HL Deb 12 December 1984 vol 458 cc280-350

3.8 p.m.

Lord Cledwyn of Penrhos rose to move to resolve, That this House recognises the human misery and waste caused by current unemployment of labour and resources; deplores the lack of urgency shown by Her Majesty's Government in tackling this problem and calls for a statement of the positive steps to be taken to enable available labour to be used to meet undoubted national needs.

The noble Lord said: My Lords, the Government are faced with a number of problems at this time, some of which are of their own making and others for which they cannot be held responsible. Their task is to try to find solutions for these problems. That is their job. They pledged themselves to do so in two successive general elections. For a time at least, a Government can blame their predecessors—and some Members opposite are expert at that. But whatever the merits or otherwise of the previous Administration prior to 1979, it is too late for that now. This Government under Mrs. Thatcher have been in power for 5½ years. Like "The Mousetrap", the play goes on and on. It is true that the cast has changed substantially. Some star actors are now resting. But the leading lady is still on stage, for the time being at least.

By far and away the biggest problem facing the nation is that of unemployment. It has trebled to over 3¼ million under this Government. And after a period of misplaced faith and unrealised hope many members of the party opposite have begun to worry about it. They are of course right to do so, as many of the ills in our society stem from it: the growing lack of respect for law and order; the crime rate: the safety of our streets; even the problem of drugs and drink. All these are acknowledged to bear some relationship to the failure of so large a number to find work or to have a prospect of work.

There are also wider costs and consequences to society. They are reflected in increased demand on doctor services, on social services departments, on organisations such as the Samaritans and the NSPCC. The Survey of Social Service Departments for 1983 had this to say: We have found evidence that long-term unemployment puts individuals under great strain and is a major cause of family breakdown … We can only repeat our past warnings that society must not be surprised when some young people feel resentful, apathetic and resort to delinquency, drug addiction and drunkenness because they feel we do not afford them the chance to become worthwhile citizens". It is a grim warning.

The statistics of unemployment are well known to the House and I shall therefore only summarise them briefly. As I have just said, the official figure of unemployed stands at over 3,250,000. An analysis of this shows that it is deep-seated, for 369,000 have been unemployed for more than three years, nearly 700,000 for over two years, and 1,047,000 have been unemployed for more than a year. There are other, equally distressing figures. For example, it is estimated that 63 per cent. of 16- and 17-year-olds will not find paid work by the end of this year, and 40 per cent. of the total out of work are under 35 years of age. This is the human misery and waste that we refer to in our Motion.

In a speech yesterday, the Prime Minister rightly called for a reduction in waste. This is what we are stressing today: that there is a waste of experience and a waste of young lives; and the longer the period of unemployment, the greater the deprivation and insecurity. In 1981 there were 15 million people living on the margins of poverty; and of these, 2.8 million were living on incomes below supplementary benefit rates—a level below which Parliament believes no one should fall. This, in 1981, was three-quarters of a million more than in 1979, and things have got much worse since then. By December 1983 the number of people living on supplementary benefit had risen to 7.2 million. The number of people living in poverty as a result of unemployment has trebled since 1979. This has occurred solely among those of working age and it is a consequence-a direct consequence—of the Government's economic policies.

According to a Low Pay Unit paper, in 1983 the United Kingdom was found to be in breach of Article 4 of the European Social Charter, which states: There is a fundamental social and economic right of workers to a remuneration which will give them and their families a decent standard of living". The "decency threshold" set by the council is a wage equivalent of 68 per cent. of average adult earnings, or £108.30 in 1984. We should be ashamed of that. Of course, there has been great confidence in the economic policies among some members of the Government, including the Prime Minister. We were told that the policies were right: and we were told that the policies would work, even though all the signs pointed in another direction. This is the lack of urgency to which we refer in our Motion.

The Chancellor of the Exchequer worries me. Last year he said on "Weekend World": There is every prospect that by next year"— that is, 1984— we will see the start of a fall in the level of unemployment". Not so long ago—I think it was in September—the Chancellor. when charged with the size of this problem, said: Crisis? What crisis? There is no crisis". I say to him, to noble Lords opposite, and to the House, that it is a crisis for that skilled man, if he has been eating his heart away because he thinks he is no longer needed; it is a crisis for his wife and for his children; it is a crisis for that young boy or girl who leaves school without the prospect of a job; and, while I value youth training, it is a crisis for the young people if, at the end of their training, there is no job for them.

Furthermore, it is a crisis for the country when so many of our people have become increasingly desperate or hopeless and when the most priceless of all our resources—our men and women, with all their skills and their aspirations—are sacrificed on the altar of economic doctrine. Lest it be thought that I am exaggerating—and I do not want to do that in this debate—I shall call one quotation in aid. Here it is: The dole today is better than anyone could have dreamed of in the 1930s—we are able to cushion the hardships of the unemployed. But the social waste is still the same, the human debilitation just as bad, the affront to dignity just as tragic". These words were uttered by Mr. Peter Walker two weeks ago—Mr. Walker, a member of the Government, a Cabinet colleague of noble Lords opposite. I shall return to Mr. Walker a little later.

But the fact is that he is at odds with the great majority of his colleagues and with the Prime Minister. They are obdurate in their refusal to modify their economic policies and their reliance on monetarism. This is well known, but how successful have these policies really been? The Government's message over the past five years has been: "Put up with these difficulties; and once we've got inflation right, things will get better and unemployment will start to come down". It was on that very prospectus that the Government won two general elections. They have rested their policy on the control of two arbitrary statistics—the money supply and the PSBR—and both have failed as the real economy of Britain has deteriorated.

The Government claimed that unemployment would come down if inflation was reduced. It is true that inflation has fallen, but unemployment has gone on rising and all predictions indicate that it will continue to rise. If there is any evidence to the contrary, this House will require to hear that evidence from the noble Lords who are members of the Cabinet and who are speaking in this debate.

The Government have blamed unemployment on the world recession, and of course we recognise that the recession affects every country. But our unemployment rate rose more than twice as much as the rest of the OECD, between May 1979 and May 1984. In short, the Government's medium-term financial strategy is not working; the economy is not responding to it. The Prime Minister is on record as saying: There will he no change in our economic policies, because they are absolutely right". The Prime Minister's strength is her determination; her weakness is her obstinacy; and in due course she must change her policies or she must go. It is no use carrying a well-thumbed copy of the 1944 White Paper on unemployment in your handbag if you do not read it. She reminds me of a fundamentalist preacher who was always preaching from the more lurid texts of the Old Testament and completely forgetting the messages of the New Testament.

She says that the Government's policies are those of the White Paper. But she has forgotten its foreword, which said: The Government accept as one of their primary aims and responsibilities the maintenance of a high and stable level of employment"; and further: Public investment should be used as an instrument of employment policy". I can imagine Lord Beveridge's reaction if he thought that unemployment was one in six of the labour force, with no hope of improvement in the foreseeable future. He would have been horrified.

The Government are to be condemned therefore for operating unworkable policies and for accepting—indeed, for creating—unemployment as a part of those policies. By so doing they have created a huge problem, and it is necessary to stress that it is not one which can be quickly or easily solved. There is no short cut to the days of full employment. What we want to see, and what we are asking for in this debate, is a clear and constructive start on the road back to full employment.

The Youth Training Scheme, the efforts of the Manpower Services Commission, of which the noble Lord, Lord Young, was a distinguished chairman, and even the Voluntary Community Work Scheme which the Secretary of State for Employment is said to be planning—all these are laudable; but unless the Government are prepared to modify their economic policy, all these are sedatives and not remedies. They will not bring the country back on to its feet.

Let me put this plainly to the Government in this debate. There is a very strong feeling in this country—and it is a feeling which cuts right across party political boundaries—that the Government should move quickly to rectify their mistakes before it is too late.

Many constructive proposals have already been made and they have come from several sources. A Select Committee of this House under the chairmanship of the noble Baroness. Lady Seear, made some important recommendations. Many of those, like the proposal to extend the Job Release Scheme, should be considered by the Government; but the report of the noble Baroness and her committee was put on the shelf to gather dust. It is time that the Government acted upon some of its recommendations.

Furthermore, a number of leading Conservatives, in addition to Mr. Peter Walker, have expressed their profound disquiet about the present state of affairs. Mr. Francis Pym in another place, and yet again on television two weeks ago, had no doubt in his mind that the Government should take action. Sir Ian Gilmour. Mr. Geoffery Rippon, Mr. Edward Heath and many others have expressed similar views. I could quote at length from their speeches, but I think that their considered opinions are well known to noble Lords opposite. They were supported by a large number of speeches made at the annual conference of the CBI where unemployment again was properly the central issue.

Some Ministers in this Government, and no doubt one or two noble Lords opposite, will shrug off these protestations, but I do not, cannot, believe that the Leader of the House. with his great experience and his sense of what is right, will do so; he will realise that the future of this country is at stake in this matter.

There are some other things which could be done now without great cost. For example, voluntary early retirement on a proper scale—something discussed in the Select Committee's report—should be introduced. Measures should be taken to halt the outflow of capital from this country; we cannot afford the luxury of British capital being invested overseas when it is needed by British industry here at home. And we should also extend the programme of retraining and training to people of all ages, so that they can make full use of changes in technology. We rightly emphasise the problems of young people. But we must not overlook the desperate worries of men over 40 and 50, many hundreds of thousands of whom throughout the country are losing all hope of ever finding work again.

The training programmes introduced by this Government, although they are welcome, are not an answer to the problem. There are indications that the Youth Training Scheme itself—and I address this to the noble Lord, Lord Young—is not fulfilling the Government's expectations. The Financial Times on 10th December reported that in a paper presented to the Youth Training Board on that day the figures showed that at the end of November the provisional number of young people on current year schemes was 258,000, which is about the same as this time last year. I believe that a figure of over 400,000 was predicted the Government. I support the Youth Training Scheme. but it would be a great mistake for the Government to make exaggerated claims at this time. There is nothing to be gained from that in the long run.

With others, we have urged that far more should be invested in our infrastructure. We debated this in the House last January, and there is widespread agreement that investment in improving infrastructure would bring real benefits. This again was urged strongly upon the Government at the CBI conference.

The case for capital investment in the infrastructure appears to be overwhelming, not only because a good part of our infrastructure is in need of replacement, but also because we cannot have economic recovery unless the infrastructure is in good shape. The Chancellor of the Exchequer has told us to look to the private services for salvation. They will make a contribution, but they will not solve the problem. I regard public sector employment as playing a crucial role, and we should not forget it. The construction industry in particular has a key role to play, and I am sure that a number of noble Lords who are to take part in this debate will refer to that vital area.

Noble Lords opposite may ask, "Who is to pay? How are we to pay? If we do pay, it is a departure from economic policy and will bring back inflation". Is that the case? The Independent Institute of Fiscal Studies and the London Business School—not unfriendly to this Government—recently came to the conclusion that £1 billion (and I say this specifically to the Government and to the Chancellor in advance of his Budget) spent on tax cuts reduces unemployment by about 30,000 in four years. But £1 billion spent on investment, particularly capital investment in the infrastructure, reduces unemployment by about 185.000 in four years. Which is the Government to choose? Is it tax cuts, or is it jobs? We shall see on Budget Day, but I hope that Ministers like the noble Viscount the Leader of the House will make their voices clearly heard in the Cabinet when the debate takes place. I hope that the Government are not so intransigent that they will not listen to views other than their own.

In short, we have come to a point where there is a need for the most urgent and careful study of the implications of the current unemploymet crisis. To potter around at the edges without going to the heart of the problem is to ask for trouble. One of the causes of the present tragic strike is that the people living in the mining communities do not believe that the Government have any serious plans to provide alternative work for them in the valleys if the pits are closed. This lack of confidence must not be ignored.

The tragedy is that, at a time when we are enjoying one of the biggest bonuses in our history—the great North Sea oil development—the Government should be using the revenue to pay unemployment benefit and not to invest in industry and infrastructure. It is the most unhappy paradox that money which should be used to build our country to match the challenge of a difficult age should be used to keep men and women on the dole. It is a sad and sorry tale.

I read with interest what Professor Michael Howard wrote in The Times the other day. He said: unless people are able to contribute by their work to the functioning of society, thereby acquiring some status within it, they will feel rejected and ultimately alienated".

When the lighthouse flashes its warning beam the prudent captain knows that danger lies ahead and he will change course. The warning lights are flashing for Britain today; there is still time to change course and we plead with the Government to do so. If they do not, they will take Britain into the utmost peril. I beg to move.

Moved to resolve, That this House recognises the human misery and waste caused by current unemployment of labour and resources; deplores the lack of urgency shown by Her Majesty's Government in tackling this problem and calls for a statement of the positive steps to be taken to enable available labour to be used to meet undoubted national needs.—(Lord Cledwyn of Penrhos.)

3.29 p.m.

The Minister Without Portfolio (Lord Young of Graffham)

My Lords, in opening today's debate on behalf of the Government, I should not like your Lordships' House to consider that the eight minutes allotted to me in any way reflects either the Government's or my lack of concern about the subject of this debate, which is, after all, the central issue of our time. Nothing could he further from the truth and, although the time is more than enough, I suspect, to refute the case put forward by the noble Lord, Lord Cledwyn, it will not be enough for me to expand on what the Government have done, are doing, and will do. In leaving some of that task to my noble friend Lord Gowrie, I hope that no-one in your Lordships' House will feel that the Government are in any way defensive of their record or that I am in any way slighting this House.

Unemployment is a matter about which we all share a profound concern. Experience here and abroad has proved time and time again over many years—not just during the lifetime of this Government—that it is a deep-rooted problem, and one to which there are no easy answers. Indeed, if there were easy answers, if there were simple solutions and if we could just have waved a magic wand, would we not have waved it, would we not have implemented such solutions and, indeed, would not other countries have done so? But there is none. It is no service to the unemployed to pretend that there are any. They at least deserve more honesty from us than that.

Of course, the Government recognise the human distress and waste which unemployment brings to individuals, to their families and to whole communities. I know only too well the waste of our country's most valuable asset—our people. But we shall not solve this problem by the fine-sounding words which the noble Lord, Lord Cledwyn, produced today. We can all produce fine words, but it is sound policies that are needed—policies that will provide a real, lasting basis for a better future. I do not believe that the noble Lord, nor those sitting on his Benches, have such policies.

We have heard once again the "mores" of the Opposition—more Government spending, more Government investment, more Government jobs and more Government controls. I have to say that the noble Lord sings a song with a tired refrain. Time after time we hear the same old song.

I find it extraordinary that the noble Lord and his party have still not learned the lesson that you cannot spend your way into sustained economic growth. Where is this money to come from? From higher taxes? From more borrowing? By printing more money? And what would be the effects of any or all of these in combination? We have only to look back a little way in our history to find the answers: higher interest rates, rising inflation, fewer incentives, lower investment and, in the end, higher unemployment. We have tried it before and the noble Lord would have us try it again.

If massive extra public spending was the right way to create jobs, then the big rise in public expenditure as a proportion of GDP over the past 20 years should have solved the problem. But it has not. The fact is that the Government are already spending over £130 billion a year. But no matter what the level of public expenditure, the noble Lord and his party always seem to think that somehow just £1 billion more would make all the difference.

The Government are not against investment. Far from it: we fully understand the need for effective investment if our industries are to be able to match their foreign competitors. Fixed investment across the whole economy is at a post-war record; this year it is estimated at over £55 billion at current prices. It is up by 7.5 per cent. in real terms, and we expect it to be higher next year. But more than that, between 1981 and 1985 it will have increased by over 24 per cent. compared with a mere 5.1 per cent. for the EEC as a whole.

Of course, the balance between public and private investment has shifted as the Government have released resources to the private sector. We make no apology for that. But we also recognise the value of public capital investment where it is appropriate and where it can earn a proper return. However, it is absurd to suggest that spending yet more millions of pounds of taxpayers' money on major infrastructure projects is any answer to unemployment. The job-creation effects of such expenditure would be much less than is imagined. I must tell your Lordships that it would be good for the hire of plant, but it would be bad for the hire of men.

I should now like to turn to one particular aspect of unemployment which the noble Lord, Lord Cledwyn, mentioned—that of youth unemployment. Here, at least, in your Lordships' House, there can be no disagreement. For a young person to go straight from school into unemployment is something which none of us can lightly contemplate. Unemployment among school-leavers represents a waste of young people's energies at the very moment when those energies are at their most receptive. It also conditions the young people concerned into an attitude of mind in which to do nothing is the norm and where the street corner becomes the limit of their vision and of their ambition. That is why this Government have devoted resources on an unprecedented scale to meet this challenge. This year we shall be spending approaching £1 billion on employment and training measures just for young people.

The results of that expenditure are now clear to see. A recent survey showed that nearly 60 per cent. of the young people who left the youth training scheme this summer went into employment and a further 13 per cent. were in, or intending to go into, further education or training. If only 250,000 people take part in the youth training scheme as against the original estimate of 400,000. it is because many more young people found employment.

However, this does not mean that we can rest content or that there is no more to be done. I am undertaking an urgent investigation into the whole range of our provision for the employment, training and payment of benefits to our young people. I profoundly believe that the youth training scheme has been a major milestone along that road, and I think that we owe it to our young people to encourage its progress by all the means at our disposal. It was Oscar Wilde who said: Children begin by loving their parents. After a time they judge them. Rarely, if ever, do they forgive them". I am not too sure that many of our young people will readily forgive us if we do not do all in our power to create a climate in which their enterprise is allowed to flourish.

There are many other key questions on which I should like to have touched, including the very real problem of the long-term unemployed, but time does not permit. The key to reducing unemployment can only lie in the policies being followed by this Government. That means controlling inflation, restraining public expenditure, encouraging the growth of real jobs and returning to this country the spirit of enterprise which was so nearly extinguished by the heavy hand of state control which by 1979 had come to permeate almost every corner of our land.

I know that there is impatience to see these policies result, as they will do, in falling unemployment. But they are already bearing fruit. We employ 66 per cent. of our population of working age, compared with 61 per cent. in Germany and 60 per cent. in France. We are the only major European economy generating additional jobs. Only Australia, the United States and Canada are doing better than we are, and in the last 12 months we have done better than Japan, Germany, Italy, Switzerland, France, Sweden, Norway and Spain. Our policies are working: for the road to reduced unemployment is to get employment going, and it is only by the policies followed by this Government that the way lies for a return to fuller employment.

3.38 p.m.

Baroness Seear

My Lords, we on these Benches have repeatedly explained our macro-economic policies in relation to unemployment in general, and in the time allowed me I do not propose to repeat those policies. Instead, I want to concentrate on one group of the unemployed to whom I attach the greatest importance—the long-term unemployed. I agree with much that the Government are doing to make industry more efficient. I agree that if we have the changes in industry and if we have training of the labour force, which the Government support, then for many people in this country the prospects of employment can be quite good.

However, the fact remains that we have a residue of long-term unemployed who will not be absorbed into work as a result of the Government's policies, and it is of those people that I- wish to speak today: for they need interventionist policies of the kind that, to a great extent, the Government have been unwilling to adopt. In relation to such interventionist policies the Government will say that they have to be cost-effective. Of course we want them to be cost-effective, but I beg the Government, when they consider cost-effectiveness. to consider it in the terms of the economist and the management accountant, and not in the terms of the bookkeeper, as they so often do at the present time.

It is not for me to repeat the sexist remark made by a Member speaking in another place (or was it made by a Member of another place speaking outside this building?) when he referred to the economics of the housekeeper. I would not use such a term, but I think that my meaning is the same as his. For so often when the Government are looking at expenditure in these matters they think extremely short-term, calculating the benefit on a yearly basis, taking into account only the immediate results that they get; and yet when dealing with the long-term unemployed it is necessary to take other considerations into account. I am not talking now about the pain, suffering and social cost, I am talking about the harsh financial cost of maintaining large numbers of people in this country in permanent unemployment, and that is the position of the long-term unemployed.

We find the long-term unemployed tragically not only among the elderly and the middle-aged but also among the young. Far too much unemployment is concentrated among the under-25s, and there are many under-25s who rank as long-term, having not had a job for one, two, or even three years. I would ask the Government to look as a matter of urgency at the policies, some of which they have already started, which they have started, in my view, in too tentative a way and with too little courage, too cautiously to tackle this particular and urgent problem.

Let us take first the young. I am a strong supporter of the Youth Training Scheme and what the Government are attempting to do. I know that it is in the mind of some Ministers that we should have a two-year and not a one-year programme. I ask the Government as a matter of urgency how soon can they come to a decision about this, not necessarily to make the second year from the age of 17 to 18 but to have a second year which can be used as appropriate for the youngsters when they are ready to take that second year? I would ask that one year should be available to some more of the under-25s who have missed the opportunity of the Youth Training Scheme and who are heavily represented in the ranks of the long-term unemployed.

Then again I would ask the Government to look at the question of those youngsters who study but who, if they are on supplementary benefit and if they take worthwhile courses—courses involving more than 21 hours of study—lose their benefit. What sort of cost effectiveness is this? We all know that we suffer in this country because we have an untrained labour force. We all know that in the future the race is to those who have a fully-trained labour force, an educated labour force, capable of flexible adjustment to the new opportunities that arise. If we do not want to turn the young of today into the long-term unemployed of the future we must encourage them in every possible way to get themselves educated and to be flexible. Surely it is the most paltry economy to suggest that if they study for more than 21 hours their supplementary benefit should be reduced. I ask the Government to look urgently at that point.

Then there is the question of jobs and work for those people who are indefinitely unemployed. The Government have done something. It was one of the points suggested in the Select Committee report: the Government have done something to allow unemployed persons to earn more than was allowed before and still to keep their benefit. But it would pay us hands down in regard to those people who have been unemployed for one, two or three years, particularly those in the older age groups for whom, frankly, the likelihood of a return to full-time employment is almost nil. This will be the case however succesful the Government's policies may be, because the success of the Government's policies will involve the elimination of the very jobs that people of that kind have in the past been able to do or have any prospect of being able to do in the future.

It would be a cost-effective thing to do to enable the people in that category—and it would not be difficult to discriminate between people in that category and others—to earn a far larger amount than they are at present permitted to do without losing their unemployment benefit. The savings in other directions would go a long way to offset the cost that would be involved in allowing them so to do. It would increase the number of men in part-time employment, and that might be a very good thing indeed. It would encourage some people to take part-time employment, and therefore to release the full-time jobs to other persons who need them more and want them more urgently.

I beg the Government to ask themselves whether it is possible to move much further in that direction so that there could be really worthwhile part-time jobs for people in the category of long-term unemployed without them losing to any substantial extent the benefit that they are able to draw. In so doing we should be moving in the direction—a direction in which we on these Benches are convinced that we have to go—of a minimum citizen income. That is the way that sooner or later we shall have to direct ourselves.

Then. in the minute left, I come to the community programme. The Government have been on a winner in the development of the community programme, but they have done their best to ruin what was one of their own most successful ideas, because they have not allowed sufficient continuity. This scheme is based on the collaboration between the statutory and the voluntary bodies, drawing on the ability, enthusiasm and knowledge of people at grass roots level, but they need to have continuity. The voluntary bodies need the assurance that they will be able to continue with their plan, and at present again and again when schemes have got going they have been cut back because of changes in the budget.

I beg the Government to look at ways in which, once schemes of that kind have been accepted as being worth while, they can be assured of a degree of continuity which at present is not there. If these schemes take root, I believe they will be worthwhile job creators, but they are not taking root at present as they should because of the way in which the Government have played ducks and drakes with the financing of them in the past.

May I in the half minute left to me just make one further point? The recent regulation which has come out in relation to community programmes which prevents people who are not drawing benefit from being employed on the community programme is in my view indirect discrimination against women. I hope that the Equal Opportunities Commission will take the Government to court on this.

3.47 p.m.

The Lord Bishop of Southwark

My Lords, eight minutes is not very long for an early participant in a major debate. I have hacked off as much as I can from my speech and I hope that the rest hangs together. I want to offer two particular suggestions in relation to Lord Cledwyn's proposal for a statement of the positive steps to be used to meet undoubted national needs. I take no party line, but we are reaching a point in what may be called national consciousness when the need to take action about unemployment is seen by most of us as overwhelming and urgent. It is for this reason that my first proposal is short-term, immediate, and relates directly to the statement made by the Chancellor of the Exchequer on 12th November at col. 418 when he stated that tax changes already made, will take full effect next year and reduce taxation in 1985–86 by some £1¾billion. He then went on to say that, it does look as if there will be scope for some further net reductions in taxes in next year's Budget. The best figure that I can put on it at the present time is about£1½billion. I am sure that everyone here wants to see the burden of taxation on the lower paid lifted. The poverty trap is a menace. But what worries some of us is that, if you simply lift the taxation threshold, a great many other people who are not in such urgent need, or in no need at all, also benefit. From that point of view, a simple increase in child benefit will do the job much more precisely for many and it will help those who pay no tax at all.

If it is argued that the money left in the hands of the better off through lower taxation will then be used to invest, or to buy more consumer goods, thus creating more real jobs in the long term, then one has to ask another question: will this in fact create the jobs where they are most needed and which will best serve the long-term interests of the country at the present time? That is one of the key issues before us.

I am a member of the inquiry into British housing which is chaired by His Royal Highness the Duke of Edinburgh and has many serving on it who are very knowledgeable about housing questions generally, which I am not—not yet, anyway. So far, we have been receiving and sifting a large amount of evidence. On the basis of what I have read and heard—and I must stress that this is my personal opinion—some broad conclusions emerge which will not be unfamiliar to Members of this House. First of all, in certain areas those with low and limited incomes are facing increasing difficulty in finding or keeping a home. There is a growing shortage of housing to rent, and it is most severe in London.

Secondly, there are worsening problems of house conditions throughout Britain, despite some increase in rehabilitation and maintenance work in recent years. This is principally because such huge numbers of houses were built, often to lowish standards, in the late 19th and early 20th centuries, and because of the well-known defects of some recent system building, especially in the municipal sector.

Thirdly, capital investment is not being attracted into the provision of rented housing, and while interest rates remain at or near double figures it probably never will be attracted again into the commercial or private sector except at the luxury end of the market. Good housing is such a basic need for any society. It seems obvious that its high cost must be shared within the community and across the generations in some way. If I billion is to be available in next spring's Budget, then there must surely be a very strong case for saying that part of it should be used to tackle the appalling housing problems faced in places like Southwark, in my own diocese.

These broad arguments, I know, were powerfully deployed in the debate on the infrastructure earlier this year. Its relevance to this debate is the obvious one that the construction industry is labour-intensive. It employs mainly younger men, and if it is not revived a little soon it will become incapable of carrying out work which will have to be done if we are to avert a housing crisis, a sewer crisis, a road or a rail crisis, or possibly the whole lot together in a few years' time. In 1960 the construction industry employed 1½ million people. By 1983 that figure had dropped to under 1 million. I do not think that much of that can be simply attributed to technological change.

Since Bishops are rightly suspected of being weak on the subject of economics—though they are not alone in this—may I add that I am well aware of the arguments about more Government spending leading to inflation, and I accept the strength of them. But in this case we are talking about a surplus which the Chancellor has already told us that he hopes to have. A professor of economics whom I consulted opined that to give all that surplus back in tax cuts is more likely to be inflationary than using some or most of it on capital development, if only because some of it would almost certainly be spent on imports and services abroad.

My second proposal is the long-term one touched upon by the noble Baroness. Lady Seear. I am trying to bring into play certain convictions that are, I believe, part of the Christian understanding of how we should live together in a crowded and dangerous world. Any consideration of these positive steps to be taken to enable labour to be used to meet undoubted national need must not stop at the traditional views about work and remuneration, which still lead to such sterile debates. Many of us believe that there will never be enough work again for everyone who wants to work for 35, 40 or 45 hours a week. Many of us also believe that it is not everyone who wants to spend long hours at boring and repetitive work of one sort or another. Gradually, a whole new debate is emerging about the possibility of a society in which everyone might be paid a guaranteed minimum income or wage and then paid more for particular kinds of skills, responsibilities, danger and so on. Many of your Lordships will know much about this already, and it has been quite well researched.

I think your Lordships will also know that when one first hears about something of this kind one greets it with mild disbelief, or worse. It sounds like an invitation to laziness on an unprecedented scale. I have no doubt that original sin, or whatever one chooses to call it, will raise its head in certain ways on issues that have to be faced. But the main thing about it is that the more one thinks about this the more one suspects that we have to move towards some radically new solution. Beveridge welfarism cannot stand the present strain much longer. And leaving it all to private capital is not producing fair or adequate solutions, either. There must be another way: a way which makes it possible for more people to work part-time, which they want to do; to retire earlier, which they often want to do; to change jobs more easily; and a way which gives people a sense of participating more in society and being valued and wanted. That is a crucial issue in this debate.

There must be another way, too, to reduce the almost unbearable bureaucracy which is now administering our so-called welfare. Something along the lines of a basic wage might be the answer.

I wanted also, like the noble Lord. Lord Cledwyn, to quote Michael Howard, but time does not allow that. He said at the end of his article that we may have become a society in which the enrichment of the few contributes little if anything to the national wellbeing but the deprivation of a substantial minority impoverishes us all". They are brave words. I think they are true, and I believe that wise self-interest, never mind a true concern for the unemployed and their families, must make us look very hard for new ways out of our dilemma.

3.56 p.m.

Lord Jacques

My Lords, 40 years ago the leaders of our political parties had seen at first hand the misery and waste caused by the unemployment of the 1930s. They resolved that the greatest need of the British people was a high and stable level of employment. and they acted accordingly. For the first 25 years after the war we had full employment. We had the highest increase in our standard of living in our history. We were able to develop the welfare state because such a high proportion of our people were working that the cost per head was relatively low.

As it was the greatest need of the British people 40 years ago, it is now the greatest need of the British people. We have had experience in the meantime and we know from that experience that what is required, if we are to conquer the problem of unemployment, is that the Government of the day must give the problem first priority.

Secondly, they must be prepared to consult, and seek the co-operation of, both sides of industry because a policy of high employment cannot exist without that co-operation. They should co-operate with industry with a view to devising, directing and monitoring a strategy for dealing with the problem—a strategy which is embracing; a strategy which covers training, public investment, particularly in the infrastructure, and the timing of that investment so that it helps the economy; a strategy which includes private investment, which in turn will give rise to consideration of capital movement and interest rates: a strategy which includes consideration of regional aid; and, above all, a strategy which seeks to control inflation. The control of inflation is vital, but it is only one of the elements; it is not the only element, and things will not come right simply because inflation is controlled. We know this from practical experience.

But what do we have? We have a Government who do not give first priority to unemployment. We have a Government who scorn consensus, who are really contemptuous of consensus—and openly so. As long as we have a Government who are openly scornful of consensus, we shall never solve this problem; we shall simply divide our people. The Government not only have no place for consensus; they have other policies to which to give preference over the problem of unemployment. They give preference to privatisation and to confrontation. For example, in the last few weeks the Government have spent the best part of £250 million persuading the public to buy Telecom shares, and at the same time they have reduced the regional aid to industry by £300 million. That shows where their preference lies.

Their policy of confrontation has given us the most disastrous strike, a strike which should never have occurred, a strike the cost of which has to be measured not in millions but in billions. The real cost is in billions. It is a strike which never need have occurred and would not have occurred had the party opposite had the good fortune to have a Harold Macmillan as their head. If he had been leading the party, if he had been in Office, then in my opinion there would have been no strike. He would not have appointed MacGregor; he would have known that the appointment of MacGregor would provoke, and that that provocation would lead to trouble. Harold Macmillan would have wanted not confrontation but agreement; and because he would have wanted agreement, he would not have provoked.

There would of course have been a dispute, but that dispute would have been settled long ago. It would have been settled at the point when ACAS said to the parties, "There has got to be some kind of arbitration here". The Coal Board said, "Arbitration yes, but not binding". The NUM said, "Arbitration is of no use unless it is binding". Harold Macmillan would have seized the opportunity there with both hands. Here was an opportunity of getting an agreement which in the long term could almost have been a no—strike agreement, an agreement in which if there was going to he arbitration on one thing there was no reason why there should not have been compulsory arbitration on other things. And if there were to be general compulsory arbitration, then in effect you have a no-strike agreement. It would have been possible to come out with something like that and somebody of Macmillan's calibre would have done so. The Chancellor of the Exchequer was chided by his own party as to the cost of this strike. He said that it was a good investment. My Lords, an expenditure of money which sowed seeds of conflict among our mining communities can never be a good investment. It is not a good investment. The cost is simply the cost of being clever rather than of being wise.

There is to be a by-election tomorrow in Southgate and last week Gallup took a poll. They gave the electors a list of issues and asked them which would be important in their consideration of which party to vote for. Unemployment was at the top. Some 25 per cent. of the Conservative supporters said, "Unemployment"; 55 per cent. of the Liberal supporters said, "Unemployment" as did 64 per cent. of the Labour supporters. Until we get a Labour Government we shall never solve this problem of unemployment because they are the only party who are willing to do what is necessary to solve it.

4.4 p.m.

Lord Thorneycroft

My Lords, I start with an assumption. I assume that this island will continue to export or try to export one-third of everything that it makes. I assume that it will buy much of what it wants abroad. I assume that it will live by foreign trade. On that assumption, there is no choice. We have to be competitive and efficient or we fail in everything; and above all, we fail in any jobs policy. Against that background, I accept the Government's strategy. Abroad, there is a policy of wider trade and payments, living with the General Agreement on Tariffs and Trade and the rules of the EEC and so forth. I think that that is inevitable and indeed necessary to us. At home, to major in their attack on inflation. For inflation in this situation would suck in imports. Inflation erodes jobs; inflation loses markets, not only here but overseas as well. And I agree with the Government in their policy about union legislation, for the abuse of union power and immunities make free wage negotiations impossible. Free wage negotiation is an essential factor in a free society and the swift moving technological world in which we live. So I regard the Government's policies, their strategy, as not only right but inevitable.

I recognise, though, that the debate about this strategy tends to take on a curious form. It looks from the outside like an argument between one group of men who argue for the market mechanism and for spending rather less; and another group of men arguing for a wages policy or corporate Socialism and wanting to spend a lot more. It is an unhappy spectacle for someone living in a home on the North-East coast and wondering what job they can put their son into, to see an economic argument of that kind raging without any real hope of resolution. They ask, and I think that we are entitled to ask, "Isn't there something between these two extremes which will give some hope to people who are facing emergencies and difficulties of that character?".

My Lords, I have time only to list the points and hardly to debate them, but I think I would ask one question: is anybody doing better? The answer is yes, America is doing better; Japan is doing better. And if they are doing better, had we better not admit it and had we better not ask why? There are differences between us, and I do not say that we accept everything that happens in those countries, but we cannot go flat contrary to everything that our more successful competitors do and expect to find a solution to this problem. Real wage costs have risen faster here than in the countries of our principal competitors. We are not likely in those circumstances to hold on to jobs. Wages councils—and I recognise that they have done a great thing in the past—have exacerbated that particular difficulty and hurt particularly the young and the people who are trying to give jobs in small businesses.

The attitude of unions is different. The attitude of unions in the United States is innovative, entrepreneurial, investment-minded, willing to use new equipment. How does that compare with what we have here? Do we expect to hold jobs with attitudes of that kind, so far below what our competitors have managed to adopt? Or, my Lords, take mobility. Not only are workers on Japanese shop floors more skilled than ours and the percentage of skills is far higher, but they are more mobile, and they are more mobile also in the United States of America. Here it is not so; and not only are our people immobile—one of the most immobile peoples in the world—but they belong to clubs. They belong to the Transport and General Workers' Union or the electrical trade union. In America they change the club when they change the job.

My Lords, we have got to look at these things afresh. We have all got to ask ourselves, whether we are management or unions, whether it is not we who are creating a great deal of the unemployment and the immobility that is going on at present. Far less of this is concerned with economics than many people imagine. A lot of it is in straightforward practical management or education and training. Look at the percentage of skills in Japan or in the United States of America: the whole thing is geared, monitored and watched to see the relation of that education and training to the ability to get jobs. And what do we do here? We have just had a tremendous debate on who pays for education. We have had a hell of a row going on about who actually does the training, as to whether it is the Government or industry or not. But we have not managed to produce the quality of training which is related to the kind of age we live in, and I think that unless we do others will have the jobs, not us.

There are of course other differences. The managers on the whole are much better paid, and if there are very well-paid managers there are more people trying to be managers, and the quality tends to rise considerably. The small men start businesses— service businesses, little service industries all over the United States of America. We should study closely to see the enormous bureaucratic difficulties which exist in this country before anybody can start anything. If things could be made easier, more people would undoubtedly be employed.

Lastly, but not least perhaps. there is a sort of strategic management from the centre in both America and indeed to some extent. as the noble Lord, Lord Soames, was saying, in France. There, the government can come forward. In Japan, as the noble Lord, Lord Jacques. was saying the government trade organisation, Miti, calls together management. unions, banks and insurance companies. There is central management of great projects which have to take place in the world today. I wish that the Labour Party—if only I could have been a leader of the Labour Party, I always think I should have done it so well!—would only abandon the talk of "ownership" and think of the great central strategic leadership that is wanted in the country at the present time: what a claim that would be for them to put forward! What an argument to present!

I conclude simply by saying this. Of course people will debate strategy, but it is not the strategy that is going to determine matters altogether here. Here it is trying to put unemployment first, whether we are managers or unions—and, by heavens. my Lords, it means very drastic alteration of attitudes on both sides to achieve it.

4.13 p.m.

Lord Seebohm

My Lords, nobody could possibly disagree with the rather vivid description given by the noble Lord. Lord Cledwyn of Penrhos, regarding the tragedy and horrors of unemployment: but I do not think we are going to get very far unless we are absolutely clear what the causes of unemployment are, and I do not agree with what he said on that particular subject. In the short time that I have I should just like to say what in my view I believe to be the main causes of unemployment, and where that leads us so far as the cure is concerned.

The first thing that the noble Lord did not mention was in fact the double oil-price "hike" that took place in the last decade. That put many industries in the developed world which were based entirely on cheap energy into a tail-spin, and many of them only just managed to pull out of this tail-spin before crashing to the ground.

The second thing. which people who have been in my job and in my profession know only too clearly, has been the financial collapse of the third world. World trade grew in the 1960s at an enormous rate, and that was probably one of the reasons for the great prosperity which took place in this country during that period. In the 1960s, when the colonies became independent, they were all launched with adequate foreign exchange reserves. These were all exhausted by 1979; and, of course, the second oil "hike" really put them absolutely into a mess in that particular period.

The financial mismanagement of the Eurodollar market by the developed world was to my mind another cause of our troubles today. It was a classic example of borrowing short and lending long, and the only restriction or control was in fact by interest rates.

The next thing I believe is the lack of competitiveness in world markets; the lack of productivity and lack of skills which we have, not only in this country but in the whole of Europe. Then I think there is a lack of any possible incomes policy which we could possibly put in force, with the present relationship between the employers and the trade unions. The result of inflation and the rise in incomes has led to the collapse of profits, leaving no money for investment and no alternative but to slim down the workforce and close surplus manufacturing units.

Then I believe that the expectation of annual increases without any economic justification is another very serious problem today. I do not know how one can get over that. It is something which I think must be faced, but I do not know how it can be put across to the trade unions so as to obtain their agreement.

Nothing that we have done has caused the 18 million unemployed in the Common Market. You cannot accuse this Government and our Prime Minister of causing 2 million unemployed in Germany, 2½ million in France or the highest unemployment there has ever been in Belgium. This is something which is far outside anything this country has caused. As a result, there have been I z million jobs lost in Europe, compared with an increase of 18 million in North America and 5 million in Japan. At the same time. 2 million more women have entered the workforce in the United Kingdom and there are 500,000 more people coming into the workforce in the next two or three years in this country. And you cannot blame this Government for the baby boom 15 years ago!

America has reduced its unemployment dramatically, although there has been little increase in the GNP; but real wages have fallen by 11 per cent. as compared with this country, where wages have increased by 10 per cent. over the rate of inflation in real terms, with the result that I have indicated. In fact, there has been a massive redistribution of wealth in the United States which has allowed so many new jobs to be created, most of which are in the service sector and many of which are part-time.

So what? What are we going to do? As I say, it is no good accusing this Government of causing massive unemployment. Our Prime Minister is not responsible for the 18 million unemployed in the Common Market. The first priority must be to make the whole of Europe more competitive with the United States, Japan and the Far East. When you think, there are 230 million people in the United States and Canada, a common language, common laws, a mobility of capital and a mobility of labour, completely competitive over the whole of that area; when you think, Japan is in a similar situation; and when you look at Europe you see that it is fragmented into 10 units with no common laws, no freedom and no common market.

We have already had a debate on this subject, in October, and I will not repeat what we said then; but it is just worth saying that in this country, quite apart from Europe itself, we have 65 per cent. of our workforce who have no occupational qualification, whereas in Germany it is only 30 per cent. In France, 40 per cent. of all those between the ages of 18 and 20 have full-time educational or vocational training. In this country it is 19 per cent.

I must reiterate what I said in that debate: that no young person must be unemployed under the age of 18. He or she must either be in full-time training and education or in a work situation with at least 20 per cent. of his or her time spent in further vocational training. I also remind your Lordships of the recommendation made by the Select Committee that 16–18 year-olds should be given a defined status of student trainee with independent income, starting at a low figure and progressing to the right rate for the job as they get an occupational qualification.

My second priority is for the long-term unemployed—that is, those who are unemployed for more than a year. I need not dilate on the utter misery of these people. They are in poverty, they are demoralised, while others in employment have never had it so good, they have never had it so bad. Their wives are no longer in employment—they do not work—as they lose all but £4 from their earnings, however much they earn. This does not even pay their travelling expenses. The rules must change for these people. My recommendation would be to allow a 50 per cent. disregard for all earnings of man and wife so that there would be some incentive to get a job, even if it is a part-time job. It is really hitting a man below the belt when he loses a job, to lose his wife's earnings also, whereas when the man is in work both his earnings and those of his wife are retained, subject only to the normal tax rules.

My third priority, for which I make no apology, is that which has been put forward by the right reverend Prelate the Bishop of Southwark, the question of expenditure on housing. Even if it is necessary to borrow money to do this, I would do it. There is a strong social as well as economic reason for doing this. There are 20 million homes in Great Britain. The useful life of most houses is 60 years. This means that 330,000 houses must be built or refurbished every year simply to stand still. We are doing about half that. If we do not start now in this country we will be in a devil of a mess by the end of the decade.

My fourth priority is the adoption of many of the palliatives recommended by the One Nation group of MPs in their booklet called Jobs Ahead. I have not time to go into them but I hope the Government will take full notice.

Finally, I believe the important thing is somehow to make the Common Market work. Unless we do that, I see no chance whatever of our competing with America or Japan. This seems to me the highest priority. I do not see the present Government giving quite the impetus to that particular need which to me strategically is what must happen if Europe is to get rid of 18 million unemployed.

4.23 p.m.

Lord Davies of Leek

My Lords, I am sure that the House has listened with interest to the noble Lord, Lord Seebohm, and knows of his experience. I listened, too, with interest to the dynamism of the noble Lord, Lord Thorneycroft. I thought that he was coming over to this side of the House to dynamise it.

We are not asking for this side of the House to be dynamised at the moment—it is not in power. It is his side of the House he should dynamise to show that its lack of urgency at the moment is a disgrace.

Lord Parry

My Lords, did the noble Lord say dynamite?

Lord Davies of Leek

No, my Lords, I did not say dynamite. I will keep my speech to about four minutes. The House has shown its interest in the subject by the number of noble Lords who are down to speak. I will try to keep to four minutes and consequently I shall keep to my brief. I am rather interested in the wages councils. I deprecate the growing attack on them by the Gradgrind policy of the Thatcher Government. They weaken, enfeeble and make impotent, so they think, the British trade union movement. I think that that is a fundamental mistake. One of the greatest trade unionists was Winston Churchill himself. He was a member of the bricklayers' union. In 1909, he himself supported the British trade union movement and pointed out how it stopped "cowboy" firms exploiting other firms by achieving cheap labour in various concerns.

There is a concerted effort from noble Lords opposite and from their colleagues in another place to ask questions on the wages councils. Those questions have been put down for Answers in both Houses and to my mind it is a pre-arranged attempt to lower wage and trade union standards throughout the country. The Government wish to get rid of the wages councils. The purpose of the wages councils was, and is, to give some protection to low paid workers. In some kind of queer economic theory that seems to be floating around at the moment the Government appear to think that cheap labour will lead to prosperity. Nothing could be further from the truth because those affected will have very little purchasing power to buy with their lower wages the goods that are in the shops. Low minimum wages and rates of pay affect nearly 3 million of our workers, in the clothing business, in shops, hotels, agriculture, the catering industry and hairdressing. They are usually poorly unionised and poorly paid. The Government should support such organisations and not try to destroy them. Often these people work at home. The Employment Committee, in its minutes of evidence of June 1984, pointed out that about one—fifth of them were women and were often exploited, especially at this time of the year, making crackers, working for Christmas shows and so on.

It should be remembered that the wages council is the United Kingdom's sole claim to compliance with the International Labour Convention No. 26, which requires signatory governments to create or maintain machinery whereby minimum rates of wages can be fixed for workers employed in certain trades in which no effective arrangements exist for the regulation of wages. Now Thatcherism—I will use that word without denigrating anybody—undermines even these minimum low-pay agreements. This is the worst Tory Government that the British public has had to tolerate for a generation or more. The Government are even willing to extricate themselves from the International Labour Office and their treaty obligations on the payment of wages. Efforts are being made to do that. We need a statutory minimum wage, and one day, after the downfall of Thatcherism, some compassionate government of either political party will see to it that that is done.

The Labour party is committed to moving towards this idea. I have looked at some of the Hobart Papers, as I often do, and in their high sounding language they seem to denounce the work of the wages councils. They seem to regret the acquisition of the power of the wages councils. They question their usefulness. They talk in language more suitable for selenography, or for talking on the surface of the moon, than for the down-to-earth minimum wage protection of the workers. Would the party opposite abandon the wages councils that protect the disabled? Have they thought this out, as they argue for the abandonment of wages councils?

As I said, the British wages councils were first set up in 1909. Churchill himself supported them and their protection as trade boards. Men and women in sweated industries were at least given some little protection. These councils now cover some 3 million workers in nearly 400,000 small establishments. They try to set minimum wages and conditions. They comprise equal union and employer representation, and independent members to hold the balance are appointed. All successive governments until this one of Thatcherism supported these justly formed wages councils.

I want them to be made more efficient. When the CBI was asked this question, although some of the members favoured the abolition of the Fair Wages Resolution, the Government decided to ask the CBI for its views before going ahead with any dismantlement of the wages councils. The CBI accepted that: Wages council industries enjoyed good industrial relations"— but the CBI wants their reform rather than their abolition. That is the sensible approach and I hope that both sides of the House will adopt that sensible approach to the wage councils in future. I am sorry, my Lords, but I have taken a couple of minutes over time.

4.30 p.m.

Lord Alport

My Lords, put very simply, to me the issue we are debating is whether the damage to the public interest resulting from inflation is greater or less than damage caused by mass unemployment. It is true that the impact of inflation affects a larger number of people. It involves sacrifices which have to be borne by the nation generally. On the other hand, the impact of unemployment affects the lives of, say, 10 million to 12 million people—less than a quarter of our population.

If we believe the Benthamite plagiarism about "the greatest happiness of the greatest number" being "the foundation of morals and legislation", there is much to be said for a policy which keeps inflation below 5 per cent. There is of course a price to pay. Part of that price is the miners' strike, as the noble Lord, Lord Jacques, pointed out. Part is the alienation of communities and individuals and great areas of northern Britain, Scotland and Wales from the South.

Part is the inevitability of social unrest which may have ugly consequences for the cohesion of our nation before the century ends; and part is the waste of human resources leading to despair, misery and violence.

The issue, then, is between those of us who believe that there is no alternative to the deflationary policy being followed by the Government, whatever may be the effect on the lives and expectations of a minority, and those of us who believe that those policies are sowing dragons' teeth, the harvest from which will destroy the increasingly fragile structure of this nation. The truth is, that while the Government's present policies continue there will still be 3,500,000 unemployed by the end of this decade, and perhaps more.

We recognise that we are going through an industrial revolution and that many of the landmarks of our past history when we were the "workshop of the world", an imperial power, and the rest of it, have disappeared. Yet we are trying to cope with the problems of a new age with polices derived from the nineteenth century.

We must not misinterpret the significance of the miners' strike. The strike of 1926, as I remember as a boy. had revolutionary undertones, just as has the present strike. In 1926 it failed, but it had a far-reaching impact on the political life of Britain. Combined with the economic crisis of 1929 to 1931, it brought the middle classes before the war, and the Tory party after the war, to realise that the economic policies based on the market economy—or laissez faire, as we called it in those days—and the social consequences of mass unemployment could no longer be tolerated. But here we are today with a Conservative Government in power following one and acquiescing to the other.

Accompanying the technological revolution in industry we are going through a counter-revolution in the social sphere. The class structure of this country has changed. The balance between the middle classes and the working class has altered. The middle classes are possibly now in a majority. They feel that the Welfare State has relieved them of the social responsibilities brought home to them by the events of the years between the wars. The abuse of power by the trade unions during the past 20 years has, they believe, released them morally from having to concern themselves with the consequences of unemployment, social deprivation and even poverty. It was not any of those things which caused 150 members of the Government party in the other place to rebel against cuts in the grants for higher education, but the interests of parents with incomes of more than £20,000 a year.

What Tories like me are trying to say to the Government is that the dominance of policies which serve the interests of the middle classes are just as dangerous and divisive as the policies which are designed to give domination to the working class. The unacceptable face of monetarist materialism is just as unacceptable as the unacceptable face of Marxist materialism. That is why we seek the middle way—the policy of consensus; the ideal of Britain as one nation. That is why we oppose the social consequences of monetarist finance and why I find myself in constant disagreement with the policies of the Prime Minister and those on whom she relies.

However, it may be that out of our present evils may come good. If there is magnanimity—the truest wisdom in politics, as Burke said—on the part of the Prime Minister and her Government, as well as a change in policies and priorities, this country may be able to avoid the social disaster for which it is at present heading. The first priority must be not inflation or the reduction in direct taxation, but the reduction of unemployment and increased investment in public services, both national and local. To this end the Government must seek to reshape, in consultation with both sides of industry, the present distribution of opportunities for employment. They must reassess the relation of overtime to genuine productivity and the pattern of productivity incentives in relation both to wage levels and output.

Secondly, the Government must recognise that in governing this country they must work through, and with, established institutions; not only the law of the land but also the trade unions, local authorities, the Established Church, and representative bodies of intellectual, academic and professional opinion. There is one more thing that the Prime Minister and her advisers must remember. Whatever may be the class consciousness, the apparent insensitiveness and the acquisitiveness of the majority on whom she today relies for her support, there lies deep down far more powerful instincts: a belief in fairness, a distaste for the arrogance of power and a generous acceptance of the moral principle that the strong must help the weak, whether it be here in the United Kingdom or the deprived and famished people in the world outside.

If the Prime Minister and her Government continue with their present policies the Prime Minister will end up by destroying the party she leads. Behind her she will leave anger, disillusionment and a nation divided against itself. A nation, like a house, divided against itself cannot stand.

I intend tonight to vote for this Motion, not because I believe that the Labour Party or the Alliance would do any better or that my vote will have any influence, but I hope that no-one will accuse me of speaking in coded terms. We in this House, without the incubus of ambition, without expectations for the future or regrets for the past, have the immense privilege of saying publicly exactly what we think. Your Lordships will remember the old army story of the company commander who, when his company was marching towards the edge of a precipice, could not bring himself to order a change of direction, and his sergeant major shouted, "For God's sake, sir, say something, if it's only 'Goodbye' ". I do not want to say "Goodbye" to a Conservative Government, but unless the Prime Minister now uses her strength and authority to give the order for a change of direction the electors of this country will certainly say "Goodbye" to her and her Administration when the next general election takes place.

4.39 p.m.

Baroness Ewart-Biggs

My Lords, the noble Lord, Lord Alport, in very clear terms has made an overwhelming case for the Government to make some changes and to take some remedial action to satisfy the most fundamental human requirements which prevail in Britain today. I do not think that my speech can in any way measure up to the level of his.

For my part I should like to concentrate on the last part of the Motion calling for, positive steps to be taken to enable available labour to be used to meet undoubted national needs". I should like to use the area of housing to illustrate my point. As the right reverend Prelate the Bishop of Southwark and the noble Lord, Lord Seebohm, have already said, housing policy has resulted not only in an insufficient number of houses being built but many being allowed to fall into disrepair. This has brought in its wake a combination of high unemployment among construction workers and more and more of Britain's families either badly housed or not housed at all. Therefore, just at a time when the economy is obviously badly in need of regeneration, we are faced with this almost unbelievable, vicious circle made up of unfit housing, unemployed construction workers and inadequately housed people.

What has brought on this disastrous combination? First, it must be remembered that housing work in its various forms has consistently accounted for around 40 per cent. of the construction industry's output in the post-war period, but present circumstances have put as many as 400.000 construction workers on the dole.

Running parallel to that, a potential shortage of housing is being accumulated against today's new household requirements—requirements which are rendered more acute by changing social trends, such as the elderly living longer and the rising divorce rate. On the one hand, there is an insufficiency of new building and. on the other, so many dwellings are falling into disrepair. It is now estimated that the number of houses in serious disrepair increased by about 22 per cent. between 1976 and 1981 and that there may now be up to 1 million totally unfit dwellings in England and Wales and between 2.2 million and 4.5 million others in very poor condition.

The reasons for this are as follows. First, an increasingly large proportion of owners are elderly and lack both financial resources and the necessary physical skills to keep their houses in a proper state of repair. Secondly. the system of mortgage tax relief not only encourages people to buy, but to buy as expensively as available mortgages will allow them. That often has the natural result of leaving them with insufficient resources to maintain their homes properly. Thirdly, although I certainly do not want to engage in the debate about tax benefits and the Government's obsession with owner-occupation, I should, nevertheless, like to stress that the unfitness and disrepair of houses predominates in that sector.

Together all that means that not only are so many of Britain's families badly housed, but there is a steadily increasing number who are not housed at all. Last year the London boroughs alone accepted 24,000 people as homeless, although of course it is known that the actual number of homeless is probably three times that number. Instead of investing in building programmes and providing jobs in the construction industry, public money is being used to provide temporary accommodation, such as bed-and-breakfast hotels, at a horrendous cost.

If we look at the problem from the employment angle, it is now widely accepted, I believe, that each house built creates two jobs: one on site and one off. A further calculation can be made that for each £1 invested in housing, between 70p and 80p can be recouped, mainly from increases in tax revenues and savings in welfare benefit payments. Based on that assessment, doubling last year's housing investment of £1,650 million would in real terms cost only between £330 million and £495 million. No one could argue that that is not extraordinarily cost effective. Nor can the fact be dismissed that house-building has the two advantages of being highly labour intensive and needing to use little in the way of imports.

Finally, one word about priorities for future training. The consensus expressed by NEDO was that: The scale of the outstanding repairs problem in urban housing and strong social pressure are likely to maintain renovation as the priority area whatever the level of public housing expenditure". Bearing that in mind, it is important to recognise that skilled labour accounts for a higher proportion of the total in renovation as compared with new work. Indeed, the scales are 80 per cent. to 65 per cent., respectively. That points to the critical need to increase the declining number of apprenticeships and other training facilities for young people within the construction industry.

I think that I have said enough to illustrate how destructive is the present negative spiral in housing policy, resulting in a combination of unemployed construction workers, millions of houses falling into disrepair and so many of Britain's families inadequately housed or homeless. What an irony it would be, and what a cruel and devastating condemnation of the present system, should a situation arise whereby a man, after many years in the construction industry, suddenly found himself unemployed, ending up with his wife and child existing in one room in a dingy bed-and-breakfast hotel—and doing so at the total cost to the state of around £1,000 a month. That would be the utlimate in the cruel and wicked waste of resources. both in human and economic terms, which prevails in Britain today.

4.45 p.m.

Lord Nugent of Guildford

My Lords, I should like to congratulate the noble Lord, Lord Cledwyn, on mounting this interesting debate and in particular on choosing a five-hour limit for it. I am sure that that is to the advantage of the whole House. I hope that the noble Baroness will forgive me if I do not follow her very interesting speech on housing which had many cogent points in it.

I must confess that I believe that the Government have been taking effective steps to meet the urgent need to reduce unemployment, and that their policies of stimulating growth of GDP by the firm control of public expenditure, decreasing inflation and reducing taxes on businesses and individuals are succeeding. GDP this year is 2½ per cent. plus: next year it is expected to be 3 per cent. That is the best in the Community. Inflation is under 5 per cent. Taxes were down last year and are going to be down again probably next year, and that includes raising tax thresholds for individuals. All that is bound to be helpful.

The result is that—and this point has already been made—the total national investment for this year is some —55 billion. Whether the investment involves public expenditure or private, it is equally good in creating more wealth and more jobs. The result is that in the past 12 months we have had some quarter of a million new jobs, and next year there is a good prospect of the number being even higher, and I think a prospect that it might overtake the loss of jobs that we are still suffering from. It' not spectacular, it is a record of solid progress.

Total spending by the state, which is critical, has gone down from its peak of 46 per cent. 10 years ago to 42 per cent. this year, and it is going down to 41 per cent. next year. We should compare that with the halcyon days of my noble friend Lord Stockton, when it was only 33 per cent. We can then see just how vulnerable we are. I commend Mr. Gladstone's splendid principle: let the money fructify in the pockets of the people. That may commend itself to noble Lords on the Liberal Benches.

The alternative policy of the noble Lord, Lord Cledwyn, was, among other things, increased expenditure on infrastructure. Already £9 billion a year is being spent on those purposes. Even on a limited scale, to increase it. in the judgment of the Government, begins to run us into the same old risks that we have run into time and time again in the past 20 years. Government after Government—not only the noble Lord's but ours as well—have tried to spend their way out of trouble. Inevitably we have had increasing inflation and mounting penalties. Above all, as my noble friend Lord Thorneycroft said, we have lost markets. Twenty years ago Great Britain had 20 per cent. of world trade; today we have only 8 per cent. That is the story. That is where the jobs go. We shall get them back again only by turning the tide, which we are trying to do.

There is President Mitterrand trying all the same things. His policy was to keep unemployment under 2 million. He introduced his great reflation programme, with nationalisation and everything. Within a year he had three devaluations and had to throw everything into reverse. Unemployment went over 2 million. It has now gone over 2½ million and is expected next year to go up to 3 million. However attractive in the short term, such policies simply do not succeed in practice.

Here I come to the point of my noble friend Lord Alport. The price of consensus is to grant the noble Lord what he wants, but I do say that, in the face of our own experience and that of others, it would be the height of irresponsibility to try such policies again. The hard path of strict financial control of public expenditure, leaving a margin of relief for industry and commerce, is the only road to growth and more real jobs. Some of those will come from new businesses. Britain is very weak on that. The United States last year had 600,000 new businesses. The Government have this new enterprise allowance scheme. It has created, since 1979, some 200,000. We need many more. There is not doubt about that.

Another point about the United States picture is that three-quarters of the seven million new jobs created there in the last two years were in the communications industry. This is what we have to look at. This is the training point. We are in the middle of this new revolution in the technology of communication. Therefore at school and afterwards it is most urgent to press on with every kind of scheme to try to train the youngsters to be ready for the jobs that are there and the many more which will be there. I very much agree with the noble Lord, Lord Seebohm, on this. I believe much more is needed. Past experience shows that the countries which adopt most vigorously the new technologies win the most benefit in jobs and growth.

This all seems very slow but I have one point which I think is worth making. It is that history shows that in the last hundred years Britain, and indeed other countries, have shortened hours of work. The working population a hundred years ago was 14 million. It is up to 26 million now. Productivity increased five-fold but we decreased hours of work by 40 per cent. OECD countries in the past 30 years reduced working hours by 30 per cent. At the same time growth of GDP and standard of living have steadily improved. So the longterm trend for workforces is to take the benefit of technological innovation partly in increased earnings and partly in shorter working life.

The problem for my noble friend and the Government is to supplement the positive policies to which I have referred and to help industry and commerce with policies to encourage this long-term trend to shorter hours of work. This would begin to ease the problem of new jobs that are needed. The statutory cut in working hours as tried by France is useless. All it does is to increase working cost and thus lose jobs. Work sharing schemes succeed in practice, we have found, only if accompanied by income sharing. Past experience shows that in practice this happens only gradually through bargaining between employers and unions, particularly as employers introduce new technological innovations which reduce costs and thereby increase the productivity of the workforce, leaving employers and employees the elbow room to shorten hours and still maintain earnings.

Last year, the European Commission proposed a reduction and reorganisation of working hours across the whole community. We opposed it, and some other countries did too, because we thought it would simply increase costs of production and markets, and thereby jobs would be lost. However, I am sure that the European Commission should look at this again. I hope that my noble friend will take this point. We know the long-term trend is in this direction. Anything that Ministers and governments can do to try to ease it along and to give incentives to push along that path is bound to he something which will help our own people here and indeed the other 18 million people who are unemployed in Europe.

My noble friend Lord Young has said that his job is to remove barriers to increase employment. I would ask him to look at this particular aspect of the problem with that objective in mind. We know it is a long term trend. We have done it for the last 100 years. We just want to ease it over the next few years, accelerate it a bit and then we should help to reduce unemployment faster than we are now doing.

4.54 p.m.

Lord Hatch of Lusby

My Lords, I intervene in this debate for one purpose only. That is to introduce a dimension which I do not believe will be spoken about by any other noble Lord. It has already been referred to by the noble Lord, Lord Seebohm, but he did not develop the theme. I am delighted that the noble Earl is to wind up this debate. I hope he will be able to find a minute to answer the one point that I want to put to him.

I begin with a quotation from the noble Lord, Lord Belstead, who was answering a debate which I initiated on May 23rd this year. The noble Lord said this: let us remember that British exports benefit from the aid programme in a number of ways. Just to give a figure or two, in 1983 some 75 per cent. of our bilateral aid of —604 million was tied to the procurement of British goods and services. In addition, we reckon that we arc winning export business in multilateral aid programmes broadly equivalent to our contribution of some —417 million." —[Official Report, 23/5/84, col. 292.] In the next paragraph, the noble Lord said this: since 1977, when ATP"— the aid and trade Provision— was started, grants of some £264 million have resulted in additional British exports in excess of £1,298 million. Surely the only interpretation of this statement from the mouth of a Government Minister is that overseas aid helps trade and that trade provides employment.

But this Government have cut overseas aid by the equivalent of 20 per cent. since they came into office in 1979. Why? I hope that the noble Lord—and I do not believe that he will—will not resort to the old stereotype and sterile argument, "We can't afford it." We cannot afford not to invest in this way if we are going to work our way out of recession into economic recovery and so reduce unemployment. That is my single point.

It is not a coincidence that during the time in which this Government have been cutting overseas aid, in 1982 28 per cent. of our total exports went to the less developed countries but in 1983 that percentage had fallen to 20 per cent. This year it is substantially below 20 per cent. I am not saying that this is the only cause, but is it not a valid argument that as the Government cut aid so they are cutting the standard of living, the infrastructure, the ability of the people of the third world in the closed market which extends halfway round the world to buy our goods and so, therefore, are they increasing unemployment?

As the noble Earl knows, last year was the first year since the beginning of the Industrial Revolution that this country had a deficit on its manufacturing trade balance. This is not a coincidence. It is certainly not because people do not need our goods and do not want our goods. I simply put to the noble Earl, who I hope will be willing to take this argument on board and to meet it, that the cuts in overseas aid and the lack of interest in exports to the developing world are one of the direct and major causes of the growing unemployment in this country. One of the major ways in which unemployment could be cut would be both to increase overseas aid and to pay much more attention to trade with the closed developing world.

Let me give the noble Earl two examples. Some noble Lords may be weary of my using this example. I hope they are not, because it is a very cogent example and it is a very human example. It is what has happened at Bathgate. Last May, just the day before I introduced my debate, the Government announced that 1,800 workers in the British Leyland factory would be declared redundant, thus creating a figure of 40 per cent. of the workforce unemployed in that part of West Lothian. Why? Simply because that factory had been producing 2,500 truck kits a year, almost entirely to export to Nigeria, and last year Nigeria could only afford to buy 300. That is a direct consequence of lack of purchasing power in a third world country creating unemployment in a specific area in this country.

Secondly, it was only last month that I asked the Government whether they were prepared to use the aid and trade provision of our aid programme in order to assist the tender of British Aerospace to replace the Viscount aeroplanes in Zimbabwe. The Zimbabwe Government want British Aerospace to supply those replacements. The major competitor is the Dutch Fokker. The Dutch Government are prepared to put a substantial element of aid into that tender. This Government refused to use British overseas aid to assist British Aerospace to put in for the tender. To the best of my knowledge, that is the reason why the tender was lost. I know from my personal experience in talking to the Minister of Transport in Zimbabwe that they wanted British aircraft, and that had the aircraft been supplied by Britain it would not have been supplied only to Zimbabwe but there would have been repercussions all round the central African area. These are two specific examples which I hope that the noble Earl will take up in answering the questions that I am putting to him.

There are four million unemployed in this country. There are 17 million children who die every year through lack of the provisions that we could provide. That is surely an obscene commentary on the state of our world today. It has been shown clearly over the last few weeks that the British people feel a deep compassion for people in the third world. That compassion is being shown in the voluntary contributions that they are making. But this is not enough. It has to be supported by Government action. I am suggesting that this is a way in which morality and self-interest come together, and that this is an economic argument as well as a moral argument for increasing our contributions to overseas aid and thus increasing our overseas trade with the developing world and decreasing unemployment in this country. I say to the noble Earl—I know that he likes quotations, because we have swapped them before—that the whole argument was put by Ezra Pound when he said: We have one sap and one root. Let there be commerce between us".

5.3 p.m.

Viscount Hampden

My Lords, last week I visited an art exhibition. In one of the rooms there was a large placard which had the motto: Work is Love made visible". I know that this referred to the artefacts that we were looking at, but it seemed to me a very appropriate quote, or motto, for the debate this afternoon.

I declare a small interest in that I employ a few people—not many but a few. I am happy to say that in the years of recession, over the last five or six years, they have remained constant. We have made no-one redundant. When a man has retired we have replaced him with a younger man. It was not absolutely necessary. We thought that it was the right thing to do. One question that I should like to ask the Government is whether they could not reverse the trend. It has become morally acceptable to make people redundant. Originally there was a good argument, I think, for reducing over-manning, but the policy of redundancy payments means that employers have been able to shelve their responsibility to the employees.

Redundancy payments were designed, first, I believe, to make the pill a bit sweeter for the employee who had been made redundant, and secondly, as a deterrent to the employer making an employee redundant. I do not think that this has really worked. My experience, especially now that private industry enterprises are becoming more profitable, is that employers are saying, "We shall have to shut down that little section or that little factory. We have to pay redundancy money. OK, if the Government tell us what to do, we will do it". They shelve the responsibility. The Government should give a moral lead to try to make employers feel more socially responsible for employing people.

My second point, to which some noble Lords have referred, relates to infrastructure. They are referring I think to the curious way in which the Treasury does its accountancy. It cannot differentiate between capital investment and current expenditure. If I ran my business or myself the way that the Treasury runs its affairs, nothing would happen at all. I should either be so extravagant, because I was adding my farm expenditure to current household bills, that my bank manager would say, "You cannot possibly do this on your income", or I should say, "I cannot invest in the future because I am unable to take a view about the future". The Treasury seem incapable of taking a view of the future. I shall be interested to hear what the Government say in reply to a Question by the noble Lord, Lord Ezra, on this matter next week.

The noble Lord, Lord Jacques, made a comment about the British Telecom issue. This seems a most extravagant exercise in public money. I should perhaps not complain because I have with me my letter of acceptance for 800 British Telecom shares for which I applied. I am therefore happy to have my £400 profit. All that I should have had to do was to write out my form and my cheque, but the Government were so keen that I should not make a mistake that they paid my stockbroker £8 to do it for me. That must be an enormous expense to the public purse that is totally unnecessary. I should like the Government to examine that point.

In closing, I wish to refer to an incident that happened to me early this summer. I asked a young man who had thumbed a lift in our village what he was doing. He told me that he was studying to be an actor at a drama college in south-east London. To my comment that this was an extraordinarily risky business, he replied that in the view of my generation it probably was but to his generation all professions were risky. That is I think a very sad comment on 1984.

5.7 p.m.

Baroness Carnegy of Lour

My Lords, I want to suggest to your Lordships, with the greatest respect, that the way in which we are conducting our national debate about unemployment, outside and inside Parliament, is increasingly out of date, arid, and for the man in the street, a growing cause for cynicism. I want to suggest that it is high time that both the agenda and the style of the national discussion changed. Of course, every citizen has a right, some a duty, to question whether current policies are the best ones, to propose improvements and alternatives. Of course, it is important constantly to remind the Government of the day that they act for every single citizen, that the economy exists for the people and not the people for the economy, and that in deciding overall economic strategy the effect on individuals must unfailingly be the major consideration.

But it seems to me wrong and cruelly counterproductive—I would say this to my noble friend Lord Alport as well as to the noble Lord, Lord Cledwyn—to pretend to ourselves for whatever reason that the old debate will do, that the old arguments are still relevant, and that the old alternative solutions are adequate when we all know that there has been a sea-change to the problem. It is surely obvious to every thoughtful television news viewer and radio news listener that economic theory, to whichever of the 57 available varieties it may belong, has not kept pace with changes wrought by developing technology, instant communication, and growing interdependence, world and nationwide.

What are urgently needed—I believe the public are ready to be persuaded of it—are absolutely new ideas; radical, really innovative policies; the courage in this country to think the unthinkable, to try new ways which until now have seemed out of the question. Of course, that is not at all easy to achieve. Modern governments find it very difficult to be radical. If they begin by developing their ideas in private, there are leaks, a political scream and the way forward is blocked. If they begin with public consultation, there are formed alliances of defenders of corners and the way forward is blocked.

If they begin by simply announcing a policy cold—and we have had a bit of that lately—there are political explosions and again the way forward is blocked. Likewise, political parties—and, not infrequently, alas, politically inclined Church leaders, too—find it difficult to allow governments to be radical. British political conventions include automatic suspicion of the other side, and of the Government. Public expectation is that oppositions will oppose. The media exaggerate that opposition, and any disagreement there is among a government's supporters are exaggerated, all to turn it into entertainment. One cannot, I suppose, be surprised that the politicians find themselves living up to the image the media have created.

But somehow these problems have to be overcome. We are at a moment in history when much more radical thinking must be done, and conclusions arrived at, about matters your Lordships have been discussing so far in this debate, and other matters, too. We have to think about the whole area of interaction between benefit, national insurance and income tax; the resulting poverty trap; the disincentive to taking on part-time work at the very time when part-time work opportunities are increasing. We have to think about ways to encourage employers to take on more people, and of helping people move to where the lobs are; and that may mean re-examining legislation, perhaps employment legislation, perhaps landlord and tenant legislation. I agree there with the right reverend Prelate the Bishop of Southwark that there is a great need for more rented accommodation in many places.

We need to build on what has been done so far in education and training for competence. We have to identify, as our main industrial competitors did long ago, what can be paid for by the employer, what by the person himself or herself, what has to be paid for by the taxpayer. We have to continue developing the successor system to apprenticeship. We have to shift some of our effort away from some traditional higher education to more flexible and cost-effective distance learning. We have to develop the new and important adult training strategy. We have to take a hard look at the health service.

In the course of this sort of radical thinking it will be necessary to look afresh at a whole herd of sacred cows, at policies and legislation of which both parties who have recently been in government were not so long ago proud but which may now, on balance, be doing more harm than good, particularly to the most vulnerable in our society. In China, in 1977, the Central Committee issued an edict, and, as a result, every year since then there has been some 8 per cent. growth in agricultural production. Now a new edict is announced to bring similar private enterprise and growth to the urban scene. Here, edicts do not do the trick. Somehow the country has to overcome the political ding-dong and come together a bit over the next two or three years. We dare not leave it longer.

Dare one hope that this House, true to its independent-minded self, may give something of a lead in the move to urgently needed searching for new solutions to new problems? Dare one hope that on all sides of the House it may be possible to persuade the noble Lord, Lord Cledwyn, not to divide us this evening? We all agree with the first part of his Motion, and if the second part was withdrawn, that would be a beginning of a new approach. I suggest both the content and style of the national debate on unemployment have to change if the Government are to be allowed to be radical. Is it too much to hope that your Lordships can start now?

5.15 p.m.

Lord Soper

My Lords, the House is invited to recognise the human misery of unemployment. I do not intend to generate a head of emotional steam, particularly in a short speech. But I would share with the House my anger, rather than my sentimental approach to this problem, and would seek to promote a sense of anger among those Members of your Lordships' House who may not—I speak, I hope, without impertinence—be aware of some of the more dreadful aspects of unemployment as I had to face them, though not because I have been unemployed; with the present level of original sin, I am in no dire difficulty there.

I began to work in 1927 or 1928 in the Old Kent Road. and I worked in Islington where the highest rate of unemployment in those days was being suffered. I would introduce into this debate two impressions which were mine and which I have never forgotten; they have become more deeply penetrated over the years. The first is that to so many people who were unemployed the really grievous and terrible thing was not so much that they had not anything to get, but that they had not anything to give. Nobody wanted them. They had no opportunity of fulfilling the kind of life in which they felt they might be of some significance; that significant opportunity simply was not there. I find this a matter which promotes a great deal of anger, and I think it is righteous anger.

Secondly, there is the fact that the candle of opportunity, the developing of those innate resources which many of these young people had, was snuffed out before it had any chance of becoming a flame. What impoverishment of the community in which we live can be put down to the fact that so many who might contribute in art, in welfare, in beauty, in truth. are in fact prevented from so doing by the terrible burden of having no opportunity of developing those characteristics with which they are endowed or which they could develop? It is in that regard that I remember when I first was presented with what I have discovered to be a truth—that poverty is a crime; so, I believe, unemployment is a crime. It is a moral situation which I think we ought to find intolerable, and though the methods by which it can be dealt with may seem remote—and some may seem almost impossible even of introduction—yet it was surely Winston Churchill who on one occasion said how valuable anger is if it promotes action; and I believe it can.

Therefore in a very short speech I want to try to say something about what can be effectively done. First, I must indict the Government. I am not saying that the Government are indifferent to these matters. But I am saying that, from my own acquaintance with public affairs and with people outside and inside, my experience is that there is a very widespread conviction that the people who are today in charge of our affairs—so-called—are indifferent. It is felt that they are indifferent not in the sense that they are deliberately contriving something which is evil and anti-social, but in the sense that they have not a sufficient realisation of the impact of their own actions and that they in fact promote a feeling that, though they may not themselves be committing what is an evil practice, they are doing very little indeed to offer to ordinary people the sense that they have a constructive role to play, as I believe they have.

First, it is surely necessary to recognise quite simply that, whatever may be the decline in the inflation rate and whatever may be the validity of many of the economic arguments which have been introduced into your Lordships' debate this afternoon, unemployment is increasing—it is going up. That is an unassailable fact. In as much as the capitalist system has never acquired a basic ideology and has been subject to vagaries from time immemorial (to say nothing of the 1930s in America, and the oil crisis of more recent date), it is no law of the Medes and the Persians which the Government are compelled to maintain, because they have recognised it to have an innate validity of its own. It is a policy which is failing and which ought therefore to be subject to the pragmatic retort that if you find something in as grievous a situation as this, where so many people are being dispossessed of a great element of what can be called humanity, you should do something else. In that regard I am entirely in favour of what the noble Lord, Lord Alport, has said.

This Government have failed, and are failing. And, in the primary conception of what ought to be done to get rid of, or at least to assuage, the burden of unemployment, I believe that there is an overwhelming case for the infusion of public monies into constructive programmes, particularly in the realm of housing and in the refurbishment of a great deal of the substructure of our great cities. People may say that that will produce all kinds of inflationary processes. I would infinitely prefer to have an increase in inflation and an increase at the same time of that consensus which recognises that we are not living in a divided society, as the noble Earl, Lord Stockton, pointed out, as between north and south, those in employment and those who are unemployed. The moment you create a sense that people are living together and can form something of a society, you have in my judgment the greatest creative effectiveness that you can possibly develop in any field whatever.

Therefore, I ask the Government to do two things. First, I ask them to take greater care, to give the impression at least that they are dealing not with an economic problem, but with a moral one—indeed, a problem that is fundamentally a question of human beings living in a society where we have all the implements and the opportunities to provide a full life for all, if we only knew how to distribute them adequately.

Secondly, will the Government recognise—and it will do them no harm whatever to do so—that there is widespread conviction among those who are competent to make such an assessment that the policy hitherto is failing? It is not reducing unemployment. Unemployment is now a greater curse than it was even a year ago. Let the Government recognise that and let them turn in their own tracks and begin to do something for which I believe there is an increasing demand on the part of intelligent as well as well-meaning people. I believe that they would receive a response. A response would at least give them the opportunity to do something better than they have been doing regarding the prevailing curse of unemployment about which I have a mixture of anger and hope and about which I have at least communicated my own sense of conviction.

5.23 p.m.

Viscount Hanworth

My Lords, it is often interesting to look back at the opinions expressed some time ago. When unemployment had exceeded 1 million it was almost an ethic that if the figure reached 2 million it would begin to destroy the fabric of our society. With hindsight that view may have been overstated, but a gradual erosion is now taking place, and that is quite clear to nearly everyone. It is only when people have a real grievance that extremists are listened to. Surely the spectre of unemployment is a major cause of the miners' dispute?

I dislike the way in which the Opposition try to put all the blame for unemployment on Government policies. It is ridiculous to do so and it cheapens anything else that they say. Unemployment has affected all western countries recently, and with Britain's economic problems it is not surprising that our unemployment rate is higher than that in most other countries. Nevertheless, the Government's monetary policy and their desire to keep down inflation at any cost is a contributing factor.

Productivity, with competitive prices, is all important to our exports—and export we must to survive. But paring down services and administration to the bare bones is a questionable policy when it just puts more people on the labour market and costs the Government around £5,000 a person to keep them unemployed.

The Government's proposals to reduce income tax can surely be justified only on political grounds. Much of the extra money put into the economy will be spent on imported goods and will therefore not increase home production and lessen unemployment. The Government say that it is intended to help lower paid workers. But surely those not paying any tax and the unemployed are still lower paid?

The SDP has put forward proposals for an emergency employment programme costing just under £3 billion, but producing 1 million extra jobs. I do not wish to go into detail. The proposals are readily available to those interested. I would only say that they are not the same as those put forward by the Labour Party.

Today I should like to look at the unemployment problem rather more fundamentally, starting with the proposition that the more people there are who can work usefully for the longest possible time, the richer a nation should be. The word "usefully" needs to be underlined. However, no economist can dispute this proposition; and there are so many things which do not require imports but which are of great importance to our society. Better prisons, smaller classes in schools, and of course sewers, are a few examples of matters which have recently been in the public eye.

It must follow that there is something wrong with our Western economics which, in spite of this proposition, means that we pay about 75 per cent. of the cost of employing a person to keep him unemployed. That is only one of the reasons why some people—and I think that this might apply to Mr. "Wedgie" Benn—have apparently abandoned the capitalist system as being beyond redemption, and many now seek to destroy it altogether. I do not of course subscribe to that view. But unless our economists, the City and the equivalent in other countries really get to grips with the changes which need to be made to the capitalist economic system, taking into account the needs of developing countries, the system, in my view, will not survive.

Finally, I should like to make some other major points. I suggest that we can divide unemployment remedies into three categories: first, fundamental economic changes; secondly, emergency measures; and thirdly, what I would call palliatives. I call them palliatives because they contravene the fundamental proposition that I put forward earlier about maximising the labour force and the hours that they work. Some of these palliatives may be what society wants; for example, shorter working hours, early retirement, longer holidays, job-sharing, part-time working and so on. Let us, however, be clear on one thing: unemployment could be solved almost immediately if the Government and the unions were prepared to accept the now unacceptable side effects. But we should keep such possibilities in mind because in the end the side effects could become more tolerable than the disease.

What are the solutions? Obviously one solution is much increased Government spending on promoting industrial growth and exports, with the side effect of producing some inflation. There is also the reduction of real wages and harder working by all employees—the Germans recovered after the last war by these means. Job sharing and part-time working provide a real opportunity here, inhibited only by the difficulties in operating such schemes. I believe, but I cannot prove, that many women and some men would prefer to work part-time rather than full-time, and this could in fact help the situation. If I am right, the Government need to make part-time working more attractive, and industry needs to recognise its benefits.

I now come to job sharing. If you accept that it costs the Government 75 per cent. of the average employee's wage to keep him unemployed, then if two people share a job and the Government chip in, part-time workers need accept only a small drop in their wages. The problem of course is, or would be, the anomaly as regards full-time workers; but it might be possible to do this in selected areas.

5.32 p.m.

Lord Beloff

My Lords, I rise in the first place to echo the words of the noble Lord, Lord Soper. Unemployment is a moral challenge to any society. Any Government must give priority to the solution of the social problems that it presents, and it must equally be the wish of all other parties in the state. Above all, I should have thought that, on those grounds, we ought to condemn unreservedly any man or group of men who seek deliberately to add to the toll of unemployment in this country.

The leaders of the National Union of Mineworkers have, for the last nine months, been engaged in destroying jobs and attempting to destroy jobs in the pursuit of a political objective. They have already, in their own industry, destroyed jobs permanently in those mines where coalfaces have been or are likely to be abandoned. They have destroyed jobs on the railways, as British Rail has told us, and a great deal of work is likely not to go back. You may say that road transport will take up the employment. But, more seriously, they have tried and failed—thanks to Mr. Bill Sirs, very largely—to destroy jobs in the steel industry. People forget the attempt to close down Ravenscraig, Scunthorpe and Llanwern, but everyone knows that if production in any of those three works had been interrupted for any length of time, they would never, in the present state of the world steel industry, have been reopened.

An attempt was made—and again things move on and people forget—to close down the docks. The docks, one would have thought, have suffered enough from troubles to the benefit of Rotterdam and other Continental competitors. The dockers proved wiser than their union leaders and for the moment the jobs in the docks are safe. But of course if the traffic through the docks had been interrupted, if, above all, the power cuts with which the National Union of Mineworkers has been threatening us at intervals over the last nine months had actually materialised, there would have been a loss of jobs in almost every industry, since every industry is power-dependent. This massive attempt to create unemployment—some of it perhaps temporary, but much of it permanent—is something which has not been condemned by noble Lords opposite in the way in which they have condemned. and condemned in this Motion, lack of urgency on the part of Her Majesty's Government. Therefore, even if I were as critical as the noble Lord, Lord Alport, of some aspects of Government policy, I should not find it possible to vote with an Opposition which is more concerned, let us say, with neglect than it is—in the words of the noble Lord, Lord Soper—with deliberate crime.

It is a pity that this has been the case, and the divisiveness in our society to which the noble Lord, Lord Jacques, and others have referred, is a product of the fact that, in the last resort, there has been an unwillingness on the part of Her Majesty's official Opposition, to face the fact that unemployment is a general problem, a problem of all countries, and a problem which can only be solved by a high degree of national consensus. To give support to an attempt to destroy employment is not the way to bring about that national consensus.

I very much agree with my noble friend Lady Carnegy of Lour that it would be desirable if the noble Lord, Lord Cledwyn, in the light of this debate, withdrew the second half of his Motion. I think it desirable that this House should unanimously call attention to the human waste involved in unemployment which Lord Soper, not for the first time, has drawn to our attention. But if it is to be made a matter of party politics, if it is somehow to be said by the speakers on the other side of the House that there is no willingness on the part of the Government to respond to this need, if they are not prepared to admit how difficult it will be to restore competitiveness to our industries—a point to which the noble Lord, Lord Thorneycroft alluded—then I must say that we are where we started; we are still divided, but divided not by our wish but by the wish of Her Majesty's Opposition.

5.37 p.m.

Lord Parry

My Lords, your Lordships' House is a curious Chamber. From time to time, you hear in it words of total confrontation couched as liberal expositions of a case for reason. We have heard tonight in this Chamber, people who firmly believe that they have been expressing themselves in a way that is helpful to the debate, and not realising that in fact the same speeches have been made on the opposite side of the issue in slightly more strident tones.

Almost all that I have left in my mind of the speech that I prepared for this debate is the grid map of Great Britain. It is the grid map of the blackspots of unemployment, and it shows in fact that it coincides with those areas where confrontation is at its greatest, where there is a total violence, and where people are disturbed as to what the future of the community, much less the future of the job, will be.

It is at this stage tonight that I would ask this House to pause a moment and to realise that we are talking about a deterioration that has gone on for a very long time indeed. The last time that I was free to speak in this House without the prefix of the Addison Rules, I spoke about the fact that no Government of Britain of the last 60 years could be totally blamed for the unemployment which is our dilemma at this time. Nor has the Opposition tonight, despite what some noble Lords have misunderstood, blamed this Government totally for the unemployment that they inherited and which has grown worse under their administration. Let us understand that.

This is a difficult problem arising out of the decay of the heavy industry base which no longer finds in Great Britain, or indeed in Western Europe, cheap labour, cheap fuel and the cheap raw materials that we were once able to import from the Empire.

When I first fought in politics in this country, I fought the policies of the noble Lord who has been canvassed earlier this evening as a possible leader, if he could come back in power, of the Labour Party. I fought the noble Lord sitting opposite who was himself canvassed for the job of Leader of the Opposition. It is an essence of the dilemma which faces us, and our failure to respond to it, that we are conducting a debate in this House which is not the same debate that is being conducted in the valleys of Wales or in the towns and cities of Scotland, or in the peripheral areas of Britain that reflect this problem in terms of human misery more vividly and graphically than do those regions of the Golden Triangle which even yet is growing richer.

Let me say to the noble Lords who have spoken—because I believe that they do care, and I should not dream of suggesting in this debate that there is on this side of the House a greater caring than there is among noble Lords on the other side—that it is possible to be isolated from the consequences of the drain that has taken place in the communities of the peripheral areas of Britain. It is possible to be isolated in this city from the decay of the inner heart of the city, and it is possible to go about your business believing that you care deeply and that you understand the problem, yet without appreciating the lives of the people in the areas which have unemployment now ranging between 20 and 23 per cent. as in the case of Northern Ireland, or in the high teens of percentage, as in Wales and in Scotland.

Is it any wonder that we begin to import into mainland Britain the problems which have bedevilled Northern Ireland and that there is some of the violence that we have seen in the streets? We, too, condemn that violence. In a democratic society that is alterable we condemn any violence which seeks to challenge the law, because in this country if you serve democracy properly and use it well, you can change the law.

Do not let us forget tonight in this debate that we need to solve the problem of communication before we can solve the problem of unemployment. The communities are run down; the roads are pockmarked; the chapels are closed; the cinemas no longer exist; the Co-op has shut down, and not only is there no longer any "divi", there is no longer any place to shop, and people have to travel two and three miles at high cost, and more than that in many places, to find services that they once had close to home.

When we talk about public expenditure we are not talking about misuse of public funds; we are not talking about those individuals who might under any system abuse the power that is vested in them. What we are talking about is the use of public funding to restore the values of the communities to the point where the people who live within them no longer feel alienated from the rest of the nation of which they are a part. I understood the noble Earl, Lord Stockton, to say that; I understood the noble Lord, Lord Thorneycroft, to say that. It would be to the great advantage of this House if the message went out from it tonight that we do understand the frustration and bitterness of historical unemployment, sometimes too readily blamed by one side of this House on the other, and that we are determined that somehow we shall find a better way—because. my Lords, there must he a better way than to bring up a generation of children in unemployment.

Do not forget that some of those people who now await trial were 14 years of age when we last stood up in this House and debated this issue of the decay of the heavy industrial base of Great Britain. Violence is caused by the absence of integration in the communities of Great Britain, and we ignore that fact at our peril. When we blame one another, we help to destroy democracy.

5.44 p.m.

Lord Somers

My Lords, nobody could deny that unemployment is a very bad thing. To have some knowledge, some talent, or some ability and not to find a way of using it is most frustrating and is enough to destroy the soul of any person. But I must say that, like other noble Lords, I get a little tired of hearing unemployment—which is perhaps the most serious crisis that has occurred for many years—being used merely as a party-political brickbat with which to batter the other side. It is not a political matter. I was delighted to hear the speech of the noble Lord, Lord Parry, to which I listened with great attention. It was completely free from that, and as a result we listened to him much more seriously.

Unemployment began long before the present Government came into power. It was not the result of any particular party's policy; it was the result of a world malaise, since we see it in other countries besides our own. Any doctor, when called in to give an opinion on a case, looks back to find whether he can trace the cause of the disease. I think that the cause of unemployment is valuable to know. My noble friend Lord Seebohm touched on it, but I go back even earlier. I remember that years and years ago when we started increasing automation in industry a great deal I could see the beginning of it. Looking back I do not think that I was altogether wrong.

Another cause arose—and I hope that this will not be misunderstood—when we started large scale immigration. Let it not be thought that I am saying anything against the immigrants themselves; I am not. But when they came to this country they of course expected jobs, and they got them. Well, I wonder how often they got them at the expense of our own British workers.

Then we come to the question of school-leavers. Some of them are anxious to work, others of course are just young people who, having been free for a long time, do not really want to get work. It is important that they should be taught that work is valuable. It is not just something that one must do in order to earn a living, but is valuable to express oneself with. I should like to see a much greater adoption of the apprenticeship system. The noble Baroness, Lady Carnegy, touched on this. It would mean that they would start work at a lower wage in order to learn their trade, whatever it may be. Then, as they learnt it, they could take some examination at the end of a given period, and if they qualified, they would then become full wage earners. But to go in at once without any training at all and to expect to receive full wages—as much as those of an experienced man—is totally wrong.

Now I come to another rather touchy point. The unions, (which again I am not accusing of anything intentional) have probably been responsible for a good deal of unemployment because they were founded to protect the interests of their members. Sometimes they do not look at the other side of the picture. They do not realise that by constantly pushing up wages they are making things so difficult for some firms that they are having to close down, thereby causing more unemployment. There, again, co-operation between management and unions would he valuable.

I sincerely hope that something constructive will come out of this debate. I am sure that it will, because unemployment is a bad thing and must be cured if we are to return to being a productive and prosperous nation.

5.50 p.m.

The Earl of Cork and Orrery

My Lords, when I was a boy I lived in a house in Somerset; not a large house, but reasonably well-to-do. We had no electric light, no gas, no main drains, no mains water, no telephone, and the roads outside were dusty because it was before the invention of tarmacadam. I do not say this to make out how enormously old I am, because a number of Members of your Lordships' House are older. My point is simply to indicate the amount of change that has gone on in one fairly ordinary lifetime. However, one thing that has not changed is the general attitude towards work and unemployment; the attitude of people who are in Government or, on the whole, in management.

This afternoon we have heard speeches still advocating what we read in the newspapers or hear on our wirelesses; all sorts of expedients for reducing unemployment by increasing public expenditure. We even hear former Prime Ministers going on about this. Most of the people know very well that all these things have been tried, and failed. If we go on doing it, it will always be the same sterile story.

On the other hand, other things have changed. One thing that has changed only since the war is the belief that has grown up that every working man or woman has the right to an increase in salary or pay every year. That is absolutely new and there is no justification for it whatever, as far as I know. One should receive more money only if one gets better at one's work, but not automatically. This is one of our troubles.

Something else has changed, too, and I shall give a rather graphic illustration which will not be completely new. It occurred only a few days ago at Stoke-on-Trent. I shall read from a BBC transcript the words that were spoken by Mr. Arthur Scargill after Mr. Wilkie, the taxi driver, was killed while taking two miners to work. Mr. Scargill said: The National Union of Mineworkers dissassociates itself from any acts of this kind". At that point he was drowned by applause, as many of your Lordships who listened to it will have heard. So the people in the hall, though not the people outside, did not hear the words that finished that sentence. They were: which occur anywhere away from the picket lines". So what the leader of the mineworkers was saying was not that he condemned but that he dissociated himself from any act of violence, however murderous, unless it occurred upon the picket lines.

Mr. Hattersley has been reported—I do not know whether correctly or not—as having said that those words make no difference. Do they not? If your Lordships should find yourselves lying awake in the cold silent watches of the night, let those words run across the eardrums of your soul to see whether they affect you or not. Will you find that they make no difference, or will you find that they chill your blood, as they do mine?

The world has changed. Why do I bring this subject of change into my speech about unemployment? For the reason that this is Scargillism. It is not new. We have had it before, but it is only now that it has crystallised under a single word. It is deadly; it is poison. The reason it is important in the context of this Motion is that unemployment is both the cause and the effect of Scargillism. If we cannot get rid of unemployment Scargillism will be the reward that we shall reap. It is not a prospect that I personally care to face.

What is the solution? I do not know. I do not pretend to have wisdom to see into the future and know. But I hold a conviction that it is quite wrong—I say this with respect to many of my friends—to say that there is no alternative, ever to use those words at all about anything. To use them about any Government's policies and to say that there is no alternative is, to my way of thinking, the purest obscurantism. It is also defeatist, negative and I want no part of it. It has nothing whatever to do with the vote of censure—if that is what it is—on the Order Paper. That has to do with the lack of urgency, so-called, alleged by the noble Lord, Lord Cledwyn, on the part of the Government. This does not come into the argument as far as I am concerned, because there is no urgency on the other side, either. Urgency is not the problem. The problem is what will the future be like and how shall we find out?

Here we come to the admirable speech made by my noble friend Lady Carnegy of Lour, who said that we have to start trying to think the unthinkable. What do the years ahead hold in the way of work opportunities? We are told of the possibilities such as work sharing and this kind of thing. I do not know. What we have to do is to set up some kind of an organisation, some commission or whatever it might be called—I almost said we need a crystal ball, but that is too fancy—to look into the future, using for the purpose the computer that has caused all the trouble, anyway. This commission could look into the future to see what the world will be like, because unemployment, as has been pointed out by several noble Lords, is going up. It does not matter how many more jobs are created, how many new firms come into being; unemployment is increasing because of high technology, new technology, the microchip and all the electronic horrors that lie ahead of us.

What can we look forward to? Who is to tell us? Where is Merlin? Where is Lao-tsze? Where is Cromwell? Where is Shumacher? Can the Government or somebody not think—it does not have to be the Government—how to find somebody to set up such an organisation? I am inclined to believe, without implying any personality, that a suitable person might be someone such as the President of the Royal Society to set up a kind of think-tank. But the matter is urgent. We do not know and we must find out—soon because time is running out—how to prevent this country from approaching the abyss which I believe it is doing at the moment. We must learn how to steer it away from that abyss, to keep it on the path and to restore it to the great nation that it has been. that it ought to be, that it will be, but which Scargillism would prevent it from being. By such means, if we can steer it away from that abyss, and away from the picket lines, I believe our future will shine in a way that it does not shine at the moment.

5.59 p.m.

Lord Molloy

My Lords, the quintessence of the Motion moved so ably by my noble friend Lord Cledwyn of Penrhos was to ask this House to recognise the, human misery and waste caused by current unemployment of labour and resources and to deplore, the lack of urgency shown by Her Majesty's Government". To an extent, that debate has already been won. It has been agreed by both sides of the House. Nearly everybody who has spoken has shown something that ought to be done which the Government are not yet doing.

I wish to refer briefly to the speech of the noble Lord, Lord Young. I acknowledge immediately that he was in a difficult position, having only a short time in which to make a speech from the Front Bench in reply to the formidable delivery made by my noble friend Lord Cledwyn. But what Lord Young said struck me as being rather peculiar: that he had no time to show what the Government have done or what they intend to do. I am bound to say that not much time is required to say nothing much; and there was no point in saying it because there was nothing to be said. When the noble Lord, Lord Somers, quite rightly said that there was high unemployment in this country before this Government came into office for the first time, that is true. It was nearly a million. And when they were defeated by the Conservative Party, unemployment was being reduced.

Let us have a look at the arguments of the noble Lord, Lord Thorneycroft, which are always formidable until you examine them in some depth. He mentioned that period of from 1945 to 1951, when it would appear that the Labour Party was obsessed with ownership. We were not obsessed with ownership. Many of us had gone through the hoop of unemployment in the 'thirties. Many of us found it despairing, as I have said before, that it should have been Hitler and Mussolini who gave us our jobs back. Perhaps Lord Thorneycroft does not remember that. Many of us who served in Her Majesty's Services do.

When that Government came into office they quite rightly said that the basic fundamentals of this Great Britain of ours in a property-owning democracy must be owned by the democracy; the democracy is Parliament and Parliament will be answerable to the people. And so, were the great industries taken into Mr. So-and-so's ownership, into Lord So-and-so's ownership, into the ownership of a little group? No way. They were taken into public ownership on behalf of the British people. And it not only put Britain back on its feet. That policy, my Lords, put Europe back on its feet.

The Americans helped tremendously with money. Aneurin Bevan was sending white timber and scores of skilled workmen to beleaguered France, to Holland, to Belgium. even to Germany, to assist them to build up their bombed hospitals and bombed homes. I have to say therefore that that was the principle on which we then achieved the other end of the scale—under that Labour Government with their wicked nationalisation! Now there is patriotism for you, is it not? Fancy having not only the Navy owned by the people, the Army and the Air Force, but also—and so it should be—what has been lying under the ground for millions of years; so that no single person can claim that and say, "That is mine".

We in South Wales were brought up not to become multi-millionaires but to have compassion and to share. The best way of sharing was through a democratic Parliament, and the best that that Parliament could do to that end was to take industry into public ownership. Only when that principle was attacked in 1980 did we see the base of British industry fundamentally damaged, and then slowly the inexorable increase of unemployment. That is an irrefragable argument and cannot in any way be contradicted.

I want to turn very briefly to another aspect which has not been mentioned. When people say, for example, that there has been no deliberate creation of unemployment by this Government, then I say that perhaps they have not done it deliberately but they must have been terribly myopic if they did not know that some of the things they were doing were going to create unemployment. Let me read from the extremely Left-wing periodical, the Journal of the British Medical Association! It talks about a considerable waste of resources created by this Government; there are 700 junior doctors out of work. I do not think that this is a particularly nice thing for us to have to realise. We know that the British Medical Association carried out a survey during the summer to collect reliable information on the prevalence of unemployed doctors in their training grades. They were appalled to discover that more and more young doctors were being unemployed, sometimes for a month only—and that is a month too much. That any doctor can be on the dole for one month is a disgrace to this nation.

We did not start having this sort of thing until the party opposite came into power. And that has got to be acknowledged. It is no use to be mealy-mouthed about it. On these debates I have pleaded for trade unionists to be sensible. I have pleaded for the trade unions, the organisations of employers, some of our best minds in our universities, in banking and commerce, to get together to see if we cannot work out something to resolve this problem. But all these appeals have been ignored by the Government because they are too arrogant to think that perhaps somebody has got a good idea which would help my nation to rid itself of unemployment. I realise that unemployment in our National Health Service among medical and support staff is a shattering experience.

My Lords, I beg you to listen to this. The Department of Health and Social Security, to try to dodge the issue, no longer collects figures of the people and of the employees of the largest employer in Great Britain. It collects no figures to find out how many doctors, nurses and midwives are on the dole. That is a very brilliant way of dodging the issue. They shut their eyes in the hope that the problem will go away. If we were to apply this Conservative Government blindness to our armed forces we would not have even a couple of armed boy scouts. But that is what is happening to the NHS. If that were to be the attitude to the rest of industry—not to make calculations as to how many jobs we need, how many people are being thrown out of work—then we could not even have this debate. What this Government are doing is compounding venom with myopia.

To estimate the unemployment of nurses in particular one has to examine the manpower targets. In 1983 the Government introduced the manpower targets to massage and hide some of the figures in the National Health Service. The health authorities were instructed in 1983 by this Government to cut 8,000 jobs. Is it or is it not deliberately creating unemployment? That was the first cut ever in our National Health Service since that service was introduced by Aneurin Bevan, so ably helped in those days by my noble friend Lord Bruce of Donington. And the zealous authorities, the sycophants of this Government in the country, went better. They were told to destroy 8,000 jobs—the jobs of 8,000 doctors, nurses, midwives. These Tory tools did even better. They destroyed 11,400. These are the facts that the people outside know and which make them irritable.

I just want to say this, too: that in so far as an example can sometimes help. I should like very briefly to give an example of the South-East Thames NHS authority as a case in point. In 1983 the South-East Thames National Health Service authority sacked 1,500 people, 650 of whom were nurses. An accident? Not deliberate? Well, who is doing it? Who gave the order? Who gave the instructions to cut 650 nurses and put them out of work? Perhaps Lord Thorneycroft with his great influence will find out for us and let us know. The authority has no plans and they cannot do any more. They have been instructed, it is perfectly true, to try to increase nursing staff. They had cut too much. They say, "All right, we will do this, but we want extra money". The Treasury says "You cannot have extra money". So they are in a difficult situation.

I come back to the point I started with. We have got to say quite bluntly and clearly where grave and serious faults have been made—and I hope they have done that—and when that has been done the malice must disappear. I come back to my plea which I have made time and time again: that responsible trade union leaders, responsible people in commerce and industry, in Government and in Opposition should come together. Then, I believe, we can resolve this dangerous problem, dangerous not only to individuals but dangerous to my nation.

6.9 p.m.

Viscount Massereene and Ferrard

My Lords, talking about venom, I think that I have heard a most venomous speech. The noble Lord appears to think that wealth is provided only by public investment; but, of course, public investment has been the reverse of that, I am afraid. We have only to take the various nationalised industries. I do not want to go on in that sphere. I shall be very short because I spoke at length in the debate on the gracious Speech and then suggested some means whereby not all but certainly some unemployment could be cured.

It is forgotten I think that in the last few years the working population has increased a great deal. I believe it now stands at 24 million, and only last year—I think it was last year but it may be this year—the working population increased by 175,000. That means of course that the Government have to find 20,000 jobs a month in order to stand still regarding unemployment. I think that the Government, on the whole, have done very well, but we must realise that we are in an industrial revolution (if "industrial" is the right word to describe it) which is far greater than the industrial revolution that occurred in the middle of the 19th century. The noble Lord, Lord Molloy, must understand that the object of production, as I have said hundreds of times, is to produce wealth and not necessarily jobs. The theory is that when you produce the wealth you divide it out among the people through taxation to give them a far higher standard of living—which of course everybody wants, as I do.

As an example, if you take my employees—the few I have—they all have a high standard of living. They have very nice cars, they have ponies for their children, and their children have toys which I certainly was never given. I. like my noble friend behind me, was brought up in the days of only gas, and I had only a hip bath when I was very young. I remember the time when children had to walk to school, which was perhaps three miles away; and of course they were far healthier for it. We have now come to the condition where we want more and more all the time; and, of course, the more you give people the more they want.

I should like to turn for just a moment to the question of reflation, because I watched Mr. Heath on television about a fortnight ago when he made a speech at Tamworth, and he wants great reflation. Mr. Heath said, putting it simply, after all, businessmen borrow money to create work: they borrow and borrow. Why do not the Government borrow and borrow to create jobs? My Lords, you cannot compare businessmen with the Government, because businessmen, when they borrow money—and they know their job, or the majority do, although some fail, of course— they borrow it with the object of creating wealth. And if you create wealth you then create jobs.

With due respect to the Civil Service—and I have a lot of admiration for many civil servants—they are not trained to create wealth; they are trained to administer wealth. They are not trained to take ventures or anything like that. So when you branch into public expenditure you may be creating jobs temporarily but you are not creating wealth permanently. In fact, as history has shown us in this country, you are spending a lot of money, in the end to no purpose, which will eventually depreciate the currency.

We have only to go back a very short time. If you take 1972, which was when the "Barber boom" occurred, there was a Conservative Government at the time; but the Government then thought that by pumping into the economy vast amounts of new, printed money they would cure all the evils of unemployment. For a short time everybody was very happy, but the end was disastrous. We had a tremendous property boom. I am sure we all remember Slater Walker and various other firms like that; but in the end it was extremely bad for the economy. We have only to go a few years further on, when we get to Mr. Healey. Mr. Healey tried the same thing. He borrowed money—so far as I know, he did not print it, but he certainly borrowed it—and he borrowed more money than any other previous Chancellor. He even borrowed, I believe, more money than all the Chancellors of the Exchequer together from the days of Charles II. What happened? The International Monetary Fund had to take charge, and this country was in a very, very parlous state. We cannot cure unemployment, except temporarily perhaps, by printing or borrowing money.

I should like to say that the only way we can create more employment is by producing goods at a price which our customers will pay. If you think over the last three years, our wages have been 3 per cent. above prices—certainly the only country in Europe, and probably in the world, in that position. If you go on like that, you are on the road to ruin. The Government are quite right. They must not over-reflate: otherwise the result will be disastrous.

6.17 p.m.

Baroness Fisher of Rednal

My Lords, I shall be speaking mainly about the results of unemployment in the West Midlands. The noble Lord, Lord Balfour, a few weeks ago, when he opened a debate on unemployment, said, among other things, that perhaps I was to blame because I did not get the train and go to see for myself. May I say to noble Lords that when I leave this Chamber at the end of the week I go back to the West Midlands. I live in the West Midlands and so I do catch the train and I do know what is going on in that part of the country. It is a region which once attracted mobile labour on the promise of affluence and security, and it is now faced with the twin realities of lower pay and higher rates of unemployment than the national average. From May 1979 until the last few weeks approximately 600 factories have closed in the West Midlands involving something like 32,000 workers. The unemployment ratio at the present moment—that is, the number of men and women chasing jobs—is 27 to 1.

The West Midlands is not an area of feckless men and women who do not want to work. It is an area where the problems of unemployment have hit them between the eyes and they do not really know what to do. These are well-qualified workers who are in the greatest difficulties—perhaps even greater than those in some other parts of the country which are more used to unemployment. The West Midlands has changed from being an industrial heartland to being an industrial wasteland, and, compared with other regions of Britain, it is now notable as having the biggest rise in unemployment rate, the worst long-term unemployment, the largest cut-back in its employment base, the greatest competition for jobs and the lowest economic growth of the decade.

Only last week the noble Lord the Minister gave us details of regional assistance. The whole of the West Midlands is now eligible for selective regional assistance. The worst hit areas have failed to achieve development area status due to the choice of travel-towork areas as the basis for designation. If that is not massaging the figures, I do not know what is. I would ask the noble Minister who is to reply how many people travel from Ross-on-Wye and Cinderford to the West Midlands to work because they are in the travel-to-work areas of the West Midlands?

The change in Government industrial policy over the past few years, the 1984 Budget and the Autumn Statement give little encouragement to manufacturing industry; and service industries will not be feeding us in the future. It is of fundamental importance, in my view, not only to the West Midlands but to all the other manufacturing areas that the Government must not accept the swift decline of manufacturing in the United Kingdom as an inevitable fact of life.

We should also look at what we call the "transnationals" as distinct from the multinationals. Many of what we call "transnationals" were the very large industrial concerns that we knew in the West Midlands. Perhaps Dunlop is a case in point. I think it was the managing director, who perhaps was not very successful at the job but now has a post at the CBI, who was telling people how to run their organisations. Nevertheless he was able to sell Fort Dunlop to the Japanese. We are finding more and more that the transnationals have been restructuring their global operations at a very rapid pace. The world recession is helping them but great help also has been given to them by the Government because of the abandonment of exchange controls, so that they move out into the developing countries where low wages areas appertain and where, as we know, there is a lack of environ- mental controls. With their moving out from areas like the West Midlands there is a knock-on effect on what the noble Lord, Lord Thorneycroft, referred to as the new thrusting industries. These are the smaller companies that were supplying inputs and services to these larger organisations. When they move out what happens to those organisations is complete bankruptcy.

I should like the Minister to explain one point. I am serious about this because I cannot understand the Government's reasoning. The Government say that the better-off in the nation need to enjoy the extra affluence of tax cuts as a means of solving unemployment, while the less well-off, as a means of solving unemployment, should suffer wage cuts. If the noble Lord the Minister could tell me the Government's reasoning on that point I should be most grateful—that is, of course, if he heard what I have just said.

Have the Government the courage to say to those in well-paid jobs, to those who are directors of companies and seem to get an increase in their salaries every year equivalent to the best paid in the country, to those in the upper income bracket, "You have to forgo your income-tax benefits in order to give more hope to the millions without work?" The Government's phraseology about real jobs and about real wages upsets me very considerably because they never say that unemployment is about real people. All we get is statistics.

Many examples of Government policy have actually increased unemployment. I wish to look quickly at Government cuts in transport. In the West Midlands there is the famous factory of the Metropolitan Cammell Company which makes tube trains for London Transport and is also a very large bus contractor. This Christmas the company is going to have to make redundant more than 400 workers because of the virtual collapse of the bus market. This has occurred because the Government have phased out the 50 per cent. subsidy on bus purchases enjoyed by transport authorities. If they want deregulation, the Government are going to make quite sure that transport authorites are not going to be profitable in the future.

At the moment as a case in point, the West Midlands Transport Executive which was going to order 275 new buses in the next three years now expects to order only 100. Other authorities are taking the same line, and yet this factory of skilled work people, which supplied the Tyneside Metro Services that were taken up by the Hong Kong Government and used as their multi-transport system, is in this dilemma because of cut-backs in Government expenditure. I am talking about service jobs, but what worries me is that the Government do not understand what service jobs are. Many of them are in local authorities where there are real financial cutbacks. What we are finding is that our cities and our towns are showing quite obvious signs of neglect—potholes in the roads, uneven pavements, whole areas looking neglected because of lack of maintenance; in other words an obvious tatty look—

Noble Lords


Baroness Fisher of Rednal

If noble Lords will give me half a minute, I will draw to a conclusion. We have cutbacks in housing policy which have already been mentioned. My noble friend Lord Cledwyn pointed out quite clearly that in the Conservatives' election manifesto—we are always hearing what they are going to do, whether it is the abolition of the GLC or whatever; they are always saying, "It was in the manifesto"—there was a clear case that they would do something about unemployment.

Finally, other noble Lords have spoken about the loss of dignity felt by the unemployed. I would conclude with a very earnest request. I say to the Government, for God's sake listen to the large percentage of people who perhaps did not vote for you; in a democracy they also have a right to be considered. They are equally as important as the parents of students.

6.28 p.m.

Lord Harris of High Cross

My Lords, as one brought up as a Wesleyan Methodist, I am glad to join the noble Lord, Lord Soper, and others in acknowledging that there is a large moral element in all important economic issues; not least that of unemployment. I recall that Pascal taught us that the first principle of morality is to make the effort to think clearly. Therefore I make no apology from the Cross Benches in offering a critical comment on both the Government and Opposition approaches to unemployment, from the strict standpoint of a Cambridge economist brought up some years ago, before Lord Kaldor, on the great Maynard Keynes. If you will dip into the opening pages of The General Theory you will find that Keynes never supposed that all unemployment could be mopped up by the simple expedient, beloved of the Labour and Liberal Parties, of increasing Government spending. Keynes acknowledged very explicitly that there were several distinct categories of unemployment, each with separate causes and different sorts of remedies. Indeed, his own central novelty of stimulating demand was put forward as appropriate only in the special case where the job situation was due to a deficiency in total spending. Thus in the slump of the 1930s, when even Milton Friedman agrees there was a massive absolute fall in the total demand, increased money would have drawn idle resources and labour into employment.

The whole crux of the argument is that today's circumstances are quite different. There has been no contraction in monetary demand since 1979. There has been a slower rate of increase in the monetary aggregates necessary to bring down inflation from 20 per cent. to below 5 per cent. But it is not plausible for any speakers in this House to argue that a further increase in Government spending of a few billion pounds—representing 1 per cent. or 2 per cent. of the national income—would make any significant dent in unemployment which is now running above 10 per cent. of the labour force. The crucial distinction fudged by such proposals is between raising nominal demand, as measured in money, and the real effect as measured by goods and services that money will buy.

Therefore, my argument is that even if a 1 per cent. or 2 per cent. increase in spending gave some small fillip to employment, there would be no lasting relief because we should see interest rates soaring and costs and prices resuming their upward movement, so offsetting the increase in monetary spending. I therefore agree with the Government that there is no alternative to persevering against inflation; but I urge the Government that there are additional policies to their central strategy that could help to relieve the scourge of unemployment.

If we go back to Keynes we find he acknowledged two other main categories of unemployment which I think are more applicable to our present malaise. The first is frictional, or structural, unemployment caused by a mismatch between available skills and those required by changing markets and techniques. This has nothing to do with the volume of demand, but calls for policies to improve training and mobility along the lines that the Government are struggling to develop.

Even more important, to my mind, is Keynes'third category where, again, manipulation of demand can do nothing to help and may, in fact, make things worse. This last category Keynes defined as "voluntary unemployment". It was an inexact use of language. In ordinary parlance, what he meant by "voluntary unemployment" was where workers are unable or unwilling to accept a wage reflecting their market value. My case is that most unemployment today is voluntary in this strict Keynesian definition. So, far from yielding a Marxian surplus value, too many prospective jobs offer a negative value either to the worker or to the frustrated employer.

Keynes explained that voluntary unemployment arose, …as a result of legislation or social policies or of combination for collective bargaining or of slow response to change or of mere human obstinacy… He is saying that the causes of this unemployment are nothing to do with laissez faire or the uncontrolled capitalism that haunts the fevered brains of the Tory wets and others. This cause of unemployment arises from gross Government intervention with market forces. I am not saying that it necessarily follows that Keynes would be sure to join me in urging the present Government to abolish wages councils, to abolish rent control, to further curb trade union privileges, to curb employment protection and so-called equal pay, or to reverse indiscriminate welfare and the mounting taxes and national insurance necessary to pay for them; although I recommend all those policies as helping to reduce unemployment.

But there can be no dispute that what Keynes was pointing out in this early section of his General Theory is that social policies so beloved of the wets, if I may say so, of all parties are bought at the price of unemployment being higher than it would be in a freer and more flexible labour market. One can make one's choice in the matter. The dilemma for the Labour Party is like that of a rather over-amiable doctor who has administered excessive doses of what might be called social painkillers and then turns ugly when the side effects show up as impairing the patient's ability or inclination to work.

I ask your Lordships to ponder a specific example of a Mr "F", with his wife and two children, who works at Uxbridge for £96 a week. Family income supplement, child allowances and housing benefit lift his gross income well above £120 a week; but after taxes and national insurance and allowing no more than £5 for work expenses, Mr "F" is left with what is technically called, by those who understand these matters, a net spending power of almost exactly £80 a week. Against that, if he decided to opt for Keynes' voluntary unemployment, on supplementary benefit he would get, on the latest reckoning, £77.70. Therefore, he is working for 40 hours in return for a net gain of £3, which is just short of 8p per hour. If he earned a little less, or if he had three children, or if he had higher work expenses, he would actually be worse off working than taking social benefits. If he were a single householder with his £96 a week he would be only about £10 a week better off working than taking benefits. My Mr "F" has chosen to work, but there are well over a million people in very similar circumstances who might currently inflate the official unemployment statistics although they are hard at work in the underground economy.

A combination of easy indignation and easy money will do nothing to relieve the misery and waste of unemployment. Sooner or later we shall have to tackle the issue of work incentives for both the worker and the employer. We shall have to contemplate a radical overhaul of the labour market, including far-reaching changes in the whole topsy-turvy tax benefit system. I would certainly welcome, in the terms of the Motion, more urgency from her Majesty's Government in those directions. However, I shall probably not be lured into the Lobby with the Labour Party, because I must say that, unintentionally and over a long period of years, they have sown the bitter fruit which we are now reaping. If the noble Earl is short of a vote and will hold out some hope of action, for a start, on the matter of wages councils, I will thank him in the Lobby.

6.37 p.m.

Lord Belhaven and Stenton

My Lords, the House is debating a very serious problem and it is right that the noble Lord, Lord Cledwyn, should draw our attention to it, but I think it is fair, in considering the terms of the Motion, to ask not just what Her Majesty's Government are doing about unemployment but what Her Majesty's Opposition are doing. Having listened over 20 years to many debates of this kind in this House which have been moved by the Opposition, I have never in my experience come across a worse case of the pot calling the kettle black. Therefore, I come back to the question: what contribution is the Labour Party making to the problem of reducing unemployment? I do not just mean words. We can talk until we are black in the face and make every sort of suggestion, but in this situation there is surely an obligation on those who have power—and although not in office the Labour Party certainly has power—to do all they can to mitigate the situation, regardless of party advantage or the prospect of office.

I make no apology—because others have mentioned it—in referring to Motions enthusiastically carried at the Labour Party conference and at the TUC supporting the striking miners—not the working miners. That support continues to this day and is forcing people who want to work and who want to earn a wage for their families not to do so. Moreover, it is wiping out jobs throughout the country.

The noble Lord, Lord Jacques, and others, spoke about a consensus; but what sort of consensus is this? Only yesterday it was reported in the press that British Steel had lost £245 million and it was stated that that is a direct result of the miners' strike, which Her Majesty's Opposition are currently committed to supporting. What effect will this have on the jobs of the steel workers?

There is continuing agitation to impose an embargo on coal and oil going to our power stations. If that were to be effective, millions of jobs would be wiped out, millions of people would freeze and millions would possibly even starve and die. I cannot conceive of anything more wicked than this continuing attack on the power stations which supply the very lifeblood of our modern nation.

Then there was the dock strike of last summer, which was of short duration thanks to the common sense of the dockers and not of their leaders. I was briefly involved in a situation where a number of buyers were brought to a dock to inspect a consignment of timber which had come from a long way away, and who were prevented by union officials even from going onto the dock to look at it. What sort of contribution is that to the problem of unemployment?

In another case not directly related there are civil servants in secure jobs who are refusing to do their work and thereby putting millions of old-age pensioners at risk. If they had their way, those pensioners would not get their pensions at all. In all these cases—miners, dockers and civil servants—those who are striking and disrupting the economy are well off. They are far better off than their fellow citizens who they damage and impoverish by their selfish actions. People are sending food parcels to the striking miners. I would make a suggestion. The poverty of most striking miners is self-imposed. Surely it would be better to address those parcels to their victims—the people they have driven out of work.

Finally, this nation cannot afford to go on living like this. We are too dependent on each other in this new era to be able to indulge in this constant social and industrial anarchy. Strikes which were once directed against the moneyed classes are now directed against the poorest people in the community and those least able to stand up for themselves. I would appeal to the party opposite at least to try to see that that is so; that industrial action taken by people like miners and civil servants who have secure jobs damages the unemployed and the poorest in the land—the very people whom the Labour Party was originally formed to protect.

6.42 p.m.

Lord Kaldor

My Lords, I am in agreement with the terms of the Motion, but I am afraid that I am not in agreement either with those who believe that the problem of unemployment can be substantially dealt with merely by returning to the same techniques of demand management which maintained full employment for 20 years after the war, or with some of the previous speakers like the noble Lord, Lord Harris, who think that the present unemployment is voluntary and will disappear if greater incentives are given or wage rigidities are lessened. I believe that the basic causes of our present unemployment are external to our economy and not internal. I am surprised that nobody has—at least in my hearing—brought that out.

The fundamental reason for our heavy and growing unemployment lies in the inferiority of British manufacturing industry in relation to most other industrialised countries and the consequent shrinkage in the growth of our exports and the rapid rise of imports of manufatures. This is a very long-standing process. I shall deposit in the Library some graphs and tables to show that it began in 1885. Since then our share of world trade has been diminishing at a constant geometric rate. In other words, the process began 100 years ago.

Yet as recently as 1954 we were fundamentally in a viable position because our net exports of manufactures were sufficient to pay for our net imports of everything else; that is to say, of food, beverages, fuel and raw materials. We were thus in a viable position, even though that position entailed an acute labour shortage—not unemployment but a labour shortage—which required us to allow the importation of labour on a large scale from the new Commonwealth countries, as well as from Ireland. Our labour force was supplemented in that way with certain social consequences.

But since then, since trade was liberalized, our imports of manufactures have increased far more rapidly than our exports. In the last 30 years the volume of our imports increased 12 times, whereas the volume of our exports increased less than three times. As a result, our net position has become a great deal worse. Import penetration, by which is meant the share of imported goods in final domestic demand, has increased in the last 30 years from 5 per cent. in 1953 to 33 per cent. in 1983. At the same time our share of world exports of manufactures, which was 20 per cent. in 1954, fell to 10 per cent. in 1979, and was only 7.2 per cent. in the third quarter of 1984. No wonder that in the circumstances our manufacturing industry could grow only very slowly. Indeed, in the last 10 years the slow growth has turned into an absolute decline. This year the output of our manufacturing industry will be 13 per cent. lower than it was in 1973, 11 years earlier.

But for the fortunate coincidence of North Sea oil we should be in a most catastrophic situation already. We were heading towards a catastrophic situation. But even with North Sea oil at current levels, a major crisis will merely have been postponed and not avoided altogether if the present situation is allowed to continue. We had increases in import penetration, particularly in engineering products, of the order of from 5 per cent. to 40 per cent. or 5 per cent. to 60 per cent.—that was in mechanical engineering. instrumental engineering and electrical engineering. I mention those examples because the buyers of those products are themselves industrialists. The goods are for industrial use, and their buyers are careful and expert judges of quality.

Moreover, the situation is worsening. In the past three years imports of manufactures into the United Kingdom increased by 44 per cent. in value and 19 per cent. in volume. Exports of manufactures from the United Kingdom increased only by 14 per cent. in value and decreased by 7 per cent. in volume between 1980 and 1983. The reappearance of unemployment which began in the late 1960s is more than fully accounted for by the decline in manufacturing, which lost 3 million or one-third of its labour force.

Mr. Lawson said the other day that unemployment is caused by workers, pricing themselves out of jobs". In the British context that, I think, is the silliest remark ever made by a man in his position. I suppose that he would equally say that our post-war labour shortage which lasted 10 or 15 years was due to the failure of the trade unions to price people out of jobs. They priced themselves too much into jobs, and that is why we had the labour shortage. It is not the workers who are at fault; it is their employers who have allowed themselves progressively to be driven out of markets on account of their failure to produce goods of quality and design comparable to those of other countries. Their minds are much too preoccupied with financial manipulations in the City—with mergers and takeover bids—to give much thought to such tedious and slow maturing tasks as product development or design improvement, which are the bases on which industrialists of other countries compete in the world market.

However, the public appears to have a far better appreciation of the nature of this problem than do Her Majesty's present Ministers. Recently a reputable research organisation found that the greatest percentage of those questioned on how to solve Britain's economic problem thought that the introduction of import controls was the only effective remedy. This view was remarkably uniform across the political, and even the social, spectrum—72 per cent. of Conservative voters, 72 per cent. of Alliance voters, and 73 per cent. of Labour voters were in favour of import controls. They thought that import controls were the ony thing that could solve our problems. Again, I shall deposit in the Library the table in the book from which that is taken. As against that, the Government's favoured remedy of reducing spending on health and education was favoured by only 15 per cent. of Conservatives, 6 per cent. of Alliance voters, and 13 per cent. of Labour voters.

For my part I am convinced that the 72 per cent. of voters in favour of import controls are right. Sooner or later we must, and we shall, overcome all our prejudices in favour of free trade and renegotiate our various obligations which stand in the way. The question only is, when. Will it be when unemployment reaches 5 million, or 7 million, or 10 million? All these figures are within the realm of future possibilities if nothing is done to reverse current trends as between import penetration and the continued fall in our share of world exports. The end product is the 19th century version of the dole—mass emigration. Without a manufacturing industry, much the greater part of the inhabitants of these islands will have to emigrate in order to make a living. It is not a very cheerful prospect.

6.52 p.m.

Lord Campbell of Alloway

My Lords, it is always a pleasure to follow the noble Lord, Lord Kaldor. However, I hope he will forgive me if I confess that his geometric graphs going back to 1885, which he is going to put in the Library, will be really quite beyond my limited comprehension.

What I should like to do, if I may, is to try, as best I can, to meet head on the core of the criticism which inspired the noble Lord, Lord Cledwyn of Penrhos, to move this Motion. He makes, on analysis, two fundamental assumptions, or rather assertions. Recognising (as he did) that our fiscal, economic and employment policies are but facets of a single general strategy, the noble Lord, Lord Cledwyn, asserts that this strategy is not only unworkable, but is not working.

Secondly, the noble Lord asserts that the policies of Her Majesty's Government are wanting in urgency, in imagination and in resilience—this because we should spend our way out of unemployment by spending on what are called "undoubted national needs" or, as he put it on another occasion, "major works on the national infrastructure". These are somewhat subjective concepts, like beauty in the eye of the beholder, for you will search the OED in vain until you reach the supplement, only to find a definition of "infrastructure" which is largely inapposite.

To meet this assertion—and I want to try to meet the criticism—we could perhaps treat work on the national infrastructure as including the maintenance, modernisation and erection of installations concerned with means of transport, communication and energy. We could also include institutional buildings, such as prisons, hospitals and law courts; public services, such as sewers and water; social services; our voluntary institutions, including civil defence; and perhaps even the housing stock, to which the noble Lord, Lord Seebohm, referred.

It is not easy to define terms. If some such definition were acceptable, then we have to take into account—do we not?—massive subsidies to state-owned industries, such as the coal mines. We must also take into account that roads expenditure is up 12 per cent. this year on last year; that there is £300 million to be spent on the electrification of the railways; that the expenditure on new prisons, hospitals and courts is far greater than ever before under any previous Administration; and that, as for our old friend the sewers, some £800 million is to be spent this year. The point is made that there is no evidence of any cut back on expenditure on the infrastructure; quite the reverse.

On what infrastructure project should the Government spend? Without some specific proposal, we would beat the air with verbiage. Without some proposal relating to need, cost, job creation (whether permanent or temporary) and the inflationary impact on the economy, we indulge in discussion, but to no great profit.

One such project which calls for examination was raised in The Times on 27th November by my noble friend Lady Airey. This concerns orders for two new AGR nuclear stations in an area of high unemployment, giving four years' work for 70,000 men. But let it not be supposed that any project-by-project approach could ever provide work for the real unemployed—about 1.2 million, 60 per cent. of whom have no manual skills. I do not refer to the unemployed in transition, who change jobs at the rate of about 6 million job changes a year. The real unemployed—I assume they total 1.2 million—excludes those who are medically unfit to work and the work-shy, to whom the noble Lord, Lord Harris of High Cross, has just referred, who find the differential between living on social security and earning a living too meagre to warrant the effort.

As for the real unemployed, some 700,000 are being helped by various training schemes. This is at a cost of £2¼ billion. Some 130,000 are being found work with voluntary associations or in local authority projects under the supervision of MSC—this at a cost of £214 million. To open up more training for about 10,000 a loan scheme is being set up at an initial cost of £5 million. To enable the unemployed young people to set up on their own an allocation of £72 million is proposed for 1985–86 to provide for an intake of 1,250 new entrants each week.

On Government general strategy, if we are to achieve any substantial and lasting reduction in unemployment. it is essential not only to increase productivity, but also to retain confidence in the stability of money. Is it of the order of compassion to deprive a man of training for a real job by creating some make-believe job? That would be but a callous exercise in cosmetics, a political placebo, a cruel deception. As my noble friend Lord Young said in opening, the unemployed deserve more honesty than that. Is it of the order of compassion to follow the advise of the noble Lord. Lord Barnett, which he gave on the fourth day of the debate on the gracious Speech: spend our way out of unemployment on the back of a huge budget deficit? That would be to land us up with out begging howl in the corridors of the IMF.

My noble friend Lord Alport's forensic nightmare, in which he conjured up my right honourable friend the Prime Minister in the guise of some deranged monetarist fairy queen distributing this largesse of dragon's teeth to destroy society, is no doubt good material for Christmas pantomime. One wonders to what extent this merges with the noble Lord, Lord Cledwvn's, assertion that Her Majesty's Government are using oil money to keep people on the dole, or with the noble Lord, Lord Molloy's, concept that the policies of Her Majesty's Government are a compound of venom and myopia.

These policies of Her Majesty's Government on training the unemployed, on helping the unemployed to set up on their own and on the provision of work on the infrastructure are resilient, are imaginative and. Indeed, are sound. They not only recognise the human misery and waste which all of us condemn on all sides of your Lordships' House, but also afford relevant and urgent remedial action that is both general in terms of cash and compassionate in terms of humanity and fairness.

7.2 p.m.

Lord Kilmarnock

My Lords, in practically every opinion poll on issues of concern to the public over the past five or six years unemployment has come top. Yet the mood of the country on the subject has fluctuated considerably. Perhaps the period of greatest alarm was when the figure was pushing 1.5 million, or about three times Beveridge's allowance for frictional unemployment. It was about that time—in 1978, I think—that the noble Lord, Lord McCarthy, sounded the alarm in a notable debate in your Lordships' House in which he conjured up memories of the Great Depression. Then, in late 1979, your Lordships Select Committee on Unemployment was set up under the chairmanship of my noble friend Lady Seear. During the committee's two-and-a-half years of life, unemployment doubled again.

By the time the committee reported in May 1982, the country, after a frisson caused by the events at Brixton and Toxteth in 1981, seemed to have settled into something that was not quite acquiescence but certainly fell far short of revolution. I think that it was during this period, the early 1980s. that the Government won the propaganda war and gained considerable acceptance for their claim that it was all the fault of the world recession abroad and the unions at home and that it was quite beyond their power to do anything about it except to pursue economic policies that would lead to an upturn and thus eventually to more jobs. I believe that the country swallowed this and gave them the benefit of the doubt. This was certainly so at the last general election. Neither the Labour Party's claim to be able to put 2 million people back to work within the lifetime of a Parliament nor the Alliance's more modest bid of 1 million was taken seriously. The climate of resignation was then at its height.

I believe that that climate has changed. The wind is beginning to blow quite sharply from another quarter. In the first place, more and more people are coming to question the Government's economic theory. They note the achievement of bringing down inflation to a steady state of about 5 per cent. but they also note that repeated assertions that unemployment will eventually decline too have simply not been borne out.

The Government claim a small increase in the total number of jobs in the economy but their critics note that there is a rising number of people after them and that the net balance is not better than before. The noble Earl, Lord Cork and Orrery referred to this. Indeed, it is rather worse. Therefore, accepting that we are going to have to live with the Government for two or three years to come, various bodies and individuals have been coming forward with proposals based on the proposition that a good deal could be done without a sea change in economic policy. We might perhaps call them damage limitation proposals.

Back in 1982, the Unemployment Committee adopted the plan of the noble Lord, Lord McCarthy, for long-term, low cost. group specific, net job creation—a mouthful that none of us could ever get out in the right sequence but which meant 400,000 additional jobs in public sector and voluntary sector welfare and amenity services. Many more suggestions have been made here this evening although time does not permit me to go through them. Some of these suggestions involve small increases in public borrowing and some larger ones. But all, I think, fall well within the range considered normal by other and more successful European economies. The noble Lord, Lord Harris of High Cross, in dismissing those who want investment in the infrastructure for the purposes of job creation, entirely overlooked how badly these jobs need to be done.

But none of these measures is likely to be adopted because the Government's expenditure plans are set, if not in concrete, certainly within very narrow limits of tolerance as we saw the other day when the Secretary of State for Education and Science had to finance his climb-down over student fees by clawing back a bit from university laboratory equipment, a bit from the proposed increase to the research councils, a bit from poor old long-suffering adult education, and so on. So, if there is no give, no flexibility in the Government's present attitude, where can we look for some movement, some hope in this sorry situation?

We have to look, I think, to the moral dimension. Politics is not only a matter of economics. And the morality of the Government's stance is being called increasingly into question. After five years in which economic theory has failed to halt the rise in unemployment, people not unnaturally turn to the moral issues. This, I believe, is where the real change of climate has occurred. The right reverend Prelate, the Bishop of Southwark, referred to a change in the national consciousness—I think that was his phrase—and he has something there. Morality is not some airy-fairy concern of a few academics or even churchmen. It is the bedrock on which we construct the practical rules that guide our conduct. It lives and breathes in the judgment and actions of ordinary men and women. It is a very close relation to common sense. If the Government are tempted to believe that morality has little to do with political economy, they are deluding themselves and blinding themselves to history. I think that the noble Lord, Lord Harris of High Cross would agree.

If Adam Smith is prayed in aid, the Government will do well to recall that he was the author not only of The Wealth of Nations but also of the Theory of Moral Sentiments, in which he largely adopts Hume's view that sympathy with one's fellows is one of the most important springs of human action. The famous "invisible hand" was not intended to represent the interplay of unrestrained impersonal economic forces but rather the hand of providence behind the process whereby wealth is passed from rich to poor via consumption and investment. It is not all that distant in conception from the Keynesian "multiplier".

In any case, Adam Smith was writing for a society of farmers, craftsmen, merchants and small manufacturers before the Industrial Revolution got under way. With his 18th century love of harmony and of the proper working of all parts of society, there is every reason to think that he would have been appalled by the imbalance, disutility and "deformity"—that is one of his favourite words of condemnation—of our present system. As a Scot, albeit a London Scot, I challenge the way in which one of the greatest luminaries of the Scottish enlightenment has been hijacked by the "New Right".

If we move forward to 19th century utilitarianism, we find that Bentham's early model, in which the greatest happiness of the greatest number is seen as a by-product of self-interest, is replaced by Mill's version in which the individual is exhorted to take the general happiness as his ultimate end. If your Lordships ask me why I am dwelling on these old moralists, economists and political philosophers, it is simply to demonstrate to the Government that they have precious little foundation even within the British empirical tradition—the tradition of Bacon, Hobbes, Locke, Hume, Smith and Mill—for the pursuit of their divisive policies and for their refusal to consult the interests of the British people as a whole.

So where have they turned for inspiration? Having rejected our native tradition, who have they chosen as their advisers? They have turned, have they not? to foreign gurus. They have turned to von Hayek and to Milton Friedman and for all I know the Prime Minister may dip into a few pages of Mr. Robert Nozick before she switches off her light at night. But the British people will expect a British Government to follow British traditions and British principles. And if at the end of the day they do not do this, they will not be forgiven.

Before I sit down, because I do not want to take more than my ration—I think that we are running within our time—and the noble Lord, Lord McCarthy, gets up to speak, I have a swift word for the noble Earl, Lord Gowrie. In his speech during the debate on the Loyal Address he made an urbane and ingenious—as we expect of him—but ultimately unconvincing defence of the Government's economic record in which he claimed that everyone would be delighted with the Government's economic performance, positively purring over it, were it not for the minor peccadillo of unemployment, which he then neatly set on one side in order to get on with the more important business of presenting his catalogue of the Government's achievements.

The Chancellor of the Duchy of Lancaster and Minister for the Arts (The Earl of Gowrie)

My Lords, I never used the words "minor pecadillo".

Lord Kilmarnock

I did not suggest that the noble Earl had used the word "pecadillo". It was the word that I chose to indicate the tone of his reference to that subject. This was tantamount to staging a performance of Hamlet without the Prince of Denmark. This evening, he will not be able to get away with that. It is now incumbent on him to give us good reasons why we must accept 3 million to 4 million unemployed for the foreseeable future. He has the last word, and we shall listen to him eagerly. We admire his intellect and wit and we hope his argument is worthy of them. If he unveils any substantial measures to create jobs, or gives us any hope of a re-ordering of Government priorities, we may stay our hand and abstain. But if he does not, despite the policy differences between us and the Labour Party, we shall vote for the Motion on the Order Paper.

7.10 p.m.

Lord McCarthy

My Lords, this has been, on the whole, a good-tempered, relevant and well-meaning debate. In the time available to me I cannot hope to sum up either the case on our side of the House or the arguments set against it in other parts of the House. I should like to say very quickly one or two words to those of us who I am afraid I would argue, with great respect, have introduced an irrelevancy into this debate. This is not a debate about who is to blame for the miners' dispute. It is not a debate about the effects of this dispute on unemployment in this country. If anybody wants us on this side of the House—and me in particular—to agree that the miners' dispute, and the consequences of the miners' dispute, are disastrous for the economy and for unemployment, I am pleased to do so. But if anybody wants us here to come down and accept the Government's arguments that the National Union of Mineworkers in general, and Mr. Scargill in particular, are the only ones to blame for this dispute, then he has chosen the wrong people and, with great respect, he has chosen the wrong debate.

Therefore, I should like to turn to the debate itself. As I say, I should like to try to discuss and argue about areas of agreement and disagreement, about the Government's own policy and why we think it is wrong, and about what we think should be done. It has been said on several occasions tonight that there is a degree of imprecision about what we think should be done. I should like to say what I think should be done, not simply by a future Labour Government—because that is some time away—but by this Government, now, at this moment.

First of all, I think we have had a very wide area of agreement, not simply on the Labour Party side but from speakers in all parts of the House. In this respect, I note particularly the speech by the noble Lord, Lord Alport, about the nature of the problem, about the state of the economy—we are in the middle of an unstable, uncertain partial recovery—and about the fact that nobody really believes that for the foreseeable future unemployment is going to get better. Indeed, in this respect we have more agreement in this House and in the other House than we have had in the past, because now, at last, the Chancellor, unlike the Chancellor last year and unlike the previous Chancellor at all, accepts that unemployment is going to rise and go on rising; he says it will rise by 150,000 a year, next year. The Select Committee in another place does not agree. Most independent assessments think he is under-estimating. But at least the Government agree with us—and there is agreement tonight—that unemployment is not going away and is getting worse, on the present policies, for the foreseeable future. I regard that as an advance in realism.

Secondly, there is an agreement—and we agree with the Government, because they have made it clear enough—that so long as this Government are in office, on their present policies, as has been said by speakers on the other side who accept the Government's policies, nothing will be done at the macro level to improve the position. The Chancellor made it very clear in his Mais lecture that this Government believe that you cannot improve the unemployment position by trying to raise the overall level of demand. The job of macro policy, he says, is to pursue lower inflation. We believe, of course, that in pursuing lower inflation he pursues it through permanent high unemployment; but that is a disagreement between us.

What is agreed is that, in so far as the Government have any policies—and they have told us tonight that they have some policies; no doubt the noble Earl will tell us again about them—they are all on the macro level. They say, "We are going to make the labour market work; we are going to make the labour market more efficient; and, indeed, that's what we have been trying to do since 1979". We have had trade union legislation, which is now admitted to be aimed at reducing union power. We have had the abolition of the national insurance surcharge. We have had reductions in employment protection coverage. We have had the abolition of fair wages resolutions; and the Chancellor says, "We are now selling council houses".

That is the Government's policy so far, unless the noble Earl will announce any more policies at the macro level for dealing with the problem, which they now recognise is getting worse. Several things can be said about them. First of all, of course, they have not helped so far. I do not say that these policies, which have been there for the last five years, have made the situation worse, but they have not made it any better. All the suggestions which are made in this House and elsewhere for going further along those lines, we argue, will not necessarily make it any better, either—abolishing wages councils, as they abolished the fair wages resolutions; abolishing rent controls; abolishing the Employment Protection Act; even the notion of the noble Lord, Lord Young of Graffham, for some form of industrial conscription. None of this is going to help because it is all a supply side solution. It all assumes that the problem is that people will not work. It all assumes that if only you can get wages down or get unemployment benefit down, people will flood in, in a country where the ratio of unemployed to jobs is something like 30 to 1.

We say that is not realistic. But I must be fair. The Chancellor does talk about other things. He says that the unions or the workers—it is not quite clear who—should reduce money wages; in fact, they should reduce real wages. Indeed, he told the Select Committee in another place that there was a mysterious—mysterious because it is unpublished and unquantified; but it is coming—relationship between a 1 per cent. cut in nominal wages and the reduction in unemployment of 200.000 a year; so that if you could have a 3 per cent. cut in nominal wages for three years, he says, you could have an increase of something like 1½ million in employment. I say with certainty that I know of no research into this and I know of no serious academic anywhere who produces figures of any kind at all in this region. It will be very interesting when the Chancellor publishes his figures; and I am not a bit surprised that it is taking rather long.

We shall also be told, of course, about what happened in America. We are being told constantly that there have been real wage reductions in America, that money wages have been reduced and that, as a result, employment has risen. The facts, of course, are quite different. As the noble Lord, Lord Kaldor, said in a previous debate in this House, there has been no real wage reduction; there has been a money wage reduction; and the main reason why there has been a money wage reduction is that there has been a 30 per cent. increase in the size of the labour force in a period when we had a 5 per cent. increase in the size of the labour force. Two-thirds of the increase in employment was brought about in two periods when the Governments concerned were following something very like Keynesian economic policies.

So I come, finally, to the last thing the Government will say, to be fair to them. We all know that they will say that in April there is to be a tax cut. As I understand the noble Lord, Lord Young of Graffham, a lot of people have shown some doubt about the relationship between employment and tax cuts and employment and public spending. I would like to know the evidence upon which the Government are so sceptical?

The Institute for Fiscal Studies recently published their budget options for 1984 in which they computed, as my noble friend the Leader of the Opposition said, a relationship between the employment effect of tax cuts and the employment effect of public spending cuts where for similar amounts of money tax cuts would produce something like 30,000 jobs a year and public spending about 185,000 jobs a year. I say to those noble Lords who believe that that is not much use because there will be an increase in prices—as was argued—that the Institute for Fiscal Studies also argued that tax cuts over that period would produce a 1.1 per cent. increase in prices and public expenditure increases would produce a 0.8 per cent. increase in prices. Are the Government seriously suggesting to us that tax cuts will produce as many jobs as increases in public expenditure? Is that what they are telling us? Are they telling us that all the economic analysis is wrong, that the Institute for Fiscal Studies is wrong, and that subsequently they will publish information to tell us so? They must be careful because they are going to make those tax cuts, and 12 months after they have made those cuts we shall want to know where the jobs are.

When the noble Lord, Lord Young of Graffham, last spoke in this House he said—and I rather liked it—that he was a remover of barriers, a remover of obstacles. There is no barrier now, there is no obstacle now except ideology. The majority of speakers in this debate have criticised Government policy and have opted for something similar to a select increase in public expenditure of the type put forward by the Opposition parties. That is what is wanted by the wets in the Conservative party; that is what is wanted by the CBI. The barrier is one part of the Conservative Party—that part which is in office; the barrier is ideology; the barrier is bigotry; the barrier is a refusal to admit that they were wrong.

7.22 p.m.

The Earl of Gowrie

My Lords, this debate has been very useful in demonstrating the concern felt by the House for high and rising unemployment, which is, of course, a social and economic evil that we must fight with all the force at our command. I must say, however, that parliamentary debates urging compassion and concern are not enough—as my noble friend Lord Belhaven reminded us in a very trenchant and admirable speech—because our words butter no parsnips and they generate no jobs.

Britain is a trading economy and that was the central lesson of the speech of my noble friend Lord Thorneycroft. We earn our living and we earn, therefore, our jobs in the market-places of the world. Moreover, it is in markets, whether at home or abroad, that our jobs are lost and won. At present we are indeed winning markets and winning jobs. So we are doing better, both absolutely and, as my noble friend Lord Young told us, in terms relative to our competitors. I believe that the noble Lord, Lord Cledwyn, does no justice to his own case by refusing to acknowledge this.

Economic growth has been restored to this economy. We have been growing, and growing with progressively lower levels of inflation, for four successive years now, and we have been growing at rates not seen since the Macmillan era—a time when world trade was generally more buoyant. So we are doing quite well, but we must do a lot better. We are in great danger of ceasing to do well and of not doing better mainly, in my judgment, through political pressures.

It is an old story. Britain is the oldest, stablest and greatest political democracy. But too often our political sensitivities interfere with the competitive cutting edge that we need to maintain market shares at home and abroad. That was the point put so well by my noble friend Lady Carnegy of Lour.

My Lords, ask yourselves one or two simple questions. Since the war has the politics of our country concerned with industry and industrial relations been principally aimed at maintaining or increasing industrial market share? Or has it been mainly concerned with social and political issues? My noble friend Lord Beloff posed that question with his usual pertinence. We care rather more in this country about the distribution of the cake than we do about its size. That is changing now.

Or, my Lords, ask this question: on whose shoulders are the present burdens of unemployment falling? Leaving aside the young, who we all agree we should take off the labour market and into training wherever possible, overwhelmingly the burdens are falling on the shoulders of middle-aged, male, industrial workers. They are the victims of previous decades of labour protectionism and of rates of pay negotiated without reference to market share, as my noble friend Lord Campbell and others reminded us. They are the victims of the politics, rather than of the economics of our industrial culture. Well, slowly and painfully that, too, is changing.

Under this Government, if you strike you are unlikely to be rewarded. Let me say to the noble Lord, Lord McCarthy, that I agree with him that it will take a sea change in British attitudes substantially to reduce unemployment and this is because taxpayers in productive work can no longer afford to maintain indefinitely out of their taxes industries which are losing market share. In the main, that is what all the pressures and upheavals in our traditional labour markets are about; they are not about Locke or Hume or even Hayek or Milton Friedman. Because we are British, the pressure on industry to become competitive is being applied in what is still a relatively gentle way. It is, I confess, being applied if anything rather too gently for my own taste. We are still subsidising industries which have little hope of regaining market shares. I know that the noble Baroness, Lady Fisher, would disagree with me, but in my view it would be more compassionate and also a great deal less expensive, to direct that money directly to the individuals affected by the decline of industries in which they work, and, under the "buy out" policy, to some degree that has been done.

Ask yourselves just one more question. Is the British educational system primarily directed to serving the British economy and to turning out men and women who could help regain the losses in world markets which have cost us jobs? I used to work in that system and I loved it. I left it because I thought that it was not serving our economy.

We are an agreeable people and this is a very agreeable country in which to live. But if we fall back into our old ways, if we alleviate the pressures which this Government have already—albeit, in my view, rather too gently—applied, we shall, in the early years of the next century, stand rather in the same type of economic relation to the economies of the Far East as Turkey stands in relation to Western Germany today. In terms of unemployment alone that is hardly an enticing prospect. Let me say, therefore, to the noble Lord, Lord Kilmarnock, who challenged me particularly on this issue, that the moral ground on which this Government stand is their determination to reverse this slide and, having done so, to start to move up the ledge a little. We have reversed the slide and we are beginning to climb. But there are growing pressures—and we have listened to many this afternoon—in favour of our dropping right back again.

Lord Kaldor

My Lords, may I interrupt the noble Earl for a second?

The Earl of Gowrie

My Lords, we are under a time constraint and if I may, I want to continue without interruption. I have a very long debate to answer and I want to answer every noble Lord that I can.

This is the general context, the moral ground, if you like—as the terms of the Motion were couched in moral terms—in which I ask the House to judge our response to particular points made to us in today's debate, to judge and to vote accordingly, if we must come to a vote. However, I must say that I do not think it gives the best signals to our economy if we do vote on this issue.

Turning to the main themes of the debate, one was that the Government should invest in jobs directly by increased capital investment rather than go for tax reductions, and the noble Lord. Lord Cledwyn, in introducing the debate, and the right reverend Prelate, the noble Baroness, Lady Seear, and others all urged this upon us. In the view of the Government, however, there is an intimate connection between disincentives to work and some—though not, of course, all—the present numbers of registered unemployed.

In January 1984, a single householder in cheap local authority accommodation needed a gross wage of £94 in order to be £10 a week better off by working. Why bother? Why resist the temptation to earn £10 or £20 a week more in what is politely termed the informal economy? Yet a supplementary benefit claimant who earns more than £4 a week should in theory forfeit the whole package and pay 9 per cent. national insurance contribution and income tax at 30 per cent. on weekly earnings above £39. Where then is incentive and responsibility? Again, the noble Lord, Lord Hams of High Cross asked us—

Lord Kaldor

My Lords,—

The Earl of Gowrie

My Lords, I said that I will not give way in a debate of this kind. I have debated in this House for several years, and I have never done so under a time constraint. If the time constraint is taken off me, I am quite happy to give way, but if it is not, I would rather not.

This point about what I would call the benefit or the employment trap was put to us very pertinently by the noble Lord, Lord Harris of High Cross. That is why we must continue. Budget by Budget, with the policy of lowering tax thresholds and reducing the benefit trap, which, as I said, I should prefer to term the employment trap.

We have already made significant strides in this direction. The basic rate threshold has been increased by 16 per cent. in real terms since 1979, and the threshold for the higher rate taxpayer has only been increased by 10 per cent. May I say to the right reverend Prelate that higher rate taxpayers—who number a little short of 900,000 at present—have enjoyed a lesser increase in the tax thresholds relevent to them than the ordinary basic rate taxpayers? In other words, there has been a modest but useful degree of discrimination in favour of the bulk of the 20 million ordinary taxpayers, and we must take into account at the same time the trenchant point made by my noble friend Lord Thorneycroft about incentives, not to rich people, but to the upper echelons of management—those same managers who, the noble Lord, Lord Kaldor, told us (in some cases not without truth) may have been responsible for our decline in market shares.

I am one, therefore, who urges the Chancellor to continue where he can in this direction of tax reforms and raising thresholds. It is not a case of preferring tax policy to jobs policy. The two are interchangeable, and I suspect that the noble Lord, Lord Kilmarnock, even as he threw down his elegant challenge to me, was aware of that as well. If this Government do not further improve tax policy, they will indeed be guilty of that lack of urgency which the noble Lord, Lord Cledwyn. deplores.

Many noble Lords have appealed for reflation through capital spending. This was dealt with in general terms by my noble friend in opening the debate. It is simply not the case that capital projects are not now being undertaken. This year, we expect fixed investment across the economy—that is to say, the private and public sectors taken together—to run at the highest level ever in our history—some forty-five and a half thousand million pounds at 1980 prices. The figure for the public sector, the underlying gross capital spending figure, has recently been running at about twenty-two thousand million pounds in 1982–83 prices. This is an excellent record, as my noble friend Lord Campbell of Alloway reminded us. But as my noble friend Lord Young told us, capital expenditure, like heavy industry generally, is today capital- rather than labour-intensive.

I am one who happens to be thoroughly in favour of the Channel Tunnel. If it is constructed, it will certainly generate some additional employment. It would be an idiotic project to undertake, however, for that reason alone, as the jobs would not be sustainable beyond the life of the project, and they would in any case be rather fewer in relation to the cost of the project than can be achieved by, let us say, fiscal measures. (I fear that as well as being prejudiced in favour of the Channel Tunnel, I am also—as I must say to the noble Lord, Lord Kaldor, somewhat prejudiced in favour of free trade.)

The noble Baroness, Lady Ewart-Biggs, the noble Lord, Lord Soper, and the noble Lord, Lord Seebohm, urged a greater attention to housing programmes. I am greatly in favour of this, but two of the speakers appeared to imply that housing was especially neglected. We have a measurably superior stock compared with our European Community partners in most respects; that is to say, in relation to space per person, in supply of water, electricity and the like, and in access to proper kitchens, baths and sanitation. The Government believe that home building will continue, as in the past, to be very sensitive to interest rates, and that to raise the level of housebuilding we want the right macro-economic policies to produce low or falling interest rates. That is exactly what we are doing and what we will continue to do. A policy of higher public borrowing would of course do the opposite. and it is not as though public borrowing is particularly low at present in any case.

The noble Lord, Lord Cledwyn—and one or two others mentioned this as well—urged the reimposition of exchange controls. I must say that I can think of few single items of policy under this Government which have been more instantly beneficial than the abolition of exchange controls. Britain's wealth has, since the reign of the first Elizabeth, been achieved by direct involvement in economies overseas. As North Sea oil reserves reach their peak and start to decline, our global investments become ever more important to us. If there were shortage of capital for activities at home, exchange controls might be justifiable, but there are no such shortages. There may he an insufficiency of profitable fields for investment at home, though I believe this is changing. I really challenge noble Lords in all parts of the House to provide me with examples of opportunities of real potential which are starved of capital.

I believe, too, that abolishing exchange controls is the best answer to the question of the noble Lord, Lord Hatch. There are indeed great opportunities in the third world for investment as well as aid, which is also important. and I urge our institutions to seize them—

Lord Underhill

My Lords, would the—

The Earl of Gowrie

My Lords. I have already said that I shall not give way.

Noble Lords

But you challenged the House.

The Earl of Gowrie

I challenged the House rhetorically, my Lords. The noble Lord, Lord Underhill, can write to me and I shall write back to him. I intend to make a brief speech, so far as is possible, and the noble Lord, Lord Cledwyn, will have ample chance to reply.

My noble friend Lord Young and I agreed with rather more, I suspect, of the speech of the noble Baroness, Lady Seear, than we were supposed to. I know the ideas of my right honourable friend the Prime Minister about this economy rather well, and they are in very many respects close to those of the noble Baroness, and even closer to those of the right honourable gentleman the Member for Plymouth, Devonport. The noble Baroness and the noble Lord, Lord Harris of High Cross, from very different perspectives commended our training efforts and urged us towards tailoring them towards tomorrow's rather than yesterday's industries. This is being done.

May I say to my noble friend Lord Alport that his juxtaposition of the working and the middle classes seems to me to be simply out of date. He mentioned the miners' strike, which is of course a dispute within a trade union and not between union and employer or union and Government. Would my noble friend call the working miners middle class? Yet their aspirations and their desire to fulfil them are precisely what is sustaining this Government, both morally and in electoral terms.

Three cheers, my Lords, for my noble friend Lord Nugent for reminding us that this is a Gladstonian rather than a Disraelian Government. I love Disraeli. He was a marvellous novelist and the great ringmaster of British imperialism. But allowing money to fructify in the pockets of the people is the better way towards economic health and prosperity for a free society in our age.

The noble Viscount, Lord Hampden, mentioned the British Telecom flotation. In my view £2,000 million, not merely £1,000 million, would have been cheap at the price for the greatest extension of share ownership in our history. He gave the Treasury, through me, strictures about not distinguishing between investment and current spending. When the noble Lord pays his trip to his bank manager, as he said that he did in order to sustain—and I commend him for this—the employment of those he employs, his bank manager will point out to him that that borrowing has to be paid for regardless of the worthy ends to which it is directed.

I have to say that I was staggered—indeed flummoxed would be the word—by the speech of the noble Lord, Lord Molloy, who seems to believe that we could reach full employment through greater expenditure on the health service. Total expenditure on the NHS in 1983 was of the order of £15½ thousand million. Real spending on the NHS has risen by 21 per cent. since 1978–79, much faster than public expenditure in general, and I believe that that alone answers some of Lord McCarthy's questions about public spending.

May I close, as I began: it does damage to confidence in this country, and therefore to employment, not to recognise that real improvements are being achieved, not by the Government, if you like, but by British business in productivity and competiveness and the regaining of markets, and these improvements are beginning to flow into the labour market. About a quarter of a million more people are in work in the year to June; unemployment rates are higher in Belgium, the Netherlands, Spain and Ireland than in the United Kingdom; output per head has risen by nearly 6 per cent. a year since the low at the end of 1980; well over a third of a million people leave the unemployment register every month—we must not talk about the 3 million unemployed as though they were a solid phalanx—and about half a million find a new job every month; about 10,000 new businesses start up every month; and in the last four years—and I find this particularly encouraging—there have been nearly 120,000 more business start-ups than stops; and about 6 million people change jobs every year.

It will not help employment, which noble Lords opposite claim to be so concerned about, to discourage this improvement. Indeed, it will put in jeopardy the new jobs that are coming on stream at a highly encouraging rate. Long-term unemployment—which I acknowledge with the noble Baroness is probably the most severe problem that we face—is the consequence of long-term decline, and in some industries of increasing automation.

Our social system therefore must continue to earn money in markets at home and abroad in order to ameliorate the effects of unemployment on individuals and to train new workers for new jobs. That is precisely what we are doing. It would be crazy in economic terms, and I believe immoral in human terms, to follow Lord Cledwyn's party down that same road which led to our decline in the first place.

The French Socialist Government started out precisely along that road and pursued precisely the same policy advocated by the noble Lord. The results were so bad that they were forced to reverse their policies, not to some degree—no fine tuning—but absolutely. Alternative policies are unworkable. Unworkable incomes policies; indisciplined unions; make-work schemes rather than real training; the piling up of debts for posterity to pay; and, above all, futile attempts to insulate Britain from the need to compete in the real rather than the imaginary world, are the policies of cruelty, not compassion, and I urge the House not to follow them.

Lord McCarthy

My Lords, before the noble Earl sits down, may I ask whether he is suggesting that the financial disincentives to work of which he makes so much and by which he justifies tax cuts were significantly different when unemployment was 1 per cent.?

The Earl of Gowrie

My Lords, I did not hear the noble Lord's question. Perhaps he would like to put it to me in writing.

Lord McCarthy

My Lords, the noble Lord made a great deal of the fact—and we have 15 minutes for the answer—that the financial disincentives to work are now so much that we must have tax cuts. I am asking him if the financial disincentives were any different when unemployment was 1 per cent. but we had more jobs?

The Earl of Gowrie

My Lords, at that time we also had a far greater share of markets. In order to have incentives to regain those markets we now have to get rid of some of the obstacles to working.

Lord Kaldor

My Lords, I do not—

Several noble Lords


Lord Kaldor

My Lords, I am not asking—

Several noble Lords

No! Order!

Lord Kaldor

My Lords, I am not asking a question. I am merely asking that the noble Earl should deposit the evidence in the Library for his assertion that this Government have recently succeeded in fundamentally reversing the decline in market share. I have seen no evidence for that. I am not asking for evidence now, but it should be made accessible to Members of your Lordships' House.

The Earl of Gowrie

My Lords, the point I made is that we have halted the slide and we are beginning to climb again. We halted the slide in the year 1981.

7.48 p.m.

Lord Cledwyn of Penrhos

My Lords, I think that the House will agree that we have had an interesting, timely and important debate, and this includes the enthusiasm of the last few moments. I am grateful to all noble Lords who have taken part. All the speeches—and I heard them all—were of interest, especially considering the restriction on time. There are only two brief points I should like to make. First, I was chided by one or two noble Lords for making what they called a party-political speech. It was a political speech, I concede. It is part of our work to make political speeches, and I would be guilty of a grave dereliction of duty if I did not criticise the Government on so serious an issue as the present unemployment situation.

I suppose it was also a party-political speech, although the criticism of the Government comes from all sides of the House. It comes not only from the official Opposition but from the Alliance Party, from the Cross-Benches, from the Bishops' Bench, and indeed from the Conservative Benches. I am sure that the House was impressed—it could not have been not impressed—by the speech of the noble Lord, Lord Alport. It was a courageous speech. I think he was right, and I would say with great respect to the noble Earl, Lord Gowrie, that the noble Lord, Lord Alport, is more in touch with the people of this country at this time than the noble Earl is on this issue.

Secondly, I and my noble friends were criticised for advocating massive spending. We did nothing of the kind. We proposed a number of reasonable measures, as indeed did the noble Baroness, Lady Seear, the leader of the Liberal Party, the noble Lord, Lord Kilmarnock. and the right reverend Prelate. They were reasonable proposals which the Government could accept. There was no intention to ask this Government to spend massively because one knows well that they would not do so in any event.

What I did, as we were reminded by my noble friend Lord McCarthy and by the noble Earl, Lord Gowrie, was to suggest to the Government that they might divert any money which was available at the time of the Budget from tax cuts to capital investment. I believe that to be a reasonable proposition to put to the Government at the present time.

I am deeply disappointed by the Ministerial speeches, by the response to the criticisms which have been made in this debate—and they have been constructive criticisms. The Government have given me no confidence that they have a policy to deal with this problem. I have heard no sense of urgency whatsoever in Ministerial speeches. I have seen no indication that they are prepared to discuss rationally.

Unhappily, this Government do not consult anyone. If ever there was a closed Cabinet or a closed Government, this is it. It would do them a great deal of good to walk around the streets of this country to find out what people are thinking. In the circumstances I have no alternative but to invite noble Lords on all sides of the House to go into the Division Lobby to vote for this Motion.

7.52 p.m.

On Question, Whether the Motion shall be agreed to?

Their Lordships divided: Contents, 105; Not-Contents, 134.

Airedale, L. Hatch of Lusby, L.
Alport, L. Hughes, L.
Ardwick, L. Hunt, L.
Attlee, E. Jacques, L.
Avebury, L. Jeger, B.
Aylestone, L. John-Mackie, L.
Banks, L. Kaldor, L.
Barnett, L. Kilmarnock, L.
Beaumont of Whitley, L. Kirkhill, L.
Beswick, L. Lawrence, L.
Birk, B. Llewelyn-Davies of Hastoe, B.
Blease, L. Longford, E.
Blyton, L. Lovell-Davis, L.
Boston of Faversham, L. McCarthy, L.
Bottomley, L. McCluskey, L.
Broadbridge, L. McNair, L.
Brockway, L. Mayhew, L.
Brooks of Tremorfa, L. Meston, L.
Bruce of Donington, L. Mishcon, L.
Campbell of Eskan, L. Molloy, L.
Caradon, L. Mountevans, L.
Carmichael of Kelvingrove, L. Nicol, B.
Cledwyn of Penrhos, L. Ogmore, L.
Collison, L. Oram, L.
David, B. [Teller.] Parry, L.
Davies of Leek, L. Phillips, B.
Davies of Penrhys, L. Pitt of Hampstead, L.
Dean of Beswick, L. Ponsonby of Shulbrede, L.[Teller.]
Denington, B.
Diamond, L. Prys-Davies, L.
Elwyn-Jones, L. Robson of Kiddington, B.
Elystan-Morgan, L. Rochester, L.
Ennals, L. Ross of Marnock, L.
Ewart-Biggs, B. Seear, B.
Falkender, B. Sefton of Garston, L.
Falkland, V. Serota, B.
Fisher of Rednal, B. Shackleton, L.
Gallacher, L. Simon, V.
Galpern, L. Soper, L.
Glenamara, L. Southwark, Bp.
Graham of Edmonton, L. Stallard, L.
Hampden, V. Stedman, B.
Hampton, L. Stewart of Alvechurch, B.
Hanworth, V. Stewart of Fulham, L.
Harris of Greenwich, L. Stoddart of Swindon, L.
Stone, L. Wallace of Coslany, L.
Strabolgi, L. Wedderburn of Charlton, L
Strauss, L. Wells-Pestell, L.
Taylor of Blackburn, L. White, B.
Taylor of Gryfe, L. Wigoder, L.
Taylor of Mansfield, L. Wilson of Rievaulx, L.
Tordoff, L. Winstanley, L.
Underhill, L. Young of Dartington, L.
Abinger, L. Killearn, L.
Airey of Abingdon, B. Kinnaird, L.
Arran, E. Lane-Fox, B.
Avon, E. Lauderdale, E.
Barnard, L. Lindsey and Abingdon, E.
Belhaven and Stenton, L. Long, V.
Beloff, L. Lucas of Chilworth, L.
Belstead, L. Lyell, L.
Bessborough, E. McAlpine of West Green, L.
Brabazon of Tara, L. McFadzean, L.
Brentford, V. Mancroft, L.
Buchan, E. Margadale, L.
Caithness, E. Marley, L.
Cameron of Lochbroom, L. Marshall of Leeds, L.
Campbell of Alloway, L. Masham of Ilton, B.
Campbell of Croy, L. Massereene and Ferrard, V.
Camegy of Lour, B. Maude of Stratford-upon-Avon, L.
Cathcart, E.
Cayzer, L. Merrivale, L.
Chelwood, L. Mersey, V.
Coleraine, L. Middleton, L.
Constantine of Stanmore, L. Morris, L.
Cork and Orrery, E. Mottistone, L.
Craigton, L. Munster, E.
Cullen of Ashbourne, L. Murton of Lindisfarne, L.
Daventry, V. Napier and Ettrick, L.
Davidson, V. Nugent of Guildford, L.
Denham, L. [Teller.] Onslow, E.
Dilhorne, V. Orkney, E.
Drumalbyn, L. Orr-Ewing, L.
Duncan-Sandys, L. Pender, L.
Ellenborough, L. Penrhyn, L.
Elliot of Harwood, B. Peyton of Yeovil, L.
Elton, L. Plummer of St. Marylebone, L.
Ely, Bp.
Enniskillen, E. Polwarth, L.
Erroll of Hale, L. Rankeillour, L.
Faithfull, B. Renton, L.
Fortescue, E. Rochdale, V.
Fraser of Kilmorack, L. Rodney, L.
Gardner of Parkes, B. Romney, E.
Gibson-Watt, L. Saint Oswald, L.
Gisborough, L. Saltoun, Ly.
Glanusk, L. Savile, L.
Glenarthur, L. Selkirk, E.
Gowrie, E. Skelmersdale, L.
Grafton, D. Somers, L.
Gray of Contin, L. Southborough, L.
Greenway, L. Suffield, L.
Gridley, L. Swansea, L.
Grimston of Westbury, L. Swinton, E.[Teller.]
Haig, E. Terrington, L.
Hailsham of Saint Marylebone, L. Thomas of Swynnerton, L.
Thorneycroft, L.
Halsbury, E. Tranmire, L.
Hanson, L. Trefgarne, L.
Hardinge of Penshurst, L. Trumpington, B.
Harmar-Nicholls, L. Vaux of Harrowden, L.
Harris of High Cross, L. Vickers, B.
Harvington, L. Vivian, L.
Henley, L. Ward of Witley, V.
Hives, L. Whitelaw, V.
Hood, V. Wigram, L.
Hornsby-Smith, B. Windlesham, L.
Hylton-Foster, B. Wynford, L.
Inglewood, L. Young, B.
Ingrow, L. Young of Graffham, L.
Jessel, L. Zouche of Haryngworth, L.
Kaberry of Adel, L.

Resolved in the negative, and Motion disgreed to accordingly.