Economic Recovery and Unemployment (Hansard, 2 May 1984)

§ Lord Dean of Beswick
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

§ The Chancellor of the Duchy of Lancaster (Lord Cockfield)
My Lords, while we have not yet seen sustained reductions in the level of unemployment, elsewhere there are encouraging signs: employment is rising, short-time working in manufacturing is the lowest for four years, and overtime hours are almost 20 per cent. higher than this time last year. In the long run, improvements in job prospects will continue to depend upon lower inflation and lower wage settlements.

§ Lord Dean of Beswick
My Lords, I am grateful to the Minister for that Answer, and, like all Members of this House, I welcome the fact that the unemployment figures showed a fall last month. But the Minister must be aware of the Answer given by the Secretary of State in another place yesterday, when he said: It is too early to tell whether the improvement in the economy will move fast enough to cope with the additional 160,000 people seeking work this year and the undoubted improvements in productivity also being achieved".—[Official Report, Commons, 1/5/84; col. 177.] He said that that is the challenge we must meet. Does the Minister not agree that unless our overall performance is improved considerably, by more interventionist measures by the Government, there will be no significant impact made on unemployment, with the present policies continuing?

§ Lord Cockfield
My Lords, I share the noble Lord's concern about the present level of unemployment, as I think we all do. The encouraging point is the way in which the total level of employment, including self-employment, increased last year. So far as the future is concerned, I share the first part of the view he expressed; namely, that what is required is an improvement in the performance of the British economy, which is to be achieved partly by the Government following a responsible financial and economic policy (as they are) and partly by the efforts on both sides of industry to improve competitiveness. However, I do not share the noble Lord's view that this is best done by intervention on the part of the Government. In fact, experience suggests the contrary.

§ Lord Hooson
My Lords, to what extent have the Government addressed their minds to the probability that whatever the significance of the economic recovery—which we all hope will be considerable—with modern technological developments there may not be a significant drop in unemployment? What do the Government intend to do about that?

§ Lord Cockfield
My Lords, all experience since the time of the Industrial Revolution indicates that an increased level of technology and improvements in methods of production lead in the end to higher output and therefore higher employment.

§ Lord Molloy
My Lords, in view of the Minister's statement that intervention has been proven not to be of any great assistance, can he explain a little further what kind of intervention he means? Does he mean intervention of the kind sought by Franklin D. Roosevelt just before the second world war, which made such a great contribution to our being at least in some measure prepared for the onslaught of Nazism? Or does he mean intervention of the kind seen just after the war, when literally million of soldiers, sailors and airmen found jobs when they returned home because of government intervention? In short, does the Minister not agree that civilised, sensible government intervention can assist the private as well as the public sector?

§ Lord Cockfield
My Lords, we all—including the noble Lord, Lord Molloy—need to learn from experience. The circumstances which exist today are very different from the circumstances which existed in 1931. Many of the measures taken then were appropriate to the needs of the time, but the world has changed a very great deal since then. The kind of centralised direction of the economy which was practised, for example, between 1945 and 1951 is not only no longer appropriate but would not produce the results which both the noble Lord and myself would hope to see.

§ Lord Molloy
My Lords, does the Minister not agree that the major threat to the United States in the 1930s and to Great Britain in the mid-1930s was the same as the threat which exists now, under this Government—that of massive unemployment?

§ Lord Cockfield
My Lords, we can debate the issue of unemployment, but unemployment is due to two major factors. The first has been the world recession; the second has been the increasing uncompetitiveness of British industry. As far as both those factors are concerned, the world is moving out of the recession; and I am very glad to say that as a result of great efforts made on both sides, the level of the competitiveness of British industry is improving.

§ Viscount Trenchard
My Lords, following my noble friend's last answer, does he not agree that had our share of world markets not fallen by more than half between 1960 and 1978, and had we been a little less uncompetitive in that period and our share had fallen to only, say, 11.5 per cent. of the world markets, then 537 our employment situation would be the best in Europe by quite a long way? Would my noble friend not further agree that if we can now, with our new-found, increasing competitiveness, start to regain our share, we will indeed see a reduction in unemployment?

§ Lord Cockfield
My Lords, I agree with my noble friend's analysis of the situation. The position is that, as a result of growing uncompetitiveness, particularly in the 1970s, our level of costs became out of line with those in the rest of the industrialised world. As a result, both our exports suffered and our propensity to import increased.

§ Lord Barnett
My Lords, despite what the noble Lord the Minister said, will he confirm that the Government's own assumptions, judging from papers issued recently, indicate that unemployment will not fall during the life of this Parliament? In those circumstances, would it not be more honest to concede that situation, so that at least alternative plans can be made to ensure that the present appalling levels of unemployment are reduced?

§ Lord Cockfield
My Lords, the noble Lord, as a former Chief Secretary to the Treasury, speaks with great skill. There is, of course, no connection between the first part of his supplementary question and the second part. As he himself acknowledges, the figures to which he refers are assumptions; they are not in any way forecasts.

§ Lord Barnett
My Lords, why, then, did the Treasury make those assumptions?

§ Lord Cockfield
My Lords, the Treasury makes the assumptions on precisely the same basis as they were made when the noble Lord himself was Chief Secretary to the Treasury. It is standard form that the assumption taken for the first year in the public expenditure White Paper is carried forward unchanged to subsequent years.

Lord Paget of Northampton
My Lords, may we take it that the fact that the increased employment resulting from industrial recovery is apparently being taken up by overtime working, instead of by increased general employment, is a matter which the Government regard with complete indifference?

§ Lord Cockfield
My Lords, at the moment there is a substantial increase in the amount of overtime being worked. This is perfectly normal in the early stages of recovery. There are certain obstacles to the employment of additional people. One of them, of course, was the national insurance surcharge, which has been abolished in the proposals announced by my right honourable friend the Chancellor of the Exchequer.

§ Lord Dean of Beswick
My Lords, in an earlier reply the noble Lord the Minister referred to the major factor in the present unemployment situation as being the world recession. He also disagreed with me on the second part of my supplementary question regarding 538 Government intervention. Is it not a fact that many responsible sources apportion the responsibility for the present level of unemployment as being 50 per cent. due to the world recession and 50 per cent. due to the present Government's policies? Is not that intervention of an adverse kind which we could well do without?

§ Lord Cockfield
I do not accept the analysis to which the noble Lord refers. In fact, it is essential that the Government should follow a responsible financial and economic policy in order to reduce the level of inflation. The high level of inflation in past years has been one of the major factors causing unemployment.

§ Lord Leatherland
My Lords—

Noble Lords
Order!

§ Lord Denham
My Lords, we have been 10 minutes on this first Question. It is a very important Question and it is right, of course, for your Lordships to ask supplementaries, but I wonder whether the House does not think it right to move on now to the second Question.