Unemployment

HL Deb 18 February 1987 vol 484 cc1096-111

2.58 p.m.

Lord McCarthy rose to call attention to the need for accurate statistics to measure the present levels of unemployment and the causes of unemployment; and to the case for an assessment of the long-term consequences of failing to deal with the problem; and to move for Papers.

The noble Lord said: My Lords, I should like to begin by thanking all those Members of the House who have put down their names to speak on what I regard as an important Motion. We have 19 speakers wanting to speak on this subject today; in fact three times the number who wanted to speak, so far as I can see from the Order Paper, on the equally contentious Question tonight of the extent to which we are satisfied with page 3 of the Sun or page 1 of the Mirror. It is a good example of the House finding the right balance.

I want to remind the House that we draw attention to three things in the Motion—the need for accurate statistics, the need for an accurate analysis of the true causes of unemployment; and the case for an assessment of the long-term consequences of failing to deal with the problem.

I want to deploy three arguments. First, we suggest that the Government's current methods of measuring the level and rate of unemployment are misleading and inaccurate, and underestimate the true extent of the problem. Secondly, we believe that this is linked to a faulty analysis of the causes of the problem, which is partly rooted in the wrong headed nature of past government policies. Finally, I want to say something about the true causes, about the need for new initiatives to deal with the problem as defined.

So far as the measures of unemployment are concerned, the figures this month are: unadjusted, 3.29 million; adjusted 3.1 million, an overall rate of 11 per cent. We claim this is misleading. It is misleading in historical terms in two ways. It is misleading because the Government have taken out of the count 19 changes they have made which result in some 463,000 workers being taken out of the register; 100,000 or so are adults over 60; 180,000 or so come out because of the way in which the benefit count has been moved. But in some ways more surprising and less easy to justify, the Government have put some people into the count. They have put into the count the self-employed, a completely novel introduction, and those in the armed services. By putting these two groups into the figures they are able to produce a substantial reduction in the rate of unemployment.

So by putting people in and by taking people out they produce a rate of unemployment which I calculate at 11 per cent. In fact, if we go back to the historical calculation of the figures it is something like 14.2 per cent. or 15 per cent. or an absolute figure for unemployment of 3.1 million or 3.29 million; and if you put them back in or take them out as they were in 1979 you reach a figure of between 3.6 million and 3.8 million.

My first question to the Secretary of State is: apart from manipulating the figures, apart from making them look better, what is the real justification for putting in these historical adjustments except to produce more attractive figures? It is not just the historical comparison that is the only aspect of the present unemployment statistics that we find unsatisfactory. The Government conduct, and have conducted for some time, a labour force survey every year. As a result of that labour force survey it usually appears (and has appeared recently) that there are about three-quarters of a million work seekers, workers looking for work, who do not appear on the register. So our argument and our question to the Secretary of State is: why is it that most of those workers are not put into the calculation of the unemployment statistics?

I know what is the traditional answer of the Secretary of State. It is that there is an equal number—sometimes he says a slightly larger number—of workers who are on the register but who are not looking for work. Therefore you can take one lot off and put one lot in and it comes to much the same thing. One can take the published figures to be accurate figures. We do not think that is fair for a number of reasons. First, many of the 750,000 work seekers who do not register have been seeking work for a very long time. Some of them must be among the long-term unemployed. Some of them have said that if work were available they would be looking for it, yet the way in which the Government justify excluding virtually all these people from the count is to say that they told the investigators that they were not looking for work in the previous week.

We do not think that is good enough. Most objective observers who have looked at these figures have suggested that about 50 per cent. of those who are not on the register and who may have given up looking for work because they live in areas where frankly there is no work, ought in all fairness to be regarded as still seeking work if work were available. If we were to allow anything like, say 400,000 of those who seek work but who are not on the register back into the count then we should have a level of unemployment of about 4 million and an overall rate of something like 16 per cent.

But even these misleading practices do not constitute the whole of the case. I am afraid there are four more ways in which the employment statistics mislead. There is, for example, the decision which has only recently come to light to count part-time jobs as though they were full-time jobs and to count two part-time jobs done by the same person as though they were two jobs done by two people. So that when the Government say, as they frequently do, that they have put 1 million more people into work or have created something like 1 million new jobs since 1964, it is right that they should talk about jobs. They should not talk about people because there may not be many more than a quarter of a million people involved although there may be 1 million jobs. We regard that as unsatisfactory and misleading.

There is also the calculation of the self-employed. In the past the self-employed were calculated on an updating of the 1981 census based on the labour survey. But as I read the Department of Employment Gazette, that stopped in 1985. The self-employed, a notoriously difficult lot to calculate, are now calculated by some perpetuating upward curve. The rate of increase in the past few years is an estimate of an estimate of an estimate. We do not think that is satisfactory.

Then there are the two other ways: there is the way in which the Government operate the Restart programme. The new availability for work questionnaire UB.671 has something curious about it.

The Secretary of State for Employment (Lord Young of Graffham)

My Lords, UB.671 came into being in 1947 and it has carried on since then. It can hardly be described as new.

Lord McCarthy

My Lords, I think the noble Lord will find that more questions have been added to the form.

Lord Young of Graffham

My Lords, if the noble Lord will forgive me, in fact I have looked at that today. There are today fewer questions than there used to be in 1947 and in the 1950s.

Lord McCarthy

My Lords, the noble Lord will not deny that there are nine questions now being asked and that these questions in effect ask people whether they will take work anywhere, at any price, and do any job. That is what I am complaining about. We are saying that the calculation that has been done by the Government suggest to us—and it has been said, I believe, by government spokesmen—that from the results on the basis of the pilot the Restart programme will take about 160,000 workers off the register. The Secretary of State may shake his head, but that is what is said. The Minister must deny a statement in the Guardian newspaper based upon an internal memorandum by Mr. Jeremy Surr of the Manpower Services Commission.

Lord Young of Grallham

My Lords, once again I am happy to deny almost any statement in the Guardian newspaper about Restart.

Lord McCarthy

My Lords, I am sure that will be noticed in the Guardian office. The question therefore is: can the Minister tell us what degree of reduction in the register he expects from the Restart programme? Is he really suggesting that the Restart programme will create additional jobs? I am sorry that I cannot totally dismiss the Guardian in the way the Minister can, because what the Guardian said is that the memorandum suggested that only 0.6 per cent. of the people in the Restart programme actually found a job. If the Minister denies that and says that the Guardian is wrong I hope he will tell me what the correct figure is and what he expects to come off the register as a result of the Restart programme.

We are saying that when you put all this together, when you add in the army, take out the over-60s, when you count one person twice, what you have is creative accounting. It is the best piece of creative accounting since Gogol's Dead Souls, with much the same effect. It is massaging the official statistics to achieve the objectives of the massage. Why stop at the army? Why not add in the population of Her Majesty's prisons? Perhaps they do. There must be other people whom the Government could add in, and if they add enough perhaps they may get unemployment below 3 million.

The first part of our argument is that these figures are specious and misleading and that the Government should recalculate the figures on a more reasonable basis to give us a more accurate measure of the unemployment problem.

I turn now to the causes and the policies the Government have pursued. Essentially it seems to us that government policies have gone through three phases. There was the period between 1979 and 1982 or so when they saw the problem of unemployment as a by-product of the inability to get under control the notoriously slippery M3. If only you could control the money supply the problem of unemployment would solve itself. That was the period when they ran down the special employment programmes and when they introduced reductions in the numbers of training boards.

But that did not cure the problem, and therefore somewhere around 1982 the Government developed a new argument. The problem was not the failure to get the money supply under control, which once it was done would automatically cure the unemployment problem. The problem was that the level of pay, and particularly the level of pay for the low paid—because this Government have never complained about the rates of increase for the higher paid—and the level of collectively-bargained pay were so high that people could not be priced into work and therefore unemployment was an aspect of an over-regulated economy.

This was the period when the Government introduced the Jobstart programme; when they ended the young workers' scheme, and introduced the end of the fair wages policy, together with the attack on wages councils. That policy has not completely vanished. Only recently the Minister responsible for employment in another place, the honourable Member for Rushcliffe, attacked the system of industry-wide wage bargaining in this country and declared that he felt there ought to be a totally individual system of wage bargaining, where pay was based on individual performance and the operation of local labour markets.

What we say to the Government in that respect is that of course that applies in a narrow area of the labour market; that kind of system of pay determination applies at the top. It applies to boards of directors and chief executives; it applies among the wealth creators; and of course it is producing far higher levels of wage increases than those now being produced in the organised system lower down. If the Government want to preach wage restraint they should not talk about individual bargaining or individual performance. They should ask their friends in the higher areas of income distribution to practise a little restraint. If we have a wage explosion at the moment, wages are being pushed up from the top and not from the bottom.

In any case the Government have come to realise that this attack upon collective bargaining and upon the system of wage determination may make good copy but it does not cure the problem of unemployment. Therefore we have moved, and we have moved under the present Secretary of State, to a situation in which the Government have complemented such arguments with an increased enthusiasm for special measures: the expansion of YTS, the new worker scheme, the community programme, the enterprise allowance, the Jobstart allowance and so on. I am told that if you include YTS in the overall figures, the Government can now claim as a result of their special measures to be taking something like 750,000 people off the register.

Our position on the special schemes of the Government is simple and clear, but it is constantly misrepresented. In general we welcome these special measures. Without them the level of unemployment now, on our calculations, on an historical calculation of the figures would top some 4.7 million. In 1982 we on this side of the House, at the time of the report of the Select Committee chaired by the noble Baroness, Lady Seear, actually argued for—though we got very little for our pains—an expansion in YTS and the community enterprise programme, as it then was, of the job release and job sharing provisions, which we said at the time were worth about 500,000 jobs. We were told from that Dispatch Box that that was moonshine.

Nevertheless we have certain criticisms to make of these programmes. We consider that they contain insufficient training and that they are very often mitigated in their effect by the attempt of the Government to combine them with the old policy of pricing people into work, which is one of the weaknesses of the Jobstart allowance. But, most important of all, we consider that the Government still regard them as all that needs to be done. All the evidence suggests that on these figures, at this size of effort, we are not going to get unemployment below 3 million—except for transitory figures as a result of Dead Souls-type massage—except maybe in four or five years' time.

The Secretary of State has made a great deal in the last few months of the fact that, apart from this month, which is a little bad for him, he has taken about 100,000 or so off the register over six months. If your Lordships work that out for yourselves, it is going to take four or five years, given the present increase in the size of the labour force, to get down to anything in the region of 2.5 million.

Again there was a leak—I suppose the noble Lord will say this is another leak, but it was not only in the Guardian but also in The Times this time—that the Government went along to the European Community and, when asking for regional aid, admitted they were not going to get the unemployment count below 3 million until about 1990. Our central criticism of these programmes is that they do not go far enough. That is why you find a whole range of people—not simply in the Labour Party and the Opposition generally, but all kinds of groups—suggesting that we now need to have a much more radical extension of policies of job creation.

A figure has been mentioned of 1 million jobs in two years. The Secretary of State and his Minister in another place frequently ask for details of those figures. I am tempted to suggest that if he wants a nice account he should turn to page 162 of the 1982 Report of the Select Committee, which offers him 1 million jobs over two years for just under £2 billion. The problem with that is that he has done half of it and therefore it is worth only half a million. Therefore we have to propose other suggestions.

The curious thing about those suggestions—and there have been many of them, including the CBI projections, the more ambitious TUC projections and the detailed projections by Mr. Jackman and his friends at the Employment Institute, based upon the long-term unemployed and to guarantee work for 750,000 over a period of two years—is that they are all far more specific and detailed than the programmes of the Government for further expansion.

The Secretary of State systematically misrepresents what is said. He said only on 19th November (at col. 239 of the Official Report) that what the Labour Party favours is the indiscriminate recruitment of workers into the public sector. Nothing could be further from the truth. What the Labour Party proposes is that a specific number of jobs, directed at specific groups, such as, for example, the long-term unemployed, shall be complemented by a specific costing of jobs in areas such as construction and social amenities. These figures, produced both in official and unofficial estimates, are far more precise than what the Chancellor is almost certainly going to propose in the Budget.

This Government are the government of indiscriminate private sector consumption-led expansion. They are going to remit something like £2 billion or so—or whatever it may be—of income tax payments in the hope that it will have some effect on unemployment. I challenge the Minister to deny that all objective studies—from the Institute of Fiscal Studies onwards—of the alternative of detailed public sector-led, employment-centred creation of jobs shows that it is between five and nine times more productive than a general indiscriminate remission of taxation. There is absolutely no alternative to the policies that we are proposing—an employment-centred expansion of jobs, which is specific, precise and infinitely cheaper than the kind of give-away which the Chancellor will propose in the Budget. My Lords, I beg to move for Papers.

3.20 p.m.

Lord Young of Graffham

My Lords, I have noted the great concern over statistical accuracy which was so much the theme of the speech by the noble Lord, Lord McCarthy. I welcome this opportunity to put his mind at rest and to set the record straight. I should hate to think that the noble Lord spent the night hours tossing and turning with worry and concern over the accuracy of the Office of Population Censuses and Surveys and the Government Statistical Service. I wonder, however, whether it is entirely a coincidence that this concern over unemployment statistics has arisen just as unemployment itself has fallen. Is there a connection—I ask myself. For I must confess that I could detect little concern before. Perhaps this new concern is a suitable subject for respectable academic research.

Lord McCarthy

My Lords, will the noble Lord give way? Is the noble Lord seriously suggesting that we on this side of the House have not been concerned about unemployment since his Government took office, since 1979, and that we have only recently become concerned?

Lord Young of Graffham

Of course not, my Lords. I have heard a great deal about the noble Lord's concern, but only since last summer have I heard concern about the statistics. But I shall come onto that.

In the United Kingdom, in common with many other European countries, we use the system for administering benefits to the unemployed as the source of the monthly unemployment statistics. The figures for unemployment are based on the count of the number of people who declare that they are unemployed and available for work, and who are claiming unemployment benefit, supplementary benefit or credits for national insurance payments.

All administrative systems are changed from time to time and those changes affect the unemployment statistics. The main change was in 1982. Until October 1982, anyone who lost his job had first to go to an unemployment benefit office, then go and sign on at a Jobcentre and finally come back to the unemployment benefit office. That was hardly the best way to treat people who had just lost their job and, in any event, little was ever done with the registration at the Jobcentre. It was mere bureaucracy of the worst order. We cancelled the compulsory signing at Jobcentres, made administrative savings and provided a better service to those who came into the Jobcentres.

That change also had implications for unemployment statistics, which had previously been based on registration at Jobcentres. We had to change to count claimants at benefit offices, because most people stopped registering at Jobcentres when registration became voluntary. In fact, there are today only some 320,000 unemployed people in the land who have registered their names with Jobcentres.

It also meant, after October 1982, that the unemployment statistics included disabled people, who had previously been ignored; no longer included many who had been previously included merely because of out-of-date manual records; and no longer included those who were neither claiming benefits nor credits.

The net effect at that time was to reduce the number of people counted as unemployed by some 190,000. But it did not change by one iota the numbers of unemployed people in this country. What the number really is I will come to later. These changes reduced the administrative costs borne by the taxpayer by some £10 million each year, and I believe that the change improved the accuracy of the unemployment statistics.

There have been five other changes which have had an impact on the unemployment statistics. Of these only two were statistical changes. The others were changes in the administration of benefits which had an effect on the figures. One of those changes, and one alone, was made during my period of responsibility as Secretary of State for Employment. This change is the basis for my new reputation for "fiddling the figures".

Let us examine for one moment the basis for this claim. My statisticians had found substantial over-counting of claimants. We know when people come onto the count because they claim benefit immediately. We do not know when they leave the count for, thanks to the fortnightly signing on arrangements. It is often some time before they tell us. With 400,000 people leaving the register every month, my statisticians calculated that about 65,000 people were counted as unemployed who were already back at work. They suggested a longer waiting period between the count date and compiling the figures, which would remove some 50,000 from the count—50,000 only. It would still leave an overestimate of unemployment of some 15,000. I agreed.

I should add that John Prescott, the spokesman for the Labour Party in the other place, agreed on television at the time that had he been in my office he would have made exactly the same change. On this one change my reputation was made. One other change removed a small error in the figures in Northern Ireland. Again the purpose of the change was to remove from the count of the unemployed those who were not unemployed at all. My Lords, is that another fiddle?

The other changes were due to the way in which benefits are paid. In 1979 we changed weekly signing on for fortnightly signing on. This again had the effect of increasing the number counted as unemployed. Then there was the extension of the long-term rate of supplementary benefit to claimants over 60, and removal of the need for men aged over 60 to declare their availability for work week after week, in order to receive this higher rate or, later, to receive national insurance credits, again reduced the number of people signing as unemployed.

The effect was to make life easier for claimants, while recognising that most men aged 60 and over were not actively seeking work anyway.

I believe that, by and large, the impact of these administrative changes on the count of the unemployed improved their accuracy. There can, of course, be no perfectly accurate measure of unemployment. No statistic of the human condition of unemployment, the number of people available and looking for work can be absolutely precise. It is not possible to construct an absolute measure of how actively people are looking for work and how available for different kinds of work they might be.

Are single-parent families really unemployed? Are working wives who have just had a baby really looking for work during the first year after the birth? Are those in their fifties, retired on occupational pensions but signing on for credits only, really looking for work? Are redundant steelworkers and miners, drawing a pension from their old employer, really looking for work? Are any of them looking for work? Your Lordships must be the judge. But they are all included in the figures.

We have made no secret of the fact that some past changes in administration have affected the number of people counted at that time as being unemployed. For example, the October 1986 edition of the Employment Gazette, published by my department, included an article setting out the changes affecting the unemployment count. We regularly publish a consistent series back to 1971 according to the current basis of the count. If this is fiddling, then it is remarkably public.

I know that there are attempts to discredit the unemployment statistics; attempts which our political opponents have tried to exploit by quoting large numbers of supposed "fiddles"—the product of some very fevered imaginations. Perhaps the Labour Party should tell us which of those so-called "fiddles" they would seek to reverse. Would they add in those who say they have retired? Would they add in those not looking for work at all? Would they add in nonexistent people created by statistical errors? Perhaps they would add in people who had left the register but were still being counted by the system. They would not.

They are making claims of numberless fiddles, based on adding together minor administrative changes and one-off statistical changes which have no effect on the present count of the unemployed. I am intrigued, if not surprised, by the lengths to which the unemployment unit, among others, has gone to list fiddlers. Let me give your Lordships two "fiddles" which it identified in 1979.

First, it drew attention to the addition of some 20,000 to the register added in by the statisticians because we changed the system from weekly signing to fortnightly signing. Then it drew attention to the compensating downward adjustment of 20,000, which we made to allow for this change, so that our statisticians could produce a consistent time series of unemployment figures. First it says we go 20,000 up and then it says we go the same 20,000 down. Those, believe it or not, are two of their 18 changes—two for the price of none.

Then again, in 1981 one result of the DHSS strike was to inflate the unemployment figures during the period of the strike. During that time, and that time only, the statisticians took account of the over-recording in the seasonally adjusted figures. They claimed that that was yet another fiddle.

These fraudulent claims are being made to divert people from the fact that employment has grown by a million since 1983 and that unemployment is now over 100,000 lower than it was six months ago. But as if statistical fiddles were not enough we are now being accused, as we are accused by the noble Lord, Lord McCarthy. of using employment measures to manipulate the count.

I realise that the self-employed arc classed by some as non-persons. They cannot be members of a union, after all. That I can understand. But what I cannot understand is the claim by these fearless searchers after truth that all those who, working for themselves and helped by the enterprise allowance scheme, should actually be added back to the unemployment count.

Then again I am surprised that anyone should suggest, as the noble Lord did a few moments ago, that people in training should be called unemployed. No previous government in our history have done that. Indeed, I am surprised—

Lord McCarthy

My Lords, if the noble Lord looks at what I said, he will see I did not say that at all.

Lord Young of Graflbam

I shall come to precisely what the noble Lord said. He went so far as to say that those on YTS should be added back to the unemployment count, and added on to the 750,000 people on special measures. If the noble Lord wishes to disagree, now is the time.

Lord McCarthy

What I said was that those special measures are neccessary—and I am not against them—in order to prevent a level of unemployment over 4 million. If the Government had not introduced those special measures, that is what the level of unemployment would be. I am not saying that there should be no special measures.

Lord Young of Graffham

My Lords, I shall come very shortly to the true level of unemployment in this country. However, many of those on YTS are employed and many more would be otherwise employed if their employers did not run the training programme because they recruit through it. It is a training programme; it is permanent and not temporary. It will be here long after youth employment is anything but an unpleasant memory. Indeed, that is what next Easter will bring, because there will be no more unemployment for those under 18 in this country.

The community programme pays the rate for the job. That is not good enough for those critics who classify all the quarter of a million people engaged on the programme as unemployed. Mind you, these are the souls who demand a guarantee for the long-term unemployed using the community programme and other schemes, and in the same breath accuse us of fiddling with employment measures. How did the Economist describe them? First, they complained about the quality of the food and then they complained that the portions were too small.

I am particularly sad to see Professor Layard joining in this chorus—sad because as a professor of economics he has his sums wrong and very badly wrong indeed. He is wrong to treat the self-employed as non-persons and wrong to say that employment growth has ceased. His recent article in the Financial Times calculated the growth in employment by ignoring those who work for themselves, and then made a blanket assertion that growth in employment has stopped for the last half of 1986. The figures I announced last week showed that for the third quarter employment growth was 80,000—the best quarter since the beginning of 1985—while the figures for the last quarter have not yet even been compiled. What does the good professor know that we do not?

He assumes, as do far too many, that we have an insoluble problem on our hands. There is growth in our economy; there has been for the last six years and it looks as if we shall have a seventh good year as well.

But I acknowledge that some of the fall in unemployment of the last six months was due to our measures. Some of the fall—perhaps as much as a quarter—can be attributed directly to increased uptake of our programmes. I make no apology for that. I have for many months told your Lordships' House that we are making a priority of the long-term unemployed. As long ago as last June I said in reply to a question put to me by the noble Lord, Lord Cledwyn of Penrhos: In six months' time we shall begin to see long-term unemployment go down". And we have. Today I was able to announce that for the second successive quarter long-term unemployment has gone down, not by accident but because our policies are working. The whole Restart programme was devised to ensure that we did not ignore those most in need of help. I believe that it will long help those who have been out of work for too long, and the recent extension to six months and every six months will pay great dividends.

I fear that I may be abusing the courtesy of your Lordships' House by taking a little longer in my opening statement. However, I should like to say that I shall gladly give up my time in winding up. There are one or two points regarding statistics with which I should like to deal now as I believe they are of great importance.

Those who doubt the accuracy of our unemployment statistics based on a regular count of the unemployed should look at the alternative way of measuring unemployment through sample surveys. Some countries such as the United States, Canada and Australia use such surveys as their main monthly method of measuring unemployment. The disadvantage is that they cannot measure unemployment on a local basis at an acceptable cost. In this country we publish annual results from the labour force survey, a sample survey based on some 60,000 households. This provides estimates of unemployment by identifying those people who say they are without a job and actively seeking work.

What does this alternative source of unemployment statistics tell us? First, it confirms that the official claimant count figures do not underestimate unemployment. If anything, they appear to overestimate it. Secondly, the last labour force survey in the spring of 1985 showed a lower number of people unemployed than the official claimant count figure: 320,000 below on one definition of unemployment, and some 160,000 lower on the basis of the definition which closely follows the guidelines of the International Labour Organisation. Perhaps the noble Lord, Lord McCarthy, should tell the ILO that its definition is not fair, since we gladly accede to it.

Thirdly, the labour force survey figures show unemployment rising less fast then the official claimant count. Between 1981 and 1985, unemployment on the current official claimant count basis increased by around 900,000, while the labour force survey figures indicted an increase of around a third of a million.

I do not want to overemphasise those differences. But I do not want to hide them and I await with interest the publication of the next labour force survey in a few weeks' time. What the labour force survey shows is that claims of official under-recording of unemployment are utterly without foundation. Indeed, if there is an error it is in quite the opposite direction.

Unemployment rates for different countries published by the OECD using internationally accepted guidelines confirm this. The latest OECD figures for the United Kingdom based on labour force survey information shows an unemployment rate of 11.2 per cent. in December 1986, which compares with our claimant count figure of 11.3 per cent. If the noble Lord, Lord McCarthy, believes that the OECD is fiddling, he should add that organisation to the list as well. I am confident that people who consider the question of the accuracy of the unemployment statistics rationally and dispassionately will conclude that they do not underestimate unemployment.

The accuracy of unemployment statistics is an interesting side show, and it has been important to set out the facts in a fair amount of detail to rebut the charges of fiddling the figures which have been levied. But I wonder what someone who has been unemployed for some length of time would make of all this synthetically generated concern about the accuracy of statistics. The important issue for this House to discuss and for the country to settle is the cause of unemployment and the best way to tackle it. That I will discuss in some detail when I have listened to all that noble Lords have to say and when I have an opportunity to reply.

Lord McCarthy

My Lords, before the noble Lord sits down, will he make the position clear? Is it right that he is not challenging the effect of what I said in my examples? By adding in the Army and the self-employed, the rate is reduced by 3 per cent. By taking out 460,000 people as a result of 19 changes, the level is reduced by almost 500,000. Is that not correct?

Lord Young of Graffham

No, my Lords, it is totally wrong. If you wish to calculate unemployment in relation to those who are employees in employment, as against those out of work, you have a figure of 13.1 or 13.2 per cent. If you wish to calculate unemployment by the proportion of those out of work compared to all those people in our country who are working, including the 2.8 million people who are working for themselves, unemployment is 11.2 per cent. I think I mentioned a moment ago that the OECD definition is 11.3 per cent. That seems to me to be the accurate definition. If one wishes to keep adding back through a series of statistical adjustments, I have no doubt that you can make unemployment up to any amount. If the noble Lord were to calculate the total number of those who have retired in the last 25 years and to add that to the count, that would have as much bearing on the number of unemployed.

3.40 p.m.

Lord Diamond

My Lords, I feel that the appetite of your Lordships' House for statistics is very nearly satisfied. For that reason I propose to spend a short time only on that aspect, and more time on what I regard as perhaps the more substantial aspects in the Motion. I do this partly because I agree with virtually every single word that the noble Lord, Lord McCarthy, said in criticism of the statistical approach of the Government and of the Secretary of State. We are very grateful to the noble Lord for this opportunity to make a fairly detailed statement justifying that anxiety.

The noble Lord could have added two things. One came out very clearly in answer to the intervention at the very end of the speech of the noble Lord the Secretary of State. He said that, if one wants to calculate the unemployment percentage in one way, one arrives at a figure of 13 per cent.-odd; if one wants to calculate it in another way, one arrives at 11 per cent.-odd. These are the truthful answers to two different questions.

If the noble Lord the Minister would always give us both answers, if he would always give us all aspects of the truth—there is no single aspect and there is no single answer—about which any honest man can ask himself, and treat your Lordships as if they had something above their necks, then every noble Lord would be able to make his own judgment and say, "This is a significant question", or "That is a silly question". The 11.1 per cent., or whatever it is, in my view is the answer to a silly question, and the 13 per cent. is a significant figure. If only the noble Lord would only give us both answers on all occasions; indeed, there may be three or there may be four answers.

I have found over my five years' full-time chairmanship of a Royal Commission that had to deal with the production of statistics—we produced 2,000 pages of statistics, none of which so far as I am aware has ever been challenged—and we all found, because the commission was composed of men and women from every walk of life, that there is no single answer but that, if one is trying to convey the total truth, one must do what one does on oath; namely, give the truth, the whole truth and nothing but the truth.

Lord Young of Graffham

My Lords, I am grateful to the noble Lord for giving way. I should like to point out that each month I publish both figures in the unemployment statistics, clearly marked. On page 4 is the 11.3 per cent., which is the calculation that includes the self-employed; on page 6 is the 13.3 per cent., which treats the self-employed as non-persons.

Lord Diamond

My Lords, of course the Government publish those figures. Those of us who are interested and who go to the trouble of getting the monthly digest of statistics, the labour force survey, other documents that are made available from time to time and the single article produced in Economic Trends once a year, which sheds light on all these subjects, get a fair assessment of the situation, but that is not available in time to every one of your Lordships. Your Lordships have other things to do than concentrate entirely on finding out the reliable figures that represent the whole truth on unemployment and employment. For that, your Lordships seek the advice of the Government and the Minister.

If the noble Lord the Minister had more regard to what the noble Lord, Lord Barnett, said from the Front Bench of the Labour Party only a short time ago—namely, that the noble Lord the Minister was far too selective; a criticism that I fear I must endorse—he would realise that the difficulty from which we are all suffering is that he himself prefers from time to time to give only one aspect of the truth: that is the aspect that suits his party and his propaganda most. So my appeal on statistical grounds is the one that I have made. Let us have the whole story, and your Lordships can then judge which is the significant part and which is not the significant part.

I go now to the other aspects referred to in the Motion of the Government's failure—that is the only thing I can call it—to deal with the problem of unemployment. There we need to start with some figures. My own figure—but I do not ask anyone else to accept it—is 4 million unemployed. If one took the figures of those seeking work now and those who would seek work if there was work available, I have no doubt that it would exceed 4 million. If there were a normally active economy in the present situation, there would be 4 million people seeking work who would not find it at present. That is the figure. The Government accept a figure of about 3.25 million, and there were about 1.25 million when the Government came into office.

The figures are extremely simple. On the Government's own basis—we will give them this for the purposes of the argument—there is a difference of 2 million. That 2 million, according to the work done objectively by outside bodies—and I have been over this ground many times before—is attributable as to approximately half to the Government's policies, and half to international consideration over which the Government had very little control. It is therefore that million for which the Government are responsible. It is just as ridiculous to complain that the Government are responsible for the whole of 2 million as it is ridiculous for the Government to say, "All this unemployment is due to external circumstances; just have a look at the figures of other countries", and then to give us selective figures of other countries that do not represent the story.

That is what the Government have achieved. Why? Because they have given priority not to this problem but to inflation, or disinflation. That has been the Government's priority. They have said in every Budget, in every Autumn Statement and on every important occasion on which the Chancellor has spoken and written and the Government have published documents, "The No. 1 priority comes out as inflation; we must deal with inflation". They do not say, "We must deal with inflation and unemployment equally". That is why they have given that the whole of their attention.

The result has been the most crude of all deflationary policies, resulting in this massive increase in unemployment and in bankruptcies, and a massive decrease in industrial production, especially manufacturing. That is the story of the Government's achievement. I must not forget to add on that, as regards inflation, as a result of diverting the whole of their mind and concentration to that one single issue they have managed half as well as the average of our competitors in reducing inflation, if one considers the difference between the rate of inflation as it was when the Government came into office and the rate of inflation as it now is. That is the story.

What are the Government proposing to do different from what they have done which has produced these results? The answer is, nothing. They are totally unwilling to take an entirely different point of view. They are totally unwilling to leave their soiled monetarist policy and adopt the view that, if one spent money on developing, on replacing, on capital expenditure and on maintenance of one kind and another, then one would achieve an increase in employment which would exceed the natural increase in people available to be employed, and would therefore result in a reduction in the number of unemployed. They are unwilling to do that and therefore all we can expect from the Conservative Party, if it were to be in office for another period, is a continuation of the same medicine with the same results.

I am supported in this view by every commentator I have read. Those commentators regard it as likely that over the next four or five years there will be about 3 million unemployed—broadly the existing figure. That is what can be expected from a continuation of the same policies by the same Government in another period of office.

What we are going to do about it? I hope that I do not have to spend a lot of time, from these Benches, dealing with that question.

Noble Lords

Hear, hear!

Lord Diamond

Such approval from the other side is very encouraging. I have before me an interesting booklet—our policy in black and white. It sets out every single detail of what we propose if we succeed in winning the people's support, as we have succeeded in winning it in all the by-elections, at the next general election. We have obtained more votes from the electorate than either of the other parties in by-elections so far. The policy has been on the record since our first by-election in 1981. It was carefully worked out. A good deal of it has been copied by the Labour Party and I shall come shortly to what Labour proposes. Perhaps, however, in view of the time, I should come to it straightaway.

What the Labour Party proposes is wholly fanciful. I am sorry to have to disagree so entirely on this matter because I agree so much with the first part of the Motion. The Labour Party has made the total error of going over the top and imagining that it can secure the confidence of the international financiers from whom it needs to borrow and to apply that borrowed money in the way it wants. First of all, you have to borrow money; and before you borrow, people must have confidence in you. That confidence exists to the extent that they know that if they lend money they can get it back again. The first thing an investor wants to know before going in is that there is a way out.

I know only too well—I speak from personal experience—that a Labour Party in any country is not the greatest friend of the financiers of that country and those interested in international finance. We know that the Labour Party is approached with hesitation and doubt by the international financial community. One has to build up confidence. What has the Labour Party done in order to build up confidence, starting not from zero, which is where we or the Tories would start, but from a minus figure, because, unfortunately, that is the accepted point of view internationally?

What has the Labour Party done to build up confidence starting from such a prejudiced position? It has made absolutely clear that there will be legislation to ensure that money will be brought back into this country by compulsion and that anybody from abroad who invests in this country will not be able easily to take his money out again. As a result, I am sorry to have to say that the confidence of the international and national money markets would be mirrored by the goodwill which the Front Bench of the Labour Party shows at the moment towards the City. One has only to listen to what is said in debate after debate to realise that this, what I might almost call, hatred for one another, is mutual. That is not a way of building up confidence. One hears these statements about the City time and again. That is not a way to build up confidence.

I am therefore bound to say that the Labour Party's view that it would be able to stay in office and achieve what it is trying to achieve is wholly fanciful. Within six months it would be faced with a major sterling crisis which would make it turn all its efforts towards looking after a minimum standard of living instead of pursuing the policy that is necessary to reduce unemployment.