Social and Economic Policies

HL Deb 23 January 1985 vol 459 cc228-372

3.12 p.m.

Lord Beswick rose to call attention to the need for Her Majesty's Government, in this new year of 1985, to develop economic and social policies which unite the nation; which aim at directly creating employment rather than reducing taxation; which give new life to national pride in our welfare state and encourage motives of social responsibility rather than self-interest; and to move for Papers.

The noble Lord said: My Lords, the Motion which I am privileged to move is intended to provide an opportunity to look at the state of the nation in human as well as economic terms. I hope that we can take time to consider what sort of society we would like ours to be.

My first point is that in this highly integrated society an extra effort is needed, through constructive discussion, to get the widest possible agreement for policies which affect us all. I greatly admire the readiness with which the noble Earl, Lord Gowrie, brings his intellectual gifts so readily and generously to friendly debate here and we all acknowledge that our Leader, the Leader of our House, always prefers agreement if that is possible. But above them is the right honourable Lady, the Prime Minister. We recall the right honourable Lady's statement that she believes in consensus but a consensus based upon her convictions. This attitude to power she emphasised in a television interview just before Christmas, when, in answer to a question as to whether she ever listened to others, she said, "Yes, I listen carefully and then I explain why I believe I am right".

Current differences are not simply about market forces, nor even monetarism. It is the extreme and intolerant way in which these concepts have been shaped into a cult or culture that is at the root of so much of today's discontent and disunity. This criticism cannot now be brushed off as a party point. There are Conservatives, who have earned great respect in our public life, and there are leaders of our established Church who ask for what Mr. Francis Pym calls in his recent book, "the politics of consent".

Can we not now in this House say that the assumption of infallibility is an unacceptable face of democratic Government? The Prime Minister's attitude is scarcely justified by conspicuous success in our economic affairs. Certainly the inflation rate has been brought down. But curbing inflation is not an end in itself; it is a means to an end. Those tragic tribes in Ethiopia have no problem with inflation. Some percentages have been quoted and doubtless will be quoted again to show how well we are doing. But the inescapable facts are that at the beginning of this New Year our pound sterling slumped to an all-time low; the unemployment figures reached an all-time high, and for the first time within our memory we show a deficit on our overseas trading account in manufactured goods.

The stark figures of the unemployed sadden us all, on all sides of the House. But what gives me even greater cause for concern is the feeling, supported by facts, that the essential basis of a genuinely sound economy and society is being weakened and not strengthened by current attitudes and politics.

The Chancellor has been massaging his accounts with thousands of millions of pounds of these transient oil revenues—I am told, £14,000 million in one year. Then there are the thousands of millions of pounds from the sale of national assets. These enormous sums, over and above normal revenues, never before available to Governments, have now come into the Treasury. They could be used for building the future: more basic research; wider and deeper technical education; long-term investment in industry; increasing the housing stocks; replacing the sewers; building the roads to the East Coast ports and attending to those bridges and hospitals which NEDO says urgently need repair.

But it is in this situation that the Prime Minister has said that taxes should be cut: not a positive provision for our national future but tax gains. Some say that service industries will benefit. No doubt the financial services will get quite a boost. I have spoken before in this House about the growing imbalance between the effort and resources devoted to trading in money and that put into the actual creation of real wealth. This imbalance becomes ever more pronounced in the Western world.

Professor Tobin, in his 1984 Fred Hirsch lecture, said this: I confess to a suspicion that we are throwing more and more of our resources, including the cream of our youth, into financial activities that generate high private rewards disproportionate to their social productivity".

There is all the difference in the world between genuine savings, proper investment, prudent banking, on the one hand, and the plethora of parasitic money dealing, internally and across the exchanges, that has grown up since the war, all facilitated by the margins provided today by absurdly high interest rates and encouraged, too, by this current culture that short-term gains for self, however made, will somehow result in long-term gains for society.

It is true that, since the days when we came back from war and helped lay the foundations for our new welfare state, there has been a great increase in wealth production. But that makes it all the more saddening, all the more difficult to understand, why there should be now so much talk of the need to retrench. Proper economy, yes; a campaign for efficiency because we are proud of the service, yes. That is one thing. But cuts because we are told public expenditure is, by definition, a burden, are demoralising.

Last year, I saw a notice in the local paper which read, In the interests of economy, flowers will not be planted this year in the following public parks". How extraordinary that, in this increasingly clever world, with new-found energy resources, with microchips, computers and automation, we cannot afford to plant flowers in certain public parks! But of course the cuts go deeper, and yesterday's White Paper, whatever the noble Earl says, is a catalogue of cuts. A consultant cardiologist at the King's College Hospital wrote to The Times on 20th December saying: The latest round of cuts … has just closed one of our wards … It is not putting it too strongly to say that patients may die as a result of our being unable to accept them. This letter should not be interpreted … as a special plea for cardiac patients. All my consultant colleagues are facing the same difficulties". That conscientious professional was constrained to add that: ultimately it is the Minister of Health and beyond him the Prime Minister … who stand responsible".

Is it not just possible that somewhere we have some priorities wrong? A recent American report stated that a prosperous American family would now expect to own three to five television sets, sophisticated stereo systems, play-back units, Betamax, video discs and video games. If we get those promised tax cuts, no doubt more among us will move nearer to that splendid way of life. But can the consultants at King's College Hospital and elsewhere look forward more confidently to the days when hospital wards will not be closed over an extended holiday period?

There is this evidence of wrong priorities. But are we not also encouraging self-interest instead of social responsibility? Mr. Milton Friedman lays it down that the role of the state should be to protect property, enforce contracts, control the money supply, maintain internal law and order and promote external security. Beyond those limits, the theory is that individual choice should prevail. But this Government now intervene beyond those limits. Social engineering was once dismissed as a Leftist concept. But this Government now practise it in a big way.

The Cheltenham affair is relevant. At GCHQ the Government offered a bribe of £1,000 to those who would give up trade union membership. They lost a great opportunity to take a step forward in responsible trade union behaviour. They offered and could well have negotiated a no-strike agreement. Some Japanese firms have already shown this way forward in British industry. Here was a chance to go forward in the public service. But, no. The Government preferred to spend public money to create non-unionists.

Or take council house sales. There is a good economic case for home ownership. There is also a case for a stock of public housing for those who need to rent. But there is no good case for selling off public property at such cut prices. Encouraging to buy is one thing. I am for it. But bribing to buy is another. Six hundred thousand local authority houses have now been sold. Even allowing for owner-occupation prices, the average sale must have been £5,000 per house below the market price. In other words, some £3,000 million of public assets has gone in the furtherance of a political cause.

Then there is the case of the BT flotation. In the December debate, criticism was made about the money lost through under-pricing. The Minister replied: In my view £2,000 million, not merely £1,000 million"— note the words "not merely"— would have been cheap at the price".[Official Report, 12/12/84; col. 346.]

Cheap in what sense, my Lords? And to secure what? An extension of share ownership, we are told. How far did this take us to national unity? How many unemployed bought shares? How many on supplementary benefit? And how many of the buyers will also be sellers for an easy profit? The millions of pounds spent on commissions and advertising was money spent on encouraging not social responsibility but self-interest or, to put it more crudely, selfishness. What if this same self-interest motivates the BT unions when the next pay claim is put forward? How can we counsel restraint when all the propaganda has encouraged stagging and the creation of a body of shareholders whose purpose is not to put effort into that organisation but to get what they can out of it?

Here again, an opportunity has been missed. Suppose that those millions spent on share pushing had gone instead on research and education about new forms of employee and consumer participation and a new relationship between Whitehall and public sector management which gave greater scope for managerial initiative. Could that not have been a more constructive investment in the future of our genuinely united nation?

There is increasing evidence here and elsewhere that this emphasis on self-interest and the drive for that competitive cutting edge can have consequences that none can welcome. Even with extra public expenditure on bigger police forces, we shall not prevent those thrown out of work from sharing the same instincts as those in work. In this country, the Henley Centre for Forecasting last year predicted that the middle-class home of the 1990s will be a luxurious electronically controlled fortress which the owner will be reluctant to leave".

This is not a prospect that pleases me. I am suggesting that we need changes in national leadership which will direct us to something more hopeful. New technologies must mean industrial changes, but we should be developing with urgency new social techniques and criteria to ensure optimum benefit from those changes. We shall not, for example, secure lasting benefit nor ensure national unity by concentrating Whitehall propaganda on dividing the miners. If we talk proudly of an increased gross national product, I am suggesting that we should be more concerned with what kind of product. We should give up talking of public expenditure as a burden and proudly develop a carefully monitored contribution to the quality of life. If there is a choice between tax cuts and productive employment, then we should say firmly that we choose the latter.

I am saying, too, that if we are considering our potential effort, our total national capacity, we should recognise that there is a huge fund of energy and expertise that will respond to motives warmer and wider than self-interest. The lads I saw in the television pictures marching in that cold, harsh light to make the final assault in the Falklands were not spurred on by the prospect of a quick profit in the stock market. Their commander was not someone brought in from the outside at an inflated salary. Those people among us who subscribed over £20 million in a matter of days for Ethiopian relief were not motivated by self-interest. There is, then, this hopeful side of human nature, of British human nature. If our national policies appealed to it more directly and could be seen to apply more fairly, our total effort could respond and we might even get that competitive cutting edge more quickly.

I should like to think that much of what I have tried to say is consistent with that new moral effort for which the noble Earl, Lord Stockton, called in his memorable maiden speech. If we could take agreement that far, then in further debate and maybe with more time and fewer distractions, we might make progress towards defining the practical measures which such agreement calls for. Meanwhile, my Lords, I beg to move for Papers.

3.30 p.m.

The Earl of Gowrie

My Lords, the noble Lord, Lord Beswick, is experienced in government and in industry, and he is also, as we have just heard, a wily debater. But I am afraid that his Motion asks us to tilt once again at those airy and familiar windmills of British political debate: uniting the nation, for one thing. I am from Ireland, and I am married to someone from Germany. I know how immensely fortunate Britain is in that even the fiercest arguments here take place in the context of one nation. Like other countries, Britain has immense problems, and I shall not duck them this afternoon. But there is no evidence of disunity on most of the central issues of the day.

Then there is the idea in the Motion that employment is created, rather than won or earned. Then there are the doubts cast on the Government's commitment to the welfare state. Yet since coming into office the Government have more than doubled cash spending on health. Some doubts! As to separating the notions of self-interest and social responsibility, that is of course a pretty subjective issue. I for one find it a rather bogus choice. I am a bit suspicious of paternalism, of people who know what is best for other people. Gladstone's great adage about letting as much money as possible fructify in the pockets of the people is still, in my view, the best way towards economic health and prosperity in a free society.

So while we on this side welcome Lord Beswick's initiating this debate we must, I think, look beyond the Motion to more solid questions about the state of our economy and where it is going. I shall outline the strategy and report on progress. My noble friend Lord Whitelaw will deal with major specific issues when he comes to wind up.

The Government's economic programme was put to the nation in 1979. It received solid support. This support was reaffirmed, to put it mildly, in 1983. It is in all essentials the programme which the Government will put to the electorate again later in this decade. I believe it will continue to receive solid support. This is because the programme has delivered great gains to the economy already, and it will deliver many more if we hold to it.

I believe it is quite wrong to say that there is not consensus on the fundamentals of this programme. Every test of opinion suggests wide agreement that Britain earns her living in the real world of markets, and politicians who turn their back on markets have not been doing well in recent years, as the Labour Party has found to its cost. People in this country are mostly well aware of when they are buying foreign goods. They are mostly well prepared to buy British goods if they are good value for money. British industry is responding to this and it is becoming more competitive.

But people are also deeply worried at the scale of unemployment, which is at record levels in so many countries. So are the Government. Therefore most of my speech will deal not with the gains of the last few years—the credit side of the ledger, so to say—but with the immense challenge of unemployment. The scale of unemployment, which has been decades in the making, is a measure of how far still we have to go. It is not an argument for changing course, for throwing away all the hard-won progress of the last five years. But while people are rightly anxious about unemployment, few of them believe any longer that you can spend or borrow your way out of it. Why should they? They have been told that you cannot by Mr. Callaghan, as well as by the Prime Minister, by Mr. Hattersley in a recent speech, as well as by the Chancellor. They have been told it by Dr. Owen. We all know that winning markets at home and abroad is the only sure route to greater sustainable levels of employment.

I mentioned progress in the economy and the gains made. It weakens, in my view, rather than strengthens criticism of the Government and Opposition not to acknowledge these. Gains on inflation are sometimes acknowledged, and, to be fair to the noble Lord, Lord Beswick, he did so. But gains in terms of recovery and growth are rather less often mentioned. These are of course linked with getting inflation down, which is why we must strive to get it lower still. Continued recovery is essential to the new jobs on which we shall increasingly depend during this period of great sea changes in the labour market due to technology, population changes and many other factors.

Let us look at the balance sheet of the British economy at the present time. We have experienced the worst slump since the war. But since 1981 we have embarked on what will soon be the longest post-war recovery. In 1983, gross domestic product was up 3 per cent.—the best record in the Community. May I say to the noble Lord, Lord Beswick, that you need that kind of increase to meet the demands of the caring services, to which he drew attention? Profits on the stock markets—share pushing, as he rather dismissively described it—bring taxes for those same caring services as well.

Last year GDP slipped to just over 2½ per cent., but only thanks to the "own goal" of the dispute within the National Union of Mineworkers. Please note that I am choosing my words very carefully. This tragic and unnecessary dispute is between miners and miners. Other unions are not supporting the executive of the NUM, in practice. There is no winter of discontent. There has never been effective parliamentary support for the strike and there is less and less support outside Parliament. There is national unity in respect of this dispute as well. As the dispute runs down we should go back to the higher pattern of growth. How much depends on how fast. We are all anxious for it to end quickly. It has been a tragic and expensive affair—heart-breaking, as my noble friend Lord Stockton said in his maiden speech. It is, indeed, heart-breaking that so great a union could have been so misled. Nevertheless, there are heart-warming signs that courage and common sense will end this strike; and a powerful signal is going out at home and abroad that this nation and its Government, unlike our three predecessors, are not being defeated or even deflected by large, Left-led, public sector monopoly trade unions.

In spite of the setback of the dispute, confidence in continued recovery goes on being turned into solid progress. Investment last year was at record levels. It is set to grow by large amounts this year as well—a remarkable 15 per cent. in the manufacturing sector, according to the CBI. Even in this last, difficult week the Stock Exchange topped the legendary 1,000 barrier and a lot of that money will find its way into higher investment. Exports—excluding oil—rose by 12.5 per cent. in the quarter to November, between 1983 and last year. Productivity has been rising very fast. Company profitability is expected by the CBI to rise this year to levels which have not been experienced since the 1960s—that period which was acknowledged by my noble friend Lord Stockton, again in that remarkable speech so free from nostalgia, as belonging to an altogether different world.

The European Commission's regularly published surveys of producer and consumer attitudes show our economy to be the most optimistic of the Community. As to demand for goods and services, just look about you, my Lords. Look at the shops or the share performance of retailing. I do not just mean in London or the South-East. Overall demand is surprisingly buoyant all over the country: in Liverpool, Newcastle and Glasgow as well as here. The great exception is in the areas affected by the miners' dispute. Wages are keeping well ahead of inflation—too far ahead for the unemployed indeed—and we have of course one of the largest workforces in work in Europe.

Three things are remarkable about this record of recovery and growth. Two of them are welcome; one of them is not. It is welcome that growth has been taking place against a background of falling rather than rising inflation. That is really the essence of the Government's economic programme. Inflation is a tax that guarantees that the money you have earned is worth less by the time you have banked it, or reinvested it, or distributed it to your partners, or paid it out in wages, or just gone out and spent it. Sustained growth with falling inflation has been the aim of every single Government since the war. This Government are unique in having brought it off for nearly four years in succession. This aim of every Government since the war has been achieved for four years in succession. We have further to go, as I freely acknowledge, on very many fronts; but we are quite determined that that record will continue. As recent events have shown, we shall not hesitate to take whatever action is required to achieve it.

Then it is welcome that the evils of what used to be called "stop-go" have so far been avoided: violent accelerating and breaking rather than smooth driving of the economy. The noble Lord, Lord Beswick, tried to make much of recent movements in sterling. I do not altogether blame him for this as it has been a difficult week for the Government, and the Opposition have not been singularly successful at seizing the initiative in the House of Commons, as I expect we shall now have to learn to call it. But I would remind this House that during the period of recovery we have had three hiccups involving sudden rises in interest rates such as we have just experienced. There is no avoiding erratic changes in exchange and interest rates in an uncertain world—a world, moreover, in which international financial markets are ever more closely linked. But provided the Government carry through and convincingly affirm their central strategy—as we have—there is no need for these episodes to threaten recovery or inflation. Nor would joining the EMS help. This is on account of technical reasons with which my brief here is stuffed, but of which the following is a crude approximation: sterling is a petro-currency and the other EMS currencies are not. The time may come to join the EMS, but in the Government's view it is not now.

The unwelcome thing—and it is very unwelcome—is this. It is not welcome that even with sustained growth and lower inflation, unemployment has continued to rise. Of course sustained growth is delivering new jobs to this economy. It will go on doing so. Not going for sustainable growth will deny us new jobs. But these have not been delivered at anything like the rate needed to replace the jobs that have been lost or to cope with a growing labour market. Jobs that have been lost for a whole variety of reasons: loss of markets at home and abroad through uncompetitiveness; management failures of marketing or design; unions wanting pay rises unmatched by productivity; Governments indeed covering up the consequences of failure by reflating; population changes; commodity price increases; more competition in the world at large; technology; or failure to invest in technology. The reasons do not matter to the unemployed—except in so far as we all must learn from mistakes. What matters is what we do for them.

I have already dealt with the Government's overall strategy: to use all the methods at our command to see that growth is as little eaten into as possible; to see that the fruits of growth are not eaten away by the maggots of inflation. To this end we need to keep strict control over public spending and borrowing. Let me say to the noble Lord, Lord Beswick, and the House that of course there is nothing wrong with public spending; but like all spending it has to have some relation to what you are earning. There is nothing wrong with borrowing. But you have to pay for it, and you have to pay for it at a rate which attracts the loan in the first place. Noble Lords cannot urge the Government to borrow more and at the same time complain that interest rates are too high. I hope that subsequent speakers in the debate will be too wise to fall into that trap.

I accept however most profoundly that, given the special problem of unemployment, this overall strategy is not enough by itself. We therefore intend also to continue with two very important policies to help unemployment and to ease the position of those who are suffering this biggest headache and heartache of our otherwise much healthier economy.

First, there are the special employment measures on which we are spending £2,000 million each year. I was one of those responsible for changing the youth opportunities programme to the youth training scheme. The YTS is much better. It has a long way to go but at last we are beginning to rationalise training in this country. Training is good for our economic future and it also postpones entry into the labour market of many young people. I wonder how many of your Lordships really want your children or grandchildren to seek paid employment while they are still in their vulnerable teens. It is also demonstrably clear that such really worthwhile employment measures as the YTS, the community programme and the enterprise allowance scheme are far more effective in taking people off the register than any other kind of public spending. I hope that this debate will recognise that fact as other recent debates in your Lordships' House have done.

No less important is our determination to try and reduce the employment trap—where you are only marginally better off working than you are remaining on benefit. We are, as the House knows, planning to peg public spending, but only at present levels in real terms. Even so, the burden will remain large in relation to our present wealth, which is why growth in public spending will jeopardise recovery. If we spending Ministers—and I am sharply aware in the Arts that I am one—allow him, the Chancellor will no doubt try to continue his policy of raising tax thresholds, and that helps the poverty trap as well. If he is able to do this, the gap between benefit and work will widen in time. That will not solve unemployment. But it will help over time. Not doing so will hinder. Lower taxation also means that some people in work can take lower pay rises and still have the same increase in take-home pay. Lower pay rises mean more jobs. A change of only 1 per cent, to the average level of wages will in time make a difference of no fewer than 150,000 to 200,000 jobs. As at Question Time we had some exchanges about the OECD report, perhaps I may say that in an OECD report this fact is recognised and tax cuts, in the interests of thresholds, are urged upon us.

As to the argument in the noble Lord's Motion that this money—assuming public spending allows the Chancellor to find it—is better spent on the infrastructure, two things are conveniently forgotten by opponents, including I am sorry to say by the noble Lord, Lord Beswick. One is that public capital spending is already taking place on a massive scale. This is true whether you think of roads or gas pipelines, hospitals or other programmes—and that could be higher if some local authorities would wrestle with control over current costs—even if you think of my own little neck of the woods where the new British Library building may turn out to be the most expensive public building of the century.

The other thing that is often conveniently forgotten is the capital intensive nature of modern engineering. I am sure that your Lordships are all much too busy to spend time loafing about watching other people build motorways, mend sewers or extend airports. But if you do, you will not find many unemployed youngsters from inner cities working for £40 a week on these projects, or many middle-aged welders from declining industries working for £80 a week. You will find skilled machine operators on well over £200 a week. All this means that the tax way and the special measures way are the surest roads to more jobs for the unemployed. I most respectfully challenge noble Lords who take a different view to cost their proposals carefully in this debate, showing long-term jobs gained for public monies spent.

I must make an end—and indeed it is uncommonly close in here for the time of year! I look forward to the debate and to no less than two alluring maidens—indeed, the prospect of the right reverend Prelate the Bishop of Birmingham gives a whole new meaning to the phrase "the Church militant". I do not doubt that the Government will be told that there are alternative routes to sustained growth: import controls, incomes policies, and the like. I would only ask the House to recognise that such alternatives have appalling downside costs and that most have been tried and failed.

I do not doubt that the Government will be called doctrinaire. I would only say that our strategy appears to me to be strikingly close to that of Mr. Healey and the noble Lord, Lord Barnett, following the IMF period—a strategy that was patently bringing results before they lost their nerve. Then they doubled the public sector borrowing requirement, unleashed the winter of discontent, issued post-dated cheques for public sector pay, and were promptly thrown, as they deserved to be, decisively out of office.

Our national fortunes depend on getting on with the hard graft of earning our living, winning back lost markets at home and abroad and not paying ourselves more than we earn. That is more a matter for industry of all kinds than for the Government. What the Government can and must do is to create the conditions in which industry and commerce can prosper. We must also do all we can to mitigate the social and personal costs of the overdue changes through which our economy is passing. We shall not let up in either endeavour, and we ask others not to let up as well.

3.55 p.m.

Baroness Seear

My Lords, we on these Benches have always recognised and supported the Government's determination—their right determination—to reduce and to conquer inflation. We remember—and this is often conveniently forgotten in other parts of your Lordships' House—the misdirection of resources, the anxiety and the fear in all sections of society created by high levels of inflation, and we must know too that those who suffer most from inflation are those who are least able to bear the strain. So we have welcomed the Government's constant determination to reduce inflation and are glad that they have so nearly succeeded in meeting the target that they set themselves of getting inflation down to 4.5 per cent. in 1984.

Where we part company with the Government is in the extent to which today the Conservative Government are dominated by dogma. The noble Earl, Lord Gowrie, rightly said that he would be told that the Government are doctrinaire. Indeed, this is a doctrinaire Conservative Government of a kind unknown in this country. The Conservative Party is the party of pragmatism. Indeed, its enemies said that it lacked any principle except the principle of a determination to get into power and to remain in power on a pragmatic policy. Now we have a Conservative Government with principle and it is a thousand times worse.

Indeed, a strange transformation has come over British politics. It used to be the Labour Party which was the doctrinaire party obsessed with dogmas. Those dogmas, starting but by no means ending with the dogma of public ownership of the means of production, distribution and exchange, until experience told us the results of the application of that policy, still remain the dogmas of the Labour Party. But the difference is that today the only people in the Labour Party who really believe them are the far Left of that party. Indeed, the centre and the Right of the Labour Party might properly be described as a secular version of the Bishop of Durham, except that the Bishop of Durham is more frank about his attitude to dogma.

No, it is in the Conservative Party that there is this devotion to dogma, although not of course throughout the whole of the Conservative Party. There are what have been called the "wets" and the "drys". I would prefer to talk about the Tory "Samaritans" and the Tory "Pharisees". The Tory Pharisees believe that salvation is to be found by strict adherence to the law—I was about to say, but it would be too awful a pun, to the law the "profits". But what a strange dogma, what a strange rule by which to be governed! That dogma is the dogma of monetarism and of reliance on market forces—the belief that if you follow monetarist doctrine, if you allow market forces to have their way, then all will come well in the end. Of course, it is sensible to control monetary supply. We on these Benches have always been in favour of following market forces in so far as it makes for good results in the long-run, but not in a doctrinaire and absolutist way.

There is no doubt that the Government are dominated by this belief and it means that they fail to tackle the problems which Government have to tackle in all their many aspects. It is only in the comfortable areas of academia that, other things being equal, it is possible to talk about economic matters. In real life, alas! they never are. Every problem that the Government have to face—or nearly every problem—has an economic, a social and a political aspect, and the job of Government is so to manage affairs that all aspects are held in focus and the social consequences of economic change and the political implications are fully taken into account, and an estimate is made of those consequences at each stage.

Therefore, every economic change should be seen in relation to the effect it has on the major social issues, especially the social issue of unemployment. It is because the Government are so dominated by their economic theories that they are unable adequately to grasp the social and political aspects of the problems we face. As the noble Earl, Lord Gowrie, admitted, in consequence they have failed, and failed woefully, to deal with the issues of unemployment, which continues to rise, and rise, and rise.

We on these Benches say: take all these aspects into account, and in the position in which you now find yourselves adjust your policies so that you meet both social and political objectives as well as economic objectives. Of course we do not believe that you can spend your way out of these problems. That was the false doctrine of the Labour Party from which they have not yet sufficiently dissociated themselves.

We do not believe those people who thought that Keynes would have said, "Spend your way out". They have always forgotten, those popular neo-Keynesians, that Keynes was dealing with problems in a day when there was no threat from inflation. When there is no threat from inflation, then, indeed, Keynesian policies can be made to work. Of course now that the Government have had so much success in the reduction of inflation, the time is coming when it is possible to embark on a higher degree of spending along Keynesian lines which it would have been quite wrong for them to have done until inflation had been reduced to present levels.

We say: be prepared to spend more on capital infrastructure. We are not saying that the reduction in taxation is wrong in so far as—and this is an important reservation—it deals with taking the low paid out of the tax level. It is absurd that we are taxing people at a rate which knocks on 40 per cent., because you must add national insurance contributions to income tax. We are taxing people at a level of pay which is little above the social security level at which ordinary people are expected to be able just to survive, and then as soon as they move into employment they are expected to pay a marginal rate of 40 per cent.

There can be no sense whatsoever in continuing with that policy. It is not a criticism of the unemployed, as has been suggested, to say that this should be changed because it discourages them from looking for work. That may or may not be the case. But it is certainly right to say that that situation should be removed because it is grossly unfair and ridiculous that people at that level of income should be expected to make so large a contribution to the Government expenditure.

Do not let us forget, when we are crying out for subsidies to decaying industries, that those subsidies are being paid to well-paid workers out of the pockets of people who earn a great deal less than the workers in those industries. But, my Lords, is it not possible—no, I shall not put it as a question; obviously it is possible that you can take the lowest paid out of tax without giving tax benefits to those who are better off. There is no absolute reason why you have to have the existing bands of tax in their present position.

You do not have to make the rich richer by changes in taxation if your main aim is to see that the low paid no longer have to pay tax. We urge the Government to take the low paid out of tax, but to see to it that there is no immediate benefit in the pockets of the better off, if for no other reason than the divisive effect that that most surely would have, though also because there are far better things to do with the money than to see that the rich get richer.

My Lords, infrastructure, indeed; capital expenditure. There is a world of difference in borrowing to pay for capital development. Since when was it considered wrong to borrow to pay for capital development? That is totally different from borrowing to pay for consumption. I find it an odd application of the economic doctrine of the Conservative Government that, as my noble ally Lord Diamond is constantly pointing out to them, they sell the family silver to pay for current consumption, but will not borrow for capital investment. That seems a curious reversal of the way in which normal business people conduct their normal business.

All right; the noble Earl, Lord Gowrie, has said that infrastructure development is not particularly labour intensive. But there are many forms of building and capital investment which in fact will employ a considerable number of the unskilled and semi-skilled. It is, as your Lordships know, the unskilled and the semi-skilled who to a quite disproportionate extent make up the long-term unemployed; and it is the long-term unemployed about whom your Lordships' House should be, and I believe is, particularly concerned.

So infrastructure expenditure and capital investment will have to take place sooner or later, and as we all know, if you delay that kind of essential capital expenditure, it only costs you more in the long run. By such action we shall do something to dent the unemployment problem. We are not pretending that you can get rid of it; of course you cannot. But you can do something to improve it.

In particular, it is especially disappointing that the Government are cutting back on maintenance grants for housing improvements. Where house improvements do not take place the value of the house rapidly deteriorates, and beyond a certain point that deterioration is alarmingly fast. It is a waste of our resources not to go on with the best possible level of house maintenace. That surely is an area in which the semi-skilled and unskilled can be usefully employed and taken out of the ranks of the long-term unemployed.

Again, education is an investment. I should be the first to agree that there are many aspects of education which need reform, but it is ridiculous to cut back on technical education and, indeed, on the wider education that gives a greater understanding of the economy and society, when we are moving into an age in which beyond any shadow of doubt we need a highly educated, versatile population. In the short-term view you can make savings on education, but in the long-term view this is about the most false economy that you could possibly make.

Again, looking at the political, social and economic aspects together another change which we in this country would wish the Government to make, and to make quickly—I believe that the noble Earl, Lord Gowrie, though he disclaimed it today, is nearer to our point of view on this matter than perhaps he is willing to admit—is to recognise that there is no longer a good reason for delaying our full entry into the European monetary system. Such a move would give greater stability to the pound. It would give Europe as a whole a greater ability to deal effectively in relation to the dollar.

But perhaps more important is the political significance of this. We have trailed our feet in relation to Europe. We have not been good Europeans. There are Gaullists in this Government. The time has surely come to show that we are taking our part in the European monetary system; that we are prepared for a change in attitude; that we are prepared to help to give that leadership to Europe which we so failed to give 15 years ago, and have failed to give ever since.

With this there are economic and social consequences which we could begin to forge: improvements in the internal markets of Europe, which would be of the greatest help to our manufacturers here; improvements in transport throughout Europe. Large sums of money are wasted because of the continuing nationalism which dominates Europe and which, with good leadership, could be done away with. The development on a European scale of schemes of research and development could begin to challenge the leadership of America and Japan in these all-important areas of high technology. But we need to show leadership here, and the Government are again trailing their feet. They said before that they could not go in because the pound was too high. They are saying now, I suppose, that they cannot afford to go in because the pound is too low. At what point will it be right to go in, or is it because of their Gaullist prejudice they do not want to go in at all?

These are just some of the things that we would do to begin to give this country opportunities for greater social development and greater stability. But we do not for one moment deny that none of these things by itself will deal adequately with the problem that exists.

The noble Earl, Lord Gowrie, has attempted to paint a very rosy picture of the way in which the economy is developing with the one exception, which I know he is sincere about, of the deplorable level of unemployment. But there are other and darker sides to the economy in relation to our competitors. Why have we so poor a share of the American market? Why are we not increasing our share of the markets throughout the world? Why are we finding that many of our competitors, not in countries with low standards of living but in countries with a relatively higher standard of living than ourselves, are being more successful and are recovering faster than we are?

One can find figures which show that we are doing fairly well at certain points, but it all depends from what level one has started. Some of that increased level of improvement in productivity is simply a measure of the low level from which this country started in comparison with the levels of our competitors. It is a pretty false argument if one says that this proves that we are now well on the way to recovery. The fact is that the future is not at all rosy unless we make some fundamental changes of the kind that it is difficult to get the people of this country to accept. They will only accept them if there is a broad basis of consent.

The noble Earl, Lord Gowrie, said that there was consensus in this country. I wish I could believe him. I wish he would go to the North of England and listen to the things which are said there. There is not the level of consensus that both he and I would like to see. There is no foundation for it in our political system. The noble Earl, Lord Gowrie, claimed that the Government had been returned to power with the overwhelming support of the country. They were returned on a minority of votes, and the noble Earl, Lord Gowrie, knows that well.

As long as that system is continued, Parliament will not reflect the views of the country as a whole and, therefore, will not have the support of men and women throughout the country. I will not go further on that as this is not the debate in which to do it. I could, as the noble Earl, Lord Gowrie, knows, win that argument hands down. But that is just one way in which we have divided ourselves. We are a divided society, and we have to take active steps to see that that is put right.

Again, we need the greatest possible collaboration between the Government at the centre and the local authorities, the people out in the country. What have this Government done? What a singular achievement it is to have alienated even the knights of the shires in local government when it comes to achieving collaboration between the centre and the locality!

In industry, we need the greatest possible collaboration and the highest degree of participation. What have the Government done to build that kind of participation in industry for which many of us have worked for so long? It is true they have done something by way of wider share ownership, and that we welcome and are glad to see; but there is a long way to go.

We need a much greater degree of consent for unity: and where are we to make the changes that have to be made? Where is the leadership for that coming from? I was astonished to see the Labour Party put down a Motion asking for unity—the party which came to strength by playing on class conflict and never loses an opportunity to play on class conflict today! They know a great deal about the absence of unity. Poor Mr. Kinnock! I felt so sorry for him: that miserable face on the picket line at 5 o'clock in the morning. And it was not only the cold that made him look so unhappy! He cannot even control his own party in another place, let alone throughout the country. Divided? Yes, indeed, there are divisions, but not the old divisions that the Labour Party was built on and continues to believe in. Let them take a leaf out of the pages of the Chinese book. The Chinese have told their members not to take too much notice of that brilliant old man buried in Highgate. He was a brilliant thinker in his time, but the sociologists would say that his field work was a bit defective and the time has come to think again—and in less divisive terms than exist today.

We hear from the Labour Party the old messages based on the old worn-out doctrines. They are the voices of yesterday's men. The reason why they cannot possibly lead to unity is because they represent sectional interests. When the Alliance was formed the wise men of the media told us that we could never achieve anything because we did not represent a sectional interest. It is our proudest boast that we do not. A party not based on sectional interests is what this country needs to move to unity.

4.16 p.m.

The Lord Bishop of Birmingham

My Lords, I find myself in somewhat of a dilemma. Despite the noble Earl's expectations about the Church militant, I understand that the tradition of this House requires that a maiden speech should be non-controversial. On the other hand, I am speaking to a Motion which evidently invites controversy. Perhaps therefore I may stand back a little from the Motion and reflect on some of its underlying themes: the unity of our nation, the resurgence of national pride in the welfare state and an encouragement of the motives of social responsibility. In that case it seems hardly appropriate for someone like myself to discuss whether employment is better created by increasing public expenditure or by reducing taxation. In either of these cases there seems no realistic hope of a return to the full employment which our cities enjoyed a bare decade ago.

Must not people be offered useful work to do, especially young people, even if they cannot be employed gainfully? In my See city of Birmingham today some 5,000 16 to 18 year-olds are unemployed—almost the same figure as last year—despite a 5 per cent. rise in the numbers of those on training schemes. The tragedy of empty young lives will be felt by all Members of this House. We should perhaps recognise that we are entering a period of economic and social change in our country, comparable in some ways with the times of the enclosures or of the industrial revolution. Whichever way we look, we see change occurring at an unprecedented speed. There are many more women at work. There are far more retired persons. The electronic revolution is already radically altering the nature of work, making it more capital intensive. Only last week I went round a factory in the Black Country where four men make 2 million litres of paint each year. There is fierce competition from new industries in Eastern countries which seems likely to grow. We are living in an increasingly pluralist society. There are among us huge social changes, especially in the institution of marriage.

As a nation most of us dislike change and we find ourselves without clear aims for a future society without really worthwhile goals to uplift the spirit of men and women so that they will want to contribute their best to the common good. It is somewhat melancholy to reflect as we approach the 40th anniversary of VE Day that war can unite a nation and bring out the best in people while a long period of peace such as we have enjoyed tends to make us self-centred and bring out our divisions. And we are not without those today.

The latest edition of Social Trends records that 90 per cent. of our population believes that ours is a racially prejudiced society. Whatever the tragic coal strike is due to, it is—at least in part—a struggle of North against South, so it seems. According to statistics, the rich are getting richer and the poor are getting poorer. Dare we forget Disraeli's novel Sybil where Egremont said that our Queen reigns over the greatest nation that ever existed. And he was corrected. She reigns over two nations, he was told, the rich and the poor. Fortunately, however, we are far removed from the bitterness of those hungry 'forties of which Disraeli wrote. One great step forward in our social provision has been the so-called welfare state, with which our Motion is concerned today, that complex network of health and social services which tries to meet human need at its most acute points.

Our form of the welfare state is somewhat different from that which has evolved on the continent of Europe and in Scandinavia; but it was made possible by an era of full employment and great economic growth. The noble Baroness mentioned Lord Keynes. The Beveridge welfare state and Keynesian full employment went hand in hand; they needed one another. The welfare state, with its transfer of incomes to those who spent it on consumer goods, actually helped in those days to maintain full employment. And in those days there were far fewer women competing in the labour market. A larger proportion of the population was of working age. Today, like most other countries in Western Europe, we have recession and the large number of unemployed that the noble Earl mentioned; and so our welfare state, like theirs, is in trouble.

Unless we print more money or raise the level of taxation—and already our level is high—we can only increase benefits by cutting down on other expenditure. In fact, a higher proportion of our national income, statistically speaking, is going into the welfare state today than when it was first set up—and yet there is a large number of those who badly need more than they get. For all the improvements that could and should be made, can we not all take pride today in our welfare state and the transfers of income that it still effects? Is it not a real attempt in a free-enterprise economy to meet basic human needs? However, we need to clarify its aims and its goals. Should there be transfers of incomes from group to group, such as from the healthy to the sick, from the employed to the unemployed, from the young to the old? Or should there be a vertical distribution from high-income brackets to low-income brackets? Even more important, is the welfare state there for the security of individuals (as it began) or for the reduction of inequality, as some would prefer it to become? In our situation today is there room for a new concept of the national income where the unemployed receive not so much supplementary benefits as compensation for the impossibility of finding work?

These questions of social justice are important in seeking a sense of national unity. There is more opportunity today for consensus to appear through discussion in the media. Conflict itself is inevitable and can be creative providing that it is open and informed and leads to consensus. The sense of unity that a nation feels is based largely on a consensus over values—and despite our pluralistic society that consensus is possible. The sense of unity in a nation does not depend upon its economic standing or its materialist success. It is something intangible and spiritual, an inner feeling that the nation has worthy goals which inspire individuals to contribute their share to the common good.

We need to feel that we are creating a just, participatory and sustainable society. We need to feel that each individual person has a role and a purpose in our society. We need a sense of adventure for the strong, a creative outlet for aggression and enterprise. We need equally compassion for the powerless. We need a new vision for Britain in a new age, a Britain which, despite its troubles, is still, as we have heard, increasing its wealth year by year in terms of GDP and which, if it develops its potential, can still lead the world no longer of course in material prosperity but in something far more important in true human fulfilment. If it were to be generally believed that the goals of our national policy were specifically framed to promote the true fulfilment of our people, this in itself would release vast spiritual and moral energies and help to make our dream a reality.

4.27 p.m.

Lord Cledwyn of Penrhos

My Lords, it is my pleasant task to congratulate the right reverend Prelate the Bishop of Birmingham on his first speech in this House and to say that he lived up to his reputation of being interesting and stimulating and, of course, eloquent as well. He has raised matters of great importance and by so doing he has enhanced our debate. We all look forward to hearing the right reverend Prelate many times in the future.

Like other noble Lords, I am grateful to my noble friend Lord Beswick for tabling this Motion and for his thoughtful opening speech. It was also very timely because, as he said, it gives the House the opportunity to look very carefully at Government policies at the beginning of a new year. The Government's promises, the Government's performance, the Government's prospectus—all these are matters of acute concern to the House and to the general public, I am bound to say at the start that I did not recognise the euphoric scene which was painted by the Minister for the Arts in his opening speech. My noble friend Lord Beswick, appealed for policies which will unite the nation; and he is right to do so, for Britain has not been so divided for many years.

In 1979, the Conservative Party said that they were going "to reunite a divided and disillusioned people". We remember the Prime Minister's exhortations outside No. 10 Downing Street. Today, my Lords, the divisions are far greater than they were then and they are the direct result of Government policies and also of the clumsy and inefficient way in which the Government have tried to carry them out. I regret to have to say that this Government have become notorious for their unwillingness to consult those people who are affected by their actions; and this has contributed to our national problems. The gulf has widened between the well-off and the less well-off under this Government, between the North and South of this country. It was, indeed, former Conservative Prime Minister and leader of the Conservative Party, Mr. Edward Heath, who said the other day—and I quote him: In economic terms, the North does now begin at Watford". There is also, as the noble Baroness, Lady Seear, has said, the division which has developed in the last few years between central government and local government. Measures have been taken by the Government without adequate consultation with the elected authories. It is no use Ministers fobbing this off by referring to Labour-controlled authorities, as they invariably do. They should know that there is deep disquiet and resentment among local councils of all political complexions. This is a tragedy because these councils, with encouragement and the normal resources, could assist the Government to resolve some of their problems. Then there is the division between the public sector and the Government. The Government have interfered with a heavy and unsympathetic hand in their affairs. Finally, there is the gulf between those who are still fortunately at work and those who are unemployed.

The Government have now had nearly six years to fulfil their promises to unite the nation, to deal with unemployment, to secure adequate investment in industry and in general to strengthen the economy. How have they performed? To be fair to them, they have achieved one of their objectives: inflation is down to a relatively low figure. But that has been achieved at a very high price indeed. The almost fanatical pursuance of monetarist policies without regard to the consequences has brought our country to a critical position. Let me make this plain. This criticism is not made by my noble friend Lord Beswick alone, or by this side of the House alone; it is made by a broad spectrum of opinion, including Conservative leaders such as Mr. Edward Heath, Mr. Pym, Sir Ian Gilmour, Mr. Geoffrey Rippon and, significantly, by members of the Cabinet as well, such as Mr. Peter Walker, as well as by responsible bodies who are not unfriendly to the Government such as the CBI, and by the Trades Union Congress. I could quote them all at length, as noble Lords in all parts of the House know perfectly well, but their views are too well known by now to make that necessary.

The noble Earl, Lord Gowrie, spoke of the challenge of unemployment, and I wish to deal with what he said because this is very much in the minds of every one of us in this debate. In my view, unemployment at the present level is the most dangerous and the most divisive of all the consequences of Government policy and it must be borne in mind that out of the three-and-a-quarter million people out of work about 370,000 have been out of work for more than three years, 700,000 for more than two years and 1,047,000 for over a year. That is the tragic picture. Again, the estimate is that 63 per cent. of 16 and 17 year-olds will not have found paid jobs by the end of December and that 40 per cent. of the total unemployed are under 35 years of age.

Statistics are inadequate to convey the gravity of the position or the implications of this for the future of our country, and I welcome—we all welcome—the steps taken by the Government to provide training for young people, such as the youth training scheme to which the noble Earl, Lord Gowrie, referred. But let me repeat to him and to the House what I have said before, that while training is important, and indeed vital, it is no substitute for a job which carries hope for the future. Unemployment at any age—at 20, at 30, at 50 or more—is a bitter experience, but for those young people upon whom our future as a nation depends it must have very serious implications indeed. My noble friend is therefore right to say that economic and social policies which bring Britain to this pass must be condemned.

We all know what the Government's response is to these criticisms and we have heard some of these again from the noble Earl this afternoon. First, they remind us that there is a world recession and that therefore we must expect some of the consequences of that. Secondly, they say quite rightly that inflation is down and that industry is leaner and fitter. It is certainly leaner, but I am not sure that it is fitter. Our manufacturing industry is at an all-time low and bankruptcies have reached a record high: 13,406 bankruptcies in 1983. The fact is that the "lame duck" argument, used by so many Ministers to describe industries which are in financial straits, is not fair or valid because many old-established industries with reasonable management have been forced to close down over the last four years. That has gravely weakened job resources in so many parts of the country.

I also welcome industries which come into this country from overseas, if they provide jobs for our people, and I support Ministers who travel abroad looking for jobs for Britain. We must not forget however that British ingenuity, British skill and adaptability and British hard work are still here; but they need encouragement and at times they need Government help and investment. Other countries do this, but too many of our able young people go abroad and too many British inventions and discoveries are exploited abroad and not here at home. It is a sad thing that, for the first time, our imports of manufactured goods exceed our exports. "The workshop of the world" is not doing so well these days, and it is difficult to detect the recovery which the noble Earl, Lord Gowrie, claimed in his speech.

The Government have argued over the last two years that the service industries will take up redundancies from manufacturing. This is a point that needs looking at rather more carefully. I believe that it can, if over-stressed, become misleading because while service industries like tourism can make an increasing and important contribution, they are not a substitute in quality or numbers for jobs lost in manufacturing industry. I think that before the Government repeat this claim they should set up an independent inquiry to look into its full implication.

Again, the Government are fully entitled to point to the world recession and to its effects on our economy. Unemployment in western Europe is high and economic performance has not compared well with the United States, but the question for the Government is how Britain has performed compared with out competitors—a point made by the noble Baroness, Lady Seear.

The noble Earl, Lord Gowrie, complained in a recent debate that I have not acknowledged the Government's achievements in winning markets and jobs. I do want to give credit to the Government where they make progress, because it is very much in all our interests that the Government should succeed and I would be very glad to praise them if I thought that their policies overall were succeeding; but I cannot see this as plainly as the noble Earl. I must come back to the OECD Economic Studies Report, which states quite firmly that Britain's tight fiscal policies are in part to blame for our poor performance. That is an objective assessment of the Government's performance. The latest OECD report again put us at the bottom of the international league in spending on investment and on infrastructure. I will return to that point in a moment.

The noble Earl referred briefly to the coal strike and I wish to say one word about that. Whichever way one views it, it has been a tragedy—a tragedy for the nation and a tragedy for the miners and their communities. Those areas which are vulnerable to pit closures, like South Wales, which I know so well, have been prepared to endure the hardship of a prolonged strike because they believe, first, that their pits were likely to be closed arbitrarily; secondly, that no measures have been prepared, or even thought of, to find alternative work in the community. It is a combination of very high unemployment and acute insecurity and mistrust which has created so bitter a reaction in those communities whose futures are at risk.

We all want to see an end to this strike and I believe that the Government have an obligation to propose an agenda which would form the basis of a negotiation. I believe that if both sides could move away from public rhetoric to private negotiation a workable formula could be achieved. I believe that it is the Government's duty to take positive action to that end now.

The recent sterling crisis has also demonstrated the Government's uncertainty. It seemed at one stage that the pound was to be allowed to plummet without any Government intervention, and Britain's standing suffered not only because the pound fell but also because the Government were seen to be inept and seemed not to care how low the pound fell. When the Government did act, it was with the panic of a housewife who smells her dinner burning. This is what creates lack of confidence: this and the fact that we are frittering away our North Sea oil revenues when the world knows that these will decline and cease in the foreseeable future. My Lords, £17 billion, roughly, in revenues from the North Sea: £17 billion spent on unemployment benefit. What sort of policy is that? The oil revenues which should be used to expand key industries and to create new ones are being used to pay unemployment benefit.

Let me say to Ministers that what I say about the Government's action reflects a very wide view which, again, includes supporters of the Government. Let me read from The Times, which is well known to be sympathetic to this Government. This is what The Times said about the sterling crisis: The Government is wholly to blame for the sterling crisis of this weekend, and within the Government the Prime Minister and the Chancellor must take the lion's share. The foundation stone of a strong currency—any currency—is confidence. It is a basic, gut confidence in this Government which is lacking and has been lacking fundamentally since the 1983 election and in particular since last year's budget". Those are not the views of the Alliance parties or of the Labour Party, but the views of The Times newspaper.

The other argument advanced by the Government is that the proposals suggested by their critics (that is, by us, the Liberals and so on, and by a large section of the Conservative Party) have been tried but have failed—the "airy windmills", to use the elegant words of the noble Earl. This leads to the second part of my noble friend's Motion. We have suggested to the Government, as have many others, that if they have money to spare, as Mr. Lawson has said they will have at Budget time, they should invest this in the country's infrastructure. We say that this is necessary in itself and that it will also provide jobs, especially in the construction industry. But the Prime Minister, the Chancellor, the noble Earl and other Ministers in the Government have turned this down out of hand. The Chancellor, who said in 1983 that there was going to be a fall in unemployment last year, now says that he plans to introduce a tax cutting, tax reforming budget for jobs on March 19th, and that money spent on construction projects would only be a short term palliative". That is the Chancellor's solution.

Most people appreciate a tax reduction, but where the choice is one between a big tax handout or an investment in the infrastructure at this time of economic and social uncertainty it would be at best foolish and at worst wicked to hand out the money. That has been tried before, and it did not work. My Lords, £3 billion has been paid out in tax concessions since 1979, but the consequences are as I have tried to describe them. It does not seem like good house-keeping to me. I believe that the Government should get their priorities right.

I quoted the OECD report, where all the evidence is that Britain's infrastructure is in dire need of attention. Then we have the CBI and the NEDC, who strongly believe that any available funds should be invested in jobs. Let me quote to the noble Earl, Lord Gowrie, a phrase from the report of the Institute of Fiscal Studies: namely, that £1 billion spent on tax cuts reduces unemployment by 30,000 in four years, whereas £1 billion spent on capital investment in the infrastructure would reduce unemployment by 185,000 in four years.

Noble Lords

For how long?

Lord Cledwyn of Penrhos

The quotation is clear. That is the view expressed by an authoritative body, and I think the Government ought to take account of it. We believe that that is the choice that the Government have to make: either tax cuts or investment in the infrastructure. The study on the infrastructure which was handed to the Chancellor on 9th January says—and, after all, the NEDC was set up to advise the Government—that there is a huge backlog of maintenance and renewal to be done on roads, on bridges, on water mains, on sewers, on housing and so on: and, make no mistake about it, these are absolutely vital to the future prosperity of Britain; there is no argument about that.

We do not ask a great deal in this debate. We are pleading with the Government to be resilient. They could spend much more on these essential projects without sacrificing a great deal. Expenditure on capital programmes has not been greatly inflationary in the past, and need not be this time. Yesterday's White Paper, I found, was essentially depressing. This afternoon I appeal to noble Lords opposite who are members of the Cabinet—there are four in this House—to exercise their influence when these matters come up for decision in the Cabinet. It would help towards the kind of consensus which the right reverend Prelate the Bishop of Birmingham advocated.

My noble friend's Motion ends with a reference to the welfare state and social responsibility. These things tend not to be fashionable in these days, but they are vital to millions of people. My noble friend Lord Underhill is proposing to deal with these issues when he comes to wind up the debate this evening.

For all the reasons I have given there is a most urgent need to change course; to be resilient in tackling the crisis; to be prepared to listen to more than one opinion. We are asking the Government to heed the CBI and the NEDC, the private construction sector of industry and some of their own senior statesmen. The right reverend Prelate quoted Disraeli, and I shall do the same. He said: Finality is not the language of politics". The tradition of politics in Britain is resilience; to aim for consensus, to get people to work together; in fact, in the words of the Conservative manifesto, "to unite the nation"—something they have signally failed to do. They have three years or so in which to find new solutions. We appeal to them to do so; and I most earnestly invite the House to support my noble friend's Motion.

[Interruption.]

4.48 p.m.

The Earl of Stockton

My Lords, I hope it will not be thought impertinent of me as a very new boy in your Lordships' House to extend my congratulations to the right reverend Prelate the Bishop of Birmingham. I have recently passed through the ordeal of making a maiden speech and I know how pleased he must be to have got over that hurdle. He can certainly feel happy that both in matter and in manner he has made a most distinguished contribution to our debate.

We have in this Motion drawn in very wide if somewhat Pecksniffian terms a range of subjects which would allow one to talk about almost any social or economic question. I propose in a short time today to refer mainly to matters which are most in our minds—unemployment and industrial revival. We have been through all this before. Sixty-three years ago I went to Stockton-on-Tees to stand for Parliament. The unemployment figure was then 29 per cent. Last November I went there to a party of my friends—the unemployment is 28 per cent. That is a rather sad end to one's life, but that is what has happened.

Whatever my noble friend, who spoke so admirably in the best defence of the Government I have ever heard made, may say about the standard of consumption in those areas which are suffering from I this terrible unemployment, that is largely because 60 years ago the unemployed were kept on a Poor Law basis. Happily, they are now treated with much greater liberality. Nevertheless, the facts remain and the wheel has come full circle.

After the First World War the economic recession struck the world. That was four years after that war—in 1922. It lasted until rearmament and the Second World War. The problem was never solved—let us be frank about it. Everybody had all kinds of different views, which are now repeated today. Some of them objected—and I think rightly—to the return to the gold standard and the parity of the pound at 4 dollars 86 cents. I believe that the return to gold was a good idea, but not at that parity.

That development was forced upon the Government of the day—rather against the willingness of the Chancellor of the Exchequer, Winston Churchill—by the whole financial establishment; the bankers, the Bank of England, what are called the experts, and the writers in financial papers—all those great world commentators who always know what is best but happily forget later what it was that they recommended.

Then there was the same argument about expansionism or restrictionism. One of my oldest and dearest friends, Lord Keynes, represented—although not in the way he is now supposed to have done, but in a moderate form—an expansionist policy. That policy was opposed by the Government. One can almost hear the same phrases today in another place and in your Lordships' House that one heard 50 years ago.

After the Second World War, happily, a great industrial reaction did not take place. I rather expected it—I believe that many of us expected it. That it did not was perhaps because the Korean war gave a boost to the economies of Europe, or perhaps it was because of the generous act of Marshall Aid that allowed the nations of Europe to buy what products they needed from Britain. Anyway, that reaction did not come. We all said how clever we had been in avoiding that unemployment—we all did that. But when it goes against us, it is of course the inevitable forces of world powers, and so on. But it was all right then.

Ten years ago, it went wrong—not only here but all over Europe and throughout the capitalist world. Was it because of the sudden rise in the price of oil, which enormously increased the costs of manufacturing—with terrible results for the third world, which found it impossible to buy what it needed or to sell its own exports of raw materials? We do not know.

It is interesting to see how exactly the same arguments have been reproduced and the kind of action that has been taken. When this change struck the Labour Government, in the first case, they naturally followed what I believe are called neo-Keynesian policies; that is to say, permitting a reasonable amount of reflation—putting money into the infrastructure and all the rest of it. In having to put so much more money into the system, the Labour Government had to invent a restrictive policy of restraint on wages and on prices, to try to prevent this money from producing impossible inflation. They were not successful. As we know well, price policies and wage control policies do not succeed; they just create a great dam which, when it bursts, creates something worse than existed before. When that Labour Government went out of office matters had become very bad. The pound had declined to some terrible figure—to two dollars or something of that order. At any rate, it was a very low figure, and the Government were driven out of office.

Next, the Conservative Government came to power and they revived the restrictionist system, which meant cutting off all possible expenditure, raising bank rate to 18 per cent. interest by way of encouraging manufacturers, I believe, and then gradually—and one must give them this great credit—sacrificing almost everything to perhaps the first need (I am not saying it was not) of stopping runaway inflation, which would have ruined us and destroyed the whole social structure of our people. That is what they have done, but it has been at a very high cost. And now the argument goes on—backwards and forwards.

May I ask your Lordships—and I shall venture to keep the House for only a few minutes more—to consider another country which had the same problems; a country whose people are very similar to us and from whom I am proud to claim that I am half-descended. I mean by that, the United States of America and the American people. Four or five years ago, when the rather depressing reign of President Carter came to an end, the Americans were very much in the position that we are in now. Their economy was depressed. Unemployment was very high—terribly high. It stood at one person in eight. The economy was falling and there seemed to be not much hope.

Then President Reagan did a very wise thing—he dismissed all the academic economists in Washington. President Reagan said to himself, "This is absurd—let us look at the realities. Let us not talk about juggling with money but let us consider the realities of the creation of wealth". That is what we must do today. Happily for President Reagan, and unhappily for us, the monetarists were the first to be exiled. They were of course received with that courtesy with which we always receive refugees. They settled in Oxford, they settled in Cambridge, they settled in Whitehall—and it is rumoured that they even settled in Downing Street. They have done infinite harm because they have diverted our attention from what is really happening.

What is really happening is that the third industrial revolution is on its way. The first industrial revolution was based on coal and steam and brought great strength to the 19th century—with all its weaknesses as well. The second industrial revolution began at the end of the last century, when we changed from coal and steam to oil and the internal combustion engine; to the motor-car, the aeroplane, and the container ship. That was a complete revolution, affecting all forms of production and transport.

I was interested to ear my noble friend quote Mr. Gladstone's words to the effect that one of the chief objectives of government was to reduce taxation in order to allow the money to fructify in the pockets of the people. I am not surprised at that; I have long realised that the great figures in my old party have long I ago given up Toryism and have adopted Manchester Liberalism of about 1860. Apart from that, all this is completely out of date.

What have the Americans done? They have tackled the problem at its best. They have been the protagonists in invention, in development and in exploitation of the new technologies. They have done that on an immense scale. What is interesting is that, at the same time as all that is going on, they have reduced unemployment by means of the new wealth created. They have made 5 million new jobs altogether. The old plants do not employ more people. General Motors do not employ more people. Of course not. They employ fewer people because they have largely gone automatic. It is the new plant, the new methods and all that goes to build them, the new wealth built round them and the new service industries that have sprung up round them. Nor is this only in the field of atomic physics. Extraordinary biological developments are also going on which will revolutionise the whole structure of the world. And we are somehow out of it.

Of course, many of our leading, able industrialists are taking a full part, but not most of them. They are hardly conscious of it. We speak about the depressed areas, the north-east coast, shipbuilding, iron and steel and coal. Will they ever come back? No. That kind of shipbuilding is finished. It will in future be the container ship, with which we were so slow to press forward and which our harbours foolishly, in most cases, reject.

I ask your Lordships to reflect for one moment. Let us suppose that, by the wave of a magic wand, in one night all our plants and industrial production could be brought up to the level of the best. What would be the result? Another 1 million unemployed? I would say another 2 million unemployed. The industries would all become capital intensive and would all employ less labour. There is only one hope. Either we can sit by and do nothing, when we shall become just an obsolete country which is a nice place for tourists, but obsolete, or we must take part—a leading part—in what is happening and cannot be altered. The first industrial revolution was not brought about by governments, it just happened. It had terrible and harsh results when it took the loom and the wool from the cottage and put people into factories. There were terrible results when, under the aegis of men who were good Christian men but dominated by dogma and who allowed no interference by government, children worked for 12 hours in the factories or 12 hours underground. There were bad results, but in the long run, by the end of the century, this was the simple test: real wages and salaries had doubled and, in many cases, trebled. In other words, the standard of living of the mass of people was enormously improved.

The second industrial revolution, aided by two wars, had similar dramatic effects and the third, which is bound to come, is creeping forward. One question is: are we to be in it or to wait until we fall behind? My noble friend, who made such an admirable defence of the Government, spoke of some of the good signs. Exports have increased by some percentage in the past few months. Of course, if you halve the value of your money, you ought to be able to export. I am not very much impressed by that. More seriously, this industrial revolution is going to happen and the question is whether we are going to be in it.

I think we can learn quite a lot from the United States. I was amazed when I was there some four or five years ago, at the end of the last Presidency, to find that this bouyant people were defeatist, had lost heart and hardly believed in themselves. They were very self-critical and were allowing themselves to be knocked about. Now their natural bouyancy and determination to press forward with what is new and created has taken control. We are told that they have too much debt and that they spend too much money. How can you have production unless you borrow the money to produce? I do not believe in the theory that you must first produce and then borrow the money. That is not what my grandfather did. He borrowed the money and then produced.

Anyway, on this new theory that has somehow gripped us that we ought to be afraid of things instead of pursuing them with all the energy we can, the monetarists have left us only one alleviation of their austere regime. They have invented the one new law that there is no difference between capital and income. Under this law, apparently, you can spend all your capital on current account. In the old days we had above and below the line. This new law is of great help because it at least gives us some alleviation from a very rigid rule. Of course, it may apply to governments but I am not sufficiently well up to know. It certainly applies to individuals. Some of the nicest fellows I have known in my life have experienced this confusion between capital and income, but they usually ended up in rather dreary lodging houses.

This is now the test. Let us stop these futile, purely theoretical, academic and economic arguments. Let us get back to the reality; the reality as it happens before our eyes, is happening all over the world. Incredibly, it is happening even in countries like Taiwan and North and South Korea. One can see more modern forms of industrial production there than one can see in England. It is happening, and it must happen here. We must not be the slowest ship in the convoy. We must be the leader of the convoy or, at any rate, make an attempt to regain the leadership we have had for so long.

It is for the next generation—it will not be for me but for my successors—to make the decision. Should we just slowly and majestically sink—not perhaps drastically or tragically but go slowly down like a great ship—or shall we make a new determined and united effort, putting, as far as we can, party aside? There must be parties, of course, but there can be co-operation and even national governments. Let us do the latter and then historians of the future will not describe the ending of this century as the beginning of the decline and fall of Britain but as the beginning of a new and glorious renaissance.

5.8 p.m.

Lord Taylor of Gryfe

My Lords, I am sure Members of your Lordships' House will bear with me in the difficulty of following a star performer. My first duty is, however, to congratulate the right reverend Prelate the Bishop of Birmingham on his maiden speech. As has been said, a maiden speech is an ordeal at the best of times, but in the special circumstances of this afternoon, it requires a degree of courage—a quality which the right reverend Prelate has never lacked in his distinguished career. I am happy to hear that he will make regular visits to your Lordships' House and give us the benefit of his wisdom and experience, although we cannot guarantee the same large audience that he has enjoyed today.

As Social Democrats and as members of the Alliance, we support the terms of this Motion. But, while we are not questioning the honest intentions of the noble Lord, Lord Beswick, we must question whether he represents the authentic voice of the Labour Party. His reasonable speech this afternoon is very far from the strident pronouncements of the Labour Party annual conference and hardly in keeping with the deep intolerance witnessed regularly on our TV screens which is practised by his militant allies and which has driven so many good people and good democrats out of the party to which he now belongs.

I was impressed, as I always am, with the lucidity and conviction of the noble Earl, Lord Gowrie. He speaks well, he speaks logically and he speaks with conviction, but I sometimes wonder whether he is living in the same world as I am. It is easy to rhyme off economic statistics; but, if one lives in Glasgow where I live, where one in three in unemployed, it is difficult to match statistics proving the success of the strategy with the events that I see in my daily life. While I admire the noble Earl, Lord Gowrie, I wonder whether sometimes in his quieter moments he sits down and asks himself, "Is it really working?". While the statistics that have been quoted are impressive, I am not sure that in the great cities like Glasgow, Liverpool and Birmingham the evidence that the economic strategy is working is apparent.

The Minister's was a good speech; but, if I may say so, the quality of the debate cannot be measured simply in terms of economic statistics. I thought that the right reverend Prelate was right when he said that this debate is about spiritual and moral values, the most reverend Primate the Archbishop of Canterbury, in a recent interview in The Times, said: I believe that people one day will wake up and see that this is not a decent sort of society in which we live". The Motion raises fundamental questions about the nature of our society. It demands social policies that unite the nation. It seeks to encourage social responsibility. Perhaps the noble Lord, Lord Beswick (who I regret is not in his place) should direct his trade-union friends, as well as the Government, to that phrase about "social responsibility rather that self-interest".

Last weekend Dr. David Owen gave an interview in the Observer under the heading, "I am afraid for Britain", and there must be many in this House who share his anxieties. In the past few years we have witnessed a tragic decline in and a loss of respect for the values on which our democratic society depends. Democracy depends on a high degree of consent to and acceptance of certain principles held in common, such as respect for law and order and protection of the right of minorities. It cannot survive in a nation which is deeply divided on those fundamental matters. It requires the acceptance of the Christian principle that in our community we are members of one another.

That view is sadly at odds with the values that are presently encouraged by the two major parties in this country. The present Government exacerbate rather than alleviate conflict and equate consensus with weakness. The boast of the Prime Minister—and I quote—"I am no softie", is not the voice of the healing influence which our society requires. Equally, the intolerant militancy of the Labour Party has no relevance in achieving the national unity which the noble Lord's Motion demands.

Let us examine for a moment the main areas of tension. First, a democratic society must be seen to be fair in the election of its government. However, the electoral system of this country provides 61 per cent, of the seats in the House of Commons for only 42 per cent, of the votes—those who supported the Conservatives. Thirty two per cent. of the seats are held by Labour on 27 per cent. of the votes cast. The Alliance, with 25 per cent. of the votes cast, is given only 3.5 per cent. of the seats in the House of Commons. That is manifestly unfair.

It is difficult to reconcile our democratic pretensions with the fact that many of our citizens are denied the political representation which their votes would justify—yet the two major political parties in this country conspire to prevent our voice being heard. They have good reason to be afraid. In the seven by-elections since the General Election, 37 per cent. of the voters supported the Alliance; against that, 35 per cent. supported the Government and only 27 per cent. supported the Official Opposition.

I welcome the concern which has been expressed in all parts of the House about unemployment. How can we talk to people about observing social responsibilities—which means responsibility to society—when society has rejected them and made them feel unwanted? How can we defend a system in which more that 3 million of our fellow citizens are anxious to work yet, with so many things crying out to be done in our society in housing, building, new schools and hospitals, they have to stand idly by? That is totally indefensible.

An experience as a young man haunts me in these days. I lived in Germany as a young student in the 1930s. There were 8 million unemployed people in Germany in the period 1931–32. I can well recall the gaunt faces of men without jobs and without hope. Since Weimar democracy offered them nothing, they became desperate and sought desperate solutions. They became the victims of the demagogy of Fascism and Communism, and the world has paid a heavy price in the events that followed. If democracy is to survive in our country, it must be seen to be really caring about unemployment and must give people hope.

The other area of tension which commands our attention is industrial relations. Here again, the two major parties make no relevant contribution. We have the experience of GCHQ, with the lack of consultation. The appalling practice of bribing employees by paying them £1,000 each to leave their trade union is degrading. The appointment of Mr. MacGregor as chairman of the National Coal Board, whatever other qualifications he may have, revealed a serious insensitivity to the special circumstances of that industry. Whatever was intended by these events, they have created an atmosphere of confrontation. They have driven moderate and responsible trade union leaders into an indefensible position in the TUC. When they were seeking to build bridges, the Government slammed the door and provided a gift to the militants.

Having said that, we must confess that the trade unions themselves cannot escape some responsibility for our industrial decline. Some of them resist technological change on the false assumption that it is protecting their members' jobs. They are frequently prisoners of their class war traditions. Enlightened trade unionism in the German, American or Scandinavian model is required as an essential element to create more wealth. As has been so rightly said by the noble Earl, Lord Gowrie, and also by the noble Baroness, Lady Seear, unless we produce more wealth we shall not be able to finance the social services which we are now demanding.

Not all trade unionists are bloody-minded, but it is easy to understand resentment when they see a great British company collapsing with the loss of 50,000 jobs—men and women who have been declared redundant in the last decade—while four directors who had boardroom responsibility for the company departed with £750,000 between them.

To get Britain going again requires a new spirit of co-operation and understanding in industry, and both employers and workers will need to work hard to achieve this. It will not be done by legislation. It will be done in the boardrooms and on the shop floor. As has been said throughout this debate, unemployment is the great scourge in our society. All of us admit that this problem is not easily solved. Some of my other colleagues on these Benches will expand later in this debate on our proposals for investment without inflation.

I said at the beginning that this Motion raises important questions about the nature of our society. If we are to create the good society it must be based on an accepted sense of fairness. While we in our party support diversity in education, it is unacceptable that a minority should be able to buy privilege in education which almost guarantees their protection from the dole queue. Equal opportunities to reach high standards of education should be available as a right to all our young people.

We must treasure the health service but work hard to make it more efficient. Decent standards of health care should be available to all our citizens who need it. It will be sad in Britain if good standards can be purchased only if you have the money. I quoted St. Paul earlier and I return to his gospel. I recall his commandment: Bear ye one another's burdens and so fulfil the laws of Christ". I believe that this must surely be the text to guide us in accepting our responsibilities for strengthening our social services.

We believe that if our people expect these things we should share a responsibility in making a contribution to society. There is an urgent, crying-out need for reviewing the opportunities for voluntary service in our society. The response to the Ethiopian appeal demonstrated that there is much good among the British people; it is not all violence and picket-lines. Yet there seems to be a lack of moral leadership which can stimulate the necessary activity and dynamism through voluntary service.

Before we witness any further erosion of the democratic principle, which we cherish and for which men and women have died, let us face the challenge of this Motion and confess that the new direction cannot be given by two tired old political parties. Our people in this country, if you listen to them, are tired of their squabbling and their ideological games while our country declines. I believe there is a great reservoir of goodwill among the British people waiting to be tapped. It requires a new force. Once again, in the words of the most reverend Primate the Archbishop of Canterbury, We need leadership in our national life which will unite us and not divide the nation". If we do not get this, I believe, with David Owen, that we are right to be seriously concerned about the future of our country.

5.27 p.m.

Lord Roll of Ipsden

My Lords, may I begin by adding my tribute to the right reverend Prelate the Bishop of Birmingham on his maiden speech on an occasion which is clearly far from free of contention. He has managed very skilfully to preserve the tradition of an uncontroversial maiden speech but without loss of substance or eloquence. I am sure we look forward to many more of his contributions.

Whatever views we may take of the causes of our present discontents or of the appropriate remedies, I am sure we can all unite in thanking the noble Lord, Lord Beswick, for having given us the occasion, so early in the new year, to debate matters of grave concern not only for our economic prosperity but also for the health of our society. I cannot but agree that the signs of division are too clear to be ignored: division economically between the employed and the unemployed; division regionally between the relatively prosperous South and the depressed North and the inevitable consequences in the social sphere which are much more difficult to identify and to quantify but which in the long run are surely just as evil if not more so. There is another division which has not yet been referred to. That is division within families. There is enough prima facie evidence in recent research to show that this is yet another consequence of persistent unemployment.

As the noble Earl, Lord Stockton, has said, the progress of social security in the last 40 years has enabled us to escape the worst physical manifestations of the last great era of unemployment, the 'thirties We have not had hunger marchers descending on London. However, I fear that the social and psychological consequences, including the division within families to which I have referred, reproduce some of the uglier features of the 'thirties and I fear they will leave scars for many years to come.

I do not want to dilate on this aspect of the Motion, because I am sure many more noble Lords will wish to speak in it. I want rather to say something about the second half of the Motion; namely, about the economic policy to which the present situation points. Here let me say at once that I have no intention to engage in controversy about this or that act of the Government, this or that omission of action on the part of the Government, or indeed about the dramatic events of the last week or so. I have for long enough been reasonably close to the places at which decisions are taken to be as aware as any noble Lord can be of how difficult these matters are and how great are the pitfalls in economic policy.

I want rather to say something on the basic approach to economic policy, for unless this is corrected it is very unlikely that specific measures will produce the desired result. I hope very much that in what I am about to say on this point I shall have the agreement of the noble Earl, Lord Stockton, under whom I had the honour to serve on a number of important occasions. Here I am afraid I have to say, despite the warning of the noble Earl, Lord Gowrie, that I do feel some considerable concern about the doctrinal rigidity which seems to have become fashionable. This is in respect of an area of political action, the economic action, where it seems to me to be particularly unsuitable. Economics, despite its long history and creditable achievements, is not a science—and perhaps never will be—precise enough to provide a set of rigid prescriptions for specific action valid in all circumstances.

We are told nowadays, on very high authority, that macro-economic policy can do nothing about the level of economic activity and employment and that this can only be improved by micro-economic policies. If micro-economic policies include training schemes and measures to improve the mobility of labour, both geographically and occupationally, then of course I welcome them most wholeheartedly. But to believe that these alone can cope with the massive unemployment problem of today is surely fanciful. What is more important, to believe that macro-economic policy—by which I suppose is meant fiscal and monetary policy—has nothing to do with the level of activity, with growth and employment, is not only to ignore the results of economic analysis but it is to fly in the face of our own recent experience.

Curiously, taxation seems now to be included in micro-economic policy, leading to the proposition that tax cuts, as preached by the so-called supply siders in the United States, are endowed with an especially stimulating potency. Well, I am not against tax cuts at appropriate times. But what is claimed for them is surely far from certain. Can it really be contended that cuts in taxation in 1979 and 1980 which, I hasten to say, were entirely justified, and indeed belated corrections of failures by previous Administrations, have had such a stimulating effect on growth and employment that we now have 3.5 million unemployed? What is more important, can it be contended that the other element of macro-economic policy—namely, a restrictive monetary policy relying primarily on interest rates—had nothing to do with the subsequent decline in the level of economic activity and employment?

As I ventured to say in a debate in your Lordships' House as long as four and a half years ago, the trouble with interest rates, so to speak, is that they hit the guilty and innocent alike. Plans, projects and enterprises that appear perfectly rational and full of promise of profit at one level, or expected level, of interest rates, very quickly turn uneconomic and invalid at a higher level. And what about the consequent appreciation of the currency brought about by an influx of foreign funds in search of high yields? Do they not have disadvantageous consequences for our international competitiveness?

On the occasion of the same debate four and a half years ago, I had just come back from Australia. I had to report to your Lordships that one distributor of British motor cars told me that with an appreciation of sterling of 40 per cent. effectively—it went even higher after that—he could not sell a single British car. We hear a great deal about wages and international competitiveness. Of course, wages are a very important, though by no means the only element in unit labour cost. And, of course, unit labour cost is a very important, though by no means the only, element in international competitiveness. But what decline in unit labour cost and in wages would have been required to offset the blow to our international competitiveness caused by the appreciation of sterling in those years? Enterprises abandoned through being made uneconomic by high interest rates are not easily revived. And foreign markets lost through a sudden appreciation of sterling are very difficult to regain.

We are often told that we should look at the policy of the United States, particularly, since in the last two years or so, the American economy, as the noble Earl, Lord Stockton, says, has shown such substantial growth. Unemployment has declined—somewhat, at any rate—and the inflation rate has also been brought down. But is it really certain that these results have been brought about only by the tax cuts of the Reagan Administration? Or are they the result of the whole complex of a liberal—indeed, an all-too-liberal—fiscal policy both on the revenue and on the expenditure side, combined with a monetary policy that is only restrictive enough to prevent the worst inflationary consequences without killing off the stimulating effect of the fiscal policy? As the noble Earl, Lord Stockton, told us in his memorable maiden speech, is not this whole policy, with its huge budget deficit and its huge deficit on the balance of payments on current account, sustained by an enormous influx of funds from all over the world, including this country, and, incidentally, leading to the apparent paradox of a very strong currency?

The other country to which we are often referred as an example is Japan, a country that I have visited very frequently in the last 27 years. Indeed, I only returned from there last weekend. Let us look at Japanese policy. Japan has a very large budget deficit indeed. Japan has a marginal rate of personal taxation among the highest—perhaps it is the highest—in the developed world. I am not saying that we should imitate her in those two respects. I am saying, however, that these two factors do not seem to have militated against remarkable economic progress with unemployment and inflation hardly in existence. This is not doubt at least partly due to Japan's highly successful employment and incomes policy. Whatever may be the place for those policies in this country, they have certainly enabled Japan also to achieve a very remarkable improvement in her standard of living. Incidentally, this is, alas, an aspect of which we cannot be very proud when we read in the latest OECD report that, among the countries in the developed world, we stand in thirteenth place in that respect. It can also be argued, and, indeed, has been cogently argued, by a distinguished Japanese economist, that one of the most important factors—perhaps the single most important factor—in Japan's success, from the very earliest post-war days, has been a very carefully managed exchange rate policy.

This brings me to my final point—the role of sterling and the European monetary system. There may have been at least plausible arguments in the early stages for our hesitation over becoming full members. I confess that I have never been fully convinced. Indeed, I have always thought that the resistance was primarily due to a deep-seated prejudice against the whole European venture and arose from a sort of residual fear that we might lose yet another important aspect of economic sovereignty. I must confess that I have not seen much evidence of sovereignty in the recent development of the sterling exchange rate. At any rate, we have come a long way since. There was evidence already four and a half years ago that the system was stable and that it has conferred benefits on its members. That evidence has accumulated considerably since.

Your Lordship's House debated this matter a little over a year ago on the basis of a report from the Select Committee on the European Community. That report was prepared by a most distinguished group chaired by my noble friend Lord O'Brien of Lothbury—a guarantee, if he will allow me to say so, that profound and expert knowledge would be applied to this problem with thoroughness and objectivity. That report came to a generally favourable conclusion on our membership. When debated here, many, if not most, of your Lordships spoke in the same sense. Yet the Government, I am afraid, have done nothing.

We have now been told by the noble Earl, Lord Gowrie, in a recent answer to a question, and again today, that the reason is that sterling is now a petrocurrency. Frankly, I have no idea what that is meant to be. I suppose at one time one could have called us a Scotch whisky currency; the French franc a champagne and perfume currency; the D-mark a Mercedes and machine tool currency, and so on. If, by-this, is meant that the price of oil, or the expected price of oil, is the main influence on the rate of sterling, I claim that that is, at best, a gross oversimplification. Surely, the high appreciation of sterling in 1979 and 1980 was due much more to the high rates of interest prevailing in this country that produced an influx of money in search of high yields than to anything else. At any rate, no one has yet demonstrated convincingly why the influence of the price of oil on sterling argues against, rather than for, membership of the EMS. No, when the noble Earl, Lord Gowrie, speaks on this matter, what I hear is St. Augustine praying to the Lord to give him chastity and continence, but not yet. I think it is high time that St. Augustine's prayer was answered.

I do not say that the Government should replace one set of doctrines with another. By no means! What I am saying is that exchange rate policy, interest rate policy, the precise balance between taxation and expenditure on public capital investment and all the other paraphernalia of economic policy, including the attitude to, and methods of, wage settlements are not matters suitable to be elevated to points of dogma.

The countries which are held up to us as examples of successful economic policy pursue all sorts of different mixtures of policy, and none of them at all like ours. So I am afraid that what is extolled as the only practical expression of economic wisdom is hardly to be found anywhere else. I beg the noble Earl the Minister and the noble Viscount the Leader of the House to urge upon their colleagues not to be bound by self-imposed doctrinal shackles, which in my view are quite wrongly equated with high principle, but to pursue policies which are appropriate to the circumstances in which we find ourselves.

5.41 p.m.

Lord Monkswell

My Lords, you may be aware that there are two types of maiden. There is the English version, which is the sweet young thing you want to embrace, and there is the Scottish version, which embraces you with daggers. Earlier we heard the approved English version. I sincerely hope that my contribution this afternoon will not be the Scottish version.

I must first of all declare an interest, a vested interest, in this debate. I am one of those fortunate people who work for my living; I have a job. In the way that most people understand the phrase, I am an employee, subject to the risk of unemployment in the way that millions of my fellow citizens are subject to the risk today. This is a debate about unity of the British people, about unemployment, and about pride in our public provision for public need. I am under strict instructions, as your Lordships will be aware, to be non-controversial, and for that reason I hope to stick to the facts of the situation as I see it. We must face these facts.

There are many divisions which affect us as a nation. The noble Earl, Lord Stockton, revealed a fairly shattering division. I should like to say that I was brought up as a Socialist, believing two things about the Tory Party. One was that its policies were always wrong and the other was that it was totally united. My illusions are shattered today because the noble Earl, Lord Stockton, has revealed to me, in very glowing terms, that the Tory Party is in fact terribly divided; and it is rather a shattering event for me to appreciate.

If we look at these divisions we may say, "Well, they may help the Government to govern us more easily, but in reality they weaken the fabric of our society". What dark forces have been unleashed to cause the divisions between North and South, between rich and poor, between the Irish and the English, and what wickedness has caused the division between the men of Yorkshire and the men of Nottinghamshire? One of the saddest divisions there is today is that between central and local government in those areas of our country where the need is greatest for more employment, for better housing, for better education, for better services for our frail and our elderly, where local voters elect councils to promote employment, to build houses, to educate children, to improve education, to improve the services and defend the services for our frail and elderly. They suffer financial penalties. They are forced by central Government diktat to cut the provision of services or are ultimately threatened with abolition.

Another division is that between the employed and the unemployed. But in reality—and I hope to explain this to noble Lords—that division is a false division. Unemployment affects us in two ways—as individuals and as a community. As individuals, it starts with fear—fear of unemployment, fear of the sack. It might be called rationalisation, redundancy, early retirement; these are fancy names, but they mean the same thing—you lose your job. That fear can sap the strength of the bravest man in our country.

Then comes short-time working—that limbo state. Even if you are paid full wages, you sit at home doing nothing and you begin to wonder, "Am I going mad, or has the world about me gone mad?" It is at this stage that the happily married man will snap at his wife and children. The contented, hard-working employee will become disenchanted with his employer, will look elsewhere and lose interest in his job. You feel unwanted.

The next stage is when you are out of a job. Now you know that nobody wants you. You join the millions of others on the dole: the lucky ones. Well, they are not really lucky. They may have some redundancy money—sometimes more money than they have ever seen in their hands at any one time. But that will soon go. Then the real reductions in living standards start. People do not eat so well. They are worse clothed. They are cold. The psychological hurt goes on and on. They have more illness, and they die.

I wonder what the Government would say to the parents of the 18-year-old young man who has never had a job since leaving school at 16 and goes for a walk on the motorway; or what the Government would say to the widow of the 4 5-year-old man who is made redundant and sees absolutely no future for himself and his family; he parks his car in the garage, leaves the engine running, and is found the next morning. Would they say, "Sorry, there is no alternative?"

Unemployment also affects us all in a very direct way by reducing our standard of living. Some people think that what we have is rather like a pie or a cake, to be shared out: we will give some people more and other people will have less. But only people like Marie Antoinette can think of employment as a cake to be shared; and we remember what happened to her. In this country and in the world at large the goods and services which make up our material living standards are produced by human effort. If we have 10 per cent. of our population not working it means there are 10 per cent. fewer goods and services available to us all. We are all 10 per cent. worse off. We have only got to look around us to see that there is no end of work to be done which can benefit us all. Much of that work has been referred to previously: repairing the roads; repairing and rebuilding the sewers. I would go further and say that we need to build and rebuild whole industries.

It may be asked, "But is there the public will to embark upon such a programme to cut unemployment rather than to try and cut taxes for the better off?" For years now we have had disputes in industry about redundancy and loss of jobs. Some have involved large numbers of employees—indeed, thousands. But in the main they have been unsuccessful largely, I suggest, because of the will of those employees. But now we have a dispute in the coal industry where over 100,000 men have endured sacrifice and personal hardship for almost a year—and their families have also faced that hardship—to demonstrate their opposition to unemployment. They are not alone.

Yes, my Lords, I believe that there is a will in this country to embark united upon a crusade to reduce unemployment and to restore our pride in the public provision of service for the community—to rebuild roads and sewers; to build houses fit for British people to live in; to heal the sick; to take care of our frail and elderly; and to educate our children. My Lords, I beg your support for this Motion.

5.52 p.m.

Lord Boyd-Carpenter

My Lords, it is now my very pleasant duty on behalf of your Lordships to congratulate the noble Lord, Lord Monkswell, on the extremely impressive and moving maiden speech which he has made to us. From this side of the House it is particularly agreeable to see that the noble Lord came to address us this afternoon within 24 hours of joining us. It is reassuring to see so obviously loyal a member of the Labour Party feeling so great a concern and interest in this House. We all find it very reassuring. As regards what the noble Lord said about the personal tragedy of unemployment, I think he expressed what certainly I feel and what I think most of us feel: the humiliation, the feeling of being unwanted, which, given the present standard of social services, is in fact far the worst aspect of this curse.

Let me also, for reasons that he will appreciate, say how glad I was to hear the speech of the right reverend Prelate the Bishop of Birmingham. He will recall that he and I had a somewhat noisy controversy some years ago on the appropriate subject of Concorde. I am very happy to see in this House, and addressing us, so doughty and effective an adversary as I encountered in the person of the then Bishop Suffragan of Kingston. Perhaps the right reverend Prelate will recall that that matter concluded with the very entertaining words of his then superior officer, that great man Dr. Stockwood, then Bishop of Southwark, who as I understand it greeted the right reverend Prelate on his arrival for some service with the words, "Hello, Hugh. I gather you are neither a giver of peace nor lover of Concorde"! We certainly hope to hear the right reverend Prelate many times in this House.

Throughout this debate both sides of the House have called each other doctrinaire, and those on the Liberal and SDP Benches have called both sides of the House doctrinaire. As I understand it, "doctrinaire" is a term you use when someone advocates a policy with which you happen to disagree. If you happen to agree with the policy, it is all right. The other theme of the debate—going back to the original Motion and the admirable speech of the noble Lord, Lord Beswick—is the desire to "unite the nation". That is the type of emotional phrase which rings deeply in people's hearts—"How nice it would be if we could all agree"! But, my Lords, on what? Surely what is far more important than agreement on policy is that the policy itself should be right.

We are dealing, as my noble friend Lord Stockton said in his immensely impressive speech a few minutes ago, with the affairs of a great country at a very crucial time of its history. I suggest to your Lordships that it would be quite wrong to seek unity and all the goodwill that goes with it at the cost of not pursuing the policies which you are convinced are right and in the interests of the country. It is surely the duty of the British Government not to run about looking to see what type of policy would be generally popular—that is easy enough—but to pursue a policy through to the end which brings success to the country and which therefore enables them, in the words of the poet, To scatter plenty o'er a smiling land, And read their story in a nation's eyes". As I say, so many good people adopt the attitude of "Let's get unity". I thought that it was best dealt with, as your Lordships may remember, by the late Ernest Bevin in words which he addressed about his then leader, George Lansbury. He said: The trouble about George is that he is always allowing his bleeding heart to run away with his bloody head"! Your Lordships will forgive the adjectives. Those of your Lordships who knew that great man Mr. Bevin will appreciate that that was his method of speech. Surely what lies behind this debate is not whether you can get unity—I am sure that any of us could devise a policy which would do that—but whether you can get a policy which will do right and which will lead us, in the words of my noble friend Lord Stockton, into the third industrial revolution.

The two runners seem to be reductions in taxation or increases in public spending. But I must take issue with the noble Lord, Lord Cledwyn of Penrhos, when he said almost as an aside that this high and tragic level of unemployment was the result of the policy of Her Majesty's Government. The noble Lord knows that that is not so. He knows that quite different policies in other countries have equally caused their Governments to preside over distressingly high levels of unemployment. It really only obscures counsel and obscures a proper analysis of our problems to say, "Oh, it was caused by the policy of the Government".

Lord Cledwyn of Penrhos

My Lords, I am much obliged to the noble Lord for giving way. I made it quite plain that the international recession was a contributory factor. I did not blame it all on the Government.

Lord Boyd-Carpenter

My Lords, the noble Lord is quite right: he referred to the international recession, but he used the phrase that unemployment was caused by the policy of the Government. If the noble Lord will look at Hansard tomorrow he will see that that is what he said. I take it from the noble Lord's intervention that he now withdraws that observation?

Lord Cledwyn of Penrhos

No, my Lords—

Lord Boyd-Carpenter

My Lords, if the noble Lord does not do so, then his intervention was wholly pointless and a waste of time.

Lord Cledwyn of Penrhos

My Lords, I made it perfectly clear, and I hope that the noble Lord will do me the courtesy of reading Hansard tomorrow. I said that unemployment was due to the Government's policies, but was also due to the international recession. Both have contributed to it; but we are dealing today with the Government and their case. That is the difference, and that is plain.

Lord Boyd-Carpenter

My Lords, it seems absolutely plain. It seems plain that the noble Lord's intervention was wholly pointless. He made the remark which I attributed to him and which I shall confirm in Hansard tomorrow, and it is simply not true. It does not help us in our consideration of this matter, any more than did his references to the coal strike.

The noble Lord knows as well as anyone—I think that he represented a mining constituency when he was in the House of Commons—that the longer this strike continues, the more consumers of coal begin to think that it is an unreliable fuel from the point of view of supply and find that they can get on without it; and the longer the strike drags on, sadly, the more the number of pits that will have to close. I hope that the noble Lord, Lord Cledwyn, will reflect on that. The noble Lord, Lord Cledwyn, spoke about a division in the country. No one can speak more effectively on division than someone who is a leading officer of the Labour Party, which on this issue—as on so many others—is split absolutely down the middle.

I turn to the question of public spending as against tax cuts. The argument against increased public spending in general is that this is an experiment which has been tried at least three times since the war and has ended in failure, in inflation and in rising unemployment. It is no good the noble Lord citing other people in another place—or, as I think he rightly said and as we should now say, in the House of Commons—when they invite us to commit the same errors of policy as they themselves committed when they had power. We really must learn from experience. High public spending as a means of dealing with economic depression has been tried again and again, and it has failed on every occasion.

What about tax cuts? I think it was the noble Lord, Lord Monkswell, from the Opposition Benches who referred to tax cuts for the rich. Such changes in direct taxation as I hope and believe are in contemplation must necessarily involve people at the lowest end of the scale by the raising of the threshold. Those are precisely the people who stand most to benefit from escape from the poverty trap, the trap which means that when you leave unemployment benefit, free of tax, and start working for a little more, your take-home pay is hardly any the greater. Surely anyone who wants to see relief given there wants to see tax cuts.

As my noble friend Lord Gowrie on the Front Bench said, the other great merit of tax cuts is that they enable people to increase their take-home pay without increasing their wages, and therefore we benefit people without increasing the labour costs of British industry. Among other things, it is the labour costs of British industry which, by making us uncompetitive in the world, have to be attended to very seriously indeed. One cannot get away from the fact that, apart from the strike, it has been economic to import coal all the way from Australia and South Africa. It is not academic to point out that shipbuilding—which 30 years ago, when, as Minister of Transport, I was concerned with, was our pride and joy—is now a failure. Even great British shipping lines such as P & O and Cunard now go abroad for the building or refitting of their ships. It is worth noting that, by becoming uncompetitive, a good many of our industries have added to the level of unemployment.

Therefore, it seems that the sensible approach is reductions in taxation, which help not only on the wages front but which also help to encourage investment and saving. We have here the example of the United States of America which has cut taxation. Indeed, it was pointed out the other day that the two countries which have come best through the economic recession—the United States and Japan—are the two major countries which take a smaller proportion of the national income in taxation than any other country. The noble Lord, Lord Roll of Ipsden, referred to the marginal rate in Japan; but, on the other hand, Japan takes very little more than a quarter of the national income in taxation, whereas we take nearly half; compared with our almost 50 per cent., the United States takes little more than a third. One cannot ignore these things and if we are looking for the sort of enterprise which will take us into the third industrial revolution, which will cause the great new technologies to be exploited and used, we must make those who are asked to invest in these industries believe that if they are successful they will receive and keep a reasonable return on their money.

From the way in which some noble Lords opposite talk about tax cuts one would think that we are a low-taxed country. As I have said, we are taxed much higher than the Americans or the Japanese. Our highest rate of tax on earnings is 60 per cent., and to take 60 per cent. of any part of someone's earnings, however high they may be, is in some ways confiscation. But far more important than that is the stimulus which could be given, and would be given, by a substantial reduction in taxation towards that enterprise which we so much need. The choice of course is between using the money in the way in which my noble friend on the Front Bench has already mentioned when he quoted Mr. Gladstone saying: allowing money to fructify in the pockets of the people", or letting the Government invest it. I think it is a matter of fairly common experience that if that money is available for investment in private hands, it is much more likely to be invested in a profitable concern which will endure and bring returns for many years, than if it is invested by Government in, for example, the DeLorean type of enterprise.

Therefore, I come down unhesitatingly on the side of a reduction in taxation. I hope that the Government will pursue this line. I hope that they will continue in their courageous approach with policies which it is quite right to say are not easy or popular and with policies that can easily be misrepresented. I submit to this House that these are the measures which in due time will bring us through our present troubles and will lead us to the sort of state of affairs that every one of us in this House wants to see. The Government are still at a fairly early stage in a long task. I should like to encourage them by quoting some words of Sir Francis Walsingham nearly 400 years ago: There must be a beginning of any great matter, but the continuing until the end until it be thoroughly finished, leads to true glory".

6.13 p.m.

The Lord Bishop of Norwich

My Lords, although it is not our custom to continue to congratulate maiden speakers, I should like to break the rule by adding my own words of thanks to those spoken by the noble Lord, Lord Boyd-Carpenter, because I thought that the remarks of the noble Lord, Lord Monkswell—who is now moving from the Benches to the Bar (the Bar not being the place where we drink but where we stand in this ancient House)—were most interesting, and I should like him to hear my thanks. In fact, I want to rush to the care and comfort of the noble Lord, Lord Cledwyn of Penrhos, who has now moved from the Bar to the Opposition Front Bench. I want to come immediately to his support because, having listened to the exchanges across the Chamber, and, from these Benches, speaking always only in the national interest, I should like to thank the noble Lord for what he said when he made the very positive point that he believed in congratulating the Government when congratulations were in order and complaining when complaints were in order.

Some time ago I read the book by the noble Lord, Lord Home of the Hirsel, on his experience in opposition. It taught me something about how we, as bishops, play our full part in the life of this Chamber. The noble Lord wrote: I had declared the approach to our function as an Opposition to be to give support for the Government when they acted in the national interest and implacable opposition when they did not. That was thought by an increasing number to be weak if not wet". I think that that was the origin of the word "wet"; it goes back to the noble Lord's book. I think it was then that the word "wet" first entered into our parliamentary language. Lord Home said:

I thought then, and I think now, that the essence of successful opposition in Parliament is timing, and that indiscriminate bludgeoning is boring to the great majority of thoughtful electors. Nor can a clarion call to the nation be made once a week". It is not for me even to wonder whether some of the things we have been saying to each other would be called noble nit-picking today, because that is not a very parliamentary phrase, so I shall withdraw it. But it is important for us to take the particular view of trying to see what the Government are doing, of gaining a fair and full understanding of it, and then of commenting and commending or criticising. There is a sense there of when St. Paul was writing to young Timothy to tell him his business. He said: I exhort therefore, that, first of all, supplications, prayers, intercessions, and giving of thanks, be made for all men; For kings, and for all that are in authority; that we may lead a quiet and peaceable life in all godliness and honesty". There is a sense in which we need to look at Government policies in that rather positive way.

Now that we have forgotten that the lights are still on and, for all I know, that the cameras may still be rolling, may I say that when we began this adventure of inviting the nation to see us in our discussions we felt it not proper to let them see us saying our prayers. Well, some things are sacred, and that may be it; but to me one of the rather wonderful moments each day is when we as a House come together as one Chamber, one House, in a way one Parliament, if you like, under God. I hope that when this is discussed later it may be in some way possible, without intrusion, for us to be seen at prayer.

I remember the historical analogy. It was considered that it was not suitable for the most sacred moment of the coronation to be seen on televison. I think that is understandable, but I just make the point. I believe that is one of the things that we as bishops are meant to do: we pray for the nation, and seek to speak in the national interest where we can.

Having said that, I think there are areas of real optimism in our national life and in government policies that I should like to encourage. It all depends how you see things—optimistically or pessimistically. When, 14 years ago, I became Bishop of Norwich, the television people asked me to speak to them in Norwich via a link-up, I being in London. I spoke to a charming girl called Jane who did a lot of work for us in Norwich on television. She said to me, "You are to be the new Bishop of Norwich. You have 550 medieval churches in the wonderful and great diocese of Norwich". I said, "Yes, that is true". "But", she said, "those churches are half empty". "Well, Jane", I said, "it depends on how you look at these things. If they are half empty, they are half full. Let us fill the other half". This is the view of either optimism or pessimism.

I want, therefore, to underline three things about Government policies which I believe to be in the right direction and which I hope can be increased, strengthened and deepened. The first is so obvious that I just touch on it in passing. We have not given enough credit to the fact that in the years in which this Government have been in power they have managed to hold to the anchor of all good Government fiscal policy, which is resolutely to tackle inflation. The fact that inflation stands at the figure it does today, that the money in our pockets buys the things which are needed by us all, whether we are rich or poor, in work or out of work, is fundamental to the unity of national life; and the conquest of inflation leads, therefore, to the greatest good for the largest number, whether or not they are in employment.

Secondly, I want to underline the great net, if you like, of social security. This is only really possible through containing inflation, through the responsible payment of taxes, and through a slowly growing and buoyant industry and resolute Government policies—policies which are not necessarily popular but which I believe to be necessary if the money is to be there to care for the social security situation. It is to me an extraordinary fact that in our national financial situation we are able to put 29.5 per cent. of our total financial product towards the care of those in need in all sorts of ways—by social security as well as in national health. I do not know how this compares with other nations, but we are surely glad of this; and if 12 per cent. only goes in education and 14 per cent. only goes on defence, the Government should be encouraged in this broad compassion and caring for all in need.

I want to touch on three areas which I know about from Norfolk, because although this is not meant to be a constituency speech it is much easier to speak from what one knows than about what one does not know. I have not added my support for my brother Prelate of Birmingham, who made his maiden speech with such pellucid ability, artistry and the great gifts which I have recognised all through my friendship with him, because it is not customary to keep on thanking maiden speakers. But it is important for your Lordships to know that you are now listening to the Bishop of Norwich and that the Bishop of Birmingham is sitting beside him, because in the councils of the Church we are constantly taken for each other. We are different people, although we stand shoulder to shoulder at this Bench speaking in the national interest.

Perhaps I may say one word about the youth training scheme, not because it has not been mentioned a lot before but because this is something where we actually can see the thing in action and in detail. I have been most encouraged by the way in which, in the church life of Norfolk and the part of Suffolk in my diocese, we really have entered into partnership with the Government in relation to the youth training scheme and the Manpower Services Commission. This is going so well that 50 per cent. of our youngsters during training are finding jobs during their first year, and at the end of the time the proportion of those going into work, particularly some of them who are not necessarily very clever people and are rather disadvantaged, shows that this is an important task. One of my industrial missioners said to me last night, when I was seeking advice from all my various workers in the diocese, "Whatever else happens, the youth training scheme must go on as an absolutely essential offer of hope, not just to the high-flyers but to the youngsters who have not very much going for them, who are getting anxious as they leave school, and who see this as something which will really help them tremendously".

I also want to underline the importance of keeping going in the other two areas, still fairly new: the enterprise allowance scheme and the community programme. The more we can give publicity to them the more useful they will be; the more people will come to know about them, and the more they will use them.

Running through all this is the spectre of helplessness by all of us to do something practical ourselves. Let me commend to you Pastoral Support for the Unemployed by the Revd. Julian Charley, who runs Shrewsbury House in Everton. I know about this because my son-in-law and daughter are on the staff there and work among very disadvantaged youngsters in Everton. That booklet shows the Church deeply involved in a local situation, Everton, and actually finding ways and means by which they enter into the minds of those who are out of work and see how they can come alongside them in their loss of freedom, in their sense of boredom, and in their slow loss of a certain dependence on themselves, which becomes weaker and weaker.

In my last minute—and I intend to stop at 12 minutes; 12 is a good sort of biblical figure: the Apostles and all that —I want to make a plea about the supplementary benefit situation and the £4 figure, which is all the first-rate, hardworking and conscientious members of our community who are on supplementary benefit are allowed to gain. I know such people. I believe that if that £4 were increased to £10 it would be of immense help to people who, through no fault of their own, are not in employment and who, because they are on supplementary benefit, have to fill in forms, report to officers and have the whole of their affairs looked at in such detail. I know them, and I know that if we could move from £4 to £10 then by that gesture the Government would lift that little corner of the weight of unemployment.

6.21 p.m.

Baroness Ewart-Biggs

My Lords, like the right reverend Prelate the Bishop of Norwich, I also cannot resist congratulating the two maiden speakers and saying how much I enjoyed both their speeches and how highly relevant to this Motion I found them.

From what has already been said this afternoon there is little doubt that my noble friend's Motion touches on something very fundamental. Previous speakers have clearly indicated that its purpose is to question whether the present policies are the right ones to make the best use of the skills and energies of the people of this country to produce the goods, while at the same time, maintaining the level of social and welfare services available at a time of high technology. It would seem to many of us that the onset of modern technology must release workers' time which should in turn be channelled into providing services to ease and enrich people's lives.

Based on that premise it is inconceivable to regard provisions such as adult education, residential care for the elderly, child care facilities and so on, as a drain on the economy when the real drain comes from the millions spent on unemployment and related benefits together with the loss of tax revenues and productivity from those who are willing and able to work but who are denied the opportunity to do so. The question is whether it is really acceptable that, while hundreds and thousands of men and women are in enforced idleness, the growing number of the elderly are not being properly cared for, nor are the mentally and physically handicapped. The crisis in housing has brought the number of homeless up to an unprecedented and horrifying level.

The OECD figures, though disputed by the noble Earl today, have been published and show that Britain comes bottom of the international league table in spending on investment, construction and infrastructure. Surely in the years to come this combination of circumstances will seem irrational and inexplicable.

However, even if the Government may be content with the present situation, and certain speeches today would show that they are, there is evidence that a growing number of the public is not. Indeed, the most recent issue of Social Trends published a couple of weeks ago reveals the following: Even amongst those with an annual income of at least £15,000 more than half thought the gap in income between the rich and the poor was too large". The quotation continues: it seems that most people are particularly unsympathetic to the view that the rich in Britain are overtaxed". It was also reported that 90 per cent, supported the Government in setting up construction projects to create more jobs. Surely the Government should take note of the growing awareness that we live in a divided country.

Having commented on the broad principles underlying this Motion, I should like briefly, in respect to the long list of speakers this evening, to touch on one aspect of the Motion, which is the circumstances surrounding employment for women, especially those unskilled and semi-skilled women who, even at the best of times, have only one foot on the ladder and in times of recession tend to fall off it altogether.

First, the view that women should give way to men in an overcrowded labour market must surely be seen as divisive and discriminatory and contrary to the aspirations of a united society. A recent report entitled Women and Employment, by the Office of Population Censuses and Surveys, shows that the vast majority of women working want to work, enjoy their jobs and have high financial dependence on working. But the lack of opportunity to train for certain professions was high for them.

I will give one example which some of your Lordships may think is rather inappropriate. Of the local authority direct labour operatives in the construction industry, only 0.075 per cent. of those employed are women. Some of your Lordships may say that such work may be too heavy for women. I would ask them to try picking up a heavy baby, pushing a heavy pushchair, and bringing home the family shopping, before they decide that a few piles of bricks are light in comparison.

Secondly, there can be little doubt that the phrase "care in the community" has become a euphemism for women giving up their work to stay at home to look after elderly or sick relatives—a task which seems to be accepted as almost exclusively the responsibility of women rather than men. Indeed, the employment survey showed that 13 per cent. of the women questioned were responsible for people, other than their own children, who were dependent on them for care. The sort of attention these people require is not a cup of tea now and then but often involves many hours of time-consuming work and care.

Thirdly, the survey shows lack of child care facilities as one of the major obstacles for working women. Indeed, over half of those not working said that difficulties with child care was the reason. This is easily understandable when approximately only 1 per cent. of the country's 3 million under-fives attend council day nurseries, with another 22 per cent. in nursery education and 18 per cent. admitted to primary school. I am sure your Lordships will agree that these figures compare most unfavourably with the French record, which shows that 100 per cent. of their four and five year-olds are placed in nursery schools, with 88 per cent. of their three year-olds and 33 per cent. of their two year-olds. The French put a greater priority on child care for the under-fives and for the working mother.

Furthermore, our very low rate of child care provision can only be aggravated by the effects of Government control on local authority expenditure, for those local authorities which have the highest rate of provision are also faced with the severest penalties and rate-capping under the current Rates Act. As this provision is discretionary and there is no statutory obligation to provide child care facilities, this is an area where local authorities have been able to cut back to meet Government expenditure targets. There are numerous examples where local authority services have been cut in regard to day nurseries, nursery education or support services to the voluntary sector, or all three.

I must mention that the most recent attack on nursery education has come with the decision of the Inland Revenue to tax parents on their employer contribution for workplace nurseries. This is made even worse because six years' retrospective taxation is to be imposed on those parents who have used these nurseries in the past. That seems to me to be a totally negative measure and will probably result in the closure of most of these invaluable workplace nurseries.

Lastly, may I say a word about the single parent mother who has the dual role of being the breadwinner and the child-carer and is most keenly affected by these problems. It is now a well-known fact that the staggering rise in single parent families has meant that the proportion of people living in such families has doubled from 2½ per cent. to 5 per cent. This represents over two and a half million people. In certain areas local authorities find that one family in three is a single parent family. According to the report, these are the women who have a high financial stress and as many as 78 per cent. of them give financial necessity as their main reason for working.

I end by commenting on one particularly cruel anomaly regarding the child care facilities which affect single mothers who wish to take training courses. This concerns the two Government-sponsored national training programmes, the training opportunities programme and the youth training scheme. The problem is that neither of the two Government agencies involved, the MSC and the DHSS, will take responsibility for payment of child care costs for women while training—which means that those young, lone mothers with the courage and will to wish to attain new skills and find employment, instead of being a charge to the state, are either denied the opportunity of participating in a course or are penalised for doing so. Consequently, those young women determined to carry on with a course will be paying anything between £5 and £25 out of their MSC allowance of £41 -odd to put their child in a nursery or with a child minder. This extra expense can only mean that these families are doomed to live at an indescribably low level of poverty.

So, in many cases the very people for whom these schemes were devised—that is unskilled young women who wish to create for themselves something better and become self-reliant—are being penalised simply because they have children which they are struggling to bring up alone. That is indeed a cruel irony. It is as if society were saying to them, "Ah well, it's just too tough that you've got children. Therefore, you will have to forgo the opportunity of bettering yourself and them and stay on supplementary benefit". This utterly unfair discrimination persists even when there is a simple and inexpensive remedy, and a fair remedy, of, first, introducing a change in DHSS regulations, and then the introduction by the MSC of allowances which would be entirely in line with those they pay for meals and travel to cover child care expenses.

I have given this one specific example in order to reflect the part of my noble friend's Motion calling for policies which encourage motives of social responsibility. These are the policies which bring out the best in people, policies which, so to speak, touch the nice bit of Britain. It is the Government's failure, through their attitudes, values and priorities, which we on this side of the House deplore.

Viscount Massereene and Ferrard

My Lords, before the noble Baroness sits down, does she consider that a married woman with young children, who has a husband in lucrative employment, should go out and get a job; or does she consider that she should remain with the children?

Baroness Ewart-Biggs

My Lords, I think there should not be discrimination of job opportunities between men and women who have the same qualifications.

6.33 p.m.

Lord Camoys

My Lords, the present high level of unemployment, and in particular of long-term unemployment, is a matter of very great concern; and, as has been evidenced in this debate, there is no monopoly on this concern. As we have seen, it is shared by all political parties—indeed, by all human beings. I am sure that not only all Members of your Lordships' House but many outside will be very grateful for the opportunity which the noble Lord, Lord Beswick, has given us to debate these various issues. Personally, I have seen the hardships and the demoralisation which affects friends and relations who are or have been unemployed. Again, personally—and I hope your Lordships do not mind my being so personal—I have four children, all of whom will be seeking employment in the next 10 years; so I can honestly say that my concern is very deep, just as deep as that so compassionately illustrated by the maiden speech of the noble Lord, Lord Monkswell.

The quality of the national debate on this issue could, I believe, be so much improved if we could move on from this sterile question of who cares most. Critics of the Government too often take cynical delight in the opportunity to brand them as halfhearted and uncaring. But to do so really does no service to the unemployed. Indeed, it trivialises what is the most important issue before us. I have to say that to some extent I believe that the Government bring this sort of criticism upon themselves. Ministers who so readily stress their determination to keep control of inflation sometimes forget to impress upon the nation their equal and connected determination to conquer unemployment—and they are very much connected. Yet, with unemployment so high and showing little signs of falling, many people in this country today would say that the victory over inflation is but small consolation.

The difficulty is that the cure for unemployment does not lie entirely or even mainly in the Government's hands. There are many who will disagree with this point; those people, for example, who argued only two or three years ago that all that the Government needed to do was to bring down the exchange rate. Yet, now that the pound is down by half, I have heard no one suggest that we can expect unemployment to fall apace—certainly not the Government, as we heard this morning. It is certainly true that the strong pound made industry concentrate on raising productivity. The pity is that it took such severe pressure to stimulate the sort of reappraisal which is part and parcel of ordinary business practice in the successful economies of the free world. The need to improve productivity led to redundancies; and unemployment, therefore, has risen to levels not witnessed in Britain since the 1930s.

In analysing the underlying cause of this surge in unemployment, it is important to bear in mind the fact that over much of the period since the war the British economy was in steady decline. Over-manning, restrictive practices, bad management and bad marketing took their toll. By the end of the 1970s, Britain was close to industrial suicide. Rates of return on capital fell to levels that were, in real terms, dangerously close to zero. Wage demands paid no heed to falling profitability and attempts by successive governments, as we have heard earlier, to impose wage restraints were largely ineffective.

This unhappy catalogue is something for which today's unemployed are paying such a high price. The immediate economic prospects, I believe, are moderately good. Now that the pound is weak against the dollar and other currencies, there will be opportunities to boost exports. Interest rates have been rising but provided that the Government can re-establish their rapport with the markets, they should not need to rise much further, if at all. Much of what was fundamentally wrong with the economy has over the past three or four years been rectified. It is difficult to think of a single major company which has not emerged from the recession with its efficiency and management much improved. All of this is good news, as is the emergence of so many small businesses particularly in the high technology industries.

There is, however, a missing generation. Had the small-business sector flourished in the 1970s as it does now, had the larger companies taken the measures which they took so late, the necessary re-structuring of the economy to meet changing patterns of demand could have been much less painful. It would be a brave man indeed who would claim to be able to cure unemployment in Britain overnight. Before the last election, Her Majesty's official, and unofficial, opposition parties were full of such brave men. I notice recently, however, that there is a growing willingness on all sides to come to terms with reality and to begin a serious debate about the ways in which the level of unemployment can be reduced.

This is something from which we should all take heart. We can also take heart from the fact that the prospects of school-leavers have been much improved. For decades I believe Britain muddled along without a comprehensive training programme. It is an indictment of us all that unemployment among school-leavers had to rise to such very high levels before this situation received any serious consideration. The youth training programme really does represent the emergence of good out of adversity, and the Government deserve credit for the achievement, however belated.

I also welcome the measures of the Secretary of State for Education to raise standards in schools so that young people are better equipped to make use of the training available to them when they leave. However, I continue to wonder whether our school system, whether public or private, could not do more to prepare students for employment. I really believe that there is a serious need for further study on this point. So these are positive steps that have reduced or will reduce the unemployment problem. If further progress is to be made, however, the Government will need to apply the same singlemindedness which they have applied to the control of inflation; but we must also understand that the time scales are different. If Government control their own borrowing and refrain from printing money to accommodate the borowing of others, it is only a matter of time before inflation falls, and it may fall further. Governments are the main—though not the only—cause of inflation; and when they return to the paths of what I would call righteousness, they are usually rewarded remarkably quickly.

Responsibility for employment, however, is much more widely spread. Government can alleviate it; but effecting a cure is another matter. We hear much less of late about major reflation. That seems—nearly but not quite—to have taken early retirement. There are, however, two modern variants of this theme which I think we should address. The first proposition is that spending on the infrastructure of the nation will help to reduce the level of unemployment. The advocates of this approach see the repairing of the nation's roads and sewers, for example, as a remedy for its economic ills as well as helping its general health. This idea seems to me fundamentally misconceived. It is of course perfectly sensible to repair roads, railways, hospitals, and so on, and to add to them right up to the limit which can be afforded. But to expect that the act of spending money can not only allow the acquisition of goods but also make the spender richer is really straining the laws of economics too far. Spending money might make one happier; it certainly makes one poorer. The substitution of the word "investing" for the word "spending" is not enough to change this reality. Some of our wives might like to tell us that we should invest in jewellery; but the investment actually makes us poorer, nonetheless.

The second proposition is that a reduction in the level of income tax can create jobs. This idea is equally misconceived. Tax cuts will stimulate the private sector only to the extent that they are accompanied by public expenditure cuts. If they are achieved by borrowing or printing money, they will lead to high interest rates or inflation as surely as night follows day. And inflation—I think this view is commonly held in this House—is the great enemy of increased employment and of course it creates the most divisive forces that one can imagine, and understandably so.

If the Government really have public expenditure under control they can choose to cut taxes or plough excess income into public works. These options, in my opinion, should be compared on their respective merits; but nobody should imagine that either has much to offer the unemployed. Of the two, however, I would choose a cut in taxation. Income tax and national insurance, as we all know, bear heavily on the lower paid; and I would agree with previous speakers that a reduction in this burden should be a priority of economic policy.

Hand in hand with that, as has been mentioned earlier, should go a reform of the benefits system. At the moment, money taken with one hand from the lower paid is returned with the other as housing benefit, family income supplement or some other form of support. An initiative by the Secretary of State for Social Security to sort out this mess surely deserves our full support. I hope that the Budget in March will initiate a sustained programme to relieve the burden of taxation on the lower paid. I hope that it will also contain a package of measures which will help the long-term unemployed; for the Budget speech relates to macro-economic policy and since the causes of unemployment are essentially micro-economic, it seems to me to be perverse to look in that direction for a total cure. Rather, I believe we must look to continued trade union reform, to continued privatisation, continued pressure to eliminate waste and inefficiency in the public sector, much better training, much better management and greater concentration on producing the goods which people will want to buy. If Ministers want to do more, they could do worse than remind us at every opportunity to buy British, whenever the price and the quality of goods on offer so justify. I think there will be scope for that if the Government continue their policy.

6.44 p.m.

Lord Carmichael of Kelvingrove

My Lords, I think that my noble friend Lord Beswick has done us a great service today by choosing a subject such as this for a debate. He particularly attracted me to his Motion because he said that he wanted the Government to develop economic and social policies which unite the nation". He wants the Government to turn over a new leaf in this year of 1985. I believe that almost everyone in the country, including in their hearts of hearts many members of the Government, really believes it is time a change was created. I sometimes feel that only the Chancellor and the Prime Minister really believe that the policy is working, although, in fairness, I must say that the noble Earl, Lord Gowrie, did seem to believe what he said in his speech.

My noble friend Lord Beswick stressed the importance of social policies which are all too often ignored in the cold economic equations that we get from this Government. I should like to give a current example: it is a small example in the macro-economic debate that we have been having but it is a slight illustration. It concerns the closing of post offices. The Government have demanded that the Post Office supply a certain rate of return on their capital, and although they are making a profit just now—that is, the post offices altogether—nevertheless post offices have to be closed if they do not meet a certain criterion in order to keep up this rate of return. This means that for a very large number of people—and very frequently in the areas concerned they are better known to Members on the Government side of the House than on this side—the standard of living and the quality of life in some of the areas will be considerably reduced.

Just over 20 years ago I made my maiden speech in the other place and it was during an unemployment debate. Because of that I thought I would look up what had been said—not what I had said, because maiden speeches are rather special things, but what others had said. Scottish unemployment was at the disgraceful level of 135,000, and everyone agreed that was an unacceptable level. Today the Scottish unemployment official figure is 350,000 but everyone accepts that a realistic figure is at least 400,000, and if we add to that 100,000 people who are in training schemes we reach the figure of half a million men, women and young people in Scotland alone without work and almost without hope of ever having regular work.

I remember one of the phrases used in that debate. One of the reasons I was checking up on it was that a Conservative Member of Parliament—he will be well known to many Members in this House although, alas, he is dead now—the late Sir Herbert Butcher, said: There is something wrong somewhere and human values are being debased". He was speaking of the unemployment figures. How much more applicable are his words now! Not only are human values being debased but community values are being destroyed.

We have today in many parts of Scotland, and especially in the part of Scotland I come from, a male unemployment rate of over 35 per cent. In one or two fairly big pockets it reaches almost 50 per cent. The Government seem to me to be locked into simplistic economic theory which is slowly tearing our society to pieces. I may be over-simplistic, but I just do not believe that a society with 4 million unemployed nationally can be efficient, far less compassionate.

We must think of the social costs of enforced idleness, and, particularly in regard to the young, think of the corrosive feeling of alienation that is their lot. I live in a city which was one of the great industrial cities of the world, and certainly of these islands, up till a few years ago, and I am fearful of the future unless we can give people the opportunity to find a socially useful means of using their skills, their intelligence and their energies.

I should like noble Members of this House to go along to a local employment exchange or a local DHSS office quietly and anonymously. Do not telephone the manager and do not tell him you are coming on a special visit; just go along and mingle with the crowds. You will not be all that different because the unemployed now go right through society, from the people who thought they had good, secure jobs in junior and sometimes middle management but who now turn up at the labour exchange every day. I did it myself when I lost my seat at the last election. It is not a nice experience but it is well worthwhile going through it to see just what happens at these labour exchanges. Men and women, many of whom had good positions and a secure place in society, a secure role in society, now find themselves suddenly faced with empty lives.

But the most worrying group in my area are not those who had jobs but the young people, many well educated, many of them graduates, who have never even had a firm offer of reasonable, permanent work. They are keen; they are anxious to get work. They tell you that society has done nothing to help them and in fact treats them as an embarrassment, or sometimes even as a nuisance. I find it very difficult to offer them any hope.

So far in my part of the country we have had no communal violence as we had in Bristol, Liverpool and parts of London, and I very sincerely hope that we never have any, but I would urge the Government not to be complacent about this. When human values are being debased, what happens is that people who feel that they personally have been debased do not see why the rest of society's rules should apply to them. They have been virtually excluded from society. I do not believe that any Government can wave a wand and suddenly get rid of 4 million unemployed or find jobs for 4 million unemployed people in useful, worthwhile work, but I do believe that we can start giving people something to hope for.

There have been many suggestions today from different sides of the House about the sort of things that can be done. Of all the proposals, the most obvious one—it has been spoken about by responsible economists, if there are such people; because in today's debate we have had probably every possible shade of economic theory put forward—would be a gradual extending of the building and construction industry. While the noble Earl, Lord Gowrie, is quite right in saying that the big civil engineering works, the big dock works, the big roads, use very little labour and mainly capital, there is no doubt that one of the things we badly need to do is to look at our housing stock, which does not use huge capital investment, is very labour intensive and is very important to the nation, because it is slowly, indeed in some cases rapidly, deteriorating.

A great deal of rehabilitation is required. Housing repairs need to be carried out and the housing stock needs to be renewed. It is as I have said a labour intensive industry. Plenty of skill is available; plenty of material is available; the imports required are very low. Timber is about the only material which the industry needs to import. I believe that not only would a start be good in general for the infrastructure of the country and provide better homes for people to live in, but the very fact that something was starting, that there was a movement in an industry such as this, would give people hope.

Older people have told me—this is what worries me about the younger people just now—that when outdoor parish relief was first introduced in the 1920s for able bodied men (able bodied men were not until then supposed to get outdoor relief; they had to go to the poor house) the cynics in my part of the world where they had a nice sense of wit called it "society's fire insurance". That was the sort of term used. I am not sure whether the people of today, particularly the young, would be likely to accept placebos such as that.

The Government start from the wrong end. They seem to believe that their policies will ultimately be vindicated and that the suffering, disillusion and the loss of pride and hope today will be worthwhile when the re-construction of society has been completed. I think they are terribly and dangerously wrong and that, unless they include in whatever economic equations they are using now some recognition of the human values referred to by so many noble Lords today, particularly by my noble friend Lord Beswick who started the debate, they will create a society of which many will not really want to be part.

6.55 p.m.

Lord Thorneycroft

My Lords, I have really only three points to make. I want to say a word about sterling. I want to say a word about sterling because I think that the value of our money matters quite a lot. I do not stand here to criticise the Chancellor of the Exchequer: I have held that office myself. I know what pressures operate on a Minister in those circumstances.

As always, the attack on sterling was triggered from outside; the strong dollar and the weak oil market; but as always I think we ought to look closely at ourselves. Rather an odd debate has been raging in this country. One lot of gentlemen is arguing that we ought to spend very substantial sums of money on new capital investment; another body of gentlemen is arguing that we ought to have substantial reductions in taxation. I put the question to your Lordships as to whether we are really in a position to march very far down either of those delectable roads.

They are, at any rate, soft options. They are the cases which politicians love to argue; to spend more money—always a most attractive proposition; to reduce taxation—this is the way to get the votes. If we are going to talk about taxation—I do not want to be critical of the Government—I must say that I was brought up in days when you talked about it at the Budget. I think there would be something to be said for dropping the discussion on the tax side until at any rate a little nearer to the Budget and preferably only when the Chancellor rises at the Dispatch Box.

I think we ought to consider what we look like from outside. From outside, a holder of sterling sees a nation enjoying peak revenues from oil; enjoying a cash flow from the sale of capital assets; holding—hopefully—but not cutting expenditure; still only marginally competitive; emerging from a strike and having a huge debate as to how it should enjoy itself best. I do not think that that is a very satisfactory state to be in. I am encouraged by the noble Lord, Lord Camoys, who, in a very admirable speech which I was delighted to hear just now, pointed out that neither of the options would probably do a great deal of good to unemployment anyway.

In those circumstances, I make the point that the attack upon the Government is in my judgment wholly misplaced. The Labour Party and the Social Democrats alike and one or two from other quarters have urged that we should unite to demand more expenditure. I think that the noble Earl, Lord Stockton, will recognise my voice when I say that the remedy has generally been extremely doubtful, but in present circumstances and with the pressure that is on the pound at the moment, it would be a disastrous remedy and I think we ought to make that absolutely plain. I therefore congratulate the Government on standing firm, on upping interest rates, on holding expenditure and on the robust performance of the economy of which the noble Earl, Lord Gowrie, was able to give us an account in his opening speech. That is my first point.

My second point concerns the medium term. In my lifetime, the centre of gravity in politics has moved far to the right. Indeed, I often think that it has left me behind. Although not, I think, classified officially as a Tory "wet", I am known to suffer seriously from rising damp. I am still—and I say this to the noble Lord, Lord Beswick—a man who hankers after consensus. I seek always the agreement of other men if it can be achieved.

There is still room for Socialist governments in Europe. In France, there is Mr. Fabius, the Prime Minister, and there is Mr. Craxi in Italy. There is room in Spain and in Sweden. But I would draw the attention of the noble Lord, Lord Beswick, to the fact that in every country where there is a Socialist government actually in power, and actually charged with the responsibilities of government, they are pursuing policies which are much closer to Mrs. Thatcher than they are to Mr. Kinnock.

Lord Beswick

My Lords—

Lord Thorneycroft

I am not giving way, my Lords, because there are other people speaking in this debate, and I also have other points to make. The point I wish to make now is that there is far less room to manoeuvre between parties when they actually come to the business of government. They are all driven, sooner or later, much closer to one another. What political parties should be doing is battling for the centre ground. If I may say so with great respect to the noble Lord, Lord Beswick, and the Labour Party, I wish that they could join in battle for the centre ground. It is only when you have parties battling for the centre that consensus in any real form is possible. Therefore, I make that my second point.

My third and final point concerns the longer term. I believe that I find myself in some agreement with the noble Lord, Lord Roll—and not for the first time—in that I believe that good government is adaptable government. Static problems are relatively easy to solve. Unfortunately, they are few in number. Only a short while ago, what was our problem? It was that the pound was too strong. I seem to recall that the same officials from the CBI were to be heard on the radio in the morning pointing out the horrors of a strong pound and the desperate difficulties which confronted us in relation to exports and the rest. A week ago, the pound was falling through the floor.

It was not so long ago that I was making speeches about oil prices—explaining to bewildered audiences how, if the price of oil went up too far, it affected the purchasing power of all the underdeveloped countries of the world. It was tremendous how we longed to get the price of oil moving downwards. Now we have that situation.

Today, we are saying the dollar is far too strong and that the United States economy is far too vigorous. Let me reassure your Lordships that before we are all much older, all that will change. Someone there will find some ingenious method of getting rid of the deficit and bringing things down. Just think of what we shall be saying then; just think of the horrors that we shall see in that new situation of an America unable to purchase all the goods that we wish to produce in other parts of the world.

The point I wish to make is that governments do not live in stable conditions. They live in a kind of cyclone where things are changing every day around them. I agree that no single policy and no single doctrine—whether it is Socialism, or monetarism, or bimetallism, or anything else—can produce a solution to these problems. Particularly in this House we talk not about doctrines; we talk about objectives. We should seek what our objectives are—stability is one of them. A pound is a pound is a pound—and it is a pound whether it is in our own pockets or whether it is in a holder of sterling somewhere else. One does not sharply divide these things. I never agreed with Lord Wilson when he did so, and I should not agree if we did so at the present time.

I agree with the noble Lord, Lord Beswick, that we should seek unity. I agree that we should find great pride in our great social services. But we should find pride in ourselves as well. We should find a determination to kindle again within us that resolution which has served us in the past and which is the only characteristic that will achieve our objectives in the future.

7.5 p.m.

Lord Ezra

My Lords, I am delighted to be following the noble Lord, Lord Thorneycroft, with whom I had the pleasure of collaborating some years ago in trying to stimulate our exports. It is always a pleasure to listen to his ringing and reasonant tones.

We are all indebted to the noble Lord, Lord Beswick, for having launched us on this wide-ranging debate, during the course of which so many words of wisdom have been uttered. No doubt they will tend to dry up a little as the night wears on, because many of the earlier speakers will have mentioned some of the most important points. However, I should like to follow the theme introduced in the remarkable speech made by the noble Earl, Lord Stockton, when he spoke about the third industrial revolution and the role we should play in it. The word "role" reminds me also of the speech of the noble Lord, Lord Roll, in which he made some very practical suggestions as to how we should be proceeding from now on.

I fear that in making some suggestions for trying to establish a lead role in the third industrial revolution I have to start with the infrastructure. The infrastructure provides the basic services, and unless those are right then we shall have weaknesses in all the other things we do. Here I join with the noble Lords, Lord Thorneycroft and Lord Camoys, in deploring the emotive debate that is now going on about infrastructure expenditure, on the one hand, and tax reductions, on the other, as if, either way, we can find a solution to all our problems, but that somehow they are totally opposed things for us to do. I do not see that the problems can be tackled in that way at all.

What we need to decide in so far as the infrastructure is concerned is what sort of infrastructure we require. Do we have an infrastructure that is adequate to do the job? Let us be quite clear that we are not talking only about the individual citizen's use of the infrastructure: it is a vitally important ingredient in the success of industry, as the CBI has very often emphasised.

I feel that we should be quite disturbed about the state of our infrastructure because of the recent publication of the report by the NEDC. That is not a report which deals with the subject in general terms. The executives have, at the request of the National Economic Development Council, examined the state of our infrastructure with great care. They have come to the very disturbing conclusion that in dealing with the problem of the infrastructure there is not a proper depreciation policy and there is not a proper policy for repairs and renewals. This is just a practical issue. It is not a political issue, and it is not an emotive issue. What it demonstrates is that in this vital area of our national affairs the treatment which any business would normally apply to capital assets is not being applied.

The picture which that report reveals is indeed extremely disturbing. I take it that everything they have stated is valid. They presumably had no objective other than to reveal things as they were. For example, they state that, there appears to be no attempt at the appropriate level within central Government to base the case for annual allocations of funds on strategic assessments of requirements and priorities". They go on to say that in many areas the present systems of resource allocations have led to backlogs of maintenance, repair and renewal which are not trivial. They then itemise some of the areas where these backlogs in essential repairs and renewals have built up to very substantial amounts.

For example, take hospitals. They say that the magnitude of the repairs and renewals which represent the backlog in that sector amount to at least £2 billion. A number of health authorities said that they would have to spend twice as much as they are doing at present on repairs and renewals in order to clear the backlog. In education, in many cases they found that the amount spent on repairs and renewals was 40 per cent. short of what was required. In housing, they stated that to repair the houses built in the 1960s, which was a bad building period in which errors were made, would require £5 billion. On roads, they found that the resurfacing is taking place at much longer intervals than is required to keep the roads in good condition. They found that similar considerations applied to water and to sewerage.

Therefore, what I would ask the noble Viscount the Leader of the House to tell us when he replies to the debate is: what will the Government be doing about this very important report? Unless we get our infrastructure right in the practical way in which they have referred to it—not on the basis of just trying to solve the unemployment problems with the infrastructure but of providing us with the basic services that we need—we shall find ourselves in great difficulty in getting into this improved economic situation which we all desire.

I next turn to our industrial situation. Here the big problem is that as a result of world circumstances, of policies which have been pursued internally and of other pressures, the size of our manufacturing industry has been substantially reduced. That is most vividly manifested in the very large net adverse balance which has presently built up in our overseas trade in manufactured goods. Until 1983 we were showing substantial surpluses in that trade. In that year it was about £2.5 billion. Then it turned rapidly, and is now running on the other side of the balance sheet at about £3 billion in deficit.

A noble Lord

It is £6 billion this year, my Lords.

Lord Ezra

My Lords, I am told it is £6 billion, and that is still worse. I have not seen the final figures. Whatever it is, the movement is adverse, and it is a reflection of our diminished industrial capability.

In previous debates on economic policy in this House I have been rather disturbed when Ministers, in responding to points of this sort raised from this side of the House, have tended to suggest that they do not put particular importance on manufacturing industry and that somehow the transfer of employment to the service side of the economy could compensate for any decline in the manufacturing side. That, patently, has not yet happened. Nor is it likely to, because by its very definition the service sector exists to serve and a very large part of it—perhaps as much as half—directly serves manufacturing industry.

If I were to be asked what are the steps that can be taken to build up our manufacturing industry again, I should like to make four very brief suggestions—and there could, of course, be more. First and foremost, I should be very happy to hear a ringing declaration from the Government that they attach the highest possible priority to seeing that our manufacturing industry is rebuilt to its previous size. I think the doubt which some of us have in our minds about Government attitudes towards the manufacturing sector of industry would to some degree be dispelled if such a firm statement were to be made.

Secondly, I think that in the fiscal area there are two things which seriously need to be done. To begin with there are likely to be difficulties in the level of capital investment in industry in the years 1986–87 as a result of the rapid reduction in those years of the investment allowances arising from the last Budget. This is a point which has been made very clearly by the CBI, which has shown what a serious dip in the level of industrial investment could take place if the capital allowances run down at the rate that is envisaged. Therefore, the suggestion which it makes, and which I fully support, is that that reduction should be made more gradually.

The second fiscal measure which I think could help industry and reduce unemployment is to adjust the national insurance contributions. Although the Government have quite rightly removed the National Insurance Surcharge, the charges for social insurance are still very heavy, and we ought to be reaching the point at which taking on more people does not impose any form of fiscal impediment. We should encourage firms, through the fiscal system, to take on more employees, rather than to do the reverse. Therefore, I recommend those two practical possibilities to help industry to get going again.

Thirdly, I feel that we need to do very much more to stimulate existing industrial sectors to apply the new technologies. We must all have been struck by the report which the Japanese Ministry of International Trade and Industry (MITI) brought out recently in which they confirm the view which many of us may have held for years: that Britain is a very inventive nation but that it is poor at applying those inventions. They demonstrated that since the war about 55 per cent. of the most significant inventions have originated in Britain and only 22 per cent. in the United States, with as little as 6 per cent. in Japan. However, when one talks about the application of new technologies those figures are reversed. Therefore, I think a very serious drive is needed in this area. This would not necessarily involve public funds but could involve a real and positive lead by Government to reinforce what has already been done to make sure that the new technologies, the micro-electronic technologies, and all the new developments now being so rapidly devised, are more and more widely applied.

There are some examples, of course, of firms who have done this. Clark's, the shoe manufacturers, for example, have transformed their business prospects by computer-aided designs for shoes. The use of silicone rubber for producing tableware has totally changed the facility with which that can be done. There is a whole list with which I will not bore your Lordships. All that I shall say is that there is a vast array of inventive genius at the disposal of industry which is not being absorbed sufficiently fast.

The Earl of Gowrie

My Lords, may I say to the noble Lord that this list of successes is not boring at all?

Lord Ezra

My Lords, I shall certainly notify the noble Earl of some of them. Some are very exciting. There is the flexible manufacturing through micro-electronic control of a series of machine tools which gives enormously greater variations in shop-floor operations. Far from displacing labour, some of these applications have actually enabled firms which would otherwise have gone out of business to continue working. These new technologies have come to their aid. I should like to see something approaching a crusade to make sure that these inventions are applied in existing enterprises. That is the third step which I think should be taken.

The fourth, which is one of which I have had a good deal of personal experience, is the use of purchasing power. In this country about £100 billion of purchasing is concentrated in relatively few hands—departments of government, local authorities, nationalised industries and large-scale private sector manufacturing and distribution organisations. This purchasing power has in the case of some of the more enlightened enterprises been used to stimulate suppliers in this country, providing them with the goods and services they require on a competitive basis. Nobody is talking about buying British just for the sake of doing so. But the power of the large purchaser to stimulate a competitive response from a myriad of suppliers is very considerable indeed if such purchasers put their minds to it. My Lords, £100 billion is a lot of purchasing power. About 4 per cent. or 5 per cent. more of that purchasing power placed on a competitive basis in Britain would totally eliminate the present trade gap so far as manufactured goods are concerned.

I put forward those four practical suggestions as to ways in which we can take our prime place in the third industrial revolution. What I believe we should be doing now—and this is something that all of us should be doing—is to see whether, in addition to the success which the Government have had in combating inflation, the policies which they apply should now be widened to make absolutely sure that we get the sort of infrastructure that we need in a good state of repair and renovation and that we firmly adopt policies which will make the best use of the inventiveness which we undoubtedly possess in such as way as to put British industry back in the lead.

Lord Kaldor

My Lords, may I just add this as a footnote?—and the noble Earl, Lord Gowrie, may also be interested in it. I recently came across a report by a team from Ford of Britain which was sent to Japan to examine the methods of producing motor cars in the factory of a firm called Toyo Kogyo, with which Ford has a very close relationship. That report is a most fascinating document. It shows that Japanese technology is miles ahead, not only of the technology of Ford of Britain but of that of Ford of America.

7.24 p.m.

Lord Glenamara

My Lords, for the third time since I entered your Lordships' House, I wish to speak on unemployment. I listened very carefully to the speech of the noble Lord, Lord Thorneycroft, for whose wisdom I have great regard and for whom I have a great deal of affection. He congratulated the Government on the robustness of the economy but he had not a single word to say on unemployment, yet this is by far the biggest problem facing this country.

Lord Thorneycroft

My Lords, will the noble Lord give way?

Lord Beswick

My Lords, the noble Lord need not give way.

Lord Glenamara

My Lords, let me repeat what the noble Lord said. I am not giving way. Admittedly, in the red plush magnificence of your Lordships' House it is a bit difficult to remember, but out there in the cold there are 3¼ million of our fellow men who are denied the right to earn their livelihood. They, with their families, amount to about 6 million souls, all of whom are maintained marginally above the breadline by weekly handouts from the state. It is a remarkable coincidence that the cost of paying unemployment benefit, together with the loss of taxation income for the Treasury, come to almost exactly the same figure as our income from North Sea oil, which was quoted by my noble friend Lord Cledwyn. The whole of this providential but finite national windfall—which is rather like Britain winning the pools—has to be spent in maintaining this appalling mass unemployment in our midst.

Before the First World War there was an old song: We don't want to fight, but by jingo if we do, We've got the ships, we've got the men, we've got the money, too". We have got the men and we have got the money, but we do not use the men and the money to fight obsolescent housing, to fight inadequate roads or even to fight for a bigger share of the world's export markets. We use the money to keep the men idle. I think that that is an idiotic way to run the country. There has to be a better way of doing it than that.

Never before has this country had the kind of income that it is enjoying in the 1980s. These years—the 1980s—should because of North Sea oil and gas, have been years of unparalleled affluence and prosperity for Britain, but they are not. They are what Mr. Heath called them in the other place a fortnight ago. They are years of shame—shame that we tolerate 3¼ million unemployed. They are years in which the rich are getting immeasurably richer and the poor are increasing in number and getting a great deal poorer. That could almost be the theme song for this Government: "The rich get rich and the poor get poorer, but in the meantime ain't we got fun"—like the fun, for example, on the first day on which British Telecom shares were marketed.

On that day the stags made an actual profit—not a paper profit: but by selling their allocations they made an actual profit of £324 million. Three hundred and twenty four million pounds worth of purchasing power was handed over to a small number of people in return for no service whatever. But they are not wicked people. They were doing exactly what the Government wanted and expected them to do.

From the Government Front Bench, the noble Earl regarded the sale of those shares as a great triumph and success; it was the high water mark of the refurbishment of capitalism by this Government. Under this Government, making money is the highest possible form of endeavour, while earning money is denied to 3¼ million of our fellow citizens. There is a great deal of difference between earning money and making money. When we talk about the unemployed, so often as politicians we tend almost to regard them as statistics in a ministerial employment publication. But they are men, women and children. They are men and women who are not getting enough to eat; who can barely pay their rent or their mortgages; who sometimes cannot pay their mortgages. They are men and women whose children are not adequately clothed or fed in this weather; young people in their late teens and early twenties who have never had a job; middle-aged men who have been paid off and who have little hope of ever getting a job again. They are men and women with the same dreams, the same hopes for the future and the same fears as we all have. They see their little lives running out quickly, and they are beginning to believe that they are not going to get very much out of them. We are talking about human beings like ourselves: men, women, and children—six million of them—six million living on the breadline in this great prosperous Britain of ours, which has the biggest income it has ever had. I make no apology for getting angry about this.

However, we still pride ourselves on being a Christian country. We pride ourselves that our law and our morality is based on the Christian ethic. One of the central themes of the Christian ethic is surely that we are parts one of another, that we are indeed our brother's keeper. If that is so, unemployment, this appalling blight in our midst, is the responsibility of each one of us individually and it is the responsibility of all of us corporately as a nation. I believe that at this point in time the nation is aware of that responsibility. I believe that at this point in time the nation is prepard to make sacrifices to put our fellow men and women back to work.

Only a government can mobilise the whole nation. Only a government can do that. This Government cannot do it unless they are prepared to change their attitude towards the phenomenon of unemployment. This Government are dedicated to the proposition that market forces will solve all our problems. They sit round the cauldron of the market place like a lot of witches. They throw into the cauldron all our problems: prices, even the health service, even the education service and unemployment. They all sit back and let it bubble away and they say to themselves, "If we wait long enough it will be sorted out in the market; it will all change to gold, all be transmuted and the golden age will dawn". This proposition is based on a premise which we in our party utterly reject. It is the premise that what principally motivates men and women is gain, profit. That is how the market works. We reject that.

We have different views about the strike but the strike has shown one thing: that thousands of men up and down the country are willing to endure great hardships for something they believe in passionately. There is much more to men and women than the desire to make money, the desire for gain. The market theory has failed—and failed dismally—to reduce unemployment. It will never succeed unless the Government are prepared to intervene—and intervene extensively.

May I demonstrate that by way of a very simple illustration? I am sorry that the noble Earl, Lord Stockton, has left. When he was Prime Minister I was a young Back-Bencher and I had a problem in my constituency about some threatened closures in a Vickers Armstrong's factory in Newcastle. I knew that a defence order for a certain tank, or an armoured vehicle, would avoid those redundancies. I tried all the defence Ministers and drew a blank, so, in desperation and not hoping very much, I rang up the Prime Minister's private office and asked if I could come and talk to him about it. Word came back almost immediately: "Of course; come along tonight after the Division".

I went to his room in the House of Commons at 10.30 in the evening. The two of us sat there until a quarter to 12 talking about employment and unemployment in the North-East because he was passionately concerned about it. Needless to say, we got the order for the tanks and we avoided the redundancies. For good measure, he sent to the North-East the present noble and learned Lord the Lord Chancellor, complete with a cloth cap but, more important, armed with considerable powers to assist industry in the region.

I believe that the Government must exercise constant vigilance about threatened closures and redundancies, look at them case by case and use their not inconsiderable powers to intervene wherever they can.

I think the second thing the Government have to do is to abandon any plans they may have for giving tax reliefs to the well-to-do in this year's Budget. To do so when six million people are living on or just above the breadline would be an outrage; it would be obscene. What would happen to the money which the Treasury would forgo? Small tax cuts would be spent on consumer products and would suck in imports from Japan and elsewhere. Large tax cuts, if the recent pattern of investment shows anything, would flow overseas to the Pacific Basin, Singapore, Japan, Korea, Australia, America and West Germany and probably create jobs there. They would create very few jobs in this country.

I believe that if the Chancellor has any money to spare in this year's Budget he should do two things with it. First of all, he should initiate a significant programme of public expenditure projects, projects which have a small import content and a large labour content. One of the silliest things said over recent weeks was said by the Chancellor of the Exchequer when he said that our argument that this would create employment was witchcraft. If this is witchcraft, then let us have a lot more witchcraft. That is the first thing that he should do.

The second thing the Chancellor should do is to give some assistance to our exporting industries. He could do this in a number of ways which do not infringe EEC rules. For example, our industry is at a tremendous disadvantage compared with our competitors in the cost of fuel. On the six o'clock news last night, I heard a French official saying that the cost of electricity to industry in France was 40 per cent. lower than in Britain. Gas, electricity and water have been more than doubled in price by this Government, not because those three undertakings needed more income, but as an alternative method of taxation. They are at it again this year, demanding that the water authorities put up their prices far beyond anything that inflation justifies. They could make a major contribution to our exporting industries by reducing the price of gas, electricity and water.

I have another point. One of the most tragic aspects of unemployment in this country is the disparity between some of the older regions and the south of England. In the North-East of England, unemployment is overall 18.7 per cent. The noble Earl, Lord Stockton, quoted the level in his own constituency as 28 per cent. There are some towns in the North-East of England with 40 per cent. male unemployment. There are 39 unemployed for every vacancy on the books—I repeat, 39 for every vacancy.

The last time I spoke, I quoted a very menial vacancy at Newcastle airport helping to load petrol on to planes. Eight hundred men applied for that one vacancy. There is unemployment in the South and in the South-East and it is a tragedy anywhere, but the unemployment in the North-East of England, in Merseyside, in parts of Scotland and in parts of Wales is of a different degree and of a different character. It is deep-seated, structural unemployment.

This Government's response to that has been to halve the regional aids to industry—halve them. Last week they declared a temporary moratorium. What they should have done was to double them, not halve them. There was a foolish thing said by the Junior Minister, Mr. Lamont, when he said that they did not provide new jobs and the jobs they did provide were too expensive. Let me mention only one bit of regional policy now abolished by this Government and completely forgotten: the device of the industrial development certificate. Between 1964 and 1970, the IDC procedure, which costs nothing, produced 75,000 jobs in the assisted areas. It is one device that could be exactly quantified. Really, the Government must do more to assist the areas where there is this old, deep-seated, structural unemployment. As I have said, this Government can only tackle it if they change their attitude towards unemployment.

The question now facing us and facing the country is whether or not this Government are big enough and courageous enough to admit that they have been wrong and to change course. The much maligned Mr. Heath was courageous enough to do this. When he came to office in 1970, he brought out a White Paper called Policies for Public Spending. He discovered very quickly that they were the wrong policies. Without any hesitation whatever, he did a 180 degree U-turn and changed policy. Yes, he did, with the full support of his Government, some of whose members now sit on the Government side of this House. At least, they did not resign. And certainly he had the full support of his Minister of Education. The question now is whether she, in her present capacity as Prime Minister, will show the courage that Mr. Heath showed in the 1970s, admit that her policies, far from reducing unemployment, are increasing it, and change them.

7.41 p.m.

Lord Campbell of Alloway

My Lords, in following the long, angry and emotive speech of the noble Lord, Lord Glenamara, if I am neither angry nor emotive and try to be a little shorter, I hope that he will acquit me of indifference to the misery of unemployment or to the scourge of unemployment as such. For it appears that in the mind's eye of many noble Lords who have spoken in support of this Motion, there is a sort of Utopian oasis of full employment where toil is unrelated to productivity but everybody spends. This is but a mirage which all of us know vanishes at the touch of the IMF. If we are to move forward to take our place in the third Industrial Revolution, as my noble friend Lord Stockton suggests, it is idle to debate in blinkers, shutting our eyes to the stark reality of the facts of our own economic life as distinct from economies elsewhere.

If defensive action against the strength of the dollar and the weak oil market, which creates the sizeable debt interest problems to which my noble friend Lord Thomeycroft referred, renders immediate reduction of tax thresholds inopportune, this is but a matter of timing which in no way impugns the validity of the proposal as affording a positive contribution to the relief of unemployment. Indeed, the rectitude of the proposal was expressly affirmed by the OECD review to which the noble Lords opposite have already referred. As the criticism of Government policies transcends political preconceptions, one searches the fields to find the sustainable argument. But, my Lords, search as you will, you shall search in vain. All that you will find is a sort of bemused grasshopper jumping from one questionable assertion to another for no apparent reason.

The first assertion that is made—it is made in this Motion—is that instead of reducing the tax threshold we should spend our way out of unemployment on the back of a budget deficit, accepting the inevitable inflationary consequences. Spend on the infrastructure, spend on the welfare state, spend on housing, spend on major works, spend on what you will as if the fiscal option were in no way related, or was irrelevant to, unemployment policy! It is as if the spending option lay in antithesis as affording the only viable alternative, as if expenditure in the public sector were out of tune, unbalanced and inadequate. My noble friend Lord Camoys dealt with this in an admirable fashion. His analysis, I would respectfully suggest, is unanswerable.

As my noble friend Lord Gowrie said, reduction in tax threshold is relevant to productivity and in mitigating the poverty trap for those in work. It also provides an incentive to productivity for the work-shy who find the differential of perhaps some £5 to £10 a week too meagre to warrant the effort. Massive spending in the public sector is irrelevant to the achievement of any substantial or long-term reduction in unemployment. Indeed, it would put to the hazard the retention of stability of confidence in our money—surely already under sufficient pressure. These points were also made by my noble friend Lord Boyd-Carpenter.

It is said by way of criticism that we should create jobs for the sake of job creation without any assessment of need, cost, productivity, inflationary impact or long-term effect. It is said that by some process of social engineering along the lines of Vredeling or the Fifth Directive we should spread the toil around and that in order to do this, we should impose some sort of new social framework upon industry regardless of commercial effect. This is sheer economic fantasy. And this Government are not in business to finance fantasy.

It is said that our fiscal and economic policies are not working. But the record speaks otherwise. The November 1984 figures, published in December in The Times, show an export record of £6.45 billion, a return to surplus in our trade in manufacturing goods, a £278 million surplus on current account and a drop in the trade deficit since the previous month of October from £888 million to £122 million. As already stated—and truly stated—our GDP growth compares favourably with the rest of the European Community. It would have been considerably better but for the miners' strike—it is not too bad notwithstanding—because it was generally accepted at the Dublin Summit that our country was leading the rest of the European Community out of recession.

I speak of the facts; that is the only way to answer a charge. Investment for 1984 was 7.5 per cent. up on the previous year, and so total demand has increased to raise real production. Inflation has been contained at around 5 per cent., and this has led to the creation of more jobs. Confirmed by an independent source, the jobs manpower survey published on 28th December concluded that now, today, as your Lordships debate, job prospects are the best for five years. There is the record and that is the answer: those are the facts.

It is said against the Government that our policies on employment are wanting in urgency, imagination and resilience. If the stagnant part of the pool of unemployment is the long-term unemployed—over one year; that is 1.2 million, 60 per cent. of whom have no manual skills—then at least the shift from 1½ million (I am using broad figures) for those unemployed for up to a year to about half a million for those unemployed for between half a year and a year, shows movement, and it shows movement in the right direction. Although part of the pool is, regrettably, stagnant, the whole pool is not. It is also apparent, although it has not been mentioned in your Lordships' debate, from the P45s that there is considerable mobility among the unemployed in transition, who are changing jobs at the rate of 7 million to 8 million a year; that is according to the October 1984 figures.

I agree with the noble Baroness, Lady Seear, when she says that the problem is the long-term unemployed. However, at a cost of £3 billion more in the current year, 700,000 are to be put on training schemes. One hundred and thirty thousand are to be put to work on community service in socially useful projects. Twelve hundred and fifty applicants a week can apply for grants to set up in business on their own, and there are loan schemes available for 10,000 more to provide further training facilities. Surely on an objective analysis, free from the emotive approach, this is a robust, relevant and fair response by the Government to this need.

In conclusion, I am tempted to say only this. Is it not perhaps rather curious, even quixotic, that those who evince an attitude of indulgence towards conduct calculated not to alleviate but to intensify unemployment should charge this Government with dividing the nation, should charge this Government with causing want of consensus, and should, on top of all that, complain that the Government have failed to make sufficient jobs available? I am going to resist the temptation to pursue that line, because it could debase the order of this debate and it could well obscure the essential issue. I, for my part, welcome this debate as an opportunity for the justification of the Government's policies on their merits.

7.56 p.m.

The Earl of Halsbury

My Lords, the subject which we are debating this evening has been a preoccupation for nearly all of us nearly all of our lives. That is why I should like to thank the noble Lord, Lord Beswick, for giving us an opportunity to think aloud to one another in the course of today's procedings. I am sorry he is not here to hear me say so, but doubtless he will read it in Hansard tomorrow.

My preoccupation began as a schoolboy when I was given the holiday task of writing an essay on unemployment, which had to be completed during the course of the summer holiday. My principle source of information, of course, was my father, and at this point in time I cannot remember in what words of wisdom he told me about it; but his vocabulary was not of today. He talked of such matters as the viscosity of labour, which meant nothing to me except the reluctance of people to leave home and go away to work somewhere else.

Nowadays we have a different vocabulary. Adversarian politics, as they are now called, are polarised between Keynesian demand management on the one hand and Friedmanian monetarism on the other. It is important to remember that Keynes developed his ideas against a background of deflation which no one could control and Friedman developed his ideas in terms of a background of inflation which no one could control. Because for Keynes inflation was over the horizon, because he was fighting deflation, he paid very little attention to it; and because Friedman was concerned with deflating he paid no attention to the resulting unemployment. But I believe that neither policy can be really adopted according to the letter of each and that there must be a middle course between the two of them which has regard both to inflation and to the need to give full employment. As far as I can see, from what I have listened to, the Government's blend of monetary and fiscal policies is a middle course which it is possible to pursue.

I now return to the days of my youth: no longer a schoolboy, but an adult. I came of age in June 1929 and I did not realise that all the signal lamps and danger signals were going unattended. Commodity prices were tumbling everywhere and the stock market index was soaring to high heaven. The bubble burst in the autumn when I had become an adult for approximately three months. The great deflation of the 1930s took everything into its grip. Half the money supply in the USA—M3, we call it today—simply evaporated into thin air. Demand dropped, unemployment soared, and of course we were affected by it, too. We had had, during the 1920s, never less than 1¼ million unemployed on a labour force of about 15 million in those days. By 1931 it had doubled—it was 2½ million—and by 1933 it was within 1 per cent. of the 3 million mark.

Then, suddenly, something happened. Roosevelt became President of the United States and introduced Keynesian demand management: the New Deal, a recovery programme based on unbalanced budgets, infrastructural investments—all that we have been listening to today—and the slogan which put new heart into people: "We have nothing to fear except fear itself". It worked, and it worked so well that the world learned a lesson from it, a lesson which it will never forget and few can think in any other terms.

This is a pity because the unemployment from which we suffer today is set in an inflationary environment, and whereas you can spend your way out of a deflation, you cannot spend your way out of an inflation by injecting still more money into a pool where there is too much already. That stopped people from rethinking it. People had forgotten that Roosevelt was fighting a deflation. We are fighting an inflation. The coupling of unemployment to deflation is fairly easy to understand, but the coupling of unemployment to inflation is a rather more elaborate mechanism which I shall not expound here. However, I want to say something about what happens if you allow that to take place.

Imagine an economy in equilibrium—and by an equilibrium condition I mean that it is isolated from the rest of the world so that it can provide a model. It is supposed to be at full employment. Wages and surplus spent must balance the output of consumer goods from factories. Wages and surplus saved must be invested and balance the output of the capital goods industry. All is assumed at full employment. A system balanced in that way would not remain so because new investment always produces a higher level of productivity than old investment. Therefore if it were in equilibrium in one year, it would be necessary to introduce an adjustment the next year such as working shorter hours or lowering prices with increased consumption. It is isolated; it is not in balance with the rest of the world where of course a succession of unpredictable events is always throwing things out of balance. I have read—I do not know whether it is the case—that one of the reasons for the run on the pound last week was a rumour that Nigeria was leaving OPEC. That is the type of unexpected transient thrown into the system from outside with which we cannot cope.

Inflation can start anywhere. It can start by over-investing; it can start by too high wage demands. But it always induces a wage-based inflation at its final stage through people trying to compensate for the price rises to which they are subjected. The gross national product is, as to 70 per cent., made up of wages and salaries. So if you imagine a 10 per cent. inflationary increase in wages in my little model economy, that would produce a 7 per cent. increase in prices. If you then asked that that should be compensated for, you have 70 per cent. of 7 per cent.—that is, 4.9 per cent. or, say, 5 per cent. the next year; and the year after that it would be less and it would be dropping. But if you just do the arithmetic and work out what happens under those conditions for five years, you find that the original inflationary 10 per cent. becomes 20 per cent. over that five-year period.

However, if the economy were growing at 3 per cent., then the 7 per cent. which had to be compensated for would reduce to 4 per cent. The year after that there would be only 1 per cent. for which to compensate. You would bleed the whole inflationary situation out of the system in two to three years of self-discipline, but that, alas, has been the perniciously missing factor. The inflation goes on and on. Wage rises should be less than the price rises if inflation is ever to be bled out. But they are still running at 50 per cent. above the inflation rate—I repeat, they are still running at 50 per cent. above it. Indeed, 4.5 per cent. inflation may be very favourable compared to what it was some years ago—

Lord Ardwick

My Lords, may I ask the noble Earl a question? Is he advocating an incomes policy?

The Earl of Halsbury

No, my Lords, I am not advocating a policy at all other than that I think that the Government's middle of the road policy is about right. I am advocating self-discipline. People should not ask for more wages than are reasonable.

Lord Ardwick

My Lords, I am sorry to pursue the matter, but self-discipline is just exactly what an incomes policy is about and it has been consistently opposed by people on the noble Earl's Benches and by people on the Benches opposite.

The Earl of Halsbury

My Lords, my Benches do not have a policy of supporting or opposing anything. I must make that clear to the noble Lord. On the contrary, an incomes policy is precisely what self-discipline is not—it is the imposition of an external discipline and you fight it. Self-discipline means that you discipline yourself according to your own ideas of what is right and not the ideas of somebody else who is trying to impose them on you.

If we compare the 1980s with the 1930s we find that in 1931 unemployment was 2½ million. In 1933 it grazed 3 million and it was back to 2½ million by 1935. It never receded to its value in the 1920s until the war. There was a disastrous injection of deflation by the United States in 1929, and it took a decade to bleed that out of our system. The economy is sluggish in its responses and I think that it is wishful thinking to suppose that we are going to get rid of the present pool of unemployed as fast as the noble Lord, Lord Glenamara, should like, or as fast as I should like.

All benches sympathise with the plight of the unemployed, particularly the structural concentration of unemployment in local regions, particularly the devastating effect it may have, not on mature people, but on schoool-leavers whose character is not yet fully formed. It is absolute devastation. It is quite wrong to suppose that any party has a monopoly of sympathy for what is going on. What I am urging is that the situation must not be dealt with by complacency. The situation is not really as bad as the 1930s. We have 3¼ million unemployed out of a labour force of 26 million, whereas at that time they had 3 million unemployed out of a labour force of 15 million. Their unemployment figure was 20 per cent. and ours is, overall, on average about 12.5 per cent. But that is no excuse for complacency.

What do we need to do? We need a transfer from income to investment. That is the whole point. As I understand their arguments, the Opposition Benches want to have a monetary inflation to provide capital. It will not do so—it will merely raise more prices. The only way in which we can have capital formation is not to spend all our income. That leads to the primary accumulation of capital. It is the only way in which it can be achieved. Without self-discipline and not spending all our income we are conniving at a situation in which a 4.5 per cent. continuing inflation satisfies us, although it will halve the value of money within 20 years. It merely prolongs the whole unfortunate set up.

I am sorry that I have exceeded my 10 minutes; but I shall sit down as soon as I possibly can. One way of looking at the matter is in connection with the welfare state and the social contract. In bygone years the welfare state entered into a social contract which it cannot afford in times of crisis. The attempt to do so merely hinders recovery. That is one way of saying that we are over-spending our income and that is one reason why we do not get real investment.

Who then should do it? Should it be the Chancellor or the private investor? I see no reason to suppose that the private investor would do it worse than the Chancellor, and I can think of many reasons why he might well do it better. I am sorry that the noble Lord, Lord Ezra, is not in his place to hear me say so, but I hope that your Lordships will pay attention to his words of wisdom. It is extremely important to try and get our manufacturing industries back on their feet again and in particular to go for a product mix which will not consist of things which we can export to people who can do without them in difficult days. Our trading position would then be a very sensitive one.

The great prosperity of the first Industrial Revolution, about which the noble Earl, Lord Stockton, spoke, was due to the fact that we were exporting goods that people wanted. The most important thing for any human being is to be alive and not dead. The conditions for that are that you have enough food, enough housing and enough clothing. We exported textiles all over the world, we taught the world how to build railways and we gave it what it wanted. I am rather dubious about this high technology. It is very great fun to play with; I have played with it myself. However, nearly all its products are items which one can do without in evil days, and I should not like to see our manufacturing industries over-wedded to it. I should like to see this country with a prosperous textile industry again because that is something that everyone wants.

8.10 p.m.

Baroness Fisher of Rednal

My Lords, we have witnessed the terrible consequences of the Government's monetarist policies on the economy each and every day since the Tory Party first came to power in 1979. Throughout Great Britain we have seen much of our industrial base seriously undermined and prosperous manufacturing areas like the West Midlands, where I come from, turned into derelict wasteland. Only this week there was a Question on the Order Paper about illness and suicide arising from unemployment. I am convinced that glue-sniffing, drug addiction and a more violent society have to be related to the boredom arising from the social deprivation and unemployment of our young people. The devil finds work for idle hands: that is something which I learnt many years ago.

However, the social consequences of unemployment are further exacerbated by the continual onslaught on our social services and our National Health Service, and one awaits with trepidation the announcement of the harshness that will result from the Government's review of social benefits. The Government may look upon tax cuts as a political Holy Grail. To the high income bracket that may be attractive, but it is no consolation at all to those unemployed receiving social security benefits.

The continuing rundown of industry threatens the living standards of those still in work. Fear of unemployment and a reserve army of labour is often enough to pacify a workforce into a submissive role. The attacks on working people and their trade unions have been horrendous; and in my view the Government seem hell-bent on the destruction of formal and informal institutions in which working class culture has been embodied and which is indirectly translated into political allegiance—a political allegiance which is against this Government.

Those in low-paid jobs (be it in the public services or whatever) and other disadvantaged groups of workers are usually the ones to bear the brunt of Tory Government policy. This Government are aiming at, and most of the speeches today from the Government Benches have been emphasising, the creation of a low-wage policy. We see privatisation taking place in the National Health Service hospitals. There, women are being asked to do much more work with a real cut in wages, with no holiday benefits, and are experiencing all the other actions that can be taken against those who are lower paid. Privatisation aims to undercut wages already being paid in those jobs which are low-paid jobs anyway.

We have the abolition of the wages councils. As we all know, they cater for the low-paid in society. Their abolition will mean that the people who are at present covered will suffer still further. It is this constant effort on the part of the Government to create this low-wage policy which is dividing people into two distinct groups. There is the group of people who we are calling low-paid. We all know that when we are measured in society it is very often the wage packet or the salary packet which brackets us as being important or not so important. Therefore, when we divide people off into low-paid groups we are making them feel less important as individuals.

The low level of investment in Britain's manufacturing industry and the absence of any Government strategy for boosting it to a much higher level is one of the greatest effects of the Tories' so-called recovery. The Government are now talking of a sustained recovery. I go to the West Midlands every weekend, and I do not see this sustained recovery. In fact, whenever I go to the city or the surrounding areas I become increasingly worried at seeing factory after factory being left empty. Great fires take place at these factories because people are using them for the wrong purposes, and this involves the expense of calling out the fire brigade to put these fires out. I walk round and feel so sad. I feel even sadder when I speak to the people who have been involved in creating the exports that used to come from the West Midlands. But the Government are talking about a sustained recovery.

It is hard to believe that a recovery can be built on the basis of a lower level of capital spending now than that which took place three years ago. Many of the goods with household names that we purchase and use in our homes are at the bottom of the league when it comes to capital spending on manufacturing investment. I wonder why. The Government should find out why these large household names, in which we take great pride, are not investing. Could it be, as I know has happened in many of the factories in the West Midlands area, that they are investing abroad in those cheap labour areas that are still available because it is essential that they get the products as cheaply as possible in order to maximise profits for their shareholders?

It is perhaps time for us to pause and reflect on the long-awaited reconstruction of Dunlop, which is now being challenged on the share market. This private company, which is now part and parcel of a wrangle on the share market, has over the past few years declared over 20,000 workers redundant, many of them in the West Midlands area. The wrangle is going on about reconstruction. The wrangle should have taken place with those captains of industry four or five years ago to make their wares much more competitive.

In their election manifesto the Government promised the electorate that they could do better than Labour; they promised to cut unemployment, which they said Labour could not possibly do. I remember all the hoardings which told us that. They said that unemployment could be reduced in a market economy. I ask tonight: when do they intend to influence market forces to honour that commitment? That was a manifesto pledge. We find that the Government are quite quickly putting onto the statute book manifesto promises which came at a very late stage in the day. I am talking now about the abolition of the metropolitan county councils and of the GLC, which, as we have now learnt, was quite an afterthought in the manifesto but which is now a prime piece of legislation. Let us ensure that the Government also honour their election pledges and their manifesto promises on unemployment.

We are constantly being hectored by the Government on the themes of "nation", "our pride in the nation", "our duty", "our standards" and "our families". This masks the policy which the Government then follow, which encourages self-interest and competitive individualism, and which is anti-national ownership of enterprises. May I give two comparisons of how Government legislation operates in two different fields. The first is the deregulation of the bus services which we shall have on the statute book later in the year. With that deregulation of bus services we shall most likely get increased fares. We know very well that there are fears of lost services. The greatest concern is of course by the elderly, who fear that they will be the losers of that marvellous little card which they carry about, the free bus travel pass. We compare possible cuts in that direction with the individual tax benefits of the company car and the perks which go with that. Are the Government going to cut back on those things as they cut back on the bus traveller?

Another comparison is the cost of Trident, which is increasing each and every six months. The latest published figure is over £9,000 million to be further increased by 14 per cent. On the other hand we look at the local authority rate-capping, which means to local authorities and the people who live in those authorities—mainly in large cities of social deprivation—that we shall find that their services for the people, for the family, will be lessened, or not provided at all.

I see the time is running away and I am drawing to a conclusion, but what concerns me is how the courts are being used constantly by the Government against local authorities and, vice versa, by local authorities against the Government. While it is true that most of the local authorities which are being challenged are Labour councils, because they are in the areas of the greatest deprivation, we see in today's paper that a water authority chairman is now taking legal advice regarding an excess increase in water charges. This chairman is not a Labour councillor. He is a businessman appointed by a Government Minister to look after the needs of the water consumer, but even he feels that there is a need to take legal advice about Government legislation.

I close with a remark which was written by Beveridge in 1944. He wrote: It may be that cattle must be driven by fear. Men can, and should, be led by hope". What causes me the greatest concern is that this Government will completely dash all hope for the unemployed, and all hope of developing the economic and social policies which would unite the nation.

8.23 p.m.

Lord Orr-Ewing

My Lords, I have noticed in this debate that the average speaking length is 15 minutes. If we go on at this rate we shall not finish until the early hours of the morning. I am sure that that is not desirable in the House of Lords, and not desirable for all those who serve us outside. Therefore, I shall try to keep to the standard which others, and particularly the two main speakers in admirable speeches, have set of 10 minutes. It means one has to drop some of the courtesies which are normal in this House in referring to the previous speaker, and I apologise on that score.

I have to refute one point. I was disappointed that in the admirable opening speech which the noble Lord, Lord Beswick, made to his Motion, there was no reference at all to the wealth creation before you reap the benefits in social services. The noble Lord wants to restore the social services, to restore the "national pride" in our social services, but if you do not create the wealth you do not have social services, you do not have education, you do not have hospitals, and you do not have houses. That is the theme which the Government have set: you have to create the wealth first, and then you will improve the social services.

I think it is a fact—and I am proud of it—that since this Government came to power, despite the tremendous recession which has affected our manufacturing and other industries, particularly in the switch from the old industries to the modern high technology industries—from the sunset industries to the sunrise industries—they have managed to spend more in real terms on our social services.

Lord Beswick

My Lords, would the noble Lord give way? May I make one point? I did not make a reference to wealth creation. It should have been made. I tried hard to prune my speech. I was shorter than some of those who followed me.

Lord Orr-Ewing

My Lords, I am glad to have that corrected. It did not appear in the original text.

Wherever we may sit in this House there is one matter which gives us deep concern, and that is unemployment. It is nonsense to pretend that the Government are not trying. After all, every Government try to use their assets to the maximum extent. We would not be spending £2.3 billion—a large sum compared with the annual expenditure on Trident, or any other object—on the cost of unemployment if we did not have to do it. Half that is on the creative side. On the attracting and training of young people, all of it is good investment for the future; although I concede that the present situation is hard on the young people.

I want to make some constructive suggestions, for despite all the efforts of the Government there are still areas where they could be more helpful, and more helpful in the coming Budget. I quote from a number of proposals in the admirable booklet published by Sir Philip Goodhart from the House of Commons. I want to bring out four areas which are worthy and deserving of attention. First, help to the assisted areas where there is high unemployment—that is why they are called assisted areas—by Her Majesty's Government. Surely they should now cut by half the national insurance contribution so that whenever an employer employs somebody he should pay only half the going rate.

Secondly, I should like the Government seriously to consider the policy of giving help—again in assisted areas—to the young. Surely we could waive any national insurance contributions by the young for the present. The Government should waive this and thus encourage employers to take on extra young people. Thirdly, I should like to see the Government waive national insurance for 12 months when an employer hires an applicant who has been on the register for more than a year. These are the hard core, the people who have been suffering most, and they should get every possible encouragement; and employers should be encouraged to take them on. Lastly, I should like the Government to look again at encouraging part-time work. Despite what has been said in this very good debate, it is better to work in the mornings or in the afternoons than not to work at all. We need to reduce the financial penalties and increase the incentives for the part-time worker.

Since the Opposition have not yet put forward any viable policy to solve our problems, and tend to paint this scene of our nation in doom and gloom—and this Motion in some of its wording does the same—I should like to say that there is one area in which overseas countries have decided, notwithstanding all the bad propaganda we get from our strikes and the like, that Britain is the best place in which to invest in new factories and manufacturing.

The United States of America has invested widely in Western Europe as a whole, mainly in modern manufacturing technology. But of the investment they have made in Western Europe easily the largest slice has been in Britain. These are hard-headed business people. They would not invest in Britain if they did not think that ours was a viable economy which had a considerable future. The next place for their investment is West Germany, but whereas 36 per cent. of their investment in Western Europe goes to the United Kingdom, 21 per cent.—considerably down—goes to West Germany; and third in this investment table is France with 11 per cent.

It is no good the Opposition condemning everything that the Government have done: people stand back and make judgments on those who wish to invest here. The admirable report from the Investment in Britain Bureau, which is part of the DTI, shows that this inward investment created 15,000 jobs in 1983 and, incidentally, it has also safeguarded a further 18,000 jobs. This inward investment by the USA, above everyone else, mainly in sunrise and high technology industries, is of tremendous importance. Two-thirds of these jobs have been created as a result of United States investment in Britain. I would ask the responsible elements of the Labour Party who sit in this House to use their influence on the hard Left Wing to say "Stop being anti-American. Stop trying to kick America, lock stock and barrel, out of this country", because we are deeply dependent on their inward investment and on some of the high technology, research and development and the products which that investment produces in this country.

To summarise, despite the efforts of the Government, I urge them again to look at ways of encouraging employment of the young and also encouraging employment of the long-term unemployed—those who have been unemployed for more than a year. I ask them to look at the question of part-timers to see whether we could not somehow arrange our taxation affairs so that people are encouraged to work part time rather than not at all. I believe with confidence that all that has been said today shows that we in Britain have geared ourselves to finding employment in the high technology and sunrise industries and that, if we press on with imagination and determination, we shall succeed.

8.32 p.m.

Lord Ardwick

My Lords, my heart went out to our two maiden speakers. It is always an ordeal to make a maiden speech, but in a Chamber illuminated with these bright lights, with the crowded galleries and a crowded Chamber containing a number of stars of debate, it must have been a very severe ordeal indeed. I thought that they acquitted themselves like veterans, and I hope we shall hear a great deal from them in the future.

The speech which impressed me very much was that of the noble Lord, Lord Roll of Ipsden. I thought that he gave a very good answer to the statement which is frequently made that there is no alternative to the Government's policy. He showed that there is a variety of alternatives and that within that variety it is possible to probe and experiment to produce the best results. He also suggested that it was time that Britain went into the EMS. I entirely agree with him about that, and I do not understand the Government's attitude.

The noble Earl, Lord Gowrie, said, "Yes, but not now". The reason it is "not now" is because we are an oil currency. But we shall be an oil currency for the next 10, 15 or perhaps even 20 years, so "not now" can mean never. A week is a long time in politics; ten years is never. I do not know whether the noble Viscount who is to wind up can deal with this problem. The noble Earl, Lord Gowrie, has said this before, and I have been rather puzzled by it.

When I was listening to the noble Baroness, Lady Seear, I was a bit embarrassed because her speech might almost have been written from the same brief as mine, until she came to the end. She made the point very strongly that this Government, far from expressing a consensus, represent only about 42 per cent. of the electorate. Then she began to attack my party. I thought that the viewers would realise why we have a Government which represents only 42 per cent. of the electorate while we have an Opposition which represents all the rest. It is because that Opposition is divided among three parties, and, as we have heard from the speeches from this side, is rather bitterly divided.

When I was a boy I was taken to many socialist meetings. The speakers were evangelists brimming over with fervour and faith. Yet their pattern was simple. They would describe the ills of our neighbourhood, of the city, of the country, of the world, and then they would reach a magnificent climax. "Comrades", they would say, "we shall never get rid of these ills unless we have socialism". It was a magic remedy which did not have to be thought out.

I have often thought of this during the past few years. This Conservative Government, this strident band of conviction politicians, have a naive faith in the magic of the market economy, of free enterprise capitalism. They have the same simple faith in that as we had in socialism. "Cut down public expenditure", they say, "reduce taxation, stop subsidising industry and restore competition and all the problems of high unemployment, all the problems of expanding production and all the problems of the external account will fade away, or at least will be very much simplified".

There was an excuse for the socialists of my childhood. The world was complex, mysterious and full of threat, injustice and deprivation. These pioneer socialists had no experience of office. All they had to live on was faith and hope that one day the entire cruel system would be changed. But the Conservatives of today have no such excuse. They have more experience of office than any other party. They were in charge during the tragic years of mass unemployment in the 1930s. The mass unemployment was reduced, but it was never abolished throughout the 1930s, despite low wages, tame unions, a National Government which was dominated by the Conservatives though led by a poor, weak, worn out Ramsay MacDonald, followed by a very powerful Neville Chamberlain. Despite low interest rates, stable money and tame trade unions, a few months before war began unemployment was still almost two millions—1.8 million—until May 1939.

If these conditions which the Government postulate are the cure for these evils, why did they have so little effect, despite a housing boom on the basis of a 2 per cent. interest rate and despite rearmament? Why do the Government believe that the formula which had so little effect then is the formula which can have an effect now? That unemployment weighed very heavily on the conscience of the nation. Even the playboy Prince of Wales, cried out when he went to South Wales, "Something must be done!"

One of those who tried to do something about this was the first Lord Woolton. He went to both my schools. His first education was in Ardwick, and he was a friend of mine. He was exposed to the suffering in Liverpool and Manchester. He did all he could to succour the unemployed and also to bring industry to the north-west. I believe Speke Airport was partly due to him. He became a commissioner for the distressed areas in the north.

Towards the end of the war, when he was a pillar of Churchill's National Government, he was made Minister for Reconstruction. Winston gave him his brief—food, homes, work. Woolton used to tell how he reversed it, putting "work" first of all in the priorities. Under the influence of Keynes, and even more, of Beveridge, he produced the famous White Paper which began: The Government accept as one of their primary aims and responsibilities the maintenance of a high and stable level of employment after the war". Woolton did not join the Tory party until 1945 but within a year he was chairman and he encouraged Churchill to take up this pledge of high and stable employment as a priority in the general election of 1950. Then the years of consensus began. A new Conservative Party was created on the intellect of Rab Butler and on the geniality of "Uncle Fred" as he was known.

The Tories were able to build on the firm base provided often in the face of great opposition by the Attlee Government. The terms of trade changed in our favour and the lives of the British workers, including all those of my extended family in Lancashire and South Wales, were transformed. But even 26 years ago Woolton was warning of the new perils of prosperity, of inflation and overfull employment.

I must say that the Conservative repentance was never quite complete. All political parties are kinds of Jekylls and Hydes. We all have our Hyde side—and it is in the Conservative Party as much as in any. There were always, even at this time, Tories murmuring, very much to the embarrassment of the Front Bench, that a whiff of unemployment would put the workers back in their place. There were always Conservatives enjoying inherited affluence who thought that social security was undermining the initiative and the independence of the poor. And there were large numbers of middle-class Tories who bemoaned the diminished differential between themselves and the workers. They also were very concerned that the shop assistants had ceased to be as deferential as they had been before the war. They used to cry out about the wickedness of the unions and the burdens of taxation.

I am not going to suggest for one moment that the Government of today is composed of people like that. It is not. But it seems to me that some of this kind of Tory find the current Government much more to their taste than some other past Conservative Governments. The Conservative Party has turned its back on the party of Churchill and Butler, of Woolton and Macmillan, and years of consensus—alas!—are over. Today, the priority of the Conservative Party is not as it was in those days: work for all. It is not to get back to a high and stable level of employment. Neither is it to improve welfare and educational opportunity.

No, the priority is to cut taxation and reduce public expenditure and to give respectability to this materialistic philosophy, there is a high-falutin' theory that this is the key to the solution of all other problems; that this is the magic formula. The Government, I admit, have had some success in combating inflation. There have been some years of modest recovery and, thank goodness, the Government have not been wholly consistent with their philosophy. The job creation schemes, the youth training scheme, and so forth, are an aberration from the dogma.

This House has many virtues but it has one grave defect. Unlike the other place, it does not have large numbers of Members who, like my noble friend who has just spoken, live in the industrial areas of the Midlands and the North where there are pockets of 40 per cent. unemployment, where there are abandoned factories, empty shops and, throughout the community, a loss of hope in the future. There is today a conflict in the party opposite, in the party of Government, about the degree of priority that ought to be given to public works, particularly those which refurbish the infrastructure. And each side in this argument can produce figures showing that either the tax cuts will produce more jobs than capital investment in the infrastructure or the opposite.

One cannot enter into that kind of statistical argument. The problem, the clinching point of the argument, is that the jobs that tax cuts create will have no visible link with the creation of those jobs. They will seem to be the result of chance. What people need is a clear proof that the Government's concern is for the workless, and this can be given only by the direct provision of jobs in areas where the need is greatest. After those resources have been used, if there is something left, then there is a case after this for taking poor taxpayers out of the tax bracket; but there is no case at all for cutting taxes in a way which makes the better-off people richer.

8.47 p.m.

The Lord Bishop of Derby

My Lords, the noble Lord, Lord Beswick, has called attention to the need for Her Majesty's Government to develop policies to give new life and national pride—not, in this instance, the opposite of humility—and to encourage motives. This is to ask not only for changes in action but also for a fundamental change of mind, a change of attitude, repentance—a word that has been used already and not from these Benches. Policies applied with authority inevitably affect people's thinking. They can give a right lead guiding people to repentance, and it is the nation as a whole that needs some change of mind and attitude. This Motion has implications for us all. Unless there is a general will to achieve the noble Lord's objectives, Her Majesty's Government's objectives, if they are in the right direction, will be undermined.

To debate these issues in this House brings out, significantly on this particular day, the great value of the life of this House that, in it, ideas can be exchanged without the kind of polarising of opinions which so often occurs elsewhere. I hope that when we come to read the record of this debate the polarising that has appeared will not seem quite as so astringent as at the moment it has sounded. A great thing about the debate has been the number of constructive suggestions which have come from all parts of the House.

Violence sometimes arises in our community because we project on to others our own failures to solve problems. Perhaps this accounts for the increasing personalisation of politics, which is a most unfortunate development. In every area of life it is the man or woman at the top who is continually held to account, discussed, abused, blamed. In politics, this can destroy the sense of joint responsibility. It adds strength to the false idea that conviction and consensus are opposites. It is always possible for people with conviction to work towards such a consensus as will unite the nation. There is responsibility on us all, not only in this House but everwhere, to do more constructive things than attack the Government. The Government, however, give a lead by the way in which they respond to the general mood in the nation and the principal issue is the kind of lead they are giving.

In preparation for this debate, I have taken soundings of clergymen and others in my own diocese, which is almost precisely in Derbyshire. All of those working in mining areas have been conspicuous in the impartial and reconciling care that they have given to all their parishioners, whatever their direct or indirect involvement in the mining dispute. Those areas cry out for unifying policies.

It is not only there, however, but much more generally among people of all ages, including the young unemployed, that there is a mood of helplessness, an awareness of inability to change what appears to be a deteriorating situation, in almost every area of our national life. Ordinary folk feel that their views do not count and their votes do not count. The wife of a miner, once on strike but now working, said to me among a small group of people, that they do not know what the powers are which now control their lives. They are just weak and find themselves incapable of doing anything to bring about change.

There is also a feeling of despondency among those in employment. No one can be quite sure where the axe is likely to fall next, and a whole factory may be closed down. Currently in my own See city, many in the British Rail works and in Rolls-Royce have great fears for the future, whether those institutions are or are not to be privatised. The general mood cries out to the Government both to speak a word of hope and to take action to give people some faith in the future. I wish that we could see more clearly some groups of people thinking, either officially or unofficially, about the way in which the nation in the future is going to deal with all issues of work, employment and leisure—because the situation is changing and, far from the ding-dong of political argument, we need constructive thinking to be brought to bear on future policies and actions.

Along with this general despairing mood goes a widespread feeling that the high hopes of Beveridge have been reduced to such an extent that the welfare state is near to breaking down. Government spokesmen make clear, no doubt with complete exactness, how large and increased is the financial contributions being made to the National Health Service. More money still is needed. An inquiry in a number of major hospitals revealed widely that only two or three hours a week are being given to outpatient departments for radiotherapy for cancer patients. More beds need to be made available for that work if it is to be done properly; but more beds mean more hours and larger costs. All the way through there is a danger for those who are particularly vulnerable: the young, the elderly and casualties.

However, the issues here have to do not only with hospitals but with many other aspects of welfare. In a television documentary a few weeks ago, a man was shown in his family setting. His wife was urging him to go and get his new spectacles which the optician had prepared, but he could not go because he lacked the £34 to pay for them. There was another, smaller instance—small, yes, but still indicative—concerning a dentist's bill for £13.50 for one examination and one filling. Charges of this sort destroy the whole principle of national insurance.

I will give your Lordships some illustrations from what has been reported to me. First, faced as we are in this small area with such a high incidence of alcohol abuse, child neglect and battering, we recognise that what are needed are structures that will enable long-term help to be given, whereas the social services can really afford to cover only emergency situations. There is a point of great need there.

Another example: on our one small estate of 515 dwellings, 41 per cent. of tenants are single-parent families. Notices seeking possession are served on 9 per cent. of the tenants annually. One family in every 18 is referred to the social services each month and, my correspondent said, these are figures: the reality, in terms of pain, hurt and depression, are not expressible. I know that particular area.

Another example is that modernisation was recently carried out, and even though many of the houses concerned took 18 months to complete, tenants were not moved out because funds were not available. People spent months without heating, without plaster on the walls, with unfinished plumbing and so on. Then I received the bitter comment: "In more affluent areas such a thing would not have been allowed to happen but because these are poor people, then anything goes".

Situations of these kinds are not the direct and immediate responsibility of the Government only. I applaud their success in reducing inflation, because so many people benefit from that. Having no economic theories, like most people, I cannot see why reducing inflation and also reducing unemployment are impossible of attainment together. I appreciate the palliatives the Government have brought to bear on the situation and the way in which policies are intended to make improvements, but the question which rises up from so many is: how long? How much longer is it going to take for policies to work?

There seem to me to be two main failings—not expressed here, but very widely expressed elsewhere. The first is an apparent ignoring of the widespread existence of poverty in the nation and the problems of the underprivileged. So much talk in response to questioning on radio and television seems to assume that there is really no problem of poverty at all. The second failing is the assumption that if only people put out a little individual effort all would be well: people are their own worst enemies and they are the ones who can put things right. But the poor are gravely disadvantaged and the whole nation needs to take this fact fully into account.

It will not be sufficient, as the noble Baroness, Lady Seear, has pointed out, to free large numbers of people from paying income tax, immensely valuable though that step would be. Reducing taxes, we are told, would benefit all. So it would, but in what a disproportionate way! It would increase the affluence of many but would do nothing to abolish poverty and the accompanying needs; and when threats are made or leaks take place about value added tax on food, they can surely only come from people who earn infinitely more than the average wage. It is an extraordinary thing, but it is only the poor who are told to be content with their lot and to avoid the sin of envy.

I do not believe that a completely egalitarian society is possible or even desirable, but I cannot believe that it is right, to take a very recent example, to pay anyone in the public service £95,000 a year, however able he may be and however crucial a responsibility he may carry, while at the same time millions of others are being ordered, persuaded and cajoled into accepting wage increases which will give them infinitely less than £9,000 per annum. If payments in the private sector set the pattern, so much the worse for the private sector. Surely the Government should encourage public service without undue regard for financial rewards.

There is, of course, a moral problem over holding together the necessity to produce money and the desirability to be detached from it. But the crucial thing is our care for people—for all people—and that moral problem should press on us all. An industrial adviser in the diocese of Derby, having been round areas of dereliction and depression, was invited to take part in what he called a post-mortem on the subject of the Church and the unemployed. He said: "I didn't say much. I can cope with the statistic of 3.5 million out of work: it's the people that bother me". Individuals who are the kindest and gentlest people can be found to take part in the harshest and most violent of actions, and we have seen something of this in recent days. Similarly, individuals with the greatest personal compassion can be corporately indifferent to the needs of others. It is not primarily a unity of ideas that is needed but a unity and compassion; not sentimentality but compassion.

The purpose of the noble Lord's Motion would be the more speedily realised if Her Majesty's Government were to be more apparently bothered by the people who are in distress. I do not question the attitudes of individuals but the impression we are so often given in what is said is that there is great indifference and, when a lead in this respect is apparently lacking, then the response is bound to be small.

9.1 p.m.

Lord McAlpine of Moffat

My Lords, in addressing you tonight, I must declare an interest because I will be mentioning civil engineering. One of the things that I have learnt during the many happy hours I have been among you in this Chamber has been that it is extremely unwise to stand up and talk about a subject of which you do not have a considerable amount of experience and a certain amount of knowledge. As far as the former is concerned, I can claim to have more than half a century's experience, but as to the knowledge, I am afraid it is up to your Lordships to judge.

I want to make three points because I feel very deeply about them. The first point is whether it is wise to spend money on heavy civil engineering to make employment; the second point is about how we can get more houses; and the third point is a conundrum. It is a great conundrum to me because I just cannot understand why our Central Electricity Generating Board appears to be absolutely determined to build an American reactor here when the British one is proving to be so very much better.

I shall deal with my first point: the question of spending perhaps £1 billion in getting heavy civil engineering. I am afraid that my noble friend Lord Gowrie more or less stole my thunder because he expressed the situation so much better than I could. It is absolutely tragic that that industry should spend so much time and energy in trying to kid you all that they will find a lot of jobs. A man leading a very big business said—and it was published the other day—that if you spend £1 billion you will give jobs to 120,000 people. You might do it for four months, but the industry is so mechanised that it is absolute nonsense and I would love to see that stopped. What my noble friend Lord Gowrie said was so very right.

I think it was the noble Lord, Lord Carmichael, who raised the question of housing. I agree with a great deal of what he said, but once again one must realise that it is not money that gets things done. I was so interested in getting houses built—it is not my job, because I do not build houses, but I wanted to see houses being built—that I arranged for the Minister of Housing on two occasions to meet 30 or 40 builders to have a general discussion. On both occasions the same thing came out: central Government were doing their best but they were plagued by the selfishness and smallmindedness of local government. Everybody wants houses built, but nobody wants one built at the bottom of his garden. That is why we are not getting houses. It is not money; it is the low class mentality of planners. If I were going to recommend the Government to do something—far be it from me to instruct them, but I should like to persuade them—I would suggest that they get a vast pair of scissors and cut through all this tiny, bureaucratic red tape and then we shall get the houses. It is not money.

I should like now to go on to my baby—the question of why we cannot have a British nuclear power station. We have got through this horrible political strike as far as I can see without a single light blinking. I think it is terrific praise to the people who operate the generators, the power stations, the Central Electricity Generating Board, the South of Scotland Electricity Board, who have all done a fantastic job. It is not possible to pay a sufficiently strong tribute to them. They will get halos, wonderful big halos, and they will deserve them. But what have they done to deserve those halos?

One of the greatest contributing facts has been the tremendous success of the British designed and built nuclear reactors. Even the black sheep at Dungeness is producing electricity and it will produce a little more later in the year. This is a very crucial matter. Why should we go to America? It will take two years before we start an American station, because of this Sizewell nonsense going on. If we ordered two twin nuclear power stations tomorrow they would be finished and working in seven years. This would give work to 70,000 men in the places that we need them.

Everyone is talking about spending capital to make work for the people on the North-East coast, in Renfrew and in Glasgow. Factories have been built which have been mothballed, simply because of the determination of the Central Electricity Generating Board not to order any more British reactors but to go for American ones. To me that is absolutely crazy.

I should like to read to your Lordships a few of the remarks given in evidence at the Sizewell inquiry by the South of Scotland Electricity Board: If Sizewell B is to be the first PWR in the UK, then it would cost more than a comparable AGR only because of launching costs. If thereafter there is to be a programme of Nuclear Power Stations, the difference in cost between the AGR programme and the PWR programme"— the American one— would be insignificant. A comparison"— this is very important— of the latest design and performances of AGRs in the UK and PWRs in USA shows that during the last three years the load factor achieved by the AGRs"— the British one— is 80 per cent. against 70 per cent. by the PWR". Why do we go on? The two stations that have been built in Britain to date, one at Torness and one at Heysham, are both within programme and within scheduled price. I cannot help feeling that my noble friend Lord Stockton had a point when he remarked that we would sink if we did not use our own abilities. We have produced great and wonderful technical abilities. The hour is late, but I hope that your Lordships will think seriously about an answer to my conundrum.

9.7 p.m.

Lord Prys-Davies

My Lords, in this debate we have returned to a theme which we on these Benches are constantly advancing. That theme is the responsible society and the just society that we want to see for ourselves—and, above all, for our children—and the policies to be pursued in order to achieve those ends.

We can start by identifying the basic priorities. People want a job; they want a home; they want good schools for their children; and they want hospitals and health centres. People also want a level of income, whether they are employed or out of work, which will enable them to live a full life and, if they so wish, to participate in the life of their community. One would have thought that those were the basic needs, and that we ought to be able to create a framework that will enable people to live a full life. What is clear, however, is that the policies which have been relentlessly pursued by the Government are not achieving those ends for many people, and many parts of the country.

We are ready to make concessions to the Government. My noble friend Lord Cledwyn was very fair when he acknowledged that the country is suffering from the effects of a world recession, that we cannot be isolated from world markets, and that our country is being affected by the impact of new technology. But what the Government will not acknowledge, at least publicly, is that only a part (according to some authorities, only one half) of the worsening of our conditions stems from world conditions—world conditions which they are unable to do much about.

The Government will not acknowledge that a substantial part of the hardship is a direct result of Government policy. If one listens to the Government—and this is what is disturbing—nothing is blamed on the fault of their policies. Blame is placed on the faults of the world, on the faults of the unions, or possibly on an act of God. But nothing is the Government's fault. Is this self-deception or is this an arrogant attitude of mind?

I will give three examples. It is true that they are small examples, but they are indicative of the effects of Government policy. They are very much in line with the examples which the right reverend Prelate the Bishop of Derby gave to the House. First, I was struck by the evidence given to a Select Committee of this House by the Family Welfare Association. In 1982–83, this charity gave £80,000 to the poor: but its director told the Select Committee that it could have donated more than 10 times that amount to meet what he described as "desperate needs". So there is undoubted evidence from the grass roots that more and more people are being driven by the Government's policies to the edge of poverty, and made to rely on charity.

Again, I was struck by something which the school inspectors had to say in their annual report published last June. They drew attention to the fact that parental contribution is now (and I quote): a moderate or a substantial addition to school's purchasing power in three out of four schools". In the poorer areas, a cutback in education cannot be substantially alleviated by parental contributions and by deeds of covenant; and an inadequate supply of books, paper, art material and, indeed, computers (and we heard about computers during Question Time this afternoon) may not be made available.

Children can be attracted by the well-stocked library, and they can be attracted by the computer. But in the poorer areas the children whose parents cannot afford to buy books for the home are also the children in schools where the cutback is a cutback that cannot be alleviated by the parents. So, unless the local education authorities can somehow work miracles with their funds—and that becomes increasingly difficult—the cycle of disadvantage in education in the poor areas is almost complete. I should have thought that all this made nonsense of our belief in equal opportunity for all our children.

My third example comes from the county of Mid-Glamorgan in the heartland of South Wales, where I live and work. Your Lordships will know that the core of this county was coal in its numerous valleys, but it is a county which is subject to great pressures and contains within its boundaries many difficulties, as it has been overcome by change at an unprecedented speed. I give a few examples. Male unemployment is at a rate of 22.6 percent. Of its 16 to 17 year-olds, 38 per cent. are seeking jobs. About 5 per cent. of its population is on a waiting list for in-patient or out-patient hospital admission. Ten per cent. of its houses are in desperate need of modernisation, and about 10,000 people are languishing on the housing waiting list; and 44 per cent. of the householders of Mid-Glamorgan are without a motor car.

There are, therefore, enormous problems within the county which cannot be solved by this county relying and drawing on its own potential and its own resources. The councillors and the people of Mid-Glamorgan will say that the Government, in co-operation and collaboration with the councils of the county and with the area health authority, should be assessing the overall needs of the county and then should be pursuing policies which will involve public expenditure and capital investment in order to narrow the gap between the facilities which exist and the facilitities which ought to be available. So this region, like other depressed regions of the country, requires guidance, planning, and investment in order to achieve a balanced development. That is the prime function and role of Government.

The Government are basing their programme for future prosperity on the continuing policy of a reduction in income tax. That being so, we ask the Minister to explain how a penny off income tax will reduce the waiting list for housing; how it will reduce the waiting list for hospital admission; how it will enhance education opportunity for all our children; and how it will make more funds available for housing improvement grants. In short, will the Minister explain how a penny off income tax will improve the quality of life in the regions which I have described? It is not enough to say that there is no alternative. We have heard this afternoon that there are numerous alternatives and one of those alternatives is spelt out in general terms in the words of this Motion.

9.18 p.m.

Lord Wilson of Langside

My Lords, I have listened with great interest to the speech of the noble Lord, Lord Prys-Davies. I am sorry that I am not able to follow him in his theme, but I hope that the Minister, in replying, will have something convincing to say in response to the many matters which the noble Lord raised.

I was glad to see that a few moments ago the noble Lord, Lord Boyd-Carpenter, came back into the Chamber and I prepared myself to raise one or two minor matters arising out of his speech. I am very disappointed that he has since gone, but as I decided to touch on those matters and since my cerebration is not as quick as it used to be when I was young, I shall nevertheless do so. He met the accusation of the Government being doctrinaire—as one would expect of the noble Lord, Lord Boyd-Carpenter, because his advocacy is probably the most brilliant in this House—by laughing it off; which is always an effective trick, if I may say so.

The noble Lord said that the doctrinaire was a person who held certain doctrines with which one disagreed. The point would no doubt be taken by some of your Lordships. It is of course that a doctrinaire, as I understand it, is an impractical theorist or one disposed to carry principles to logical but unworkable extents. This is the accusation which the Government have to meet in this context from many parts of the House: Are they or are they not doctrinaire—not in the sense of the noble Lord, Lord Boyd-Carpenter, but in the true sense?

The other thing which the noble Lord tended to dismiss was the allegation—and we have heard much of it in the course of this debate—that the Government's policies have been divisive. He said—and there is truth in this—that of course there are many issues on which all of us are divided. That we know, but the tactics of the Government in almost every sphere in the industrial context that they have touched on, from the miners' strike to anything else one likes to think of, have been so inept that they have driven the moderates into the hands of the extremists. That is what has upset so many of us—utter incompetence and ineptness of the Government's handling of these situations; and I shall touch shortly on the miners' strike in a moment.

We are all in debt to the noble Lord, Lord Beswick, for putting down this Motion. He is one of the wise men of the Labour Party—there are still some—who remain there for all sorts of reasons. As I understand the Motion, it is a recipe for 1985. Speaking for myself, I am very glad that 1984 is over, because it has not happened! It occurs to me that it may be that, like many Cassandras, Orwell was right and he just happened to get his timing wrong. We shall know in due course. Anyway, with 1984 out of the way, it gives us an oportunity to come to grips with the reality of the British political scene. I would only offer your Lordships one or two random political reflections from a mere tyro in the field.

The British political scene is really all rather like Joxer Daly's world; it's in a state of terrible chassis. Having got 1984 out of the way, I think that it gives us an opportunity to reflect on the British political scene in the context of Orwell's other considerable political satirical work—Animal Farm. Your Lordships will remember Animal Farm. I tried to find my copy last night, but I am speaking purely from recollection. There were the two counter slogans: one turned them round. One said: "Four legs good; two legs bad". The other said: "Two legs good; four legs bad". I think that it was the sheep and the humans. Do your Lordships remember that? It is really rather like the Conservative and Labour Parties echoing: "Privatisation good; nationalisation bad", and vice versa. It is really awfully like that.

It occurred to me too that in the Palace of Westminster every now and then there are significant moments of truth. I think it is a great pity that, when these occur, someone—perhaps whoever is in the Chair or the Chief Whip or the Leader of the House—cannot order a period of silence in order that we may reflect and absorb these moments of truth.

The one which has most appealed to me over these last months was during the quite memorable maiden speech of the noble Earl, Lord Stockton. Of course we shall all have our own ideas of what was the most significant thing that he said, but for my money it was when he said that what we needed in the state of Britain today and in the context of British politics was a kind of intellectual revolution. I must say that many of us on these Benches must have agreed with him. I saw him as pointing in the same direction as we do, to the need for a change in the mood and the pattern of British politics.

Of course many of the commentators and many on the Labour Benches have made mock of us about this, saying that we are the remoulders who want to remould everything nearer to the heart's desire and so on. That is fair fun. I thought this was the direction in which the noble Lord was pointing. I may be wrong. I see the noble Leader of the House looking a bit puzzled, so perhaps my point is not as clear as I ought to have made it. However, I will just have to leave it there.

In any case, I have great hopes that we shall achieve this intellectual revolution, this remoulding, this changing of the pattern of British politics because the alternative to that hope is surely despair. I think that probably the greatest contribution which the BBC has made to British political life in recent years has been to put on the television screen The Pickwick Papers. I see the Leader of the House again looking very puzzled. This will remind many people who have forgotten and it will inform the many millions who have never heard of it about that famous election all those years ago at Eatanswill and about the Blues and the Buffs and about Mr. Slumkey and Mr. Fizkin I hope no one will say, as I think the noble Earl, Lord Stockton, said of Lord Beswick's Motion, that it might be a bit Pecksniffian.

I have the feeling that, after many years moving away from the atmosphere of Eatanswill, of late, over these last two or three years, we have been moving back in that direction. That is really what it is all about. If we do not turn away the tide in another direction, Britain's decline will continue.

May I just say in conclusion—and I do not always agree with him—that Dr. David Owen was absolutely right when he said in the Observer on Sunday that he very much feared that if the political gavotte of the Tory and Labour parties did not come to an end, Britain's decline would continue in so far as politics has influence on its industrial and economic front—and might be permanent. That is what the desire to change the mould and the pattern of British politics which we on these Benches all share is all about.

9.29 p.m.

Lord Stallard

My Lords, like the noble Lord, Lord Orr-Ewing, I hope that I shall be forgiven if I do not spend too much time on the usual courtesies of the House except to say that I agree with the tributes already paid to the maiden speakers. I should like to add my gratitude and congratulations to my noble friend Lord Beswick for giving us the opportunity to have this debate and for setting the trend and the framework, together with my noble friend the Leader of the Opposition to enable us to have the discussion.

Many of today's speeches have demonstrated clearly that our greatest problem is mass unemployment and the fear and the insecurity that it brings. The link between increased crime and drug addiction and unemployment has been made clear. It has been mentioned by a number of speakers. No amount of rhetoric or excuses can disguise the misery, the worry and the ill-health that many thousands of people are suffering as a result of the present Government's policies. In my opinion, one of the Government's greatest crimes is the calculated destruction of our manufacturing industry. This matter has been touched upon by a number of noble Lords. I shall therefore try to be brief.

I wish particularly to deal with the lost job opportunities and the lost training opportunities that have gone with the destruction of manufacturing industry. There are over 1.25 million young people under 25 without jobs. Those are horrific statistics in anyone's language. A total of 355,000 youngsters have been on the dole for over a year. A whole generation will have grown up without ever having had a job. In fact, they are in danger of becoming what is called natural wastage without ever having had a job. That is a terrible indictment of any government.

I wish to spend a few minutes discussing the plight of these young people and to refer particularly to training. Here, I want to express an interest. Before coming to Parliament, I spent all my working life in engineering, first as an apprentice, then as a craftsman, and finally as an instructor teaching future craftsmen. I believe therefore that I have some understanding from that standpoint. I recognise that it is vastly different to the standpoint of many noble Lords in this House. However, from that standpoint, I have some understanding of what the decimation of our manufacturing industry means to those craftsmen and women and their families.

I listened with extreme interest to the noble Earl, Lord Halsbury, who is not in his place at the moment, when he related to us how, very early in life, he wrote an essay on unemployment and how his father had given him some advice upon writing it. I can tell the noble Earl that the essay was probably written about people like my father and many others in the neighbourhood. They were probably the subject of his essay. It was not an essay that I was writing; it was the life we were living—the unemployment and all that went with it.

I can recall, too, the pre-war punitive approach to training when young lads were sent on training courses under threat of suspended benefit if they did not go. Most of the available courses—in fact, almost all that I can recall—were on boot and shoe mending. There was no job at the end of the course. In fact, many of the youngsters that I knew had very few boots and shoes on which they could practise at home, even if they could have afforded the materials to do the job. We did not write essays but we knew quite a lot about unemployment.

I can remember, too, the discovery of training during the war years. I recall the capacity to learn quite intricate engineering skills shown by men and women of all ages from all walks of life. In the years immediately following the war, training took on a new interest and a new impetus. We saw a great many developments. One major development in my view was the recognition that no longer could the voluntary efforts of employers be relied upon to fulfil training needs. With the agreement of all the political parties in Parliament, as well as experts and trade unionists outside, the 1964 training Act was introduced. A network of industrial training boards was established and funded to stimulate training and to avoid skill shortages in key sectors of industry.

In 1973, the MSC was set up to promote national training objectives and to co-ordinate their implementation with industry and the education service. As recently as 1981, a new training initiative was being pressed by the MSC which was designed to improve and develop apprenticeships and to give all young people under 18 the chance either of continuing in full-time education or undertaking a period of work related training. This initiative was welcomed by industry, by the trade unions, by the TUC, by the Labour Party and all those people who were involved and interested in training; but the Government refused to provide sufficient resources to back up that national training initiative and instead began to dismantle the whole post-war approach to training.

The situation now of course is extremely critical. Your Lordships may know that in 1979 there were 106,100 apprentices employed in the engineering industry. Last year there were 59,000. That is a massive reduction, and the number is falling rapidly. Indeed, apprenticeships in manufacturing industry have been disappearing even faster than jobs, and that is fast enough. The apprentice percentage of all employees in manufacturing industries had fallen from 2.2 per cent. in 1979 to 1.5 per cent. in 1984; and in 1984 the apprentice intake reached an all-time low of 7,800 because of the Government's approach and their determination to destroy the manufacturing sector.

We know, too, from reports and surveys that discrimination against young women and black youngsters is on the increase in industry; that employers are failing to cater for the disabled and the disadvantaged; and that trainees are being forced to work in unsafe conditions. The quality of training on the YTS is variable, and those who complete their courses have no guarantee of a job at the end. I do not know how many noble Lords watched a programme on Sunday evening on the BBC; I think it was called "16 Up"—a report on the YTS. I am sure that those who saw it were as horrified and disturbed as I was at some of the revelations in that programme: bogus certificates, false training, the effects on some of the youngsters who had been involved, the impressions they had gained from their experience of that kind of phoney course. This is something about which we ought not to be proud. It is all right being complacent and shaking our heads, but we ought to take very seriously the kind of things which came up in that programme; I certainly do. I hope that we shall learn something from that kind of research which is being done.

The present chairman of the Tory Party has said: we need to move forward so as to secure a well-trained workforce, which is an essential condition of our economic survival". I do not think anybody would disagree with those sentiments. But how have the Government reacted? How are the Government implementing those sentiments, those fine words? I do not believe that the Government are moving forward at all. I believe they are moving backwards—back to the days of ignorance and fear, back to the days when people's lives were ruled by employers and an authoritarian state. The Government are treating training not as part of a strategy to create jobs in long-term growth but rather as a substitute for such a strategy. Resources are released only to disguise the increasing number of youngsters without jobs, to depress real wage levels and to restrict public spending in other areas. They have funded the YTS by plundering resources from other programmes, mainly adult training programmes, and made them up with resources from the European social funds.

The Government have blocked any increase in the allowance for trainees and have re-introduced the punitive approach that I mentioned not so long ago by reducing benefit, or threatening to reduce benefit. I see in his place the noble Lord who is quite familiar with this threat to reduce benefit entitlement for young people who leave early or refuse to take part in these schemes. The Government have also cut back on training and re-training resources for adults under the training opportunities programme, and they are considering loan systems for adult training.

The Government are going back to the discredited approach of leaving training to the employers—an approach which everyone agreed failed prior to 1964 and the setting up of the industrial training boards. Indeed, 16 out of the 23 industrial training boards that were set up have been scrapped by the Government, and the mechanisms that went along with them for the sharing of the training costs have gone as well. The Government are also seeking further cuts in the network of skill centres, which in my view have provided an invaluable training resource.

So we are entitled to question the Government's commitment to the Tory Party chairman's stated objectives, and I think that I can certainly demand from the Government the same financial commitment to training that they have shown, irrespective of cost to the taxpayers, in other spheres. For example, I am thinking of the defence of the interests of the Falkland Islanders, the determination to defeat the miners and to crush trade unionism, and the resolve to destroy local democracy. All of those things are being pursued irrespective of cost. I think that I am entitled to ask for the same type of commitment in respect of training in order to get our youngsters into paid employment.

In the last minute that is available to me tonight I suggest that the restoration of training boards must be paramount, and that there must be expansion of apprenticeships in trades and occupations where skill bottlenecks have already reappeared. Major changes must be made in the youth training scheme along the lines of its original aims—and if I had time I would quote the original aims to the noble Lords opposite who look puzzled. For example, the allowances must be increased and linked to increases in the cost of living, because so long as the YTS is viewed as cheap labour it will have little credibility for the youngsters who are being asked to participate. The YTS must remain voluntary and it must offer a range of choice on a sufficient scale to meet the needs of young people. Moreover, the quality of training must be improved.

Resources must be made available to the careers service to advise on the various schemes and how they can best be adapted and used, and action must be taken to secure equal opportunities for young women, for ethnic minorities, and for the handicapped and the disabled. All schemes must ensure a safe and healthy working environment.

I could continue to speak on this subject for much longer if time were available. However, I am sure that the steps which I have mentioned, and many others, are urgently necessary if we are to begin the process of preparing our manufacturing base for the growth that we are told is on the way. If the Motion tonight is carried, it will be a welcome step in the right direction, and I support it.

9.43 p.m.

Lady Saltoun

My Lords, on 9th May last year the noble Lord, Lord Spens, who is so sadly missed in this House since his death in October, spoke in the debate of the noble Lord, Lord Wilson of Rievaulx, on unemployment. He said that, thanks to the new technologies, we should never again have full employment as we have known it and that, indeed, the situation would become worse. At column 949 of Hansard on 9th May last year he said:

What should be done? Long term, I believe we must get the working week reduced to not more than 32 hours per employee. If we could so this, it would allow one additional employee to be taken on for every four now being employed, but it would be useless to try to reach this target gradually by reducing hours by one a year or something like that. It has got to be done immediately, across the board. That will require new sets of taxes and social security payments and benefits, which will have to be produced and adopted. I believe that we ought to have some form of committee or commission to look straight away at that long-term problem". The noble Lord also said that employment protection legislation should be repealed, wages councils abolished and overtime reduced. He also suggested that prosperous firms should combine to provide advice and assistance to new businesses, as has been done by Enterprise Ashford in Kent. Finally, he suggested that measures should be taken to persuade married women to give up jobs subject to PAYE and to encourage them to become self-employed. The noble Earl, Lord Gowrie, was winding-up for the Government on that occasion and probably remembers that speech well, although I do not think that he agreed with it all.

However, I wish that the Government would think seriously about the points that Lord Spens raised, and either consider implementing some of his suggestions or think of some other way in which to deal with the situation, because the new technologies will not go away; they are here to stay and to flourish.

I have a few more brief points to make. If the working week were reduced, leisure would increase. If you are well educated, you can occupy almost unlimited leisure hours cheaply, profitably and enjoyably. But if you are not, you need constant entertainment, and that is usually expensive. So a good education would be of paramount importance.

Secondly, in a more leisured society you would have a vast number of potential voluntary workers. I wonder whether thought could be given to tapping this potential source of help for such things as caring for the elderly, the infirm and the disabled in their own homes? Thirdly, we have heard a great deal today about the need for expenditure on the infrastructure. In this context may I make a plea—not for the first time in this House—for toll motorways? I do not know why people are so opposed to them. They have them in other countries and they seem to work perfectly well. So why not have them here? The Forth and Tay Bridges work perfectly well. When they were opened they transformed life for people in North-East Scotland who had had to queue for hours for a ferry, and they were perfectly happy to pay a toll, just as they had had to pay to use the ferry.

Finally, we have heard from various noble Lords about uniting the nation. Extreme adversity, such as another world war, would certainly unite the nation, but it would be a terrible price to pay for unity. The price of unity can be too high.

9.47 p.m.

Lord McIntosh of Haringey

My Lords, my noble friend Lord Beswick has drafted his Motion admirably to enable us to consider the economic policies of this Government, not only in terms of their efficiency but in terms of their equity. A number of noble Lords have spoken much more eloquently than I could about the equity of Government policies. I want to concentrate on the efficiency of Government policies, and I want to look at Government policies as they were expressed in yesterday's White Paper on Public Expenditure in terms of how well they conform with modern business principles and modern business practices.

In the days before rising interest rates and the plummeting pound, the Prime Minister was known to compare the national economy with the economy of the household. I think it would be as well if occasionally we thought about the economy, and the controls and obligations on those who have responsibility for the economy, in the light of the principles on which one might conduct an enlightened business enterprise.

The first thing that is noticeable in the public expenditure White Paper is how much it lacks a business plan for the nation as a whole: in many ways, as an economist would see it, it concentrates only on one part—an almost random part—of public expenditure. The second thing one notices is that there is a complete failure, not only to have capital and revenue budgets for the economy as a whole but even to recognise the distinction between capital and revenue, of which we were reminded most eloquently earlier this afternoon by the noble Earl, Lord Stockton.

It is noticeable how, in their statements to the nation on economic policy, the Government fail to make use of that invaluable accountants tool, the analysis of the source and application of funds. If we were to look at the various sources of public revenue, and to look at them in terms of their longevity and their capability of being maintained over a period of time, we might look rather differently at the sort of conclusions which Government spokesmen draw as they talk to us about the Government's economic policies. It is true that the domestic and business taxpayer is a continuing source of funds. But we must look at Government revenues in terms of the other sources, notably the revenue from oil, which, as has been said on a number of occasions this afternoon and this evening, has a finite life and particularly the revenue from the disposal of public assets, which, again, has been referred to. As the Lex column in the Financial Times pointed out this morning, when that runs out we shall be back to dull old debts again. It is incumbent upon the Government, if they are going to be honest and consistent in their economic reporting to the nation, to point out that some sources of revenue for the Government are not as stable, not as long term, as others.

The main defect that we ought to examine in the economic reporting of the Government to the nation, and indeed the economic planning by the Government for the nation, is in their attitude to assets. A number of noble Lords, notably the noble Lord, Lord Ezra, have made effective reference to the need to maintain our fixed assets and the infrastructure of this country, and the damage which will be done if we allow ourselves to get in the position of spending immensely more for repairing assets which have already decayed rather than dealing with them on a planned maintenance basis as any efficient business would do.

There is also the obligation on the Government to take consistent care of their existing earning assets. That seems to me to exclude a lot of disposal of assets which has in fact taken place, and particularly when we come to examples like British Telecom where the disposal of assets not only takes place in such a way as to remove the possibility of future earnings from those shares from the public sector, but also actually hands away billions of pounds to speculators who are going to play no part in the economy of this country.

Another obligation on an effective business ought to be the creation of new earning assets. It is here that the Government's policies and the Government's presentation of their policies most conspicuously fall down. Let us take the example of microelectronics, high technology. The Minister for Information Technology, Mr. Geoffrey Pattie, said that he does not believe that market forces alone will provide long-term high-risk research investment. In other words, he is saying that there is an obligation for the public sector to take a part. What do the Government in fact do, having successfully invested in Inmos and created the largest manufacturer of integrated circuits in this country with the aid of public investment? They sell Inmos off, and then in November last year cancel the existing microtechnology support programmes on the grounds, if you please, that the budget has already been spent up until January 1986.

Can you imagine a business organisation finding successful sources of investment, and finding that it is pursuing the right path and that people with good projects are there to take up the money, saying, "I am sorry, the public expenditure White Paper insists that this money has now run out and is not available any further, and we are no longer going to be giving any grants under these programmes"? It is economic nonsense, and it is only those who are completely blinkered by the way in which they approach the formulation of public economic policy who could possibly think otherwise.

Finally, I want to refer to the management of human resources. I am sorry for the jargon phrase which has crept into this country from American industry, but it expresses something real. Other noble Lords have spoken with far more skill about training than I could. We have had an eloquent speech just now from my noble friend Lord Stallard on this point. It is possible to make serious judgments about the efficacy or otherwise in economic terms of youth training and adult training.

Did the noble Earl, Lord Gowrie, make such an assessment? Did he attempt to? No such thing. His only reference to training in his opening speech was to claim the fact that training takes people off the job queue and reduces the unemployment figures. There was no reference whatsoever to the fact that the management of human resources through training is an investment in the assets of this country for the future. Here again we have the example of the Government blinkered by their own way of looking at economic policy, unable to see the wood for the trees.

Finally—I have said that word before and I apologise; one gets caught in this. There is the question of reporting standards which the Stock Exchange or the Securities and Exchange Commission might impose on business organisations. I suggest that some of the examples of economic success used by the noble Earl, Lord Gowrie, in his opening speech fail to come up to the reporting standards which we ought to expect of a responsible private or public authority. He jumps from annual figures suddenly to giving quarterly figures for exports, in order to take advantage, without explaining why, of the changes in the exchange rates for the pound. He claims that the falling off in the increase in gross national product has been caused by the miners' strike, without explaining the differences, in several degrees of decimal points, between the effect of the one and the result of the other. I could give many more examples, but there were so many examples where he simply took the easiest way out rather than pursue a consistent argument.

I suggest that the Government ought to have at least the standards which would be required of an honourable business enterprise in presenting their figures. Enlightened businesses nowadays produce a social audit account; they produce accounts in which the money paid in taxation is considered to be a benefit to society and a contribution by the enterprise to society as a whole. That breadth of vision, which is now available and being used by business enterprises, could be adopted by the Government. We could get away from the narrow view which has been presented by the Government and by their spokesmen today.

The noble Earl, Lord Stockton, paid a dubious compliment to the noble Earl, Lord Gowrie, of saying that his was the best defence of Government policy that he had seen for a long time. It is rather like saying that the defence counsel for the Mafia is doing an excellent job in court. I think the responsibilities are greater. My noble friend has very properly drawn attention to the necessity for, and the consideration of, social justice as well as economic efficiency.

9.57 p.m.

Lord Beloff

My Lords, at Question Time this afternoon—which seems a very, very long time ago—reference was made to the overseas services of the BBC. In the World Service tomorrow two Members of this noble House are to be asked to explain today's debate to the world: one of them is me. I have therefore been giving close attention to our proceedings. I must say that from the beginning I have found them falsified to some extent by a Motion which, in a less tolerant House—for instance, a school debating society—might have been ruled out. I say that for this reason. There are three elements in the Motion of the noble Lord, Lord Beswick, which, give or take a word or two, any civilised government ought to accept. Any government would want to unite the nation; any government would want to stimulate pride in the welfare provisions of the nation; and any government would wish, even in a sinful world, to make something of social responsibility. But in the middle we have the joker in the pack where the noble Lord, Lord Beswick, inserts the words: policies … which aim at directly creating employment rather than reducing taxation". It is perfectly arguable that there are ways of reducing unemployment other than by the reduction of taxation. But the noble Lord, Lord Beswick, is perfectly well aware that there are many people in this House and outside who believe that there is no contradiction between a reduction in taxation and a reduction in unemployment; on the contrary, that it is precisely the reduction in taxation which is likely to lead to a reduction in unemployment. I do not propose to pursue that particular contradiction in the Motion because I am not able to argue the case either way. I do not know, and I do not believe that anyone knows, the exact relation between reduction in taxation and other methods of tackling unemployment.

Lord Beswick

My Lords, the noble Lord, I believe, has overlooked the word "directly" in "directly creating employment".

Lord Beloff

My Lords, I agree that I left out that word. I cannot see that it makes very much difference because, directly or indirectly, a person either becomes employed who was not previously employed or does not. Whether this is the result of someone buying something which he is going to make, or whether he is directly employed by a nationalised industry or by an agency of government, to him, I should have thought, makes very little difference.

As I say, I do not wish to argue this because I do not believe that economic science now or perhaps ever will be able to give the kind of precision to which some people attach importance. Someone actually said that the Institute of Fiscal Studies (which we were told was a reputable institution, and I have no reason to doubt it) can calculate in so many numbers the actual numbers of people who would be employed if this or that policy were adopted. This seems to me to be running in the face of all the predictions about economics and the economic future of this and other countries that we have had from professionals in that subject for generations.

Rather, I should like to ask your Lordships to consider another aspect of this question which I fear is much more serious. That is that we must be, in many ways, deeply depressed by today's debate, first of all—and not exclusively—by having to face the disagreeable facts about the present which the right reverend Prelate the Bishop of Derby and others have repeatedly called to our attention. This is a country with a great deal of unhappiness, most of it resulting from unemployment. That is common ground. What worries me more is that the divisions that are caused and the observations that are made appear to be in many aspects so familiar.

If one looks back over British history—not as many noble Lords have done, since the Second World War; not as the noble Earl, Lord Stockton, did, looking back on his own active lifetime; but looking even further back—many of the things that were said about unemployment and its result, poverty and deprivation, were common from among the observers of the social scene in the first great period of social surveys, which is almost exactly 100 years ago. It was one of the great contributions of the 1880s.

We were told by many noble Lords, particularly on this side of the House but from all sides of the House, that Britain can only remedy some of this at least by a more active and enterprising concern with newer industries, including of course training, which was referred to by the noble Lord, Lord Stallard, and possibly direct financial intervention, as was suggested by the noble Lord, Lord McIntosh, and so on. The trouble is that people 100 years ago in this country were saying exactly the same thing about what were then the new industries. They were already pointing to the fact that the industries which had created Victorian Britain and its industrial empire were already becoming obsolete and that it was the Germans who were discovering the new industries which in that period were—not as now, electronic—very largely chemical.

What is it about this country which, after a century, still inhibits us from doing something which it was pointed out was essential to our economic salvation a hundred years ago? Speakers have referred (I think the noble Lord, Lord Monkswell, did in his moving maiden speech) to divisions; for instance, the divisions between north and south and between the less and the more comfortable parts of the country. This is not new. If one looks at Beatrice Webb's diaries, written before the first world war, she had already observed a growing difference between those areas of industrialisation in the north, which were already having a totally and increasingly different outlook which could be measured electorally and in other ways, and the rest of the country.

So when we think we are dealing with things which are so deep-rooted that they go back even beyond the lifetime of the noble Earl, Lord Stockton, it is not, I think, very useful or very helpful to spend very much time condemning a Government and accusing them of lack of concern about these matters or, still less, of trying to perpetuate or increase the misery.

I was reproved during the last debate we had on unemployment by the noble Lord, Lord McCarthy, who is not in his Front Bench place today, for saying that in our current economic problems there was a relevance and a connection between the miners' strike and unemployment, because a strike of that duration was not only causing unemployment in that industry itself but was increasingly affecting other industries, too. I am glad to say that today, at any rate, it has been admitted by noble Lords opposite that there is a connection and that you cannot discuss unemployment without taking account of the miners' strike and of certain other things connected with it, of which the current negotiations between British Rail and its unions are perhaps the most obvious, if not necessarily the most deep-rooted.

I think, therefore, that one has to look at some very fundamental questions which are themselves so large that, like the clues in G. K. Chesterton's detective stories, one may overlook because they are so large. The one which most concerns me and which I think should most concern those who regard unemployment, rightly, as the first thing on our agenda is this. Although, as I said, in the 1880s and 1890s a great many of these phenomena were observed, what has happened since then is that there has been a massive rise in the standard of living of a very large proportion of the people, still leaving at the bottom of the heap a proportion which varies according to the trade cycle, according to recessions and according to world trade conditions, but which is certainly much larger than a civilised society ought to tolerate.

I cannot help feeling, without being an economist, that there must be some connection between the ability of society constantly to add to its material possessions so that the fully-employed family is infinitely better off now than a fully-employed family was in the 1880s and the 1890s, whereas the unemployed now, as then, are the subject of deprivation which, as has been rightly pointed out, goes beyond mere physical deprivation to moral suffering. If we could agree to examine together as a grand inquest of the nation, as Parliament was once termed, our progress or lack of progress over this century in those terms, perhaps we could bridge some of those divisions which the noble Lord, Lord Beswick, deplores.

10.10 p.m.

Lord Hatch of Lusby

My Lords, as is unfortunately habitual, I am going to take an approach to the Motion moved by my noble friend Lord Beswick which I imagine is unique among those who have spoken or who are about to speak. I want to concentrate simply on that phrase in my noble friend's Motion which calls for the direct creation of employment. We are talking here about what has commonly become known as TINA—there is no alternative, the creed of the Prime Minister. We are talking about unemployment, surely accepted on all sides as the greatest scourge of this country today, over the past decade, and fearfully over the next decade.

At Question Time only on Monday I asked the Government if they would not themselves institute research into the effects of unemployment on the family, on the health of the unemployed, on the incidence of suicide among unemployed men and their wives. There have been a variety of approaches to the issue of how unemployment can be reduced and new employment can be created. As the noble Earl, Lord Stockton, pointed out to us this afternoon, we are in the midst of the third industrial revolution. Some have talked about the necessity for working shorter hours, for sharing work, for early retirement and for longer holidays, but the Government have adopted increasing unemployment as part of their policy, as an essential part of their policy.

They say that their main objective is to bring down inflation, although I would point out that even though they have had some success there, they increased inflation before they brought it down. Even now they have not brought it down anything like as much as, for example, the West Germans.

There are 4 million unemployed in this country. Do none of us equate those 4 million unemployed with the 17 million children who die every year for lack of resources that could be supplied by the workers of this country? Her Majesty in her Christmas address of December 1983 pointed to the gap between the rich and the poor as the greatest problem on earth. The response of the British people to the tragedy of Ethiopia shows that those words have been echoed far and wide across this country.

I hope that the noble Viscount who is to wind up the debate—I sympathise with him in the multitude of points with which he will have to deal—will spend one moment in unravelling a mystery which the Government appear to have thrown at me in previous debates of his kind. I have previously quoted—I warned the noble Viscount that I would be doing so again—the words of the noble Lord, Lord Belstead, when he replied to a debate which I initiated last May on the necessity for this country to increase its trade with the third world. In his reply he gave these very significant figures. He said that in 1983 75 per cent. of the bilateral overseas aid allocated by this country was tied to the procurement of British goods and services; in other words, created jobs. He said further that the export business again was equal to our contribution to multilateral aid, creating jobs in Britain. Thirdly, he said that from 1977 the aid and trade provision which gives grants to British businesses for overseas tenders spent £264 million, but that it had resulted in additional exports for firms in this country amounting to £1,298 million—creating jobs for British workers.

I quoted those figures in the debate we had last December which was wound up by the noble Earl, Lord Gowrie. What was his answer? He almost slid away from the issue. He replied that my question could be answered through the Government's policy of abolishing exchange controls. Does that answer stand up to any examination?

Since the noble Earl has several times stated—as he has done again this afternoon—his approval of the abolition of exchange controls, may I point out to the noble Viscount who is to answer for the noble Earl that in 1982 (the latest year for which figures are available) the outward direct investment from this country was £2,528.3 million. Of that amount, only £331.8 million went to developing countries—a mere 13.12 per cent. The rest went to the developed countries and industrialised countries which are our competitors. In other words, the opportunity which we have for breaking into the closed market of third world countries is not satisfied by the abolition of exchange controls; capital goes to industrialised countries, capital goes to the established industries in those countries, and capital goes to those countries which are our major competitors.

I do not accept TINA, and we on this side of the House do not accept it. There is an alternative in the provision of jobs. We may need more industries, and we may need new channels for our current industries to trade in new markets. Let me quote in support the ICFTU affiliates in the Nordic area and in the Federal Republic of Germany. They have issued a statement which shows that if there is a stimulus of 1 per cent. of the gross national product plus (and I would underline this) the implementation of the United Nations target of 0.7 per cent. of GNP in development assistance, then over a period of from two to three years this would create 10 million jobs in the OECD area plus further millions of jobs in the rest of the world.

Despite this proof—and this is a point I fail to understand and it is one on which I have never secured an answer from the Government—that aid assists exports, assists our trade, and is an investment in our economy, this Government have cut overseas aid by nearly 20 per cent. during their five years of office. How can they equate that action in their own terms and according to their own standards? How can they defend that action? How can they justify it?

From yesterday's White Paper on public expenditure we learnt that they plan to go on doing the same thing. Over the next five years the cash increase in overseas aid is to be 16.4 per cent. That is well below the Government's own forecast of inflation. In other words, they are saying quite deliberately that they will be continuing to cut overseas' aid, despite the fact—as I quoted from the noble Lord, Lord Belstead—that some of them, at least, recognise that overseas aid is an investment in the economy of this country and a way of creating jobs in this country.

Is it any surprise to find that—as well as the fact that we are in manufacturing deficit for the first time since the beginning of the Industrial Revolution—when manufactures take such a big part of our exports to the third world countries, to the closed markets of today, in 1982, 28 per cent. of our exports went to the lesser-developed countries; in 1983 that figure came down to 20 per cent.; and in 1984, although the figures have not yet been published, they were substantially under 20 per cent.? In other words, our exports to the third world are declining and our aid to them is being cut. Why? Because the Government cannot see the logic of their own case. They are, therefore, cutting the purchasing power of our potential customers.

It is only a week or two ago—and I can quote this in public because the examination was in public before the Select Committee on overseas trade set up by the noble Viscount—that the leading officials of the Foreign and Commonwealth Office and of the Overseas Development Administration admitted to us (as I say, this has been published, so it is open) that logically a cut in aid meant a cut in exports.

I ask the noble Viscount to meet this charge of inconsistency. I suggest that the Government's attitude to unemployment can be summed up in the words of the philosopher John Dewey: To profess to have an aim and then to neglect the means of its execution is self-delusion of the most dangerous sort".

10.22 p.m.

Lord Banks

My Lords, the Motion moved by the noble Lord, Lord Beswick, calls for economic and social policies which will give new life to national pride in the welfare state. I should like to echo that plea.

The impact of the world recession has meant that the welfare state has been under attack in the developed world, and throughout Western Europe there has been a nibbling at the edges of the welfare state. In this country, of course, we have had cuts in it and I think particularly of the two Social Security Acts of 1980. It is not surprising that there has arisen from that the question whether we can afford the welfare state. In trying to answer that question, we should bear certain facts in mind.

The first is that the United Kingdom Government spend a smaller percentage of the gross domestic product than does the rest of the European Community; more than the United States as the noble Lord, Lord Boyd-Carpenter, reminded us earlier—

Lord Boyd-Carpenter

Much more, my Lords.

Lord Banks

—although that country runs a large deficit which does not appear to create inflation, but less than West Germany.

The United Kingdom Government also spend rather less on welfare provision—or social protection as it is called in the EC tables—than most other EC countries. Half the Government's expenditure goes on welfare—that is, housing, education, health, personal social services and social security—and 60 per cent. of that goes on social security. So the social security budget is the major factor in the welfare budget. It is true that the cost of social security has risen from 9½ per cent. of the gross domestic product to 11½ per cent. of the gross domestic product between 1979 and 1983, but of course during most of that period there was no growth.

There are two factors which led to that increase. One was the very considerable increase in unemployment. The second was the fact that there were more pensioners at the end of that time than at the beginning and that they had had a real increase in their pensions, particularly before the link with earnings was broken by the Government. Now we have a measure of growth, and, with the present level of benefits and modest growth, the cost is expected to stabilise at around 12 per cent. of gross domestic product, if I have understood correctly the expenditure figures which were issued yesterday.

I think that we also ought to bear in mind that social security benefits transfer a claim on resources. They do not consume them in the same way as they are consumed if a hospital is constructed or a school built. I think that that is important when we are considering whether we can afford the welfare state. In view of all these factors, I come to the conclusion that we can afford our welfare state as it is now, and even extend it a bit, provided that there is no real decline in GDP and no further dramatic increase in unemployment. I do not think that it would be the end of everything if we were to stabilise social security spending at, say, 14 per cent. of GDP instead of 12 per cent. and that would allow some quite considerable improvement.

I said just now that social security benefits do not consume resources; they merely transfer a claim on them. Of course that has implications for the economy. The money transferred from one lot of people to another will be spent differently. If one transfers it from the better-off to the less well-off, some that might have been saved will be spent. Then again there obviously must be limits to redistribution if one is not to damage the economy. We on these Benches feel that we are a long way from reaching the limits of redistribution and that there will have to be further redistribution if the very real poverty which exists amidst comparative affluence is to be eradicated.

If we are to put into the public new pride in our social security system, we must reform it. We are well aware that some benefits are inadequate, that there is immense complexity and that there is the impact of taxation on the social security system leading to the poverty trap. Those things, no doubt, have led the Government to set up the reviews which are now looking into these matters. We await with interest, though with apprehension, the Government's findings in this sphere.

I have made it clear to your Lordships on many occasions that in my view the best way to deal with these particular problems is to establish a tax credit system which will unify and simplify the tax and social security systems. But I said earlier that we could maintain our social security system and our welfare spending generally so long as there was no real decline in our GDP.

I know that our present unemployment is partly due to world recession and partly due to policies initially pursued by the Government—high interest rates, an overvalued pound and a deflationary squeeze. I certainly agree with the proposals put forward by my noble friend Lord Ezra for investment in the infrastructure both for the reasons which he gave and because of the impact which it would have on unemployment. But there is another underlying cause of unemployment, and that is our steady industrial decline, to which reference has been made throughout this debate. It is highlighted, as the noble Lord, Lord Hatch, has just said, by the fact that we no longer have a favourable balance in manufactured goods. Exports of manufactured goods, plus invisible earnings, have paid for our imports and for our standard of living. They no longer do so. Exports of North Sea oil are bailing us out.

When North Sea oil runs out, if we cannot pay our way, we shall then have balance of payments difficulties, a falling pound as a consequence, inflation as a consequence of that, and declining standards generally. There will then not be relative but actual decline and it would certainly be difficult to maintain our welfare state in those circumstances. It seems to me that this is perhaps the most urgent problem that we have before us, not because the effects of it would be felt immediately but because, if we do not take steps now, we shall not be well placed to deal with the full effects of the problem when they come upon us.

Our need is to discover and promote industries which will serve a large world market. I think we have to build up our manufacturing base, as my noble friend Lord Ezra said, and to be part of the third industrial revolution to which the noble Earl, Lord Stockton, referred. We seem to have spent our research and development funds mainly on defence and on industries where there is little opportunity to secure a large and growing overseas market. The noble Lord, Lord Roll of Ipsden, referred to Japanese economic policies. I believe it is true to say that in Japan there has been a remarkable union of government leadership and direction on the one hand and private enterprise on the other. The Ministry of International Trade and Industry, to which my noble friend Lord Ezra referred, has co-ordinated, stimulated, promoted and controlled development. It has inevitably been selective. How it has operated has been set out very clearly in Keith Smith's Pelican book, The British Economic Crisis, which I should certainly recommend to any Members of your Lordships' House who have not come across it. No doubt we should rightly consider some Japanese policies quite unsuitable for us. But I feel sure of this: while the markets have an important role to play, left to themselves they will not solve our problem.

For a start, we need greatly increased expenditure on research and development and stronger strategic direction. We must stop thinking of state intervention and private enterprise as irreconcilable. We need to face this basic problem with a blend of the two. Winston Churchill, in 1906—incidentally, in his Liberal days—said this: It is not possible to draw a hard and fast line between individualism and collectivism … No man can be a collectivist alone or an individualist alone. He must be both an individualist and a collectivist. The nature of man is a dual nature. The character of the organisation of human society is dual". I believe those words are as true today and as relevant today as they were when they were first spoken.

10.33 p.m.

Lord Irving of Dartford

My Lords, in 1979 we embarked on an experiment in monetarism, with inflation as the main enemy. The essence of this approach was a tight control on public expenditure, a complete faith in the market economy and the conviction that tax cuts would stimulate the economy to a new and enduring prosperity.

Five years later, we have inflation at 5 per cent. or less but unemployment at an all-time record. Nearly 25 per cent. of our manufacturing capacity has disappeared, we have a trade deficit in manufactured goods of £5 billion for the first time in our history and our annual tax bill has risen by £22.5 billion. A recent OECD report of the 20 industrial nations shows that our standard of living has dropped to fifteenth in the table. Forty-five per cent. of our construction workers are on the dole and much of our infrastructure desperately needs replacing.

For some time the pound has looked to be in a state of collapse and £20 billion have left these shores to fuel the boom in America, or have gone to help recovery in Japan. The savings and other funds of British people are not being used to regenerate British industry but, because of high interest rates, have gone to America to be invested there. This is a very sad state of affairs. It exacerbates, I believe, Government policies. I wonder, in fact, whether the Government were wise to abandon exchange controls when they came into office immediately after 1979.

The Earl of Gowrie

Yes, my Lords.

Lord Irving of Dartford

My Lords, the Government have claimed repeatedly that we are in an international recession from which all are suffering. While not wishing to minimise the importance of a low inflation rate or denying the fact of an international recession, it is nevertheless true that, although we concentrated exclusively on inflation, both America and Japan have done better with lower inflation rates and also with lower unemployment figures. Both have maintained a much larger public service borrowing requirement than we have. The truth is that they have not been impeded by a doctrinaire attachment to monetarism.

However, it must also be remembered that we started with an enormous advantage over every western nation except Norway with the windfall of North Sea oil. From 1979 to the end of last year the Government received over £40 billion in North Sea oil revenue. None of our principal competitors has enjoyed this advantage. The bill for unemployment benefits since 1979 has been, coincidentally, also £40 billion. Therefore, the total of our oil revenues has, in effect, been spent on unemployment benefit.

The Government have failed in other ways. Despite our vast nationalised coal, oil and gas resources, energy prices to the high energy-using industries like paper, with which I have an association, steel, chemicals, cement and glass, and to the clay-using industries, have been higher than those paid by their foreign competitors in France, Germany and America, putting them at a disadvantage. Although numerous appeals have been made to the Government by the leaders of these industries and by Sir Terence Beckett of the CBI, it has all been of no avail. Despite all these horrific facts, the Government have announced once again today that there will be no change in their policy.

Nothing that the Government have said in this House or in the other place seems to many people to be remotely adequate to deal with the future. Economic survival is at stake, and we have no strategy for dealing with the situation. If we do not secure an improvement in our balance of payments when the oil revenues peak and begin to decline, as they will soon do, we shall be unable to pay for our food and for other goods that we need from abroad.

The Earl of Gowrie

Nonsense!

Lord Irving of Dartford

My Lords, we have backed ourselves into a monetarist cul-de-sac with a Government committed to leaving it all to the market but also with a belief that it is not possible for Government to influence the situation in any really significant way. The Government's posture has been one of resolute indecision—as someone said, "Of waiting not to intervene"—but, as in the case of sterling, being inexorably driven to intervene but always too late and often wrongly. This can be seen in the mining dispute, in the sterling crisis, in the battle over oil prices and in other areas. The Government had no policy when the 2.40-dollar pound was damaging our exporters. They had no policy 10 days ago, when they intervened once again to encourage the increase of rates. They had only the fear that the pound might go through the floor.

None of our competitors takes this view. The reliance on the market economy is all very well as long as every other country acts in this way. But we know that in many ways the governments of many of our competitors do believe in intervention and give considerably more assistance to their industries than we do.

The obsession with the public sector borrowing requirement has caused difficulties which not only inhibit the future but could weaken us for a generation or more. I should like to deal with one such situation. Those of us who serve as members of university councils know of the damaging cutbacks that have taken place there. The Science Policy Foundation published a series of critical essays on United Kingdom science policy last year by a group of distinguished people with an introduction by Sir Herman Bondi, for many years one of the Government's chief scientific advisers. They said: What is already abundantly clear is that without determined and consistent publicly-funded research and development, the imaginative creativity leading to essential innovation will vanish. The report goes on to say: The message of this first review, put in simplest terms, is that publicly funded research and development continue to be essential to the wellbeing of the United Kingdom. The acceptance of this by Government seems to be in question". There is no future for the United Kingdom without a highly-qualified scientific and technological manpower, and that is not possible without support for basic science. The Government's lack of concern for research was clearly shown when the Tory Back-Benchers revolted recently over parental contributions, when the money was found overnight by cutting research. Universities suffered a 10 per cent. cut in funding between 1980–81 and 1984–85, with the loss of £460 million of resources. Real resources going into research councils have also been seriously reduced. Sir David Phillips, chairman of the Advisory Board for Research Councils, estimates the research councils face a cut of 25 per cent. over the next 10 years. If we want to be in with a chance in the future we must make more of an effort now. This is a state of affairs which is due to the policy of monetarism and its preoccupation with the public sector borrowing requirement and its unwillingness to borrow to invest in the future.

One other way we are failing to meet the challenge of our time is in the rejection by the Government of consensus. At a moment in our history when we need the co-operation of everyone in our society if we are to survive, we live in a society where conflict is the order of the day. The adjustments we need to make if we are to compete in the world are so considerable that we cannot afford the cost of a divided nation. Difficult though it may seem, the Government must secure the confidence of organised labour. Our best companies know this well and have excellent relations with their workers and their unions. It is made even more difficult with a Government who proclaim, as a virtue, their rejection of consensus.

However, the immediate change to be made must be to give unemployment at least equal priority with inflation. I am not asking, nor is the CBI or others, for a massive lurch back to stop-go economics. Nor do we want to risk high inflation. What we want is a moderate reflation of demand to prime the pump, but above all to create jobs in the most direct way and to give hope to many who live without hope—some even living with the fear that they will never have a job again. Where there is no hope there can be no respect for society, and therein lie the seeds of social discord.

In terms of unemployment, it has been said by the Institute of Fiscal Studies, supported by the London Business School, that £1 billion of public investment would provide 185,000 jobs and these, by their purchases, would add further to demand. However, £ 1 billion of tax cuts would produce only 30,000 jobs and this money would be more likely to be spent on imports. The people of this country are prepared to forgo tax reliefs to enable jobs to be created. We ought not to betray this spirit of compassion or the unemployed.

The Earl of Gowrie

Unbelievable, my Lords.

10.44 p.m.

Lord Harmar-Nicholls

My Lords, at this late hour, and after such a list of speakers, it would not be unreasonable to think that all that should be said has already been said. However, there are still one or two points which ought to be covered. The first one I should like to mention, without wanting to over-egg the pudding, is purely a domestic one to this House. What is this Motion doing on the Order Paper? This Motion has been treated by most noble Lords as though it were a serious exercise that there might be in some high-class debating society where they put forward points of view. It is not. I do not complain about the Motion, because it gave my noble friend Lord Gowrie an opportunity to make an excellent speech. I congratulate the noble Lord, Lord Beswick, for his tactical success in getting it on the Order Paper—a clear, blatant, party political exercise.

What makes this a domestic point is that we had such a party political exercise in the form of a Motion on 12th December. The reason that I am particularly drawing attention to it is that I am rather interested in seeing that we maintain the proper standards of our parliamentary system in the two Houses. On Page 379 of Erskine May—which is the "Bible" which sets down the general standard that we should follow—it says: Matters already decided during the same Session, a motion or an amendment which is the same in substance as a question which has been decided in the affirmative or negative during the current Session, may not be brought forward again during that Session. What we debated on 12th December was identical to what we are debating today, and this is the same Session. I have the feeling that this Motion is only on the Order Paper because, in the knowledge that the cameras were going to be here, it was thought a good opportunity to place on the record what were thought to be some good, hard, political points that would be against the Government. I congratulate the noble Lord, Lord Beswick, on getting it through—

Lord Beswick

My Lords, I hope that the noble Lord will withdraw those congratulations. This was not something that I thought up on the spur of the moment; I had been thinking along these lines for a long time, cameras or no cameras.

Lord Harmar-Nicholls

My Lords, I shall willingly withdraw the congratulations; but in order to show that I have not said what I have said without some thought, let me give the chronology. Of course the conclusion could be wrong; the long arm of coincidence is often present. However, the reason that I say it on the chronology is this. We had a debate on 12th December and the speeches made then were identical. Almost the same speeches have been made today by the people who spoke on that occasion. They did not have to do much preparation for today. Three days later on 14th or 15th December it was known that today would be the first television day, and two days after that, on 17th December the noble Lord, Lord Beswick, got his Motion on the Order Paper. It may well be a coincidence; but I submit that that, added to the advice that I read from Erskine May itself, would excuse anybody for thinking that they are entitled to treat it as a jolly good tactical success—and I always congratulate a winner—in being able to get through the rules and to achieve something that they wanted to achieve. There is nothing wrong with that.

Lord Camoys

My Lords, I find it very difficult to agree with the noble Lord, Lord Harmar-Nicholls, on this point. First as I understand it, the date on which we were going to be televised was agreed remarkably later than when the Starred Questions were put down. Secondly, I think that the subject which has been proposed in the Motion is so important that it deserves further consideration. I am sorry, but I totally disagree with the noble Lord's point.

Lord Harmar-Nicholls

My Lords, my noble friend is of course entitled to his view and I very much enjoyed his contribution. However, he has been here a very short time; I have been competing in this kind of thing for 35 years and with the same people as I am competing with now. Therefore, I can perhaps recognise things that my noble friend may not be able to recognise, and that is quite understandable. But in answer to my noble friend, let me say that the chronology is quite true. The debate was on 12th December; the announcement that we would be having the cameras was on 14th or 15th December; and the Motion of the noble Lord, Lord Beswick—identical almost to the other one—went down on 17th December, two days later. Erskine May said that it was not something that ought to be allowed. However, we have allowed it and so let us get on and discuss the Motion.

The other matter which has not been mentioned and which I think is important to have on the record in view of the way in which the debate has gone is this. To form a proper assessment of any Government success or failure, you do have to take into account in my submission the starting point and its inheritance. You must do that before you can form any conclusions as to whether a Government has been a success or a failure in meeting problems which are besetting not only this country, but almost every other country in the world. In talking about the inheritance, I should like to remind your Lordships that in the five years of the last Labour Government the national debt increased more than it had increased in the past 300 years. The national debt went up from £45 billion to £95 billion.

Lord McIntosh of Haringey

My Lords, will the noble Lord give way?

Lord Harmar-Nicholls

My Lords, I would rather not because of the clock; I have already taken longer than many people wanted me to—I am very well aware of that! The national debt went up from £45 billion to £95 billion. The interest alone on that has averaged out at something like between £9 billion to £10 billion a year, and the total income over that same period from North Sea oil has been about £9,000 billion to £10,000 billion. The last Government put North Sea oil in pawn before we came to office. I want to know how many times they will spend the North Sea oil revenue. They put it in pawn 10 years ago; now they want to use it again for investment in this and investment in the other, just as though that indebtedness to which we had been committed before we came to Government did not exist. We should remember that when this Government came to power, in addition to the national debt, the overseas borrowing had risen to £22 billion. During the five years we have been in office we have repaid half of that; we have repaid £ 11 billion. Is that something that ought to be remembered or denied when we hand out the credits and the criticisms of what happened in those five years?

The manufacturing argument has been put many times. In those five years the output per person in manufacturing has gone up 18 per cent. In France it has only gone up 13 per cent. in the same period; in Japan it has only gone up 11 per cent. in the same period; and in Germany it has only gone up 8 per cent. in the same period. Again, we should remember that, per 1,000 of the population, we have more people in employment in this country than any other European country except Denmark. These are matters that ought to be taken into account when we think of the criticisms that will be put forward.

As I want to deal with this as a debate and not as a prepared lecture, I am impressed by the contradictions that come from people who genuinely want to find an answer to many of the problems. The noble Lord, Lord Ezra, who is not in his seat, made a most effective speech; he recommended most strongly that industries ought to invest in capital equipment to make them feature among the leaders of the world, and that is right. The noble Lord quoted an example of a shoe firm which, because it had spent money on investing in new machines and equipment, had been able to preserve jobs that would not have been preserved. But as a consequence of having the new equipment, it had to dispense with a number of employees, who had to go on the unemployment list. It had to do that in order to remain efficient; in order to remain in business at all.

I should like to think that the noble Lord, Lord Ezra, and those noble Lords who agreed with him, were prepared to admit that some people had to go on the unemployment list in order to keep certain companies modern and competitive, instead of charging the Government for the extra unemployment which had arisen from the very investment that they had recommended as the answer to some of our problems. Those are the sort of contradictions to keep in mind.

I am sorry that the noble Lord, Lord Glenamara, has left his place but he made a most emotional and very impressive speech, and I know that he was very genuine about it. In the process of making his speech, because he was concerned for the North-East, he said that it was a pity we did not carry on with the industrial development certificates, which meant that past governments sent industry to the North-East where it was needed. The noble Lord may be weeping for the North-East, but I am a Staffordshire man and I weep for the West Midlands. The main reason that the West Midlands, which was the most successful part of this nation for something like 60 years, is now in the doldrums and at the bottom of the league, is because it was not granted industrial aid certificates at a time when it wanted to vary its industries. That was a crime committed by Governments of both sides, my own as well as the Opposition. I make the point only to show that, if the noble Lord, Lord Glenamara, thinks that it is right in the interests of the North-East that these things should be done, then of course, the Government have to take into account my views too, when that supposed remedy brought such disaster to the West Midlands, which is my part of the world.

Then we heard all the talk about our supposed position as a result of the report of the OECD that we had not been spending on infrastructure. The facts are clear. The spending on infrastructure in 1984 was equivalent to what it was in 1979. The Government are spending just as much in real terms in 1984 as they did in 1979. But if you add to that the contribution to the replacement of infrastructure that has been made by free enterprise as well, the total of the free enterprise contribution and the Government contribution is no less than £55 billion—the highest it has ever been. These are the considerations which have to be taken into account if we are to look upon this for what it is—a Government-bashing exercise done under the auspices of this particular Motion.

The one thing which I hope will come out of it, whether it is in accordance with Erskine May or not, is that we can on things which matter so much for the future success of this country find some sort of unity. You are not going to get unity of parties, but you can get the unity of the people in some aspects, and particularly on the question of unemployment.

I should like to feel that this House would take the lead in removing this charade of charge and countercharge on unemployment, and take it out of the party political arena. It does no good. It is not helping, and there is no need for it. We know that unemployment is not a British problem. We know that unemployment is a problem affecting the whole of the Western world, and we know that it is a nonsense to suggest that that is not being dealt with because our Prime Minister is more assertive in her style than some people would like her to be.

We have really to get down to this. As the noble Lord, Lord Ezra, has said, we ought to make use of our inventions, but when we get inventions which will do in ten minutes what it previously took a hundred men a week to do, of course we have to go through a phase where we have the problem of unemployment, and we get nowhere by turning it into a party political shuttlecock as has happened today.

This House ought not to do that. That is why I did not want the Motion, although I recognised it for what it was—a party political ploy. If this House is going to remain a part of our parliamentary system, the strength of this House will lie in its objectivity, and the fact that, when legislation comes here, we look at it without the normal party spleen which I suppose is absolutely essential in the House of Commons. When we have debates such as this which highlight differences which, deep down, do not truly exist, I think we are injuring the contribution we can make to the future government of this country.

I should like this House to give a lead in getting down to seeing what the best answer—not the perfect answer, or not one that will bring a solution overnight—is likely to be for dealing with the scourge of unemployment, which is affecting not Britain alone but our fellow men all over Europe.

10.59 p.m.

Lord Kaldor

My Lords, in view of the lateness of the hour I shall restrict myself to one point; that is the causes and consequences of the recent spectacular fall in the exchange value of the pound. I apologise to your Lordships if you detect that I say something that has already been said by one of the previous 34 speakers. I shall try to avoid that.

I believe I am right in thinking that the fall in the pound in recent weeks caught both the British public and the Government unawares. The Government are firmly ensconced in their beliefs in monetarist dogma which states that provided the money supply is correct inflation will be kept at bay and we do not need to worry about the exchange rate. It has been said many times both by the Chancellor and by the Prime Minister that the exchange rate must be left to market forces. That was changed last Sunday and I will not go into that now.

I merely wish to say that when the market forces do something quite so big and unexpected as the fall in the pound from 2.40 dollars to 1.10 dollars in little more than 18 months, this may have far-reaching consequences, especially when after the event in looking back we can find pretty good reasons why international speculation should have turned against the pound. It reflects a lack of confidence in our continued ability to pay our way and to pay for essential imports by exports, despite the godsend of all this extra revenue from oil, which we could not have reckoned on before it occurred.

For several centuries Britain lived and prospered—I am stating absolute platitudes—by exporting manufactures in exchange for essential food and raw materials. As recently as 1954 this country had a perfectly well-balanced trade structure. Our exports of manufactures, which exceeded manufactured imports by more than three to one, were enough to pay for our essential imports of food and raw materials. But from the late 1950s onwards our position continuously deteriorated. Our net trade in manufactures became smaller and smaller because the imports of manufactures, despite devaluations and this and that, consistently rose in volume twice as fast percentagewise as our exports. In the course of this our share of imported goods in the total domestic demand for manufactures rose from 5 per cent. in 1954 to 33 per cent. today, whereas the world demand for British goods as a percentage of total world demand has not risen; on the contrary, it has tended to fall. Of the 11 major industrial exporters we are the only one to have halved our share between the early 1950s and 1970.

After 1972 the position appears to have stabilised itself. Our share hovered around 10 per cent., but this may simply have been due to the fact that as a result of the oil shock there was a general stagnation in the world—world trade had not risen. On past experience we have always done much better, relatively speaking, in years in which world trade has not risen much than in years when it has. It was when world trade was rising fast that our share was falling fastest.

In 1979 our share of world trade started slipping again and now it is only three-quarters as high as it was in 1980. If your Lordships do not believe me, a CBI circular was circulated to all members today which contains these figures. The net balance in manufacturing trade showed a steady and alarming fall. In 1963 our exports were still more than twice as high as our imports. In 1967 our exports still exceeded our imports by more than two-thirds. But a few years later, by 1979, the surplus had disappeared. Since then, the balance has turned increasingly negative.

If you take the last three years alone, the rise in imports of manufactures exceeded the rise in exports by £3 billion a year. This year the balance is £9 billion less favourable than three years ago. This means running into a catastrophic balance-of-payments crisis; and anybody who studies these figures will become a natural speculator against the pound. Indeed, the deterioration over the last six years has swallowed up all the benefits balance-of-payments wise which we had from North Sea oil, which enabled us to reduce our imports and to have net exports of oil.

This deterioration is still going on. It may be kept in check or temporarily reversed by spectacular falls in the exchange rate, such as last week's fall, which was greeted by our industrialists, according to the Financial Times, with the utmost joy. They will be able to export at a terrific profit because the pound is so undervalued. All I wish to say is that from the Government's point of view, as regards the avoidance of inflation, it is a mixed blessing. It is a very dangerous development because what happens is that, with each of these shocks, the pound's external value becomes more undervalued in relation to its internal purchasing power.

That is a sure sign of running sooner or later into the kind of sweeping inflation that Germany went through in 1923. That summer, I remember, for a dollar you could live in Germany for a week—about the same price as a single meal in London or New York—because the mark was so undervalued in relation to its internal purchasing power. That kind of undervaluation sooner or later unhinges the domestic cost and price levels and leads to a cumulative process of inflation.

The second thing that I want to say is that, contrary to what various people have said on both sides of the House—and I did not agree by any means with everything that was said on this side—mass unemployment such as we now have is always a sign of some kind of malfunction of the market economy. A healthy market economy eliminates by itself any involuntary unemployment on a large scale. But if something does not function properly—if I may use a human analogy, if some organ, either your liver or your heart, or some other organ, has something wrong with it—then you get as a manifestation, in this case, heavy unemployment.

Keynes was the first to analyse this. He showed that heavy unemployment was a consequence of disproportionality between the people's propensity to save and business's desire to invest. That causes incomes and employment to fall until the two coincide. To take the simplest example, if you are able to export 20 per cent. of your maximum potential output of manufactures but you import 25 per cent. of all your consumption of manufactures, or personal consumption and investment, the result is that businesses will make losses at any level of output which is higher than 80 per cent. of the full employment level, because at 80 per cent. the two ratios become equal to each other—the export ratio and the import ratio. And that is the necessary condition for producers as a group getting back in the form of receipts as much as they laid out.

So what I am trying to say is that, if you want to get rid of unemployment, there is only one way of doing it—but when you hear what it is you may be uncertain whether the remedy is worse or better than the disease. To get rid of unemployment, all you have to do is to restrict imports to the percentage which would be compatible with an equality of imports and exports at the full employment level.

There are hundreds of ways of restricting imports: by duties, as we did in 1932, by licences, as we did during and after the war, by embargoes, by this or by that—there are hundreds of ways of doing it. But any way in which you restrict imports will automatically provide an expansionary force to increase domestic production and employment until this involuntary unemployment is eliminated. That is why I say the remedy may be worse than the disease, because this is the sort of remedy which is incompatible with our membership of the Common Market.

My Lords, if I may speak just very briefly, I think the Common Market has been an absolute disaster. One cannot say that the Tories or Labour were responsible for it: the whole nation is responsible. There was a referendum, which came out two to one in favour of joining. But whereas before we joined the Market we had an annual surplus in manufactured trade with the six countries of Europe, including Germany, of £400 million at 1970 prices, which is equal to nearly £ 1,800 million at present prices, last year we had a deficit in our manufactured trade with the countries of the European Community of £7,900 million. This year that deficit is going to be anything between £8.5 and £9 billion. It is twice as much as our total deficit in manufactured trade. So the employment that we lost, we lost to our partners in the Common Market, who, though they bought more from us, bought much less than what we bought from them as a result of being in the Common Market. It is only in this way that a surplus of £2,000 million can be converted into a deficit of £8,000 million, and that fully explains all the unemployment that you have here.

I know that there are Euro-fanatics who think that the future of Europe is far more important than prosperity, full employment or even the fate of this country—and after all they have the right to emigrate to Europe and set up business there. Whether all of us feel like that, I do not know; but I would merely wish to end my speech by saying that there is a simple remedy for unemployment—a remedy which was taken by a Conservative Government—the so-called National Government—in 1932, which in five years practically cured the situation by increasing manufacturing output by 50 per cent., increasing manufacturing employment by 33 per cent. and reducing unemployment by one and three-quarter million. So we could do it again. We did it once and we could easily do it again. But when we did it then we were not members of the Common Market. Whether we can do it now without leaving the Market, I do not know.

11.15 p.m.

Lord Rea

My Lords, at this late hour you will be relieved to hear that I am not going to give a discourse on macro-economics but will diverge to a rather more domestic subject.

I think it is appropriate to spend a few minutes in this debate considering the National Health Service because it forms a major part of our national life both economically and socially. We nearly all use it, and about 1 million people work in it. I have worked in it for about 25 years now. It is a very popular organisation and very cost effective compared with the health care systems of other countries. According to recent figures given by Mr. Kenneth Clarke in Hansard of another place—or should I say the House of Commons?—on 5th December, we spent 5.9 per cent. of our gross domestic product on health in 1982, compared with 9.3 per cent. in France and 10.6 per cent. in the United States. In cash terms, we spent £290 per head per annum, only just over half as much as the French who spent £540 per head, and I think received no better service for their money, although their doctors did a great deal better than ours.

It is good value for three main reasons. First, there is the referral system in which patients have to pass through a primary care "sieve" before reaching the more expensive secondary care or hospital level. Secondly, it is funded centrally from general taxation, a fact which in one sense might worry monetarists but in another sense might gladden their hearts since they can of course control it more easily. To this Government's credit, they have been more generous to the National Health Service than to other departments. Perhaps this has been politically expedient because the service is so popular. Thirdly, it is free at the point of service, thus eliminating a whole area of expensive bureaucracy as well as in my view greatly improving doctor-patient relationships. All of us know who said,

The National Health Service is safe in our hands". Those of us working at ground level in the Health Service, however, sometimes feel that these hands are gripping us so tightly that it is becoming hard to breathe. Certainly morale in the Health Service has not been good for some years but pessimism is now rapidly giving way to anger. Much of this is due to the directives from on high to regions and districts about how to manage their affairs, instead of trusting them to get on with it. We are very uneasy about some of the recent appointments to the health authorities which, due to the Conservative administered reorganisations of 1974 and 1982, were undemocratic in the first place and depended very heavily on carefully chosen personnel. We trusted the Minister to be fair in his choice. We are particularly worried now about the new Griffiths managers.

Expertise in commercial business is not necessarily a good qualification for managing the more difficult ethical and social problems involved in running a health service. Enforced "putting out to tender" of services has been greatly resented resulting as it has in many cases in reduced standards, loss of jobs and diminished security for the lowest paid, as my noble friend has pointed out. Cleaners in a hospital are part of a team.

Professor Davies of Addenbrookes Hospital, Cambridge, the paediatrician who resigned from his district health authority in protest, said: In my ward we value very highly the responsible and loyal work of our cleaners and the personal help that they often give to our patients and their parents. I think that many of us who have spent time in a hospital ward would echo this. Casual contract labour cannot fill the gap, but the profit from their labour can fill somebody's pockets.

I will briefly suggest three ways in which the National Health Service could be developed, and which may help to restore morale. First, community care should be strengthened—and I hope in a moment to develop that theme a little. Secondly, research and new advances in treatment should be generously funded. Very expensive equipment and procedures must of course be subject to close scrutiny. Technology for its own sake, despite its excitement, is to be avoided. But we have in Britain some of the best medical scientists in the world: they will go elsewhere if we do not use them. Here I echo the noble Lord, Lord Ezra, in regretting recent cuts in the Medical Research Council and University Grants Committee budgets for equipment and research. This was an appallingly bad decision. It is equivalent to a farmer who is in financial difficulties selling off his seed corn to pay his debts.

As well as improved treatment, research also uncovers the causes of illness and ways of preventing it. This leads me to the third way in which the National Health Service could develop. Real efforts should go into preventive health. The main brunt of the diseases of affluence with which we are now afflicted falls on those aged from 40 to 70—an age group that covers most of the people in this House. I wonder sometimes whether the reason why the lip service paid by successive Governments to prevention is not followed by action is because they fear that they could not handle the increased numbers surviving to enjoy their retirement and eventually having to be looked after in their old age. This is a difficult problem, but one that should be faced honestly in any look into the future.

An ageing population is already a factor that the Government acknowledge. In financing the National Health Service we have to run in order to keep still. To give credit where it is due, the Government recognise this. Sometimes, however, this "built-in" cost increment has been claimed as a real increase, whereas it is in fact paying to keep the service where it is.

This brings me back to look again at community care. For a long time it has been accepted that more care should take place in the community, in patients' own homes or in small domestic-sized institutions wherever possible. This applies to old people, to mentally ill people and to some of the work now done in acute hospitals. But initially this is not cheap. Buildings need to be adapted and new staff taken on. When all the large Victorian institutions are finally closed or modernised and their staff retrained and redeployed in the community, we may possibly break even or even save money. But for some years many mentally ill patients, for example, will need the protective environment of a self-contained institution.

Some of those institutions are being emptied too fast. Many of your Lordships may have seen the "Horizon" programme last week on the closure of Friern Hospital. Insufficient resources are being made available in the communities which are receiving people discharged from the large hospitals. The budgets of some local authority social service departments are being augmented by joint funding schemes—an excellent idea, but eventually they will have to shoulder the burden themselves. With the threat of rate-capping it is not surprising that local authorities are reluctant to commit themselves to sufficiently wide-ranging community care schemes. In the circumstances, they may resent having vulnerable people literally dumped on them.

The Government's policies to control local authority expenditure are thus directly hindering the development of the community care that is needed as a result of their own policy of hospital closures. It is the least articulate, with the least ability to look after themselves, who are suffering.

Care in the community also includes primary care—general practice and its related services, including the district nurses, for example. I include the home helps and meals-on-wheels service as an essential part of that team. General practitioners and district nurses cannot look after old frail people in their own homes without the assistance of these absolutely essential people. They are funded by the social service departments, which are in great difficulty at the moment. Primary care controls the gateway to the expensive hospital and specialist services.

In general practice today standards are higher than ever, with universal vocational training, but excellent young vocationally trained GPs are now having difficulty in finding jobs. It is not because there is no need for them but because the practice vacancies are controlled rigidly by medical practice committees under DHSS direction. Many older doctors are not retiring, as the Acheson report suggested they might, and making way for well-trained and enthusiastic newcomers, often with a broader outlook than some of the older family doctors—of whom I suppose I am now one.

I think that wise investment here will pay off by helping to contain the ever-rising costs of hospital care. But GPs are not getting much encouragement from the DHSS right now. Instead, they are being told how to manage their business without consultation. Last year they were told to cut down on deputising services without any constructive alternatives. After a very angry response the Department of Health and Social Security backed down. Now, again, we have an edict from on high limiting the drugs prescribable on the National Health Service. There was no prior consultation, and the Government have succeeded in making enemies of the British Medical Association, the pharmaceutical industry, the Labour Party and the Alliance—strange bedfellows your Lordships might say.

I hope that by the time we debate this issue on 6th February—answering the Unstarred Question of the noble Lord, Lord Kilmarnock—the Government may have had second thoughts on the matter. One has always believed in some limitation on what we should prescribe. I was at first inclined to stand back and watch the contestants slug it out, but there is a principle involved apart from the lack of consultation. Some people of limited means will not be able to get the prescriptions which most suit them and to which they have become accustomed. Those who can pay for them will do so. Double standards based on ability to pay are being introduced. What is strange about this decision is that the Government have in their hands an excellent report—the Greenfield report—which came out with a much fairer way of saving money on drugs and which was much more acceptable to the professions concerned.

Looming ahead for general practice is the Green Paper on primary care. There were days when we could have looked forward to a constructive and forward-looking proposal from the DHSS in such a paper, and I hope we still can, but we fear that its main purpose will be to put financial restrictions on general practitioners and the services which they can provide.

I think I have said enough to suggest that the National Health Service needs an injection of hope and a new sense of direction. We have got a service which is popular and an integral part of our national life. There is a real need for wise investment in key areas of what is already a remarkably cost-effective but very underfunded service.

11.29 p.m.

The Earl of Longford

My Lords, I will not follow my noble friend Lord Rea in his very interesting observations. The time is late—it is just on half-past eleven—and I am assured by high authorities on this side that I shall be tolerated if I speak for not more than 10 minutes, popular if I speak for seven or eight minutes and still more popular if I speak for five minutes. I may not achieve the last named figure, particularly if I am interrupted.

I rise with one purpose only—to support the general theme of my old and dear colleague, my noble friend Lord Beswick. In the absence of the noble Earl, Lord Gowrie, whose great talents we recognise, I shall not criticise him except to say that I am afraid that he missed what seemed to me the main point of my noble friend's speech. It seems to me that he was stressing the disaster that will overtake any country that relies on unadulterated self-interest as its driving motivation.

To focus our thoughts, I shall just quote an extract from St. Francis of Assisi. No noble Lord on the Benches opposite, and I am certain not the right reverend Prelate, who spoke so well, is likely to object to it. In a prayer attributed to St. Francis one reads these words: Lord, make me an instrument of your peace. Where there is hatred, let me sow love; Where there is injury, pardon", and this in particular: Where there is discord, union". When the present Prime Minister, whose great qualities are recognised by all in varying measure, took office originally, she proclaimed from Downing Street those words and some more attributed to St. Francis. Obviously those words are very hard to live up to. Perhaps no Administration has ever lived up to them totally, but I venture to say that no other Government in recent times have failed so totally to approach the problems of government in that spirit.

I come to the unemployment problem, which was effectively expressed by a number of speakers, but I have in mind particularly what was said by the noble Lord, Lord Glenamara, who is not with us now. He was speaking about the whole area. I cannot speak for any large area like the noble Lord, Lord Glenamara, and other noble Lords, but let me say a few sentences about unemployment among the young homeless in central London. I was talking yesterday to one such young man in a club which I visit almost daily and have done for 15 years. He had been unemployed for four years. When I asked him whether he was looking for work, he admitted that for two years he had not thought it worth while to try to get a job.

I am sorry to lose the attention of the noble Earl, Lord Stockton, as I was coming to him, but I shall have to speak about him in his absence. I very much enjoyed his speech.

The young man made it plain that he had lost any desire to find a job. In fact, through the extraordinary working of our system he gets something more than £5,000 a year on social security. That is quite legal and that is what he gets at the present time owing to the extraordinary rents that people have to pay; and that in itself is an outcome of the housing policy. If one considers young men in central London, and indeed all over the country, not only in the areas affected by the mining dispute but in the North, Liverpool and all such other areas, I venture to suggest that many of them are being damaged for life, and a heavy responsibility falls on the Government who are leaving them in this state of almost permanent unemployment.

What I was going to say about the noble Earl, Lord Stockton, was this. It arises out of something that he said about the noble Earl, Lord Gowrie. He said that he had quoted with great satisfaction some words of Mr. Gladstone—words that must have been spoken a good hundred years ago. The noble Earl, Lord Stockton, said that he had for a long time begun to realise that Conservatives were no longer Tories; they were just Victorian Liberals. I think that there is a lot of force in that; self-interest is to be regarded as the sole effective motivation.

Some years ago I remember Mrs. Thatcher discovering a pamphlet for the first time—the works of Adam Smith, whose The Wealth of Nations came out in 1776. It will be remembered—the noble Lord, Lord Rea, will certainly remember it—that in The Wealth of Nations Adam Smith argues that any man in pursuing his own interests will serve the interests of the country. That was the optimistic doctrine of Adam Smith because he believed there was an invisible hand which assisted that result to come about. Well, I am afraid that no invisible hand seems to be assisting the present Government. I do not know whether they expect an invisible hand to produce this result. Adam Smith's optimism led on, as I think economists who are present, my noble friend Lord Kaldor and so on, will agree, to the gloomy doctrines of Ricardo and then on to the class war of Karl Marx. What we find when we pursue self-interest is that selfishness in the employer is selfishness in the workman or in the group of workmen. In other words, economic man is a greedy man.

This greediness, which is the philosophy of the Government, is what is producing a state of national dissension. I know that we shall never get total union in peacetime in a democracy, but in the days of the noble Earl, Lord Stockton, and some other governments—certainly we tried to do it in Labour governments and it has been tried in previous Conservative governments—there was a desire to try to find some common purpose. That desire seems to have evaporated in the case of the present Government. Therefore, the only advice I can offer the Prime Minister—she might not take it but nevertheless I must offer it—is to forget Adam Smith, try to avoid the consequences in the teachings of Karl Marx, and return to St. Francis of Assisi. That was her first and her best guide.

11.38 p.m.

Lord Molloy

My Lords, it has been a long debate. The pitch has become a little bumpy, but the lights are still blinding. Some have found it too "hot in the kitchen" and have gone off home. It is now 20-odd minutes to midnight. Just a few moments ago the noble Earl, Lord Stockton, left the Chamber. He had sat it right the way through and I would not be surprised if he came back. I think he deserves some credit for that.

Lord Boyd-Carpenter

My Lords, would the noble Lord allow me? My noble friend left the Chamber and said he was returning. No doubt once he sees the noble Lord's name on the annunciator he will hasten back.

Lord Molloy

My Lords, that only goes to reveal that the noble Earl is not only a man of courage and ability but of great intelligence. The last part of the recitation goes like this: "There is a match to win"—and there certainly is. The match that we have to win is to try to get this Government to listen to others than their own specific rich friends. If we can have done that in this House tonight, I believe we shall have made a good contribution to overcoming some of the ills that afflict us.

The noble Earl, Lord Gowrie, made I believe a very brave speech. It is very difficult to have to defend this Government in any rational society. I believe he spoilt it with a redolence of sycophantic behaviour and unfortunately he seemed to borrow a certain amount of arrogance—I think he borrowed it from 10 Downing Street.

The noble Baroness, Lady Seear, thought all of us were out of step except, of course, the Social Democratic Party and the Liberals, and that Britain would do much better if it stood on the club feet of those two so-called political parties. There is a desperate unpleasantness and an awful attitude abroad in our country, which has been developing over the past three years. Tolerance seems to be withering on the vine in Great Britain. There is, all over the country, an amount of abrasiveness which I believe we are not used to. Basically the cause of all this is not merely one person being unemployed in a particular family; it is the overall result of unemployment on all the family.

On this particular aspect, I know what I am talking about; I know what unemployment means. Before the Government gave me a free suit in 1939—we all know what for—my parents, with their family of seven, had gone through the agonies of unemployment. It is not merely a question of doing without things; it is not merely a matter of damaging one's health: it damages people's minds. This is what this Government have to try to understand. Because of this awful threat of unemployment, because of the state into which the nation is getting, we have seen the appalling increase of the drug racketeers and, I regret to say, of violence, too, both on our streets and on the picket lines.

I come from mining stock. I am 100 per cent. with them. But I firmly believe, as Mr. Kinnock does, that they are doing their just cause no good by resorting here and there to violence. I have to say this loud and clear. I, for one, will never accept that from John o'Groats to Land's End there is no Briton capable of running Britain's mining industry. To say otherwise is a disgrace. It is unfortunate for Mr. MacGregor, but it is a great disgrace to our country when I hear Frenchmen, Germans, Americans, Belgians and Dutchmen make the point, "Whatever has happened to you? You have to turn to someone from another country to come and run your great industry." That is something we shall have to deal with.

When I say that I deplore violence, I can also understand the agonies in the mining communities which are being destroyed. I say, however, to those who have indulged in violence that when you have convinced thinking men that it is right and humane men that it is just, you will gain your cause. Men lose half of what is gained by violence. What is gained by argument is gained for ever.

There has been an increase in many evils in addition to unemployment. Over the past four years we have seen a dramatic increase in drug-taking. There is an enemy within our nation: it is the enemy of callousness. Sometimes, when I look at the callousness of the Government, I ask myself, "How can one blame other people being callous in their attitude to each other?" Good manners seem to be going. Good things are under threat. The NHS has been under threat; housing has been under threat; our civilised welfare state has been under threat. There is the curse of unemployment, and, if I may say so, the curse of bankruptcies. Under this businessmen's Government, we have had a record number of small businessess going bankrupt since records were kept. The small family business does not seem to count to this Government. When will someone as well as those on this side stand up for them? This, linked with unemployment, is a cancer affecting many families.

I believe, too, that the dreaded curse of unemployment among our youth has not really been taken seriously by the Government. I have listened to a number of examples given by various Ministers from time to time as to what has to be done. But nothing really has been done, not only to try to reduce unemployment but also to prevent unemployment. It goes on and on. Where it hits our youth, it is very serious. The millions of young people in the dole queues of Britain are the trustees of our posterity. There is a grave danger of Britain's national pride being a victim of the callousness of this Government.

It seems to me that the Government are bent on destroying or crushing aspects of trade unionism, forms of demonstration and the spirit of youth. Local government is under attack, as are all the things really beloved of the people of this country. This Conservative Government seem obsessed with the discipline of fear rather than with encouraging the sustained energy of confidence which could help our nation so much.

The Government are hanging on to discredited and dangerous economic policies. They are blind and deaf to the lessons of the 1920s and the 1930s. Twice we have heard in this Chamber the remarkable experiences of the noble Earl, Lord Stockton. In the days when he wrote his book, The Middle Way, some of us thought that it was our only salvation. Written by a Conservative Member of Parliament, it was totally ignored by the National Government of the day. But it was not ignored in other places.

As I have said, from time to time we have had assurances from the Benches opposite that unemployment is going to be reduced; it is going to be dramatically reduced; we have only got to wait until next year, or perhaps for 18 months. That has been going on for nearly five years. What the Government have really been doing is whitewashing their own pie in the sky. That is the truth, is it not? The humour of Shaw, the humour of Shakespeare and the humour of Oscar Wilde told so many great truths. May I modestly join their company?

There is a real and tried alternative, and it is this; I have mentioned it before. I am referring to the policies of Keynes and Galbraith, which they in turn outlined to the greatest American of our time, Franklin Delano Roosevelt. He implemented the economic policies of Kenneth Galbraith, a Scots-Canadian who was to become an American ambassador. I think that is a remarkable achievement for a person whose roots are in this island, and of whom I am most proud. Galbraith, with Keynes, convinced FDR about their policies. What happened? There was in the United States of America in the mid-1930s a remarkable recovery, which drifted over to this island and assisted not merely in getting rid of unemployment in the United States and starting to bring it down in Great Britain but in providing us with valuable breathing space to resist the onslaught of Fascism. I am very pleased to read that Mr. Edward Heath has joined my four-year-old plea to adopt the policies of Keynes, Galbraith and Roosevelt and return to the sanity of spend and prosper.

We need to give a lead to involve ordinary people in the principles of fair play: trade unions and management. I believe that social justice for all our people will encourage them to give of their best. In conclusion, I should like to quote our great poet, Milton, as I have done once before in this Parliament. I ask the Government to take note of this; it is well worth noting. It is about the greatest, most wonderful thing we have in Great Britain—our own British people. As Milton has said, we are, A nation not slow and dull, But of a quick, ingenious and piercing spirit, Acute to invent, Subtle and sinewy in discourse, Not beneath the reach of any point, The highest that human capacity can soar to". If we can really accept that as a description of the backbone and the guts of the British people I say that we have nothing to lose but our national sadness and the despair which afflicts this island. I hope the Government will read this great debate today, that they will take the advice proffered on all sides of the House, and that we can move forward, but not to become a great nation just simply for the sake of greatness. I happen to believe that, with that sort of leadership, the endeavours of the people of this country can be an example to all mankind.

11.50 p.m.

Lord Graham of Edmonton

My Lords, it is clear to me that a consequence of the economic policies being pursued by the Government is to diminish the declining store of fellowship and national spirit that we so desperately need in 1985. The question others have already asked and which must be repeated is: what is the economic imperative of this Government? Shorn of all the jargon, it is to make the rich richer, even if in so doing they make the poor poorer. We have seen crocodile tears for the victims of Tory economic policy—the 4 million unemployed—fail to mask the true recipients of the Government's concern. That is spelt out in the priority to be given to reduce taxes in preference to reducing unemployment. The Government are responsible for recreating the class system in our society—not the old classes, but the new ones: those who are in work and those who are not in work. By appearing to care more about the lot of those in work than those without jobs, there is created a dreadful resentment in our society between the two classes.

Government policies that perpetuate divisions and rivalry create dreadful choices. I say to the Government: you cannot strengthen the strong by weakening the weak. The poor, the needy, and the disadvantaged in our society are the real martyrs. The appeal to greed, to selfishness and to the devil take the hindmost is naked and unashamed. Many illustrations of that have been given in this debate. I intend to pursue only one: that touched upon by my noble friend Lady Fisher when she referred to the issue of the low paid, and wages councils.

It seems to me that the Government are determined to get out of the business of government by withdrawing from the government of business. Yet while they are ostensibly concerned with justice in the workplace, they are pledged to remove some of the protections enjoyed by workers in general—but in particular in the distributive trades. The shop workers and catering workers are among the lowest paid sectors and rely upon statutory protection to ensure fairness and equity. For instance, it is an open secret that the Government are hostile to the continuation of wages councils. The 1983 Conservative election manifesto was pledged to ensure that wages councils do not reduce job opportunities by forcing workers to charge unrealistic pay rates.

The Chancellor is on record as asserting that institutional mechanisms for fixing pay, such as wages councils, distort—and I emphasise that word—the operation of the labour market by maintaining high rates of pay, and prevent employers from taking on more workers. Let us look at both of those claims. What are the unrealistic pay rates? The adult male rate covered by the Retail Food Wages Council is £71 a week; the 60 per cent. rate for 16 year-olds is £42 a week. The supplementary benefit level for a couple with two children and paying rent and rates of £21 weekly now stands at £103. 15p (that is the long term rate). That puts the wages council rate at £32.15p below the supplementary benefit level.

If we take earnings as a yardstick, the Retail Food Wages Council figure for earnings, as a percentage of national average earnings, is 71 per cent. In 1979 it was 84 per cent. The relative position of workers covered by wages councils and the position of other low-paid workers has declined dramatically under this Government. For non-food retailing, the decline has been from 87 per cent. to 75 per cent.

In the light of the figure of £71 being the rate that we seek to protect—and to that the Opposition say "Hear, hear"—and in the light of the likelihood of that wage rate being abolished, I ask the Minister how on earth it can be regarded as an unrealistic wage rate? I recall the words of the right reverend Prelate the Bishop of Derby who earlier reminded us of a Government official, an appointee, who was paid the enormous sum of £95,000 a year. How can we expect to get national unity and support for the Government and do away with resentment if, on the one hand, £71 a week is looked upon as an unrealistic wage rate and, on the other hand, the Government pay £95,000 to an official? For instance, do the Government ever listen to their friends in the CBI? The CBI has stated that wages councils will provide a valuable safety net for low-paid workers; that wages councils play an important role in preventing under-cutting of wages. Smaller companies benefit from the multi-employer bargaining in wages councils. Yet what have the Government done to strengthen and enforce statutory protection for these low-paid workers in shops and in small factories, and also for the home workers? Since 1979 the number of inspectors has been cut from 166 to 120; the number of visits to employers has declined from 34,000 to 26,000. Inspectors discovered that over one-third of the employers were breaking the law; more than £2½ million in wage shortages were assessed.

It is a sad fact that many employers would pay less even than the current low level if they could get away with it. It is a further fact of life that wages councils are found in industries where there is little effective trade union organisation, where workers have inadequate job security and where they are vulnerable to exploitation. If the wages councils are abolished, that will make their position far worse.

However, this policy of abandoning the weak to the perils of market forces contrasts remarkably with the Government's policy on pay towards its own employees, the civil servants. The Chancellor of the Exchequer has said: The overwhelming majority who remain in work have seen their living standards rise steadily, no matter which measure one cares to use". Earlier, the noble Earl, Lord Gowrie, in speaking as the second speaker in this debate, said that lower pay rises mean more jobs. Yet since 1980 Civil Service pay has increased by 24.8 per cent. while over the same period, from March 1980 to March 1984, prices have gone up by 36.8 per cent. White-collar workers' pay has gone up by 50 per cent. Civil servants have had to take the lower pay rises. But as for jobs, 108,000 civil servant jobs have gone, with a further 37,000 planned to go by 1988. Here is a case of workers having to settle for low wages to save jobs only to find that their jobs have gone as well.

The Government have succeeded in creating an atmosphere in our society which is not only divisive but frightening; they have created a state of affairs where the conditions for conflict dominate. They have presided over the emergence of a climate of confrontation. They glory in the language of conquest; they delight in turmoil. They seek to reward the strong by punishing the weak. They will pursue these ends at our national peril. Within the timescale of a Parliament, with its massive majority, there is much that the Government can do; but to do it requires the confidence of the people and a Government who care. The Government do not care, and in my view they have lost the confidence of the people. Until they manage to reverse their priorities, and support the weak rather than the strong, they will find no support from these Benches or from me.

11.58 p.m.

Earl De La Warr

My Lords, I listened with great interest to the tripartite discussion between the noble Lords, Lord Harmar-Nicholls, Lord Beswick and Lord Camoys. I do not propose to pass any judgment on this. I shall only tell the House that I intend to make a largely apolitical speech because this is the way in which I believe matters of this type should be dealt with in your Lordships' House.

I want to talk to your Lordships about the special problems, if special they be, of long-term unemployment; that is, unemployment that lasts for over a year. As noble Lords know, the figure now stands at 1¼ million and over half of those people have been permanently unemployed for over two years and many of them for three and four years.

A significant statistic follows from that. During the last three to 3½ years long-term unemployment in the terms that I have defined it has gone up by two times. It has gone up from 600,000 to the figure it stands at today. At the same time short-term unemployment has gradually reduced over that period by about 10 per cent. I fear that there is an ugly lesson in that trend.

The vast majority of long-term unemployed, although they are people of all sorts, are made up—as the noble Baroness, Lady Seear, pointed out—of people who are manual workers with limited, or very limited, skills. Therefore it is perhaps not suprising for that reason alone, although there are many others, that there is a very sharp decline in the probability of getting a job as the months go on.

Indeed, about two years ago the Manpower Services Commission published a pamphlet on the subject of long-term unemployment and they produced this figure of probabilities: if a chap had been unemployed for only three months then his chances of getting a job within the following six months stood at just about 50 per cent. His chances of getting a job after 12 months had decreased to below 15 per cent., and that, I think, is a good measure of the problem that we have before us.

Of course the flow on to the unemployment register and off the register is as big as it ever was. Something like 350,000 people a month leave jobs and join the register, and about the same number leave the register and go into new jobs. Therefore the turnover is still, at least at the short-term end, extremely fluid. But still there is this inexorable slippage into the long-term group.

To me it is rather like—if I may try an analogy—an overflow from a fast flowing stream trickling away into a still and nearly stagnant pool alongside. We can all agree—can we not?—that we cannot let this increase in long-term unemployed continue and it must be checked somehow; but mark my words, my Lord—and my noble friend Lord Camoys put this much better than I can—this is not primarily a job for Governments. Governments do not run this economy it is run by business. It is run by managers, by their employees, and the unions of those employees, and it is run by commerce and the representatives of finance. It is management and unions and the Government together who are responsible.

If I may say so, I think that frequently politicians have dug their own graves over this, because year in year out since the war every party has claimed that it was going to do something about unemployment, and is it therefore surprising that everybody believes that it is up to the Government to put everything to rights? Of course it is not, and the sooner we learn that the better.

I should like briefly to tell a story that is apposite here. It concerns a company in the food business; a company that many of your Lordships will have heard of, called Kentucky Fried Chicken. It has 300 outlets around the country, and if any noble Lord has a taste for it he might like to know that the nearest outlet is a 25p bus ride away, just at this end of the Old Kent Road.

In an expansion programme the company plans to employ another 10,000 people within the next four or five years. It has for some time been company policy, and will continue to be so, that it does its level best to take its employees from the ranks of the unemployed, and, if possible, from those who have been unemployed for six months or longer. I wish there were more firms who thought and behaved like that. It does not ask for handouts from the Government to do these things, but does them as a matter of policy. I believe there is an important moral there.

I want to make two suggestions: neither is in any sense macro-economic. I believe for reasons that I have given that long-term unemployment will be with us for a very long time, so these suggestions are specific to the long-term unemployed and are intended to be of help to them both from the point of view of morale and, to some extent, from the point of view of finding jobs.

The first suggestion is one which, in nearly the same form, has been made already by the right reverend Prelate the Bishop of Norwich, who has said that there should be a substantial disregard in the matter of part-time earnings. But I say it should be for the long-term unemployed only, because we do not want to go too far in encouraging a nation of part-timers. The improbability of the long-term unemployed getting a job surely provides a justification. It seems quite ridiculous that a man should be able to earn only £4 a week before the extra is docked pound for pound from his weekly benefit money. I should certainly treble that figure. In doing that, I think I am £2 ahead of the bishop, am I not?

The Lord Bishop of Norwich

My Lords, that is correct.

Earl De La Warr

My Lords, when I heard that I thought of putting it up higher, but I decided that I would stick to the existing figure. I contend that if this succeeds, in that it encourages many more people to take part-time jobs, in so far as the taxpayer is concerned it would be at exactly neutral cost. I know that one can argue the other way, but I argue strongly that it would be of nil cost to the taxpayer. I hope that the Government will be able to accept that.

The second suggestion I want to make concerns the enlarging of the existing community programme, for which the Government deserve a great deal of credit. It now takes in 130,000 people every year at a net cost of £190 million. I say "net" because it should be clear that I have deducted the cost of the supplementary benefit which would have to be paid. These schemes are sponsored and run by local authorities and by various voluntary bodies, and they do such work as clearing derelict sites, visiting old people and painting their houses, and generally doing other community work. For this they get paid £63 a week.

Three things have emerged from a study of this programme, which, under various names, has been going on for some time. First of all, there is no shortage of volunteers and no shortage of would-be sponsors. Secondly, there is an enormous fillip in hope and morale among those who are on the courses, and clear signs of an improvement in physical and mental morale. But, above all—and this is the most important—the chances of getting a job after you have been on a course are reckoned (although it starts at a low base) to double. So by any standards this is a cost-effective scheme, and I should like to see funds provided to enable the number to double from 130,000 to 250,000 every year.

I would only add that there is an immediate necessity, whether or not that is accepted, for the appropriate department to give the sponsors a longer-term assurance than the one year that they get now; because they cannot possibly organise these schemes if they have to work on the Treasury basis of year by year. This is something which I should like to ask the Government to attend to at once.

These suggestions in no way conflict with the general thrust of the Government's economic policies, and here I should like to join my noble friend Lord Thorneycroft, in two ways. First, like him, from time to time I show manifestations of "rising damp"; but, secondly, I agree with him entirely in that I, too, congratulate the Government on the sterling way in which they have stuck to their guns in making the control of inflation the most important and the most central point of their economic policy. I hope the Government will take on board the suggestions I have made and will consider them carefully, for, quite apart from the terrible wastage, the plight of the long-term unemployed is, indeed, one of the worst of the social evils of our time.

12.14 a.m.

Viscount Chandos

My Lords, as the first speaker tonight (or should I say "this morning"?) with the formidable task of winding up this remarkable debate, I feel like the man commissioned to summarise Paradise Lost in one sentence. The noble Lord, Lord Beswick, has prompted a debate which has fully lived up to the importance of its subject, and I should like to join other noble Lords in thanking him for it.

There is one very clear impression that I have been left with, and one very clear conclusion. The noble Lord, Lord Beswick, has not only proposed a Motion on the need for uniting the nation, but has succeeded in creating that very unity tonight here in your Lordships' House. On every side of the House—on the Conservative Benches, on the Labour Benches, on the Alliance Benches, on the Cross-Benches, on the Benches of the right reverend Prelates opposite—a sweeping majority of speakers has supported the Motion of the noble Lord, Lord Beswick, and has condemned the Government's policies. The Government Front Bench are isolated, with a handful of supporters scattered behind them, as they have seen their case destroyed by rational argument, by example and by eloquence.

The noble Earl, Lord Stockton, at the same time as talking about a government of national unity, said that the speech of the noble Earl, Lord Gowrie, was the best defence of the Government's policies he had ever heard. I join in agreeing with other noble Lords that the noble Earl, Lord Gowrie, put up a stalwart performance, even though I sometimes wonder whether, with the noble Earl, Lord Stockton, as a noble friend, the Government Front Bench needs a noble Opposition.

The very facility with which the noble Earl, Lord Gowrie, put the Government's case makes the undoubted success of the Government's critics tonight all the more impressive and significant. The illusion that the Government have fostered these last two or three years that there is, and can be, no alternative has been shattered in your Lordships' House, in the House of Commons, in the City, in the country and abroad. The shattering of that illusion today was also achieved, of course, in a most uncontroversial way by the two maiden speakers, whose mixture of restraint and passion I greatly admired. After the noble Earl, Lord Gowrie, introduced the right reverend Prelate the Lord Bishop of Birmingham as "the embodiment of the Church Militant", I thought that permission might have been given for ecclesiastical fireworks; but the right reverend Prelate's contribution remained restrained, and was no less striking for it.

Perhaps the most notable dissection of all was by the noble Lord, Lord Roll, who used the great authority and impartiality of the Cross-Benches, combined with his reputation as a most distinguished economist and banker, to demonstrate the fallacies of the Government's position. While doing so, the noble Lord, Lord Roll, supported the noble Earl, Lord Stockton, in reminding your Lordships' House of the limitations of academic economists, the noble Lord's own first profession. Modesty, however, may have prevented him from saying that, whatever those limitations may ultimately be, the intelligent critical pursuit of economic analysis is a vital and central aid to good government.

The Chancellor of the Exchequer described the views of Mr. Edward Heath as "voodoo witchcraft" in the House of Commons last week. I would suggest to your Lordships that the conduct of government and economic management in the belief that professional economists have little to contribute is a real example of the ancient form of witchcraft. In this context, I should like to pay tribute to the noble Lord, Lord Balogh, whose recent death has reduced the ranks of great economists as well as the Membership of your Lordships' House. His writings influenced my inadequate study of economics, and his speeches in your Lordships' House were vigorously honest critiques of the Government's misguided policies.

The noble Lord, Lord Roll, has had a second career, as I have said, as a most successful and widely-admired banker. For that reason also, his speech was significant, because it reflected the extent to which his views are now gradually being absorbed in parts of the country, the City, industry and the rest of the business community, which had previously supported the Government with hopeful, but misplaced, loyalty. As a demonstration of that trend, your Lordships may like to read today's Financial Times on the subject of the Government's White Paper on Public Expenditure. "Planning on the never-never" reads the headline of the Lex column. The column reported: 'Shoddy' was one of the kinder adjectives in City circulation last night. The financial markets in London and world wide have lost confidence in the Government and its management, non-management or mis-management of the exchange rate. The markets would welcome knowing which of the first two functions the Government were attempting to achieve.

The noble Lord, Lord Roll, demonstrated the crippling damage that an over-valued exchange rate does to exporting industry, and emphasised the point that lost markets cannot easily or quickly be regained. It is for that reason that the noble Lord, Lord Camoys, was being unfair in suggesting that the current lower exchange rate's failure to transform the prospects for increased employment proved that a lower exchange rate three or four years ago would have made no difference.

My noble friends and allies in your Lordships' House and in the House of Commons have called repeatedly for our full entry into the European Monetary System. The noble Earl, Lord Gowrie, despite his voluminous Treasury brief, chose only to tell your Lordships that we could not link sterling to the European Currency Unit within the EMS because sterling is a petro-currency and the other EMS currencies are not. The noble Lord, Lord Roll, has asked what a petro-currency is, and if he does not know, I do not know who does.

Perhaps your Lordships would consider that Norway is in a position rather similar to the United Kingdom; indeed oil and gas production now accounts for a greater proportion of Norway's economic output than it does of the United Kingdom's. The Norwegian Krone might therefore fairly be considered a currency whose sensitivity to the price of oil is at least as great as that of sterling. Yet since the end of 1983 sterling has weakened against the European Currency Unit by twice as much as the Norwegian Krone—12 per cent. against 6 per cent. The EMS has all the flexibility and strength that is needed to absorb the strains that oil price movements impose on the sterling exchange rate, and the Government are being wilfully obstinate in finding one excuse after another for remaining outside the EMS.

The Alliance welcomes the belated change to sterling's parity, but is disturbed by the Government's indecisive ineptitude shown in their exchange rate policy—or non-policy. I hope that the noble Viscount, Lord Whitelaw, can expand on the comments of the noble Earl, Lord Gowrie, and explain why the Government are so reluctant to introduce the exchange rate stability for the future which would substantially ease the burden of uncertainty on British industry.

The central theme of today's debate has perhaps been the choice between personal tax cuts and increased public expenditure which the Government might wish to consider. Events have possibly already overtaken your Lordships' debate with the publication of the White Paper on Public Expenditure to which I have already referred. The newspapers this morning have without exception summarised the paper as proposing a major squeeze on public expenditure. I should like to quote briefly once more from the Financial Times, this time from the leading article:

The other plan which is undesirable in itself is the continuing planned squeeze on public sector capital formation, which will be reduced by nearly a quarter in real terms over the next three years if defence 'capital' is excluded … A company which ran down its assets in this way would soon earn a very poor rating in the financial markets. The Government publishes no balance sheet, so the neglect of public assets can be estimated only by inference". The White Paper lays down plans for the nationalised industries to be net repayers of debt to the central Government, which can be achieved only by under-investment, overcharging of consumers, or a mixture of both. The noble Earl, Lord Stockton, joined my noble ally Lady Seear in asking how long the Government, by making no attempt to distinguish between capital and current spending, will try to mislead the country over the true balance sheet of the public sector.

The noble Earl, Lord Gowrie, himself suggested that your Lordships' House examined the balance sheet of the Government. A little later, his noble friend Lord Camoys repeated the argument used by the Chancellor of the Exchequer last week, that the country is now suffering from the low rate of new business formation in previous years. My first reaction to that claim is to suggest to your Lordships that any problem deriving from such a shortage of maturing small companies pales into insignificance compared with the damage done now to the future economic prosperity by the Government's current attitude towards investment in capital goods and educational facilities.

It also set my mind on another train of thought. The early 1970s—the years of the previous Conservative Government—saw the flowering of a new style of businessman and company; the liberator of under-utilised assets, or, more popularly, the asset stripper. Many noble Lords, might agree that the consequences of that development may have accounted for the paucity of soundly-based new businesses at that time, as much as any other single factor.

The current Government could perhaps have been successful in encouraging some measure of entrepreneurial activity on a sounder footing, but instead have themselves adopted the behaviour of an asset stripper on a vastly magnified scale. The fast-growing fringe bank of Thatcher, Lawson and Company, with its West End branch under the management of the noble Lords on the Front Bench opposite, has been pursuing policies of an irresponsible short-term nature.

In the run-up to each public offering that is made to the electorate, Thatcher, Lawson and Company seldom strip assets, and indulge in creative accounting in order to put the most superficially attractive gloss on the Government's prospectus—quite regardless of the irreparable damage being done to the long-term prospects for economic growth. The Government and their supporters claim to be concerned with long-term solutions rather than short-term remedies, and yet all the while action is being taken on the most shortsighted basis. The Government have, as your Lordships know, raised billions of pounds through the sale of shares in previously Government-owned companies. This policy might receive slightly wider support if the Government showed any willingness to reinvest those proceeds in new industrial projects.

British Leyland has achieved a really remarkable transformation since Sir Michael Edwardes was appointed chairman by the last Government. The company, thanks to the realistic and necessary, but still painful, sacrifices of much of its workforce, as well as to improvements in management, now has a model range and a level of productivity and quality control which enables it to face the toughest competition in the world. Some three and a half years ago, the vice-chairman of its technical partner, Honda, told me that the quality of the Triumph Acclaim produced by BL was in some respects higher than the equivalent car produced by Honda in Japan. The turnround of BL is as great an achievement as the rescue of Chrysler, also with government support, in the United States—although Chrysler has benefited from the huge expansion in the American economy during that time. Therefore, it has already reached a high level of current profitability.

Despite this, the Government seem to be prepared to cripple and stunt the next stage of BL's return to profitability by refusing further government financial investment. Instead, they insist on continuing the sale of BL's profitable operations. What chance does BL have of securing private funding when the financial community sees this lack of commitment by the Government? In the private sector, banks and investors will look very closely at the reasons why a 98 per cent. shareholder will not put up new investment in a venture that has made progress as remarkable as BL's.

The noble Lord, Lord Boyd-Carpenter, suggested that it was a commonly-held view that the public sector was incapable of investing funds wisely, in contrast with the unerring aim of the private sector. That view may be commonly held but it may not necessarily be right. In 1978 two high-tech companies were founded; one with £60 million of investment, and one with £30 million, invested over the first two or three years. At the end of last year the first was sold for more than £ 100 million and the other was worth a few million pounds only.

Noble Lords may be surprised to know that the first was Inmos, already mentioned by the noble Lord, Lord McIntosh, backed by the Government and now a vital part of the country's microchip and computer industry. The other was Nimslo, backed by private investors and now a prominent loss-making company in the dead-end industry of 3-D cameras. Not all public investment need be bad or badly applied and it is not necessary to advocate nationalisation or re-nationalisation in order to justify a willingness of government to invest in good industries they already own.

The Government continue to pursue short-sighted and short-term policies which short-change the country as a whole. The unmistakable mood of your Lordships' House tonight is that such policies are wrong and should be changed. My noble friends and allies have tonight advocated policies which we are confident will produce greater employment, prosperity, fairness and unity. Many noble Lords on other Benches have suggested measures with which we agree. I should like to add my strong support, therefore, to the Motion proposed by the noble Lord, Lord Beswick, and call on the noble Viscount, Lord Whitelaw, to indicate to your Lordships that the Government will not stand rigidly and blindly to attention on the bridge of the sinking ship so vividly described by the noble Earl, Lord Stockton, but instead adopt policies to achieve the aim of the Motion of the noble Lord, Lord Beswick.

12.32 a.m.

Lord Underhill

My Lords, it is a privilege to follow the speech of the noble Viscount, Lord Chandos. I think he has made a forceful, well-informed, direct speech, and one which, frankly, despite what the noble Lord, Lord Harmar-Nicholls, may feel, basically was free of party politics, dealing with the issues of state. It is because I appreciate the generosity of the noble Viscount, and also because usually I find myself in agreement with his noble friends, the noble Baroness, Lady Seear, and the noble Lord, Lord Taylor of Gryfe, that I deeply regret that in their speeches they took the opportunity to deliver a party political broadcast in attacking my own party. At the right time my colleagues and I will justify why we remain loyal to the principles with which we came into this party and for which we have worked for well over 50 years.

I also appreciate the generous statement of the noble Viscount on the introduction of this debate by my noble friend Lord Beswick. His speech and that of my noble friend Lord Cledwyn set the keynote for this debate. That is the answer to the noble Lord, Lord Harmar-Nicholls—that so many noble Lords wished to take part in the debate and, by and large, have dealt with the issues of the Motion, which is concerned not just with unemployment but also with social welfare and the important question of emphasis on the motives of social responsibility.

It has not been a competition as to who has the most compassion. I believe that noble Lords opposite have as much compassion as I have. The trouble is that we have different policies. There is a difference in philosophy, and that difference in philosophy makes them adopt attitudes which I believe are opposite to that of social responsibility.

The noble Earl, Lord Gowrie, said that there is no indication of a lack of unity. The noble Earl must move in a different world from that of most of us, and not in the real world. Many speakers this afternoon and this evening—we have now had over nine hours of debate—have shown quite clearly that he is in a different world. There is not a mood of national unity in the country. The Government give no inspiration towards a common purpose. A tendency to there being more authoritarian government and a feeling of confrontation is abroad in the country, which is promoted by the Government, particularly by the Prime Minister.

There is the encouragement of individual well-being—and this is a basic point in the Motion—which the Prime Minister calls "self-reliance", irrespective of the general good. The noble Earl, Lord Gowrie, said that there was a suspicion of paternalism. He went on the say that there was a rejection of the idea that the state knows best, or words to that effect. Frankly, I thought that he must have been joking. I know what the Government have done to local government, and of the directions given by them. We have more control of local councils than we have ever before had in modern Great Britain, yet the noble Earl says that this is a Government who do not follow a policy of parternalism! It is worse than paternalism: it is domination.

The atmosphere between local councils and local authority associations on the one hand, and central Government, on the other, is worse than ever before. That is not good for the general progress of our economic well-being, apart from not being good for local government. As noble Lords know, I am president of the Association of Metropolitan Authorities. I hear the reports of the central council. The associations no longer go to the central council to discuss the details of what should be done. They go there and are told by the Government what is to be done and how best to cut their own throats; and, naturally, local government is not going to do that.

The cuts in the rate support grant throw a greater burden onto the rates. As everybody recognises, the policy of GREA is hopeless and does not help the situation at all. Now local councils are being stopped from using their own capital assets, even for schemes of great social importance.

There is a difference between north and south, but even in the south there are pockets of heavy unemployment and deprivation. I have not forgotten the visit that my noble friend Lord Graham of Edmonton and I made to Hackney, to which we referred in one of our debates on rating. We found areas of deprivation in Hackney, which is facing rate-capping and cuts, with all the problems that it has to deal with. My noble friend and I, together with a few other Members of your Lordships' House, spent four hours this morning visiting parts of Greater London and Inner London looking at the problems, such as the modernisation of houses and social problems. Even greater problems will face the borough councils in meeting the cost of this important work if abolition goes through. All these factors should before us.

The right reverend Prelate the Bishop of Derby (I think it was) referred to the need to redistribute income. I hope that noble Lords have not forgotten that under this Government VAT was deliberately increased from 8 per cent. to 15 per cent., and that ever since 1979 that has affected the poorest of our people. VAT is the sort of tax that hits the poorest hardest, and it was this Government which introduced it.

When we look at the question of redistributing income, we find that the most wealthy have held on to or increased their share of the nation's wealth. This is made clear in the Inland Revenue statistics for 1984. Let us keep in mind that the top 1 per cent. of the population own one-fifth of the nation's marketable wealth. That equals what the bottom 75 per cent. own in total. The poorest 50 per cent. of our population own just 4 per cent. of the nation's wealth. No one can justify that. Nobody can deny that unless we strive to change that we cannot expect complete national unity.

The Financial Times of 17th January stated that the income of the poorest section of our community fell by 60 per cent. between 1975 and 1983. The income of the better off 20 per cent. of the population rose from 44 to 48 per cent. of the national income over the same period. Surely we have to do something about this, and that is what the Motion says. Since 1979, tax concessions to the better off have totalled £3 billion a year and, with other mid-term financial strategies over these five years, frankly have not worked.

Many noble Lords have referred to the level of unemployment in their own areas. The noble Earl, Lord Stockton, referred to 28 per cent. in his own area. I think we ought to say how we—certainly I, many of my colleagues and other noble Lords—appreciate the fact that he has remained throughout the whole of this debate and shown his interest in this subject. When one reads debates in another place, Members of Parliament regularly give an account of the position in their own constituencies, but the figures for the different areas can be seen in the Department of Employment Gazette by any noble Lord. Some are just appalling. I will not go over areas. But let us remind ourselves of what the situation is. Unemployment has doubled, from 1.3 million, when this Government came into office in 1979, to 3¼ million today. Everyone recognises that that is not the real figure and that the real figure is nearly 4 million unemployed.

A noble Lord

They massage the figures.

Lord Underhill

As the noble Earl, Lord De La Warr, made quite clear, the worst problem is the problem of the 1¼ million who have been out of work for more than a year and many who have been out of work for longer than that. One and a quarter million is the highest figure ever for those who have been unemployed for more than one year.

I said that was the worst problem, but possibly the worst is the position of our young people. There are areas where one in three of the young people have been out of work and have never had a job. There is the feeling of hopelessness. What are we offering? I think we all welcome the training schemes, but most of us recognise that some employers use these training schemes for cheap labour and, as soon as one has finished, they get another one. I said "some employers". Also at the end of the day, special employment measures and training for young people do not provide jobs. There have to be economic and financial policies which eventually find them jobs.

Let us not overlook the fact that the numbers on supplementary benefit have risen from 2.9 million to 4.3 million. That is a 50 per cent. increase, under this Government, in the number of claimants on supplementary benefit. My right honourable friend Mr. Roy Hattersley, in a recent public speech said: Men and women in work, some of them enjoying an increased standard of living, no longer regard their neighbours who are out of work as somebody else's problem. Unemployment is now a moral as well as an economic and social issue". We ask that the Government accept that. If the Government do not accept that, then, frankly, we have to build up a consensus of opinion outside which will make the Government appreciate that point of view.

Noble Lords, as the noble Viscount, Lord Chandos, has said, have concentrated a great deal of attention on the policy of direct job creation through public investment, or tax cuts. The Government would appear to be determined to stand by a policy of tax cuts. In reply to Questions in the Commons on 13th December, the Prime Minister refused to accept the conclusions of three surveys published on that very day, including one based on the Treasury's own model. In the course of our debate, reference has been made to one or other of those surveys. All those surveys concluded that increased public investment is by far the most effective way of reducing unemployment. The noble Earl laughs. I will come back to that point in a moment.

The Prime Minister has also said that she wants to see extra demand for goods. I quote: Reduction of tax can lead to extra jobs, as it leads to extra demand". All that I have said appears at Col. 1202 of the Commons Hansard of 13th December, so I am not making this up. Of course, tax cuts create demand—a consumer boom—with no control as to whether all that demand is met by imported goods. It seems generally agreed that the Chancellor is likely tq have at least £1.5 billion to spend. We argue, as many noble Lords in all parts of the House have argued, that more jobs will be secured by using direct investment through public investment than will be secured by tax cuts. I have other quotations to justify what I say. The Guardian, referring to the OECD report—not a Labour Party report—stated:

Research carried out … reinforces the view of the Conservative Party's backbench dissidents that any budget money should be spent on investment rather than income tax cuts". The noble Lord, Lord Boyd-Carpenter, said that we should not follow a policy for unity unless it was the right policy. The OECD says what should be the right policy-—

Lord Boyd-Carpenter

My Lords, the noble Lord must not misrepresent me. I did not say that we should not follow a policy for unity. I said that we should follow the right policy and then try and unify the country behind that.

Lord Underhill

My Lords, that is what I intended to say. You can put that down to the fact that I left school at 14. I repeat it. The noble Lord said that if we want a policy of unity, it is no good having the wrong policy. That is what he said. That is what I intended to say. The OECD says what is the right policy to follow. If the Government's reply is that they do not accept the OECD analysis, then I should like them to tell me on what grounds they reject the analysis.

The noble Earl, Lord Gowrie, also said that capital expenditure was taking place on a massive scale. Yet various noble Lords have referred to the OECD report showing that Britain is at the bottom of the industrial nations' table of spending on investment, construction and infrastructure. The latest available figures for 1983, says the OECD, show that the share of investment—gross fixed capital formation—in Britain's real national income was only 13.6 per cent., the lowest figure of all countries for which results were calculated for that year.

When the noble Lord, Lord Thorneycroft, compared Britain's performance with that of our competitors, he overlooked telling your Lordships that those countries did not have the benefit of vast sums in North Sea oil receipts, as this country has. Nor did he tell your Lordships that those countries do not possess—in some ways, they are fortunate—the capital receipts from the sale of our national assets. The criticism made by many noble Lords is that these things have been frittered away. My noble friend Lord Cledwyn reminded us of a figure of, I think, £17,000 million being spent on unemployment as a result of lost tax revenue, the cost of unemployment benefit and lack of national insurance contributions.

We are not saying that investment in our infrastructure is the only requirement. Of course, there are others—training, research, improved productivity, better industrial relations and so on. But a vast number of influential bodies support the policy of greater public spending on our infrastructure. Your Lordships' own Select Committee on unemployment made this recommendation. It was debated in your Lordships' House. In the last few days we have had further reports from the British Aggregate Construction Materials Industries. They say that this is an absolutely essential policy to follow. In a covering note, they say: An objective and searching reappraisal of public spending would reveal the justice of the case for more investment and the means to pay for it. Further, it would enhance the present economic recovery and mop up idle human and construction resources". This very morning we had a brief sent by the Building Employers' Confederation, also urging that this policy should be followed.

One of these documents draws attention to the fact that public capital has declined by three-fifths in a decade while current spending on goods and services—that is, excluding pensions, unemployment and social security benefits—has risen by one-fifth during that same period. The document asks the same question as did the noble Baroness, Lady Seear, and a number of noble Lords. They put the case that the reason investment carried out within the private sector is praised, whereas public investment is condemned, confounds all analysis. I should like the noble Viscount, when he replies, to give the answer to that, because that is the key to a basic, fundmental argument. Surely there is no argument at all about the types of projects which are needed. They have been listed so often that one need not go into this again. Apart from the need for—I am afraid I cannot give way; I have been speaking for 20 minutes and I do not want to speak for too long.

Before I close, I am going to mention the question of the National Health Service. I am pleased that the noble Lord, Lord Rea, brought this into the debate. Ministers often quote figures to disprove that there are cuts in the National Health Service. I never like referring to things unless I have got some facts. I hope noble Lords will forgive me if I talk about my own locality. I have here an official document of the Waltham Forest Health Authority. I attended one of two meetings where there was a large-scale protest about the closure of a small hospital which is loved by the people in the area. The medical staff are the local doctors; they are on call. That will be the fourth local hospital to be closed in that area in 18 months. The authority says: The Authority is faced with substantial cuts in the amount of money received to provide these services … In the face of a cut of £2 million per annum in the budget over three years, the authority had to re-examine its priorities". Having been instructed to cut out over 100 acute local beds, a hospital which deals with 83,000 X-rays a year will no longer deal with them.

Over and above that, I saw in the Guardian of 28th December that the Royal National Ear, Nose and Throat Hospital, which is England's—the noble Lord laughs. If he can disprove this, let him disprove it. The paper says that England's only post-graduate centre for the three specialities—that is, ear, nose and throat; I know what delay means there, because my wife was a patient there just a few years ago—is to lose half its facilities from the end of January because of spending cuts. The paper says that the proposal will mean 17,000 out-patients using the one remaining site and that 2,300 patients awaiting operations will face further delay.

There is in the country a widespread feeling, which the Government have got to recognise, that the Government are moving towards creating a second-standard National Health Service. The National Health Service is very dear to people of all parties. It may be that money is being shifted from one region to another region, but it is causing cuts which are diminishing the standards.

In conclusion, I should like to say that I fervently hope there will be no suggestion, as has been reported in the papers, of a further increase in prescription charges to £2. There has been a 700 per cent. increase in prescription charges since the Government came to office. It ftits the poorest hardest. The noble Viscount will not be able to give us a definite answer on that point, because it may be a Budget matter; but I hope that the Government, if they have any thoughts of raising prescription charges to £2, will cancel them immediately.

All these matters relate to the Motion. We are dealing not just with unemployment but with the whole question of social welfare and the general standing and life of our people. The figures show that we must do a great deal more if we are to equalise the disparities between the sectors in our community.

Viscount Whitelaw

My Lords, this has been an historic debate in your Lordships' House. For the first time a very large number of people have had the opportunity to listen to and watch the proceedings from their own homes. No doubt we shall be told how many actually decided to do so. Equally, there will be much argument about the value of televising your Lordships' House. But surely few will dispute that the views and opposing arguments of noble Lords who have taken part in the debate were worthy of a wide audience.

So I am sure that I speak for the whole House at this moment in thanking the noble Lord, Lord Beswick, for his Motion; for the scope of his Motion; for his opening speech, and for the tone and character of it. I am sure that the House is very grateful to him. I should also like to congratulate the two maiden speakers, the right reverend Prelate the Bishop of Birmingham and the noble Lord, Lord Monkswell. If I may say so, the right reverend Prelate was a model. I made comments about the most reverend Primate previously which gained some amusement and credibility in the press, and I must therefore be rather careful not to follow that by saying that the Bishop of Birmingham has shown a very high standard of ethics, or something like that. But I think he did show a very considerable understanding of your Lordships' House in making a maiden speech which was not controversial but which went into the background of many of the problems that we are facing today in a very fair way indeed. I should like to thank him for his speech this afternoon.

The noble Lord, Lord Monkswell, spoke with considerable feeling from his own experience. That is always something that it is very important to do. It would be impertinent for me—someone who has been in this House such a short time—to say that that was something that your Lordships' House liked. But I have learned, even in this short time, that that is something that your Lordships do like, and so I hope that we shall hear from the noble Lord again in a similar vein. Indeed, I am quite certain that we shall hear the right reverend Prelate again, if not necessarily in a similar vein. But we shall look forward to that as well.

It is my particular task in winding up the debate for the Government to try to refer to as many of the contributions that have been made in this debate as possible. Since I have heard nearly all the speeches and have been sitting in this House, with two very short intervals, for nearly 10 hours on end, I hope that the House will understand if sometimes my notes are not as adequate as they ought to be or maybe as readable as they ought to be. However, I shall do my very best to reply to as many of the points as I possibly can, and, indeed, as fairly as I can.

Before I do that, I should like to make one comment about the noble Lord's Motion. The Motion covers a great deal of ground. It is clear that what lies behind it is the desire for a united nation. Here I think that one is entitled to say that that is a desire that is shared in all parts of the House, and, I believe, by anyone who is genuinely in politics.

I would never have spent the last 30 or so years of my life in politics if I had not had the desire for one nation in this country. I certainly would not have spent all the time that I did fighting for this country in the war if I had not thought it was right to have one nation; and I certainly would not remain in the Government now unless they had the desire to have one nation. I want to make that perfectly clear. Therefore, I find some of the charges against the Government, and against me personally on one or two occasions, fairly offensive in all the circumstances, because I do not think they are charges which are in any way right, and I utterly refute them. I think it is also fair to say that someone like myself, who represented a North of England constituency in another place for some 28 years, will certainly not acquiesce in a Government approach which appeared complacent or unaware about the dangers of a north-south divide in our country.

In fact, I believe that the Government can be shown to have acted with determination and success to tackle some of those very problems which have divided society in the past. In particular, our economic policy has focused on tackling inflation, which at the highest levels of the 1970s destroyed the savings of many who had worked to build them up over the years, and which particularly hurt the low paid and those on fixed incomes. Wherever we sit in the House, whatever Government we have been in, we were all responsible for various parts of those days of high inflation—all of us. We all know it and we all know that it was divisive to our society. This afternoon many noble Lords have said that they regard the Government's success with inflation as good and they have given us credit for it. They may have criticised much else; but for that they have given us credit, and for that I believe we are entitled to take some credit.

I now turn to the major argument about the action which should be taken in order to deal with the very distressing levels of unemployment in this country. It is fair to say, though it is no excuse, that unemployment levels are known in many other countries of the world at the present time. Nevertheless, they are most unsatisfactory to our country and we have to do everything we can to deal with them. The questions that have been posed to your Lordships' House today—and many solutions have been offered—have, in the main, fallen into two categories. There are those who believe that action must be taken through more public spending, and there are those who believe that tax cuts raising the threshold will create more incentives and therefore in turn lead to more jobs. Both arguments have right on their side. I thought that my noble friend Lord Thorneycroft put the matter in very proper perspective, as he so often does—and it is not surprising that I say that because, after all, I was his Parliamentary Private Secretary 29 years ago—when he said that we cannot advance too far down either of those particular roads.

Surely history has proved that to be correct. As my noble friend Lord Boyd-Carpenter said, successive governments have tried the course—sometimes it would appear the easy course—of getting out of unemployment by high public spending. Alas! it has not led to more employment; it has led to rising costs, to loss of competitiveness in industry and so to loss of jobs. Surely we would be deceiving ourselves—and far worse the people of our country—if we pretended that, if we tried again this solution on its own, of simply increasing public expenditure as fast as we could that would in some way provide unity and prosperity for our nation, when it so manifestly failed to do so in the recent past, and where it has so manifestly failed to do so in socialist France—the socialist government in France has had to give up that very policy itself.

However, that is not to say that there is not a place for public spending—of course there is. My goodness me! if we look at what this Government are spending, there can be no doubt that there is a considerable amount of public expenditure already. The noble Viscount, Lord Chandos, waxed eloquent about the criticisms in some newspapers this morning of the public expenditure review, but he did not mention, because it did not suit his case—and I do not blame him because people do not mention things that do not suit their cases—that many other newspapers said that the Government were spending far too much, that there was far too much public spending, and that it was very dangerous in our present situation to spend so much.

So there are two arguments there as well. I would claim that we must do both. I would never suggest for one moment that it was right simply to go down the road of tax cuts alone; nor would I wish to see it done—and here I come to the remarks made by the noble Baroness, Lady Seear—on the basis that we did not help those at the bottom end of the scale by increasing the thresholds, and that we simply made the rich richer. I believe it is important to get people out of the poverty trap. It is important, as the noble Baroness said, to seek to get people out of taxation at the bottom levels altogether. It is difficult to do so, as I understand it, without giving some reliefs at the higher levels at the same time. But certainly I take the point she made because she was very fair indeed on many other factors.

I noticed—and I shall come back to this when I mention the noble Viscount, Lord Chandos, at the end—a certain divergence of view among the Alliance. After all, the noble Baroness the Leader of the Liberal Party said that it was quite wrong to spend your way out of unemployment, and they were false prophets who suggested that. It seemed to me that the noble Viscount, Lord Chandos, took a different view. The noble Baroness also believed in increasing the thresholds and helping taxpayers at the bottom levels. It did not seem that the noble Viscount, Lord Chandos, looked at it in quite the same light. But there it is: if you are going to form an alliance you have to get your act together, and no doubt the Alliance will be able to get their act together in the fullness of time.

If I may come to a very serious point, my noble friend Lord Stockton mentioned the question of how we were going to get into the third industrial revolution. I thought that with his remarkable perspective of history, if I may so with all humility to him, he led us on the road to realising the challenge that faces us. The first industrial revolution, the second, and now the third. We have to take advantage of it. I believe that we would all accept that that is something we have to do.

Certainly that is something that I know the noble Lord, Lord Cledwyn, in his speech—and I thank him for some of the support he gave on different matters, although he had many criticisms to make, quite reasonably, at the same time—realised we have to do. The question is: how are we going to do it? My noble friend Lord Orr-Ewing mentioned that we were attracting considerable American investment in the technology industries at the present time. I think that my noble friend Lord Stockton would say that that is an extremely valuable thing for us to be doing.

I believe that the Government, by their help for small businesses, by many of the other employment measures they are putting forward and by the help they are giving in the technology industries, are seeking to go down that road and to give every encouragement to industry to do so. I appreciate what my noble friend Lord Stockton says, but I believe that we need to do everything in our power to encourage that investment and to give every help to that particular development. I am sure he is right, and I am sure that is something which the Government must seek to do.

The noble Lord, Lord Taylor of Gryfe, made a speech about the nature of our society. I have a great admiration for his sincerity of purpose, but I do not altogether accept the road down which he wished to go as a result of that sincerity. But I understand what he I feels and what he means. I understand very well, having lived near Glasgow for some part of my life, exactly what he says, and I share many of his feelings.

The noble Lord, Lord Roll, was anxious about the divisions in our society, and came to this point of concern about doctrinal rigidity. I have the greatest respect for the noble Lord, who I have known in many capacities. Perhaps he would understand me when I say that I have after all been in Cabinets and Shadow Cabinets of the Conservative Party now continuously for nearly 15 years. I do not find the Cabinet that I am now in any more doctrinaire than the one that I was in between 1970 and 74. I do not expect my right honourable friend Mr Heath would necessarily accept that argument; but I have to tell the noble Lord that I have been in both the Cabinets, and quite frankly, I do not think that the present one is more doctrinaire. I believe that, on the whole, Cabinets are faced with so many difficult problems that come before them that they simply are not in the position half the time to take a doctrinaire attitude. They have to make up their minds on the facts put before them at any time; and I have found that both the Cabinets I have been in have been doing exactly the same thing. So I do not really accept this argument about being doctrinaire. Everybody has found everything in the world wrong with me during my political life, except one thing: no one has ever suggested that I was doctrinaire. If I do not think the Cabinet is doctrinaire I am entitled to say so.

The noble Lord, Lord Roll of Ipsden, raised the question of America and our success compared with the American success. I am sure that he, from his banking standpoint, would agree that the American currency, in regard to attracting investment and the number of people who deal in that currency, is in a very different position from our currency. We have to overcome some difficulties which they do not have. That does not mean that we do not have to do it, but I think the noble Lord would agree that they are different.

My noble friend Lord Boyd-Carpenter I have already mentioned in relation to being doctrinaire and his points about public expenditure. He was generous in what he believed, that the policy of the Government, if we stuck to it, was the right policy to lead us into the third industrial revolution. That encouraged me because I am most anxious to meet the requirements put forward by my noble friend Lord Stockton. If the policies are right to that end, as my noble friend Lord Boyd-Carpenter said, that would be a great encouragement to me.

The right reverend Prelate the Bishop of Norwich said that he was an optimist in national life. I found that encouraging. I hope that I can reciprocate that I was an optimist in my minor efforts in his field of religion: I trust that I am. From his optimism he said that we had tackled inflation; he admired the youth training scheme—which has come under fire from some other people, so I am grateful to him for that—and the employment schemes.

The noble Baroness, Lady Ewart-Biggs, talked about employment for women and the problems about employment for women. I note the difficulties which she sets out. I thought she somewhat exaggerated them, if I may humbly say so, but I can see some of the arguments she put forward.

My noble friend Lord Camoys, who I was delighted was able to take part in the debate, made a very striking speech. He started with the point that the question who cares most was sterile. I do so agree with him; it certainly is a sterile question. We all care. The question is: how are we to give effect to that care? He pointed out that wage restraint in the past had been ineffective. He pointed out that the prospects today were moderately good, and that the prospects for exports were good. Indeed, he praised the ideas of the small businesses and the advance in technology. He hoped that we would do better with standards in our schools. That is something which is extremely important for us in going into the technological revolution of the future.

The noble Lord, Lord Carmichael, referred to many problems in the Scottish environment and the human values concerned. I thought he was slightly a prophet of doom. Nevertheless I understood some of the points that he put forward.

The noble Lord, Lord Ezra, asked me specifically about the recent NEDO report on the infrastructure. Some of the figures in the report, it is fair to say, are clearly exaggerated. I do not think I can deal with them all in detail now, but in answer to him, and indeed in answer to the noble Lord, Lord Underhill, at the end, I would ask them both to remember that total investment in the economy, public and private, is expected to run at some £55 billion in 1984 and it will rise further. I should have thought that that was a considerable investment in both sectors and gave some of the answers to what was said about the NEDO report.

My noble friend Lord Campbell of Alloway was generally supportive of the Government's policies. I am afraid that his was one of the speeches which I regret I did not hear, but I am grateful to him for the support he gave and for the points that he put forward.

The noble Earl, Lord Halsbury, said that there was a great difference between the inflation and unemployment situation in the 1930s and now. Today we are facing unemployment in an inflationary environment whereas before we had been facing unemployment in the 1930s in a deflationary position, and that was very different. And, he said—I believe very fairly and gave support to the argument which I put forward—that because we have unemployment today in an inflationary environment one cannot spend one's way out of it simply by increasing public spending on its own.

The noble Baroness, Lady Fisher of Rednal, spoke about social service spending, and I noted the points that she made. Again, as with the noble Lord, Lord Carmichael, I thought she was incredibly gloomy and I regretted that, because I do not think that that is necessarily her nature and I do not know that she felt quite so gloomy as she thought it right to appear on this particular occasion.

My noble friend Lord Orr-Ewing, apart from making the point which I have already mentioned about attracting American investment, made some very helpful points about training and employment measures. I am grateful to him for what he said about the value of these measures and for his proposals for particular help in the assisted areas. The noble Lord, Lord Ardwick, said that the Tory Party had turned back on the Tory Party of the past. Well, I seem to have been a member of the Tory Party now which has turned back on the Tory Party before. I do not notice that it has happened, and I have been there. Therefore, I do not accept it.

The right reverend Prelate the Bishop of Derby said he hoped that there would be constructive proposals from all sides. He said that he hoped that there would be unifying policies for the mining dispute. I say to him that I think it is very difficult for the Government because, after all, it is not the Government who have caused the splits in the mining dispute. The Government have made sure that those miners who wish to continue to work have been able to do so and increasing numbers have decided to do so. In doing so, those miners have split from some of their other colleagues. That, I agree, from the point of view of the mining community and the miners' union is very regrettable, but I do not think it would be reasonable for me to go further at this hour of the morning in explaining who I believe to be responsible for that. However, I think it is perfectly clear that the responsibility must lie with those who have split the union. The right reverend Prelate said that the welfare state was near to breakdown. I must say I could not accept that argument, although I have to pay attention to the very important points that he made about his own area.

My noble friend Lord McAlpine of Moffat made three very important points about the civil engineering industry, about which he knows—and as so often in this House someone knows more than everybody else about a particular subject—probably more than most of the rest of us. He says that, in fact, increasing activity there gives only a limited opportunity for employment. I think we have to pay attention to that. He talks about more houses being obstructed by local authority bureaucracy and planning controls. I think we have to pay attention to that. Lastly, he makes his point about backing our own British nuclear reactor instead of the American one. I must simply pass that on to my right honourable friend the Secretary of State for Energy. I have known that view of my noble friend and I think I had better not say any more about it at this stage.

The noble Lord, Lord Prys-Davies, gave examples, of which I have taken a very careful note, of some of the problems in schools and some of the problems in Wales. The noble and learned Lord, Lord Wilson of Langside, said that we were very doctrinaire. I do not think that he is now here. Oh! yes he is. I had thought that I was going to be absolved from saying anything about him if he was not here, but I must apologise to the noble and learned Lord. He talked about the remould of the position and he talked about the miners' strike. I have to say to him much the same as I said to the right reverend Prelate the Bishop of Derby; that is, that it is certainly not the Government who can be responsible for any of the divisive positions in the miners' strike.

The noble Lord, Lord Stallard, talked a lot about training. I am bound to say to him that I was involved in the 1964 Training Act as a very junior Minister in that Government and I have known something of industrial training ever since. I did not recognise many of the things that he said about industrial training at the present time. I do not think they are accurate and I believe that we have done a great deal to improve the training position and that my noble friend Lord Young is doing a great deal on this particular front.

The noble Lady, Lady Saltoun, mentioned the various proposals put forward by the late Lord Spens, whose death we all so much regret. She also mentioned the idea of a commission of long-term, unemployment trends, and the employment protection legislation and wages councils being a bar to more employment. She also referred to the new technologies. Further, she mentioned a hobby-horse of my own. I am not allowed to have hobby-horses when I am in the Government, but if I were not in the Government I would have the same one as her, about tolls on motorways. As I am in the Government, I am not allowed to have it.

The noble Lord, Lord McIntosh of Haringey, talked about management techniques so far as the White Paper on Public Expenditure was concerned, about the infrastructure and about training. I certainly noted the point that he made. The noble Lord, Lord Banks, came back to the position of discussing the welfare state, on which he is an acknowledged expert, and the whole question of American investment and the position of America. I think I must just say the same to him as I said to the noble Lord, Lord Roll, that I think we have a different problem simply because their currency, for a wide variety of reasons, is very attractive to investment, and ours of course is not in the same category.

The noble Lord, Lord Irving of Dartford, began by not comparing like with like when he started discussing our position with that in America. I am an old friend of his and I hope that I may be allowed to say this to him. I thought that because he started from false premises he drew some wrong conclusions (which if you start from false premises, you are almost bound to do) and as a result I could not agree with what he had said. My noble friend Lord Harmar-Nicholls made some strong points in support of the Government, and I am very grateful to him.

The noble Lord, Lord Kaldor, eventually came out—I was waiting for it—with policies which he has had for a long time and which have not found favour; that is, import control and withdrawing from the European Community. He will long proceed to put forward those policies. I do not think they will be accepted by any government; but I do not think he will be deterred in any way by that.

The noble Lord, Lord Rea, raised the question of the management of the National Health Service, and indeed at the end of our debate the noble Lord, Lord Underhill, also mentioned the National Health Service. I think I ought to remind them both that in England alone this year we shall be spending some £13.5 billion in cash—more than double the £6.5 billion spent in 1978–79 and, in real terms, an increase of 18 per cent. Capital spending has also been increased, following a cut of one-third under the last Labour Government. The result is that 142 major new schemes are being designed or are under construction and further developments costing over £1,100 million are also being planned. That does not sound like what the noble Lord, Lord Underhill, or indeed the noble Lord, Lord Rea, were telling us about.

My noble friend Lord Beloff raised some very interesting points and gave some considerable support to the Government's point of view, for which I was extremely grateful. The noble Lord, Lord Molloy, had some delightfully amusing similes, which cheered us all up at a late hour; but he did say one thing which was totally incorrect. He kept on talking about Mr. MacGregor as "a foreigner". As a fellow Scotsman originally, born in Scotland as I was, and as Mr. MacGregor was born in Scotland too, I think I am entitled to somewhat resent the fact that an Englishman like the noble Lord, Lord Molloy, should describe a fellow countryman of mine as a foreigner, because I do not think that he is. I hope that the noble Lord will realise that in fact Mr. MacGregor is a Scot and not a foreigner—and I do not think I should give way, because Mr. MacGregor is a Scotsman: I do not think it can be denied.

The noble Lord, Lord Graham of Edmonton, talked about wages councils. I think that in considering the activities of wages councils and indeed the poverty trap of the low-paid one needs to consider the raising of the thresholds to a point which I hope he will have in mind. My noble friend Lord De La Warr spoke about long-term unemployment and this being with us for a long time. He put forward various points on disregard for benefit and concerning the community programme. I am extremely grateful to him for his advice to us to stick to our guns.

I have already spoken about the noble Viscount, Lord Chandos. I had an enormous respect for his grandfather and I hope that in time I shall gain a sufficient respect for him.

The noble Lord, Lord Underhill, spoke about local government money. I think that one must remind him that in the relationship between national and local government the problem of local government money, so much of which is provided by the taxpayer—by the central government and so by the taxpayer—has not just arrived. The noble Lord will remember the late Tony Crosland, as Secretary of State for the Environment in the Labour Government, saying: "The party's over".

Indeed, the party was over then, and should have been over, and we are seeking to ensure that the party is over now because some of that expenditure is very damaging. I have dealt with the noble Lord's points about the National Health Service.

I am afraid that I have delayed your Lordships for a considerable time. I felt it was my duty to try to answer a very long debate with the fullness that it deserved. I hope I have been able to do so and I hope I have convinced your Lordships, although I do not expect so, that this Government are on the right course and are determined to do what is best for a united nation.

Lord Hatch of Lusby

My Lords, may I—

Noble Lords

Order! Lord Beswick!

1.27 a.m.

Lord Beswick

My Lords, we have had quite a long debate and it has been wound up in a most remarkable fashion. The noble Viscount, Lord Whitelaw, said to me earlier that, after so long a time, he did not think he would be capable of living up to the standard required. If he can do this after 10 hours it would be very interesting to hear him after a 20-hour debate.

It is not for me to open arguments again. I would simply like to offer my thanks to all those who saw fit to take part in the debate. We have had 40 interesting speeches and of course I cannot hope to refer to many of them. I should, however, just like to add my congratulations to the two maiden speakers and I hope that we shall hear them again before so very long, and maybe in more normal circumstances.

I should like to say that I was sorry that the noble Baroness the Leader of the Liberal Party felt constrained to get so cross about the Labour Party. I think it would have been much better if she had concentrated on what I actually said, especially as he took 20 per cent. more time to say it than I did in moving the Motion.

I am sorry, too, that the noble Lord, Lord Thorneycroft, could not give way because there were some points that I thought ought to be clarified.

I was particularly grateful for what the right reverend Prelate the Bishop of Derby said because he seemed to me to show the understanding of our human problems for which I had asked. I hope that the House has not lost any of its recently acquired admirers as the result of this debate and the televising of it. I offer no judgment upon it. We shall await reactions. I can say only that so far I have no reason to regret my vote against the televising of our proceedings. I feel, however, that the discussion we have had might, as I pleaded in my original Motion, well be taken a little further on some other occasion to see if we cannot get nearer to agreement on some of the matters that need sorting out and some of the policies that are required.

I repeat my thanks. I congratulate all those noble Lords who stuck it to the end and I admire the obvious stamina of them all. I have no requirement for the Papers mentioned in my Motion, and therefore beg leave to withdraw it.

Motion for Papers, by leave, withdrawn.