HL Deb 21 March 1978 vol 389 cc1696-701

3.25 p.m.

Lord WALLACE of COSLANY

My Lords, I beg to move that this Bill be now read a second time. This Bill, which I am delighted to be able to introduce this afternoon, is a very important measure which is designed to enable the Government to take swift and effective measures to tackle unemployment. The Bill will provide the Government with powers to set up schemes to enable employers to retain or recruit employees and generally to maintain or enlarge their labour force. Specifically, the Bill is needed for some of the additional special measures to counteract unemployment which were announced last week by my right honourable friend.

Noble Lords are well aware of the economic situation which has produced the need for this Bill and these measures. We have experienced the longest and deepest recession since the 1930s. Every Government in the industrial world has found it necessary to take steps to counter the unemployment effects of this recession. As a result of the measures we have taken since 1975, we can justly claim to have made a significant impact in reducing the overall level of unemployment. The various measures we have introduced—the temporary employment subsidy, the job release scheme, the youth employment subsidy, the small firms subsidy, the job creation programme and the work experience programme—are now providing some 320,000 jobs or training places. When the new youth opportunities programme, the special temporary employment programme and the further measures announced on 5th March come into effect, that figure should rise to more than 400,000 by March 1979.

We must face the fact that high unemployment is going to be with us for some time yet. We all regret that, but I do not think there can be any disagreement about it. In the long run, we are only going to reduce unemployment through economic growth. The Government's industrial strategy aims to raise the efficiency and competitiveness of industry in this country and to create more jobs, but we know that this is going to take time. Hence the need for the further special measures announced last week. As I have said, the purpose of the Employment Subsidies Bill is to provide a power to run some existing schemes and to introduce new ones. Specifically, the power is needed to cover the following measures.

It will provide cover for the small firms employment subsidy which, as was announced last week, is to be extended in scope from 1st July to manufacturing firms with fewer than 200 employees in all the assisted areas and in the inner city partnership areas outside the assisted areas. For the last few months the subsidy has been financed under the Appropriations Act. The Bill will also cover the temporary employment subsidy which will be modified in a limited way. The Bill will cover the new arrangements to be introduced to support short-time working in the textiles, clothing and footwear industries. All these measures were announced on 15th March. Finally, the existing youth employment subsidy and also the job introduction and capital grants schemes for disabled people in Northern Ireland will be covered by the Bill. The Bill is an enabling measure, like the powers of the Employment and Training Act 1973 which it replaces. It will give us the flexibility necessary to plan ahead and introduce or modify particular measures to meet different or changing needs.

I turn now to the detailed provisions of the Bill. The Bill provides for the repeal of Section 5(1)(b) and (c) of the Employment and Training Act 1973, as amended by the Employment Protection Act 1975. These sections of the 1973 Act are narrowly framed and deal only with schemes designed to postpone or avoid redundancy and schemes which encourage employers to recruit from those who are particularly affected by rising unemployment. The temporary employment subsidy and the youth employment subsidy are at present operated under these sections of the 1973 Act.

The remainder of Section 5(1) of the 1973 Act is left in its original form. The intention is that in future it should be used to cover job creation schemes which are outside the normal run of industrial and commercial employment. The Employment Subsidies Bill deals with all schemes which are intended to assist, by various means, the creation or maintenance of normal employment. The Bill is not concerned with the youth opportunities programme or the various training programmes operated by the Manpower Services Commission. Nor, indeed, is it concerned with the job release scheme which is covered by the Job Release Act 1977.

Clause 1(1) of the Bill substitutes a broader power for the provisions of the 1973 Act. This wide power allows the setting up of schemes for making payments to employers which will enable them to retain employees who might become unemployed, to take on new employees and generally to maintain or enlarge their labour force. This broad approach should provide the flexibility that we believe to be necessary in tackling unemployment.

Although the powers in the Bill are wide there is—as is usual—a requirement for Treasury approval of schemes set up under the Bill. There are also, as I shall explain a little later, provisions for seeking Parliamentary approval for setting up schemes costing more than £10 million a year. Noble Lords will appreciate that the Bill authorises payments to employers rather than to employees because this is the most direct and practical means of alleviating unemployment. Payments to employers bring an immediate improvement in their cash flow and hence enable them to maintain or expand jobs.

By virtue of Clause 1(2), the Bill covers Northern Ireland as well as Great Britain. The principle of applying Great Britain Bills to Northern Ireland has been accepted for some time now. The Northern Ireland measures to combat unemployment are similar to those for Great Britain. This Bill would establish the same powers with similar limitations. The Northern Ireland provisions of the Bill are so worded that their powers can be used not only during the present period of direct rule but also under any subsequent system of devolved Government.

Clause 1(3) requires consultation with organisations representing employers and workers before any schemes are introduced. This is, of course, normal practice, but I am sure that noble Lords will agree that this is a sensible provision, given the nature and impact of such schemes.

The Bill contains two clauses dealing with transitional problems. Clause 3(1) provides for the continuation of schemes previously set up under those parts of the 1973 Act which this Bill would repeal. Otherwise, such schemes would have to be cut off abruptly the day the Bill gained Royal Assent only to be immediately re-established under the new Act. Such a procedure would produce unnecessary complications for both employers and the Government. The second transitional provision is Clause 3(5) which provides for the payment of allowances in individual cases where a commitment has been made to pay allowances for a certain period but the Bill's powers lapse before payments have been completed. In these circumstances individual payments may continue for up to 18 months after the powers have lapsed.

Finally, the Bill makes twofold provision for Parliamentary control. First, the powers under the Bill extend only until the end of 1979. Beyond that, they will lapse unless renewed by statutory order. The Bill's powers may be renewed for up to 18 months at a time. This means that Parliament will have the opportunity at regular intervals to discuss the need for and the use of powers under the Bill.

It may be thought that the time limits on the operation of the powers of the Bill will create uncertainties for employers who will not be able to plan ahead in the knowledge that a particular scheme will still be in operation in a couple of years' time. That is true but, I think, inevitable if we are to maintain proper Parliamentary control. We have tried to strike a balance and I believe that 18 months is a reasonable period for renewal. We have done what we can to remove the dangers of abrupt changes by the transitional provisions of Clause 3(5) which I explained earlier.

Clause 2 requires the Secretary of State to seek the approval of the House of Commons via a resolution, for the introduction of any scheme whose cost is expected to exceed £10 million a year or to alter or extend any scheme in such a way that the cost is expected to exceed £10 million. What this means is that Parliament must be consulted on any major new initiatives or changes in existing schemes. However, Clause 2(3) allows the Secretary of State to take emergency action without a resolution of the House of Commons where he is satisfied that urgency is required and a resolution would involve an unacceptable delay. In such cases, the Secretary of State must lay before the House of Commons a statement of the action he has taken and his reasons for it. This provision is intended simply to allow essential action to be taken in emergency situations. Noble Lords will appreciate that large-scale redundancies may suddenly threaten an industry or locality. In such circumstances, the Secretary of State may need the additional flexibility afforded by Clause 2(3). It could mean the difference between success or failure in saving hundreds, perhaps even thousands, of jobs.

The Bill requires that schemes may be set up under the Bill only if unemployment remains high. It is, of course, a matter of judgment as to what constitutes a high level of unemployment. I do not think that it would be sensible or practical to specify a particular level in the Bill. I am sure that noble Lords will agree that it is essential to allow the Secretary of State discretion in this matter. I have explained the provisions of the Bill to noble Lords. It is a short Bill but I am sure that noble Lords will recognise that it is an important one. It does not of itself provide instant solutions to the problems of unemployment. However, the powers which this Bill will provide can play a vital part in allowing the Government to respond quickly and flexibly both to preserve existing jobs when they are threatened and to encourage the growth of new jobs.

The schemes which the Government intend to introduce in the near future under the powers which this Bill will confer were announced last week. The contribution that these schemes can make can be gauged by the success of the temporary employment subsidy, which has preserved some 389,000 jobs since it was introduced in 1975. Again, the small firms employment subsidy, which, so far, has been run on a small and necessarily experimental scale, has led to the creation of over 5,700 extra jobs in the special development areas. The Bill will enable the extension of the small firms employment subsidy and the continuation of a modified temporary employment subsidy, together with new arrangements for the support of short-time working. All these schemes have their part to play in reducing unemployment and aiding economic recovery. Therefore, I commend the Bill to this House as an essential measure to counteract unemployment and enable us to create the jobs which are essential for our economic recovery. I beg to move.

Moved, That the Bill be now read 2a—(Lord Wallace of Coslany.)