HL Deb 14 February 1980 vol 405 cc336-46

4.6 p.m.


My Lords, with the leave of the House, I should like to repeat a Statement being made in another place by my right honourable friend the Secretary of State for Employment on the special employment measures for 1980–81. My right honourable friend's Statement goes as follows:

"We announced on 12th June last year some changes in the programme of special employment measures for 1979–80 which were designed to focus them more sharply on areas and groups with special employment needs and to reduce public expenditure. The current programme of measures expires on 31st March and we have been reviewing the measures, again taking account of their cost-effectiveness, the particular groups most in need of assistance and what we can afford. We have reached the following decisions on the programme to operate in the year from 1st April 1980.

"We have agreed to a proposal from the Manpower Services Commission to increase the size of the Youth Opportunities Programme from 210,000 entrants this year to 250,000 to 260,000 entrants in 1980–81, with the number of filled places increasing to 100,000 to 105,000. This expansion will provide further work experience and training opportunities for unemployed young people designed to improve their prospects of finding permanent jobs, and will enable the Commission to continue to operate under the programme their present undertakings for unemployed school-leavers and young people unemployed for 12 months or more.

"We have also agreed to Manpower Services Commission proposals to maintain the community industry scheme for personally or socially disadvantaged unemployed young people at the current level of 6,000 filled places, and to maintain the special temporary employment programme for long-term unemployed adults at 12,000 to 14,000 filled places, concentrated on Special Development Areas, Development Areas and designated inner city areas.

"We have decided that the small firms' employment subsidy, which is the least cost-effective of the special employment measures, should close for applications on 31st March 1980. The temporary short-time working compensation scheme, which reimburses employers for up to six months for payments made to employees on short-time as an alternative to redundancy, will continue to operate throughout the country on the present basis.

"We are extending for a further year the job release scheme, which opens up vacancies for unemployed workers by enabling older workers to leave their jobs early. The scheme will continue to be open to women aged 59, but for men who are not disabled the age of eligibility under the scheme will revert from 62 to 64. With this change it will not now be necessary to tax the allowance from April 1980 as the previous Government had planned; this also applies to all those who enter the scheme by 31st March this year. The allowance will, however, be increased to £45.50 for a married person with a dependent spouse with income of £10 or less a week and to £36 for all other applicants.

"There will also be a special job release scheme to enable disabled men to leave their jobs from the age of 60 as at present and to be replaced, where-ever possible, by an unemployed disabled person. As the allowances for disabled men will be payable for more than one year they will be taxed, but will be further increased to maintain on average their value net of tax. The allowances will be £53 for a married man with a dependent spouse with income of £10 or less a week and £43 for other applicants.

"All these changes to the Job release scheme will take effect from 6th April 1980—the beginning of the next financial year.

"We consider that this programme of measures will make an important contribution towards reducing unemployment and helping particularly hard-hit groups within a level of expenditure which we can afford. The impact of the measures on unemployment has increased during the present financial year and the new programme should maintain that increased impact over the year from 1st April".

My Lords, that ends my right honourable friend's Statement.

4.10 p.m.


My Lords, I should like to thank the Minister for repeating this Statement and to welcome several aspects of it—three, in particular, as I understand it. I should like to welcome the fact that he does not propose any cuts in the Youth Opportunities Programme and that there will be a natural expansion in that area; although I am bound to say, that, on the Government's own figures, youth unemployment is likely to double in 1981. Given that fact, one is bound to ask whether this represents a real increase in relation to the problem. Secondly, I think one would like to welcome the provision for the disabled under the job release scheme and, thirdly, to welcome the maintaining of the community industry scheme. In many ways this is a welcome example that there are still cases where in the Cabinet, despite disagreements, the doves can draw level with, at least, if not pass, the hawks. For that, we on this side are very grateful.

There are some unsatisfactory features in the Statement as I read it and I should like to raise them now. The first point is the most important. It is not clear from the Statement whether this represents an overall increase in the money which will be available for the special employment measure or whether it represents a reduction in real terms, and, if so, what are the nature and the size of the savings? What are the figures for these factors? I wonder whether the Minister can tell us about that.

Secondly, it must be the case that what is being suggested here today undermines further the work of the Manpower Services Commission. Here I should like to ask the noble Earl whether he has read the statement which Sir Richard O'Brien made to the Select Committee on Employment in the other place yesterday, when, as I understand it, he said that he was very concerned about the present level of services in the Manpower Services Commission and that he wondered whether they could maintain the present level of services under the cuts of roughly a further £30 million which the Government intend to impose; and whether this did not further undermine the work of the Manpower Services Commission. Can the Minister tell us something about that?

Thirdly, I should like to protest. I should like to ask for some explanation about the decision to raise the eligibility for job release from 62 to 64. There will be undoubtedly many thousands of people between the ages of 62 and 64 who have been confidently anticipating that they would be able to take advantage of the job release scheme and in that way be able to make way for certain young people who would otherwise be unemployed. I wonder whether the noble Earl can tell us what savings are anticipated as a result of raising the eligibility from 62 to 64 and why he should suggest that they will be worth while.

Fourthly, I should like to ask why there should be—from this Government, above all—abolition of the small firms employment subsidy. I must say to the House that I always thought that this Government favoured small firms. I always thought that their tax policy and their policy towards incentives stemmed from their belief that small firms were going to save the economy. If so, why the abolition of the small firms employment subsidy? What is to be put in its place? Finally, I should like to ask the Minister if he can explain the last part of the Statement, which reads: We consider that this programme of measures will make an important contribution towards reducing unemployment". I should like to ask, what contribution? I should like to ask whether we can be given the figures of how far it will reduce unemployment. The Statement goes on to say that the programme will help, particularly hard-hit groups"— What hard-hit groups?— within a level of expenditure which we can afford". Surely it is the time for the Government to tell us why measures of this limited kind are expected to deal with the fundamental underlying problem of rising unemployment throughout this country, especially in particular areas and in particular occupations. If it will not help, what do they propose to do about it?

4.18 p.m.


My Lords, we on these Benches should like to join in thanking the noble Earl for having repeated this Statement. Like the noble Lord, Lord McCarthy, we welcome the increase in the size of the Youth Opportunities Programme and the opportunities that expansion gives for further work experience and training for unemployed young people. We welcome also the maintaining of the community industry scheme.

One of the disadvantages of speaking after the main Opposition spokesman in response to this Statement is that one has one's thunder stolen; but I should like to echo practically everything the noble Lord, Lord McCarthy has said. We, too, should like to know what are the overall estimates of saving or of increase in expenditure which these measures, taken together, will produce. If it is the case, as reported in today's Guardian, that Sir Richard O'Brien told the Commons Select Committee on Employment yesterday that there was to be a cut of £30 million in each year from 1981–1982 onwards—that is, for three years from that year onwards—we for our part would on the face of it very much regret that. We, too, have noticed the point in the Statement concerning the small firms employment subsidy and the job release scheme. Little explanation is given as to the reasons underlying these two items and I should like to echo what the noble Lord, Lord McCarthy, said in asking the noble Earl if he will be good enough to give us some further explanation as to the Government's thinking on these matters.


My Lords—

The Earl of GOWRIE

My Lords, if I may, I shall take the points of the noble Lord, Lord Kilmarnock, in a moment; but perhaps I may first answer the substantial points put from the Opposition Benches. The noble Lord, Lord McCarthy, gave two cheers at any rate for the Statement; and for that I am grateful. I take this teasing about doves and hawks, but I do not think that this is a particularly dissenting or inconsistent aviary because we did not oppose these measures in particular in substance when we were in Opposition and therefore there is no need for us to appear inconsistent by not doing so now. As I have shown, we have, in certain instances, expanded upon them.

The noble Lord welcomed the expansion of the Youth Opportunities Programme. That is an expansion of some 25 per cent. That, we think, will be more than adequate to enable us to give our Easter undertaking whereby any young person unemployed after a certain period of having left school will have a place on the scheme offered to him. He welcomed the remarks about disablement in relation to the job release scheme and also in connection with community industry.

Both the noble Lords, Lord McCarthy and Lord Rochester, asked about the public expenditure implications of the Statement. The expenditure for all the measures will be found from within the reduced resources provided for the Department of Employment and the Manpower Services Commission in the White Paper to be published in March. Both noble Lords wanted some specific overall figures. The total expenditure on the programme of special measures in the financial year 1980 to 1981 is expected to be about £360 million; that is similar to the expenditure provided for this year which was £374 million. What we are trying to achieve is to serve a rather larger number of people but also at a slightly reduced cost by maintaining a reduced STEP programme and cancelling the small firm employment subsidy about which I shall have a word or two to say in a moment.

Both noble Lords (if I may say this to them), perhaps casting round for things to criticise in an otherwise admirable Statement, said that we might be undermining the work of the MSC. I attended the Select Committee of another place and heard everything that Sir Richard O'Brien said. I wish to pay a tribute to Sir Richard O'Brien for the close co-operation that he has given us in trying to frame these schemes, operate them and prepare the Statement. Sir Richard is, as one would expect, a good fighter for his corner, and that was what he was engaged in doing in another place the other day. I would certainly not criticise him for that. The fact that we have in certain realistic and effective ways been able to increase provision within overall slight reduction of expenditure is an indication of the importance that we give to the work of the Manpower Services Commission, and we would continue to give importance to that work within the constraints that the economy faces.

The noble Lord, Lord McCarthy, asked me why we were putting up the job release eligibility age for men from 62 to 64. I regret this. I like the job release scheme; I think that it has been very effective, but we have managed to preserve it within considerable public expenditure restraints. It was certainly not our fault that the public sector borrowing requirement that we found in May was £11 billions rather than the £8½ billions that Mr. Healey had told us to expect.

Finally, some remarks were made about the small firms employment subsidy. Our understanding was that this was less cost-effective than it might have been, and certainly when there was a cutback in that particular subsidy to small firms last June there was a quiet reaction about it. I am glad to be able to say to the House that my right honourable friend the Chancellor will be giving considerable attention in drawing up his Budget proposals to the needs and problems of small firms. We think that there are more effective ways of assisting them than with this subsidy.

4.23 p.m.


My Lords, would my noble friend take this opportunity of giving the House some information about the retraining facilities? If there is to be redundancy—and particularly in places like South Wales—and if there is to be expenditure by the Government of £48 million on shadow factories for the future so that other employment is available, is it not desperately important that we should match those efforts with some real effort to provide training and retraining facilities so that people who are declared redundant will take on a new craft or a new industry?

The Earl of GOWRIE

My Lords, I share the views of my noble friend about the importance of training and retraining. He will appreciate that, just as the special employment measures are only part of the work of the Department of Employment and of the Manpower Services Commission, they do not cover all instances of training. There is a training element contained in the special measures in the Youth Opportunities Programme which we have expanded and in the Special Temporary Employment Programme which has been sharpened (if I may put it that way) by concentrating them on areas of greatest need. Both those programmes contain training elements but the thrust of the work of the Government on training is not in the special employment measures as such.


My Lords, I thank the Minister for trying to answer at least three of my five questions. I do not want to go into those. It leaves me with two which I do not think he even tried to answer, and I want to try again. He did not say how far the proposals he put before the House today represent an overall saving or an overall increase, particularly in real terms, in the STEP. He used two figures. He said at one stage we were spending £360 million, and then £374 million. It seems to me that, given the Government's assessment of a 14 per cent. inflation rate, which I think is grossly too low—but I leave that aside—this represents a real reduction. Does he agree with that, and, if so, to what extent? The second question which I ask him was my fifth question, which he did not answer. I referred him to the last paragraph of the Statement: We consider that this programme of measures will make an important contribution towards reducing unemployment …". My question is quite simple: what contribution will it make?

The Earl of GOWRIE

My Lords, I plead guilty for not answering the noble Lord's last question. Though I should in courtesy have mentioned this, I do not intend—and I do not think that it is useful—to get involved in forecasting. These measures are carefully designed to operate on a year-on-year basis, that being the efficient way to proceed because then one has some indication in any given year of what the requirements are going to be in the following year. So I am going to avoid—but quite deliberately—any argument about forecasting.

On the question of whether these figures are in real terms, the answer is that they are. The total expenditure on the special employment measures, which the Statement announced, adds up to £359.5 million, which is what I said in my supplementary remarks. The expenditure provided for special employment measures last year totalled £374 million. So there has been a reduction in real terms; but there has also been an increase in the numbers of people serviced in real terms, as people must always be seen in real terms. We consider that we have gone for cost effectiveness and have directed the programmes in the areas of greatest need.

One more point on that aspect: when we came into office we found an extraordinary à la carte of eccentric "make-work" schemes. One of the STEP projects that I was asked to investigate—I had to say that I refused—was the consideration of the relationship between Commoners and ponies in the New Forest. It is that kind of scheme that we were fairly ruthless in cutting out of the programme. We reckon that we have the balance now about right for this coming year. What happens thereafter of course will have to be considered again.


My Lords, may I express to the noble Earl my relief that the winding up of the small firms subsidy scheme does not indicate that the Government are ceasing to take an interest in this sector? May I ask the noble Earl if he is aware of the Massachusetts Institute of Technology's study on the extremely important role of job creation played in the United States by recently formed small firms? I am sure that he is aware of this. Also when the noble Earl's right honourable friend considers the question of small firms, will the noble Earl draw his attention to this very important study?


My Lords, I am grateful for the remarks of the noble Lord, Lord Kilmarnock. One of the difficulties with subsidies is that if you withdraw them the arena which is affected always feels in some way under fire. The Government are relying enormously on the wealth creation and on the employment generation capacities of small firms, and a great many of our fiscal and other policies are directed towards this end. The problem with expansion subsidies, like the small firms employment subsidy, is that they are inevitably paid even when employers would have created extra jobs without payment of the subsidy. This is not the best way to fulfil our responsibilities and what we are hoping to achieve from the small firm.


My Lords, I think that many of us expected very much worse than this, judging by the kind of things that we have heard mooted around the country, such as that the Government were concerned about real jobs and not about the kind of jobs that were being provided under these schemes. So I am very glad that there has been a change of heart. I am disappointed that the noble Earl the Minister told us that he is not going to indulge in forecasting. Surely what he means is that he is not going to publish forecasts, because I should be very surprised indeed if the Government would have gone about spending this amount of money, and being able to say that it would help more people, without having made some kind of forecast. What I am concerned about is how this fits in with the real need for this kind of scheme, because we know that at the present time unemployment is rising. In Scotland over 200,000 people are now unemployed. We used to be appalled when the figure was 100,000. Does the noble Earl think that this is going to be in any way adequate to meet the real needs in respect of the unemployed young people?

The Earl of GOWRIE

My Lords, I am grateful for the first part of the noble Lord's remarks, when he praised us. But he took away the praise towards the end, without, in fact, adding anything further to the argument. The point is that it is because we are responsive to changes in the employment position of young people, that we have increased the provision of the scheme. All I was saying was that the essence of these programmes is that they should operate year on year, so that one can monitor what reality is. We have kept the Easter undertaking, which, as the noble Lord will be aware, is an undertaking that all young people who are unemployed for six weeks after leaving school will receive an offer of a place on the programme before the following Easter. We are therefore responding, as it were, to market conditions in terms of employment levels, rather than notional ones. That is surely the sensible way to proceed.