HL Deb 21 February 1991 vol 526 cc649-52

3.9 p.m.

Lord McCarthy asked Her Majesty's Government:

What special measures they intend to introduce to deal with the unemployment consequences of their present economic policies.

The Lord Privy Seal (Lord Waddington)

My Lords, the prime objective of the Government's economic policy is the defeat of inflation on which future prosperity and employment depend. The Government have taken a number of measures to help unemployed people get back to work through the advice and support services of the employment service. In addition to existing counselling and other schemes, my right honourable friend the Secretary of State for Employment has asked the chief executive of the employment service to provide up to 100,000 further opportunities in jobclubs and through the job interview guarantee scheme for unemployed people.

Lord McCarthy

My Lords, do the Government accept that the time has gone when they could rely almost exclusively on interviews to put people back into work? The last time the Government's economic policies raised unemployment at this rate, there were special measures and 750,000 people were taken off the register. When will the Government move back in that direction?

Lord Waddington

My Lords, it would be quite incorrect to say that the Government are now just relying on interviews. There is a whole range of schemes to help people with training. All 16 to 17 year-olds have the right to training, and 88 per cent. of those who complete youth training obtain jobs. One in five of 18 to 19 year-olds are now in higher education compared with only one in eight in 1979. The training and enterprise councils will be able to spend more in 1991–92 than in 1990–91. The training credit scheme will be in force from April of this year.

Lord Boardman

My Lords, does my noble friend agree that one of the most effective measures to bring down unemployment would be for employees, and those who influence them to show maximum restraint in wage demands?

Lord Waddington

My Lords, that is undoubtedly true. No one wants to see a rise in unemployment. However, if we do not tackle inflation now, the cost in terms of unemployment will be far greater later. The extent of unemployment will depend crucially on the level of wage settlements.

Lord Barnett

My Lords, while I agree with the Government that bringing down inflation is vital in order to bring down unemployment, given our propensity to pay ourselves more than we are able to earn from increased productivity over the years and certainly relative in unit cost terms to our competitors abroad, how do the Government propose to ensure that unemployment comes down but that inflation does not rise again?

Lord Waddington

My Lords, I do not know whether the noble Lord is suggesting that we should try an incomes policy again. Whenever it has been tried in the past it has failed. We certainly need to get the message over to employers that restraint in wage settlements is of the most vital importance. Firms would gain three times as much from cutting their wage settlements by 1 per cent. than from a 1 per cent. cut in interest rates.

Baroness Turner of Camden

My Lords, is the Minister aware that Barclays Bank has recently announced that it will cut its workforce by some 20 per cent.; that the other clearing banks are likely to follow suit, that the retail and distributive industries are also facing mass redundancies, and that this is in addition to continuing redundancies in the manufacturing sector? Is this not a much more dangerous situation than that which pertained in the previous recession in the early 1980s? What special steps are the Government taking to deal with it?

Lord Waddington

My Lords, I do not agree that the situation today is much more serious than in the early 1980s. British industry is in far better shape now than it was then. However, the fact remains that the greatest threat is inflation. If we do not tackle inflation now, we shall have far greater problems in the future and greater unemployment.

Lord Rochester

My Lords, in answering the noble Lord, Lord McCarthy, the noble Lord the Leader of the House referred to measures that are already in train. Do the Government have any new measures in mind to alleviate the increasingly adverse effects of unemployment?

Lord Waddington

My Lords, I mentioned in my original Answer the new measures which have recently been announced. The range of measures which are in existence are right for the circumstances.

Lord Molloy

My Lords, one of the consequences of ever increasing unemployment is the possibility that craftsmen may have to learn new skills. Has that factor been taken into consideration by Her Majesty's Government?

Lord Waddington

My Lords, clearly training is of great importance. The resources for the employment service have increased. The training budget stands at £2.6 billion. That is two-and-a-half times what it was under the previous Labour Government. Employers are spending £20 billion a year on training. Certainly training is important and the funds are there for it.

Baroness Phillips

My Lords, will the Minister ask the Government to look at the question of the employment of part-time workers to see whether there cannot be some change in the payments that small employers make towards insurance and other contributions? Those contributions are preventing part-time workers from being employed.

Lord Waddington

My Lords, I shall certainly look into that matter. It goes wide of the Question, but I recognise its importance. The fact remains that the number of part-time jobs has increased quite dramatically in recent years in response to the demand for part-time work.

Lord Mellish

My Lords, the construction industry, of which I have some knowledge, predicts that 150,000 jobs will be lost in the next few months due to the tremendous recession in the building industry. Is the Minister aware that that industry is crying out for a cut in interest rates to enable people to buy more houses?

Lord Waddington

My Lords, the overriding priority must be to maintain interest rates at the appropriate level to continue the downward pressure on inflation. Interest rates will be further reduced when it is safe to do so.

Lord Mottistone

My Lords, does not my noble friend agree that it would be helpful to put the TECs in the picture as regards finding new jobs so that people are known by name locally rather than just as numbers? Does my noble friend further agree that that would help greatly in finding jobs for people under the new systems that he has announced?

Lord Waddington

My Lords, I agree entirely with my noble friend. The TECs are doing an important job. They will be able to spend more in 1991–92 than in this year. Some 51 TECs are fully operational, and they will all be operational by the end of the year.

Lord Stoddart of Swindon

My Lords, did the noble Lord the Leader of the House see the statement made by a representative of the NatWest Bank which asserted that our membership of the exchange rate mechanism would result in an additional 600,000 unemployed people? Does the Minister agree with that statement and, if so, will he not reconsider all the answers that he has given and accept that extra special measures are needed to deal not only with present unemployment but with the high unemployment that is yet to come?

Lord Waddington

My Lords, entry into the exchange rate mechanism was warmly applauded by industry at the time. It is an important discipline. It will help us to keep the downward pressure on inflation that is vital for the future of jobs in this country.

Lord McCarthy

My Lords, I understood the Minister to say that the Government relied on training and interviews to tackle unemployment. Is he aware that the Secretary of State for Employment said in another place on 6th February that the Government were cutting planned expenditure on training for the long-term unemployed because many of them were already trained? He further stated that those people did not require either training or interviews but jobs.

Lord Waddington

My Lords, I have already pointed out the resources which are being put into training overall. However, the funding arrangements for employment training were altered because studies showed that a significant proportion of the long-term unemployed already possessed the qualifications to match vacancies in their areas. What they needed was advice and assistance to help them get back into the available jobs. Hence the importance of Restart, jobclubs and the job interview guarantee scheme. I make my following comment with the greatest diffidence. I am sure the noble Lord will take it in good part. I remind the House that the noble Lord was the adviser to the Labour Government on these matters between 1975 and 1977 when disaster hit this country. I can only hope that he can assure the House that the Labour Government accepted none of the advice that he tendered.

Baroness Turner of Camden

My Lords, is it not true that far more people were in employment then?

Lord McCarthy

My Lords, I can inform the Minister that I was not the adviser and that period was not a disaster.