policies of that kind. We have not pursued such a policy to anything like that extent in this country, but one must accept the consequences of such a policy and as labour becomes more expensive so the necessity arises to employ fewer men or to use more expensive machinery. That is the path we have been following. Any intelligible discussion about one million unemployed needs to take some account of it. As a result, as my noble friend Lord Amory said, we have spare capacity here; and at the moment if there were an increase in demand in most of the activities which I know about, it would not result in an increase in employment. We should be getting more output from the factories as they are and the labour force as it is.

There is at the same time a shortage of demand for capital goods. I shall be very brief. I shall touch on only four points that I think are relevant. If it is accepted that more demand, particularly in the capital goods field (in other words, more investment), is needed—and we are constantly told that that is required—what are the factors that operate on men's minds in decisions of that character? One of them is profit; for without profit or without the lively hope of profit, nobody is going to invest. The noble Baroness, Lady Wootton, may say that we have got the jitters; she may say we are looking for golden stockings—well, there are golden stockings about; the long-dated gilt-edged market is more profitable than many forms of actual manufacturing in this country. And if profit is relevant, as I hope the House will accept, one has to realise that profits in this country have not been large. The earnings per share have not increased over many years. Profit, as a percentage of the gross national income, still remains a little lower than it was before. Look at the countries where investment has taken place and you will find an entirely different picture. That is a relevant factor.

The second factor is security. Men will not invest unless they are fairly sure that they can go on manufacturing for values. Earlier this afternoon I was having a discussion in the course of business on investment in the television industry, which is booming. But how many television manufacturers would really invest under the present threat of Japanese competition, after what has happened to the radio market and after watching what has happened in the U.S.A.? Men must have some security if they want investment. If any Government wants that to happen, then account has to be taken of situations of that kind.

Thirdly, the cost of money. Some people say that it does not matter. It is quite fashionable to say that it does not matter. I think that it does. Why do they not lower bank rate? It would not hurt them in the slightest. What case is there at this moment with a million unemployed for not lowering bank rate? I do not press the Government for answers on subjects as delicate as this; but I do ask them to take a cold hard look at the banks' open market operations recently and tell somebody, if not me, whether they think that these operations are really relevant to the unemployment situation as it is today. I should have thought that some very sharp reversals in monetary policy could undoubtedly be made; and when men say that it is irrelevant, as some employers have sometimes said, why do they employ such able young men to look at the discounted cash flow and the return on capital employed? Are all the calculations on our desks irrelevant? If they are relevant then, surely, the long-term cost of money is relevant. I do not say that any of these factors are decisive; but I do say that if you want a policy you must have large numbers of things all moving in the same direction—and security, the cost of money, the hope of profit are the things that generate activity and employment in this country. Somehow we must join together and think out ways of making that move in that direction.

Finally, my Lords, the cost of labour itself. I will not embark on the question of an incomes policy. I share with my noble friend Lord Amory the feeling that it would be nice if we could get one; but I am bound to say that I am less confident than the noble Lord, Lord Brown, that I could produce an absolutely watertight arrangement of this character. But many useful contributions in this field have been made. I would only repeat what I have said before to the Government: that I hope this evening they will still keep their options open. We are moving in a difficult and dangerous world on incomes at this moment and I should not like to close any possibilities for action that the Government might wish to take.

My Lords, that is all that I wish to say. Let us try to devise a series of relevant measures, none of them wholly effective or conclusive in themselves but all moving in the right direction and, importantly, including action in the field of monetary policy. Then let us stop what is going on now and get back to work. For myself, I do not accept that one million unemployed is necessary.

BARONESS GAITSKELL

My Lords—

LORD THORNEYCROFT

My Lords, I shall not give way at this time. I am reaching the end of my speech. That is a good reason for not being interrupted. I do not accept that there is a necessity for one million unemployed. There is plenty of work to do in this world. My belief is that we shall find a way to do it.

BARONESS GAITSKELL

My Lords, before the noble Lord sits down, may I ask a short question? As a large employer, has it ever crossed his mind that in this revolutionary technological age he might begin to think of economic measures not in terms of the status quo but in terms of the Motion of my noble friend Lord Beswick?

LORD THORNEYCROFT

My Lords, I do not know that I was thinking of economic measures in terms of the status quo, but I was saying that monetary policy as well as some other things I mentioned continue to be relevant with the passage of time, and I do not accept that they should entirely be neglected when a million unemployed are waiting to find jobs.

8.52 p.m.

LORD DIAMOND

My Lords, there was a good deal in the speech of the noble Lord who has just sat down with which I profoundly disagreed. There was a good deal in the speech of the noble Viscount, Lord Amory, with which I profoundly agreed. I hope, therefore, that as I have chosen two most distinguished ex-Chancellors of the Exchequer to show my completely dispassionate and objective approach I shall not be accused of partisanship in some of the rather harsh things which I shall find it necessary to say later on. What I must first say, which I am sure will be acceptable to the whole House, is that those of us who, like myself, have had the privilege of listening to most of the speeches in this debate must consider themselves privileged. We have had a great deal of most valuable debating skill, knowledge and sincerity brought to bear on one of the nation's most difficult topics at one of the most difficult times in our nation's economic history.

I also wish to say at the start, which I hope will please the Government at all events, that I think the noble Lord, Lord Drumalbyn, was quite right when he started by saying that there were three areas, one of which was the international monetary field, and in that area the Government could claim success. I think that what has been done in conjunction with others in that area has been most important and has relieved a situation which could have been almost as disastrous as the situation in which we find ourselves now, not only for this country but for many countries. There was developing a crisis which was leading to continually more illiberal trading practices by one large trading country, to be followed by a similar reaction by another large trading country, and we could all have found ourselves in a very difficult situation indeed. I therefore want to say straight away that I followed very carefully indeed what the Chancellor said and did in the Group of Ten, and more particularly with the Six—and as some of my noble friends have expressed interest in this subject I hope I can give the clear answer here. I was particularly glad to see that this first association with the Six, and the resulting capacity of seven nations to be able to speak with one voice in the Ten and therefore in the community of nations concerned, resolved an issue which might otherwise never have been resolved, certainly not so quickly, and it bodes very well indeed for our future association with those nations. My Lords, I have finished, I regret to say, congratulating the Government.

The noble Lord then turned to the domestic scene, and having listened to the economic statistics which he gave I think that many of your Lordships will have come to the conclusion that truth must indeed be many sided. What I had better do is to give some other sides of the truth. I will therefore give your Lordships, if I may—and I know how unacceptable they usually are—a few relevant statistics, all culled from Government sources. The increase in the wholly unemployed in the last year is over 37 per cent. As to vacancies in Great Britain at the moment, there are nine unemployed for every vacancy, and in Scotland over 13 unemployed are chasing every job. In terms of production for the third quarter, the latest quarter for which figures are available, in a comparison between this year and last, there is not an increase but a drop of 0.9 per cent. in manufacturing industries, 0.6 per cent. in all industries.

In investment, a comparison of 1971 with 1970 shows a drop of 5 per cent. in manufacturing industry's capital investment; in terms of investment intentions, as gathered by the Board of Trade, there is a further drop, over and above that, of 3 per cent. in the current year. In regard to prices, the retail price index has gone up by 9.2 per cent. over the year. Average earnings over the same period have gone up 9.0 per cent., retail prices up 9.2 per cent.; real increase in wages, nil. I say to the noble Lord. Lord Thorneycroft, real increase in wages, nil. He is totally deceiving himself, and so is everybody else who says that labour are pricing themselves out of the market; and the Government's mischievous, if not wicked, nonsense that the cause or part of the cause of unemployment is the increase in wages is both Luddite and, as I said, mischievous. The fact is that prices have more than followed the increase in wages—9.2 per cent, as against 9 per cent—so I hope we shall not hear any more on that score.

My Lords, it is a pretty bleak picture that I have painted, but the picture is not entirely one of gloom. There is a balance of payments where the surplus is in excess of £900 million for the current year when the figures are all got together. This is owing, in a large measure, to the continued competitiveness of our prices, we are all delighted to say. One thing that has surprised all the commentators has been the continuing strength of exports and of the balance of payments owing to our prices remaining thoroughly competitive. So let us hear no more about pricing ourselves out of the export market. Nobody expected to be able to stand up to-day and say that the balance of payments was still as strong as this.

The other bright feature, as already indicated by one of my noble friends, is company profits. For the third quarter, the last quarter for which figures are available, and over the year as compared with average earnings going up by 9 per cent., company profits have risen by 24 per cent. Undistributed profits have gone up by 35½ per cent. So the picture is not entirely bleak, is it? Equally, it is not entirely well balanced, is it? It is more than a coincidence that unemployment and the Financial Times index reached their respective peaks on virtually the same day. That is more than a mere coincidence. What has happened is that as a result of Government policies there has been such a switch as to create a total unbalance at the moment, as felt by most members of the community. When you have that kind of situation you will get a number of explosions.

But before I go on to that matter let me say a word or two about productivity. Let me remind your Lordships that the increase in real wages has been nil. The increase in productivity, according to every noble Lord who has spoken from the other side as a Government Minister or as an employer, has been considerable—more than of recent years. So what kind of share has the worker had in real terms in the productivity to which he has contributed? Answer, none. Profits up 24 per cent., real earnings remain level, productivity going—to whom? Not to the worker. The whole idea of every bonus scheme, of every productivity scheme, is that the worker shall get his share and the employer and the shareholder get their share; and this works well for all. But the figures of redistribution of incomes, pressure on wages in certain sectors, alas! show the results of Government policy in this field: workers share in their increase in productivity, nil; companies, 24 per cent.

I am coming back to that point in terms of the miners' strike, because of course miners have as much sense as we have; miners and their wives are members of the community, just as we are. But before coming to that, I want to deal with a most damaging theory that seems to be gaining ground; namely, that in some way or other it is against our interests to increase efficiency and productivity. I realise the difficult short-term effects. We shall not solve our problems in this country, we shall not maintain our capacity to earn our living abroad, if we fail to look at this problem full in the face. Every noble Lord with knowledge of these matters has referred to the need for greater investment. What does that mean? Let me tell your Lordships what it means in the boardroom—and any director will contradict me if I am wrong. It means the appropriate manager or somebody coming along to the managing director and saying: "Such-and-such a firm have sent their salesman along and they have a wonderful new machine. It does everything that the machine that we now have in the workshop does, and it does it a lot better." The managing director says: "What do you mean by saying that it does it a lot better? How many men does it save? What is the cost? And what is the relationship between the two?" Then the manager will say: "If you get this machine you will be able to save 3 men a week"—or 30 men a week, whatever the case may be—"It will cost you so much, and you will cover your cost in 2 years, 2¼ years or 2½ years." Then the managing director says: "We will buy it." I am sorry to waste your Lordships' time, but I wanted to bring this down to grass roots.

Every investment means a reduction in the numbers employed to produce that amount of turnover. That is what it is there for; that is what it is about. So every Government, and every noble Lord who pleads for greater investment—and who is right to do so, because the increase in our standard of living depends on our capacity to do so—is saying that we must create a situation in which men become freed from the present job they are doing. That is why we have a redundancy policy—which, I may say we secured with great difficulty; but that is a different story for another day. Because we have a redundancy policy we have mobility of labour without hardship, and the ability of men to move from one job to another: from the job where there has been additional investment, so putting men out of work—labour saving, as it is called and as it means—in order to increase the national output by engaging them on other tasks for which they are now free. That is what the Government mean when they say: "We want additional investment." We must not burke the issue that additional investment means men and women becoming free to do other jobs; and it is the Government's function to provide the other jobs. That is what management of the economy means, and that is what the two ex-Chancellors of the Exchequer sitting here know as well as I do.

THE EARL OF DUDLEY

My Lords, may I ask the noble Lord why it is, if his argument is correct, that the industrial countries with the highest rate of growth domestic fixed asset formation have the lowest rate of unemployment?

LORD DIAMOND

My Lords, in the first place, that is not necessarily true. The noble Earl has not even been considering America. But it only shows that he has not followed my argument. What I am saying is that the plea for investment is a plea for an increase in our standard of living, and a plea to free men to do another task and thereby increase our production. That is what it is there for; and it is not wise to try to burke the issue because you have a situation in which men become free. It is the employer's duty to increase the efficiency of his firm. It is the Government's job to provide economic management of a kind that will result in men becoming free being able to occupy themselves in some other work. That is what the training programme is for. So I hope we are not going to deceive ourselves into thinking that a way out of our difficulty is to slip into some neo-Luddite philosophy by which you keep people employed, each person doing less and less. What you do is to have an economic policy (and the noble Viscount, Lord Amory, illustrated a number of things which could be done to increase demand) which enables the freed man to become mere fully employed.

I was not, if I may say so—although I agree that this is entirely a matter of opinion—attracted by the idea of early retirement in order to fill this gap when there are so many people in need in this country. When one looks abroad, one sees that the need is endless. When one can be told by the whole of India, Asia and all the starving countries that they do not want any more transport, any more hospital equipment, any more university teachers, clothing, books or anything like that—when we can be told that, then will be the time to think of retiring early, because everybody will have the production needed. But that is a very long time away. So do not let us deceive ourselves by thinking that we are suffering already from overproduction, when there are millions of people in the world who are starving.

Now, my Lords, I turn to my main topic: why is it that we have this high increase in unemployment? It is not because labour has priced itself out of the market; it is because the Government's economic policy has failed. We knew it would, and we said it would. Unfortunately, when we said that much earlier on, it was contradicted. I made the point in November last that the Budget then introduced produced additional demand of £250 million: according to the National Institute the need was for £1,000 million of additional demand. I went on to say that the Treasury had made it clear that the effect of the last Budget—in terms of demand, not tax relief—was £250 million only. This was denied, and it was necessary for me to refer to the articles in the Financial Times and the Daily Telegraph, both of which made it clear that the Treasury had issued this information. I think it is due to me that I should put the record straight, because the challenge came from a very high source.

It is clear, first, that the Government's economic policy has failed. It is clear also—and this is what we are particularly interested in to-night—that the Government's incomes policy has failed. The Government's incomes policy (and we have already been over the ground that every Government has an incomes policy: it may be explicit or implicit, it may be direct or indirect, but it is there all right) has been one of selective compulsion; that is, compulsion where they could compel, which means wages in the public sector. That is where they have sought to exercise their incomes policy. Spurred on by their success with the Post Office workers, they prepared, and prepared long ago, apparently—we have been told this by noble Lords opposite, by the noble Lord and the noble Earl—back into last August and September, for the forthcoming confrontation with the miners. It was a well-laid, careful preparation. They made all their calculations, hut, as usual, they got their calculations wrong. They miscalculated the stocks of coal, and they miscalculated the spirit of the miners and the miners' wives—and that was the most serious miscalculation. The miners realised what was happening and decided to fight. What the Government were trying to do was to lower the standard of living of miners, to impose a wage which meant a lowering of real standards. What the Government were trying to do was to say to 80,000 miners, "You go down the pits", and to say to 80,000 miners' wives, "You go along to Social Security and claim the family income supplement, because you are below the standard of living which is recognised by the State as being the minimum."

The Government also succeeded in bullying the Chairman of the Coal Board to make the most preposterous statement that he could not afford another penny. We see that in to-day's light it was a laughable statement to make; and we said so at the time. The miners were not prepared to "wear" that. They recognised what was happening and what the Government's incomes policy was. They recognised what the Government's trade union policy was and what the Government's taxation policy was—high profits and low take-home wages. They recognised all these things; and they decided to respond to a show of naked power with a show of naked power. We might not like it, but that is what happened. One of the great drawbacks of having destroyed the machinery which might have acted as a buffer is that the Government moved into this confrontation and we now find ourselves in this terrible situation. We now see Government Ministers on their knees begging the miners to go back to work in order to save the Government from the evidence of their own mistakes. All this could have been avoided if the Government had wished to settle at a reasonable figure earlier on.

What of the future? I wish one could say that the damage was confined to this particular episode—and, my heavens! the damage is high enough. It must be running into millions of pounds so far as the Coal Board are concerned; it must be running into tens of millions so far as exports are concerned; and it must be running into hundreds of millions so far as lost production to the nation is concerned. That is the cost of the Government's fatal error and determination to have a show-down with the miners which has been planned since last August or September. But that is not the end—there is another year next year. The miners have already said that they will not settle for 18 months, that they will settle only for 12 months. What are the miners going to say next year when they recognise the power that they hold? What are they going to say when they see the weaknesses which the Government have disclosed in the set up? What are the power workers going to say in a year's time?

LORD THORNEYCROFT

My Lords, has the noble Lord considered whether, in debating a Motion of this kind, he should make a speech which could be gravely damaging?

LORD DIAMOND

My Lords, I carefully thought whether I ought to bother your Lordships with a statement of apology for the kind of speeches that I have made in the past, because it is perfectly clear that if all of us on this side had shown a much more determined, pointed attack on the Government at an earlier stage we might have saved the nation from this disaster.

My serious view is that so many of your Lordships are totally insulated from the facts of miners' lives and workers' conditions, and their attitude to the present Government and trade unions, that somebody has the duty of putting their case to your Lordships. We have heard many times the argument that when things are in a sensitive situation it is very irresponsible to add to the Government's difficulties. I know this argument very well indeed. I can only say that I appreciate the question asked by the noble Lord, Lord Thorneycroft. I asked myself the question last night and I take the responsibility for a considered view. My considered view is that we must turn from this policy, which I should have thought the Government would realise now is as dead as the Dodo, the policy of selective bullying, and start a new approach, that of strengthening the trade unions, repairing fences and going along a road which is not completely barred; the road of joining with the trade unions in the formation of some method whereby workers can be seen to get a fair share—which they have not so far received—of what they produce for the nation, and a method whereby they can themselves arrange for a fair distribution of that share between their various members. That is not a road which is completely barred; the road the Government have been pursuing is.

My Lords, it is for those reasons that I hope that in the Division that is forthcoming your Lordships will consider very carefully whether the wording of the Motion is such that you can seriously disagree with it. Many of your Lordships have spoken in favour of the Motion. I am talking about noble Lords who are sitting on the other side, and I will not embarrass them. I hope that they will consider very carefully indeed whether the situation to-day justifies them in refraining from voting or, indeed, in voting with us.

VISCOUNT WATKINSON

My Lords, before the noble Lord sits down, may I say this to him? If he intended to try to bring this debate to a reasonably balanced and non-controversial end in the very difficult circumstances in which our country finds itself, he has signally failed to do his duty to the House.

9.20 p.m.

EARL JELLICOE

My Lords, despite the last speech, I am glad that we have had this debate this afternoon.

LORD GREENWOOD OF ROSSENDALE

That one speech?

EARL JELLICOE

The speech by the noble Lord, Lord Diamond. And I should like to start by making an apology because I was unavoidably prevented from hearing most of the speech of my noble friend Lord Amory, as well as a notable speech, I understand, from my noble friend Lord St. Oswald—and the speech of the noble Baroness, Lady Wootton of Abinger. I am glad that we have been discussing this matter since one of the central elements in the health of any society is the ability of that society to offer jobs and opportunities for the vast majority of its working population. Some of your Lordships may have vivid firsthand memories of what unemployment meant in the years before the war. For others, those of my generation and of younger generations, those memories are for the most part second-hand. But there is no doubt that those years in which unemployment was running at levels between 2 million and 3 million have left a scar on the memory of our country. Most of us had hoped that all this was something of the past, and that hope we had seen increasingly removed in the last half-decade. It is right, therefore, that we should have been asked this afternoon to focus our attention on this problem introduced in a speech, not all of which I agreed with, but of moderation and good sense.

I should like to make it crystal clear that the Government are in no way complacent about this situation. We all recognise of course that in terms of material distress unemployment to-day for the individual and his family is perhaps a different matter from what it was four decades ago. However, we must also recognise what unemployment means in the waste of our most precious national asset: the skills of our people. We also recognise, as any responsible Government must recognise, in the terms of the Motion of the noble Lord, Lord Beswick, what unemployment involves in "human misery": all the bitterness, the frustration and the sheer despair.

My Lords, the debate has ranged very wide, and perhaps at this hour the best course I can take, speaking from this Box, is to attempt to draw together some of the central factors as I see them. The first central factor is that it was not this year last year or the year before that the rise in unemployment which we have been discussing started. As my noble friend Lord Drumalbyn pointed out at the outset of this debate, this is a trend which has been evident in our economy since the summer of 1966. The second central factor is that these trends towards falling employment and rising unemployment have been sharply accentuated since 1970. Many of us have been surprised by that sharp accentuation, not least the former Chancellor of the Exchequer. Mr. Roy Jenkins, who made it plain at the time of the April Budget last year that the reflationary measures taken by my right honourable friend the Chancellor of the Exchequer would at least hold the unemployment ceiling where it then was. The third central factor, with which until very recently in this debate most noble Lords would agree, is that Governments of neither political complexion have yet found the key to these twin problems of inflation and unemployment. The fourth central factor is the reason for that sharp accentuation in the unemployment figures of which I have spoken. I myself have no doubt—and here I disagree with the noble Lord, Lord Milford—that that sharp accentuation sterns largely from the wage explosion bequeathed to us as an Election dowry by the last Government. It has been aggravated drastically—and here I agree with the noble Communist—by the effects of the restrictionist straitjacket in which they had been forced.

My Lords, I should like to turn to the question of company profits, which was touched on by the noble Lord, Lord Diamond. The facts are that in 1970, when the wages explosion burst upon us company profits had already been drastically cut. Between 1964 and 1970 the share of profits had fallen by one-third, from 15 per cent. to 10 per cent. of the national income. Between the years 1964 and 1970, profits, at constant prices, fell by £1,000 million, or 25 per cent., whereas the national product, at constant prices, rose by £4,000 million, or 14 per cent. I am afraid I do not agree, pace my noble friend Lord Watkinson, with everything that the Industrial Policy Group in their recent paper have said, but I do agree with what they have said on this point: and I will quote their words: It seems therefore impossible to avoid the conclusion that although conditions will vary from firm to firm and industry to industry, yet Olen profits are calculated on a rational economic basis, in a significant part of British industry profits have been nonexistent in recent years, and for the whole of industry profit rates have compared unfavourably with the cost of raising money. My Lords, this situation was a direct consequence of many of the measures pursued by the previous Government, not always as an act of deliberate policy. In certain cases they were forced into them others they chose: increases in taxation, the deflation of the economy, low growth and the policy of statutory control of prices. And I would draw your Lordships' attention to the fact (and I think it was the noble Lord, Lord Beswick, who referred to this) that all this took place when we had a Prices and Incomes Board set up by Statute to prevent just this sort of thing. At any rate, the result was that companies could not absorb large increases in wages and could not pass them on in higher prices. They were left with only one alternative, which was to reduce their total wage bill by shedding all their surplus labour.

I come back for a moment to diagnosis. As we see it, there have been two reasons for this sharp and sad rise in unemployment—slackness in the economy, aggravated by the wages explosion. This analysis has been confirmed by the O.E.C.D., who in their December Economic Survey were emphatic about the reasons for the shakeout (I hate that particular word but it is in the jargon) of labour. That Report stated, and I quote their words: This shakeout of labour resulted from slackening demand conditions and sharp labour cost increases as a consequence of inflationary labour settlements. My Lords, that is my answer, from that neutral and impartial source, to much of what the noble Lord, Lord Diamond, was saying in the speech to which we have just listened.

The fifth central factor I would claim is that, faced with this situation, and a situation the aggravation of which some of my right honourable friends have frankly admitted (and I think rightly admitted) we did not foresee, the sharpness of this decline, the Government have responded with a massive and coherent range of policies. In the first place, we recognised that as an island and a trading nation we are inevitably in large part dependent upon international trade in the international monetary climate. That is why the Washington Agreement of last December, following the crisis and helping to resolve the crisis which resulted from the American measures of August 15 last summer, was so significant. I should like to say here that I appreciate what the noble Lord, Lord Diamond, said in this respect and the implied tribute which he paid to my right honourable friend the Chancellor of the Exchequer for the part he played in the negotiation of that vitally important Agreement.

Second, we have embarked on the biggest reflationary package to which any British Government at any time have ever been committed. It is not necessary for me to remind your Lordships of the salient elements in that package; my noble friend Lord Drumalbyn did so at the start of this debate. But I would just remind your Lordships of score of the other measures which he did not touch on, the miscellany of measures all designed to improve liquidity and aid reflation, the abolition of import deposits, successive cuts in the bank rate. And I noted, and I am sure my right honourable friend the Chancellor will note, what my noble friend Lord Thorneycroft said in that context: the new measures of credit control, the abolition of hire-purchase term controls and so on.

I think the sixth and the last of the central facts, is that we would all agree, on whatever side of the House we happen to sit, that in terms of substantially increased production, in terms of the higher investment which most of us desire to see, and in terms of lower unemployment, these measures have yet to work their way through. But, my Lords, I would claim, as my noble friend Lord Drumalbyn has claimed, that at least before the coal strike these measures were starting to bear fruit, and that as we recover from that disastrous strike we shall see them progressively work through in terms of rising employment and rising production.

Central to the success of these policies is, of course, the necessity to contain inflation. I think none of us would dissent from that, although some noble Lords would dissent from the measures which this Government have taken. But the figures for both price and wage increases, the fall in the rate of increase quoted by my noble friend Lord Drumalbyn, show we have gone a long way along this path. We, the, Government and the nation (for we are all mixed up in this) have made real progress in this matter in these last 12 months. I do not wish to herald any false dawn, especially in this twilight period while we await the results of the Wilberforce Inquiry. But at least until we were plunged into the strike there had been clear, distinct, although not strong enough for my liking, signs of an improvement in the economy. A a result of the tax cuts and greater freedom in credit controls there had been a marked boom in the consumer goods side and there had also been—

LORD SHEPHERD

A fall-off in investment.

EARL JELLICOE

I am coming to that. I would agree that the recovery so far had been what I would term lopsided. In spite of the effect of tax cuts and increased public spending, demand was still slack on the investment side. Until very recently, at least, industry has hesitated to invest in new plant in the face of growing evidence of expansion of demand on the consumer side. Why did this hesitancy persist for so long? I think one can only put it down to a lingering fear over large sectors of industry of a return to "Stop-Go", and it is perhaps natural that after years of stagnation and false dawn—and we have had that with Governments of both parties—industry still finds it difficult to acclimatise itself to the idea of rapid, sustained and sustainable growth. I deliberately use the past tense in describing this hesitancy All the signs before the coal strike started were of a slow, if tentative, return to confidence.

All the recent straws in the wind that I have seen—the D.T.I. survey of investment intentions, the D.T.I. survey of industrial trends (from which the noble Lord, Lord Beswick, quoted rather selectively) and the O.E.C.D. December survey—point the same way. As the O.E.C.D.'s report states: Nevertheless, when viewed together, the initiatives and measures so far taken"— that is in this country— form a consistent initial strategy for dealing with the entire group of problems, and for breaking out of the 'vicious circle' in which the United Kingdom has been caught in the past We must of course be frank about one aspect of almost all these assessments, and that is the shake-out. Industry, after the traumatic experiences of the last half decade or so, is now markedly more efficient and more productive. We are now doing with 19 men or so what we were doing with 20 men or so 18 months or more ago. In most circumstances I believe that this would be a great achievement. I do not happen to be one of the Luddites of whom the noble Lord, Lord Diamond, spoke. I think, as any fairminded noble Lord in your Lordships' House knows, that our industry right across almost the whole spectrum has been overmanned for many decades now. It is absolutely necessary that we should obtain this increased productivity and really full employment.

I do not wish to subscribe to extreme views of how far output can rise without more jobs being created. The evidence is now pretty clear that if we are to cure the unendurably high unemployment of the past few months, we must not merely match the uninspiring growth rate of the Socialist late 'sixties, we need to move to a far higher rate of sustained and sustainable growth. The noble Lord, Lord Milford, suggested that we were not committed to a high and sustained growth rate. I can assure him that this Government stands by that commitment. The Government regard this period of difficulty not only as a challenge but also as holding real opportunities within it.

My noble friend referred at the outset to the Chancellor's forecast last July of a growth rate verging from between 4 and 4½ per cent. per annum. Perhaps we can do better. Certainly we should be able to do better. Moreover, with the margin of unused abilities which have been built up through the slow growth rate of the last few years, unused capacity in our factories, and unused abilities among our unemployed, some of whom are very skilled workers, there are good prospects that domestic demand can be held at an annual increase in the area of 4 to 5 per cent. for several years without the balance-of-payments crises which have marked and marred previous attempts at sustained growth. Externally, at present, we are no longer under the same balance-of-payments constraints and I do not think that we shall be so for some time to come. Internally, if we can master inflation, if we can secure, as this Government urgently wish to secure, a more fruitful climate of industrial relations, then we can not only go far to cure this canker of unemployment, but we can do more. We should be able to look forward to a period of growth and prosperity such as this country has not known in the post-war years. That is the challenge which is presented to us. That is the challenge which I believe we should accept. I believe that the opportunities presented by the Common Market will allow full scope for us to meet and seize that opportunity.

As I move towards my conclusion, may I emphasise that some noble Lords opposite have sought to imply that this is a complacent Government, and that we are prepared to rest upon the Chancellor's present reflationary package come what may; that we are not prepared to explore new avenues or to push further, if further push is required. This is the reverse of the truth. On the external side—and I make no apology for referring again to the external side, because with our dependence on foreign trade it is very central to our position—my right honourable friend the Prime Minister has made it clear that we regard the Washington Agreement of last December as giving us, and other great trading nations of the world, no more than a breathing space. We are quite determined to do all we can—and we should not underestimate our influence in these matters, especially as we move increasingly towards more closely co-ordinating our policies with the Six in these areas—to promote the growth of international trade; that growth on which as an exporting nation we so very largely depend.

So far as our home front is concerned, we propose to remain equally watchful and equally prepared, if need be, to take further action. Thus, my right honourable friend the Chancellor of the Exchequer has made it absolutely clear that, if a further injection of demand into the economy seems to be required, he stands ready to give that injection and to give it at any time in the financial year. Likewise, if further measures to help create the climate for essential investments are required, we shall not shirk those measures. Again, if in the regions extraordinary efforts are required, or existing policies need to be reviewed, those efforts will be made and those policies will be subjected to review. In my hearing, two noble Lords concentrated mainly on these regional issues. The noble Lord, Lord Hoy, dealt with some important Scottish issues, and I understand that my noble friend Lady Tweedsmuir of Belhelvie has already informed him that she will be writing to him about them; and my noble friend Lord Ridley emphasised the desirability of a regional development authority.

May I just say this to the noble Lord, Lord Hoy? I do not think that I am disclosing any State secret in making it clear to your Lordships that we are now making a very close study of the efficacy of our existing regional policies and looking at the whole spectrum of other alternative policies. Again, while we remain quite determined to grapple with the beast of inflation—and it is a beast and an enemy of all of us—we are, as my right honourable friends have made clear time and time again, very willing to look at our present policies in the light of advice from either side of the industrial fence, be it from the C.B.I. or be it from the T.U.C.

I regret that I did not hear most of the speech of my noble friend Lord Amory, but I heard the speech of the noble Lord, Lord Brown, with its powerful "blurb" for a powerful book. May I say that I think they both touched on one of the great problems in this whole area of incomes—the problem of differentials. I go a very long way in agreeing with them that this problem is at the heart of the matter, and that it deserves further study. Some noble Lords have suggested that, in essence, we may he faced with something of a sea change in the overall employment position; that we must perhaps accustom ourselves to the possibility that in modern industrial conditions, with automation and the rest, we may have to reconcile ourselves to a different and, perhaps, lower level of general employment.

I do not wish to enter into any theoretical or theological argument here, but I would stess one point. Noble Lords have argued in this, and in other contexts, that we should, in any event, be planning for a far larger training and retraining programme in this country than we have hitherto had. I would agree, and, which is far more important, so would my right honourable friend the Secretary of State for Employment. As your Lordships know, and as I was glad to see the right reverend Prelate recognise, Mr. Robert Carr has now published a Consultative Document showing that we envisage a dramatic extension in our facilities for training and re-training. Under this plan, some 100,000 workers a year will be trained under the Government's vocational training scheme, quite apart from those caught up in other extended and expanded schemes.

It may he that other countries—Sweden is one—already do more in this field than we do. It may be that our plans here are not as yet as ambitious as they can be, although they involve a really dramatic expansion of the present programme. All I would say is that they represent that dramatic advance, and that it is our intention to put real muscle behind this programme. Following this line of thought, a number of noble Lords—the right reverend Prelate himself: my noble friend Lord Watkinson, speaking with all his prescience and experience; my noble friend Lord Polwarth; my noble friend Lord Amory, and the noble Lord, Lord Hoy—have suggested that, if this diagnosis is correct, if we are moving into a different employment climate, we should be thinking of other and imaginative ways of harnessing the potential skills of those who might otherwise find themselves unemployed. Whether or not they are right in that implied diagnosis, I think that most of the things which were mentioned are worth doing in any event. And may I say—and in this I again happen to agree with the noble Lord, Lord Diamond, I think partly because he happened to agree with my noble friend Lord Thorneycroft in this respect—that there is plenty for a great industrialised nation like ours to do in this world. There are plenty of jobs to be found, if only we consider the crying needs of much of the world for just the sort of goods that we can produce.

LORD DIAMOND

My Lords, I am most grateful to the noble Earl for giving way. As he said that—and I am grateful to him for having said it—and as he has laid stress on the Government's training programme, and as he has talked about the theology of full employment, does he not think now that he ought to make it absolutely abundantly clear whether or not the Government still stand by the policy of full employment?

EARL JELLICOE

My Lords, I made it absolutely clear that we find the present level of unemployment totally unacceptable, and that we are determined to see it drastically reduced. I hope that in this and other matters what I have just said indicates that this Government have an open ear to constructive suggestions. With this in mind, I can assure my noble friend Lord Watkinson and other noble Lords that we will look very carefully at the suggestions which have been put to us in this debate. I was myself attracted (and here I am speaking personally) by the noble Viscount's suggestion that, as and when peace breaks out on the industrial front—and the sooner the better—the Government might formally ask the C.B.I. and the T.U.C. to lie down together with a view to conducting an objective joint examination of the whole problem of the size and structure of the employment problems confronting us. I was attracted by this idea, but on reflection I reminded myself that under the auspices of the National Economic Development Council, the "Four Wise Men"—and they include Mr. Campbell Adamson from the C.B.I. and Mr. Vic Feather—are already conducting such an examination, and their terms of reference specifically include the problems of unemployment.

My Lords, that brings me (and I apologise for detaining your Lordships) to the Motion before the House and to the advice which I should give my noble friends if, as I understand, the noble Lord, Lord Beswick, decides to press his Motion to a Division. I sometimes personally rather deplore the increasing tendency in this House to divide on Motions of this kind. My personal feeling is that we often do better when we do not set ourselves up as a sort of mirror image of another place. The noble Lord, Lord Soper, described the Motion as a modest one. So it is. There is, in fact, much in it which is common ground to all of us. We all deplore unemployment at the present level. Indeed, the Government have made it clear time and time again that they regard it—and I make no apology for re-emphasising this—as quite unacceptable. We are likewise totally committed to reducing it. We are totally committed in this respect since, like all Members of your Lordships' House, we deplore the economic waste and human misery it involves.

Again, there are some of us who may feel in their bones that the patterns of employment in our society may be changing perhaps in some qualitative as well as quantitative manner. We may in truth be facing something of a new situation. This being my feeling, I had rather hoped at the outset of the debate that the noble Lord would not press his Motion to a Division. One reason why I felt this is because, like my noble friend Lord Amory, I am very content to call myself a consensus man on issues of this sort. I believe that on these issues we should all seek to find as much common ground as possible. I believe, in this tense and difficult moment of our economic and social history, that this is in the wider interests of the nation.

But my feelings, or my illusions, on this score were dispelled by the partisan and Party political and, if I may say so, rather destructive speech—unusual for him—of the noble Lord, Lord Diamond. If, when we vote on this Motion and if perchance it were to carry, given that speech the result would be totally to misrepresent and totally to underestimate the commitment of this Government to grapple with the twin evils of inflation and unemployment. It would be totally to ignore the massiveness of the counter measures we have initiated and also to ignore our manifest willingness if need be to break new ground. That being so, I must ask my

noble friends to go into the Division Lobby united against this Motion.

LORD BESWICK

My Lords, many of my noble friends on this; side of the House live in what is known in the current jargon as a "high risk" area. They want to get home as quickly as possible. After the complacent speech we have heard from the noble Earl opposite, I can only think we are living in a high risk country. To say that everything would have been all right but for the fact that unemployment has doubled over the weekend, that we are on a half-time basis now, really is displaying a complacency which does not justify this debate. The noble Earl searched very hard to find a reason for not dividing the House and for not accepting this Motion. When he eventually plucked upon this bizarre idea that it was the destructive speech of my noble friend Lord Diamond which justified that action, I can only say that the sooner we divide the better.

9.54 p.m.

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

Their Lordships divided: Contents, 68; Not-Contents, 122.

CONTENTS
Archibald, L.	Gaitskell, Bs.	Popplewell, L.
Ardwick, L.	Garnsworthy, L.	Raglan, L.
Arwyn, L.	Geddes of Epsom, L.	Rathcreedan, L.
Bacon, Bs.	Gladwyn, L.	Rhodes, L.
Balogh, L.	Greenwood of Rossendale, L.	Ritchie-Calder, L.
Beswick, L.	Heycock, L.	Rusholme, L.
Blyton, L.	Hoy, L.	St. Davids, V.
Bowden, L.	Jacques, L.	Serota, Bs.
Brockway, L.	Janner, L.	Shepherd, L.
Brown, L.	Kennet, L.	Shinwell, L.
Burntwood, L.	Lee of Asheridge, Bs.	Snow, L.
Burton of Coventry, Bs.	Llewelyn-Davies, L.	Soper, L.
Byers, L.	Llewelyn-Davies of Hastoe, Bs.[Teller.]	Stocks, Bs.
Champion, L.		Stow Hill, L.
Clifford of Chudleigh, L.	Longford, E.	Strabolgi, L. [Teller.]
Collison, L.	Maelor, L.	Summerskill, Bs.
Davies of Leek, L.	Milford, L.	Taylor of Mansfield, L.
Delacourt-Smith, L.	Milner of Leeds, L.	White, Bs.
Diamond, L.	Morris of Kenwood, L.	Wise, L.
Donaldson of Kingsbridge, L.	Noel-Buxton, L.	Wright of Ashton under Lyne, L.
Douglass of Cleveland, L.	Pargiter, L.
Energlyn, L.	Peddie, L.	Wynne-Jones, L.
Evans of Hungershall, L.	Phillips, Bs.
Fiske, L.	Platt, L.
NOT-CONTENTS
Aberdare, L.	Auckland, L.	Berkeley, Bs.
Aldenham, L.	Balerno, L.	Bessborough, E.
Allerton, L.	Beaumont, L.	Boyd of Merton, V.
Amherst of Hackney, L.	Belhaven and Stenton, L.	Brabazon of Tara, L.
Amory, V.	Belstead, L.	Brecon, L.
Brooke of Cumnor, L.	Goschen, V.	Orr-Ewing, L.
Brooke of Ystradfellte, Bs.	Gowrie, E.	Pender, L.
Burnham, L.	Greenway, L.	Polwarth, L.
Burton, L.	Gridley, L.	Reading, M.
Caldecote, V.	Grimston of Westbury, L.	Redesdale, L.
Carrington, L.	Hailes, L.	Reigate, L.
Coleraine, L.	Hailsham of Saint Marylebone, L. (L. Chancellor.)	Rhyl, L.
Conesford, L.		Ridley, V.
Cornwallis, L.	Hanworth, V.	Rowallan, L.
Courtown, E.	Harvey of Prestbury, L.	St. Aldwyn, E. [Teller.]
Cowley, E.	Harvey of Tasburgh, L.	St. Helens, L.
Craigavon, V.	Hatherton, L.	St. Just, L.
Cranbrook, E.	Hertford, M.	Saint Oswald, L.
Crathorne, L.	Hives, L.	Sandford, L.
Croft, L.	Hood, V.	Sandys, L.
Cromartie, E.	Hylton-Foster, Bs.	Savile, L.
Cullen of Ashbourne, L.	Ironside, L.	Selsdon, L.
Daventry, V.	Jellicoe, E. (L. Privy Seal.)	Sempill, Ly.
de Clifford, L.	Killearn, L.	Stamp, L.
Denham, L. [Teller.]	Lauderdale, E.	Strathcarron, L.
Derwent, L.	Lothian, M.	Strathclyde, L.
Digby, L.	Lyell, L.	Suffield, L.
Drumalbyn, L.	Lytton, E.	Swansea, L.
Dudley, E.	Macleod of Borve, Bs.	Thomas, L.
Ebbisham, L.	Mancroft, L.	Thorneycroft, L.
Eccles, V.	Mar and Kellie, E.	Trefgarne, L.
Elliot of Harwood, Bs.	Margadale, L.	Tweedsmuir of Belhelvie, Bs.
Emmet of Amberley, Bs.	Massereene and Ferrard, V.	Vernon, L.
Essex, E.	Merrivale, L.	Vivian, L.
Exeter, M.	Milverton, L.	Wakefield of Kendal, L.
Falkland, V.	Monck, V.	Ward of Witley, V.
Falmouth, V.	Mowbray and Stourton, L.	Watkinson, V.
Ferrers, E.	Northchurch, Bs.	Windlesham, L.
Ferrier, L.	Nucent of Guildford, L.	Wolverton, L.
Gainford, L.	O'Neill of the Maine, L.	Yarborough, E.
Glendevon, L.	Onslow, E.	Younger of Leckie, V.

Resolved in the negative, and Motion disagreed to accordingly.