Unemployment

HL Deb 09 May 1984 vol 451 cc923-1002

3 p.m.

Lord Wilson of Rievaulx rose to call attention to the continuing high rate of unemployment in this country and the need for effective proposals to deal with the problem; and to move for Papers.

The noble Lord said: My Lords, Benjamin Disraeli, respected and revered Leader of the Party opposite and respected by many others not of his party, said in his novel Sybil: The youth of the nation are the trustees of posterity",

and with that we all agree.

For nearly 40 years, give or take one or two boundary changes, I represented the same Merseyside constituency. In that constituency in 1981 only 10 per cent. of school-leavers secured a job holding out any hope of continuing employment; in 1982 only 8 per cent. were so fortunate; and last year, 1983, the figure was again 10 per cent. Of course, that experience is not confined to Merseyside. It is mirrored in the realities of unemployment in other parts of England, and in Scotland and Wales, to say nothing of Northern Ireland. Speaking for myself, I have only praise for the local firms in my then constituency—British Insulated Callender's Cables, Pilkington Glass and, despite its difficulties, Ford in Liverpool—for what they did in virtually creating jobs that did not exist and, above all, in spending a great deal of time, money, staff and patience in training out-of-work school-leavers for ultimate employment in industry.

We all know, of course, that the same problem occurs in the United States and other advanced countries. However, as noble Lords will know, not least those in all parts of the House who have served a term in another place, large areas of Britain, including some which a few years back were hard put to it to recruit the workers that they needed, are now beset by chronic unemployment. As one who learned his way about the realities of unemployment, and the statistics thereof, as a researcher for three years working with William Beveridge in the late 1930s, and also as a former head of the government manpower statistics branch under the Churchill Administration in wartime, I have to put on record today that the official figures of adult unemployment grossly understate the true position.

I can remember the misery I felt when, as Prime Minister, I saw the unemployment figures creep up to 1 million. It seemed a chronically difficult situation and, in a sense, one could only feel ashamed. But the official figures, as currently published by the Government, with the help of a slight seasonal fall, in Great Britain amount to 3,027,000 and in the United Kingdom as a whole to 3,143,000. Of course, those are the official figures, but the official figures are a crude understatement of the true position.

One reason why I say that the official figures are a ludicrous travesty of industrial reality in our country in 1984—and this is not in any way the fault of the highly trained and competent government statisticians who serve us—is that one major reason for the present state of the labour market lies, strangely, in the growth of the pension funds movement, though the exact figures are difficult to quantify. What is happening now is that hundreds of thousands of would-be workers who would have liked to go on working, particularly among the older echelons of employed people, having subsisted as they have had to on national insurance and related payments for months (indeed, for years in many cases on which I could report) have opted instead to retire on their industrial pension, which, of course, will now and for the rest of their lives inevitably be lower than would have been the case if they had worked out their normal full industrial life-span.

That, of course, was one of the main findings of the Committee to Review the Functioning of the Financial Institutions—Cmnd. 7937—for some reason known as the Wilson Report. Even when we reported, nearly four years ago now, the pension funds by that time already owned some 60 per cent. of the equity of Britain's 200 biggest industrial enterprises. I must say that I found it rather amusing after all the great arguments we have had in this country in more than one Chamber about nationalisation and one thing or another that, in fact, British industry had been virtually socialised—not nationalised, not under state control, but virtually under the control of the pension funds if they chose to exercise that power—and it had happened without a single Minister of either party even knowing that it had occurred: a warning to all of us, I think.

However, the latest published official government figures of 3,143,000 are higher than the figures in the world slump of the early 1930s. They are an all-time record for Britain. What I have said is perfectly correct—you do not become President of the Royal Statistical Society for nothing. If allowance is made for premature retirement—premature, of course, because there are no jobs available—in my view the true unemployment figure must be of the order of 4⅓ million. That is just working on the published figures.

However, a few days ago—and noble Lords will have seen this article—the Guardian provided further powerful and to my mind highly relevant evidence to suggest that the published figures are inadequate on two counts. One is the premature retirement to which I have just referred; but the other relates to the eerie functioning of the labour market. When I saw this article in the Guardian—and I have tried to check it—it was news to me. The Guardian pointed out that during the fourth quarter of 1983 the official unemployment figures fell by only 5,000. But the Department of Employment's estimates show that the number of jobs in the fourth quarter rose by 118,000. This would seem to suggest—and I think that the House is entitled to a full explanation from a representative of the department some day—that something over 100,000 of those fourth quarter jobs were filled by people who were not included in the Government's regular unemployment count.

Therefore, at some point—and I am not asking for it today—I hope that we shall be given an explanation of this. The Guardian sums up its findings as follows: In other words, the apparent rise in employment with a negligible cut in unemployment in the fourth quarter merely confirms the long-standing suspicion that there are a good many more people who want work than are shown in the Government's spurious unemployment statistics".

That adjective is not mine; I was quoting the Guardian.

Another area of government policy cannot be disregarded, and it is, of course, the cumulative devaluation of sterling under successive governments. If anyone has the right to query the present goings-on, I think that I can claim right of way. In 1967 the pound sterling was devalued from 2.8 dollars to 2.4 dollars. Members of this House old enough to recall those events will recall how the national press, with few exceptions, went to town on the action which had been taken. I have never had such a pasting from the press, and it was because we went down from 2.8 to 2.4 dollars. I would point out that "floating", which we now have, in those days was not possible, because under the GATT rules—and I had been a little involved in negotiations years before—you had to have a flat rate; you could not float about the place as we are able to now.

When we had to announce that devaluation I remember that the reactions of our faithful and loyal British press could only have been described by the famous poet who referred to, '"Arold with 'is eyes full of arrows on 'is 'orse with 'is 'awk in 'is 'ands".

That was a very tragic experience. But in those days we could not have a floating rate. Now, of course we have and it has been floating for some time. This is of central relevance to the prospects for jobs in this country because, although it helps you to sell more cheaply, you have to pay a great deal more; you have rising costs for your imported raw materials.

In this very week we have seen sterling, not at the 2.4 dollars for which I was blackguarded, but down yesterday to an all-time low of 1.3775 dollars. That is the situation we have now reached, and I am sorry to say that not a dog in Fleet Street has barked over that account. But yesterdays's sterling—I saw an authoritative statement today—was at its lowest level vis-à-vis the dollar in 200 years of world trading. One can see the problems that this is going to create. It may help our exports, but we have the cost of the imports.

Noble Lords in all parts of the House will rightly be concerned with the problems facing small firms. They are important in themselves in terms of providing work, certainly, particularly in scattered and distant areas. But they are important, too, in that, as the whole House appreciates, so many of our great establishments of the present time started life as one-man businesses, or two-men businesses, and so on. I would give just one example: Unilever began with the two brothers Lever boiling up soap in their mother's kitchen.

Small firms have had the roughest time of all in these past two or three years. The sources of funds for start-up of new firms and for expansion are far from being what they were not very long ago. Industrial histories and treatises used to stress the role in the creation and the improvement of small businesses of elderly relatives—usually aunts, apparently—who provided a few thousands' worth of initial capital. For some reason in Victorian legend the aunt in question was always known as Aunt Agatha. My committee on the financial institutions, in looking into the question of start-up capital, had to record the sad demise of Aunt Agatha. She does not exist any more, and many small firms are still struggling for funds, despite some of the quite imaginative actions taken by the Government in the last three or four years.

Certainly it is the case that the present Government, after the report that we issued—perhaps because of it—moved for a time to help small businesses, and actually nominated a Minister to take special care of their welfare. But it has been uphill work, not least at a time when much larger, established firms were themselves at risk of closure. I regret one decision of the Government following the report, and it applies particularly to small businesses. It is not really a decision they have taken; it is something they failed to do.

Noble Lords will have read of the revolutionary Lloyd George budget of 1909, three quarters of a century ago. Included in his speech was a proposal to develop specific avenues of help to small businesses in rural areas. He set up an organisation with which many in the House may be familiar, called COSIRA—the Council for Small Industries in Rural Areas. My committee recommended the establishment of a parallel body, COSURBA, to mirror COSIRA's work in the urban areas. After all, in these days of overflow of big cities, and so on, it is becoming increasingly difficult sometimes to know where urban areas end and rural areas begin.

But, regrettably, I have to say that the Government have not acted upon that recommendation. Therefore, let us hope that at a time when so many small firms are facing difficulties, when so many small firms are indeed facing closure. Ministers will now, at long last, move speedily and resolutely to equalise the facilities which are required—first for survival, and then for possible expansion.

It is important, too, that Government should be ready to move in when a firm runs into difficulties. I recall once, on the annual flight to Balmoral, receiving an in-flight message that Ferranti were in difficulties. Ferranti were one of the brightest stars in Britain's industrial constellation. It was purely a cash-flow problem, and the Government acted. We took it over nominally and saw it through. I remember, after I left No. 10, reading a copy of the Economist recording the emancipation of Ferranti, and the City scramble for the shares on the new placing. The Economist called it, the sexiest package the City has seen for a long time".

I think that was true. But what I am now concerned about is whether some other firms, perhaps capable of rivalling Ferranti but in different areas of industry, are not going to be rescued in that way.

It is only fair to mention—and I want to mention it—that the Conservative Government of 1970 to 1974 moved in with comparable speed to assist a temporarily worried Rolls-Royce engines company and a similarly situated firm of national repute which was in similar trouble. The Conservative Government certainly moved in rapidly. Had they not done so, I believe that that would have been a difficult situation for two more firms which were important to Britain, quite apart from the employment consequences.

In conclusion, I should like to refer to a debate which took place on a Private Member's day. I remember that a Conservative Member had won his place in the ballot. He was respected for having worked his way up from a junior City apointment to a position of great influence and for having an international reputation. He chose to debate the report of the committee which reviewed the functioning of the financial institutions, to which I have referred. On that occasion both he and I stressed the potentialities of a market on which something had been written, though there had been little on it in our report, and on which little seems to have happened since; I refer to the potentialities of the unlisted securities market.

There will be many noble Lords who, with their deep knowledge of the City, will know something of the unlisted securities market. Of course there are distinguished firms, such as Nightingales, playing an important, and indeed revolutionary, part, and it is something quite different from what we knew and understood to be the case in years gone by. I can only wish that Her Majesty's Government would now move further, and indeed faster, to encourage these developments, because they provide help, ideas, guidance, and frequently funds to assist City cygnets—if that is the right word—to achieve full "swanmanship" on a later occasion. There are perhaps many of these firms which need even more help from the Government than they are getting—and I am not criticising what is being done—and then we would have a real return, not least in terms of helping to deal with unemployment.

Another tribute I would pay as a result of my years on that committee is to the clearing banks. Until we reported I think that few, except those in the City, knew how many of the clearing banks really invested in what was then potentially the biggest risky area in the country, when the clearing banks put up so much of the money for the North Sea oil operations. I do not think that this was generally known in the country, and it came as a surprise to us. As an institution which economists used to say specialised in seed-time to harvest operations it was a remarkable and successful piece of work.

To sum up, I should like to set out what we need. First, we need a drive to reduce unemployment, with particular emphasis on juvenile unemployment. In almost every debate we hear of various claims on the nation's money. I believe that this has to come pretty well near first. Last night's news about the new oil finds in the North Sea, which must have pleased and gratified all of us, provides a timely and urgent reason for moving towards a more expansionist internal economy in this country.

Secondly, I should like to see us make fuller use of Government, and joint Government-City and Government-industry ventures, such as those which have flourished in past years. I think in particular of the National Research Development Corporation. Naturally, I especially think about that body because it was set up in my Board of Trade days in the 1940s. It has assisted in turning inventions, which perhaps have been produced by people without marketing experience and with little production experience, into industrial expansion. This country has received hundreds of millions of pounds in royalties as a result of the Government, through that organisation, taking part of the venture capital.

The third matter to which I referred is that I should like to see action taken to match COSIRA, to which I have referred, as I have suggested with a new COSURBA, either as a separate organisation or possibly merged as a single body. I do not know which would be the right answer. As I have said, it is now becoming increasingly difficult to know where the rural areas and the built-up areas begin. There is a great area common to both which could benefit in terms of helping to provide jobs for our people.

My fourth and last proposal is that I think it would be right for Ministers and others concerned to sit down patiently with the trade unions. I am not referring to the present problems in the coal industry. That should be set on one side because I am more concerned with the long-term aspect. But I should like to see them sit down to work constructively for greater industrial success and for a return to full employment. My own figures which I have put forward will take a lot of shaking but the requirement is for about a million or a million and a half more jobs than the Government have even begun to contemplate are necessary.

I should like to ask them to sit down patiently with the trade unions—I am not referring to what is happening now—to work constructively for greater industrial success and a return in this country to full employment. Let us remember those areas and let us give priority to those areas where over three years, on the figures I gave at the outset of my remarks, 90 per cent. of school-leavers have not had, and still do not have, jobs. We are, after all, one country. What we need from the sources of democratic power under our constitution is a clear message to the Prime Minister—and, let us hope, via the Prime Minister a clear message in Churchillian terms: action this day! My Lords, I beg to move for Papers.

3.22 p.m.

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

My Lords, may I extend a warm welcome to the noble Lord, Lord Wilson of Rievaulx, to the Front Bench. It is always an awesome occasion even for such a promising newcomer, but no doubt it is made in his case a little easier by the knowledge that he appointed most of the people sitting beside him.

I am glad to be able to say that my own noble friend Lord Cockfield sitting beside me was also a president of the Royal Statistical Society, even ante-dating the noble Lord, Lord Wilson, and presiding over his appointment. Sandwiched between such distinguished statisticians the House will be relieved to learn that I shall not use too much in the way of figures except at the beginning by way of illustration.

The noble Lord, Lord Wilson, is, of course, wholly right to debate unemployment and the House is much indebted to him. It is the major issue facing Western governments of varying political persuasions today. In the last 12 months, on national definitions, unemployment has risen by 13 per cent. in the Irish Republic; by 11 per cent. in Spain; by 10 per cent. in the Netherlands; by 9 per cent. in France and by 8 per cent. in Italy. Using the standard figures of the Organisation for Economic Co-operation and Development, the unemployment rate in February stood at 15 per cent. in Belgium and 14.1 per cent. in the Netherlands. Even Germany and the United States, who are more than twice as rich per head as we are, are suffering unemployment rates of about 7 per cent. In the European Community as a whole there are nearly 13 million people out of work. It is a colossal problem.

Against this sombre background there are a number of indications that things may be improving, not least for the United Kingdom. Indeed, Britain is faring relatively well where international comparisons are concerned. In the last 12 months our unemployment rates went up by only 2 per cent. Industrial output in the three months to February was up 4½ per cent. on a year earlier. Last year our gross domestic product growth was the highest among the Community nations. Last week the Confederation of British Industry declared that this year was likely to be the best for British industry since 1977. The Western world is coming out of recession and we are getting our share of the improvement. That is the crucial thing for jobs in this country. Jobs are not in the gift of governments but of customers; customers at home and abroad.

If governments could solve unemployment they would do so. They would have done so when the noble Lord was Prime Minister. They would do so today. A cynic might say they would do so if only for the base motive that unemployment is politically unpopular and threatens Ministers' own job security. But we all know that all governments do have higher motives. Unemployment is wasteful in business and economic terms. It can be tragic in human terms. It is immensely expensive in terms of lost tax revenue and increased benefit payments. But it is a real problem in the real world. In a free society and in a trading economy it is just not susceptible of simple political solution; the choice of one policy over another. Any politician who believes that is a fraud. A substantial and lasting improvement in employment levels is largely dependent on a continued upturn in world trade and in our own competitive response to such an upturn. And if world trade levels should not continue their improvement we shall have to compete even harder still to maintain the same number of jobs. We have no special reason to feel gloomy on this score at present— though, as I said in an earlier debate a few weeks ago, the interest rates and the United States federal deficit are worrying. We earn our jobs by the sweat of our brows and by what lies behind our brows. Our jobs are not on offer from politicians, not even ones as distinguished as the noble Lord.

Wrong policy can, of course, make a difficult task much harder. The Government's economic and industrial policies are aimed at creating conditions where Britain's competitive response can improve. That means lower inflation than our principal competitors; lower unit labour costs; higher investment in new and productive technologies; higher quality control; better marketing—there I am in total agreement with the noble Lord; and better profits. That is a very substantial change of gear for British industry. As a policy it is a pretty tall order. Over the past five years many people have been sceptical about it, although I have to say that scepticism about reality, about the universe, or death or taxes does not seem to me to be a very productive activity. But all the evidence is that the tall order is being filled. No one is seriously suggesting that British industry now returns to the manning levels of the 1960s or early 1970s—the Wilson years, if you like. No one is seriously suggesting that we invest only, or even principally, in labour-intensive rather than capital-intensive industry. Even before the energy crises of the 1970s and the great inflations which tried to cover up their consequences, people in this country were voting with their feet to get out of labour-intensive industries. How many of your Lordships, looking back a decade or more, wanted your children or grandchildren to work on factory production lines? Surely, the common aim is for industry to make the wealth as efficiently as possible and then for markets—or governments (and I know which I prefer)—to distribute the wealth so made.

Why is the level of unemployment so high in this country? As with any problem, there are many causal factors, some of which have built up over many years. In the United Kingdom the world recession came on top of a long-standing decline in our economic performance relative to that of our competitors. And for a country as dependent on trade as ours, lack of international competitiveness had an obvious impact as world markets become much tougher. Between 1955 and 1980 our share of world trade fell by half. It fell from 20 per cent. to 10 per cent.

High inflation and wage increases not justified by performance contributed to the problem. During the 1970s output in this country rose by about 17 per cent. and wages by no less than 350 per cent. We were paying ourselves at levels which were not justified by increases in our output or by improvements in productivity. The noble Lord, Lord Wilson, is universally known as a fair man. He will acknowledge that he played some part in this dismal story. I am afraid the tanks never got off his lawn. But, to be fair to him, too, the longer-term changes in the structure of the economy have also had a devastating effect. The economy is dynamic and constantly changing, reflecting not only external competition but also technical developments, innovation and invention and changing consumer tastes. Who would have thought, even a year and a half ago, that snooker would be big business!

The effects of these changes on the labour market are obvious but important. Agriculture was originally the dominant source of work for people in this country; yet today it provides jobs for not much more than 3 per cent. of the labour force. Look how productive British agriculture is! Criticism made of it, of great interest and distinction, I think, recently, by a Member of your Lordships' House, the noble Lord, Lord Melchett, is precisely that it is over-productive. Over the last 100 years the proportion of the workforce employed in service industries has nearly doubled to over 60 per cent. And in the post-war period manufacturing employment has declined as a proportion of the total: since 1966 the number of employees in manufacturing has fallen by no less than one-third. I do not believe that overall these changes are anything but to be welcomed. Over a span of time living standards and working conditions have improved. But it is virtually inevitable that the development and expansion of new industries and services should not exactly match the decline of employment opportunities in the old industries.

Structural unemployment of this kind has always been associated with technical change. The noble Lord mentioned Benjamin Disraeli. We have only to look back at the upheavals in the textile industry in the early 19th century. Our present upheavals pale by comparison; and the principle of redundancy compensation is surely an excellent one. I know of no better use of North Sea oil—and again perhaps here the noble Lord and I are in agreement—than bringing people out of old industries and training them for the new. That is precisely what the Government are doing. For it is at least possible that we are now going through a period of even more intense change than the early 19th century. Technical revolutions do not happen overnight and. as I have said, the changes that they bring are usually to be welcomed. New processes enable industry to improve productivity and quality. New products emerge for which there are new markets. A piece in the newspaper today suggested that cable TV may bring 12,000 wholly new jobs. New products, therefore, are good for the economy. Failing to take advantage of the opportunities would leave us even worse off and in the long term they are, therefore, good for employment.

But adjustment takes time. The Scottish electronics industry—which we think of as "Silicon Glen"—now employs more people than the shipbuilding, coalmining or steel industries in Scotland. Who would ever have thought that even 20 years ago when the noble Lord first became Prime Minister? Its emergence is vital for future prosperity. Without it unemployment would undoubtedly be higher in Scotland. The great problem is that so far its magnificent expansion has not been sufficient in employment terms to compensate for the decline in the old staple industries; and there can, of course, be terrible stress and strain on those who, through no fault of their own, are caught in the grinding machinery of an economy that is changing gear. We do not, as our opponents' political rhetoric sometimes has it, "throw these people on the scrap heap". There is in many cases compensation—in all cases in the public sector. There is training and retraining, there is our honourable social security system. Postponing the decline, putting off the painful changes, betrays tomorrow's jobs and our children.

The motor industry provides another example, where increased productivity is good for the health of that industry. Austin Rover now produces 12 cars per man-year, a figure comparable with most of Europe. But that process, vital and good in itself, has resulted in fewer people being employed in the industry. As I said earlier, we are not undergoing these changes in isolation. They are the common currency of the Western industrial world. The lesson to learn from the Eastern industrial world, I believe, is fast footwork and flexibility: not resisting change but welcoming it, adapting to it.

Where do we in the United Kingdom stand at present? I have made brief mention of the overall economic strategy. There can be no question that without the policies we have pursued since 1979 we would today be discussing a problem of greater magnitude than the one we are in fact faced with, difficult though that is. My Lords, why do you think socialist France is trying to emulate Conservative Britain at present in this regard? Reducing inflation, now down to about 5 per cent., and improving competitiveness are vital. Manufacturing cost-competitiveness has improved by no less than 20 per cent. since 1981. Mr. Roy Hattersley, the Shadow Chancellor, wants to borrow more money. Yet it is common ground that such money has to be paid for in taxes and in interest rates. And these are not job-creating. The recession has obviously affected, alas, the rate at which it has been possible to cut taxes overall. But that difficulty, that failure if you like, as our opponents charge us with it. is a far cry from putting taxes up again.

So what I am trying to say is that the economies of the real world are the essential backdrop to any discussion of unemployment. Out there, in the real world, there are signs of improvement in the labour market. Between March and December 1983, last year, the number of people at work in the economy increased by 200,000. In 1983 the number of people employed in the service sector increased by around 280,000. Hours lost through short-time working in manufacturing are now running at the lowest level for four years.

The House will know that we have done a number of things to ease the burden on employers, particularly small employers, who feel deterred from taking on workers by employment legislation, restrictive practices and the like. We shall be debating in the widest sense the Trade Union Bill next week. But I acknowledge that very much remains to be done to liberate the labour market and to allow it to work more flexibly. Removal of obstacles to free functioning of markets will encourage improved competitiveness, higher output and better employment opportunities.

Last week, I read a story about three jobless teenagers who started an on-board food and refreshment service for coach travellers. The foolish person would dismiss this story as simply a drop in the ocean of unemployment. The wise person would, in my view, see it as an illustration of how labour markets actually work. Coach travel is expanding. There are jobs to be had on the back of its expansion. The first question any unemployed young person should ask is: what do people want? The second question is: how can I supply it? The third question is: can someone else—the Government, say—help me acquire the knowledge and skills to help me supply it?

Our training policy is of particular importance in this regard. I do not want to repeat now the debate that we recently had on the subject in the name of my noble friend Lady Carnegy, but a discussion of employment opportunities would be incomplete without at least some consideration of this. The Youth Training Scheme is about employability, about helping young people to be more effective and efficient workers and thus better able to compete in the labour market. And the young people themselves have recognised this. Right now, over a quarter of a million of them are out in factories, offices and other places of work and training, on the scheme. The YTS offers them the foundation training they will need to develop skills that can be used across a range of jobs, or as a base for further educational training: this is especially relevant today since over their working careers they are liable to be faced with the prospect of changing jobs several times. We were convinced from the start—and I was in at the start of this programme—that one of the key areas where transferable skills would apply would be in high technology literacy. Consequently we made it a requirement that all YTS schemes should include an introduction to computer literacy and information technology. For 1984–85 we plan to develop this aspect of the scheme, including a recommendation that all trainees should receive at least 10 days' "hands on" experience.

The Government are also committed to an imaginative Adult Training Strategy. Central to that strategy is that the training on offer should be relevant to the employment needs of industry. As part of this strategy, my honourable friend the Minister of State for Employment, Mr. Peter Morrison, announced on 12th April a new programme to help meet this need, and £1.3 million will go to it. The Manpower Services Commission and the education departments are to co-operate in a number of pilot projects to provide launching support for local initiatives by employers and providers of adult vocational training and education. They will work together to define local training needs and how they can best be met. In general, employers know best what their training needs are. If we can get firms to identify their needs more accurately and then ensure that those needs can be met at the right time and price, we shall have won an important victory in the battle for sustained growth in output and employment.

We also have policies to encourage enterprise. In addition to the wide range of assistance available for small firms under Department of Trade and Industry programmes, we have introduced the highly popular and successful Enterprise Allowance Scheme. It not only helps unemployed people to create their own jobs but, by encouraging new small businesses, it is helping to stimulate local initiative and bring about additional employment opportunities. By the end of March 1984 a total of 31,000 unemployed people had taken advantage of the scheme to start their own businesses. Given a little time, this scheme could prove a revolution in the economic culture of this country.

I am sure that the House is aware of the lessons from America. New job generation in America is going at a much faster rate than in Europe and the bulk of it is coming from small service industries and from corporate franchising. My Lords, what a far cry that is from the deliberations of Neddy! As might be expected, there is a very wide range of businesses being set up under our scheme. While the majority are in traditional sectors such as shops, general building repair and maintenance, motor repairs, clothing manufacturing and hairdressing, we also have people making a success of agricultural smallholdings producing fruit and vegetables, and there are new technology ventures such as micro-computer programming.

One of the most heartening features of the scheme, in my view, is that it not only provides worthwhile employment for those on the allowance but the new businesses are also generating a significant number of jobs for other workers. Evidence from surveys of those who have been receiving the allowance for nine months suggests that on average for every 100 firms set up under the scheme almost 50 further jobs have been created. Employment generation among the firms which survive and continue to develop after payment of the allowance has stopped is showing signs of being even higher, and we shall certainly be keeping a close watch on this important element of the scheme.

The last thing I would say in conclusion is this. I have heard it said that the Government lack compassion for the unemployed. Compassion without action is bogus compassion. The unemployed do not need bleeding hearts or wringing hands: they need money and they need practical help. The Government provide as much of both as they can without wrecking the prospects for employed people. We have, after all, 87 per cent. of people in work, and one of the biggest workforces in Europe. But those in work can make a contribution to others less fortunate than themselves. Rates of economic growth in this country depend on cost-performance, and cost-performance depends on realistic levels of pay. It was the noble Lord himself (and all credit to him) who memorably said that one man's pay rise was another man's job loss. This is sharply true, especially in the public service sector. I work in it and of course I think it is important. But it it is not at the front end of wealth generation and job generation. Criticism of the Government on the grounds of high unemployment is, therefore, ill-founded coming from those with secure jobs in the public service sector. Compassion towards the unemployed begins at home and in one's own pocket.

This is a difficult time for Britain but, in my view, it is also a very exciting one. We have moved, and not before time, from a cheap food, low wage, high-manned and low technology industrial society to a dear food, higher wage, lower-manned and high technology society. We have made this move under pressure from external competitive forces and on this move the continued wealth of the country depends. If only we can clear away the restrictions, the restrictive practices and the obstacles, real jobs will follow the generation of real wealth. The central purpose of this Government—the moral ground, so to say, on which they stand—is that people in the main do act responsibly once cause and effect are not concealed from them. I commend this philosophy to the noble Lord, Lord Wilson of Rievaulx, and to the House.

3.47 p.m.

Baroness Seear

My Lords, may I first apologise to the House and especially to the noble Lord, Lord Wilson of Rievaulx, and the Minister that, because of a long-standing engagement at 6.30 this evening, it will not be possible for me to be here at the end of the debate to hear the reply.

As the House will be fully aware, I am not a Fellow of the Royal Statistical Society and I would hesitate in any way to cross swords with the noble Lord, Lord Wilson, on his figures. I should like merely to add a point to what he said as to the actual size of the unemployment figures in this country. There is no doubt, as I think most people would agree, that the official figures conceal a considerable number of people who are in reality unemployed. I should like just to say that I was a little surprised that the noble Lord, Lord Wilson, made no reference to one group of unemployed who do not appear in those figures: that is the large number of women who are seeking employment and who do not appear in the figures for a whole variety of reasons. They add very considerably to the real figures and they are genuine unemployed, in that they are genuinely seeking employment if they could get it.

In many ways, we on these Benches applaud much that the Government have done in the improvement of the economy, and we recognise that the general improvement of the economy is a necessary condition for an improvement in the employment position. The fall in the inflation rate is undoubtedly a very great advance, and the lists of changes which have taken place, which the noble Earl has just given us—the reduction in overmanning, the training schemes which have been undertaken, and so on—undoubtedly do lead to a very much healthier economy overall than we had five years ago. So far so good, but only so far.

There is in some circles, at any rate, among the party opposite a belief that if the market works properly, and if efficiency is increased, then the working of the labour market by itself will deal with the problem of unemployment: that jobs will sooner or later be found for all by the effective working of an efficient market. If you can believe that, you can believe anything. Of course, if it were a perfect market in the sense that wages could fluctuate totally in response to labour demand, if there were no social security and if there were no trade union organisations, then theoretically it is true that the working of the labour market could deal with unemployment. But anybody who thinks that that bears any relationship to the real world is living in cloud-cuckoo-land, and none of the people who talk like this would in reality vote for getting rid of unemployment benefit, social security, disbanding the trade unions and all the other changes which would be necessary to make the labour market work in that sense. So it is nonsense to say that left to itself unemployment will cure itself as the economy becomes more efficient, highly desirable though that achievement of greater efficiency is; and, as I said, one pays tribute to the Government for what has been achieved in that direction.

The truth of the matter is that, however we improve our efficiency—and, in fact, to some extent the more we improve our efficiency—the more we are going to be left with a residual problem which will not be cured without direct action to help to cure it. That is because the economy into which we are moving is an economy which, for the first time in human history, has less and less use for the people who have nothing to sell but their time and physical strength—for the unskilled, for the people who have no marketable competencies— and it is a misfortune (the product of the unwisdom of this country in the past) that we in fact have in our labour force far too high a proportion of people who have nothing to sell except their time and physical strength.

Those large numbers of unskilled people who make up the great proportion of the long-term unemployed, which is our serious residual problem, are not going to be helped by the recovery of the economy. They will remain left behind as the long-term unemployed unless we take positive action to deal with them.

Indeed, there is new jargon coming into force to describe them. In some quarters they are called the under-class; the people who are left out when all the changes which are planned, and which are obviously in the pipeline, have taken place. They will still be there when the recovery has been achieved and when our efficiency is in line with the efficiency of our major competitors.

The point to bear in mind is that, owing to past neglect and past folly, we have a higher proportion of such people in our labour force than have our competitors. I gave these figures to your Lordships before, but I repeat them because they bring home a point that is urgently needed to be made and remembered. Of the school-leavers in this country at the end of the 'seventies, 44 per cent. went either into unemployment or into jobs with no training, compared with 19 per cent. in France and 9 per cent. in Germany. Those are horrifying comparisons. So the problem remains: when we have done all that has to be done to improve efficiency and competitiveness—and we go along with all that—what is to be done about the residual long-term unskilled unemployed?

The noble Lord, Lord Wilson, said that the major problem is among the young, and, of course, the problem of the young is serious indeed. But there is an equally serious problem among men in their middle 40s with no skills, who are out of work and have no prospect of getting back into employment before they reach retirement age. As things stand, it is likely that there are youngsters leaving school today—although I applaud and go along with the schemes which the Government are operating for the improvement of the position of the young—who, unless they acquire skills, will never have what your Lordships understand as a proper job between now and the time when they reach retirement age.

So we need a policy to deal with this residue, and the policy must be two-pronged. We must reduce the number of people who have no skills. I do not believe it is true that none or so few of those who are graded as unskilled are incapable of acquiring skills. We know that with modern training methods very old dogs can learn new tricks, and this is being proved all the time. I applaud and go along with what the noble Earl has done in training, but we have not done enough and perhaps we are not always doing it in the right way.

So we have to reduce the number of those without skills, both by adult training and by preventing school-leavers from joining the ranks of the unskilled by seeing that they get training—and that is what the YTS scheme is all about. But when you have done all you can do on training—and I do not think we have yet done anything like all we can do on training— there are still those who will not be employable in terms of today's and tomorrow's economy, and for them there has to be some positive job creation.

I should like to say also that positive job creation links with the other prong of training, for people are not. as a whole, yet convinced that training is valid and is an answer to the problem. Up and down the country, those of us who are working in training schemes hear continuously the criticism. "What is the point of training if there are no jobs for people to go to when they have been trained?" Unless there are jobs for people who are being trained, cynicism about training will grow and there will be a great reluctance to accept the training opportunities that are there. That exists already in some quarters.

The great test will be—and it will come over the next year or two—when the youngsters leaving the YTS do or do not get jobs. If the job rate is low, then more and more will people—parents, schoolteachers, and the youngsters themselves—say, "Training is no good; it does not get you anywhere". This whole brave adventure of having a trained labour force at last will be defeated, because they will believe that it leads them nowhere at all. So job creation and training are linked together.

May I say, in connection with training, that the YTS one-year scheme is a foundation scheme. It is doing a number of quite different things for different youngsters. It is providing those who know what they want to do with the preliminaries of specific training, and the sooner this is closely geared into modular apprenticeship training, so that the YTS leads on in a logical way to the completion of training for a skilled job, the better. It is helping those—the great majority—who do not know what they want to do to find out. and that is a very important function. But it is only a beginning of training; it is not training in itself.

Then, for those who have achieved very little at school it is filling in the gaps and the things which ought to have been learned and mastered at school but which have not been learned and mastered at school. Those are three very different tasks and they do not add up to full training to equip people to take part as skilled people, people who have learned competencies in the labour market, in the future.

So we need to build on the YTS. Some of us have been saying that two years are needed: a foundation year, followed by a more specific year which will lead people to have marketable competencies. Whether that year should be from the age of 17 to 18, or whether it should be a year that people can hold in hand, as it were, to use for training when they know what they want to do and see the right opportunity at a later date, I do not know. That is something we ought to find out. I tend to think that there should be an option: either to take the two-year training straight off from the age of 16 to 18, or to take the foundation course from 16 to 17, and then have the right to a year's training when people are aware of what, quite specifically, they want to learn.

So much for enhancing the training, rather than assuming that when people have done YTS the problem has been solved. As I have said, among the long-term unemployed there are still a very large number of people who will not take training—who would not respond to training, if they took it—and for whom work has to be found. For these people there have to be specific job creation schemes.

First and foremost—we have said this so often, but it must be said again and again—why we cannot get on with the essential infrastructure capital projects which must be undertaken sooner or later passes the comprehension of those who sit on these Benches. No, I shall not talk again about the Manchester sewers; I bore myself, let alone everybody else, with the Manchester sewers. However, the fact remains that sooner or later we shall have to spend that money. If it is spent later, it will cost us more than if it is spent now. On any economic grounds, let alone employment grounds, I simply cannot understand why on earth the Government do not get on with it. Of course it can be selective, and selected, in relation to the job creation potential; but the construction industry, which will be needed for a great deal of this infrastructure capital development, will provide jobs, both skilled and unskilled, once it gets going. Whenever we have come out of a recession in the past we have always found that the construction industry runs out of skilled labour as soon as it begins to get moving. So we could link the infrastructure development with the products of YTS and adult training in order to provide those very easily identifiable skilled people who will be in short supply as soon as we get moving.

I know that we shall be told that the money for it has got to be found. But there is all the difference in the world between putting money into a capital expenditure activity and putting it into current consumption. I cannot understand why the Government do not go to the market to borrow a great deal of the money. The Government are keen enough on privatisation. Why can they not privatise the sewers and get on with it, if that is the only way they are prepared to deal with it?

In addition to the infrastructure, there are inexpensive, low-cost service jobs which need to be done. I do not mean the Whitehall and town hall jobs. Again, we have said before—and it remains true—that if we want to keep the old and the sick in their own homes, we must have good domiciliary services; and domiciliary services are cheap in comparison to institutional services. Yet the Government are cutting such services as home helps, which seems to me to be absolutely ridiculous. In this area of real individual need for personal services surely we can create jobs which, in the longer run, are very cheap. But when we have said that we have not said it all. We are left with people who it is very difficult to employ. We must ask the Government to do more—they have already started, through the MSC—for such schemes as the community and voluntary projects of the MSC and for community enterprise schemes. None of these schemes is totally cost-effective, but they have great merit. They involve collaboration between the statutory and voluntary services. Surely that is something which this Government believe in and want to sponsor. Such schemes give work, activity, self-respect and some income to people who otherwise would not have it. They generate a feeling of neighbourliness and mutual help. These are all very valuable objectives to achieve.

I know that I shall be told that the MSC is already spending a great deal of money on these schemes, but may I now get down to some of the nitty-gritty. The Government are in great danger of ruining the very good idea of collaboration between the statutory and voluntary services by the way in which many of these schemes are working out. It is absolutely crazy to get local people and local voluntary organisations to put a great deal of time, enthusiasm, work and spirit into working out schemes and then to tell them, sometimes at a month's notice, that they will not receive any more money and that they will have to dismantle it all. This has happened up and down the country. I cannot understand the reasoning behind it. A great deal of time and money is spent on starting schemes; then, for some extraordinary reason, the people involved are told that the schemes will have to be dismantled, sometimes for no other reason than an argument between different Government departments: because an underspend in one department cannot be used to finance a deficit in another, although the objective is the same. When that kind of attitude holds up very worthwhile projects of this type, one is left almost speechless, trying to find words to describe the folly that this represents.

I do not believe that the Government can realise what they are doing to voluntary bodies by pursuing this kind of policy. I have personal experience of it, and I declare an interest. I am the chairman of an organisation called the Apex Trust, which has set up 10 centres to help ex-offenders to obtain jobs. The trust obtained money through a voluntary project. What do we find? At the end of the first year we are told that we have got to dismantle. To be quite honest, we have not yet been told that we have got to dismantle, but it has been said that it is very likely that there will be no more money. As a result of all the work which has been put into getting the schemes going, 30 per cent. of the ex-offenders who have gone through the schemes have obtained jobs. This is a remarkable achievement; but we have been told that we shall be unable to continue. The Government are destroying the very collaboration upon which we wish to build. I beg the Government to look at it again and examine whether or not more continuity can be fed into these schemes.

I should like to make one other point about the long-term unemployed. These are people for whom it is very difficult to find work. It is quite extraordinary to me that, when we have this residual problem, the Government, in their short-sighted way, are cutting back on the staff in job centres. I recognise that a great many people find jobs without any help from the job centres, and that is fine; but if fewer staff are required because people can find their own jobs, why can the residual staff not be given special training and very low case loads in order to find work for the hard-to-place? It would be a highly economic course to pursue. The hard-to-place, the long-term unemployed, are very expensive in the long run. If, instead of cutting down on the numbers, we diverted the manpower of the job centres in order to give them more time to deal with the hard-to-place, we could save a very great deal of money.

I shall be told that all this takes money and asked, where is it to come from? We should recognise that unemployment costs money. In Sir Robin Day's interview with the Prime Minister I was astonished that the Prime Minister seemed to think that the cost of unemployment is limited to the amount paid out in unemployment benefit and supplementary benefit. If you can believe that, you can believe anything. Not only is there the loss of tax from people who are not in employment, but also the loss of the national insurance contributions and VAT they pay. They surely should all be added—and they were not added in the figure given by the Prime Minister to Sir Robin Day.

There are also other costs—the social costs of keeping people unemployed. A distinguished member of the Government once said that they saw no connection between unemployment and crime. If you can believe that, then you simply are not living in this world. Can anybody seriously believe that all young men between the age of 16 and 25 with nothing whatsoever to do are not going to get into trouble? Of course they will. I do not care from which class of society they come, because they will start fooling about and causing trouble sooner or later. At its lowest level it costs more than £7,000 a year to keep a man in "jug".

Surely there are savings to be made by the sensible use of money in order to promote the employment of the long-term unemployed. The Government should do their sums in a more realistic way. And I have said nothing about the pain, suffering, frustration and despair which unemployment brings; I shall leave that on one side.

4.11 p.m.

The Lord Bishop of Southwell

My Lords, we are all grateful to the noble Lord, Lord Wilson of Rievaulx, for initiating this debate—and I, speaking from these Benches, should like to add my quota of thanks. It is not within the competence of the Church to declare which programmes are better suited than others to provide long-term solutions to the problem of unemployment. What is within our competence is to comment on the human consequences of any policies and to suggest the kind of criteria which should be borne in mind if we are to act in a responsible way. My brief contribution has that in mind.

First, it has always been a very important principle that work is made for man and not man for work; people matter even more than industry and the human factor is primary. It is essential to the dignity of any man or woman that they should have satisfying work to do. By satisfying work, I mean work that enables a man to feel he is pulling his weight in the community, contributing to its wealth, and fulfilling his potential as a human being. The fact that more than 3 million people are unemployed, and that so many young people have little prospect of long-term employment or of life-long careers, is itself an evil which none of us in this House can condone.

We are all committed to reducing unemployment just because worklessness is degrading. We differ only in the strategy to be employed in achieving this. Archbishop William Temple, in his classic book, Christianity and Social Order, wrote: The worst evil of unemployment … is its creating in the unemployed a sense that they have fallen out of the common life. However much their physical needs may be supplied … the gravest part of the trouble remains; they are not wanted. This is the thing that has power to corrupt the soul of any man. Because he has no opportunity for service, he is turned in upon himself, and becomes, according to his temperament, a contented loafer or an embittered self-seeker. This moral isolation is the heaviest burden and most corrosive poison associated with unemployment; not bodily hunger but unsocial futility". I want to emphasise with all the conviction I can muster that future policies implemented by any government must aim at the priority of giving men responsible, socially-fulfilling work. I appreciate that an inefficient economy will result in the disappearance of all jobs, but the human factor must not be given a lowly place in any plan. We could become a rich country without a soul and in consequence become a very vicious society. There are signs that now, in many areas of this country, unemployment is producing severe personal and community stress. It is breaking up the happiness of many homes, driving people to crime, and increasing dependence on drugs—with all the consequent ills which those situations engender.

In Nottingham, where I live, we are going through a time of very bitter strife. The coal mining community, which is a highly responsible community, and generally rock solid in its fraternity, is at this moment being completely torn apart. Our miners are even breaking the strictest rule of union membership)—not to cross picket lines—just because they cannot face unemployment. In other parts of the country, it is fear and a total loss of hope in any worthwhile future for their community that is making rational men behave irrationally. A policy that fails to put proper work for all at the top of its agenda is socially dangerous.

Secondly, I believe it is right that we should have makeshift programmes to sustain the unemployed until we get the situation sorted out. I applaud the efforts which the Government have made to ease the lot of the unemployed—particularly the school leaver—so that the worst hardship is avoided. We shall disagree about the success or otherwise of the various schemes that have been tried—but not to have tried would have been criminal. Work experience and training schemes must be better than merely being idle on social security.

The Church, together with many voluntary agencies, has endeavoured to co-operate with government in trying to make these schemes work. The Church has a very honourable record in this field. For instance, as long ago as October 1980, Church leaders of all denominations in Nottingham asked the Manpower Services Commission to meet them. They asked the question, "What would you want the Churches to do?". The result was the setting up of a major agency for providing work opportunities for the young. It was by far the largest agency in the county and provided a blueprint for similar work set up elsewhere.

Now that the youth opportunities programme has been superseded by the youth training scheme, the Church has tried to adapt to the new situation. One result has been a highly professional and comprehen-sive survey of all buildings owned by churches and voluntary agencies in Nottingham, so that they can be called on to advantage by those responsible for setting up Government-sponsored schemes. I have recently visited some highly successful schemes providing high quality training under efficient and dedicated instructors; COMMAC in Newark is a superb example. These schemes are valuable in themselves, in providing young people with a skill that they can feel proud to have acquired.

But—and this is surely the most important consideration for any future strategy—it is little use training people in skills if there are no long-term prospects of their being able to use them in paid employment. Indeed, it is questionable morality to raise the hopes of young people by offering them skills and then failing to provide for them the chance for those skills to be used. This means, first, that we must offer training in those skills which are going to be needed in the future (and I am glad to hear that the Government really are making this a priority); secondly, making available the funds which will enable new industries to be established which have a foreseeable future as industries and which create wealth and provide essential services for the nation. It is surely a matter of principle that creating long-term, wealth-creating industries is more important than more widespread temporary schemes which sometimes give the impression of window dressing.

Some of your Lordships may remember the report of the Select Committee of this House on unemployment which was published in June 1982. In it the attempt was made to add up what the Government lost in revenue from income tax, national insurance contributions and national insurance surcharge, what was paid out in national insurance benefits, other social security benefits and rent and rate rebates, and the administrative costs involved. Then account was taken of the probable loss of gross national product from running the economy at a low level, the extra pensions payments involved, the cost of running the MSC special measures, and so on. The conclusion reached at that time, two years ago, was: In our view the fiscal cost of unemployment now representing an annual cost to the Exchequer of £15 billion is best estimated at £5,000 per person unemployed per year". With that in mind, should not some money be put into making industries more viable so that they can compete rather than disappear?

Perhaps the most important principle must be that the good life must not be just for the few who are privileged to afford it, but for all, and in as equitable a way as possible, recognising that tastes differ and that not all people have the same priorities. In a society where there is only hope for the clever and the rich and not for the less able and the poor, there is neither justice nor a safe future. I hope that your Lordships will bear with me when I plead for a human approach to employment in the future. It can be had only at a price, but the price is worth paying.

4.21 p.m.

Lord Kaldor

My Lords, it is a special pleasure for me to be able to participate in a debate initiated by my noble and distinguished friend Lord Wilson of Rievaulx, whose Governments have done so much to uphold the policy objective of full employment. For 25 years after the war this was an objective to which both of the great political parties were equally committed. It was in pursuance of a solemn commitment of the coalition Government headed by Winston Churchill in 1944 that high and stable employment should henceforth be reckoned as one of the Government's chief objectives and responsibilities. This commitment was abandoned in the 1970s under the influence of monetarist doctrines, whose real purpose was to change the power relationship between capital and labour and to use mass unemployment to drive down wages.

This change of sentiment was by no means confined to Britain. It occurred in a number of different countries, in all of which prolonged prosperity and the feeling of security engendered by the plenitude of job opportunities meant that wage earners succeeded in obtaining an increasing share of the product. Profits were squeezed even though, owing to full employment and the rapid increase in productivity and production which a full employment regime implied, they continued to increase in absolute terms. Nonetheless, the revival of long discredited ideas on the virtues of "sound money" promised relief from pressures which post-war incomes policies, depending as they did on securing the willing co-operation of workers, could not secure. For Britain the decisive change came when the new Conservative leadership rejected the policies of previous Tory Governments, abandoned the post-war consensus on the welfare state, and opted for mass unemployment as a remedy for the supposed evils of "debilitating" post-war policies.

I am not suggesting that during the full employment era our performance was all that satisfactory; it certainly was not. The share of our exports in world trade fell by more than half—from 21 per cent. to 8.5 per cent. between 1958 and 1981—and the volume of our manufactured imports increased steadily, year by year, at a rate of 10 per cent; more than twice the volume of our exports. This explains why the rise in our industrial production was so much less than either the rise in imports or in exports. It was a very bad record, but it was no worse a record than the one Britain had in the 50 years preceding the First World War. Britain's industrial decline is of very long standing—it was only interrupted for the 25 years between 1932 and 1957, during which time we had import controls of one kind or another and the volume of imports was held constant—and by no means can it be wholly ascribed to Mrs. Thatcher's policies. But the point is that North Sea oil gave us a god-given chance to escape from that long standing predicament and due to accidental circumstances we have flunked it.

It was our peculiar misfortune that by sheer coincidence North Sea oil and Mrs. Thatcher came on stream more or less at the same time. The arrival of North Sea oil meant that we had a vital new source of wealth, involving a sudden fall in oil imports and a sudden rise in oil exports—a turnround of almost £15 billion in the balance of payments; the full benefit of which required that we devote this money to the regeneration of British industry by expanding domestic investment by the same order of magnitude, either by a large increase in public investment or by large assistance, whether by tax remission or in other ways, to private investment or some combination of both. Failing this, the new wealth from oil could not enrich the nation—I repeat, oil could not enrich the nation—since it was bound to destroy older existing sources of wealth to a similar extent. As Mrs. Thatcher's Administration were determined to prevent any expansion of demand from taking place, we had to endure, over a relatively short period of two years, a 15 to 20 per cent. reduction in manufacturing output and a 2 million increase in unemployment, most of which, although not all, came from manufacturing.

It was of course inevitable that we should have—as we must have had—a negative balance of trade in manufactures with the rest of the world once oil came on-stream. Otherwise, how could the European Community countries, or anyone else, have paid for the £5 billion worth of oil annually which they bought from us? But if we had not followed the internal deflationary policies of Mrs. Thatcher's Government, we could have used all these extra billions to increase our imports of plant, equipment and machinery for the purpose of strengthening manufacturing industry, instead of—as the Chancellor of the Exchequer said recently; I believe on 9th of April—"hastening the structural decline of our manufacturing industries" by allowing a rise in the exchange rate of sterling. He failed to add, I am afraid, that all this was quite unnecessary. It was the result of bungling and incompetence, and not an inherent consequence of the situation.

It was in our power to neutralise the effect of the high oil price on the European economies by, in effect, selling our oil to our European partners in exchange for additional purchases of capital goods. Instead, we sold our oil on terms that made it almost a matter of indifference whether Germany bought her oil from Saudi Arabia or from us—totally overlooking the fact that, unlike Saudi Arabia, we were members of the European Community. We could have prevented the post-1980 recession, which is very largely a European affair. It does not extend to either America or Japan, or to South-East Asia and other third world countries, (which are doing better than before) with the exception of parts of black Africa. We could have prevented the recession in Europe as no one else could have done. Had we done so then, quite apart from both the immediate and the long-term benefit to our own economy, we should have achieved a position of leadership in Europe instead of being regarded as a thorough nuisance, constantly quarrelling over petty sums of money.

History, I am afraid, will not be kind to Mrs. Thatcher—not nearly so kind as her contempories, who are quite oblivious to the true enormity of her errors and to the opportunities missed out of sheer incompetence and doctrinal stupidity, particularly in the first few years of her Administration. She was so pre-occupied with the trade unions, with the wickedness of the working classes and with saving little bits of money here, there and everywhere, that she treated Europe as a grocer would treat a customer with unpaid bills, and she never gave a thought to the unique opportunities given to Britain by oil in the early 1980s.

By now it appears as if the chance of using oil for retrieving our industrial fortunes has gone. The damage has been done; and since we no longer have the balance of payments surpluses of earlier years—in one of these years oil gave us a £6 billion surplus in the current account of the balance of payments, and in the past four years together the surplus amounted to £ 17 billion—it looks as if we are no longer free to engage in a major policy of expansion without inviting balance-of-payments crises, as happened on earlier post-war occasions.

Fortunately, in my view, this is not so, or at worst it is only partly true. Ways could still be found if it were recognised that there is no substitute in Britain for a large, balanced and comprehensive manufacturing industry. With a population of 50-odd million, we cannot make a living out of agriculture however pleasant the prospect of a purely rural and pastoral Britain may be; and it is nonsense to suggest, as I explained the other day, that we could make a living out of services. There is no alternative (if I may quote those famous words) for Britain but to be a prosperous manufacturing nation. If the will was there we could utilise our newly accumulated foreign assets of some £17 billion for the purpose of investment in British industry. We could also borrow. The Americans have shown us how much you can borrow if you want to finance economic expansion.

The Government have used every possible excuse for their miserable record. They mention the world recession on every possible occasion as the cause of our poor economic showing, leaving out of account the fact that, as an oil exporter, we are in the same position as some of the OPEC countries, and we were the cause of the recession in other countries and not its victim, just as America was the cause of the post-1929 world slump due to the large contraction of her purchases from abroad, following her internal convulsion. It is as if President Hoover had said that he could not do anything in 1931 or 1932 to stimulate the economy because Europe had so many unemployed!

Despite the carefully orchestrated optimism about the current United Kingdom situation, the best that one can say is that we are no longer shrinking, we are just drifting. But there is no firm evidence of true expansion. Unemployment is still rising. There is a continual stream of fresh redundancies and job losses reported in the press week after week; and our manufacturing investment, which has always been inadequate—in relation to output it has always been lower than that of any other major industrial country—is still down by some 30 per cent. on 1979.

The fact that other countries are now getting into deep water—unemployment is rising in almost every European country; as was pointed out, it is over 13 million altogether at the moment—and with each one of these countries, whether Germany, France, Italy or Holland, finding itself unable to expand on its own, makes it all the more urgent that we should take the initiative. If our leaders were convinced that prosperity must be restored, and could only be restored by a policy of economic expansion, we could take the lead in urging such a policy on others, as well as adopting it ourselves, and could put forward schemes for expanding mutual trade by planned measures of increasing purchases from those whose expansion is hindered by insufficient exports and by diverting trade from those which accumulate enormous surpluses as a means of boosting their economy.

The main problem is to secure recognition that there is an urgent problem here and that it has a solution. To quote M. Raymond Barre, the former French Prime Minister, there is need for, new rules of the game", in international trade which assure, conditions of growth, security and mutuality", in trade without which, as he said: unregulated free trade is nothing more than a pretext for the strongest and least scrupulous as well as being a trap for the weakest". If that last sentence sounds a bit odd, it is only because it is a literal translation from the French. Those are brave and true words. I wish, however, that M. Barre had done more about this while he was still Prime Minister. The quotation originated from the time when he was Prime Minister.

The need for international action on these lines, and the need for Britain to take the initiative in Europe, is now greater and more urgent than ever.

4.39 p.m.

Lord Thorneycroft

My Lords, I believe that the House is grateful to the noble Lord, Lord Wilson, for initiating this debate. I think that the House would agree with him both as to the scale of the problem and to the difficulty of finding a solution to it. In my case, brevity is my chief aim in the debate. I want to make four points only. I want to say something about the facts as I see them, about the damage that we do to ourselves, about the options that are no longer open, and about how best to soldier on.

First, I shall deal with the facts. Over the past 10 years, as I see it, unemployment, in crude figures, has trebled in this country. But, then, it has either doubled or trebled in France, Germany, Belgium, Denmark and Italy. In Holland, it has gone up by four times. Only in America—and I agree with the noble Lord, Lord Kaldor—though it is high, has unemployment remained virtually constant. America—rich, extrava-gant, deficit-running, innovative, and capitalist—has done something. As the only Member of the House who has not been president of the Royal Statistical Society, may I say that I have just a little doubt about the figures. But perhaps my noble friend Lord Cockfield, when he replies, will deal with that.

For the rest, in Europe, we are certainly not alone. All are different, too. All have been pursuing policies which they think better than the others—Mr. Mitterrand, Mr. Kohl, Giscard d'Estaing, Mr. Craxi and Mrs. Thatcher. I come to the conclusion that, with all of them pursuing different policies and all of them achieving more or less the same results, there is not an individual solution for an individual country. Moreover, even individual parties do not follow the same policies for very long—if I may say so with hesitation. The heady days of the noble Lord, Lord Barber, and Mr. Heath are a little different from the more sober approaches of Mrs. Thatcher and Nigel Lawson. And, if I may mention it, Labour Party policy, before Mr. Healey saw the light on the road to Heathrow Airport, was very different from the subsequent arrangements whereby the IMF really ran the country.

Lord Kaldor

My Lords, will the noble Lord give way?

Lord Thorneycroft

My Lords, I hope that the noble Lord will not interrupt. I intend to speak for only a few minutes. I am not giving a minute to the noble Lord.

The IMF ran it very well, but it was not the same policy as that which had preceded it. I would therefore say that the lesson that I get from these figures is that there is not just some remedy. I approach the thing with a good deal more modesty than perhaps do some others. I do not know the answer, and I am not ashamed to say so, because I do not see anyone else in Europe who knows the answer and who knows what to do completely about unemployment.

As to the damage that we do ourselves, this is a debate about jobs—about how you win them and lose them. At this moment in time, if a man wanted to study that, he would not sit in an armchair reading Maynard Keynes or Mr. Hayek. He would turn on the television set and watch Mr. Scargill's miners trying to bring down the Ravenscraig steel works. It is vulnerable enough already. Its whole future is in question. If you wanted to ruin it, you would do exactly what they are doing to it today. That is where jobs are won or lost. Even if Mr. Scargill had his way and kept his uneconomic pits open, and put up the price of electricity and energy, that is the way to lose jobs in this country. That is what this debate is really about.

That is not the only example. You can look around elsewhere and see these things happening. Look at the wastelands that were once the Port of London Authority! I remember that it was, I think, Jack Jones and my noble friend Lord Aldington who decided that you should employ permanently those who were virtually unemployable (not always through their own fault, but partly through their own fault), and the shippers of this country moved to Rotterdam and broke bulk there. We manufacturers smuggled in such materials as we could get through smaller ports or in smaller quantities. That is another way of losing jobs.

Take Liverpool. It was the noble Viscount, Lord St. Davids, who, in another context, said the other day that there is no position so bad that if you did not give it a real push you could not make it worse. That, if I may say so, would be a good text for Liverpool. I am happy to say that I heard on the radio this morning that those responsible have actually postponed for a week or two the making of their city bankrupt. That was a good idea. If we are talking about jobs, that is a good way of helping to save a few jobs, at any rate for a few weeks longer. Those are the things that matter about jobs. Jobs are not decided in the House of Lords: jobs are decided in the North of England, in Liverpool, Manchester and Newcastle, and in Scotland. That is where jobs are decided. It is the people of this country, and certainly any of us concerned with any form of manufacture or extractive industry, or those in the unions, who determine in a big way whether jobs are won or lost. I think it is worthwhile making such points in a debate of this kind.

I turn now to my third point concerning options that are not open. I shall be brief. A wages policy is not open. It would save an awful lot of time if we stopped talking about that. Stopping imports is not open. It is not open because our jobs in this country depend upon trade. You cannot simply stop all the goods coming in without stopping all the goods going out. This would be very bad for jobs. With great respect to the noble Baroness, Lady Seear, the dash for freedom is not open, either. I say that only because in a long and mis-spent life I have seen so many governments engaged in the dash for freedom. The mess, the crash, the bodies lying strewn upon the ground, many of them Ministers, show that it is better not to attempt these things over and over again. I dismiss them.

So we are left with soldiering on. I am bound to say that I think Her Majesty's Government have soldiered on very well. The battle to bring down inflation has been infinitely worthwhile. In saying that, I know that I carry the whole House. The noble Lord, Lord Wilson, and many others have emphasised that the holding of inflation is the basic requirement in achieving employment in this country. We are all at one with that.

The battle for technology is another. I do not know how many of your Lordships have been watching the television serial, "All Our Working Lives". I find it rather moving, actually, to see on television men of great dignity describing the downfall of one industry after another. It is even more moving if, like myself, you have presided over the downfall of some of them in your time. I was President of the Board of Trade during the whole of the period of the cotton story that was shown. We had the sight of these great industries holding off the advances of technology, letting the Japanese get in ahead and refusing to accept the changing world about us. It has been seen time and time again. I was delighted to hear the determination expressed by my noble friend Lord Gowrie that we are not going to do that again. I am delighted to read day after day how Mrs. Thatcher is pushing forward new technology on every front—direct broadcasting by satellite this morning, cable television, or whatever the advance may be. We have got to have technology of that kind pushed on in front of us.

I have been speaking for 10 minutes. To my knowledge there are no quick answers, or perhaps no answers at all, to an evil which is spread across a continent and across half the world. But we can mitigate the damage, we can lay the foundations for the future, and I think Her Majesty's Government have not done badly in either of those fields.

4.50 p.m.

Lord Spens

My Lords, it is always a great privilege to follow the noble Lord, Lord Thorneycroft, because his stimulating speeches are enjoyed by all of us, even those on the Opposition Benches. I am going to be a little more pessimistic than anyone who has spoken so far, but at the same time I shall probably be a little provocative. I had the privilege of being a member of the Select Committee on Unemployment of your Lordships' House, which was referred to by the right reverend Prelate. I found there that there was a fundamental disagreement between myself and one or two others who, like me, believe that we shall never again see full employment, and those—the majority on the committee—who believe that history will repeat itself and that out of the ashes of our present unemployment will arise the phoenix of new industries to restore full employment once again.

I managed to persuade my colleagues to let me put one paragraph in our report, and I should like to quote it because it is pertinent to my pessimism. It is paragraph 4.38 on page 25, and it reads: There is now a body of opinion which believes that full employment for the total workforce will never again be reached because of the increasing impact of the technological revolution, which we are now only beginning to glimpse. This view sees a ceiling on jobs, which is already lower than the total available workforce by some 3 millions, gradually descending upon the remaining persons in work—at present some 22½ millions—and squeezing more and more jobs out of the market-place, so that the ceiling may, perhaps before very long, limit total available jobs to, say, 20 millions and later on to, say, only 15 millions or less. This is because the new technological discoveries, however much they may appear to provide new jobs temporarily for their own expansion, will at the same time be providing new ways of automating those new jobs. As I say, the majority of my colleagues on that Select Committee did not agree with me, but I know someone who did. I was not able to hear the Dimbleby lecture given by the right reverend Prelate the Bishop of Liverpool because I was lying in a hospital ward, linked up to a heart monitor. But I read the criticisms of it in the press, and that made me feel that I wanted to read it. I bought a copy of the Listener and I read the lecture in full. I want to quote from that lecture something which follows what I have just been saying. The right reverend Prelate said: We must recognise that for an indefinite period of many years, the employment market, as we know it, will not need the whole labour force. In other words, there will be indefinite unemployment on a large scale, and politicians must face up to it. This technological revolution is now gathering speed. I expect to see dramatic changes develop in retail distribution and selling, but more especially in the office world, where even today computers can communicate with each other over vast distances. Surely before very long this is going to mean the end to the office with a typewriter and a copying machine, because everything will be put on to the computer and relayed instantly to the terminal in Australia, or wherever it has to be sent. There will be little need for the post, and probably in the future there will be fewer commuters, which will have an effect on the railways and other forms of transport. In other words, this technological revolution is going to put more and more people out of work. I do not believe that we are ever going to close the gap.

Five years ago I had the honour to introduce in this Chamber a debate on unemployment. Then I made a prediction that we should have three million unemployed by 1984. In fact, we reached that figure a little earlier. I want to make another prediction now—that by 1989 the figure will have increased to five million, unless something is done. I link that to a Question answered by the Parliamentary Under-secretary of State for Employment in another place on 1st May, when he said: The civilian labour force, which includes people seeking work as well as those in work, is projected to increase by 458,000 in Great Britain between mid-1984 and mid-1989".—[Official Report, Commons, 1/5/84; col. 179.] In other words, the labour force is going to grow more and more and jobs are going to get less and less.

What should be done? Long term, I believe we must get the working week reduced to not more than 32 hours per employee. If we could do this, it would allow one additional employee to be taken on for every four now being employed, but it would be useless to try to reach this target gradually by reducing hours by one a year or something like that. It has got to be done immediately, across the board. That will require new sets of taxes and social security payments and benefits, which will have to be produced and adopted. I believe that we ought to have some form of committee or commission to look straight away at that long-term problem.

But meanwhile there are several things that we can do now; they will help to reduce the gap, but will not close it. The first—I was very glad to hear the noble Lord the Minister mention this—is that the greatest disincentive to the employment of more people should be removed. I am referring to the present employment protection legislation. Time after time I have heard small businessmen say that it is not worth their while to take on more employees because of the jungle of protection legislation with which they become involved, including the costs of redundancy and the frustrations of trying to get rid of a dud employee.

At the moment there are, I believe, some 11 million hours of overtime being worked in this country per week. That is a monstrous amount. To bring it down to just one example, I recently talked to a local manager of a high street bank who told me that he had been reviewing the overtime in his branch, which came to 400 hours a month. That is worth at least two new employees, but he told me that he was not going to try to expand by even one employee because of the additional financial problems of pension rights and, as I have said, the employment protection legislation, which would stop him from getting rid of a dud employee. So that is a field that we ought to tackle straight away.

Secondly, I believe that far greater efforts should be made by all businesses making profits, to help their own local unemployed. I wish in this respect to give an example which I have mentioned in this Chamber previously; namely, the example of my local town's Enterprise Ashford, in Kent. It consists of a body of people led by a chartered accountant and supported by all the local businesses in the town and by three out of four of the high street banks. I have failed so far to get the fourth bank involved, although I hope that I shall do so before too long. Without any Government money involved, they have managed to raise sufficient money to finance a director who is there to run an operation to advise and help new businesses to get started. They have been running now for two years and during that time they have started more than 100 new businesses. I believe that the failure rate has been almost minimal. That is an example of the businessmen in the locality acting responsibly towards those unemployed in the locality. I should like to see that example copied throughout the country, because it would make an enormous difference to the unemployed to know that they have the support of their local businesses.

Thirdly, I want to see wages councils abolished as soon as possible. Let us get away from fixed minimum wage rates for the 16-to 18-year olds. Those rates at the moment are far too close to the adult rates and as a result the 16-to 18-year olds do not get the jobs. It is much cheaper for the employer to employ someone more senior, more expert and who has not got to be trained. The difference in the wages is so minimal that the newcomer does not get the job.

I turn to my fourth suggestion. I am looking around the Chamber to see whether the noble Baroness, Lady Lockwood, is present, but I am afraid she is not here. This is my really provocative suggestion. I want to return to a proposal that I made five years ago that measures should be taken to persuade married women to give up paid jobs—by which I mean jobs subject to PAYE—and that those women should be encouraged to work as self-employed and preferably from their own homes. I offer a way of doing this although it may possibly seem a bit expensive to the Treasury. I should like to see the married women's earned income allowance abolished. I should like to see a married woman's benefit of, say, £40 a week given to every married woman under pensionable age. But, for those who continue in paid employment subject to PAYE, that £40 a week could be deducted every week at 100 per cent. so that there would be no direct encouragement to married women to continue in such employment. It would not, of course, be deducted if they became self-employed.

An example of a successful self-employed married woman is my own daughter-in-law. She works at home even though her children are away at school. She realised that she must do something and so she took a short course on picture framing. Now my son has the greatest of difficulty in keeping the sales of her pictures below the limit above which she would become involved in having to be registered for VAT. In other words, she is achieving a turnover of more than £10,000 a year from this "hobby"—I call it "self-employment".

If we were to carry out some of those suggestions—all of them, I hope—I believe that we should help a great deal to reduce the unemployment gap. But I do not believe that that gap will be filled until we get round to that long-term plan.

5.6 p.m.

The Earl of Longford

My Lords, the noble Lord who has just spoken is entitled to present himself as an accurate, if gloomy, prophet. I have no credentials of that kind. After Mrs. Thatcher had been in office for a little while I jotted down in my diary the thought that she would not last more than two years, because I could not believe that any group of self-respecting Cabinet Ministers would allow themselves to be dominated to that extent by any one human being however remarkable, and whether a man or a woman. However, we cannot all be true prophets all the time.

I am sure that many old friends of the noble Lord, Lord Wilson, and still more admirers outside his circle, were looking forward keenly to his first major speech in this House. For myself—and I think for everyone—I can say that our hopes have been more than fulfilled. The noble Earl, Lord Gowrie, pointed out that quite a number of us were on his payroll in the sense that we had achieved membership of this House through the good offices of the noble Lord. That was not exactly my situation. But when I look around these Benches I am sure that the noble Lord showed great wisdom and discretion, and I only wish that other Prime Ministers had shown quite so much acumen.

However, as far as I am concerned, I do owe a great deal to the noble Lord. He appointed me as Leader of this House and retained me in his Cabinet. I only realised the other day, when I read the diaries of Mr. Cecil King, how extraordinarily generous his friendship was, because according to Mr. Cecil King—who was an old friend of many of us here, but who was not always entirely accurate—the noble Lord, Lord Wilson, recorded the opinion that I had the mental intelligence of a child of 12. To have retained me for so long in the Cabinet shows extraordinary friendship and almost Christian love. At any rate I am very grateful to him for many reasons.

I now turn to this terrible subject. All noble Lords who have spoken have approached the matter from expert knowledge of one kind or another. I, today, would not claim to be as much in touch with the situation, nationally, as are probably some other noble Lords. But almost every day I visit a centre for homeless young people which I started and of which I am chairman, and many of them are unemployed for long periods. So I know a little of how the young view unemployment.

However, I shall use my ration—and I hope to emulate the noble Lord, Lord Thorneycroft, who was so eloquent and yet so brief—in trying to put this problem into a kind of perspective, which is possessed by my noble friend Lord Kaldor, and perhaps not by everyone else. In 1943 I was personal assistant to Lord Beveridge, as he became, when he was drawing up his report, which was later published as a book called Full Employment in a Free Society. My noble friend Lord Kaldor was one of his leading advisers, as was the noble Baroness, Lady Wootton, and my noble friend Lord Kaldor contributed to a very erudite appendix.

But at that time Lord Beveridge was drawing up a policy which was widely believed would secure full employment. In the same year the Coalition Govern-ment, representing all parties, produced their report, in which they announced that one of their primary aims and responsibilities was the maintenance of a high and stable level of employment after the war. Lord Beveridge spoke of full employment and the Coalition Government spoke of a high and stable level of employment. No one would pretend that at the present time we have either high employment or a high and stable level of employment. Clearly, that objective has not been achieved in recent times.

However, for a long time that objective was achieved. I would venture to recommend to noble Lords who wish to look up these matters historically, that they turn to one of the later editions of Lord Beveridge's book, which was published in 1960, which contains a prologue in which he looks back on the events from 1944 to 1960. He points out that his own objective of an unemployment figure of 3 per cent. had been much improved on because up until 1960 in this country the unemployment average was half that—1.5 per cent. That seemed to be a very remarkable achievement.

The high and stable level of employment as a top priority was, to the best of my knowledge, pursued by all the political parties right up to the days of Mrs. Thatcher. I am sure that the noble Viscount, Lord Whitelaw, the Leader of the House, will not dispute that statement that until the days of Mrs. Thatcher this policy was pursued.

Then this remarkable lady came to power. The noble Earl, Lord Gowrie, frowns at me. I am sure that he does not object to the word "remarkable".

The Earl of Gowrie

My Lords, there was a temporarily quizzical look on my face because the previous Government had considerable difficulties with unemployment, as indeed all Western Governments have had. The idea that this is something that has sprung from the genius of Mrs. Thatcher is quite incredible.

Lord Kaldor

My Lords, there is some difference between a figure of 1.2 million unemployed, which existed when Mrs. Thatcher came to office, and a figure of 3 million, which she has managed to achieve after two years.

The Earl of Gowrie

My Lords, I do not know—

The Earl of Longford

My Lords, may I have my turn? I think that there is a limit to the amount of dialogue that can take place without the speaker who nominally holds the Floor being able to intervene. I was saying that at the time Mrs. Thatcher came to office there was a new philosophy. At the end of his eloquent speech the noble Earl, Lord Gowrie, delivered a eulogy in favour of the present philosophy. Whatever that philosophy is, it is not the same as the philosophy which prevailed earlier.

No one who has listened to any recent utterance of the noble Earl, Lord Stockton, would imagine that he would have done anything along the lines of Mrs. Thatcher. Why did he take the name of Stockton?—because he could never put out of his mind the thought of the unemployment in Stockton. No one supposes that if he had been in power, or if Mr. Heath, the noble Lord, Lord Home, or any of the other leaders since the war had been in power that they would have pursued the policies that Mrs. Thatcher has pursued. So if the noble Earl, Lord Gowrie, says that Mrs. Thatcher's is the correct philosophy, I imagine that he has simply moved with the times and is now up to date. I cannot believe that he would have said so five years ago.

Let us look at what has happened. On the whole, for many years unemployment in this country was very low. Then it began to rise, but at the same time, there was of course the problem of inflation. No one will deny that that was very serious. If anyone has time to look at Lord Beveridge's book he will see that in 1960 he referred to the efforts made by the first Labour Government—the Attlee Government—and later by other Governments to cope with the problem of inflation, which by 1960 was already becoming a cause of great disquiet. But inflation was still with us and was for a good many years afterwards in the so-called "heady" days referred to by the noble Lord, Lord Thorneycroft, of Mr. Heath and the noble Lord, Lord Barber.

Therefore, this policy of putting the attack on unemployment as a top priority was pursued. But it was abandoned by Mrs. Thatcher, who gave top priority to the war on inflation. I would not be so churlish, or indeed so foolish as to deny the considerable success that has been achieved on that front. The point is: is the price too high? That is the issue that we are discussing. We can approach it from the angle of the right reverend Prelate the Bishop of Southwell, from other angles, or from the angle that comes home to me every day when I visit this centre for homeless and mostly unemployed young men—is this price too high? Personally, I think that it is intoler-ably high. To be quite honest, I do not believe that it would have been paid by previous Conservative leaders; it is associated with a policy called "Thatcherism". In the eyes of the noble Earl, Lord Gowrie, I hope that that is not a derogatory term. If his enthusiasm for Mrs. Thatcher is as great as it appears, he must be rather proud to be a member of a "Thatcherite" Government, because, as I have ventured to say before in this House, no one in peace time has ever dominated his or her Cabinet to the extent that this remarkable lady has.

Therefore, that is Thatcherism. We now have the equation: very heavy, tremendous, appalling and unspeakable unemployment and some considerable success on the inflation front. That is the issue. The noble Baroness, Lady Seear, worked out very brilliantly the human and social cost in terms of distress and waste. That is what has to be put on the other side. I have seen no signs of the present Government making such calculation. They are simply concerned with statistics. My noble friend Lord Kaldor would probably know the economist who lies behind all this. I do not know where it all comes from. But that is the calculation.

Therefore, today one has the question whether or not one wants to proceed on these lines without reference to human suffering and waste. From what I read in the papers these days I see that Mrs. Thatcher is not really an idealogue at all; she is what is called a committed pragmatist. I gather that a committed pragmatist is a person who has principles but who is always ready to change them. I gather that that is what Mrs. Thatcher is. Let us hope that it is true that she is ready to change her principles and adapt them to the circumstances when the appalling pain of all this in human terms is brought home to her.

The other day I came across some lines of poetry. The noble Earl, Lord Gowrie, is a poet, so he probably knows where they come from. They read:

• "Turn again, O my sweetest.
• Turn again false and fleetest.
• The beaten way thou beatest
• I'll swear is Hell's own track".

I address those words to Mrs. Thatcher and hope that she is a pragmatist and that she will be ready to learn from her predecessors. We now have three former Prime Ministers in this House: the noble Earl, Lord Stockton; the noble Lord, Lord Home; and the noble Lord, Lord Wilson. I hope that it is not just loyalty or just admiration for his speech today which leads me to suggest that perhaps the wisest guide would be the noble Lord, Lord Wilson.

5.20 p.m.

The Lord Bishop of Peterborough

My Lords, first I should like to thank the Government—yes, more than thank them: congratulate the Government—for what they have done towards the redemption of Corby, the steel town in my diocese. It was a place of deathly despair, and it is now a bed of hope which is blossoming. I wish they would go on from one good work to another and see to what has happened in the boot and shoe belt of Northamptonshire, where, over the past 12 years to my knowledge, firm after firm employing 10 or 20 people has collapsed. The effect of this, of course, is not so spectacular as in the large towns, nor even in Corby itself, but the effect is just as devastating although it is covered up by the general care that one has of the other. I hope that that will sweeten the noble Earl, and I hope he will not split himself wide open with over-gratification.

For years to come, I suppose, or for generations to come, enforced idleness—which I think is a better word than unemployment—will be the lot of a great multitude, and will be, as it has proved, substance for endless debate, for rhetorical speculation and, worse still, for rhetorical statistics. That every grown man should have the chance to do worthwhile work is an oft-repeated and self-evident need of human dignity. Your Lordships have said that here over and over again. No amount of talk about it, although talk we must, can do anything except, of course, provide work for the printers. Meanwhile, and for a long while, far too many are likely to be idle, and well-advertised sentiments about the caring and compassionate society create little solid comfort.

Of course, sooner or later we all come up against the prospect of compulsory idleness—most of us later—and we call it retirement. Your Lordships are lucky—and I refer to Lords Temporal—for you can find enjoyable self-employment in this House for as long as you can walk, and for longer. But I, for my part, have no such prospect and no place to go to but to depart hence and be no more seen.

But what is happening when we look at it this way is that compulsory retirement is coming earlier and earlier in life, and too many are finding no work to retire from except school work. This idleness, I believe, must be transformed and thought of, or made into, leisure if it is be be not only tolerable but in any way mentally and spiritually profitable. Otherwise there will come disaster with an ever-increasing sense of guilt, not only in those who find no work but also in those who have to watch them in their idleness, and all too quickly we can create a ready recruiting ground for every nihilistic agitator and political pimp. There is, too, nothing like an induced sense of guilt for making a complete mess of all morality.

Leisure, at least for the present generation, I believe is the immediate question, if not the root, to which we must apply ourselves, Education is the progenitor of leisure, for the word "school", which is schola, means leisure, and the real test of a man's education is what he does when he is alone and has endless time on his hands. I know it is easy to say this—very easy—and for lawyers and clergy it is always easy to spin words, but the prospect must make us look and look again at what is the chief industry of this country: the education, the mental nurture, of the young.

We have heard it said several times today and before that it is a confidence trick just to equip them for work which they will never have the chance to do. But it is the beginning of honest confidence to teach them simply to think, to see and perceive, and to be able for themselves to weed out self-opinion so that knowledge may grow. If we do not look to this then we are bankrupt, and the outlook is bleak with half the population working to keep the other half in helpless idleness. More leisure and less work for all is far better than hard work for a few and no work for the rest.

In my idle (or perhaps I should say in my leisured) moments, I imagine that if he had been born 2,000 years later, and not born a foreigner, what a happy Member of this House would have been the late Marcus Tullius Cicero, for he was a genius at making much out of little. There is a sentence of his which I was forced to learn by heart as a schoolboy and which I shall repeat to your Lordships. I shall not read it, because I know it by heart. It is: "Non enim possunt una in civitati multi rem ac fortunas amittere ut non pluris secum in eandum trahant calamitatem"— which, for the benefit of the Welsh, means: "When a lot of people lose a lot, they draw a lot of others into the same ditch".

I have nothing much to add save to say that too many have lost not only their earning of their living but also the integrity of a satisfied mind, which alone makes existence in this world a joy. It is to this that we ought continually to look; otherwise Satan—who is not, to my knowledge, a Member of this House—will find untold mischief for idle hands and empty minds to do, and none of us here is ignorant of his devices.

5.28 p.m.

Lord Bauer

My Lords, I have had to overcome considerable hesitation in joining such a distinguished list of speakers. I finally did so because I felt that some critical issues behind unemployment were often overlooked.

The present heavy unemployment is frequently attributed to restrictive financial policies. For instance, in the mini-debate on 2nd May in this House on the Starred Question of the noble Lord, Lord Dean of Beswick, unemployment was compared to the United States' experience in the early 1930s. But, there, demand, spending and the national income all collapsed. Our situation is different. Between the second quarter of 1979 and the last quarter of 1983 (the latest for which firm figures are available) total monetary spending in the United Kingdom rose by 63 per cent., retail prices by 58 per cent., real GDP by less than 1 per cent., and recorded unemployment more than doubled. Does it make sense to describe policies as restrictive when total spending rose by 63 per cent?

We must persevere in the attempt to rein in inflation or it will accelerate, with dire social, political and economic consequences. These forced themselves on the attention of such distinguished Labour Chancel-lors as Hugh Dalton and Mr. Healey. Because inflation misdirects labour and capital, its control tends to cause bankruptcies and unemployment. The longer inflation persists, the more costly it is to check because the vested interests in its continuance become more extensive, the resulting unemployment more severe, and inflationary expectations more deeply entrenched.

Incidentally, the wide yield gap between fixed-interest and index-linked Government stocks suggests that these expectations still persist. As long as they persist, the trade-off between expansionist financial policies and unemployment referred to by the noble Earl, Lord Longford, is of the most short-period nature only. This was recognised explicitly by Mr. James Callaghan in September 1977, when he said that it was on illusion that we could spend our way out of unemployment. That passage has often been quoted in this House and elsewhere.

Widespread economic distortions and rigidities in Britain and elsewhere make more difficult large-scale and lasting reduction of unemployment. The output of much capacity can neither be sold on the market nor devoted to necessary public purposes. Redeployment of resources, especially labour, is severely obstructed or even prevented by rent controls, council housing, minimum wages and union restrictions. The resulting immobility makes some rescue operations socially and politically unavoidable. These perpetuate distortions and waste capital.

Mobility is also inhibited by restrictions on discharging labour, as the noble Lord, Lord Spens, has mentioned; and also by comprehensive and lax social security payments, as distinct from help for those in genuine need. Their administration can directly promote unemployment. In December 1981, the DHSS issued a circular stating explictly that the unemployed were entitled to reject as unsuitable a job at a wage lower than stipulated by collective agreements or paid by "good employers". Thus, the unemployed are officially discouraged from pricing themselves into work. That circular fudges any distinction between voluntary and involuntary unemployment. These conditions exacerbate the unemployment attendant on disinflation.

These obstacles to the adaptability of labour help to explain what goes on around us but does not find its way into statistics. For years now, unemployment has been a major topic of discourse, yet everywhere public and private enterprises and households are forced to economise on labour, and self-service establishments are springing up right and left. Consumer spending hits new records, yet the simplest repairs are difficult to secure. Hence the saying that those who have many dealings with the Gas Board die young.

A few years ago at Holborn Tube station, there were two notices side by side: a newspaper poster announcing record unemployment and a London Transport apology for the closure of a line due to shortage of labour. At about the same time an employment agency advertisement offered jobs to anyone who could walk, talk, read or write.

It is thus misleading for some noble Lords to talk of unemployment mainly on the basis of macro-economic policy and international competitiveness —as the noble Lord, Lord Kaldor, did—rather than the patterns of production and consumption. If the economy were more flexible and labour more adaptable, much production, and especially consumption, in both public and private sectors would be more labour-intensive and less capital-intensive. This would not mean backwardness or uncompetitiveness. It would mean such things as more live theatre and fewer video recorders; more seaside holidays and fewer video games; more of all kinds of services and less DIY equipment.

It is no use pinning all our hopes for much lower unemployment on economic recovery and international competitiveness. Lasting improvement requires major institutional reforms to promote adaptability in the labour market. This necessity is underlined by rapid technological changes and near saturation in ownership of such durables as television sets and refrigerators. I have in mind, for instance, reduction in the scope of wages councils, or even their abolition, as the noble Lord, Lord Spens, proposed; revival of the market in private rented accommo-dation; concentration of social security payments on those in genuine need; further reduction of direct taxation of wage earners; promotion of collective bargaining at the regional and local rather than at the national level. Without such measures the Government may well condemn unnecessarily large numbers of people to unavoidably long periods of unemployment, which is, in practice, truly involuntary. Such policies may not be popular, but they are necessary if we give the conquest of unemployment priority over lesser social objectives.

5.38 p.m.

Lord Roberthall

My Lords, we are all grateful to the noble Lord, Lord Wilson of Rievaulx, for introducing a debate on the crucial economic problems of our time. As your Lordships will know only too well, we have talked about this subject already a great deal and no doubt today we shall mainly repeat arguments that we have put forward in the past. But I do not think that that is any criticism of the noble Lord. It is the most important problem. Nothing is being done about it and unless the people who are critical about the level of unemployment keep on being critical about it we are in danger of letting it be overlooked altogether, which I think would delight the Benches Opposite.

I have listened with great interest to the noble Lord, Lord Bauer. I think he was arguing that the sooner we got back to perfect competition, the better. I agree that there is a lot to be done; but I think he is living in a dream world if he thinks we shall ever get back to anything like that—

Lord Bauer

My Lords, may I say that none of my arguments depends upon perfect competition? This has become an irrelevant stick with which to beat virtually any argument which is politically unpopular.

Lord Roberthall

My Lords, I would still maintain my point of view. We have heard from the noble Lord, Lord Kaldor, and from the noble Earl, Lord Longford, something about the origin of the present position. Neither noble Lord is in his place so will not have to listen to me going over it again; but I would say to the rest of your Lordships, those who have been good enough to remain, that, as they pointed out, the policy of high and stable employment was the agreed policy of the coalition Government in the 1944 White Paper. As they also pointed out, that was the policy of all governments from the end of the war until about 1975 or 1976 when, as the Conservatives are fond of reminding us, Mr. Healey was forced, largely by the IMF, to become a sort of weak monetarist. I myself do not think that it ought to be any comfort to the Benches opposite that Mr. Healey started this. It was important at the time, as I am going to say, but nobody would suppose that Mr. Healey would drive it to the present position. Because one or two doses of medicine are good for you, it does not mean that the more medicine you have, the better—which is very nearly what I think is being said on this score.

To come back to the departure from this, the reason why the policy was changed was the dangerous levels which inflation had reached. I myself and a great many other people thought at the time (and, I think, said so) that an incomes policy which had been the weapon—first just by advocating it, and later by implementation after Mr. Selwyn Lloyd had introduced the initial one—had failed. Therefore, I thought that the Government had a right to try something else and that was monetarism. That has achieved some reduction, a substantial reduction, in employment and, as my noble friend Lady Seear has said, it has also produced some very beneficial effects, not exactly on labour relations but, at any rate, on the conduct of the business world. I do not think that we should underestimate that.

But the fact is that we adopted monetarism and that meant that we were abandoning the commitment to high and stable employment to which all previous governments had been committed, and were now giving priority to the fight against inflation, and in particular we were committed to using unemployment as an instrument of policy, which had not been used by any of the previous governments. There is no doubt that the fall in inflation and the increase in unemployment are opposite sides of the same coin. It is no use the Government saying that they cannot do anything about it or that they are not responsible. Why are they claiming the credit for the reduction in the price levels if they will not admit that it is because of the use of unemployment?

The position now is that we have some amount of unemployment—and the official figure is about three million but, as the noble Lord, Lord Wilson, has said, it is a great deal higher than that; and various estimates have been given. But the fact is that we now have more unemployment than we have ever had in this country before, and I think that no economist is predicting any improvement. I think that the noble Lord, Lord Spens, is the only person who is putting up his estimate to anything like five million—which I suppose would be seven million by other ways of counting it. For this we must look forward to inflation of not much better than 5 per cent., although the figure is likely to reach 4 per cent. We are paying this very heavy price for it.

I want to say a few words about the reasons that the Government give for not wanting to go in for any sort of demand stimulus. The two main ones are, first, that they are inclined to blame the world recession for the present position—and that rather contradicts their view that they are responsible for the reduction in inflation. The noble Lord, Lord Kaldor, has said something about that. Going back to the White Paper, that pointed out that if some countries have high unemployment it is very difficult for other countries to maintain them because of the well-known effect of recessions of other countries exporting their unemployment. As some noble Lords will remember, the White Paper proposed that this should be overcome by co-ordinated action between all countries, all committed to high employment targets, and to consulting regularly with one another to make sure that there was international co-operation.

Well, like the commitment to full employment, that commitment also has been abandoned. For many years there were regular discussions among the leading countries, the OECD countries, about the international situation and what ought to be done about it. This Government, as the noble Lord, Lord Kaldor, has pointed out, have certainly abandoned that as well as the other commitment. Secondly, the Government were in a position to do something about this threat of unemployment because of the North Sea oil here; but, instead of that, at the summit meetings not only do we find ourselves with one of the highest levels of unemployment but we also urge people to maintain this high priority against inflation.

Internally, the Government say primarily that if they stimulated the economy at all it would set up distortions; and the noble Lord, Lord Bauer, mentioned this. They also say, though not so strongly, that it would stop the fight against inflation. My contention is that their real reason for going on with it must be to continue the fight against inflation; because I think the idea that distortion would be produced will not stand any examination. For a long time after the adoption of full employment policies the average unemployment here did not rise above 3 per cent. For a few more years after that it did not rise above 4 per cent. It was only in the middle 1970s that it began to get to its present figure. During the whole of that period, industrial production went up more or less on an even keel, whereas now it has dropped back to figures which are still well below what they were some years ago.

I think, too, that if distortions were going to develop in this way they ought to have developed at that time. Apart from the arguments about inflation and Lord Bauer's arguments about factional forces, I have never understood what is meant by this distortion. It usually means structural difficulties. Well, the main structural difficulty in the early years was the regional one—parts of the country with declining industries. But that distortion the Government have done something about. And they have only assisted, rather than not, in the maintenance of high levels of unemployment.

I consider that the present policy is introducing distortions into the economy. The principal distortion, of course, is this very large number of long-term unemployed. We have already heard a great deal about that, and from people who have good reason to know about it. I think there is no doubt at all that the long-term unemployed are gradually becoming demoralised and unable to pull themselves together or even to look for jobs. They become inured to living on social security, and there are a very large number of people in this country in that situation. That is a very real distortion—to have going right out of the system a very large number of people, most of whom must have been able to work a few years ago when unemployment was so much less than it is now.

The noble Lord, Lord Thorneycroft, in his amusing speech, dismissed the incomes policy with a wave of his hand, and I agree that it did not work; and because it did not work we had to go over to what we have now. But now what have we got?—three million, four million, five million unemployed and a rate of inflation still about 5 per cent. and just as likely to go up as to go down, with no prospects in any of the estimates of doing anything better. In my view, it was the wage inflation and the inability, in conditions of high employment, to stop these big wage demands that gave us the inflation.

Why did the incomes policy fail? It was partly, as the White Paper warned, that people ought not to take advantage of the easy conditions of employment. As things got easier and memories got slimmer, they were taking advantage. I think that a big factor in it was that the people who ran the incomes policy and especially, I am afraid, the Labour Governments—and the noble Lord, Lord Wilson, himself has some responsibility for this—when they were trying to persuade the unions to be moderate they offered them as concessions considerable improvements, from the trade union point of view, in trade union law. They did that twice. They got a very short answer from the unions: they were easy for a little while and then they came forward with claims which each round were higher than before. That was what led to the situation when we had to change.

I should like to go on to talk about the second distortion—

Lord Bruce-Gardyne

My Lords, just before the noble Lord leaves that point, I wonder whether he could explain to the House how one could achieve agreement with the trade union leadership if one did not make precisely the sort of concessions to which he is taking exception?

Lord Roberthall

My Lords, my argument is that if you can only get this sort of situation by having a great deal of unemployment we are bound to have high unemployment for a very long time, and I am asking whether we cannot do better than that. What this Government are doing is to have a half-hearted sort of incomes policy. They have not thrown it to the winds. They are trying to impose on their own employees much lower rates than are being accepted anywhere else. I think all previous history shows that a disparity in wage rates which is set up in this way produces a very unstable position, and I do not think it will be very long before the workers in the National Health Service, in the schools and the Civil Service—in the whole of the welfare state apparatus—drop so far behind that they cannot stand it any longer and then, if we have nothing else, we shall get "leapfrogging" again. So I think there is that distortion in the system.

My own view is that there is the choice between long-term high unemployment, which is what it looks as though we are going to get from the Conservatives, and a return to high wage inflation, which we would certainly get from a Labour Government, because they have promised to repeal all this improvement (as I would call it) in trade union law as soon as they come back to power. We have to choose between the Scylla represented by the Benches in front of me and the Charybdis represented by those on my left, and I think the only hope is with the Benches where I sit. The safest course is in the middle.

We do believe that there has to be some form of incomes policy; but, unlike the Labour Party, we are not tied to the trade unions and we would approach them as equal partners, expecting a real bargain that would be kept.

5.56 p.m.

The Countess of Mar

My Lords, when is the unemployment situation going to improve—this year, next year, some time, when the world economy picks up or when the Government inject massive sums of borrowed money into public projects? All the indications are that never again will we see the unemployment statistics of the two post-World War 2 decades. The circumstances which brought about a general return to work in the late 1930s are totally different from those which exist today, and it is futile to suggest that the solutions which worked then will work again.

One of the reasons for our recent inability to compete in world markets has been the failure of British industrialists to invest in the new technologies. Now we are told that the economy is improving, where are the captains of industry going to invest their new capital? It is patently obvious that they are, wherever possible, going to spend it on labour-saving computers and automatons. Machines do not go on strike, fall ill, need holidays or involve form-filling and taxation, as humans do. Yes, the new technology does create some new jobs, but what kind of jobs? Would a redundant coal miner, shipbuilder or steel worker be able to adapt himself to sitting at a bench hour after hour soldering fine wires on to a silicon chip, even with training? These so-called "sunshine industries" are not going to provide jobs for our traditional breadwinners—men.

Wherever you look you can see the results of this revolution. You no longer see the roadman with his hook and shovel keeping the country lanes tidy, or the street sweeper with his barrow and broom. An office no longer needs an army of clerical and secretarial staff when a computer with one human operator will perform all the functions. A modem telephone exchange requires two or three engineers to do what twenty would have done a decade ago. Productivity in every aspect of industry and commerce has improved, at the cost of male-dominated jobs. I hope that I do not upset my noble friend Lord Spens here. The new industries are providing work, but they are providing it for women in greater numbers than they are for men. They tend not to require the high degree of strength, skill and craftsmanship that our dying manufacturing industries required, and women seem to be able to adapt themselves more readily to repetitive and intricate tasks. When there is no direct pay comparison, they may also tend to accept lower wages and salaries than men would accept.

So what have we today? No longer is the great divide between the social classes a dominating factor. We are reduced to two classes: the employed and the unemployed, or the "haves" and the "have-nots", to put it more simply. The rift is rapidly widening, with the failure of Government to grasp the nettle effectively. A man or a woman who has served an employer for 20 or 30 years must suffer far more than any of us here can conceive when handed a redundancy notice. So often they are too old, or deemed to be too old by prospective employers, to start again. What future is there for these people with little, if any, money in the bank and an income which barely meets their daily needs?

At the other end of the age scale, young people leave school after an assortment of courses designed, in all sincerity, to improve their chances of obtaining employment. They can then join further schemes which, in one way or another, give them work experience. They know full well that, as the end of this phase approaches, there is a queue of other youngsters waiting to step into their shoes.

There would seem to be no shortage of statistics to show what is happening to our disillusioned young people, especially in towns and cities. Regular debates in this House have highlighted their problems. What effective solutions are there? I have yet to hear any Front Bench politicians admit that unemployment, at its current magnitude, is a problem for which they have no real solution, though the noble Lord, Lord Thorneycroft, was refreshingly honest. Surely they have access to the predictions of the Treasury and other credible agencies which are generally available to the public.

Even the most optimistic of the crystal ball gazers can give little prospect of any significant reduction of the number of unemployed in the foreseeable future. Politicians of all hues must first accept this, publicly admit that they have a problem for which there is no short-term solution, and take radical measures to make the life of the unemployed worth living. The very areas which should have been developed most in the last five years have suffered the most drastic cuts by this Government's fiscal policies.

In the eighteenth and nineteenth centuries the unemployed were the sons of the aristocracy and the squirearchy. Their parents sent them off on the grand tour when they had completed their rather limited schooling. Many of those young men returned with ideas and ideals which helped to make Britain great. Now the unemployed are to be found in every stratum of society, and modern technology has superseded the need for the grand tour. Instead of contracting education to the three Rs, it should be expanded to give boys and girls, and men and women of all ages and abilities, the opportunity to expand their horizons, to educate them for constructive, creative and fulfilling leisure.

The Government should encourage such bodies as Sport for All. Even the unemployed need to get out and meet people. The tremendous growth in those corrupting influences—bingo halls, amusement arcades, and video nasties—is fulfilling a need to fill time, but how much more usefully that time could be be filled. Instead of cutting back on funding for the arts, the subsidies need to be increased so that the arts, particularly in the provinces, can come within the reach of all the people who should be encouraged not only to watch, but to participate. I am very pleased to see the noble Earl, Lord Gowrie, here.

The Government should spearhead with the trade unions a programme to change attitudes to work, to promote schemes for early retirement, a reduction in the working week, and time sharing. No one willingly gives up what he already has and, in some cases, legislation may be necessary to ensure a fairer distribu-tion of employment, leisure and income. Instead of paying highly skilled artisans to stay out of work, why do the Government not publicise more widely, simplify the procedures, and expand the availability of help for these people to become self-employed? I believe that the much maligned GLC has an excellent scheme for promoting small businesses and my noble colleague Lord Spens has mentioned the one in Ashford.

All this will take time and will cost a great deal of money, and I know that the Minister will say that there is none available. I am no economist or financier. The noble Baroness, Lady Seear, made the point very clearly. Like her I believe that with a redistribution of funds, what I suggest would be feasible, and in the long-term many of the projects would become self-financing, or could be funded by expanding, highly efficient, new industries, which the Government are now encouraging.

The Earl of Gowrie

My Lords, before the noble Countess sits down, and while the point is fresh in the minds of the House—I listened most carefully and with great interest to her speech—may I point out that it is not a case of saying that no money is available. In fact, on youth training alone the Government are spending more than £2,000 million; so we recognise the need for expansion in this area.

6.4 p.m.

Lord Vaizey

My Lords, in examinations it is always a good practice to question the question and I would, with the permission of the noble Lord, Lord Wilson of Rievaulx, question the question which he has put down on the Order Paper today. We have a paradox; a paradox which has endured certainly for all the time that the Select Committee on Unemployment sat under the noble Baroness, Lady Seear, and which has endured, indeed, for a considerable number of years now. It is that not only is there high registered unemployment; there is also extremely high registered employment. The number of people in work is going up at the same time as the number of people out of work is going up.

It is for that kind of reason that I find myself driven to do what the right reverend Prelate the Bishop of Peterborough—who has now left us—asked the House not to do, which is to try to tackle the statistics. But since statistics lie at the heart of this debate, as the noble Lord, Lord Wilson, said so charmingly when he introduced his Motion, it is important to dwell upon what the figures really mean; and I am not at all sure that I accept many of the statements which have been made in the course of the debate about the nature of what it is that we are discussing.

Clearly, there are major regional differences in the pattern of unemployment; clearly, there are major sectoral differences. Different industries and different grades of labour have suffered different rates of unemployment. It is well known that we have a very large black economy, which is another way of saying employment which does not appear in either the statistic of employment or the statistics of unemployment. We all know people, certainly in Greater London and in the south-east area, who have two or three jobs. These are not secret facts. They are well known to anybody who goes about at all in the world, and nor is this situation confined to the prosperous south-east. There is the paradox of places such as Newcastle-upon-Tyne, where there are many people with very good jobs. For example, one of the most successful Marks and Spencer's stores in the country is to be found in Newcastle-upon-Tyne, at the same time as there are dying pit villages surrounding the place.

I do not necessarily find that the concept of unemployment, just as revealed by this figure of 3 million, means very much, and the Select Committee on Unemployment said that. I share the view of the noble Lord, Lord Wilson, that it might be substantially more in real terms, but looking at it in another way, in terms of people who are suffering seriously from unemployment, it might be substantially less. And, of course, what we are seeing is a major change in the structure of the economy and of society, and it is this structural change to which many of your Lordships' speeches have directly or indirectly been addressed.

The question is: What is happening in the economy, what is happening in society? Why is it, if we have so many seriously affected unemployed people, there is a paradox of unfilled jobs side by side with people who are apparently unable to find work, idle and suffering from deprivation and poverty? I think that with the price rise in oil in the early 'seventies and the restrictive budgets which the Callaghan Government adopted, particularly after the visit of the IMF, there was a causal shock in the direction of unemployment in certain areas of our economy, in certain parts of the country, and in certain major industries. That much seems to me to be obvious. But, at the same time, the shock was so great because our economy seems to have been more rigid and less capable of taking the shock than were a number of other economies.

What was it that held up the capacity of this economy to respond flexibly and quickly to the shocks of the early 1970s? That is the question to which I should like to address myself, and it is a matter about which I find myself in great agreement with my noble friend Lord Bauer. He has drawn attention to many of the factors in our economy which have caused an unnecessary degree of unemployment, although, as I said. I do not necessarily accept the figures which are widely bandied about. It is clear that labour costs in this economy were, in many ways, too high. There is a great deal of evidence that employers have found themselves shedding labour because the labour costs were too high.

It is not true, however, that the labour market does not work at all; it works imperfectly but it does work. The reason why the teachers were on strike today was that their incomes had dramatically fallen in the hierarchy from the position to which the noble Lord, Lord Houghton of Sowerby, pushed them up, 10 years ago. The reason why the miners are also dissatisfied from time to time is that they also slipped to a large degree in the earnings hierarchy. Relativities do change, but I would submit that they do not change sufficiently quickly or rapidly to take up the people who would be taken up if the situation were more flexible.

There are serious barriers of entry into many occupations: not only into the ancient professions and the ancient trades, but into modern areas. I do share very strongly the view of the noble Lord, Lord Thorneycroft, about London's dockland. My own family worked on the River Thames for 150 years. I was brought up in the dockland and I know what I am talking about. When you walk through this devastated area of our great city you see the monument to the TGWU: because they were the people who prevented the docks from adopting the modern techniques which have seen the ports of Rotterdam and, to a lesser extent, Felixstowe and so on, develop. The London docks were completely killed. There are serious barriers to entry, which is why we have so much illegal or black employment.

There is inadequate education and training. I find it deeply shocking that teachers should have been on strike today when at the same time I am responsible for one of the community training programmes of the Manpower Services Commission. The young people who come to us from our comprehensive schools have suffered very badly indeed from gravely defective teaching. It is outrageous that year after year when the pupil-teacher ratio in this country has been improving steadily under all recent Governments teachers should have failed so abysmally with large sections of young people. I find it deeply offensive that they should have the effrontery to walk out of their schools today.

We suffer badly from geographical immobility. It is not true that people do not move about. The reason why we continually have redistribution of seats in the House of Commons is that the population does move dramatically from north to south, east to west and so on. Nevertheless, it is frightfully difficult for people in council houses to move, although many of them wish to do so. The private rented sector has been, to all intents and purposes, destroyed as an effective means of offering housing to people. The only way, broadly speaking, you can get a house is by putting a deposit down for a mortgage. That is an area which the Government is tackling and, in my view, ought to tackle more rapidly.

It is worth noticing that there are economies where unemployment does not exist at all. One is Singapore. Another where it does not exist officially is the Soviet Union, where it is illegal to be unemployed, so they do not count the statistics.

When people say that attempts to rethink the structure of the social security system are an attack on the basis of the welfare state, I wonder whether they seriously think that the present welfare state either works in terms of alleviating the povery of those who are genuinely in need (because I think it does not) or, in fact, supports people who would otherwise wish to work if the possibility were there.

The poverty trap in this particular instance is a serious dissuasion, I think, to employment. I certainly welcome very strongly the studies which are now going on into the social security system. It certainly seems to me to be important that we should study whether the present structure of social benefits is itself a dissuasion to employment.

We have seen the beginnings of a revolution in productivity in recent years. It is quite clear that new management attitudes, new labour attitudes and new approaches to competition are spreading very rapidly through the economy—I think probably more rapidly than are measured in official statistics. Certainly every year the Central Statistical Office revises output figures retrospectively, and it is seen that growth is faster than it has appeared to be.

I do not share the pessimism of the noble Lord, Lord Spens, about the future of employment. I think that once the shock of the structural adjustment of the economy to the consequences of the oil price rise in the early 1970s and the new conditions of world trade have been experienced—provided that steps are taken adequately to make the economy far more flexible—we shall be surprised at the extent to which full employment will be restored and the rapidity with which it might come about.

6.17 p.m.

Lord Bottomley

My Lords, it is a great pleasure for me to take part in a debate initiated by my noble friend Lord Wilson of Rievaulx. In the immediate post-war Labour Government we worked together for some years in the same department, and when he became Prime Minister he kindly invited me to join his Government. It is because of this long association that I know of his concern for the unemployed and the poverty stricken, not only in this country but in the Commonwealth and the third world generally.

I became interested in politics because my father could not get a job. He was a hard-working craftsman who struggled to provide for his wife and his family. He really enjoyed his work. I was determined to try to change a society which made it possible to deny a man his livelihood and the opportunity of looking after his family. There is a present member of Her Majesty's Government who said that when his father was unemployed he did not sit back and do nothing: he got on his bike. That is precisely what my father did. He went from door to door selling, but he was a cripple and found it too much for him. But through the agency of a good friend he got a job as a labourer—denied the opportunity of carrying out his own trade as a skilled craftsman.

I was compelled to go out to work at 14 years of age to supplement the family income. I obtained a job on the railways, and I took part in the 1926 General Strike. Because of doing that I was put on short time for two years. I did not believe that those conditions would ever return. Alas! they have; they are with us today. They particularly affect young people. At present there are 1,239,000 young people aged under 25 registered as unemployed in the United Kingdom. Of these young people, 384,000 have been unemployed for over six months and 347,000 have been unemployed for over a year. Included in these totals are 204,000 young people who are aged under 18, and 321,000 aged 18 to 19 years. This is a total of 593,000 teenagers. This total excludes the 280,000 youngsters at present involved in the youth training scheme.

One statistic which the Government do not release is the number of those young people registered as unemployed who have yet to enter their first real job. The monthly school-leaver statistics published by the Government relate only to school-leavers aged under 18. The definition of a "school-leaver", in statistical terms, is a person who, as yet, has not entered employment. It is estimated that the total of those under 25 currently unemployed who have not yet had their first experience of a real job must be approaching 1 million, and must certainly be in excess of this figure if those in the youth training scheme are included.

The reduction in apprenticeship training in recent years has been considerable. In short, it has been catastrophic. The contraction in training has been the result of our traditional policy of linking training as an apprentice with employment as an apprentice. When employers do not recruit, training cannot be given. I urge the Minister to tell the Government that they should introduce special sponsorship schemes to enable young people to complete recognised periods of training. There is no shortage of training facilities, either among employers or at apprentice training centres and colleges of further education. The present problem is that employers are not in a position to employ apprentices—that is, to recruit them to their payroll. This is an opportunity for the Government to do something to ease the situation.

I should like to pay tribute to the work done by careers service officers. When I was the Member of Parliament for Teesside, Middlesbrough, I learned about the valuable work they do in looking after the interests of young people. The careers officer of Cleveland still keeps me regularly informed about the situation. He is typical of those officers who are devoted to helping the young through the careers service. The noble Earl, Lord Gowrie. spoke earlier about youth training and what has been done.

I took part in the debate on the Rates Bill, and if time had permitted, I would have referred to the absurd situation in which the Government encourage local authorities as employers to take part in the youth training service as managing agents and sponsors and then penalise them by not allocating to them resources with which to do the job. Local authority expenditure on initiatives to alleviate unemployment through EEC and urban aid schemes is also limited.

The Earl of Gowrie

My Lords, while it is fresh in our minds, may I say that the point about local authority expenditure is not that local authorities do not have the resources for these admirable tasks, but that well over 70 per cent. of their resources are absorbed by wages and salaries for their own employees. That is the problem.

Lord Bottomley

My Lords, surely something could be done through the urban aid and EEC schemes, because the EEC makes some contribution. But even when that money is provided, the Government penalise local authorities for trying usefully to employ that financial assistance.

It is my belief that the cause of our economic ills can substantially be attributed to our disorderly and uncoordinated system of private enterprise. We live in a lop-sided society. A worker who takes part in designing and building houses, factories and offices is not well paid, but the man who speculates in the sale of property can make thousands of pounds overnight with little effort. And a stockbroker who sells shares will probably make more in commission during one transaction than a worker with a lifetime in industry can earn in a month. Our standards are wrong. Commercial profit is not a test of true value.

The Government's policy of encouraging private enterprise to invest as it pleases will deprive the country of resources needed to modernise and re-equip our essential industries. Investment should be directed into industries upon which our future depends: electronics, microchips, communications, chemicals, atomic energy, machine tools, quality goods, cars and textiles. The world will buy our quality goods, not the shoddy ones that we make in order to compete with the rest of the world.

Last year a Commonwealth statesman, Lee Kuan Yew, a friend of my noble friend Lord Wilson and mine, was given the freedom of the City of London. He paid tribute to the skill of the British people in being able to organise the Falklands campaign. He said that he refused to believe that Britain was not capable of applying the same methods of organisation and planning to tackle her ailing economy. I believe this to be true. I refuse to believe that it is not possible to provide material comfort and cultural opportunities for our people. To do this we have to develop to the fullest limit the material resources of the nation. The road we are taking is that of chaotic improvisation, instead of that of well-ordered and scientific design.

With the continuation of heavy unemployment and the reduction of educational and leisure facilities, we are in danger of leading our country into social disintegration and national decay.

6.27 p.m.

Lord Harris of High Cross

My Lords, I am somewhat dismayed to find that I am the sixth professional economist to take part in this debate, although I fear that innocent non-economists among your Lordships might be even more dismayed. I listened with close attention to the speech of the noble Lord, Lord Wilson of Rievaulx, and I thought I detected just a note of conflict between the fun he made of the low level of the exchange rate and the approach of his former economic adviser, the noble Lord, Lord Kaldor, who made rather heavier work of the earlier rise in the exchange rate. But I do not doubt for a moment that the noble Lord, Lord Wilson of Rievaulx, would be equal to providing a perfectly convincing reconciliation of this apparent disharmony.

I want briefly to join issue from the Cross-Benches with three claims that are most commonly heard from Labour speakers. The first concerns the magnitude of this problem; the second is its true nature and cause; and the third, following the noble Lord, Lord Thorneycroft, is what might be called non-solutions.

First, on magnitude, the challenge that confronts us is stern enough without rejoicing in exaggerated talk about 4 million, 4½ million or 5 million unemployed. Even the official figure, which is stuck around 3 million, conceals to some degree the active nature of the labour market, with a turnover every year of some 7 million changes of jobs. It also magnifies the jobless total, at least to the extent of the black economy upon which the noble Lord, Lord Vaizey, touched, which some estimates have pitched as high as 1.4 million people. We may deplore the extent to which otherwise law-abiding citizens feel themselves driven into the underground economy, but it is instructive to ponder for one moment the reason. It seems to me that there cannot be much doubt that it is because the black economy comes closest to the free market that was mocked by the noble Baroness, Lady Seear, where the cost of employing somebody is not inflated by taxes, closed shops, restrictive practices, employment protection, equal opportunities, equal pay and all the rest.

This modest insight emphasises that the demand for labour depends chiefly upon its price. It seems to me not to require a grasp of higher economic theory to know that, other things being equal, the higher the cost of employing someone, the fewer will be the number of people likely to be employed. Otherwise, why has everyone joined in condemning the National Insurance Surcharge as a tax on jobs? Why did Labour's 1983 general election manifesto call quite explicitly for employment subsidies, unless it was thought that the cost of employing people stood too high for their own good?

I have today a more telling witness to this truth in Mr. Len Murray who, at a special conference in February to discuss the reduction of the working week, explicitly warned that, and I quote, There is a trade-off here. It is a trade-off between incomes and jobs". One report indicated that Mr. Scargill was reduced almost to speechlessness—although this happy condition did not persist too long. He joined in insisting that there should be a shorter working week linked with increases of pay. Even in this burst of candour, the general secretary of the TUC was not exactly accurate.

Except in the black economy, the trade-off is not between incomes and jobs but, in the real world, between total labour cost and jobs. That is a very important distinction. The cost of employing a worker in the regular economy is not equal to the worker's take-home pay—as in the black economy—but nearer twice as much. The reason is that the employer faces on top of wages an on-cost of 30 per cent. or 40 per cent. for National Insurance, pensions, employment protection, health and safety, and all the rest. On the other hand, the worker receives his wages only after deductions which can also amount, similarly, to 30 or 40 per cent. of the wage paid by his employer. Governments have created a kind of topsy-turvy world which perversely combines high labour costs to employers with take-home pay often not much above social security benefits. I am therefore led to take issue with those critics—including the noble Lord, Lord Bottomley—who blame unemployment and every other ill to which the economy is heir on the cruel operation of unchecked market forces unleashed by higher capitalism.

Our famous mixed economy is well on the way to being a halfway house to full-blown collectivism. Even the present Administration is spending more than half the national income and is employing nearly one-third of the entire labour force. In addition, it intervenes extensively throughout the whole economy with a confused mixture of subsidies and taxes—to say nothing of controls over all rents mentioned by the noble Lord, Lord Vaizey, and their control of the pay of more than 10 per cent. of the labour force locked into wages councils, referred to by my noble friend Lord Spens. The resulting mess of political potage is not only an over-governed society but an inflexible, sclerotic economy that is slow to adjust output and jobs to new opportunities.

I come to my third issue of whether still more government is the cure or the chief cause of our economic malady. If we look back 20 years to the days when the noble Lord, Lord Wilson, was cheerfully lighting his pipe by the white heat of a technological revolution, we might recall all the wel-intentioned but ill-fated policies to protect jobs and pick the winners. Out of natural delicacy I will refrain from dwelling on the National Plan, which mocked nature by passing from teething troubles in 1965 to death rattles in 1966 without the customary interval of hopeful life. But what about all the nonsense of regional policy, of indiscriminate subsidies, of selective employment tax, of bale-outs by courtesy of the IRC or the NEB, when the embrace of the State was often the prelude to the kiss of death? Those were the years when foreign observers diagnosed the "British disease" and when more homespun talk against "de-industrialisation" did not prevent jobs in manufacturing falling from 8.5 million in 1966 to little more than 7 million in 1979.

Looking forward in this debate, I hope that the noble Lord, Lord Molloy, will agree that there is not much scope here for self-righteous indignation on the Labour Benches over what is in my view the present unnecessarily high level of unemployment inflicted unintentionally by Governments.

Lord Kaldor

My Lords, did the noble Lord really mean that, "unnecessarily high"? What, in his opinion, would be the right amount?

Lord Harris of High Cross

I mean, my Lords, that the level is far higher than it need be for the degree of success of other aspects of policy, as I shall try to indicate as I go along.

In retrospect—as the Lord, Lord Vaizey, implied—we can see that the seeds of our present troubles were sown in the years of phoney full employment without full efficiency. They were the years when trade unions insisted on two men doing the job of one man; when employers acquiesced in over-manning and opted for a quiet life even though their profits were declining; when Governments of both parties accommodated ever-rising costs by inflationary finance. Yet through those years—in the 1960s and 1970s—the trend towards rising unemployment was still visible. Throughout those dream decades of relative economic decline, what was most lacking was any effective penalty for the economic failure of unions and managements to put their ramshackle house in some kind of order.

It seems to me little surprise that the present Government are not basking in universal acclaim. They have been the first Government since the war to make a start with restoring discipline, by phasing out the soft—and, I may say, wet—option of cost-plus inflation. We should not wish them to contract out of the continuing struggle for higher employment through increased efficiency by returning to the discredited expedient of still higher government spending suggested by the noble Baroness, Lady Seear.

As we see from the National Union of Mineworkers, the National Union of Railwaymen, the National Union of Teachers and others, irresponsible union leaders are still lying in wait—ready to hijack any increase in monetary demand for unearned wage increases rather than for increased production or investment. If we wish to make room for more employment, the rough rule of thumb is that wages and salaries should increase by less than the rise in prices except where employers have difficulty recruiting sufficient labour. That is what happens in many of the countries with which our industries and products have to compete. I say again to the Government that wage restraint along these lines would be far easier if they would reapply their minds to ways of reducing Government expenditure so as to make possible a continuing prospect of reduced taxes on low incomes.

6.38 p.m.

Lord Mais

My Lords, this is, as everyone in this House would agree, one of the most important debates in which your Lordships have been engaged for a very long time. It is commonly accepted that, today, unemployment is the biggest challenge facing not only the Government but also the country as a whole. There are more than 3 million people registered as unemployed at the moment. There seems to be little hope that there will be any decrease in that number in the foreseeable future.

It must be a somewhat frightening prospect for a young person leaving school or college today, wondering what they are going to do. There is very little opportunity for them to pick and choose. They have probably studied hard for a number of years to acquire a trade, degree or profession, and then they find that they cannot put it to proper use.

I am speaking on this subject because I am one of those people who, like many more, faced a similar situation in the early 1930s, when, if my memory is not at fault, only about one in four of those who passed out when I did actually obtained employment. Those who did had to take what they were offered. I, as a qualified engineer, managed to get what was called a junior engineer's appointment, driving a tunnel. I quickly found out that there was not much engineering required—I was the tea boy. But I did learn what a splendid lot of people there were who worked in tunnels and what splendid men the working types are in this country. They deserve a good deal more than they probably usually get.

There are many other Members of your Lordships' House who have gone their ways in the construction industry. I think they would agree with me that probably the industry has the best relations of almost any industry, and it perhaps has training schemes and employment schemes for the young which are as good as any. There is every possibility for the young to make progress, but, like every other industry at the moment, the construction industry is going through an extremely bad time. It may not be as bad as some but it is bad enough, and there is a considerable amount of unemployment.

As I said, and to give your Lordships some idea of how inflation has taken over in recent years, back in the 'thirties one of the projects I was working on enabled young people to buy a house for £5 down and at a total cost of £250 all told, with legal expenses paid. It was the provision of housing at that price which did a great deal to bring the construction industry, and many other industries, alive and back into profitability. One hopes that some thought is given, not to doing the same sort of thing on that scale, perhaps, but to doing at least something in that direction.

It can be done not only in housing. There is so much else that the civil engineering and building industries can do. This may sound as though I am putting a case for myself, but as I am no longer connected with the industry I feel I can do so. Only last week, if my memory does not play me false, one of your Lordships asked a Question regarding a village that was on a quiet road in the Midlands. Life was made a misery for the residents of that village because of the heavy vehicles that went through the High Street during daylight and in the evening. The suggestion was made that a bypass might solve the problem, but that did not exactly meet with enthusiasm. However, I put to your Lordships how much better it would be for the people of that particular village, and many others in similar circumstances, if a bypass were constructed. It would provide a considerable amount of work for those who really are the most difficult people to employ—the semi-skilled.

The same situation exists in many other parts of the country. It will not solve the present unemployment problem, but if the road programme, which seems to some extent to have dried up, were re-activated, and if housing and construction work generally was brought forward—it can be put into operation very quickly—it would use many unskilled as well as skilled workers and do much, as it did in the 'thirties, to start a general revival of industry and trade. We are at the moment very much at the bottom of the pit, and a move must be made to get out of it. Therefore, it must be started somewhere. It is difficult with the amount of unemployment that we have because many of the workers are undoubtedly unskilled and, therefore, are not really acceptable in a large number of key industries.

Another point I should like to make, and which is indirectly connected with today's debate, is that relating to the cuts which have been made in university grants. Although I am pro-chancellor of a university, I have to confess that I do not exactly grieve over these cuts. I feel that the money could be much better spent in providing additional courses—sandwich courses— during which young people spend part of their year in the college studying and part of their year with industry. If they are going into a practical industry they are basically far better qualified when they have finished than if they go straight out of university. It also gives the Government the opportunity to bring industry into this problem to assist the Government, or to give its active support to the Government, in trying to reduce unemployment among the young.

In my view unemployment among the young is one of the most serious aspects of this present slump. There is nothing worse for young people who have worked hard to find that there is nothing to go to when they come out. It is something that probably stays with them for a large part of their lives. It takes a long time to get over. I only hope that whatever schemes the Government embark upon they will give serious consideration to supporting sandwich schemes, even at the expense of the universities, and will give young people the opportunity to obtain a trade, a craft or a professional qualification. It can be done while they earn, and that in itself means that they will have their self-respect. It is a very difficult problem that the Government face, and there is no one in this House who does not sympathise with them.

6.49 p.m.

Lord Bruce-Gardyne

My Lords, I should like to join with other noble Lords in congratulating the noble Lord, Lord Wilson, on raising this important topic this afternoon. I do not know that he came up with any particularly specific, effective proposals to deal with the problem", in the words of his Motion. I am bound to say that, like my noble friend, Lord Thorneycroft (who made a marvellous speech, if I may say so), I would not criticise him for that, because I doubt whether there are magic solutions. We had one or two of those in later stages of the debate. In particular we had a contrast shown us between what the noble Lord, Lord Kaldor, called the age of full employment, or what the noble Lord, Lord Roberthall, referred to as the period of full employment policy commitment, and the wicked ways in which we live today.

In preparing for this debate I looked up some figures of performance, or non-performance, in the unemployment field. I found that over the entire post-war period there were in fact only two Prime Ministers in this country who demitted office with a lower level of unemployment than when they took office. I am bound to say that the noble Lord, Lord Wilson, was not one of them on either of the two occasions when he demitted office. The only two were my noble friend, Lord Home, and Sir Winston Churchill.

Of course I accept that we were talking in those days of levels of unemployment in this country which to us today seem insignificant, but I question whether they seemed insignificant at the time. I am just about old enough to recall the shock headlines in the newspapers in 1962 when unemployment went up to almost 900,000. We did not look upon it at that time as the age of full employment. I remember very well the shock which accompanied the passage for the first time since the war of the milestone of 1 million unemployed. That was not what the noble Lords, Lord Kaldor and Lord Roberthall, referred to as the period after the passing of the commitment to full employment. It was in 1972. If one looks over the whole of that period recalled by the noble Lords, when we listened to the repetitive commitments of each successive Government to the principle of full employment, the truth is that their achievement in fulfilment of that principle diverged with each successive Administration, with those two exceptions, further and further from their intentions. I am bound to say to the noble Lords that it did not feel that way at the time.

The noble Lord, Lord Kaldor, explained to us that since 1979 things have taken a vast lurch for the worse, and apparently that was because we failed to exchange our North Sea oil for capitals goods. I am bound to say that I did not hear the noble Lord explain to us exactly how that precise exchange was to be worked, but I assume that it was to be done by the direction of investment by the state. When we look back over the years at the performance of the state in this country in directing investment, I wonder whether that has made such a signal contribution to the curing of the long-term problem of unemployment.

Lord Kaldor

My Lords, I am very grateful to the noble Lord for giving way. I think that I pointed out in my speech that if we are net exporters of oil it is inevitable that we should be net importers of manufactured goods. Our customers could not pay us in anything else in real terms except by having a surplus in their net exports of manufactures. But now it makes all the difference from a British point of view whether this net export is attained in the way it was attained, by destroying some of our industries. A few weeks ago the Chancellor referred to the fact that it caused the exchange rate to rise to the point where so many of our exports became unprofitable and so much of our home consumption went on imports instead of on British goods that this balance of imports over exports was attained. But it could have also been attained without any detriment to our industry.

Noble Lords

Order!

Lord Kaldor

That is the point I wanted to make. It could have been attained by our using additional imports for investment. Then we need not have—

Noble Lords

Order!

Lord Kaldor

—of course, the surplus.

Lord Bruce-Gardyne

Yes, my Lords. I thought that was what the noble Lord said, and that was what I said he said. If I could resume my remarks and try to keep them as brief as I may, the point I was seeking to make was that if we look back over the record of directed investment by the state in this country it is hard to see that it has made a very tangible contribution to long-term employment.

Let us take Concorde, which was a marvel of technical innovation without a shadow of a doubt, but after £ 1 ½ billion of expenditure there is not a single genuine commercial order. There is not one. On a much more modest scale, let us take our investment in De Lorean. A lot of long-term jobs that produced! Let us take another technological innovation in which the noble Lord, Lord Wilson, took some pride—the Humber Bridge. It won a by-election, but I doubt whether it has ever made much of a contribution to the regeneration and advancement of employment and industry in that area of north-east England.

The truth is, I believe, that, for the most part, Governments over the years, whether they have committed themselves to the concept of full employment or not, have more often made the problem worse than better, not least by that very commitment in itself. The noble Lord, Lord Roberthall, talked about trade unions exploiting a climate of full employment. If Governments say that they can guarantee full employment, who can blame those in industry on either side who assume that they are exonerated from the consequences of their own actions? Would we have had the appalling damage done to the engineering industry in 1979 by the long weeks of rolling strikes if those on either side of industry had not had such long experience of Governments who assured them that the consequences of those actions would not follow and that in some way they would be insulated from market reactions? I do not think that we have all that much to learn from the past.

I want briefly to make one or two very modest suggestions. First of all, I want to pick up the important point that Lord Wilson and others raised about the remarkable existence at one and the same time of substantial increases in employment and the continuing rise in unemployment. I want to pick up a point which I think Lord Vazey made. I hasten to say that these are the only statistics I shall mention. Let us look at the stastics of the European Community for the year 1982—the latest year for which figures are available. As noble Lords know, 1982 was not for us at all a happy year—not remotely in the depths of the recession. But in that year in Italy the proportion of the total population in employment was 36.3 per cent. In France, it was 38.6 per cent. Over the European Community as a whole it was somewhat under 40 per cent. In Germany, it was nearly 41 per cent. In this country, it was 41.4 per cent. We have a remarkably high activity rate.

It is at this stage that I would like to venture to interpose myself—I realise that this is a dangerous proposition—between the noble Lord, Lord Spens, and the noble Countess, Lady Mar. The noble Lord, Lord Spens, suggested that we should pay the ladies £40 a week to stay at home. As a former Treasury Minister, I am bound to admit that I do not see much appeal in that. I can see other objections as well. I wonder, however, whether it really makes sense to provide a fiscal bias in favour of two-earner families. I would not for a moment argue in favour of discrimi-nation against two-earner families. But a fiscal bias seems to me something that we might legitimately look at, and the sooner the better.

The second proposition that I wish to mention briefly is one of which we have heard a lot today—the issue of labour market mobility. We cannot ignore the fact that in the United States over the past decade 13 million new jobs have been created. There are a variety of reasons for that. It does not have everything to do with supply side economics or a massive budget deficit, because that stretches over the whole of the last 10 years. I believe that it must have something at least to do with the flexibility of American labour markets—a flexibility that, as many noble Lords have pointed out, seems to be increasingly ossified on this side of the Atlantic.

I wish to pick up an issue that the noble Lord, Lord Mais, among many others, raised—the problem of youth unemployment. I do not under-estimate at all the seriousness of this, particularly having a son soon to enter the labour market who suffers from a handicap as well. I realise the real nature of the problem. But I have to ask myself, "Is it really sensible under those circumstances that, as I understand it, the school leaver entering the engineering industry in Germany is paid a wage of approximately 23 per cent. of the wage of a time-served adult man, whereas in this country the school leaver entering the engineering industry is expected to be paid up to 80 per cent. of the wage of the time-served adult man?". Is it surprising, under those circumstances, that we have a far more acute problem of youth unemployment than the Germans have?

I suggest that we should do better to try to face up to a problem that in all conscience I do not believe we have had much success with, over a far longer period than the noble Lords, Lord Kaldor and Lord Roberthall, would have us believe and should tackle the inflexibilities of our labour market rather than seek to resolve the levels of employment with a fresh splurge of public money spending such as we saw in 1971 and 1972, which ended in the hyper-inflation of 1975.I do not think that we should go down that road again.

7.4 p.m.

Viscount St. Davids

My Lords, this is a long-term business. While not decrying in the least many fine ideas for short-term remedies, I would wish to put the matter in rather a longer-term context. It has always been my belief that what we wanted in this world was to make everything cheap except man. Man should be the most expensive thing in the world. Here, I find myself congratulating the trade unions, although I am sure that they will not like my congratulations. They will understand what I am talking about, possibly in some years' time, but not now. The trade unions have undoubtedly made men more expensive, and that has had various results.

One result undoubtedly is that unemployment has been considerably increased. I am not going to get into an argument with any noble Lord about exactly what the figure of "considerably" is. It must be obvious to everyone in the House that that is the right word. There has been a second result. It is that employers have been forced to mechanise and to go in for capital expenditure in order to reduce their labour costs. I put it to the House that, in the long term, that is probably the most valuable thing that has happened. I would quote two examples, one from a field that I know well. In school, one is always taught that the sailing ship was driven off the sea by the steamer. That is not so. When the steamer first came on the seas it had a very hard time to stay there in competition with sail. What made the steamer finally win over sail was the rise in men's wages. Once men became more expensive, the steamer, with its smaller crew, won hands down.

To prove this, there are many areas of the world, even now, where men are cheap and where sailing cargo ships are the regular means of moving goods. It was only the rise in wages that compelled the higher investment in the steamer. That process is still continuing. Even now, as seamen's wages go up, ships are carrying fewer and fewer crew, and, an even more important figure, they are carrying fewer men per tonne. The result is that we are going in for bigger and bigger ships with smaller and smaller crews in comparison to their size. The process is going almost certainly to a terminal point. We have already reached a size of ship where the men are quite unable to handle her if anything goes wrong. All they can do is yell for help. Even the officers are pretty near unnecessary because you can feed data from a satellite into a computer and establish your exact position on the earth's surface. It is coming to a point where about the only useful purpose that the crew of a ship serves is to paint it—and that, no doubt, will be mechanised very soon. We are coming there very close to the robotic age.

I shall quote another example. The United States of America is a very powerful industrial society. It got ahead of the rest accidentally but as one looks back it did so almost inevitably. The industry of the young United States started on the East coast. When anyone became dissatisfied with his job he got on his horse—getting on a bike not yet having been invented—and went West young man. The result was that the wage costs on the Eastern coast were kept high. There was simply not the competition for work.

That meant that the employer had to mechanise to keep his wage costs down and it also meant that there was an enormous inflow of people from Europe and other parts hoping to enjoy—indeed, they did enjoy—the higher wages they found in that area. It was that combination of early industrialisation and a very considerable increase in manpower which gave the United States the great thrust forward which put it into the front line—a position which it has never lost.

Those two cases are incontrovertible. The fact of the matter is that we are using more and more machines and fewer and fewer people. It may be possible to reverse that to some extent. I believe the situation has now reached the point where the speed of that development is beyond anything that we can control and we are going to look at an entirely new world. What can we do in this new world? I believe that the Government are on the right lines. They can cut down on the unproductive parts of old industries while increasing the investment in higher technology in those industries. But that is going to cause us to use fewer people rather than more. They can push forward the new technologies with the idea of developing those industries. By so doing they will indeed create more employment, but finally at the cost of pushing the whole process so that ultimately we need fewer people.

As has been put to the House so cogently by a number of noble Lords, we can reduce the rigidities which at present foul our industrial system. I know that in so doing we shall be opposed by the national union of bow and arrow makers, but I am afraid that until they learn better this has just got to be the case; we have got to wear that. Although the Government will have had some success when they have done all these things, I do not think they will have the success they expect; in fact, I never heard of a Government that did, so that is not surprising.

There are two other answers. I have never believed that full employment was either likely or even necessary. As far as I have ever been a socialist, I have always called myself a Gilbertian socialist. When asked what that is, I have always quoted Gilbert and Sullivan: When everyone who feels inclined, Some post may undertake to find Congenial with his peace of mind, Then all shall equal be". That is really what we should be working towards. They are some of the wisest words that have ever been said. Bernard Shaw tried to put much of his theory into jest and make people swallow it simply by standing the situation on its head. I think that on that occasion Gilbert and Sullivan said much more truth than many of us have believed so far.

What shall we be doing if the machines take over? They will take over; have not a doubt about it. I suggest there is one field where the machines will never take over and that is the field in which man serves man. It is in the field where man goes into the loving care of his fellows that we should be looking for the future employment of people. I am not going into this to any great extent; I will quote just one example, the health service. Nobody has any doubt that if we set about embarking on the expenditure for putting right every conceivable ill which can affect the human frame—embracing the old, the young, the crippled, the lot—we would be embarking on a sea without boundary and without bottom. That is an absolutely unlimited field. The only thing we must be careful about is that in launching ourselves on such a sea we must build a ship which is not so frighteningly expensive that it will destroy the economy that launched it. There is absolutely no end to the way in which man can serve man, and that is the direction in which ultimately we should be moving.

There is a third answer. I have already got to my feet and put this answer on the floor of the House. I shall do it again now, and on some future occasion no doubt I shall do it again. I do not believe that full employment is possible; maybe it is not even wanted. There are a number of people who never can be employed and possibly a number who do not want to be employed and who, if they were employees, would be very bad ones.

I should like to see the end of the whole idea of any stigma being attached to unemployment. I believe that, instead of the unemployed, we must talk about ladies and gentlemen of leisure. If a large part of the population are idle, either through their own wishes or through their inability to do anything, it should be understood that those people are perpetually at leisure; I do not say unemployed. Then we are embarking on a new world in which those people would not spend their time hanging around "misering" because they have not got some paid job. They would set about doing what ladies and gentlemen of leisure have always done, and that is quietly to improve things in their environment. The result for the world would be an enormous change. I believe that is the ultimate industrial revolution into which we are going to go.

I do not deny for one moment that there is a great value in reducing unemployment as far as we can by the measures which have been suggested, but I would suggest to your Lordships that in the ultimate that is the direction in which we should move. We have moved out of a period when there were slaves and out of a period when there were servants. We are moving out of a period when there are paid employees and we are moving into a period when there is a new sort of slave, the machine. Then at last we shall come to a democracy like that of ancient Greece, but better than the democracy of ancient Greece because that depended on slaves whereas we shall depend on machines.

7.20 p.m.

Lord Molloy

My Lords, the House will be grateful to my noble friend Lord Wilson of Rievaulx for introducing this debate drawing attention to the continuing high level of unemployment—indeed, it has been continuing for three years—and the need for solutions to deal with it. Not only will the House be grateful to my noble friend, but so will the unemployed. What my noble friend has done this afternoon, among other things, is to see to it that those who accuse Parliament of not caring realise that we have continually put the unemployed on the agenda for our discussions. We have been doing it for a long time. Under this Government we have had over 3 million unemployed for over three years, but not much has been done about it. The serious aspect is that the unemployed were deliberately created; it was not an accident. It does not matter what has happened previously. There have been drifts in unemployment upwards and downwards. For example, in the last six months of the last Labour Government the total of 1 million unemployed fell to under 1 million; the number was on the way down.

Before I go any further I should like to say that both the noble Viscount, Lord St. Davids, and the noble Lord, Lord Harris of High Cross, are quite right to say that those of us on these Labour Benches, and those of us who are socialists, are of course emotionally concerned. We are emotionally concerned not only as a result of what we see, but as a result of what we have experienced. In my party we believe that the capacity for emotional concern for individual life is the most significant quality of a civilized human being. When one considers the real scope of unemployment, one realises that probably it is even worse in this era than it was in the 1920s and the 1930s. At that time the middle classes did not suffer much, and that was why they did not care. But now they are suffering. It is the professional man, who sends his children to private schools and who is buying his big house on a mortgage, who suddenly finds that he has either got the sack or is made redundant and is no longer required, and who has to go through the traumatic experience of standing in the dole queue, moving out of his big house, returning the company car and sending his children, with all the other British kids to ordinary school. A cruel person would argue that that is how it ought to be. But, of course, we are still sympathetic to the traumatic experience that such people go through. I do not think that it is a good thing for us continually to make a vast number of excuses with very little response as to what solutions ought to be undertaken.

The noble Earl, Lord Gowrie, as usual, made a very brave and well thought-out speech in defence of this lamentable Government—no easy task. But alas!, I must say that I listened to his speech carefully, and it was rather a shaggy sheep speech—all wet and woolly. It had no solutions. It had nothing to do with aiding people. If the unemployed had been listening to it, they would have said, "We are no better off now that he has sat down than we were when he stood up". This is a very serious situation.

I have been in this House for three years. I have listened to the debates, the excuses, the submissions and the arguments from the Benches opposite, and they have not made the slightest difference to the fact that unemployment is on the way up. All that we hear is the same old story to make us joyful and happy. The Prime Minister, the Government and the speakers on the Benches opposite all chorus with joy, "It is just as bad all over Europe and all over the United States of America". When that message gets to the unemployed tomorrow they will all be so happy that they will take the day off! What an absurd answer to give to people in this modern age!

However, there is another aspect. This, too, has happened before. We have been all through this before. Britain suffered massive unemployment; Europe suffered massive unemployment; the United States of America suffered massive unemployment; and there came an answer which was highly distasteful in the unloved figures of Mussolini and Adolf Hitler. As unemployment in Italy and Germany screamed upwards, so they became more powerful. When it started to descend in Germany, so the almost sycophantic gestures to Hitler diminished. That is something that we want to have very much in mind and of which we must take very full cognisance. Even decent people—people who comprise good Governments—can perhaps slip this way unintentionally.

I am frightened to death when I consider what has been done by the Tories to win London government. They smashed the LCC. They created the GLC, which they won for a while for conservatism. But then it was smashed again. So what is left? It is, "Let's completely destroy it and do away with it, and do away with Liverpool while we are at it, and do away with Manchester". I had hoped that there would be a number of voices on the other side who would resist this type of behaviour, because it is incredibly frightening.

I am so sorry that the noble Lord, Lord Thorneycroft, has left the Chamber, because I wanted to say a few things about his remarkable speech. I was particularly impressed when he almost claimed that Mrs. Thatcher was responsible for the new technology. To listen to the noble Lord, Lord Thorneycroft, one gained the impression that Alexander Bell, Marconi and John Logie Baird were all members of her Cabinet. The fact is that new technology has been taking place for quite a number of years. It is simply the systematic application of scientific or other organised knowledge to practical tasks, and forcing divisions and sub-divisions of such tasks into component parts. With decent, sensible planning, with which every big corporation agrees, with which every big organised private concern agrees and in which we also believe, we should not be too afraid of the new technology.

My party's approach is simply this. It is a challenge to industry and to our nation. It is not a question of accepting new technology or of fighting it. The issue is: can we minimise its costs while we maximise its benefits? We must also ensure that its benefits are equitably shared. I do not believe that that is beyond the ken of decent, ordinary, sensible people at least to attempt to achieve. If we cannot do it in one fell swoop, then let us be always moving towards it. Let it be a guiding principle. Without principles, where are we?—not very far along the road to establishing a good society.

I am very pleased that the noble Lord, Lord Thorneycroft, has returned to his seat because I wanted to pay him a compliment, and I am entitled to pay him this compliment. It does not matter how early he speaks in a debate, he is present right the way through and he is always present at the end as well. I know, because I have been waiting for my speech, which is at the end, and I know that he is the one person who will be present when the end comes. But I am bound to say that I do not believe that the new threats to Great Britain are either Mr. Scargill or the great City of Liverpool.

Just after the First World War the 1945–51 labour Government created miracles. Europe was devastated. We had just come through the most appalling and terrifying war in mankind's history. Yet in those five years we started to build up this nation and to help many other nations. We created those magnificent pieces of social furniture like the National Health Service and social services. I believe that the things of that type which we had in those days were then lost in 1951, when we entered that dismal, terrible period of the barren 13 years—the years when the philosophy of the five unwise virgins prevailed.

The noble Lord, Lord Thorneycroft, quoted the noble Viscount, Lord St. Davids, on the matter of British steel and British coal, and said that one more big push was required. We have had the big push—we had problems in the coal industry, we had problems in the steel industry. The big push has come along and almost devastated them in the figure of Mr. MacGregor. Speaking parenthetically, I shall never accept that from John O'Groat's to Lands End there is not a Briton somewhere who can run those industries. I do not believe that our nation has to go scampering off to America to find someone to run these great publicly-owned industries. Instead of running them, Mr. MacGregor has absolutely ruined them. That must be said loud and clear as well.

As we have heard, there are many causes of unemployment, but we have not heard a great many solutions. In my judgment, unemployment in the United Kingdom was deliberately created. To a degree, the philosophy and policy of this Government certainly reduced the rate of inflation. One cannot go to the families of the three and a half to four million unemployed and say to them, "You are on the dole, there is not much money coming in, you spend hours looking for work, but is it not lovely to know that we have reduced the rate of inflation?". When you take money away from four million people so that they cannot buy so much, of course you reduce the rate of inflation. Goods suddenly become cheaper because they have to be made a little more attractive. That seems to be an elementary approach, and we have gone through it all before. Therefore, I believe that when people in this Government say that in order to attain this wonderful achievement we have to create a few pools of unemployment (and I am all for this philosophy), when they talk about deliberately creating pools of unemployment, they should be flung into them.

In the middle of the 1960s to the 1970s unemployment came down. It rose again in the middle to late 1970s and then in the final year of the Labour Government it started to decline again, and it has risen dramatically as a result of this Government's policy, which I understand is known as monetarism. That means that the market sector has, quite rightly, as the Government would claim, enjoyed reduced taxation in order to urge greater incentives. Once taxation is reduced for the rich, they put more endeavour and more effort into their work. What were they doing before—malingering? Are they a new type of lazy person and will they only overcome their malingering when they are bribed to do so? Thank goodness the armed forces are not made up of such people!

Therefore, we must be very realistic about this, because, as I think the noble Lord, Lord Thorneycroft, mentioned, unemployment has many evil sides and some terrible ramifications. We must constantly aim for a high quality of life for all our people, and that can only be achieved with a reasonable and appropriate income.

In this country we must stop the business of constant confrontation—someone is always against someone. It is about time that the TUC and the CBI, with the Government of the day, talked sense about overcoming this terrible problem, about which we have been talking, first and foremost for the unemployed and, secondly, for our country. I believe that in this nation we still have the knowledge and the wherewithal to be able to set an example to others.

In this particular context, I should like to point out how we have done this before, We did it when Europe was in ruins, when we made a massive contribution to defeating Fascism; we then made a massive contribution to re-establishing democracy. That was done on these islands with the aid of the United States of America, which made a massive contribution and helped us just before that war because of the philosophies of Keynes and Kenneth Galbraith, which were adopted by Franklin Delano Roosevelt. It was this "spend and prosper" philosophy which has been so derided. All the theories of economists that I have read might sound wonderful, but they have proved nothing. Keynes, Galbraith and Roosevelt proved what could be done. Even if this House does not agree with all that they did, I am sure it would say "Thank goodness they did it", because it enabled us to beat off the most frightful challenge Europe has ever witnessed, that of Fascism.

We laugh and smirk at the IMF, but what a wonderful organisation that was. It had to pick up France and Germany, and got many small nations out of the maw of Communism. It is about time that we gave the IMF credit for that action. This was followed by the Marshall Plan, another piece of wicked Socialist planning to look after our neighbours and to lift them up. Everything was worked out, sometimes to the last detail, and the result was that the march of Stalin was stopped. From these Benches I, for one, say thank God for that. It is about time that the party opposite also acknowledged this instead of deriding it every couple of minutes. The formula of Keynes, Galbraith and Roosevelt has been tried and tested. It saved us in the 1930s. I do not have time to examine in depth what was done; it took me a long time to read and understand it. I had to make comparisons.

I know what it is like to come from a large family with no one working, where the dole was only for 13 weeks and then there was nothing except hunger and desperation, and we were left to wonder whether this country was finished. I do not want us to go back to those days. It is about time that we had a Government who are willing to try the doctrine of Keynes, the doctrine of Kenneth Galbraith and the doctrine of Franklin Delano Roosevelt. When we can do these things, I believe that this nation will most certainly lift itself up to the benefit of the unemployed, by getting rid as much as possible of the ogre of unemployment, thus increasing our standard of life, which can be a model for all mankind.

Unfortunately, we cannot do that because we have a Government who do not accept the principles of the philosophy. Therefore, before we can have Keynes, before we can have the spirit of the IMF, before we can have the doctrine of the Scotsman, Galbraith—not Socialists by any means—and before we can go along this road we must have a system of priorities. After three years of debating all the miseries of unemployment, our first priority must surely be to get rid of this Government and have a Government that will have the courage to tackle and resolve the problem.

7.38 p.m.

Lord Beloff

My Lords, many of us may think that the subject which we are discussing is so serious and grim that it is not, as the noble Lord, Lord Molloy, said, a suitable subject for confrontation. But, having sat opposite the noble Lord for the three years in which he and I have been in this House, I must say that I find it difficult to accept from him a preaching in favour of non-confrontation. It is enormously insulting, not only to Members of the Front Bench, but to all of us who sit on this side of the House, to tell us, and to shout it—because no evidence is ever produced—that it is the intention or ever has been the intention, of Her Majesty's present Ministers deliberately to create unemployment. That is an insult to us all, and I must tell the noble Lord that we resent it.

If it were true of those countries in Europe which are, as has been admitted by the noble Lord, Lord Wilson, and other speakers, also having to face serious unemployment, then it would also be the case that Mr. Craxi, who is a Socialist, President Mitterrand, who is a Socialist, Mr. Kohl, who is a Christian Democrat, the rulers of Holland and Belgium, and even President Reagan, have all of them been engaged in deliberately creating unemployment. I say that because, unless they have, why should one assume that the British Government alone are guilty of what would be an offence against humanity?

We are dealing with a difficult subject, and certainly no one on this side of the House would want to minimise either the human or the economic implications of what has been happening. Whether we say there are 3 million, 4 million, or 5 million unemployed, it is far too many of our fellow citizens for any of us to be complacent about it. But we shall not get anywhere unless we give the subject serious thought. One way of giving serious thought to the subject is to get our historical facts right.

The noble Lord, Lord Molloy, who today made the same speech as he made in my debate last Wednesday, is under the impression that the theories of Maynard Keynes, applied by Franklin Roosevelt in the New Deal, cured unemployment. They did not. The New Deal saved the American financial system; it gave, through various schemes, new hope to a great many of America's young people. But the level of unemployment in the United State in 1935, 1936, and 1937 was very high indeed, despite the fact that Roosevelt, who had entered office with a commitment to a balanced budget, changed his mind.

It was, alas, the fact in the United States, as in continental Europe, that what brought about full employment was rearmament. It was only in 1940, when the United States was beginning to be the arsenal of democracy, that the enormous American unemployment figures came down. Therefore, to tell us that we can cure unemployment through a historical analogy which bears little relation to our situation—just as the position of the United States, a great continental country, bears little relation to our problems as an island trading nation—is to divert us from the facts.

The facts have been stated in this debate from many quarters, and they are twofold. There has been, and there is, a recession from which we and other industrial countries have all suffered. This has come on top of a much longer-range process which is the third, fourth, or whatever it is, Industrial Revolution; the replacement of human work by machines of one kind or another.

One division of opinion was whether, as in all previous industrial revolutions, the immediate effect on employment will be taken up by the new industries created, or whether there is something qualitatively different about our present situation. It would be most unwise for any of us to be dogmatic on either side. It may be that the noble Lord, Lord Spens, is right, and it may be—and I think he would admit it—that something will change and he will turn out to have been wrong. One reason why I say this—and this has come out in this debate, though perhaps not as directly as one would have liked—is that there is a real problem about the relations between those in work and those out of work and their respective incomes and standards of living, and the working nature of different economies.

The noble Lord, Lord Vaizey, rather dismissed the experience of the Soviet Union and the other socialist countries by saying that they got rid of unemployment by making it illegal to be unemployed. That is, as he would admit, not a complete picture. The fact there is that it is possible, in a command economy, to get rid of unemployment by insisting that everyone is employed, and it is perfectly possible to do that. A dictator in this country could tell every employer of labour, "If you have three, you must now have five", or whatever the figure ought to be. As a result we would have, as in the command economies, a lower standard of productivity, a lower standard of living, and the people in work would pay for mopping up unemployment.

I think there are arguments in favour of that position. There are times when one's feelings about the frustrations of the young bring one to the point of saying that perhaps even that sacrifice would be worthwhile. But even if we thought this, it is not a path down which we can possibly go. The simple reason is that in a society of any free kind in which those in work are powerfully represented through a trade union movement, through various professional associations and so forth, the resistance to trading off their standard of living against the spread of employment is very great indeed. That is one of the obstacles to the shortening of the working week, early retirement, and all the other things which on paper look as though they would cure unemployment, but which, since they would have the effect of lowering the relative capacity and the relative productivity of our industries, would in the end do nothing of the kind.

Nevertheless, it seems to me that one ought to look carefully at what people think and what people believe. I was taken, as I think we all must have been, with the recommendation of the noble Lord, Lord Wilson of Rievaulx (to whom we owe this debate) that there should be an open discussion with the leaders of the trade union movement. But, as the noble Lord, Lord Thorneycroft, indicated, we could not have a discussion except on the basis of some common agreement as to the objective to be sought.

I am not thinking merely of those in that movement to whom the noble Lord, Lord Thorneycroft, referred, who appear to be engaged in wilfully destroying jobs. There the wilfulness seems to me to be much more apparent than in the policies of the Government, to which the noble Lord, Lord Molloy, referred. I am not referring to them. I am referring to what appears to me to have been a general unwillingness—and I think that the experience of the noble Lord, Lord Wilson, bears this out—in relation not only to incomes, but also to taxation, to accept the fact that in a society in which for the employed person the standard of living, in all classes, has been steadily rising for decades, something ought to be done in policy to make, somehow or other, some of that advantage go to those who otherwise might never enjoy a job.

They are serious issues. It is quite absurd to think that we can discuss them with people who do not even begin by accepting our own good faith. This is an issue which we see repeated in every advanced industrial country. It is our business to see where things are handled better, and where they are handled worse. One would like to know more about America's achievement in creating the new jobs to which the noble Lord, Lord Bruce-Gardyne, referred. One ought to look more closely perhaps at the countries of Eastern Europe, to see whether some measures which they have adopted—even if they meant some degree of lessening of economic growth—might have social advantages. Where I agree with the noble Lord, Lord Molloy—and we rarely agree—is that the threat of unemployment is to not only the unemployed, but also our society, because it is to ourselves and to our consciences that the challenge comes.

Therefore, as the last speaker before the leaders of the parties in your Lordships' debate, I should like to end by thanking the noble Lord, Lord Wilson of Rievaulx, for setting us along this discussion. The noble Lord, Lord Wilson, and I have one thing in common. We both started life as junior fellows of an Oxford college. Thereafter our paths diverged. Sometimes I have wondered what would have happened if we had chosen each other's career. It would not be for me to say that I would have made a good Prime Minister, but on the showing of today's seminar on unemployment it is clear that the noble Lord, Lord Wilson, had it in him to be a magnificent professor.

7.51 p.m.

Viscount Chandos

My Lords, when the noble Lord, Lord Wilson of Rievaulx, first became Prime Minister I was of an age at which much of my reading matter centred on stories about a schoolboy in the upper sixth suddenly finding himself playing in the Cup Final shoulder to shoulder with Roy of the Rovers or going into bat at Lords with a latter-day W. G. Grace. I say this not to emphasise the handful of years that separate the noble Lord from myself in age, but to express my feelings in trying to wind up on behalf of my colleagues on the Alliance Benches in the debate introduced today by the noble Lord, Lord Wilson.

The noble Lord was unarguably the dominant political figure throughout the time when I first became aware of the political world, so I feel some awe in trying to respond to his speech and the many others that he thereby prompted from your Lordships' House. I feel that I am going into bat as a tail-ender (even as a night watchman in view of the hour) with the light fading and the noble Lord still bowling at the peak of his form and still maintaining his ability to field at square leg and at point simultaneously.

As my noble friend Lord Roberthall has said, the noble Lord, Lord Wilson, has introduced a debate on a subject which is not original by any means but whose importance is demonstrated by the very regularity with which it has been raised in your Lordships' House over the years and since 1979 in particular. As the subject comes up to be debated like autumn changing to winter it serves to remind us of when the topic was last discussed, and to look perhaps at how things have changed, or not, since the last time and the time before that.

In the time that I have been a Member of your Lordships' House I have taken part in a number of debates on the subject of unemployment or the general effect of the Government's economic policies. I am more strongly struck than ever by just how little progress or improvement there has been, whatever the thetoric of the Government. The current Chancellor of the Exchequer announced more than three years ago, when he was still serving his apprenticeship in a less elevated position, that the peak in unemployment had been reached, since when a further three-quarters of a million people have lost their jobs; 750,000 people, equal to the population of six whole towns of the size of Basingstoke, where I grew up. Noble Lords on the Government Front Benches here have echoed these fanciful forecasts throughout the time I have attended your Lordships' House, and today has been no different.

The noble Earl, Lord Gowrie, has modestly deprecated his own aspirations as a future president of the Royal Statistical Society in the presence of the distinguished past presidents, but I must say that he has shown that a comparative amateur can use figures at least as imaginatively as an old pro. I have reminded your Lordships on other occasions of a skirmish between the Prime Minister and Sir Robin Day when the Prime Minister scolded Sir Robin for the misleading use of selective statistics in connection, I think, with the cost of the unemployed, to which my noble ally Lady Seear referred.

The noble Earl should stay behind in class as well for the arbitrary and confusing collection of statistics which he has chosen to give your Lordships today.

The Earl of Gowrie

My Lords, I am most grateful to the noble Lord for giving way. Can he point to a single statistic that I used either arbitrarily or selectively?

Viscount Chandos

My Lords, I think that the use of statistics referring to a selection of European countries over the last 12 months is definitely arbitrary in considering a subject such as unemployment where the trends are a great deal longer term than 12 months. I hope that when the noble Earl speaks again he may quote some figures on the growth in unemployment in the United Kingdom by international comparison over, say, the five-year period which the Prime Minister has just so confidently celebrated, rather than just three or 12 months. It will certainly take, as he said, fast footwork and flexibility to show that the United Kingdom has fared well compared with our European neighbours and competitors.

The noble Earl seemed to give the game away in his own speech when he asked why the level of unemployment was so high in the United Kingdom. I will not risk being branded as a fraud by saying that the answer is simple. The level of unemployment in the United Kingdom is so high for a number of reasons, some of which are common to all or most developed countries and some of which are exclusive to the United Kingdom. Some of the factors which are exclusive to the United Kingdom may be attributable to years of history, past governments and mis-government, but some are undoubtedly the result of the policies of the Conservative Government.

Your Lordships should be in no doubt that the noble Earl's claim that we would now be facing a worse position without the Government's measures since 1979 is unsubstantiated and unjustifiable. Not only is the current position worse than it need have been, but, even more important, the future prospects are considerably worse and that will turn out to be the issue by which this Government will be judged, weighed in the scales and found wanting.

I should like to suggest, therefore, that there are three timescales within which to consider economic policy and the level of employment. In the short term there is the matter of providing temporary bridging employment or training at cyclical peaks of unemployment, as exemplified by the youth training scheme to which my noble ally Lady Seear referred and a variety of measures listed by the noble Earl, Lord Gowrie. On this there is little disagreement in principle between the Government Benches and these Benches, but on the other areas of short-term policy there is far greater disagreement. The Government have argued that specific measures of public sector investment in the infrastructure or in productive parts of the nationalised industries could only provide additional jobs in the short term at the expense of longer-term higher inflation and, ultimately, increased unemployment. This argument can only be supported by a simplistic—so should I also say, fraudulent?— correlation of the gross cost of such measures with a consequent net increase in the Government borrowing requirement and hence the future level of inflation. As my noble ally Lady Seear has argued, the true cost of unemployment is so high that infrastructural and productive investment could be increased at relatively small cost to the Exchequer and the small increased borrowing that resulted could be achieved with no increase in the level of interest rates or inflation and without crowding out any of the private sector industrial borrowers.

In the short term also I would argue that a more measured approach to declining industries could further reduce the level of unemployment that has otherwise been suffered. Nobody is denying that many traditional industries do not have a long-term future, but the Government's economic policies, particularly those which caused artificial and unbearably high exchange rates between 1980 and 1981, caused many marginal companies to fail when they might otherwise have provided employment and goods (which have been imported instead) for a good few years during the inevitably drawn-out changeover from the old industries to the new.

The noble Lord, Lord Wilson, drew attention to the current levels of sterling relative to the dollar—perhaps only to renew his well-established jousting with the press. The sterling-dollar exchange rate, of course, is not as crucial as it was, as our trade has become increasingly with our partners in the European Community. But I say, nonetheless, thank God for a more realistic exchange rate! I hope that the noble Lord, Lord Wilson, will join me in asking the Government to show some benign neglect and at the very least allow sterling to weaken further against the European currencies in line with the dollar, when that now mighty currency eventually weakens against most others.

In the medium term the Government must ensure that the structural conditions of the labour market, of industry and its management and of the capital market are as efficient as possible. The noble Lord, Lord Wilson, has reminded your Lordships of the improvements that have taken place in the capital market and of some that still await the Government's action. I continue to believe that the availability of capital to industry, even to small companies, is inadequate only to the extent of mutual misunderstanding and ignorance between financiers and entrepreneurs and is not based on any technical shortage of funds. The further extension of personal tax relief therefore, for investment in small companies should not be contemplated unless a far more convincing case can be made that there is a true element of additionality in the business thereby financed. The cost of the existing allowances, let alone any increase, might well be better spent in business education and training at every level.

The imperfections and distortions of the labour market, to which the noble Lord, Lord Bauer, and other noble Lords referred, are central to the economic weakness of the United Kingdom since the war. They therefore represent one factor in causing the unacceptably high level of unemployment. The noble Lord, Lord Bauer, advocates red-blooded free markets if not a return to perfect competition, while the noble Lord, Lord Wilson, calls for greater consultation with the trade unions. My Lords, the first is the policy of the last century and the second is the policy of the last decade. Outside political circles there is extraordinary unanimity that industrial democracy and profit sharing, a new but commonsensical approach to the relationship between employer and employee, represents the crucial long-term change that is needed. It is depressing that the Government have made only token attempts to institute real change in this area. My colleagues on the Alliance Benches call on the Government and the trade unions to join in working together with industry to achieve real progress in industrial democracy and widespread profit-sharing— and only then the markets can play their full role in producing the vital growth of the industrial economy.

In the medium term, too, industry needs stability and it will be a familiar argument from these Benches that constitutional changes are needed to promote stability and are therefore relevant to industrial success and economic prosperity. In the recent past the greatest economic damage has been done in the early years of each Government: 1970–72, in Mr. Heath's; 1974–76, by the noble Lord, Lord Wilson's; and 1979–81, by the current Prime Minister's. The later stages of every Government a more realistic and a less ideological approach has been adopted which, if it had prevailed earlier, might have spared the country much loss. I will not labour the point further, but would emphasise that a twin policy of industrial democracy and electoral reform is more relevant to creating new permanent jobs than a whole string of privatisations, on the one hand, or import restrictions and protectionism, on the other.

In passing, I should like to draw the attention of the noble Earl, Lord Gowrie, to the deeply unstabilising effect that the Government changes to corporate taxation are having on companies' long-term investment plans. It is difficult to say that the prevailing system of capital allowances was right, but the effects of the change may well not be beneficial in the foreseeable future, with industries which the noble Earl has singled out and in which he has a special interest like cable television, television and films particularly hard hit. Once more the balance between change for intellectual or ideological reasons and stability seems to have been wrongly chosen.

There is one longer-term timescale than all this to which I believe the Government should have, but have not, given attention. The educational policies and the budgets being adopted now will shape the economy and industry of the United Kingdom at the beginning of the next century. I would suggest that if there is one achievement of which the noble Lord, Lord Wilson, could rightly be most proud it is the rapid growth of further education achieved through the 1960s. Without that, where would the Tartan Silicon Valley be now? An entrepreneurial environment, if that is what the current condition of the country can be described as, would produce no great companies without the educated and trained young people who grew up in the last 20 years. The Government cuts in education, and in higher education in particular, are helping to create a low technology and high unemployment future, rather than the high wage, high technology society that the noble Earl described earlier.

In conclusion, the Government have failed in the short, the medium and the longer term to adopt policies which will provide employment of a satisfying, fulfilling nature to as many people as possible. In comparison with this, the many criticisms of the policies adopted by the Government of the noble Lord, Lord Wilson, pale into insignificance; so for his administration, as well as for tonight's debate, we should be grateful. The policies which will achieve the best possible future for us and our children are, however, held by the parties who ally themselves on these Benches. I believe that slowly but surely, whether by influence on or participation in government, these policies will be implemented to the benefit of all the people in this country.

8.7 p.m.

Lord McCarthy

My Lords, I have two duties to perform tonight. The first and the pleasant duty is to thank the noble Lord, Lord Wilson of Rievaulx, for the Motion which he has put on the Order Paper and about which we have had such an interesting discussion. The noble Earl, Lord Gowrie, said that quite a lot of people on our side of the House were Wilson men or had Wilson to thank or had Wilson to blame. I have Wilson to blame, somewhat belatedly, for having the chance to answer this debate. I thank him for that, too. So I come to my second task which is to try to summarise the debate as it has been put forward on our side of the House and to say where we disagree with the arguments to which have been put forward on other sides of the House.

First of all, let me say a few things about what we are not saying and what we have not said in this debate—because on one or two occasions in the afternoon and early evening it looked as though some noble Lords on the other side thought we were saying these things. We have not said that the Government are responsible for the whole of the employment problem of this country. Why should we? Most independent forecast organisations conclude that their policies are responsible for about 50 per cent.—and 50 per cent. will do. We are not saying that if there had not been a recession there would be no unemployment. We are not saying that easy alternatives are available. We readily accept, for example, that when the noble Lord, Lord Wilson, last took office as Prime Minister of this country it took his Government two and a half years to get the level of unemployment moving down. We are not saying that it is easy. It is extremely difficult. We are not saying that the problem of reaching post-war levels of unemployment has not become significant and qualitatively more difficult since the early 1960s.

The noble Lord, Lord Bruce-Gardyne, gave us the names of two Prime Ministers who during their period of office, had, he said, actually presided over a decline in the rate of unemployment. I suggest to him that one of them was not there really long enough to know whether it was going up or down, and the other one was long ago and far away. Of course in the past 10 years or so it has become more and more difficult; so we are not saying any of these things about the Government, and certainly I am not saying what the noble Lord, Lord Beloff, got so annoyed about. Let me say that I am very glad he got annoyed, because if he thought that that was being said he should have got annoyed. It is a pity many more people—

Lord Beloff

My Lords, would the noble Lord give way? It was said in so many words by the noble Lord, Lord Molloy, and everyone present in the House heard him say it.

Lord McCarthy

My Lords, let us wait and see what Hansard says tomorrow. I was saying that if the noble Lord got annoyed by what he thought was being said he was quite right to do so; but no one can really say that the Government are deliberately setting out to create full employment. The problem with the Government is that they do not know how to avoid increasing unemployment. Indeed, what I say is that this Government have no policy for dealing with unemployment, and the proof, of course, is that they have no target for reducing unemployment. We can never get from this Government any figures about what they think will happen to unemployment because every other aspect of the Government's policy—and this is the true charge—puts itself forward before the employment level. The critical thing is to get down the price lever; the critical thing is do something about the money supply. Those are the critical things. We have endless figures and endless tasks in connection with the money supply—they do not affect anything—and every time something goes wrong we have another set of targets.

Even now we have had, if not a target, an indication about the exchange rate. The Chancellor has said that after the oil goes away we must have a more realistic exchange rate, which is his way of saying that it has to come down. But the Government do not give us an unemployment target. They do not say, for example: "This time next year it will be 2.8 million or 2.6 million". I wish they would do so tonight. I wish they would stick their necks out and say what they think unemployment will be in one year's time, in 18 months' time or in two years' time; and I wish they would say what policies they have to deal with it.

I must be quite fair to them and say that they do have ideas. They have these barmy ideas about the working of the labour market which the noble Baroness, Lady Seear, spent a great deal of time deflating. I do not have time to deflate them now. We deflate them regularly once a month in this House but it makes no difference. They have no targets and they have no goals; and tonight I want to try to say two or three things about the kinds of target they might have and about the sectors of the economy where, if they adopted these targets, they would expect the jobs to come from. I should like to ask them whether they agree that they would require changes in their existing policies if anything at all is to be done about unemployment for the foreseeable future.

First of all, surely the noble Earl would accept that the Government are making no progress with unemployment at the moment. If we take the March to March figures, it would take 30 years to cut the register in half. If we take the April to April figures, in 30 years' time the register would be up to 4.5 million. Here I talk just about the register, although we know the noble Lord, Lord Wilson, is perfectly correct in saying that if you do not talk about the register but if you speak about those who are not registered then the unemployment figure starts moving up to 4 million or 4.5 million, or even, some say, 5 million. I am talking just about the register of unemployed.

As a result of the fact that nothing is happening as regards unemployment, the Government in general and the Secretary of State for Employment in particular are now talking increasingly not about unemployment but about employment. We have heard that in the debate today. The Government talk about the number of people in employment, as against the number of people out of employment. They have told us—and it has been repeated on the other side by one speaker today—that during the last nine months some 200,000 new jobs were created or came into being; so that if you take that as typical you might say that we are now creating jobs—I want to be fair to the Government—at the rate of 260,000 a year. You might think therefore that in 12 months that could make a very significant impact on the unemployment problem.

However, as the Government know only too well, the problem is that the labour force itself is growing. On the Government's own estimates it is growing at the rate of about 160,000 a year and therefore we have to go faster and faster to stay where we are. The question is: are the Government trying to go faster? Are they seeking to work out ambitious targets and to do something ambitious about unemployment? For example, what would it be like to cut the register of 3 million in half by the time of the next general election? What would it be like, if not to cut the register in half, to cut it by one million? If you cut the register in half then you would require, because the size of the employment labour force is rising by 160,000 a year, to create over half a million new jobs a year for the next four years. If you leave out 1984, because nothing much is being done about that, you would have to create something like three-quarters of a million jobs a year for the next three years. To take a less ambitious target, to take one million of the register you would have to create 1 .64 million jobs—400,000 jobs a year for four years or, if you leave out 1984, 500,000 jobs a year.

Unless figures of this kind are in the Government's mind, they are cheerfully, happily, looking forward to the prospect of going into the next general election with a higher unemployment rate than at present and certainly a much higher level of unemployment than when they came into office in 1979. I am asking whether this is what the Government accept. If the Government accept it and if they do not have any policies to deal with it, to come back to the point made by the noble Lord, Lord Beloff, I am not saying that they deliberately set out for this to happen but it is a fine commentary upon their stewardship if they see it happening and have no policies whatever to deal with that problem.

Let me ask where those jobs might come from. I take it that it is agreed on all sides of the House that, if only to take one million off the register—let alone more—jobs of that kind are not coming from manufacturing industry. I take it that that is generally agreed. Manufacturing industry, as a proportion of the labour force—manufacturing industry in absolute terms—has been falling in numbers for 20 years, not only in this country but in most other Western countries. Of course the future of manufacturing industry is utterly essential. Here I agree completely with what the noble Lord, Lord Kaldor, said. It is essential as the base upon which our international balance of payments depends—I repeat, it is essential—but it is not going to be the place where one million jobs are going to be created in the next four years.

I would ask: what about the public service sector? We have 5 million or so working in health, in education, in local and national government, in the police, in the armed forces and so on. There is no reason in terms of international trends, in terms of past trends, in terms of the 20 years from 1960 to 1980, why we should not get another 1 million jobs, if not in 4 years at least in 10 years, by a percentage rate of increase in growth in the public service sector which is no larger than the percentage rate of increase in growth which we had over the 'seventies and over the 'sixties, and which most other countries in the West had.

The only objection is the Government's ideology. The Government believe that if anybody gets into the public service sector and works there—unless, of course, he is privatised—then somehow the country is becoming progressively immoral. So we shall not get any employment out of the Government in the public service sector. The only employment policy we have that is lasting 10 years is the employment policy which, by inference, arises out of the Government's Green Paper on public expenditure, because it says that if the level of income going into public expenditure is to be the same in real terms over the next 10 years then the number of workers employed will undoubtedly fall, though by how much it will fall is extremely difficult to say.

Let me take another area of the economy which, in the 20 years from the 'sixties to the 'eighties, before the onset of the great recession, made a contribution to full employment. What about the construction industry? There is no reason why the construction industry, which grew by 300,000 or more over this period and is now down to less than 1 million, should not take on 100,000 or 200,000 workers. But for this Government there are two problems. First, there must be a housing boom, and there is no sign of a housing boom; and if what we think is going to happen to the rate of interest happens in the next day or so, there will be a housing slump. Secondly, there has to be some relaxation of public sector investment policy, because there has never been a sharp and significant increase in construction in the years I am talking about unless it has been sponsored and effectively begun by public sector investment. The employment takes place in the private sector, but the investment begins in the public sector.

So I come to the Chancellor's pet—the only area where this Government can seriously come to us and tell us that they want to do something about unemployment. That is the private service sector. There are 8 million or so people still employed, despite the recession, in the private sector parts of the service industries. At first sight, this would look to be a good area. It has suffered less than the rest of the economy in the recession, losing about half a million workers. It rose throughout the 1960–80 period from 40 per cent. to 60 per cent. of the labour force. This is an area with a good growth potential. So if the Government will not put it in the public service sector, and if they will not privatise the sewers in order to build new ones, as the noble Baroness suggested, why cannot the Government create jobs, why cannot they preside over jobs, in the private service sector?

There are problems here, too. First, the private service sector is not equally advantageous, helpful and expansive from a growth point of view. There are large parts of the private service sector, such as distribution, transport and so on, which over the last 20 years have had either low or negative growth. Indeed, about half of the private sector where there has been high positive growth is banking, insurance, financial services, miscellaneous services, hotels and catering, hairdressing and so on, making a total of about 4 million. This is the area which the Government talk about when they talk about new jobs.

But the increase which would be required to make a significant impact, in terms of even the lowest target that I have suggested—that is, to reduce the register effectively by 1 million—would need an expansion of this part of the private service sector of something like eight times the annual rate between 1970 and 1980. In fact, in the context of the rate of growth which this Government assume for the next few years, we shall be fortunate if this part of the private sector replaces half of the people who are due to go on the register between now and the next election. Therefore, on their present policies, given their present prejudices, given their present blind spots, I say to the House that this Government have no policy for dealing with unemployment. They have put unemployment at the end of the queue. They have focused on other things. They have nothing whatsoever to say in answer to this debate.

8.26 p.m.

The Earl of Gowrie

My Lords, your Lordships gave me a good run at the beginning of the debate. I shall therefore try to wind up as specifically as possible, in spite of many temptations, not least from the noble Lord, Lord McCarthy, and the noble Viscount, Lord Chandos, speaking for the official Oppositions, to be again drawn into wider areas of debate. I was able, rather to my surprise, to agree wholeheartedly with something which the noble Lord, Lord Molloy, said. I understand the irritation of my noble friend Lord Beloff—and I shared it—with much of what the noble Lord, Lord Molloy, said. But there is something to be said in our debates, when they become a little crepuscular and we approach the wind-up speeches, for one who raises the temperature. The noble Lord is invariably put in to try some slogging—to borrow one of the cricketing metaphors of the noble Viscount, Lord Chandos.

The noble Lord, Lord Molloy, said that not a single job would appear as a result of the speech that I made earlier this afternoon. That, in a sense rather pithily, was the precise text of my speech. I am highly sceptical of the ability of Governments to create sustained employment, though I am not in the least bit sceptical of their ability to create conditions which work against sustained employment. I do not mean to belittle the seriousness of the problem if I use an illustration drawn from sport. Sport, as we know, can be a serious business and is, indeed, employment-generating these days. The Government would see themselves as setting the framework, or drawing the lines of the tennis court or soccer pitch, but the real generation of wealth and the real jobs that come thereby must be a matter for the players. We can, however, enter the field ourselves and trip them up from time to time; and this is what—with some success, I think—we are trying to avoid doing now.

I also agreed with the statement, which I relished, made by the noble Lord, Lord Molloy, in which, in praising the IMF—and I share his sentiments about that body—he said, "Before we can have the IMF, we shall have to have another Labour Government". That was a very well taken point and I wholeheartedly agreed with it—

Lord Molloy

My Lords, will the noble Earl allow me to intervene so that this can go on the record? I did not say that, and Hansard will show it. What I said was that if we are to begin to solve unemployment, the first priority is to get rid of the noble Lords opposite and their Government.

The Earl of Gowrie

My Lords, I was not dealing with my noble friends or with my honourable and right honourable friends. I was dealing with what I understood the noble Lord to have said about the IMF. But, indeed, I shall turn to the text tomorrow.

I think that where the noble Lord, Lord McCarthy, and his strictures about our lacking targets are concerned, he must credit us with a very great deal of political naivety. We have no intention of losing the next election, and we are therefore extremely confident that our policies are the right ones for the generation of wealth and jobs.

The problem is, as I said in my earlier speech, that all the Western economies are finding it difficult to bring new jobs on stream at the speed at which old jobs disappear. But the noble Lord, Lord McCarthy, in a very reasoned and interesting speech—which I shall study most carefully and recommend to my right honourable friends—was not, I think, at any stage in his argument of the view that we should try for very much longer to support jobs which are liable to be going out of the system in any case. If I am interpreting him correctly, that is a great advance for his party—though I must say I have not heard much of it from his friends in another place.

If the noble Lord wants a simple policy for unemployment, there is one of course: it is to adopt a command economy, and my noble friend Lord Beloff dealt admirably and pithily with this. In brief, Britain would withdraw from the Western trading community of nations and reduce very rapidly and very hard the standard of living of those in work. There is no doubt that if those in work were prepared to have their standards of living sharply reduced, we could reduce the number of those who are not in work. But this is a free society, and there is no evidence which I can see that the vast majority of people in this country are prepared to suffer such a reduction from their Government. As a result, the alternative must be the one suggested in my opening speech.

Lord McCarthy

My Lord—

The Earl of Gowrie

Perhaps I may just finish making the point. We have to have a framework wherein constraints against competing successfully are removed, and that was the burden of most of the labour market remarks from this side of the House; we have to go out and get the customers who create these jobs elsewhere.

Lord McCarthy

My Lords, would not the noble Earl agree, in the light of what he has just said about the impossibility of driving down the level of wages in this way until we can reach full employment, that it makes nonsense of what is said by those in his party who believe that we should make the labour market work by driving down the level of real wages until we can get full employment?

The Earl of Gowrie

My Lords, I do not think it does.

That brings me precisely to the second point the noble Lord made, which is that we should be creating additional employment through public service industries and the like, There is no doubt in my mind whatsoever that this could be done. When I was the Minister with responsibility for the MSC, I was aware of an enormous number of opportunities which young people could fill in what I think the noble Viscount, Lord St. Davids, called the "people" or caring industries. The difficulty again in this free society is that those organised workers —and I do not particularly criticise them for this—those who were operating in such industries, were not at all attracted to the idea of being undercut in their performance by a factor of £10,£12,or£14a week by young unemployed people. My frustration when I was the youth unemployment Minister (which was effectively my job) was that I needed jobs in this economy at about £35 per week. If I had had jobs in this economy at £35 per week, I could have filled them in droves. Nothing that I have learnt from my successors leads me to think that it is very different.

If I may ask your Lordships very briefly to cast your minds back, you might recall that at the end of my opening speech I made a fairly overt appeal to those who work in the public service industries. These industries, which were, rightly in my view, referred to by the noble Lord, Lord McCarthy, and the noble Viscount, Lord St. Davids, look like being potentially employment intensive in the future. I appealed to those who had jobs, wherever their jobs were, to lower their economic sights in favour of those who were searching for employment. All of us, I think, put our money where our mouths are a little in this regard. As a Minister, in my present job I am constantly appointing people 10 or 12 years younger than myself to posts in the public sector at considerably higher salaries than the salary which I myself earn. So, I do not think we can be subject to too much criticism there.

Another theme of this debate—and this was borne out by the speeches of the noble Baroness and her noble friend Lord Chandos—is that we are ignoring the employment-generating possibilities of public sector investment. We are not; there is a large amount of public sector investment going on. As "museums" Minister, I am well aware that the Chancellor gives me some money for the maintenance, improvement and sometimes additions to the museums, and that is just a very small end of a very large estate.

The question is one of degree. Here, again, I apologise for wearying your Lordships with an example that I have used many times before. We have, I think, to look over the water at my own native land—or a bit of it—and see what the consequences of constant capital spending have been for sustained employment in Northern Ireland. If you discount the troubles and other political difficulties of Northern Ireland by a factor as high as 25 per cent.—and that, I think, is much too great because it is a very hard-working, stable, and thrifty society—the remaining 75 per cent. should, on the argument of the noble Baroness and the noble Lord, give you one of the most thriving economies in the British Isles. But of course, you find no such thing.

Closer to home, in the former constituency of the noble Lord, Lord Wilson, we have seen all through my adult life Liverpool being bombed and blitzed with public money. It has not been conspicuously successful either in terms of the Liverpudlian infrastructure or in terms of sustained employment. I think those of us who are urging more of this kind of expenditure at least have to answer that factor, as we have to answer the fact that such money does not grow on trees. No one now thinks that we should print it. We therefore have to borrow it, or tax it, and I am quite sufficiently Keynesian—may I say this to the noble Lords, Lord Molloy and Lord Roberthall—to believe that increased taxation and increased borrowing are not liable to be highly productive in employment terms.

I am not going to tangle with the noble Lord, Lord Chandos, on statistics, though I must say I found his strictures on my use of them a little offensive. I simply pointed out that there were some encouraging signs of the end of the recession around the international landscape, and within those encouraging signs the United Kingdom was faring relatively well. I chose not even the Government statistics (though everyone has paid tribute to them and everyone accepts their integrity) but the OECD norms. We see that between 1981 and 1984 the United Kingdom's percentage increase in unemployment has been from 10 to 13 per cent.; Germany's from 5½ to 10 per cent. (a very substantial rise there); Belgium's from 14 to 19 per cent.; Holland's from 9 to 18 per cent.; and Denmark's from 9 to 12 per cent. To describe such improvements as there are in the way that I did is far from saying that everything in the garden is rosy.

The noble Baroness, Lady Seear, asked me a specific question about the APEX project. I will, if I may, write to her about this. I should just say to noble Lords who might be interested in her point that one cannot guarantee every scheme designed to help the unemployed. Rather, as in my own field of arts funding, if one did not cut some schemes there would not be the resources for new schemes to come on. My understanding is that only one out of seven APEX schemes has been cut. I will check that and write to the noble Baroness.

The right reverend Prelate the Bishop of Southwell said one thing which rather astonished me. He said that miners in his area (which I took to be Nottingham) are crossing picket lines just because they cannot face unemployment; otherwise, they would not cross picket lines. It is because unemployment forces rational men to act irrationally. My idea of irrational behaviour is not the behaviour of the Nottinghamshire miners.

The noble Lord, Lord Kaldor, gave me notice that he could not be here at the winding up, but he added with his usual charm that that should not prevent me from dealing with his speech, albeit critically. What I gleaned from it was that he appeared to be castigating the Prime Minister for treating Europe "like a grocer treats a customer who has not paid his bills". I remember some splendid castigations of the European Community coming from the noble Lord, Lord Kaldor. I do not know whether we are witnessing a spectacular "U" turn of some kind or another.

I hope I can be exonerated from unctuous behaviour when I say that my noble friend Lord Thorneycroft made a speech which was really too good to mention. It was unpartisan, short and to the point. I only hope that the British watercolourists, for whom I have some responsibility now and to whom I understand my noble friend is addressing a book shortly, will do as well as we have this afternoon.

The noble Lord, Lord Spens, made a remarkable speech and asked me some questions about overtime. As a matter of arithmetic, it is certainly right that if the 11 million hours of overtime which are currently being worked in manufacturing could be converted into normal full-time jobs there would be many more full-time vacancies. But this is to ignore practical realities. Overtime is often the most efficient and cost-effective way of dealing with fluctuations in the workload or regular small amounts of extra work. The amount of overtime worked by individuals is not, on average, very great. It varies from sector to sector. I am advised that the average overtime worked by men in 1983 amounted to three hours in an average total working week of 41 . 5 hours, It would involve a very substantial intervention by bureaucracy—for which the noble Lord, wearing another hat, would castigate me—if we were to try to correct such a situation by central policing on that scale.

Both the noble Lord, Lord Spens, and my noble friend Lord Bauer, who also made a very clear and commonsensical speech, raised the issue of wage councils. I had to tangle with these organisms when I was Minister. I certainly agree with the noble Lords that statutory minimum wages can officially distort the workings of the labour market with adverse effects for jobs, particularly where young people are concerned. I go back to my plea for more £35 to £40 a week jobs in this economy. The Government are reviewing the position having regard also to our present treaty obligations. But these are shortly to run out, and I hope that we can somewhat improve the situation.

I was absolutely fascinated by that part of the debate when the noble Lord, Lord Bottomley, spoke and then the noble Lord, Lord Harris of High Cross, spoke. There is simply no meeting of minds whatsoever. If the noble Lord, Lord Bottomley, reads the speech of the noble Lord, Lord Harris of High Cross, he will learn something—I would say to his advantage. If the noble Lord, Lord Harris of High Cross, reads the speech of the noble Lord, Lord Bottomley, he, I believe, will see just how far he has still got to go in this economy in order to get people round to slightly nearer his point of view. When I listen to the noble Lord, Lord Harris of High Cross, I always feel like a rather overweight, middle-aged man—which is not, perhaps, too inaccurate a description—in the company of a seasoned jogger. There is something about the pur sang of classic liberalism—very unlike the present incumbents—which is not my idea of conservatism but very much classic market liberalism that comes from the noble Lord, Lord Harris of High Cross, and which has been an invaluable injection into the thinking of this Government and our national life.

I was a little—I shall not say offended because I have known him for too long and admire him too much for that—but peeved by the speech of the noble Earl, Lord Longford. It seemed to me to be an argument ad hominem or ad feminam, if that Latin is right. I refuse to cast myself in the role of a time-serving toady of the Prime Minister. One of the many things I like about the Prime Minister is that, knowing perfectly well about a fairly major disagreement on policy, she none the less promoted me. That was, I thought, tolerant and genial behaviour, of very much the same kind, no doubt, as that which the noble Lord, Lord Wilson of Rievaulx, meted out to the noble Earl, Lord Longford, when they were working together. I am afraid that I do think, more seriously, that the noble Earl, Lord Longford, was dealing with what I call the myth of the internal solution: the feeling that there is somewhere buried under a rock a mechanistic solution which a wise politician could find which would solve this dreadful problem. The noble Earl also fell into the fallacy of the inflation and employment equation, a fallacy which, to judge from the speeches when the noble Lord, Lord Wilson of Rievaulx, and the right honourable Gentleman, Mr. Callaghan, were in office, they did not fall into. They were quite clear about the connection between inflation and unemployment. If he will not take it from me, I hope that the noble Earl, Lord Longford, will consult them.

The Earl of Longford

My Lords, since the noble Earl has been so kind about me, may I say to him, to quote something once said by Sir Winston Churchill, that I do not feel altogether extinguished by the noble Earl's censure.

The Earl of Gowrie

My Lords, I do not know about my censure, but I was far from extinguished by the right reverend Prelate the Bishop of Peterborough, who was kind to the Government in pointing to Corby as not merely a success story but something of a phoenix-rising-from-the-ashes story. The right reverend Prelate give us the credit for that. I honestly think, as a Christian of a kind, that I must disclaim with due humility this credit. I should be delighted to take the credit, but it was the workers and the managers of Corby who did the job by refusing to knuckle under or to be got down and by refusing to listen to the kind of rhetoric which we have heard tonight from the Opposition parties. They have to face very difficult circumstances, and they are engaged in overcoming them with commendable vigour.

My noble friends Lord Vaizey and Lord Bruce-Gardyne again, I thought, injected pragmatism and sense into a debate which was prone to rove too much into the macro-economic. As one who has wearied your Lordships with many macro-economic speeches in debates, I tried this time in my own speech to focus the discussion away from employment and the issue of unemployment and more towards the issue of jobs: what wants are we to supply, how are we to supply them and how are we to get the skills to supply them? That is what I suggested young people should be directing their minds towards. I am very happy to agree with the tribute paid by the noble Lord, Lord Bottomley, to the careers service officers, who I found to be immensely sensible and pragmatic when I had ministerial charge over them.

I have to say to my noble friends Lord Beloff, Lord Bruce-Gardyne and, if I may so term him, Lord Harris of High Cross, that the debate has shown me one thing: that the Government are vulnerable to criticism more from what is nowadays called the Right—those who are sensitive to the obstacles in the way of employment generation in this economy—than from the Left. If I have any disappointment about the debate at all, it is that we are still too prone in this country to concentrate on failures rather than to emulate successes. No noble Lords on the Opposition Benches took up my point about job generation in the United States which, in spite of what the noble Lord, Lord Kaldor, said, did suffer a severe recession (it was not simply the Ayatollah who turned out President Carter) but is now creating new jobs at a really phenomenal rate and overwhelmingly in such small, capitalist service industries as I mentioned in my speech, in new technology, and in nationwide corporate franchises. What we want to do is to copy them. We have to set a framework of financial stability. Here, I should be more critical of them, in that they export their financial instability in a way that we cannot. We have to create a framework of financial stability for this, but there is no reason why we should not follow them otherwise. Their enterprise historically, after all, springs from ours.

Lord Wilson of Rievaulx

My Lords, I do not intend to follow the noble Earl in his venture into the darker recesses of psychology, which he has just inflicted upon us—morbid psychology at that. Nor do I intend to inflict upon the House a speech or even a summary and comment on the speeches which have been made today by noble Lords in different parts of the House. I shall, if I may, say just a few words.

We on this side of the House were concerned today merely to raise a major question affecting millions of families; to analyse the causes of unemployment, and perhaps suggest possible paths towards a state marked by fuller employment. Some of the speeches, I believe, have opened up possible new approaches to this grim and ghastly national problem. Nor has the House—if I may say this as a relatively new entrant—failed today to face up to the problems which we have, each of us, sought to analyse and, wherever possible, to venture into possible solutions.

What has impressed me in my short time here is the wealth of experience—industrial, local government, national government—and the readiness of noble Lords, wherever they may sit, to put forward new approaches in facing up to problems. May I therefore thank all parts of the House for their response to this approach, which began earlier today. With those thanks, I now beg leave to withdraw my Motion.

Motion for Papers, by leave, withdrawn.