HL Deb 20 June 1979 vol 400 cc988-1098

3.58 p.m.

Debate resumed.

The Earl of GOWRIE

My Lords, your Lordships expressed in the Budget debate yesterday some pleasure at being able to address a Treasury Minister directly for the first time in this House for many years. I hope it gave your Lordships equal pleasure to hear a Statement on aircraft safety from a fully qualified air pilot; such is my noble friend.

It has become a convention in this House when congratulating the mover of a debate for his choice of Motion and manner of moving it, to call the subject important, and usually it is. Even the debates on wildlife, which a decade or so ago used to get your Lordships rather laughed at, are now seen as symptoms of a proper environmental and ecological concern. But because we call most subjects important, it is important, too, to up the ante sometimes and call some of them crucial. This is the situation this afternoon.

I am most grateful to the noble Lord, Lord Spens, for choosing a subject which is as close to the Government's heart as it is crucial to our fortunes. I thank him for the bipartisan spirit with which, as befits a Cross-Bencher, he opened the debate and addressed himself to this most serious matter of high and rising unemployment in the economy. Like some other noble Lords—and we should not be afraid of controversy—I found his remarks on married women a little controversial. If my name were not linked with a married woman, I certainly could not afford to address your Lordships from this position.

I am also grateful to the noble Lord for giving the Government the first opportunity in either House in this Parliament to address ourselves to the problems of unemployment in some detail in the medium and longer term as well as the short term—in fact to try to see them steadily and see them whole. With the leave of the House, I shall outline our general approach in my opening remarks, so as not to be too long, and will then deal with the individual points which have already been made to me. As for the points which will be made to me thereafter, I will deal with those when I reply to the debate.

I start by saying to Lord Spens that there is, in my view, only one issue in our political economy at present that is more important than unemployment—namely, our determination not to alter or undermine our approach to giving the British economy the chance to correct at least some of its own troubles and, by so doing, provide a great deal more real employment than it does at present.

In the last 15 years or so the best laid plans of Chancellors and men have often gone agley because our national and historical hypersensitivity to high levels of unemployment have led us to gear our economy to short term palliatives and correctives. I am not for a moment saying that we as a Government are insensitive to employment questions. At the lowest level of political interest we cannot afford to be, and as the noble Lord said, we shall have to be re-elected in 1984. But we also cannot afford, and the country cannot afford, to play a kind of numbers game with the unemployment register, or the retail price index, or the median levels of pay settlements, or all these generalised and often distorted models of reality by making the little adjustments to the tiller which make the ship appear to be a site of great activity but which lose her the race in the end. The amount of real employment which a Government—any Government—can create in a free society is in any case rather limited, as the party opposite, or at least those who served in its Government, have painfully learned.

But a Government—any Government—can, and must, do two things. They can create the conditions in which, at least on a domestic level, there are far fewer obstacles to the industrial performance and economic growth on which the bulk of jobs depend. And they can lessen the ill-effects of unemployment on individuals and their families at least to the degree that the first condition allows. Before I return to the Government's role, however, I should like to look at the present situation, as the noble Lord's Motion requires me to do, and at our immediate prospects, including the technological developments that he has outlined for us.

Since becoming a Minister directly concerned with employment questions, I have found it useful to think in terms of three broad categories of joblessness. The point of doing this is that the issue is itself too broad to tackle head on. A policy which might improve the situation in one region or category could be altogether a waste of time and money in another. There is the hard core of inner city unemployed: usually young; often black; living in homes provided by the State and on State money; unskilled; growing up and entering the job market amid visible signs of urban and industrial decay. We think of inner London, Merseyside, parts of the Midland cities, Tyneside, and Glasgow. Their plight is immediate and horrible, but it also goes a lot deeper than different Governments having simply conducted the wrong set of economic policies, and it cannot simply be improved by changing gear.

There is the wide category of the reasonably proficient school-leaver—not going to set the Thames on fire, perhaps, but quite capable of acquiring skills, but whose chances of getting work are spoilt by structural imbalances; that is to say, having the wrong skills, in the wrong place, at the wrong time—what in the employment trade we call mismatch. He or she is severely hit by the labour-shedding and recruitment restriction with which the efficient modern management of industry overrides the overmanning and restrictive practices which are the predictable and understandable response of the unions to labour-shedding and recruitment restriction. I fear that in the course of my speech we shall run into many such vicious cycles.

There is the category of those who have been in work for most of their working lives, but whose jobs have been lost because of the collapse of a labour-intensive industry—shipbuilding, for example, or textiles. Southern Britain and pockets of the North adjacent to the richer agricultural areas remain a stable and prosperous country, exporting services, particularly financial ones. But crudely welded to southern Britain is the debris of a great manufacturing civilisation: our industrial mezzogiorno, as I have always thought it—a kind of Italy in reverse.

When one contemplates this last category the remarkable thing is how many people are still in work, not out of it—and this is even before the advent of the chip technology. My own instinct is that real employment, in the sense of value-adding, productive work, is much less in our economy than appears, and by inference therefore prospective unemployment greater than it is at all pleasant to contemplate. The noble Lord said that he was an optimist. I have to confess that in the short term I am a pessimist. As a manufacturing country Britain is in the ironic position of being on the rocks, in a sea of oil. The oil is a blessing, but it also constitutes a curse. As my noble friend the Leader of the House argued in the debate on the Queen's Speech last month—and the theme has been taken up by my noble friends Lord Trenchard and Lord Cockfield, as well as by Ministers in another place—our energy sources and our consequently strong currency are helping to hide from our people the true degree of our industrial decline. We have to learn to awaken from a nightmare of vicious spirals: high unemployment; a low birth-rate of new businesses; skilled labour shortages in growing companies (as the noble Baroness mentioned); high manning levels in obsolescent industries, and strong union resistance to their reduction; over-manning, leading to low profits and cash flow problems, leading to low investment and obsolescent plant, leading to low output, low pay, low profits, low investment, low growth, leading back to defensive union attitudes and more over manning; low pay leading to pressure for pay rises unrelated to what low growth can generate, leading, in conjunction with social service costs and the costs of unemployment itself, to high taxes, high rates of interest, high inflation.

My Lords, if you add to all this a world in recession because of high energy costs and the petrodollar surplus, and, as I have said, a currency made artificially strong on account of our own energy surplus, thus making us uncompetitive, we are indeed in need of a kindly light amid the encircling gloom. Let me now at least try to point in the direction from which the light might come.

The Government's first and continuing duty is to attack the causes of present levels of unemployment, where it is directly connected to our economic decline. Where it is connected to other factors—to technological developments, as the Motion suggests, or to our need to improve our competitiveness in international terms—we may need to proceed slightly differently, but I shall come back to that in a minute. The bulk of unemployment, the third category I mentioned, where unemployment is the product of industrial decay, can be kept at present levels, let alone brought down, only by a coherent and determined strategy for reverting the decline. That is why we are strengthening incentives, and—which is as important—trying to rectify disincentives towards starting new businesses, as well as trying to attract equity capital on a smaller scale than is often viable in the corporate sector and the corporate fund markets. That is why we are reducing the burden of financing the public sector and trying to leave a little more for commerce and industry. Our only strength is our conviction that we have a clear mandate for this strategy, of which the Budget last week, and the issues we debated here yesterday and in the Motion of the noble Lord, Lord Melchett, last Wednesday, are only the first steps.

I do not underestimate the shift from direct to indirect taxation and the steady lowering of the tax take generally as an essential part of the strategy, but since we have already debated it at some length, let me deal quickly with the employment emphasis of the cuts to public expenditure and our approach to questions of public expenditure. Few Conservative Ministers could put the position on the first point with more succinctness than Mr. Joel Barnett, the former Chief Secretary to the Treasury. In November 1976 he said: Our public expenditure has grown faster than our rate of economic growth could sustain. I also believe that this has been an important reason for our generally poor industrial performance, for it has meant that the public sector—that is, both central and local government—has pre-empted financial and manpower resources at the expense of manufacturing industries. That position has to be reversed. It will be both painful and difficult". It will be even more painful and difficult if the party opposite forgets in opposition the lessons they learnt in Government. The position outlined by Mr. Barnett is crucial for the creation of future business and the take-up rate of new labour and labour made redundant by businesses in decay or collapse. It should—it must—become common ground between the parties. Our cuts last week are not a one-off affair; they will continue and they will be painful. Living on the edge of the abyss does not guarantee a quiet life. However, we believe that large-scale redundancies may be contained to acceptable, though still painful, levels. But the implications for take-up of employment are bad and it is not the slightest use pretending that things will not get worse before they get better. As the noble Lord, Lord Wallace, said, the prospects are gloomy.

It is because the situation is so serious that the attitudes of employers and trade unions to their pay negotiations are so important. The Government are as committed to the necessity of sensible cash and overall monetary limits as they are committed to the reduction of their own spending, and of the overall burden of taxation. We have done our bit, until the next Budget, on pay. I know that the noble Lord, Lord Kaldor, and certain sections disagree with me, but we feel we have ensured that the direct tax cuts have increased real take-home pay after the increased indirect taxation has been accounted for. It is not as much as we would have liked. We are still hoping to be able to get the standard rate down to 25 per cent, and it is no secret that the differential at standard rate, while still substantial, is not as large as we hoped for. It is also no secret that we wish to continue this process and establish a greater differential in subsequent Budgets. But, in the meantime, we have, as I have said, done what Governments, as against individual organisations, can do. We have handed back to British industry the awesome task of settling its own affairs on pay matters and the real responsibility for determining what levels of pay do for levels of employment.

For much too long, Governments of different parties have tried to take this responsibility upon themselves. It is not as if it has been a success. It has not contained inflation and it has accelerated rather than arrested unemployment. I am not for a minute saying that a prices and incomes policy could not, in theory, work: I am saying that it is not at the present time, and in British context, feasible. For one thing, our unions compete with each other rather than with employers or shareholders. A prices and incomes policy in Britain is therefore only possible in the context of large-scale amalgamations of trade unions and large-scale reforms of union procedures. If the unions wish to proceed along these lines themselves our free society enables them to do so. The Government can deal only with the situation they find, and the degree of consent to change which the Government—and Parliament as a whole—command. The Government do, however, have clear and unique responsibility over taxation and over the currency.

Our message to employers and to unions is therefore unequivocal. We have taken nearly one and a half million people out of income tax altogether and reduced the upper rates of income tax to a sensible, if still, by comparative standards, high level. In the middle bands, we have increased real take-home pay at once; and, if pay claims permit, we will make substantial further increases again. We now intend to keep out of the pay round, as we have so often been urged to do, and let the principals concerned get on with the job, as they have so often asked Government to let them do. The Government will protect the public by protecting the currency. In commercial life, what that means is that unless the cost of wage increases can be met by improved efficiency the higher prices resulting could cause businesses to fail and jobs to be lost. In the public arena, what that means is that managerial bodies and unions will be subject to the cash limits imposed by the Government under the system established by the last Government and by their own assessment of what the customer will stand. Additional cash will not be provided and there will be no alternative to redundancies if the claims exceed the limits. I do therefore urge all concerned to act responsibly. The Government, for their part, will continue steadily to reduce the burdens of taxation in the light of these responsible actions. I believe that last week's Budget shows that we mean what we say. We do.

I have dwelt on the pay issue at some length because the effects on unemployment of excessive pay settlements are immediate and startling and because I want to be quite clear that any future attempts to seek excessive pay settlements can only lead to higher unemployment. I said earlier, however, that it is also the Government's responsibility to lessen the ill-effects of unemployment on individuals and their families. The system of transfer payments, of unemployment and supplementary benefit and the like will of course continue. Indeed, the announcement has already been made that they will be increased.

Prospects for youth employment all over the industrialised world are not good. The reason is quite simple: it is the cure complex. I call the reason the "Catherwood effect" because Sir Fred Catherwood, who I am glad to see has been returned to the European Parliament, identified the paradox. He pointed out that the high consumption, high social benefit systems of Western countries required high investment, high technology and low labour costs. Because we in the West also, and quite properly, require that wages shall rise with prosperity (or even, as in the case of Britain, sometimes without it) we also require low labour costs; that is, high wages meaning fewer jobs available. In other words, the paradox is that to support a welfare State, with its unemployment benefits as well as other transfer payments like pensions, social security and the like, you need to be highly competitive in international markets and pretty low in your all-round labour costs. This makes the outlook for skilled workers relatively good, in that they will be in demand in both the productive and service sectors, always assuming that the energy position allows the West to continue to grow, even if growth is slower than in the first 25 years after the last war.

The Government recognise that in order to provide skilled workers not only must they encourage industry to train people but they must also play a part themselves. In this respect, we are indeed fortunate that training for skill qualifications is readily available to people through the Manpower Services Commission's Skillcentres and through the Industrial Training Boards. However, perversely, this comparatively good outlook for skilled workers makes the future for unskilled workers appalling, particularly when you add the inner city decay and ethnic problems which I cited earlier.

We therefore attach great importance to training, and to the special employment measures run by the MSC. These latter are already helping to alleviate the plight of the inner city unemployed. They have been criticised as being "artificial make-work schemes" rather than real work, and I have been guilty of this criticism in Opposition myself. However, I have been impressed not just by their success in the training programme but with the degree that they have managed actually to place people in jobs as a result of that training. The cuts in public expenditure, where the MSC and the Department of Employment are concerned, represent cuts in the expansion previously planned to take place between now and March 1980. We expect that, even after the cuts, the impact on employment of the special measures will increase significantly in the next year. Lord Wallace of Coslany raised this point with me; and I would, in passing, pay tribute to the fact that this system was set up under the last Government. We were also able to make significant savings by focussing the measures on the areas and groups which particularly need work on training assistance at a time of high and rising unemployment.

I hope that young people everywhere will be left in no doubt as to the need to get a skill unless one wishes to drift with the sad tides of social security, and I absolutely agree with what the noble Baroness said in this context. I am not happy about the degree of vocational preparation taking place in schools at present, and I am preparing to meet with junior Ministers at the Department of Education and Science to see if we can co-ordinate some improvement. It is also my aim to try to involve more large firms in the retail and service sectors in training programmes. Of course the manufacturing sectors already have them. Many have an admirable record in training but many do not and all stand to benefit in their own businesses by the reduction of poverty and unemployment.

This brings me finally to micro-electronic technology and the energetic public debate which has been going on and is still—as we can see—going on about the likely effects on employment levels. A major characteristic of the debate has been the predictions from a number of sources of massive job losses arising from the applications of the new technology. In the Government's view—and of course it is the business of Government to proceed with some caution—these predictions are excessively pessimistic and, in some cases, are derived from at least arguable assumptions. We do not believe there will be no job losses—no sensible person would claim that. We would wish in a healthy system to have considerable turnover in jobs, people going into employment and out of it again. What we do say however —and this is a view that is becoming widely shared—is that the potential for creating new jobs may be just as important as the more easily demonstrable potential for job destruction.

At this stage, the slow rate at which British industry is adapting to the new technology makes any reliable quantification of potential manpower effects not even remotely feasible. So I think we should return to the issue as we generally debate industrial strategy. As I say, it is hard to quantify at this point the actual employment effects. We must accept that the micro-electronic revolution is going to happen whether we like it or not, and that British industry has no option but to play its part in the revolution. Whatever the difficulties—and there will be some—British industry must not be "Luddite" and must adapt to the new technology at least as quickly as its overseas competitors. We also have to look to the future by providing workers with the necessary new skills to work with the new technology. This requires a major effort in training and retraining of the existing workforce. We shall look of course to industry as well as to Government bodies to help increase this.

This is the fourth, and I think for the time being probably the last, of our debates on the econony since the Government took office. It is important to look at our approach in its whole context. The context is expressed simply and pithily in a banner headline in today's Morning Star—a paper I never expected to find myself quoting in your Lordships' house. It said "Britain deep in red and going for broke". That is why we not only have high unemployment and rising unemployment, but also levels of people in work in employment which utterly fail to reflect real work, which is only to say real productivity.

If we are to reduce unemployment to anything like its historical level, we have to make it worth while for people to identify new markets and produce more goods. We cannot do this by going on as we are, and I have heard little from the other side in all these debates to suggest that there is a serious alternative strategy. The nearest thing to an alternative strategy is the statutory control of prices and incomes. There is not the slightest indication that industry would accept this at the present time. It is certainly not the policy of the TUC, nor of the Labour Party. The Cambridge economists have suggested import controls. But we are in the business in this country of exporting goods and services and incidentally money (that supplies a lot of our living and will now supply more) and we would be extremely vulnerable to any retaliations on that score.

The message I should therefore like to see read into all these economic debates is that we cannot take even our rather diminished standard of living for granted, and we cannot expect that electing one Government or another at the polls will in some way provide a living for us. This Government's aim to is set the scene, to increase the size of the wealth-creating sector of the economy. Everyone agrees that this should be done. As Mr. Healey said two years ago: The steady contraction in our manufacturing industry is the main reason for our disappointing performance since the war. The contraction must be halted and reversed. But we cannot reverse the trend if we plan to take more resources into the public sector". Not everyone realises—and Mr. Healey and noble Lords opposite should go on and tell them this too—that the change of gear after many years of a relatively soft ride will be unpleasant, uncomfortable and socially and politically dangerous.

Politicians have talked about the approaching crisis for many years and perhaps they are guilty of engaging in overkill. Now we are here. I believe that people want a new start, a way out of our valley of the shadow of decline, and the incredible good fortune of our energy resources will, if we keep our wits and nerve, give us such an opportunity. Even if people do not want a new start and the discomforts it may bring, there is not much of an alternative. Running downhill is no way to take one's rest.


My Lords, before the noble Lord sits down, as he referred to the Cambridge economists at the end of his speech, may I be permitted to ask him a question? This country had high protection, ad valorem, after 1932 when the import duties Act was introduced by the National Government. This was followed by a quantity of import controls which were reintroduced by a Conservative Government in 1951 and not abandoned finally until 1959. Over those 22 years—

Several noble Lords: Order, Question!


My Lords, the question I want to ask is this. During that time our export share was very much greater than it was before or has been since, and our industrial growth was greater. I ask the noble Lord whether he could have this period studied a little before he expresses dogmatic views on the subject.

The Earl of GOWRIE

My Lords, I am always happy to take lessons from the noble Lord.

4.27 p.m.

The Lord Bishop of WORCESTER

My Lords, I am sure we are grateful to the noble Lord, Lord Spens, for the manner in which he has introduced this debate. We are glad indeed that the Government are ready to consider these issues at this very early date. It also falls to me to express our gratitude to the noble Earl, Lord Gowrie, for his statement on behalf of the Government. We note the categories of unemployment that he has outlined. We also note the economic policies directed to them. A number of us will be given a degree of reassurance. Nevertheless, there seem to be some very important basic issues here and some short term policies to which I should like to draw the attention of the Administration.

As we come to look at this great issue of work or no work as it affects our peoples, most of us have come to accept the Hebrew-Christian tradition that work ennobles man, that it develops personality, that it gives status and social identity. Indeed, work is a sign of responsibility. It is deeply established in our way of life that there is a right for people to work or to be usefully employed, occupied. If, against our wishes, the opportunity to work is taken from us, our society is shaken and it begins to break up. We face profound questions about our future. Perhaps because of this confidence that we have had as a nation in the significance of work, particularly ever since the 1920s, the term "unemployed" has carried with it the implication that it could be overcome; that an upturn in the economy, increased capital investment or national and local public service schemes could bring it to an end. Alas! this seems no longer to be the case. We are now bound up in a technical revolution and an international context which makes it difficult for us to solve our problems by the old method.

We need also to face the fact that these high levels of unemployment are in part the result of holding down demand so that inflation can be brought under control. The unemployed in this sense have been paying the price of our greed. All of us are to some measure to blame. Behind this grim and sad fact we may well remember also the words of Archbishop William Temple who, in many ways, was the mentor and instructor of many of us 30 years ago in this particular field, who said before the last war that the most corrosive poison associated with unemployment is not bodily hunger but so-called futility. It is something of this that I want to talk about. I find myself inevitably referring to the short term issues rather than to long term policies, although I am deeply aware of the need for the study of the latter.

The burden of this situation is increasingly falling on the young, the unskilled and the semi-skilled. Seen in other categories, it is the school-leavers (particularly girls) and the coloured community. These people, who could formerly sell their strength or their willingness to work in elementary occupations, often in groups or gangs, now are often unable to do so. It will not do simply to say: "Go away and make creative use of your leisure". A number of people are naively saying that. It will not do simply to say: "Go away and draw benefit", because that degrades their characters.

We have become afraid in our society, as I see it, of telling each other the truth in the debate on unemployment. As the noble Lord, Lord Spens, pointed out, we have got a totally new situation which calls for new thinking. Modern technology only needs a limited part of the workforce in order to earn all the wealth that is needed by us or all the wealth that is available. Only a small part of our workforce is ultimately required. As I see it, there will never again be full employment in the old sense of the word, and this is perhaps something that we are reluctant to admit. If we were ready to admit this we could then start the public debate about socially useful jobs where need and other requirements await action.

Instead of paying the dole to unemployed young people we should seriously be considering the paying of a wage for a proper piece of work that is wanted in the community. To cite one possible example, what would it do for the quality of life in a block of high-rise flats if, when the front door was locked, two janitors came on duty day and night? What would it do for the bill for vandalism which is currently being paid if we had imaginative schemes of social employment such as this, instead of the dole?

As one who has been privilged over the last three years to be chairman of the Birmingham Board of the Manpower Services Commission and thereby allowed to see intimately something of the West Midlands situation, I have come to realise very deeply the urgent necessity of helping the young unemployed—whose whom we could bracket up to the age of 25—with an immediate offer of further training, work experience or temporary employment. Without these schemes we should have a much more severe social problem on our hands than we already have.

As regards the youth opportunities programme, which I see is to suffer cuts of some £25 million, we in the Manpower Services Commission have already been given assurances that these should not greatly interfere with that programme; but it is important to remember that last year some 220,000 young people were enjoying the benefits of job creation or work experience at a price which was not very much larger than the cost of carrying them on the dole. This scheme could well become a permanent feature of our society, costing little more than unemployment benefit and delaying entry into the labour market for young people, which would be an advantage to all of us.

In areas such as Merseyside and Strathclyde—and again it is my privilege also, as a bishop, to find myself in meetings with the chairman of the Manpower Services Commission and thereby one learns one's sphere of work—where unemployment is known to be chronic and not cyclical, it would be wise to encourage youth opportunities programmes and special temporary employment programmes to grow and not to contract. I hope that the Manpower Services Commission will be encouraged to explore socially useful programmes which may need to become permanent rather than limited to six or 12 months. Community service, as we have come to call it, which at the moment affects in the West Midlands only about 3,000 or 4,000 but which could affect 20,000 or 30,000 young people, can provide a young person with an opportunity to try a number of different kinds of work, to exercise responsibility and to acquire any range of different skills. Experience has shown that it often sets a young person on a road to long-term personal goals which otherwise he would never have entertained.

In addition, there are one or two particular points that I very much hope might be emphasised as these matters are considered. First, we should reject the false distinction between education and training, which is a distinction far too frequently encountered in the corridors of Westminster. As long ago as 1918, H. A. L. Fisher maintained that, Every citizen under 18 should be regarded primarily as a subject of education rather than a factor of production". A great phrase like that, coined after the Great War, is as relevant today as it was then. This requires a common approach involving schools, colleges of further education, the careers services of both the Department of Employment and the Manpower Services Commission, as well as employers, trade unions and the Government. In this way, educational and vocational preparation for the 14 to 19 year-olds could be regarded as one programme instead of a lot of rather disconcerting options.

Colleges of further education play an essential role in this whole sphere and I would hope they will be encouraged to revise and adapt courses so as to cater for all kinds of young people and employment. This has not generally been within their scope in the past. We should ask them now for more vocational courses to be arranged for girls, for the ethnic minority groups, the disabled and the handicapped, and particularly for those children of low achievement, because these form the great bulk of the unemployed young people who are not easily helped. I would hope that the colleges will be given every encouragement to undertake programmes of staff development so that the staff are able to cope with new types of work and new types of student that they will encounter. They will be grateful, if I may say so, to the noble Baroness, Lady Seear, for pointing out that the essential need at the moment is for a larger skilled working-force; but the foundation of such a skilled working force is in the routine work of what we used to call our technical colleges.

I should like also to point out that work-sharing, as a concept, is something that we very badly need to look at again. Is it really true that the option is for mum to go out to work, for father to stay on with overtime and for grandfather to extend his working life, if that is to be at the expense of youth employment?— because this is precisely what is happening now. Work-sharing, whether it is a deliberate attempt to work out new ways or whether it is a matter of employers, trade unions and the Government looking at this issue, surely means that we now have to look at the benefits that could come from a real policy of greater work-sharing. The burden of unemployment could be more evenly distributed by shortening the working day or week, the working year or life and by having longer holidays and more sabbaticals. But, above all, we must ask both the employers and the trade unions to look at the question of less systematic overtime, in order to enable the available work to be shared more fully.

There is one other rather sensitive issue which I feel compelled to raise. In the long run, it is employers that we are looking for. Individual initiative and incentives have for long been national characteristics which have, fortunately, come our way. Is there not now a need to ask the Government whether they will give more encouragement, and not less, to the small company? I am sad about the cut in aid to small firms. Small firms—and we in Birmingham are really dependent upon them—are usually more labour-intensive than large ones, and each job costs less in capital to create. A recent survey by the CBI has suggested that in such firms employees feel a stronger sense of involvement, know their bosses better, identify with the company's objectives more easily and enjoy better industrial relations. Interest in the job is high, too. In my view, these are all important aspects of the work situation, if it is to be found to be creative and fulfilling for the new generation to be involved. It is important for society, too, for small firms are part of the seed corn of the future.

I apologise for being only an amateur economist in this whole sphere, but I see a good deal of this side of the nation's life in my calling. It would surely seem clear that full employment, as we have known it in the past, will not return in the way that we might have hoped. Today, we are under a new obligation to plan for the large number of school-leavers, for the considerable numbers of those who need to be retrained and for a fresh initiative for industry in the areas of chronic unemployment.

4.42 p.m.


My Lords, I am particularly grateful to the noble Lord, Lord Spens, for introducing this important—nay, crucial—subject. I agree with the noble Earl, Lord Gowrie, that we have to "up the ante" here. So long as unemployment is treated as a temporary malfunction of a divinely ordained system, there is no cure for it and we are heading for disaster. It must be recognised as a harbinger of the changing relationship between Western man and his work. This change is accelerating and will go on accelerating, faster and faster. This has already been spelled out by the noble Lord, Lord Spens, and it cannot be stressed too strongly. Disaster can be avoided only if we can learn how to transform enforced, and often unwelcome, leisure into a better way of life. But if the phenonemon continues to be seen and wearily accepted as a regrettable by-product of the energy crisis and technological innovation, to which the Motion refers, we shall never be able to contain the bitterness, the bewilderment and, in some cases, the cynicism that it breeds.

I believe that the figures at the end of May were 1.3 million. The Observer article concerning a hushed-up Treasury memorandum predicting 2 million at the end of the year was mentioned yesterday by the noble Lord, Lord Bruce of Donington. But I am not concerned with the exact figures. As long as undeserved guilt attaches to joblessness, the figure is bad at any level. As it rises, social turmoil will increase, to say nothing of the strain on the resources of the State.

Paid work for a span of roughly 40 years has been the basis of industrial society. As it has been the only respectable means of acquiring the wherewithal to stay alive, it has acquired the status of a right. The right reverend Prelate referred to this. The belief in the right is accompanied by a fear—the fear of losing your job or of not getting one commensurate with your talents. This fear dictates the maintenance of work structures and, indeed, of whole industries which are fighting a losing battle. As they retreat from 40 to 36 hours and retirement drops from 65 to 60 to 55 and so on, men strive to protect the shinking span of their working life, because they believe that this is the only grounds of their claim upon society.

But, my Lords, is this not absurd? Is it their only claim upon society? Is not the retreat from 40 to 36 hours an advance? William Morris had important insights into this in his pamphlet called Useful Work versus Useless Toil, which was published in 1887 and in which he wrote: When all were working usefully for its support"— he was referring to the support of civilisation— the share of work which each would have to do would be but small … We shall have labour-power to spare"— which is what this debate is about— and we shall, in short, be as wealthy as we please. It will be easy to live". What on earth would he make of our present predicament? After all, should we not be deriving increasing human and social benefits from our mechanical and technological ingenuity? The noble Baroness, Lady Seear, had something to say on this point. If not, what has the industrial revolution been about? Why do we not smash our sophisticated machines, go back to our ploughshares and ban the silicon chip from England's green and pleasant land, just as the clock was banned as an instrument of the Devil from Erewhon? This would, perhaps, also entail banning the noble Lord, Lord Miles, who during his enjoyable maiden speech yesterday, had the temerity to produce the material for 30,000 chips in your Lordships' House.

But we know in our hearts that we cannot do it. No, my Lords, what we should be doing is seeking a new balance between work and leisure. And if we do not seek this balance and design it as we want it, it will thrust itself upon us in unwanted forms. There is probably no universally ideal balance, but we should certainly be looking at proposals such as work-sharing, to which the right reverend Prelate referred, a further reduction of the working week, sabbatical years, earlier retirement and the continuance of further education throughout adult life. We should push our thought to the limit.

I suggest that a Government that did not address themselves to these questions would be guilty of a grave dereliction of duty, to say nothing of reckless imprudence, and I was glad to notice that the noble Earl, Lord Gowrie, seemed to recognise this in his speech. Suppose, for example, that our share of wealth declined further and that unemployment continued to rise to a point where it could not be paid for, or could be paid for only at the expense of health and housing. What would result?—sccial chaos. It is often argued that elected Governments are not in office long enough to take a long-term view. But a new Government, with a respectable majority in the Commons, may well be in office for five years, and that is surely time enough for them to set in motion, or to give their blessing to, a thorough-going investigation of rising unemployment with all its threats and challenges. The threats and challenges may not be exactly long-term and may well rock their own Administration.

The only question in my mind is what form the investigation should take. As I suggested on previous occasions in your Lordships' House, I believe that it is a subject which should be tackled initially —I repeat "initially"—by a Select Committee of this House. I think—impenitently—that a coherent study with fairly wide terms should be attempted. If the workload seems daunting, I do not see why the chairmanship of some meetings should not be delegated to a noble Lord with special knowledge of the subject on which evidence is being taken, as has been successfully practised in some EEC sub-committees with their wider-ranging reports.

I think that such a committee should first commission background papers of a theoretical and academic nature. I do not see how you can approach the matter without very good background material. Personally, I should like papers on such subjects as the effects of technological change on clerical staff; on the effects of energy supplies and costs on jobs, and I should most particularly like one on the effects of Third World development on trade. A specialist adviser might equally direct the committee's attention to valuable works already in existence on these themes.

Turning to oral and written submissions of evidence, obviously the unhappily named "two sides" of industry would have, as always, to be consulted, but the British Institute of Management should also be invited in here. I have here a letter from a young manager in a Metal Box plant with about 800 employees, who writes about the British Institute of Management: What appeals to me is the lack of attachment to either the capital or the union side, and therefore the greater credibility of the apolitical stance—almost cross-bench quality". The last words are his, not mine. Managers could give very valuable evidence on such things as overmanning, demarcation and overtime.

The committee should certainly reserve time, too, for associations representing small businesses, which have been referred to this afternoon, and the self-employed. The latter, in my view—and I think that it is the view of Lord Spens, too—do a great service to themselves and to society and are not always fairly treated by Big Brother State". Voluntary organisations, charities and religious bodies would have important views on the way people use their leisure in unpaid services and how this might be expanded.

The evidence of the Departments of State would of course be necessary, but I should be most interested in that of the Department of Education. Education is probably the single most important factor in the whole matter. This was one of the main burdens of the speech made by the right reverend Prelate. Certainly it is the most potent in relation to attitudes and expectations. Young people need to know what is going on in the world; they must not be prepared for a world which has passed away. So I should like to hear from teachers their views on the suitability, for the contemporary world, of the curricula they teach; and I should also like to hear from the National Union of Students. Finally, I should like to reopen the question of negative income tax—which was a Bow Group initiative way back in 1974–75—and the effect that this might have on work patterns.

That is a very personal shopping list. It is a United Kingdom list rather than an European Economic Community list. I offer it in all humility as a basis for discussion, but I am convinced that some very hard thinking must be done, and must be done fast. I think that the committee's report would reveal an important series of misconceptions in our thinking about work and leisure. I think that it would reveal a gap between education and reality and that it would expose some fallacies, such as high investment leading to more jobs. The noble Lord, Lord McCarthy, clearly demonstrated in your Lordships' House in March 1977 that increased investment in manufacturing industry is not an employment multiplier.

I think that the committee's report would open up further avenues to be explored—avenues at present obstructed by myths and fears. I think that it would be an essential foundation document for any real progress in turning unemployment from a curse into a blessing. If that is not a worthy undertaking for your Lordships' House, I should like to know what is. I repeat my thanks to the noble Lord, Lord Spens, for introducing the Motion. He has done us all a very great service.

I end, if I may, by putting to the Minister of State a question of which I have given him notice. Will the Government give their support and blessing to the setting up of a Select Committee of your Lordships' House to study and report on unemployment? I am very much looking forward to his reply.

4.53 p.m.


My Lords, may I begin by giving an explanation. My noble friend Lord Lee of Newton, who was to speak next, has had to leave us to attend a Shadow Cabinet meeting. At the request of the Whips, we have changed places. Therefore, my noble friend will speak later.

I have not had the misfortune to be unemployed, I am very pleased to say, but I have had the opportunity to see at first hand the effects of unemployment upon the young, the middle aged, and some a little beyond middle age. In all cases I have found that unemployment has been demoralising. The way in which it is demoralising, and the extent to which it demoralises, depends upon the character of the individual and his environment. But it is always demoralising.

The conscientious man, when unemployed, feels that he has been thrown on the scrap heap too early. He does not want unemployment pay, which he regards as charity. He wants to work for his living. He is inclined to be critical of the system which has thrown him on the scrapheap, and very often he is driven to the extremes, in politics, of the Left or the Right. On the other hand, you have the lazy man, and unemployment encourages him to be lazy. That is equally demoralising. Then there are thousands of others who are affected in different ways between these two extremes. But being unemployed is nearly always demoralising, and we should do all we can to prevent a high level of unemployment.

Unfortunately, I believe that the policy of the present Government, in so far as we know it, will not give us a high level of employment. Therefore, I shall turn my attention to that policy and say why I believe it will not give us a high level of employment; then I shall try to outline the kind of strategy which I think would give us a high level of employment.

I believe that the policy of the present Government is too heavily reliant upon two things: first, changes in taxation and, secondly, control of money and credit. Both have a place, but not the place which the present Government give them. If we are to take for granted what they said during the election and what they have said since, the Government tend to rely far too heavily on these two things. I accept that, if the prize at the end is greater, then there will often be a tendency for people to take a greater risk, or to work harder. But that is not by any means always the case.

To the conscientious, a tax concession will make little difference—and many of those who are in management are conscientious—but a tax concession might encourage laziness in the lazy. If somebody can get an increase in his income without any effort on his part but because of the Government's effort, and can therefore have greater take-home pay, then there will be less need for him to take risks and to work harder. So the effects of tax incentives are not always what the Government believe them to be. They can act in different ways, according to the character and the environment of the individual.

What I fear most, however, is the Government's heavy reliance upon the control of money and credit. As I said in an earlier debate, I am convinced that this is based upon assumptions which are nowadays completely false. They assume, first, that there is free trade. We all know, from observation, that it is possible for trade unions to negotiate a wage increase with companies and for those companies almost immediately to increase the price of their products to cover that wage increase. I am sorry that he is not in his place, for had he been there I should have said that nobody knows that better than the noble Lord, Lord Cockfield, who was chairman of the Price Commission. This is a false assumption.

A second false assumption is the idea that in this day and age unemployment will inhibit applications for wage increases. That was true before workers were organised, but in this day and age it will not do. Unemployment is much more likely to lead to militancy and to overmanning in the factories. The workers are now organised and can stand up for themselves. They cannot be pushed around. Nobody imagines that next winter the trade unions are likely to seek wage increases amounting to less than the increase in the cost of living. Everybody knows that they are going to seek to cover the increase in the cost of living. If employers tell them, "Ah, well, you have saved £150 per annum in direct taxation" they will reply, "Yes, and you have saved £2,000, £2,500, or £3,000 a year in the same way. So what?" That is the kind of answer one would expect from any human being, and it is the answer that will be given.

If this country is to have a high level of employment, the first thing we have to do is to get out of the inflationary cycle. We were making good progress under the last Administration; we got inflation down to single figures, although there was some small increase afterwards. If, however, the Government continue to place reliance upon the control of money and credit I believe that the outlook for this country in the immediate future is indeed bleak.

The second and the long term step that we have to take is to regenerate our manufacturing industry. There is general agreement about that, but I do not believe that we can do it in the way in which the Government are approaching the problem. I believe that we must have a strategy which is agreed—or at least accepted—by both sides of industry and that that strategy should have the following elements. First, there should be an acceptable—not necessarily agreed, but acceptable permanent and flexible incomes policy. I outlined the policy that I had in mind on the second day of the debate on the Queen's speech and at this stage I shall not repeat it. I outlined in some detail the kind of policy which I thought would be acceptable in the long run and which could be acceptable to the trade union side and, I believe, the employers. However, so far as the trade unions are concerned, it would not be acceptable with the last Budget as a background. It would be necessary to have an entirely different background.

Coupled with that incomes policy, I dealt with the question of industrial relations; it involved substantial changes and improvements in our industrial relations. I believe that that is the key—a permanent but flexible incomes policy connected with some changes in industrial relations. That is far more important than tax incentives.

The second element in the accepted strategy is that there should be agreed minimum facilities for consultation and communication. There should be a recognition that employees are an important part of the business who should be consulted and should receive communication—not in due course, not after the event, but before the event.

Thirdly, where there are technical changes which result in some increase in productivity the advantages which accrue to the workers should at least in part be given in reduced hours rather than in increased pay. I believe that is a practical proposition in many industries. It could not always be done in the same way, but I believe it would be possible. For example, it might be done not necessarily by shorter working hours each day and working the same number of days, but by working on certain days and not on others, so that there would be a spread of employment. I will give an example from practical experience in the dairy industry, where, instead of a five-day week, the workers worked six or seven days for several weeks and then had several weeks off. It was negotiated between both sides of the industry and worked to the satisfaction of both sides. So there are various ways in which hours can be reduced and those ways would have to be the ways which were most convenient for the particular industry.

Fourthly, I think we must have considerably improved methods of training skilled labour. There has been some progress in this in the last few years, but we have yet to see the benefits of the work which has been done in the last few years because the apprentices who joined have not yet reached maturity. So there is something in the pipeline, but I think we must redouble our efforts in all industries to make sure that we have adequate skilled labour. The training must be partly in the classroom and partly in the workshop—and I attach greater importance to the workshop than to the classroom.

Also, any incomes policy must not allow an erosion of the differential which goes to the skilled worker. That simply drives him into unskilled work and is a waste of the time that has been taken in giving him the skill. I believe that skilled workers' differentials must be maintained as one of the lessons that we have learned over the last decade.

Fifthly, we must cast our net much wider in enrolling management. There must be much more recruiting from the shopfloor. Therefore, we have to expand our methods of training management and there has to be co-operation as between the university and the workshop in order to get the right kind of training. Special efforts must be made in that training in dealing with places where we know there is neglect. For example, in our debate last week, my noble friend Lord Brown pointed out the neglect that there was in industry in commodity development. I believe we must give that a much greater place in management training. There are many other similar ideas which could be introduced into management training in order to give us better management than we have now.

Sixthly, we want cheaper money. If we are going to have the money available for investment in the new technology then it has to be cheaper money and I believe that we shall not have cheaper money until we have a permanent incomes policy. A permanent incomes policy will facilitate our having cheaper money, but if we rely entirely upon control of the money supply then we shall get cheaper money "sometime never".

Seventhly, I think we have to maintain our National Enterprise Board so that there is an institution available to industry when private capital is not forthcoming. I believe the National Enterprise Board should assist those industries which have a future but which require immediate assistance in order to develop a product, in order to introduce a new technology and things of that kind. I believe, also, that the National Enterprise Board should be available to help, particularly, small firms where private capital is not prepared to take the risk but where, in the interests of the nation, we should be prepared to share in the risk with the small firm.

My Lords, in brief I believe that there is only one way out of our situation in both the short run and the long run, and that is to have a complete programme of social democracy, with all its implications. I believe that is the alternative to the present Government's Right-Wing programme and I believe that a social democracy policy is the only policy which will get us out of the wood.

5.9 p.m.


My Lords, there are seven Members of your Lordships' House who are professional economists—or who call themselves so—and of course there is an old joke that whenever there are seven economists found together there will be at least eight schools of thought represented. Partly, of course, that is an ironical comment on the complexities of the issues with which economists have to deal, but it has more than an ironical bite now. In the 30 odd years that I have been studying and teaching economics I do not think I have ever known the subject to be in such intellectual disarray, above all on two central policy issues—inflation and unemployment.

I have my own ideas as to the reason for this intellectual confusion but it would be idle on the part of any informed person to deny that such confusion exists. Consequently nobody, whether a professional economist or not, can afford to be dogmatic about the causes of our present level of unemployment and the measures that might be taken to alleviate it. Even less can one be dogmatic about the longer term future. Consequently, what I have to say in this debate will be literally contributions to a discussion rather than a statement of what I believe to be certainties. I distrust those who think they know anything with certainty on this subject.

My Lords, there is indeed very little certainty in these matters. For example, we do not know how much unemployment there is in this country at present. Officially, it exceeds 1¼ million people who are registered for benefit. But many people are not so registered, particularly women. So the figure may well be greatly in excess of 1¼ million people. On the other hand, many people doubt whether there is very much genuine unemployment. We are told that 13 per cent. of the labour force is unemployed in the docklands in London. Yet less than 10 miles away, in West London, I know for a fact that it is impossible to get people to do jobs—bus drivers, shop assistants, postmen, window-cleaners; at all levels of skill there seems to be an absolute labour shortage. Is this juxtaposition, within a very few miles, of surplus and shortage a paradox? I would venture to suggest, not entirely.

We all know, do we not, that there is a large black market for labour. It is impossible to get a large number of jobs done unless you pay in cash or in kind. It is to be hoped that the Chancellor's tax reductions will make it easier for people to come into the open about their employment activities. After all, even the Inland Revenue estimates the black market to be of the order of 7½ per cent. of economic activity, and that 7½ per cent. is in practice greater than the measured level of unemployment. That is the order of magnitude of uncertainty with which we are dealing.

I think myself that the black market for labour is not only a sign of tax evasion. Many of the data seem to me to point in one general direction; that is, that the epoch of the mass employer may well be over. If I may, I should like to enlarge a little on that enigmatic remark. If British productivity is to rise to continental levels, with the increased investment about which several noble Lords have spoken this afternoon, we know that even with substantially increased output certain major employers will shed labour, and will shed it in very great numbers. This includes the motor industry, the steel industry, the coal industry, the railways and the greater part of heavy manufacturing industry in general. To my mind, that makes a total of at least 1 million people likely to lose their jobs in the 1980s if British productivity begins to rise towards the level which prevails in the rest of the Common Market. In addition, education is contracting because the number of children is smaller than it was. In health care the health trend is away from hospitalisation, so fewer people will work in hospitals. The computer and the other devices which have been the occasion for this debate will cause, quite certainly, a substantial fall in office jobs. Just take the example of the way that the telephone service now requires far few operators for far more telephone calls, and think how the telephone has to a considerable degree replaced the letter as an ordinary means of communication. That is perhaps a second million people likely to lose their jobs in the 1980s.

We see in the black market for labour a considerable increase in the number of people working on their own account, particularly now in construction, building and repair, in domestic work and in professional activity, and a very considerable, and considerably unsatisfied, demand for specialised services. It seems to me that it is in this sector, the sector which is to a very large degree full of the self-employed, that we may well see in the 1980s a dramatic rise in employment. I recollect, anecdotally, a summer that my family and I spent in the Rocky Mountains a couple of years ago. The young men and women, mostly students, who ran the local shops and restaurants, who took us down the Colorado River on a raft, took us up the mountains on various expeditions, were part of a new economy. They were in business for themselves, in jobs that they had invented for themselves to meet a growing demand. They were in the service sector, which offered them great personal satisfaction, and, above all, great freedom of choice in lifestyles, when to work, how to work, what to wear and so on. It seems to me that the future of employment will certainly lie, above all, in this sector of small, probably one-man, businesses which people have invented for themselves to meet specific individual needs in our economy as society grows more complex and richer. This seems to me to be of the greatest possible significance.

It cannot be denied that at the heart of our problems as a nation, perhaps at the heart of our problems as a civilisation, lies the question of work. Many people are discontented with their jobs and as a result with their lives. At the same time, as the noble Lord, Lord Jacques, and others have said, all people need jobs in order to feel useful, to have an important area of their life recognised by society. Many of your Lordships will know the work of my esteemed colleague, Elliott-Jaques, the distinguished social thinker; and he tells me that in his considered opinion people need four types of activity to lead to sane and fulfilling lives. Of course, they need family life; they need active life in voluntary activity, the Red Cross or socially useful charitable work; they need private time just to be themselves, listening to records or playing games or doing up the house; but, above all, they need paid work, a feeling that they are providing a service that society feels is useful and shows it recognition of that service by paying for it.

I need hardly say, as the right reverend Prelate the Bishop of Worcester said earlier, this is a long-standing Christian moral teaching. It is, I think, this essential matter of the nature of work and the need to ensure a society in which work is available, not just for most people but for everybody, that lies perhaps at the heart of this debate and at the heart of the creation of a sane and fulfilling society. If we do not give our people this opportunity for work, and if the work which is given is not satisfying, then society becomes deeply unhealthy. I have no doubt myself that this is our central economic and social problem and one for which really radical solutions will be required.

5.19 p.m.

The Lord Bishop of SOUTHWARK

My Lords, it is evident that in all parts of this House this afternoon there is agreement that unemployment is a human tragedy and a national disaster. Every unemployed person costs the country £6,000 a year in benefits, in lost tax, in revenue and lost production. That is a total of £90,000 million a year, more than the total Government Bill for education, more than the Bill for health, and twice as much as the bill for housing. It is time we made an all out effort to end this crazy situation. Some of us remember when we were young how the late King Edward VIII visited the coalpits of South Wales, and faced with the wretchedness and poverty of the unemployed miners, said, "Something must be done". It is my hope that all Parties in Parliament, all employers and trade unions—in fact the country as a whole—will say the same today: "Something must be done". Indeed, not merely say it, but do it.

I have in mind especially the young people. It is estimated that about a third of those who are unemployed are below the age of 25 and the effects of this on young people and the consequences for society are manifold. Last week I spent a day with the police in one of the largest boroughs of South London. We discussed violence, vandalism—the cost of which runs into millions of pounds on our housing estates—muggings and many other matters. In fact, we discussed most of those things which make up and characterise the urban desert in South London of which I happen to be the Bishop. There are, of course, several causes but, as the police said, the basic one is unemployment. Boys and girls leave school with no prospect of a job. They tramp the streets, sometimes for months on end. They feel that society has rejected them and so they reject society.

When we last debated this subject I urged the Labour Government to consider non-military national service. They never replied to my request. Almost anything is better than aimlessly roaming the streets in hordes. There are hundreds of worthwhile constructive jobs that young people can do. To give but one example, on Tyneside the first iron-clad battleship—the battleship that probably altered the balance of power in Europe and which had been left rotting in Milford Haven for years—is now being restored as part of our national history at a cost of £8 million. I am told that it is being done by Locomotive Enterprise, which sets out to provide jobs for unemployed youth. Forgive my pride when I say that the moving spirit of that great enterprise in restoring this most historic battleship is a Durham clergyman. There must be dozens of men and women with similar vision and determination who can find jobs that our young people could do in the national interest. It is the Government's task to encourage such leaders to come forward.

I realise, of course, that what I have suggested is a mere pecking at the problem on behalf of the young. When we come to the older generation we are faced with massive problems—so massive that there is a temptation to accept mass unemployment as a natural feature of our national life. However, that temptation we must resist. As the new technology faces us, either science will be used to lighten the burden of labour and increase man's educational and cultural employment, or else, being seen as a threat to jobs and living standards, it will hasten our decline. If we are to win the battle, or rather if we are to begin to win the battle, six things are necessary and I shall make the briefest reference to them.

First—and this has come out this afternoon—we must keep our nerve. Inevitably people who expect to be the victims of the scientific revolution find it difficult to welcome change. A gigantic campaign in public relationships is necessary and I commend that to Her Majesty's Government. The fear of change has always been with us. It was a characteristic of the Industrial Revolution. Yet, in Britain, technological development during the past 100 years has had the opposite effect to what was expected. In spite of the disappearance of old industries, crafts and skills, there are more than double the number of people at work in 1979 that there were in 1869. Living standards have increased beyond the wildest dreams. Meanwhile, each side must listen sympathetically to the fears of the other. There must be a greater readiness on the part of employers and trade unions to understand the nature of the changes needed and there must be a greater involvement of working people in the processes of decision-making about these changes which will affect them.

Secondly, as far as possible, the technological revolution should be removed from the party political arena and be allowed to develop on the lines of consensus. Government, trade unions, employers of labour, not just in this country but internationally, must work together. Continuing and extensive action between all parties is necessary.

Thirdly, there must be a massive changeover from traditional jobs to jobs dependent upon the new technology. In the transitional years it will not be easy and it is no good pretending that it will be. For some it will mean earlier retirement. If so, they must be assured of a reasonable pension and worthwhile opportunities in leisure. For others it will mean retraining, the readiness to go back to school and acquire new skills. If we are to do this satisfactorily we must create more wealth because we cannot distribute wealth for these purposes until we have created more.

Fourthly, there will be a constant need to relate technological change to a reduction in the working week, the working year and the working lifetime. Within the lifetime of most of us there has been a drastic reduction in working hours and a remarkable extension of holidays. This is but the beginning. The 35-hour week will be with us shortly and by the year 2000 it will probably be considerably less. That means a revolutionary attitude towards leisure. It may well be that man's major preoccupation will be not his work, but his free time. We shall become a different sort of society. Instead of spending the greater part of the day in the office or the factory or at the bench, our successors will be faced with the alternative of using their time usefully or killing time uselessly.

In the Athenian State, Pericles, in his famous funeral speech, extolled the glorious possibilities of Athenian citizenship. It was a citizenship steeped in a rich cultural heritage. Unfortunately it was based upon slave labour. In the future the slave will be no longer the Athenian helot—the human being in chains, as the helot was. No, the slave will be the computer and the silicon chips. But there can be no short cut. The ability to use one's leisure usefully and for the enrichment of personality is an attitude that must be acquired and a skill to be learnt. As a country we have made progress in recent years and thousands of people value the recreational opportunities available. But we still have a very long way to go. In future, training for leisure should be started at primary school or indeed even earlier and it should continue until retirement and beyond.

Fifthly, we must recognise that the developing technology is making the world smaller. We must face the fact that different countries must specialise in different things. Textiles, for instance, should increasingly be manufactured in India; TV sets in Japan; pocket calculators in Taiwan and computer software in Britain—wherever, that is, they can be done best. Our views may differ about the degree of freedom and planning, but some planning there must be. And that will become even more necessary as the technological revolution hits the Third World. Unless we make sensible arrangements between the nations, the European butter mountain will become an international Everest and the European wine lake will become an ocean.

Sixth and last, during the transitional period Britain must be prepared for a siege economy. When wars occur we have to learn to do without, to tighten our belts and to reduce consumption. We are engaged in a war today. This time it is a war against unemployment, with all the wretchedness and misery it brings in its wake. If we are to achieve victory, we must spend large sums of money upon capital equipment, upon industrial renewal, upon re-education and upon pensions for early retirement. It is not an inviting prospect, but the alternative is less inviting. The alternative is decay and possibly defeat. We have fought wars before and we have usually won. I believe that with restraint, wisdom and unselfishness this war can be won, and ahead of us lies a victory which could point us to a glorious and thrilling future as we move together towards a just society.

5.31 p.m.


My Lords, this is a subject which we in your Lordships' House have often discussed, usually in connection with more general economic problems. But because we have often discussed a subject does not mean that we must not keep on at it. Therefore, we ought to welcome the opportunity given to us by the noble Lord, Lord Spens. To me his speech was quite unexpected because he dealt with much longer-term problems than those with which we are usually preoccupied and, from that point of view, I think that his speech will be welcomed.

I confess that I do not altogether share his forebodings about the future. All our history so far shows that we are able to take advantage of changes which reduce the burden of human labour. It was, indeed, interesting that the other matter he mentioned on the gloomy horizon was the energy shortage, which, of course, works in exactly the opposite way. If he had wanted to, he might have amused us by cancelling them out so that all those who are not doing clerical jobs would be busy on hand transport for, after all, the whole of our present civilisation depends on cheap transport. The one thing that is certain is that unless we can discover some new form of cheap transport, we shall all have to move. That might help what the noble Lord, Lord Vaizey, said was coming about; that we shall go back to village industries, maybe because we want to—and, no doubt, we would be happier if we did—but also because we shall be unable to go to the towns and get the blacksmith to do our work, and all that sort of thing. However, I do not propose to continue with that argument.

One of the troubles about a subject which is constantly debated is that one tends to have to say the same thing. The last time I spoke on this subject was in the debate on the Address last November. I hope that I can be brief in repeating to some extent what I then said. The causes of unemployment are basically the failure to adapt to change: changes in tastes, changes in methods of production. Changes imposed on us from outside, like the oil shortage, disturb the pattern of production and in the process some people are thrown out of work. Therefore, the level of unemployment is a measure, partly of the extent of the change with which one has to cope, but partly a measure of one's ability to cope with it.

Last November I reminded your Lordships' House of the very alarming feature about the British economy over the last 30 years. I said that the level of sustainable employment, or the level of unemployment with which we cannot cope, has been rising steadily. In the 1950s it was about 400,000; in the 1960s it moved up when Mr. Jenkins was Chancellor. He aimed at 600,000 to 700,000—a very unambitious target it would have seemed to his Labour predecessors who believed in having more jobs than unemployment all the time. After 1972, when Mr. Heath made an expansion, the economy ran out of steam much more quickly than people like me, who had previous experience of it, would have expected. That was a further indication of our troubles becoming more severe.

Of course, the immediate cause of this debate—although I can see now that the noble Lord, Lord Spens, did not mean it in that way—was that present unemployment has become so much more acute since 1974. All this seems to me very strongly to suggest that we are becoming less and less adaptable, because in this period the technical changes to which we have to adapt have not been all that bad. The worst was undoubtedly the rapid increase in the price of oil, which gave everyone a shock. But other countries adapted themselves to it much more quickly and easily than we did.

The traditional method by which we dealt with these problems of adjustment was through the market and the price system, the inducement to those who wanted to make the adaptations to carry them out and the adverse inducement—the pain, so to speak—inflicted on those who tried to resist the change. There can be no doubt that in a number of respects we have encouraged the inability or the unwillingness to adapt. It is partly due to the Welfare State and the social security system.

I agree with a good deal of what the noble Baroness, Lady Seear, said about this. I do not mean that I have not always been in favour of easing the burden of unemployment, because it is the unemployed who are having to pay the costs of change. But when we did that, we should have been very conscious that the system was not designed to prop up, as it does now in so many cases. It makes people so much more choosey about which job they will take; it makes them unwilling to accept methods that they do not like. Of course, most people want to work, but one cannot avoid realising that when people are getting away with this sort of thing, it tends to spread.

The other big negative factor has undoubtedly been the growth of trade union power, which almost everyone would agree has been a very marked feature—especially over recent years. Of course, it is natural and understandable that the trade unions should want to look after the interests of their members, that they should resist anything that is likely to throw their members out of work, and that they should drive the hardest possible bargain with employers who want to innovate. In accepting that that is natural, I do not think that it was necessary to continue, as we have, to strengthen their legal position. One of the great difficulties about inflation has been the fact that in their desire to obtain the cooperation of trade unions with incomes policy, successive Governments have made quite big changes in industrial legislation, practically all of which make it harder to overcome this natural obstruction. The Times may be an extreme case, but, as I understand it, all those who object to the new technology have been offered a guarantee of employment for the rest of their working lives. However, the union says, "Oh No, because if we had this, that would destroy our union". There you are. I know that that is an extreme case, but it is a straightforward case of a flat refusal to countenance an innovation. Presumably everybody would like to see the newspapers, but now you cannot get them because you have to preserve these jobs for all time. Where would we be if the grooms and horse owners had taken that line, or an even stronger line, in former days?

On the other side, Governments have been driven to reduce incentives and the ease of the managers of industry who have to make these changes. Not only have they these greater obstructions but they have had many burdens placed on them. The attempt to control inflation, which has strengthened the position of the unions, was often accompanied naturally enough by price control, which has put a great burden on industry. The amount of work that industry now has to do for the Government is very great, both as unpaid tax collectors and as providers of informa- tion. I will not go on in this strain. There is a great deal to be done. Yesterday the noble Lord, Lord Cockfield, outlined the strategy of the Government, and the noble Earl has said some more about it today. It must be clear from what I have said that I welcome the objective which they are setting before them; that is, to move towards more of a market economy with more of the sticks and carrots—as one sometimes calls them—of that economy.

Many speakers this afternoon have stressed the need for change. However, many of them, like the right reverend Prelate whom I am following, have laid stress on the changes that have to be made and not on how you are going to make them, which is what the politician has to cope with. I wish the Government well, but I hope they do not underestimate the magnitude of the task before them. I agree with the view that is often heard about this situation: that we have to educate the community to realise that inflation is the enemy of the mass of the community, and low productivity is the enemy of the mass of the community. These are not new ideas.

I have been connected with the Government or an observer of Government for 30 years. Such things have been said over and over during that period. But, as I have tried to demonstrate, things have got steadily worse in that time. I know that greater efforts are now being made to educate people, but they have not got us anywhere. There seems a strong drift in the other direction. A lot of things that have been done have weakened the credibility of ideas that are put forward.

Before you come to an election you tell people that inflation and low productivity are bad, but somehow during the election you tend to convince them that you are going to do all sorts of things for them and that all these horrors are going to disappear. Just as I have thought regarding incomes policy that the crucial thing was the credibility of the policy, I thought that neither monetary policy nor incomes policy were credible now because nobody believed that the Government were going to proceed to the lengths that they are going to do. I hope that we shall not have confrontations. But when you talk about credibility it puts it in your mind. There is no doubt at all that we have declined tremendously as an industrial society. Our inflation has been far to high; our productivity has been far too low. How we can get these messages across to people is the problem which the Government have to face.

5.45 p.m.


My Lords, I too am obliged to the noble Lord, Lord Spens, for introducing this debate. It is worthwhile pointing out that it is very precise in its wording. It is: To call attention to the unacceptably high level of unemployment; to the likelihood that this level will increase as the result of the world energy crisis and the introduction of significant technological innovations…". So we are presented with two subjects. I like that kind of approach because this evening I am going to deal with the second one, the question of the technological advances that have been made.

The noble Lord, Lord Spens, I am sure would have been surprised if I had spoken first, as I was surprised when I found that I had to follow him, because most of what he said in the first part of his speech I entirely agreed with, and I think I am going to repeat it. When we come to the bit about the women in the home I am not going to pretend to be an ally there. I too have to go home tonight to face my wife, and I would not like to be lynched by an army of ladies outside if they got to know what had been said.

These days employment statistics are being bandied about all over the place. They are being kicked around like a football, and so is conjecture about the limits to which unemployment is going. We really do not know. It has been quoted in terms of millions; 2 million is the latest figure I have heard. Indeed, the Minister himself has confessed to an increase of 200,000. What is certain, certainly in the short term and I think, as I shall explain, for some time, is that the number of people out of work will increase. But statistics mean very little. Indeed, they can be very annoying to the individual who is included in the statistics—the person who cannot get a job. It is a situation which happens mostly not because he himself causes it but because of the industrial pressures which have brought about a shortfall in employment requirements.

This kind of situation can indeed reduce a man to despair, and it can be, as I know very well, a very real morale breaker. It can very often ruin him. The young man, and the young woman, leaving school and finding nothing to do must of course feel that they are not wanted—this has been said by the right reverend Prelate—and they must feel that there is no place for them in industry, perhaps in society, except the street corner, the pub, the betting office, or the gang. The resentment which they must feel, either consciously or unconsciously, comes out in anti-social behaviour; vandalism is a symptom, and so is a lack of concern for other people. For the older person with a family to look after, the sense of failure can be absolutely devastating.

I know this because I am perhaps in a very good position to know. For six years I was chairman of the Supplementary Benefits Commission. I spent a great deal of time visiting the local offices, sitting with staff who were interviewing claimants, and going out into claimants' homes and talking to them there. Of course, it was a privilege to be able to go into people's homes. One felt uplifted at times at the obvious attempts that were being made to maintain a dignity of life on a very low income; on a catastrophic fall in income. It was ennobling to see how parents, mothers in particular, were making very real sacrifices for their children.

On the other hand, it was sad—this happens so often—to have come up against people who really could not cope, people who did not have the inner reserve, as it were, to respond positively to such a situation. They had lost interest in everything and sometimes had reached the stage when it was impossible for them to hold down a job or perhaps to go out and find one—a dull, drab, unhopeful, joyless existence which in most cases society had forced on them. Therefore, we all want to see the unemployment levels reduced and a better situation reached. But I am afraid—this has been said before in this debate and I agree with it—that the unemployed, like the poor, seem always to be with us, and, although we do not like the situation, it seems we have to live with it. That basically is the point I am making in this debate.

We must accept that technology has reached such a level that it will be impos- sible to return to a situation of "full employment" as we have been conditioned to think of it. In the 2nd June edition of the Economist there is an article on micro-chips which begins by declaring: The micro-chip revolution promises to do for the 21st century what James Watt did for the 19th". With respect to everything that has been said, I believe that to be an understatement. In my view, it will be revolutionary in an extremely acute form. We overcame problems which resulted from the Industrial Revolution, but those arising from the introduction of the silicon chip and modern technology will present us with even greater difficulty. In other words, this situation is going to have a much bigger impact on us. The article continues: British industry is only catching up with the micro-chip revolution slowly and lopsidedly, with a few brilliant exceptions". For sure, this new technique will have to be adopted if we are to maintain our competitive status with other countries and maintain our overseas sales; and abroad much more has been done, particularly in Japan and the United States.

To date, very few people really understand the extent of this revolutionary procedure. It means in effect that much of the work done by skilled craftsmen can be taken over by machines or robots. We have heard about the possibility of creating more skilled jobs on, for example, the computer side, and while that is true and one welcomes it, there is another aspect; namely, that many people who are doing skilled work today will be replaced by robots and become deskilled, so making the problem of their fitting into a modern civilisation more difficult.

Take, for example, spot welding and car spraying. These can be and are being done by machines. In the case of car spraying, a skilled operator does the job in the ordinary way with a handheld spray gun. As he does it, every move goes on tape and into a micro-processor, and after that the machine does exactly what it has been taught to do by this man doing it first, and the machine will go on doing it time and time and time again until the instructions are changed.

The Department of Industry has published a booklet entitled, Micro-electronics: The New Technology, and Lord Spens referred to this document, in which we are told: The existing and potential use and fields of application of micro-electronics are multitudinous. Indeed, it is difficult to point to any industrial and commercial area which may not eventually be affected by the new technology". In effect, what the micro-processor does is to control the recording and reproduction of the activities of human hands. To quote just a couple of examples, in Japan, Hitachi Television, by reducing the number of transistors required in television sets and replacing them with micro-processors, reduced their labour requirement from 9,051 in 1972 to 4,299 in 1976, a reduction of over 50 per cent. National Panasonic, another Japanese television firm, reduced their labour requirement from 9,875 to 3,900 and, over the same period, Sony reduced theirs from 4,498 to 2,778. In the car industry, reductions are taking place and I have seen it estimated that the American car industry will be reducing by about 18 per cent. by the mid-80s.

I suggest with great humility that we should recognise that this new revolution is going to hit us with enormous force. We should prepare for it and not be taken by surprise. We cannot afford to be unprepared, for I believe that sheer competitive necessity will demand a rapid build-up of new techniques. Accordingly, we should recognise the social and industrial human consequences which will inevitably follow and plan to adjust to them, and it is in the field of unemployment that most adjustments will have to be made. Even without the impact of micro-processing having yet taken effect, the Manpower Services Commission asked a consultancy to make an inquiry of business firms throughout British industry, both public and private. They were asked what they thought their labour requirements would be in the next 10 years, giving their view of the impact of technological change. The Commission reported: If the future trends in employment in Britain can be gauged from the plans of the largest companies, then the prospects are bleak indeed. Most sectors foresaw their workforces at best remaining static in terms of numbers and, at worst, they are planning reductions of up to 30 per cent. over the next 10 years". A similar view was expressed in European countries that were visited. In view of that, and the probability of the rapid and snowballing introduction of micro-processing, I suggest that we shall have to adjust our attitudes to employment and non-employment. Basically, the distinction between them will, I believe, have to be amended in financial terms.

It would be presumptuous in the extreme for me to make proposals—I do not wish to do that—and I deliberately began by describing how unemployment affects people. If measures are taken to provide for a shorter working week, a shorter working life with longer holidays and sabbatical leave and steps of that sort to ensure that people are able to continue working (one speaker mentioned the possibility of working for five weeks and then having five weeks off; working halftime, as it were) then that is not unemployment but non-employment. I believe that those who are not working in those circumstances are in all justice entitled to be provided with an income which compares not too unfavourably with that which they receive while working.

The fact is that even today being unemployed carries a social stigma; hence the outrage which one reads about in the papers about the so-called scrounger. I am not saying that there are no scroungers, but there are not nearly so many as some people in the media would like to make out. Incidentally, in this context it is interesting to note a proposal outlined by Professor David Donnison, chairman of the Supplementary Benefits Commission. I have not seen the Commission's report, but I read about this matter in the paper this morning. It is being proposed that the Supplementary Benefits Commission should no longer stop benefit when people go abroad on holiday. This is the result of new thinking. The Commission is saying in effect that holidays abroad are a natural thing, and it is asking why these poor folk who are out of work and on supplementary benefit should not enjoy holidays, too.

A minimum income for all—working or not—has been suggested, but come the day when the application of the new technology makes it possible to produce all the wealth needed to support a civilised community by the employment of very few people, those who are employed must, I think, accept that they are working not only for themselves but also to support a whole community—a community where not working at times is a natural state of affairs. How that is worked out in detail I would not presume to predict.

Clearly the important task of providing for alternative activities will have to be tackled. As I have said, there are far too many who cannot absorb, who are not resilient enough, who cannot respond positively to the leisure being thrust upon them. They are lost and confused when unemployment hits them. Perhaps longer and more comprehensive educational opportunities, on both the technical and the classical side, will provide an answer to the problem.

The concept of a society in which one knows that doing one's stint of work is not simply something which one does for oneself alone and to enhance one's own position, but is also of value to the whole community in order to predicate a better society in terms of leisure, culture and all the rest of it is surely a good thing in terms of the Socialism in which I was brought up, and is surely also in line with what Christianity itself would teach. Having said all that, I am not gloomy, depressed frightened or even worried about the future. I believe that the new developments can bring about changes which will enable us all to create a better, more equitable, more enjoyable and more cultured society.

6.4 p.m.


My Lords, I hope to detain your Lordships for only a very few minutes on one particular point, and one only, which has not generally been touched upon, except by the noble Lord, Lord Spens. who introduced the Motion and to whom we are most grateful for so doing. I want to talk about the position of women in the present unemployment organisation. From what the noble Lord said I understand that there are 7 million women employed at present and that the outlook is extremely gloomy, especially for secretarial work and the like, and that therefore this is an urgent matter. I propose to suggest a possible solution which may shock your Lordships, but I am sure that it is the right one, otherwise I should not be putting it forward.

It is interesting to recall that at the end of the war when I was serving on a county council we were faced with the necessity of providing nursery school accommodation for women who had been employed during the war and who wanted to go on being employed and for others who were envious of this position and wished to do likewise. But we found that establishing a nursery school in a building which had to be adapted, along with staff who had to be found and with children who had to be fetched and carried was far more expensive than any income that the women who were employed brought in.

Of course those were different days. Women were paid much less than they are now. Nevertheless, there remains the economic factor that staffing and starting a nursery school is a very expensive business, and this should be taken into consideration. My solution is to pay women to stay at home and look after their children. If one balances this against social benefits, unemployment pay, anxiety and everything else, I think that it will be found that it provides a far better solution. It is quite true that the saying that a mother's place is in the home is, as it were, an irresistible instinct which has tremendous consequences upon the children and which cannot be replaced in any way. Nevertheless, one should no more take advantage of that than of the vocation of a girl who wants to be a nurse. For many years I was chairman of a children's court. I found that the children's characters were formed virtually by the time they were nine. The influence of a mother over her child, especially in the younger years, is enormous; it cannot be exaggerated. It involves the continual personal contact with the child, and if you take that away, you are losing something which is quite irreplaceable. I am certain that much of our delinquency is due to the fact that there is not enough supervision over the children in the home by the parents especially the mother, in the younger years. Of course a father has his place, which is to support the mother, and naturally a mother and father must work together in these matters.

One can gain a picture of what I mean if one bears in mind that one of our best exports was the British nanny. The British nanny was the substitute for the parent. There must be somebody. There must be a parent or, as is very often the case, a British nanny. She was one of our very best exports. British nannies have brought up many royal families abroad, some perhaps to the good and some perhaps not quite so to the good. But never mind, my Lords. It is the sense of security that a parent, especially a mother, gives a child which really cannot be replaced. That should be paid for. I am quite certain that it would be less expensive to pay a mother to stay at home than it would be to start nursery schools all over the place. The cost of nursery schools would be saved. If those involved were unemployed the cost of unemployment and other benefits would also be saved. I am quite certain that here is a role which women must play but which they have rather forgotten, and which should be brought back into prominence publicly, and should be paid for.

It is no good thinking that you can get all these things for nothing. Look at the woman's economic position. If she stays at home, if she is not paid, she may be envious of her sisters or friends who have got a job and who when they wish can buy a new hat. I remember a Labour Minister who was a great friend of mine saying to me, "You are right. I do not see why my wife should ask me for cash whenever she wants to buy a new hat". It is the same with housekeeping money. When I was a magistrate I dealt with a lot of cases of village women who used to come and see me asking: "What can I do to increase my housekeeping money? I know that my husband's wages have increased; but I do not get any more. How can I do this?" I used to say to them, "You can go to court, but that's not the best way". In any case, the woman who is at home and who is paid nothing but what her husband gives her is at a disadvantage with the woman who is in employment of whatever kind. Therefore, I feel that this is a totally social and new outlook which must be redressed. The woman who stays at home, who keeps her home and her children until they are over school age and looks after that sort of thing ought to be paid.

That is my main point and my only point: that the love of a mother for her children should not be penalised or looked upon as something which she has got to do whatever happens. The love of the young goes right through the animal kingdom, from us to the animals. All who live in the country know how a cow lows when the calf is taken from her and how a chicken will gather her brood under her wings if she thinks there is any danger. This is a universal instinct but we should not take advantage of it. We should pay this woman for producing what is after all the future of our nation. In her hands lies the future members of our nation and how they are brought up. We shall save in the costs of delinquency, of social benefits and of unemployment if we take this matter seriously and give it some thought.

6.13 p.m.


My Lords, in considering this subject I start with one fundamental and simplistic proposition: that the more people who can work efficiently and usefully for the longest time, the richer the nation should be. We cannot afford many of the things which are important to all of us, such as improved hospitals, better social benefits and so on. We ought, therefore, to consider why this simplistic proposition does not work out in practice and decide what can be done to improve matters before considering such palliatives as the abolition of reasonable overtime, the acceptance of over-manning and early retirement. If any noble Lord wishes to dispute the truth of the fundamental proposition that I made at the start, I will give way, but I would emphasise the caveat; "working efficiently and usefully".

I should like to give six reasons why I think we cannot usefully employ our potential labour force. Each, in my view, deserves a detailed survey because clearly there are some areas in which employment may be possible although, as usual, there are likely to be undesirable side-effects in taking too drastic action. First, I would mention poor mobility of labour. Accommodation in new locations and the need for removal expenses are two factors in which improvements might be made. However, much more intractable problems arise with the man with a teen-age family. His wife and children may have jobs and educational commitments in the area or his sons and daughters may have formed firm attachments with locals of the opposite sex. To move the whole family is often impracticable and to split it up is economically and socially unacceptable. However, improved transport to not too distant alternative work could in a few cases solve the problem.

Secondly, unwanted skills. With the rapid change in industry, it is inevitable that some craftsmen are only required in decreasing numbers while others become in short supply. Retraining is the obvious answer, but it is difficult to estimate a shortfall on the national basis years in advance and, certainly, almost impossible to do so on a regional basis. The attitude of some of the unions that retrained personnel become second-class craftsmen is understandable but it is intolerable in practice. Moreover, their insistence that a six year's apprenticeship is necessary to become, say, a qualified carpet weaver when 18 months is all that an intelligent man requires cannot be in the national interest.

Thirdly, lack of capital and enterprise to start new industries or to make older one competitive. Both Conservative and Labour Parties have recognised this problem and have produced different solutions. There is a need to encourage small businesses. From them can come some new ideas and growth which so far have often been lacking in the larger companies in spite of their apparent superior powers of research and financial strength. We need to consider whether the excessive bureaucratic form-filling and other disincentives such as unfair dismissal provisions for staff are not throttling their initiative. I may be wrong, but it seems to me that the existing company law allows the "wide boys" to escape personal financial liabilities while at the same time discouraging the sturdy independence of the small businessman. In my view, the problems require continuous study and, hopefully, some measure of inter-party agreement.

Fourthly, the inability to export all our potential production and, correspondingly, to reduce the import of products which could be equally well manufactured at home. This is a well-worn theme and is what every other nation is trying to do. However, we are more dependent on our own exports than are most other countries for paying for our imports of food so that there must be constant review to see what improvements can be made with the controls, incentives or economic measures at our disposal.

Fifthly, and everyone has mentioned this, the speed of change which will in the future be increased by the silicon chip is too rapid for the socio-economic system to adapt itself and keep in step. To reduce the speed to any great degree means quite simply that our products will be uncompetitive in world markets. Speed of change is nothing new and useful parallels can be drawn with the 19th century industrial revolution.

Sixthly, the economic system. I venture to suggest that, at any rate, on an international basis, economics is our master and not our slave. If this were not so, there would be greater agreement among the experts as to what the result of any change would be. On a national basis, the effect of altering one variable, such as bank rate, can have far-reaching results and side-effects. It is idle to suppose that there has ever been, even in the 19th century, a completely free economy, and today, with controls on labour and much else, it must be only a question of degree. It is therefore imperative that we continuously consider what useful changes can be made to the economic system so that with the philosophy of the present Government it can hopefully be left to work out for the best and for our future recovery.

So far thought seems to have been concentrated upon "tuning" the existing system and not so much to considering what alterations to it might be useful in providing a more stable long-term system adapted to the needs of the 1980s. I appeal to the Government for thinking on these lines; they at least seem to have made a start in this direction. I acknowledge that in the short term we shall have to resort to palliatives to deal with increased unemployment—aspirins, if you like the analogy—but I am making this speech in the hope that I can persuade others to research in depth the six matters which I have raised, and that the Government will take some action on some of them.

I am therefore hesitant in making other recommendations which must surely be controversial; nevertheless, I think I should do so. In the first place, I think it ought to be stressed that the State is paying the unemployed almost as much in social benefit as it would if it could employ them. Job creation schemes need not therefore be an expensive solution in net terms. If military service were again introduced in this country, it would have a considerable effect on unemployment; but in the present climate of opinion, whatever its merits, it is a political non-starter. However, there are rather similar possible alternatives. There is much to be said for a time gap between qualifying for universities or other forms of higher education, and taking up residence. The student can see something of the outside world and the maturity so gained will help in obtaining the full benefit from the university or other course. Only perhaps in mathematics would a year or 18 months' gap have any serious effect on later academic performance.

Surely an arrangement for spending this time abroad in, say, an EEC country would have enormous advantages, not the least of which would be acquiring a foreign language. All this of course presupposes that useful and interesting employment could be found in the host country. Clearly there are many areas in which useful work could be done which would not otherwise be considered commercially viable. If such a scheme were to be successful and of sufficient interest to participants, money must be spent on the infrastructure. Dare I say however that our society ought to accept an element of working for our fellow men, if necessary in a manual capacity in the same way as this is done in China. The trip-wire is of course the unions' attitude to any work which they imagine might or could be done by organised labour. Clearly this country would benefit by a greater degree of self-sufficiency and in an extreme degree if we were forced into a siege economy. It is said that we could increase our own food production by 10 per cent. and this figure could be considerably increased by using marginal cheap land. The same applies to forestry. Bearing in mind the cost of unemployment benefit, such projects might still be economically viable in overall terms.

In conclusion, I believe that there is a long-term problem of unemployment far more intractable than the one we now foresee. It is that, with ever-increasing technology and the automation of services—for instance, petrol pumps—there will remain a substantial number of persons with disabilities, in particular low IQ, for whom up to now the only viable employment has been in labouring jobs and services, both of which will be increasingly less needed.

6.25 p.m.


My Lords, the noble Earl who spoke from the Government Bench today was gloomy about the immediate prospects for employment. He was honest in saying that he put his faith in the medium and longer term revival of the economy based on the revival of initiative and the revival of enterprise in our society by the measures which his Government are introducing.

Those of us who are involved in job creation—and at the moment I am in that most of my working life—can only wish him luck. In my job as chairman of a development corporation for a New Town which has to be employment led—and we are now scouring the world for jobs—I do a great deal myself by simple doorstep visiting to presidents of international companies. In my other job in the Development Commission we are creating permanent jobs in the countryside.

It will not have escaped the noble Earl that his hope for the medium and long term may well be overtaken by the kind of revolution which the noble Lord, Lord Spens, was talking about. As fast as he is reviving at the one end, the whole emphasis in the future, in the 1980s, will be jobs disappearing at the other end for quite different reasons. I see him nodding his head in approval.

The Earl of GOWRIE

My Lords, there is a difference between agreement and approval.


My Lords, he is agreeing with what I am saying; exactly, I did not want to tempt the noble Earl too far in that respect.

In these circumstances, it is therefore very important to look at how we do, in any case—whatever the success or otherwise of the Government's policy—begin to provide more jobs at least some- where. It is for that reason that I want to devote the whole of my remarks to the issue of the small firms sector. I want to be told in my claims and in what I suggest because I think the time for boldness has now arrived, and we should state exactly what we can do and how we might be able to do it. I do not want to claim over much, but I hope my remarks will be helpful.

I want to try to say that helping to create jobs in a small enterprise is not expensive for Government to do. It is desperately needed by international comparison and according to what people in this country want. I want to prove that it is cheap in the actual cost of each job. I want to prove that it does not create a vast army of civil servants in order to bring considerable results. I want to prove that any organisation which can do it—particularly in the urban areas where we have very little happening on this front at the moment—need only act as a catalyst, does not have to act as a nanny, does not have to be a nursemaid, and try to do too much in actual stimulation.

Those are bold claims and I want to start by saying, as other noble Lords have said, what are the advantages in any case of small firms. First of all, obviously they are more labour intensive. The noble Lord, Lord Vaizey, and the right reverend Prelate, among others, spoke about how important this is. For my part, I do not put any hope on the statement that silicon chips are going to create many jobs: I think that silicon chips will soon be controlling the manufacturing of silicon chips! Therefore there will be no vast army of new employment that is going to be created there. We are going to be in permanent shortage.

Secondly, people want a human-sized operation. People crave personal satisfaction which comes from a job in a small and friendly atmosphere. Thirdly, employers, too, are now rejecting size. The noble Lord, Lord Vaizey, said this. I can tell him from my experience in America, where I go every three months to recruit for my New Town—my doorstep selling to the companies concerned—that even the big multinationals are now saying to me quite openly: "We do not want to go above 300. Beyond that, problems accumulate, labour relations deteriorate and indeed we squander grants from Government in making up for the deficiencies of overlarge size". Fourthly, of course, these are the seeds of enterprise for the future: there is this great hope in small firms. Lastly, as I say, they are not very costly in stimulation and enterprise.

As regards international comparisons, in a Guardian article last Friday it was said that Germans are 12 times more likely than Britons to set up in business on their own. That led me to look up some figures—I apologise for bringing figures into this—in a remarkable book by one of those gentlemen who are now apostles of the alternative technology, the Green Solution, the ecology lobby—whatever you call it—Mr. John Davis's Technology for a Changing World. These figures are quite astonishing in giving small firm comparisons with other countries. I quote what he says on page 30: Whereas in this country less than 30 per cent. of manufacturing employment is in plants of less than 200 employees, in France, Japan and Sweden the proportion is 50 per cent. or more. At the smallest level of less than 10 employees, there are only about 27,000 manufacturers in this country as compared with 180,000 in France and 150,000 in Germany". These figures are astonishing if they are right, and I am quoting them in good faith. He says: Furthermore, the difference is getting rapidly worse with a considerably higher death rate"— that is in the United Kingdom— and a birth rate which is only about one-third that of some other industrial countries". In other words, our record in small industry creation is way below what it ought to be by international comparison. The other thing that is worth noting, as the Guardian said, is that in Japan—and this is one of many examples that could be given—small firms have access to £400,000 at 7¼ per cent. That access to capital is very crucial. In this country the minimum lending rate can vary from 7 to 14 per cent. in a twelve-month and I have met more than one firm—and, as I have said, most of my life is devoted to this issue—who are really put in jeopardy by a sudden fluctuation in the bank rate.

Leaving aside international comparisons, which show the desperate need to get on with it in this country, my own personal experience is how cheap and effective it is to create jobs: permanent jobs, not money poured down the drain in temporary job creation, but permanent jobs in small enterprises. Through the Development Commission, we create jobs by building small factories. We have something approaching 750 now approved, anything from the size of a large double garage to 5,000 square feet, all employing from 2 to 50 people. That is, in my view, the right sort of size where enterprise takes off.

Why do we build? We build because this is the one thing that the small entrepreneur cannot do. He cannot find the capital to build. He may have technical know-how; he may have a bit of money for working capital; but he cannot lay out money for a building at today's cost, which is often £20 per square foot. We now find that our factories are taken immediately. We have 160 built—the figures change every day; we started from nil four years ago—and they are pretty well all taken. Of the 250 under construction, about 90 are spoken for before a brick is even laid, or certainly while still being constructed. There is an insatiable demand for entrepreneurs to get on with it, if we can only provide them with this bit of the means.

Why is it important that the Government help in this? Why cannot the banks do it? The banks do not usually find long-term money for buildings, and in any case Government factories are let at market rents which, in deprived, declining areas, are well below the economic rent. So there is a good deal to be said—I shall not say too much—for continuing Government involvement in this.

The second thing that goes with that is the advising and sustaining of the enterprise when it gets started. We do that in rural areas through COSIRA, the Council for Small Industries in Rural Areas. We are 300 in staff and the total cost in one year of keeping the whole of this rural small industry going is £3 million. This is no great drain on national resources and I hope it will provide a good example of how we can do things in the urban areas. They sustain these firms by an evangelical approach: we have organisers in each county, guided by voluntary committees of businessmen who go and see every firm and offer them help technical training, advice in management, loans and even training in our own workshops. This sustains the business. That is the one mistake the Small Businesses Agency makes in America; it does not keep them going once it has given them the money. We shepherd them, so far as we can, through the formative stages of their business.

Thirdly, there is the loan situation. Here demand is now outstripping supply. Despite the fact that we have diverted £1,500,000 to the banks, with whom we have a very good arrangement, we do not try to do more with State money than is necessary. We push as much as possible into the hands of the banks so that they can help the small firms. We have been lending—I checked the figures today—£27 million over the years, and only £42,000 has been written off. That is not a bad record: 0.15 per cent. of loans to small firms written off.

As regards the total cost per job in this package of factory space, advice and all the rest of it, in our 12 more recent factories I checked that we have created 213 jobs at a cost of £4,447 per job. That is just one example of 12 recent factories— all in small enterprise, all people standing on their own feet, loving every minute of the freedom, the enterprise and the initiative that they can show. In the Eastern borders we have been checked on by the University of Newcastle who say that we created there 1,000 jobs at about £1,600 per job; so it is cheap and we really must now learn the lesson that small enterprise does not need a great deal of help to get going.

To give further examples, I take what we have had to do in my New Town We have there no access to COSIRA, which can only operate in the rural areas; and so we had to set up our own small businesses unit to keep our firms afloat. It is cheaper to keep them afloat than to go out looking for new ones when they have gone bust! In Telford we have six people only in a small businesses unit, now looking after 126 small firms. Half to three-quarters of all the advice they give is in financial and management matters. That is the clue: a man has the technical know-how and we can help him with the factory, but it is nearly always that he is a good technician and not a manager. That is where he nearly always comes adrift. I should like to give you some examples. A pottery firm employed six people when we first got involved with it: it had financial problems. The firm was investigated and we improved the costing and pricing structure. We provided funds under a bank loan scheme. We took the owner by the hand to the bank. We installed a management accounting system. The business now employs 18 people: we are helping with future expansion plans and believe it will be employing over 25 people by the end of the year. That is not a bad record.

We investigated a firm engaged in steel fabrication. They were running unprofitably and fighting, to hold off their creditors. We improved the estimating system, changed the pricing policy and persuaded a financial backer to inject more loan capital; and the bank—again through private enterprise and not the State—provided increased overdraft facilities. We designed a larger plant and all sorts of other things—I could go on with a long list—and we put the firm back on to the road of self-sufficiency and success. Six people do that and they are keeping afloat the basic small industry of a town which is relying on small industry more than on anything else.

With that record, what I want to say very briefly to the Government is this. The time has now come to take the lessons—and these are not the only ones; the noble Lord, Lord Vaizey, and others who are in business know of themv—that can be learnt about sustenance and about the assistance needed for small businesses and try to make a national pattern out of them. We have a good scheme—I claim it, anyway, for the rural areas; I have to, because that is my jobv—but what is missing is anything equivalent in the urban areas. It is quite ridiculous that where it is least needed, in the sense of the smallest population, it seems to be rather good, if I may say so with due modesty, but in the urban areas where it is desperately needed and the numbers are huge nothing exists.

What can we do? First, we have a problem. The local authorities have some responsibility in this matter. District and county councils are jointly responsible for industrial promotion. But they have no money and it is rather fruitless to ask them to do very much in this respect in the next few years. I do not think it would be any good, either, asking them to set up a technical advice system such as COS1RA has, because they do not need all the technical advice in one local authority area. They need it on a regional basis, to be on call for the firms that require it and want to call in specialist technical advice. So it would be wasteful if we left this to local authorities to deal with. Thus, first, we have the local authorities and that is their problem.

Secondly, fiddling about in the urban areas, particularly in the assisted areas, is the Department of Industry. I have good relations with the Department of Industry in my job, and I have nothing bad to say about it. I am not here to criticise it. But the problem is whether it is building small enough. It is really interested in building big stuff, and we have somehow got to get it, or a Quango derived from it, involved. I see the noble Earl smiling, but the advantage of Quangos is that we can go and bang people's heads, and civil servants cannot. When I have a problem with a local authority—and we work entirely through local authorities—I go and see the chairman and deal with him and urge him to do something for his rural areas, if I do something on behalf of Government. Quangos have this independence, and need this independence, to go to urban areas and get them moving as well as offering Government help. They can stimulate by their independence.

To come back to the Department of Industry, it is not building small enough and I do not think that it will do so, because we need to go down to 1,000 sq. ft. workshops where young men can get a start. Also, there is a need—and this is something else which the Department of Industry cannot do—to convert old buildings. I ask your Lordships to look at what is happening in the Clerkenwell workshops. There are 350 people employed in an old Inner London Education Authority furniture warehouse, run by a local enterprise trust. Go and see some of the other local enterprise trusts all over the country that are now doing this and putting small people into business in their own way. I do not think that the Department of Industry can do that either.

Thirdly, one of the Department's disadvantages is that its small firms' advice scheme is not evangelical in the way that it ought to be. It is responsive; it sits and waits for small businesses to come to it. It needs to be more like COSIRA. It needs to go out and look at the small firms, get their confidence and then be a regular visitor in case trouble is on the way, so that if knows what is going on and can be helpful if the firms turn to it. So that we really need a "COSURBA". We need to have something like a COSIRA (the Council for Small Industries in Rural Areas) available on call for the urban areas.

I want to say immediately, at the risk of repeating myself, that this is not to be an all-provider. I am sure that some units, some small factories, will be built by local authorities. We want to stimulate them even further if we can. They are doing it, and some local authorities are building 1,000 sq. ft. units. Some private enterprise is building them. I am glad to say that the Coal Board Pension Fund—I do not say it too loudly, because too many people will be writing to them and wanting units—is now willing to provide, on a speculative basis, 1,000 sq. ft. units: all credit to them for having this idea. So we do not need to be all-providing. We can take other people in with us and get things going.

To give one example from the rural areas, we found an area in Northamptonshire which was totally derelict after a railway withdrawal and we said "OK, we will come in with a few factories if the local authority will buy the land." The local authority then became enthusiastic, it bought the land and suddenly private enterprise came in and began to buy all the plots. So we said" We are not needed after all." We just acted as a catalyst in order to get the thing moving. So one does not need to be an all-provider.

Secondly, there is no need to turn to State agencies to provide all the loans that small enterprise needs. Banks are increasingly helpful, but what is often needed is an advisory body that holds the hand of the small businessman, takes him to his bank, explains his problem for him and enables the bank to cope with it and to offer him the loan he needs. Similarly, there is no need to provide all the advice because, luckily, some of the banks are also providing that kind of help as well as loans.

Those are three things that such a body is not. A fourth is that, as I said, it does not consist of thousands of civil servants. The Development Commission is run by 32 staff and I do not think that it is a great consumer of civil servants. Earlier, I gave the figures for COSIRA for staff in the rural areas. What the body should be able to do is to build as needed, to offer loans where they cannot be provided through the banks or private enterprise and to offer an advisory service which is on call to the local authorities and to small firms in the urban areas. It is not for me today to go any further into the precise machinery for this. I spend my life working on this subject. I am passionate about the success that I see in small enterprise wherever I travel the length and breadth of the rural areas, and in the most wonderful and heartening examples that I see in my own New Town. I say most urgently to the Government that I hope they will very early turn their eyes towards what can be done to strengthen this experience and, above all, to make it effective in the urban as well as in the rural areas.

6.48 p.m.


My Lords, I listened with great enthusiasm to the noble Lord who has just sat down. Having once had a small factory myself, I wonder why he does not change sides. That is the kind of speech that I would expect from our side of the House. I should like to thank the noble Lord, Lord Spens, for introducing this debate at a very timely moment, as we all live under the shadow of the approaching micro-electronic revolution. But I personally do not regard it with any great fear. I regard it as the dawn of a new era, the dawn of brightness for many millions of people in this country, and I really think that we should look at it like that.

I should first like to say a few words about the subject of this debate, which is of course unemployment. I can remember unemployment when I was a boy and then a young man in the 1930s. I can remember marches, and unemployment in those days was extremely distressing because it brought physical privation. So we are all glad that today, though unemployment will be very frustrating to many people, we do not, thank God, have that great physical privation. Everybody has enough to eat, people have cars and even if they are unemployed there is no physical distress. We have to be very thankful for that. It is due largely to technology.

I do not want to introduce a jarring note into this debate but, as I have already mentioned, I used to have a factory. It was reasonably successful, but at the end we were making no money at all; we were not losing money but we had a lot of sweat for absolutely no return. This factory was situated in Deal. It was a plastics factory, employing about 100 people. Deal was an area of fairly high unemployment; we used to ring up the local labour exchange and ask them for machine operators. I had automatic machines which required no skill to operate. Although we paid good wages, we got very few takers in this high unemployment area. We interviewed many people, but they said, "We're getting with the dole £40 or £50 on supplementary benefit. If you can give us £60 to £70 a week"—which in those days was a very high wage—" we might come".

Although the registered number of unemployed in this country stands at the moment at 1,279,000, that is not the true figure. My experience, and that of many people whom I know, is that there is not a village, a hamlet, or even a street in a big city where there are not one or two people who, although gainfully employed, are still registered as unemployed. I know one or two in particular who are doing very nicely, thank you. One young man I know drives his own lorry. His earnings amount to well over £100 a week, and he is still drawing the dole.

I do not want to be repetitive, but I must repeat a story that I have told twice before in this House over the last 12 years. I refer again to a visit which an inspector made to a Southend labour exchange. Some noble Lords may have heard me tell this story three or four years ago. The inspector found 100 men at that labour exchange who had been drawing the dole for over a year but who had no right to do so. I do not know how many labour exchanges there are in the country, but I imagine that there must he 5,000. If we were to find that the same thing applies in all those labour exchanges it would mean that nearly half the unemployment problem had disappeared. It is a quite sobering thought.

As the late Lord Beveridge said, we all know that there will always be a certain amount of unemployment because there are quite a number of people who are unemployable—not necessarily through any fault of their own but because they are made that way, or because of their general attitude, or because of their health. Turning to the Budget, I believe that it was very bold and imaginative and I hope that it succeeds. I was cheered to hear the Chancellor of the Exchequer say that the Government were going to take a closer look at—I do not know whether "fraud" is too strong a word, but at the jiggery-pokery that is going on regarding social security benefits, in that many people who are not entitled to those benefits are getting the benefit of them. I am quite sure that the late Lord Beveridge, who introduced the system, would be appalled at what is happening today.

The report of the Supplementary Benefits Commission has, I understand, been published today. They say that, in their opinion, welfare is crumbling, but I hope that they are not accurate in this statement. Certainly the matter needs to be looked at. I think it was Nye Bevan who said in 1948 that national assistance would be needed only for a few years; then people would no longer need it. How wrong he was.

May I turn to the question of vacancies. I am still an employer, although in a very small way now, and I am amazed like others that it is so difficult to fill any vacancy, even if one is in an area of quite high unemployment. I was down in Brighton the other day and met a man there, Mr. Lane, who said that for several weeks he had been trying to fill 150 unskilled vacancies. He is involved in light industry. Brighton is an area of quite high unemployment, but Mr. Lane could not get any takers. This is a terrible state of affairs, and something must be done about it. If you travel by British Rail, you find that the trains are often late. And what is the usual excuse? The usual excuse is shortage of staff. God Almighty! When there are nearly l½ million people unemployed, what is the excuse for shortage of staff? It does not add up. What is the cause of all this? To a certain extent it is due to industrial failure. In the last four years, wages in industry have more than doubled, but productivity has made no strides. Employers have frequently been blamed for not introducing new machinery, but that is not true. There are many modern factories in this country. Even the introduction of new machinery, however, has not improved the overall position.

As if employers were not harassed enough, now we have the Employment Protection Act. I hope that this Government will alter that Act. It ought to be called the "Prevention of Employment Act" because, as I have said, even though we already have more than enough to contend with, the Employment Protection Act completely reverses British law. It makes the employer guilty before he can put his case. I have pointed out before that if an employee takes his employer before an industrial tribunal, the employer has to prove his innocence. However, the industrial tribunals appear to be fair, and I have no complaint to make on that score.

Unemployment is a terrible problem in this country. Since we live in a democracy we cannot have direction of labour. Therefore, we have to compete with automation, with self-service, and so on. Our shipping industry has declined. Having given the Empire away, now we have no imperial preference, although that has not affected employment a great deal. It has thrown out of employment about 36,000 white seamen, but many of our mercantile marine seamen are Asians. Therefore, it has thrown many of those Asians out of work.

Also, we have a swollen population of 56 million, and very extensive immigration. We have emigration, too. In the last four years or so, 57,000 people have emigrated from this country, although we cannot do without them because, generally speaking, they have been skilled people. Furthermore, a great number of them had capital —some abroad from which the United Kingdom can now get no benefit. The immigrants do not bring foreign currency into this country. What is the cure? We have had a lot of ideas today, such as earlier retirement, and I think that is quite possible. The position of married women has been referred to. I do not want to tie married women to the kitchen sink, but when married women have young children I think they should remain in the home. I believe that to he extremely important and I should like to see a State wage for married women who look after their young children. My noble friend Lady Emmet of Amberley made a very good speech on that point. I think it would stop a lot of youthful delinquency.

Other things have been suggested, and something which I do not think has been suggested today, but which at the same time I do not think is really practical, is to divide a shift into two and have two men doing half a shift each. But the company would not be able to afford to pay them both the wage of a single man doing the whole shift, so it is not really practical. Mention has also been made of non-military National Service. I think it was referred to by the right reverend Prelate the Bishop of Southwark and it is something to which I have often given thought. I do quite a lot in boys' clubs and for a long time I have been treasurer of the Kent Branch of the National Association of Boys' Clubs, and I consider that we do very good work. I do not think that the Government ought to cut down on training for the young. Where it can be proved that there is a great deal of money being wasted, that is fair enough; that can well be cut, but the actual training should not be cut. We should cut down on the people who waste money and dismiss them. I apologise to your Lordships if I have spoken for too long a time, but in conclusion I should just like to say that I do not fear the electronic micro-processor silicon-chip invasion—or whatever it is called—which is going to hit us in a year or two. If we are sensible we shall be able to deal with it. We have faced far worse problems and I am sure we shall be able to surmount this one.

7.3 p.m.


My Lords, I was interested in the noble Viscount's reason for the lateness of the trains being staff shortages. Of the last 27 journeys that I have made between Euston and Liverpool, Lime Street, on 26 of them the train has been late but I have never been given that excuse. They tried the one about being short of diesel fuel and then realised that they were electric trains! Now they say that there is something technologically wrong with the wheels. With regard to the suggestion made by the noble Viscount that the noble Lord, Lord Northfield, should go over to the Conservative Benches, I would suggest that he might make a far shorter journey to these Benches and have a happier home, since under the last Government our party did a great deal of a positive nature to encourage the assistance of small businesses. So now the noble Lord, Lord Northfield, is welcome in all parts of the House.

I hope I may be forgiven if I concentrate my remarks on the problems of one area, that of Merseyside. It fits in very well with the terms of the debate initiated so appositely by the noble Lord, Lord Spens. First, Merseyside has an exceptional and unacceptable level of unemployment. Secondly, that level of unemployment is largely, if not entirely, caused by technological innovation and change in market demands. Thirdly, while it requires urgent and immediate remedies—what might be termed fire brigade action—there is also a great need for long-term study into the changes which would be required to resolve the pockets of high unemployment in the various regional sections of this country.

The level of unemployment in the Merseyside special development area is, I believe, fairly widely known but it should be repeated in order to underline the great seriousness of the problem, which caused one of the Ministers in the last Government to compare Merseyside and the rest of Great Britain, and Great Britain and the rest of Europe, as the "sick man". So it is a serious problem in national and European terms. In April 1979 the level of unemployment in Merseyside was 82,400 people or 11.2 per cent., which is twice the national average. In the 10 years from 1969 in Merseyside we have lost over 100,000 jobs, or 14 per cent. of the total jobs in the area. We have more unemployment than the whole of the Principality of Wales and to me that is somewhat ironic since my grandfather, in common with thousands of other Welshmen—and, of course, in that period, Irishmen—came with them from Wales and Ireland, and the Celtic fringe generally, to find work in Liverpool. People are now leaving Merseyside in great numbers to find employment in an area which has special advantages, such as Wales and Scotland and Northern Ireland. We have the highest concentration of young unemployed—which is perhaps the most serious thing—in the whole of the country. In July 1978 the figure stood at 20,200 young people, and although this year it has decreased to just over 6,000, in the present circumstances, with school-leavers coming to the age when they must leave school next month, it seems likely to rise to a similar figure in July this year.

I think I have painted a pretty black picture, but the worst feature of the unemployment in my part of the world is the long-term nature of so much of it. While it is unpleasant, I think that temporary unemployment is acceptable if one knows that one is likely to get a job within about six months, but where 24,800 of the adult males have been unemployed for more than 12 months, as on Merseyside, and where there are over 6,000 young people who are under 18 and have been unemployed for over 12 months, I think it will be seen how serious is the problem and how deep-lying and almost hopeless the situation is for many people in Merseyside. I agree with the noble Lord who said that while we concentrate a lot of our sympathy on the young people there is also on Merseyside, in the shipbuilding and ship repairing industry, the great problem of people who are declared redundant in their mid-fifties without much hope of any new employment whatsoever.

One of the great problems of youth unemployment is that the 15-year-old leaving school cannot benefit from the youth opportunity programme and he cannot claim supplementary benefit. I hope the Government may consider bringing the 15-year-old school-leavers into the same position as the 16-year-old school-leavers; and as to the age group of the 18 to 20-year-olds, who are too old for youth opportunity programmes, although I know the Government are reducing the money spent on special temporary employment programmes I think that consideration should be given to extending those programmes so as to encompass the 18 to 20-year-olds who are too old to benefit otherwise. They did not get the Easter benefit of the 16-yearolds.

To continue my catalogue of tragedy, in Merseyside in the year 1978 14,300 redundancies were declared; namely, 8.5 per cent. of the total national figure for redundancies in the country. The important point is that half of these losses were from large companies employing more than 500 employees. In my view, that is perhaps the most important point. Although the reasons for the high level of unemployment on Merseyside arc complex, I think they are all associated either with changes in market demand or with the new technologies, as I mentioned earlier, or with the fact that none of the large companies who get rid of the employees and create redundancies have their head office in the Merseyside area.

When contraction has to take place history shows that contraction takes place from the outside and towards the centre, the headquarters of that company. That is why it is so important that we should be encouraging the building up of small businesses, which are less subject to that kind of problem than the large company with its head office in London or Birmingham or wherever. I must go on and underline, if I may, that the reasons given by those people who have contracted, declared redundancies, are not —I repeat not—generally because of a low productivity on Merseyside, not because of high absenteeism on Merseyside and not because of high unit costs. In other words, the Merseyside disease is more of a figment of the media's imagination than a fact. It is largely our own fault. On Merseyside we produce a lot of comedians; we like laughing. Indeed, people say that to live on Merseyside you have to have a sense of humour.

But we do have successes. This year we have won two export awards in two different countries. One motor manufacturer says that Merseyside is the best place to encourage the production of his vehicles. Large companies like British Insulated Calendar Cables, Fords, Squibbs, Cross International, Kodak, etc. are all expanding and find Merseyside a good place to create new work and a good place to have high productivity. We must welcome, I think everyone in all parts of this House should welcome, the major breakthrough that GEC and Fairchilds have had in locating their microprocessor at Meston in the Wirral area. This is the first break in our part of the world from the traditional patterns of reliance on heavy industry, admittedly without the production of a large number of new jobs, but as a first step towards Merseyside adapting itself and absorbing and seeking new technology, not living in the past believing that our future lies in the recreation of heavy industry, because that is not the case.

I do not want to give the impression that aid has not been made available to the Merseyside area. I do not wish your Lordships to think that we are complaining because successive Conservative and Labour Governments have neglected us. In fact the Merseyside Chamber of Commerce estimate that there are 78 different forms of assistance available to companies on Merseyside. The trouble is that it is a bewildering and confusing array of help for the new investor and the new entrepreneur. It has been said unfairly and unhelpfully, I think, that, Merseyside will not recover until the national economy recovers. But that is no excuse and should not he any excuse for doing nothing. The conditions can be created so that Merseyside can become successful through its own efforts. I think this is the important point. I would expect that the Conservative Government would welcome it if one creates conditions where people can rescue themselves. This is preferable to large inputs from national Government.

We believe—and I think we believe across the parties on Merseyside—that the Government's regional policies since the war have been crucial, and, speaking generally, Government policies to assist Merseyside have failed: first, because Merseyside has not benefited from a share of regional aid commensurate with its massive unemployment problem. Very little has been done from Government resources to reach the very severe unemployment black spots such as Kirkby and Speke and Birkenhead, the area I represent on the county council where unemployment often runs to between 20 and 30 per cent. Secondly, I think a disproportionately large share of aid has gone to large, well-informed, well-run companies who have little or no permanent commitment to the area, as I suggested earlier. Small firms, speaking generally, either have no knowledge of or have been bewildered by the confusing array and multiplicity of different kinds of aid which apparently are available. Very often they do not know how to get them, and often they find when they do get to the end of the tunnel that they are too small to benefit from them. This is most discouraging for the smaller company, which is the type that I think is the most healthy kind of development for Merseyside.

Thirdly, the main thrust of regional policy has been to encourage manufacturing industry. There has been little or no help in the past 20 years for service industries. I think that has been deliberate policy, and it is a pity, because much of what we would describe as service industry does in turn create more employment. Tourism creates more employment. Again, I would underline that I feel it is a great tragedy that the small firms employment subsidy has been lost, if the Budget announcement made last week is correct. Fourthly, the Government have stated that they intend to concentrate their efforts on priority regions. If this means that genuine regional priority for places like Merseyside—I do not think there are any places like Merseyside; so genuine regional priority for Merseyside—is restored, this must be welcomed. But the deferment of the regional development grants announced by the Government does not give us much confidence in the present Government's policy. I hope that the noble Earl can confirm that the Government will abide by the decision made by the previous Government to bring 2,750 new jobs to inner Merseyside by establishing Civil Service departments there.

In addition to all these problems, in addition to the 78 different kinds of aid we can get, there are far too many Government departments promoting industrial development in Merseyside and other regional development areas. There are over 12 Government agencies concerned in some way or other with the regional development and the cure of unemployment in Merseyside. The initiatives that we feel we need on Merseyside—and again I think we feel this across the parties —the initiatives that we need to put ourselves back on our feet and cease to be the sick man of Great Britain are, first, a clearly-defined regional development strategy and budget, so that we can then claim a fair share of the available finance and we have a basis for claiming EEC aid. Secondly, there is a need for means and powers to get on with the job of solving our own problems. We want to expand the way in which we can assist the small businessman. We have set up agencies like the Merseyside Economic Regional Development Organisation. We have tried to start these things off, and I believe that we can do much more in giving aid, advice and information, of the kind the noble Lord, Lord Northfield, mentioned, to the small business. Also, I emphasise the importance, in my view, of providing for the service sector of industry.

Another problem is that at the moment the package of aid that comes from central resources to regions is the same package wrapped up in exactly the same way, whether that package is going to the South-West, to the North-East or Merseyside. The problems are all different, and therefore the package should he differently wrapped when providing for the problems of Merseyside or the problems of the South-West or the North-East. Therefore, there should be a great discretion of decision, the opportunity for which is already within the Industry Act, and we hope that this Government will use that discretion more widely.

Thirdly, we think that the regional priority of Merseyside—and this is where we come with a begging bowl—should be restored. Areas which have had serious unemployment problems which have now improved should be descheduled as Special Development Areas. Moreover, we should be given the opportunity on Merseyside to compete fairly and equally with the Scottish and Welsh Regional Development Agencies. Scotland and Wales have far more resources than we have on Merseyside. We cannot compete fairly or equally with them, although I think that I detect a feeling of unease emanating from my noble friend Lord Mackie of Benshie at those remarks.

Fourthly, genuine consideration should be given once again to the possibility—this is a radical suggestion but it should not lack consideration for that reason—of giving free port status to Merseyside somewhat along the lines of what is done in Northern Germany.

Fifthly, consideration should be given to unifying the agencies and the different means of getting resources into one body based on Merseyside. We do not really feel that we have enough "say" in dealing with our problems on Merseyside. We welcome the frequent visits from Ministries of the present Government and we had frequent visits from Ministries of the previous Government. We feel that on Merseyside our problems are sufficiently important and our area sufficiently large to mean that we should have our own office there to deal with those problems rather than suffer the demeaning practice of having our problems dealt with by civil servants in Manchester or London. Surely we have the ability on Merseyside to call upon financial and managerial expertise and assistance at Merseyside level.

We want to encourage—and I think that we all feel that this is extremely important—the rescue of areas like Merseyside by encouraging experiments, adaption and adoption of new technologies and new training programmes. We do not want to say: "Please restore to us those industries that we had in the 1930s, the 1920s or indeed the 19th century". We want to seek new technologies, new programmes and retraining. On Merseyside, we have the considerable problem of a high level of unskilled elements in our population and therefore we need to give a high priority to training programmes. Finally, what areas like Merseyside need is the means to use their own considerable initiatives, their own considerable skills and their own characteristics. If Her Majesty's Government can do something to give us that, I do not think they will regret it.

7.23 p.m.


My Lords, I think we have reached a moment when it is very important to look forward to see how we are to face the economic problems of the future. Personally, I am an optimist because we have an extremely clever population full of industrial skill and know-how and a very productive agriculture. If we had a better organisation and made a few reforms, and if we took away the obstacles to progress, then I believe that we could do a great deal. I shall try today to list a few of those things which I believe need doing most urgently.

First, I warmly approve of the Government's strategy. It is absolutely essential to squeeze inflation out of the economy before we try to go forward. If we go forward before we squeeze inflation out of the economy—which is what we did in 1964, again in 1973 and again when the last Government were in office—the only effect will be to draw imports into the country and to ruin the balance of payments. That is an impossible thing to do. We must start by squeezing inflation out and the Government are entirely right to do so. I was the last chairman of the OECD and that is the standard practice of that great organisation. We have helped many, many countries to do it. What the Government arc proposing to do is pretty standard practice. I can tell your Lordships that it will be painful and I think that we have a very difficult winter ahead of us.

Turning to the principal subject of our debate, I do not think that it is possible to cure unemployment unless industry is allowed and helped to function. We simply must get industry functioning if we want to get people employed. At present our industry is functioning very badly, for, although financial, monetary and fiscal measures are essential—and I entirely agree with the Government's thinking on this—they are really not enough to get our industry going. I understand why the Government do not want to intervene in industry. The last Government intervened too much. The report published by NEDO—the National Economic Development Organisation—in November 1976 put forward a dreadful picture of constant political interference by our politicians in the working of industry. We must not do that and the Government are right to want to avoid it.

On the other hand, our economy is like a ship waiting on the stocks. In my opinion it is ready to slide down the slipway into the sea of prosperity, but it is held and prevented from sliding down the slips by quite a number of props. If one attends the launching of a great ship, one will be surprised at how few props stop the ship going until the last moment. Therefore, I wish to give a number of examples where I think the Government could make a big difference to industry and, what is more, could do so without increasing inflation. I turn first to the planning system. As it works at present it is very inefficient and creates mountains of paper. In my experience, it is a scene of incompetence, delay, expense, inquiries employing QCs, and other sources of expense and bother. It gives free licence to objectors, who are allowed to make the same objections time after time. Then there is a public inquiry, two years go by and even after that a long period elapses before the Minister decides.

We simply must make it easy to reach decisions. I know a young Swedish salesman who represents one of those Anglo-Swedish companies which are tremendously productive both in this country and in Sweden. He came to see me in Paris some years ago tearing his hair out. He said: "What can I do? My company in the Midlands has invented a product which nobody else has thought of. I could sell unlimited quantities all over the world—in Europe, Australia, America or where-have-you." He went on to say: "The directors of my company in England say that they cannot make more than 20 a month. It is quite absurd. They ought to be making a thousand a month but they say that they cannot do that. They would have to put up another factory; they could not get planning permission, they haven't got the money; the system is too difficult, and they would have to take on more employees." That shows the rigidity, the friction and the immovable obstacles in our system, quite apart from the reluctance of directors to move with the times.

For 38 years I was a public official. I can assure your Lordships that when it comes to Government offices dealing with an application to do something, practically the only thing they can say is "No". They cannot say, "Yes, such and such a thing can be done and we shall help it". That would he terrible because they might help one particular company and not another. Therefore "old sealed lips" and a general stiff-upper-lip attitude come into play and nothing whatever is done.

I shall give your Lordships a good example. Your Lordships may remember that Toyota wanted to set up a huge motor installation near Bristol. But the planning authority said, "No, you cannot do that, not at Bristol. You must go to Liver pool". I apologise to the noble Lord, Lord Evans of Claughton, who preceded me, because Toyota said, "No, we would not dream of going to Liverpool; the Liverpudlians never want to work any new process. Skelmersdale has gone to pot; Speke has gone to pot. For 18 months they would not work the new graving dock. This is no way to go on. We want to be near Bristol." Eventually they were allowed to erect quite a small installation there and the United Kingdom lost a great deal of employment.

Therefore, the Government must set a new policy in these matters. The position abroad is quite different. The Governments there are willing to help. The Government must help in these matters. I am not saying that the Government have to nationalise or do things themselves, but they must be prepared to help the companies that want to do such things. It may be a matter of building a proper road to an area. of laying new drains quickly, or of getting other things done. There are many systems for helping industry, but the rigidities and the frictions are overwhelmingly destructive of all enterprise.

That brigs me to the education system, which is my next point and which has been mentioned several times today. Our system is too remote from the requirements of industry. Our teachers, in either the schools or the universities, do not seem to be in the least anxious to produce the sort of skills and qualities which are necessary in business. When I say this to the universities—and I speak mostly of the old ones because I was at Oxford and connected with two colleges there—they look very sadly at me and say, "Oh, you are one of those who want to give a degree for hairdressing". Actually I am not. However, I want the universities and the schools to pay more attention to the requirements of industry.

Lately I have come across a number of cases where businessmen are trying to recruit, and have recruited, candidates for the Staff College who have passed the exam. Industry gets them before they go there because it knows that these men are highly intelligent, highly disciplined and are likely to be very useful when they are retrained. This seems to show that our universities should be able to do better. I believe that our schools are in the same category. The apprenticeship system makes up for a good deal of the failure of national education and, of course, it uses the technical colleges, but much more ought to be done.

I should like to tell this story. Some years ago I went with a parliamentary delegation to Russia. At a certain moment we found ourselves sitting in front of the eminent mathematician who was then the Rector of Lomonosov University at Moscow. When my time came to ask a question I said, "What is the connection between the Lomonosov University and the Soviet economy?" I received a very interesting reply. The Rector said, "It is a very close one. I have to pay the students' allowances to the students." They do not come through the counties or the provincial authorities, as they do here; they come through the university. That gives the university power to refuse at any rate a part of their pay to students who are disruptive and who behave badly. That is a much better argument than trying to apply other measures to them. However, every six months the university has to send to the State planning authority a forecast of the graduates which it will produce in the next year. The planning authority comes back and says, "All right. We want 10 per cent. fewer geologists, 5 per cent. more musicians, 50 per cent. fewer philosophers, and soon, and the university has to comply. At the end of the degree course—and I recall that it is five years—the university has to continue paying allowances to its students and graduates until it has placed them in a job. Your Lordships will appreciate that the university is in touch with every corporation, co-operative, company, business, Ministry and every conceivable place in order to place people in jobs because it would be ruined if it did not get rid of all those people. The Rector told us that at the end of the year he had an extremely small hard core, which even so was a great problem to him.

We do not have a State planning authority, and I do not suppose that we shall have one. But here there is a lesson to be learned and it would certainly help to provide that connection between the universities and the requirements of the economy which would help people to get jobs and help the firms to obtain employees.

I turn now to the delicate question of trade union reform. One must call a spade a spade. There was once a Bishop of London who got into a third-class carriage on a train travelling from Dartford. In that carriage there were two workmen who began to use the most filthy language. Presently one of them turned to the bishop and said, "Beg pardon, my Lord, but we're them as call a spade a spade". The bishop said, "Very interesting. I should have thought you would call it a ruddy shovel". One must be frank in this matter. Our trade unions have been allowed to become very decadent, in spite of their remarkable leaders. I wonder whether noble Lords remember the BBC broadcast when the Russian trade union delegation paid a visit to this country. The TUC asked them, "What is your principal function in Russia for your trade unions?" The Russians said, "Our first function is to raise productivity". It was simply astonishing; the TUC practically fell out of their chairs in astonishment. They said, "Presumably you have to protect the interests of the workers, do you not?" The Soviet people said, "Yes, of course, but that goes with the rise in productivity". Here there is a lesson to be learnt. Our trade unions will punish people for not coming out on strike; but they will never punish people for not carrying out the agreements which the trade unions have negotiated on their behalf.

That is a very one-sided and harmful attitude and does immense damage to our industry. It means that collective bargaining is really collective swindling. A bargain that is not kept is a swindle. It is a free run for disrupters. We must face the fact that the legislation of 1974 and 1975 must be re-examined. We said that it would be a free run for the bully boys, and so it has. We said that it would destroy productivity, and it has done just that. I know that this is difficult, but in the long-run agreements which are made ought to be kept and the trade unions ought to be prepared, if they believe in the agreement which they themselves have negotiated, to keep their people in order and to use effective influence. They will not be able to do this as long as we dish out public funds to people when they go on strike in breach of an agreement—I repeat, in breach of an agreement. As long as we do that we take away the power from our excellent trade union leaders. I have known a great many of them, and many are absolutely outstanding, but we have taken the power away from them. We must restore that position.

How do we decide whether or not the agreements have been broken? That is what the industrial tribunals are for. The industrial tribunals have had a tendency to become rather official and legalistic. They could very well be made a little more informal and easier to approach. Then they would be a very favourable development for our industry. Reference has been made to the Employment Protection Act 1975. In practice it makes it almost impossible to dismiss anyone if you employ more than five people. I do not think we can continue with the situation in which the schools and universities cannot get rid of a teacher who is no use. The teachers ought to be got rid of it they are no use. A disruptive employee ought to be got rid of if he is no use, because he only destroys the productivity of his workmates. I do not know why the workmates put up with it, but it is hard for them, it requires great courage, and I sympathise with them. This is something the Government will have to think about in the future, if not this year.

My noble friend Lord Somers unfortunately did not make a speech as he intended to, but he has given me one most interesting point that he was going to make. An honourable Member of another place, Mr. Michael Grylls, introduced a Private Member's Bill intended to ease unemployment. One of his ideas was that there should be a temporary employment contract to be offered by smaller firms, of say up to 200 employees, for a maximum of 104 weeks—that is, two years—the actual length being given to the prospective employee in writing.

Many small firms want to employ extra staff, but if it was done this way the Employment Protection Act might be by-passed and they might be enabled to take on extra people without taking on an enormous burden which so many of them fear. I believe that masses of jobs are available. Wherever I go in the country you cannot get a plumber; you cannot get a man to put up a bit of your roof; you cannot get a chap to repair a gutter. Ordinary simple things cannot be done because the builders will not take on extra people. This is due partly at least to the Employment Protection Act 1975.

The result is that there are a great many tiny groups of two or three people and a great many people working entirely on their own, and they come together as required. But the system is inefficient. It is extremely expensive, and it is bothersome for everybody. The small men are not permanently employed, and I think it is a system we really ought to improve. It also lends itself to a great deal of moonlighting, which involves loss to the Exchequer, and so on. Some of the moonlighting people at least are drawing social security and getting paid in cash.

There are masses of small employers up and down the country who want employees. There are masses of private employers who would like to have an extra person in the house, but the man who is on social security is not allowed to take a job. If he takes a half-time job—many of us cannot afford to employ him whole time—then he tends to lose his social security, or is afraid of being questioned. They are very nervous of it. This system is causing a lot of unemployment quite unnecessarily. I urge the Government to have a look at it. I believe it would give great satisfaction to a great many people. I liked very much the points that my noble friend Lord Northfield made in this connection.

The closed shop ought to be looked at again, but I recall that employers rather like the closed shop because it makes it certain which trade union they deal with. Incidentally, if all the workforce are members of one trade union it ought to be possible for them to exercise some democratic control. If the Government were to introduce the sort of measures which facilitate the exercise of that control, then it would make a great difference. It is essential to limit picketing. I hope that the Government will get on with that. It is quite unreasonable that the miners should be able to stop the electricity people using their own stocks. I thought that Grunwick was a lesson to all of us of the things that should not be done.

We have referred to energy. I want to refer to this because we are almost certainly going to be short of energy. Things can be done in this field which would increase employment and ensure the continuity of energy supplies, which are essential for the continuity of employment. For instance, at the present price of oil I should have thought that some of the processes already in existence—and I recall that there is a very good one in Germany for hydrogenating coal and making oil out of it—ought to become economic. This is the sort of point where the Government could usefully get some new ideas and new factories starting. I do not say the Government should do it themselves. I do not want nationalisation. I think private firms would do it much better. But let the Government give them a bit of encouragement. If they want a factory, let them help them to find one. If they want roads or railways built for supplies, let them build them. It they want extra sewers laid, let us see that it is done without people objecting and holding it up for two years. This ought to be got on with.

I come to a more controversial question; the fast breeder reactor. The fast breeder reactor has been running at Dounreay to my certain knowledge for nearly 20 years. It is 20 years since I went to see it on the point of going critical. It is many years since the commercial prototype was running. I do not understand why we have not given the start to making fast breeder reactors. They would completely change the economics of power production from the existing Magnox reactors. They would use up all the unpleasant Uranium 238 which is lying about. The safest place for the plutonium is inside the fast reactors because it is too dangerous to get.

The conservation people have talked sheer bilge on this subject, and I do not know why we put up with it. This has to be got on with. You will probably have seen that the President of the Soviet Academy of Sciences has been recommending in a public speech that more should be done in this direction. If we got on with this it would give a great deal of useful employment. It would be especially good to get on with new technologies. In fact I say it is vital to get on with the new technologies.

Then I come, at the risk of boring your Lordships, to another subject where there is an immense rigidity and friction in our system. When a new factory starts in Newcastle they search around for employees and they may find some in the South of England. But there is no housing in the North. You cannot just build houses like that. It takes time. Ages go by. Why do we not revive the rented sector? Nobody is going to rent a room in their house if they cannot get the tenant out when they want the room for granny.

I know that this is a controversial question for the politicians. Let the politicians stuff this one in their pockets and get on with it. It is high time that we revived the rented sector and saved a lot of money on new housing. There are tons of people who would love to rent a room. There are tons of people who would like to lease one. I cannot see why this could not be done, and it would certainly not cause any inflation. Probably save some.

I wanted to draw attention to what happened last year, because I think we have had a winter of discontent and that Grunwick was a dress rehearsal for much more serious developments. The BBC blackout of the Queen's speech was disgraceful; the suppression of The Times seemsseems to me to show that there is a risk that the leftist extremists are really out to prevent freedom of information and leadership by the Government. It is essential that the Government should be able to exercise leadership. If they cannot, they will never get rid of unemployment. The steady decline of the United Kingdom, so ably commented on by Sir Nicholas Henderson, is deplorable and we really must stop it. It is going further. How good is it that Sir Nicholas's final despatch was published—I am extremely glad that my final despatch was not published! — and appeared in the Economist a few weeks ago. It should be read. I shall mention two of the tables which he included.


I wondered whether the noble Lord's final despatch was a very long one, my Lords.


Probably not so long as my speech, my Lords. I was about to refer to the rate of productivity since 1974. The productivity of Britain in 1974 at 100 was, in 1977, 168; in France it was 266; and in Germany it was 277. That is a disgraceful show-up and an explanation of our decline. The number of days lost in industrial disputes in all industries and services in 1977 in Britain was 10 million plus; in France it was 2.5 million; and in Germany the figure was 86,000. I repeat the German figure of 86,000.

It is essential that the Government should use active measures to help the private sector to develop. I know they do not want to intervene, but they must be active. They should have a policy and get it carried out. It is not sufficient to say, "We take these financial measures; now the private sector goes". It will not go and it never will go so long as these rigidities and frictions persist. I believe that the National Enterprise Board would be a useful instrument for the Government to use and I earnestly hope they will not abolish it.

In the next 10 years either this country will be the biggest slum in Europe, losing all our best people—we are beginning to do that already—or we shall have standards of wages and prices and productivity rising to the European level. Which is it to be? Surely we should get an unequivocal answer from the great mass of our countrymen in favour of economic regeneration and progress. Surely we have here a prospect which should engage the interest of all sections of our community, Government, CBI, TUC, the trade unions generally and the educational system. If the National Economic Development Organisation is not the right one to do it, then I urge the Government to form an organisation specially for the purpose. Indeed, it has occurred to me that your Lordships' House might be quite useful in that connection.

7.55 p.m.


My Lords, I hasten to reassure the House that I will not tell noble Lords what the noble Lords, Lord Balogh and Lord Energlyn, might have said in their speeches if they had been here. In fact, I can dispense with a number of pages of my own speech because the noble Lord, Lord Northfield, has already said much of what I might have said and said it far better than I could have done.

I begin by thanking the noble Lord, Lord Spens, for introducing the debate. He uses the phrase, "the unacceptably high level of unemployment", and of course it is very disagreeable for all of us, most of all for the unemployed and particularly for a Labour Government after nearly five years in power. It was not surprising that the noble Lord, Lord Wallace of Coslany, who is not at the moment in his place, made such a staunch defence of his party's measures. However, the fact of the matter is that if one compares July, 1973 with July, 1978, after over four years of Labour Government, the plight of the under-20 year olds, about whom most of us feel the greatest concern, was six times worse than it was when they began; there were six times the number of young unemployed under 20 at the end of that period July, 1978, than there were at the beginning July, 1973. I do not want to say any more by way of criticism in that connection. I only point out that that fact alone shows that we have a problem here which cannot be said to be under control. We cannot be said to have got to the root of it.

I do not think we should spend too much time deploring those figures, deplorable as they are, still less trying to disguise our predicament, but bend our energies to mitigating the worst effects, especially for the young, because the effect on them is so disastrous, and, still more, concentrating on diagnosing and then treating the long-term causes and particuarly improving the climate for the fresh growth of new small-scale enterprises. This has been advocated by more than one speaker, for example by the noble Lord, Lord Vaizey, who has already come over to this side, and by the noble Lord, Lord Northfield, who seems to be well on the way.

I venture to speak at all in this debate—I do not normally speak on unemployment—because I have been chairman of an organisation known as Task Force North which for the past three or four years has been dedicated exclusively to helping young unemployed people by using the Manpower Services Commission's programmes, the Job Creation Programme and now the Youth Opportunities Programme and the Special Temporary Employment Programme. We have been doing this in town and country throughout the North of England—in what my noble friend Lord Gowrie calls the English Mezzo-Giorno—to try to engage these unfortunate young people in useful work, worthwhile training, and personal development on projects of environmental improvement. I thought that this experience was sufficiently relevant to the matter under discussion to share some of it with your Lordships.

Our projects, as I say, are planned for the improvement of the whole of the environment from the beauty spots of the Lake District to the slummiest parts of the inner city of Tyneside. Our personnel training and management has to cater for some of the most illiterate, the least numerate—lack lustre, ill-motivated and. I regret to say, delinquent young people who are unfortunately idling in the market place. More than 4,500 of those young people have now passed through our hands and, with their help, some 1,200 environmental improvement projects have been completed. I am glad to say that almost 70 per cent. of our young rangers, as we call them, have succeeded in securing proper full-time permanent jobs before the year is up during which they are allowed to be with us.

The key point that I want to make is that all this costs the country no more than £7.50 per head per week over and above the cost of having them on the dole, and that £7.50 covers the cost to the Chancellor of the Exchequer of the materials and tools used in the projects themselves. I would therefore certainly endorse what the right reverend Prelate the Bishop of Worcester was saying that in our hands those three programmes have given good value for money.

The right reverend Prelate the Bishop of Southwark said that anything was better than having young people going straight from school on to the dole. However, that is not an excuse—the fact that anything is better than that—for not doing the very best we can in this difficult situation of heavy and lasting youth unemployment; doing our best for the least advantaged children, doing our best in the very worst environments and doing our most where the jobs are in shortest supply and unemployment is the highest. Therefore, I, from this position as chairman of Task Force North, very much welcome the challenge laid down by the Government to concentrate our efforts more and on trying to get nearer the root of the matter —to concentrate our efforts where they are needed most and to enlarge them in the worst situations. That is what we intend to do.

It seems to me that we must take fresh action on two fronts. First, we must redouble our efforts to make good the shortcomings now so starkly revealed in the vocational preparation of the particular group of young people with whom our organisation has been dealing. This is the group which was known in an educational report some years ago as "Half our Future". These are the young people whose talents are more in their hands than in their heads, who arc not high attainers in educational terms but who nevertheless have all kinds of latent talents which are greatly needed in modern industry. That is one area which needs to be tackled very thoroughly and I need not say anything more about it or about how it should be done because the noble Baroness, Lady Seear, and others have done that already.

The second sphere which we need to develop and which we are going to develop —and we have formed a subsidiary organisation to do it—we have called Enterprise Generation. I had prepared several pages to be delivered to your Lordships on this matter, but I need not deal with this other than very briefly because almost everything I would have said and certainly all the philosophy behind our thinking has been expressed for me by the noble Lords, Lord Northfield and Lord Vaizey. However, I want to make a particular point and to endorse what the noble Lord, Lord Northfield, was saying about trying to get the means of financial support to very small enterprises properly organised. My own view is that Her Majesty's Government could very greatly assist by encouraging the clearing banks, with guarantees, to be more adventurous in lending to new small businesses. The banks are already being more adventurous, but I believe that if the Government were willing to give them guarantees in this field they could be encouraged to be even more adventurous.

I wish to refer very briefly to some particular experiences in Enterprise Generation. T.F.N. was concerned with a scheme in the Lake District, called the Upland Management Experiment, which was well directed by a seconded officer from the Ministry of Agriculture and was well chaired by a friend of mine, Mr. John Durming. He is a farmer in that part of the world and is now a countryside commissioner. He organised the work that we were doing in the countryside there with young unemployed in such a way as to leave behind a whole trail of small contractors to carry on the work that we had initiated and demonstrated. If that can be done following an experiment in countryside management, how much more can be done if the advice of the noble Lord, Lord Northfield, is taken up and some proper organisation is given to the support of small industries in our inner cities.

Our experience so far in operating the MSC programmes is that within local government and within the MSC itself there is not enough readiness for the novel approach. There is too little concern for enterprise and there is the usual bureaucratic tendency to back projects just short of the point of profitability. They are happy enough as long as the project is employing unemployed labour. They are happy enough as long as it can be shown to be of public benefit. But as soon as the project looks as if it is to yield a profit to someone, they get very anxious and pull back just at the moment that their support is needed.

So for that reason we are creating our own organisation, and I am very glad to say we have the support of several large national firms and that we are in the course of securing support from smaller local firms. We have various ideas about how to set about this—it is far too late this evening now to enlarge upon them—but I know that our own ideas will be greatly enriched by the debate. The fact of the matter is that we must all do more to improve the local and the national climate for enterprise and the scope for small firms and small contractors to develop and to blossom in parallel with and in the wake of the special but temporary projects and programmes that have been created for the jobless.

8.5 p.m.


My Lords, I can assure the noble Lord, Lord Mottistone, that I am not going to read my last will and testament into Hansard. However, I want to thank the noble Lord, Lord Spens, for giving us this opportunity for a debate. We have been looking for such an opportunity for quite a while, notwithstanding the fact that people have said we have discussed the matter on various previous occasions. I am not going to talk about unemployment. I am going to talk about non-work. Unemployment is a soul-destroying word. It recalls for me the purgatory of the mid 'thirties and the Jarrow crusade, when skilled men of Tyneside—engineers, shipbuilders, foundrymen and craftsmen —marched on London, and I marched with them. Some of them had been out of work for 10 or even 15 years, and they were marching for the right to work. They were marching for the right to regain their self-respect. In those days the miners of this country numbered over 1,200,000. In the Welsh valleys over 80 per cent. of the miners were "on the dole"—that degrading term implying that they were loafers. Today, with mechanisation, the miners of this country number 299,000. I have never thought it right nor proper that human beings should slave with pick and shovel at the coal face, but it is a different situation when it means a livelihood. Therefore the unemployed miners of the 'thirties were suffering from the deprivation of their self-respect, even if it was just hoicking coal at a coal face. In the 1930s farming employed 1½ million people, and now only 400,000 people are employed on the land.

I prefer my own term "non-work" which includes compulsory unemployment—the kind of thing which is forced upon people to the loss of their selfrespect—or shorter working days, shorter working weeks, holidays with pay, redundancy, early retirement, or even normal retirement. It is what we have called leisure, when it was the earned respite from work, the halcyon hours away from drudgery.

I should like to reconcile your Lordships to the non-work ethic, which is not arguing for sloth (which is one of the deadly sins) but for a proper acceptance of the fact that within 10 or 15 years—I should say within 10, and certainly within the period when the school-leavers of today, with whom the noble Lord, Lord Sandford, is very much and properly concerned, will have families to provide far—the figure of chronic unemployment, that is to say, machine produced unemployment, will be at least 5 million. There will be people displaced by silicone chips, micro-processing, the computer, and cybernetics and comprehensive automation. That is a conservative estimate because the effects on the production industry—the material goods content of the GNP—will have repercussions throughout other areas which we all call work: in commerce, in the service sector, and in the professions.

So I ask your Lordships to rethink your terms and readjust your ideas about economics, the totality of economics when one comes to this kind of eruptive situation, and indeed about the money system. You may recall that Henry Ford, while he condemned operators to the monotony of the assembly line, paid them all higher wages than were paid to the skilled craft industries because, he argued, well-paid workers would buy his mass-produced motor-cars. The corollary to this was the famous exchange between Charles Wilson, the President of General Motors—and your Lordships may recall that the Defence Minister of the United States said, "What is good for General Motors is good for the United States"—and Walter Reuther, the head of the United Auto Workers. They were in a pay bargaining round, and Wilson threatened to automate the entire production process. He said to Walter Reuther, "Electrons do not pay union dues!" "No", said Reuther, "but will electrons buy your automobiles?"

That is the modern quandary. Purchasing power depends on earnings and earnings depend on work. But what is work and what are the incentives to work? The work ethic, that hallowed virtue, dates back to Eden where Adam delved and Eve span for sheer subsistence. Its modern version—and perhaps it still belongs to the Garden of Eden—is productivity or surplus capacity, and it dates hack to Cain, the settled tiller who killed Abel, the nomad, and also killed the pastoral life of the food-gatherer. The husbandman with field crops and domesticated animals could produce beyond his family's subsistence and laid the foundation of our goods and trade economy.

In the age of the Greeks the distinctions were clear. Slaves provided the muscle energy, craftsmen contributed their skills, and the philosophers had the leisure to think. Plato made the distinction clear when he upbraided Eudoxus and Archytus when, by experiments and recourse to instruments, they solved problems which the philosophers had regarded as insoluble. He accused them of making use of matter which requires much manual labour and is the object of servile trades". Whatever Plato worked at, it had nothing to do with productivity.

Throughout our history, we have had this conflict between innovation and tradition, if you like. What we see facing us now is an eruption of innovation, something we cannot cope with because we cannot even use our imagination to see where it will lead. I am not going to give your Lordships a lecture on silicon chips or the micro-processes. I will say categorically that it is true that at this moment in the state of electronic chips you could put all the knowledge of all the libraries of all the world in a container no bigger than the human cranium. We have miniaturised this capacity to this point.

When I was watching automation growing, I said that it would mean an enormous physical growth. What we did was to miniaturise. It is true that today anything that you can conceive, that the human rational and logical process can conceive—and I do not invest the machine with any imagination, but I invest it with an inherited capacity because once a computer is trained to correct human errors it goes on correcting into the next generation of computers—can be done by the machine. We do not expect imagination from the computers, but we can totally accept the fact that anything that the logical faculties, or the central nervous system, the feed-back system of cybernetics in the human sense can do, the machine can do. It is absolutely true that, whatever you want to produce in terms of material goods, the machine will produce it for you.

Where are we? Where are we going to? We are now faced with the precarious position—and a very important one—which Keynes foresaw in 1930. He wrote then in an essay, Economic Possibilities for our Grandchildren: The economic problem, the struggle for subsistence, always has been hitherto the primary, most pressing problem of the human race. If the economic problem is solved, mankind will be deprived of its traditional purpose. Will this be of benefit? If one believes at all in the real values of life, the prospect at least offers the possibility of benefit. Yet I think with dread of the readjustment of habits and instincts of the ordinary man, bred into him for countless generations, which he may be asked to discard within a few decades … Thus for the first time since his creation, man will be faced with his real permanent problem—how to use his freedom from pressing economic cares, how to occupy his leisure, which science and compound interest will have won for him, to live wisely and agreeably and well". I turn to Freud. What we are talking about is what happens when the galley whip of work is withdrawn from human beings. We do not get much consolation from Freud. He said: Laying stress upon the importance of work has a greater effect than any other technique of living in the direction of binding the individual more closely to reality. In his work he is at least securely attached to a part of reality, the human community. And yet the great majority work only when forced by necessity and this natural aversion gives rise to the most difficult social problems". We are looking for something in which we are compelled, almost by a flash weld process, to resolve these predictions. It is here and now! There is nothing that you could imagine which is not at present in existence, and which is, in terms of the picture that I am putting forward, not possible. We in Britain must" get in on the act" as regards silicon chips and do what the National Enterprise Board put us in the way of doing. We should at least acknowledge that we are behind, and that private enterprise was hopelessly behind, in the silicon chip endeavour, but now we are moving into this phase. If we can go on to establish research and development, if we can understand the "why" and not just the "how", then we might escape from what seems to me to be the foreseeable situation that we will become the component assemblers in the way that Taiwan and Hong Kong are today. It does not matter to the multinational corporations, geographically, where the process starts. Where the profits will end up is another matter. But we have got to get in on this act so that at least we can be the masters of our own destiny. We must fill this serious void—and this is something which has been touched on. How can we get over to the younger generation the reassurance that the future is not so bleak as the machine picture might present it? How can we give them back their capacity to develop their own talents and express their own personalities?

My Lords, I sit down with a statement which was made by Julian Huxley and which I think is a relevant one today. He said: Beyond the Welfare State, the Fulfilment State". We can find fulfilment if we can use the resources of the human personality, develop the talents which are in us and get away—All right! we will be thrust away, anyway—from the tragedy of what has been man's lot in the past.

8.19 p.m.


My Lords, I owe an apology to the House for the fact that I have not been able to be present for quite a long period during the debate. I had to attend a rather important committee in another part of the Palace. I shall try to make up for my lapse by cutting out three-quarters of what I intended to say. I congratulate the noble Lord, Lord Spens, not only on the Motion that he has put on the Order Paper but on the enjoyable speech that he made in support of it. Both his speech and that of my noble friend Lord Ritchie-Calder reminded me that for at least 20 years I have been trying to persuade my colleagues in the trade union movement that there is no better way to spend their money than on research into the use of leisure time. I believe that that is now becoming quite obvious. But also I believe we are clear we are now going into a period of intense technological change, and under such conditions naturally employers are concerned to shed labour. They do it as rapidly as possible, and, apart from redundancy payments, they believe that is the end of the story. Of course, Governments cannot, or indeed should not, leave it at that, for they have a responsibility for the wellbeing of unemployed people. That responsibility includes efforts to ensure alternative job opportunities. My criticism of the present Government—and especially the Budget—is, although it seems to accomplish the task of getting people out of work, it does not show much sign of knowing how to get them back into alternative employment.

The last Government spent huge sums of money training people and also trying to create the kind of new jobs which we all know are very necessary. But, despite the huge expenditure on both those items of training and creating new jobs, they failed to get unemployment down to acceptable levels. That being the case, how can we possibly believe that a Government, who are now cutting much of the expenditure in which that Government indulged in training and creating new jobs, have any chance whatever of creating the kind of alternative jobs which are absolutely vital in the situation into which we are now moving?

I saw the other day Mr. Prior telling us: "You cannot possibly consider reducing the working week". I remember some months ago Sir John Methven, in a letter to the Guardian, argued we would price ourselves completely out of world markets if we did it alone. As a matter of fact, I ventured to write to the Guardian, but they did not consider my letter was worth printing in answer to Sir John. Not only then but on a number of occasions in this House, I have argued that while there might be dangers in going it alone —I am not saying it would not be dangerous—there is no reason I can understand why we cannot agree to a reduction of the working week at international level. We can consider asking the ILO to bring together the highly industrialised nations of the world—and I see the Americans are talking about going back into the ILO and that would help—and either through the ILO or conferences between Governments, employers and trade unions, we could agree internationally to bring down the working week to a common basis. That, I suggest, would not then price any of the industrial nations out of world markets and it would go some way to meet the problems which the noble Lords, Lord Spens and Lord Ritchie-Calder, have been telling us about.

In the Budget speech, and speeches since then, the Government have shown that they expect an actual reduction in the products of our manufacturing industries. In recent years—as the noble Earl opposite and myself were agreeing the other day—a great deal of good work has been done in the engineering industry, in particular. Compliments were paid to my noble friend Lord Scanlon by the noble Earl and myself on his work in training, and a great deal of good work has been done in the training of apprentices. Yet, despite all this work, we see that our manufacturing sector is being reduced year by year. I do not pretend that I know the whole answer as to why. I think one of the reasons has been that, because of the hopeless bias against engineering degrees in our universities, there is the second-rate citizen mentality—I do not want to say all our managers are under par; they are not—and we have far too many second-rate managers who are unable to keep abreast of the need for the vast change which our manufacturing industries should now be undergoing. Therefore it seems to me that we must endeavour to get a completely new approach in the universities to the question of engineering degrees, and degrees of that type.

We can no longer afford to play about with the huge problem of the continuing increase in the level of imports of manufactured goods. In this respect, there are one or two alternatives. I should like to see the Government bring in a quite high-powered, high level inquiry into the reasons for this continuous increase in the import of manufactured goods, and to find why it is that in this country, which led the world in our engineering knowledge and techniques, we find that sector of the economy, which more than any other produces the wealth upon which we depend, is quite unable, apparently, to hold its own in world markets, either by increasing exports to the necessary levels, or to do a big job in import saving in the way I have suggested.

If that is impossible, I suggest that the Government cannot sit back and afford to be rather sneering—I think that would be the right word—in their attitude towards import controls. One cannot play it two ways; we have to get imports down. I am not now referring to raw materials; I am talking about the imports of manufactured goods which our own engineering industries and our manufacturing sector are quite able to produce —and if they are not, we should inquire why. I would even bribe them; I would offer them development area advantages if they would agree, when the Government have done an analysis of the type of imports of manufactured goods which are increasing, to try to produce, as an import saving programme, the kind of imports which are coming in. If we cannot do that, I see no possible alternative to the Government going ahead with a programme of import controls.

I was looking at the Guardian leader this morning. They were arguing that in the first five months between January and May this year the volume of imports has been running at 5 per cent. higher than in the second half of last year, and the volume of exports has been 5 per cent. lower, and we are still managing to run a trade deficit despite North Sea oil. They argue that on competitiveness we are already 8 per cent. worse than last year, and 13 per cent. worse than the year before. I know that the figures yesterday were pretty frightful. I ought to be really despondent; my information is that those figures conceal a great deal that is far worse than the figures produced. Under those conditions for the Government to believe in asset-stripping of the profitable sector of the public economy, or cutting back on public spending, especially on those areas which we depend on for training and so on, means almost getting back again towards the period that Galbraith was talking about: "Private affluence and public squalor."

It seems to me—and one has tried to point this out for some time—the way we are progressing, we face the grave danger of a huge unemployment problem among unskilled labour and an equally large demand for non-existent technologists and craftsmen. We have now managed to achieve that very remarkable feat. That being so, the puny and rather ridiculous content of the Budget and of the programme, such as it is, that we have heard from the Government is, quite frankly, insufficient for any of us.

I do hope that following this debate certainly my Party will pursue the line of demanding that there shall be a very deliberate effort to improve our manufacturing base, that training shall now take care of the points made by the noble Lord, Lord Spens, and the noble Lord, Lord Ritchie-Calder. It may be necessary to change our approach to the whole concept of training. One thing is certain: the silicon chip is not going to run the machine by itself: you are going to need more highly skilled people and therefore the need for more and more training of highly-skilled people is more obvious than ever it was, and I hope that the Government will take the necessary steps.

8.32 p.m.


My Lords, I should like to begin by thanking the noble Lord, Lord Spens, for introducing this debate. One of the earlier speakers said that we had had a lot of debates on this subject. I do not think that is at all a bad thing, and it is very apt at this point in time. I must also apologise to the noble Lord, Lord Spens, and to other earlier speakers because I was a little late in arriving in the Chamber and so I missed his speech and one or two others.

I hope that the noble Lord, Lord Lee of Newton, will forgive me if I do not follow him. I should like to outline an approach which is rather different from that of pretty well every other speaker, as far as I can tell, except perhaps my noble friend Lord Sandford and the noble Lord, Lord Northfield, whose speech I very sadly missed while I was putting my own together. I have the feeling both noble Lords were on the same tack.

My suggestion of a way to tackle this problem does not involve the Government in spending any money and indeed it involves little effort. It might involve a declaration of policy and it certainly would involve paying for a lot of publicity; but that is just about all. This line of thought came to me when reading an interesting European Parliament Working Document, No. 169/79. I should like, if I may, to read the first two paragraphs: On conclusion of oral questions on employment policy, the European Parliament notes that unemployment continues to affect some six million people, that the situation is likely to become even worse and that an early return to full employment is unlikely. … draws attention to the ineffectiveness of the policy of concerted action decided upon at the Copenhagen and Bremen Summits to tackle the problem of under-employment". The rest of this—it is quite lengthy—I will not read out, partly because of time but also because I think it would appeal only to perhaps the noble Lord, Lord Jacques, and the right reverend Prelate the Bishop of Southwark, when I recall what they said earlier in this debate. I should add that the debate in the European Parliament was initiated by three Socialists from other countries. The thought that this gave me was that perhaps we are tackling this problem from the wrong end and that the reason why those conferences were ineffective—and pretty well everything the European Community as a whole has done has been ineffective—is that they are taking it for granted that the top organisations (the Community, the Commission, the governments of the Community countries) are the bodies which can solve this problem. I would question whether in fact they can.

We have heard a lot of speeches today about how the Government should do this or should do that; how it should not do something else but should keep on doing what the last Government did. We also heard from the noble Lord, Lord Lee of Newton, that he was disappointed that the last Government's efforts had been singularly ineffective. I wonder really whether this is not because we have been tackling the problem from the wrong end.


My Lords, if I may say so, they minimised what would have been a much worse problem.


I exaggerated, my Lords; forgive me. Coupled with that thought is the fact—and this has been mentioned by various speakers—that big companies, whatever happens, are unlikely to employ more people because as they improve their efficiency in the hopes that they will respond to the initiative taken by the Government, on the whole they will reduce employment rather than increase it. That is certainly my knowledge from my association with industry and I think it is the same for most of us. There is also the fact, which we cannot baulk, that a great number of the conventional industries which used to employ many people are dying on their feet—shipbuilding comes immediately to mind. Therefore, in another sense we cannot look, as perhaps we used to be able to look, to the big companies to solve the problem of employment and give them the chance to build more ships or whatever, or order more battleships—and I deliberately say "battleships" because during that era this was a cry that meant something. That has all passed too.

Coupled with this perhaps is the micro chip situation which people have mentioned. I rather go with the noble Lord, Lord Vaizey, on this. I think that the revolution which is coming about in that general area is by no means certain to add to unemployment. It may indeed have a modifying, if not a reversing, effect; so I shall drop that and I shall not concentrate upon it.

I feel that if we are not going to go for the governments, for the European Community and the big companies, we should ask ourselves: What are we going to go for? It seems to me we want to "home in" on the local communities. I think the local communities are the people who should be conscious of the unemployment situation in their relatively small areas. I am thinking of the sort of remit of a district council—that sort of area—and not the county councils, because they are too big as well. I believe that somehow we ought to get across to the local communities that it is their responsibility.

The problem here, I think, is perhaps that it relates to the fact that it used to be a shameful thing to be unemployed and so the names of the people who were unemployed were rather closely guarded. It may not be a bad thing, and in a way I think it is a good thing, to have had this "opening up" in the last 20 years or so that I have detected in communication of all sorts. It is now not a shaming thing to be unemployed. I myself was unemployed for only six weeks between leaving the Navy and going into industry, but I had no compunction about it: I almost boasted about it to my friends. I should not have boasted about it if it had been two years—do not get me wrong —but it is not in the same category as something that has to be swept under the carpet.

I would therefore suggest that perhaps we ought not to restrict the names on a local basis to the Job Centre only but to spread them around, give them to the district council, to the local chamber of trade and to the Rotary Club—of course, with the agreement of the individuals concerned. When they signed on, one of the things the Job Centre would ask them would be: "Would you mind your name being publicised in this way? It might help you to get a job". Even if they used only (shall we say?) 75 per cent. of the names, and if each time the district council met there were extra names added to list and others chopped off the top, it would then "home in" on the local people that it was their responsibility to do something about it. If it was widened to include the chamber of trade, the Rotary Club and such people, you would bring in local businessmen to an even greater extent than you do on the council.

All kinds of ideas could flow from this. But the people I want to feel partly responsible are the local business community, the people who can actually give the jobs. In this way a community might be ashamed. Perhaps at the next county council meeting district council A would have to confess to district council B in the same county council area that it was not doing so well and had managed to employ only 10 people the previous week. You could start by restricting the kind of people for whom this would be done to those under the age of, say, 25, because I think we are all agreed that we want to concentrate on the young people, but it could be widened out afterwards. One could imagine that, though they are very important, as various noble Lords have said, the older people would more naturally be inclined not to let their names be widely known to all the councillors and such people, because they would feel themselves to be their contemporaries. So one would have to do it gently and, of course, it would have to be voluntary.

But what is most important is to recreate a sense of local responsibility for this situation, instead of trying to solve the problem from here and from Whitehall, where we are singularly ineffective. We have all kinds of schemes, a lot of which are obviously very good, but they do not seem frightfully permanent. This scheme would provide some underpinning and, furthermor—and this is extremely important—would get into the small companies and the medium-sized companies, which are the ones which would be able to help solve the problem. They are the people who do not bother to sit on great bodies, such as the CBI in London; they do not have the time. They sit on their local bodies, if they sit on anything at all. So it would be up to the Rotary Club or the chamber of trade members to do a bit of proselytising with these other companies which do not belong to anything—and there are several of them.

I throw this idea to your Lordships, and I throw it more especially to my noble colleague on the Front Bench. I am not trying to decry all the other things that happen, or the competence and good efforts of the managers of the job centres. But the managers are not responsible for finding jobs and, furthermore, they are agents of Government and are seen in a different light. Furthermore, I am not trying to decry all the plans that the Manpower Services Commission has. Some of them are counter-productive and some do not achieve very much, but that is another problem. We want to have these things in parallel, in a sensible kind of way. The main thrust, however, should be towards local responsibility for this appalling problem, which could be well tackled in that environment.

8.44 p.m.


My Lords, I cannot resist saying to the noble Lord, Lord Hankey, that if the 16 speakers who preceded him had taken as long as he did, it would have been midnight before the noble Lord got up; and if those of us who followed him had taken as long it would have been about half-past two in the morning before the noble Earl, Lord Gowrie, replied. Because of the time, I do not want to be long tonight. A good deal has been said. The field has probably been covered extremely well, and in your Lordships' House there is no need for me to cross "t's" and dot "i's".

I accept that Governments in power have a perfect right to carry into operation a programme that they consider to be the right kind of programme for the country. But what concerns me is that practically the whole of the programme is designed to create unemployment. I do not think that that has been denied by a single Minister, and everybody—including, I believe, the Government in power—has accepted that the figure will be around 2 million during the coming year. What appals me is that there has been no Minister on the Government side who has expressed the slightest concern at putting 2 million people out of work. The noble Earl, Lord Gowrie, can shake his head, but I ask him to name the Minister who has expressed real concern.

The Earl of GOWRIE

Myself, my Lords.


My Lords, the noble Earl did not allow me to finish. The noble Earl said this afternoon that it was a dreadful business, and I was hoping that when, with the leave of the House, he came to wind up he would say in more explicit terms what a shocking business it is. It is really the plight of the unemployed that I want to talk about tonight. I am sure noble Lords opposite will not agree with me when I say that we are probably closer to the problem of unemployment than any noble Lord on the other side, with the exception of the noble Lord, Lord Mottistone, who, I believe, was unemployed for six weeks in between jobs.


My Lords, if the noble Lord will allow me to intervene, I also have close relations who have been unemployed for very much longer. There was a time when what the noble Lord was saying was right, but I do not believe that in these days noble Lords opposite have a monopoly of understanding of the situation, unless they are in the older age bracket.


My Lords, I still say that I think we are in closer touch with the long-term effect of unemployment on people, and with the reality of the situation. I do not want to talk about the Budget. What I want to talk about, for just a moment or two, are the effects, which I think escape a large number of people. I was interested to learn that Professor Harvey Brenner of the John Hopkins University, where they have been researching into the effect of economic change and unemployment on health, produced a special report two years ago. It was commissioned from Professor Brenner by a Congressional Committee, chaired by the late Hubert Humphrey. Professor Brenner looked at a 1.4 per cent. rise in American unemployment in 1970, and concluded that it cost more than 51,000 deaths. The deaths were attributable to unemployment, anxiety, heart attacks, strokes and to going mental and dying in mental hospitals. The noble Lord, Lord Evans, referred to Liverpool. Professor Brenner went to Liverpool, as the noble Lord probably knows only too well, and he also visited Nottingham. As the noble Lord, Lord Evans, said, there are in Liverpool 409 unskilled unemployed persons for every one unskilled job that may be vacant, whereas in the rest of the country—I am still talking about unskilled jobs—there are only 43 people for every one unskilled vacancy.

As I said, Professor Brenner also visited Nottingham, where the harmful effect of unemployment was confirmed by the consultant psychiatrist of one of its hospitals, who said that the hospital had between 450 and 500 patients in it at any one time. Over 40 per cent.—and he was talking about 1975—were unemployed at the time of admission, and it was his view that you arc more likely to be admitted if you are unemployed than if you are in good employment. Nottingham was chosen because its unemployment rate is generally below the national average, and Nottingham is considered to be a prosperous city, with few unemployment problems. In both Liverpool and Nottingham, however, it was established beyond doubt that, when the jobs curve went down, the death curve went up, and suicide became a good indicator of the state of the economy.

I do not want to be dramatic about this. I am sure that noble Lords think that I am being dramatic, but it really is not a laughing matter. For many years I worked as a professional social worker in one part of London. I have seen the effects of unemployment; they can be absolutely devastating. I know that the Government will not take the slightest notice of what I am saying. I do wish, though, that the Ministers, and those sitting behind them, would look again at this matter and ask themselves whether this sort of cut right across the board, which is going to result in widespread unemployment, is really necessary and whether or not something can be done to prevent what is going to result in large-scale unemployment in the next few months and in 1980.


My Lords, I hope that the noble Lord will forgive me, because my intervention is excessive, but did the noble Lord address the kind of very fierce remarks which he has addressed to my noble friend to his colleagues during the last four years?


My Lords, we were aware of the problem, to such an extent that we spent millions and millions of pounds on job creation schemes and on bolstering up, as a number of noble Lords opposite have said, lame dogs and lame ducks in order to keep people in work. I am prepared to argue that it may not be the best possible method, but it was the only method open to the Government at that particular time. And if I had to choose between subsidising a firm and directly or indirectly subsidising workers in order to keep them in work, I would do it. The right reverend Prelate mentioned, I think, that it will cost society £9,000 million to keep 1½ million people unemployed, because it is estimated that an unemployed person costs the State about £6,000. I am talking to businessmen. Is it not far better to use that money in a much more constructive way and to keep people in work, however we may decide to do it, so that at least they have the knowledge that they are working, that they are earning, that their families do not feel different, that their children at school do not feel different from other children whose fathers are at work while their fathers are not at work? Children can be very cruel in such a situation.

My only other point is that what concerns me is that the latest returns of unemployment figures which I can get are about two months old. I see, however, that over 50 per cent. of the unemployed men in this country are between 20 and 44 years of age and that over 30 per cent. of them are between the ages of 25 and 44. It is the 25 to 44 year old age group which is having the greatest difficulty in making ends meet, by virtue of the fact that, in the main, these men are married and have two or three children.

When we talk about unemployment we ought not to talk about it lightly, because it imposes a very severe strain on the individuals concerned, upon the family and upon relationships within the family—bearing in mind, as I say, that over 30 per cent. of unemployed men are in that age group and are, in the main, married, with very real family responsibilities.

I want to ask the Government to think again about what effect this ever-increasing unemployment is going to have upon the health of the individuals concerned and upon relationships within the family. I am inclined to agree with the right reverend Prelate the Bishop of Worcester that we must face the fact that there will always be unemployment and that we are never going to eliminate or eradicate it. But if that is so, it puts a much heavier burden upon us, as legislators, to see that something is done whereby they can do some work.

In that connection, I have some sympathy with those who have suggested that there ought to he some kind of inquiry. I would not leave it, with the greatest respect, to your Lordships. Nor would I leave it to the other place. I do not know whom I would suggest, but I should like a competent outside body—which would have to include the unions and the employers, in the sense that they would have a contribution to make—to be involved in this inquiry. I do not know whether the Policy Studies Institute is the right body. All I know is that it would be independent.

I do not believe that we can deal with this problem piecemeal, as all Governments have dealt with it for many years now. We must come to terms with the problem and realise that if we do not do so we arc condemning a very substantial number of our fellow human beings to a great deal of misery and to a great deal of anguish—which results, as I say, in bad health, sometimes in the most extreme form.

It is not my intention to try to answer all noble Lords who have spoken tonight. That is a job for the noble Earl. All I would say is that a number of your Lordships have referred to the small business issue. Noble Lords will know that it was the Labour Government which recognised the small business issue and increased the Development Commission budget for rural areas from, I believe, about £4 million to something like £20 million. We supported it, and we did as much as we could at that particular time.

8.59 p.m.

The Earl of GOWRIE

My Lords, I must say that I think the noble Lord, Lord Wells-Pestell, ended his speech on an upward note. We enjoyed the last part of it. He started on what I would call the politics of competitive moral indignation. Whatever that does, it certainly does not employ very many people. The real difference between us is not at the level of caring, or anxiety about a number of issues in our economy, of which unemployment is very much to the fore. The difference between us is that the noble Lord feels that doing something about unemployment is essentially a matter for the Government. We believe that the Government have a role but that their role should be to help the economy to put matters right by itself.

If at this point I may turn, with considerable diffidence, to what one or two noble Lords have said about the black or secondary economy—with diffidence because from the Box where I stand this is in no sense to be applauded or given any kind of moral boost whatsoever—there you are seeing the workings of an economy correcting imbalances set for it elsewhere, and I believe we have something to learn from that. I think of all the distinguished economists who addressed us this afternoon my noble friend—as I am now happy to be able to call him—Lord Vaizey put his finger upon it. People make adjustments. The State can set a scenario for an economic programme: it can be from the Left—that is a perfectly legitimate scenario involving, let us say, control of prices and incomes as one possible solution or import controls as another. But it is only a scenario; it does not really affect the day to day business of earning one's living within that scenario.

Secondarily, as I said in my opening speech, the State can take on the work of helping those who are affected by something in that scenario which is not working as well as it might be—and we know that no scenario can work at 100 per cent. capacity. We have abandoned that idea. But I was distressed to hear the noble Lord, whom we all respect in this House and who had ministerial experience in the last four or five years—just as I was not so much distressed as angry to read the reports of Mr. Varley's speech in Bourne-mouth today — somehow attributing unemployment to something like the Budget. It does not work in that way. One can say of the Budget that it set a course for the economy which did not, over a period of time, help the employment problem but one cannot say that a Budget is creating unemployment or employment. That is what employers do.

I want to say one more thing on this point because it is an important one. A fairly short time ago there was a Government in power which was told that the unemployment figures were rising to 700,000 on the register. That Government felt obliged to change its course of direction very considerably in order to meet that problem. I am not getting back into the issues of prices and pay policies because we have debated those already earlier today, but what I am saying is that the attempts to deal with unemployment were not conspicuously successful in that area. Other things may have been helped; other things may have gone wrong, but looking back over the last five to 10 years when, on and off, we have had statutory or voluntary policies, one cannot say that they have been conspicuously successful in reducing unemployment levels to the kind of levels of the '50s and'60s to which the noble Lord thinks we should return. I do suggest, however, that there may be a number of alternative strategies, including alternative strategies from the Left. One difficulty of our political system is that, in my opinion, no strategy, Left or Right, has much chance of making any kind of dent in this problem under around 10 to 15 years. That is a difficult fact of our political economy.

I want now to turn back to the relatively calm uplands of micro-chip technology. In my earlier speech I meant to give a plug but because I was running over time I did not have time for it. The plug is to the TUC, who recently held a conference to consider their interim report on unemployment and technology, and who have issued a report. I read that report with great care for this debate and I reacted to it most favourably. I do not mean that patronisingly; I thought it was a brilliant report. It is encouraging that trade unions share the view that industry has no option but to adapt to the new technology as quickly as possible. I believe the report to be sound and realistic in its approach and I hope that your Lordships will read it.

I should like to turn to another point made by the noble Lord, Lord Spens, whom I again thank for the interest and attention which this debate has commanded. The point was made by my noble friend Lord Massereene and Ferrard and it was also taken up by the noble Lord, Lord Hankey. It was connected with the employment protection legislation. I agree with the noble Lord, Lord Spens, that the employment protection legislation has, in our view, been damaging to employment and it is our concern to amend it, although we shall go about it cautiously and shall watch the effects of any changes in the orders that we make. But at the Department of Employment we have a positive library of complaints about its effects and I may say that these did not pour into the Department simply on the election of a Conservagive Government; they were there when we got there. I just have time to quote two of them. The first was from a small engineering firm and it said: Obviously due to the present restrictions of the employment laws we are very reluctant to engage staff on a short-term basis, which might commonly be of the order of six months to one year so that we may meet the delivery requirements of a particular contract". Another firm said: It takes us at least two years to train a junior to the skill standard that we require and it is virtually impossible to assess a person's potential within the six months' period of time". So we are looking at those orders and we plan to amend them.

I want to come to the speech made by the noble Lord, Lord Wallace of Coslany, and to attitudes to the special employment measures which many noble Lords, including my noble friend Lord Sandford, dealt with—and may I say at this juncture how interesting it was to hear of the "mixed economy", if I may put it that way, of the activity of the noble Lord, Lord Sandford, with Task Force North. We of course recognise, as I did in my opening remarks, that at times of high unemployment the special employment measures operated by the Department and by the MSC, which a Conservative Government set up, can supplement economic and industrial policies by providing jobs or training opportunities for those who would otherwise be out of work. I have special ministerial responsibility for the Youth Opportunities Programme. People have been concerned about the economic effects of the cuts on the YOP. We must get it out of people's heads that Ministers enjoy making cuts. It is a case of the misery really falling equally. One of the most pleasant sides of ministerial activity is spending other people's money and broadly speaking I think Ministers have tended to spend it well. I am not against the spending of money; the difficulty is that we are very short of money to spend but we have ensured that it is an expansion programme which is being limited, rather than numbers of people involved. We are putting people into schemes for shorter periods of time, trying to intensify their experience, trying to focus schemes in regionally difficult areas, including, as the noble Lord, Lord Evans of Claughton, knows, Merseyside. This seems to us at least to have the merits of concentrating the approach a little more.

The noble Lord, Lord Wallace of Coslany, said that the cuts in the training of skilled people were regrettable. Of course it is always regrettable but I would point out to him that no Manpower Service Commission programmes have been abolished or have suffered radical changes. It is only a pruning of expenditures. This will affect some courses, but the courses it will affect chiefly are in the commercial and clerical arenas, and there are staggering vacancies in all parts of England on the commercial and clerical side. I slightly question whether it is the role of Government money, particularly at a time when things are very short, to train people for jobs that are very much in demand in the private sector, because presumably they could save up and learn to type themselves. It is not always as simple as that; there are deprived children and the like who might be helped into clerical work by these schemes. We are looking at it carefully and we shall proceed with great caution.

I would say to the noble Baroness, Lady Seear, that we in the Department of Employment have especially commissioned a look at the potential manpower implications of the micro-chip. We are going cautiously, as it is quite hard for us because this country is not yet as advanced in that technology as, say, Japan or America; but we are taking consultations there as well. When that report reaches me I will try to see, within the limits of my responsibilities, that it also reaches your Lordships, and perhaps we could come back in a short debate particularly to deal with micro-processor problems. The noble Baroness is mistaken in thinking that suitable offers of training can be turned down by the workshy, because refusal of offers of suitable training attract the same penalty as refusals of offers of suitable work, which is disallowance of benefit. We are—and I say this to my noble friend Lord Massereene and Ferrard, also, who was concerned about it———looking at in- stances of fraud or abuse within the benefit system in a cost-effective way. We arc not looking at it with a moralistic view; we are seeing whether we can make some savings by uncovering genuine abuses.

I turn to the remarks of the right reverend Prelate the Bishop of Worcester, whose speech I immensely enjoyed and who was concerned with employment. His knowledge of employment issues—he is on the Manpower Services Commission —is well-known and commands our respect. It was he who, in no kind of party sense—I have no idea what the right reverend Prelate's politics, if any, are—said that there will never again be full employment in the old sense. The message that comes out of this debate is that we arc going to have to react to a new kind of situation in which employment may be something you go in and out of. It may be something you concentrate on at various times in life, it may be very highly paid, but it is not the kind of situation of pure expansion which we had before. I dealt with that in my opening speech. I do have a sensible and considered note for him on work-sharing policies, but if I may, because it is a little detailed, I will write it to him in the form of a letter, unless he would particularly like me to go into it at this juncture.

The right reverend Prelate and other noble Lords mentioned the point of earlier retirement. This, if adopted as a reversible measure—because one may not always want to reduce the labour supply; situations change—may have some merits. We are continuing the Job Release Scheme, which offers voluntary earlier retirement to men aged 62 or 60 if they are disabled —and I have a special responsibility as the Minister responsible for the disabled in employment issues—and to women aged 59, but this offer is only provided if when they retire an unemployed person is taken on by the firm. We do expect a large take-up on this.

I come to the question put to me very specifically by the noble Lord, Lord Kilmarnock, about whether your Lordships' House might not set up a Committee to look into unemployment. Nothing gives away Ministerial naivety or amateurism more than "buck passing", I do not think the setting up of House of Lords Committees is something I can hand across the House from this Box. It is a matter for my noble friend the Leader of the House, but I will bring the noble Lord's suggestion to him. I would point out that we do have Sub-Committee C of the European Committee, which looks at unemployment among other things, and I take a great interest here because I am the departmental Minister responsible for European affairs when they affect employment issues.

The noble Lord, Lord Jacques, referred us back to his argument at an earlier stage for a permanent and flexible incomes policy and the improved industrial relations that might flow from that. My own view is that a move towards incomes policy in Britain would have to come from the trade union movement itself. Governments would have to adapt to it or see what they thought about it. It cannot be imposed. So far as I know, that is also the position of the Labour Party, so it is hands across the sea over that matter.

I have already mentioned the speech of my noble friend Lord Vaizey. The only qualification I would add about those young and relaxed kids in America who, with their own businesses, looked after my noble friend and his family so well, is that my personal bet, as someone who taught in American universities for six years, is that they were all probably middle class or certainly not inner city kids. That is the problem and one of the points of our Scheme is to try to make people more conscious of what kinds of opportunity in employment would be available to them.

I turn to the speech of the second right reverend Prelate who spoke; namely, the Bishop of Southwark. He argued for a non-military national service. The difficulty is: Would people do it? I think it was my noble friend Lord Massereene and Ferrard, who often masks Liberal points and calls for higher Government expenditure under the guise of extreme Conservatism, who said, "you cannot direct Labour in a free society". It was certainly the noble Viscount, Lord Hanworth, who said that national service itself might be a military non-starter. The difficulty here is the voluntary element.

The noble Lord, Lord Collison, made a moving correlation between Christian and social values. I have to defer to the Bishops' Bench as regards that. However, as a Christian I certainly feel that social duties are imposed upon us as individuals. It seems to me that we lack guidance for our corporate behaviour from that particular religion, and my own instinct is that that is just as well. It is when we have argued about religion corporately that the blood and fur have flown.

The noble Baroness, Lady Emmet of Amberley, who kindly told me that unfortunately she was unable to be here for the wind-up, mentioned the situation of women. I deal with the matter simply because other noble Lords have mentioned it and I am the departmental Minister responsible for women's employment issues. I would refer noble Lords and especially the noble Lord, Lord Wallace of Coslany, to our debate on the Industrial Training Levy (Engineering) Order when I said, covering myself as regards the women's movement, that what I wanted to see was many more girl engineers and fewer girl typists. In fact, that is not simply a frivolous situation. We are concerned about the immense growth of the clerical sector of this economy and if girls want to be engineers we shall do everything that we can to help them.

The noble Viscount, Lord Hanworth, made a number of points, and the operational point to my mind was about the difficulties in mobility of labour. There is, of course, a problem of geographical mismatch in the labour market. Even in times of high national unemployment levels, there are industries and occupations which are very short of labour in some parts of the country, while in other parts similar workers are unemployed. I point out to the noble Lord, Lord Wells-Pestell, as regards his understandable indignation about unemployment, that one must also direct one's attention to mismatch and to the number of vacancies that are present. We are working on a number of schemes to try to see whether we can improve the situation. The EEC is concerned with it, and I have been trying to find out what it is doing about it.

The noble Lord, Lord Northfield, made a remarkable speech; indeed so much so that everyone on all sides of the House is competing for his favours. It was, if I may say so, the best speech that I have heard, among many good ones, from the Labour Benches since we took office. I would recommend it to his noble friends who are, let us say, a little too instant in their criticism of our work—for example, the noble Lord, Lord Hatch of Lusby: possibly the noble Lord, Lord McCarthy. and others. I should like to be able to give him immediate encouragement. I do not know that I cannot give him immediate encouragement. I was so impressed by his speech that I shall see that it is read in my Department although it is, in fact, technically a matter for the Department of Industry.

We are, of course, aware of the job creating potential of small firms and we want to create the right atmosphere. We shall review any obstacles created by Government legislation, including the Employment Protection Act, but if there arc other obstacles and the noble Lord cares to bring them to my attention, I shall of course do everthing I can. He was absolutely right and it was a breath of air in the debate to have someone coming in from the field, as it were, and telling us of real work actually being done. It is true, I am sorry to say, that existing Government support for small firms tends to be best organised for the rural areas through COSIRA, the Welsh Development Agency, the Highlands and Islands Development Commission and the like, although small firms can receive help under the Industry Act. My noble friend Lord Mottistone made an original suggestion which might be correlated with the speech of the noble Lord, Lord Northfield, and I shall see what I can do about that. My noble friend was quite right to stress the local element as did the noble Lord, Lord Northfield.

I come to the speech of the noble Lord, Lord Evans of Claughton, who told us of the conditions on Merseyside. They are indeed a terrible indication of our economic decline—a microcosm of it, in a way. As someone who comes from Ireland I understand that the Irish are, at present, trying to recruit skilled labour in Liverpool, so there may be something of a reverse migration. It is, of course, because we recognise the needs of areas like Merseyside, that in dealing with the public spending reductions we have ensured that the special measures are retained in the areas of greatest need; for example, STEP, YOP and the small firms employment subsidy all operate within Merseyside. The noble Lord made a very important point which is accepted by the Government; it is that different areas within the country need different solutions and different degrees of treatment. As he is aware, my noble friend the Secretary of State for Industry has recently made visits to different areas of the country.

The noble Lord, Lord Hankey—who had many interesting things to say and who got it perhaps rather strongly in the neck for making a little too long a speech—took up a point made in my original speech (and I certainly agree with him) that education is a little bit remote from the requirements of industry. As I say, I shall have meetings with junior ministerial colleagues to try to deal with that. I do not think that this is either the time or the debate to deal with industrial relations; that we are shaping up for some rather limited reforms, and they will be a matter of interest in your Lordships' House.

The noble Lord, Lord Ritchie-Calder, said that Henry Ford paid well because high-paid workers will buy his cars. One of the ironies of our situation is that we are going to move into very high wages for skilled industrial workers. My guess is that over the next decade or so they will receive £10,000 plus a year. Although that in itself is excellent, it does not help the general levels of employment.

I have received a message from the noble Lord, Lord Jacques, that the noble Lord, Lord Lee of Newton, has become a member of the Shadow Cabinet. If that is the case, I congratulate him; I am delighted to hear it and I shall tell my stockbroking friends that it is a clear indication that the next Labour Government will have a statutory prices and incomes policy. I think that we have had an excellent debate. We shall take Hansard back to the Department and read it with great care. I am happy to be able to say that I need not refer it to Ministers in the department, but shall look at it myself. I hope that noble Lords have enjoyed the debate as much as I have, and I hope that we may return to some of the specific interests later in the autumn.

9.25 p.m.


My Lords, we have had a fascinating and, to me, a very stimulating debate, even if we have strayed a little from the scenario which I thought I had set. However, I remain very optimistic. I think that a study of Hansard tomorrow will show that a very large number of ideas have been advanced today and that a very large amount of information has been given which perhaps we are not able to absorb tonight, but which we shall certainly absorb tomorrow. I thank all the noble Lords, the two Baronesses and the two right reverend Prelates for their contributions. My Lords, I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.