HL Deb 16 March 1977 vol 381 cc9-27

2.53 p.m.

Lord McCARTHY rose to call attention to the need for further selective measures to deal with the problem of unemployment; and to move for Papers. The noble Lord said: My Lords, in rising to move the Motion which stands in my name I am very conscious of the fact that this is the first time that I have deliberately sought to use the rules of chance to inflict upon the House a 2½-hour debate which is of interest to me; but I have a number of excuses. One excuse is that I believe this is in fact the most important social, political and economic question of today. Secondly, I am supported in this belief by the number of noble Lords who have put down their names to speak after me, who will certainly remedy any defects in my introduction to the subject. In this respect, I am asked to say, from the usual sources, that it would be appreciated if noble Lords could restrict their speeches to approximately 12½ minutes.

I want to argue three propositions: two of them I take to be incontestable, though I have no belief that this will prevent argument. The first is that we face a growing threat of mass unemployment which is unprecedented since the depths of the depression in the 1930s and which will almost certainly be much more difficult to remove than the mass depression of the '30s because we know far less than we did then about how to do it. Secondly, the existing economic policies of the Government are unlikely to have more than a marginal impact on this problem. Those two statements I take to be incontestable.

The third point I should like to argue is that our only hope in dealing with this problem lies in further measures of, what I would call, selective job creation; that is, measures designed to have a maximum impact on the labour market with a minimum impact on the general level of prices and demand. Those are the three arguments I wish to put before the House this afternoon.

First, I should like to say something about the extent of our present problems and the reasons for our present position. In the United Kingdom at present we have just under 1½ million workers drawing unemployment benefit; but, if we calculated unemployment in this country in the way that unemployment is calculated in many other countries—in other words if we had sample surveys rather than employment card counts—we would probably have an unemployment rate of something in the region of not 5.6 per cent. but 7 per cent. and one third of this unemployed labour force has been out of work for six months or more. In international terms we are near, if we are not below (depending upon how one calculates it) the EEC average. If we take out the exceptional cases of Canada and the United States of America we are near, if not below, the OECD average. In other words, in comparative terms this country has ceased to be a country of high employment; it has become, if anything, a country of relatively low employment.

The most important point is not the overall level of employment but the structural and regional differences in the level of employment. In certain areas of this country—Northern Ireland, for example—we have on our own computation of statistics an unemployment rate of 10 per cent. More important still, if one thinks about the structural variations in employment, unemployment in this country is increasingly becoming a problem of the old, of the disadvantaged and, most important of all in terms of the future, a problem of the young. Thirty per cent. of the unemployment rate is due to unemployment among the under 25s. Just over 30 per cent. of school-leavers are in fact at this moment likely to find themselves unemployed. If one thinks in terms of the unskilled school-leaver, then the unemployment position is almost about 50 per cent. and likely to increase in the next few years.

The second point I want to make about the extent of the problem concerns the nature of the problem and the reasons for it. If one thinks of the major reasons for the problem, the significant point that comes home to one is that they are more likely to get worse than better in the course of the next few years. The single most important reason for the problem is, of course, the depth and extent of the world depression, which has produced over 5 million unemployed in Western Europe alone. Unless one has very sanguine beliefs about an increasing rate of recovery, one believes that this is a problem which will continue.

The second reason is that measures which have been necessary from this Government and would be necessary from any Government to tackle the economic problem, and in particular the problem of inflation, have left us with high interest rates and progressive cuts in public expenditure. Unless one believes that this kind of policy will be set into reverse immediately, the chances are that the problem will get worse rather than better. The third reason, which is long term, is the continuing—I would say, irreversible—decline in the traditional labour intensive industries; the very industries which in the past could be expected to take up the great bulk of the unskilled school-leavers—the mines, the docks, transport industries and, nowadays, even engineering.

I suppose the next reason is the obsession of management, for reasons that I hope to come to later in my speech, to indulge in labour saving technology, especially in those growth industries like tourism, catering and the tertiary trades where we might have thought in the present circumstances there would be an increase in labour supply which would take in some of the unskilled young and the redundant old. Finally, of course, there is the recent rise in the number of school-leavers and the undoubted future increase in the number of school leavers which will result in an increase in the total labour force in this country by 1981 of something like 750,000.

On some projections which have been made by serious students of the subject, basing themselves on factors like this, the indications are that what one might term the natural rate of unemployment, or the rate we are likely to get unless existing policies are significantly reversed, will rise from 1.4 million or 1.5 million to something like 2 million by the end of 1977, and indeed without further action to something like 3 million by the end of 1979. This is the nature and extent and character of the problem which we face.

Of course, at this point I may be told, quite legitimately, from my side of the House, that I have forgotten to mention the impact, the intention, of the Government's industrial strategy. This strategy commits the Government to a reduction in the rate of unemployment to 0.7 million by the end of 1979. It seems to me essential—in some ways this is the most important single point I want to make this afternoon—to say a number of things about this. First, this projection of what would be done about the level of unemployment was based, and honestly based, upon abandoned growth rates, upon a growth rate of 4 per cent. in 1976 and 5½ per cent. in 1977, far in excess of the growth rates now planned by the Government. The second point is that since these growth rates were published and these plans were made we have had further cuts in the level of Government expenditure, which have not yet worked their way through and which are bound to have a growing effect upon the labour intensive sectors of the public sector.

The third, and in some ways the most important, point to make about the impact of the Government's economic strategy is that the manpower assumptions have, quite frankly, always been the shakiest aspect of the strategy. The assumption was always that there was still in manufacturing industry a very strong employment multiplier, and that by increasing the rate of investment in manufacturing industry by the rates the Government expected in their economic strategy we could generate something like 300,000 new jobs in the next year or so, and that the subsequent effect on other trades of this employment multiplier would produce by the end of 1979 or 1980 something like another 1 million jobs.

My Lords, the facts are—it is essential for the Government and the House to appreciate this—that the overwhelming majority of those who have concerned themselves with this problem, the overwhelming majority of labour economists, now believe that in manufacturing industry we have a negative employment multiplier. Employers are interested in productivity—oriented investment, to maintain the existing level of output but reduce the size of the labour force. Therefore, even if it were possible that the whole of the Government's economic strategy were to be successful, if there was a turnround in the balance of payments, if we had single-digit inflation, if we had a growth rate of 4, 5, 6 per cent. in 1978 or 1979, we could still have a situation in which 50 per cent. or more of school-leavers were more or less permanently unemployed. This is the scope and nature of the problem, and this is the relationship between the problem and the Government's economic strategy.

I should like to move, as quickly as I can, to the third question: What should we do about this situation? There are a number of possibilities. One possibility, which I mention simply to discard—if others wish to take it up in the course of this debate, let them do so—is that nothing must be done on any account to generate increased employment in this country until the trade unions have learned their lesson and the role of collective bargaining in inducing inflation; therefore, if it be the case that we shall have to have 1.5 million, 1.7 million or 2 million unemployed in the course of the next two years, this is an essential part of introducing a measure of discipline into the labour market. If anybody believes that, my Lords, they will believe anything!

The second policy objective, or alternative, is to say that this can be solved by a simple act of regeneration, simply increasing the general level of employment in the economy. There are several things one could say about that. The first is that the problem, as I have sought to point out, is structural; it is sectoral. Even in countries which have had over the past ten years far higher levels of employment than we have had in this country, the problem of structural, sectoral unemployment among the old, the disadvantaged and the young remains. The second simple argument against this approach is that if we attempted to have a general expansion of that kind it would very soon produce over-heating and a rapid increase in the general level of inflation, and would be brought to an end.

The key, therefore—this is the third general heading I want to address myself to—is a selective approach: selective measures of job creation designed to have the maximum impact on labour and the labour market and the minimum secondary effects. This is now accepted in all OECD countries, all EEC countries, many of which in all sorts of ways have gone further along this path than we have.

My Lords, before I conclude, I should like very quickly to make three points. First, I have no desire—as other speakers coming after me may have, for their own reasons—to belittle what the Government have done, either in the field of training by its increased provision in respect of skill centres, the ITB programme or the work experience programme, or in the field of job creation through the temporary employment subsidy, the youth employment subsidy, job release scheme, and so on. It has been said that this has already saved something like a quarter of a million jobs. As a result of a Parliamentary Answer which I was given a short time ago on the impact of the job creation programme on youth employment, I calculate that the Government's measures can be said to have saved about 140,000 jobs among the under-25s. So I have no desire to belittle what has been done so far.

My second point, however, is that it is now clear that a very large part of this programme was conducted on the assumption that we were going through a temporary slump and that we would soon move into an upswing. This is too defensive and too temporary, especially, in my opinion, the temporary employment subsidy; it is temporary, though it is constantly being renewed, and it is defensive. Its function is to keep in work those who are already in work rather than to stimulate new employment opportunities. As a result of the Parliamentary Answer, I can tell the House, if noble Lords have not already noticed it, that it is not really significant in dealing with the critical problem of youth unemployment. Only 10 per cent. of the 140,000 workers helped by the temporary employment subsidy are young workers.

I should like to see this type of proposal replaced by a mixture of the German-Swedish system of job expansion incentive. The TUC in its recent economic review suggests an incentive of something like £20 a week for a maximum period of four years. It seems to me that if we based our policy on this kind of positive employment incentive we would be able to phase out the defensive short-term measures of the temporary employment subsidy and other measures. This kind of measure would be more flexible. It could be biased towards balance of payments industries. It could be combined with more labour-intensive forms of selective investment scheme, as has been done in other countries.

I realise that it will be said that employment subsidies are inherently inefficient, that they promote over-manning, distort labour market preferences, create useless jobs, and are costly to administer. The answer to all those objections is that most of them, if not all, apply equally to investment subsidies. What we have to appreciate is that we can no longer assume that there is an automatic employment multiplier by investment subsidies. We could have a vastly expanded programme of investment subsidies and all we should be doing is reducing the level of employment.

My Lords, my final point is that this is really the moment for a realistic manpower forecast which sets out the real costs of the options available before us. It should tell us what is the natural rate of unemployment, if we continue as we are doing until 1981. It should offset this in terms of the present level of unemployment benefits, lost tax revenue and lost output. It should cost the alternative measures of positive job creation, and the likely impact of these in terms of various alternative measures.

I do not believe that the Manpower Services Commission is the best instrument to carry out this kind of realistic future manpower forecast. It seems to me that this is either a job for some central policy review, a Parliamentary Select Committee or, most appropriate of all, for an extra Parliamentary body with the authority and resources of the Royal Commission on Income Distribution and Wealth. I should have thought that policies for positive employment creation are at least as important to this country as the question of future income distribution.

I am told that it is traditional in this House at the end of one's remarks to ask leave to withdraw a Motion of this kind, if only because there are no Papers to be seen. At the end of this debate I intend to do so. I have no desire to challenge the tradition of the House. However, I hope that this will not be the end of the debate, as it is certainly not the end of this question. My Lords, I beg to move for Papers.

3.11 p.m.

The Earl of GOWRIE

My Lords, in this short debate I shall not indulge in ritual pieties about the horrors of unemployment. It is sufficient to say that waste in all forms is no part of good household management—and what else are economics? Human waste of course adds the dimension of tragedy. Even those of us born during or just after the Second World War are close enough to the catastrophe of world recession in the 1930s to be able to understand the force and urgency of British feelings about the dole queue. Even those of us who are critical—as I shall be critical a little later—of the attempts by Governments to sacrifice the long term to the short term in relation to policies designed to alleviate unemployment are aware that this folk memory of the 1930s has become a habit which it is hard for all in this country to kick.

It is said, and well said, that whereas the Germans are fearful of inflation, the British are fearful of unemployment. Unfortunately for us, there is a chicken and egg element in such attitudes. Inflation is an even greater enemy of high employment than world recession or the transfer of resources and money from one part of the world to another. Inflation has done much more harm to British jobs than the Arabs or, to put it a little more fairly, the OPEC price rises of 1973–1974.

Of course the balance of evil is not just on the British as against the German side of the argument. Before the war German inflation and German unemployment were cured by Hitler in a savage and ultimately disastrous parody of Keynesian methods. Since the war the principal burden of unemployment in times of recession in Germany has fallen on the wretched and ill-protected shoulders of guest workers—and what horrible double think lies behind that phrase—from Greece, Turkey and the Italian Mezzogiorno. So we in Britain need make no apology for our often debilitating and self-destructive concern for unemployment. Our job is to keep the concern while getting rid of the selfdestruction—our tendency to ensure that the cure is worse than the disease.

This debate gives us an opportunity to try to clarify our often confused thinking on unemployment and so we may be grateful to the noble Lord, Lord McCarthy, for moving for Papers. We look forward to the maiden speech of the noble Lord, Lord Glenamara. We on this side are delighted that he has gone back to the good old habit of taking a place name as a title and is not to be known as "Lord Ted-Short" or some such modern addition.

The years 1973 to 1980 were bound to be tough ones—the seven lean kine of Joseph's dream in the Bible story—for Britain. We have had to adjust to the considerable if ill-balanced shift of economic power from the richer to the poorer countries. So, of course, have our competitors within the rich man's club of the OECD. Unfortunately, the defeat of the last Conservative Government at the very moment when they were beginning to adjust to this shift in resources, and the refusal of the Labour Government to make even a partial adjustment until over two years later, has had the disastrous result of ensuring that we have made a much worse adjustment to the crisis than most of our competitors and allies. Indeed, they have had to bail us out at a time which is not particularly easy for them where their own industries, and their own jobs and their own people are concerned. This is a national humiliation for us. Those of us who earn our living in the invisible exports sector, as I do, and who therefore have to travel about the world, have been made only too well aware of it.

In 1973 my noble friend Lord Barber, the then Chancellor of the Exchequer, put an end to the expansion of credit which is ironically so often blamed by Labour Ministers for our economic ills. I say "ironically" because the acceleration of this expansion, which until 1972 had been well within our economy's capacity but which I acknowledge later became very damaging indeed, was a consequence of what the Conservative Government felt to be their intense vulnerability to an unemployment level of just over 600,000. That is rather less than half of the rate presided over by the architects of the Social Contract and by the Government who campaigned on a slogan of: "Back to work with Labour". Lord Rothschild and Sir William Armstrong (as he then was) pulverised the Heath Government—and as a cat in that Administration I was reasonably well placed to observe the behaviour of the kings—with unemployment projections which they sincerely felt might threaten our entire social cohesion. A prices and incomes policy was created. Whatever one's feeling about economic management along such lines, it must be said that in their early stages such policies do protect jobs. Until that policy was breached both prices and unemployment levels remained relatively stable—certainly as stable as external events allowed, more stable than the levels of the majority of our competitors, and almost exactly twice as stable as what transpired under the three years of Labour rule.

However charitable we may feel, and however much we may appeal to external events or internal politics, we cannot escape the record. Three years of Labour rule has actually doubled the rate of unemployment and nearly doubled the rate of inflation. That is not a record that I, for one, would care to campaign on this year or next. The expansion of money, which did the real harm to jobs, was not the expansion initiated by my noble friend Lord Barber and then halted by him at the end of 1973; it was the money that the Labour Government printed and spent between March 1974 and the end of last year. That resulted in a high of inflation of 30 per cent. and a low, if we are charitable, of about 15 per cent. I say "if we are charitable" because only this week in another place Mr. Roy Hattersley was driven to admit to a rate of some 21 per cent. That in turn resulted in the currency crisis of last year and in the rates of interest which became consequent on the Government's borrowing. These were the highest in peace time and, without inflation adjustment, I think the highest at any time in our history.

High interest destroys investment; high inflation destroys profits. High taxes destroy incentives, whether in the board-room or on the shop floor, and so through the erosion of differentials do wage controls. All this, compounded by price controls and the enshrining of restrictive practices by legislation, destroys, and has destroyed, the contribution of private industry to wealth creation, and the contribution of wealth creation to jobs.

That leaves only the public sector, and the public sector is bankrupt. It should function as the result of the contribution which a just and compassionate society demands from vigorous industry. It in fact functions by courtesy of Mr. Carter and Mr. Schmidt.

In the face of this record, we on this side of the House are sceptical of the ability of the Government to ease the burden and tragedy of unemployment. We welcome the Government's declared conversion to public sector cash limits, and to the lower level of public expenditure so long urged by us and, in this House at any rate, by the Liberal Party. We welcome on this side the public expenditure White Paper of 1977, which is really, I would contend, the background to this debate. But, of course, the implementation of this White Paper, the implementation of these cuts, will raise unemployment yet more.

So are we on this side in fact welcoming increased unemployment ourselves? I would say not a bit of it. If this programme had been, as we urged, part of an orderly run-down of expenditure from the autumn of 1973 to the present, such as we have seen happening in the USA and in West Germany, unemployment would have been levelling out at about this time, and, coupled with the abolition of price controls, should even have been falling. With steady reductions in direct taxation, and with increases in purchase tax, it would, in my view, never have exceeded 1 million, or 1.1 million at most. The sins of the Wilson Government are being visited on the Callaghan Government; the sins of the Social Contract on Plessey, on British Leyland, and on jobs lost everywhere through its doctrinaire attack on profitability.

We are sceptical, therefore, in spite of what appears to be a shift in the right direction, because even as the shift is being made, the dreadful old furies of prior policy commitments are being trundled on stage. As I understand it, tomorrow afternoon the Aircraft and Shipbuilding Bill, admittedly a little improved by your Lordships, will receive Royal Assent. This will actually increase public sector borrowing requirement by some £850 million. Thus the delayed and vaunted cuts made by Labour must be seen against the increases in Socialist spending which they have carried out, and other policies which their numerical weakness in the House of Commons may delay them from abandoning.

Our scepticism is also shared by those still fortunate enough to have their jobs. We have heard already in this debate, and I imagine we shall hear more, of the measures adopted by the Government in response to the levels of unemployment which they have themselves helped to create. The temporary employment subsidy, for instance, and the recruitment subsidy lately replaced by the youth employment subsidy, have been introduced. The one provides a £20 a week subsidy for employers who keep on employees that they would otherwise have made redundant. The other will give a £10 a week subsidy to employers for creating opportunities earlier than they otherwise would for young people who have been unemployed for six months or more.

Attempts have been made to give basic work experience to unemployed young people through the job creation programme which provides funds for short-term community orientated employment. The Government are now preparing to supplement this with the work experience programme to provide workless youngsters with insight into industry. It is highly questionable whether these measures are effective overall, though I acknowledge that full assessment of the job creation programme cannot yet be made. I understand that the Manpower Services Commission will be reporting in a month's time, and I hope that this debate will not prevent us from examining it at a later stage after it has so reported.

In sum, then, we must start to think a bit more about the long term and a bit less about the short term where jobs are concerned, and indeed where the whole of our economic management is concerned. No one likes to institute policies which throw people out of work, which throw even local government officials or civil servants, to take two classes under attack at the moment, out of work. No one underestimates the dangerous cynicism engendered in the young by what appears to them to be a wilful refusal by society to take up their time or their talents. As an ex-university teacher, I was delighted to hear what the noble Lord, Lord McCarthy, had to say about that. But we do have a Welfare State; we do have a caring society; we are not, as is so often touted about in political debate, a deeply divided society—I for one cannot find any evidence for this. Having come to this pass, and not through the fault of my noble friends, we must resist the damage that palliatives and controls, and contracts with one interest group or another, may do to the private side of the mixed economy on which our money and our working life depend.

All developed countries have witnessed a growth in service sector employment in recent years. The difference between Britain and the rest is that the transfer of manpower has been much more rapid here. Our exceptional increase in public services has done little or nothing to create wealth and trade and jobs; instead, it has absorbed resources through the increased taxation necessary to finance it.

Reversing our decline will involve a massive transfer of resources out of the public services and into the private sector. It will mean the achievement of higher output levels and better productivity per man in industry. Essential to this process will be the creation of an economic climate in which investment can be spontaneously generated or attracted from abroad. But the efficient deployment of our national manpower resource will not occur unless people can be attracted to new jobs and away from old ones; unless existing restrictive practices are abandoned and new ones avoided; unless people can be trained for necessary skills; unless disruptive demarcation disputes can be avoided; and unless productivity can be improved in advance of pay. To create such an economic climate will not be easy, for we have left things very late. It will, I acknowledge, need time. But more than anything it will need an Administration with the political confidence and the political will to believe in what it is doing. There is not the slightest evidence of such confidence or belief in the attempts of the present Government to deal with its unemployment today.

3.27 p.m.

Baroness SEEAR

My Lords, in the short amount of time which is available to one in a debate of this kind I want to raise three points. The first is really in the form of a question to the Government, and perhaps it would be more appropriately put at Question Time. The noble Lord, Lord McCarthy, in introducing this debate this afternoon, referred to the various groups of people who were particularly suffering from unemployment: the old, the disadvantaged, and the young. Rather surprisingly, however, he omitted one group which, if I read the official figures aright, are suffering exceptionally; that is, women in employment. A reading of the figures—and I am asking the Government to give us an explanation of this—shows that since March 1975 the rate of increase of unemployment among women has risen much faster than that among men.

It may be that this is a statistical quirk. It may be due to little more than the fact that a great many women were not in fact paying National Insurance contributions in recent years, and they may now be paying it to a much greater extent and therefore getting into benefit and registering. That could be the explanation. It could be that a great many women working part-time have been got rid of as part-time shifts have been shut down. But the matter certainly needs some explanation. It ought not to be because women are being dismissed in preference to the dismissal of men, because the legislation that we now have in the country explicitly makes it illegal to operate redundancy against the interests of women, women and men being treated equally for the purposes of redundancy.

I should like at this point to ask the noble Lord—and I shall understand if he cannot reply at the present moment, because I did not give him notice—what is the explanation. I would ask whether he would agree that women's rates are going up much faster than those for men, and what explanation there is for that. If the noble Lord does not know, then we really ought to find out, because these figures need some explanation, and so far we have not had one.

The two other points I want to make are of a quite different order. They are different from the kind that have been made by the noble Lord, Lord McCarthy, and the noble Earl, Lord Gowrie. It seems to me that two matters of considerable importance create a very great paradox in the situation in which we find ourselves with regard to unemployment. I have on previous occasions in debates of this sort drawn attention to the paradoxical situation that, while we have serious, rising and grievous unemployment figures, we also have acute shortages of labour in certain key sectors. In my view this factor should be at the centre of our thinking when we are considering unemployment; it is not a matter which should be treated as a peripheral and marginal one.

Relying on official publications and figures, I would draw the attention of the House to a proposal put forward by the Manpower Services Commission in June of last year when they were talking about serious shortages and submitting a proposal for collective funding, which I understand is not now being pursued. The Commission produced a long list—I will not weary your Lordships with all its details—of jobs for which it is difficult to find manpower or womanpower; included are electrical and electronic production fitters, production electricians, press and machine toolsetters, toolmakers, tool fitters and markers-out and precision instrument makers. I could continue with the list—all absolutely key, skilled people. We must focus attention on the fact that in the present state of serious unemployment, particularly among the young, we are unable to fill skilled jobs.

The Neddy report on engineering craftsmen which came out only three weeks ago re-emphasised and documented this state of affairs. Talking about apprenticeships a highly relevant aspect in the whole issue of youth unemployment—the report said: In recent years the number of people completing apprenticeship training fell from an average of 15,000 a year in the early 1970s to an anticipated average of under 10,500 in the next few years, barely enough to make up for expected promotions of craftsmen, let alone other wastage. It seems inevitable that in 1977 and 1978 there will be fewer craftsmen available than companies will wish to employ unless there is a substantial measure of redeployment and changes in utilisation of skilled crafts. The report went on to point out that not only was there this drop in the number of apprentices in the industry but there was also a drift of skilled men away from it. It gave details of men who had drifted away from the industry. Where are these skilled men going? What are they doing? Where have they gone, these men who are our very life-blood? They are doing such jobs as those of licensee publican, dog kenneller, butcher, warden caretaker, grave digger, whisky blender. I have perhaps chosen the less important of the occupations to which they have gone, but this is no laughing matter.

The need to have sufficient skilled men and to promote a willingness among people to become and remain skilled is at the centre of our economic recovery. These are the men who add value to and who create the wealth of the nation. I say this in full knowledge of the fact that I am speaking at a time when skilled men in Leyland are revolting against the conditions under which they have been working. I do not say this in opposition to what the Government are doing in that connection. However, when we create a situation in which toolmakers, who are the crème de la crème of the engineering industry, are, for one reason or another, taking action of this kind, it is long overdue that we make a thorough investigation into what is happening to the recruitment and retention of craftsmen in industry.

As I say, I am speaking of the people who create the wealth of the nation, but they also create jobs because the employment of skilled men makes possible the employment of semi-skilled men; they are carried along in the train of the work of the skilled men. Moreover, they create real wealth because, after all, our wealth is, to a large extent, the value we add to imported materials. We cannot afford to ignore our skilled manpower. By creating wealth and jobs they create purchasing power, and in turn that creates other jobs in all that range of services which are highly labour-intensive. If there were more wealth to be spent, we could be finding jobs for many of the people who are now unemployed.

I urge the Government to accept that what is happening in the skilled trades—the inability to recruit youngsters and retain and obtain more skilled men—should be a matter of the greatest urgency and should be inquired into. We can only guess at the reasons for the present state of affairs. It may be—there are suggestions to this effect in the report from which I quoted—that some of the jobs which are called skilled in industry are in fact not very skilled; that men who have served their time and learnt a complex skill are disappointed and disillusioned by the tasks they are asked to do. It may be that it is too difficult for older people who are capable of being trained for skilled trades to take that training and then get the jobs which require doing in the skilled trades. I do not know, but certainly we should find out. It may be pay, prospects and differentials. It may be that in our desire to enhance the position of the low paid, a really worthy desire, we have so narrowed the differentials between the skilled and the semiskilled that it is no longer worth the skilled man's while, not only in terms of what he can get now but in terms of prospects, because there must be prospects for the skilled man as well as for the rest of us. I urge that this whole area should be seen as a central issue in this overall question of unemployment.

The second point I wish to discuss is different, and here the noble Lord, Lord McCarthy, may disagree with me less than I hope he has agreed with me so far. I find it paradoxical in the extreme—I agree with Lord McCarthy that many people far more expert than I am are accepting this position—that in a country, still more in a world, which is grievously short of both materials and services that men and women throughout the world want, we should accept as inevitable, as so many are accepting, that unemployment will persist. In my view, it is sinful that we should accept that situation. Instead of saying that we must learn to live with unemployment we should be far more radical and ask, "Why does this absurd and paradoxical situation exist?

After all, we do not have a surplus of goods and services in the world. On the contrary, there is a great shortage. We are misusing our resources of cash and people and we must discover how to stop misusing them. We need to concentrate our resources where value-added is high—this links with what I said about skilled manpower—so that out of that high value-added we generate the resources to pay for the services we want. This must be the scenario for the future. But what are we doing? We have low value-added. Many of our well-meaning policies of the last two decades have led to a position in which we are more and more rigid, freezing people in the jobs they are at present doing, however low the value-added.

This is an absurd way for this country to use its resources. We should get together in the face of the continuing threat of unemployment, which we must not in any circumstances accept as being inevitable, and find out how, with a better utilisation of resources (and this will mean the reversal of many of the policies we have adopted in the past), we can ensure that people are used in such a way that they will add value and be wealth-creating. This is why, although, in the short term, I understand so well why the noble Lord, Lord McCarthy, is putting forward many of the policies he is—and would, in the short term, go along with them—I believe that we must as the same time say that we have to get out of this situation and must see to it that we are prepared to redeploy our resources so that they are being used as effectively and profitably as possible. Out of that increased wealth we can provide jobs through the provision of services which, in this country and throughout the world, are so badly needed.

Lord McCARTHY

My Lords, before the noble Baroness sits down I wonder whether she would agree with me that three quite simple reasons are that more women register now that we have automation in the industries like catering and cleaning where women would be expected to go—the unskilled industries—and that, in a period of high unemployment with an Equal Pay Act, some people still prefer, if they have to pay the same amount, to employ men.

Baroness SEEAR

My Lords, I asked the Government because these are all possible explanations, but we do not know. In answer to the last point, I would say to the noble Lord, Lord McCarthy, that I do not think that we want to get into an argument about this but that, since, alas! jobs for men and women are at present so segregated, men and women are rarely interchangeable. So I do not accept the noble Lord's interpretation.