HL Deb 16 March 1977 vol 381 cc40-70

4.15 p.m.

Debate resumed.


My Lords, although I was for 25 years in the other place, I am very much a new boy here and therefore I ask the indulgence of your Lordships for a maiden speech. When the noble Lord, Lord McCarthy, raised a debate on unemployment I felt that I should say something about the situation in the North of England, from which I come. May I say that it is quite like old times to be speaking from the Back Benches on unemployment and to be followed by the noble Baroness, Lady Ward of North Tyneside.

Your Lordships will have noticed in the Press on Monday a forecast by the Henley Centre that, when the upturn in the economy comes, firms in industry are not likely to take on as much labour as previously. They forecast that by 1982 the unemployment figure will rise to 2.5 million. They then went on to say that if the Government take vigorous measures to encourage new growth industries the unemployment figure could probably be held to 1.1 million by 1982. I do not accept these figures at all but I accept the proposition on which they are based: first that it is very unlikely, because of technological change, that industries will ever again employ as much labour as they did previously; and secondly, however, that that change can be mitigated by vigorous Government action of the right kind and the right quantity now.

I want to illustrate what I have to say by referring exclusively to the North of England, for a number of reasons—because I live there, because I represented part of it for a quarter of a century, and also because one of my voluntary jobs is the chairmanship of the North of England Development Council which covers the big quadrilateral from Barrow to the Solway to Berwick and to the Tweed. In that area at the moment there are, on average, 7.9 per cent, of men and women unemployed. This is the highest figure in the United Kingdom except for Northern Ireland. And 105,000 people are out of work.

In September last year the research department of the Development Council did a very well based piece of research and they forecast that by 1978–79, one to two years from now, an additional 92,000 jobs will be lost in that region in shipbuilding, in the manufacture of power generation equipment, in steel and in construction because of the structural changes taking place in those industries. This takes no account of the spin-off on the firms supplying them. Anybody who knows the industrial area knows that when a works or a shipyard closes it affects everybody down to the shop at the corner of the street. If these additional 92,000 job losses occur—and at the moment the forecast is depressingly on target in the six months since it was made—male unemployment in one to two years from now in that northern quadrilateral of England will rise to 14.1 per cent. and a large number of areas in that region will have 20 per cent. and upwards unemployed.

This is due to the long-term decline in manufacturing and extractive industries, the start of which pre-dated the present recession. As a result of that, for many years we have exported jobs and people to the post-war boom areas of the Midlands and South-East of England. To make matters worse, we have an older population than the rest of the country. The Northern Region—and this is the major point I want to make—is a clear demonstration of the nature of unemployment as a long-term, deep-seated structural problem and not solely as a consequence of the present recession. That—and I hope the Government will appreciate this; for I am afraid from their policies they are not appreciating it—is the difference between unemployment in the North of England, in industrial Scotland and in Wales, and unemployment in the Midlands and the South-East. The job creation scheme, the temporary employment subsidy and so on are all very welcome. Anything is better than unemployment. But such measures are not a solution to the kind of unemployment we have in the North of England. The stimulation of new industry, new growth industry, is the only way to resolve this problem.

To emphasise the point, may I illustrate the situation in the North of England by referring to two towns: one big town on the East Coast and one very small town on the West Coast. Sunderland has a population of just over 200,000. Today it has a male unemployment figure of 14.4 per cent. and an average unemployment figure of 10.9 per cent. One exchange area in the town has an unemployment figure of 16 per cent. The ratio of vacancies to unemployed is one to ten. A fortnight ago, the Plessey firm announced the closure of a large telecommunications factory in the town. That factory employs 2,088 people. If it closes (and it looks as though it is going to close), the average unemployment figure in Sunderland will be 14.3 per cent. That is excluding the spin-off on all the firms who supply the Plessey company. There are also another two possible closures on the horizon. If they occur, the unemployment figure could rise to 16 per cent. The only prospect at the moment for new jobs is about 750 by the middle or late 1980s. Of course others will arise, but they are the only ones in sight at the moment. Here is a big town in the North of England drifting rapidly back to the 1930s. That is not an exaggeration.

May I now turn to a small town on the coast of Cumbria. Maryport built its industrial prosperity in the 19th century on coal, iron works and docks. In the depth of the depression in 1934, 88 per cent. of the male population in Maryport were unemployed. The unemployment today is almost the same as Sunderland's, 14.5 per cent. male unemployment, and the average unemployment is 11.2 per cent. The ratio of vacancies to unemployed in Maryport is 1 to 15. In the 16 years between 1961 and 1977 only 250 new jobs were created and 500 jobs were lost. There has been a steady outward migration. I checked up from the county council, and the population dropped by 900 in the ten years between 1961 and 1971. Of all the people left, 63 per cent. were in the 20 to 34 age group. The population is now 11,500.

Here is a small town with a great industrial history which will die unless some vigorous Government action is taken. That is not propping it up with job creation schemes, but some vigorous promotion of new growth industries in that area. A distinctive feature of the situation in the North is that the problems are getting worse because they are structural. I am sorry to say this about my late colleagues, but the priority that the Government attach to solving these problems appears to be diminishing.

Let me explain what I mean. Industrial policy over the past few years under both Governments has consisted of a number of carrots and one stick. The carrots have been regional development grants, the regional employment premium and Sections 7 and 8 of the Industrial Act 1972. The stick has been the issue of industrial development certificates. But I am sorry to say that the Government are demolishing the regionally selective policy. In May of last year they lifted the exemption below which factory development could take place in non-development areas from 5,000 square feet to 12,500 square feet.

This relaxation had particularly damaging consequences for the North of England, Wales and Scotland. The IDC procedure is a particularly useful instrument for relieving long-term structural unemployment. It has been estimated that it has brought 75,000 new jobs to the assisted areas between 1964 and 1970. It therefore helped the areas in the South-East of England and the Midlands suffering from recessional unemployment, but it did so at the expense of the older industrial areas suffering structural unemployment. The relaxation last May by the Government took place at the very point in time when the procedure should have been tightened and not relaxed.

Secondly, the Government have ended the regional employment premium. What effect has this had on the North of England? It has increased the average wage costs in manufacturing industry in the North of England by £2.71 per week. It has taken £64 million out of the economy. In the North of England it has been equivalent to a revaluation of the currency in the region, raising the price of all the goods and services that we produce. When he made the statement on 15th December last year about this, the Chancellor told us that the REP should now give way to more selective measures. He said that forms of selective assistance to get increased resources were sectoral schemes to support the Government's industrial strategy. It therefore appears that subsidies for labour costs have now been re-allocated to subsidies for capital costs, and a regional subsidy has been re-allocated to a selective sectoral strategy which takes little or no account of regional needs.

Why do I say that, my Lords? To date, the assistance for sectoral schemes and accelerated project schemes has given the North 6.5 per cent. of the Great Britain total. Wales, which has a similar problem, has only 2 per cent. The West Midlands has received 15.7 per cent. I am talking about the money allocated under this scheme. The Eastern Region has 14.9 per cent. Yorkshire and Humberside, where the unemployment problem is less severe, has received 31.5 per cent. This is because it is designed to aid sectors of industry and not regions. I believe that this is sheer lunacy at the present time.

Nor has the loss of REP been mitigated by the temporary employment subsidy, for to qualify for the payment of this subsidy a firm has not only to prove that it is viable; it has to prove its viability after the period of payment of the grant, and precious few firms in the North can do that. In the North up to March, only 73.7 per cent. of applications for TES had been accepted, and only 58 per cent. of jobs for which it was requested have been covered by payments compared with the Midlands, who have three times the total given to the Northern region, because many firms in the North fail this viability test. By its very nature it helps recessional rather than long-term structural unemployment, so the older industrial areas have had a very raw deal indeed from the temporary employment subsidy. Therefore, of the Government's industrial strategy, only two instruments remain unscathed: Section 7 of the Industry Act and regional development grants.

On 5th November last year, the Secretary of State for Industry made a speech in Coventry. He told his audience that the Government were carrying out a critical review of regional industrial policy. He said that in future the emphasis would be on an industry-to-industry basis and that there would be no advantage whatever for Coventry to be given special development area status. In other words, the Government are clearly abandoning regionally based assistance, in spite of the chronic, deep-seated nature of our problem.

I believe—and I end on this note—that assistance should be mainly regionally selected, not sectorially selected; because sectorial selection does not help the older and depressed regions to the correct extent. One of the basic weaknesses in our economy has been the gross regional disparities that some areas like the North, South Wales and industrial Scotland have suffered, with high unemployment, low wage rates and all the other consequences springing from those things in education, in health and in the environment—one deprivation upon another. There are so many areas of that kind in Britain.

We often talk, especially on this side, of creating "one nation", and we do it usually in terms of social class. I am not very interested in the class struggle, but I am very interested in raising all parts of the United Kingdom to the level of the most prosperous ones. Unless we do that, my Lords, it is really a bit of a mockery to talk about "one nation" in these Islands. Had we done that in the past, I believe that pressure for devolution, for example, would never have built up to the extent that it has. Anybody who goes to the areas of industrial Scotland and Glasgow can see the extent to which the older industrial areas have been neglected. We cannot allow the little towns like Maryport to die. We cannot allow the big towns like Sunderland to drift back to the 1930s. The Government's present policy, I am sorry to say, is not helping the process of creating one nation. I therefore implore my colleagues in the Government to stop the process of demolishing regionally selective assistance and to devise new regionally selective inducements to industrial growth. Only in this way, I believe, can we create "one nation" in our country.

4.33 p.m.


My Lords, it gives me the greatest possible pleasure to congratulate the noble Lord, Lord Glenamara, on his maiden speech. I sincerely and absolutely mean that. I should like also to congratulate him on having arrived here in our Lordships' House. I am sure we all agree, having listened to his maiden speech, that he is a most experienced individual, and that the experience and knowledge displayed in his maiden speech is a great asset to the part of the world which he and I both love and admire.

I have never before been called upon to congratulate anyone on a maiden speech. Perhaps I might be allowed just to say that I have known the noble Lord for many years. As he has told us, he was in another place for many years, and I too was there for 38 years. Therefore he and I know each other very well indeed. We have very often disagreed, but that is completely natural. On the other hand, I know very well that the noble Lord has great humanity and that he wants, as I do myself, to do everything possible to ensure that our part of the world is as prosperous, happy and contented as many other parts of the country. I hope that we shall hear the noble Lord, Lord Glenamara, very often in the future, for he has a great deal to offer this House from his knowledge and experience.

I am going to make a very short speech, my Lords. I have only two or three things to say, but I believe they are important. I listened with great interest to the Statement made about Shotton and Port Talbot which are producing steel. I hope that before the end of our debate today—and I am sure the noble Lord, Lord Glenamara, will agree with me on this—we shall be told that the Consett Iron and Steel Works will receive just as much consideration and help as the others. Consett has once or twice been under the threat of closure, but I hope it will be maintained as a most important steel-producing plant. It is tremendously important.

There are several things I should like to mention. I should like to go back for a moment to 1931, when I first entered Parliament as the Member for Wallsend-on-Tyne, which is a highly industrialised area. At that time, in certain parts of the industrial section of Wallsend-on-Tyne, 84 per cent. of the employable population were unemployed. Since that date I have done my very best to try to ensure full employment for the area. I repeat, 84 per cent. of the employable population were then unemployed; and I think it speaks marvellously for the people in our part of the world that they have worked so hard and so well under such frightfully difficult circumstances. I remember one very skilled pit man telling me that when he was first offered the dole he went home and smashed up all his furniture. Quite why he did that, psychologically, I have no idea. But we in the North have a most wonderful population—and long may they remain there! I think we have done very well in very difficult circumstances.

I should like to put one thing on the record. It is something I have wanted to do for very many years. Not only have we contributed industrially, but internationally we have made some very great arrangements. When the last war broke out in 1939 we were just beginning to get over our unemployment problems. We had our trading estates, and new industries were coming in. We were just beginning to get over the frightful period of unemployment experienced in the early 1930s. At that time, in 1939, the assessment was made—and nobody could criticise it—that the East Coast (particularly Northumberland and Durham, and parts of East Anglia, too) were nearest to the Germans and therefore were the most likely areas to receive the first German bombs. It was then decided—and, as I said, no one could really criticise the decision—that we were not to be allowed to have any new industries at all. We kept the industries that we already had, and we worked very hard to make our contribution, but we were not allowed any new industries. Both Northumberland and Durham had their coalmines, which were very early developments. We were one of the first mining areas to be developed, so our mines were beginning to run out; we had raised all the coal. We still do not have very many mines, but they are jolly good ones.

What happened was that the new developing industries, which were so essential for victory and which have played a great part in the economic development of this country, all went either to the Midlands or further West. I think that this was made clear in the speech of the noble Lord, Lord Glenamara. This happened in the case of the motor car industry, in the development of radio and television, and even in the man-made fibre industry. Nobody in our part of the world—if I may say that to the noble Lord, Lord Glenamara—complained, because it was essentially a decision in the national interest. What happens now? Nobody has mentioned that we require more attention, because we did not have the benefit of any of the new industries which enabled us to win the war. Having waited for so long, I am very glad indeed to have that important fact on the record.

Another point which is of interest is that it has been advantageous to Scotland and Wales to have Secretaries of State, who can argue inside the Cabinet. We can only argue for ourselves. Though I am not in favour of devolution, which certain parts of Scotland and Wales are now demanding, we want people to put our case, as the noble Lord, Lord Glenamara, did so excellently in his maiden speech. While the present Government are in power, the noble Lord, Lord Glenamara, will perhaps be able to argue for us, instead of through a Secretary of State as they do in Wales and in Scotland. We have had to fight for ourselves in our own way. Sometimes we have had success, and sometimes we have not. Everybody is very nice in this House. People are very helpful, very co-operative, very charming and very polite. I know that I must sometimes annoy people in this House by always standing up for my part of the world, which I shall continue to do; and now that he has arrived I am sure that the noble Lord, Lord Glenamara, will also stand up for that part of the world.

In arranging policies, it is not always very good to have them put forward by people with either safe Conservative seats or safe Labour seats, because unless people know as much as the noble Lord, Lord Glenamara, and, if I may say so, myself—which is not very modest—about our part of the world, people say: "Oh, goodness! Is that girl at it again?". However, I never minded standing up in another place, and I have tried to stand up in this place. I have some friends, and I am sure that the noble Lord, Lord Glenamara, has friends on his side of the House. But I have enjoyed listening to him. I think it was very lucky for us that the noble Lord, Lord McCarthy, introduced his Motion today; and it was a very good idea for the noble Lord, Lord Glenamara, to make his maiden speech on an occasion like this.

I am not talking only about selective schemes which can be developed anywhere. We want something done to help us, and the East Coast, too, because that area has lost quite a lot by also having no new developments. We want to have a fair share, we want fair arguments and we want jolly good Ministers, whether they are on the Labour side or on the Conservative side. I will not go into politics, because this is not a good day to do that, but I expect that everybody knows what I mean. Anyhow, I am very glad to have been able to take part in this debate. I hope that it will enable this country to play the full part which we have always played in the past, and I also hope that the problems of our country will be rapidly and justly settled.

4.47 p.m.


My Lords, may I add my congratulations to my noble friend Lord Glenamara? I, too, come from the North and it is good to know that someone has such a deep and profound understanding of what is going on there. We have textile mills in Todmorden in Lancashire. In 1970, there were 731,000 people employed in the textile industry. On the last count in November 1976, there were only 526,000 people employed in the textile industry. That is an annual decline of 30,000 jobs. While we are debating today, another 120 people will probably have lost their jobs in the textile industry in the North of England.

Is this inevitable? Is this an act of God? May we look at the reasons? Could it be, as we hear about in other industries, union trouble or shop-floor trouble? The answer is emphatically, No. No other industry could wish to have a more responsible, responsive or co-operative labour force than the textile industry. I do not remember any strife, struggle or strike in the last 30 years in our part of the world. Could it be lack of skill? I think I am able to assure your Lordships that in textiles this country still leads the world. This country teaches the world. In fact, in large measure, we supply the skilled people who run the textile industries in the United States and even in West Germany and Switzerland, as well as in other parts of the world. No, my Lords, it is not a matter of skill.

Is it possible that the demand for textile products has declined? Again, the answer is, No. There is a large and ever-growing demand. What could be the reason? In my view, there are two prime reasons for the decline. Very largely, the textile industry depends on free enterprise. In our mills, we just do not have the competitive ability to reward people and induce them to stay in the industry. I have had occasion before in this House to mention that for exactly the same job and responsibilities, a man in this country has to settle for less than half the pay that his counterpart would get in Europe. It is not cheap competition from Taiwan or Korea that stops us from expanding or holding our own in our industry; it is that we are uncompetitive in holding people of the right talent. This is a very serious criticism.

Could the reason for our uncompetitiveness be that we so desperately need the revenue received from the higher incomes? The statistics show that the total tax accruing to the Chancellor of the Exchequer at the higher rates is less than 2 per cent. of the total revenue received. For the sake of this 2 per cent. we amputate incentive at the top. Any industrial unit is run by example, not by exhortation. If you destroy incentive at the top, it filters right down the line. Could it, then, be that the reason for our uncompetitiveness is the moral compulsion or the theological requirement to introduce a gap between the very well off and the not so well off, between the rich and the poor? Any one of us going through London these days sees far more rich people than we have ever seen before, except that they are not English. Not only can we not collect any revenue from them; we cannot even collect parking fines from them. So in that sense there is no justification for it. May I earnestly suggest that we look again at the fundamental cause of the decline of our industry: the inability to reward people in a competitive way for their skills. We are denying ourselves the benefit of our four-minute milers.

There is another point which ought to be looked at very carefully. In the textile industry, success depends upon being able to keep the industrial units going at as even a pace as is possible; yet it has high points in demand and then slack periods at other times. The only way to solve the problem—this is the way in which our successful competitors in Europe and overseas go about it—is to build up stocks at times of low demand which will then be useful in meeting the high demand which will, one hopes, and which usually does, turn up.

With our peculiar fiscal system, with our peculiar taxation system, when it comes to calculating tax liability for corporation tax, the Revenue takes the attitude that the stocks held should be valued at either cost or market value. How does one measure the market value of the future? You get the absolutely absurd situation that in most textile mills you spend more money on accountants than you spend on technicians to argue out this barren argument; and since at some point you have to settle half way, the prudent manufacturer decides to opt out of the argument and to produce only against firm orders.

In textiles, it is impossible to build up production to meet a sudden demand. Of course, our competitors abroad, who are better placed, are ready to exploit the situation with their stocks. The demand is met, but it is met from abroad. Thus the situation has been created in which our textile industry declines at the rate of 30,000 people a year, which is almost parallel to the increase in employment in the textile industry in Italy. In Sweden, which has a not dissimilar tax system, the industry is allowed, and indeed encouraged, to write down its stocks to zero if it wishes, because they say that they will burden the industry with profits tax only when the profit is made. We, however, are called upon to provide a commitment on profits which we have to pay out of money which we have not got. That is a very serious handicap.

Our debate today is about selective measures to help our industry. We cannot run a free enterprise economy without reward. I think we should be careful not to kill the goose which lays the golden egg in anticipation of the goose laying the egg. May I suggest that this point should be looked at. If, through our fiscal policies, we purge this country of talent and industry of its reserves the decline will continue. I thank noble Lords for their indulgence.

4.56 p.m.


My Lords, I, too, should like to congratulate the noble Lord, Lord Glenamara, on his maiden speech and from these Benches to welcome him to this House. Like the two previous speakers and the noble Lord, Lord Glenamara, himself, I come from the North, albeit from the North-West and therefore share that sympathy with him. May I also say briefly what a pleasure it is to follow the noble Lord, Lord Kagan. Not for the first time I find myself very much in agreement with much, indeed practically all, that he had to say.

In the words of the Motion of the noble Lord, Lord McCarthy, I accept the need for further selective measures or for the development of existing measures to tackle the problems of unemployment, at least in the short term. Also, I very much support what my noble friend Lady Seear had to say about the shortages of skilled labour which an increasing proportion of CBI respondents, for example, are citing and the need for adequate training opportunities.

As the Employment Secretary said last week, and as we have been reminded by the noble Lord, Lord Glenamara, the problem no longer has to do solely with economic recession or the lack of training. It involves also the serious new factor of a growth in our potential working population which is likely to last for some years and also the factor of technological development. The number of people available for work is currently increasing by 150,000 per annum. This is largely due to the bulge in the birth rate in the 1960s. At the same time, large-scale industry is becoming more capital intensive. For example, the company for which I used to work has just sanctioned capital expenditure of £25 million on a new plant which will provide only 90 jobs. In my view, therefore, there is a need to approach the longer-term problem in an imaginative way so that if it continues to be the case, despite all our efforts, that there are not enough jobs to go round, we shall be ready to meet the situation with more than temporary expedients.

Here I should like to offer the opinion that, if necessary, it would be better that those who have reached the age of, say, 60, should be encouraged, as they are already being encouraged in a number of progressive companies, to retire prematurely rather than that there should be unemployment among young people. I know that to a limited extent, at any rate, voluntary early retirement is the purpose behind the Job Release Bill which we are to debate next week, so I shall say nothing more about that subject now. But surely there can be nothing more demoralising than that a young person's first experience of the outside world after leaving school should be that for him, or her, there is no worthwhile occupation. If I may amplify some of the statistics already given to us by the noble Lord, Lord McCarthy, unemployment among young people has become progressively worse since the year 1973–74. At its peak in August 1973 it stood at 43,000; in August 1976 it reached 242,000; at its lowest, in March 1974, the figure was 21,000, and in March 1977 (this month) I understand it is unlikely to be below 75,000. In fact there is every indication that for school-leavers this summer things will be as bad as last year, or alas! worse.

Since 1973 there has in fact been a steady deterioration in the employment prospects of young people compared with those of adults and the problem is accentuated by so many of them being disadvantaged—often coloured immigrants, and living in the centre of cities where housing, violence and even crime are already bad enough. According to my information, many people in the careers service and elsewhere who have direct experience of the labour market are convinced that there have been long-term changes which are working against the recruitment of young people in particular. Among the factors they quote is the undoubted growth in the employment of married women—it is not for me to answer the question posed by my noble friend Lady Seear; it may be that her fears relate rather more to young single women than to married women and no doubt the noble Lord, Lord Wallace of Coslany, will enlighten us, if he can, when he winds up the debate. That is one factor as I understand it.

There has also been a narrowing of pay differentials between adults and young people; there is the growth in National Insurance contributions and other non-wage costs of employees; there are the effects of the Employment Protection Act, including redundancy payments, and so on, reducing turnover, and there is the belief of many employers that young people are leaving full-time education nowadays with poorer levels of literacy and numeracy and with generally lower motivation to work than has been the case in the past.

All that sounds rather gloomy. As regards what should be done about it, I can speak with some knowledge and experience of the matter as the chairman of one of the district manpower committees which were recently established throughout the country to advise the Manpower Services Commission on employment and training problems in the various areas. The committee for which I bear responsibility last year set up a working party to deal with this very problem of youth employment and to encourage local employers, voluntary organisations and local authorities to take part in, for example, the job creation and work experience schemes of which we have heard already this afternoon. They are aiming to give at least temporary employment to school-leavers. In this I am glad to say that, along with other such committees, we have largely succeeded but as has been said, schemes of this kind have drawbacks and are at best only short-term palliatives.

However, some time ago the Manpower Services Commission set up a working party, on which educational interests are represented, to study all current measures for helping young people. Its aim is to provide a constructive alternative for all school-leavers without a job, including possibly some form of national community service; and I understand it is due to report at the end of this month. Perhaps when the noble Lord replies to the debate he will be kind enough to confirm that all this is in fact the case and that the Government will consider the report as a matter of urgency.

I do not myself rule out the possibility of work sharing as a further way of tackling the problem, so long as unit costs are not allowed to rise as a result. Given that essential qualification it would become largely a matter, as I see it, of whether those in employment were willing to forgo the regular overtime that much too frequently is still being worked while others have no job at all. It might even become a question of whether those employed, for example, as teachers would be willing to be paid at a lower rate so that others trained to teach could make use of that training. I expect the question really, if the worse came to the worst, would be at what point the desire for job security would act as a sufficient spur to prompt people to accept lower living standards.

I do not want to strike too pessimistic a note, because I very much agree with what my noble friend Lady Seear and others have said, that the great need is to create more employment and solve the problem in that way. Nevertheless, these are all matters which we shall have to face if we cannot generate sufficient economic growth to avoid the problems altogether. Our hope is that if we can learn to live and work and plan together we shall not have to face them. Whatever we do, do not let us approach the problem simply by calling for more inquiries, committees and organisational changes, and imagine that by so doing we shall solve the problem. Admittedly there are already a great many bodies involved in the problem of unemployment—according to my reckoning, at least five Government Departments, the Manpower Services Commission, the Advisory Conciliation and Arbitration Service, the Health and Safety Commission, and so on. I understand that a review of the roles of these extra-Governmental bodies is already under way, but the prime requirement seems to be for us to confront the problems face to face within existing structures rather than altering those structures yet again.

I should like to end by offering some encouragement to the body which is mainly involved in this problem; namely, the Manpower Services Commission, and I hope that my motives in doing so are disinterested. Certainly I know at first hand that the Commission are going to some trouble to maintain two-way communication with district manpower committees and in other ways with the local communities which use their services, to respond to criticism and generally to enable people in their localities to influence, so far as practicable, national policy. I know, too, from their first published attempt to establish a strategy in the document called Towards a Comprehensive Manpower Policy, that the Commission recognise some of the basic issues which are involved, such as how the labour market works, what the long-term needs of the economy are, how people set about selecting jobs, what are the obstacles in the way of mobility, and so on.

The Commission have also recognised the most critical problem of all, which has been referred to, rightly, on several occasions this afternoon: that any real improvement in our economic health will come only from an increase in our productivity, and that such an increase ahead of economic growth may mean less employment in the short term, and to reduce unemployment permanently therefore is a far more difficult problem than many people seem to realise or are willing to acknowledge. Our prime needs are to improve this country's industrial performance, export sales and profitability, and I suggest that the Commission deserve our support for their apparent readiness accurately to diagnose our illness before spending millions more pounds in treating the symptoms. Let us, therefore, give the Commission, and for that matter the Government, whatever their previous failings, a fair wind in this enormous task.

5.10 p.m.


My Lords, may I begin by thanking the noble Lord, Lord McCarthy, for giving us the opportunity to have this debate. May I join with others in congratulating my noble friend Lord Glenamara on his maiden speech. Of course, he is hardly a maiden; he has had long experience in the other place, and before that he spent years teaching children, who do not want to learn. I have no doubt that, as your Lordships will have noticed from his speech, he is quite capable of giving this House many good lessons at various times. I have an apology to make to him: my wife had asked me to tell her when he was making his maiden speech and I forgot to tell her, so I hope that when the noble Lord sees her he will not make the situation too difficult for me. I am sorry that as my speech develops Lord Glenamara might feel that he and I do not entirely agree. He has put the case for the North, and I am going to put the case for London.

My Lords, unemployment in London has increased steadily since 1971 and now stands at 7.2 per cent. in Inner London. Within this 7.2 per cent. there is great variety: Poplar has an unemployment rate of 13 per cent., Stepney 12 per cent., Deptford 10.9 per cent., Holloway 9.8 per cent., Canning Town 9.1 per cent., Hammersmith 8.1 per cent., Bermondsey 8.9 per cent., Fulham and Brixton both have unemployment rates of 8 per cent. I always invite your Lordships to remember that London boroughs contain 250,000 people, so that when we are talking of percentages in London we are talking about a lot of people. I must apologise to the noble Baroness; of course, I am referring to male registered unemployed and not to female registered unemployed, because the male registered unemployed is this large figure that we are certainly worried about at the present time. But I agree with her that it is true the figure for female registered unemployed is steadily increasing.

The factors causing unemployment in Inner London are deep-seated and structural. The higher rate of male unemployment in London as compared with the rest of the South-East Region is largely attributable to higher unemployment rates among operatives. Within the operatives more detailed analyses, however, reveal that there are very high rates of unemployment for the unskilled and there are actual shortages in some skilled groups. Again agree with the noble Baroness, who brought out this point. So, while the general message is that a reduction in London's unemployment may best he dealt with by an expansion in the demand for operatives, it is essential that retraining takes place on a scale sufficient to meet demand by firms for certain skilled workers. An improved supply of skilled labour will encourage firms to stay and expand in London, and this increasing demand for skilled labour will again increase the demand for the unskilled operatives. So it is an essential part of any improvement in the unemployment situation that we should have more training.

Of course, different areas contain different balances of occupations. Thus, where there are proportionately large numbers of operatives living in an area, particularly if they are unskilled, there will naturally be a higher rate of unemployment; that is borne out by the figures I have given. Nevertheless, even allowing for this, unemployment is still higher than would be expected in Inner London and lower in outer West London, even among skilled workers. This suggests that there are more deep-seated social and economic reasons for the observed differences such as might arise from obsolescence of the physical infrastructure of an area and concentration of vulnerable firms and workers there; there are more deep-seated causes than these.

Moreover, analysis of unemployment in different age groups shows that the duration of one spell of unemployment rises markedly with age in all locations. Despite this, however, it is in the 18 to 24 age group that there is the highest rate of unemployment, except in one or two areas where it is higher in the 60 to 64 age group. This means that manpower policies specifically related to young people are desirable. Some Government measures along these lines, as, for example, the youth employment subsidy and the work experience scheme, have already been implemented; but such measures being of a temporary nature—here I agree very much with what Lord McCarthy had to say—do not necessarily overcome the risks to which young people are exposed. What you need is something of a more permanent nature. I support Lord McCarthy's suggestion of a subsidy for job creation over a long period rather than this temporary subsidy, which tends not to help to create new jobs, which is what is needed.

The central problem, therefore, is to create the conditions for more stable employment in London, so that closures and redundancies are fewer and there is a better distribution of appropriate skills in the labour force. The Greater London Council is particularly concerned about this matter; more particularly about employment in London's manufacturing industries, because these have fallen by more than half a million since 1961. That represents a loss of 38 per cent. since 1961, compared with the fall of 9 per cent. in England and Wales as a whole, and an increase of 13 per cent. in the rest of the South East. So there is a situation ill Inner London—this is about the third time I have tried to bring this point to the attention of your Lordships and the Government—which deserves the utmost attention. There are parts of Inner London which are as in need of support as any of the development areas anywhere in this country. Manufacturing employment made up 32.6 per cent. of London's employment in 1961. By 1975 that figure had dropped to 22.2 per cent. Those figures are important, revealing, and should not be ignored.

I come to the first matter over which my noble friend Lord Glenamara and I disagree. We have pressed the Government on the IDC policy for a long time. Perhaps as a result of our pressure, they have lifted the ceiling from 5,000 square feet to 12,500 square feet. However, we want them to abolish it altogether for London. This policy of restriction was quite right for London at certain stages—it was certainly quite right 15 years ago—but it is wrong today. I turn to the question of office policy. We have a Location of Offices Bureau busily trying to encourage office employment to leave London, despite the fact that London has the rate of unemployment I have mentioned. We have asked the Government to disband the LOB system as it relates to London. I do not think that those two requests are unreasonable.

I turn to another extremely important request; one which we have pressed on the Government for a long time but on which we never seem to make any headway. I do not know whether noble Lords know, but it is illegal for London to advertise for firms to come to the city. We have been trying to persuade the Government to change that law for as long as I have been active on the other side of the water. Recently we thought that we had moved some way towards achieving that end, because in a Statement on docklands Mr. Shore accepted that there must be some relaxation of the present statutory restriction on the advertising by local authorities of London's commercial and industrial advantages in respect of dock-lands. He added: and some other areas in London which are experiencing particularly serious unemployment problems. I hope that he had in mind some of the areas that I have mentioned.

As the Government have no plans to promote the appropriate legislation—at least they have not announced any—the Greater London Council has included a clause in its 1976/77 General Powers Bill which, if enacted, will empower the Secretary of State for the Environment to exercise a discretion—we ask no more than that—to allow exceptions to the ban. I hope that when the Bill comes before your Lordships' House noble Lords will support the clause because, if passed, it will be of some benefit to London.

I turn to the job creation scheme. I do not want to be misunderstood over this. We are under the impression that under this scheme the criteria for projects for London are higher than those for other places. Again, we hope that the Manpower Services Commission will examine this matter, will recognise London's problem and will not ask from London more than it asks from elsewhere. In its anxiety to do something about unemployment in London the Greater London Council has been asking for powers to enable it to set up an industrial development agency to deal with the economic planning problems of the inner city. There is nothing unreasonable about that, but so far we have made no progress in that direction either.

My penultimate point deals with the whole question of the dispersal of civil servants. There was, of course, a time when it was sensible to talk about dispersing employment from London. This policy is now worth re-examining because of London's present state and the fact that it is quite clear that this is not just a temporary phase but that London is steadily having to face a difficult employment situation. We must decide whether it is right to continue to disperse civil servants from London.

Finally, I turn to the point about training. On 3rd March 1977, Mr. Booth announced a continuation of the Government's measures to keep up the level of training in industry. Care must be taken to ensure that these measures are not selectively applied to London's disadvantage. I put it that way because in everything that is done there is always a tendency to assume that London is rich and that London does not have the unemployment problems of other areas. That does not happen to be the case. London is as much in need of training facilities as are other parts of the country. I hope that I have not made matters too difficult for my noble friend Lord Wallace of Coslany, who is about to make his first speech from the Dispatch Box. I hope that he will be able to reassure London on some of these matters.

5.27 p.m.


My Lords, my first appearance at the Dispatch Box was supposed to be a baptism of fire. In point of fact, I have the impression that I have been under intensive bombardment. I do not complain about that because as one who knew the 1930s and what it was like to be on the end of the exchange queue, I know exactly how people feel about the question of unemployment.

On behalf of not only myself and the Government but the House as a whole, I sincerely thank the noble Lord, Lord McCarthy, for bringing forward this Motion. This is a subject that needs even further debate. The noble Lord made a number of valuable suggestions, some of them quite outside the scope of the Department which I am alleged to represent this afternoon. However, I shall certainly ensure that they are forwarded. I assure the noble Lord that the Government are always open to constructive suggestions on this subject and that they will be seriously considered. I assure him that his speech will be considered very carefully by the Government. It is not the end of the debate.

The noble Lord, Lord Rochester, mentioned the Working Party of the Manpower Services Commission. It is about to report very soon, and although I am not in a position to give a positive undertaking, I know that my right honourable friend the Secretary of State has indicated that he is favourably inclined to an early debate in another place and that he will see the Leader of the House. I, personally, and on behalf of this House, hope that we shall have a similar opportunity in the not too distant future, but I have no responsibility for Government order of business.

The noble Earl, Lord Gowrie, I am sorry to say, disappointed me, because I got the impression at one time that we were having a General Election immediately and that he was making a General Election speech. He talked about the sins of the Social Contract, and it would appear that all the problems of unemployment and the rise in unemployment were the responsibility of the present Government.

The Earl of GOWRIE

I did not say that.


Well, my Lords, the impression I got was that we were under attack; that our criticisms of the Conservatives in the past were out of date, and that he was criticising us. I would draw the attention of the House to the fact that there is considerable concern throughout Europe over the position of the unemployed in their respective countries. It is a disease that has spread like a cancer throughout the Western World. We had an intensive debate in Strasbourg on 27th January, when a number of constructive suggestions were put forward to deal with the problem of unemployment. Many of them are already in operation in Britain.

So far as the noble Baroness, Lady Seear, is concerned—and I thank her for a valuable and constructive contribution—I tried to get an answer to the question of women in employment, but unfortunately I have not been successful. If the noble Baroness would either put down a Question, or formulate a letter, I shall certainly get the details for her.

Baroness SEEAR

My Lords, could the noble Lord not take the question I raised instead of a letter? It would save a letter and postage.


My Lords, that is an excellent suggestion, and would save a lot of work and additional printing of the Question. I will see that note is taken of this point, and we shall get an answer to the noble Baroness. She also stressed the serious question of shortages of labour in industry, particularly skilled labour, and the need for additional training. That will be dealt with later on in my speech. I hope to give her some satisfaction on that.

I should like to congratulate my right honourable friend and colleague in the Commons in the past, and in the Lords at present—my noble friend Lord Glenamara—on his maiden speech. It was a sobering, somewhat controversial, but definite and positive contribution, and an indication of the value that we can expect from his speeches in the future. I have known my noble friend Lord Glenamara in another capacity, and I know that he does not waste words but gets straight to the point. Quite frankly, I think he did so this afternoon.

The noble Baroness, Lady Ward, who is an old campaigner from another place, and still campaigning, raised the question of the continuation of the steelworks at Consett. This is not a responsibility of the Department for which I am answering. I suggest that she puts down a Question, or perhaps we can arrange for the point to be put forward. If she would like to put a Question, probably an oral Question, she no doubt will be able to give the usual supplementary question afterwards. I shall leave that entirely to the noble Baroness. The noble Lord, Lord Kagan, raised quite a number of budgetary issues. I cannot anticipate the Chancellor's Budget, especially in this House. Let us hope that the noble Lord's point is met.

We are facing a very serious problem, as has already been indicated in the House. We have not only got to reduce unemployment over the next live years but also to find jobs for an estimated increase of 700,000 in the labour force. This is not going to be easy, and it is no good shirking the issue. Nevertheless, there are important ways in which we can help ourselves, and to ensure that we shall be ready to take advantage of the upturn in the world economy when it comes.

Improvements cannot be achieved overnight. No politicians of any Party can say that improvements can be achieved overnight. We have to face facts. I tend to take the view that this debate is not so much as political debate but one which cuts across all Party affiliations. We are concerned with human issues, and we can debate them as such. 'We are determined not to be swayed by immediate pressures into taking any action which might have an effect on unemployment in the short term but which could undermine our longer-term prospects for increased levels of employment and for economic performance generally.

However, this is not to say that we are content to sit back and do nothing about unemployment in the short term. I simply will not apologise for any measures we are taking to deal with unemployment in the short term. Even if it means taking a lad away from leaning on a lamp-post to some temporary work, that is far better than having nothing to do at all for him and everybody else. Within our overall industrial strategy there is room for measures to mitigate the worst effects of the recession and, with the assistance of the Manpower Services Commission, we have introduced a number of selective measures of this sort aimed particularly at unemployment among young people. The size and variety of these measures is not widely appreciated. So let me take the opportunity, time permitting, to explain what we are doing.

First, we have saved jobs through the temporary employment subsidy, introduced in August 1975 and extended since then. Under this scheme the Government provide a subsidy for up to 12 months to firms which agree to defer redundancies involving 10 or more workers. So far the scheme has been responsible for saving the jobs of over 214,000 workers in 3,050 firms, and there are in the pipeline applications covering a further 45,000 workers. The subsidy not only delays the date of redundancy; in many cases it helps the firm over a difficult period so that, when the subsidy expires, the firm is in a stronger position and no redundancies are necessary. The subsidy has been most extensively used in the clothing and footwear and textile industries and by medium sized firms with between 10 and 200 workers. The future of the temporary employment subsidy is presently under review and the Government will announce a decision before the end of April.

Secondly, we have created new jobs under the job creation programme which is run on behalf of the Secretary of State for Employment by the Manpower Services Commission. Under the scheme the Commission pays the wage costs and part of the other costs of approved projects which provide short-term work of social value for people who would otherwise be unemployed. The projects are organised and managed by sponsors willing to help alleviate unemployment in their area. The programme came in for some criticism when it was started in October 1975, but it has proved very successful. By 10th March nearly 69,000 temporary jobs had been created in 6,917 different projects, and many more projects are being considered. There has also been a steady increase in the quality and range of schemes approved under the programme, including some worthwhile co-operative projects which are expected to become self-financing.

Thirdly, we have provided funds for the Manpower Services Commission to expand training opportunities for both adults and young people. Part of this expansion is permanent and reflects the importance we attach to increasing training in industry, but, in addition, we have allocated over £190 million for special training measures. Not only does this make sense when many of the new trainees might otherwise be unemployed, but training builds up the stock of skills we shall need as we enter the period of recovery and rising employment opportunities. I think that answers quite a number of the queries we have received this afternoon. So often in the past recoveries have run into bottlenecks of scarce skills and have ground to a halt. We are determined that this will not happen in the period ahead.

The greater part of the special funds have been allocated by the Training Services Agency to the industrial training boards and other organisations to increase the number of awards and grants available for the long-term training of young people in industry. In 1975–76 some 25,000 people benefited and this year the total is expected to be over 43,000. The extra £46 million announced on 3rd March should support about 41,500 training places in industry. In addition, the training opportunities scheme, under which individuals who wish to increase or change their skills receive training mostly at skill centres or colleges of further education, has been rapidly expanded. In 1976 over 89,000 people completed training under the scheme compared with 60,700 in 1975 and 46,000 in 1974. This total included over 12,000 unemployed young people on special courses such as short industrial courses and occupational selection courses which are designed to help those youngsters who are having particular difficulty in settling into permanent jobs. This year the total is being increased to 17,000.

These special training courses for young people are among a number of measures which have been taken to open up opportunities for unemployed young people. In October 1975 we introduced the recruitment subsidy which encouraged employers to give jobs to school-leavers. Over 30,000 applications were approved before; in October 1976 the scheme was replaced by the youth employment subsidy. As noble Lords will be aware, this is a subsidy of £10 a week to be paid for up to six months to employers recruiting any young person under 20 who has been registered unemployed for six months or more. By 11th March over 12,340 applications had been approved.

We have also provided funds to expand community industry—a permanent scheme intended to prepare disadvantaged young people for regular employment in as short a time as possible. Until August 1975 community industry had an authorised capacity of 2,000 young employees. Since then the capacity has been increased to 5,500 places. In July 1975 Government finance was made available for 230 additional careers service staff employed exclusively in finding work or training for unemployed young people. Since then these staff have collected over 16,000 vacancies and made about 11,000 placings. The Government have decided to increase the number of these special posts by another 90 and will review the position in September of next year.

Another measure to improve the employment prospects of young people is the Manpower Service Commission's work experience programme. The programme, which was launched by the Commission on 21st September, gives young people in the 16–18 age group a realistic introduction to working life. Under the programme the Manpower Services Commission pays a maintenance allowance to young people on work experience schemes. Any employing organisation can mount a scheme. They do not provide employment, but facilities to enable young people to learn about different types of work. Schemes should last at least about six months and should include giving young people the opportunity to learn about working life at first hand—this is a very important advance in the education of our young people—and to gain systematic practical experience of a range of different tasks; wherever possible, schemes should provide for further education and training. The Manpower Services Commission has put a great deal of effort into this programme and although it has admitted that it has started rather slowly, it is becoming well-established and is attracting increasing support from employers. By 12th March, 2,255 schemes had been approved involving 13,875 places, at a cost of some £6 million. The Government have acted to affect the supply of labour and in January of this year the job release scheme came into operation. I will not go into the detail of this scheme because we shall be debating the Second Reading of the relevant Bill next week.

On 3rd March my right honourable friend the Secretary of State for Employment announced decisions on a number of these schemes. I have already mentioned some, but it may be helpful if I go over them in some detail. A further £46 million spread over the next two financial years, has been allocated for the training of apprentices and technicians in 1977–78. About 41,500 people should benefit, mainly young people. The number of places for young people taking courses provided directly by the Training Services Agency will be increased by 5,000, raising the total number of places for young people to 17,000 this year. A further £25 million will be allocated to the job creation programme to allow new applications to be received until the 31st August. The work experience programme and the youth employment subsidy will also be extended to 31st August. The community industry scheme will be temporarily expanded by 1,500 places to provide 5,500 places in all. The additional posts in the careers service will be increased by 90 to 320 in all and will be continued next year.

All of these schemes are directed mainly or exclusively at young people and particularly at those who have been unemployed for lengthy periods. The effect of the new decisions will be to maintain, and in some cases increase, the employment and training opportunities open to them in the coming months. Longer-term action to combat the problems of unemployment among young people are being considered by a working party which was set up by the Manpower Services Commission and which includes representatives of the TUC, CBI and the education services. We hope the working party's report will shortly be available and discussed. Of course, the young are not the only ones to be hit by the recession and the Government are now reviewing a number of possible schemes for helping unemployed adults, including the temporary employment subsidy and the job release scheme. Decisions on these will be announced in due course.

To sum up, over the last 18 months we have introduced measures to save jobs, to create jobs, to expand training opportunities, to open up new work and training places for young people and to swap jobs between those close to retirement age and younger unemployed people. These measures have been described as a "dribble of cosmetics"; certain slighting terms have been used about them this afternoon. They are nothing of the kind. They would certainly not be regarded as mere cosmetics by the worker whose job has been saved by the temporary employment subsidy, by the young person who has a job under the job creation programme, by the worker, old or young, who has improved his skills as a result of the expanded training programme, or by those who leave employment or find jobs under the job release scheme.

The measures are an unprecedented attempt in scale and variety by the Government and the Manpower Services Commission to tackle the problems of high unemployment, especially among young people. In total, we have allocated over £650 million to these programmes which we estimate have already helped nearly half a million people through a period of abnormally high unemployment. If these measures had not been taken—this must be remembered when people talk about cutting expenditure in the public sector—there would be over 200,000 more people out of work now than there are. They demonstrate our concern to counter the trend of high unemployment, with all its social and economic waste, while at the same time pursuing the economic and industrial strategies and safeguarding the future.

My Lords, may I end with what is partially a personal appeal? Noble Lords will notice that there are no cuts in public expenditure in this vital field. On the contrary—and let us be honest about it—here, we have an investment in the future of our young people and our country to which, surely, no one can object if he is in his right mind. I appeal to all in this House and outside with industrial or commercial connections to give maximum support and publicity to the schemes announced. Further ideas and constructive suggestions will always be welcomed and carefully considered by my right honourable friend, his colleagues, the Manpower Services Commission and the staff of the Department. Both the latter are doing excellent work and it is time that we recognised the valuable work of some of our public servants, who are so often derided. My Lords, on this issue, we face a challenge: let us be capable of accepting that challenge and getting on with the job.

5.52 p.m.


My Lords, I feel that we have had an informative, knowledgeable and, on the whole, very good-tempered debate. I am very pleased that, according to my notes, at least two of the three proposals that I put before the House seem to have been universally accepted. It is universally accepted, I take it, that we are facing an unprecedented post-war problem of unemployment which is not going away and which may very well be getting substantially worse. It seems to be generally accepted by everyone, with the possible exception of the noble Earl, Lord Gowrie, that the problem is structural, sectoral, and that the solution is selective. The noble Earl, in a great deal of what he said, seemed to think that it was a kind of by-product of past monetary mistakes and the Social Contract. Of course, the short answer to that is that there are many other countries—not least, West Germany—which have made neither of these mistakes and which have a higher level of unemployment that we do.

So far as a selective solution is concerned, I agree strongly with my noble friend Lord Glenamara—whom I would congratulate on his maiden speech if I had the cheek to do so in view of the number of speeches he has made in Parliament compared with the number I have made. I agree with everything he said about the importance of the regional dimension. The proposal that I made for a job creation incentive has the advantage that it can be steered in a regional dimension.

I agree with the noble Baroness, Lady Seear, who said that it was not just a matter of dealing with unemployment but of dealing with the skill gap. Here, I would draw the attention of everyone who does not know about it to what I take to be the very sensible, very reasonable but, I am afraid, very controversial recent publication of the Manpower Services Commission, Training for Vital Skills. It strongly deserves the support of anybody who believes, as do the noble Baroness and I, that skill shortages and the skill gap are still extremely important.

Finally, I should like to thank my noble friend Lord Wallace of Coslany for agreeing to take away the ideas put forward today. I would say to him, in reply to a point made by the noble Lord, Lord Rochester, I think, in reply to me, that I am not suggesting a great pattern of new institutions. I am merely suggesting that someone must take an honest and serious look at the present manpower strategy and accept that that aspect of the Government's industrial policy is seriously out of true and seriously out of line. I should like to end by thanking all those noble Lords who took part in the debate and those who stayed to listen to it, and to beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.