HL Deb 27 July 1983 vol 443 cc1532-5

3.5 p.m.

Lord Jacques

My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government, if British industry has improved its competitiveness as much as they claim, why the percentage of unemployment in the United Kingdom is 4.4 points higher than the average for OECD countries when United Kingdom unemployment was only 0.4 points higher in 1979.

The Minister of State, Privy Council Office, and Minister for the Arts (The Earl of Gowrie)

My Lords, until 1981 wages were increasing more rapidly in the United Kingdom than in other countries, our competitiveness fell substantially and our unemployment rose very steeply. Since 1981, however, we have regained a good deal of ground. Our competitiveness has recovered very substantially and our unemployment is now rising more slowly than in many other countries.

Lord Jacques

My Lords, I thank the Minister for that reply, but is he aware that from 1979 until the beginning of the present year the fall in inflation in the United Kingdom was only one point more than it was for the OECD countries but our unemployment was four points greater than for the OECD countries? Does this not indicate that had the Government used wisely all the measures available for restricting inflation, they would have achieved their objective without so much hardship for our people?

The Earl of Gowrie

No, my Lords. Unemployment has risen more in the United Kingdom than in other countries over the whole period since 1979 for two reasons: first, our problems were more deep-seated than theirs, and, secondly, if the United Kingdom wage bargainers had reacted more quickly to outside events in the period from 1979 to 1983 the rise in unemployment would have been less.

Lord McCarthy

My Lords, would the noble Earl not agree that on the three tests of our comparative employment performance we have got much worse in terms of the absolute level, the rate of increase and the size of our employed labour force? Does he not agree that in each one of these three ways the record is much worse than it was in 1979?

The Earl of Gowrie

No, my Lords. First of all the United Kingdom total labour force is at the very high end of those of our competitor countries, and secondly, as I pointed out in my original Answer, in the past 12 months OECD standardised rates show increases rather greater than ours.

Lord Ezra

My Lords, is the noble Earl aware of the fact that the consensus of economic forecasts is that the present high level of unemployment is likely to remain for at least another year and possibly two? In view of that very serious prospect, what are the policies of Her Majesty's Government to alleviate that situation?

The Earl of Gowrie

My Lords, my own judgment would be that very high levels of unemployment will remain throughout the Western countries for the rest of the decade.

Viscount St. Davids

My Lords, I am sure that the noble Earl will agree that unemployment on the European level is very understandable, but will he also agree that the extra unemployment that we have suffered is due to feather-bedding coming home to roost?

The Earl of Gowrie

My Lords, I think that the noble Viscount has put it most succinctly. I refer the House to the article in the Standard yesterday written by a member, or perhaps a former member, of the Labour Party, Mr Brian Walden, which pointed out that the protection of jobs costs more jobs in the longer run.

Lord Mackie of Benshie

My Lords, does the noble Earl's previous answer mean that the Government are content to see unemployment remain at the present level for the next seven years?

The Earl of Gowrie

No, my Lords. To recognise factors and economic forces at work in the Western world does not mean that one is satisfied with them.

Lord Beswick

My Lords, will the noble Earl not agree that whatever feather bedding there was, it was more than exceeded in damage by the degree of underinvestment? Will he not also agree that one of the most worrying things about the present situation is that on the one hand we have this high degree of unemployment and on the other hand the great degree of need in our society?

The Earl of Gowrie

My Lords, I certainly agree with the noble Lord, Lord Beswick, that investment is essential; but with all of his experience of industry, he will know that nowadays investment is nearly always to save labour and not to add to it.

Lord Mishcon

My Lords, while I appreciate, as I am sure does everyone, the art of the noble Earl the Minister in defending questions, may I ask him whether he can please be positive and answer the noble Lord, Lord Ezra, as to what are the Government's policies in order to try to keep down this dreadful unemployment?

The Earl of Gowrie

My Lords, as I indicated in my earlier answer, the Government's policies are to set a framework of sensible fiscal and monetary management, in order that the firms of this country can become more competitive in relation to those abroad. That will save jobs and generate more jobs.

Lord Morris

My Lords, does not my noble friend agree that investment in certain loss-making industries should not be dignified by that term?

The Earl of Gowrie

My Lords, as I indicated earlier, it is certainly the case that under successive Governments in this country—I make no party point here—there has been a tendency to try for the noblest of reasons to protect employment, but at the cost of a greater shake-out of labour later as we lose competitiveness internationally.

Lord Roberthall

My Lords, docs the Minister's reply to the previous supplementary question mean that the Government are indifferent to the effect of the exchange rate on competitiveness?

The Earl of Gowrie

No, my Lords; and the noble Lord will be aware that the exchange rate has become more competitive in recent months.

Lord Hankey

My Lords, in view of previous experience of this country in moving out of recessions when British industry has been terribly slow to get going, may we take it that the Government will be giving industry every possible encouragement, by abolishing, or removing, the obstacles which make it harder for business to progress? I am thinking of such matters as the special tax on motorcars, the poor communications with many of our ports, and the bad conditions in the ports, which make it hard for exports and imports to move. May we in general ask the Government whether they are really devoting every possible means so as to get industry going?

The Earl of Gowrie

My Lords, I take the point of the noble Lord, Lord Hankey, and it is the central thrust of the Government's policy to try to discipline and contain the very many and wholly legitimate demands on its own spending in order that more resources are available for industry. I am glad to say that there has been some encouragement here and that is why, as I said originally, the present figures for this country in comparison with our OECD competitors are very good.

Lord Spens

My Lords, will the noble Earl agree that the level of unemployment is directly linked to the total number of jobs available, and that with the rapid increase of technology the total number of jobs available is likely to decrease over the next few years, and therefore the level of unemployment is not likely to go down?

The Earl of Gowrie

My Lords, this is a very large question, and I do not know whether I can exchange ideas about this vital subject by means of question and answer. But certainly it would seem to me that if we do not proceed along the lines of greater investment in high technology, our overall wealth base will shrink, and that will not generate employment—rather to the contrary.

Lord Jacques

My Lords, is the Minister aware that there is a large body of competent economists which believes that the most important factor causing our unemployment is the selection of methods of controlling inflation used by the Government? Is this not supported by the very low rate of unemployment that we had in 1979 compared with OECD countries?

The Earl of Gowrie

My Lords, I think that the noble Lord, Lord Jacques, will have to concede that that same highly respectable economic opinion has been advised to nearly all Western Governments of widely differing political complexions—obviously I am thinking in particular of France—and that when put into effect the advice has not proved able to generate employment.