HL Deb 24 April 1991 vol 528 cc270-317

3.15 p.m.

Baroness Turner of Camden rose to call attention to the continued growth in unemployment, particularly in regions which hitherto have been relatively prosperous; and to move for Papers.

The noble Baroness said: My Lords, I rise to move the Motion standing in my name on the Order Paper. I welcome the opportunity to open the debate this afternoon on the subject of unemployment although no one can welcome the fact that the choice of subject is so timely and so apposite.

As everyone knows, the employment situation is far from good, and there are no signs of improvement. As the Minister confirmed in answer to Questions in this House last Thursday, there are now over 2 million people unemployed. In March unemployment in Britain rose by 112,900; that is the biggest monthly increase since current records began. There are prognostications that the figure will rise to 3 million over the next 12 months.

One feature of the new growth in unemployment to which the terms of the Motion refer is that it is now happening in areas which have hitherto been relatively prosperous; for example, in the South East. There is also a growth in unemployment in the North West and the Midlands. While we continue to lose jobs in manufacturing, which has been a feature of the past decade, we are now losing jobs in financial services, in banking, in the service industries generally and in public services such as local government. Today the Evening Standard indicates that London is being ravaged by the recession. In the South West heavy redundancies threaten the aerospace industry.

We all welcome the peace dividend, but the fact remains that unless there is diversification unemployment will threaten many thousands of highly trained people working in the defence industries. Employment in those industries, already reduced from 765,000 in 1980 to 618,000 in 1990 is expected further to reduce to around 495,000 by 1995. Where is the Government initiative to transform those industries and utilise the highly trained personnel through a diversification programme? All that is happening is that they are likely to be added to the figures of those already without employment. We are seeing real life situations such as that in Vickers in Barrow, where my own union tells me that between 3,000 and 4,000 jobs are to be lost. That is an absolute catastrophe for that town.

As we all know, unemployment is always a personal disaster. It brings in its train an immediate lowering of living standards. If it continues it results in real poverty, not only for the individual, but also for the family and dependants. It is a threat to health. It plays a role in marriage break-up. It undermines the individual's sense of self-worth and respect. In a society in which we largely define each other by what we do, not to have an occupation and to be on benefit is seen as indicative of a lack of worth. That is particularly true in the case of the long-term unemployed, many of whom are older people who may have had skills which are no longer recognised as relevant. Some industries have been particularly hard hit.

I wonder how many noble Lords saw a recent television programme about, of all places, Bournemouth. It now faces unprecedentedly high levels of unemployment. A former site manager working in construction was interviewed. He had been in three jobs in less than two years. Each time the company for which he had been working had closed down. The construction industry has been particularly badly hit. I am told by the Federation of Master Builders that the greatest reduction in employment in the industry is 10.7 per cent. in London. However, it says that a quarter of all firms are making redundancies. The federation says that to achieve any relief for the industry further reductions in interest rates are urgently needed.

Another problem which undoubtedly arises when there is widespread unemployment is that of people who cannot meet mortgage repayments. That has scarcely been addressed by the small reduction in building society rates that we have seen recently. People were encouraged by the Government to embark on house purchase. There have been few homes to rent at reasonable cost; local authority programmes have been cut back and, whether people like it or not, they have been forced on to the housing market. As the former Prime Minister said, it may very well be true that house purchase is a good, long-term investment. But that is of very little help to someone with a young family to support and who is now facing an immediate drop in living standards and income.

What is the Government's response to all this? I credit the Government with caring about unemployment since it would be electoral suicide to give the impression that they were indifferent to it or that it was in any way part of a deliberate policy. Indeed, I understand that Conservative constituencies now have rising levels of redundancies. However, at the beginning of the decade there was a great deal of talk, notably from the previous Prime Minister, about the need to shake out surplus labour to produce a leaner, trimmer and fitter industry more able to compete internationally.

We have had the shake out, as many unemployed, particularly the long-term unemployed, can testify. But we are apparently no more competitive than before—if anything, rather less—since we now have an enormous balance of payment deficit. Furthermore, manufacturing output is down sharply. In the three months to February it fell by 2.1 per cent. compared with the previous quarter, and it was down 4.6 per cent. against a year ago. One line of approach adopted by the Government has been to support total deregulation. We have seen a series of legislative moves in the past decade designed to remove whatever employee protection existed previously. The employment legislation has been based on the assumption that the employee needed protection from his or her union rather than from exploitive employers. So we have seen the repeal of the fair wages resolution, and sections of the employment protection legislation allowing for arbitration and providing machinery for union recognition have been expunged. The powers of wages' councils have been eroded. There was some talk of doing away with them altogether. It is now much more difficult to take cases to industrial tribunals.

The Government have consistently opposed the idea of a social dimension and continue to oppose the European social charter. One of the reasons for their opposition is that it would allegedly inhibit job creation. But we now have what must be the most deregulated and unprotected labour market in Western Europe and yet we have growing unemployment. It is surely the case that unemployment arises from general economic factors and has little to do with regulations about employee protection.

The Government have also pointed to high wages as a reason for unemployment. I am sure that the Minister will repeat that this afternoon. Plainly that cannot be so because in the United Kingdom it is acknowledged that we actually have a low wage, low productivity economy. Certain sections of the workforce—that is to say, those possessing certain important and needed skills—are sometimes in a position to make high wage demands and sometimes get them satisfied. Presumably that also applies to the senior directors who have been awarding themselves 22.7 per cent. salary increases. But a very large part of our workforce works for low wages. Indeed, the Government's social policies actually subsidise low wages through the provision of benefits like family credit. Almost 1 million people rely on means-tested benefits to top up low wages.

No doubt the Minister will attempt to scoff, as he has done previously, at the Labour Party's commitment to minimum wage legislation. Yet we do have a form of minimum wage here already—but instead of employers paying for it, public funds do so via the social security system—and at low levels. On the social security side, it has been government policy to encourage people to take up low-paid employment rather than to remain on benefit. Yet despite all that we still have growing unemployment.

There is a cost involved in keeping people unemployed rather than in productive employment. According to figures that I have been provided with, it costs£8,082 per year to keep one person unemployed. That includes the cost of benefits, tax revenue foregone, and so on. Thus the cost to the Exchequer, if we have 2 million people unemployed for a year, is£16 billion; and if we have the projected 3 million unemployed, the cost will be£24 billion. That is a very substantial sum indeed.

Although this is not a debate specifically about training, one can hardly discuss unemployment without referring to it. Everyone appears to agree, including the Government, that training ought to have priority. Conventional wisdom is that one of the reasons why we are now in recession is that over the years we have neglected training, yet, compared with our competitors, we are spending less on it. The Government are presiding over cuts in the training budget for 1991–92 even after the recent decision to restore£120 million to employment training. Committed people—that is to say, people who give up time to serve on TECs—are becoming increasingly frustrated about the lack, as they see it, of adequate resources.

I still believe that, as regards training, the Government's commitment to the employer-led voluntary approach is not the right one. I still regret the demise of the Engineering Industry Training Board as a statutory body although I naturally hope that the successor body will be able to accomplish the heavy task laid on it. We have to think about economic policy when considering unemployment, particularly at its present levels. I believe that the present Government's record is one of failure. We have failed over the years to give sufficient support to manufacturing industry. Our service industries ride on top of our ability to manufacture and will themselves be adversely affected once that ability is drastically impaired.

The Government have not developed a long-term policy for industry. Investment in manufacturing is no higher now than it was 11 years ago. We have lost more manufacturing output than our European neighbours. Yet all this time we have had a bonus of revenue from North Sea oil. These are revenues that should have gone to upgrading manufacturing and providing training and research capabilities.

The Motion refers to the impact of unemployment in regions formerly regarded as relatively prosperous. I have already made some reference to these—that is to say, to the South East and the South West, London, and the formerly prosperous areas of the Midlands, and to industries such as the service industries where employment is now threatened. That all serves to underline the fact that we are now deeper into recession. That has wider implications than the recession that occurred in the early 1980s. It is beginning to affect all areas and most occupations.

There is a need for short-term measures to deal with the present situation. Smaller firms facing the daunting prospect of possible closure urgently need help. We need temporary employment programmes to assist the unemployed, particularly the long-term unemployed. We must put more money into training. In particular, we need to accept as a society that full employment is not a hopeless, unattainable and out-of-date goal. Labour and Conservative governments after the war accepted full employment as a social objective and as a priority of social policy. Policies were developed with that in view. That generation had had enough of unemployment and recession in the 1930s and was determined that there should be no return to those days. We may be getting perilously close to a return to them.

Yet it does not have to be so. There is no reason why full employment should not once again be regarded as a legitimate social objective, remembering that it costs society heavily to maintain people in enforced idleness as well as creating a social blight and social problems of which we are all too well aware. Unemployment is an avoidable catastrophe. Given the political will it can be overcome. My Lords, I beg to move for Papers.

3.28 p.m.

Lord Jeffreys

My Lords, it falls not to me to enter into a soliloquy into the causes of employment or, should I say, the lack of it. There are many here better versed than I in this subject. Anyway, I rather suspect that this may be too contentious a subject for a maiden speaker in your Lordships' House. Unemployment has become an established feature of our society. It has been here for many years and, sadly, it may well be here for many years to come. I prefer the saying, when talking about unemployment, that perhaps, from all evil some good doth come".

In that regard I specifically wish to refer to the very good work being done at the moment by the employment services and, more particularly, the work being done in the job club programme and by the TECs—the Training and Enterprise Councils. Before doing so I should like to draw your Lordships' attention to the effects on the family of being out of work. Apart from the obvious loss of income and all that that entails there is the loss of self-esteem, the loss of morale and the general lack of motivation that an individual placed in that situation may feel. It is in that light that I shall discuss further the job club programme.

The job club programme was set up in 1984 after a very successful period of work in the United States. It is worth reflecting that during a recession for many people it may be the first time they have been unemployed, while for others it may be 20 years since they left school. It is for those people that the job club programme was set up. The programme is specifically involved in the practicalities of the situation; how to look for work and where to look for work and bettering the self-projection of the individual concerned, both in interview situations and in the writing of letters for job applications. The programme helps to teach self-discipline to the individual both in his search for employment and in the management of his personal financial responsibilities when his income has ceased. Much credit for this work must go to the staff employed in the programmes. They live in the realms of where anything is possible. Just because someone is unemployed does not necessarily mean that he is unemployable.

Perhaps I may give an illustration. Nationally, in the year 1990–91 140,000 people entered the job club programme. Of those, 65,000 were employed as a direct result of the programme and a further 21,000 were indirectly employed shortly after leaving the programme. That represents a 61 per cent. success rate and at a time when unemployment trends are rising. That is a record which we can all be very proud of. In my own area of Nottingham, and more specifically in Nottingham itself, there are are 22 job club programmes which can boast a 74 per cent. return to work. Better still, there was an 86 per cent. return to work on the one existing management job programme. I suspect that there are many reasons for that success, but I should like to illustrate just one. It is the boldness and motivation to go and seek out the 50 per cent. of jobs which are never advertised, be it in the national press or the job centres.

Perhaps I may make a small observation about being unemployed. Over the years being unemployed in this country has been almost a dirty word. People who have been unemployed have been spoken about in hushed tones. In the worst instances it has been suggested that people have been sponging off the state, that they do nothing and make no attempt to find work. There has been a stigma about drawing unemployment benefit. Perhaps more damning than all, statistically industry has been far less likely to employ someone who has been six months or more out of work than someone who has been unemployed for only a short time.

All those things could not be less true. I venture to say that unemployed men or women are likely to be far more motivated to do a good job for any company willing to employ them. The experience of being unemployed is so unpleasant that they can have no other choice than to follow this course. However, times are changing. Significantly, more funds have recently been introduced and industry is now looking to the job clubs as a source of motivated labour.

In speaking of the job clubs it is right to draw attention to the linkage that exists between them and the Training and Enterprise Councils. It has been recognised, after a long period, that there is a need within industry, and within the country as a whole, for a labour force having better qualifications and skills: more specifically, having skills that are actually required and not necessarily those skills that are presumed to be required just because we have always had them. In the same way that there is a linkage between unemployment and training so there should be one between government and industry. Government alone cannot be expected to pick up the tab for funding training throughout the country. It should be a joint effort between industry and government. In addition, on the government's part it is important to illustrate to industry as a whole the availability of skilled labour and unskilled labour and, from industry's point of view, to indicate the skills required from the training agencies.

Great challenges face us in the next few years; not only from Europe, where competition is fierce, but obviously from the rest of the world. I should like to believe that the illness has been diagnosed, the surgeon has operated and recovery is underway. If we can get the training right then the unemployment problem will begin to sort itself out and, who knows, perhaps even the job clubs will become redundant. Great things have been done. Let us help to keep up the momentum.

3.37 p.m.

Lord Rochester

My Lords, it falls to me on behalf of the whole House to congratulate the noble Lord, Lord Jeffreys, on his maiden speech. He has spoken with sympathy of the effect of unemployment on the individual and with conviction about some of the practical steps that are being taken to alleviate unemployment. We hope that, having chosen this crucial subject of unemployment on which to address us for the first time, the noble Lord will speak to us again on many future occasions. I hope I may now be allowed to take another minute for my speech if that should be needed.

In preparing for this debate I have looked back to the report published in 1982 of your Lordships' Select Committee on Unemployment, of which I was privileged to be a member under the chairmanship of my noble friend Lady Seear. I have been struck by the way in which many of the long term remedies for unemployment that were then put forward still appear valid. First, the committee did not shirk the vital issue of how this country could achieve and maintain realistic pay levels if we are to regain competitiveness. It considered that the route lay in the willingness of the workforce to relate earnings to added value and the capacity of managements to maximise that value. We hoped that understanding of these facts would lead to realistic pay settlements. The committee also expressed the view that governments would find it necessary to prevent inflationary settlements by introducing what we called flexible and comprehensive incomes policies of indefinite duration. Our fear was that otherwise the impact of pay on inflation and competitiveness would result in indefinite prolongation of unemployment in the hope that those without work would, in the end, price themselves into jobs.

Today the economic background is different in a number of respects. In particular, entry into the European Exchange Rate Mechanism is bound eventually to force our rate of inflation more closely into line with the level of our competitors. But the transition could well be painful, involving increases in unemployment that we must strive hard to avoid. To that end there is in my view a strong case for the Government to enter into discussions with representatives of employers and trade unions aimed at obtaining wide understanding and, if possible, acceptance of the overall increase in incomes which at periodic intervals the country can afford.

In our best run companies managements profit from consulting employees and their representatives before taking decisions affecting those employees' interests. In that way they find it easier to gain agreement and commitment to the decisions which, ultimately, only management can take. I do not see why government—any government—should shrink from doing the same, particularly when decisions affecting the relationship between pay, prices, investment and employment are taken not only by government but also by employers and trade unions.

I want to make it absolutely clear that I am not advocating a return to discredited notions of corporatism and statutory incomes policies. I am suggesting that as a matter of good management—in this case of the national economy—there should as far as possible be consultation with representatives of the relevant interests before decisions are taken. In my view it is only on the basis of consent that in a democracy like ours the often disagreeable policies required to achieve and sustain economic recovery and alleviate unemployment can be made to stick.

Another proposal, much canvassed lately, is that pay bargaining should be co-ordinated in such a way that negotiations in both public and private sectors take place within a set period. I recall this idea being put forward by Sir John Methven, when he was director-general of the CBI in the days of the last Labour Government, as a means of eliminating leapfrogging claims which even then were proving so damaging to our competitiveness. I once had the good fortune to work with John Methven and always thought: he had ideas ahead of his time. No doubt that was why he failed at that time to carry with him the general body of employers, never mind trade unions. I see r o reason why this concept should not be included as one of the items on the agenda for the process of consultation that I have been advocating. But that, too, can only come to fruition with the consent of employers and trade unions; and I include government as an employer.

Incidentally—here I must disagree sharply with the noble Baroness, Lady Turner—it would in my view be madness to contemplate the introduction of a statutory minimum wage. I say that because of the inflationary consequences that would inevitably ensue from the need to preserve skills differentials.

In its 1982 report the Select Committee recommended that education or training should be the norm for 16 and 17 year-olds; that at that age young people who left school should be regarded as trainees and that for those who went straight into work on leaving school at 16 employers should be obliged to offer release far further education or on-the-job training for a minim um of 20 per cent. of their working time. I believe that those are sound principles which should apply today and, indeed, be extended. It is in fact the policy of my party that there should be a statutory requirement for employers to train all their 16 to 18 year-olds for an average of at least two days a week. Employers could choose whether the training should be "in house" or on a recognised course and it could be done either in blocks of several weeks at a time or on two days every week.

That would, of course, involve the Government in additional expenditure in providing for the expansion of tertiary and technical colleges to deal with the increased demand for courses resulting from such a requirement. But on these Benches we have been for years advocating that expenditure on education and trainin—and for that matter on transport and the infrastructure—should be regarded as an essential investment for the future. Indeed, I believe we are alone in having said that we are prepared if necessary to increase taxation in order to finance additional expenditure on education.

All that is for the long term. More immediately, the predicted growth in unemployment is such that there is need in my view for the Government to reintroduce special measures in the form of temporary work schemes on the lines of the old community programme to alleviate the plight particularly of young people and the long-term unemployed. In 1982 the Select Committee on Unemployment advocated that what was then called the community enterprise programme should be expanded to accommodate 100,000 places annually. We said that the aim should be to offer a place to every 18 to 24 year-old who had been unemployed for six months and that remaining places should be made available to the long-term unemployed aged 25 and over. At the time of the committee's report just over 3 million were registered as unemployed and actively seeking work. We said then that unemployment of that proportion required immediate as well as long-term policy reaction. Allowing for the changes which have occurred since that time in compiling unemployment statistics, it looks as though we shall soon find ourselves in a very similar position.

I have put this question to the noble Viscount, Lord Ullswater, on two or three occasions recently. His reply has been to the effect that the Government already have a large training programme for those who have been out of work for some time and for young people. He has also said that training is not always the right answer and has referred to what is being done through extra places at job clubs to deal with the problem. However, I am not talking of existing training schemes and job clubs. I understand that the Department of Employment has been for some time considering the introduction of additional measures to lessen the increasingly severe effects of unemployment. I do hope that when the noble Viscount replies to the debate he will on this occasion be able to respond positively to my question.

That brings me to the one case of a regional nature to which I wish to refer. I live in mid-Cheshire, where there is a training centre catering particularly for those with special needs; for example, to improve literacy and numeracy and for rehabilitation following a period in prison. To my personal knowledge that centre has, during the past five years, performed admirably for the local community in providing training and obtaining employment for both young people and adults. The manager has now been told that his employment training contract will be terminated next month and will not be renewed for the ensuing 12 months. Already there have been redundancies among the trainers. That is simply because of a government-induced cut in the centre's budget which will have the effect of limiting adult training to those best able to benefit from it in securing qualifications and jobs. This comes at a time when, as your Lordships will know, government policy is said to be to reduce the prison population by expanding community punishments. What a time at which to reduce job training in the community for ex-offenders!

That is not something peculiar to mid-Cheshire. We read that according to an internal report by G10—the group of chairmen of training and enterprise councils who act as a mouthpiece for TECs with the Government—rising unemployment is causing TEC boards generally to doubt whether they can satisfy government guarantees of training to the unemployed.

I want to end on this note, for ultimately in my view it boils down to a question of how society determines its values. I have always felt that inflation must be regarded as Public Enemy No. 1. But the work ethic is still sufficiently strong within me to make me feel that at the same time as we battle against inflation we must somehow do more to provide opportunities for training and employment to those who are at the very bottom of the pile.

3.49 p.m.

The Lord Bishop of Guildford

My Lords, I am grateful to the noble Baroness for introducing this debate on unemployment with particular reference to areas of relative prosperity. I should like also to add my personal congratulations to the noble Lord, Lord Jeffreys, on his maiden speech in which he kept before us with such effect the human realities of unemployment.

I come from a part of the country which until recently has not experienced the scourge of unemployment. However, in recent months we have begun to feel its lash. It cannot be claimed that unemployment in Surrey is as serious, as persistent or as socially damaging as it is in other parts of the country. Although unemployment is growing faster in the South East than in any other region, the numbers in absolute terms are still comparatively small. Therefore, there is little cumulative effect on the local economy. Nonetheless, the individual human misery of the unemployed is heavy.

It is possible that unemployment, at any rate in the South East, may prove to be only a passing phenomenon; nonetheless, where it hits, it hits hard. People in the South East are that much more likely to have high mortgages, and unemployment very often therefore means rapid loss of a job and of a home. Some people in the repossession sections of the building societies in our region are now having to work on Saturday mornings in order to keep pace with the repossessions. Moreover, the loss of a home as well as a job can do lasting damage to family relationships: young people can become the innocent victims of economic forces and they can find their whole pattern of life rapidly dislocated. In our determination to master inflation—proper though that is—I wonder whether we are always sensitive to the human and social damage caused by economic policies.

One of the particular human and social problems which we experience in the leafy parts of the South East is that here, perhaps more than anywhere else in the country, the local culture is geared towards success and, in large measure, that is measured in terms of economic success. Therefore, when people fail—as it appears to them—through being declared redundant or, for that matter, through other ways, it is so alien to the whole local culture in which they are being nurtured that they often try to conceal their anxiety. They find it much more difficult to seek the help and assistance which they urgently need at that stage. There is nothing more tragic than to find someone who is apparently successful being declared redundant and trying to conceal that fact from his friends and associates, and even from his own family. That is tragedy indeed. It is the by-product not just of unemployment, but of unemployment and a culture which has been too readily encouraged to think that life is to be assessed in terms of economic success.

Young people are at risk not just because their parents' homes may be repossessed, but because there is no employment for the young within easy reach of home. To start one's working life with no work can be a spur to determination and enterprise. But equally it can be the beginning of disillusionment with society and, in particular, with the older generation who have produced such circumstances.

The Surrey Career Service reports that there has been a 60 per cent. drop this year in job vacancies. It is having to advise young people to consider other alternatives. Those alternatives—for example, youth training and further education—are good in themselves; but embarking on them for negative reasons, because there is no work alternative, is not the most promising approach.

Our hope in the South East is that unemployment will be only a passing phenomenon. For that, if it proves to be the case, we shall be grateful. But there are dangers: it could delude those of us who live in the South East in the more secure part of the country to think that, once our ills are cured, the nation as a whole is through the worst of unemployment. However, that will probably not be the case. As a whole nation, we need to be aware of the human and social damage which can be caused by continuing high unemployment across the country.

As has been said, those who are particularly vulnerable are the long-term unemployed. Moreover, despite the fact that our society has in recent years been taking far more seriously the problems of the disabled and the handicapped and indeed those of the ethnic minorities, it is precisely those people, of whose needs we are increasingly aware, who are likely to be among the first to suffer during any period of unemployment.

Therefore, alongside our policies of trying to overcome inflation, I hope that we shall be able to put equal energy and resources, and increasing energy and resources, into training people in computer and numeracy skills so they can take up employment as and w -ten it becomes available to them. I appreciate that a great deal is now being done in this connection, but surely equipping people for the jobs that will probably become available is every bit as important as overcoming the scourge of inflation.

Finally, in speaking of unemployment we are talking not so much about a social and economic phenomenon, but about people. We are talking about people who feel discarded by society. It is that human reality that we must keep continually before us.

3.56 p.m.

Lord Jay

My Lords, in congratulating the noble Lord, Lord Jeffreys, on his maiden speech, I think I can say with conviction that most of us agreed with a great deal of what he said—although not quite everything.

Some people seem to have been surprised during the past week to discover that unemployment rose last month by the all-time record figure of 113,000 and that manufacturing output in the United Kingdom is now running at an annual rate of about 9 per cent. below what it was a year ago. Some of us were of course treated as alarmists when we warned the Government last autumn that if they continued with their extreme deflationary policies—that is, exceedingly high interest rates and a grossly overvalued exchange rate in the ERM—unemployment would rise by 50,000 or 70,000 a month during this year.

I am not being wise after the event. I warned the Government in the debate which took place in this Chamber on 14th November, after we joined the ERM at an overvalued rate, that on present policies unemployment may well reach 2.5 million before the end of..991. An overvalued exchange rate deflates the economy in three highly effective ways at the same time. First, it acts as a subsidy to imports, which are now increasing; secondly, it acts as a tax on exports; and, thirdly, by enforcing excessive interest rates, it deflates demand. In those circumstances, not surprisingly, output, employment and productivity (through short-time working) rapidly fall.

Our Own 45 years' post-war experience shows that the UK economy works best when the exchange rate is at an economic level. The recovery in 1987-88—which we were told was a miracle at the time—was in fact, as one can see now, clearly due to the fall in the sterling rate in 1985-86. Let us not forget that from 1945 to 1970, a period of 25 years, unemployment was held at 3 per cent. or less and real growth was achieved in almost every year. But now, according to the Government's Red Book, real GDP is forecast to fall by 2 per cent. this year and fixed investment by 9.75 per cent.

However, the most spectacular and forbidding example of the effects of an overvalued exchange rate has come from East Germany during the past year. A year ago, the real value of the East German mark was really about one quarter of the West German mark. But Chancellor Kohl—as if the job of swapping communism for a free market in 12 months was not bad enough—chose for political reasons to set the exchange rate at one for one. As a result, almost every enterprise in East Germany was rendered uneconomic at the stroke of a pen, and East German unemployment now stands at about 30 per cent. of the total labour force and is expected by many to reach 50 per cent. by the end of the year.

It seems to me that the conclusive objection to deflating our economy—in addition to all the human evils about which we have just heard and all know about—to the present glaring under-use of productive capacity is the appalling economic waste that it involves. It means in plain English that we pay 2 million people to do nothing instead of paying them to do something useful.

If we allow for short-time working, as well as unemployment at present, we are now leaving idle at least 10 per cent. of our real productive capacity and probably much more. As our money GDP is now running at about£600 billion a year we are needlessly throwing away about£60 billion a year of real income. That£60 billion is nearly one-third of our total budget expenditure. It is equal to the whole of our social security and defence spending put together.

The truth is that in a modern economy, if the Government are too lazy or too cowardly to organise an incomes policy—the present Government and the City between them have made one impossible by the levels of the top salaries which we now see prevailing—we have to choose between high unemployment and a gradually rising prices level. If we are forced to make that choice, it is surely better to choose a gradually rising prices level, because that means higher real output of goods and services from the economy as a whole. Surely the chief aim of economic policy—in the medium or the long term—must be the highest output of goods and services which people want to consume, and not the maintenance of some particular value of money which, in any case, has been plucked out of the air.

One secondary aim must be to moderate the rise in the prices level, but the various objectives of economic policy—there are more than one—must surely be kept in balance and not all sacrificed to the one near obsession which the Government now call fighting inflation. Money, after all, is supposed to be a means of exchange, but if one pushes one's obsession with the value of money to the point where, as now, the national real output of wealth is falling, one is guilty of the absurdity of using what is supposed to be a means of exchange to prevent exchange taking place. We should be keeping 2 million people and their families out of the process of exchange because they would be unable to sell their services. Apart from the huge economic waste involved, it is a doubly unfair policy because it forces the excluded millions to accept, in real terms, a smaller share of a smaller total. Nor is it true that a rising prices level, as we are so often told, hits the poorest families worst. There are extraordinarily few people nowadays living wholly on a small fixed income.

By joining the ERM at an untenable rate the Government have locked us into an economic cul-de-sac. Now admitted daily in the financial press—it is not all wrong—is what some of us predicted six months ago: the ERM prevents us from cutting interest rates. Even that instrument has been lost. We now have not so much a "one-club" Government as a "no-club" Government. Indeed, they dare not even call a general election.

The correct national policy, as I see it now—indeed almost the only practical policy left—is to bring down interest rates substantially now, and let the exchange rate find its natural economic level. If instead we persist yet again, as we did for years after 1925, when we faced a similar situation, in sacrificing everything to the fetish of fighting inflation at all costs, we shall weaken this country even further, at home and abroad, economically and politically, and end up as before by having to admit defeat.

4.5 p.m.

Lord Boardman

My Lords, I hope that the noble Lord, Lord Jay, will forgive me if I do not follow him in that economic debate. There are many points with which I hope I might have the opportunity to take issue with him on some future occasion. Perhaps I may join with other noble Lords in congratulating my noble friend Lord Jeffreys on his most excellent maiden speech. It was sympathetic and lucid. I am sure that speeches of similar quality will be repeated on future occasions.

My noble friend referred, as have all noble Lords so far, to the problems of the unemployed and especially to the problems of the families of the unemployed. That is something about which we all feel passionately. The wife and children of an unemployed man often feel most bitter or most hurt by the impact of that unemployment upon him. It is not just a question of the financial consequences, although as I shall say in a moment they vary considerably from one type of unemployment to another; the majority of people, despite what is often said by some, want a job. They prefer to work. They do not want to live off the state.

I shall refer to the financial consequences of unemployment which fall into three categories. First, there are the low-paid who find that unemployment benefit does not fall far short of what they were earning in their jobs, and for whom the financial consequences are less severe. Secondly, there are the top executives who, by reason of service contracts and the like, sometimes seem to be well sheltered from the full impact of unemployment. Thirdly, there is the enormous band in between of the middle earners for whom the financial consequences can be acute and can lead to the loss of their homes and the selling of many things. Those are circumstances which call for considerable sympathy.

As the noble Baroness, Lady Turner, said, some of the recent increases in unemployment have happened in areas which in the past have been sheltered from it, and where the impact is perhaps more severe and felt more severely. The total number of unemployed—the figure used by the noble Baroness—is always a good stick with which to beat the Government, but I am not sure that it gets us very far. We can achieve 100 per cent. employment. It was secured in East Germany, Russia and some other countries, but at what price? If we want to ensure that everyone is employed, we must accept that the standard of living will be appalling—something which I am sure none of us wishes to have. It can be secured in a command economy at the risk of virtual starvation.

I should like to try to distinguish between the present rising unemployment and that which happened in previous years—the rising unemployment which occurred when the Government took office in 1979, 1980 and so on. At that time there was some slimming down of overmanning—to which the noble Baroness has referred—and the closure of plant and mines which had continued beyond their economic life. Some of that had happened previously. It happened during the early 1970s. It happened during the Labour Administration when the noble Lord, Lord Robens, closed more mines than any other government. That caused large blocks of unemployment in some areas. The unemployment was concentrated in small areas—the Consetts and Corbys and so on. Such areas called for special treatment— dedicated aid—and for financial incentives to persuade people to invest.

It has been a remarkable success story. If we take, for example, Consett, one steelworks was closed in 1980 causing 5,000 unemployed. Today there are over 200 separate smaller businesses employing between 3,000 and 4,000 people. That shows that the transition has been made, but it is slow and painful. It needs concentration of government effort, together with private enterprise, to bring it about.

Today's unemployment is a different variety, a different brand. It is not concentrated in small areas. It does not affect large numbers of people from one firm or organisation—steel, coal or whatever it is; it affects a few people from many separate firms. It covers a wide range of experience, not just great blocks of former miners and steelworkers but, as the noble Baroness and the right reverend Prelate said, people with a mixture of skills. They come particularly from the construction industry which has been hit at the moment more severely than most, but they also include clerical workers, retail staff, engineers and similar people. They are today's casualties of the world recession. They call for quite different treatment from that given when there were concentrated blocks of unemployment due to the closure of a basic industry.

We may ask how this came about. I shall not enter into the economic argument with the noble Lord, Lord Jay. We are in good company—or perhaps it is bad company—in that the total unemployment in this country remains below the average for the Community. However, that is of no comfort to the unemployed individuals; we all know that for them it is 100 per cent. The unemployed person of today can receive tremendous encouragement from the schemes and opportunities available to him as regards training and help directed towards getting him back to work as soon as possible. I shall not go through the list; my noble friend will no doubt have much to say on the matter. There are a great many schemes into which money is quite rightly being directed.

Noble Lords have referred to their particular interest in one scheme and perhaps I may be permitted to do the same. It is a private scheme established by His Royal Highness, Prince Charles, and it is called the Prince's Youth Business Trust. It exists to make loans and bursaries to disadvantaged young people between the ages of 18 and 25 and the disabled up to the age of 30. In addition to providing the loans and bursaries, it does absolutely essential work in providing them with continuing advice and a shoulder on which to lean. They can obtain help from the trust which 1- as been and is a tremendous success. Private sources have provided over£40 million and the Government have matched that amount. It is carrying out great work in easing unemployment in that most important and yet most vulnerable section of our society. I am sorry to see that the noble Lord, Lord Mason, is not in his place. It is no doubt known to many noble Lords here that he has been a great help in his native Yorkshire.

Perhaps I may make one further comment. One reads of companies and businesses which have given substantial wage or salary increases and shortly afterwards the same company or business has made a number of people redundant in order to reduce its costs. These industries are not in permanent decline, they are just suffering the short-term downturn in the present world recession. Surely it would be more sensible if everyone in that business—in which include management just as much as the people on the shop floor—accepted a cut in pay during the short-term recession. In that way they would be able to remain in employment and the surplus that may be thrown up could be used in further training until the recession is over and they will once again be wanted.

Cuts in pay are becoming acceptable in some industries and I should like to see far more use made of them in a wider field. If that is not done, if wage increases are given across the board, then jobs will go. Noble Lords may have seen in yesterday'sFinancial Times figures of pay costs per unit of output amounting to an increase of 11 per cent. per annum here, whereas in Germany it is 2 per cent. per annum. If that pattern is continued, it is plain that jobs will go.

Finally, I have resisted the temptation to comment on the Labour Party's policy documentOpportunity Britain. Suffice it to say that on this subject in my view it would inevitably lead to large increases in unemployment. It is not just on the point about minimum wages to which the noble Lord, Lord Rochester, referred; almost every part of it adds to the burden of unemployment. It is a sad compromise, a patchwork of slogans which would make matters much worse—not better. I shall say no more on it.

4.15 p.m.

Baroness Fisher of Rednal

My Lords, the recession which contributes to unemployment did not arrive from outer space. It is a direct result of economic mismanagement by this Tory Government. For the second time in a decade, the Conservative Government have thrown the economy into a deep and damaging recession.

What did we see on our television screens last night? The director-general of that bastion of Tory support, the Institute of Directors, said plainly for thousands to see that the Government were guilty of mismanagement of economic policies. That came from one of their friends. They do not need enemies when they have friends like that.

As my noble friend Lady Turner said, the previous recession was supposed to shed all our surplus fat. That was a nice way of saying to people "Well, you're no use any more because you are surplus to requirements". Now there is a repetition. We had a leaner force after the first recession, now we are going through the next exercise and are not only creating more unemployment but are closing down factories. They will never re-open. It is the same with pits, shipyards—you name it. I see that the noble Viscount smiles. He has not had much to do with unemployed people. Perhaps he does not meet them on the doorsteps or in the shopping areas. Perhaps he does not meet them in the job clubs about which the noble Lord spoke. He may not see the misery and sadness. To me, unemployment is no laughing matter.

I shall concentrate on the West Midlands. With the East Midlands, it is supposed to be the industrial manufacturing centre of the country. The West Midlands has nearly 200,000 jobless; company collapses are at record levels. Comments from the CBI, industry and chambers of commerce are that prospects for 1991 are bleak. In the West Midlands region we see that the key industries are in engineering. They are suffering from falling sales and worsening cash problems caused by high interest rates. Thus the demand for machinery, components and sales of motor vehicles is falling by the wayside.

The inactivity even spreads to the building industry. Builders blame the situation on their competitiveness in international markets being affected by the high value of sterling. At present if we take the ratio of unemployment to vacancies, in the West Midlands it is 25.4 against a figure for the rest of Great Britain of 15.8. Therefore in what is called the industrial heartland of the country there is a serious problem.

The last count held in April showed that nearly 200,000 people in the West Midlands were unemployed—that is 7.6 per cent. of the region's workforce. That represents the largest increase in 10 years and the largest percentage increase in the country. Many surveys are being conducted on unemployment. I have asked for details from chambers of commerce and other organisations which could supply me with information. I was quite surprised to learn that over the past 12 months manufacturing industry has constantly brought reports to the attention of interested organisations.

I had no difficulty in obtaining information on this subject. The Warwick Business School, the Wolverhampton Business School and Price Waterhouse have stated that we are in a deep and serious recession. Those bodies issue a quarterly report which contains all kinds of statistics which prove conclusively that manufacturing industry in the West Midlands is in a serious decline. One wonders whether the Government have these figures and whether they are sent statistics from chambers of commerce and from the CBI. Do the Government digest this information and ask themselves what they are going to do about the situation, or do they just sit twiddling their thumbs, wondering what to do about the poll tax to get more votes at the next election?

We must make sure that manufacturing output increases. Since the 1960s it has fallen at a rate of 9 per cent. a year. In the late 1950s nearly 8 million people were employed in manufacturing industry. That figure is now fewer than 5 million. That is a frightening illustration of the speed with which economic activity has declined and is still declining. As has been said, manufacturing is a dirty word to some people. However, it is manufacturing industry and the exports it produces that keep the economy of the country on an even keel.

The Government have a long way to go if they are to prove that they care about the unemployed. It is not a matter of talking about the problem but of doing something. I sympathise with the unemployed as much as anyone else. When I was first married I suffered from unemployment because my husband worked at what was then the Austin Motor Company. At that time one only ever worked for six months out of 12 in the car industry. Therefore I know what unemployment means, and I am sincerely sympathetic towards the people who are experiencing unemployment now.

During the past 12 years there have been 12 Secretaries of State at the Department of Trade and Industry. I do not believe that that shows much consistency on the Government's part as regards industrial policy. I would point out to the Government that defeating inflation will not on its own bring an end to the depressing cycle of events which have afflicted our economy over the past decade. Britain's economy must be nursed back to health. That will mean placing emphasis on policies which increase industrial investment, strengthen manufacturing, improve education and training, promote research and development and modernise the national infrastructure.

Last week an article appeared in the press concerning a Tory MP who was asked what he thought his party's chances were of winning the next election. The remarks were not attributed to any particular MP. The article stated: We have ditched Mrs. Thatcher and abolished the poll tax, but we are still presiding over a deep recession after 12 years of having the run of the country. The voters will have to decide whether we deserve another chance". I believe that the grief and the despair of those who are unemployed will convince them of the need never to vote Tory again.

4.25 p.m.

Lord Mellish

My Lords, I wish to begin by congratulating the noble Lord, Lord Jeffreys, on his maiden speech. It is extraordinary that a Conservative Back-Bencher should choose to speak on unemployment of all subjects. It shows the noble Lord has courage. I hope that when the Minister comes to his usual platitudes about maiden speeches, he will remember that his party has gained a young Conservative who at least has the guts to talk about unemployment in a compassionate way. I congratulate the noble Lord.

I have great sympathy for the Minister who is to reply to the debate. He has a brief, but this is a rotten subject to speak on. I hope that he will not try to defend the figure of 2 million unemployed people as it is an impossibility. He will have to try to excuse the figure and also attempt to explain where the Government go from here in endeavouring to reduce it.

I do not speak tonight with authority; however, I have some knowledge of the construction and building industry. I have been associated with the industry in one form or another all my life. The Labour government gave me the privilege in 1964 of becoming the Minister responsible for public building and works. Therefore I became involved in the construction industry from a political point of view. When I say that I talk to reputable builders, I must make it abundantly clear that no one is more aware than I that the building industry contains many cowboys. About 50 per cent. of building firms are not worth talking about. However, the other 50 per cent of firms are reputable. They earn their living from building; they would almost die for the industry. Those people really matter. I have asked such firms how their businesses are progressing. I have been told that the present recession in the building industry is the worst that has occurred in the past 40 years. That is the view not just of individual firms but also of the highly respected president of the Building Employers' Confederation, Sir Clifford Chetwood, who cannot be accused of being a friend of this side of the House. Sir Clifford has said that the recession is the worst he has experienced in 40 years' association with the industry.

The noble Baroness, Lady Fisher, spoke with great authority of the situation in the West Midlands. I shall not attempt to match that authority, but I know a little about the situation in London. I wish to put on record the fact that 56 per cent. of all new architectural commissions in London during 1990 were abandoned or postponed. They were abandoned because the recession hit the building industry hard and the developers concerned decided to withdraw from their commissions. I doubt very much whether any other sector of public industry has been affected so badly. The situation in London may not represent the whole story, but it is the area that I know best. Over the country as a whole estimates of the decline in workload this year vary between 4 per cent. and 8 per cent. There is no guarantee that things will pick up in 1992, and even if they do it will be far too late for many firms.

In the first quarter of this year new orders were 21 per cent. down over the corresponding period of 1990. There is no sign of an upturn in any sector. The DTI is, I hope, an impartial body. It has reported that in the first half of 1990 insolvencies in the industry were 40 per cent. higher than in the first half of 1989. I wish to place on record, although I do not expect the Minister to reply to the point tonight, my belief that the last straw leading to the insolvencies was the decision of banks to pull in loans, thereby forcing people to pay capital they did not have. The result is that many famous names in this country have been made insolvent and the receivers have been called in. Many firms have been lost in that way.

Responsible estimates indicate that by the end of this year 100,000 jobs will have been lost. That figure could IA ell increase to 150,000—and I speak only of London. I know nothing of the problems of the Midlands or anywhere else although there must be heartache there as we have heard. The worst aspect is that many skilled and key people will be lost to the industry.

Many suggestions have been made as to what can be done Some concern fiscal and monetary measures. The recent Budget, which was awaited with great interest, did not help the industry at all. The increase in value added tax is a deterrent to carrying out repairs and improvements and the retention of stamp duty was a disaster. Therefore, the Budget to which people in the industry looked forward was a disaster from their point of view. They are not Labour people but ordinary employers in the building trade. The Government's present attitude in preventing local authorities—I am not talking about Lambeth and all that rubbish but about real local authorities—spending their own money on essential repairs is hurting the construction and building industry very badly. I beg the Government to look at the matter.

I was involved in Docklands. We have made some progress towards rebuilding what was a pretty run-dow.1 area, the worst of its kind in Europe. I remember going round the area with the chairman on the first day, 6th July 1981. I came back in tears. It was an area hat I knew very well. In 15 years the local authorities in charge had not even built a ruddy toilet. Going around Docklands I saw the dereliction. The Government gave us some inspiration, money and certain planning powers. However, I understand that Docklands has now run into the sand. It has run out of cash. I t has to be helped by the Government and by others.

In the few minutes that I have left, I should like to refer to the Government's own proposals. Government figures estimate that£23 million needs to be spent on public and private housing to bring it up to date. The Department of Health reckons that at least£1 billion has to be spent on hospital repairs and maintenance. The Department of Education says that£3 billion is required to restore schools to a certain standard. I beg the Minister to give a lead because we are talking about tomorrow.

I understand that the Government have been fighting against inflation in recent years. I understand that there is no worse enemy than inflation. However, does the Minister understand what the Government have done? In fighting inflation they have created a recession, and that is a disaster. I say to him now, frankly and firmly, that he has to give the lead and open the door to schools, hospitals and housing. The Government have to find the money which is required, according to their own figures. I accept that it is a vast amount of money but if that were to happen it would provide an incentive for every other part of industry to act on the basis that the Government are now prepared to have a go and do something.

Surprising though it may seem, I am trying hard to make a non-party political speech. I beg the Minister to understand that I am in the House of Lords not at the request of the Labour Party—if the Labour Party had its way, I would not be here—but as an independent. However, I believe sincerely, as a realist, that the problems that face this country have been caused mainly by the Government and have been reopened by the Government. I beg the Minister to talk of tomorrow and say what is going to be done.

4.35 p.m.

Baroness Nicol

My Lords, my noble friend is to be congratulated on the timeliness of her debate. The figure of 2 million unemployed announced last week is horrific. We are being asked to live with that total for far too long. Even yesterday the Chancellor of the Exchequer said to the Institute of Directors that unemployment would have to rise even further, even as we move out of recession. Those figures are based on the new method of counting, which means that it is a conservative estimate in both senses of the word.

As we have heard, fear of unemployment is no stranger to many parts of the United Kingdom, especially to the North-East of England and, as we heard from my noble friend Lady Fisher, to the West Midlands, to Scotland and to South Wales. Now it is even stalking the leafy streets of the prosperous South-East. In all those comfortable, true-blue Tory seats voters must be asking themselves why, after faithfully ensuring that their government would go on for 12 years, their reward should be the sack.

Despite the kind words of my noble friend Lady Turner it seems to me that the Government's utterances contain no hint of understanding of the human tragedies behind the statistics. My noble friend Lady Fisher made that point and I agree with her. Unemployment is treated as just another economic indicator and a tool to manipulate and intimidate the remaining workforce.

Many speakers have referred to the point that I shall now make. In a society in which human beings are primarily identified by what they do, millions—we are told 2 million but I suspect that the figure is nearer 4 million—are now suffering the indignity not only of material loss but also of the loss of their identity within their communities. The noble Lord, Lord Jeffreys, spoke very movingly about the effect on the family. I congratulate him on his maiden speech, which was brave and all the more welcome since it came almost unsupported from the other side of the House. The frustration of the provider who can no longer provide is equalled by the humiliation of the loss of status which comes with the loss of work and the desolation of an insecure future.

The effect on family life is devastating, even in the short term. However, when many months pass without a return to work, when household items wear out and cannot be replaced and when eventually even the home itself is threatened it is an unusual and fortunate family which can survive. Last year 45,000 homes were lost as a result of inability to maintain mortgage repayments and 250,000 more are presently at risk. I ask your Lordships to consider what that means in terms of the impact on the family and in sheer human suffering.

Unemployment is a cancer destroying our society. It gnaws at the very roots of all our lives and it endangers all those institutions which allow us to call ourselves civilised. It must be defeated before it defeats us. It should be a top priority for all of us. We have long since passed the stage of "shaking out overmanning" and making industries "leaner and more competitive". What is happening now is the result of recession and high interest rates. Many of the companies which are now going to the wall are efficient and competitive. There is nothing more they can do. They are the victims of circumstances over which they have little or no control.

The disappointment expressed yesterday at the Institute of Directors' convention revealed support for that point of view. The members obviously expect a more proactive approach from the Government. The most constructive way to tackle the majority of the 2 million admitted jobless is to offer training and retraining. That advice has come from all sides of the House today. The Government know that. Successive Ministers have paid lip service to the theory and various schemes are afoot.

Despite the continuing rise in the monthly figures and against the background of what the Chancellor said yesterday that employment will continue to rise, we see that this spring£245 million is to be cut from the training budget. Labour is determined to reverse that trend. If we are to survive, let alone prosper in Europe, we must address the task of bringing the skills of our people up to at least those of France and Germany. We in the Labour Party have published a detailed and realistic programme to achieve that. The physical, moral and economic health of the United Kingdom depends on getting our unemployed millions back to work: work which they can be proud to do and which will restore their self-respect. We are wasting our most precious asset—the skills of our people—and in so doing are undermining the basic human dignity which is essential to a healthy society. I support the Motion.

4.40 p.m.

Lord Dormand of Easington

My Lords, the Minister has already heard repetition from a number of speeches. He will hear more from me and I have no doubt that he will hear further from subsequent speakers, but I hope he will take that in the right spirit. As has been said, these are absolutely unique problems which the Government ought to be considering and on which they should be taking prompt action. When Members on this side of the House express concern about the number of unemployed, Ministers give the same replies which to many of us seem highly irrelevant. I wish to examine in some detail the content of some of those replies.

It has to be said at the outset that to have 2 million unemployed after 12 years of unassailable power must in itself be a complete condemnation of the Government's economic policies. It is interesting that at yesterday's meeting of the Institute of Directors the president made the same comment but in a slightly different context. The reasons or excuses which for some time the Government have been producing do not now apply, particularly over the past 12 months or so when the jobless total has significantly increased. I give some examples. For a long time the Government have been telling the country that the militancy and power of the trade unions has been the cause of the trouble. One of the great boasts of the Government has been that they have curbed that power. That being the case, the unions cannot have been responsible (if they ever were) for the problems that have given rise to 2 million unemployed. It is also interesting that the Government are now blaming the unions for irresponsible wage claims when no such claims have been made over the period when unemployment has been increasing. We have heard precious little from the Government about massive pay increases given to chairmen and chief and senior executives, particularly those of big companies, over the past 18 months. Sometimes we are told that these people have earned the increases because of their companies' increased profits. If that is the case, why do we not hear of decreases in payments when profits decline? There have been plenty of examples recently. The Government know full well the effect of such obscene increases on the shop floor worker but have chosen to turn a blind eye to the matter. Last month's survey by Hay Management Consultants, commissioned by the CBI, found that employers had been awarding themselves increases of 14 per cent. a year while at the same time they were lecturing employees about having 9.25 per cent. increases.

Another excuse used by the Government has been the effect of inflation brought about not by their own policies but by importing inflation. That was certainly true some time ago but it has not been valid for a long time. Almost all of our trading partners have a lower rate of inflation than this country—certainly that refers to European countries—so that cannot be blamed for adding to the present sorry mess. The average rate of inflation of our European partners is half that for this country.

Against those and other aspects Ministers keep referring to the position in other countries, particularly those in the European Community, the implication being that the same factors are at work in all countries and we are dealing with those problems at least as effectively as other nations. I dispute both propositions. According to figures published by the European Commission, Britain has had a 14 per cent. rise in unemployment in the year from January 1990. The next highest increases were 3 per cent. for Denmark and Ireland. In Spain, Italy, Portugal and Germany the totals fell. Across the EC as a whole there was a decrease of 1 per cent.

The problems here have been of our own making, caused especially by the expansion of our economy against a much reduced manufacturing base. When I refer to the expansion of the economy I am referring to those two disastrous mistakes of the Government: the error in calculating the amount of consumer spending and the incredible underestimation of the effects of financial deregulation. Those factors gave rise to high inflation, high interest rates and then high unemployment. One of the standard answers we receive from Ministers in dealing with unemployment is that we must reduce inflation. Their vital unspoken words are "at all costs". The evidence is that the Government will allow unemployment to increase to any level in order to reduce inflation. My noble friend Lord Jay made what I regard as some very pertinent remarks on that aspect of the matter.

In paying a massive price to reduce inflation and the rate of interest by a tiny fraction the Government take great pride in what they regard as a substantial achievement. Such a situation reminds me of a recent comment by a professor of applied economics who said: This is like jumping off a cliff and then congratulating yourself on having climbed back to the top". That summarises the point admirably. There are 650 firms going bankrupt every week and 2,000 people joining the jobless queue every day. Employers' organisations are saying that on the evidence sent to them by their members the position will get worse.

When comparing our position favourably with that of other countries Ministers fail to admit that our rate of increase in unemployment is faster than that of any other industrial nation. I give some other figures to illustrate that disturbing fact. In April 1990 the increase was 400; in July, 13,000; in October, 34,000; in January 1991, 49,000; in February, 88,000; and in March there was a record increase of 112,000. That rate of increase appears to frighten everyone except the Government. Last month the CBI revised its forecast. Last autumn the CBI said that there would be 1.9 million unemployed in 1991 and 2.1 million in 1992. It now expects the figures to be 2.3 million this year and 2.7 million in 1992. Other independent organisations are forecasting similar figures. Those figures come from friends of the Government, not this side of the House. The rate of increase and its consistency do not compare with any other European country.

Another story we hear regularly from the Government is that there are now more people at work in this country than at any other time. That may well be true, but in view of the doubt cast upon government statistics in recent months I should like to see the evidence for it. My noble friend Lord Donoughue recently made a brilliant speech on the inaccuracy of government statistics. Even if the government are correct, is it much to boast about when after 12 years in power there are still more than 2 million people out of work? Not much has been said about the increase in the number of long term unemployed, which is at least as important. If the Government were to reduce unemployment to the level when the Labour Government left office in 1979—that is, 1,141,000—it would be nothing to boast about after all this time, but at least it would represent a significant difference from having over 2 million unemployed.

There is one more aspect of the present situation which has been mentioned and no doubt will be repeated. It is so significant that we include it in the terms of our Motion. The depth of the recession is so great that all parts of the country are affected. Much has been said about the South East. In the past it appears to have been immune from high unemployment but it is now one of the principal areas affected. As the noble Lord, Lord Boardman, mentioned, the effects cut across the whole range of employment—services, manufacturing and so on. This has serious implications for the Government about which I am not unduly worried. I am, however, worried that attention may be diverted from those areas which for years have suffered high unemployment when other regions have not had any job problem. I remind the Government yet again that my region—the North—continues to have the highest rate of unemployment in the country outside Northern Ireland. That has been the position for a long time. If the Government's policies are as successful as Ministers claim, one would have thought that their 12 years of continuous power would have removed the region from its unenviable position at the top of the unemployment league in mainland Britain.

We hear nothing from the Government about the cost of unemployment. Had I the time, I would go into the matter in more detail. We frequently hear from the Government about the 1979 winter of discontent. The strikes of that period are small change in economic terms compared with what is happening now and what will happen with from 2 million to 3 million people unemployed.

The tragedy of the situation, shocking though it is, is that it will get worse. We know about some effects of unemployment. A number of noble Lords from both sides of the House have spoken about poverty, ill health—physical, mental and emotional—and the strain on family life and loss of self-respect. Other problems of which we are not yet aware may well come to light.

The personal and financial problems and the economic effects do not appear to weigh too heavily with the Government. One can only hope that the near certainty of 2.5 million and the possibility of 3 million jobless will prove so traumatic that it will lead even this Government to change their policies.

4.52 p.m.

Lord Brookes

My Lords, I join other speakers in thanking the noble Baroness, Lady Turner, for having introduced this debate. It loses nothing by its repetitive appearance in this Chamber. There is no subject that should be nearer to the heart of every Member of Your Lordships' House and indeed every member of our society.

At this stage of the debate one is bound to be repetitive about the many faceted aspects of unemployment. None of them shines like diamonds. Of the many, three of the most disastrous aspects have already been mentioned by other speakers. I do not hesitate to reaffirm and re-emphasise them.

The first aspect is economic. I believe that many board rooms in Britain have lost sight of the fact that the most vital asset on the balance sheet is human resources. There should be no credit given to companies or management for the efficiencies of redundancies. Redundancies are not efficient. Blameworthy or innocent they are a reflection of a measure of leadership failure, management failure and maybe employee failure. They are nothing of which to be proud. They are nothing to claim or mark as expressing or reflecting efficiency. Very much to the contrary. That is the worst of the economic effects; namely, the appalling and unforgiveable waste of human resources.

The second aspect which has also been mentioned by other people is the emotional one. There is the impact and the indecency of the effects of unemployment upon human dignity and on a man's pride and belief in himself. There is the gradual inner diminution of those beliefs. There is the loss of self-respect and the feeling that even the respect of his family, wife and children around his table is lost, and even if that is not in doubt, he feels that it might be so. There is the loss of respect and standing among his friends. Unemployment is not merely an economic shortcoming: it is a social crime; it is a political failure; it is a business failure. In different measure we are each and all responsible for it. We have allowed it to happen.

The third aspect is the social structure. The impact of unemployment upon family life results all too often in family break-up and further impairment of a society which is already threatened upon so many counts. We have sown dragon's teeth. We are reaping a bitter harvest.

In the 1960s and 1970s we all—unions, management, men and capital—allowed our industry to become a battleground and a free-for-all. We squandered opportunity right, left and centre. It is not a matter for blame. Each and all were to blame. In the 1980s our board rooms were preoccupied with the threat from the predator—the unknown predator standing in the wings ready to make a fast buck out of a takeover. When it happened, all too often there were thousands of redundancies. But the question mark must always be over whether there was there any real gain in efficiency. Or did the bankers and institutions (I do not criticise them since they are there to fulfil that service) find that there was a fortune to be made on the way to destruction of vital assets? Those then are the dragon's teeth that we have sown.

How will we put the situation right? I respect but suspect many of the training programmes. They have to be good enough to train for something meaningful and purposeful. There has to be something on the horizon for which to be trained. I suspect some of the employment figures because I do not regard as employment jobs in confetti service industries which are shortlived and not lasting. One cannot run a great nation on takeaways or the people who clean up the mess outside them. There is no alternative. We have to regenerate our industrial base. We have to stop being rude about the so-called smoke-stack industries.

A gleaming motor car is a reflection of many smoke-stacks, of mining minerals and processing metals, of plastics and glass. Consider it. That gleaming motor car is a whole hive of human endeavour expressed as it shines. I shall refer again briefly to the motor industry. But we must stop being rude about smoke-stacks. In fact, we must get more smoke going up chimneys even when it is clean.

I must rack my memory for the date, but on 5th December 1985, speaking in your Lordships' House, I made detailed reference to the motor industry. Based upon a report from the Society of Motor Manufacturers and Traders and the PEDA Report (the association which researched the industry and its employment characteristics), I demonstrated, and was never challenged, that 500,000 motor cars directly and indirectly meant 500,000 jobs. That figure was not criticised. We have not done much about it. The much maligned motor industry is the whipping boy of successive governments for all kinds of tax impositions and interventions. Even more recently a doubtless well intentioned Government have imposed a further impost upon an industry whose survival is a miracle against all the prejudice, hurt and injury that has been inflicted upon it. The tax on a motor car today—I refer not to the tax that one pays to drive it away but that against the manufacturer's intended retail outlets price—has been increased on a cumulative compound basis to 27.3 per cent. Why is there a tax of 27.3 per cent. on a motor vehicle which creates jobs when other appliances escape (if one can call it that) with 17.5 per cent. I ask why.

However, when making such a speech one ought to advance some possible solutions. The thought occurs to me that if we have selectively taxed the motor industry adversely, why cannot we, and why should not we, have the brains, the intelligence, the means, and flexibility of mind selectively to plan and tax our industries and activities, in relation to their contribution to the common wealth, the common good and those factors which really matter rather than the cosmetic, confetti-type of businesses to which I referred earlier.

In short, I believe that there are enough brains in your Lordships' House, and good enough existing committees from which sub-committees can be formed, at least to put to Her Majesty's Government a coherent plan for the selective, differential taxation of industries, commerce and activities, in relation to their national worth.

It is not an original idea. I am well aware that Ministers, and those who are noting the speech outside this Chamber, will provide comments and answers. The moment that one puts forward a solution one puts up an Aunt Sally for a kindly Minister to knock down. I have set it up. I do not mind it being knocked down. But if we are anxious about GATT, and the European Community, let us have the ability, dexterity and panache to display the same ballerina-like characteristics in tip-toeing through the tulips and protecting one's own kith and kin as the French and the Italians so successfully and repetitively demonstrate. I thank noble Lords.

5.2 p.m.

Lord Donoughue

My Lords, I join others in congratulating the noble Lord, Lord Jeffreys, on his courageous maiden speech. Unemployment is perhaps the most emotive subject which concerns my noble friends on this side of the House. I do not say that noble Lords on other Benches do not care about unemployment. I am certain that all do, although only two Conservative Back-Benchers joined the maiden speaker in bothering to participate today.

Politically and collectively as parties, the different sides o1 the House have different priorities. Several of my noble friends, in particular the noble Baroness, Lady Turner, and, from the Independent Benches most impressively the noble Lord, Lord Brookes, have spoken about the human dimension of unemployment. That is ultimately the most important aspect of the problem. My earliest childhood memories as a young boy in the 1930s are of my father talking bitterly about his years of unemployment. That may explain why for the first half of my career I sought the safe havens of job security in the public sector; and I believe that that applied to many of my generation.

However, I should like to approach the problem less emotionally, and—as did my noble friend Lord Dormand in his outstanding speech—more analytically. To begin with it is necessary to state in a non-partisan way that unemployment is of course a global problem. It is not confined to the United Kingdom. In a global recession there will be unemployment in most countries. That will be true, regardless of the colour and labels of their governments. However, levels of unemployment vary and governments with different priorities, philosophies and policies can produce lower unemployment within the broad range that interdependent global economies and different domestic demand pressures dictate.

Such differences already exist in Europe. Perhaps I may say in anticipation that it is not impressive when Ministers tell us that British unemployment is slightly less than the EC average; and that it is lower in the United Kingdom than in Ireland, Italy, Belgium and so on. In fact British unemployment is rising faster than in any of those countries. As the noble Lord, Lord Boardman, generously mentioned, it is no consolation to tell the long-term unemployed in London or Sunderland that they would be even worse off in Cork or Naples.

The present Government have a clear responsibility for the present plight and the dismal future prospects of Britain's unemployed. Historically, their conduct of monetary policy was so promiscuous in the year before and after the 1987 election that the credit boom and disaster that followed was bound to happen. The length and strength of the economic squeeze over the past two years, with interest rates at record "highs" for record lengths of time was made inevitable by the folly of that credit explosion.

The depth of the present recession, and the scale of unemployment deemed necessary to cure that credit disaster and lance the inflation boil, is the price being paid by the most vulnerable in our society—the unemployed—for the follies of this Government's economic failures in 1986–88.

The future prospects are equally bleak. The economic forecasters of the ITEM Club, writing in theSunday Timeson 24th March forecast unemployment at 2.75 million by the end of this year and 3 million in 1992. Other prestigious City houses do not dissent from that view.

Before the noble Viscount is tempted when replying to dismiss those views as speculation, perhaps I may remind him that when last year at Question Time I quoted Goldman Sachs as forecasting 2 million unemployed by now in 1991, he dismissed it as "speculation". For Britain's unemployed the near future is not speculation. It is certain to be a harsh reality.

The latest national increase in March was the largest in a single month since 1971, the earliest year for which comparable figures are calculated. That takes me back to the delicate question of the calculation of unemployment figures. I have already had courteous exchanges on the subject twice this year with the noble Lord, Lord Hesketh and the noble Viscount, Lord Ullswater. They were well and defensively briefed. The fact is that however much the Government claim in very carefully worded phrases that the present unemployment figures are statistically comparable to the figures in the 1970s, the calculations are not the same. Were one to use the same criteria and categories as in 1979, today's official unemployment figures would be much higher. The Government have introduced some 30 changes to the official measurement of unemployment since 1979. They are not all "statistically significant" claimed the noble Viscount at Question Time. But they probably all made a statistical difference.

Why make such change? Certainly the change to measuring only those claiming benefit made a big difference. It excludes many married women and former part-time workers who are now unemployed but do not have sufficient national insurance contributions to be eligible to claim benefits. The present system of calculating the monthly unemployment figures is not a reliable and realistic measure of the balance of labour supply. It is excessively sensitive to changes in the administrative rules governing benefit rather than to changes in labour supply and demand.

According to the prestigious and independent Employment Institute, the true level of unemployment today—that is, how many people are out of work, available for work and seeking work regardless of benefit eligibility—is more than 500,000 higher than the official level. In other words, there are now more than 2.5 million unemployed people and that figure will rise to above 3 million by December.

Within that huge total is a large core of three-quarters of a million long-term unemployed people. They are not the unskilled, work-shy people often depicted in the right-wing press—although some are, as in all societies. Research carried out by Professor McCormick of Southampton University, a leading economist, shows that during the 1980s many long-term unemployed people were not "no hopers". Previously they had been successful employees and were desperately keen to acquire new skills and new jobs. During the passage of time the long-term unemployed become demoralised. They suffer from above average poverty, family problems and ill health. It should be an absolute priority of our wealthy society to provide the financial help, work training and personal counselling which the victims of failed economic policies need and deserve.

The Government's approach to unemployment is to treat it as merely an unfortunate side effect of the policies to control inflation. That is not good enough. We all appreciate the need to control inflation but it is unnecessary to rely solely on narrow, deflationary policies in respect of which the unemployed carry the whole burden. There must be another way and I believe that there is. We need a broader range of policies; credit controls as well as interest rates; and greater emphasis and expenditure on the training and education necessary to produce a more highly skilled and therefore more employable workforce. We also need a modernised physical infrastructure in this country, especially in respect of transportation, to assist the efficiency of our industry. We need greater investment in manufacturing and the involvement of all sides of industry to build a consensus on how to achieve what we must have; that is, a low inflation, low unemployment society.

It will not be easy for any government to resolve what is a difficult trade-off between inflation and unemployment. But if we do not achieve it then within the ERM, at the present exchange rate, the future will offer even lower growth and even higher unemployment. That is not a prospect that we or the unemployed should accept.

5.15 p.m.

Baroness Phillips

My Lords, I am afraid that I cannot be analytical and that I must be emotional because that is the way I feel about this subject. I congratulate my noble friend on her splendid introduction to the debate for which she has fought so long. It has come at a time when everyone will be istening—that is everybody except Members of the Conservative Party. Noble Lords opposite promptly walked out of the Chamber when the debate started. Had we been talking about race-horses, salmon fishing, shotguns, or forestry, they would have been present. However, they could not care less about a subject such as this, and let us not kid ourselves.

Every day we hear casual announcements made on the radio; for instance, that the BBC is to lose 500 employees. It could be throwing out anything, even old bits of wood. British Rail is getting rid of people and in consequence there are far more accidents. I may be a Luddite, but I believe that no machine has yet been invented like the human being with two ears, two eyes, two hands and, it is to be hoped, a brain. I sometimes wonder about the latter but not in respect of the people working in the front line.

The Chancellor of the Exchequer has been quite glib about the matter. On several occasions we have heard Mr. Lamont saying that in order to reduce inflation, we must have unemployment. It is all right for him; he has a good, well-paid job. If we can believe the Sunday newspapers, he also has property with strange tenants, although I do not know whether that is correct. Let us say that he is not on his beam ends! I was interested to hear my noble friend mention 12 Secretaries of State. I suppose that is one way of helping unemployment on the other side of the House—Members are changed around and they get a new job.

Certainly there is employment for some people; for instance, the people who have to feed computers. However, one must find something to put in the wretched computers. We have never had so many surveys and forms to fill in. On many recent occasions I have had to fill in a form stating who I am, my status in life, how much money I have if any, and so forth. These forms and surveys are churned out by the dozen. Most are totally useless because one contradicts another. Perhaps in common with me noble Lords receive a vast amount of junk mail through the post every morning. I am sorry to say that a great deal comes from universities which is the only way that they can earn money. Each survey contradicts another.

That is one way of obtaining money but the important base is manufacturing. Let us not delude ourselves about that. Some noble Lords will have heard me mention the articulated lorry that was stuck outside my house. The driver had come all the way from Sweden bringing tiles to a building site. What kind of situation is that? It is bad enough to have to suffer those terrible Golden Delicious apples instead of ours. They should be investigated under the Trade Descriptions Act because they are neither golden nor delicious. Constantly we import goods that we can make far better. For some curious reason we undersell ourselves in the world and I shall never understand the reason why. The manufacturing base must be restored.

What is redundancy like? I must now be personal and the person about whom I shall speak will never forgive me; that is my son. He is a Cambridge graduate and a clever and distinguished man. He is also a lovely man but I suppose that all mothers say that about their sons—but speaking impartially it is true. He had the misfortune to be employed for 23 years as a head of department in a school in Westminster. The fact that it was a Catholic school did not improve the situation and in my view made it even worse. My son saw the head teacher on Maundy Thursday. Your Lordships will understand that the story of the Passion is so typical; there are those who deny that they have ever seen you before, those who wash their hands of the affair, and those who cheer you on Sunday and crucify you on Friday. They all still exist. The head teacher chose Maundy Thursday to inform four heads of department that they were to be made redundant.

Why was that? What had they done? Each of them had more than 20 years' service so they could not have been so bad. However, they were employed by a borough which must keep down the poll tax. The company with which Lady Porter is connected is more generous. Its chairman earns£4,000 a day. Just imagine! That is as much as some hospital cleaners earn in a whole year—and I have checked that fact. They a -e doing a job which is a darn sight more useful than his. However, Westminster council must keep down its poll tax. It has been praised by the Government for doing so—it is marvellous! How has the council done that? It has made people redundant, that is low. What in that is there to be proud of and what solution does it offer? Professional people are suffering appallingly. Redundancy brings demoralisation. I (now people in the medical profession and in the Civil Service who see that spectre in front of them. If any one believes that he can obtain better service from people who have the threat of unemployment hanging over their heads, he cannot have employed anyone. People give of their best and are loyal when they know that they are part of a concern.

Unemployment is an obscenity. That is the only word I can use for it. I recommend a solution; that is, to elect a Labour Government. I hope that a Labour Govern rent will put this matter at the head of their priorities. This Motion does not ask for a solution but merely calls attention to the problem, in case the Conservative Party has not noticed that. We have called attention to it. The Institute of Directors, which one can hardly say is revolutionary, has called attention to the problem. Even then, it had to be snobbish and say, "We do not want a return to beer and sandwiches at No. 10 Downing Street." Therefore, that is not asking for a Labour Government.

We do not want human beings to be flung on the scrap heap with a loss of dignity and a feeling that they are unnecessary. Human beings must come before anything, else. Money is meant to be a means of exchange. It is not a commodity. It is no good appealing to this Government, but I contend that I have called attention to this problem.

5.20 p.m.

Baroness Seear

My Lords, the noble Baroness, Lady Turner, quite rightly said that we are a low wage, low productivity economy. We have been that for a very long time under both Labour and Conservative Governments. Therefore, I do not know whether a return to a Labour Government would necessarily achieve the improvements which we desire. However, I do not propose to join in the pre-election campaigning which seems to have been going on during the past hour or two.

As long as we remain a low productivity country, we shall continue to be a low wage country. Unless we find a solution to that, even if we spend money now, as I believe we should, in order to deal with current unemployment, that situation will return again and again. Our basic problem is that we are not competitive. We have not made ourselves competitive for many reasons, some of which have been referred to today and some of which I shall take up in more detail.

The noble Baroness, Lady Turner, said that wage claims have nothing to do with this. She pointed out that very high payments are being made at the highest levels of industry which certainly do not set an example. However, that is why this party has always said—and I believe that it is now more widely accepted—that it is only possible to achieve a high wage, high productivity country when there is far more collaboration at company level and when wage claims are related more closely to the success of the company. However, that is not the primary point which I wish to make this afternoon.

As many noble Lords have said, the level of unemployment in this country is intolerable. The only way to solve that problem is for the Government to be prepared to spend money in the right way and to spend it in a way which will not only help to deal with the immediate unemployment problem, which needs to be dealt with, but in a way which will make it less likely that we shall run into the same difficulties in the future. Money must be spent in order to build a high productivity country rather than a low productivity country.

There are a number of important steps which the Government could take immediately which would help considerably. For example, in the recent Budget the Chancellor could have cut back on the uniform business rate. Everybody knows that small businesses are collapsing all over the country. One reason for that is that they simply cannot carry the uniform business rate. It would not take time for the Government to do that but it would mean a loss of money. However, when the Government found that they had to do something about the poll tax, they managed to find£140 per person. And yet, they have done nothing about the uniform business rate. In terms of unemployment, which is the problem we are discussing today, the uniform business rate is more important than the poll tax. The Government could take that step on Monday if they wished to do so.

When I say that the Government should spend money, I mean that they should spend money on investment. I often believe that this Government have lost the understanding of what used to be called below the line as distinct from above the line expenditure. Money paid out for unemployment benefit is merely for current consumption which does no good. That is no help at all in building the high productivity economy which we need.

A number of investments could be made at this moment which would bring a real pay-off in the short term and also in the long term. It is the burden of my theme that we must deal with the immediate problem while also building for a future in which we shall not return to high unemployment.

I am glad to agree with the noble Lord, Lord Mellish—although I do not always agree with him—when he said that we should put more money into housing. We should allow the local authorities to spend that money which they have not been allowed to spend on housing. We all agree that the housing situation and the cardboard society is an absolute disgrace. To have people unemployed on the one hand, and people sleeping in cardboard boxes on the other, is a combination which everybody must condemn. Therefore, money should be released to build houses and to start to revive the construction industry. Revival of the construction industry has a multiplier effect which comes from that. Once money is spent on that, one begins to see expenditure elsewhere.

Money should be spent not only on houses but on schools and on the infrastructure otherwise we shall not obtain the maximum benefit from our membership of the European Community. I could not disagree more with almost every word which the noble Lord, Lord Jay, said but in my 10 minutes I cannot deal with that. However, as we are a member we must obtain the maximum benefit from our membership. We need a good infrastructure in order to do that. Why cannot the Government put money into the infrastructure now and thus benefit from the effect of that as regards unemployment? Of course, benefit would be gained because it would not be necessary to spend as much money on unemployment benefits. I believe that the figure quoted is£8,000 per person. When there are 2 million unemployed, that would create quite a large sum which could be used for investment purposes.

There are other aspects. We can make a start now on changes in education which we need to make. We know that we should keep more 16 to 18 year-olds at school or in employment with real training. One reason that young people do not stay on at school is that there is an economic advantage if they go to work. Why do we not grasp the fact that we must pay people who stay on at school after the age of 18 an allowance which makes it worth while for them to stay on so that they are not at a disadvantage compared to those who choose not to stay on at school? The Government should encourage a great deal more training for young people aged 16 to 18 who are in employment. Some of that should be paid for by employers, but probably not all of it.

It is extraordinary at this time to cut money going into the TECs. A time of unemployment should be a time when we put money into training, to train the people that the country will need as soon as it moves out of the recession. In my over-long life I have seen again and again that in a period of unemployment a lot of money is spent on unemployment benefits, the country begins to come out of the recession and industry is then screaming out—north, south, east and west—because there are insufficient skilled people to take advantage of the reviving economy. It always starts with the construction industry. As soon as a recession departs, that industry is always short of skilled workers. Why do we not invest money now? Why do we not give back to the TECs the money taken from them so that they can get on with the necessary training?

The same applies to employers. There are many people in employment who need to be sent on training schemes in order to keep up to date. Instead of getting rid of people, the Government should encourage employers to send workers on training courses so that there will not be a shortage of the necessary skilled workers when they are needed.

I said that the Government should spend money. I shall be told that if they spend money, that will enhance inflation.

I am in absolute agreement with the Government when they say that we must defeat inflation. But the way in which they are doing it is not the only way. Unlike the noble Lord, Lord Jay, we on these Benches feel that far from being wrong to be in the ERM, we should be in a tighter band in the ERM, because then we would not have to keep interest rates so high. They are kept high because people do not believe in the strength of our currency. If we show that we have confidence in it we could begin to reduce interest rates further. That is what industry throughout the country is crying out for.

That is one thing we could do. There are other things. When I spoke a few weeks ago I raised an issue which I know is a political hot potato; that is, the money going into mortgage interest relief. Everybody now realises that that£8 billion which is being spent on mortgage interest relief in many ways has produced an economic disaster. It has increased the price of houses; it has allowed too much consumer expenditure; it has had a great deal to do with inflation. When one talks to politicians they admit that that is true.

Only yesterday in another room in this building I was engaged in a debate with—noble Lords may be surprised to hear—the director of Shelter. She was crying out to get rid of mortgage interest relief. She said that it has done the greatest harm to housing. It has also done great harm to the economy.

I must continually remind the House that I speak for myself and not for my party. I realise that one cannot get rid of it overnight. However, surely there could be a consensus, an all-party discussion, on what to do about it. The figure is£8 billion and is increasing inflation. Until we do something about that it is humbug to say that we can do nothing about inflation except keep interest rates high.

5.32 p.m.

Lord McCarthy

My Lords, we must thank my noble friend Lady Turner of Camden for initiating the debate. In all the speeches we have so far heard—the Minister is yet to speak—it is remarkable that we have had no straight bat defending the Government's policy. Perhaps I may join with other noble Lords in congratulating the noble Lord, Lord Jeffreys, on his maiden speech. He showed a real understanding and sympathy for the plight of the long-term unemployed.

People on the other side of the House have spoken about the problems of unemployment and about the social and economic consequences.

They mentioned the forms of unemployment and the reasons for it. So far nobody has set out to deny the essential thrust of the Motion; that is, the continued growth in unemployment, particularly in regions which hitherto have been relatively prosperous.

Nobody has sought to rebut the arguments coming from the nine speakers on this side of the House who spoke in broad terms largely addressing two other questions; one, the weakness of the Government's policies for dealing with unemployment—they are significantly weaker than they were in the last recession—and the other, the fact that there are alternative policies. Many such policies have been put forward from this side of the House. I add only that some of the policies available at the moment are policies that the Government used in the early 1980s and which, for reasons I do not understand, they refuse to use now.

In regard to the first issue there can be no denial that there is a rising and threatening rate of unemployment. The question is how long and to what extent the trend will continue. I should like to ask the Government whether they see it as being worse than, the same as, or better than, it was in the early 1980s. One recalls three years of escalation, four years of stagnation, when the level of unemployment was around 10 per cent. to 11 per cent., four years of decline and another year of escalation. Is that how the Government see the position?

I ask the Government whether we are to undergo another year or so in which unemployment will escalate. If it escalates at the present rate, that means it will rise above 3.4 million within 12 months. Is it likely to be a shorter period of escalation? Much more importantly, what about the years of stagnation? It took four years to significantly reduce unemployment last time. What will it take now? Will it be one, two, three or four years?

The Government may say that it will not take so long although I am not sure that they will say how long. The Chancellor has said that the recession is bottoming out. He has said that unemployment will continue to rise for some time but that it is bottoming out. The critical figures come from those aspects of economic measurement which directly indicate what is likely to happen to unemployment over the next 12 months I say to the Government that those aspects are very bad indeed. Production is falling; overtime is falling; vacancies are at the lowest level since 1983; stocks are high; and short time is still rising. All the indexes of labour demand are going down. That suggests at least another year of what is now happening and then a couple of years of stagnation.

The Government may say that inflation is not so serious a problem as it was the last time. I accept that. The inflation problem last time was very much a worldwide problem. This time it is nowhere near that. Peter Morgan, the director general of the Institute of Directors, said yesterday that this awful recession was due to the failure of the Government's economic policy. The Government may say that that is right; that there have been a series of own goals; and that there is no need for inflation to be so high and that it will soon come down. When it comes down they may say that they will reflate the economy and we shall not have four years of stagnation.

But the problem was indicated by the noble Lord, Lord Jay. Last time, inflation fell in the way that it did because we had a high exchange rate. We were a petrol currency. The sterling index continually rose in 1979 and 1980. That largely cured inflation. However, nobody believes that the pound will accumulate in the way that it did in the late 1970s and early 1980s. The most for which the Government can hope is to keep the exchange rate where it is. If the noble Lord, Lord Jay, is right, and the Government are wrong and are forced into a devaluation, they will not necessarily say, "Inflation allows us to reflate the economy."

Those are the good points: it may be that the situation is not quite as bad as it was last time. Let us look at some of the bad points. Last time the recession improved partly because it hit only the North and was largely confined to manufacturing. As several speakers on this side of the House have said, non-manufacturing is in some ways now being hit even worse than manufacturing. In the early 1980s the recession began to decline because in the end the Government were able to claim that 1.2 billion jobs were claimed by the services. Is that what the Government think is happening now? Do they believe that we shall have 600,000 new jobs in the service industries in the South over the next 18 months to two years? That is extremely unlikely.

Perhaps the main reason I am worried that we may be entering an even longer period of stagnation is that this time the Government are doing virtually nothing about special employment measures. The total absence of special employment measures, given the present rate of increase in unemployment, is nothing short of fantastic. In 1983 the special employment measures, which to some extent the Government inherited from their predecessors, were worth around 300,000 jobs. In overall terms by 1987 they were worth 800,000 jobs. We argued whether they were really worth 500,000 or 600,000 jobs. But it was very significant. Had it not been for those special employment measures the level of unemployment in those bad, early years of the 1980s would have been significantly higher. They would have been about a third higher than they were.

Where are those special employment measures now? They do not exist. The trouble is that as soon as the level of employment began to decline the Government scrapped the more effective and efficient of the special employment measures and went for the cheaper ET. They abandoned the community programme, which was providing very considerable relief for the long-term unemployed but at£7,000 a head, in favour of the benefit plus£10—less than half cost—ET.

The Government did not even expand ET in the way that it had been done in the previous period of rising unemployment. As has been said on this side of the House, they cut the budget to the ET as the recession became worse. They have given reasons for that and to some extent I accept the validity of those reasons. The Government say that surveys which they have carried out in Bristol and elsewhere show that they were wrong and that not all the long-term unemployed need training. We told them that. They say that the long-term unemployed need motivation and that they do not try to get work. The Government believe that if only they would try to get work and reduce their expectations at work, there would be more people in work and fewer unemployed.

So we have seen what is called in the trade "the deficit model" of the employment service. That exhibits four unsavoury features. One is constant counselling; another is diversion into job clubs and into restarts and restart, restart restarts. There are more restarts than in an old Ford Anglia! Worse still is the practice of placing workers—particularly the long-term unemployed who are sufficiently non-cooperative—on what is called "on notice". The effect of all that has been that three times the number of workers have been disallowed benefits since 1985. That has been partly induced because the Government have discovered another bad occurrence which has been taking place. It has been mentioned by noble Lords on this side of the House. They must have almost reached the end of what is called "creative accounting" in the area of unemployment and in the unemployment returns.

The noble Lord, Lord Donoughue, mentioned some of these matters. We all have our favourites. They include not counting the over 60s, which was a good one. Others were counting second jobs as first jobs; counting part-time as full-time; and including the self-employed, especially when one can escalate the numbers of the self-employed. But the measure which has always been my favourite is adding in the Army. That was a masterpiece. So the Government now find that they are virtually at the end of creative accounting. Therefore, the only way of levering down the level of unemployment is by massage in terms of the deficit model—that is to say, taking people off the employment register.

We say that that is not sufficient. Above all, we say that in the short term the Government need a new version of the temporary community work programme which they cut off in 1988. A model for that, which I commend to the Government and about which I hope the Minister can give us news now, was advanced by the Campaign for Work the other day. It would involve two days' work at basic rates, one day training and one day looking for work. It is quite clear that in the 1990s it will cost rather more than the community programme which cost about£7,000 a job. The Government must remember that, as has been said by speakers on this side of the House, each person on the dole is a Treasury loss of at least£8,000 a year. That comprises£4,000 a year paid in benefits and£4,000 a year in lost tax revenue.

We do not pretend, and have never pretended, that a substantial temporary work programme will solve the problem of unemployment. It would now take a long time to get it off the ground. It might take 18 months before a brand new temporary work programme took 200,000 or 250,000 people off the register.

I conclude by asking the Government this central question which I asked when I began. Given the fact that unemployment is escalating, and that if it escalates at last month's level it will be at 3.3 million in 12 months' time, do the Government believe that there will be another three years of stagnation? If there is at least another year of stagnation, can the Government say what is wrong with a temporary work programme?

5.45 p.m.

The Parliamentary Under-Secretary of State, Department of Employment (Viscount Ullswater)

My Lords, this has been an interesting debate and I have listened carefully to the many points made by noble Lords. My noble friend Lord Jeffreys made a very well-measured and sensitive maiden speech, drawing on his experiences in Nottinghamshire. I congratulate him on a good speech and look forward to his contributions to your Lordships' debates in future.

The Motion moved by the noble Baroness, Lady Turner, was to call attention to the continued growth in unemployment, particularly in regions which hitherto have been relatively prosperous. All rises in unemployment, regardless of region, are regrettable, but I should point out, as I have before, that even after the recent increases, the United Kingdom unemployment rate remains lower than the EC average. I hope in the course of my contribution to be able to reassure the noble Baroness that the Government are not complacent. I shall also set out how the Government are tackling this problem, both in terms of the economy as a whole and in helping people return to work. I shall also try to respond to the many points made during the debate. I shall write to noble Lords if time does not allow me to answer all the points raised.

My right honourable friend the Chancellor, in another place, has acknowledged that unemployment is likely to go on rising for a while yet, even after the economic recovery has started. Lower inflation is crucial to ensure a return to sustainable increases in output and improved employment prospects and to improve business and consumer confidence. The Government are determined that inflation is going to come down and stay down. Our decision to join the ERM last October was a clear signal of our overriding commitment to conquer inflation.

But there is no painless way to beat inflation. The good news is that we are clearly winning the battle against inflation, which has been falling now for some months. The fall in inflation is set to continue. I say to the noble Lord, Lord Dormand, that the forecast published with the Budget is for inflation to fall to 3.75 per cent. by the middle of 1992. In his Budget statement, my right honourable friend the Chancellor said that there are good reasons to expect that the economic recovery will begin around the middle of this year. In recent months we have seen a fall of three percentage points in interest rates.

The noble Lord, Lord McCarthy, asked whether the recession is 1980–81 all over again. Far from it. The current recession is likely to be both shorter and shallower than in 1980–81. The Government's supply side reforms have helped to make the economy much stronger and much more competitive. The level of inflation that needs to be squeezed out of the system is lower and the gap between our inflation and the rest of the EC is smaller. Finally, though the world economy is weak, it has not had to face an oil price shock on the same scale as in the early 1980s. These factors should combine to ensure that the economy starts growing again quite soon and probably around the middle of 1991.

Lord McCarthy

My Lords, I thank the noble Viscount for those facts. I particularly want to know what the Government think will happen to the level of unemployment. In a previous recession, once the level stopped rising, it stopped where it was for 3½ years. Will it stop at the same point for 3½ years now?

Viscount Ullswater

My Lords, I will deal with the point that the noble Lord makes when I deal with the help available to the unemployed. The foundations, as I say, are thus being laid for falling unemployment and a resumption in the jobs growth that was such a remarkable feature of the mid to late 1980s when the workforce grew by over 3 million in seven years to the benefit of all regions in the United Kingdom. The noble Baroness, Lady Seear, suggested at least three ideas for stimulating the economy: cutting UBR; more expenditure on investment in infrastructure; and methods to deal with the homeless. However, the Government have considered all these points and believe that they are on course for the recovery, as I suggested. For instance, there are now more small businesses in this country than ever before. By the end of 1989 there was a staggering 373,000 more businesses registered for VAT than in 1979. That means a n average of over 100 extra businesses on the VAT register every day since 1979. All the evidence shows that growth continued in 1990. That is the way to future prosperity and not in a command economy to ensure full employment, as my noble friend Lord Boardman warned us.

Many noble Lords spoke about the fall in manufacturing. However, the United Kingdom has had an impressive record of output growth in the 1980s, faster than Germany, France and Italy. In the 1960s arid 1970s we were at the bottom of that league.

Job prospects will improve following a resumption of economic growth, but the extent to which new jobs are created and unemployment comes down depends crucially on the speed with which pay settlements come down. The current upward trend in unemployment will be more difficult to reverse if wage settlements continue at unrealistically high levels. There has indeed been a small fall in the year-on-year rise in average earnings. The CBI and other commentators are also reporting a clear, though modest, fall in the average level of wage deals.

Lord Mellish

My Lords, does that include directors?

Viscount Ullswater

My Lords, the point about directory is that they have had deals which have indicated that they would be paid where there is productivity. In that it falls in a year when the productivity comes down is a completely different matter.

The CBI and other commentators are also reporting a clear though modest fall in the average level of wage deals, although there remains a wide spread in the level of individual settlements. Some firms have deferred pay settlements or agreed pay pauses in response to business conditions. But there is a need for much greater realism in wage bargaining generally. The sooner this is accepted, the sooner we will be able to reverse the trend in unemployment.

I must tell the noble Lord, Lord Jay, that ERM membership reinforces the need for realistic wage demands comparable to those of our EC partners. There is now no escape through devaluation as the noble Lord suggested should be allowed. If industry and employees working together are not able to contain unit wage costs by realistic pay settlements and improved efficiency, then both will have to bear the consequences of their short-sighted actions.

Lord Jay

My Lords, when the noble Viscount keeps mentioning wages, does he include salaries? If so, why does he not say so?

Viscount Ullswater

My Lords, I am talking about pay increases. It is in that context that we must judge the proposals to introduce a national statutory minimum wage. The noble Baroness, Lady Turner, suggested that I might want to return to this point and she is right.

Last week, the Labour Party committed itself once again to introduce legislation requiring such a minimum wage—to be introduced at an initial level of half average male earnings, rising over time to a level of two thirds average male earnings.

My right honourable friend the Secretary of State pointed out earlier this week that, even if only half the previous levels of differentials were restored, such a policy would destroy three-quarters of a million jobs immediately, and one and a quarter million as the minimum wage was raised.

But we know from the firm words of Mr. Bill Jordan, leader of the AEU, on Monday that differentials would be eroded by the introduction of a minimum wage only "over his dead body". And if the unions succeeded in restoring differentials in full, then Labour's minimum wage policy would destroy one and a quarter million jobs immediately, and no fewer than two million as the level of the minimum was raised. It is not necessary to take the word of this Government for that conclusion.

Baroness Turner of Camden

My Lords, will the Minister forgive me for interrupting? Will he arrange to have the figures on which he bases these assertions placed in the Library? All we have heard is the assertion that 3.25 million jobs would go.

Viscount Ullswater

My Lords, perhaps I can illustrate the point more vividly by calling attention to the words of the Labour predecessor of the noble Baroness—Mrs. Barbara Castle, now the noble Baroness, Lady Castle—who published a White Paper in 1969 which ruled out a national minimum wage because: there is little present evidence that higher paid workers would not take advantage for their own purposes of the attempt to help the low paid through the establishment by law of a national minimum". She also published a report that year which pointed out that when the federal minimum wage was raised in the United States employment declined in nearly all industries concerned, the decline ranging from 3.2 per cent. to more than 15 per cent. No policy could be more damaging to employment prospects than such a minimum wage. That is why successive governments of both parties have rejected it.

The Motion of the noble Baroness, Lady Turner, refers to the rise in unemployment in regions which hitherto have been relatively prosperous. This suggests a wide variance in unemployment across the country. No one denies that there are regional variations in levels of unemployment. However, these differentials should not be exaggerated. The latest labour market figures show that the lowest regional rate of unemployment in March was 5.3 per cent. in East Anglia; and, leaving aside Northern Ireland, the highest was 9.6 per cent. in the northern region. While this difference is by no means insignificant, it is hardly as startling as those who see Great Britain in stark North-South terms might have us believe.

There are moreover marked unemployment variations between different localities in the same region. Those regions with unemployment above the UK average often contain prosperous areas with lower than average unemployment. For example, Aberdeen has an unemployment rate of under 3 per cent. and Harrogate in Yorkshire has an unemployment rate of 3.5 per cent., one of the lowest in the country. The converse also applies, with generally affluent regions containing pockets of deprivation and higher unemployment, such as Thanet, in the South East, which has an unemployment rate of 11.5 per cent.

Many areas of higher than average unemployment were in the past dominated by large heavy industries, such as coal, steel and shipbuilding. These industries have had to adjust to more competitive world markets, reduce staffing levels and increase their productivity. Some of the communities affected are still grappling—often with great energy and determination—with the challenge of adjusting to a more service and high-tech-orientated economy.

The noble Baroness, Lady Fisher of Rednal, asked whether the Government cared for the regions, and she mentioned the West Midlands. The Government recognise that some areas need additional help to benefit fully from our economic success. This help takes many forms and several government departments are involved. For example, the Department of Trade and Industry's regional enterprise grants, selective regional assistance grants and consultancy initiative which target funding and advice where they can do most good in terms of encouraging enterprise and jobs growth. The Department of the Environment's urban programme and other inner city initiatives are also highly relevant, being aimed at encouraging economic regeneration and individual enterprise in inner city areas in partnership with the private and voluntary sectors. We should also not overlook the assistance for rural areas channelled through the Rural Development Commission. The noble Lord, Lord Mellish, drew attention to the problems facing the construction industry. It does indeed face problems. However, I was in Docklands this week and I was very impressed both with what has been achieved in 10 years by the development corporation and with its plans for the future.

My noble friend Lord Boardman drew our attention—

Lord Mellish

My Lords, can the noble Viscount say something more? Docklands is one aspect of the matter. Can he give some hope to the construction industry for the future?

Viscount Ullswater

My Lords, I am trying to demonstrate what the Government are doing in order to stimulate the economy and to improve the jobs position in all industries.

My noble friend Lord Boardman drew our attention to Consett and the North East, an area of high unemployment, where new service and light manufacturing industries are replacing old heavy industries such as steel-making and shipbuilding. Following the success of Nissan in Washington, considerable inward investment is being attracted to the area. Nevertheless, what I have said about relative levels of unemployment is little comfort to someone finding himself unemployed. In this respect I must agree to some extent with the words of the noble Lord, Lord Brookes. None of us under-estimates the anxiety and uncertainty of unemployed people at the present time—particularly about how long they will be unemployed and how quickly they can get back to work.

The noble Baroness, Lady Nicol, chided me for not understanding as if only those on the other side of the Chamber can understand. The help which my department is providing is designed to ensure that everyone has the best possible chance of getting back to work. I must tell the noble Lord, Lord McCarthy, that even now, at a time of rising unemployment, some 400,000 jobs are available in the economy. It is also very encouraging to note that 275,000 unemployed people leave unemployment every month and more than 50 per cent. of people unfortunate enough to lose their jobs leave unemployment within three months of becoming unemployed.

The Government are determined to ensure that those people who are unemployed have the best possible advice and support to put them on the road back to work and special help when they need it. We already have in place throughout the country a comprehensive package of counselling and job search advice geared to the specific needs of individuals. In order to help people find the assistance most suited to them we have produced a new guide Employment and Training Services for You. This informs unemployed people about the whole range of employment and training measures which is available and how they can obtain access to them.

Last month my right honourable friend the Secretary of State for Employment announced in another place the provision of£55 million extra resources for the employment service for 1991-92. These additional funds will ensure that its standard of customer services are maintained and, where possible, enhanced and will enable the employment service to provide more help for those who do not find work in the firs t few weeks of unemployment.

In future, for the first time, every person who has no job to start will, after 13 weeks of unemployment, have a guaranteed offer of an interview—a chance to review his back to work plan and to assess further options for returning to work. New job teams will be set up to search out jobs which are suitable for those who have marketable skills and to match individuals to jobs.

Job search seminars will be run to provide extra advice on job search for those who are not seeking work i a the most effective way.

My noble friend Lord Jeffreys complimented the employment service on the working of the job clubs. More than 520,000 people have been through the programme and more than half have gone into jobs. A further 80,000 have gone into training, full-time further education, self-employment or a place on the former community programme. More job club places will be provided for those with more intensive problems and needs who are already eligible to enter job clubs after 13 weeks of unemployment. We are also increasing the help available to those who have been unemployed for six months or more. In the course of the next financial year the employment service will be providing up to 100,000 extra opportunities mainly through job clubs and the new job interview guarantee.

My department keeps under review the whole range of its help to the unemployed, in the light of developments in the labour market. I can tell the noble Lords, Lord Rochester and Lord McCarthy, that that is the position now as it has been on previous occasions when I have answered the noble Lords' questions.

The current measures are clearly succeeding. Sixty-six per cent. of those leaving job clubs go into work or into training or further education. The job interview guarantee is quickly proving to be a very effective way of helping the long-term unemployed back into work. In the year to February 1991, more than 2,500 people were placed in jobs. In addition, up to around a quarter of a million unemployed people this year will be able to upgrade current skills or learn new ones to improve their chances of getting a job through employment training.

This represents the most comprehensive range of help and advice ever made available to unemployed people. We are providing assistance to unemployed people when they need it most. My department now offers same 650,000 opportunities to people to get back to work. These are included in a wide range of options, so that individuals can find the help which most satisfies their individual needs.

Lord Dormand of Easington

My Lords, I am grateful to the Minister for giving way. He is spending a good deal of time, understandably, explaining what can be done about the large number of unemployed people. Will he spend a minute or two explaining how we came to have 2 million unemployed?

Viscount Ullswater

My Lords, I have traded with the noble Lord on many occasions the reason for jobs being lost in the economy; namely, the scourge of inflation. What is required now is to get inflation down. I have told the noble Lord that on many occasions.

The job clubs and the job interview scheme are particularly successful in helping people with searching for jobs and securing interviews. Nevertheless, I am sure we all agree that it is of particular importance at a time of economic down-turn that we do everything possible to sustain both employer and individual investment in training. Only thus can we be confident that the country has a ready supply of skilled people to fill those jobs which are available.

The foundations have already been laid for a significant improvement in the skills of the workforce. There are many positive signs that skill levels are increasing, and that employers and individuals are becoming increasingly aware of the importance—

Baroness Seear

My Lords, I am sorry to interrupt the noble Viscount. If that is true, why on earth have the Government cut the money available to the TECs?

Viscount Ullswater

My Lords, I shall go on in a minute or two to say that the money available to the TECs is broadly the same as they spent last year. The idea of cuts is exaggerated.

There are many positive signs that skill levels are increasing, and that employers and individuals are becoming increasingly aware of the importance of education and training to our future economic well being. Training has never been higher on the business agenda. We too are playing our part. In February of this year my right honourable friend the Secretary of State for Employment announced in another place an extra£120 million for TECs to ensure that ET can continue to play its full part in helping unemployed people to enhance their skills or learn new ones and get back to work. We are actually planning to spend broadly the same amount this year as we spent last year and there is extra provision over previous plans for youth training including training credits, which has been increased by about£38 million, and other measures such as career development loans and TVEI.

My answer to the noble Lord, Lord Rochester, and to the right reverend Prelate the Bishop of Guildford is that all young people under 18 not in full-time education or employment are guaranteed the offer of a suitable training place. Expenditure by my department in this area is two-and-a-half times as much in real terms as was spent in 1978–79.

Training and enterprise councils, and the local enterprise companies in Scotland, are the means of developing and building on this investment in training. All 82 training and enterprise councils and 22 local enterprise companies are now in place. Over 1,200 of the country's senior business leaders have now committed themselves to providing the leadership required to develop the skills which industry will need in the 1990s. My noble friend Lord Jeffreys welcomed the establishment of the TECs. How right he was. That leadership has been built not by regulation and compulsion, but through voluntary commitment and willing participation.

As well as securing commitment from employers, individuals have a growing interest in taking greater responsibility for their own training needs. We welcome this trend and the Government have already taken a number of steps to increase individuals' say in their own development. For example, up to 45,000 young people have the opportunity of participating in a pilot exercise of training credits which are giving them, at the outset of their careers, real purchasing power to choose the training and development most appropriate to them. Career development loans are also giving valuable help to individuals who are paying for their own training.

I see that the noble Baroness, Lady Phillips, wishes to intervene. I am happy for her to do so.

Baroness Phillips

My Lords, I am most grateful. The noble Viscount has talked only about the opportunities in training for young people. But what about the 50 year-old highly trained professionals who are being made redundant?

Viscount Ullswater

My Lords, I tried to indicate—indeed, other people have commented on this—that such training is not necessarily what those highly-skilled professional people are looking for. The job clubs and the job interview guarantees are much more suitable for getting those people back to work.

The new training tax relief which my right honourable friend the Chancellor of the Exchequer recently announced in another place will provide another important incentive for individuals to acquire national vocational qualifications—SVQs in Scotland. That latter measure removes barriers in the tax system which stood in the way of people who wished to improve their marketable skills and has been warmly welcomed by the training and enterprise councils and the business community. Non-taxpayers will benefit equally as the tax will be deducted at source from the cost of the course. That will be of particular help to women returning to work.

Those measures will allow individuals to have real control over their career training and development and provide a powerful stimulus to those who wish to train but are deterred by the cost. The Government are playing their part to create an economic climate conducive to growth and enterprise, but employers and pay negotiators must play their part in keeping wage settlements down if they are not to destroy the prospects for jobs.

I take issue with the noble Lord, Lord Brookes, as regards the way he talked about jobs in the service industry. I believe that he called it the "confetti industry". In my view he is wrong. The people in that industry are proud of their jobs and they are worthy of more consideration from the noble Lord.

The noble Lord, Lord Donoughue, asked me a question which he has put to me before. He asked about the unemployment figures and the comparison. Using comparables from the data of the Statistical Office of the European Community (SOEC), the rates for the United Kingdom indicate that the change in percentage points between 1979 and 1990—that is, using the SOEC data and the consistent claimant data which I have already explained to the noble Lord—are very similar. The former showing a rise of 1.7 percentage points and the latter a rise of 1.8 percentage points. We could continue a debate about statistics for the rest of the evening. However, I should point out to the noble Lord that I believe he is barking up the wrong tree.

Job creation would not be assisted by immediate implementation of the European Commission's social action programme which would add£3 billion to the cost of British employers. Yet that is the policy of the Labour Party. Job creation would not be assisted by the introduction of a tax on the payroll of companies so that they could lower their tax bill by sacking workers. However, that is Labour Party policy. Further, more jobs would not be created if legislation were introduced which would make strikes easier and weaken the power of the courts to punish trade unions which break the laws. Yet, that too, is part of Labour Party policy.

It is more important than ever to assess all policies in the light of their effect upon job creation. The Government will continue to give top priority to the creation of a climate in which enterprise can flourish and jobs can grow.

6.15 p.m.

Baroness Turner of Camden

My Lords, I thank noble Lords who have participated in the debate. It was indeed extremely interesting. I should especially like to thank the noble Lord, Lord Jeffreys, for his contribution. I am most flattered that he chose this debate in which to make his maiden speech. He made a maiden speech of great compassion and humanity on a subject which I am sure is very dear to the heart of every one in this Chamber.

I wish I could say that I was very happy with the Minister's reply. He will not be surprised to hear that I found his response extremely disappointing. Many issues were raised by speakers on this side of the House to which I believe we have received very inadequate replies, to put it mildly. The noble Viscount set out inflation as being the main cause of unemployment and the main dragon to be slain.

The Deputy Speaker (Lord Alport)

My Lords, the time allotted for this debate has now elapsed. In the circumstances, does the noble Baroness wish to withdraw her Motion.

Baroness Turner of Camden

Yes, my Lords; I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.

6.16 p.m.

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