HL Deb 21 April 1983 vol 441 cc697-712

7.15 p.m.

Lord Molloy rose to ask Her Majesty's Government what action they propose to take to deal with the economic problems confronting the unemployed and their families and the effect of those problems on their morale.

The noble Lord said: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. The current incidence of unemployment in our nation is probably the most disgraceful episode in British history since the end of the war, for two reasons: first, that it exists and, secondly, that the disastrous high level that it has now reached need not have happened at all, and that is probably the greater disgrace.

My Motion talks about the economic problems and the morale of no fewer than 4 million of our fellow countrymen, and that probably means a couple of million of ordinary British families. It is perfectly true that this ogre of unemployment first peaked at around 1969. Under the Heath Government it was speeded up until it reached 1 million. In all fairness, I am bound to say that in the other place, where I served at that time, there was deep concern on all sides and a great deal of frustration. It continued into 1974 and it continued under the Callaghan Government until its last quarter, and then unemployment started to decrease.

Then came the general election. Within the first few months of the present Administration being in office unemployment continued to decrease, and then this Government's policy of monetarism—on which they are totally hooked—started to bite. When it started to bite we lost our competitiveness; when it started to bite we saw industry and commerce frustrated; when it started to bite we saw the loss of jobs, and the only thing that spread, in a vicious way, through this nation of ours was the unhappiness and tragedy of unemployment. Because it is a tragedy.

It is not merely a question of statistics. You cannot only say that 10 per cent., 20 per cent. or 30 per cent. of our people are unemployed. When one man has lost his job, he is 100 per cent. unemployed, and with it goes all the agony that accompanies this appalling curse; and, as I say, much of it need not have happened.

The Government have always sought excuses by looking elsewhere, gaining comfort from the fact that there are millions of Americans out of work, millions of German and French people out of work, and therefore believing that there is no reason why there should not be millions of Britons out of work. What an attitude! What an appalling, total lack of human compassion!

I want to say straight away that much of the data that I would like to give I shall not have time to deal with, but I have collated it from the media, from newspapers of all sorts of political opinions, 95 per cent. on the Conservative side and the remaining 5 per cent. on the Opposition Party side. All of them together have condemned and given instances of what unemployment really means and what the economic problems are facing unemployed families.

I also want to pay tribute to the massive researches of which I have read done by Dr. Fagan and Professor Brenner and also refer to my own contacts with unemployed people in areas where they have contributed so much to the wealth of this nation of ours. This is another part of the bitterness. We all know that if it had been some bigger fact than Galtieri that threatened us there would have been no closing of steelworks, no sacking of miners, no rendering of engineers redundant. The call would have been, "Your nation needs you". Well, that threat did not happen so the nation does not want them. That is what they think, and with some degree of justice.

I have to say this, too. Perhaps one of the most frightful episodes in this whole incident of unemployment is that it stretches from school-leavers right through to those attending technical colleges and universities. When they finish their studies to be engineers, doctors, quantity surveyors, bricklayers, electricians, even skilled labourers, when they have finished their training in school, hundreds of thousands of them are not required. Many live in homes that ought to have been pulled down years ago and yet we have tens of thousands of construction workers in the dole queues.

There are many other aspects. We have to acknowledge, in this measure of unemployment, the equally bitter example of small businessmen, little family firms who have made their contribution to the country, their little contribution to gainful employment in a variety of trades and professions, where they have crashed. If I may say so, speaking in parenthesis, many times in this Chamber I have pointed to the appalling figures of unemployment, the disastrous figures of small firms going bankrupt. They share the agony, the frustration; they are compelled to endure the bitterness of the men they have had to get rid of in their little factories.

When one realises what this means because of the economic conditions, there is the sudden realisation that the dole will not pay the mortgage; when they have been out of work for a few months and the last demand comes from the gas corporation or the electricity board, of from the local authority for rates, then people start arriving at the frontier of understanding. I say to everyone in the House this evening, supposing they were to go home and on Monday morning came a notice from the building society saying "If we don't have some contribution to catch up on the repayments which you have failed to honour, we shall have to repossess".

I must now state the next awful, frightful element, the element of suicides which, as Professor Brenner has shown, is increasing; it is something that ought to make us dreadfully ashamed of what is happening. We go through another level of Professor Brenner's report—I hope I may have the attention of the Front Bench. I am shattered and shocked to discover that the suicide of some of our people may cause some amusement; I find that terribly hard to endure. Nevertheless, let us look at another example. In Professor Brenner's report it is shown that when he talked to schoolchildren of the unemployed families, in places where there is mass unemployment, he found a form of camaraderie. But in instances where the unemployment was only marginal, in interviews school children said that they felt ashamed that their daddy was not capable of holding a job; then they had to point out that their mother had to go to work to keep them all.

It is these things that I believe we must consider in depth. This is the aspect of the morale of many of the families in our country. When you realise, too, the crass absurdity of this abysmal monetarist policy, you realise also that once the family is out of work first of all the rent or the mortgage has to be secured and so there are no holidays this year. I hope this gets to the holiday firms because if there should be the disaster of another election and the present Prime Minister gets back, they can forget about their adverts over next Christmas; but that is the first thing. The unemployed have a system of priorities of what they have to do without, and what they have to do without immediately is the idea of holidays.

Then follows—I know, because I have experienced it—no more new coats or new frocks for the youngest or the middle children; they will have to do with the hand-downs from the elder children. That is economics for you, my Lords. When millions do that the reflection—as has been proved beyond all peradvanture—is immediate on the clothing industry and the clothing industry starts contracting. No new suit. Keep sending that one to the cleaners; patch it; sew it; tidy up the unravelled sleeves. These things in my judgment—and I ask your Lordships to consider this—show that it is not only an evil policy to create unemployment but a disastrous economic policy as well.

I believe that we might have found a way similar to the one that has been found on previous occasions. There has been much experience in the system under which we live of booms and slumps; and we find there always seems to be a level of the community which is immune. The level of the community which has been immune over the past few years has had larger salary increases than a family man gets in dole. That is one of the reasons. Ally this to the youth who no longer know they can get jobs; put these things together and one can see the vanishing of discipline within the home. The youngsters are on the streets and not merely is there vandalism but we experience the sort of things that we have seen in many of our major cities—in Liverpool, London and other great cities. It is in the main all part of the effect on family discipline and morale of unemployment.

I believe that it is not too late, that we ought to try to do something positive. I hope I am not going to be regaled with some civil servant's brief, pregnant with statistics and not one word of understanding or sorrow or unhappiness, merely so-called facts and figures. I appeal to your Lordships, we cannot go on in this way. We can read every day in our newspapers, for example, that young couples are seeking medical methods which will ensure that they will not be burdened by giving birth to future Britons. Does that seem a good thing? It is not merely distasteful; it is disgraceful. I think one must also have a look at some of the activities of management, where they have been making absurd contributions and taking risks to create even more unemployment. One reads, for example, of the abysmally absurd attitude of some managements driving workers to desperation, so that we could have, as in the case of British Leyland, an absurd strike caused by a management that is not fit to run a whelk stall in the East End of London. They are irritating skilled craftsmen, and annoying them.

I have some sympathy with the working men, and I will tell you why. I think that the noble Lord, Lord Trefgarne, will know this story. Pithead baths were not given. No kind employer hauling the coal of Britain came along and said, "I will provide nice baths so that you can go home all nice and clean to your dingy little cottage". I can remember the days when my grandfather would come home, strip to the waist under one tap outside the cottage and swish off the muck and filth before he went into the house.

Things have changed. To think that some bright managerial spark at British Leyland hit on the mummified idea that, "We can squeeze them a bit more by pinching the couple of minutes they need to wash before they go home". In the media, quite rightly, they have to show both sides. I ask for the sensible approach in this House, to see that the blame does not always lie on one side. If we can do so in this House, let our message go out. I am of the opinion that there is not an occupant of a Bench in this Chamber that has not got natural sympathy and deep compassion for those who now form the unemployed. I believe that each one of us individually would like to see it erased from our society.

We have had certain economic measures which they have said will do this. But we have been having them month in and month out. In the couple of years that I have been in your Lordships' House I have heard the stories from the Front Bench opposite. The great dream is that next month there will be an end of the recession. As we have been told of the great dream each month, it has turned out to be a horrid nightmare. Up and up has gone the unemployment figure, down and down has gone production; and then has come all the misery in those families that I have been talking about. I believe it can be changed, but I believe it can only be changed when good men everywhere, of all parties, come to the aid of the unemployed, because by coming to the aid of the unemployed we come to the aid of our nation.

I have asked your Lordships in previous debates to consider that when this ghastly incidence of unemployment confronted Europe and the United States of America all the well-known economists throughout the world did not seem to have the answer. It seemed to me at that time, and it still does, that if you put all the economists in the world from end to end they would never arrive at a conclusion. But there were two men who are still scorned—Kenneth Galbraith, a Scottish-Canadian, and Keynes. When the President of the United States of America decided that these two had something different to proffer he launched, on the principle of "spend and prosper", the new deal. That new deal was emulated in this country, and we saw unemployment begin to fade away in the USA and begin to fade away in Great Britain.

I believe that we have got to have something like that. I want to see a new deal for the unemployed, which will mean a new deal for commerce and industry and for all the great services of our nation. These two great new deals could create a new society—a new society of Great Britain which could, I believe, command the admiration of the world.

7.35 p.m.

Lord Banks

My Lords, the noble Lord, Lord Molloy, has certainly raised an important subject in his Unstarred Question this evening. I think we are in danger of creating two nations: those with a job and those without a job. It is difficult for those of us who have a job to understand fully the situation of the three million unemployed—

A noble Lord

Four million!

Lord Banks

— the three million who have no job. We tend to forget that low-income families suffer from a higher inflation rate than the community as a whole. In February, the Low Pay Unit's index indicated that low-income families (among whom, of course, the unemployed are predominant) had a rate of inflation of 6.8 per cent., or 1.4 per cent. high than the rate for the rest of the community. Another worrying thing about the present situation as far as the unemployed are concerned is the degree to which the unemployed today rely upon means-tested supplementary benefit.

There are overall, including everybody, 6.5 million people on supplementary benefit today, which is a record. That figure has increased since 1979 by 1.75 million, which is also a record increase. Of the unemployed themselves, 63 per cent. now rely on supplementary benefit and 53 per cent. rely solely on supplementary benefit. They are not receiving national insurance at all because their national insurance has run out and they are now entirely on supplementary benefit.

I wonder what the Government's view is of that situation. Are the Government happy that so many people should be on supplementary benefit; and have they any plans to get the unemployed off supplementary benefit? One of the virtues of the tax credit scheme which my party supports (and to which there was some reference made in the press today) is that it would do just that. Some unemployed are on supplementary benefit because their unemployment benefit, their national insurance, is inadequate. At least the 5 per cent. abatement is to be restored, but they have to wait until November for that. But the present Government abolished the earnings-related supplement which helped to cushion the fall from the rate of income that an individual had in work to what he received when he became unemployed.

I want to ask the Government whether they are opposed in principle to the concept of an earnings-related supplement or whether they abolished that merely as an economy measure. We know that it was part of an economy package. Was it solely because of that, or was it because they have an objection in principle to any attempt to relate the first stages of unemployment benefit to the income which an individual was earning before he came on to unemployment benefit? Incidentally, the supplementary benefit rates themselves are inadequate, which is a view just reiterated by the Social Security Advisory Committee. The child additions to unemployment benefit have been reduced, with no compensating increase in child benefit. That is a matter which we have debated in this House, and which is a matter of concern to many people.

The Government recently extended the long-term supplementary benefit to the over-sixties, including those who are unemployed, so that they could go on to the long-term rate straightaway. But the long-term rate is still not available for those who are unemployed and under 60. While we welcome the one improvement, I should like to ask whether there is any prospect of the other, because we feel that everybody who is unemployed long enough should go on to the long-term rate, like other people.

These are a few of the matters which it seems to me are raised by the Question the noble Lord, Lord Molloy, has asked this evening, and I shall certainly listen with great interest to the reply which the noble Lord, Lord Trefgarne, is to make in order to find out what the Government have in mind to deal with these problems and to remove so far as possible the very real economic burden which is borne by the unemployed.

7.41 p.m.

Lord Soper

My Lords, there are two topics in your Lordships' House which I find irresistible, or nearly so. One is the question of war and peace and the other is the issue of unemployment. That is why I am presuming to take part in this debate tonight. These two issues have a number of things in common. They are both apocalyptic in one sense; they are unprecedented and there is no point is looking back as if to find in a history book the kind of evidence which can supply the answer to a contemporary problem.

These are unprecedented conditions promoted by our scientific capability, and in the matter of unemployment it does not seem to me that it is reasonable to anticipate that there ever will be a time again when what our fathers rather ambitiously called mass employment will be recoverable—and for a number of reasons. It is in that particular environment of thought that I am the more impressed by the form of words in which this particular debate is couched. We are to ask Her Majesty's Government, what action they propose to take to deal with the economic problems confronting the unemployed". I would heartily wish to see the transformation of unemployment into creative leisure, and I think it is a possibility. But I take it that the inner meaning of this particular debate is: what do you do with a situation which at the moment is irreversible or any rate at the moment cannot be fully answered? It is to that point that I wish to address what I have to say.

I will chide the Government, if I may, not for their innate hostility to compassion—I think that would be impudent—but for a lack of understanding of what really constitutes the problem that is promoted by an economic stricture and expressed by the word "unemployment" Your Lordships will allow me, as a social worker of sorts for the past 50 odd years, to make a comment here which has been beaten into my own experience in no uncertain fashion and which is that the personal sufferings of an unemployed family are particularly individual. You cannot add them up and say that the suffering is twenty times greater if 20 families are victims of unemployment problems. But one thing which is central to this whole argument is the quite devastating effect that unemployment has in as so many of the relationships which are necessary for the amenities and the well-being of a decent family life.

There is no doubt at all that dignity is one of the first things to suffer. As the noble Lord, Lord Molloy, has pointed out, it is quite right that children can be unconsciously very cruel and can divide families by the kinds of comment they make and the imputations they suggest. These are not matters of irrelevance to the general question, for the over-arching problem is: what do you do in a society when you no longer require the manpower which made it possible, at least for all who had some technical achievement, to find a reputable job and where, in the higher echelons, the younger sons could go either into the Army or into the Church?

It is this problem that I find almost unanswerable unless we are prepared to limit, for the time being at least, our anticipations of what can be done. It is the intention of the Labour Party, so far as I understand it, so to promote a general increase in public spending as to remove from the register in the next year or two one million of those who are now on the register of the unemployed, which is another way of saying that there will be three million left. If we in your Lordships' House imagine that this problem is one capable of a speedy solution and a return to the mass employment which we cherish as a memory of past days—though it is an illusion, as I said before—we are deluding ourselves and contributing nothing to the practical outcome of a debate like this.

I would adduce two areas which I would suggest that probably the Government do not know very much about. One is an area in which I have been interested and, your Lordships might think, addicted to for a very long time now: namely, the consequences of unemployment in the field of alcohol. I would take it as generally to be regarded as credible at least that the "working classes", so called, are not so susceptible to the temptations of alcoholism when they are out of work as are those of what we are pleased to call the "upper middle classes" and the managerial class. I could give your Lordships evidence, if it were desired, of almost innumerable cases where the impact of unemployment has been to increase the tendency towards alcoholism, which is running at an alarming rate today and, as I have said so many times before, when we begin to discover what is in the upstairs wardrobes in the nature of drink we shall have a better appreciation of the scourge that alcoholism represents today.

Nothing could be more practical for a government concerned to alleviate the evils of unemployment than to apply themselves with greater diligence and greater generosity to those measures which are now current and of which I have some knowledge and experience, in which it might be possible to reduce the impact of unemployment in relation to these alcoholic influences, which are more destructive than almost any other of the particular addictions to which I refer.

It so happens that earlier today I had the opportunity and the privilege of launching a handbook under the title Unleash, which is designed as a comprehensive reference work, covering all aspects of pastoral work being undertaken by the Christian churches and other voluntary organisations. This is primarily directed towards the homeless young and the single homeless. Unfortunately the vast majority of the single homeless are indeed unemployed, and I think that is relevant to the discussion in this House tonight.

What is the way in which those who are under the stress of unemployment can to some extent find some kind of relief and some kind of usefulness? The answer is that there is now a proliferation, very largely sponsored by the Christian Churches, of intentions at least to do something in this field. Those intentions have now been collated. I would respectfully suggest to the Minister that he looks at Chapter 7 in this particular document, in which he will find to what extent there are already remedial processes whereby those who are unemployed can find something to do in an atmosphere which does not reproach them but understands them. Here is a marriage, again, of statutory and voluntary obligation which does not relieve us of the problem of unemployment as such, but does direct our attention not so much to the far-off day when this problem will be solved but to the fact that you cannot wait for next year's harvest of grain when people are hungry today.

The personal application of concern which is so often the intention of good-hearted people has been frustrated by their inability to know where to turn and what to do. I could relate to your Lordships many occasions on which unemployed people have come to me with their problems and, had I known what is now in this handbook, I should have been much better equipped to do something about it. I quite realise that these are very much measures that belong to an ambulance at the bottom of a cliff, rather than a fence at the top. Therefore, I shall turn for a moment to what is implied and what has been stated in the speech of my noble friend Lord Molloy.

I entirely disagree with the proposition that a vast infusion of public money into necessary and desirable public works would be disastrous. Nobody knows whether it would be disastrous, but there is at least one concept in which I believe it would be fruitful. What we are now doing, by preventing 4 million people from becoming contributors, is denying ourselves the creative capacity that they could, in their turn, produce, and, in producing it, add to the sum total of general wealth. I am not a competent statistical diagnostician in these economic matters, and I have an increasing suspicion of those who attain what they assume to be that omniscience.

I take the view that I find recorded in the conversation which Mr. Schacht is supposed to have had with Mr. Hitler in his early days. He is supposed to have gone to Hitler and said, We are in a desperate position and there is nothing we can do about it, except to recognise the desperation in which we find ourselves. Hitler is supposed to have said: You go home, Mr. Schacht, and write out a statement that we arc in a very much happier position. Tell me next week that we are doing very well and we will go on from there. That may be a little naìve and simplistic, but I wonder whether it is true. In fact, I am sure that it is true.

The one asset we have is the creative capacity of human beings. When we utilise that creative capacity, we create wealth. It may be that in the short term inflation will increase, but I infinitely prefer to see an inflationary spiral with many more people at work, than a reduction of inflation and the condemnation of 4 million of my fellow creatures to the kind of idleness which I so much deplore. I do not believe that it would be a financial or a social disaster. In any case, such is the desperation of the situation which has been so eloquently put to this House by my noble friend Lord Molloy, that I believe it would be infinitely worth while to try it.

Let me finish by saying this. The curse of unemployment is not that you have nothing to get. It is that nobody wants you to give anything. That is the curse of unemployment. We must create the sense of community which is the very opposite of privatisation, and bring into the family and the group the warmth of a social conscience. This is not a piece of last Sunday's sermon, although it might well have been. It is a part of what I firmly believe and would offer to your Lordships' House tonight. Here is the opportunity for a moral transformation which in its turn, because it is morally right, could never be politically or economically wrong.

7.54 p.m.

The Lord Bishop of Lincoln

My Lords, it is late and I shall be very brief, but I should like to say one word about the subject of the implications of the knowledge and understanding of the things we are talking about tonight—the effects of unemployment on people—for industrial relations. That may sound rather strange, but what I mean is this. I think it is clear that bad industrial relations are a factor in the crippled state of our economy, and that better industrial relations would contribute to our economic health. But one of the problems about improving industrial relations is that, so often, the motive is not there, because the sides concerned are so bound up in the mistrust that has been created between them that the motive does not get through to achieving something better.

It seems to me that the realities of what is happening to the people who are not in work are something very new to our generation, and something very terrible, as has been talked about tonight. They should be brought home, wherever possible, to those who have to do with finding better relationships and therefore better ways of doing their business in industry, in terms of what the combination of bad industrial relations and a bad economy is doing to 4 million or 5 million people.

This is a new sort of humanitarian motive, a motive which could settle on to people's consciences—and people have consciences—in their general business of trying to get better understanding together about making our industry and our economy work better. I suppose that there are departments of the Government which have to do with industrial relations, and it is not fanciful to think that that might be an aspect of things which they could impress upon people, and which those of us who have contact with people in industrial concerns at a local level could also do.

7.56 p.m.

Lord Bruce of Donington

My Lords, the House will be indebted to my noble friend Lord Molloy for having put down this Unstarred Question tonight. We shall be looking forward to what the noble Lord, Lord Trefgarne, has to say in reply. But, first, we on this side of the House should like to express our appreciation of the noble Lord, who has been engaged today on the British Shipbuilders Bill, then had another session and is now going to reply to this Unstarred Question. We should not like the occasion to pass without paying some tribute to the noble Lord's hard work which started at the beginning of this afternoon.

I hope that the noble Lord, when he replies, does not merely set out a catalogue of the various things which the Government have done in amelioration of the economic situation as it now exists. We are all very well aware of them—the small business schemes, the efforts to reinforce regional funds, aids and so on—and are deeply grateful for them. So if the noble Lord intends to read out a lot of the Government's actions that have already been taken, may I at once say that they have no real impact on the main problem, and that the Chancellor of the Exchequer himself has envisaged circumstances where even the current astronomical level of unemployment is still due to increase. It is the actions that the Government propose to take in relief of the basic situation that really concern us.

The right to work is surely one of the basic rights and liberties within a free society. The right to work, to create things for consumption or for the service of one's fellow human beings, under conditions of dignity and freedom, is surely an aim to which any society or any Government should direct itself. It should be the first priority. Indeed, it is a matter of common sense, in one way, for my noble friend Lord Soper to say that, although he himself is not an economist and views economists with the deepest suspicion, with which I entirely sympathise, it does not make any sense for people to be paid to be out of work and doing nothing, when they are fully capable of producing goods and services which can be used by their fellow citizens. Whatever the economists may say, this is the plain common sense of the matter. It is irrefutable.

We want to know what fundamental steps the Government are going to take, bearing in mind their own commitment. I do not want to reproach the noble Lord in party terms too much, because he has been so assiduous today in the application of his labours, but he will undoubtedly recall the election call of Mrs. Thatcher, stigmatising the Labour Party as the party of unemployment: "We are the party of employment". The noble Lord will recall the poster, with which he may possibly be reproached in June or October, which showed exactly what that meant.

One is well aware—it would be wrong to say otherwise—that in the main the members of the party opposite are quite compassionate, in their own minds, about the unemployed. One would not say, with certain exceptions, that the party opposite or the Government are composed of people who are deliberately cruel. But surely one has to examine not only the things they are doing but the motives which inspire them. The Government themselves eschew any formal economic philosophy other than monetarism, and they are beginning to abandon monetarism. In fact, their stance in front of the country is that this is quite the natural order of things: there is a world depression and, sooner or later, automatically, for some reason or [...], we shall all get out of it; as long as we are all competitive (I do not know what will happen if everybody is equally competitive throughout the world, for that produces another situation) everything will be all right.

So what is the motive behind what the Government have done, what they are doing and where they propose to go? I thought it was rather revealing when the Prime Minister enunciated the other day her Victorian values. She announced them with some pride. They were incorporated in the Standard of 15th April, under the banner headline "The Good Old Days". I put it to the noble Lord, I put it to the House and, if I have the chance, I will put it to the country, that the main, compelling drive behind what the Government are doing lies in their nostalgic regard for the old values, for the Victorian values. Mrs. Thatcher said: I was brought up by a Victorian grandmother. We were taught to work jolly hard. We were taught to prove yourself. We were taught self-reliance. We were taught to live within our income. You were taught that cleanliness is next to godliness. You were taught self-respect. You were taught always to give a hand to your neighbour. You were taught tremendous pride in your country. All of these things are Victorian values. They are also perennial values". I do not think I am being unfair to the party opposite when I say that among their serried ranks, particularly in the higher income levels, these values strike a chord. These are values which they would like to get back to, if they could. It is therefore necessary for us to remind ourselves of the consequences of the adoption of these Victorian values.

In Victorian times and, indeed, until the middle of the 1930s, one in every six individuals in the United Kingdom was employed in domestic service. In the Victorian era there was sweated labour. The Victorian era was the era of the Poor Law. The Victorian values of those days considered it to be morally wrong that when husband and wife went to the workhouse they should live together. They were segregated. These are part of the Victorian values.

I am not saying that the party opposite apprehends that it could ever get back to those precise circumstances, but those are the values, the selfish values and their expression, to which the party opposite would like to hark back. It would suit them to have the restoration of privilege and power. I personally believe that nostalgia for the adoption of these values lies at the base of the Government's policies. They would like not a total restoration, because they could not get it, but a partial restoration of the kind of life they used to lead. The noble Earl, Lord Ferrers, was kind enough to inform the House two years ago that the Prime Minister was the daughter of a grocer. Perhaps one ought to remind the Prime Minister that in Victorian days grocers had to use the tradesmen's entrance. These are all salutary matters to which one ought to address oneself, because those who will the means are at the same time willing the ends.

I was particularly glad that the right reverend Prelate the Bishop of Lincoln took part in this debate because I was educated in a little town in his diocese. The motto of my grammar school was, "Delight to be just". That motto has sustained me throughout my life and very largely lies at the root of my being a member of the party which I have the honour to represent in this House. The main trouble to which the right reverend Prelate referred, perhaps indirectly, in the course of his speech was that if 4 million people are going to be condemned indefinitely to unemployment, the Government will build up such a bitterness and hatred that it will poison industrial relations for another half a century, with all the disastrous consequences which the right reverend Prelate [...] and upon which he touched.

This is not a situation which one can contemplate with any complacency, however much one may appreciate the various ameliorative items and steps which one likes to feel were introduced by the Government as a deliberate act of policy rather than as a response to public pressure and which no doubt the noble Lord will recite in the course of his reply to the debate. A much more radical approach which goes to the root of the whole matter is required. Unless an effort is made by the Government to go to the root of the matter and to take action of real significance, I myself—I say this with a sense of due responsibility—am fearful for the preservation of social cohesion within the democratic society in which we live and within a country of which we ought to be very proud.

8.10 p.m.

Lord Trefgarne

My Lords, may I start by thanking the noble Lord, Lord Bruce of Donington, for the kind remarks he addressed to me at the outset of his speech. I shall endeavour to return them by saying that every time I rise to this Dispatch Box it seems to be in reply to a speech made by the noble Lord, Lord Bruce of Donington. I hope that that at least is for your Lordships' edification.

The noble Lord, Lord Bruce of Donington, during the course of his remarks, implored me not to recite a list of all that the Government have done. But in replying to this debate I must address myself to the Question on the Order Paper and to the remarks made by the noble Lord, Lord Molloy, when he asked his Question. I am sure that noble Lords in every part of this House are deeply concerned about the distressing level of unemployment. Where we disagree is, of course, on the policies required to bring about the reduction in unemployment for which we all hope.

This Government's policies continue to be directed towards achieving a sustainable increase in output and employment through the creation of the right financial conditions to bring down and keep down the rate of inflation, and from measures to promote enterprise and iniative and to improve the performance of our economy. I know that a number of noble Lords tell us to try to follow the example of Governments of the 1950s and 1960s (and the noble Lord, Lord Molloy, referred to the American Governments of the 1930s) and expand demand at home by spending substantially more and taxing substantiallly less. I am afraid that it would not work. It would not work because there is no shortage of demand. On the contrary, it is up by 4½ per cent. since the spring of 1981. The trouble is that too much of it is still being satisfied from imports; and that would happen all the more were we to set the printing presses working overtime. As we discovered in the 1970s more than 90p of every extra pound of "pump-priming" public expenditure primed prices and imports, not domestic output. The response would be as bad, or worse, today.

The continuity and firmness of our policies has already made a major contribution to reducing inflation—now down to an annual rate of just over 5 per cent.—and to bringing down interest rates. Bank base rates are currently six points below their peak in October 1981. The 1983 Budget, like its predecessors, was formulated within a stable medium-term financial framework for our public spending and borrowing plans. It brought positive help to individuals and businesses, including a further cut in the National Insurance Surcharge—the so-called "jobs tax".

We have also scrapped many of the regulations which stifled enterprise and initiative under our predecessors. Price controls, pay controls, dividend controls, hire-purchase controls, foreign exchange controls, industrial development certificates and office development permits have all gone; and we are pressing ahead with our plans to restore public sector industries, wherever possible, to private ownership, and to reduce the size of the public sector.

This Government have, therefore, already done a great deal to create the conditions for economic growth and a reduction in unemployment. But industry must recognise that it, too, has an important role to play if the recovery, already under way again, is to flourish and sustainable job opportunities are to be increased. We need to go on reducing the size of the pay increases we award ourselves if we are to improve our trading performance and secure a reduction in unemployment. Industry also needs to improve on quality, design and delivery dates, and all the other non-price factors of competitiveness, so that British goods are world-beaters, whether sold at home or abroad.

The latest statistics indicate that the United Kingdom recovery, after faltering early in 1982, as the impact of the world recession was felt, is now gathering momentum. Real domestic demand is increasing strongly—by some 4½ per cent. between the spring of 1981 and the fourth quarter of 1982. Consumers' expenditure increased by around 3½ per cent. during 1982 and continues buoyant as inflation and interest rates remain at low levels. Industrial output in the three months to February was around 3 per cent. above its trough in 1981. In manufacturing industry, too, there are signs of recovery; the latest three months have seen an increase of over 1 per cent. on the previous three. And the CBI's March inquiry points to continued recovery in industry over the coming months.

An essential part of the strategy I have outlined has been a need to restrain the growth in public expenditure and, regrettably, social security benefits could not be excluded from this because the social security programme forms 29 per cent. of all public expenditure. But we have taken care to make savings in such a way as to protect, and indeed sometimes to improve, the lot of the poorest among unemployed people. Thus it is that supplementary benefit—the safety net—has been fully price-protected throughout the Government's term of office. More than that, it has been improved for many families with children by the changes in scale rates which we introduced in 1980 when we merged the rate for a child under five with that for a child under 11, at the higher rate, and did the same for children between 11 and 13 and those aged 14 to 16. Further help has been given to those families with children under five during our term of office, by our giving them automatic heating additions, now worth £1.90 a week.

Noble Lords will know that last year we changed the rules to enable unemployed people over 60 to qualify for the long-term scale-rate after one year in receipt of supplementary benefit. Some 40,000 claimants have gained from that change. This year we shall do better, by extending this higher rate to all claimants over 60, without their needing to serve a year's qualifying period, and this will give increased payments to a further 42,000.

Another significant improvement, which I explained to your Lordships in response to a question from the noble Lord, Lord Monson, on Tuesday, is that we have increased the capital limit for supplementary benefit from £2,000 to £2,500 and this will go up again to £3,000 from November—a 50 per cent. increase since November 1980. This will be a particular help to unemployed people who have received redundancy payments. At the same time, we will introduce a disregard of insurance policies with a value of up to £1,500, and increase the capital limit for single payments for supplementary benefit to £500.

We have, of course, made some changes which have helped unemployed people who are not receiving supplementary benefit. I have referred on more than one occasion in your Lordships' House to the 5 per cent. abatement of unemployment benefit, but your Lordships will know that that is to be made good this year; the noble Lord, Lord Banks, referred to this in his speech. Child benefit has maintained its value, and will increase in real terms this year and this is a gain for those unemployed who receive unemployment benefit without supplementary benefit. We have further helped people in this category by increasing the amount of earnings which they may receive before it affects their unemployment benefit, from 75p a day (a level which had obtained since 1972) to £2 a day. The new housing benefit scheme which came into full operation this month will also be of benefit to the unemployed. Those on supplementary benefit will be passported to receive 100 per cent. rebates and those on unemployment benefit will receive rebates, depending upon what other income they may have.

A common complaint from the unemployed used to be that they were prevented from doing voluntary work or otherwise using their time to be of value in society because of the strict rules on availability which applied to benefits. We have relaxed these rules, making it much easier for unemployed people to take part in these activities, which are so good for morale. These changes include extending benefit to people who go on work camps for up to a fortnight.

We used to get complaints from time to time from people aged over 60 who had to sign at an unemployment benefit office in order to get credits to preserve their pension rights. As from this current financial year, we are awarding credits automatically to such people so that they no longer need to sign on for this purpose and their pension rights will be fully protected.

Benefit paid to unemployed people costs a lot of money. The overall cost of unemployment benefit and supplementary benefit to unemployed people is £4,910 millions in the financial year just ended, representing 17.2 per cent. of all spending on social security benefits or 4.7 per cent. of public expenditure as a whole. I have only to quote such a figure to indicate why it is difficult to do more, given the constraints of which we are all aware.

One question often raised is whether we will pay the long-term scale rate of supplementary benefit to all of the unemployed. Lord Banks referred to that. I have already explained how we have done more than any previous Administration by paying this higher rate to the over-60s. To extend the rate to all unemployed people who had been receiving benefit for a year or more would cost £395 million, while to pay it after that time on benefit to families with children would cost £190 million in a year. The Government have made it clear that we accept in principle the case for this extension but the resources simply are not available at the present to enable this to be done.

While talking about costs, perhaps I may say a few words about the new version of the tax credits scheme about which the noble Lord, Lord Banks, has spoken, and with whose name it was associated in the newspapers this morning. We will, of course, very carefully examine the new scheme. I am sure noble Lords would not expect me to respond in detail now, but even the Liberals themselves admit that their new scheme will involve substantial redistribution, with many losers, and indeed, for many, a marginal tax rate significantly higher than it is now. This new Liberal scheme, which is claimed to take the edge off the poverty trap, I must say seems to sit a little oddly with the SDP's scheme in their paper.

I have talked so far about the benefits received by unemployed people, but I think I should close by mentioning some of the special schemes which the Department of Employment have brought in and which help unemployed people in other ways. I would draw attention especially to two projects. The first is the Youth Training Scheme. This will guarantee places to 16 year-old school-leavers who cannot find work, providing useful training which should stand them in good stead during their working lives, when, as we all hope, jobs become more readily available for them. The other is the Community Programme, providing 130,000 places for the long-term unemployed, enabling them to do worthwhile work and to be paid for it—perhaps not as much as we would wish, but no one will be worse off than on benefit and most will be better off. In all, the Government will be spending some £2 billion in 1983–84—despite the necessary curbs on public expenditure—on a wide range of employment and training schemes which bring direct help to some three-quarters of a million people.

The noble Lord, Lord Soper, referred in his speech to a document which I think he said he had helped to launch today. I hope the noble Lord will allow me to have a copy of that; I would certainly very much like to study it. The right reverend Prelate the Bishop of Lincoln referred to the difficulties of industrial relations. Perhaps there is no better example of the effects of bad industrial relations—and I make no assignation of blame in this case—than the current situation at British Leyland, where, clearly, employment is threatened by the industrial action taking place there.

I want to end principally by refuting the suggestion which I think was implicit in some of the things said by the noble Lord, Lord Molloy, that we somehow did not care about the substantial number of unemployed people that there are at the present time. I do assure your Lordships that we do care. I certainly care. At one or two moments in my life I, too, have been unemployed. I can remember going to the Department of Employment in the town where I live and claiming unemployment benefit. It is something I hope I shall never have to do again. But the way to stop that is to get the economy really going again. I think we would be doing the unemployed people of this country a grave disservice if we were to follow some of the suggestions put to us tonight.

House adjourned at twenty-five minutes past eight o'clock.