HL Deb 03 April 1985 vol 462 cc253-306

4.25 p.m.

Debate resumed.

Lord Bottomley

My Lords, it affords me much pleasure to follow the noble Viscount, Lord Watkinson. We served very happily together in the other place for many years. I should also like to join him in congratulating my noble friend Lord Murray on his maiden speech. We have been friends for many years and I have admired tremendously his knowledge and his integrity. He brings to your Lordships' House a rich experience of industrial relations and am sure that we look forward to hearing from him again and again.

It is distressing to us all that Britain's economy is in a precarious position and that the world outside looks upon us as a weak and ineffective nation. The Government have to accept the major responsibility for this state of affairs. Britain is an industrial nation with few natural resources. Even our newfound asset, oil, will last for only a limited period. Therefore, we have to import the bulk of our raw materials and food from overseas.

The Industrial Revolution enabled us to manufacture goods which could be exchanged for raw materials and food, and we built an empire based on being the greatest trading nation in the world. The old industries making mass-produced goods requiring comparatively low technology and unskilled or semiskilled forces have now been taken over by the developing countries. In the main, new industries have not developed sufficiently to fill the gap.

Of course, two world wars added to our problems. As Sir Winston Churchill said at the end of the last war, we were a bankrupt nation. It was my privilege to be a member of the post-war Labour Government which had to tackle this situation. The ravages of war and the past neglect of our economy had left us in a distressed state. There were troops returning from the battlefields to be resettled and social problems, such as housing, education and health services were vigorously dealt with and, in spite of that, the welfare state came into being. The result was that Britain was highly respected in the world, particularly because of the creation of the new Commonwealth.

However, I must not dwell on the past. It is the present Government and their policies with which we are concerned. I believe that they have deprived and divided the nation, eroded our liberties, wasted our resources, and created a sick economy. Their failure to invest in the public utility services, or to upgrade and increase our housing stock, means that in a few years' time we shall be in tremendous difficulties.

Recently the electricity supply in front of my own house was dug up and I saw for myself the mangled cable worn and decaying. Too often, we hear of gas explosions in homes and in supply areas. One of these recently culminated in many people being killed in South-West London. Our sewage systems are hopelessly out-dated. The Federation of Civil Engineering Contractors have drawn attention to the high rate of sewer collapses. Such neglect could lead one day to widespread disease. We have a mass of unemployed labour who are being paid to be idle while there is all this vital work waiting to be done. To employ people in creating assets makes sense.

The Government say that one of the main reasons for our weak economy is that workers are pricing themselves out of jobs and that high wages are making it impossible for this country to compete in world markets. The inference to be drawn from that argument is that the wages paid in other industrial countries are lower than ours. That is not so.

Wages paid in the United States, in West Germany and elsewhere are higher than ours. If low wages created more employment then the developing countries would have a distinct advantage. As we know, they have no such advantage. The Council of Europe has recently reported that the United Kingdom is in breach of its obligations under the European Social Charter for failing to observe decent wage levels.

Low wages, I suggest, are responsible for a good deal of the unemployment that exists at present in Britain. In the public sector of industry, the Government exercise vigorous wage restraints, and private employers are encouraged to do the same. The Fair Wages Resolution, designed to ensure that workers employed by private contractors receive fair pay and conditions, has been rescinded. The Wages Councils, which set minimum legal rates to be paid to 3 million of the poorest and most vulnerable workers, have been weakened and are now threatened with abolition.

The emphasis on reducing wages will add to unemployment. People will have less to spend on the goods and services they desperately need. There are 3 million people who cannot afford to heat the living quarters of their homes. There are 6 million people who lack essential clothing, and 5. million people who have to do without some essential item of food for lack of income. The lack of demand for goods will mean that factories will have to close down. That this is already happening is made clear by the ever-increasing number of bankruptcies.

Recently, I asked a number of young people what, if they had to choose, would be their first priority; the health service, a home, or a job? They all replied that it would be a job because without full employment the nation would not have the wealth to provide the health service and homes. They said that to be employed preserved one's dignity and self-respect.

The plight of the young unemployed causes me much concern. Because they have no employment they become bored and disillusioned and they tend to drift. They seek temporary excitement and turn to vandalism and petty theft. They need mental stimulation and physical activity. There are many excellent voluntary organisations which provide this, but their work is being threatened now by Government economies.

The honorary secretary of the Institute of Careers, and Careers Officers for Cleveland, Mr. Ray Hurst, whom I knew well when I was Member of Parliament for Middlesbrough, wrote to The Times on 15th December questioning the use by the noble Lord the Minister without Portfolio, Lord Young, of the Beveridge Report: For boys and girls there should ideally be no unconditional benefit at all. Their enforced abstention from work should be made an occasion for further training". He apparently made that comment to justify possible further restrictions on the right of young people to claim benefit, ignoring the fact that the right to receive benefit during a period of unemployment has never been unconditional. It has always been subject to the condition that the claimant was at all times available and prepared to enter employment.

The Minister, in the same speech, suggested that there were jobs for young people. How can he say this when Government figures themselves show that there are more than 600,000 teenagers unemployed in the United Kingdom and only 9,700 real job vacancies? Mr. Hurst made many other valuable comments in his letter and I hope that the Government have taken note of what he had to say.

The Select Committee of the House of Lords reported that we are not providing enough vocational training compared with other countries in the European Community. In Germany, only one-third of the workforce is vocationally untrained; in France, 40 per cent. of those aged between 16 and 18 are engaged in full-time courses of vocational training; but in the United Kingdom the figure is a mere 9 per cent.

The Government's policy of monetarism and of allowing financial institutions to impose their own controls has encouraged and aided the growth and power of irresponsible multinational companies which owe no allegiance to national government or international authority. They dictate the speed and direction of scientific and technical development. They decide where people will work, regardless of the amount of satisfaction and fulfilment they will get from such employment.

This Government have attacked the fabric of our democratic institutions by abolishing the GLC and banning trade union membership at GCHQ. They have introduced further oppressive legislation to shackle the constitutions of the trade unions. This Government have succeeded in making articulate the philosophy and ideology of a soulless society instead of satisfying man's material, ethical and spiritual needs.

4.37 p.m.

Lord Marsh

My Lords, it is a pleasure for me to follow the noble Lord, Lord Bottomley. In 1959, when I was elected to another place, he and I were both members and officials of the same trade union. When I left to enter the other place he inherited my office, my car and my secretary. At that time I not only viewed him, then as now, with affection, but I also agreed with most of what he said. One of us has changed, and I do not think it is him; but I disagree with a great deal of what he has said today.

I should like to pay tribute to the noble Lord, Lord Murray, for his absolutely first-rate maiden speech. I know that could be something of an embarrassment in some quarters of the Labour movement, and I apologise for it. I also warn noble Lords who do not know him well that his future contributions are unlikely to remain so convivial and non-controversial. On a more serious note, the benefit that this House will undoubtedly gain from his membership and from his interventions in our debates is offset by the gap which he leaves behind in the upper councils of the Trades Union Congress and the trade union movement in this country. Indeed, if noble Lords wish to frighten their children they can tell them that the horrors of some of the worst parts of the trade union movement which have occurred in recent years would have been worse still without the noble Lord, Lord Murray—and that he is not there now.

Over the past few years the Government have followed a fairly consistent course in relation to the economy. The Prime Minister has reiterated many times her belief in the need for this country to restructure its industrial base. She did so in the knowledge that this was bound to be unpopular, because when one talks about restructuring the industrial base one means shutting down factories and firing people. That is the brutality involved in restructuring our industrial base, and I believe that it had to be faced.

The Prime Minister and the Government have all the way through recognised that this country can no longer rely on the traditional industries of the past. We are not going to see a revival of the coal industry, of the textile industry, of the steel industry or of the shipbuilding industry—of the big, old smoke-stack industries. If we are successful, they will not form the industrial base of this nation because they are no longer the key industries.

The decline in the importance of those industries means that we have to encourage the development of new industries; of science-based industries and of service industries. I am not talking in terms of hotels and laundries, but of financial service industries and various other industries which give us a lead into the new world. So the Government have over and over again given undertakings that they would encourage that painful, crucial transformation in the country. They have declared themselves committed to encourage skill and enterprise by progressively removing some of the more obvious disincentives in the tax system. Most people would agree that, looked at objectively, you can reward senior executives today much more effectively than was the case a few years ago. We have moved away from a ridiculous situation where the only way one could give a senior employee benefits was by buying him his suits and his shirts, or by giving him a car, with one for his wife, neither of which he wanted as he would rather have had the money.

The country at large needs to take on board that in a capitalist society the creators of wealth tend to be motivated by material things. There are very few first-rate accountants on the market at £5,000 a year. It is very difficult to get a first-rate scientist for £10,000 a year. Those people are motivated by money. Therefore, it has to be paid, and they must be able to see it.

Against that background—and I move to a specific point—I find that changes to the earnings limits proposed in relation to the national insurance contributions are incomprehensible. The noble Lord, Lord Barnett, said he did not think it would do very much good. As always, I largely agree with the noble Lord, Lord Barnett. He, like so many noble Lords on the Opposition Benches, would not stand a chance of office in the other place these days. They would certainly stand little chance of getting selected for a marginal seat—and that is to their credit.

I believe that the change will have a positively damaging effect. The intention is totally laudable, but it is slightly naive. I have no doubt it is one of those things like the Insolvency Bill. It was probably drafted in the first instance by an assistant secretary or an academic who lives in Islington and votes for the SDP. It is totally unrealistic, and is naïve in the extreme. Life does not work like that—that you can suddenly offer another £3 a week to employ people at the bottom end of the scale and, at the same time, put on a charge of anything up to £2,500 a year at the top end of the scale. In fact, I believe the reverse will happen and the effect in some areas will be disastrous. We all accept that key people of high quality are essential, but they are also expensive. Salaries of £25,000 to £40,000 a year are not high for senior employees in areas like financial services, marketing and the science-based industries. However, as I understand the proposals the increase on a salary of £25,000 a year will be about E1,200 per annum. At £40,000 a year the increase is £2,750 a year.

I am not worried about those individuals, because they will still get paid, since this is an area where market forces apply. As the noble Lords, Lord Murray and Lord Bottomley, know, the rate for the job is based on market forces more than anything else. That is what trade unions are all about—getting the rate for the job and seeing what the market will bear. Therefore, these people will maintain their standard of living. However, the effect on employment in some areas could be disastrous. These highly-paid people tend to be concentrated in particular industries. Frequently, they are in the majority in such industries, and they are not so common in the labour-intensive industries.

I give one example which I know will not be particularly popular. I declare an interest as chairman of the Newspaper Publishers Association. I know that the national press is less popular among the public than journalists believe. Nonetheless, the effect of the proposals regarding national insurance contributions on Fleet Street will be to add between £12 million and £13 million per annum to the bill. There is no way in which the industry can meet that amount. One can complain about how the industry got to that situation, which is another debate. It was before my time, and I will sue anybody who suggests that I have any executive authority in Fleet Street. I exist purely as a buffer between management and the proprietors. If one looks at the financial position of such companies it is not possible for them to meet an increase of that level.

So what will happen? I suspect that some titles will close, and that will involve a great deal of unemployment. I see no other way in which to meet the additional on-cost. I refer to another company in which I am involved—a perfectly respectable, medium-sized company in the field of financial services. The increased wage bill for that company will he about £400,000 a year. How will the company meet that? The company will find that it is much easier to shed a few of the employees at the bottom end of the scale than to shed employees at the top end of the scale. I suspect there will be a positive disincentive to employment by this well-meaning piece of legislation. Moreover, it will produce a return to payment by perks, which was a nightmare that many of us hoped and thought we were beginning to get rid of. That is the easy way round it. One goes back to providing the cars, the suits, and a whole host of ways of getting round the legislation.

That specific point leads me to the main issue of today: the problem of unemployment and the implied suggestion that there are some simple solutions to a problem which is as complex and fundamental as it is tragic to those who face long-term unemployment. Regularly we hear from the pulpit and the podium such good gentle words as "care", "compassion" and "caring" exploited to imply that the unemployed suffer needlessly; that because the elected Government for some wicked and undefined reason want to maintain high unemployment they deliberately avoid taking measures which would avoid unemployment or even reduce it. I really do not believe that people, other than extremely stupid people, can possibly believe that. The idea that an elected Government would sit with the answer to unemployment locked in a cupboard, with no one allowed to see it, two years after an election, is ludicrous.

This Chamber is full of politicians—there are nice people as well!—and any politician would love the ability to wipe unemployment off the British political scene. That is simple common sense. Yet still people who I cannot believe are that stupid imply that there is a simple recipe. This morning, when drinking my breakfast coffee, I heard the Leader of the Labour Party in a radio interview commenting on the new policy to combat unemployment which was presented yesterday. I was amazed to hear him say, when asked how rapid would be the effect on unemployment, that it would reduce unemployment by 500,000 in the first year and by another 1 million in the second year—presumably to be abolished in the third year. I must say that I find that very surprising. The simple recipe for this massive change—and it has been put more eloquently this afternoon from various quarters, not least by the noble Lord, Lord Barnett, who, as a Treasury Minister, was much less free with public expenditure than he has become since he left that office—is a massive increase in public spending. As the noble Earl, Lord Gowrie, pointed out, that is a simple prescription that we have tried, and tried and tried again, over decades. Unemployment is not a new problem in Britain.

In his first speech in this Chamber the noble Earl, Lord Stockton, drew attention to the fact that unemployment in Stockton today is similar to that which existed when he entered Parliament 60 years ago. The moral is that successive Governments have tried for decades to bring employment to the North-East and to the unemployment black spots of Wales and Scotland. We have tried massive expenditure on public works—the Humber Bridge, the Leyland bus factory, road-building and subsidies to coal, steel and textiles—and yet the worst areas of unemployment 40 years ago are in most cases still the worst areas today. All that has not changed the pattern of unemployment in this country.

Of course, unemployment is not just a British problem. There are today over 20 million people unemployed in Western Europe. Even West Germany, the most dynamic economy in Western Europe, suffers with 2½ million unemployed, not counting many thousands of repatriated foreign workers. Europeans suffer because we have not yet been able to restucture our industry and our society to enable Europe to compete with the United States of America and the growing threat from the Far East. That is why I hope that the Government will not be diverted from their policies.

5.1 p.m.

Lord Dean of Beswick

My Lords, may I join with previous speakers in the appreciation they express to my noble friend and colleague Lord Barnett for initiating the debate? I am certainly grateful for the opportunity to place on record in this Chamber my appreciation to my noble friend Lord Murray for the quality and content of his maiden speech. Also, as a life-long trade unionist of nearly 50 years' standing, I wish to express my appreciation of the work that he put in during his stewardship as secretary of the TUC. He had to contend with one of the most difficult periods for trade union public relations and their public image. I think that he did extremely well in a difficult situation.

It is to be regretted that in some respects the present Government did not listen to some of the more sound advice that he gave them. The fact that they almost totally ignored most of the advice that he gave them on various issues in some respects has bounced the ball into the court of the less moderate factions of the trade union movement. I think that some of the difficulties that we have recently experienced might have been avoided had they only listened to him a little more intently. Certainly I do not think that some of the actions that we have seen in the recent past would in any way be respected or looked on with favour by my noble friend Lord Murray—Len Murray as we used to know him. I pay my full tribute to the services that he gave.

What is this debate about? It is about the Budget, and the Budget is supposed to be a Budget for jobs. I take the totally opposite view. It is not a Budget for any such thing. I have seen quotations by various bodies recently which have predictably come to the aid of the Government to say that the Budget means 300,000 jobs, or 200,000 jobs, an increased number of people going into training, and 100.000 extra jobs by virtue of the fact that wages councils will be abolished and wages at the bottom of the scale will be depressed.

I take the view that something much more drastic must be done. I do not follow the noble Lord, Lord Marsh, down the road that he takes. Most responsible people feel that at least 50 per cent. of the increased unemployment that has taken place since 1979 is a direct result of Government policies. Certainly nobody has put the case that that is not so. A figure of 300,000 people is being talked about as those benefiting from new jobs as a result of the Budget. I take the view that we may just have 200,000 better trained people languishing in the dole queue and a wider distribution of misery at the bottom end of the wage scale.

I used to be involved in a sense with wages paid in the catering industry, and I never found that those people were overpaid. My role was as a sort of employer as secretary of a large Labour club. Nobody has presented anything at all to us to show that depressing wages at those levels will create jobs. I predict that it will not.

There are two schools of thought at present. One is to follow the policy that the Government are putting through in their legislative programme. The other is that there should be a public sector inspired regeneration of the country's infrastructure as a viable investment which is well worth the money and the time. That is certainly an economic proposition which is worthy of attention and it should be put through as a policy. The second option is being adopted by more and more people in responsible sections of our community. In fact it is being said that there is a far better Cabinet on the Back Benches on the Government side in another place, and they are totally against the Government's economic policy and in various degrees would be in favour of some form of reflation in the public sector by tackling this devastation of the infrastructure.

With the leave of the House, I should like briefly to quote one passage from the report of NEDO which was prepared for Neddy. It states: In many areas the present systems and levels of resource allocation have led to failures to maintain the fabric of building and structures, to remedy structural faults, to renew worn-out components and to remedy obsolete features. In some areas delayed and insufficient expenditures have led to accumulating and accelerating backlogs of work as the deterioration of the stock and the cost of crisis repairs increase. It is claimed that there are many instances where the quality of service provided has fallen below statutory or minimum acceptable standards". I am not making the case that we should take such steps just because we have so many in the building industry who are unemployed. Some noble Lords may remember that a few weeks ago I had the privilege of initiating a debate in the House on the building industry. Those who provided the brief for the Minister who replied stated that the building industry was having its share of economic revival and was doing very well. All the associations involved in the building industry, including the Federation of Master Builders, the Building Employers Confederation, the Institute of Maintenance and Building Management and the Federation of Civil Engineering Contractors, and the trade union side thought that that statement was beyond belief.

The Government were quite clever. I suppose they thought that nobody would be intelligent enough to analyse what they had done. They had perpetrated a con trick. They took the figures for increase in building activity from 1980. The figure that the Minister gave on that occasion for total construction and building work in the country was £20 billion in 1981 and £21¼ billion in 1982, moving to £22 billion in 1983. But, had they gone back 12 months before 1980 to 1979, when they took office, even at prices then, when there was more value for money because of the effects of inflation, we should have learnt that the figure was £23 billion.

Some noble Lords, including those who have already spoken in the debate, may have received a letter from the secretary or the director general of the Federation of Civil Engineering Contractors, which said such things as that the figures being used were no credit to the Minister or the Government which he was representing. That was the federation's terminology and not mine. Those are the facts that we have before us. In the building sector alone there are 400,000 people on the dole. I am not saying for one moment that it is possible overnight to translate money into jobs for those people, but the building industry, which traditionally is one of the biggest employers of labour, is able to translate invested money into jobs more quickly than any other industry. It is on that basis that I urge the Government, in conjunction with people of different political persuasions, people from their side of the building industry as well as the trade union side, seriously to consider what they are doing in allowing the deterioration of the infrastructure that is presently taking place.

The house building programme in the public sector, compared to previous years going back to when the noble Earl, Lord Stockton, was Minister of Housing, is an insult. It is predicted that there will be about 50,000 houses built this year in the public sector. If you look at the private sector, though that started to lift up a little hit, it is now starting to peter out.

The parts of the industry that are operating in building for industry show a progressive increase. That is extremely welcome. However, in all these other parts of the building industry we have people homeless, we have people badly housed and we have hospitals in had condition. A hospital not very far from where I live was in such a bad condition that salmonella was rife and caused numerous deaths. This is due to the fact that money is being withdrawn where it should be being spent on maintaining and improving the infrastructure.

This Budget, as it stands, will do no such thing. It will create no jobs in a real sense. Looking at this Budget, I would not see any prospects of the people in the dole queue, who are unemployed and who really want to work, drawing any optimism from it. I sincerely hope that there will be an increase in the number of people supporting the Opposition Benches. They have grown in number. The noble Lord, Lord Alport, is present in the Chamber. A few weeks ago I had the privilege, as no doubt did some of your Lordships, of reading an article that he had written in the Daily Telegraph, which drew conclusions as to how the Government were wrong. I do not think anyone could disagree with one word he said.

There is a case for a massive investment of public money to pay people to work instead of paying them while they are on the dole. There is a case for building more houses. There is a case for modernising houses. There is case for repairing houses and building new homes, new hospitals, new roads and new sewage system to replace the present ones which date back to Victorian times, I hope the Government will think again and that this Budget is the last of this kind we shall see from this government or from any other.

5.3 p.m.

Lord Alport

My Lords, I should like to begin, if I may, by congratulating the noble Lord, Lord Murray of Epping Forest, on his distinguished maiden speech. Like him, when preparing for this debate my mind was focused on the White Paper recently issued by the Government, Challenge to the Nation, which encapsulates, in effect, the results of the Budget upon the present problem of unemployment. A White Paper which is endorsed by six Secretaries of State and the noble Lord, Lord Young, has a right to be taken seriously.

When I had finished reading it and had analysed the proposals in the summary at the end I came to the conclusion that the Government believe that the problem of mass unemployment cannot be solved, and, in a mood of fatalism, do not really intend to try. They appear to be content to provide what the London Business School calculates will be 150,000 dead-end jobs for youngsters between 16 and 18 and 150.000 low-paid jobs as a result of certain financial adjustments in the recent Budget.

I have in many speeches in your Lordships' House and elsewhere been critical of the Government's policy to combat unemployment. Therefore, it would be perfectly fair if I was asked, "All right, what would you do?". I accept that, looking into the future the development of industries in the field of technology is of first importance. This requires investment in new companies and new techniques. But it also requires a strong home market. Today, the British market is flooded with consumer technological goods from Japan and Taiwan. During 1984 we imported from Japan £4 billion worth of such goods and we exported to Japan less than £1 billion worth—a balance favourable to Japan of nearly £3 billion. Over the same period we imported from Taiwan £585 million and exported only £150 million—a balance in favour of Taiwan of nearly half a billion.

I use these two countries simply as examples. None of these imports is essential for defence; none contributes to the current standard of living in this country; all compete with the trade of our real trading partners in the EEC. It is high time that Japan, for instance, ceased to export its unemployment at our expense. I realise that if we now decided to protect our industries in this field it must be after consultation with the EEC and within the general ambit of GATT. But the first thing I would do is to introduce a policy of selective protection for British industry, particularly for those firms developing in the technological field.

I should remind your Lordships of two matters. One is that the United States Senate—that very successful and prosperous country—has recently come to the same conclusion and that our partners in the EEC are deeply worried by the present situation. I should remind my noble friends on this side of the House that the policy of selective protection of the British home market to aid the development of new industries and to help to solve unemployment has been the cornerstone of Conservative policy for almost the last 150 years.

Secondly, I should direct the Government's procurement policy to the principle of buying British. In the Observer last Sunday there was a report that the Government have authorised Nottingham University to buy technical equipment costing £700,000 from the United States instead of from a British company which produces plant which is at least equally efficient and costs less. There is a fashion of thought widely current in this country that anything which comes from overseas is better than anything we produce here. The Nottingham University case seems to be a typical example. If the Government lack confidence in Britain, consumers generally will do the same. I should like to see a full inquiry as to how and why the Nottingham decision was made.

It should be the Government's policy to encourage state industries, local authorities, all Government departments and particularly the Ministry of Defence to buy from British firms wherever this is possible. I will not enter into the controversy which has surrounded the appointment by the Secretary of State for Defence of Mr. Levine. But even assuming that his appointment is both legal and appropriate, has he been instructed to place the enormous orders for which he will be responsible with British industry?—unless, of course, there is some NATO defence consideration of standardisation to the contrary.

In Colchester we have a company which in the last war made diesel engines for submarines with immense success. I have not inquired whether it has any Admiralty contracts today. All I know is that its labour force has shrunk dramatically during the last few years. But this enables me to illustrate another point I am trying to make. A year or so ago I joined with others in my town of Colchester to launch a business enterprise agency to encourage, advise and help those who want to start small businesses. It has the support of the Colchester corporation and almost all the leading companies and professional firms in the town. It has had a stream of clients, many of whom have started their own small businesses, mainly, I think, in the craft and service industries. I think I can claim it has been as successful as any agency anywhere. At the last count it had helped to provide jobs for 70 people. The unemployment in our district, which is below that in many parts of the country, is 7,000. At that rate it would take 100 years for small businesses to absorb current unemployment locally. A Government contract to any of our major companies would, within weeks, give jobs to ten times the number which small businesses could recruit in a year.

I am not making any special plea for Colchester. I am merely illustrating how the Government can help, by their procurement policy, to reduce unemployment; and I am trying to illustrate the fact that, however valuable the encouragement of small businesses may be for starting men and women with courage and determination on the road to indepenence, the policy is irrelevant to the solution of the problem of unemployment.

Next, I would launch a campaign to "Buy British and give someone a job". It has been done before. The Government should not underestimate the deep concern of people in Britain, and particularly in the more affluent south, about the unemployment problem—especially among those who themselves have jobs and the security that this involves. They are not content to leave it to market forces, the uncertainties of the interest rates or the aberrations of our fiscal policy. They want to do something themselves, and find it very difficult to know what they can do. A buoyant United Kingdom market for British industry—the choice of a car, for instance, from Coventry, and a computer from Cambridge, against an import—would give a fillip to British companies in the home market that would help both with their development and with the employment that they are able to provide.

Lastly, I have no doubt that the time is overdue when there should be changes in the pattern of employment and industrial wages. I remember the late Mr. Samuel Courtauld, one of the wisest and most experienced industralists of his generation, saying to me one day, "No one can work in any industrial process for more than 40 hours a week at full efficiency". This means that where a company is paying overtime beyond 40 hours, at one-and-a-quarter or one-and-a-half, as the case may be, they are not getting, to use a favourite ministerial phrase, "value for money".

My point is illustrated by the impending Post Office strike, which I hope, I may say, will never happen, but which, I understand, relates not only to the use of improved technology but also to the use of part-time workers or, as some might describe it, a process of work-sharing. A transition of this sort should not be brought about by confrontation between management and workers in a major public service. It is something that affects, and will do, the whole spectrum of employment in the public and private spheres alike. My proposal is that a major change in the pattern of hours of work and wages should be examined by the Government, employers and the leaders of organised labour—the trade unions—with terms of reference that cover the whole of British industry. The study should seek to take account of the revolutionary changes that the economic, social and political circumstances of this county have brought about since the end of the last war. It should consider how profit sharing and productivity bonuses can replace overtime.

There is nothing new or revolutionary in these ideas. I do not claim that they will solve the whole unemployment problem. But I know that they are practical and I know that they will help. More than that, they will change the climate of defeatism and helplessness so abundantly evident in the White Paper. Let me emphasise to my noble friend, Lord Gowrie, that all that I suggest can be done without any drain on public funds or adverse effect on inflation. Such expenditure as might be involved would be met by savings from the present cost of unemployment benefit for men and women who will no longer claim it. This does not mean that I do not underestimate the importance of investment to which reference has been made many times in the debate. Now that we have the advantage of the proceeds of North Sea oil there should be investment at this particular time, I believe, in public works; in housing, in transport, inner city renewal, energy and local and national services.

The Earl of Gowrie

My Lords, there is.

Lord Alport

My Lords, any prudent Government would regard such investment as a vital contribution by this generation to preparing Britain for the 21st century. It is easy for the Government to advise people to move to find work. Every day in the year youngsters arrive in London from the Midlands and the North looking for work. Too often, in spite of the dedicated voluntary organisations that seek to help them, they end up penniless and workless, living in rotten digs and a prey to pimps and drug sellers. It is no good telling the unemployed to go and find work when there is no work for them to find. It is no good the Government issuing challenges to the nation if the Government face their own challenge with a confession of defeatism and helplessness. If this Government are unable to meet the challenge, then I can tell them that a deeply concerned and patriotic electorate will, in two or three years' time, find a Government that will.

Lord Graham of Edmonton

My Lords, we are ready.

5.15 p.m.

Baroness Carnegy of Lour

My Lords, I should like to join in welcoming the speech of the noble Lord, Lord Murray. I spent several years as a member of the Manpower Services Commission alongside his TUC colleagues. It is good to hear him paying tribute to what the MSC has done in helping governments of the day in industrial affairs.

The noble Lord, Lord Barnett, is an experienced and distinguished politician. But listening to his speech and indeed to those of many noble Lords with, if I may say so, the notable exception of that of the noble Lord, Lord Marsh, one cannot help reflecting that on the question of what to do about unemployment, the people of Britain are now well ahead of the politicians. And the Budget is probably much closer to popular opinion than many noble Lords would have us believe. What are the true facts as perceived by the ordinary man and woman in the street? How do they see the causes of unemployment? How do they see this Budget? If the polls are to be believed, there is now widespread agreement that bringing down unemployment is a top priority but that it must be done without damaging the improving of competitiveness in wealth-creating industry and must be done without fuelling inflation.

In addition, most people know really rather a lot about the problem as it is on the ground, whether from their own experience or that of friends. They know that all over the country, there are employers, many of them small employers, whom it would suit very well to take on one or two or many more extra people but who, in fact, are doing everything they can not to take on those people. The usual reasons given are the hassle, the cost and the difficulty of finding the right people for the job. There are many other small employers who have actually given up employing people altogether and who work on their own for the same reasons. Most people also know from their experience those who are unemployed who genuinely want work but who are discouraged because they find that the only employment available would leave them scarcely better off than does the dole. In the same way, married women who are looking for work find it difficult to locate a job which, at the end of the day, will leave them and their husbands better off than if they stay at home. Most people know 16 and 17 year-olds who, on leaving school, have been persuaded that if they cannot get a job they should simply do nothing. Now, with no training, no experience and no track record, they are unemployed and likely to remain so.

Most people know at least some long-term unemployed—those who have lost the will, who have lost the work habit. They have resigned themselves to the dole and to the company of others in the same position. Most people have friends who have contemplated self-employment but who, having done their sums, find the high national insurance and tax a persuasive disincentive. These and many other practical problems which the Budget seeks to ease are nowadays very familiar to the majority of people and seen as in crucial need of attention. I doubt if the initial disappointment reported in the press came from many but the chosen few. I also doubt whether the kind of protectionism that my noble friend Lord Alport has been suggesting, would be widely welcomed as sensibly realistic. I suggest that once the electorate are fully aware of the employment implications of the Budget and of the three linked White Papers which have so far been published, they will welcome the strong and hopeful sense of direction which is now emerging.

Given that the number of people wanting to work is likely to increase by an average of 120,000 every year until 1990, it is clearly necessary not just to replace the jobs which are disappearing, but to speed up the creation of many more jobs. A great many have been created in the last few months, but many more will have to be created, and that can only be done by making it more attractive and easier to employ, to be employed and to be self-employed. It seems to me that the Budget moves in that direction—in the direction of turning growing productivity and output into the taking on of more people at lower wages rather than—and this is the important point—it all going into higher wages for those in employment already, leaving the rest literally living off the crumbs that fall from employed people's tables, which is what being on the dole is all about.

I believe that those in reasonably well paid jobs in Britain will be prepared to allow that to happen and will see the implied pause in the improvement of living standards as justified in that it helps other people to begin to earn and in the longer term helps the prosperity of all. People want to get back to one nation. I believe that this is a one-nation Budget.

People will also see many of the constraints on employment—constraints with which they are personally familiar—removed. I refer, for example, to 30 pages of complex wages council regulations which may be all right for the big boys of the CBI but which are a considerable burden, as is well known, on small employers and are not easily understood by employees either. There will be more money in the pockets of 800,000 workers who are coming out of tax.

There are proposals—and it is astonishing that no noble Lord has mentioned this point—for tax equality for married women and the end of their particular form of poverty trap. There will be the addition, as has been mentioned, of 100,000 more opportunities for the long-term unemployed to regain the confidence and the track record that they need for work, through the already successful Community Programme. Moreover, if that succeeds, there will be more places to come. The Youth Training Scheme is to be extended so that in future—and this is literally what it means—every 16 and 17 year-old can become the possessor of basic skills and qualifications by staying in full-time education towards a qualification, by training towards a qualification or by having a job, one hopes, with training towards a qualification. When that happens, no young person need be stuck without competence and no employer need be stuck for an able young person to employ.

The direction of this Budget is towards a labour market where people are far freer to employ and find employment in ways that suit all concerned, and where fresh demand can far more quickly be turned into new jobs and growing prosperity without damaging competitiveness or fuelling inflation. We are entering new territory, and new problems require new responses. I believe that the Budget, as it reveals itself, will be seen by ordinary men and women as the beginning of a bold and imaginative response—a lead in a clear and hopeful new direction. I believe that it will turn out to be what the Chancellor has claimed: truly a Budget for jobs.

5.25 p.m.

Lord Ezra

My Lords, I do not wish to add to the embarrassment of the noble Lord, Lord Murray, by congratulating him on his maiden speech, which many of your Lordships have done this afternoon. However, I should like to recall the unfailingly objective and sympathetic way in which he helped to resolve many industrial relations problems in the coal industry during the latter part of my period there. A continuance of that attitude as between trade unions and management is something which we should all try to see restored at the present time.

The noble Lord, Lord Barnett, has given us the opportunity to have a serious and wide ranging debate on some of the major issues which face us. I believe that two points of agreement have emerged out of the debate so far. The first point is that the present level of unemployment is unacceptable. The Government have said that that is so and everybody else shares that view. The second point is that there is no magic solution. However, having said that there is no magic solution, one should not be led to fail to seek an answer even though it may be complex, difficult and require a combination and a variety of solutions. Many valuable suggestions have already emerged in the debate and I am sure that the noble Lord, Lord Young, will take account of them when he sums up at the end.

For my part I should like to concentrate on one aspect, and that is capital formation. I believe that capital formation—capital investment—will have to play a major and more important role in helping to find a solution to the unemployment problem than it has so far. In looking at the question of capital investment, I am well aware of the views expressed by the noble Lord, Lord Marsh, in which he said that there is no way in which one can borrow one's way out of this type of difficulty. I entirely agree with that view. However, having said that, it does not mean to say that the capital investment route is not one of the contributors to the solution which we must seek.

I was very pleased indeed to hear the remarks of the noble Viscount, Lord Watkinson, with whom I had the pleasure of working very closely when he was president of the CBI. He was entirely right in drawing attention to the way in which capital and revenue are muddled up in Government accounting. There is a need to establish priorities in Government expenditure. As the CBI have said in their latest publication, there is a need to introduce a qualitative assessment in this field. There have been many debates on the whole subject of investment in basic services, one of which was recently introduced by the noble Lord, Lord Dean of Beswick. The recently published NEDO report has shown that those who have been pressing for rather more investment in that area have not been doing so simply as a means of finding a solution to the unemployment problem, although undoubtedly it would contribute in some degree to that end; they have been doing so because they have been increasingly convinced that there is a need for this additional investment. The Government will of course say, "But there is a large measure of investment already in these sectors". That is perfectly true. The question is whether, in the present circumstances, it is large enough; and the evidence suggests that it is not. The evidence also suggests that a limited amount of additional borrowing on the famous PSBR of the order of £2 billion to £3 billion devoted to this cause could make a great deal of difference to the efficacy of what is described as the infrastructure and could create a number of real additional long-lasting jobs.

All these figures have been worked out by responsible bodies within the construction industry and outside it. They are not figures which have been drawn out of the air, and I have no doubt they have been fully studied by the Government. That is an area which seriously needs to be looked at and I was encouraged the other day, watching the Chancellor in a television debate on a Sunday, indicate that possibly when he came to the next Budget, depending on all the circumstances and provisos which every Minister always introduces to qualify anything he may be saying about the future, nonetheless, he might well be tempted to extend his borrowing activities. I very much hope that that will be so and I very much hope that a large part of those additional borrowings will be used in the public sector investment. But investment in the private sector is also going through a difficult patch. As the CBI has pointed out, the major impact of the previous Budget reduction of investment allowances is going to bite in the next two years; that is 1985–86 and 1986–87, and there is going to be what the CBI has described as a dip in the level of investment in manufacturing industry.

It would have been helpful if some modification had been introduced in the impact of the withdrawal of these allowances in the last Budget because this was dealt with in considerable detail in the CBI's submissions to the Government. The fact is our manufacturing sector has diminished over the years. The fact is we are importing, as noble Lords including the noble Lord, Lord Alport, emphasised, more and more in net terms of manufactured production; and while the noble Lord, Lord Marsh, might have been right to some degree in what he said about the smokestack industries, all I can say is that some other nations have not given them up. They have modernised them and they have applied new technologies to them; and a large proportion, for example, of the textiles being imported into Britain today are coming not from the Far East, but from revived and modernised textile plants in Western Europe. So I believe that there is a very large area for us to be looking at there, and studying what other countries have done to apply modern technology to old industries. Do not let us give them up too easily without a fight.

There is the question of services. It has often been said that we are becoming a more service-orientated country, and certainly the services are of very great importance. There is not the slightest doubt that the banking services of this country, the shipping services, insurance services and so on, are earning the country a great deal; and that includes tourism. The CBI has, however, in its recent publication, which I find full of wisdom, entitled Change to Succeed, demonstrated that there is a balance between services and manufacturing. The CBI shows that we need to find a correct balance. Manufacturing, it says, does matter for jobs and wealth creation and indeed for the success of many of the service industries whose products we buy. There is this very close interrelationship between the service industries and the manufacturing industries. Indeed, there is a very close interrelationship between the private manufacturing sector, the public manufacturing sector and the public service sector. It is this close interrelationship, I believe, which should form the basis of a review of the various steps which we should now be taking to try to create more real investment in this country.

We should do this all the more importantly at the present time because on the one hand there is a strong undertone in our affairs which should enable us to do a number of these things. We still benefit from North Sea oil and from the sale of assets; but looking at the wider world, there are small clouds on the horizon which could become big ones. There is a great deal of uncertainty arising in the United States. There have been banking crises, there is a crisis in the farming industry, many of the large corporations are showing reduced profits as a result of the strength of the dollar, and we have seen this translated into the major fluctuations of the dollar in recent times. We in Europe have always tended to take the view that one of the problems we face has been the strength of the dollar and the impact of high interest rates which that has generated; but we should also be careful of what might happen if the dollar went into reverse and if the American market—which has been so open to so many countries—suddenly closed, and if the funds which have been made available throughout the world as a result of that were to dry up. We have to prepare ourselves for that kind of situation.

Now I believe is the time when we should be reviewing our whole economic policy so as to strengthen not only our public base hut our manufacturing base. I believe that now is the time when we should be strengthening our links within Europe; and my colleagues and I on this side of the House feel that one of the most important ways we can do that is by finally taking the plunge into joining the European Monetary System. We have heard as lately as yesterday the noble Viscount the Leader of the House saying, with that pleasant smile with which he always comes up with rather unpleasant news, that the Government still feels that the time is not right. It has of course defied the imagination of many of us who feel that we should be joining as to when the time might be right.

I believe that we are at a very important phase in our affairs. There are no magic solutions, but I believe that there are a number of specific solutions which if put together with vigour and determination and with, I believe, increasing support from many quarters, could go a long way to helping us to solve some of our major problems.

5.37 p.m.

Lord Houghton of Sowerby

My Lords, after such a notable speech from my noble friend Lord Murray of Epping Forest, I am sure that the House will welcome one more brief tribute to my noble friend who I am sure, we all agree, is a great accession to the prestige of this House. Like other noble Lords, I have known him for many years and I have had very close contact with his work in the trade union movement throughout his career in it. Those of us who know him realise that he is a man of great ability, deep intelligence and strength of character, and I am sure that we shall welcome any contribution in the future which he may feel that he can make to our troubled deliberations on this and allied subjects.

I do not believe many people come to your Lordships' House these days for their politics. We come mainly for what wisdom we can offer and what opinions we can give which may help a troubled people in these difficult times. We have behind us experience; some of us experience of government responsibilities, others of long service in many other importnt fields of public life and activity. So in my speech I am going to follow that approach to the role of Members of this House.

Let me say to begin with that I am broadly in agreement with the strategy of this Budget at this time. The Chancellor made a mistake in calling it a budget for jobs before he even introduced it and again as he sat down. It raised false hopes that by a budget for jobs he meant a budget to create jobs with schemes of public works to bring about employment. That surely was never the Chancellor's approach, nor is it mine, and nor, judging from the remarks that have keen made by the noble Lord, Lord Ezra, would it be his.

We must examine that point a little more carefully because there are many misconceptions about the possibilities of public expenditure for job creation. Budgets are about supply, about providing the resources to meet programmes of public expenditure. This particular Budget may have disappointed many people at home, and many of my noble friends here, but it gave added confidence abroad; nothing spectacular, but it certainly did good. The Chancellor's caution I think helped to strengthen the pound by contrast with the fall in the dollar. Coincidental it may have been; nevertheless, the two things took place at the same time.

The noble Lord, Lord Ezra, in his distinguished speech, referred to the United States. Here again much opinion in this country was encouraged to believe that we could look to the United States for a remedy for our own affairs. Many critics of President Reagan's general approach to politics in the United States seemed to be suggesting that what he could do with the American economy Mr. Lawson could do with ours. I do not think that that was ever on. As the noble Lord, Lord Ezra, has just pointed out, the economy of the United States is so different and its approach to its own problems is so different from our own in some respects that there is really no comparison to be made.

There is no Franklin Roosevelt New Deal going on in the United States at the present moment. Their budget, with a huge deficit and borrowing, is not to finance public works and improve the infrastructure of the country, but to finance tax reductions and the astronomical growth in defence expenditure. It is a sad reflection that rearmament, more than once in the experience of many of us in this House, has contributed to solving temporarily—and disastrously—unemployment when other remedies have failed.

I congratulate the noble Lord, Lord Alport, on his most provocative Budget speech on behalf of the "Independent Conservative Party". It was one that is worth a debate on its own. But I remind him that Britain went protectionist once before. Although I do not think that any of the remedies that either he or other noble Lords have mentioned should be brushed aside merely because they were tried before, they need re-examination in the light of conditions today, and we may come to different conclusions. The protectionist line of country, I warn the noble Lord, is very difficult and dangerous in the world of today, as indeed it was before.

The United States are not only doing some of the things that we might tolerate here; they are also beginning to cut the rate of new entrants to industrial employment throughout the United States in order to reduce costs. If we were to have something equivalent to the economy of the United States, we should have a complete merger of the EEC with our President in Brussels. That really would be the equivalent of the American economy.

However, if we come to the Budget and see what it is intended to do to help matters here, I think that the Chancellor's choice lay between selective expenditure and tax reductions. My preference in present circumstances is for tax reductions, and in certain circumstances I would even borrow for tax reductions. I believe that the Chancellor does not entirely rule that out of his own perspective; but not in this Budget, and only for essential needs and a profitable outcome.

The reductions in taxation secure the largest and widest spread of released resources, and we have to have regard to some of the problems and difficulties of selective expenditure. In my experience—and it is long in this connection—selective expansion is always uncertain in its effects, nearly always wasteful and inefficient under the stimulus of Government-sponsored demand.

There are plenty of examples of the grave mistakes which have been made in the past. Any former member of the Public Accounts Committee—I am one, my noble friend Lord Barnett is another, and the noble Lord, Lord Boyd-Carpenter, yet another—if he is honest, will admit that we have seen some quite dreadful things in public expenditure, some of which have received considerable public notice, while others have not.

It would be wrong to concentrate heavy public expenditure upon selected labour intensive industries beyond their capacity for efficient work. We need more investment there, and we need to sustain the activity there, again as the noble Lord, Lord Ezra, has just said, but it should come out of resources which we can spare from wealth-creating enterprises.

We have other warnings here. In building and expanding the welfare state we have made forward commitments well in advance of our known prospects of meeting them. If we are to regard the honouring of our obligations in that field as an important part of public policy, we must safeguard the structure of our welfare services even against demands in other directions. Public works should not be neglected. They should be considered certainly as a factor in alleviating unemployment, especially at this time, but not as a main purpose.

Perhaps I may turn to investment in private industry. There has been some criticism of the investments we have made in other countries recently. Indeed, I believe it is the policy in some quarters that a lot of that investment abroad should be recalled, or even press-ganged to be brought back home. Frankly, I do not feel that that is a proposal that is worth examining in this connection. Capital has gone abroad because it can be more profitably used there than here, and some firms in this country have maintained their prosperity here on the proceeds of more profitable activities in other countries.

There is no shortage of capital in this country for profitable industry. Institutions with large sums of money available are looking for profitable outlets all the time. I do not think that any public borrowing is likely to be necessary for that. But when it comes to efficiency and profitability budgets can help, but they cannot replace the human factor. The noble Viscount, Lord Watkinson, had something to say on that, and we must admit that there are deep-seated aspects of our affairs and our attitudes which are a great worry, and we cannot really see the end of them. I am not in favour of borrowing to finance a subsidy state. I do not think that we ought to try to emulate the United States in becoming the world's biggest debtor country.

I turn to taxation, though only for a moment or two, as I see that my time is running on. I think we should make better use of taxation. There is much to be done and I am glad that the Chancellor is to make a start. The whole system of imposing burdens upon industry and people needs drastic revision. The black economy can never be eradicated in present circumstances. Much of it is only a circumvention of grievances regarding an outdated tax law. Too many people are having to pay for tax concessions given to others who are better off than themselves.

A final point on taxation is that Chancellors will not get very far on reform of taxation if they look for a neutral outcome to the exercise. They must be prepared to contemplate some redistribution of taxation within a scheme of reform. We would have a tax credit scheme now had the Government of the day not said that it must be considered on the basis of neutrality and not on redistribution. Tax reform will have to have an element of redistribution because injustices in taxation will have to be smoothed out at some cost to some taxpayers and should not be removed wholly at the expense of the Exchequer. The Chancellor should not begin to stress budgetary provision for jobs as a general theme. That has to be undertaken in a much wider context. The Statement we have had from the noble Lord the Minister without Portfolio will add to our consideration. New jobs grow from seed rather than from any other source. They do not do very well if they are planted. I hope that following this debate we might have another, if I may humbly suggest it.

After this Budget, what next, my Lords? We should rapidly turn our minds to the future. Your Lordships' House has already shown that it is conspicuously well-suited to examine a problem of this kind in great depth. It might repay to ask noble Lords who assembled previously to consider unemployment to renew their task and give us a fresh report. The country is waiting for sensible solutions. It will be a great pity if your Lordships' House had no contribution to make amidst the clutter, a good deal of it unseemly and distressing to many of us, of the political battle that is going on. People are getting fed up with the clash of political arms out of which come mostly the remark, "You are just another." It is time that your Lordships' asserted your role as the new leaders of public thought and showed the way to those who are engaged in the struggle for power so that business can be attended to in a more temperate manner.

5.54 p.m.

Lord Bauer

My Lords, I should like to add my mite of a tribute to the noble Lord, Lord Murray of Epping Forest, for his notable maiden speech. Not all of us will agree with its central thrust, but I think we will all agree that it was highly effective as indeed we had expected it to be.

With the prevailing heavy unemployment the advocates of expansionary policies have again become vocal, even vociferous. They think that heavy unemployment reflects insufficient monetary demand and that the risk of higher inflation is small and worth taking. The reasoning rests critically on the belief that unemployment results from deficient monetary demand and the heavier the unemployment, the greater the demand deficiency.

How stringent are financial policies? Over the last five years both total monetary spending and retail prices rose by well over one half. Total output, however, increased by only about 2 per cent. and the rate of unemployment by over 140 per cent., and it is now about two-and-a-half times what it was five years ago. Retail sales register new records almost every month. Every day observation, such as crowded shops, the difficulty in getting repairs done, the spread of self-service establishments, the waiting time for consumer durables and equipment, all point in the same direction. Not all employers in the hotel industry find it easy to recruit young people, even from Liverpool and Newcastle, with offers of full board and lodging and a wage of £80 a week. Is this the stuff that insufficient demand is made of? The reason why the Government, in common with others in Europe, hesitate to adopt more expansionary policies is that they rightly suspect that this would re-invigorate inflation.

The situation here and elsewhere in Western Europe reflects the extreme difficulty of wringing inflation out of economies where inflationary expectations are strongly held; and they will not diminish as long as Governments show no sign of being able to rein in their own spending. The tenacity of inflationary expectations is not surprising. We have been experiencing by far the longest and most pronounced peace-time inflation in centuries. Hence the continuing wide yield gap between index-linked and conventional gilts and also the high level of interest rates. People also realise the strength of various social, political and economic forces which operate against the reversal of inflation, and even more against an actual general fall in prices. There is a huge volume of both public and private debt. The debtors are economically more active and politically more effective than are creditors, and they would suffer, often very severely, from a decline in the price level. The rigidity of wages and salaries and also of prices controlled by state supported cartels, from air transport to potatoes, adds to the political and practical difficulties of reducing the price level.

In the Budget speech the Chancellor described as relatively low the current inflation of about 5 to 6 per cent. In the debate on the Queen's Speech last November I reminded your Lordships that with 5 per cent. inflation 1 is reduced to 3p in a lifespan of 70 years. I quoted Keynes—that maintenance of the value of money should he a prime duty of the state because of the waste, the distortion and above all the injustices of inflation which hit hardest people with modest means. And here we have a Chancellor widely regarded as a hard liner who thinks that 5 to 6 per cent. inflation is relatively low.

Advocates of expansionary policies urge that they should take the form of increased Government spending rather than tax cuts, because the latter might result in more saving and fewer jobs. Besides implying that lack of aggregate demand is behind unemployment, this argument ignores the incentive effects of lower taxes. If the tax cuts are concentrated on the relatively poor, they will not result in much increased saving. Even if some of the tax cuts were saved, this might reduce pressure on nominal interest rates which would benefit activity. The only certain difference between the two methods is that increased Government spending further enlarges the state sector.

Advocates of more state spending suggest that it should be in the form of infrastructure investment. We have heard a lot about this here today. "Infrastructure" and "investment" have become omnibus terms, buzz words. The most diverse items have come to be termed infrastructure; and both businessmen and politicians readily talk about investment when advocating more spending, as in the advertisement, "You buy a car, but you invest in an Austin".

My Lords, the budget is in the right direction, especially in the insistence on financial restraint. The tax changes will help to provide jobs. The effects of the specific schemes are more equivocal, as they are financed by either taxation or borrowing. But although the Budget is undoubtedly helpful, it will not affect total unemployment greatly. There are major forces in the opposite direction. There are still many claimants-to-be of social security benefits. When they discover their entitlements, their incentive to accept employment at given wages will diminish. Again, businesses and private people continue to economise on labour. Technological change will reduce employment in particular activities. Ownership of consumer durables has become so widespread that in many directions further home demand must be largely replacement demand. Such developments, including automation, need not lead to more unemployment in an adaptable economy, but they will do so in one resistent to adjustment.

In the foreseeable future substantial and lasting reduction of unemployment must wait upon major changes, even radical changes in taxation, the social security system and the organisation of the labour and housing markets—changes designed to promote both great adaptability in the economy and also more labour-intensive patterns of production and consumption.

The required changes may well be politically impossible. If so, we must resign ourselves either to continued heavy unemployment or to moving back to a regimented economy with wage, price and exchange controls and, perhaps, direction of labour. To expect otherwise is to ask for the moon made of green cheese.

6.3 p.m.

Lord Molloy

My Lords, I should like to join with others who, quite rightly, have already paid compliments to my noble friend Lord Murray of Epping Forest for his considerable and, if I may say so, learned maiden speech to your Lordships' House this afternoon. I should also like to say, and I think that it has to be said, that what I find remarkable about this debate is that we have had similar debates to this one over the past four years in this Chamber. We have had similar speeches and they all have said, in much the way in which the noble Lord, Lord Bauer, ended his speech, that they are sure that what the Government have now proposed is going to ease the situation in unemployment; while the truth is that every time we have a debate like this, emanating from some Government Statement or Budget, with all the same speeches applauding it, up goes the level of unemployment! Let us hope that it does not happen this time.

I must say that in those applauding speeches that we have had, the Government can rely upon the support of the noble Lord, Lord Marsh. I am sorry that he is not in the Chamber. He made quite a number of constructive points, and as everyone knows he knows more roads to Damascus than any other practical politician today. Nevertheless, he is our own beloved Vicar of Bray. The fact is we are examining whether or not this Budget will reduce unemployment; and other Budgets and other White Papers are nothing to look at: because every time we have had a Budget or a White Paper from this Tory Government the result has been a considerable increase in unemployment.

I am bound to say that I should like, at least because of my natural Socialist confelicity, to congratulate the Chancellor of the Exchequer because he has relented at least with the changes in capital allowances on scientific and short-life investment goods. I think that that is a good thing. The changes particularly in national insurance, in the contributions from employers and from employees are also a good thing but it should have been done earlier. And we have got to remember that the Chancellor belongs to the party which put up all these charges by no less than 50 per cent. in 1979—in what was, perhaps, one of the contributory factors to unemployment. The Chancellor in his (as it is called) "Budget for jobs"—and I am terribly frightened of that phrase, coming from any Tory—has told us, quite genuinely, I believe, that he feels deeply the scourge of unemployment and the agonies of the unemployed. Yet we have had all this agony, we have had all this pain from previous Conservative Ministers and nothing really has happened except that unemployment has gone up; so that we have had to look sometimes very carefully at what they have been saying in other places.

Let us take, for example, the present Conservative Chancellor of the Exchequer. He says that his policy is to reduce unemployment. I have a document here entitled The British General Election of October 1974. It was written by the psephologists, Mr. David Butler and Mr. Dennis Kavanagh, and published by Macmillan Press Limited. This document examines statements made by various members of all parties, including (and I quote from the booklet): Nigel Lawson, the Conservative at Blaby, stated 'the harsh truth' that more unemployment was necessary to beat inflation". I take it that he himself must now say, "How wrong can one get?" He has to do so. He cannot say in 1974, "Let's have more unemployment and then, when he becomes Chancellor, "Let's have less unemployment".

The fact is that these are the things which some of our people still remember in our universities and technical colleges. They are wondering whether they are being, so to speak, "hooked" again by the phrases we have heard from the present Chancellor of the Exchequer. If the benefit entitlement involved in any Youth Training Scheme is withdrawn from youngsters because they are not suited for that training scheme, that will mean that they will become penniless. This has been done before. It caused a great deal of bitterness in 1937 when young men of 17, 18 and 19 years of age were angered at what had happened, and in 1939 they were being put into khaki and called up to defend their country.

I think that we have to consider these things. We should not do this sort of thing. I hope that, unlike the Conservatives of those days, the present Conservative Party is not of that particular mould that shrinks from principle, disavows progress, offers no redress for the present and makes no preparation for the future. I also believe that any Government which exempts unfair-dismissal claims for workers with less than two years' service and for that now to be extended from small businesses to all employers really means that this law-and-order Conservative Government are now backing possible cheaters who will unfairly dismiss people.

If I may say so to the noble Baroness, this is also what ordinary people are very angry about. We talk glibly about "the unemployed", who are these people? Never mind theories on economics that we heard from the noble Lord, Lord Bauer. What we have to understand is that our unemployed consist of young doctors by the thousand, nurses, midwives, skilled artisans of high calibre, skilled labourers and craftsmen of the engineering, shipbuilding, construction and service industries. In addition to that, we have the teachers in our universities; for example, in the University of Salford, which served these great industries and is now being savaged by the cuts that are being inflicted upon it by this Government. That is what we have to understand by unemploment. It is not so much all the great theories, but the real people involved: the doctors, the nurses, the artisans, the people who count in this country who, with management, are the only ones who can solve the problems that we face.

I believe, too, that the Budget has done an almost immoral thing. In this difficult age in which we live it ought not to have done that because it cannot help. Basically speaking, as Mr. James Callaghan said in another place, one of the quintessentials of this appalling Budget is that it provides tax cuts for the rich and wage cuts for the poor. The Chancellor of the Exchequer says that we are on course. We have more unemployment, more bankruptcies and not very good production. The National Health Service is in danger, the teachers are in disagreement, the ship of state, which is on a Tory course, applauded by the noble Lord, Lord Bauer, is headed right for the rocks; and that is a fat lot of good for anybody. Let me add immediately, speaking parenthetically, that that is acknowledged by leading members of the Conservative Party both in this House and in the other Chamber. Deliberately or otherwise, this Government over the past five years have subscribed to the adage that folly is often more cruel in consequence than malice can be in the intent.

There is a great need for change in our country, and we must adopt the language of priorities. If that is to be really understood, we have to start by getting rid of this Government, realising that their policies have not merely failed but increasingly, year in and year out, have worsened the situation. Monetarism was followed by all the curses that arise from it, and then we were led to believe that the dogma of privatisation would help. It has failed ignominiously. Therefore, to praise the Government and the Chancellor when the country is sliding into recession is to admire the statesmanship of those who apply more lubricant to the slope which we are sliding down.

There is another example of unemployment of which I think we should take full cognisance, though I do not think it would ever happen in our country. That is why I say immediately that all the faults that afflict our nation are not necessarily those arising from bad management by the Government. There has been a world recession; there have been many things beyond their control which have afflicted and harmed our nation. But let us always remember this: when you had massive unemployment in some parts of Europe, it resulted in the takeover, in one instance in 1917, by an authoritarian government which is still there; then again in 1936, via the ballot box, by another authoritarian government. That government thought that one way of getting rid of unemployment was by gassing to death about 8 million people that they did not approve of being born. Therefore we have to realise that we must help Europe and stick to our alliance with the United States. We must work together much more sensibly than we have done in the past.

We have tried various methods in order to resolve this problem, and I have read very carefully the most erudite speeches made in this Chamber by men and women of great knowledge. I have studied those speeches and the recommendations made by the noble Lord who is to wind up this debate for the Government. I find them informative, and they have helped me to understand. But I also believe that in so far as we have all gone through this before, we should not too lightly disregard what Keynes and the Canadian-Scot, Galbraith, did when their recommendations were adopted by Franklin Delano Roosevelt. If I may say so to the noble Lord, Lord Marsh, they performed that miracle within three years. Perhaps he had that in mind. In the first year the unemployment figures came down by just a few million, in the second year it was much more. The economy in the United States picked up and we followed a similar pattern in our country. We have gradually got rid of unemployment, though not totally. But we made a massive contribution in getting rid of unemployment by some reinflation and by accepting the principles of Galbraith and Keynes.

I believe that, with certain modifications, if we at least examine what was done by those two economists and the manner in which their propositions were put into practice by the greatest American President of all time, in my judgment, we will see that it would not do our country any harm whatsoever. I believe that the Government and the Official Opposition ought to get down and examine these issues, so that we can cure the one thing that is the deadliest cancer in our nation today—unemployment.

6.17 p.m.

The Earl of Onslow

My Lords, the noble Lord, Lord Murray of Epping Forest, does us a disservice, and the disservice he does us is in arriving so late in this Chamber. I suggest to your Lordships that it would have been better if we could have had his words of wisdom and speeches of the quality he has made today over the last 10 years—because this, in my humble opinion, is where the head of the TUC should be. He should be in this Chamber so that he can give his advice and consent to the Government of the day.

I was deeply moved by Lord Molloy's emotion, and I was deeply unimpressed by his logic. His feelings were totally genuine, but his solutions, I suggest to your Lordships, were illogical. I am going to concentrate on one factor, and one only: that is, the undertaking given by my right honourable friend regarding tax reform. Unlike the noble Lord, Lord Barnett, I do not think that Green Papers are unwise. I think it is a wise path down which to go—the path of consultation, discussion and care—because the personal tax system is in such a mess at the moment. It is said that the argument had already been won. It is said that it is dotty and that the present system is wrong, half-baked and unfair—and I am going to show to your Lordships some of those dottinesses and unfairnesses.

The dottinesses and unfairnesses I refer to have not, as your Lordships may suppose, been written by my eight-year-old daughter: they are actually quoted from the document which I have here, which is entitled, Department of Health and Social Security—Tax Benefit Models. I open it literally at random and I come across a page which refers to unemployment benefit in the form of total income support for a man who was earning £62 per week before he was made redundant or unemployed. He has four children aged 3, 8, 11 and 16; and his total income support is £106.78, when he was earning £62 per week. However, if he had been declared redundant when he was earning £119 per week, his total income support would be £81.74.

Taking a married couple with one child aged 3, where the husband had been earning £66 per week, he would now get a total income support of £61.58. But if he had been earning £90 a week, his new benefit would be £52.71. Anybody who constructed an unemployment benefit scheme like that ought to be carried away and put on a funny farm. I am not saying that anybody has constructed it. I am just suggesting to your Lordshps that it has grown up like Topsy—and, my God, it is turvy!

I now come to the question of wages and what is called total income support and the marginal changes in income. These are November 1984 figures, so you have to add £1.73 to the total income support figure until November, because the tax systems change at a different time from the social security system, so there is always a lovely hiatus between April and November. Again, if you are a married couple with three children aged 3, 8 and 11 and you were earning £40 a week, you get £83.54 in what is called total income support; if you were earning £109 a week, you get £93.71; and if you were earning £146 a week you get £99.21 to take home.

Can we honestly suggest that a system like that is anything but unjust, unfair and totally ridiculous? It is rather fun reading this document. One could go on reading it forever, and it gets more and more ridiculous. As I said, this is not me: this is the Department of Health and Social Security. A married couple, with two children earning £62 a week get £81.97, and when they get to £98 it goes down to £79.77. I could go on with this for a very long time.

By far the most important thing that this Government can do is to rearrange matters and get our tax and social security systems on a personal level operating in a right and fair way. I think that we spend about £11,000 million on thresholds; we spend £9,300 million on housing relief of one sort or another; and we spend approximately £5,000 million on pension fund relief. That adds up to about £25,000 million. On top of that, we have other social security benefits. Surely, these social security benefits have got to be transfer benefits, and they must go to people who really need them. We must have a system whereby if you earn extra money you get extra pay. You do not want a system whereby a man can have a 100 per cent. inflationary wage increase which does him no good at all. All it does is to bust his company and put the Chancellor's public sector borrowing requirement out through the window. We must do something about this; and if my right honourable friend the Chancellor can get this right his successors will deserve to take Nigel Lawson's Despatch Box into the other place on Budget Day, and not William Ewart Gladstone's.

6.23 p.m.

Lord Graham of Edmonton

My Lords, I should like to begin what I have to say by echoing what has been said from all sides of the House to my noble friend Lord Murray of Epping Forest. Like many noble Lords on this side, as well as on the other side, I have known my noble friend for many years. What he demonstrated in his first speech to the House is that he brings to this Chamber an authority, a stature and a respect for the calling that he has followed; and he has served not only his employers, but also the nation so well for many years.

I took careful note of two or three of his points. He stressed the unacceptability to a civilised nation of looking in the face an unemployment total of between 3 million and 4 million, and said, "This cannot be allowed". Surely that is a theme which we should echo throughout this debate. He said that there must be a better way. He was careful to say, as are most of us, that he is not certain what is the better way. But there must be a better way, there must be an alternative. He also acknowledged that it is a tough job and that this Government, or any other Government, will not have it easy; which was fair.

But he then used two words which I noted quite carefully. If there is a way out, it must be found collectively and we must do it together. The job of the Government in constructing their Budget and in helping to run the affairs of the nation means constantly coming back to the theme: how can we do it collectively and how can we do it together? I certainly look forward very much to hearing my noble friend Lord Murray again in this House.

My noble friend Lord Barnett presented a very fair critique of the Budget. He did not use extravagant language, and he brought to his contribution his experience in another place and in the outside world. He posed a number of questions on which I and others await with a great deal of interest the words of the noble Lord, Lord Young, at the end of the debate.

Normally the Budget is awaited with bated breath by ordinary people, by business and by industry. It ought to have the ability to inspire and it ought to be relevant. I have to say that this was an uninspiring Budget and it was irrelevant to the major problem of the times, which is unemployment. In this Motion we are talking about the Budget and about creating employment. We are talking about the statement by the Chancellor, which has been challenged more than once, that this Budget, like last year's, was a Budget for jobs. My noble friend Lord Barnett amply demonstrated that no matter how many other jobs we create—and I look the Minister straight in the eyes and acknowledge that additional jobs have been created—if, in creating 400,000 or 500,000 new jobs, we lose, allow to be lost, or lose to the nation, 600,000 jobs, then we are losing that race. I say two cheers for the Government and the Minister for those elements of the Budget which are genuinely constructive, such as the attempt through national insurance contributions to reduce employers' costs so that they can take on more labour.

I attended a meeting of the Enfield and District Manufacturers' Association, of which I have the honour to be president. That was a few days after the Budget and I asked them whether it was a Budget for jobs. The noble Baroness, Lady Carnegy of Lour, said that ordinary people will come to appreciate that this is a good Budget, and we are looking at this Budget strictly from the aspect of jobs. There were at the meeting representatives of large manufacturers, and small ones, such as Thorn, Cryoplant, and Belling and Lee. I asked them to tell me whether it was a Budget for jobs, but they were very disenchanted. They could not say immediately whether or not it was. To be fair to them, I said that we should leave it for 12 months and before the next Budget I would come back and ask them, in all honesty and candour, how many additional jobs had been created as a result of the measures in the Budget. I shall come back to the House at another opportunity and report, and also write to the Minister and tell him about this matter.

It is quite disgraceful that we have a Budget which is paying out to people who want to work £17,000 million not to work. The Government's priority is wrong. Their priority has been to cut income tax, but they should have given a higher priority to cutting unemployment. Like other noble Lords, I read with interest in the Sunday Times last week the report from the Institute of Fiscal Studies. It observed that under this Government between 1979 and this year middle managers were 10 per cent. better off, senior managers were 22 per cent. better off, and company directors were 35 per cent. better off. Under this Government those who are in work are better off than before, but those who are now unemployed are 18 per cent. worse off. It says something about the priorities of this Government that they are doing insufficient to get people back into work and more to reward those people who are already in work.

The Budget is deficient. There is scant hope of job creation. Although the Budget is not bereft of job creation measures, it offers scant hope for industry and for Britain's future prosperity. The Chancellor himself said that he can see no prospect of cutting unemployment totals for the next two years. What a devastating thought that must be for many families, who must go to bed night after night thinking to themselves that whoever else might get a job, the Chancellor does not believe that 3 million or 3½ million people will be returning to work now.

Reference has been made to the ambiance in which unemployed people have to exist. Part of the Government's policy is to attack local government expenditure. This is relevant to the Budget because the Treasury controls this, as it does most other things. At the same time as rents, rates, lighting, heating, gas charges and mortgages are going up, there is the dead hand on the hearts of the 4 million families who are out of work. It is a budget that seeks to make the rich richer, and in so doing it is making the poor poorer. That is wrong.

We have not only record unemployment—and this is a Government for records; we have also a record number of business failures. Last year 13,600 businesses were declared bankrupt. It may be difficult to interpret that statistic, except to say that that total is three times as many, as the comparable figure for 1979. That says something about the spirit and the climate in which the Government are operating. The Government may argue that the businesses which cannot survive in the climate they are creating do not deserve to survive. I certainly would not agree with that; for the first time in our history we are actually importing more manufactured goods than we are exporting. This is all part of the record that needs to be scrutinised.

I have already referred to the speech of the noble Baroness, Lady Carnegy of Lour, who wondered what ordinary people will do. A public opinion poll was published in the Standard last night. When public opinion polls do not suit us we say that we do not pay much attention to them. But so far as I am concerned, this particular public opinion poll is a smashing effort and I shall take every notice of it. It is headlined: Budget and pit peace lead to 8 per cent swing". The report begins: The Tories lost many lukewarm supporters on account of the Budget". It concludes: Now that the miners' strike is over public concern has concentrated even more emphatically on unemployment". Those may be false conclusions, built on a false premise by the pollsters and on the responses made by those sampled. I am sure that, like myself, the noble Baroness will wait longer than just a few days after the Budget before utterly condemning it. But those are the views of ordinary people at this time.

The House is entitled to ask what a Labour Government, faced with the same situation, would do. My right honourable friend the Leader of the Opposition has spent some time—not only yesterday and today, but in the past also—demonstrating that there is an alternative. It is not an alternative the Government would embrace and it is not one that noble Lords opposite would embrace. But it is certainly one which my noble friend Lord Barnett on the Front Bench advocates very strongly. It is that there is a range of ways in which money, whether or not it needs to be borrowed, can be used to provide employment for not just 200,000 or 300,000 people, but for I million people. If that many people could be put back to work, it would have a substantial effect.

I wish to spend the time I have remaining in making reference to the disgraceful suggestion that wages councils are to be abolished. They are candidates for abolition. There are 3 million people who have these councils as a last resort, when faced with employers who may wish to screw the last penny out of them; 3 million people working in, for example, shops, catering, clothing manufacture, laundries and hairdressing. They rely upon the ultimate defence to their dignity and their pocket provided by wages councils' orders.

Why are the Government choosing to listen to whoever it is they are listening, and why are they saying that the abolition of a minimum wage of £71 in the case of a shopworker or £65 for a fully qualified hairdresser will of itself do a great deal for the economy? The Minister knows that members of his own department who attended the Select Committee in another place three weeks ago were unable to produce any evidence of a reputable nature to suggest that abolition of the wages councils will result in jobs.

The Government are hooked on scapegoats. At one time the blame was laid on foreign competition. Then everything was the fault of the trade union movement. Now, apparently, it is the wages councils which are to blame. The Chancellor says that wages councils will destroy jobs.

At present the average wage for men and women is £172 per week. The Chancellor and the Government now say that as part of their strategy they will take away the prop that protects those people who, because of the nature of their skills and ability, can command wages of only £65 or £71 per week.

The CBI, whose views ought to be respected by the whole House and certainly by Members opposite, said, by 3 to 1, that they do not want to abolish the wages councils. When the Institute of Directors was surveyed 93.5 per cent. of its members did not even bother to respond as to whether or not they wanted the wages councils.

The doors are not yet completely closed and I ask the Minister to examine this matter again in the meantime. When it comes to deregulation, the Auld Report, upon which the Home Secretary has yet to give the Government's definitive view, is quite clear. I have a copy of it here, but time is going to beat me. The report says that lower paid workers—and it mentions shop workers, with whom I identify myself through the Union of Shop, Distributive and Allied Workers, in this context—need the protection of wages councils because there are employers who, if they can, will employ people at £68, £64 or £62 per week. Is that the kind of economy and morality in which we want to see this Britain of ours going forward?

My time is up, my Lords. I honestly believe that the Budget presents no hope for those already suffering far more than they ought from the sticks and stones of life itself. They need some support. In my view the Budget gives very little hope to those who were looking to it for help and guidance.

6.38 p.m.

Viscount Massereene and Ferrard

My Lords, I wish we could get this figure of 4 million unemployed right. In my view the figure is more like 3 million. One has to remember that out of that 3 million, as any civil servant in the department will tell you, there are always 500,000 or 600,000 people who cannot be employed for reasons of health, or because they are alcoholics, or for other reasons of that kind.

As we all know (and I can introduce noble Lords to plenty of them) there are many moonlighters. I know of one or two but I will not give their names. They run lorries and yet still draw all the benefits. I reckon that the true number of unemployed is not more than 2 million. Of that number the majority are temporarily unemployed. The permanently unemployed, I believe, total just about 1 million, although that figure varies from time to time.

I should like to congratulate the noble Lord, Lord Murray of Epping Forest, on his very good maiden speech. I should add—although this has nothing to do with him and it is not the position today, really—that for some time some unions (although not the union of which the noble Lord, Lord Murray, was a member, I am sure) were responsible for forcing wages up high above levels of productivity. Let us take the years 1970 to 1979. As I have said before—I can quote the figures in my sleep—wages went up by 400 per cent. and productivity by only 9½ per cent. But we are not in that position now. The position is much better and we are far more competitive.

I liked the Budget. It is a cautious Budget; and so it ought to be after the most appalling coal strike that we have ever had in our history, lasting almost a year, and the extraordinary antics of the dollar, although the dollar, I think, is probably over-valued by 30 per cent. We have also had a weakness in oil prices and we are, as we all know, the sixth largest producer of oil. Any Chancellor having to cope with such problems would have presented a cautious Budget. In spite of that, we have had 2½ per cent. growth in the GNP. I am quite sure that if we had not suffered from the very damaging coal strike our growth would have been, I should estimate, 3½ per cent. or perhaps even 4 per cent.

I admit that unemployment is still high. It is an absolute curse and frustrating, and, for those who want to work, it must be absolute hell. I know quite a few people who are unemployed. But it is no good, as the noble Lord, Lord Marsh, said, going back to the old way of inflating the economy and borrowing thousands of millions of pounds to embark on vast schemes which provide only a temporary cure. Such schemes will make the Government popular for a short time but we must keep to sound money. If we inflate the economy too much we shall not have sound money and we cannot make sound jobs. This is all nursery stuff which your Lordships will know, but do not always say. I feel that I must say it.

I congratulate the Government on inflating the economy slightly and for a very good cause: the Youth Training Scheme. They spent £2½ billion last year on special employment and training measures. This includes the Youth Training Scheme, which I understand is the most extensive training programme ever seen in Europe. I think the Government deserve a feather in their cap for that. The noble Lord, Lord Barnett, complained that unemployment had increased by 130,000 in, I believe he said, the last few months. But the noble Lord must remember that last year the working population increased by 160,000. Therefore, the Government have to find an extra 20,000 jobs per month to stop sliding back on unemployment. That factor must be taken into account.

I have always been a small employer—or, rather, not always, of course, because I was not an employer when I was young—and I have been in only one public company, which was involved with shipping, where one did not have to find the wages oneself. I have always been the poor individual who had to pay the wages in my own businesses, and sometimes it can be very awkward on a Friday. With due respect to the noble Viscount Lord Chandos—I understand that the noble Viscount is the son of Oliver Lyttelton, the late Lord Chandos, who was a great friend of my father (I believe they were both in the same regiment, though that, of course, has nothing to do with the debate)—I do not think that he is an employer, but perhaps I have misunderstood him.

If you inflate too much to create employment it is rather like giving a dog a bone in a dish which has a mirror at the bottom. To me it is immoral and dishonest because you are spoofing the public and you cannot spoof the public all the time. I do not want to be party political because I am not a party political person, but we need only go back to the days of Mr. Callaghan and even Mr. Heath. They both printed a lot of money. Mr. Heath did not have to bring in the International Monetary Fund, although Mr. Callaghan did. He may not have had any option, which was his bad luck. However, it is not the thing to do. As I have already said, the only sphere in which it is permissible to inflate the economy, in my view, is in training the young and trying to do something about the long-term unemployed. I understand that the Government are now arranging for 100,000 extra places in the Community Programme for the long-term unemployed. That is a step in the right direction. In addition, Her Majesty's Government are doing much in the sphere of new training schemes for the young.

As an employer, I welcome the restructuring of the national insurance contributions. I have always had a hell of a time as an employer. I have always said that you can only wear so many suits, you can only eat so much and you can only drink so much. What do you do with the rest of your money? You can go on holidays all round the world; but I do not like that, so I use my money to employ people. It is a great pity that more people—but I will not continue in that direction.

As regards the wages councils, I agree that we do not want to have sweat shops. I have not been pro-wages councils because I have no knowledge of shopkeeping or sweat shops. However, I should feel far happier if there were a few people on the wages councils who had paid wages during their careers. The members of the wages councils may be very learned in their own sphere but they have no practical experience of paying wages. If we are to keep the wages councils—I understand they are to be curtailed or even abolished—it would be an excellent idea to have some people on them who have had to pay wages.

I understand that some noble Lords opposite are very annoyed that 8.5 million people who earn less than £130 per week are to cost £900 million less through the restructuring of national insurance. I do not see why they should be annoyed about that. One or two noble Lords have said that no employer will take on an extra man just because he can get him £3 cheaper. I do not agree. It is a help. I understand that 800,000 people will cease to pay tax because of the increased personal allowances. Surely no noble Lord opposite can object to that. (I shall sit down in a moment. We are allowed 12 minutes, are we not?).

The Budget will definitely encourage employers to employ more people and has also provided an incentive for the unemployed perhaps to try a bit harder to find a job. I do not think that some of them try very hard. I would pin great faith on small businesses, although I know that the noble Lord, Lord Alport, thinks that they are quite irrelevant. In this day of the microchip, the silicon chip and computers, I am convinced that the days of vast great factories employing 10,000 people or more are over. I think that the emphasis must be more on the self-employed and small businesses.

I know that the noble Lord, Lord Alport, is not here, but while I am on the subject of computers, he was right in saying that we should buy British goods, but he also brought up the question of the Japanese. The Japanese have started quite a few factories in Scotland, and a lot of these computers and other things the public buy here are made in this country. Perhaps the noble Lord was a bit hard on the Japanese. Also, we all know if we stop exports coming here from other countries, that is a two-edged sword.

I see that I must end now, though I could say a lot more. If only bureaucracy could be a bit easier on small businesses. In this country the amount of bureaucracy involved in starting anything or doing anything weighs one down, However, I know that it is worse in Brussels. I made quite a few speeches on the Common Market before we went in. I said. "Beware of the bureaucracy in Brussels!" It is appalling and pettifogging. There are the most absurd regulations.

I shall now sit down. I should like to congratulate the Government on their Budget. I think that it is a good and a sound Budget, although it is not an exciting Budget. After all, if you are in Government, you should not gamble. You have to be cautious and sound. I think that the Government have been cautious and sound.

6.52 p.m.

Lord Kagan

My Lords, I wonder whether the premise upon which this debate is based is correct. A Budget under one Administration may produce a slight tail-wind and under another a light uphill rise in front of the economy, but a Budget's influence on, and indeed relevance to, employment is marginal and peripheral. Generating employment depends on industrial attitudes, backed by incentive policies. It depends on efficiency, on innovation, on investment, on entrepreneurial skills and, above all, on the harmony between management and labour. It depends on identifying and pursuing joint and agreed objectives. We have seen it succeed in Germany and in Japan. This is where we fail, and this is where we have to seek the solution.

I feel that history may give us two choices. One is to embrace and adopt wholeheartedly an incentive orientated economy, pursuing efficiency and geared to wealth creation, and thus generating the resources to sustain the compassionate society and the Socialism of the Methodist Bible. We must subordinate the pursuit of equality to the pursuit of equality of opportunity. The two are not the same.

The other choice which may be open to us—or, indeed, the situation in which we may find ourselves—is a controlled, closed market society, or indeed a Marxist society. But the in-between, indecisive compromise that we are practising attracts the worst of both systems and may result in a fair and equal distribution of misery, as Maoist China and Stalinist Russia have discovered. But China and Russia are turning back. Indeed, they are endeavouring to make a U-turn back to the incentive economy.

I well remember, when in Russia, talking to a director and pointing out to him the inequalities of pay and living standards in his factory. He said, "Ah, comrade, for good intentions you get rewarded by the Lord in Heaven: in this factory down here you are paid by results". That is Communist Russia.

What happened in post-Mao China we all know, but may I draw your Lordships' attention to something that is happening in Hungary? It is an interesting development. Hungary is encouraging private enterprise. It is de-centralising and encouraging innovation and private initiatives—presumably with the blessing, and certainly with the full knowledge, of Moscow. It has produced a completely new class of affluent people.

Brand new Mercedes-Benz and BMW cars with Hungarian number plates, legally owned by Hungarians, are creating traffic jams in Vaci Street, the Bond Street of Budapest. In the same street is a high fashion shop which is privately owned now and called, significantly, Clara Rothschild. It is full of critical customers buying fairly exclusive and expensive foreign clothes. A few doors up is the Ofoteli camera shop, which sells expensive Japanese cameras—Canon and Nikon—and which is constantly short of supplies. The price of a camera is five times the average monthly wage of a worker in a factory.

Inevitably that has attracted criticism from certain sections of the Hungarian press and from certain diehard Marxists who consider it, quite logically, unfair, unequal and un-Marxist. The response came from no less than Comrade Jaros Hoos. Comrade Hoos is one of the chief government planners. He is a full member of the Central Committee of the Hungarian Communist Party. One can hardly go higher. His response was—and here I quote: We must not, and we do not want to, create an atmosphere in which people who are productive and thus earning a lot of money could feel that their activities are not desired or welcome". That is today in Communist Hungary—and Hungary still has no income tax and certainly no progressive income tax.

While China and Russia are groping their way back to an incentive economy, we are weaving our way uncertainly between a somewhat confused socialism and a hesitant capitalism. In Yorkshire we sometimes discuss these matters, and I am very frustrated by the hardened attitudes we find there. Sometimes, as an employer in this country one feels as if one is called upon to run a church under atheist management.

What of the future? Management and labour must find common ground. They must identify common objectives, and the objective surely is prosperity for all. It is the duty of Government, it is the duty of the unions, and, indeed, I believe it is the duty of the Opposition, having once identified the common objectives, to encourage them and to bring them to reality, and indeed to encourage a merging of approach. On the factory floor and even in Parliament—and even in this House—I feel we should not oppose for the sake of opposition. The reward might be that when the opportunity arises for a future Labour Government—and I hope through the ballot box—to become the new tenant of 10 Downing Street, they will inherit an economy worth having, in which they can be successful and certainly keep their promises.

Perhaps I may come back for one minute to unemployment. Of course, unemployment is a danger and it is a scourge, as the noble Viscount said earlier. Efficiency temporarily increases unemployment. This is unavoidable. Modern technology saves manual work, and modern electronics saves mental labour.

There will inevitably be fewer jobs and more highly-trained people who find themselves in them and who find themselves better paid. However, the answer to unemployment is not necessarily jobs for the sake of jobs. It is useful activity, and the useful activity can only be financed by a successful economy.

Perhaps I may come to the question of wages councils. I think we should give this a lot more thought before we turn it down. Marie Antoinette once said, "Cakes we haven't got; bread isn't good enough: let them starve". The wages councils prevent cheap labour. But they may decrease the entry into the factories of certain people. We should be very careful indeed before we decide to retain or abolish them.

7.3 p.m

Lord Rochester

My Lords, we are drawing near to the end of the debate and I, for one, have found it most instructive. In the time available it may be best that I should not comment, except incidentally, on what has been said by other noble Lords but endeavour to make my own contribution to it. At the start of his Budget Statement, the Chancellor reaffirmed that the Government were determined to defeat inflation and to do what they could to combat the scourge of unemployment. In his view there was no conflict between those two objectives and he said that the Budget therefore had two themes: to continue the drive against inflation and to help create the conditions for more jobs.

We on these Benches have always been prepared to give this Government credit for their success in reducing the rate of inflation. I gladly do so again now. Moreover, I have never been among those who say that the Government deliberately set out to create unemployment as a weapon with which to control inflation. Equally, there is no doubt in my mind that unnecessarily high unemployment has been the inevitable effect of their policies. Therefore, the fact that the Chancellor has now reaffirmed the Government's determination to maintain and even to intensify their present monetary policy gives me no comfort at all.

In the White Paper on unemployment, the biggest single cause of high unemployment is attributed to the failure of the jobs market. It is said that management, employees, and the education system, working in common understanding and partnership, have together to ensure that the supply of labour meets demand in quantity, quality, cost and flexibility. Apparently, there is nothing that the Government themselves contemplate doing except on the supply side where, as we have heard, they propose, among other things, to expand the Youth Training Scheme and the Community Programme. Already today, in response to the Statement repeated by the noble Lord, Lord Young, I have made plain my view that I warmly welcome both those measures.

However, the Government also propose to remove so-called legislative impediments in relation to claims for unfair dismissal and to the operation of wages councils. Reference has been made to the subject today. I understand that there will be an opportunity in two weeks' time to debate the matter in much more detail and I do not propose to say much about it this evening. In my view, there is a case for the reform of wages councils in terms, for example, of the percentage of the adult rate now payable to young people. However, I think I should give notice that we on these benches would certainly oppose any move completely to abolish them.

I very much doubt whether a widespread reduction in earnings that are already too low would do much to increase the number of full-time jobs. In that respect, I agree very much with what the noble Lord, Lord Graham of Edmonton, had to say. Rather in contrast to the very considerable tax reductions accorded over recent years to those enjoying high incomes, I fear that such a move would be widely perceived as unfair; and, by encouraging unscrupulous employers—and there still are some—to reproduce the unacceptable working conditions that wages councils were set up to eliminate, existing tensions would be exacerbated. I fear, too, that, since it cannot be assumed that the next Government will be a Conservative one, excessive change in this area would quickly be reversed by a different Administration and thus produce instability in a field which in my view cries out for consensus.

Living in the North West, as I do, I am truly troubled by the present divisions in our society between rich and poor, employed and unemployed, and between North and South, and so are Church leaders. So also, it now appears, are the CBI, who, in their search for more social and industrial stability, propose that their members should lobby for far-reaching constitutional change, including proportional representation and a more formal consultative mechanism between Government and business. Indeed, the president of the CBI wrote in a foreword to a document published last week, to which reference has already been made, Change to Succeed: If the free enterprise system in the North of the country means 20 per cent. unemployment in some areas, then it"— that is, the free enterprise system— inevitably comes into question". It is the same need for stability which in this instance, by making exchange rates less volatile and thus facilitating business planning, has now caused the CBI to advocate that we join the European Monetary System. That is a course which, on both economic and political grounds, we on these Benches have advocated for some time, and most recently this has been done this afternoon by my noble friend Lord Ezra. I feel sure that, in the long run, it would contribute to a reduction in unemployment by improving our industrial performance particularly in the European market.

There is one point about the Budget that I should particularly like to welcome. It relates to a debate initiated by the noble Lord, Lord Terrington, six weeks ago when I referred to a survey of attitudes to profit sharing and to employee shareholding carried out by the Industrial Participation Association. An analysis of the responses to that survey showed that, whereas in companies where employees had a choice between taking their bonus in cash or in shares, 80 per cent. currently choose cash, the number choosing shares would probably double if the seven year period before shares were free of potential income tax liability under the provisions of the 1978 Finance Act were reduced to five years.

I could not refrain on that occasion from reminding the House that those provisions were introduced as a result of pressure from the Liberal Party at the time of the Lib-Lab pact. I went on to suggest that if this particular seven year provision could be modified in the Budget, it would give a real stimulus to employee share schemes generally. I gladly congratulate the Chancellor on having done exactly that. I do not suggest that this was simply a response to my words. I am sure that it was not. But, in my view, the encouragement of such schemes, which featured in Section 1 of the 1982 Employnment Act, which we on these Benches were instrumental in getting placed on the statute book, is a fruitful means by which employee involvement can be increased, thus improving our competitiveness and creating more job opportunities.

On a number of occasions in recent debates, my noble friends have called for some limited additional capital expenditure on the country's infrastructure. Again, that has been done with great force this afternoon, it seems to me, although I may be biased, by my noble friend Lord Ezra. In that respect, I find myself much more in agreement with what the noble Viscount, Lord Watkinson, had to say than with the thinking of the noble Lord, Lord Houghton of Sowerby, much though I always respect what he has to say. In reply to that suggestion, it has been said among other things on a number of occasions that, given recent advances in technology, this would not create many more jobs because the work involved would not be nearly as labour intensive as is claimed. That argument, I suggest, is wide of the mark. Expenditure, for example, on our outdated road system, particularly where it leads to East Coast ports, would surely bring in its train trading benefits and, by increasing productivity, improve also the prospects for further job creation in future.

Another criticism of such proposals is that they would restoke the fires of inflation and ultimately lead to wage costs per unit of output—already higher than those of our main competitors—rising still further. I take that criticism very seriously. The Chancellor, in his Budget statement, said at column 791 of Hansard of another place on 19th March: Too much of the benefit of economic growth is currently being enjoyed in higher living standards for those in work, too little in the form of better job prospects for those out of work. In a free society, the remedy lies in the hands of those responsible for collective bargaining throughout the economy". The Government apparently see themselves as playing no direct part in that process of pay determination. It is a proposition that I should like to challenge. In the first place, I do not believe that it is true. In the public sector, pay constraints continue to be based on arbitrarily imposed cash limits. These are understandably perceived by those affected by them to be unfair in comparison with settlements reached in the private sector.

Secondly, on the wider issue of principle, I believe that because it is so essential that increases in wages and salaries should not outstrip improvements in productivity, there is now an urgent need for consultation between Government and representatives of employers, trade unions and other relevant interests. This should be as open as possible and aimed at obtaining wide awareness and acceptance of the overall increase in incomes that the country at periodic intervals can afford. A forum for this purpose is already to hand in the shape of the National Economic Development Council. An educative project could thus be set in motion that would rely for its effectiveness not on the fear of unemployment or Government fiat but on an appeal to reason and to public understanding.

Who knows? Such an approach might eventually even lead to some agreed trade-off between pay increases, investment and job creation. I further believe that there is now a strong case for the proposition that where, in the non-trading part of the public sector, more especially in services that are vital to the support of life or to the security of the state, negotiations over pay and employment conditions, when they result in failure to agree, should be settled by a single, independent standing body whose findings could be overturned only by resolutions passed by both Houses of Parliament. I do not underestimate the difficulty of obtaining the consent of trade unions to such arrangements. But, surely, following the collapse of the coal strike, the time is opportune for some imaginative initiative of this kind to be taken by Government in an attempt to break the present pay and jobs log-jam. That would seem to accord with the new realism that was courageously suggested, as I understood it, by the noble Lord, Lord Murray of Epping Forest, before he retired as TUC General Secretary. Here, perhaps I, too, may say how much I admired the maiden speech of the noble Lord. Otherwise, I fear that, as the economy picks up, in conformity with our experience over the last six years, the continuing need to control inflation will be matched by ever-rising unemployment. That, in turn, will be compounded by never-ending disruption in essential services.

One thing is certain. Thinking of this kind, which is by no means original, cannot reasonably be dismissed as an incomes policy that has been tried before and has failed. I believe that it should now be put to the test, for neither exhortation nor collective bargaining that is said to be free but is in reality nothing of the sort, will work. It appears—I have to say this—that it is only the Alliance parties of the various political parties who are prepared to put forward specific proposals as to how this complex problem of pay determination should be grappled with.

7.20 p.m.

Lord McCarthy

My Lords, I have three things to do this evening. First, I must thank the noble Lord, Lord Barnett, for initiating this debate. Second, I must sum up the argument as we see it on this side of the House. Third, I must, like every other speaker who has spoken in this debate (except the noble Lord himself), congratulate the noble Lord, Lord Murray of Epping Forest, on an outstanding maiden speech. It is not surprising that that should be so, because Lionel Murray was an outstanding General Secretary of the Trades Union Congress. If I agree with the noble Lord, Lord Marsh, about only one matter, I agree with him about that.

When the noble Lord, Lord Murray, was the General Secretary of the TUC they used to say that he was the finest General Secretary since Citrine. A little fellow from the T and G once said to me that he was actually better than Citrine but that Citrine had Ernie Bevin, which is true enough. The speech which the noble Lord made tonight was typical of him. It had the qualities which made him an outstanding member of the General Council staff in Congress House; namely, the directness, the persuasiveness and the knack of going straight to the heart of any issue. I am sure that we all hope that we shall hear from him regularly and frequently in this House.

So I come to the debate. I think that four themes have run through what noble Lords have said on this side of the House: the state of the economy; the relationship of the Budget to the state of the economy; the consequences of the Budget for employment—because this is, as we have been told repeatedly, a "Budget for jobs"—and whether there is any alternative to the Government's proposals. And if there is, then why is it that the Government are so obstinately refusing to move in this direction?

As regards the state of the economy, I think that we could easily exaggerate the differences between us. We are like a doctor asked to give a second opinion upon a much-loved patient after a long illness which we believe has partly been caused by the faulty medicine and excessive purgatives of the doctor himself. We are glad to be able to say—and there is no disagreement on the different sides of the House—that there is life in the old girl yet. We are glad to be able to say that there is a partial, spasmodic, uneven and extremely welcome recovery. We welcome the fact that there was an increase in total output last year. We welcome the fact that there was an increase in manufacturing output last year, and that investment increased last year. We only wish that it had happened earlier. We only hope that we can go on and see, for example, manufacturing investment getting back to something like its 1979 level or output in manufacture getting back to its 1979 level. However, the recovery—partial, spasmodic and uneven—is very welcome to us. There is life in the old girl yet.

However, a number of points worry us. Two crucial things worry me. One of them is unemployment, to which I shall return. But what worries me also is the basis for continued recovery. Many reasons can be given for feeling concern about the basis for continued recovery. The example which I give comes from the Red Book itself, where the Chancellor sets out the figures in respect of the underlying movement in the balance of payments. Those figures were mentioned this evening by the noble Lord, Lord Barnett. There is a small surplus, but the surplus arises because this is a record year for oil and it is a good year for invisibles. That offsets it's being a bad year for manufactures and a bad year for "other goods".

However, the Red Book also tells us that next year will be a worse year on the balance of payments for manufactures. It tells us that the oil revenues have reached their maximum. Therefore, we ask, "Where is the recovery to come from"? If, in 12 months' time, the contribution of manufacturing to the balance of payments is worse, if the situation in respect of "other goods" is worse, if the earnings from invisibles do not double, and if at the same time it is the peak year for oil revenues, then what will prevent that balance disappearing? And if it disappears, then what is the basis for continued recovery? That is the sort of concern that we have, and we do not feel that the Government have an answer for it tonight.

We come to the relationship of the Budget to the economic situation as we see it. Essentially, we are saying that it is irrelevant. The Budget seems to us to be very largely irrelevant. The noble Earl, Lord Gowrie, said that we must not make too much of this Budget. Believe me, that is not a danger. There is not a danger that anybody will make too much of this Budget! The danger is that a Budget which has been labelled a "Budget for jobs" will not in fact increase jobs at all. That brings me to a curious aspect about Government policy; namely, their curious reluctance to specify a figure for unemployment.

We have had this strange White Paper with a blue cover which has been signed by seven Secretaries of State. It is like the scenario for an old B film. Seven editors have produced it, and there is not one concrete proposal. But in this blue paper with a white inside they tell us why they cannot give us a figure for unemployment. They say on page 2 that they cannot give a figure because it is not "pre-ordained"; it is dependent upon, enterprise, our adaptability, our control of inflation, our productivity, our wage moderation and our competitiveness". As if the level of inflation were not dependent on all those factors! As if the level of the GDP was not dependent on such factors! As if the current account forecast, which is in the Red Book, was not dependent on similar factors! As if the level of the PSBR, which was £3 billion adrift last year, was not dependent on similar factors! Yet targets can be given for the level of prices, for the level of the GDP, the level of public expenditure, and so on. But they cannot give us a figure for unemployment because it is dependent upon other variables. The fact is that they could give a figure. It is possible to provide a figure. It is in there, but the Chancellor will not own up to it.

In the Budget the Chancellor proposed an increase in the Community Programme of 100,000 jobs, in effect taking 100,000 people off the register at a very cheap price—about £2,000 per job. That is excellent. What a pity it was not done last year. The Chancellor suggests—and the noble Lord, Lord Young of Graffham, told us about it earlier today—that we apply the YTS to 17-year olds. That would take about 200,000 off the register over two years. It is an excellent idea. What a pity it was not done 12 months ago, when we suggested it.

We then come to two doubtful elements which have been discussed on this side of the House. I am referring to the restructuring of national insurance and to the cut in direct taxes of about £750 million. The London Business School says that the first of those proposals would create 150,000 jobs. I find that inconceivable. On the last occasion, when twice as much was cut off national insurance payments, it did not do much for jobs at all. So far as the tax cuts are concerned, on the basis of the figures that we know—and they can be derived from many studies, not least by the Institute of Fiscal Studies—the Chancellor's net tax reductions should take about 30,000 people off the register. So, all in all, the Government expect and anticipate an increase in the employable population of something like 300,000.

That is one of the answers I gave to those who have said that what we are proposing is fantastic, amazing, peculiar, and in particular that what Mr. Kinnock said was amazing and peculiar. He was asking for just over twice as much job creation as the Government plan to do this year, and if the Government had done it last year, and were proposing to do as much again this year, they would be on the Labour Party target. That is the size, the magnitude, of what is being asked for from the Government. But it is not being done, and 300,000 jobs a year, as the Government know very well, will not replace the number of new entrants coming into the labour market. That is why we do not have the figures, because the figures are a disgrace; because the Government know that what they plan and intend is that next year unemployment will get worse. That is why we do not have the figures.

I do not want to talk for any length of time about the alternatives because we have discussed this subject ad nauseam in this House. The situation has arisen whereby, I am pleased to.say—and I am sorry that the noble Baroness, Lady Seear, is not in her place—we have all become Seear men and women. The proposals in the report from the Select Committee of the House of Lords on Unemployment have become the established policy of every opposition party and the CBI as well. Indeed, many people on the Back Benches of the Conservative Party propose the same. It has become the considered policy of virtually everybody except the Government Front Bench; that is to say, to provide a million new jobs in a period of about two years at a gross cost of £5 billion and a net cost of about half that sum—just about the overshoot of the PSBR last year. That is our alternative policy. It is an eminently practical and reasonable policy, and the main reason that the Government do not embrace it is that they are totally boxed-in. Or perhaps there is one other reason, and I should like to spend a little time on this possibility tonight.

The Chancellor has this year found a new reason. He says—and he says it in the White Paper with blue covers—that he is now waiting for real wages to fall and that when real wages fall this will automatically reduce unemployment. He said this first when he was speaking to the House of Commons Select Committee on Unemployment. He said that a 1 per cent. cut in real wages extended over three years would give us 1½ million jobs. I said to the House shortly after that that I had never heard of research which justified anything remotely resembling this figure of 1½ million jobs for a 3 per cent. cut in real wages over a period of three years. I was not told what the research was. But now that research has been published, not in Employment—the Challenge for the Nation—there are no facts in that—but in a new publication, a review by Treasury officials called The Relationship between Employment and Wages. I think we have to take it that this publication is the intellectual cover for the Government's present refusal to do anything more about unemployment. Therefore it is worth spending a short amount of time discussing this new yellow paper on the assumed relationship between employment and real wages.

What it suggests is that there is empirical evidence to show that if only real wages would fall, and if only workers and employers would get real wages down, automatically, year by year, the level of employment would rise. In the meantime there is little the Government can do except abolish wage councils and do one or two nasty things of that kind. There are several points to be made about this contention. The first is that the evidence for it is not visible to the naked eye. To the naked eye real wages rise at the same time that employment rises. That is called, when the Government are in another mood, the miracle of capitalism. It is perfectly true that in some countries it does not happen and it is perfectly true that it has not happened in this country since the late 'sixties. But one does not have to assume falling real wages and a negative relationship between real wages and unemployment to explain the fall in employment in the country since the late 'sixties.

The second point to make is that there is no observable connection between cost-induced wage inflation, in the Chancellor's terms, and what the Government are pleased to call a more flexible labour market. The most dishonest part of the blue paper is an attempt to argue that other countries in Europe and the United States have been introducing similar policies to this country's so as to make their labour markets more flexible. In Annex 3 of the blue paper, on page 32, there is a list of countries such as France, Italy, Germany and the United States where this is said to be so. What it shows is that on the whole those countries have more ambitious job creation programmes than we do. There is no example of a country which has introduced anti-union legislation as we have. There is no example there of a country which has cut back on employment protection in the way that we have. There is no example of a country which proposes to weaken or abolish minimum wage legislation. Yet it exists in all the countries listed to a more effective extent than it does in this country.

Finally, at the end of this document a number of academics and econometricians of various kinds are quoted who have actually sought to establish a relationship between employment and real wages. What they have actually established is an enormously wide variation of results. They have established that in some countries, in some periods, there is a positive relationship or no relationships, whereas in other countries in other periods there is a negative relationship. They have established, for example, variations between 0.23 and 1.75 for manufacturing industry. Yet the Chancellor in his document, insists, at the end, that the Treasury economists say that, An elasticity in the region of ½ to 1 is suggested for the whole economy, implying that a fall in real wages of 1 per cent. might produce a demand for labour of between ½ per cent. and 1 per cent". That is to say, between 110,000 and 220,000 new jobs. To say that is as statistically reliable as saying that if rainfall in April varies from half an inch to 30 inches each day, we can assume that on 1st May we shall get 15 inches of rain. Yet that is what the Chancellor says, and that is the evidence why he cannot do anything about unemployment.

But the danger in quoting academics is that they read what one says and if one misrepresents them, they complain. Two of the distinguished academics whom the Chancellor quotes in this document have already complained. They wrote to New Society on 28th February last—Messrs. Leyard and Nickell. This is what they said of this paper which quotes them in support of the Government's policy: Despite the Chancellor's certainty this question is, in fact, the most difficult and controversial economic issue at present". And, summing up their true position they say: The Chancellor's assertion that the heart of the problem is the real level of wages is simply wrong, and calls to mind Melbourne's comment about the historian Macaulay: 'I wish I was as cock-sure of anything as Tom Macaulay is of everything'". The truth is, my Lords, that we know better; the Chancellor is not cock-sure; the Chancellor is desperate. The Chancellor misrepresents the figures because he does not know what else to say. He has no plans in his Budget or in his blue book to do anything because he is locked in by the Prime Minister's prejudices and his own beliers concerning the role of the PSBR.

7.39 p.m.

Lord Young of Graffham

My Lords, I am grateful to the noble Lord, Lord McCarthy, for the way in which he commenced his speech this evening since I wish to follow his example. I should start therefore by saying how grateful I am to the noble Lord, Lord Barnett, for introducing this debate this evening and giving us an opportunity at least to ventilate our different opinions on the way the real world is. Of course, I am less than totally grateful to him for his contribution but I shall come back to that in a moment. Perhaps I may say how happy I was to be here today when the noble Lord, Lord Murray of Epping Forest, made his maiden speech. I have vivid memories of my first appointment as chairman of the Manpower Services Commission when I called on him and of the warm way in which he encouraged me and the enthusiasm he showed for our task. Although I suspect that we may differ somewhat politically, I know that we are united in our determination to see that young people get the right start in life. I welcome him and his future contributions to our debates.

There is not one word with which I would wish to disagree in the last paragraph, page 2, of what has been called the blue paper. Not only the future levels of unemployment but the future of our country depend upon our enterprise, our adaptability, our control of inflation, our productivity, our wage moderation, our competitiveness, and thus our business success. May I finish off that paragraph in short by saying that they depend above all on what we ourselves, all of us, choose to do.

What this debate should be about is the choices which face us as to what we should do and where we should go, and how we should cure the ills and evils of unemployment as we restore the economy to its rightful place, for the objective underlying this Budget is to stimulate enterprise. It is in this context that it is a budget for jobs, and in that it is in the context of the Government's policies since we came to office.

New jobs and new wealth are born from decisions taken by individuals to innovate, decisions taken by individuals to invest, and decisions taken by individuals to compete. This Government are committed to creating the climate in which these decisions can be more easily taken and ultimately yield greater results. That, and that alone, is the theme which lies behind Tom King's White Paper on employment published last week. In it he says: The key contribution of Government in a free society is to do all it can to create a climate in which enterprise can flourish, above all by removing obstacles to the working of markets, especially the labour market". That is the reality. We must learn from the past if we are to avoid the painful experiences of recent years. Perhaps I may quote finally from the White Paper the statement which we, above all else, must learn: Jobs come from customers and from nowhere else". That is a lesson to which my noble friend Lord Watkinson referred, and one which we should all mark.

We have heard a great deal about import penetration; about the car market we lost. There was no Government restriction or inhibition of any sort preventing us from buying British cars. It was the customer who decided, and the customer alone, that the quality, the value and design of an alternative product were better, and that we must change.

The White Paper also points to how our less efficient economy has led to lower living standards. That again we must change. We have made a start, but we need to encourage and not discourage the entrepreneur; we need to encourage and not discourage the risk taker; and above all we need to encourage people and not put more obstacles in their way.

If we look round at the general economy we find it hard to recognise it from some of the descriptions that I have heard from noble Lords opposite. Only this weekend the CBI came out with a survey which showed a vote of confidence by business in our economy, and a vote of confidence unequalled for the past 12 years. Theirs is the opinion, theirs is the vote, which I would suggest we should pay attention to, for they are in the front line of business and they are the ones who at the present time really know which way the economy is going, and I suspect should be listened to perhaps more than I.

Lord Graham of Edmonton

My Lords, will the noble Lord give way? The noble Lord has attached great importance to the views of the CBI on that matter. Would he attach equal importance to the view of the CBI on the wages councils?

Lord Young of Graffham

My Lords, I thank the noble Lord. I shall come to that in a moment, if I may. May I just deal lastly with the foundations of the economy by reminding us all here this evening that we live now in an economy which has been growing every year for the last four years; we have inflation now at its lowest level since the 1960s; we have both investment and exports at record levels; and we also had half a million new jobs created in the 18 months to last September.

I am grateful to the noble Lord, Lord Barnett, for recognising the reality that higher pay settlements mean fewer jobs. I appreciate he knows that because it is clearly the product of long and hard experience. I wish more on his side shared his sentiments. But what this Government are about is not a low wage society. What we need, and desperately need, is a low unit cost society.

In the past year our unit costs went up by 4 per cent. In the past year the German unit costs went down by 3 per cent., and the Japanese unit costs went down by 6 per cent. That, and that alone, is what the debate is about; about the cost of wages and paying ourselves more. The noble Lord might perhaps scoff a little at Green Papers, but if anything needs a real rethink I suspect that it is our present benefit tax structure. That—as has been pointed out on more than one occasion this evening—certainly does not introduce incentive into our society.

Then we had the noble Viscount, Lord Chandos, who, in a manner of speaking, cycled around the course. He scoffed a little at the effect of reducing national insurance contributions for employers by £3 a week when employing a young person, or an unskilled worker, at just below £90 a week. Noble Lords opposite have scoffed at the London Business School forecasting that that, and that alone, will produce some 150,000 new jobs.

However, I received my first letter on this subject the day after the Budget from a hotelier. He said that having read of the changes he recognised—and he employed about 60 people—that he would take on two new people as a direct result of the national insurance changes. These national insurance changes are different in quality from changes in the past. They are specifically geared towards the low paid, and they are specifically geared to alter the shape of the national insurance structure. When they come into effect—and I have to remind your Lordships' House that it will not be until October that we see the effect of it—we shall see that the London Business School is more correct than some noble Lords opposite.

I am afraid I was absent when the noble Lord, Lord Marsh, criticised the removal of the upper earnings limit. But of course he spends much of his time now in a rather unusual industry. Fleet Street is perhaps a unique case, but there may well be ways even in Fleet Street that can be found to modify the cost of the excess of earnings.

I am afraid that I also missed hearing the noble Lord, Lord Bottomley, who I understand said that unemployment is the worst possible preparation for young people entering the labour market for the first time. That is one statement with which no one in your Lordships' House could possibly disagree. What this Government have been concerned to do, and I believe will be seen to have succeeded in doing, is to seek to ensure that no young person has the opportunity of experiencing unemployment. When the new scheme is in place there is not one young school-leaver in the land who will not have the opportunity of having two years of what I hope will prove to be first-rate training, and for whom unemployment need any longer be an option.

Then we had the noble Lord, Lord Ezra. I hope that in saying what I am about to say I shall not in any way suggest any lessening of my regard for him. This evening he reminded me a little of one of those programmes on television in which the hit tunes of yesteryear are played. How many times have we heard the song, "Just give me two billion more, only two billion more"? The facts are that this year capital fixed expenditure in the United Kingdom is £55 billion. In the public sector it stands at the same level in real terms as it was in 1978–79 at £22 billion. We have never had more fixed expenditure. It was up, and it is going to be up again next year.

If we have our present difficulties with unemployment, what difference would another £2 billion make, particularly when we are talking about areas of infrastructure like roads which are more dependent upon town planning and public inquiries than they are about other decisions, and water and sewerage on which we shall spend some £800 million this year? Many of those projects on which the £2 billion might be spent would, I suspect, be extremely good for the plant hire companies but I am not sure what they would do for the hire of men.

Lord Ezra

My Lords, in making those remarks, has the Minister taken fully into account the views expressed by the CBI in its report on the fabric of the nation and the views expressed by NEDO in its recent report?

Lord Young of Graffham

The short answer to that is, yes, my Lords. I have also heard many reports from the contractors and other associations who make a case for more infrastructure, but infrastructure must have its own reward. It must be there for its own sake; not in the cause of employment. There may be good causes for infrastructure, but it must be put in the context of employment.

We have heard a little about import penetration. The noble Lord, Lord Alport, wanted to put a ring fence round the nation. I can think of no single measure that would do more to destroy our competitiveness and to take us back to a siege economy.

Lord Alport

My Lords, is it not true that Japan has protected her market effectively for the past 25 years and perhaps more? Has that done any harm?

Lord Young of Graffham

My Lords, Japan may be a particular case and one to which I have no doubt attention is being given at this moment. But the sheer fact and the simple truth is that if we were to endeavour to protect our economy, we would be on a long and gradual slide to the centrally-controlled economies behind the Iron Curtain that I have heard so much about this evening. That is not the way which I suspect your Lordships' House would want us to go. We can be competitive; we are competitive. One only has to look at the experience of Jaguar over the past two years to realise that if we produce the right quality on time we can be back where we used to be. I believe we shall. Not one jot or tittle of the words of the noble Lord, Lord Houghton of Sowerby, do I dissent from this evening. All he said had the ring of truth and common sense about it. I wish he would speak to some of his noble friends and perhaps persuade them, if I am not able to do so this evening.

I have apologies from the noble Lord, Lord Molloy, who unfortunately cannot be here at this time. But to say in this House that privatisation has failed beggars the imagination. There is not one company that has been privatised that is not doing better today than it used to. There is not now one more self-evident popular programme than privatisation. The proportion of British Telecom employees who are shareholders is an example. From that example will I hope flow many more cases of privatisation. Privatisation restores once again the sense that it is the customer who counts; the customer who creates jobs. That is the lesson that goes through this debate and the White Paper, and it is a lesson that none of us must ever forget.

Lord Dean of Beswick

Rubbish, my Lords!

Lord Young of Graffham

The noble Lord may say "rubbish", but I am afraid that many of the lessons we have learned and lost during the 1960s were because in the 1960s and 1970s we were concerned with matters other than quality and production and other than the customer himself.

The noble Lord, Lord Graham of Edmonton, said that it was a Budget for jobs. It is, but it is a Budget that will take 12 months to come true because much of the work that the Budget has started—for example, the improvement in the Community Programme—will take months as it gradually builds up. Noble Lords have asked why this was not done sooner. We have built a soundly-based Community Programme from nothing to 130,000 places and now I hope we will have the opportunity to take it to 230,000 places. We have introduced a training element into the Community Programme. For the very first time over 30 per cent. of the people coming off the programme are going back into employment. Those are very real advances and ones which will be of benefit in the long run. The new Youth Training Scheme will start only next year. The national insurance changes will start in October. The Government are determined not to adopt a flashy course to do things for quick results. The Government are determined to lay secure foundations for the future which will last.

We have also heard much about wages councils. I stand here tonight personally convinced and utterly convinced that wages councils destroy jobs for young people because I have seen that. For the under 18s I have seen in too many cases wages councils set minimum rates of pay for young people above the level of the young workers scheme, and in many instances this resulted in—my Lords, I have given way three times already.

Lord McCarthy

My Lords, is the noble Lord telling us that before the consultation process begins he has already decided that wages councils are no good because they destroy jobs and must go?

Lord Young of Graffham

My Lords, the noble Lord would do well to exercise a little patience because I was just about to say that while I am personally totally convinced that that applies to under 18s, there is a period of consultation and I wish to see what comes out of that period of consultation. The noble Lord, with a few more seconds of patience, would have had his fears put to rest. We have to be patient and we have to be understanding. We have to realise that many of these restrictions that we have laid upon ourselves, many of these inhibitions that we have placed upon our expansion serve the same sort of purpose as that when we once feared that to drive a motor car we had to have a man with a red flag walking in front of us. We found to our surprise that we could manage without the man with the red flag. My role and what I am helping to do within this Government is to help to create the climate and culture of enterprise on which continued economic growth depends. I have helped to set in hand a programme of action which includes measures to remove unnecessary regulation from the market, to encourage the growth of small firms, to stimulate tourism and to help to equip young people through education and training with the skills and adaptability on which economic prosperity depends.

I must remind your Lordships and remind you again that the world in which these young people will live will be vastly different from the world in which we have grown up. A vital part of this strategy is to secure firm foundations, to encourage enterprise and to reduce the burdens that Government impose on business. The report published last week entitled Burdens on Business by the Department of Trade and Industry shows clearly that burdens are a major drain on the resources of industry, particularly on small firms which are the seed corn of our future. What concerned me about that report was that many of our small business men reported that they were not too concerned with some of the burdens imposed by Government. Perhaps they did not notice them. I can only liken that to the man who has lived in this country all his life and has never ventured abroad. He does not miss the sun, but let him spend some time on the Mediterranean and he would be satisfied no more. My job, my ambition, is to bring out the sun on all small businesses in this country so that they can expand and grow.

Within this Budget—although little credit was given for it today—the VAT threshold was raised and development land tax abolished. It is a start but a start on which we have to build. I will be leading an initiative with my colleagues to follow up the Burden on Business report and to consider deregulation more widely. I wish to aim to make real progress in reducing the cost to industry of compliance with Government rules. We have to get the right balance between licence and liberty. We need freedom to let people expand and businesses multiply, but not the licence to let them abuse another. I suggest that that balance is not set for all time, but the circumstances which existed many years ago have changed today and this is something at which the Government have to look from time to time. There is no desire on the part of the Government to take away the protection that is necessary for consumers, workers and customers. We do not wish to reduce that but we must cut the over-complex or unnecessary regulation. If we look at the economies in the world that are growing fastest they tend to be the less regulated ones.

During this evening, not enough credit has been given, I suspect, to the part that small firms play within the growth of industry. In the United States, in France and in Germany over half of employment, over half of wealth creation, is in small firms. And we are well under. What we are doing within the Budget—the reduction of the national insurance charge—will, I believe, help small firms as much as large ones. And the reduction of employment protection, although it is aimed at large firms, will help, I believe, small firms as well; because it was difficult to get the message across—allowing small firms the liberty to employ people for up to two years before making a firm commitment was not exactly well known.

So I hope very much that small firms themselves which are an integral part of the enterprise culture, small firms which are innovative and flexible, small firms which are adaptable to new market opportunities will be the firms which will help our economy to grow. I hope that we shall see many more of them—like that of the young man I met in Stirling not that many weeks ago now, who 11 years ago was an apprentice joiner and today employs 700 people. What we need, what we must have, are people who are ready to start small firms and to make them large firms. What we miss sorely today are the small firms of 15 or 20 years ago which would be employing 500 or 1,000 or more today.

It is not just manufacture. Tourism itself is a very real employer today. The hotel and catering industries have over a million people working and another 350,000 jobs exist in libraries, museums and art galleries.

The Earl of Gowrie

Hear, hear!

Lord Young of Graffham

The position is similar in sports and recreation and other services for tourists, as my noble friend Lord Gowrie well knows. But more than one independent forecast has pointed to substantial increase—anything up to 350,000 new jobs in the next 10 years—in the numbers employed in tourism and leisure. These are jobs which are not confined to the South or South-East. Not long ago I went to Bradford which, in my youth 25 years ago, I must confess I would not have chosen as a tourist place. It now has a very good tourist industry.

That is why we announced yesterday that I am going to lead a small group to focus particular attention on tourism and the leisure industries. We must look at matters about which some of your Lordships in this House have expressed concern—such matters as licensing laws, shop hours and other matters which must be right if we are to enable enterprise to flourish and grow.

I have spoken already earlier this afternoon, in making a Statement, about the great changes which are being made in our treatment of young people set out in the White Paper which is published by the Government today. In looking at that, I believe it is important to see where we were three years ago and where we are going to be in two years' time. In looking at those proposals, I think your Lordships should appreciate that, if we get the right review of vocational qualifications, if we get the right response from employers, from unions, from the world of education, in two years' time we could have the beginnings of a system of vocational education for our young as good as any in the world; and that is a very long way to travel in a very short time.

I believe that great credit should be given and tribute should be paid to the attitudes of employers, of unions and of the world of education for the way in which they have worked together—because youth unemployment is not a British phenomenon. Even in the United States, with the level of unemployment down to 7.4 per cent., unemployment in the 16–19 year age group is 19 per cent. In Italy, youth unemployment is now well above 35 per cent. and going towards 40 per cent. In most countries in Europe youth unemployment is far worse than in this country. It is the energetic steps that the Government have taken over the past three years which, I believe, will put paid to that terrible spectre of youth unemployment. They will give young people a firm foundation for the future.

That is what the Government are doing now. It is a Budget for jobs, because the only jobs you can really have in this world are not the jobs that Government create, not the short-term jobs which are created by spending and which have been tried so many times before, but jobs that have a firm foundation built upon enterprise.

I have read of late arguments that have appeared in newspapers that we, as individuals, are somehow no longer capable of enterprise; that, as a nation, we want the comfortable slide down to obscurity; that there is no one left in our world who really wants to go out and win. Those who write those articles in those national newspapers do not, I am afraid, come round with me to the schools; they do not come round with me to the colleges and to the universities. The young people whom I see out there do want to win; they are prepared to go out and work for themselves and they are prepared to go out and work for others. They are prepared to create wealth, to create enterprise; and, my Lords, this Budget is another stepping stone towards the restoration of the fortunes of the United Kingdom.

8.5 p.m.

Lord Barnett

My Lords, we have had an excellent debate and I should like to thank everybody who has taken part in it, even if I did not agree with everything that was said. I will come back, if I may, in the few minutes at my disposal, to one or two words that the noble Lord, Lord Young, has just said. But I should like to begin, as everyone else has begun, by congratulating my noble friend Lord Murray of Epping Forest on an excellent first contribution to our debates. I have known my noble friend for some time. We did not always agree. Occasionally, when I was cutting public expenditure, he thought that I should not have done so. Nevertheless, we got on excellently—as I did with most of my colleagues at that time. Whatever else one can say about my noble friend Lord Murray, his contribution to that Government, to the nation and to the nation's wellbeing goes without saying; and everybody who has contributed to this debate has paid tribute to that contribution. Speaking for myself and, I am sure, for everyone else, I am delighted to see my noble friend looking so much better, fully restored to health, I hope; and we look forward to hearing him often in future in our House.

The debate has been a very interesting one. Obviously, from the Front Bench opposite we have had speeches in support of the Government. After all, that is what they are paid for. The noble Earl says, "Not very much"! I am sure that the Prime Minister will note his complaint. But we have just been told that some people should take less.

The strongest support for the Government came, of course, from one or two Back-Bench speakers, and not just from the Front Bench on the other side of the House. The noble Baroness, Lady Carnegy, made a speech in support of the Chancellor's Budget which I doubt the Chancellor would have recognised. She said that it was a popular Budget, a bold and imaginative Budget. I am bound to say that if the Chancellor reads that he will wonder which Budget the noble Baroness was talking about, because I doubt whether even he would describe it in that way.

The strongest other supporting speech for the Chancellor and the Budget, as one would expect, came from the noble Lord, Lord Marsh—with one exception in relation to national insurance contributions, which of course he told us, and we understand, would have serious consequences for those in the newspaper industry. But he was a very strong supporter of the Chancellor.

The noble Lord told me very kindly that I would not get selected for a marginal constituency given my present views. I am bound to tell the noble Lord, judging from his contribution in this debate and others to which I have listened, that he is not likely himself to get selected for a "wet" Conservative constituency at any time. What the noble Lord did (as did a number of other speakers) was this. He constantly accused others of using old political tricks and of being politicians. He uses the oldest political trick in the game. He puts up cases that nobody has ever made and then proceeds to knock them down. For my part, I never said at any time that there was an easy way of reducing the level of unemployment. I am glad to see him nodding.

Equally, I never said that one could have unlimited borrowing. Of course one could not; and I did not suggest that. I suggested a borrowing requirement for 1985–86 which the Chancellor had for 1984–85: one which we could well live with and which would allow the expenditure of some £5 billion in 1985–86. It would go a long way to doing something to which the noble Lord, Lord Young, has just referred. He said—and I agree with him—that jobs come from customers. If you put another £5 billion of demand into the economy, you will create more customers. I see the noble Lord nodding his head. I am obliged.

There is a point where the noble Lord—I do not know whether it is since he joined the Government, and I would not do him that injustice—has now become a supply-cider. I assume he has become a supply-cider, because somebody else said in this debate that there is nobody in the Government (I think that that was what was said) who is opposed to what the Chancellor is doing. That is not true. We all know that there are one or two in the Cabinet—I excuse the present company, and I am glad to see the noble Earl and the noble Viscount nodding.

I am not sure that the noble Viscount is really all that much in favour of what is going on; but I should like to say to the noble Earl, Lord Gowrie, that he often quotes my book, and I am most grateful to him, but he does not give the name of the publisher and the price. He told us in the last debate that the Prime Minister keeps a copy of my book by her bedside. He must keep two copies, well marked, because the only lesson he clearly has not learned from my book is that the circumstances of today are very different from what they were then. Of course I was in favour of controlling public expenditure and controlling the borrowing requirement; and I still am. That much has not changed; but there are levels of unemployment in real terms which one can reach—probably at about 4 million—which are different from what they were then and which change the circumstances. So I am bound to say to the noble Earl that he really had better re-read my book—I will send him another copy if he likes—and mark it differently. Then, perhaps, we may get some slightly different contributions in the future.

We have had many contributions in the debate which dealt with the question of capital expenditure. The noble Viscount, Lord Chandos, in what I thought was an excellent speech—I believe my noble friend wishes to say something to me. Somebody on the other side of the Chamber is saying, "Too long". I have until 8.17—is that not correct? Thank you very much. I am obliged. Can we have a little silence from all sides?

Perhaps I may refer to some of the excellent speeches that we have had in this debate—and we have had some excellent ones. Some of them, including the speeches from the noble Viscount, Lord Watkinson, my noble friends Lord Bottomley and Lord Dean, the noble Lord, Lord Ezra, and the noble Viscount, Lord Chandos, referred to capital expenditure. I did not agree with much else that the noble Viscount, Lord Watkinson, said, but on capital expenditure he was quite right. The Treasury, under successive Governments, still have not learnt how to distinguish, in public expenditure, between capital and current expenditure. That is quite right. I have been concerned about it for some considerable time, from the days when I was Chief Secretary. I have indicated the nonsenses of the present definition of the public sector borrowing requirement that results in £1 billion at one moment counting as an asset and the next moment counting as an addition to the borrowing requirement, so that you have to do something about it which has the effect of reducing demand. It is a nonsense.

May I now turn to some of the other points in the debate?

The Lord President of the Council (Viscount Whitelaw)

No, no!

Lord Barnett

My Lords, I should like to reply to some of the points that have been made in the debate. I am sorry the noble Viscount disagrees with me, but I should like to say one or two things about what the noble Lord, Lord Young, has just said. I hope he will not mind that.

The noble Lord, Lord Young, gave an example of one particular small firm that was employing 700 now and which 11 years ago was not employing anybody. It had started as a one-man business and had built up to employing 700. What he did not tell us—and he must know—is that there are far more firms that were employing 700 seven years ago or less and which are now employing none because they have gone bankrupt. That is the plain fact. If the noble Lord wants me to give way, I will, but his noble friend will be very upset.

Viscount Whitelaw

No, my Lords.

Lord Barnett

My Lords, the other point I should like to take up which came from the noble Lord, Lord Young, is his reference to the need for low unit costs. Of course, he is quite right—that is the need. But he, like others, constantly talks about the need for low wages. You can have very high wages and low unit costs, as he himself concedes; and, indeed, in West Germany one sees that is the situation. I see I am wearing out the patience of some noble Lords. It only remains—

Viscount Whitelaw

My Lords, perhaps it would be fair if I told the noble Lord why there is some impatience. I think it is felt that it is not normal for the person who opens the debate at the start to make a long speech at the end. It is normally a very short speech, thanking those who have taken part in the debate, and not another winding-up speech. That is the normal custom and that is the reason for the impatience. I hope the noble Lord will appreciate that.

Lord Barnett

My Lords, I am only too well aware of the noble Viscount's record on the subject of patience and impatience, and I appreciate what he says. But, as I understood it, I had until 8. 17. I have two more minutes to go, and I was just coming to my peroration, so he will be very happy indeed to hear that. The point that a number of noble Lords have made, including the noble Lord, Lord Marsh, and one or two others, and which is central to the debate, is that you cannot borrow your way out of unemployment. That is a view with which I entirely agree. But the same cannot be said about a PSBR which is the same level as last year. For those reasons, I think the Government's economic policies and the Chancellor's Budget deserve to be condemned by anybody who is interested in the subject of unemployment. The noble Viscount now wants me to speak again. I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.