Job Creation Initiatives

HL Deb 02 November 1983 vol 444 cc564-610

3.11 p.m.

Lord Byers rose to call attention to the need for new initiatives in the field of positive job creation particularly for those who already have trained or are being trained and those who possess skills which are not being put to proper use; and to move for Papers.

The noble Lord said: My Lords, I have put down the Motion, which I beg leave to move, in order to offer the House an opportunity to discuss some of the ways in which more useful and more effective jobs could be created. At the outset, I should like to welcome the many initiatives which are being taken to train and retrain people who are unemployed. Such training, if it is properly orientated towards the skills which are likely to be most in demand in the near and the medium-term future, is invaluable. Unfortunately there are too many cases where training opportunities are not being taken up either through ignorance of their existence or through poor communications.

This applies particularly to the Youth Training Scheme, into which so much time and management effort has been put by so many employers. Those who are constantly expressing scepticism about the Youth Training Scheme and those who oppose it—as I understand NALGO does—do a great disservice to our young people in this country. The truth is that work experience and training give a young person a far better chance of getting a job than they would have without it. I think one must also recognise the many successful initiatives which are today being taken by the 150–odd enterprise agencies by such organisations as Business in the Community and other voluntary' organisations, which are resulting in positive job creation, particularly, if I may say so, by helping small businesses to start up or to expand.

Unfortunately, in relation to the size of the problem, these make a relatively small impact but that impact is an important one. Many small projects add up to something fairly substantial and should be encouraged. The London Enterprise Agency, which I and a few others played a part in founding, has since its creation been involved in helping to create or to save over 4,000 jobs. The British Steel Corporation's industries have created 20,000 jobs. That is no mean feat.

Having said that, I should now like to explore with the House some specific policies which I believe would result in a very substantial number of new jobs if they were adopted. A number of these jobs were put forward by the Select Committee of your Lordships' House on unemployment, which was chaired by my noble colleague Lady Seear. I regret that such a valuable report as this—and I notice that some noble Lords who have put their names down to speak today were on that committee—has not been given much more attention by the Government in the past year. For instance, the committee pointed out the relatively low net cash cost to the Treasury of keeping people in employment rather than paying them unemployment and other benefits, quite apart from the social gain of taking people out of the dole queue.

My first proposition therefore is that jobs for people in the low pay sector of the market constitute a relatively low net cost to the Treasury when one looks at the cost of unemployment and supplementary benefit and also the cost of rent and rates rebates and the gain from income tax and national insurance contributions paid when a person has a job. This is an equation which is very worth while studying, as the Select Committee did when they recommended very sympathetically on it. But this is neither recognised nor accepted by the present Government. In fact, with their across-the-board, non-selective cuts, they seem to have set their faces against positive job creation and I think that is totally unacceptable.

My second proposition is that there is a strong investment case for selective capital projects or for the carrying out of long-deferred maintenance schedules, especially, as the Committee noted, in housing, sewer replacement and road maintenance. As I have said before to your Lordships, these jobs will have to be done some day. Why not now? To put off these decisions will only make the projects more costly when they come to the point that they simply have to be done because they cannot be put off any longer.

The Select Committee thought that the 1982 Government programme of capital spending in these areas should be trebled. It could be far larger than that, particularly in building construction. Moreover, a large building and refurbishing programme sets up an instant additional demand for British-made goods, not only for structural materials but for fixtures and fittings. Unfortunately, the Government have decided to adopt the opposite policy of reducing home improvement grants. That is inevitably going to slow down the refurbishing programme in the local authorities, and it is going to have a direct effect on jobs. This I believe is a tragedy. It has far wider implications than the obvious wasted opportunity in the employment field. The noble and learned Lord, Lord Scarman, in his report on the Brixton disorders, emphasised most strongly that poor housing was one of the most significant factors in the background of the Brixton disorders. A figure of 12,000 houses in Lambeth were defined in that report as having been reported unfit in 1980. A further 8,000 lacked one or more basic amenities. There is probably an overall shortage of 20,000 dwellings in that area. Can this be the right time to cut down on the home improvement grants? It seems to me to be political madness. These represent clear opportunities—nationwide, not just in

Lambeth—for putting men and women to work to meet the needs of the community. The Government's policy of reducing the finance available to tackle this problem and provide jobs is to me quite inexplicable.

The third area in which I believe there is real scope for positive job creation is in the environmental and conservation field. The Manpower Services Commission Community Programme envisages conservation and similar projects involving about 200,000 people in a year, but only for a year. At present I understand that the numbers employed on purely environmental improvement are only 32,000 or so. I believe that we ought to give serious thought to creating something like a permanent force in the conservation field, rather on the lines of the American Conservation Corps. There is plenty of work to be done if we had the troops to do it. We have available unused managerial manpower—a lot of it—to manage many more such schemes, and among the unemployed there must be at least several hundred thousand people who would prefer to undertake such jobs rather than to exist in idleness. But they need organising; there must be some encouragement and initiative. What is more, this is a conservation area and an improvement area which lends itself not only to local initiatives but to close co-operation between central Government, local government, the private sector and the voluntary agencies.

In some areas this is already happening but in others it will need a positive lead by the local authorities, by a chamber of trade or commerce, by enterprise agencies or trusts or by the voluntary agencies themselves. Such programmes need not be a substantial burden on the state or on the rates; and I believe that real benefits will accrue from them.

It is becoming recognised in the enlightened private sector that improving the environment in which firms operate is good for business and that involvement in the local community makes a great deal of commercial sense. What is more, the community programme, which could be the agent for a great deal more of this, is extremely cost-effective. The contribution in cash and manpower by the private sector is steadily increasing, despite the present recession.

There are other sectors of the society in which we live where our present policies could be challenged as being anti-social and short-sighted. In looking at job creation, the Select Committee said that the public service sector is capable of taking on more labour, productively, in several areas, including the National Health Service, particularly those parts of the service which care for the mentally sick, the elderly and the disabled, and other areas of special provision. This is where the across-the-board cuts are a total nonsense when one is dealing with this type of investment of manpower.

The greatest need, they said, was for nursing auxiliaries and essential support staff, including domestics, ward clerks, porters, cleaners and maintenance services—all of them highly labour intensive. The committee expressed the view that the social services provided by local government, which have been subject to cuts in recent years, could well be expanded, particularly the domiciliary services, home helps and workers involved in the day-to-day care of old people in their own homes. This is a much cheaper and a much more satisfactory method than providing residential accommodation.

Many more such proposals are listed in the committee's report, but these are totally at variance with the declared Government policy of cuts and more cuts. Moreover, I see nothing inconsistent in improving administrative efficiency by cutting down on bureaucratic over-manning and employing more people in the front-line jobs—caring for the handicapped, the disabled and the elderly. This should be a priority of social policy.

Similarly, the urban aid programme. I express the hope very sincerely that there is no truth whatever in the reports that this programme might be cut by half next year. This would be quite appalling and very short-sighted. It is through this urban aid programme that many jobs are created, particularly on self-help and community projects.

Two other aspects need attention. I should like to suggest that the snail-like bureaucracy of local government—very often the fault of the councillors and not the staff—is affecting job creation in many council areas by seriously reducing the tempo of the decision-making process. I could give one example, but there are plenty of others. In some councils which have thousands of houses in varying states of disrepair there is plenty of interest by the banks, the building societies, the construction industry and the voluntary agencies to undertake much needed refurbishment programmes for which home improvement grants are theoretically available.

One particular model is for a voluntary organisation to buy up derelict property, then to obtain a home improvement grant and, eventually, to sell the housing unit on a non-profit making basis and plough the proceeds back into a revolving fund. The purchaser then finds that he can get a mortgage from one of the major building societies which are only too anxious to lend the money. Unfortunately, in some council areas it takes up to one whole year to obtain a home improvement grant and there is often an avoidable delay in paying progress payments to the builders. In this sort of atmosphere, people lose interest and justifiable frustrations begin to build up.

There are many ways of dealing with this problem, which is preventing job creation. First, I believe, is the need to develop a standard form of application for the home improvement grant, which should be agreed by local government and the lending institutions. It should be completed by the owner or the agent for the property and the banks or the building societies. In that way, the problems can be ironed out at the very beginning, instead of cropping up during the course of the applications. I believe that those institutions should then be empowered to hold the grant in escrow and to pay out progress payments to the builders as and when they are required. This would give a much greater professionalism to the whole of the business, and it should cut out a great deal of the red tape. If more local jobs are to be created it is essential to speed up the local processes and procedures, and there is a very obvious need for much closer co-ordination of policies and practices at the very top.

Unemployment and the need for jobs constitute a national crisis of a very high order, and what is needed is the benefit of crisis management and proper co-ordination among the Secretary of State for the Environment, the Secretary of State for Trade and Industry, the Secretary of State for Employment, the Manpower Services Commission and others involved, with a committee of the highest level to deal with this critical situation.

It is my contention that a great deal more could be done to create genuine jobs by judicious and selective capital investment without risking inflation, and at a relatively small cost to the taxpayer and the ratepayer, but these opportunities are being ignored or frustrated by Government policies. No one expects to achieve zero unemployment, but we could, with imagination and effort, make a considerable reduction in the present figures by a reappraisal of the policy of cutting public expenditure in areas where this will only increase the numbers of those out of work. If the choice is between public expenditure cuts across the board or tax cuts. I believe that tax cuts should be given the lower priority. My Lords, I beg to move for Papers.

3.27 p.m.

The Minister of State, Scottish Office (Lord Gray of Contin)

My Lords, I listened with great interest and care to the noble Lord's speech, and I thank him for the generous comments which he made on the measures which the Government have already taken in order to try to alleviate unemployment. I felt that he gave with one hand but he then tended to take away with the other, and I shall try to develop an argument which I hope will counter some of what he said. although there is no doubt that we share the same concern about unemployment. And the Government do care about unemployment. They understand the hardship and the distress experienced by those who are out of work, and by their families. They appreciate the waste of the nation's resources in terms of people's skills and talents. Of course we want to see more jobs and growing prosperity, but there are no easy answers, no quick solutions. That is not to say that the Government do not have a policy to deal with unemployment—quite the contrary. Our policy is based on understanding the problems with which we are dealing.

Today's unemployment is the outcome of years of decline in Britain's economic performance relative to that of our competitors, combined with the effects of world recession. In a country as dependent on trade as is the United Kingdom, tougher world markets were bound to have an impact, and our lack of competitiveness became apparent. If I may illustrate, between 1955 and 1980 our share of world trade fell from 20 per cent. to only 10 per cent., and between 1975 and 1981 our international competitiveness, measured in terms of relative unit labour costs, fell by no less than 55 per cent., while that of, for example, France and Germany was steadily rising. During the 1970s, output in this country rose by about 17 per cent. and wages by no less than 350 per cent. We were paying ourselves at levels which were not justified either by increases in output or by improvements in productivity.

Of course the problems of rising inflation and unemployment have also been experienced by other countries. There are now some 11.7 million people unemployed in the EEC alone, but in Britain the problems of the recession came on top of long-standing decline in industrial performance. Our policies result from facing up to these problems honestly, particularly the damaging effects of continuing high inflation. We have recognised that the only way to create real and lasting jobs is for British industry to become more competitive—to produce goods and services of the type and quality people want and at a price they are prepared to pay, thus increasing our share of domestic and international markets. So our strategy has been to try to create the economic conditions in which industry can achieve this and employment opportunities can be generated. Above all, this has meant reducing inflation, which requires pursuit of monetary and fiscal policies to control the money supply and reduce the growth in the Government's borrowing requirement.

There are clear signs that this policy is working. Inflation is firmly under control. Industrial production is 21 per cent. higher than a year ago, and 6½ per cent. up on 1981. Output per head in manufacturing is currently between 15 and 20 per cent. higher than at the end of 1980. Car production has risen by 23 per cent. in the last 6 months, and is 28 per cent. higher than a year ago. Consumers' expenditure in the second quarter of this year was 5 per cent. up on a year earlier.

Of course it will take time for economic recovery to generate the new jobs we all want to see, but the rate of increase in unemployment has been slowing up. In the last six months, the underlying level of unemployment rose at an average of 15,000 a month compared with an average of 27,000 a month in the previous six months. And the types of jobs available in the future are likely to be very different. The most striking feature in the labour market over recent years has been the decline in employment in manufacturing and the rise in employment in services.

This structural change requires a process of adaptation, and the Government are doing all they can to help through a number of schemes. We are encouraging the development of new technologies, which present excellent opportunities to British industry, and we are taking measures to help ensure that our workforce is better placed to provide the knowledge, skills and experience which employers in this country are now looking for.

Training is one means of achieving the flexible workforce we shall need. Training is primarily the responsibility of employers themselves. For them to invest tens of thousands, if not millions, of pounds in new machinery and technology but to fail to invest the tiny amount, by comparison, that is needed to train the workforce to operate those processes at optimum effectiveness is short-sighted, to say the least. The Government, however, have an important part to play in supporting employers' efforts by provision of training in areas of particular demand. Over £200 million was spent on training adults last year.

Of course there is no cast-iron guarantee of a job at the end of a course under the Manpower Services Commission's training opportunities programme. But trainees receive help from their course instructors in finding employment and, in the case of those who train at skillcentres, from placing officers attached to the skillcentre. One of the best ways for trainees to get jobs is to make sure that the training they are given meets a clear demand in the labour market for those skills. There is no point in training people in out-of-date skills; it is simply a waste of money and effort. So the Manpower Services Commission keeps its training programme under careful review to try to ensure as far as possible that their results justify the costs.

But to meet the needs of today's industry and that of the coming decades we must move away from the traditional patterns of vocational training. A principal objective of the Government's policy on training is, therefore, the modernisation of skill training, to break away from time-serving and age restrictions. This would allow more flexible access for adults to train or retrain during their working lives in order to meet changing demands for skills.

Another major feature of the Government's approach to ensuring that in the future we will have a better trained and more flexible workforce is of course the youth training scheme. The scheme is a massive step forward in the way we prepare our young people for work. It means that no minimum age school-leaver now need be unemployed. YTS offers them a year's training and work experience. And I must emphasise that YTS is first and foremost a training measure. The scheme will give young people transferable basic skills which will help them find and retain work. They will be better able to compete for available jobs. Of that there is no doubt. The importance the Government place on this scheme is clearly demonstrated by the resources we are putting into it—some £1 billion in a full year.

The question of what happens to the young people after YTS has been raised. I agree with the noble Lord that this is a matter for concern, but it is much too early to be precise about it, or to predict that large numbers might become unemployed. Many young people will go from YTS into jobs or into further education or training. And, since YTS covers many employed young people as well as unemployed, a large number will continue in their YTS jobs. This is not to say that all young people will find jobs immediately they leave YTS. Youth training is about employability. The only real solution is of course competitive industry which generates lasting jobs. Realistic rates of pay play an important part in this for people of all ages, but particularly in relation to employment opportunities for young people. The Government's young workers' scheme will be especially helpful in encouraging the recruitment of young people at realistic rates of pay that employers can afford.

Training is vital if people are to be properly equipped to take up job opportunities that become available. But training does not itself create jobs. The generation of employment opportunities resulting from more competitive industry will take time. The Government have therefore taken a wide range of initiatives to help those hardest hit by unemployment.

Taking the youth training scheme into account, we shall this year spend just over £1.8 billion on special employment and training measures, and in the next financial year that figure will rise to over £2 billion. The size of this expenditure and the wide variety of our measures amply demonstrate this Government's concern about unemployment.

The measures we operate observe certain principles. They are voluntary; they are designed to be as cost effective as possible in terms of the number of people helped for a given amount of expenditure, and they aim to support improvements in labour market efficiency. They are temporary and can be reversed or altered to meet changing needs, and they try to involve local communities, firms and voluntary organisations in helping the unemployed in their own localities. The cost of the schemes is held down by targeting on the needs of particular groups.

The community programme, for example, is our major initiative to help the long-term unemployed. We will be spending almost £400 million on it this year. This measure operates outside the labour market and aims to provide 130,000 temporary jobs for those who have been out of work for some time. The useful work experience it provides should improve their chances of getting a permanent job. The range of work undertaken on the programme is fairly wide, and those taking part will have the opportunity to use existing skills or to learn new ones. Although it is not, and is not intended to be, a training programme, sponsors are encouraged to provide relevant training and many are in fact doing so. There are also, of course, a variety of other schemes—the job release scheme, the young workers' scheme, the enterprise allowance scheme and the temporary short time working compensation scheme. So the Government are already taking the initiative.

The noble Lord suggested a number of possible new initiatives to create jobs, and I thank him for the constructive approach he has taken. It has been claimed that schemes could be devised that would have no net costs to public funds because the savings in benefits and gains in tax and national insurance receipts would equal or outweigh the expenditure on the scheme. However, experience with the variety of schemes that have been run has so far failed to produce one that meets these conditions. This is not because people on the schemes are paid vastly more than they would have received in benefits but because of the elements of deadweight (subsidising those who would have been recruited anyway) and displacement (creating jobs in one firm or project may destroy them elsewhere) that are unavoidable in such schemes. This means that the reduction in unemployment is always to some extent lower than the number of unemployed people the schemes support. These disadvantages apply both to proposals for schemes to subsidise jobs and to those to create work in the public sector; and with the latter there is also the risk that work which would otherwise have been done by the private sector will be taken from it.

Public investment programmes have important objectives unrelated to their effects on employment. Decisions about such programmes must be taken in the light of many factors, including their wider impact on public expenditure with all its ramifications, and cannot be justified solely on the grounds of their potential job creation effects. So I would ask the noble Lord and many others who advocate spending vast sums of money in this way: where is that money to come from? Higher public spending on employment measures or infrastructure (public capital investment programmes) would mean either less spending in other areas, higher taxation, an increase in public borrowing or some mixture of all three. Each of these ultimately has effects on industry that would be likely to put even further pressure on jobs.

The increases in public expenditure of the order necessary to implement the sort of schemes which we have talked about could rapidly undermine the progress we have made in getting the economy on a sounder footing. In particular, the success we have had in getting inflation under control would be threatened—and I should remind noble Lords that lasting improvements in competitiveness, and ultimately employment, depend crucially on keeping inflation down.

At the beginning of my remarks I said that this Government do care about unemployment. I hope that what I have had to say has amply demonstrated that concern and the real steps we are taking. But we cannot get away from the fact that the Government cannot themselves directly create jobs. Real and lasting improvement in the level of employment which will enable people to make use of their skills in a productive way depends ultimately on a healthy and competitive industry, and it is to that end that our economic policies are firmly directed.

3.45 p.m.

Lord McCarthy

My Lords, I want to do three things this afternoon. First. I should like to thank the noble Lord, Lord Byers, for putting down this Motion and say why I agree with virtually everything he said—although, perhaps, I should also like to say some other things which he did not. Secondly, I should like to see whether I understand what is the Government's slightly different opposition to the proposals in the report of the House of Lords Select Committee on Unemployment as they have been advanced by the noble Lord, Lord Gray of Contin, to see whether I appreciate the slight differences. If I do not, no doubt the noble Lord will be pleased to tell me that I am wrong. Thirdly, I should like to spend just a few moments talking about what I think of the theoretical dogmas—indeed, the prejudices—which lie behind the various excuses, justifications and reasons which the Government put forward for doing nothing whatever, significantly, about positive job creation.

I agreed with the emphasis which the noble Lord, Lord Byers, placed on the need for specific job-led reflation. We are not talking here this afternoon about general reflation which runs into an inflationary consequence and "guts out" six or nine months afterwards. We are talking about modest, specific job-led reflation focused on the kind of jobs which the noble Lord specified and which are contained in the report of the Select Committee. I agreed very much also with that which the noble Lord said about the contrast between the specific proposals for specific. positive job creation in the report of the Select Committee and the crude, unselective. across-the-board cuts imposed by the Government—cuts imposed even in areas where we consider there should be specific job creation.

In addition, I should like to make three points. They are, I believe, implicit in what the noble Lord said. First, surely no one denies the gravity of the present employment position. I do not want to get into an argument about whether we have 3 million, 3½million or 4 million unemployed. We have a very substantial number of unemployed, and, which is more important, we have a higher level of long-term unemployed than we have had since the war. This is the peak period of long-term unemployment; that is to say, unemployment of six months or more. The level of long-term unemployment is much higher among some groups and in some regions. It is high, for example, in the North and in Scotland, and in some constituencies rather than others. It is higher among some groups: among the disadvantaged, among the urban poor, among racial minorities. These are the groups who face the prospect of no employment at all for the foreseeable future. We face the prospect of having increasing numbers of people in this position unless something positive and deliberate is done.

Secondly, there is no significant sign—and I do not believe that the Government wish to suggest this—of an economic upturn of a size, scope or continuation which is likely to significantly affect the position of the unemployed. Whether one agrees with the encouraging people who produce surveys stating that there will be a 2 to 3 per cent. increase in production over the next few years, or whether one takes the more pessimistic forecasts by people such as the National Institute, nobody suggests that there is going to be a significant upturn in the level of employment over the next two, three or four years sufficient to make a material difference to the central heart of the problem of long-term unemployment. No one suggests that.

Indeed, if one takes the optimistic forecasts, and if one takes the most recent from the London Business School, of which the Government's supporters have made much, their optimistic predictions largely depend on their making optimistic assumptions about what this Government are going to do. The single, more optimistic assumption the LBS make is that very soon the Government will lower interest rates and abolish the rest of the national insurance surcharge. We do not know if the Government are going to do that. If they do not, then the optimistic forecasts would be less optimistic. So that is my second point, that even the most optimistic do not assume that anything significant is going to happen which will affect the heart of the long-term unemployment problem.

Thirdly, I should like to say that nobody is really suggesting that we are arguing for a general reflationary policy. We are arguing for a balanced programme, a modest programme, and the only additional point I make is that within that programme of course we must be arguing for an increase in investment in manufacturing industry. We are not arguing that a great deal of money should be spent on the service industries, on the public service industries, without appreciating that money will also have to be spent on investment in manufacturing. What we are saying is that the employment will not come from manufacturing industry, and therefore it must come from the service industries and from capital investment, that that will have to be in both the public and private sectors, and will have to be planned by the Government.

I should therefore like to turn to some of the arguments put forward by the Government in opposition to what we say. It is notable—it was notable in the speech of the noble Lord—that the Government do not say they are completely against all action to improve the level of employment. Indeed they could not say that because, as the noble Lord took credit, there are now something like half a million people affected by the special employment and training measures. It is calculated—but we are never told exactly how it is calculated—that this takes 300,000 people off the dole. I wonder whether the noble Lord knows exactly why the figure of 500,000 goes down to 300,000 and how we know that it is not 400,000 or 200,000.

But nevertheless the Government admit that in principle they put substantial sums of money into forms of job creation. The trouble with them is that most of them are being wound up, like the TSTWC, or they are very small, like the community industry programme, producing 8,000 jobs, or the job splitting provisions producing 600 jobs, or they are very heavily focused on young people. Indeed the heart of the present job creation special employment training measure is the youth training scheme. It was nice to see a slight difference in the replies that we had in that the noble Lord put what they are doing in the youth training schemes in the forefront of his defence that they could not do any more.

Therefore, I want to ask a few questions about how the youth training scheme is going, and I will echo some of the questions which were asked by the noble Lord, Lord Byers. The Government said that they plan to offer some 460,000 places for school-leavers. The Government have told us—at least, these are the most recent figures available to me—that they have at this moment in time identified approximately 451,000 of those 460,000 places. So that is completed. They say that they have approved 268,000 places, so we are falling off a bit. They say they have available 133,000 places to be taken up, but they have not told us much about how many of those places are taken up or are likely to be taken up, when they are likely to be taken up, or whether they now have good reason to believe that they will be able not simply to offer, identify, approve and make available but place 460,000 school-leavers next year.

What I should like to know is how do they think the actual placement is going, because there is a lot of apocrypha, a lot of impressionistic evidence going around—some of which was mentioned by the noble Lord, Lord Byers—that young people are not coming forward, not just because NALGO is not in favour, but because they are not in favour of what they are being offered at £25 a week. A lot of people said that that would be the case; the TUC said that £25 would not be enough. What are the Government going to do if they fill 50,000 places at £25 a week—put the price up? Or wrap the scheme up? Those are the sort of questions which somebody who comes to this House and says "We have put in the forefront the youth training scheme" should be prepared to tell us.

More important still, have the Government yet any estimate—and are they going to give us any estimate—of what will happen to the 460,000 young people (or perhaps it will be 50,000 young people) when they drop off the end of this scheme? That number of school-leavers leave every year. Are we to have another scheme next year, and is that scheme going to re-absorb those who drop off the end of this scheme and do not find a job? I ask that because although we have no figures for the youth training scheme, we have some figures for the last full year of the youth opportunities programme, and they are very interesting. We have them going back for a number of years.

In 1978, when unemployment was 5.25 per cent., 25 per cent. of trainees went back on the unemployment register; so 75 per cent. were in some way engaged. In 1981, when unemployment was 11.7 per cent. however, 56 per cent. of trainees went back on the register. I do not know what the figure is for 1982, but what do the Government think it will be for 1983; what proportion of youth training scheme entrances do they think are going to get jobs at the end of the day? Even the figures I have of trainees returned to the register do not tell me how many obtained jobs; they tell me how many did not obtain them, went back into further schemes, went on to further education or something of that sort.

What we want to know is the proportion of people out of YOP schemes who actually went on to jobs and the proportion that the Government consider will get jobs under the youth training scheme given the fact that the level of unemployment is significantly higher than it was in 1981. Those are the questions the Government should answer, given the fact that they have significantly changed their approach to defending themselves against doing anything further.

I should like, finally, to spend a few moments dealing with what I take to be the theoretical dogmas which lie behind the Government's approach. The trouble with the Government—or with the Treasury, which dominates the Government—is that they now subscribe to a particular view of the way the labour market works which makes it impossible for them to recognise that we have a permanent problem of under-employment. They have to believe that if we could force wages down low enough the natural rate of employment would rise and full employment would ensure. This is the ideological dogma that they are in the grip of.

Keynes said that the economists and Government members in the 1930s were the slaves of defunct economists. This Government is the slave of defunct economists, and the bitter thing is that they are the same economists; some of them are still alive. It is this ideological idée fixe which makes it impossible for the Government to do anything significant about unemployment. Therefore we have to have endless trade union legislation to break trade union power, we have to have the abolition of all minimum wage legislation; therefore. eventually we shall have to have—and the Government are struggling to avoid it—a cut in the effective rate of unemployment benefit because the Government believe that that will lower wages and price people into jobs. All these things have to be done because the Government are the slaves of a number of ancient and defunct economists.

It is no good saying to them that the particular measures they have introduced in the interest of these defunct economists are not working, that they have not got real wages down, that despite the depths of the depression in the four years since they took office the earnings movement has been 47.5 per cent., and the price movement has been 42.8 per cent. It is no good saying to them that this policy of driving down real wages even in the depths of this recession does not actually work, that the abolition of the wages councils has not created jobs and has not arrested the decline of jobs in those areas. Any factual evidence to the reverse of what the Government are saying is not acceptable because there is a theoretical assumption, a dogma, an ideology which is beyond all thought, beyond all reason and beyond all empirical verification. Until the Government change this view and are prepared to realise that supply does not create its own demand, that one cannot force wages down to a point where employment significantly increases, that we have a permanent under-employment problem in this country which cannot be solved, it is true, by general reflation but which must be dealt with by positive measures of long term specific group job creation, this country will continue to drift towards ever higher levels of unemployment.

4 p.m.

Lord Sieff of Brimpton

My Lords, we should be grateful to the noble Lord, Lord Byers, for raising this important issue. Most of those who lead the private sector are well aware of the growing problem of unemployment—possibly the single most important issue facing the country—and particularly youth unemployment and the increasing socio-economic problems which follow. Not enough people do enough about it.

With the permission of the House, I propose to speak from my long experience with Marks and Spencer and its direct involvement in developments which have led, and lead, to increased employment at home. Marks and Spencer has been actively involved from the beginning in the development of enterprise agencies and Government projects such as the youth training scheme and its predecessors. Valuable as this work is—and it is very valuable—it will take time before the results are seen in any substantial increase in employment. We must not, of course, think that these measures alone will solve our problems.

To create wealth in our country with an increase in employment depends considerably upon the philosophies and policies of those who lead major businesses. Marks and Spencer has long had a policy of supporting British industry and wherever possible buying and selling British made goods. This needs a lead from top management. Without such a lead I can assure your Lordships that little will happen. It requires perseverence, patience and determination.

Perhaps I may give the House one or two examples of what can be and is presently being achieved in the field of job creation. Marks and Spencer has an important and developing footwear business. In this year, 1983, of the total amount of footwear sold in the United Kingdom, it is estimated that only 40 per cent. will be produced at home and 60 per cent. will be imported. Of Marks and Spencer's substantial and growing footwear business, some 75 per cent. will be produced in Britain and 25 per cent. imported. Today, as a result of co-operation between Marks and Spencer and its suppliers, certain types of footwear are being produced successfully and profitably at home. It is only two or three years ago that Marks and Spencer was told that if it wished to have high quality and good value it would have to import from the Far East. That proved to be quite untrue.

As examples, I shall with your Lordships' permission, give the names of one ortwo firms who have more than successfully competed with the Far East: Fiona in Wales; Peter Black in Yorkshire; Lambert Howarth in Lancashire and Lotus in the Midlands are all important and growing footwear suppliers to Marks and Spencer. All these firms have modernised their plants and installed labour-saving equipment during the last few years. But, despite modernisation and this labour-saving equipment, they have, because of growing production and demand, substantially increased the numbers employed by many hundreds. All those firms are profitable and all compete in quality and price with the best imported footwear.

Perhaps another example which may interest the House is the development of men's suits. These are not high technology products. They are very ordinary products. Some of us are actually using them. Marks and Spencer started selling men's suits 10 years ago and sought suppliers in the United Kingdom. But the United Kingdom suit industry was in disarray. Factory after factory was closing. British manufacturers could not provide the quality or quantity needed. In the early years it was necessary to import men's suits from Italy, Sweden, Finland and Israel. Less than 10 per cent. of Marks and Spencer's demand was supplied from United Kingdom sources. However, two British manufacturers took up the challenge: Activon in Scotland, who already made suits, developed a special production unit; and Dewhirst, a long established clothing supplier, opened in Yorkshire a purpose-built factory based on Swedish technology. Both have been highly successful.

The Marks and Spencer suit business has increased hugely, and 'today, instead of less than 10 per cent. being produced in Britain, some 60 per cent. will be produced at home this year. Activon and Dewhirst now employ 900 people in modern plants making suits, and a further 300 are employed in making fabric for the suits. So good and competitive is the quality of their products that further substantial developments are planned which will create more jobs.

I remember a discussion that I had a year ago with a leading businessman about supplies from abroad that could perhaps be produced in Britain. He informed me two weeks ago that, as a result of investigation, he has been able this year to buy £500,000 worth of materials at home which last year were imported. He told me—he guaranteed to me—that in the next 12 months he would buy a further £3½ million of home produced materials which he is currently importing. All this increases employment.

Where Marks and Spencer cannot find the quality and value it seeks from British sources, it imports. But it has encouraged its foreign suppliers to open processing and finishing plants in the United Kingdom, thus creating more employment. In the past few years, nine foreign suppliers have invested £12 million in setting up processing and finishing plants in this country. They are now employing about 1,500 people, and the number is growing. This has been of benefit to the overseas suppliers, to the buyer and, of course, to the British economy.

The most recent examples in the past few months are two Israeli clothing manufacturing firms: Polgat, which has set up a plant in Skelmersdale for the finishing and pressing of its suits, currently employs 265 people and it is estimated that by the end of next year this will be increased to 320 people. The overall unemployment rate in Skelmersdale today is 22 per cent. The second firm is Delta. which three or four months ago set up a plant at Lesmahagow in Scotland, where unemployment is 21 per cent. Today Delta employs 50 people, and its chief executive estimates that within eight months the firm will be employing 200 people.

I must re-emphasise that these developments would not have taken place unless there had been a consistent policy emanating from top management, making sure that all concerned with the process of buying clearly understand that it is the company's policy to buy British wherever possible and not to accept that British manufacturers are incapable of competing with foreign sources. A great deal can be done by those responsible for making and selling goods in this country to ensure that more comes from British sources. All too often those who lead take the easy option. Mr. Cassels, Director General of the National Economic Development Office, said recently: Every £35,000 sterling of manufactured goods imported, when we could have made it ourselves, means a British job lost". I have told the House these facts and given these examples in the hope that it will encourage the leaders of British companies who do not have such a policy to do something similar in their own sphere. Such a policy, dynamically implemented, could make a very worthwhile contribution to job creation at home. I must apologise to the House for the fact that I may not be here for the summing up of this debate this evening due to a long-standing engagement which I cannot cancel.

4.11 p.m.

The Lord Bishop of Wakefield

My Lords, I am particularly sorry that my friend the right reverend Prelate the Bishop of Lincoln is unable to contribute to this debate from these Benches today. Through his long experience of industrial mission and his chairmanship of our industrial committee he has a wisdom and insight in these matters which I cannot claim to possess.

In our pastoral work the churches in this country are naturally very concerned indeed—as is everybody in this House—with helping the unemployed and with the creation of new jobs. In our parishes we see all too often the hurt that individuals suffer through losing a job or through not being able to use their skills and abilities in a purposeful way. We know the sense of shock that comes to people when they lose a job and of their loss of self-confidence. Often they experience a sense of betrayal and bitterness before they are able to adapt and adjust. In one parish in my diocese last year a group of men got together to offer support and friendship to those who had been made redundant, but they were unable to make any headway because their unemployed neighbours had withdrawn into themselves. It was not until some of those people had been able to find new work that they found the confidence to speak about the experience that they had been through.

The churches, like so many other voluntary organizations, are in many places offering people premises and other facilities for counselling the unemployed, giving personal support and providing drop-in centres for young people. Until it was phased out they also took their part in the youth opportunities programme. So too the churches today are taking part in some of the new special programmes for the creation of new jobs for adults. I cite one instance in my diocese of working with the MSC as being typical of many other instances up and down the country. We have a community project for 100 young adults. They are working in five different sections. One group is doing decorating, one is repairing property, one is engaged in environmental work and another with the repair and restoration of furniture, and yet another is concerned with administration training: book-keeping, wages, and so on. From our experience this year we reckon that we could next year engage with 500 people on such a project rather than the 100 that we currently have.

Of course, we all recognise, as the noble Lord, Lord Byers, said in his introductory speech, some of the limitations of such a programme. It lasts for only 12 months and then there is the continuing problem of long-term job creation. But there are encouraging signs for job creation. I cite the work of the Venture Trust in our community. In our Wakefield and Kirklees area we have a rather unusual three-part arrangement in which local industry and commerce, the chamber of trade and the local authorities are all working together through the Venture Trust. In its first two years of work the trust has been able to provide over 350 full-time and 80 part-time jobs. This has been very encouraging. The trust is also doing invaluable work through interviewing, counselling and the holding of seminars.

I think that underlying all this there is the basic question about the future shape of work in our society. Whatever new initiatives there might be through work sharing (which does not seem to have found favour), lowering the retirement age, facilitating earlier job release, increasing loans to help still further the growth of small businesses or encouraging an expanded programme of public works (which the noble Lord, Lord Byers, advocated earlier), there still has to be a change of attitude about the nature of work, the future pattern of our society and the value we place on human achievement.

We know—and we often hear it spoken of today—that we have been greatly influenced by what is known as the protestant work ethic. This was a strongly individualistic ethic. It developed in the 17th century when the partnership of church and state was no longer strong enough to regulate economic affairs. Such attempts broke down in the face of opposition from business people and traders who were enterprising, articulate, anti-authoritarian and highly critical of the church and state polity at that time. Here were men making their own way, taking personal responsibility for the work that they did and the life that they lived. At its highest they saw man's labour and industry as expressions of man's duty towards God. Labour had a religious dimension. Thrift was good; hard work brought its own rewards and was also blessed by God; and idleness and slackness were not only inefficient and impoverishing but bad for the soul.

However, in time, as religious belief weakened the quality of the past protestant work ethic deteriorated into laissez-faire—an acceptance that market forces were supreme and that full production and high consumption were valid in their own right. So we had until recently a philosophy of economic growth as being an end in itself. This produced a very harsh attitude to the environment. Those of us who live in areas such as West Yorkshire where so much of the early industrial revolution took place know full well the damage that was done to the environment. Such a philosophy also produced a very casual attitude to the finite resources of the world.

I believe that what we need today is not so much a work ethic but what has been a called contribution ethic. For too long our ethic has been too narrow. We placed such a high moral value on getting and keeping a job, obtaining promotion and a rise in the salary scale, that when people did not succeed, often through no fault of their own, they experienced the burden of a moral failure, a sense of rejection and a lack of self-esteem. I believe that today we have to begin to change our fundamental attitudes. In our schools we have to educate children not just for a job but for life, to help them see education as a continuous process through the whole of their lives and to accustom them to the fact that in the course of their lives they may do many different kinds of work at different times.

I think, too, that we have to help people find their identity and self-esteem not just in what they do but in their intrinsic value as persons in their own right. In the spectrum of personal life we matter as members of a family and as members of a society for the contribution that we make; we matter in the fulfilment of our leisure pursuits just as much as we matter in our paid work. All these facets of life are part of our definition, part of our identity as persons.

Of course, we all want to create more jobs, but it seems that we have to try to distinguish more between work and paid employment. There is an enormous amount of work to be done in our society which goes beyond the category of paid jobs that are available today. As we have heard earlier in the debate, there is great need for the care of the sick and the elderly. There is a no less great need to improve our amenities and environment. There are very many aspects of community service, and there is the development of leisure, which will surely become more marked through the development of the service industry sector.

We must not be afraid of the new technology. We ought to welcome it as a means of extending the range of human activity and capacity to eliminate drudgery, which was the lot of so many people in the past. We ought to welcome it as a means of creating wealth, but we must work out a fairer means of sharing that wealth in a society which is not again going to know full employment as we have known it in the past.

I believe, too, very much that we must not allow our imagination to be cramped by the new technology. For the good of society and for the good of individuals we need to recover some of the values of pre-industrial society. We need a greater spaciousness in life. We need more time to reflect, more time to be creative in the arts, more time to meditate. I think that we also need to recover a sense of awe, wonder and delight in the world we live in and the world that we can refashion as we engage ourselves in new patterns of work and, above all, in a more caring and compassionate society, with a greater regard for the environment in which we live, the improvement of our environment for the enrichment of our lives and for the enjoyment of creation.

4.22 p.m.

Lord Kilmarnock

My Lords, there has been a marked change of mood in the past couple of years about unemployment. It has changed from one of alarm and indignation, as it rose towards 1,500,000 in the late 'seventies, almost to one of acceptance today. In a curious way we seem to have accepted that we must settle down to a permanently high unemployment equilibrium. This is perhaps partly because we know more about it and have identified the long-term unemployed as the young, the over 50s, and the unskilled or low skilled, and partly because there has been no blood on the streets. Prophecies of mass disturbances have melted away.

But we have no grounds for complacency. Our present mood is not a healthy one. It was healthier when the noble Lord, Lord McCarthy, introduced a debate precisely on this subject—I think that it was back in 1978—which made a great impression on me at that time. It was healthier when your Lordships' Select Committee on the subject was set up in 1979. Unemployment then stood at 1,355,000 (that is in the old style of counting) and now stands at well over 3 million measured in that way. No forecast that I have seen, even the most optimistic, sees it dropping below 2,500,000 in the foreseeable future. I repeat that we have no cause for complacency, and hence the great importance of this debate introduced by the noble Lord, Lord Byers.

It cannot be said that the Government have done nothing. The noble Lord, Lord Gray of Contin, has given a number of instances of Government schemes and measures. They have provided a cheaper and larger version of the Community Enterprise Programme for the long-term unemployed; they have made some efforts to stimulate small businesses; they have introduced enterprise zones; and, above all, they have made a very heavy commitment to a new youth training scheme on a very large scale, as the noble Lord, Lord Gray said, costing in the region of £1 billion.

The questions are whether they have done the right things in the right proportions, and whether their measures are likely to be effective. When the Unemployment Committee's report was published in 1982 the Government accepted or had already put in hand some of our recommendations; but these were mainly on the supply side, or to do with training. More recently the Government performed some ingenious legerdemain with the figures. The positive job creation recommendations of your Lordships' Committee were almost ignored. We on these Benches supported—enthusiastically supported—an improved youth training scheme to replace the YOP. We were behind the Government in their ambitious plan to find trainee places for 460,000 young people, mainly 16 year-olds. But we were always aware, fearful, that such a scheme would open itself to the accusation that there would be no guarantee of permanent jobs at the end of the road. As the noble Lord, Lord Gray, has said, training does not of itself create jobs, and we feared that this would make those trainees less than enthusiastic.

It was essentially to redress the balance between the supply oflabour—which is only temporarily deferred by the YTS—and demand for it that your Lordships' committee made a whole series of positive job creation proposals. The noble Lord, Lord Byers, has referred to some of them, mainly on the private and the voluntary side. But those designed to come from the public sector and some of the voluntary services were packaged under the comprehensive, if somewhat unwieldly, label "Long-term low cost, group specific, net job creation", to which the noble Lord, Lord McCarthy, has referred; though modestly he did not mention his part in the invention of it.

That portmanteau phrase covered a number of areas in the public and voluntary sectors. They were not just to be bogus jobs to keep people happy or out of mischief, but genuine jobs, genuinely required in the community, as a result of past cuts, demographic changes, and other real factors. Some of us thought that there was more scope for genuine job creation in this direction, and others less; but all of us bar one thought it natural that a society with many idle hands, at a cost of £5,000 per annum per head (as it then was) should seek some outlet for that great waste of human potential, even at some marginally higher cost, particularly as we had been unable to measure some of the social costs which therefore did not appear in our calculations.

What, my Lords, is happening? Take the National Health Service—much in the limelight recently. I am not going to defend inefficiency or say that no improvement can be made; but it should he firmly borne in mind that our administrative costs in that service are still well behind those in any comparable country other than Sweden. At the time when the Government were seeking to impose 4,000 to 5,000 redundancies there actually were, on the admission of Mr. Clarke the Minister, as reported at col. 515 of the Commons Hansard on 27th October, 7,000 vacancies in the service, bringing those manpower cuts up to 12,000 posts. Perhaps some of those jobs were not, in the Minister's words, "in front line areas". But I have yet to meet an army that can function only with a front line. However, let us charitably suppose that half were mere empire building; we are still left with a job loss of some 8,000

Now imagine, my Lords, at a time of high unemployment, with the National Health Service closing wards and wings, imposing manpower limits on top of money cuts in the middle of a financial year, thus throwing health authorities' financial planning into chaos and actually depressing the job vacancy curb on the modest improvement of which the Government had been preening themselves. What sort of crazy logic is that?

Let us not forget the words in the Motion of the noble Lord, Lord Byers, which is particularly concerned with, those who already have trained or are being trained and those who possess skills which are not being put to proper use". Can it seriously be held that people are not available—people at present drawing unemployment benefit, or supplementary benefit, orboth—to fill those vacancies? And what about unemployed young doctors, who are estimated by the British Medical Association to total between 2,000 and 3,000? I am of course aware that there has been a long-standing aim to improve the ratio of consultants to junior doctors; but the junior doctors of today are the consultants of tomorrow. What an extraordinary waste of a long and expensive training. If you take their lower figure of 2,000 and the lower end of the estimate of training costs at £70,000, you get a sum of £140 million lying idle. Can we find no better use for £140 million worth of trained manpower than to leave it standing idle? Even if the BMA has over estimated by 100 per cent.—as the Minister suggested—we still have £70 million worth of trained medical manpower standing idle; and, incidentally, the Government's figures are a year old.

I turn to the personal social services, whose time-consuming and painstaking work goes largely unsung. The noble Lord, Lord Byers, referred to them briefly, and perhaps I may take on the point from there. I wonder how many noble Lords have read the Barclay Report on social workers, from which it emerges (in Chapter 2. paragraph 7) that if management staff are excluded, there is approximately one local authority field social worker for every 3,200 of the population. This compares with 1 to 2,100 for GPs, and 1 to 550 for police officers.

If we turn to the graphic display facing page 28—I have it here in my hands, and there are several copies in the Library—we find that an average community of 10,000 people will be likely to contain 600 aged 75 and over; 1,000 at or below supplementary benefit level; 150 children with appreciable behaviour problems; over 500 people living in houses lacking at least one basic amenity: 200 handicapped people needing daily help; 10 children under supervision; 20 children in care; 150 single-parent families; over 100 long-term unemployed; 10 physically handicapped schoolchildren; 20 patients discharged from psychiatric hospitals; 20 mentally handicapped people; 25 elderly people living in residential homes, and 18 young people who have committed indictable offences. I think that this helps us to appreciate the enormous task facing the personal social services in this country, laid on them. I may say, by no less than 30 Acts of Parliament—32 Acts, I think, to be exact.

Including the management side, you may get five professionals concerned with that average sample of 10,000 people. If you also include voluntary agency field workers and those concerned, both professionally and voluntarily, with residential and day care, you may reach a grand total of 50,000 to 60,000 devoted workers striving to service a population of 55 million—that is, one per thousand. Those people are overstretched and under-resourced, and they face an increasing demand on their services. If the National Health Service continues to be cut back further, the demand on them will be that much greater.

Your Lordships may well say that this is a specialist corps and, therefore, it does not fall within the terms of the Motion of the noble Lord, Lord Byers. But specialists require some minimum back-up. In paragraph 3.68, Barclay lists some of the things that social workers are doing but should not be doing—such as routine clerical work; arranging transport; routine assessments of housing need; rent collection; debt collection for fuel and water boards, and so on. Can it be that there is no one among the ranks of the unemployed who is able and willing to do these things? And what about home helps and meals-on-wheels workers, who do not require training certificates? Our manifesto pledged us to the immediate creation of 60,000 part-time jobs in these modest but crucial activities.

What have the Government done? Or, rather, what have they permitted the local authorities to do? I will tell your Lordships. First, a January circular disclosed that the Government expected a decrease in real terms of 1.3 per cent. in the 1983–84 total of personal social services expenditure by local authorities in Britain. Then a revised August circular showed that they were now aiming for a larger net decrease in real terms of 24 per cent. in that year. So there is no joy to be expected there from the Government, even though these were the areas in which your Lordships' unemployment committee pointed to the comparative ease of ensuring additionality of jobs in occupations which were unlikely to set the pace for the public sector.

Shifting to another department, a little detail that catches the eye in Appendix 2 on "Population Projections" is the simple fact that the number of children aged under five increases over the next 15 years. This should mean a shift towards nursery care and pre-school education, with all sorts of opportunities for part-time and full-time work. And yet the Government have seized on "falling rolls" to hammer education at all levels. They appear to have slammed the door on adult and continuing education, for example, which could provide many opportunities for part-time lecturers. There is no training required there, no expensive outlay. The skills are there, pathetically rusting, while people clamour for them. And how cost-effective is all this? Sometimes it is the little things which tell the story most effectively; for example, the firm that had to lay off 200 employees because it was no longer getting the orders for local authority dust carts. In Britain, it seems we can no longer to afford to clean the streets.

I am not arguing for any vast programme of public profligacy. Of course, we accept that the needs of industry are important, perhaps paramount, and that the cheapest form of employment for the Government and for the taxpayer is that provided by employers in the private sector. There can be no doubt about that. But there is a balance which seems to have eluded the Government. I therefore want to conclude by asking the noble Lord one or two questions.

Can the noble Lord tell me how many of the projected 460,000 training places have actually been taken up (this question was also put by the noble Lord, Lord McCarthy) and, of that number, what proportion is provided by local authorities and the voluntary sector? Can he further tell me what job prospects he sees for these trainees on present policies? Can he tell us a little more than he has about the community programme; for example, what proportion of the long-term unemployed is it able to provide a place for, and for how long? He has told us that there are 130,000 of them. What proportion are they of the total long-term unemployed at present? I have a publication from NACRO, which was working with the community programme, and I think that their 2,600 places were due. by agreements, to rise to 5,000 places by September, 1983. Has that taken place?

Could the noble Lord comment on the small but extremely valuable programme entitled "Community Industry", and tell us whether the Government have any plans to expand it? Can he tell us about the take-up on the young workers' scheme, which he mentioned himself, and, incidentially, whether employers are providing any off-the-job training on this scheme in accordance with the general principles advanced in the European draft directive on this subject?

Finally, will the noble Lord give the House an assurance that the Government will pay far closer attention than they have done to the job creation proposals contained in paragraphs 14.57 to 14.60 of the report of the Select Committee chaired by the noble Baroness, Lady Seear? It was perhaps to be expected at the time of its publication that the Government should prefer to wait for the effects of their own policies to work through the system. We all know that employment is a lagging indicator; but a year and a half has passed, and I suspect that the noble Lord's crystal ball is giving him much the same message as those of other forecasters are giving them. Unemployment may be levelling off, but let there be no doubt that we have a long, hard, high, stony plateau ahead. The Government simply must give more assistance and more encouragement to people, especially the young, to cross this plateau than they are doing at the moment.

4.37 p.m.

Lord Hatch of Lusby

My Lords, I very much welcome the opportunity of being answered for the first time by the noble Lord, Lord Gray of Contin. I have made this speech in different forms on many occasions with a whole succession of Ministers sitting on that Front Bench, not one of whom has yet answered me. Therefore, I particularly hope that the noble Lord, Lord Gray, may be able to do so. I believe that I may have some reason for that hope because, as a Scotsman. I think he will appreciate more of what I am saying, and perhaps understand more of what I am saying in view of my experience when I was teaching in Glasgow University. than would a simple Englishman.

I make no apologies for beginning, as I have done before, by declaring that to me—and I believe to the House, if noble Lords think about it—the greatest obscenity in the 20th century is the fact that there are 800 million people living in the world destitute and suffering from severe malnutrition—one in five of the world's inhabitants. The two-thirds living in the world's developing countries consume less than 20 per cent. of the world's output. It is an obscenity that, when these conditions are existing among so many of our fellow human beings, there are well over 30 million unemployed in the OECD countries, in the industrialised countries. Surely to goodness, somebody can find a bridge between these two sets of people. I am not going to appeal to the Government on any moral grounds this afternoon; my moralistic phase is now exhausted. I shall ask the Minister who is to reply—and I personally hope that a reply will also come from the two other Front Benches, from the noble Baroness, Lady Seear, and from the noble Lord, Lord Scanlon—about the practicality, in the terms of this Motion, of the facts which I shall put before the House.

Britain and her partners in the EEC constitute an economic giant in our world, accounting for 22 per cent. of world trade against only 14 per cent. for the United States and 7 per cent. for Japan. But, unlike the United States, we cannot afford to do without trade. We import two-thirds of our energy supplies and half our food. A large proportion of this trade is with developing countries, with the third world. Over two-fifths of the total imports of the EEC come from the third world, and nearly two-fifths of our exports go to them.

What has this to do with jobs? It is my submission that this has everything to do with jobs. If I just continued along a moralistic line, I know what the Government would say; they would say, "Oh yes, we agree with you; this is dreadful, this is terrible; we all suffer and we all put our pennies in the collecting tins". But then they would say. "We will do something about it when we can afford it". Governments have been saying that for the past 30 years. I am saying that we shall only be able to afford to take our rightful place in world trade when we recognise that, first, we must help to increase the purchasing power of the third world countries themselves, and that that will in itself provide a factor to lift us out of the depression, to provide jobs in this country and to help the British economy recover. That is my case.

I need do no more than simply draw the attention of the House to a number of figures. We have been shown the way and we are being shown the way today. Leaving oil out of the equation, 29.4 per cent. of this country's total exports go to the developing countries, but 46.2 per cent. of Japan's exports go to developing countries, and over 40 per cent. of the United States exports go to developing countries.

I particularly make this point about Japan because I believe that we can learn a great many lessons from Japan. Japan is quite deliberately building up a massive deficit with third world countries, particularly in Asia and South-East Asia, because the Japanese have begun to recognise that only if they provide the purchasing power to third world countries can they get their economy on a prosperous level. Therefore, they are prepared to invest in these countries in order to raise their purchasing power so that the peoples of those countries can buy Japanese goods. I know that we have all criticised the low level of Japanese overseas aid over the years. That is increasing. Although their acts do not yet match their words, it is the deliberate policy of the Japanese to increase their overseas aid alongside the increase in their deficit with third world countries.

But it is not just a question of trade. What has been happening to investment, particularly since exchange control was removed in this country by the Conservative Government in 1979? One might say that it is a very good thing for people in this country to invest overseas, because they will be investing in the underdeveloped countries of the third world. That is not so. The latest Government figures—and these figures are checked with the Central Statistical Office—show that since exchange control was removed, a 700 per cent. increase has been seen in outward direct investment by United Kingdom companies in Western Europe—in other words, in the industrial world where our competitors are strongest; a 40 per cent. increase has been seen in North America, again where our competitors are strongest; and at the same time, and by no means coincidence, only a 15 per cent. increase in investment in domestic fixed capital formation has been seen. So that is not going to the developing countries; it is going where capital has always gone—where it can find the institutions and the structures that it knows and where it can get the returns that it expects. It is not going into investment in the developing world.

Despite the constant prodding that has come from these Benches, what have the Government done over the past four years in order at least to use the factor of increasing purchasing power in the third world to modify and, one would hope, eventually to overcome the disastrous part that Britain has been playing in the world depression—the worst part played by any industrialised country? This Government have been cutting overseas aid; they have cut it by something like 20 per cent. How is that justified? I am depending on the noble Lord to answer the question, which has never been answered despite what must be the score of times that I have asked it of whoever has been sitting in the place he now occupies. Overseas aid has been cut by this Government by a higher percentage than any other item in public expenditure other than housing. Those cuts are still taking place, as we shall hear in a later debate today.

Not only has overseas aid been cut, but from the financial report we have seen that the Treasury has been fighting a battle with the Department of Industry throughout this year because the Department of Industry has been trying to support the overseas activities of companies. Perhaps some of them have been a little dubious, but the Department of Industry has been trying to counteract the subsidies that come from our competitors when getting contracts overseas. They have sometimes failed, but the Treasury has been fighting the Department of Industry and reducing the expenditure capability of that department.

Moreover, we heard only yesterday the Minister of Overseas Development tell us from his own lips that the British Government are now actually considering cutting their contribution to the International Development Agency. How mad can you get! I should like to read part of a letter from the Senior Vice-President, Finance, of The World Bank to The Times on 26th October. He said: In our view, British business can indeed claim IDA"— that is, the International Development Agency— as a worthwhile public investment. Between 1974 and 1981 (IDA's fiscal years) both direct and indirect IDA-financed procurement from the UK amounted to US $1.24 bn. Over the same period its cash contributions to IDA totalled US $1 billion.". In other words, we have made a profit of 24 million dollars on our investment in IDA. But this has increased more recently. Between 1982 and 1983 British procurement, direct and indirect, totalled 659 million dollars against a total contribution of 419 million dollars.

As I have pointed out so many times from these Benches, British contributions to overseas aid should be considered by the Government to be an investment: an investment in the development of the British as well as the overseas economies; an investment in jobs in this country. When we were in office and Judith Hart was the Minister of Overseas Development she got her officials to calculate, and they calculated that overseas aid provided at least 40,000 jobs—that is, at least 40,000 jobs at a conservative estimate—in this country, and exports to the third world created over one million jobs. I have asked Government Ministers repeatedly: does that mean that since this Government began to reduce overseas aid and reduce exports to the third world they have been reducing jobs in this country?—and not one of them has ever answered me.

The answer, I should have thought, was obvious. The aid which we give to the developing countries of the world, if it is carefully given, if it is monitored, if it is given for programmes and projects rather than just on what the Prime Minister calls a hand-out basis, is helping the developing world to come into the world economy and at the same time is helping the British economy to associate with a wider world market. Surely this is the philosophy of the party opposite.

What is their answer when they are challenged as to why they have been reducing that aid, reducing that trade, at the expense not just of the 800 million people who are starving but also of employment in this country? The party of which I am proud to be a member has stated clearly and categorically that when it returns to office it proposes to re-establish the independent Ministry of Overseas Development and to work out communications much closer than has been the case in the past with the Ministry of Industry, so that we no longer think of overseas aid as charity but as being part of our economic policy.

I think the noble Lord would agree, if he has had this experience, that this is the way in which overseas aid is considered in the Netherlands, in Denmark and in other parts of Scandinavia. It has been almost totally removed from the political field, and is considered to be a part. And an essential part, of the economic policy of the country, providing a wider market for the people of the donor nations, providing better opportunities socially and economically for the people of the developing world, and providing more jobs and a deliberate attack on the growing unemployment in the home countries. I would hope that this issue would be tackled from all three Front Benches tonight, but I particularly hope that the noble Lord the Minister will answer where his predecessors have all kept quiet.

4.55 p.m.

Lord Balfour of Inchrye

My Lords, it may be because I am very old but I cannot share the optimism of the noble Lord who moved this debate in the likely results and benefits of what he terms a new initiative for job creation. I should like to ask him a question. I am only sorry that he is not here for his own debate. My question is this. Is the noble Lord suggesting creation of artificial jobs for the sake of giving work, or is he intending to confine himself to work promoted for the furtherance of industry on which, as the Minister has said, we all depend for our livelihood? He did not make that clear in his speech. That is the reason for my regret that he feels himself unable to be here this afternoon.

As regards the method of creating jobs artificially, we had a lot of this industrially in the 1970s. Mr. Wedgwood Benn was a great protagonist of that policy. The Midlands is littered now with empty factories which were subsidised for unjustified extensions; with co-operatives which started bravely but which have failed one after the other. I do not believe that there is a future in just creating jobs for the sake of giving work. The test of a job must be whether it is in fact directly, or indirectly, helpful to industry. I am glad to say that such job creation as we are going on with now in the training of young men is, broadly speaking, based upon the path that the Government are following and on which the Minister touched this afternoon.

However, those trained and who come out into industry will enter a competitive position in an industry in transition; an industry which is able to meet the needs of the country and the needs for export with a steady diminution of manpower. Automation is here to stay and to grow, and already one man can do what seven or eight men used to do. The future for industrial manpower seems to me to be one of decreasing importance for those who do not possess first-class skills. Contrary to many beliefs, I believe that high unemployment is here in this country for many years to come. The world recovery from recession must be slow, must be gradual; and whereas we rejoice, quite rightly, when we read that unemployment has gone down 100,000 or 150,000 in a month, it is going to take years of effort to get unemployment figures down to anything which used to be considered acceptable. What used to be acceptable will take a long time, if ever, to reach. In round figures we have some 3,500,000 unemployed. No Government of any colour can cure that 3,500,000.

I remember when I first went into Parliament—a devil of a long time ago in 1929—Lloyd George was saying "We can cure unemployment". Ever since then all parties—my own party, thank goodness!, has been less prominent than other parties—have said, "Return us and 100,000 men will be employed in a year, 18 months or two years". They have all said that. I do not believe that is possible because it would mean enormous artificial falsity of employment.

I have a vision—which no doubt other noble Lords will not have—of how industry in future may develop in the world of automation and diminished manpower requirements. There will be an elite of highly skilled, highly paid men whose jobs are secure by the very virtue of their skills. They will be able to produce, with smaller manpower, what our home and export markets require.

Alongside what I term the elite there will he a fringe of industrial labour, with less secure employment than the elite, of largely fluctuating demand. Alongside the elite and the fringe there will be another big section which has security of employment and security of wages. I refer to Government servants, the forces, the Civil Service, the local authority personnel, the professions and servants of Government agencies. They will all continue to be well paid and to have security; but that can only be granted to them from the proceeds of successful, productive industry. There will always be casual work and men employed under such headlines as the noble Lord used in his speech. But when all is added up there will remain a great army of unemployed who will never work again.

I should like to refer to the Department of Employment study which will be published in full shortly. Its findings have been reported in the Financial Times as, 14 per cent. of the male long-term unemployed and 8 per cent. of women had been unemployed for more than five years". The Employment Gazette clearly identifies a group who now consider themselves to he out of the job market, and the size of that group is constantly growing, I regret to say. About 85 per cent. of those giving up all hope of a job are over 45 years of age with a sharp increase over the age of 55. There is a widespread perception in a large percentage of the unemployed that they will simply never get back to work again. It is a terrible thought for the inevitable army of the permanently idle.

My final words are these: we must not let the army of the permanently unemployed despair. We cannot let millions go to the wall and waste. I only hope that all the Governments of the future, including this Government, will concentrate on developing leisure for the millions. There will be shorter hours certainly; there will be early retirement, but these changes will only come about when industry can accept them and their costs.

I should like to see a council set up now, with representatives from all parties on it, to study matters such as fitness, sport, literature, the arts, community and voluntary service to see whether we cannot get some agreed programme, way beyond party lines for the future years for the great army of the unemployed. If we start working now and have the courage to accept the future of a national problem of long-term unemployment we could make life richer for all, including those covered in the speech of the noble Lord, Lord Byers.

5.7 p.m.

Lord Spens

My Lords, I am very tempted to follow the ideas that have just been raised by the noble Lord, Lord Balfour of Inchrye. They are ideas that I have had in my head for a very long time. They were mentioned also by the right reverend Prelate, the Lord Bishop of Wakefield, and there are at least two other noble Prelates who come to this Chamber who share those ideas as well. In addition, a distinguished Conservative ex-Foreign Secretary made an extremely long speech about this subject three or four weeks ago, just before the Conservative party conference. I am afraid that other events at the beginning of that conference wiped that speech out of the press. That was a great pity.

However, I will leave that for another time because I want to talk about something positive: that is, the enterprise agencies which the noble Lord, Lord Sieff of Brimpton, mentioned in his speech. In particular, I shall talk about two with which I have been connected. I live in Kent in the borough of Ashford. "Enterprise Ashford" is not really an agency but an operation which was set up some two years ago by a group of local businessmen led by a chartered accountant who is now the chairman of the group. He had to persuade his fellow businessmen that it was worth while setting up an operation to help to create jobs. He also managed to persuade the borough council and the trades council. Altogether the group has set up what I consider to be a first class concern.

I rang up the chairman this morning to find out the latest figures of how the group has been doing. During the less than two years that it has been in operation, it has created more than 100 new businesses. He told me that 99 per cent. of those new businesses were operating well. The important point about Enterprise Ashford is that the local community has funded it completely itself and has found a local person to act as director. He has a small office and studies the applications for help that come into him from people who want to start business. He has at his call a number of professional consultants who are prepared to give their time free to help; and, as I say, it is doing very well. Its latest venture, which I saw only two weeks ago, is an operation agreed with the Manpower Services Commission and the Department of Trade and Industry. They have set up the Ashford Information Technology Centre. It opened at the beginning of last month and I went to see it a fortnight after it was opened. It has a first batch of 11 students who have come in on the £25 a week youth training scheme wages. I think they are expecting, probably this week, a second batch to come in, and a third batch of about 10 at the end of this month. Altogether, they will have 30 students working at this centre.

The centre has 11 computer terminals, all linked together. They start off by teaching the young people how to use the computer and how to produce very elementary programmes. They then take them across to another section, where they are taught to maintain the computer and how to do moderate repairs. Of course, they cannot cope with any intricate repairs that have to be done, but, luckily, not many of those happen. Finally, they will go into a third part of the office where they will learn office procedures with the various pieces of new equipment, such as word processors and so forth, that exist, They will spend their year there. There will not necessarily be any jobs for them at the end of the year, but they will be basically trained students in microcomputers and I should have thought that they will be easily able to find jobs at the end of that period.

I think it is a very important operation, and I believe that something like this ought to be set up in every district and every borough in the country. I asked the chairman how many other enterprises of this nature there were in Kent. He told me that there were four more—in Maidstone, Gravesham, Medway and Swale. There is none in Dover, none in Folkestone, Margate or Ramsgate; and I think that there are no enterprise agencies in the constituency which the noble Lord, Lord Balfour of Inchrye, once represented. Surely we ought to be able to find a catalyst in each area of district or borough, or even smaller, to start up something of this nature.

The second operation that I am involved with is rather a long way away from where I live—I live in Kent—and that is in Somerset. I find myself the vice-president of the West Somerset Small Industries Group. That was set up chiefly, I think, with help from Shell, which provided and financed a director, I believe, for the first year or two. They may have been Government financed a little there, but no more than a director and transport for him to get about. He has now collected together a small group of small businesses. He looks after them, helps them, brings in experts to consult with them and arranges joint stands at exhibitions. At the Bath and West Show, for example, there was a stand I believe for the four days of the show supported by some of the members of this group. That is also carrying on very well. I believe that this sort of operation ought to be carried out throughout the country; but it needs a bit of a lead—and that is where the Government come in—to find the catalysts in each place and possibly to finance the start of those catalysts.

The only other thing I want to say this evening is, I am afraid, to oppose the noble Lord, Lord McCarthy, in his remarks about wages councils. I believe that the sooner we get wages councils abolished the quicker we shall get an expansion of jobs in the industries which are now subject to wages councils. When I introduced a Bill last year to try to abolish wages councils I received an enormous amount of correspondence from little businesses supporting my Bill and saying that they just could not keep up with the ever-increasing minimum rates which were ordered by the wages councils to be introduced, and that the only way they could keep up was by sacking staff. I hope that when wages councils are abolished we shall see an expansion in the number of small businesses.

My Lords, before I sit down, and although the noble Lord, Lord Hatch of Lusby, is not here, I want to put on record that one of the sponsors of Enterprise Ashford is the Zambian Engineering Company, which has a factory in Ashford and which is very close to Lord Hatch's heart. The other point about sponsors at Ashford is that we have three of the four high street banks, but not the fourth. I propose to tackle the fourth to see if I cannot bring them in. I am also glad to say that that wonderful concern of the noble Lord, Lord Sieff, Marks and Spencer, is one of the sponsors.

5.18 p.m.

Lord Ezra

My Lords, I should like to join with those who have paid tribute to my noble friend Lord Byers in introducing this very important Motion which has given us an opportunity of airing our views on what is probably one of the biggest problems facing the country both in the short term and in the longer term. My noble friend Lord Byers very succinctly stated what the problem was and made some very positive proposals as to how it might be overcome. Like him, I am one of those who support the measures which are now being taken, through the youth training scheme and other ways, to train youth for employment. But there seems to me to be a snag in all these efforts. When the youth training scheme was announced it was said to be a bridge between school and work. The school end of the bridge is visible enough; it is the work end which creates the uncertainty. None of us who has spoken today has suggested that at a stroke we can get rid of the very serious unemployment problem which faces us. Many of us, however, believe that there is the opportunity now for moving ahead more positively than we may be moving at the present time.

In order to do this, of course, we need to have the right conditions created, and the noble Lord, Lord Gray, referred to this in his remarks. Those conditions are not entirely the responsibility of Government. We all have our part to play, and I think we are indebted to the noble Lord, Lord Sieff, for what he showed us had been done by the great enterprise which he had led with such distinction for so many years in stimulating through enlightened purchasing policies a reactivation of important parts of British manufacturing industry.

This is a policy which I believe ought to be pursued much more widely. When I had the task of managing the coal industry, it was a policy which we very vigorously pursued and I am glad to say that as a result of that policy we have today in Britain a major world-competitive mining machinery industry. That was created by an enlightened relationship between purchasers and suppliers; so there is no question in my mind that this is one of the things that has to be done if we are to resolve this problem of employment and bring about the reactivation of British industry.

But there was another aspect and implication in the remarks of the noble Lord, Lord Sieff; and that is that British industry, in the right conditions and with the right stimulus, can be as competitive as industry anywhere in the world. Here I should like to refer to a remark made by the noble Lord, Lord Gray, when he spoke about the progressive decline in manufacturing industry and the progressive increase in service industry. I do not know whether it is part of the Government's philosophy that British manufacturing industry is in structural decline—perhaps the noble Lord will comment on this when he speaks later on—but if that were their view I think it would be a very harmful view. I believe we are going to need the products of manufacturing industry in this country for as long ahead as we can see, and if we cannot produce them ourselves we shall have to import them, with dire consequences for our balance of payments and our living standards. So it seems to me to be quite clear that our policy must be one of creating those conditions under which British manufacturing industry can be reactivated as effectively as possible.

I said that this was not only a responsibility of Government: but Government do have their share in this. We have Governments to set the scene, and I believe that we need a rather more positive lead from Government than we are getting at the present time; and this in two areas. First, as to the private sector, now that we are on the verge of recovery—there are some signs of it even if it is somewhat mixed—we ought to be enabling industry to take advantage of the better climate existing both here and elsewhere in the way of demand for their goods. I believe that the burdens and imposts still remaining in industry should be relieved to the maximum extent. I refer to the level of interest charges, to the national insurance surcharge, to local rates, and all the other imposts under which industry has to operate in these difficult times.

As to the public sector, I think that here we are in a situation in which the Government, in pursuit of their policy for reducing public expenditure—which in general we would all accept as a desirable objective—nevertheless have had the impact not of reducing revenue expenditure (which in fact has tended to go up over recent years) but of substantially cutting capital expenditure. That has been very serious indeed. Many have been the times when your Lordships have debated aspects of our infrastructure—the water supply system, the sewerage system and the housing system, all of which are crying out for repair and renovation but all of which have been cut back because of the diminution in capital expenditure in the public sector. And of course it is not restricted to the public sector because to cut back in those things means that large segments of the private sector have to suffer a cutback as well, such as the engineering and construction industries.

There is another worrying sign which was also referred to by my noble friend Lord Byers, and that concerns home improvement grants. When the Government not so long ago introduced some very substantial home improvement grants, these were welcomed by the many householders living in homes badly in need of repair and renewal. I can say, having been personally involved with one of the firms concerned, that those who provided the goods and the products for these repairs built up their capability to meet the demand, and indeed met it.

What is disturbing, however, is that having given a positive signal, the Government are now giving a negative signal. They have cut back on these grants. We are a mature assembly here and I am sure that many of us can think back to the bad old days of purchase tax when it was used as a "fine tuner", as it was called. I can remember the way in which the indiscriminate use of purchase tax by successive Governments after the war led to the virtual demise of the consumer durables industry. No sooner had they geared themselves up to produce washing machines and refrigerators than they were pushed right out of the market by the tax going up again. So I say to the Government that the sort of framework that will have to be established needs to be not only a positive one but a consistent one as well.

Let me conclude with these remarks: we as a country have been through a very difficult time in these recent few years. I believe we have stood up to those difficult times with admirable stoicism, but now I think there is an impatience to see a turn, to see things recover. I believe that if we can get a more positive lead from Government on the lines that have been suggested by many on this side of the House and indeed on the other side of the House during this debate, then we could and would get a very positive response from the rest of the populaion.

5.27 p.m.

Baroness Nicol

My Lords, I should like to add my thanks to the noble Lord, Lord Byers, for allowing us to have this debate today. This subject has been debated here quite recently and no doubt it will be debated again in the near future. But it is perhaps the greatest possible source of evil in this county, and it is one to which we need to give all our attention.

I was very impressed by the examples given by the noble Lord, Lord Sieff. It is heartening to hear of practical measures being taken to create jobs in this country, which is what this debate is all about. I want, if I may, to tell you of another, much smaller but nevertheless successful, experiment of a different kind which has been carried out in a district council I know of.

This is a local authority with no industrial background, and it set out to make job creation one of its priorities. On a small piece of unused land the council decided to build 15 "nursery units"—so called because they were to house embryo enterprises currently being incubated in garden sheds and garages. These units were completed about two years ago, and long before they were ready there was a waiting list. The unit size was from 450 to 1,330 square feet: very small, as your Lordships will realise. The enterprises which were finally accommodated ranged from carpenters and plumbers through go-kart making to furniture polishing, and included a new process for tungsten-tipped drilling tools, control equipment for North Sea drilling and, inevitably, various computer-allied developments.

A survey of tenants at the end of the first year showed that only one had failed—reputedly because a large national concern was tardy in paying for the work which they had done for it, which is another angle to be taken up at another time. One had moved to much larger premises and that firm is currently enjoying national and international trade. Several more have begun to consider larger premises. All are thriving and all have taken on more employees or, in one or two cases, are about to do so. All, without exception, said that without the provision of the nursery units they would have found it difficult, if not impossible, to develop.

The expenditure of the local authority was small. An original investment of about £290,000 is currently yielding 7 per cent. in rents—a return which will be much higher when the first rent review takes place at the end of the third year. A second development of 19 units is now being contemplated. Already 12 have been let and the rest are under discussion, though completion is still a year away.

With the success of the first development as an example, the local authority had no difficulty in finding a merchant bank to finance the second, helped by the provisions of the Capital Allowances Act 1968. The main difficulty for the local authority was the lack of guidance available on the application of that Act, and it would seem a useful exercise for the Government to contemplate a circular which would guide local authorities which are in the same predicament. In fact, this particualr authority had, in the end, to go out to private tax firms which demanded quite a large fee for the advice that they gave.

I have spoken in detail about one local measure, because such measures multiplied throughout the United Kingdom, as was said earlier by the noble Lord, Lord Byers, could make a significant contribution to the creation of more job opportunities. The Minister gave numerous examples of schemes designed to reduce the number of unemployed on the register. What he did not do was to give any hope that the Government were willing to create any real and permanent jobs, or indeed felt any responsibility for their creation. Without such Government direction and support, there is little hope of any real improvement in the existing desperate situation.

5.33 p.m.

Baroness Seear

My Lords, we on these Benches entirely agree with the noble Lord, Lord Gray, on the importance of controlling inflation and getting the economy working again, and we fully recognise what this can do long-term for job creation. Where we disagree with the Government is that we do not think that a single-minded concentration on the control of inflation is an appropriate response to the total situation in the country today, which is one in which inflation needs to be controlled but is also one in which we have a mammoth problem of unemployment which has most important consequences, both economic and social.

It simply will not do to wait for the hidden hand—or whatever force the noble Lord is relying upon—of market forces so to adjust the labour market that ultimately, a long time ahead, jobs will be found for persons looking for them, because, meanwhile, there are a great many people, young and old, who are attempting to live their lives in a totally unsatisfactory way. What we are urging is a multi-pronged approach; that the question should be looked at from a number of different angles simultaneously.

As I have said before in your Lordships' House, surely the approach should be that, whenever one is looking at action to reduce inflation, one should be asking the question: what impact will this have on employment? Then, whenever one is looking at action to improve the employment position, one should ask the question: what effect will this have on inflation? They are two sides of a total problem. It is not just a problem of curing inflation or trying to conquer unemployment. The two things must be seen as part of a whole enterprise of an extremely complex nature, made up of a number of different elements and requiring different approaches in order to get control of each.

That is why we in the Unemployment Committee, which reported 18 months ago, urged, as did my noble friend Lord Byers today, that the Government should be prepared to spend cautiously and thoughtfully, carefully focused on the particular activities which, with a minimum effect on inflation, will have a maximum effect on job creation. Neither my noble friend Lord Byers nor the unemployment report said that these proposals could be implemented without cost. What we did say was that by careful examination of schemes and of the use to be made of money we could make a very considerable impact on unemployment at very low cost. Indeed, in the unemployment report we worked out that the costs of the schemes that we put forward would be within the margin of error of the PSBR. You never get it right. The Treasury has never been right in anticipating the PSBR. But what we are proposing would not cost more than the cost which occurs every year because of the difference between what really happens and what the Treasury hoped would happen.

We do not for one moment suggest—we never suggested it in the unemployment report, we have not done so today from these Benches and neither has any body who has spoken so far today—that we can just spend our way out. We know that that is folly. But, equally we believe that it is total folly to refuse expenditure of a very job creating kind, especially expenditure which has to be made sooner or later. How many buses have to fall into the sewers in Manchester before this Government are prepared to spend money? Do not let us go into details, but if ever there was a service which had to be maintained, surely to goodness it is the sewers. You cannot be more practical than that. You cannot delay work on sewers indefinitely and that is surely self-evident. I understand—this comes not from the Labour Benches or from certain societies, but from a leading industrialist—that if we made a job of repairing the sewers it would create a very considerable amount of employment.

We in the Unemployment Committee were very careful in calculating what the Treasury loses when an adult man is unemployed. We did not include social costs, because they are very difficult to quantify, but, surely, nobody will deny that they are real. If we have large numbers of young men of 16 to 20 out of work, who expects that they will not get into trouble? I do not care which section of society they come from or what colour they are. If they have nothing to do, they will find something pretty destructive to do if they are left to themselves.

Even 18 months ago, it cost £7,000 a year to put a man in gaol. We did not put that into our estimates. Then there are the breakdowns, the additional sickness and the multiplier effects of unemployment in families. I cannot put a figure on it. but with very little imagination one can see that the figure of £5,000, which we put in 18 months ago, is a very modest calculation. On the one hand, we are urging capital expenditure which will have to be made sooner or later, and, on the other hand, long-term specific group job creation, in the favourite phrase of the noble Lord, Lord McCarthy, on things which in many cases are very cost-effective.

Let me quote home helps. It is ridiculous to cut the home help service. Keeping people in their own homes if they are old and sick is labour-intensive. It costs money, but it costs a tremendous lot of money to keep people in institutions to which the great majority do not wish to go. All the evidence is that people want to stay in their own homes. For my part, I am entirely in favour of the milk bottles lining up outside the door when my time comes, rather than being dragged off to some institution and I am sure that this is true of the great majority of people. But you cannot do it without good domiciliary services. These people are not in the expensive five-figure salary class. They are very down to earth, not well paid, doing extremely useful cost-effective jobs. There are people who are well suited to do them, yet there have been cuts there. I quote home helps as just one example of the kind of practical, useful social service for which we need to have much greater commitment than the Government have shown.

Before leaving the question of cuts in Government expenditure, may I ask the noble Lord to answer the question raised by my noble friend Lord Byers about the urban aid programme. Is it or is it not true that the urban aid programme, as rumoured, is going to be reduced next year? It would be a matter of the very gravest concern to a great many of us if this were to happen. It would also be a matter of the very gravest concern to a great many people who have been working extremely hard on plans to develop urban aid schemes, on the understanding and in the expectation that this money is in fact going to be provided.

I do not wish to take up a great deal of your Lordships' time but there are one or two specific points that I should like to make in dealing with the question of job creation and the whole issue of unemployment. May I, very respectfully, take issue with the right reverend Prelate and others who have spoken about the inevitability, indefinitely, of unemployment. This is still a very poor world, half of which is hungry. I know that the problem of distribution is huge. We are not running out of work. We are running out of the ability to pay for it—a quite different matter. What we need is a high degree of flexibility to respond to the new demands which exist, as latent demand becomes real demand throughout the world.

There are only two things that we know for certain about the employment position in the future. One is that we cannot forecast what it is going to be. The other is that the future for the unskilled is extremely bleak. The one point over which there seems to be absolutely general agreement among all the forecasters is that unskilled jobs are going to get fewer and fewer. This must mean training to give people competences that they can sell in the labour market and flexibility to respond to changing demand. Those two requirements are at the heart of any programme for dealing with unemployment.

I want to make the point that job creation, training and education policy and practice are closely interrelated and that action taken in one of those areas can adversely affect the intentions in the other areas. May I illustrate this from the youth training scheme. The Government have backed this scheme with a great deal of money. We are all agreed that the youth training scheme is an immensely important step, long overdue, in the right direction, whose purpose is to increase the percentage of our labour force which has in fact got marketable skills and the ability to respond to changes because a degree of flexibility is built into its training.

But the youth training scheme has by no means yet proved itself. I speak as somebody with some responsibility for it in one small area. In the first place, it has not been adequately publicised and people do not understand what it is all about. There is a strong belief that it is just the YOP with another name and there is a great disbelief that it is going to lead to employment at the end of the day. It is one thing to accept £25 a week if you believe it is leading you somewhere. It is altogether another thing to accept £25 a week if it is not leading you somewhere, and your willingness to accept £25 a week is going to be very much governed by what other opportunities are there. There is evidence that quite a lot of youngsters are saying to themselves, "We would rather have a real job because we do nt trust what is going to happen afterwards, and a real job carries more money".

There are enterprising youngsters around; there is plenty of the entrepreneurial spirit. I heard the other day of some very enterprising youngsters who might have been on the YTS but who are taking advantage of very modern arrangements in Milton Keynes where the shopping precinct is some way away from the car park. Shoppers are provided with trolleys to take their goods from the shops to the car park; but they have to put in 10p to get their trolley and then they have to return the trolley in order to get back their 10p. These youngsters hang around the car park and say, "Can I take your trolley back, Sir?" And of course they get the 10p. This is good business enterprise. This is excellent activity. But when my friend asked one of these youngsters, "How's trade?" he replied, "Not awfully good—about £30 a week". If you can make £30 a week hanging around the shopping precinct at Milton Keynes, you will look twice at £25 a week under the YTS, unless you believe that it is leading you somewhere.

There is a danger at the moment that just because a few more jobs are coming on to the market, youngsters will take jobs with no training and no real career prospect, but which they see as real jobs, rather than take YTS. Therefore, I am saying to the Government: please do something now to demonstrate to youngsters that there is a really good chance of getting a job when they have finished YTS.

There are many things that could be done. What are we going to do about the 17 to 18 year-olds? Companies could be encouraged to employ them, perhaps on a two-for-one basis, as GEC have done in Coventry. That at least would mean that they had something to go to. Or we may say that we want to extend the 16 to 17 year-old scheme to 17 to 18 year-olds; or there should be an additional year later, maybe, during which they can add more specific training to the foundation training they receive in the first year. I say to the Government that, unless they can give people confidence that the YTS is going to lead to something when it is finished, the YTS may not succeed; and if it does not succeed the chance of our developing a trained, skilled labour force which can compete with our industrial competitors in France, Germany, America, Japan and Sweden will have been lost and we shall have taken a very big step backwards. And unemployment will get worse because we shall have far too many unskilled people, since unskilled jobs are disappearing.

The second point I should like to make is that this is both an education and a training and work experi- ence exercise. I wish to goodness we could stop talking about education and training as if they were two completely different things and not different facets of the same thing. There are signs that some of the people in education are not convinced about the YTS. There are strains and stresses—not everywhere, of course. But it is extremely important to get the educationists backing this scheme, and this is not happening everywhere.

I shall give your Lordships one example. I went to see one YTS scheme which, I may say, had been over three times oversubscribed. People say that youngsters are not coming forward but this was a firm with a very good reputation. They could have taken on three times as many youngsters, but those were all the places that they had. I asked the youngsters how they had heard about the scheme. They said, "The local press", "The local radio", "My mum". I said. "Put up your hands those of you who heard about it at school". Not a hand went up. I do not say that this is general; I am not in a position to say that it is. But I am saying that, unless educationists as a whole wholeheartedly back this scheme, and training generally, then it will not survive. We need to find out now where the reluctance is.

I would also urge that we should be as flexible as we possibly can be—I know that I am going into some detail but I believe that detail is important at this stage—about the requirements for classes in colleges of further education. There are restrictions about the number of students you have to have in order to run a class. But if their training is going to be good, and YTS turns on the quality of training both in the face of work and in the college, then college training has to be devised to be integrated with the work experience.

It is not good enough for colleges to have to say, "We cannot run the course that you need for your youngsters because we do not have enough youngsters to justify it". I realise that it may make running a course more expensive, but it will still be very cheap by comparison with letting the schemes down—which is what happens (and I can give examples of this) unless there is real collaboration between the colleges and the sponsors working the scheme and giving the work experience. That should not be obstructed by regulations which make it difficult if not impossible for colleges to meet some of the requirements. So I urge that we look very closely at the integration between the education services and the manpower services at this point.

May I make one further point about training, although I realise that I have already, spoken for much too long? This is less a YTS point and more one concerning older trainees; after all, we have tremendous unemployment up to the age of 25. When youngsters have expressed an interest in training, they should be able to get into a training course quickly. Ten years ago in Stockholm I was told that, under the scheme there, if someone said on a Thursday that they wanted to undergo a training course they could be on such a course by the following Monday. I asked here only recently how long it would take to get on to a new course. Sometimes it takes up to six months. If an unemployed person is told that he must wait up to six months, you will lose him before the course ever starts. Speed and flexibility are of the very first importance. I wish that something could be done to ensure them; it is possible, and delay is fatal. It may sound like a detail but it is at the heart of making training really work.

We have now a tremendous opportunity because we are at last awake to how behind we are and how vital training is. Job creation without proper training may do more harm than good because it may lead people to think that they are going to secure employment without obtaining the skills needed. On the other hand, we may improve our markets and become more competitive, and then find that we do not have the people trained to do the jobs. Already there is a shortage of technicians to fill the vacancies for them. Where are the technicians—both male and female—to come from? I beg the Government to think again, to answer some of these questions, and not to cut back on this vital front.

5.53 p.m.

Lord Scanlon

My Lords, all speakers have joined in thanking the noble Lord, Lord Byers, for an opportunity to debate once again this very important subject. For reasons I hope to explain in due course, I thought that his contribution—hallmarked as it was by my noble friend Lord McCarthy, who said he was not in disagreement with one statement at all—was marred by only one quite inexplicable reference to NALGO. I will return to that point in a moment.

The noble Lord, Lord Gray of Contin, in giving an historic review of the economic problems facing Britain, and particularly its manufacturing base, seems to pursue a new policy which is: if one cannot say anything bad about the trade unions, keep quiet. In order that the record can he put right on this very important matter of training, I wish to inform your Lordships of what has happened.

In an atmosphere in which most trade unionists believe that the Government are seeking seriously to erode, if not destroy, trade unions; in which there are nearly 4 million unemployed: in which the rate of pay for trainees under the YTS is well below even starvation level; in which the Government have abolished 20 out of 26 training boards—in such an atmosphere, this subject was debated this year at the Trades Union Congress. It was a Congress to which the Government did not feel it was important—and I will stand corrected if I am wrong—to send even a junior Minister to listen. That Congress decided to support wholeheartedly not only the YTS but also the youth training initiative involving, as it does, retraining of adults and training to standards.

May I go even further and say that in the engineering industry, in June of this year, the Confederation of Engineering Unions debated this very important question of training to standards. We all know that technology is growing at such a rate that it will involve training and retraining probably two, three or even four times in any one person's industrial life. Against the same economic background, Congress likewise decided—with the abstension of only one very important union, which I have to humbly confess, with regret, was my own—to accept training to standards. Moreover, it has since met the engineering employers and has concluded an agreement to that end.

Would it not have been refreshing in such an atmosphere to hear just one little word of welcome for that which the trade unions are doing, instead of—and I hope the noble Lord, Lord Byers, will forgive me—what I consider to be a niggling complaint against one trade union which is not against the scheme but against the low remuneration to which I have referred and against which many of us have joined in protest?

Although this debate has developed into two facets—one about services and one about manufacturing industry—the question of training pervades them both. As the noble Baroness, Lady Seear, indicated, it is an issue on which there can be no going back if the economic well-being of this country is to develop as we hope it will develop. I hope I have said sufficient to show that if the YTS fails, and if the new training initiative launched by this Government and now welcomed by us fails, it will fail either because of inherent weaknesses of the scheme or, even more disastrously, because of employers trying to exploit the scheme for reasons which are not inherent in the scheme, and not giving anyone a hope that there will be a future after training has been given.

Lord Byers

My Lords, before the noble Lord, Lord Scanlon, leaves that point he has made a very important statement. Can I take it that NALGO gives full support to the whole principle of YTS, because that would be very acceptable?

Lord Scanlon

My Lords, it is not within my purview to answer specific questions about a given trade union. Such a question would have to be addressed to the union itself. I can only inform your Lordships of the decision made by Congress after serious debate. So far as I know, the only objection to the scheme by NALGO is the low rate of pay being offered to those who are recruited under the scheme. I cannot be too specific but that is my impression.

May I now turn to the vexed question of what seems to he a chicken and egg argument. We accept completely and without reservations at all that the ground outlined by the noble Lord, Lord Byers, is one of the most desirable and economic ways of job creation. We equally know that such things have to be paid for. Although there will be some quid pro quo—some paying out for economic measures that will give their own return—as my noble friend Lord McCarthy said, expansion or efficiency and viability within manufacturing industry will not create jobs, but they will create the wealth by which jobs in the service industries can be expanded. Therefore, I hope that when the noble Lord replies for the Government he will accept that there is no either/or argument about this.

There is the necessity to ensure an efficient, viable manufacturing base as a necessary guarantee of being able to do all those things in the social services, but not to present it in an alibi form, saying that you cannot do one until you have got the other. If we wait that long we shall never get anything done in either of those fields.

Dealing only with the question of the manufacturing base, I know there is no need to remind your Lordships House that your Lordships' own Select Committee has issued a report. If there is any ground for complacency seen in the very reserved remarks of the CBI about a recovery—and if the recovery is taking place it seems to the outsider, at any rate, to be at the pace of a rheumatic snail—and there is no ground whatsoever for complacency when one realises that the investment in research and development in our manufacturing base is abysmally below any of our industrial competitors, whether it be Japan, America, West Germany or any of our European counterparts. I do not want to go on any longer emphasising these points, except to say that there are grounds on which the Government must tackle this problem on two points. On the services argument about the need for expanding those services because of the labour-capital nature of those industries, no more need be said.

Perhaps I may answer now what I thought was a quite specific point by the noble Lord, Lord Hatch, although I do believe he answered his own question when he indicated the quite firm commitment being given that, as and when—and not if and when—a Labour Government are returned to power, they will recreate the Office of Overseas Aid. That has been a quite clear and quite specific commitment. It has gone further and said it is opposed to cuts in overseas aid. Whether we will get the same commitment when the noble Lord replies we await with interest.

I want to turn to the contribution by the noble Lord, Lord Balfour, and say how much I agreed with the noble Baroness, Lady Seear, in her rebuttal of the contribution of the noble Lord in respect of the unemployed, and, if I may say so, that of the right reverend Bishop. If ever we develop this policy of despair, this philosophy that there will be a section of our community doomed to perpetual unemployment, we shall destroy all that is being argued about now, that has been argued over the years in similar debates in your Lordships' House.

I think it was the noble Lord, Lord Kilmarnock, who used the phrase "There has been no blood on the streets yet". The one reason why there has not been is the difference between what happened in the 'thirties, when if you were unemployed you starved, as distinct from the relative cushioning that takes place through state benefit at the moment. Perhaps that is a warning signal to those who want to cut it. Except for that difference, I believe there would have been civil disorder with a level rate of three million unemployed. If we do not give them some hope that they or their sons are not destined to perpetual unemployment, we shall have to reckon that, in harnessing this new technology, as we must, there must be redistribution of the additional wealth that is created, not only in the form of further capital investment but in the form of shorter annual hours, however those annual hours come, whether through a shorter working week, earlier retirement, more shift work, longer holidays—the list is almost inexhaustible. These are means by which we can bring back into employment so many of those youngsters who at the moment are looking forward only in despair and not in hope.

I hope that this debate has not only given the opportunity of replenishing the arguments used on previous occasions but will, hopefully—but I say not too hopefully, on my part at any rate—ensure that the Government will see the warning light, and that when we see the reply it will propose something in the services element with regard to job creation.

6.7 p.m.

Lord Gray of Contin

My Lords, I think we have had a very good debate indeed. It has been constructive, and every speaker has had a real contribution to make. Initially, I dealt with the principles which were raised by the noble Lord, Lord Byers, but I omitted to answer two points which he raised. The first has been touched upon by a number of speakers. I would just say, with regard to the question of the Civil Service and their attitude to the youth training schemes, that my noble friend Lord Gowrie, the Minister responsible, has had discussions with the Civil Service and progress is being made; he has hopes for a satisfactory outcome soon.

The second point I did not deal with was the question of the noble Lord—a throw-away remark, I think, more than a direct question to me—when he asked if it was correct that there was to be a cut in the urban aid programme. The noble Baroness, Lady Seear, also touched upon that matter. I know of no such intention, but I have little doubt that the department responsible will be looking very carefully, as all departments do from time to time, at their public expenditure in the future. But I can say to the noble Lord that I know of no such intention at the present moment.

The noble Lord, Lord McCarthy, in a speech in which he expensed freely his approval of the measures which have been taken by the Government, also asked me a number of questions, and I shall try to deal with them. He asked me about the uptake as far as the youth training scheme is concerned. I can tell him that in August of this year 107,000 places had been taken up: by 20th October this had risen to 222,000, and I am happy to say that by 27th October it had risen to 240,000. So there is a steady improvement in the uptake. We must accept, of course, that the scheme is new, and for a variety of reasons, some of which have been touched upon by various speakers, there may have been a slight reluctance on the part of some youngsters to engage in the scheme; but the uptake is improving and we are very hopeful for its future.

The noble Lord asked about the job-splitting scheme. Although the response to this scheme has been somewhat disappointing, this is not entirely surprising. Again, this scheme is a new one. It is experimental and it will take time for employers to respond and to decide how best it can be applied to their individual circumstances. The noble Lord also asked about community industry. This is a very specially designed scheme to help socially disadvantaged young people, such as young ex-offenders. It is not intended to provide widescale assistance but is carefully targeted to meet the needs of a particular group. There are no plans at present to expand the scheme. We consider it to be a very specialised type of scheme.

The temporary short-time working compensation scheme is scheduled to close for application on 31st March 1984. This scheme was never intended to act as a permanent subsidy but to assist firms through periods of difficulty brought about by the recession. The Government feel that the scheme has now largely served the purpose for which it was created. The noble Lord also asked about training allowances, and the £25. The £25 is a training allowance, not a wage. If the allowance were to be raised the cost would have to be met by lowering the number of places provided on the scheme or reducing the training content. The Government consider that it is more important to provide as many good quality training places as are necessary. I now turn to the contribution—

Lord McCarthy

My Lords, the noble Lord has answered many of my questions extremely well, and I thank him for that. In fact, some of the answers are to questions that I did not ask. However, there were two questions which I asked, and as the noble Lord is moving on to other speakers I should like to know whether he is going to answer them now or will write to me. I asked in particular about the last year of the YOP in 1982, and how many people actually obtained full-time jobs when they came off the scheme as against just being recycled into further education. Further, on the first year of the YTS, what proportion does the Minister expect will get full-time jobs as against either going on the dole or being recycled into further courses?

Lord Gray of Contin

My Lords, I will try to be helpful to the noble Lord but he will agree that he asked a great many questions, and if I inadvertently mixed up other noble Lords' questions with his I apologise to him, as I do to whichever noble Lord I am depriving of an answer in his own right.

The noble Lord is perfectly correct that I have missed this note. If I remember correctly, the noble Lord was comparing the youth employment placement rates with the YTS. The YOP differs from the YTS in a large number of ways. There is a much larger proportion of places with large companies on the YTS. The YTS has a much higher training content and is a longer programme, providing a full year's training. The latest available placement rate for young people leaving the YOP is 45 per cent., including those going into work and into further education. The placement rate for that part of YOP most akin to YTS—that is, work experience on employers' premises—is 53 per cent.

Lord McCarthy

My Lords, I am not trying to be difficult, but I asked a question which has never been answered. I should like the Minister to go away and try to get the figures to answer my question. However, the department will never tell what the breakdown is between people who actually get jobs and people who get recycled into courses. The figures of 45 per cent. and 53 per cent. given by the Minister push all these together. We would like them separated.

Lord Gray of Contin

My Lords, I can assure the noble Lord that if it is within my power to get the figures separated I shall do so and write to him in due course, and try to be helpful.

The contribution of my noble friend Lord Sieff of Brimpton was most helpful and interesting. My noble friend wrote to me and also told the House that he was unable to be present for the wind-up.

Noble Lords

The noble Lord is here.

Lord Gray of Contin

My Lords, I see that my noble friend has changed his mind. I am delighted that he is able to be with us. I thought that his examples of how the company with which he is connected has been so meticulous in furthering the interests of British industry show just what can be done when management takes a positive decision that it will try to be helpful to British industry. I congratulate my noble friend and his company on the excellent success achieved. It is good to know of these examples where British industry can meet the challenge and be competitive with the best in the world.

The noble Lord, Lord Hatch of Lusby, whose main contribution I shall come to shortly, raised an interesting point on the same subject which I shall deal with now. He suggested that through our overseas aid programme we could improve and increase employment in this country. It is not always as easy as it sounds, and it is not easy to identify. There is a counter argument which I have met, and which the noble Lord, Lord Ezra, will certainly have come across. I am delighted to be able to debate with the noble Lord, with whom I had much contact in my previous incarnation. The point is frequently made about encouraging British industry. For four years I was Minister of State for Energy in another place. Various orders for work arose which were frequently connected with the oil industry, and sometimes with nationalised industries, but where British companies were not always the cheapest. Great political issue was raised as to whether the orders should go to a third world country or whether the work should be carried out in this country.

I am afraid that I took the view taken by my noble friend, that British companies should be encouraged in every possible way, and where there was not a great discrepancy in price I always did what I could to influence the orders towards British companies. But there are times when third world countries compete on a very competitive basis. If we are to follow the purely commercial aspects of the argument and we give the orders to third world countries, we are at the same time depriving our own industries. I know that the noble Lord did not intend to do so, but I think that he over-simplified that part of his argument. However, I shall refer later to what the noble Lord had to say and perhaps he will allow me to proceed for the moment.

The right reverend Prelate the Bishop of Wakefield made a very interesting contribution. We have, of course, very much appreciated the participation of the Church in various special schemes for the unemployed. I welcome the right reverend Prelate's remarks, particularly about embracing new technology as a way of enriching our lives, both materially and in relieving us of many of the more onerous kinds of work.

The noble Lord, Lord Kilmarnock, asked a number of questions, and it may be that some of his questions have already become entangled with those of the noble Lord, Lord McCarthy. However, I shall try to answer him on at least some of the points that he raised. He asked how many of the projected 460 places had been taken up. I think I have already dealt with that in replying to the question of the noble Lord, Lord McCarthy. The noble Lord asked what proportion of these places are sponsored by local authorities and voluntary organisations. I am afraid I have to tell the noble Lord that these figures are not to hand, but I shall arrange for them to be obtained and I will write to him in due course.

The noble Lord asked what proportion of the long-term unemployed are connected with the community programme or have been helped by the community programme. There are about 1,143,000 long-term unemployed people. The community programme has covered approximately 130,000 of those. The principal way in which we can help these people is by setting the economy to rights and creating the conditions for growth. I am sure that the noble Lord will be glad, as I am, that at least 130,000 of those people have been helped by the scheme.

I referred to the noble Lord, Lord Hatch of Lusby, a few moments ago. I thought that he gave us——

Lord Kilmarnock

My Lords, I am most grateful to the Minister for answering those questions, but there was just one which he missed. It was about the training element in the young workers scheme. I wonder whether he could write to me about that.

Lord Gray of Contin

My Lords, I shall certainly do so.

The noble Lord, Lord Hatch of Lusby, gave us an extremely interesting and fairly wide-ranging account in dealing with trade and investment. I am afraid that I am not able to give him an answer to the question which he put to me any more than were my predecessors. It would be impossible to quantify in a definitive way the effect of our overseas aid programme on unemployment rates. He said that an estimate has been made. With the greatest respect, I suggest that it was rather more of a "guesstimate". It would he extremely difficult to arrive at an accurate figure.

Lord Hatch of Lusby

My Lords, I have made this point before to the Minister's predecessors. When Dame Judith Hart was Minister for Overseas Development she got the officials—some of whom are still in the Overseas Development Administration—to work this out for her. It is no good calling it a "guesstimate". It was officially stated by Judith Hart when she was Minister of State.

While I am on my feet, I ask the noble Lord to consider the previous point he made in connection with my speech. I do not believe that he would want to confirm the myth which is so widespread in this country about the competitiveness between third world industries and our own. Let me give him one set of figures to answer his point on the classic case of——

Baroness Trumpington

My Lords, I think that the noble Lord is taking advantage of his intervention. I think that it would be the wish of the House that the Minister should resume.

Lord Hatch of Lusby

With great respect, my Lords, the Minister asked—

Baroness Trumpington

My Lords, I am sorry. I have asked.

Lord Gray of Contin

My Lords—

Lord Hatch of Lusby

My Lords, will the Minister give way now?

Lord Gray of Contin

My Lords, I think that the noble Lord will have sensed, as I have, that the House would wish us to move on. If he cares to write to me about any further point that he would like to raise, I shall do my very best to give him an answer.

My noble friend Lord Balfour of Inchrye made a contribution which I think we have to take very seriously indeed. He was taken to task by one or two speakers who followed, but I believe that he presented a very realistic view of the seriousness of the problem with which we are faced. I agree with him that the test of a job is whether it is directly or indirectly useful to industry and that subsidising jobs that are not really useful to anyone leads only to much more serious problems in the long term. However, I do not share his fears about there being an army of unemployed for the foreseeable future. Indeed, I think that a Government of whatever political persuasion have to face that challenge of the future and do everything in their power to create a situation where our industry can again succeed, he competitive and produce things that people want to buy at a price they can afford. I believe that that is the route, more than any other, to reduce our unemployment in the long term.

Lord Balfour of Inchrye

My Lords, would my noble friend agree that the Department of Employment report says that 85 per cent. of unemployed men over 45 now have the mental attitude that they will never work again?

Lord Gray of Contin

My Lords, I think that the noble Lord is correct when he says that a certain attitude has developed among certain age groups. This is part of the challenge. We have to try to recreate a situation in which our industrial base can revive competitively so that these people can be included. We must make an effort to produce jobs for both the young and the middle-aged.

The noble Lord, Lord Spens, described schemes in Ashford and Somerset. The new training in technology is particularly valuable. It is impressive to see local communities coming together to start such schemes. I agree with the noble Lord's remarks on wages. Very often minimum wages can raise employers' costs and reduce job prospects for the very people they are designed to help.

The noble Lord, Lord Ezra, gave support for Government training schemes. I am grateful to him. I agree with him that British industry can compete. His industry has done very well in this area. He referred to the base which we now have for mining machinery and equipment. That is in no small way due to the attitude of the Coal Board over the years and its encouragement to British industry. The noble Lord asked whether it was Government policy to run down our manufacturing industry. Without any doubt I can confirm to him that that is certainly not our policy. It is to see British industry become highly competitive so that it can compete with the best in the world. We have heard this afternoon of some areas in which it is already achieving that. I am sure that we all hope that they can be broadened. I assure the noble Lord that it is our policy to assist industry to reach this state.

The noble Baroness, Lady Nicol, also gave us some very interesting examples of job creation. She suggested that the Government had not indicated how it would create permanent jobs. I am afraid that I cannot give her exact examples of how permanent jobs will be created. I have tried to outline how we see the scenario and the climate for permanent jobs to become more plentiful. I believe that that is possible. Despite what the noble Lord, Lord Scanlon, said, I believe that we are beginning to see an upturn and there is an indication that the rate at which unemployment is increasing is falling off. That is the beginning of what will become an upturn in employment. I believe that such situations will create the atmosphere in which industry will prosper. We cannot have lasting new and extra jobs unless industry prospers.

The noble Baroness, Lady Seear, made a number of points. I entirely agree with her that education, training and work are closely related. The Government have established technical and vocational education initiatives providing work preparation links between school and working life for youngsters between 14 and 18 years of age. A pilot scheme, which the Government are watching very closely at the present moment, is making good progress, and we feel very confident about it.

I acknowledge the need for greater publicity for the youth training scheme; we fully accept that. It is certainly not a YOP by another name, but a very new, high quality, year-long training scheme for all 16–year-old school-leavers, and it has been in existence for a matter of two months only. I think that it is far too early for us to say how well the scheme will do. It is I believe as much for employers as for the Government to ensure that the scheme succeeds. We are determined to make a success of it; and we must wait for a few months more to see how it is going to progress. But we feel very confident regarding the future of the scheme.

The noble Lord, Lord Scanlon, said that he felt a little depressed that there were no words of praise for the trade union movement and what it was doing so far as training was concerned. He also mentioned how the movement had welcomed various schemes. I assure the noble Lord that I was not in any way critical of the trade union movement, and I am delighted to have his assurance that the unions are so supportive of our schemes, and in particular of the youth training scheme.

I think that I have dealt with the point which the noble Lord also raised and which had been raised initially by the noble Lord, Lord Byers, about the attitude of the Civil Service. I have also dealt with the point about the manufacturing base. To the noble Lord, Lord Scanlon, I would say merely that I am sure there is nothing between us regarding our desire to see British industry succeed again, and we probably both agree that the only way it can succeed is for it to be highly competitive in an ever more competitive world market.

In conclusion, I wish once more to thank the noble Lord, Lord Byers, for giving us the opportunity to discuss this very important subject today, and I also wish to thank the noble Lord for the very constructive approach which he and his colleagues have taken to the whole question.

Lord Hatch of Lusby

My Lords, before the noble Lord sits down—

A noble Lord

He has sat down.

Lord Hatch of Lusby

—will he be so good as to add to his answers whether he has the knowledge that in textiles, for instance, there are six times as many textile imports from developed countries as there are from developing countries, and that the developing countries' contribution to textile imports is dropping while that of the developed countries is rising?

Lord Gray of Contin

My Lords, I am grateful to the noble Lord for supplementing my briefing. I feel that it would be wrong of me to say any more at this stage. I think the House feels that we should proceed and naturally the noble Lord, Lord Byers, would like to wind up his debate.

Lord Byers

My Lords, this has been a very useful and a very high level debate, and I am extremely grateful to those noble Lords who have contributed and participated, and for the particular proposals which many of them have put forward. We ought in particular to thank the Minister for the manner in which he has replied to the various points that have been raised, and I am extremely grateful to him for that. This is not a simple problem; it is a complex problem. It needs constant review, and I can think of no better forum than your Lordships' House for undertaking a constant review of a problem which will not go away. My Lords, I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.