Unemployment Count: Calculation Methods (Hansard, 24 October 1985)

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

§ The Secretary of State for Employment (Lord Young of Graffham)
My Lords —

Noble Lords
Hear, hear!

§ Lord Young of Graffham
My Lords, the unemployment count is based on administrative records and is inevitably subject to occasional changes in coverage as a result of changes in the way benefit is paid or in "signing on" arrangements. Since 1979 there have been eight changes which could conceivably affect the unemployment count, five of which have had a discernible effect. While it has been possible to estimate the effects of these changes at the time they occurred, such effects do not remain constant and it is not feasible to assess what the unemployment count would be today if the changes had not been made. However, a consistent series of unemployment estimates according to the present coverage, back to 1971, has been introduced and published in the July Employment Gazette.

§ Lord Hatch of Lusby
My Lords, will the noble Lord the Minister confirm that his own department has admitted that there are 870,000 concealed unemployed who do not appear in the official figure? Is it not the case that the changes which have been made, such as the omission of these unemployed people who are not entitled to claim benefit, leaves this country with well over 1 million unemployed on top of the figure of 3.4 million unemployed which the Minister's department at present publishes?

§ Lord Young of Graffham
No, my Lords. The present count is a claimant count. It records each month those taking benefit where the test is availability for work. For some years past my department has carried out a labour force survey, which is a survey of some 57,000 households where the test is seeking work. That survey shows that there are some 870,000 people not registered for benefits who are looking for work. At the same time, the survey 1286 shows that there is a larger number of people—some 940,000—who during the period of the survey were claiming benefit but not actively seeking work.
The only conclusion one can draw from that is that the number of people claiming benefit and the number seeking work is approximately the same, and that there is no truth whatsoever in the assertion that there are 4 million, 5 million or 6 million people unemployed.

§ The Earl of Lauderdale
My Lords, does my noble friend not agree that as against the allegation of concealed unemployment there is also considerable concealed employment in the black economy?

§ Lord Young of Graffham
My Lords, it is difficult to take a definite view about an employment market that officially does not exist.

§ Lord Molloy
My Lords, does the Minister no! agree that the real agony of the situation is that there are, as he has indicated, people seeking employment who cannot obtain it? If people who are actively seeking employment cannot find it, then there is not much hope for those who do not even bother to try. This is a serious situation and an affliction that has cursed this country for the past four years. Is it not time that something practical was done? Many members of the CBI believe in the establishment of a national building force to construct houses all over the country, which would provide employment for artisans and professional people. That, too, would make some contribution to the reducing unemployment.

§ Lord Young of Graffham
My Lords, unemployment figures, benefit counts and labour force surveys hide different conditions in different parts of the country. It would be foolish not to admit that there are many people genuinely seeking work and for whom unemployment is a real agony. There is only one thing to do about that situation, and that is create the correct economic conditions in which there can be real growth in employment. That is something which this Government are doing, so that we may bring those terrible conditions of unemployment to an end.
I do not know how far we must go down the path of establishing artificial construction. I believe that other surveys have shown that there are 450,000 people in the construction industry officially registered as unemployed, and yet I hear complaints from all over the country about the difficulty of recruiting people into the construction industry. Conditions change in different parts of the country and we must be very careful before making sweeping assertions.

§ Baroness Gardner of Parkes
My Lords, is it not a fact that in the Greater London area many employers are seeking staff and are unable to obtain them? This is due very often to people not having the necessary skills. Is not the question more one of introducing the appropriate training?

§ Lord Young of Graffham
My Lords no Government have had as good a record of training as this Government. We have in four years introduced 1287 the first national training scheme for the young and are actively promulgating training for adults. This country has neglected training to its own costs for most of this century, and we shall not make good that neglect in a few short weeks.

§ Lord Stallard
My Lords, will the noble Lord accept that I found if difficult, if not impossible, to join in the acclamation of welcome which he received upon his return to this House this afternoon? I am one of those who believe that the position of Secretary of State for Employment should be held by an elected Member in another place. Therefore, I do not share the enthusiasm of other noble Lords in welcoming the Minister back—and all the more so when the present Secretary of State stated in a radio interview yesterday that unemployment in the London Borough of Hackney is not a problem. The Minister said then that unemployment is not a problem in Hackney and that there are plenty of job vacanies. That statement should be challenged, and it can only be challenged by the elected Members of another place.

Noble Lords
Question!

§ Lord Stallard
My Lords, that is a statement that should be and can only be properly challenged by elected Members in another place. Is the noble Lord aware that there are 21,000 people unemployed—

Noble Lords
Order!

§ Lord Stallard
In the London Borough of Hackney and only just over 2,000 vacancies? Therefore, his statement is not even factually correct and that is all the more reason why it should be open to scrutiny in the other place.

§ Lord Young of Graffham
My Lords, the noble Lord is entitled to his own opinions and he must forgive me if I do not share them. I was told yesterday morning that the leader of Hackney said that riots were caused by unemployment among the 14 to 19 year-olds. I must tell your Lordships that for two of those years there is compulsory education in schools in this country and for the next two years, as from next Easter, there will be available to each and every young person leaving school at 16 a place on the two-year vocational training programme.
I refuse to accept that unemployment is an excuse for rioting among 14 to 19 year-olds and I hope that every noble Lord will agree. There may be other reasons for riots—and unemployment can be one because idle hands get up to mischief—but we must be careful to put everything in perspective. In the Jobcentre network in Greater London there are 27,000 vacancies; probably a third of the full number. Within the borough of Hackney itself there are many places yet to be taken up in the community programme. I am aware of the serious nature of unemployment in Hackney. I am not aware that there is any serious reason why there should be real unemployment for those under 18 in Hackney, certainly not after next year.

§ Lord Dean of Beswick
My Lords, may I first of all, in accordance with the traditions and customs of this House, welcome the noble Lord on his promotion to his new post; although that is a little belated as we have been waiting for him for a week.
I refer back to the original Question on how the statistics are drawn up concerning unemployment. Is it not a hard fact that if the same criteria were used today as were used in 1979 there would be an additional half a million or more people on the unemployed list? May I also ask the Minister to have regard to the statistics given to the House last week by the noble Lord, Lord Trefgarne, that of the 626,000 new jobs created, over 600,000 are in the service sectors and the self employed? Would the noble Lord care to tell us how many jobs in the manufacturing industries are in that figure? I recently referred to the five areas in the regions where over 40 per cent of people are long term unemployed. When will the statistics be available that indicate that unemployment in those areas is coming down and the people have something to hope and live for?

§ Lord Young of Graffham
My Lords, I shall endeavour to answer those four or five supplementaries. Of the eight changes which have taken place in the count, some have introduced initial reductions and one, at least, introduced an increase in the figures. It is difficult to give an estimate today of the changes that they will make but I commend to your Lordships the article in the Employment Gazette which goes back to 1971 and from which it can be seen that the count, although difficult to estimate, will not nearly be of the order suggested by the noble Lord. There is nothing wrong in this world with over 600,000 jobs being created in self-employment or the service sector, nor is there anything to be worried about in the decline in jobs in the manufacturing sector.

Noble Lords
Oh!

§ Lord Young of Graffham
No, my Lords, what we must be concerned about is a reduction in unit costs in manufacturing, an increase in profitability in manufacturing and a recognition that just as the blacksmith once had his day so it may be that large numbers of people engaged in manufacturing industry may not occur in the future. What we must have is a profitable, wealth-creating manufacturing sector in this country, and that I hope will come about.
I shall of course put into the Library specific figures and a breakdown on the long-term unemployed. A reduction in the number of the long-term unemployed does not depend so much on the Government as on the people of this nation and the Government together. The Government can create the conditions but the people must create the jobs.

§ Lord Gisborough
My Lords, with regard to the shortage of skilled labour which already exists, and taking as an example that one company said that it could absorb every computer graduate who came from the universities, will my noble friend try to get the message over to youngsters, many of whom in certain places do not want to be trained because they believe 1289 they will not get a job, that if they receive the training then almost certainly they will get a job?

§ Lord Young of Graffham
My Lords, the politics of despair, unfortunately, has been used for the past two or three years and has had the effect on many young people of telling them that there is no point in taking courses on the youth training scheme or courses of study. But that is not so. A moment or so ago we referred to Hackney. In Hackney, in the one-year youth training scheme, over 70 per cent. go into employment immediately; and throughout the country the figure is 60 per cent.
We must start where it all starts, with the education system. It takes far too long to train people with the right skills in computing science, engineering and electronics. The Government are engaged on a long process and are endeavouring to bring changes by consent within the education sector to make this more possible.

§ Lord Beswick
My Lords, would the noble Lord give us his definition of "a person not seeking work"? Is it not a fact that a person not available for work is not eligible for benefit?

§ Lord Young of Graffham
No, my Lords. The test for benefit is "available for work". The labour force survey has a different definition, which is "actively seeking work". There are a large number of different people within the claimant count according to the survey. For example, there were 140,000 single-person families, two-thirds of whom were not seeking work and who regard themselves as fully occupied looking after their families. There were 300,000 housewives who were not seeking work who regard themselves as fully occupied in looking after the home. This was a different analysis within the labour force survey. Technically they are acceptable for the test of "available for work". There is a difference between the benefit count and the survey under the labour force survey.

§ Lord Avebury
My Lords, is the noble Lord aware that most people do not share the complacency of the Government and the Minister about the decline of jobs in the manufacturing industry and that this includes the Select Committee of your Lordships' House which reported recently, having taken a great deal of evidence and done a great deal of hard work to arrive at their conclusions? Was it not unfortunate that the Government should immediately have dismissed the conclusions of that study? Will the Government now address their minds to how we shall revive manufacturing industry in this country when we can no longer depend on the income from oil?

§ Lord Young of Graffham
My Lords, your Lordships' House will have an opportunity of debating that report before much longer and I hope then that we can have a full exchange of views. I make it quite clear that my concern is with the growth, improvement and wealth creation side of manufacturing and not with one single test of that, such as employment. I am concerned that we should have a profitable manufacturing sector, and not an overmanned one.

§ Lord Barnett
My Lords, the noble Lord said earlier that all that the Government could do was to create the right economic conditions. The Government have now been in power for some six-and-a-half years and they have created only a huge increase in unemployment. Can the noble Lord say when shall we see any real improvement in those economic conditions?

§ Lord Young of Graffham
My Lords, between 1970 and 1982 this country was at the bottom of the growth league for the whole of Europe. Since 1982 we have been at the top, and this year we shall have a greater growth rate than the United States of America. In the period 1974 to 1979 we averaged just over 15 per cent. annual rate of inflation. Certainly for the past two years we have averaged below 5 per cent. and next year it will be below 4 per cent. Last year we created 340,000 jobs in this country. The other nine countries in Europe put together lost 200,000 jobs. We are creating the right conditions; we are on the way hack. I wish I had a magic wand to wave—I wish we all had magic wands to wave—but there is only one answer, and it is called hard work.

§ Lord Hatch of Lusby
My Lords, is it a question of massaging the figures which the noble Lord has tried to conceal in answer to my question? Is the noble Lord aware that the unemployment rate in this country as a percentage of the workforce is the highest in the OECD and well above that of any of our major industrial competitors? Why is this so after six years of this Government?

§ Lord Young of Graffham
My Lords, that statement is simply not true. I shall put in the Library a full list of all our competitors' unemployment rates, both the OECD rates and the national rates, from which the noble Lord will see that some countries in Europe have higher rates of unemployment than ours and that others have a rate going up faster than ours. Of course some others have lower rates. Unemployment is the European disease; Spain, Ireland and Portugal are higher. If there were an easy answer, there is not another country in Europe—some of whom do not share the same political views as our Government—that would not have waved that magic wand and sought that easy answer. France tried and failed; unemployment there is now 40 per cent. higher than it used to be and it is rising on a shrinking workforce. I promise your Lordships that if there were an easy answer, some of us would have found it.

Lord Paget of Northampton
My Lords, when the noble Lord speaks of the psychology of despair, it prompts me to ask him two questions. The first is: who created that psychology of despair? The second question is: does he think that he improves it by cooking the figures?

§ Lord Young of Graffham
My Lords, the answer to the first part of that question is that people should examine their own consciences as to those who actually spread despair. Secondly, I resent any imputation from any side of this House that the Government's statistical service cooks any figures.

§ Lord Underhill
My Lords, I should like to help the Minister. Would he care to rephrase his answer that only hard work will solve the problem? Many Ministers have made foolish statements off the cuff. The noble Lord may have done so this afternoon. There are many people who want to work hard but who are not enabled to do so. Would the Minister care to rephrase his reply?

§ Lord Young of Graffham
My Lords, when I say "hard work" I mean hard work by Government and hard work by people. It is a long and difficult process to create new employment and new wealth and to do it in a way which lasts and contributes to the economy of the country. That is what I meant by hard work. I can assure noble Lords in this House that I know as well as anyone what conditions are like in different regions of the country, north, south, east and west. We are on the way back. This is the way to create wealth and employment and your Lordships will see it come about.