§ 3.10 p.m.
§ Baroness Turner of Camden rose to call attention to the levels of unemployment in the United Kingdom; and to move for Papers.
§ The noble Baroness said: My Lords, I welcome the opportunity of opening a debate on the subject of unemployment this afternoon, although I am sure that no one can be happy that we find it necessary to debate the subject yet again in this House. We all know that 565 the situation is not a good one. However, the present Government have been in office for over 13 years. They can hardly blame this situation on their predecessors. The large figures of unemployment are, in my opinion—and I shall argue it in my submission this afternoon—directly attributable to the economic policies followed by the Government and which they show little sign of changing.
§ Unemployment rose in Great Britain between July 1990 and July 1991 by 49 per cent. During the same period it rose in the South East by 109 per cent. Over the past year we have lost almost 300,000 jobs in manufacturing industry, and 150,000 jobs in the service industry, including 60,000 in banking and 70,000 jobs in the retail industry. In the construction industry, another 100,000 jobs have been lost. One disquieting feature is the growth among the young unemployed. Of the total unemployed population, 32 per cent. are in the 16 to 25 year-old age bracket.
§ In the early 1980s we were told that the losses then taking place in manufacturing industry were a necessary manpower "shake-out". Industry had to be leaner and fitter in order successfully to compete. But that is all in the past. Being leaner and fitter has not meant greater prosperity. On the contrary, even well-managed firms face the future with anxiety.
§ At Question Time recently I mentioned that during the Recess I had visited Leyland DAF at Preston. I was impressed by the spirit of co-operation that exists between the workforce and management. The site that once employed 13,000 people now employs only 3,000. But all are apprehensive about the future. There is a modern assembly plant there. They can turn out a high quality product, but they need orders. The bottom has dropped out of the home market because of the recession. No one is buying trucks. In case the Minister tells me, as he well may, that the solution is to sell abroad, I remind the Government that the Japanese built up their global position on the basis of a good, sound, stable and highly protected home market.
§ Incidentally, Leyland DAF was selling to Nigeria. Of course, African states need trucks to develop their infrastructure. But that market disappeared with the collapse of oil prices and the resultant effect upon the Nigerian economy. There is something to be said about the long-term advantage to the UK and other industrialised countries in providing aid to the third world. Ultimately it would help with our employment situation. One of my noble friends may deal further with that aspect in the debate.
§ The CBI has criticised the Government because of their lack of support for manufacturing industry. Its report calls for a national commitment to help sustain long-term investment in the country's manufacturing base and says the Government must be prepared to act as the champions of industry in the international arena. But we learn from the Government's own figures that manufacturing output was 6½ per cent. lower in the second quarter of the year than for the same period a year earlier. Perhaps the Government believed in the 1980s that service industries would provide the employment which had disappeared in the 566 manufacturing sector. If so, there has been a disappointment. It has not happened. On the contrary, we are now seeing widespread redundancies in the service sector. For many years—in insurance, for example, where I was a union official—there was no such thing as involuntary redundancy. Computerisation and new technologies were introduced against a background of agreements specifying that there would be no involuntary redundancy; that people would be re-trained and re-deployed or else would take early retirement on enhanced terms. Those days appear to be gone. We are now seeing involuntary redundancies in the finance sector. Indeed, Clydesdale Bank announced redundancies only last week.
§ Much of the unemployment is taking place in the South East—an area once regarded as highly prosperous. In London it has risen by 78 per cent., in East Anglia by some 79 per cent. and in the South West by 91 per cent. Unemployment is occurring among people who only a short time ago were persuaded into home ownership by the former Prime Minister and her Chancellor. As a result, the number of repossessions by building societies is higher than it has ever been. The unfortunate householders find themselves burdened with debt they have little chance of repaying. They bought homes at the peak of the market and are now trying to sell them when the market value is much less than they were originally charged. But they are still liable for the original debt. The misery that that is causing must be very great. And it is happening to people and to families who have little previous experience of unemployment, or of having to deal with the intricacies of social security provision.
§ In the first six months of 1991 there were 14,306 repossessions in the South East out of a total for Great Britain of 33,778. What that means for the individuals concerned one hardly likes to think. I remember a television programme earlier this year when a manager working in the construction industry was interviewed. He was unemployed. He had had three jobs in the past two years. On each occasion he had had a job the company had closed down after a while. He was not eligible for redundancy pay because at no job had he worked the requisite two years.
§ That highlights another cause of high levels of unemployment. In the 1980s, people were persuaded to become part of the enterprise culture. Many attempted to do so, often with unhappy results. This year has been a record year for company closures. In the first nine months of 1991, 33,500 businesses collapsed—a 71 per cent. increase on 1990; 200 firms now fail every working day. Moreover, fear of unemployment itself blights lives. It leads to drops in consumer spending and deepens the recession. There is no doubt that unemployment leads to impoverishment. Unemployment benefit is payable for one year, and afterwards the individual and his or her family must rely on income support. Britain is the only country in the EC where unemployment benefit is not related to previous earnings.567
§ It may perhaps be recalled that the last Labour Government introduced earnings-related unemployment pay, but one of the earliest actions of the Conservatives was to do away with it. It was finally phased out in 1982. Moreover, it has become progressively more difficult to qualify for unemployment benefit. Instead of being "available for work" the claimant now has to demonstrate that he or she is "actively seeking employment". Those of us who opposed the change in the formula when the Bill was before the House claimed that it was intended to force people into low-paid employment, and I do not withdraw that allegation. Of course, each change made in the formulae governing entitlement has meant a reduction in the number of those officially regarded as unemployed since only those claiming and receiving benefit are included. That undoubtedly means that the real figures are much higher than those officially quoted.
§ There is little doubt that there has been an increase in poverty and general deprivation in the past decade. Unemployment means poverty. One survey on living standards during unemployment showed that after three months of unemployment, the average disposable income of families dropped to 59 per cent. of what it had been before unemployment. Families immediately reduced their spending on food, clothing and entertainment. Unemployment was also likely to cause psychological distress. In the survey, 38 per cent. thought that the worst thing about unemployment was being short of money; but 53 per cent. identified being bored, depressed, feeling dependent and losing control of their own situations. It is little surprise that there is a close connection between unemployment, poverty and poorer health, even a tendency to earlier death. Mortality for men aged 20 to 64 is said to be 2.4 times higher for those at the lowest income level than for those in social class 1.
The National Children's Home reports that,
during the 1980's there has been a disturbing increase in the number of children growing up in poverty and an increase in families becoming homeless. Policies deliberately designed to reduce child poverty have not been adopted and the situation has been exacerbated by a sharp rise in the level of unemployment.
§ As I said earlier, there has been a disturbing increase in the number of young people unable to find work. Many of the young homeless we now see on London streets originally came to London looking for work. Centrepoint in London conducted a survey recently of young people Who came to their night shelter. They found that 75 per cent. came from outside London to look for work; over 78 per cent. had had to sleep rough; 77 per cent. were unemployed. The difficulties of actually obtaining employment for a person with no fixed address are of course very great. It is a vicious circle. They cannot find work without a fixed address and cannot find a home without employment. Some of them beg—something that 13 years ago was hardly ever seen on London streets. I do not believe that they do that from choice. I have seen young people on London streets shivering with cold after having obviously spent the night sleeping rough. No one would seek to live like that if they thought that there were other options open to them. We debated 568 this at length in your Lordships' House on Monday night in connection with the European Communities Committee's report on Young People in the European Community. Speakers in the debate drew attention to the danger that an alienated and dangerous underclass could be created which could ultimately threaten social cohesion.
§ Of course, the Government will point to the schemes which they have put in place, or those that they intend to introduce, and to increased expenditure that they intend to make. We all welcome schemes aimed at retraining the long-term unemployed and increased training opportunities for young people, though there may be some criticisms of the extent of the schemes and of the resources committed to them. However, many of those nowadays facing redundancy are already skilled, already trained, and in many cases cannot find work in the specialty for which they have been trained.
§ We shall also no doubt be told in the course of the debate that the Labour Party's proposals in regard to a minimum wage will produce large increases in unemployment. That will be said—indeed it has been said—although almost all other developed countries in western Europe have minimum wage provision either through legislation or as a result of national collective agreements. We have only very partial pay protection through wages councils in a few industries. That does not cover workers under 21 years of age.
§ The Government have already indicated that they want to abolish the remaining wages councils. However, two recent independent analyses of minimum wage proposals disprove the Government's case. The OECD analysis of the effects of the minimum wage in France found no appreciable impact on employment. The second analysis carried out by the National Institute of Economic and Social Research Review found the job impact of Labour's proposals negligible. At the present time low wages—and Britain has a very significant low wage sector—contribute to poverty. In effect the taxpayer subsidises employers who exploit their workers. Family credit has a significant wage substitution effect. If employers paid their employees a living wage, there would be savings in the social security budget. I see no reason why exploitative employers should be subsidised in this way.
§ Others of my noble friends may well deal with the minimum wage arguments in more detail. I simply say that the Government's claims in this regard are spurious. It is also spurious to claim, as the Government do from time to time, that regulation in the employment field leads to job loss. We now have one of the most deregulated labour markets in Europe and yet we have high unemployment. The fair wages resolution, supported by all governments since 1946 until this one, has disappeared. Access to industrial tribunals has been made more difficult, trade union rights and individual rights have been eroded yet we have high unemployment. It is clearly not the case that regulations protecting employees lead to unemployment.
§ The basic cause is surely to be found in the economic policies that the Government have followed 569 since 1979. The neglect of manufacturing industry, the refusal to assist small businesses suffering from high interest rates, the failure to encourage long term investment, are some of the basic causes. The Government have been prepared to leave everything to the market and have even appeared, on occasion, to be complacent about unemployment, claiming that that is the price that we must pay for reducing inflation. But too many people are paying too high a price. It will not do. The electorate will tell the Government so when it has the opportunity at the next election. In the meantime, I challenge the Government to say what they intend to do about the situation which they themselves have created. I beg to move for Papers.
§ 3.24 p.m.
§ Lord Selsdon
My Lords, I believe that we are all very grateful to the noble Baroness for introducing this Motion today and for the sensitivity of her own address. With some element of historic rhetoric it raises issues which concern all sides of the House. When I stood up to speak today it worried me that I might tend to speak in an economic debate because the inclination these days is to blame everything on economic policy, and particularly so at this moment when there are fundamental divergences between different sides of the House.
The Government believe that, above all else, the control of inflation is the most important factor. I endorse and support that because we have seen throughout the world the problems that inflation causes. Being unemployed—dare I use the old fashioned phrase "out of work"?—is almost like being at the end of a long crocodile. One suffers desperately when things go wrong at the head and it takes a long time effectively to produce a cure. I see us today repeating many of the statements that have been uttered in the past without appreciating the fundamental changes which have taken place.
Our own economy has never been self sufficient. We may pretend, because it suits us politically, that government can do all things within a domestic market. But we see that that is wrong when we look at the changes abroad. We have seen our own rate of inflation fall very dramatically against that of other industrialised countries. We have even seen our interest rates start to narrow while those of countries like Switzerland and Japan have more than doubled. The pressures in other countries are perhaps as great or maybe even greater than our own.
We have seen the second world disappear and become third class or perhaps float somewhere. There there are two types of economy struggling to come together—that is to say, one that bases its economic development on the value of property or shares, and another which places no value on them at all. We have seen the strains that have been placed on West Germany. I believe that all these trends have an impact on us.
But we would be disillusioned if we did not recognise—that is, those of us who have been employed only since the last war—that we are living 570 through a period of monumental depression and anxiety. The optimist would say that this is the greatest time to start and build new businesses because history has shown that growth is always most profitable when you get in at the bottom.
However, the bottom never actually emerges. Nobody sells at the bottom and nobody buys at the top. It passes by. Governments will automatically seek information that proves that things have turned when, effectively, they are not in total control. I believe passionately that unless we keep inflation right under control we shall experience major problems in the future for our own economic development. If I were to be critical of the Government I would say that they had failed to assess the impact of interest rates which were suddenly way above the rate of inflation when for a long time we had been brought up to believe that they were below and that people did not have to save.
In general people have few savings at the moment. Savings have been eroded by inflation. Property owners felt pleased because the value of their house might have risen from £5,000 to £200,000 between the time when their children were born and when they grew up. We have forgotten how to manage recession. Many of us who have worked do not know the differences between feast and famine. We forget the lessons of the wise and foolish virgins and even of the La Fontaine fable La Cigale et La Fourmi—I hesitate to quote French as I cannot emulate my noble friend Lord Cockfield. His pronunciation of the language the other day gives me great hope for the strength of the British in Europe in future.
We do not remember that there were years of feast and years of famine. We became so used to growth that we took it for granted that it would go on. Then suddenly we experience a depression—for that is what it is at the moment; some of it is psychological and some of it real. People are perhaps less worried about money than they would have been in the Great Depression of the 1930s. In general, people who are now out of work are better protected though they may not be perfectly protected. They are certainly better protected in the short term.
However it is not that but the social aspects which cause me worry. We are experiencing a number of trends that we may forget. People are living longer. Suddenly they are forced to retire earlier. The young believe that they are trained to a certain level yet there are no jobs for them because perhaps they have not been trained long enough. In general we Scots spend an extra year at university as against the English. On the Continent people will continue being trained maybe for the first 25 years. It is almost as though you should train people until they are 25 and they should work in a bureaucracy, institution or corporate entity for another 25 years, but for the last 25 years they should go on being productive. There is no such thing as an unproductive citizen, either economically or socially. The difficulties—and I refer to the 53 per cent. mentioned by the noble Baroness—for those who are not so much worried about economic aspects, are social difficulties. It is odd how difficult it is to occupy people. Even at this time many of the people I speak to, and who may also speak to other Members of your 571 Lordships' House, are looking for something to do where their first consideration is not monetary. They ask, "What can I do to be constructive'?" "What economic or social benefit can I provide?"
At the other end of the scale we have those who have lost their jobs in large organisations where they had thought they were secure for life, at all levels. They had joined a big group; they were not well paid but they were protected. People joined at 16 and went out at 65; then it became 60 and then 57. Suddenly people were told that they must opt for premature retirement at 50 because it was a good thing to do. That dumped on the labour market, or perhaps on society, large groups of people who were well trained and had knowledge but who had no ability or opportunity to contribute to society. These are the worries that I think about.
Your Lordships' House is a strange place to me, after nearly 30 years here. Its mind is occupied throughout. In general the average age rises by one year each year because people are making more and greater contributions and learning from each other. It is the stimulus within society that I find as important as its economic aspects. A depression such as this—and I call it that again—provides opportunities because there is less economic activity. People have more time. There is a greater opportunity for those who know to teach those who know not. There is the chance within government or private schemes to look at how we can manage to train more engineers and more people in higher technology. Only that will help to revitalise the manufacturing sector.
We cannot compete in the world if we do not look at our labour costs. We have to say that untrained labour costs in this country are going to be higher than those of many of the new industrialised nations—if that is what we call them. I do not know who will fill the gap between first and third class in the future; it is a wide gap. Only seven or eight industrialised nations have reasonably strong currencies at the moment. The rest of the world will be looking to develop itself. We shall have from them underlying pressures of inflation that we may forget about. But in this moment of pause, where we have time, it is worth discussing and considering how we can involve more of our citizens, and not fewer, in economic and social activity. Many of those who say "I wish I could retire early" wonder what to do when they take early retirement. It is odd that in third world countries—if that is not a derogatory term—people look up to the old and the wise because they were alive at the time of major problems and recessions. Today, our younger people have not been through this before. They have seen their hopes eroded, and yet their own remuneration at the younger end of the workforce is probably higher relatively than it has ever been in history.
It is the feeling of insecurity that concerns me most of all, not the economic aspects. I do not believe that a government can reassure people, because government only has a relatively small role in the economic development of a country and I would agree that my own party has sought to make that role less. However, we have had a relatively strong period of prosperous growth We are not a weak economy. We are in a weak 572 situation but no weaker, and probably relatively stronger than many of our industrial competitors, if we go back a few years.
The difficulty facing us now is that we still seem to be looking for some form of future. We had a manufacturing base which was the basis of our industrial economy. We had an empire which was the basis of our trading economy. In those days we were effectively net importers of food, but with indirect or direct subsidies we have become net exporters. We have a breathing space, I believe, when it would be possible to change some of the attitudes that exist.
Noble Lords opposite have often claimed in the past that they represented the workers in society. I think we are all workers—those who are employed. Social attitudes have changed. We are moving much closer to an equal society, whether one looks at the cars in the workplace car park owned by people of different grades or at the attitudes of one man to another. I believe that, despite this depression, the Government have taken the right stance in terms of concentrating upon inflation. I hope that before very long there will be signs of return, which must be led by hope, and, with that, unemployment—or people out of work—will start to come down.
§ 3.35 p.m.
§ Lord Rochester
My Lords, it is a pleasure to follow the noble Lord, Lord Selsdon. I found myself in agreement with much of what he had to say about both inflation and training. From these Benches I join in thanking the noble Baroness, Lady Turner, for having introduced this debate. I had not intended to talk about the national minimum wage, to which she referred, but perhaps I owe it to her and to the House to say briefly what the attitude of my party is on that subject.
We do not favour a national minimum wage for two basic reasons. First, we think that so far from ameliorating unemployment it will result in the loss of at least some jobs. I believe that the Government grossly exaggerate the scale of those losses, but that there will be some losses is acknowledged even by many proponents of a national minimum wage. Secondly, we fear that it would have an adverse effect on inflation because of the need to preserve skill differentials.
We would nevertheless retain wages councils, to which the noble Baroness also made reference, for they are already in place. It is one thing to retain safeguards that are there now and quite another to introduce others that would have adverse effects, in whatever degree, on employment. Eventually, we hope that implementation of our tax and benefit plans would go a long way towards solving the whole problem of low pay. However, that is a subject for another day.
In preparing for the debate my mind went back to one which was initiated six months ago by the noble Baroness, Lady Turner. At that time there were just over 2 million people registered as unemployed. Now there are more than 2.5 million. The increase applies to all kinds of occupation in every sector of industry 573 and commerce and every part of the land. The figures look like rising to nearly 3 million before they start to go down.
I realise that the underlying problems are deep seated and that the current recession extends far beyond this country. However, although I am not an economist I believe that the Government's policies—particularly during Mr. Nigel Lawson's time as Chancellor—have made the present situation a good deal worse than it need have been.
I am sorry that in the gracious Speech there was no mention of unemployment and the human misery that it causes. In the Autumn Statement, repeated in this House last Wednesday, the Chancellor is reported to have said:Consumer confidence has increased throughout this year as mortgage rates and inflation have come down, and is likely to go on rising as the fear of unemployment begins to abate". —[Official Report, 6/11/91; col. 237.]How can it be thought that the fear of unemployment will abate while unemployment continues inexorably to rise? However, I do not wish to dwell further on the factors that have brought about the unhappy situation in which we find ourselves. Enough has been said about that already. The fact is that we are in this mess together and what matters now is how we can best get out of it.
I very much agree with what my noble friend Lord Ezra said in the debate last Thursday on economic and industrial matters; that in seeking to escape from the present recession we must take care not again to overheat the economy. My noble friend suggested that, in looking for the right way out, instead of restimulating consumer spending the Government should sow the seeds of long-term sustainable growth through a policy of capital investment directed particularly towards the promotion of exports. In my view, that policy of capital investment for the long term can and should be extended to the field of training. It is largely about training that I propose to speak.
In contrast to the now infamous leaked spending round letter from the Chief Secretary to the Treasury in which it was suggested that the employment training budget should be reduced by a further £100 million in each of the next three years, my party considers that training and retraining should invariably be increased when unemployment rises; in other words, the skill level of the workforce should at least be maintained against the tendency of unemployment to reduce it. It is particularly important that training and work experience should be given before the unemployed person begins to lose self-confidence. Unfortunately, as we see it, the Government have until now done precisely the opposite in reducing spending on training in real terms at a time of rising unemployment.
Having said that, I recognise that last week it was announced that total planned expenditure on Department of Employment programmes is to increase next year by £470 million. I was particularly glad to learn that the Secretary of State considers that the resources committed to training will be sufficient 574 to meet the Government's youth training guarantee, for it is plain that in recent months many training and enterprise councils have been unable to meet that objective. Indeed, even last week when the Secretary of State was challenged in another place on the point he could only say:We have reached agreement with 78 of the 82 TECs that they have what they need to deliver the youth training guarantee".—[Official Report, Commons, 4/11/91; col. 219.]If that is still the position, it follows that there must be at least four which do not yet have adequate resources for that purpose. Perhaps when he replies to the debate the noble Viscount, Lord Ullswater, will tell us whether there has been any further progress in this matter. The general question was raised in exchanges at Question Time yesterday, but I do not think that that specific question was asked or answered.
In our previous debate on unemployment I suggested, not for the first time, that there was need for additional measures to be taken on the lines of the old community programme to relieve the plight of the long-term unemployed, particularly young people. Since then the Government have introduced the employment action programme aimed at providing work experience on local projects for 60,000 people in a full year and targeted on those who have been unemployed for six months or more, particularly in inner-city areas. In responding to that initiative I welcomed it as far as it went. But I believe that it should be taken further. In saying that, I realise that an additional £178 million was last week earmarked for that programme. Can the noble Viscount say what that means in terms of an increase in the number of people who could benefit from the scheme?
My noble friends and I think it is important that, in keeping with the long-term objective of sustainable growth to which I referred earlier, the employment action programme should as far as possible be concentrated on constructive projects geared, for example, to energy conservation and efficiency, which tend in any case to be labour intensive and which have also other beneficial effects for the environment. Expansion of the employment action programme would also help the increasing number of young people, particularly those living in inner-city areas, who find themselves marginalised in our society by the multiple problems identified in the recent report of your Lordships' European Communities Committee—the noble Baroness also referred to the report—as starting with a deprived home and background and leading through lack of education and training to unemployment, homelessness and sometimes even crime. Identification of those problems as being interconnected was of course the committee's main finding. Having been privileged to serve on the sub-committee which conducted the inquiry, under the chairmanship of the noble Baroness, Lady Lockwood, I was sorry to be unable to take part in last Monday's debate on the subject and I welcome this opportunity to say that I agree with that finding and am concerned about the consequences that may increasingly flow from such a vicious circle of problems.
There is one other step that we on these Benches think could be taken to tackle at the same time the 575 problems of homelessness and unemployment. I am sorry that it did not feature in last week's Autumn Statement. Funds already available to local authorities in the form of capital receipts from council house sales should, in our view, be used to finance non-inflationary infrastructure projects, especially the provision of low-cost housing. The building industry is at present suffering from a great deal of excess capacity, so such a project would not lead to bottlenecks, and the building of houses itself would help not only to provide jobs and reduce homelessness but also to open up the housing market.
In our debate last April I referred to a training centre in mid-Cheshire, where I live. It catered particularly for those with special needs—for example, to improve literacy and numeracy and for rehabilitation following a period in prison. I said then that to my personal knowledge that centre had during the previous five years performed admirably for the local community in providing training and obtaining employment for both young people and adults. At that time the manager had just been told that his employment contract was to be terminated. That was simply because of a government-induced cut in the centre's budget. Since then the training of young people in that centre has had to end altogether, and I very much regret it. It is when one comes up against such stark examples of the plight of those who are at the very bottom of the pile that the practical effect of government policies in this field comes home to one.
Part of the solution might be to implement the findings of a report published recently by the National Council for Voluntary Organisations, in which it was recommended that public funds should be ring-fenced to accommodate people with special training needs and that TECs, employers and training providers should be given financial incentives to target those needs. I hope that those suggestions will receive careful consideration for I believe that in this area the stakes in terms of continuing social stability are potentially very high.
I remain convinced that inflation is public enemy number one, and I very much agree with the noble Lord, Lord Selsdon, in that respect. I am also well aware of intense competition which now exists for scarce financial resources. In conclusion, therefore, I should remind your Lordships that my party is alone in having said that, because we regard a major expansion in education and training as an investment for the future which this country cannot afford to postpone, we are prepared, if necessary, to countenance an increase in taxation to finance it. For some time, we have advocated that there should be compulsory education or training for all 16 to 18 year-olds who are in employment and that they should receive on average a minimum of two days' training or education per week. Perhaps more than any other single policy that should contribute to the long-term improvement in productivity, job creation and competitiveness which is so urgently needed to bring down the present unacceptably high levels of unemployment in the United Kingdom.
§ 3.51 p.m.
§ Lord Mason of Barnsley
My Lords, perhaps I may say at the outset that I accept the fact that many new jobs have been created under this Government. When the Minister concludes the debate, he will no doubt give us the official figure of 2.6 million since 1983. But I would ask the question: what sort of jobs? Moreover, even the jobs which have been created have been neutralised by constant rising unemployment.
From all our previous debates, it is well understood in this House that our manufacturing industry has seriously declined and that skilled employment has fallen. The service sector has grown, hence we have a relatively higher unskilled non-productive workforce; for example, there are many waiters, service workers, and so on. Moreover, the erosion of our manufacturing base has taken our skilled production workers with it.
Service industries cannot be the backbone of a nation which has to survive on international trade. That policy, which is based on short-term expediency will, I feel, produce long-term manufacturing industrial starvation. Officially we have 2.4 million people on the dole. One even doubts whether that is the total figure. We have had massaging of the figures in the past. Of course, today many more youngsters are staying on at school. We have thousands of youths in training and more thousands of premature retirements and redundancies from our traditional labour-intensive industries of coal and steel. The true unemployment figure could be much higher.
However, we still have nearly 2.5 million unemployed and, unfortunately, the forecast is 3 million for the New Year. One very disturbing aspect in those figures is the growth in youth unemployment. In 12 months the number of unemployed young people between the ages of 18 and 24 rose to 706,000. That is an increase of 54 per cent. in one year, with the appalling prospect of the figure being I million next year—about one third of all those destined to be unemployed. What a prospect for the youth of our nation. During that time, demobilisation will begin and thousands of servicemen will be coming on to the labour market.
The Coal Bill heralds another pit closure programme, with privatisation in the offing if the Conservatives succeed at the next election. Then there will be the introduction of the EC energy tax. All that heralds another 30,000 miners facing the dole. I am afraid that, with the advent of the single European Market, the harsh winds of European competition will make it even more difficult to tackle and combat this rising tide of unemployment. This recession—or indeed, this slump—has been deep, long-lasting and it is still proving difficult to climb out of it.
I believe that the Government failed to create the right economic framework, bringing about a totally unbalanced economy with the crippling of our northern regions in which our real industrial strength should lie. Our major basic traditional industries have been shattered by the pace of rundown. It has been quite ruthless and inconsiderate. The skills of many productive workers have been thrown onto the scrap heap and steel plants have been razed to the ground, 577 with the odd shopping centre put in their place. There are still areas of dereliction, with thousands of prematurely retired mine workers and steel workers walking the streets 10 years before their natural retirement time. They have been wasted. There has been a loss of skills and productive effort. The whole process is taking the heart and life out of those regions.
One major factor in that process has been the cutback in regional aid. In the late 1970s, the Labour Government were spending £1.835 million a year on a range of regional industrial policies. That figure was halved to £989 million in the first half of the 1980s and cut further in the late 1980s to an average of £242 million a year. All that took place at the worst possible time—at the height of colliery closures when the financial needs of the northern regions were greatest. The lack of a positive regional industrial policy has caused much regional distress. In 1978–79, government regional assistance to Yorkshire and Humberside was £87.6 million, but during this last year it slumped to £27.3 million.
Allied to all that is the negative attitude of the Government to the question of development funds from the EC for the distressed regions. I believe that over £400 million was allocated to the regions last year from the various EC funds. But where did it go? It seems that the Government are totally ignoring the Brussels commissioner's determination of our depressed areas. The EC's survey and analysis of our regional distress is much more penetrating, much more understanding and, indeed, much more positive than that of the British Government.
It appears that the Government have been taking the cash from Brussels and that they have been dissipating these specially pin-pointed resources away from the EC's target zones and scattering the cash across the country on a number of government schemes, ignoring the plight of our most severely rundown areas. Even now, the Government, the Treasury and the Department of Trade and Industry on the one hand and the commissioner responsible for regional aid on the other are at loggerheads. The result has been a severe deprivation of financial aid of up to £100 million to the United Kingdom coal and steel communities. That aid was allocated by the EC but blocked by Her Majesty's Government.
I believe that the hatred of the Labour Government's industrial aid strategy by this Conservative Government came about when they discovered some examples of aid propping up industrial failures. But are they not aware that this drastic alteration in regional policy with its severe cutback in financial support, and now allied to the Government's intransigence on EC regional aid, has exacerbated our problems, caused disastrous industrial decline, a major reduction in manufacturing capacity and an unnecessary high rise in regional unemployment?
There have been, and it is still evident, far too few resources to deal with the scale of the problems. I remind the House that the northern regions saw a decline in jobs of over 100,000 in the past decade. That 578 is some price that we are having to pay. Last year, in 1990, unemployment in south Yorkshire was 53,514 but now it is 71,440. That is an increase of 18,000 in less than 12 months. Similarly, last year, in the Barnsley travel-to-work area, 7,859 people were in the dole queue. Today the figure is 11,508—an increase of 4,000 in one town; in other words, 11.6 per cent. are unemployed.
There is undoubtedly a desperate need which the EC and the commissioner responsible for regional aid fully recognise, but what is the Government's position? They are squabbling over the definition of "additionality" and the use of RECHAR money—cash especially allocated to recharge the coal and steel areas of the United Kingdom—an EC policy brought about with the aid of the Coalfield Community Campaign, an all-party association of 80 local authorities from the coalfields.
The EC believes that an increase in the appropriation of funds will have a genuine additional impact upon the region concerned, the Commission having decided that the increase in the appropriation of funds results in additional economic impact. The RECHAR programme—moneys authorised by the Commission for a number of projects in South Yorkshire and other Northern regions—cannot go ahead. All those projects are blocked. That dispute was highlighted by the Secretary of State for Trade and Industry on 22nd October when in evidence to your Lordships' Select Committee he said:We are actually having money withheld on the RECHAR programme in particular, where half of the RECHAR programme is intended for this country. We have the greatest problems resulting from the declining coal industry where those regions desperately need that money, and the greatest obstacles are being put in our paths".What is the Secretary of State doing about getting rid of those so-called obstacles? What are they? Why are other Common Market countries such as Spain and Italy receiving their cash? Why not the United Kingdom? How do we break that impasse? Why not let the regions and local authorities involved deal directly with Brussels? What is the Government's reaction to that proposal?
It appears that in the past the Consolidated Fund has received the allocated EC regional aid. It is then paid out in the United Kingdom, but the question was, and still is: where does it go? Does it go where it is intended? On past experience, Brussels thinks not; hence our regions suffer while the Government sit back and the commissioner holds back the cash.
Many jobs are at stake. We need that cash urgently to develop our infrastructure—roads servicing industrial land and new factory buildings. With the full allocation of EC funds going directly to the earmarked regions we should have a better chance of economic revival. It is an injustice to the local authorities and it frustrates their attempts to put their regional economies on a sounder footing.
If we are to combat the serious and rising levels of unemployment and to re-energise the North, the RECHAR moneys should be released; and it is incumbent upon the Government and Secretary of State for Trade and Industry to attend to that with the utmost urgency.
§ 4.3 p.m.
§ Lord Macaulay of Bragar
My Lords, as a lawyer I hesitate to enter the minefield of unemployment, but I must follow what my noble friend, Lord Mason, said and go north of the Border. What he said about EC funds was correct. It is a matter of some concern in Europe. The Government are proving to be so intransigent that money which should be released to the depressed areas of Scotland, in particular to Lanarkshire, is not being released. It is time that the Government explained why they are adopting that attitude
This is a sad but necessary debate to highlight the price being paid by the British people for Government policies after 12 years in office. The Chancellor of the Exchequer calls himself Lamont with the stress on the last syllable. I understand that he is a Scotsman, and there is no such name in Scotland. There the stress is put on the first syllable of the name. Perhaps he does not know who he is. He said:Unemployment is a price well worth payingin relation to keeping down inflation. It is not the Chancellor of the Exchequer who pays the price; it is each and every individual who is without work and to whom, irrespective of percentages and massaged figures—as my noble friend Lord Mason said—unemployment is the 100 per cent. factor in his or her life. When one speaks to young people one can readily see what unemployment is doing to the morale of this country It creates depression, a feeling that there is no point in life, low self-esteem, demoralisation and frustration, leading in some cases to anti-social behaviour and an involvement in drugs, drink and crime. It might be a good exercise for Ministers to meet the people, instead of pontificating from the cloistered surroundings of the other place and your Lordships' House. They should talk to young people to find out what life without a job is all about these days.
Involvement in crime sometimes happens because of unemployment, but that is not true in all cases. There is a popular myth that if people are unemployed they will automatically resort to crime. It is an insult to the unemployed to link them en masse with criminal activity. Most people want to work and look for work but are frustrated by the lack of opportunities available in this country.
The youth training scheme was no doubt well-intentioned, but it is an absolute disaster. It is an exercise in exploitation, paying low wages and giving people menial tasks. In the end, many young people are just thrown out of the back door because they are no longer of any use to the employer. I do not mean to be facetious, but in Scotland we now have two goalkeepers in the senior league who have come from the YTS. They are two examples of where the scheme has been a success, and no doubt it does have its successes.
After 12 years we are still discussing massive unemployment, but receiving no answers from the Government. The recession is with us and has been for a long time. It is an echo of the Government's failure to govern. One has to ask: what on earth are the Government doing? 580 The Chancellor of the Exchequer keeps climbing mountains, hoping to see a clear horizon on the other side. Each time he gets near to the top of the mountain, he finds another one. I sometimes wonder whether he is challenging the shadow Chancellor who is intent on Munro-bagging. In Scotland, that means climbing 300 mountains of over 3,000 feet. The Chancellor has a long way to go.
I do not propose to rehearse the statistics. Figures are now meaningless and, as my noble friend Lord Mason said, have been massaged. In so far as they have any meaning they are frightening, especially to the young people. He referred to people under 25. It is now estimated that 1 million under-25s in the United Kingdom will by next year have no job, no hopes and no prospects. Where is the country going? Of those, 100,000 will be in Scotland. It is impossible to give a figure for the teenagers—those under 18—because, as I understand it the Government will not publish figures for unemployed 16 and 17-year olds. They tend to push them into little doorways and keep them out of the statistics by saying that they are being educated or doing a course, and so on.
Unemployment among the under-25s in Scotland has risen by 13 per cent. which, to be fair, is less than the UK average; but, in general, unemployment in Scotland is reckoned to be running at 9 per cent. One startling and shameful statistic shows that in Glasgow 20 per cent. of the male population is unemployed. Scotland is a victim of its past success and the Government's present indifference. Had it not been for inward investment in high technology, Scotland would be a dead country. It is time the Government realised that the hi-tech base upon which Scottish wealth was founded is beginning to crumble a bit. It is beginning to look a little shaky.
There are also other problems on the horizon. There has been a lack of imagination, a lack of diversification and investment when things were going well and that can now clearly be seen. Shipbuilding is basically dead, the steel industry is basically dead. Mining is non-existent. Ravenscraig is in the final death throes of its strangulation by "Black Bob Scholey".
What happens now? At the beginning of this week we heard that British Rail is to bring a freight terminal to Mossend in Lanarkshire, right in the heart of the industrial area where no work exists because of what has happened to the steel industry. That was greeted by the Government like the second coming. It is not. It is based on the projections of the developers. The Government should realise that they must not use Mossend as an excuse for seeing Ravenscraig go. It demonstrates the Government's poverty of ideas that they think that the coming of one rail terminal, with the projected 10 to 15 years of development and 8,000 jobs, is the answer to Scotland's industrial problems.
Perhaps I may quote from a newspaper, the Glasgow Herald. AMEC is the developer. What does it say? When we get down to brass tacks, what is the development all about? The newspaper states:AMEC admitted their long-standing prediction of 8000 jobs is a 'best figure' scenario".581 That is industrial gobbledegook. I do not know what it means. There might be 8,000 jobs, or there might not. The article continues:BR confirmed the terminal for sending Scottish goods to Europe via the Channel Tunnel in mid-1993 will employ only 150 people".That is 70 more than are employed at present. It seems that only one train a day will go from Mossend to Europe, so it is not the great prospect that people think. Of course we in Scotland welcome it, but we must look at the proposal carefully. It depends on many things.
I quote the Scottish Secretary, Mr. Ian Lang, who this week called for,everyone to work together to ensure the maximum benefit for Scotland as a whole".May we have an undertaking from the Government in regard to British Rail in Scotland and the Mossend terminal that they will put the proper capital investment into the developments to make sure that Scotland benefits from the Channel Tunnel and the presence of the freight terminal?
In connection with this debate perhaps I may mention the Western Isles, in which I have a family interest and a particular interest as a poll tax payer, if nothing else. The Western Isles have the highest unemployment rate in Scotland. What has happened there is an absolute travesty. A progressive, traditionally non-political council with a caring face, from which my family has benefited, working in a difficult economic area, has now had its face scarred by the BCCI scandal. Those of us who are connected with the islands were astonished to learn that in the capital account, which disappeared down the tubes of the BCCI, was £23 million. At one time, the figure was £29 million. How did the Scottish Office allow that situation to develop?
The people of the islands are humiliated and hurt by what has happened to them. Why should they suffer for the events relating to the BCCI scandal? Not a single individual in the Western Isles, I think, invested in the bank but it is the individuals who now have to suffer, possibly through a higher poll tax.
The best that the Government can do is to say to the Western Isles, "You can have £24 million in the meantime, but you will have to service it". With a population of about 30,000 people, we shall have to pay £3 million interest. Where will it stop? Is it not time that the Government faced up to the fact that the BCCI is a one-off affair which one hopes will never happen again in this country? It is time that they took a grip on matters and helped the islanders.
§ Viscount Ullswater
My Lords, will the noble Lord be kind enough to inform the House whether he considers that it was a good investment by the Western Isles council?
§ Lord Macaulay of Bragar
My Lords, I am interested in that question. The answer is no, because it is not there any more, it has disappeared.
§ Viscount Ullswater
My Lords, I apologise for intervening once again, but perhaps the noble Lord could preface his remarks by saying that he would not have recommended that investment.
§ Lord Macaulay of Bragar
My Lords, I am not in the business of recommending anything; the investment was made on certain advice. I am coming to the point that wherever the blame lies—whether with the Bank of England, the brokers or the Scottish Office—the community is what matters. It is for the Government to help the community. I quote the chief executive of Highlands and Islands Enterprise who said:The already fragile economy of the islands has been further threatened by recent events … the sad thing about the current problem is the effect it has on morale and confidence in the islands".I can assure your Lordships from my personal experience, having been to the islands in September, that no truer words have been said.
To return to the general debate, it is clear that education and training are central to economic success, but only if they are allied to research, development and investment. These have not been strong characteristics of the Government's policy. People with degrees and qualifications spend less time on the out-of-work register which, at October 1991, was heading towards 250,000 in Scotland. Out of that, 21,000 were classed as managerial and professional, with over 1,500 teachers and 500 nurses on the register. The simple fact is that there are no jobs for these people. It is high time that the Government faced up to bringing in a proper programme of training, research and development, and so on, as has been debated before in your Lordships' House.
The situation not only in Scotland but in the whole country is a national disgrace. If real steps are not taken to reverse present trends the heart will have been torn out of the actual and potential workforce of the country. Emigration is a real prospect for many young people. They must have a vision for the future; without it, they will go. They are at a time in their lives when they are hoping to set out with commitments to work, family and social life. So far they have been betrayed and ignored by the Government. It is time for a change in direction towards positive training, investment, research and development. That will only happen with a change of Government. Meaningless courses and training with no end product achieve nothing for the economic and social life of the country.
This Government, always reluctant to publish real figures, will have trained more people to do nothing than any other government in the country's history. The gracious Speech last week gave Scotland the benefit of one sentence. There was nothing on assisting the Scottish economic situation. I close on this note. I see from the Glasgow Herald that the Prime Minister said:I do not doubt that we will increase our vote and the number of seats we hold in Scotland".He may remember a lady with whom he was associated in the political sense who said, "No, no, 583 no". Perhaps I may say, "No, John; no, John; no, John. You will not get any more seats in Scotland; indeed, you will disappear".
§ 4.18 p.m.
§ Baroness Denton of Wakefield
My Lords, first I apologise to your Lordships that I shall have to leave the Chamber before the end of the debate. As I am going to talk to bankers about industry, I hope that I shall be forgiven.
I welcome the opportunity to make a contribution today because I have a nervousness that as in my few speeches in your Lordships' House I have stressed that success depends on productivity, it may be thought that I have no anxiety for the unemployed. Let me assure your Lordships that I have every anxiety, enjoying for myself the privilege of a chance to participate in so many areas. I can think of few things worse than waking up each morning, not only having nothing to look forward to which creates a challenge or makes a difference to the day, but also having to confront the problems that unemployment brings.
Yesterday evening, at the instigation of the noble Lord, Lord Dean of Beswick, we discussed the needs of the automotive industry. That is just one industry but the situation in that industry is typical of the situation in large companies generally. They will not return to the levels of employment of previous years.
Mr. Robert Stempel, the chairman of General Motors in the United States, warns that the European Commission agreement with Japan over trading cars in the single European market brings only a brief period in which to prepare for the real competitive contest that will come to Europe. He insists that so-called lean production methods have to be adopted by the world motor industry. This could mean using about half a traditional factory space and about one-tenth of the inventories. Lean organisation has achieved dramatically higher quality and productivity and more efficient and faster product development. If a leading motor manufacturer says that, we cannot hope for job creation in this quarter.
Many years ago the Massachusetts Institute of Technology drew attention to the fact that it is small and medium-sized companies which create jobs. A recent piece of research was published in the November edition of the Employment Gazette. It emerges from that research that roughly half the total net growth in employment—half a million jobs—came from firms employing fewer than 10 people, despite the fact that they accounted for less than one-fifth of jobs overall. Within that figure proportionately the greatest growth was to be found among firms that employ fewer than five people. Those firms, on the whole, have survived.
There are few upsides to a recession, but one is that large companies retreat to their core activities withdrawing from marginal activities and thereby leaving open niches for small companies to fill. There are also opportunities for sub-contracting to increase. Further, redundancy is not always totally bad news. It allows some people who have been frustrated by the corporate system for many years to take a small 584 amount of capital and invest it in a more creative and innovative way. That process again generates employment for others.
These start-ups are not large but they are real. The research featured in the Employment Gazette shows that small firms have a relative resilience in the face of recession, which is only common sense. If one is signing the cheques and collecting the debts, one has a much greater sense of cash flow than anyone who is five-removed from a finance director. The noble Baroness, Lady Turner of Camden, records that this has been a record year for closures of small companies. However, the number of such companies that has remained in business is substantial.
It is particularly apt that we should discuss the future for employment in the run-up to the latest round of negotiations on Europe. Unlike the noble Lord, Lord Mason of Barnsley, I believe participation in the single market gives us possibly the greatest opportunity to increase our output since the Industrial Revolution. The advent of the single market represents an opportunity and not a problem, but it has its dangers. We must take the lead to ensure that Eastern Europe does not become the most attractive venue for investment because of highly competitive labour costs and less restrictive environmental regulations. We must compete on skills and on quality and training must be directed to those aims.
I have a viewpoint on language training which usually leaves me out on a limb. I believe that as regards European market opportunities, language can be a hang-up and can prevent growth. If companies feel they have to wait until they have sufficient language skills before going out to the market-place, the deal will have been done by someone else. There is no way in which companies can decide in advance which language skills they need most. Before they carry out market investigation, how can they know whether the language their employees need to learn is Spanish, Italian, German or French? However, one could possibly assume that if one's company is competing with an indigenous French industry, it probably will not be the latter!
It is much better that people go out to Europe and appoint an agent, even if that goes against their normal operating methods. Let them get ripped off in the taxi from the airport—we have all done it, but usually only once—and maximise market opportunities. English has long been the common language in many fields. With the help of the Japanese and, I suggest, the Texans, English will be the common language in business in Europe. Of course we should speak the language of our customers, but we should get the customers first, not the language.
As a past chairman of the Marketing Group of Great Britain, I wish to emphasise the role that the service and retail industries play in creating jobs. We should all like to see blocks of manufacturing, but service jobs provide the cement around them. Many of those service jobs are jobs for which training can be given relatively quickly after which employees can grow within the company concerned. Service companies are also areas in which flexibility of employment is possible and where age is less relevant.
585 It is good to see the success of the B&Q outlet in Macclesfield where employment opportunities are directed at older people. Such people are normally excluded from those opportunities. My noble friend Lord Selsdon, who made such a thoughtful contribution to today's debate, would be pleased to witness that.
It would be wrong to talk about the future of employment without mentioning the role of women. I hope the myth is dead that women work for pin money. In today's social climate many women work to keep their family together and many are the single family wage earner. Business Strategies in its latest detailed labour market analysis—to be published on Sunday—suggests that by the end of the century half the jobs in the economy are likely to be done by women. It is also suggested that in many counties there will probably be tight labour markets before the end of the century. Counties such as Suffolk, Warwickshire, Berkshire, Kent, Oxfordshire, Surrey, West Sussex, the Glamorgans and Grampian are likely to have unemployment rates below 2 per cent. by the end of the century. Analyses carried out by this company have not been proved significantly wrong on previous occasions. However, it seems unlikely that the pattern of women's employment will change quickly in the near future despite the efforts of Opportunity 2000 and the efforts that are being made in companies and in government departments.
A major programme is being conducted within the National Health Service—the largest employer of women in Europe—to allow women to move up the ladder quickly. However, it will take time for the results to become evident. That programme meets totally the requirement identified by researchers that the key to this aim is total commitment at the top.
A long time ago, Galbraith pointed out that working women create employment. Indeed I know many working mothers who think that they may well be working only to create employment by the time they have covered child care, house care, garden care and elderly relative support. Fortunately many of those responsibilities are variable from time to time in life cycles.
In an interesting study published recently on the characteristics of long-term unemployment in the North-East, it was identified that while women would accept a lower weekly wage than men, 50 per cent. of women as compared with 35 per cent. of men had vocational or educational qualifications. We must use women's skills more effectively. Although jobs will emerge for women and for young people, whom I hope we will have trained to fill the appropriate jobs, the difficult area of concern is the man who was traditionally known as the head of the household. Unemployment in a working household for that person is difficult. Until recently there were few opportunities. However, the programme of inward investment which the Government have supported has ensured that some of those people are now able to return to work and to supply quality products.
For those for whom this has not been possible, I suggest there are several important factors to be borne 586 in mind. If they are prepared to be retrained to become the maintenance person at local service outlets, we do not help them by referring to such jobs as Mickey Mouse jobs. If someone has been unemployed, paid work is paid work and pride in a job is crucial.
We should also make retraining more sensitive. Asking a 40 year-old machine tool maker to go back to school and sit behind a desk is not the best means of retraining such a person. Onsite retraining, in conjunction with local employers, is more attractive and more effective. I also believe there are opportunities for retraining parents with their children. We all know of families who became fluent in computer language as a result of the enthusiasm of their 13 year-old which subsequently spread to other members of the family. We should offer opportunities for mother and daughter together or father and son together to learn information technology or languages. That opportunity is still being missed in this country. The Open College and the Open University have much to offer to the unemployed. However, instead of "Educating Rita" perhaps we should have a remake as "Educating Albert".
An even greater difficulty than training is the placing of the trainee. If the training programme operates in conjunction with future employers, bonds can be built and criteria established which make it easier for placements to be successful.
I should like to draw your Lordships' attention to one issue which is not often discussed. Much training is started and not finished. That is usually measured as direct failure. My own experience is that, certainly in the case of the construction area, much training is abandoned when the level of skill reached allows moonlighting to be profitable. That is a major issue. Trainees in all age groups will suddenly find opportunities for earning income and disappear to build what they can without qualifications. We have to get over the message that qualifications matter.
Also in the construction area there is still a long way to go in supporting the needs of trainees. Can there be anything more demoralising than building a window frame only to take it apart and rebuild it? There could surely be better liaison between such training courses and those with community buildings which need refurbishing and where, with correct supervision, worthwhile activities could be undertaken.
Training programmes are not easy to instigate and activate. However, we have—in the Midlands at least—stopped training a surplus of hairdressers and we no longer see trainers driving around in Porsches. There is an element of forward guessing in training. Sometimes it is easy; for example, if there is a road building programme or a major relocation. More often it is difficult. Training needs to emphasise adaptability in order to overcome that problem so that people can be retrained relatively quickly to meet the opportunities. In that area I understand that the Germans have something to learn from us.
It is important to look at employment on a worldwide basis, and unfortunately unemployment is rising across the industrialised world and in every member country of the European Community except 587 Spain. That reflects not only a recessionary period; it reflects permanent change. We need innovative solutions.
In the past few months I have found the privilege of being a Member of your Lordships' House to be even greater than I imagined. I have been impressed by the sheer amount of knowledge and experience on these Benches. However, there is one area in which I have felt uncomfortable. It is the manner in which noble Lords raise the issue of unemployment on a regular monthly basis. Our discussions would seem to be more statutory than constructive. I wonder what those people out of work think of us on such occasions. I believe that they would feel a little more optimistic if today we were debating not the levels of unemployment but the steps necessary to improve employment opportunities for all ages and both sexes. I am sure that such positive thinking is what we all wish for and will produce from today.
§ 4.33 p.m.
§ Baroness Lockwood
My Lords, unlike the noble Baroness in her concluding remarks, I am grateful to my noble friend for putting down this Motion today and allowing us to concentrate on some of the problems of the unemployed.
As one who grew up in a family which suffered unemployment in the 1930s I am especially conscious of the fact that we are not discussing mere statistics. We are discussing the lives and the circumstances surrounding some 2.5 million to 3 million families. I am acutely aware of the feelings which accompany unemployment—lost pride, feelings of rejection, inadequacy, failure and even of shame—as well as the economic and social deprivation which unemployment brings, because I lived with them as a child.
I recall my feeling of dread when, as the war drew to its close, people said, "When this is all over we shall see lots of unemployment again". Fortunately, that was not so. It was another three-and-a-half decades before we again saw unemployment on the same scale. It is a reflection on our society today that we are again experiencing such unemployment and apparently have done so little about it.
This afternoon I wish to refer to one or two specific areas. The first is Yorkshire and Humberside, which comes about mid-way in the regional unemployment table but which is above average for the country as a whole. Much emphasis is being placed on the fact that it is in the southern regions that unemployment is biting hardest in the current recession. That may be so, but in the North, and certainly in Yorkshire and Humberside, we have not recovered from the recession of the early 1980s. Moreover, the structure of industry and the economy of that region means that the problem will remain with us for some time to come despite many excellent initiatives involving a partnership between local government and the private sector.
Manufacturing and the heavy industries of the North were badly affected in the early 1980s. The present recession is mainly affecting the service sector, on which our region—Yorkshire and Humberside—relies less for employment than some other regions.
588 Nevertheless, the unemployment rate rose from 8.1 per cent. in September 1990 to 10.6 per cent. in September 1991. Businesses are predicting that the knock-on effects of the recession are still to be seen in further job losses and bankruptcies of firms.
There has been an interesting spate of articles recently about the economic situation in Yorkshire. One bizarre article in the Yorkshire Post had as its headline:Better off North leaves South Behind".It referred to Britain's most prosperous area being a "Northern Playground" stretching from the Lake District to York. That is a very narrow strip of playground. Dearly as I love the towns, villages and dales of north Yorkshire, they have never been typical of the region as a whole, either in terms of population or in economic and industrial terms. The area's lower unemployment rate—5.1 per cent.—has done little to reduce the unemployment level of the region as a whole.
A more in-depth article in the Financial Times on 8th November illustrates how the North-South divide has widened. According to that article the North's share of UK GDP fell from 47.4 per cent. in 1979 to 45.3 per cent. in 1989. It is forecast that between 1991 and 1995 it will vary between 45.9 per cent. and 45.6 per cent.
The CBI's recent report Competing with the Best—an aim to which we all subscribe—underlines the vital importance of the manufacturing base to our economy. It welcomes the fact that once again there is a growing awareness of manufacturing and that we no longer hear it being derided by government Ministers. That is to be welcomed, but something positive needs to be done about the manufacturing sector.
One of the conditions that the CBI stipulates is a government commitment to playing their part at home and within the EC by creating an operating environment for British business similar to that enjoyed by at least our main EC competitors. In other words, the Government cannot stand back and leave the economy to market forces: they must set the right framework and ensure that resources are available to support that framework. A revival in the manufacturing sector would be the best fillip for employment in the North. It would not only provide employment directly within that sector but also bring an equivalent spin-off in employment in the service sector.
Yet investment in manufacturing, which by 1988 had again just reached its 1979 level, has now fallen back. The infrastructure to support a revival in manufacturing also needs to be put in place. My noble friend Lord Mason spoke about the need for a clear government policy for the regions. I endorse completely what he said and in particular the concern which he expressed about money being available from the Community but which we have failed to take up because the British Government have been reluctant to match EC cash pound for pound to be spent in the deprived regions.
The chairman of the Bradford TEC is quoted in an article recently as referring to the cutting back of the budget for adult training. She said,We have only 170 places, yet we need 3,000 places".589 A number of noble Lords and in particular the noble Baroness, Lady Denton, spoke at some length about the importance of training. That cannot be underlined too much. Investment in training is part of investment in manufacturing, part of investment in the infrastructure and absolutely crucial to our future recovery.
I turn now to a second area of comment. It is a matter to which the noble Baroness, Lady Denton, referred; namely, the employment of women. Again, I endorse completely her remarks when she said that we must make sure that we use women's skills more effectively. One of the problems in relation to women is that we do not know their unemployment situation. According to statistics, unemployment among women has risen, but at a lower rate than among men. However, we do not know the real situation. We do not know what the statistics represent because many women do not register as unemployed. If they are looking for work or are unemployed they do not register because they do not qualify for benefit and see no point in registering.
Despite what has often been said about the importance of women to the labour market, particularly in the light of the demographic changes which are taking place, women are still regarded as marginal employees. Forty-four per cent. of women workers work part-time and an increasing number of them are on contract work or in irregular employment. The majority does not share, even on a pro rata basis, the benefits available to full-time workers. Some 55 per cent. of part-time workers do not share the employment protection services that are available to other employees. One of the main causes of the downward occupational mobility of women which takes place regularly is the fact that they return to employment after a break for child rearing and they are not adequately re-absorbed into the labour market. On top of that, women represent the largest group of low-paid workers.
All that makes women very vulnerable in the labour market. As I said, we do not in fact know what their situation is. Yet their contribution to the family budget is vital. Unemployment for a woman, whether or not recorded in the statistics, brings the same hardship to the family. That is particularly true of one-parent families, something like 90 per cent. of whom are headed by a woman and who constitute the third largest group of people in poverty today.
The largest group of people living in poverty is the unemployed. The number of people in poverty has grown as the number of unemployed has grown, and sadly on present trends it will continue to grow in the coming year. Yet benefits in absolute and real terms have been eroded. As my noble friend Lady Turner said, the UK is the only country in the European Community not to relate unemployment pay to previous earnings.
There is much that could be done in the short term to alleviate the problems and the position of the unemployed. In the long term there is much that must 590 be done to restructure our economy so as to ensure that unemployment on the present scale is banished for ever from our country.
§ 4.47 p.m.
§ Lord Dormand of Easington
My Lords, I was very surprised indeed when the noble Baroness, Lady Denton, said that the one thing which has disappointed her since she came into this House is the fact that some noble Lords refer frequently to unemployment. I am probably more guilty than any other noble Lord in doing that. Apart from the fact that I table a Question every month on the day on which the unemployment figures are announced, I raise the matter on every possible occasion. Indeed, I suspect that the noble Viscount welcomes my Question because it gives him the opportunity to defend the Government, however inadequate they might be, and indeed he does it in a very charming way. I say to the House and to the noble Baroness that I shall continue in that way. The reason is this: I feel that at the moment there is nothing more important than unemployment.
I noticed that the noble Baroness made only very slight reference—I am sure that it was genuine but it was a very slight reference—to the effect of unemployment on a human being. A number of noble Lords made that point and I intend to say something about the matter later.
One of the most dispiriting features of the present disastrous unemployment situation is that the Government refuse to accept responsibility for any part of it. Even a slight hint that mistakes might have been made would be a welcome contribution to our debates and would add to the quality of those debates. A number of statistics have been referred to—properly so in a debate of this kind—but the three that worry me most of all are these: unemployment in the past year has risen by 800,000; 50 per cent. more companies are in receivership; and manufacturing investment is down by 19 per cent.—a factor which has been mentioned already by a number of noble Lords. In those circumstances it is incredible that the Government should adopt the role of Pontius Pilate. They have had no problems with the trade unions and they have not imported inflation for a considerable time. I concede that they could place some responsibility on the recession in America, but I have not read one economic commentator who has said that that was a significant factor affecting employment in this country.
The Government are rightly concerned about inflation. However, it cannot be said too often that the Government may boast about the reduction of inflation, but it was largely their policies in recent years that brought about the high level of inflation. The Government's insensitivity to unemployment is epitomised by the now classic remark made by the Chancellor of the Exchequer a few weeks ago that the high level of unemployment is a price worth paying to reduce inflation. Two noble Lords have already referred to that. I can assure the Minister that from this side we shall continue to remind the House and the country of that remark.
591 The sheer despair, and the effect on health and family are factors which the Government never recognise. I may be wrong, but that may be because so few noble Lords on the opposite Benches have been subjected to unemployment, in particular long-term unemployment.
Last month when I asked my usual Question about the unemployment figures, the Minister, and presumably the Government, took considerable comfort from the fact that the increase was smaller than it had been for some months. It was not that much smaller. However, the Government have more serious questions to answer. For example, when will there be a decrease, not a mere slowing down in the rate of increase? When will it return to the figure of 1979 when the Government took office? I remind the House that when the Government took office there were 1.3 million people without a job. When are we likely to return to that figure? The Government say that it is not possible to forecast even an approximate date.
The Minister will of course again tell us today of the thousands of jobs that have been created under this Government. That is a legitimate point and it is important. What I fail to understand is why the Government should consider that an answer to the present calamitous level of unemployment. The Government cannot complain about lack of time to implement their policies which, as they never fail to tell us, have produced an economic miracle. They have now had more than 12 years in which to put matters right. We are now in 1991 with the Government still thrashing around for new excuses to blame someone else.
When the Minister replies perhaps he will answer this question. Every economic indicator and commentator states that unemployment will continue to increase until at least mid-1992. Many say that it will continue for the whole of that year. Do the Government accept that unanimous view? Does the Minister deny that the figure is likely to be about 2.8 million? Two speakers have referred to 3 million but most forecasts indicate that the figure will be about 2.8 million.
The Government continue to refer to the reduction in inflation when dealing with unemployment, not least by comparison with Germany. Germany seems to be their favourite model for comparison, perhaps for good reasons. However, they always avoid one comparison. Germany has an inflation rate of 4 per cert. and a growth rate of plus 4.1 per cent. Britain has an inflation rate of 4.1 per cent. and a growth rate of minus 2.5 per cent. This is the second slump that the Government have taken us through in 10 years.
How many times have the Government changed the method by which the unemployment figures are calculated? That is a genuine question because I recently read that the method has been changed 19 times. On another occasion I read that it has been changed 29 times. As the second digit is the same it may have been a misprint. I am sure that Members on all sides of the House wish to have an accurate answer. The question is not new; it has been asked many times. However, today's debate is an appropriate occasion to 592 ask for a definitive answer. The Minister might consider placing a document in the Library with an explanation as to why each change was made. Some consider that the reason is simply to benefit the Government by indicating that the increase has not been as high as it otherwise would have been. We ought to know that fact.
The Government frequently talk about the economy recovering. However, like everyone else outside the Cabinet, I see precious little evidence of that. I mention that matter because we are in election territory these days and I am anxious because the Government rely on an increase in consumer demand to bring down unemployment. I suggest to noble Lords that experience with all governments in this country and abroad proves beyond doubt that such booms do not bring about strong and sustained growth—a matter referred to by the noble Lord, Lord Rochester.
A number of factors would assist in bringing about that strong, sustained growth. We hear little or nothing from the Government about such policies. In the spirit of constructive debate, let me mention three factors although there are many others. The first factor is the introduction of a tax regime which would encourage the installation of new plant and machinery. That seems crucial as a basis for long-term stability.
The second factor is to allow local authorities to use the money that the Government make them lock up, and therefore waste, at a time when it could be of use both socially and economically. Millions of pounds arising from council house sales ought to be used to house our thousands of homeless people. House building is one of the most effective means of stimulating the economy because a wide range of products are required not only in the building of new houses but also in connection with the contents. It is a classic example, as the economists would say, of the multiplier factor. The noble Lord, Lord Rochester, referred to that too. I should hate to think that I was becoming a Member of the Liberal Democrat Party but it is nice to know that there is widespread support. It seems an obvious point that the Government should consider.
The third concern is that civil research and development has been reduced and is falling dangerously behind that of our European competitors; and that is on the eve of the single European market. New figures from the OECD show that, taking inflation into account, UK Government funding for civil R&D fell 5.3 per cent. between 1985 and 1989. That compares with a 10.1 per cent. rise in Japan, a 17.2 per cent. increase in the USA, and a huge rise of 63.2 per cent. in Spain.
I have referred to government funding. However, in the private sector—which makes up more than half of the total civil R&D spending—this country is also lagging. I give two examples. For every £1 per employee spent by a UK company, US companies spent more than £2 in 1990 and German companies closer to £3. I hope the Government agree that adequate R&D is an essential component of a strong and durable economy; and that it is important that 593 fiscal and other financial incentives be introduced if R&D is to make its contribution to a reduction in unemployment.
Yesterday at Question Time I raised the serious criticisms made by the Auditor General and the House of Commons Select Committee on Employment about the work of the training and enterprise councils. Those councils are the key to the Government's policies on training. The need for proper training in relation to employment is no longer in question. I shall not repeat what I said yesterday, but it is evident that the TECs as a whole are not fulfilling their objectives. However, I say at once that I recognise that many are making a valuable and constructive contribution to training.
I was astounded to read in the Auditor General's report that one TEC, desperate to meet Government training targets, diverted almost £350,000 to two companies to pay for training programmes and that those companies were already providing the training without the need for public money. It is evident, to put it mildly, that training is not receiving value for money; a concept near and dear to the heart of this Government.
As a northerner, like my noble friend Lord Mason, I am deeply concerned about what is happening in the regions. The Government have made great play of the fact that the North has not been affected by the recession. It is true that during the first months of the recession the region was not hit as hard as the South East. That is no longer the position. The northern region continues to have the highest level of unemployment in the country; the national rate is 9.9 per cent. while the rate in the North is 12.2 per cent.
In those circumstances one would expect that regional aid would at least have been sustained or more logically increased. But what has happened? In this country as a whole regional assistance has been cut by £1 billion and in the North by £200 million. I recognise the fact that the Government are making a valuable financial contribution to the Northern Development Company, a body formed by the local authorities, employers and trade unions. It is a splendid example of self help. That is to be welcomed, but the Government refuse to provide the necessary incentive and resources for the setting up of a northern development agency. I must tell the House that the Labour Government will put that right after the next general election.
Recently the Prime Minister has had a great deal to say about freedom and choice. They are fine words but meaningless to unemployed men and women. It is small wonder that there is so much cynicism among those without a job when they hear such phrases constantly repeated by government Ministers who do nothing about the obscene increases in the salaries of the already well-paid chairmen of British Telecom, National Power, Thames Water, Welsh Water and a dozen other companies of which your Lordships know. If the Government really had the welfare of the country at heart they would do something to change the fact that unemployment now costs the country £20 594 billion a year in terms of benefits paid and taxes lost. I am pleased to hear a few Tory voices being raised in another place against that terrible waste.
That is the economic aspect, but we cannot measure in such terms the effect of unemployment—in particular long-term unemployment—on a human being. The fact that the Government have chosen to put all our eggs in the unemployment basket in order to reduce inflation demonstrates not only their lack of competence but their lack of compassion. It is to be hoped that for once in regard to a fundamental issue the Government will act on the serious criticisms and constructive proposals which have been made today by so many Members of your Lordships' House.
§ 5.4 p.m.
§ Lord Sefton of Garston
My Lords, I listened with fascination to the speech of the noble Lord from the South East. It appeared to me that the noble Lord, Lord Selsdon, spoke with the authentic voice of the people of the South East. He told us, almost in the words of the Beatle's song, "Yesterday", that they had been lulled into a false sense of security. He said that they believed growth would continue but that one morning they woke up to find that the depression was with them. The South then began to suffer. I sympathise with the noble Lord and with the southern people whose eyes had been closed to what was happening within our economy. The noble Lord, Lord Selsdon, said that he believed our debate on unemployment would become an economic debate. That is right because unemployment is the source of the economy.
The people of the South thought that they could go on but suddenly the depression was upon them and they were losing houses and jobs. They thought that it was strange and it came as a shock. It came as a shock only to people in the southern half of the country; it was certainly not a shock to people in the northern regions.
I give an example of unemployment. During the 1930s I served my time in the building trade. I was working on a small, privately-owned house in the south of Liverpool. The owner was beginning to establish a nice standard of living. Overnight the job was cancelled—we could convert his house no longer. Why was that? In 1935 the White Star shipping line was taken over and all the trade went to the Channel ports. That was my first experience of what was happening in this country. It was not unique; it was happening to thousands of people.
During that same period in our history the Jarrow people saw that there was something wrong about this nation. The answer was that it was becoming a nation of inequality and disparity. Many people will not know about the Jarrow marchers because they are too young, and others will have forgotten. When they marched on London Parliament kindly consented to adjourn for 15 minutes while the Prime Minister went out to meet the marchers. He then returned and Parliament resumed. Unemployment was an affliction in the North and it really had nothing to do with Parliament; it was the operation of the kind of society that had existed for a long time. 595 The fundamental change that took place in our society in 1979 was that a certain lady decided to return to that kind of life. The decision was to let rip private enterprise and we certainly have had private enterprise ripping. The trouble is that it has ripped off the North and only now are the consequences being felt in. the South. We have been told that if we have skill training everything will be all right and we shall be able to prosper in the North. There is no lack of skilled people in Merseyside. The only trouble is that they are exercising their skills either in the South or in the East of this country. If anyone requires proof they should go to Lime Street Station in Liverpool on Monday morning and see the number of people who are moving out for five days in order to work. Do not tell me that the Liverpool people do not want work. I can give the House examples of couples who get married in Merseyside and elsewhere in the North. It is generally accepted that the husband must travel to work and will not see his new wife for a week. That is the pattern of life that is developing. Do not tell me about skilled people being able to resuscitate an area—they will not.
The issue of the Western Isles was raised and the Minister responded by asking my noble friend whether he thought there had been good investment. Another question should have been asked in relation to the, Western Isles and the BCCI matter. Why were the Government not more careful in vetting the BCCI? Why is it that everyone in the world appears to have known what was happening in BCCI except the Bank of England? That was another reflection of the kind of society in which we live. People were out to gain a quick buck no matter who would be damaged. That is why the Western Isles finds itself in its present position. To try to say that there should have been the expertise to know what was going on inside that organisation is rather harsh, coming from this Government.
I am concerned about unemployment and its effect upon the unemployed, but that is not my only anxiety. I am also worried about its effect upon some of the employed. In Runcorn, which was once the centre of the chemical industry of this nation, people are worried. They are in employment but they know that a thousand jobs must go and they are all wondering whether they will loose their jobs. That writing has been on the wall for a long time. If you had wanted to read the book, you could have done so years ago.
I remember when the famous man of Liverpool, Mr. Heseltine, came to see me in Runcorn when I was chairman of the Runcorn Development Corporation. He asked whether we had any ideas as to what was the problem in Merseyside. I told him that the reason for Merseyside's existence had gone. It grew on the basis of being the channel of communication between two mass continents. That had gone thanks to air traffic and the movement of shipping away from Merseyside. Therefore, Merseyside required a new reason for the existence for its existence. I told him that he could do that by providing for Merseyside all the civil service jobs which were making life miserable for all concerned in London. That was pooh-poohed. The room was full of bureaucrats and civil servants. It was 596 rather optimistic of me to think that they would listen to that argument. After all, Mr. Heseltine and those same people had been responsible for taking away 3,500 civil service jobs which the Labour Government had previously agreed should go to Liverpool. Therefore, it was rather optimistic of me.
I said, "There is another thing you can look at for the future. ICI was centred in Runcorn because of the proximity of the salt beds in Northwich but modern technology has now established that the chemical industry need not be based on the salt mines of Northwich. When it seeks better markets it may well be that ICI will move from Runcorn. You had better look at that problem, otherwise there will be another major problem on your hands in regard to Merseyside". Was that accepted? No, it was considered to be much too extravagant. How could it be believed that ICI was under threat? The 6,000 people now employed by ICI are now beginning to realise that economic activities move in response to markets.
The noble Baroness, Lady Denton, read out a list of areas where unemployment is expected to drop to 2 per cent. Coincidentally, the areas which she read out were, with one exception, in the South and East of this country. Since the First World War there has never been a real attempt to establish an examination of our national problems in relation to the regions.
I give another example. In 1940 I was employed in a factory where there was a typically difficult job to be done. I met a chap whom I had known socially. He had just become employed in 1940 to work in what were known as the drying houses of the factory where timber was dried. I met him when he came through the gate at 8 o'clock in the morning. At 8.30 I saw a coffin being taken out and his body was in it. The last time that that man had had a job was in 1919. He had been unemployed since that time. Therefore, it is no shock to us in the north that unemployment is a scourge which should be removed.
When Michael Heseltine finally looked at Liverpool, he gave it a garden festival on the Albert Dock. The garden festival came and went and now there is a big area of land on the Mersey bank which has nothing on it, nothing is being done to it, and it is not providing pleasure or anything else for anybody. The Albert Dock now has some flats, a few shops and many people coming and going mainly because there is free parking adjacent to it from where one can walk into Liverpool.
The National Audit Office looked at the position after about two years and was extremely anxious as to whether we were getting value for money in regard to the jobs being created, because it is jobs which are needed to rejuvenate Merseyside. The NAO was extremely anxious about the high price which was being paid for jobs. We had to establish the goodwill of the Government and that the Government were doing something. At the same time, millions of pounds were put into the London Docklands. There is no problem about the London Docklands, is there? That is a very successful venture. Money is coming in from all over the world. No proper consideration has been given to its effect on the rest of the economy. As I said 597 last week in the debate on the Address, estate agents in London are now having a rough time because of the existence of the London Docklands. That was not thought about or, if it was, no action was taken.
We are now going a step further. A study is being carried out by the same person as to how we can develop the east of London to the estuary along the Thames. Has anybody given any consideration to the effect that will have on the rest of the economy—of course not.
There are no such things as regional problems. There are national problems of unemployment, deprivation, poverty and scarcity in certain parts of the nation. Until we learn to look at those individual problems through the eyes of the nation we shall never solve them. It is my plea that whichever party is sitting on the government Benches should look at the problems of the regions as problems of the nation.
I give another example, and in doing so I shall try to keep within my limit of 15 minutes. The real truth is that the peripheral areas of this nation are dying, as surely as anybody who is lying in his bed dying of cancer is dying, because they are suffering from a sort of cancerous growth. Recently I heard the Government boasting about their loyalty to the union—and I do not mean the Transport and General Workers' Union but the union of Great Britain. The Government like to stand on a platform and say that we must keep the union of Great Britain. We must not worry about devolution for Scotland, or about Scotland and Wales looking after themselves. They say that they believe in the union.
In Northern Ireland there are 4,500 vacancies. I shall not give many more statistics because there should be no need for anybody to give statistics about the deprivation which is being suffered in the regions. There are 4,500 vacancies in Northern Ireland as compared with 47,600 in the South-East. That is enough to be going on with. Is that the way in which the union is to be preserved?
Northern Ireland is being torn apart because of a stupid demarcation argument between individuals. At the same time there are 4,500 vacancies as compared with 47,600 vacancies registered at job centres in the South-East. We know that that is an under-estimate of the number of vacancies. How many employers in the South-East go to job centres to fill a vacancy? They do not. They go to private job centres. The probability is that that figure could be doubled and we may be talking about 4,000 vacancies in Northern Ireland against 90,000 possible job vacancies in the South-East. And all the while in the South-East of England there are 360,000 people with two jobs. Think of that! I suppose those are the jobs which the Government boast of creating. It is obscene that anyone should boast about safeguarding the union when one weighs up the disparities that exist in the regions of this country.
I conclude on this note. It was suggested that we talk too much of unemployment. I apologise to the Chamber that over the past two years, due to personal circumstances, I have not been able to attend as much as I should like. Had I attended over the past two 598 years your Lordships would have heard this story over and over again. It is not a civilised life in London and the South-East. It is not a civilised way of earning a living to be herded into railways complaining about the underground and transport system in order to get to a job, and then do it all over again to get home in the evening. That is not civilisation. The only reason it happens is that there is too much self-interest in London and too much preservation of its jobs.
When the depression lifts—I hope that will be soon—the South-East will lull itself back into a sense of security; it will close its eyes once again to the real sufferings that exist in this country and will allow the peripheral areas to go further down, as they have been doing for the past 50 or 60 years. That is the future pattern unless we can instill into people in the South-East, in government and private trade, an understanding of the problems of unemployment and get them to do something about them.
§ Lord Selsdon
My Lords, before the noble Lord sits down perhaps I could correct one misconception. We Scots feel that Merseyside is to the south. He was directing his barbs at me on the assumption that I was responsible for all the ills of the South. I am actually a Scot.
§ 5.22 p.m.
§ Lord Grimond
My Lords, I should like to thank the noble Baroness, Lady Turner of Camden, for introducing the debate. There has been a great shift of economic power and income from labour to capitalists. We can now use machines for all sorts of things which once required labour. That clearly reduces the demand for labour and may reduce its remuneration. Oddly enough, that is not the fault of the Government. But it is the Government's business to deal with those changes in the real world.
I am afraid that it may be thought inevitable that there should be a high rate of unemployment. A new term used by economists is NAIRU, or "non-accelerating inflation rate of unemployment". It means that one can have a degree of unemployment and inflation without inflicting great damage on the economy. That may be true. However, I take it that the unemployment is transient and that the inflation is within the limits of the extra production produced in the country. That is very different from an unemployment rate of 2.5 million.
There is a danger that somehow or other we are lulled into believing that inflation is inevitable and can be ameliorated by paying the bill. I should like to thank the noble Lord, Lord Dormand of Easington, for each month raising the subject of unemployment. It is the most important social evil from which we suffer and I am astonished how little attention it receives from the general press.
Apparently it is assumed in conventional capitalist thinking that in times of depression one must lay off labour. It is also constantly said that that happens the world over. I hope that the Government will not put too much reliance today on the fact that unemployment may be as bad or worse in Germany, America or 599 anywhere else. It is no comfort when one has been run over by a bus to be told that many other people have also been run over by buses.
It is not acceptable that the automatic reaction to bad times should simply be to lay off labour. I do not believe that it is inevitable. I shall give three examples of industries where it did not happen. The first is the Scottish inshore fishing industry. Its takings fell between 1977 and 1981 from £185 million to £123 million. But few people were laid off. The numbers in the industry fell from 7,600 to 7,300. The next example concerns the co-operatives at Mondragon in northern Spain, which I understand make consumer durables—washing machines, refrigerators and so on. Between 1976 and 1986, when there was a considerable depression in parts of Spain, total employment in the Basque area fell by 150,000. However, Mondragon increased its workforce by 4,200. The same pattern can be seen in America where Allied Plywood, for instance, has never laid off anyone for economic reasons.
The characteristic of those operations is that they are worker controlled. The workers not only receive most of the benefit but also take most of the decisions. That means that they feel that they employ the management and that the management share in their ups and downs. I do not believe that it is healthy in this country to see top management and directors, who are already extremely well paid, receive increases of 50 to 100 per cent. at a time when labour is being laid off right and left. I do not believe that this disparity between the treatment of top management and owners, at a time of depression, and the treatment of labour is tolerable in a decent society or a decent economy. I should like to know whether the directors of the Clydesdale Bank, mentioned by the noble Baroness at the beginning of the debate, which laid off 700 people last week, suffered any reduction in their emoluments. Clearly, the bank cannot be doing as well as it was. One would have thought that all ought to share.
Reasonable justification for believing that a share ownership economy works is given in a book by Dr. Weitzman, The Share Economy. Dr. Weitzman is a professor at Harvard. One may feel that he is a theoretician and therefore not to be believed, at any rate not in this country. But he partially made an interesting convert in the person of Mr. Nigel Lawson, who introduced some of Professor Weitzman's ideas into his budget. He did not push them very far. However, he did introduce the idea of profit-related pay. I ask the Government whether they are pursuing that line. A Minister has recently said that it is an increasing factor. I would like to believe that the Government intend to pursue the matter with energy.
If' one asks whether the Weitzman thesis has met with any success, I draw attention to an article by Drs. Saul Estrin and Keith Bradley of the London School of Economics. That is an institution which is widely admired at least on this side of the House and can be taken as reputable. Drs. Estrin and Bradley examined the John Lewis Partnership and came to the conclusion: 600John Lewis has managed a stable pattern of employment growth compared to fluctuations in sales which it attributes to a high degree of profit sharing".I am not saying that that is the only way in which one can reduce unemployment. I am saying that in the circumstances, when the country should he getting much richer and when, above all, we should have unity of action in industry, it is very important to look at these developments which appear to make sense against the changes in the modern world.
There should also be some dignity given to labour. What I find most upsetting about unemployment is that it strikes at the dignity of those who lose their jobs. They are treated as being on the dole and having charity handed out to them. They are "laid off", as it is called, when the company does badly. If we are to go to the root of the matter we must change our attitude towards the unemployed and their status. In addition, in a modern world, remuneration must be spread. The degrees of inequality that were once tolerated are not to be tolerated any longer. But they are getting worse and not better. That has to be cured. I approach the question of a national wage with some simplism. However, I believe that we shall come to a national minimum income. That would make sense in distributing the wealth which is produced more and more by machines and which in essence belongs to the whole country.
§ 5.32 p.m.
§ Lord Hatch of Lusby
My Lords, my noble friend Lady Turner referred in her speech to her visit to British Leyland and the closing down of that factory. I have a personal interest in that matter. The British Leyland factory at Bathgate was closed in the middle 1980s. That factory had been tooled-up to provide 10,000 lorry kits for Nigeria. However, because of the drop in oil prices and the decline in the Nigerian economy, Nigeria could take only 2,500 kits. The Bathgate factory closed. I remember that I had a televised debate with the noble Lord, Lord Bauer, on the question of overseas aid. We sent a team to Bathgate. It took a picture of the closed gates and the locks, and then interviewed two of the workers who had been made unemployed. At the same time pictures were taken of the deprivation in Nigeria and of the foodstuffs that would have been supplied by those lorries.
That is a most graphic illustration of the inhumane and stupid economic system of which we are a part. That took place in the mid-1980s. Since then the situation as regards the third world countries, particularly Africa, is that the flow has reversed. They are financing our standard of living and providing in interest on debts a greater amount each year than they are receiving in aid from the industrialised world. It is the poor who are subsidising the rich in the world today.
Yet since the mid-1980s the situation has become even more desperate and much more deeply significant. We are facing an era in which human life on this planet can be made progressively impossible unless certain specific and radical measures are taken towards the environment. That applies more particularly to the third world countries than to the 601 rest of the world. I have quoted before the fact that the Chinese Government have promised their 1.2 billion citizens a refrigerator in every household. If that refrigerator is of the present conventional type just think what effect that will have on the ozone layer. But there are refrigerators that are comparatively environmentally benign and do not release CFCs into the atmosphere. That is only one of many challenges that are facing us today.
What are we in Britain doing in order to meet that challenge? Surely there is a clarion call for a massive concentration on research and development. What happened was that the United Kingdom was the only country of the 23 OECD countries where, during the 1980s, the number of people in all sectors of R&D actually fell. We are the only country where that has happened. What are we doing about the opportunities and the demands that are there for trade with third world countries? According to the Government's own figures, in the years 1975–78 inclusive this country's exports were between 27 per cent. and 28 per cent. to the developing countries of the third world. Last year that figure was 15 per cent. Similarly, as regards imports, during the same period in the 1970s, the figure was 22 per cent. to 25 per cent.; last year it was 12 per cent.
That is not only immoral, but also mad. These are the markets of today and of the future if we will only see that. In the 19th century this country built its economy on opening markets all over the world and in taking technology to people who were able to use it to develop their own standards of living. That demand today is surely much greater than it was in the past century. Yet if noble Lords refer to the Select Committee on Science and Technology and its report Innovation in Manufacturing Industry which was published earlier this year, there is a relevant quotation which it gives concerning this assessment:There was virtually no net investment in manufacturing industry during the 1980s…. If market forces alone are to determine the course of events it is conceivable that we will end up with no significant British-owned manufacturing industry in the United Kingdom".The report goes on to attribute this dire state of affairs to a lack of government support for industry in stark contrast to our overseas competitors. In reference to our lamentable performance in R&D it again says that this was the result of the reduction in government support for R&D.
So when we hear the noble Lord, Lord Selsdon, talking about the state of the economy, it is not an act of God. I welcome the opportunity of debating this across the House with the noble Lord because both he and I were on the Aldington Select Committee together and we heard the evidence which showed where the causes of our manufacturing decline came from. We forecast at that time the depression from which we are now suffering. We forecast not just that it would happen, but why it would happen and what could be done to prevent it. Those measures were not taken, as the noble Lord must know.
The noble Lord talked about the paramount importance of reducing inflation. Who raised inflation? Was it an act of God? Did it have nothing 602 to do with the policy of the Chancellor at the time, Nigel Lawson, who as the noble Lord will remember, we questioned very thoroughly about the causes of the kind of depression which we then forecast? Had it nothing to do with the way in which that Chancellor not only ignored, but spurned the advice that our committee gave? As the noble Lord, Lord Dormand, pointed out, this is the second depression in 10 years. It is not an accident: it is the logical consequence of government policies. Yes, I agree with the noble Lord that everything cannot be put down to government. But that does not mean that nothing can be put down to government. When we see two deep depressions of this kind within 10 years, when we see the mounting inflation figures, the mounting figures of interest rates, one cannot simply say, "Oh, this comes from the outside and the Government are quite helpless to do anything about it". That, I suggest, is a complete exposure of the fraudulence of the Government in claiming to be competent in running our economy.
The noble Lord must know that if we compare what has happened in this country with what has happened in those of our major competitors, again it is not an accident. There is a difference of policy. I understand that if one looks back over the past 10 years manufacturing growth in this country has been 6 per cent. Of the industrial countries only Greece has a lower increase in manufacturing growth. The Germans have 26 per cent.; the Japanese have 62.7 per cent. These are not accidents. This is the consequence of government policy and of government incompetence in running the economy.
The noble Lord's speech raises an issue which I have asked the Government to answer for over 10 years and I have never had an answer. Where do the Government stand on the use of public expenditure—public investment? I have asked this question specifically and I am asking it specifically again today. Do the Government consider that public expenditure is a cost to our economy, or an investment? I apply that point to certain specific areas. It is government that determines the level of overseas aid. Overseas aid, in percentage terms of GDP, has fallen to about half of what it was when this Government took office. The last figure was 0.27 per cent.; in 1979 it was 0.53 per cent.
The noble Lord, Lord Selsdon, will bear me out when I tell the House that during the sittings of the Aldington Select Committee we constantly questioned leading industrialists like John Harvey-Jones and the noble Lord, Lord Weinstock, as to the relation between the level of overseas aid and the level of British exports to third world countries. On every occasion—and this was repeated and brought up in front of the then Chancellor of the Exchequer, Nigel Lawson; I brought it up myself—the answer was, "Yes, of course. Overseas aid is important; it is crucial to our export industry".
I shall make one short quotation from the evidence given to that committee by Mr. MacPherson, of the Association of British Chambers of Commerce. He said:Of course we have to expand to get new markets because, my word, if we do not get into new markets and if we do not ensure that other countries in the world, nations which are not 603 major industrial markets now become so, I believe the whole theory on which we base our economy will begin to fall to the ground".Later on I received a letter from an export group of construction industries, which had this to say:This country needs to persuade itself that we can afford more aid because it will be good for Britain as well as for the beneficiary country and that the return outweighs the aid in a ratio of about 5:1".Where do the Government stand in the relationship between the provision of overseas aid and the export industry on which so much of our economy depends and on which employment within our manufacturing industry also depends? It is the Government's responsibility so far as aid is provided. It is the Government's responsibility when they reduce the resources of the British Overseas Trade Board. It is the Government's responsibility when they reduce the number of commercial attaches in the Foreign and Commonwealth Office and throughout our diplomatic services.
Yes, this is the Government's responsibility, and I ask the noble Viscount who is to reply whether he will explain to us the Government's attitude when they see our exports to third world countries declining; when they reduce government provision to assist those exports; when they reduce overseas aid to those countries that are now suffering.
Finally, I shall just meet the question which should come, and probably will come: what would you do? I would say that there are three immediate measures that should be taken to rectify this rapidly declining and disastrous position. First, we must reverse the 18 per cent. decline in manufacturing investment by providing investment tax breaks. Secondly, we must abandon the privatisation of the British Technology Group. We should set up campus-based trusts to develop and expand our research. We should then apply the research, which has been provided by our universities and technical colleges for so long, instead of, as so often happens, allowing it to be taken abroad and developed there. Thirdly, as has already been said by a number of speakers, we must develop agencies in England for regional economic growth.
The challenges have never been as great or as solemn. I hope that the noble Viscount who is to reply will tell us how the Government intend to reverse what has been their disastrous policy of running away from these challenges.
§ 5.50 p.m.
§ Lord Howie of Troon
My Lords, my noble friend Lord Macaulay said that this debate was a sad occasion. I strongly agree with him and enter the debate with great dismay—dismay that it should have to be taking place at this time.
In the late 1940s, when I was beginning my professional life and starting to become active in politics, it was generally felt on all sides that one of government's main aims and responsibilities was to attain and maintain full employment for its citizens. That was a major goal of government. There was a postwar consensus along those lines. There was also consensus on the provision of adequate housing and 604 the sustaining of health. What is sad is that that consensus seems to have declined and in some respects withered away.
There was considerable debate in those days as to how full employment was to be defined. I believe I am right in saying—perhaps noble Lords on the Liberal Democrat Benches will correct me if I am wrong—that when Lord Beveridge wrote his report on full employment he had in mind a figure of around 3 per cent. I seem to recall that, not long after, Hugh Gaitskell, as Chancellor, accepted that 3 per cent. was a suitable figure in defining full employment. With the mass of statistics we have today we have to realise that the 3 per cent. figure would now be somewhat lower. I am not sure how much lower—perhaps it would be 2 per cent.—but at all events it would not be zero. We all accept that a certain measure of unemployment is inevitable and we all hope that it will be transitory and will pass away rapidly.
In the 1950s and 1960s the figure fell to 1.5 per cent. or 1.6 per cent. That was in all probability too low because it concealed a fair element of overmanning in industry. There were what one might call pensioners in industry who should really have been pensioners in the social security system. That consensus has now disappeared, and instead of it being a goal of the Government to remove unemployment, it has become one of their main economic weapons in the combat of inflation and the defence of sterling. We know that the combat of inflation and the defence of sterling are necessary, but on this side of the House we do not believe that unemployment should he the major weapon.
I agree with the general comments of my noble friends Lady Turner, Lord Hatch and Lord Sefton about unemployment. However, for the purposes of this debate I wish to concentrate on the narrow area of the construction industry, in which I have spent a lifetime. Recent figures show that 250,000 building workers out of a labour force of around 1.7 million are unemployed. That is nearly 15 per cent.—far too high and a long way from anything that might be described as full employment.
The construction industry is now one of the Government's economic regulators. The strength of the industry is no longer based on the country's obvious need for housing and infrastructure. It is no longer based on manufacturing industry's need for capital investment. Instead of responding to the needs of the nation, the construction industry is merely one of the Government's regulators—one of their weapons. The level of activity in the industry relates not to need but to the Government's requirements in controlling the economy.
During this recession—as my noble friend Lord Hatch said, the second recession of this Government's three Parliaments—the construction industry has faced one change. We all know that ordinary building workers have been hit hard yet again, but in this recession the construction professionals have been harder hit than at any time since the early 1930s. By construction professionals I mean architects, civil engineers, quantity surveyors, building managers, structural engineers, heating and ventilation engineers 605 and interior designers—all those professionally engaged in construction. Workers in all those professions have been hit much harder in the current recession than they were 10 years ago.
One may wonder to what extent that matters. It matters in the sense that construction professionals form a central part of our overseas earning capacity. According to the British Consultants Bureau, which was set up in 1966 or thereabouts, British consultants—engineers, architects and so on—are the second highest earners of invisibles. Their contribution to the balance of payments is outstanding. As the noble Lord, Lord Rochester, said, an export effort of that nature can be based only on a sound home market. But is the home market any longer sound? The Institution of Civil Engineers reports that the number of its members who are unemployed has doubled in the past year. A well-known firm of consulting engineers, one of the most successful in the world, has made 90 staff redundant. Another firm has made 71 staff redundant. The Chartered Institute of Building has been obliged to set up seminars on redundancy to advise its members on how to deal with unemployment.
It is possible that architects have been the hardest hit. Indeed, the Royal Institute of British Architects told me this morning that 5 per cent. of its members are unemployed and another 19 per cent. are underemployed. That is four times as many as at this time last year. Incidentally, underemployment is a euphemism. As noble Lords will know, the work of architects is carried out largely by relatively small groups of people. Of course, there are some big firms but the pattern is of the small practice—the kind of small business about which the noble Baroness, Lady Denton, was so pleased. She was right in that view. Small businesses do create more jobs than big businesses in total. However, when such firms go out of business they also lose more. That is what is happening. Underemployment among architects really means that a small practice has no work to do. Its principals dismiss two or three employees and they themselves pick up what scraps they can obtain from brother architects who are still economically active.
Interior designers have been badly hit by the recession. In the past, I have been unkind about them in the House. I do not take back what I said. However, they have been hard hit. A designer I know quite well, whose practice has been very successful and who is well respected—indeed, one can see his work in at least two of the terminals at Heathrow Airport—has dismissed all of his six employees. He is twiddling his thumbs, waiting for the recession to come to an end and hoping that he can survive it.
Noble Lords may wonder why I have concentrated on a relatively small part of a large problem. It is because, in a sense, the construction professionals are in the same boat as the construction workers. They deserve at least as much sympathy. As I said earlier, their contribution to our overseas earnings is quite remarkable. It is a contribution which is not making things; it is a contribution of the intellect of designing and managing things and causing them to be built.
606 There is another important matter. I refer to the issue of training, which has been mentioned once or twice during the course of the debate. If one thinks of the nature of training such professionals, it becomes extremely important that jobs should be available. I say that because an architect is trained by taking a degree and going into a firm where he works at the drawing board, or whatever it is they have these days, as a designer learning "at Nellie's knee", to use the old phrase. He then returns to college and takes his final RIBA qualification. Civil engineers are trained in a somewhat similar manner. They take a degree and then join a firm recognised by the Institution of Civil Engineers where they are trained under agreement by the company for a period of four years. At the end of that time, they are able to become corporate members of the institution and are then qualified engineers. A similar system operates for architects.
However, the key to that mode of training is that firms must be able to take on trainees. In present circumstances, it is very difficult for them to do so. Indeed, many firms have cut back on their intake of graduate students, while a good many firms have cut them out completely. Without that training there will be a lack of opportunity for young people. In addition, we shall see an important and almost unending decline in the quality of engineers and architects who pass through the system.
I know that the Government will probably say that a great deal is being done. Over the past year or two mention has been made of the fact that very large sums of money have been devoted to motorways, railways and so on. We hope that that money will actually result in work becoming available. The sum of money involved is not important; the important thing is a hole being dug in the ground, filled with concrete and then something being built upon it; in other words, that the work is actually started. Such government proposals are on the horizon. But, as noble Lords will notice, the Channel Tunnel rail link which is unfortunately taking the wrong route and going to the wrong place for the wrong reasons has been put off by about eight or nine years. Therefore, although these investments are on the horizon, I believe that they are on a very far horizon.
I agree with the comments made by my noble friend Lord Hatch about what ought to be done. He is certainly right in what he says. He will no doubt enjoy agreeing with me. But, fundamentally, what is required from the Government is a return to the post-war consensus or notion that full employment is a goal for the Government and not merely a by-product of their ideology.
§ 6.7 p.m.
§ Lord Desai
My Lords, I should like to join with other noble Lords in thanking the noble Baroness, Lady Turner of Camden, for giving us the opportunity to discuss unemployment. I find myself somewhat handicapped in discussing this matter because I am an economist. I spent far too many years of my youth reading about unemployment and studying it. Therefore, if now and again I sound didactic I beg 607 your Lordships' forgiveness. I shall try my best to keep partisanship firmly under control, but I fear that I shall not succeed in that aim.
I shall begin by saying that, even if we discount the current recession, one cannot deny the fact that the level of unemployment over the past 10 years or so has been much too high. In 1970 we had a government in power which bore the label of the noble Lord, Lord Selsdon—the "Selsdon man" was in power. We had a government which panicked when unemployment reached the figure of 1 million, and quite rightly so. Noble. Lords may remember that we had a consensus at the time. It seemed that an unemployment figure of 3 per cent. or more was intolerable and that the public would not stand for it. But, nowadays, an accusation that the unemployment figure is about to go beyond 2.5 million is thought to be a sticking point and we fight about numbers around that figure rather than around the figure of 1 million.
Obviously something has changed. It is not all the fault of the present Government. I shall deal with that which I consider to be their fault in a moment. We have to admit that something has changed over the past 20 years. The noble Lord, Lord Grimond, mentioned the non-accelerating inflation rate of unemployment, or NAIRU as it is called. It is something which, for many years, economists have tried to understand and estimate. They are trying to find some notion of employment which is not full employment, as we understand it, but is at a level that will not accelerate the existing inflation rate, whatever it is. My colleagues Professors Layard and Nickell, and Mr. Jackman have been slaving away over that problem for many years and have just published a book called Unemployment from which I shall quote.
Economists try to calculate the equilibrium rate of unemployment. Two or three things are true about it. First, the equilibrium rate has risen in the UK. We discount the recession, but in the 1960s it was roughly 2.5 per cent.; in the 1970s roughly 5 per cent.; and in the 1980s roughly 8 per cent. We are currently above that rate because we are in recession. Although the rate has risen here and elsewhere, it has not risen the same everywhere. While some increase in unemployment may be structural, we can choose how to get it down. In a booming economy we do not have an unemployment rate of 8 per cent.; it is more likely to be 4 per cent. or 5 per cent. It is not as a result of an act of God or an act of nature that the unemployment rate happens to be whatever it is; nor is it something thrown up by the market. The market does not throw things up. Policies designed to reduce the unemployment rate, working with the grain of the market, rather than against it, would bring it down. It is important that we understand how it can be done.
When the Government came to power in 1979 they believed genuinely—I did not agree with them and still do not agree with them—that the cause of stagflation in the UK was the power of the trade unions and the fact that our wage rates were too high. It was thought that o combination of policies—control of the money supply, a change of trade union laws, the introduction of wage flexibility and so on—would lower the equilibrium rate of unemployment. That has not been 608 the case. Changing wage bargaining, controlling or not controlling the money supply, whichever it was, and taking an average—good years with bad years—unemployment stuck at about 8.5 per cent.
In contrast, in the United States the policy was different. It was a much more aggressive macroeconomic policy and monetary and fiscal policy. It relied upon decentralised wage bargaining. The equilibrium rate of unemployment has not risen much and the current unemployment rate is not high. Sweden offers the best example. In Sweden, the equilibrium rate has risen from about 1.2 per cent. to about 2.6 per cent. It has doubled of course, but it is nothing like ours. We can make choices. We can ask what it is that makes unemployment an especially obstinate problem in this country. We should be patient and tackle the problem with goodwill in good times and in bad.
I am conscious of the fact that in six months we shall be on the other side of the Chamber. It will be our problem and not that of the Conservative Party. We will have to face the problems. I am sharing my thoughts, fully realising that we shall have to solve the problem.
During the 1970s and 1980s there was a global shift from manufacturing to services and from the North to the periphery. Jobs have moved. Manufacturing productivity has not been matched by the growth in manufacturing in all developed capitalist countries. The manufacturing sector has shrunk. Jobs in manufacturing have declined. They have declined more in this country than elsewhere, but that is not the point I am trying to make. Despite high productivity, manufacturing is not absorbing as many jobs now because of the lack of growth, and so we rely more and more upon service jobs, small businesses and self employment. Those jobs are much more liable to cyclical fluctuations than manufacturing jobs. In some senses, the impression that manufacturing jobs are more solid is true. They are more solid. If manufacturing industry is profitable it will retain jobs. To the extent that we no longer rely on that type of technology, we have a much more volatile and fluctuating employment pattern. When we think of policies—demand-side or supply-side led—we must remember that those jobs are susceptible to fluctuations in interest rates and taxation. Much more fine tuning is necessary when we have that type of employment.
There are two problems. One of the problems is to create and sustain jobs without them leading to inflation. How do we create more jobs? Secondly, if there is umemployment how do we get people into jobs without affecting inflation? Economists have concluded that the relationship between real wages and productivity and the flexibility of the labour market are important factors when trying to create jobs. The United Kingdom economy is doubly unfortunate. We do not have the decentralised wage bargaining that the United States has, nor do we have the centralised wage bargaining with powerful unions and employers' organisations that Sweden, Germany and Austria have. We have the worst of both worlds. That is why as our employment increases it feeds 609 inflation much more than it does in other countries. If we maintain the economy at the capacity rate of growth—about 2.5 per cent.—we can create non-inflationary employment. As soon as we dash for growth or re-election—whatever it may be—we build in inflationary pressures. Once that happens we use unemployment to bring down inflation.
Unemployment is reluctant to come down once it is high. It is very sticky. Once unemployment is high it takes a long time to bring it down. We must find a way to sustain the economy at the capacity rate without increasing inflation. Many economists say—not all agree—that given that income policies have been discredited—I have a sentimental fondness for them—we need some form of co-ordinated wage bargaining. The Government should not tell people what to do, but we need some symmetry of timing and information to be used by both sides in wage bargaining so that the macro-economic consequences of micro-economic decisions are made clear to those who are bargaining. We would not then have the leap-frogging or the relativities battles that we had. The German Bundesbank's reputation for controlling inflation has not so much to do with the fact that they are tough on monetary policy; it has more to do with the fact that they are sustained by a wage bargaining process upon which they can rely year after year to give them a wage bargain which is credible and which will stick.
Obviously such institutions cannot be created overnight. I do not say that miracles can happen, but that is one point about which we should be thinking and perhaps we can make some progress in that direction. In the medium term, however, if we are to reverse the global restructuring from which we suffer we shall have to move on to manufacturing new products and research and development-intensive products, which will ultimately require a much better educated, better trained and constantly retrained workforce than we seem to have at the moment. Again, I make the point in the context of the longer run that a developed country like ours survives in manufacturing only if goals are constantly shifted to new products. The old products can be better made by South Korea, Taiwan, Malaysia, Singapore and so on. We must always be moving on because that is the nature of competition.
If we do not move on, if we do not put money into research and development we shall fall back. It will be no one's fault—not that of the unions, the Government, the Labour Party, or the Tory Party—but a structural problem of the economy which will be hard to tackle.
Lastly, I come to the tricky problem of the long-term unemployed. Again, I do not want to get into a numbers game. Over the past 10 or 15 years the problem of long-term unemployment has become serious. The age distribution of the long-term unemployed is badly skewed towards the very young and the very old. The gender distribution is bad because young women are more likely to be unemployed in the long term than are young men. There are problems.
610 The trouble with long-term unemployment is that if we increase the number of the long-term unemployed it gives us no bite on the anti-inflation fight. We have been assured quite extensively by economists that increasing long-term unemployment does not achieve success in combating inflation or the rate of earnings, or anything like that. It is a problem which must be tackled in such a way that if there is an opportunity to take one person out of unemployment, it should be the longer-term unemployed person rather than someone who has entered unemployment but who is not likely to stay very long. Again, we have sufficient relevant information to know what kind of person becomes unemployed but does not stay unemployed long because he or she is in and out of the unemployed pool quite quickly. However, there are people who get into unemployment and cannot get out.
Again, it is important that we concentrate our attention on how we can tackle the problem of long-term unemployment because not only is it immensely demoralising but it is economically wasteful from the macro-economic point of view; that is, it does not achieve any anti-inflationary bite. Nor does it solve the micro-economic problem of making the labour market more flexible.
I do not necessarily share the view but some people have suggested that we examine the Swedish system of unemployment benefits. In it, people have a guarantee of one year's unemployment benefit during which time every effort is made to retrain them and give them new skills. At the end of that year they must be offered guaranteed short-term employment and be taken off the long-term unemployment benefit register. It is a complex problem and I do not have time to go into it, ' but those are the issues we should examine.
The problem of unemployment will not go away very easily. We are coming out of the recession. It will be sluggish and slow but we ought to be thinking of how we can get the economy down to an unemployment level of—let us have a modest ambition-6 to 7 per cent. rather than 10 to 11 per cent., as at present.
§ 6.23 p.m.
§ Lord McCarthy
My Lords, like everyone who has contributed to the debate, I wish to begin by thanking the noble Baroness, Lady Turner, for initiating it. Many speakers have said that it concerns one of the most, if not the most, important economic and social problems facing us at the moment. As I calculate it, we have had 13 speeches. Curiously enough, almost all have been on this side of the House. There have been two speakers clearly from the other side making extremely interesting and worthwhile comments. However, I have been listening carefully and up to now I do not believe we have had a speaker from that side of the House answering the attacks which were made upon the Government's policy by the noble Baroness. I think we can assume that the noble Viscount will do so when it is his turn, and unless he answers the attacks no one will do so.
Therefore, it falls to me to some extent to try to anticipate the answers the noble Viscount might give, because we have not heard them in the debate tonight 611 although we have had a whole range of arguments. I wish to be as non-controversial as I can. It seems to me that there is a large area of agreement between us or anyway potential agreement. We agree about the size of the problem and that there is an unemployment level of about 2½ million, just under 9 per cent. The Government have provided us with the figures and therefore we agree that if we recalculate the figure on the basis of the pre-1983 calculations, if we put back the people who were taken out because they were over 60 and take out the Army and the self-employed, the figure for the unemployed would rise to about 3 million. The percentage figure would be about 11.25. The importance of that is that it takes us back in terms of measurements and comparisons to the level of unemployment we had in the early recession in the 1980s. That is where we are now and we can agree about it.
We are agreed that we are among the worst in Europe and in the western developed world. I can say that—and the noble Viscount must agree with me—because it comes from a Written Answer to a Question which I asked the Government on 21st October. The Written Answer told us that our level of unemployment was 10 per cent., using a common base across the countries in the EC. That is 15 per cent. above the EC average and 45 per cent. above the OECD average. In case the noble Viscount was going to say that those who are worse than us have statutory minimum wages, let me say that that is true—two do. But then so do nine out of the 11 who are below us. They have statutory minimum wages as well.
We know the size of the problem; we know that it is pretty bad; and we must agree that it will get worse before it gets better. As the noble Lord, Lord Dormand, said, there is a disagreement about how much worse it will become before it gets better. The best recent calculation of the options available was in the recent report of the Select Committee on Employment of the other place which said that most people said that unemployment would not turn down until late 1992. By that time it would be about 3 million. That is the best estimate we have as to how much worse it will get before it gets better.
Finally, of the things we can agree about, we can agree that it is not all the Government's fault. Most speakers on this side of the House said that, including the noble Lords, Lord Dormand and Lord Mason. The Government themselves say that it is not all their fault. The Secretary of State in another place and the noble Viscount have once or twice stressed how long we have had unemployment. The latter used to say, before I asked another Written Question, that unemployment doubled every time we had a Labour Government or every time we have had a Labour Government since 199. The Secretary of State now says that it "rose" under every Labour Government since 199. What they do not say is that it also rose under every Tory Government since 199, except one, and we have had more Tory than Labour Governments. It rose under every government since the war.
The significant point is what happened in 1971. That is the point that the noble Lord, Lord Howie, 612 made because before 1971 it was below 3 per cent., below a million. It was when Mr. Heath went through the barrier that we found ourselves in a condition of serious unemployment. So increases in unemployment before 1971 do not count in the sense that most people would say that we still had a reasonable level of employment. It is the level of unemployment that has existed since 1971 that is the problem. Several noble Lords on this side of the House have discussed that matter in some detail.
Is there anything else we can agree on? I think so. I am not sure whether it was the noble Lord, Lord Hatch, or the noble Lord, Lord Selsdon, who referred to my next point. I do not think that this level of unemployment, or the rise in unemployment over the past 18 months, has been anything but a surprise to the Government. I do not believe that it was intended.
One could argue that the unemployment of 1979, 1980, 1981, 198, 1983, or 1984 came out of the policy that the Government were following, as the noble Lord, Lord Desai, said. But the present situation is an accident. That is why, when he was Chancellor of the Exchequer the present Prime Minister said, only a year ago,—when unemployment had not been rising for very long—that the Government were "coming back on track". That is why a year ago in the Autumn Statement the Government assumed there would be no increase in unemployment this year. That is why the Government have failed to do anything about the rise in unemployment in terms of what they were prepared to do about the rise in unemployment in the early 1980s. I want to concentrate on that.
Most of the other points that we on this side of the House wanted to make about our general economic policy differences have been elaborated by the noble Baroness, Lady Turner. The failure of the Government to maintain regional aid was stressed by the noble Lord, Lord Dormand. The Government's failure to use EC aid to the regions was stressed with great force by the noble Lord, Lord Mason, and others. All those matters have been attended to on this side of the House. I therefore wish to say a few words about the way this Government failed to match the return to unemployment that has occurred over the past 18 months with any special measures. That factor has been quite remarkable.
We on this side of the House have always complained that even in the 1980s the Government did not introduce enough special measures to tackle unemployment. In 1983 a report of a Select Committee was published. That Select Committee, headed by the noble Baroness, Lady Seear, recommended expanding the special measures for dealing with the long-term unemployed. However, if we look back, we can recognise that the Government introduced quite a few measures in this regard. In 1979 when unemployment was 4.7 per cent., the Government claimed that their special measures took 57,000 people off the unemployment register. By 1985, when unemployment was 13.5 per cent., the Government claimed their special measures took 674,000 people—that is 495,000 people net—off the register. By 1988, when unemployment was falling, the Government were making even greater efforts to 613 reduce the number of unemployed. Their measures took 78,000 people, or 594,000 people net, off the register. However, at that point everything went wrong.
The Government became optimistic. They believed unemployment was falling and they were under pressure due to the cost of the community programme. At that point the Government abolished the community programme, ran down their other measures and invented employment training as a general solution to the problems of the long-term unemployed. It was due to those actions that the Government got themselves into the present mess.
In March 1991 the Employment Gazette published a table under the heading Number of people benefiting from Government employment measures. That table, table 9.1, referred to a figure of 57,000 people. By October 1991 a figure of 49,000 people was mentioned under one government scheme, 981 under another and 147 under another for a total of 50,18 benefiting from all the Government's special measures. In other words there is now virtually no job creation. All there is is training with allowances. There are 60,000 people involved in youth training. There is ET, such as it is, and there are endless interviews. There are interviews and more interviews. There are more Restarts than a Ford Cortina. The Government solve unemployment by means of interviews at a time when 491,000 people have been unemployed for more than six months and 59,000 have been unemployed for more than 12 months.
That is not the end of the matter. The future prospects are still more uncertain. Something is badly wrong with ET. I hope the Minister will tell us what it is. The Department of Employment spent the greatest sum of money three years ago. Real cuts have occurred since then, at the rate of 8 per cent. a year. This year the cuts amounted to £245 million. Next year, according to the Autumn Statement, the Government promise an increase in the budget of the Department of Employment of £.5 billion. If one assumes certain things about inflation, one can see that that represents a real increase of 6 to 7 per cent. However, the Government want to initiate many measures. They want to initiate additional training credits, vocational education and career guidance. Bearing in mind also the increased cost of unemployment, I must ask the Government whether there will be a real increase in job creation this year. Will more money be spent on ET and employment action in real terms, and how much?
How much will be spent on the Government's measures, and how many people will be involved? How many unemployed will become involved in the Government's deathbed form of cut price job creation employment action? That is our real criticism of the Government. On this subject, we made three points in relatioo to the Budget. We said that the Government should restore all the cuts made in the training budget. We said that they should restore and extend a new form of community programme and spend £340 million on it. We also said that they should spend another £300 million on skills training.
614 Virtually everyone outside the Government believe that with levels of unemployment significantly above anything which should be called full employment, a permanent part of any rational, sensible and decent government policy must be to advocate what the Seear Committee referred to as long-term, group specific, net job creation. It will take a number of years to achieve that, but the Government must make a start. That is now the view of the Opposition, of the Liberal Democrats, of the House of Commons Select Committee on Employment and of all kinds of people who belong to various non-party groups such as Campaign for Work. As already mentioned, it has even been adopted recently by the Adam Smith Institute. There is a feeling everywhere that the Government must declare themselves committed, before the election, to a policy of long-term, group specific, net job creation. It is because we believe even now that the Government will not adopt such a policy that we table Motions of this kind.
§ 6.38 p.m.
§ The Parliamentary Under-Secretary of State, Department of Employment (Viscount Ullswater)
My Lords, I am grateful to the noble Baroness, Lady Turner, for introducing this debate on unemployment. I also thank noble Lords who have participated in this debate. It has been an interesting and lively discussion. However, I am sorry that the noble Baroness did not say more about the help the Government are providing for the unemployed to return to work.
Many noble Lords have spoken with compassion and sympathy about the plight of the unemployed. I wish to respond in detail to the points that have been made. However, before I do so, I must comment on Britain's economic performance. In the past decade our economic performance has been one of which the whole country can be proud. In the 1980s our GDP and investment grew faster than that of either France or Germany. Between 1979 and 1989 our manufacturing productivity grew by an average of 4.1 per cent. a year, the fastest among the major industrialised countries. In the 1960s and 1970s we were bottom of the international league in the growth of manufacturing productivity. That underlines the scale of our achievements.
Our inflation rate also compares well with our European competitors. Retail price inflation is now just 4.1 per cent. That compares with a European Community average in August of 4.9 per cent. We now have inflation levels on a par with those in Germany. Who would have thought that even a year ago?
That is unmistakable evidence that the battle against inflation is being won. The Government are determined to defeat inflation because defeating inflation is the key to improving our international competitiveness and ensuring lasting economic success.
We have had a difficult few months, and I am very aware that many people are still suffering from the results of the recession. However, September's rise in unemployment was the smallest for a year, as the noble Lord, Lord McCarthy, said. That provides 615 confirmation that the rate of increase in unemployment has eased considerably in recent months. There is evidence of increasing activity in the labour market, and in September about 359,000 people left unemployment, the highest monthly total in the past year. In September unemployment in Scotland actually fell.
There are now clear signs that the recession has bottomed out. As my right honourable friend the Chancellor of the Exchequer said last week in another place, growth is expected to start this year and accelerate next year, accompanied by a rise in exports. Recent surveys, such as those by the CBI, the Association of British Chambers of Commerce and the Institute of Directors, show substantial improvement since the start of the year.
The noble Lord, Lord McCarthy, asked me to respond for the Government. I do so, even as an army of one. To my noble friend Lord Selsdon, the noble Lord, Lord Rochester, and the noble Lord, Lord McCarthy, it would be right to indicate the Government's employment strategy. The Government cannot create jobs. Industry and commerce do so, through improved competitiveness and by producing goods and services which customers want. The Government's role is to establish an enterprise economy which will generate sustained economic growth and jobs by encouraging enterprise and helping small firms and self-employment, removing burdens on business, modernising training systems and helping the most vulnerable groups into work through youth training for young people, Restart and employment training for the long-term unemployed. The Government have provided £2.8 billion in 1991–92 on enterprise, vocational and employment training measures.
As a result of our legislation, the law now protects jobs and businesses against secondary strike action and secondary picketing. For the first time in our history, strike ballots have become a generally accepted feature of British industrial relations. Few now question the role our legislation has played in reducing the number of strikes to its current level—the lowest for at least 60 years.
That transformation in industrial relations during the last decade has been an important factor in our record job creation in the 1980s. The number of working days lost in the latest 12-month period to August 1991 is the lowest of any 12-month period for at least 60 years. That is a far cry from the United Kingdom's record in the 1960s and 1970s.
Our greatly improved strike record, coupled with low business and personal tax rates and a skilled competitive workforce, makes the UK very attractive to overseas investors. Inward investment is good for employment, exports and growth. We all appreciate the jobs which foreign-owned companies have brought to the United Kingdom. New United States investment in the United Kingdom in 1990 alone created or safeguarded over 15,000 jobs. Those companies bring more than just jobs; they also bring technology transfer.
My noble friend Lord Selsdon said how important it was to control inflation. He also painted a picture 616 which I do not recognise. He suggested that we have four years feast and four years famine and we have not yet learnt to live with that. He said that we need to improve the economic activity of our citizens and that we have a feeling of insecurity.
In answer to my noble friend, and also to the noble Lords, Lord Rochester and Lord Mason of Barnsley, I should say that I believe that that cannot be the picture if the United Kingdom remains the favoured location for investment. That is testimony to the Government's achievements in creating a climate of enterprise and initiative. Inward investment, no matter from which country, endorses the skills, productivity and trainability of our workforce.
Over half of all Japanese inward investment in the European Community came to the United Kingdom in 1990–91. I must tell the noble Lord, Lord Hatch, that a report from Nomura published last month estimated that by 1995 Japanese investment alone could add £4 billion to our trade balance, 2 per cent. to output and provide over 400,000 new jobs. Cumulative Japanese manufacturing investment will increase from £1.3 billion in 1990 to £7 billion by 1995. Most of that investment has been in the regions. I am certain that the noble Lord, Lord Sefton, would agree that that has helped the North.
I am only sorry that at this year's conference, instead of recognising the huge benefits which that investment can bring the United Kingdom economy and people, the TUC overwhelmingly condemned Japanese investment as alien.
I must agree with my noble friend Lady Denton, who stressed the importance of the share of GDP represented by services, which has risen from 52 per cent. to 64 per cent. over the past decade. Between 1979 and 1989 both manufacturing and service output rose in absolute terms. Manufacturing output rose by 12¼ per cent. Growth in the service sector was even faster at 33½ per cent., causing its share of GDP to rise. Unlike the noble Lord, Lord Desai, I believe that jobs in the service sector are just as good and durable as jobs in manufacturing.
My noble friend Lady Denton suggested that this debate should be on the help that we can give to the unemployed. I entirely agree with her. The Government take their responsibilities to help unemployed people very seriously. We are determined to provide as much assistance as we can to help every unemployed person back to work as quickly as possible.
I must tell the noble Lord, Lord McCarthy, that we have a wide range of measures available which are designed to meet the differing needs of all unemployed people. A new framework for advising unemployed people is now in place throughout the country. This provides comprehensive help and advice geared to the specific needs of the individual, whether they are newly unemployed or have been out of work for some time.
My department is making 840,000 opportunities available to help unemployed people this year and that will rise to almost a million next year. Those include the new programme called employment action which provides temporary work of benefit to local 617 communities. There is also employment training, jobclubs, job interview guarantees, Restart and Jobsearch seminars. The noble Lord, Lord McCarthy, may rubbish them, but those measures amount to more practical help and advice than ever before to help unemployed people get back to work.
The noble Lord, Lord Rochester, asked me about the additional funding for Employment Action over 1992–93 and onwards. The additional funding announced in the Autumn Statement means that we can now offer 62,000 places on Employment Action—that is 22,000 more than will participate this year. We shall also be able to offer Employment Action throughout the next three years.
It is always highly regrettable that unemployment has risen and it is likely to go on rising for a while yet. To answer the noble Lord, Lord Dormand, the Government are not in a position to estimate when employment will go down. We make no forecasts about unemployment. We on this side of the House, just as noble Lords in all parts of the House, do not underestimate the difficulties that unemployment and the threat of unemployment create for many people and their families. Rises in unemployment have not been confined to Britain. There have been recent increases in unemployment across the industrialised world, including the USA, Canada, Japan and Italy; and in France unemployment has reached record levels.
I must say to the noble Baroness, Lady Turner, and the noble Lord, Lord Mason, that even after the recent rises, the rate of unemployment among young people in the United Kingdom is below the European Community average and almost half that of Italy and Spain. Almost every other member state—Denmark and Luxembourg are the exceptions—has a higher proportion of long-term unemployed than does the United Kingdom.
I say to my noble friend Lady Denton and the noble Baroness, Lady Lockwood, that of all the European Community member states, only the United Kingdom has a lower unemployment rate for women than for men. Economic achievements, supported by the Government's flexible approach to the labour market, have been good for employment. In comparison with the rest of the European Community, we have a much higher proportion of citizens in employment. According to OECD figures, 72 per cent. of the United Kingdom's working population are employed compared with the EC average of 60 per cent. Of other EC member states, only Denmark has a higher rate. Among EC member states we have the highest number of women in employment.
I believe that the signs of recovery in the economy, coupled with a very real commitment from the Government to provide individual help for the unemployed, mean that the prospects for people who are looking for work are brighter than they have been for a while. I have stressed the number of people leaving unemployment and recorded the figure for September. About one-quarter of those who become unemployed leave unemployment within a month; about half leave within three months; and after six 618 months two-thirds will have left unemployment. Those are figures which I understand the noble Lord, Lord Desai, brought to the attention of the House. That is why the Government concentrate their efforts on those left behind.
I hear the noble Lord, Lord McCarthy, say "interviews". There are many other programmes that the Government have set up. I do believe that interviews and Restart help the unemployed to find work.
The noble Lord, Lord Rochester, speaking for his party, I believe, said that noble Lords on his Benches do not favour the national minimum wage and believe that it would adversely affect the number of jobs. The Labour Party's policy for a national minimum wage set at half median earnings could destroy 750,000 jobs even if pay differentials were only half restored. If noble Lords would like to dispute those figures, let me repeat the offer made by my right honourable friend the Secretary of State for Employment in another place. If the Labour Party will publish its own figures of how many jobs would be destroyed by their minimum wage policy, I shall have the figures checked by employment department officials and we shall publish the results.
§ Lord McCarthy
My Lords, the noble Lord asked a question. In fact what the Secretary of State said in another place was that he knew of no evidence, other than the evidence that he had, which justifies figures like 750,000 or 2 million. In fact there is a lot of other evidence from Daniel, Craig, Disney, Bushell, Caro and the IRRU study for the IPM, which demonstrates that statutory regulation does not cause any loss of jobs at all.
§ Viscount Ullswater
My Lords, I shall come on to that point in a minute. The Labour Party itself has said that no jobs will be lost as a result of the introduction of a minimum wage but if jobs did go it would have a look at it. It also tell us that minimum wages have not destroyed competitiveness in Germany and the rest of Europe. Of course there is no damage in Germany—there is no national minimum wage in Germany.
§ Baroness Turner of Camden
My Lords, perhaps the noble Viscount will give way for a moment. My understanding is that in Germany there may not be a legislative national minimum wage but there is a national minimum as a result of collective agreements which are observed throughout the country.
§ Viscount Ullswater
My Lords, I do not believe that to be true. I am told that there is some statutory national wage-fixing machinery in Belgium, Greece, Luxembourg, Holland and Portugal. There are only two countries that have a single statutory minimum wage as proposed by Labour; namely, France and Spain. The remaining five countries have no national minimum wages—that is, Denmark, Germany, Ireland, Italy and the United Kingdom.
§ Lord McCarthy
My Lords, will the noble Viscount give way? The Secretary of State is letting him in for it again. The Secretary of State chooses his words very 619 carefully. He said "like the Labour Party proposes". In other words, those other countries do not have systems which are exactly like ours but they have systems which are just as effective. For example, they have legally enforceable rates agreed by industry. They have been agreed by collective bargaining, and are legally enforceable. The only country without a scheme of this kind is Ireland.
§ Viscount Ullswater
My Lords, the noble Lord bandies words with me but I must tell him that the Government's warning of the risk to jobs from such a minim urn wage policy has been backed by an ever-increasing chorus of expert opinion. The IMF has suggested that in several countries a reduction in minim urn wages would help to reduce unemployment among young workers. The noble Baroness, Lady Turner, mentioned the OECD report on the minimum wage in France. Perhaps I may quote from that report:France's unemployment record compares unfavourably with that elsewhere … the problem is substantially more severe for youths, older workers and the unskilled … the national minimum wage seems in part to be responsible for this outcome".The noble Baroness shakes her head. Those are not my words; they are the words from the OECD report.
As a result of concern about its effect on the labour market, the Dutch minimum wage was cut by 3 per cent. in 1984 and then frozen until 1989. Is that the way to make the poor richer? I believe not.
The noble Baroness, Lady Turner, also tries to confuse us with her vision of the home market. I have said before and believe it to be true that Europe is ever more our home market and we cannot live outside it. The volume of UK exports in the past 10 years has grown faster than that of Germany, France or Italy. We now export more to Germany than we do to the United States, which was previously the UK's largest export market. The UK car industry is increasing its market share in most other European Community markets.
In reply to the noble Lord, Lord Hatch, exports are growing substantially without the help of aid—they may be going to different markets but I believe that that demonstrates the changing nature of the marketplace. For instance, manufactured exports have increased 54 per cent. over the past decade or so.
The noble Lord, Lord Rochester, asked about the youth training guarantee. Under the YT guarantee all young people aged 16 and 17 who are not in a job or full time education are guaranteed the offer of a place on YT. The Government are fully committed to the guarantee and will continue to deliver it. The noble Lord suggested that there may be a problem with four TECs. I do not wish to go into the detail but I can say that no TEC will be prevented by lack of resources from meeting the guarantee.
The noble Lord, Lord Macaulay, suggested that we hid the unemployment figures for 16 and 17 year-olds. For those not wishing to stay on at school there is a place guaranteed on youth training. Therefore, there is no reason why young people should be unemployed.
The noble Lords, Lord Mason of Barnsley and Lord Dormand of Easington, brought to the attention of the House the problems faced by the northern 620 region. However, Nissan has announced plans to employ a further 1,000 workers, with a target of 4,000 production workers by the autumn of 1992. It is also taking on another 280 staff at distribution headquarters and 70 at parts of the warehouse. Up to 1,000 jobs will be created by the DSS complex at Longbenton as part of plans to set up a national insurance contributions agency by 1991. The Newcastle headquarters already employs 7,000. Newcastle and Middlesbrough were selected as two of the winners of national city challenge initiatives. I believe that the regional policies supported by the Government have been extremely successful.
The noble Lord, Lord Mason of Barnsley, also asked what was happening to the RECHAR programme. It is the Commission, not the United Kingdom Government which is blocking the release of RECHAR funds. The Government maintain that money from the structural funds is genuinely additional expenditure and levels of public expenditure in the United Kingdom are higher than they would otherwise have been as a result of the European Community money. The United Kingdom Government and the European Commission are discussing ways in which that disagreement can be resolved.
§ Lord Dormand of Easington
My Lords, I am most grateful to the noble Viscount for allowing me to intervene since he appears to be leaving that point. In the northern region we welcome all the additional jobs to which the noble Viscount referred. Will he comment on the number of pits which will undoubtedly close over the next year or so? Such closures make a terrific dent in the employment of the northern region. The Minister may say that that is a matter for British Coal. Is that another Pontius Pilate effort by saying, "We welcome all the jobs that have been made but it is too bad for the people of the North if more pits are being closed"; and they continue to close as he well knows.
§ Viscount Ullswater
My Lords, whether pits are opened or closed is a matter for British Coal. I thought the noble Lord would like that reply! However, the point of the development corporation in the North and regional policy is to make certain that when industries require restructuring there are funds and methods available to bring jobs to the region or to the county in order to undertake that restructuring. The noble Lord cannot believe that the number of jobs in any one industry can be protected indefinitely. We have seen that during the period of a number of governments. Therefore, I do not believe it right to suggest that they can be protected.
The noble Lord, Lord Macaulay of Bragar, will welcome the fact that unemployment has risen less in Scotland than anywhere else in Great Britain. It is another factor that has proved the usefulness of the regional policy and the funds made available to the regions. For instance, Scott Lithgow in Greenock has won a £3 million contract from BP, providing 300 new jobs. Tandy is opening a plant in East Kilbride, providing 130 jobs. Motorola is to build a £100 million plant in Livingston, creating 1,500 new jobs 621 when at peak production. I could continue. However, I believe it indicates that there is a tremendous amount of investment not only in plant and equipment in Scotland but in the creation of jobs.
The noble Lord was also interested in what was going on in the Highlands and Islands. He queried what might be done by the Government because of the sad state of affairs from the BCCI developments. The Highlands and Islands Development Board has invested the following amounts in employment and capital goods in the past few years. The total is £7.54 million. That is a considerable investment. I do not believe that the noble Lord can say that the Government in Westminster are ignoring the Islands.
The noble Baroness, Lady Lockwood, also referred to the problems of Yorkshire and Humberside. Again, I can quote a number of jobs which are being created in those areas. Another 2,000 jobs will go to Leeds in the early 1990s as posts are dispersed from the DSS London headquarters. Outline permission has been granted for a £100 million airport and business park in Sheffield. Up to 3,500 jobs could be created by 1993. It demonstrates the dynamism of the economy in the North and the number of jobs being created.
Perhaps I could ask the noble Lord, Lord Dormand of Easington, whether he will put the same Question down month after month, even when unemployment is falling, to demonstrate his continuing care for the unemployed? I believe that it will be extraordinarily difficult to reach a position where we have no unemployment. I therefore believe that he has a lifetime's occupation.
§ Lord Dormand of Easington
My Lords, the noble Viscount asks a question; I shall answer. Yes, I shall put down a Question and I shall congratulate the Government on adopting policies that we have advocated from this side of the House.
§ Viscount Ullswater
My Lords, I hope that we shall soon hear those words from him.
The noble Lord also asked how many times the unemployment count has been changed. The United Kingdom adult seasonally adjusted unemployment statistics are a continuously consistent series. There have been two main changes and a number of minor ones. Each change has been explained publicly in the Employment Gazette. An article in the Gazette in December 1990 explained the basis on which the count is made and the basis of the changes. I understand that a copy of that Gazette is in the Library of your Lordships' House.
The noble Lord, Lord Grimond, asked about the pay of directors. We have always said from this side of the House that pay is a matter for the business concerned and for the shareholders; only they can decide the level of pay appropriate for their needs. The Government do not condone excessive pay increases either in the boardroom or on the shopfloor, as the Prime Minister has made very clear.
The noble Lord also asked about profit-related pay. I agree that it can improve industrial relations by giving employees more interest in the profits of the business. The number of employers in the scheme is up 622 50 per cent. on the same time last year and it has become a quiet success. There are 1,329 schemes at present.
The noble Lord, Lord Desai, admitted that he was an economist. He spoke warmly about the non-accelerating inflation rate of unemployment. I have listened carefully to him as I have to a number of economists, and they do not always agree. I fear, too, that governments of all parties are guided by economists. However, I am not persuaded that they have the answers or the solutions. I disagree with some of the conclusions put forward tonight by the noble Lord.
This has been an interesting debate and I am pleased to have had an opportunity to answer many of the important points and questions raised by noble Lords. Perhaps I may apologise to those whose questions and observations I have not been able to respond to.
I do not underestimate the anxiety and uncertainty of those who are unemployed at present about how long they will be unemployed and how quickly they can return to work. We must not forget that when we are talking about the unemployed we are talking about individuals with differing needs and expectations.
Signs of recovery in the economy, coupled with a very real commitment from government to provide individual help for the unemployed, mean that the prospects of people looking for work are looking brighter than they have for a while. The Government are determined to ensure that the unemployed have the best possible individual advice and support and, where necessary, special help to put them on the road back to a job.
§ Lord Mason of Barnsley
My Lords, before the Minister sits down perhaps he will explain to the House why he says that the Commissioner for Regional Development, having allocated RECHAR moneys to coal and steel communities of the United Kingdom, should be holding the money back? What is the truth of the matter?
§ Viscount Ullswater
My Lords, I said that it was a problem in the Commission and not a problem in this country.
§ 7.11 p.m.
§ Baroness Turner of Camden
My Lords, I wish to thank all noble Lords who participated in the debate which has been extremely interesting. I also thank the Minister for the courtesy with which he dealt with the questions raised on all sides of the House. I agreed with most of the comments that were made in the debate. That is not surprising because most of them came from Members on this side of the House. It is a matter of regret that only two noble Lords from the Back Benches on the other side participated.
I am glad that the noble Lord, Lord Selsdon, has remained in his place and I thank him for his contribution. Although I did not agree with everything that he said I did agree with his conclusion that many more people should be involved in economic activity. That is what the debate has been 623 about. We wish to see everyone in our country involved in economic activity because we want a prosperous environment. We know that we shall not achieve a happy environment and a happy social situation unless that occurs.
I am sorry that the noble Baroness, Lady Denton, is not present. I agree with her comments about women in the workforce, and I thank her for raising the issue. However, I did not agree with some other points that she made.
As I expected, the Minister emphasised the Government's view that we have lived through an economic miracle and that our economic performance is something of which we can be proud and so forth. Whether one congratulates the Government on their economic performance depends on where one is within the social scene. If one is a member of the increasing mass of unemployed people one may not be in a congratulatory frame of mind at present. Of course the Government are happy that the inflation rate has fallen. However, during today's discussion I and of her contributors have emphasised that we are paying a high price for that in terms of unemployment. I concluded my remarks by saying that I believe that we are paying far too high a price.
I regret to say that the Minister did not say a great deal about research and development. The subject was raised by a number of noble Lords, including the noble Lord, Lord Dormand, as a matter of great anxiety. Unless we spend money in those areas we shall not develop the kind of economy and competitiveness that everyone, including the Minister, says we need.
The Minister appeared to think that the legislation—the extremely unwelcome legislation from our point of view—on industrial relations has contributed to the so-called economic miracle. I believe that in every country the number of strikes has fallen. One of the reasons why there has been a reduction in trade union membership and in trade union militancy has been the threat of unemployment and of recession. Throughout the eighties the threat of company closure and redundancy has existed. In my opinion that is the main reason for the reduction in trade union militancy and in trade union membership. In addition, there has been a decline in the manufacturing base and in the size of the manufacturing sector where there was a substantial union membership. If the sector has declined, so has the trade union membership. Therefore I do not believe that the legislation that was introduced—legislation which was the least helpful to organised labour in any EC country and which certainly ran counter to a number of ILO conventions—has contributed a great deal to our economic performance.
I must reply to the Minister's suggestion about the attitude of the TUC and the trade union movement as a whole to Japanese investment. It is true that the matte' was debated at the Trades Union Congress. I must point out that trade unions have been most anxious to obtain for this country Japanese investment and the building of Japanese factories to provide employment. Only two weeks ago I was asked to show round your Lordships' House the managing 624 director and European manager of a large Japanese textile firm. I showed them round and took them to lunch. We discussed industrial relations in this country and also spoke about parliamentary procedures; a subject in which they were interested. I was acting at the behest of my union which was anxious to ensure that the firm built a factory in Mansfield providing employment for the people in that area. I would not have done so had the union not asked me. Of course the union paid for the visit. Afterwards the managing director announced that he was happy with what I had told him and it was hoped that as a result something would emerge. It is not true to say therefore that the trade union movement in this country is totally opposed to involvement by the Japanese or to Japanese inward investment.
We have heard many comments about the minimum wage. Indeed, we could have a full debate about the minimum wage. I do not agree with the Minister's comments. I understand that the quote from the OECD was from a general study which drew on a particular study of the effect of a statutory situation. The general study does not suggest any direct evidence of job loss. It is my belief that any impact on employment would be limited and narrowly based. Any problem is likely to be felt only by the most inefficient and marginal of employers who now pay less than a living wage. As I said in my opening contribution, I fail to see why the social security system, through benefits such as family credit, should subsidise low-paying employers as is the case at present. The Minister did not address that aspect in his reply.
One of the most important points made by Members on this side of the House was the need to build up support for manufacturing industry. It is clear that we must do so. The CBI agrees. I have before me a headline from the Financial Times:CBI hits out at lack of support for manufacturing industry".One of the most telling points made in the debate came from my noble friend Lord Howie. He drew attention to the fact that during the years following the war there was a consensus around the idea that governments should target the idea of full employment. That policy objective was followed not only by post-war Labour governments but by post-war Conservative administrations. Everyone knows that there cannot be total full employment but we must return to the policy of achieving at least a 3 per cent. level of unemployment.
I repeat my thanks to noble Lords who have participated in the debate and I thank the Minister for his response. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.