HL Deb 07 July 1992 vol 538 cc1054-7

3.5 p.m.

Lord Molloy asked Her Majesty's Government:

What steps they will take to reduce unemployment and business bankruptcies.

The Parliamentary Under-Secretary of State, Department of Employment (Viscount Ullswater): My Lords, the Government's key role is to ensure a sound and stable economic framework within which enterprise can flourish and produce the goods and services that people want to buy at the price they are willing to pay. That is how jobs are created and businesses become successful.

Lord Molloy

My Lords, I thank the noble Viscount for that reply. When will the Government commence the policy to which he has referred? Is he aware that the jobless figure for this year is the highest for the past five years? It is 75 per cent. higher than in May 1990. Is he also aware that 26,000 Britons have become personally bankrupt?

Notwithstanding the magnificent endeavours of Mr. Malcolm Rifkind in his discussions with the Germans, it now appears that the contract for the European Fighter Aircraft will not now take place, involving the loss of 40,000 jobs. In future ought we not to make sure that a superb Minister like Mr. Rifkind is not put to that embarrassment? I am sure that if he had the job of seeking to get rid of unemployment and bankruptcies he would be able to carry out the policy that the noble Viscount has said that the Government intend one day to implement. Would it not be proper for us to write into any such contract that where there is some disagreement the contract will not immediately be broken so that both governments can examine the situation without thousands of people being put out of work?

Viscount Ullswater

My Lords, I agree entirely with much of what the noble Lord said. I too admire my right honourable friend. Perhaps the noble Lord, Lord Molloy, would like to come and sit on this side of the House. I am sure that he would be a good advocate for us.

We obviously need now to discuss the German proposals on the European Fighter Aircraft in detail with Italy and Spain to establish whether there is a cost effective way to continue the EFA programme on a three-nation basis before we take rash decisions about the number of jobs that might be involved.

Lord Mackay of Ardbrecknish

My Lords, does my noble friend agree that one has to set against the number of bankruptcies the much larger figure which represents the number of new companies being created? Does my noble friend also agree that one way to reduce the number of bankruptcies and the level of unemployment is for local authorities and large companies to pay their accounts to small companies more timeously than many of them do?

Viscount Ullswater

My Lords, my noble friend brings out an important point in his last supplementary question. It is the duty of all large companies to make certain that their payment contracts are honoured. However, in any dynamic economy there will always be firms ceasing trading and new firms starting up. The National Westminster Bank and Barclays Bank estimate that between 120,000 and 134,000 new businesses started up in the first quarter of 1992. That puts the 30,000 failures reported in the first six months by Dun and Bradstreet—regrettable though they are—into perspective.

Lord Rochester

My Lords, does the noble Viscount agree that one way to reduce bankruptcies, in particular of small businesses, is for training and enterprise councils to provide the counselling and informed advice needed to help fledgling businesses to survive.

Viscount Ullswater

My Lords, yes, indeed. In 1992–93 TECs plan to help about 50,000 business start-ups and about 100,000 other training and counselling support activities using financial resources of £170 million.

Baroness Turner of Camden

My Lords, is the Minister aware that between 1st January and 18th March this year over 33,000 jobs were lost in manufacturing industry? Is that not a very sorry record despite what he said about a dynamic economy? Will the Government consider utilising its presidency in Europe as a first means of devising a strategy for coping with unemployment at a European level? Should not a strategy be developed at European level to deal with unemployment as a first priority?

Viscount Ullswater

My Lords, I agree that the number of jobs in manufacturing industries is continuing to drop, although at a much lower rate. However, the percentage of GDP within manufacturing has remained broadly the same for the past 10 years. Therefore, manufacturing industry is not being whittled away, as some noble Lords would have us believe. It is important that we should consider manufacturing industry because it has a part to play. However, we should not forget that a large number of jobs have been re-classified into the service industry sector.

Lord Harmar-Nicholls

My Lords, in view of the previous supplementary question and the answer that the Government are responsible for setting up a general framework to minimise unemployment and bankruptcies, can my noble friend say with certainty that some of the actions that the Government might like to take are hampered to some extent by the directives which come from Strasbourg and Brussels?

Viscount Ullswater

My Lords, if my noble friend is alluding to working practice, we need to be aware that we have one of the most flexible work forces. We must ensure that it remains so.

Baroness Fisher of Rednal

My Lords, is the Minister aware that the West Midlands is known as the heartland of manufacturing and that in that area manufacturing is rising week by week? Is the Minister further aware that although he speaks about GDP, unemployment does not pay the mortgage?

Viscount Ullswater

My Lords, the manufacturing industry is in a healthy state. During the three months to April output rose by 1 per cent. Productivity is increasing and we must ensure that we remain in a competitive position when the upturn in the economy arrives.

Lord Mackie of Benshie

My Lords, in view of the fact that any revival of prosperity must be as the result of an export-led increase, do the Government intend to take any action to revise the cuts which they have made in export credit guarantees for industry, considering the disadvantages which our exporters face when dealing with the French and the Germans?

Viscount Ullswater

My Lords, the policy is kept under review. It is pleasing to report that during the three months to May exports were 2.5 per cent. higher than in the previous three months. They are now running at a record level.

Lord Taylor of Gryfe

My Lords, has the Minister noted that, faced with similar circumstances, the United States recently reduced interest rates? Do the Government believe that a stimulus would be given to the economy if interest rates were reduced, or are we constrained from taking such action by our membership of the ERM?

Viscount Ullswater

My Lords, interest rates play an important part in the control of the economy. As inflation has fallen it has been possible to reduce them; since October they have fallen by some 5 per cent. The Government will continue to set interest rates at a level necessary to bear down on inflation and to keep sterling within its ERM bands. It is more important to keep down inflation than it is to keep down interest rates.

Lord Molloy

My Lords, will the Government consider setting up a body such as the National Economic Development Council, which its creator, Mr. Selwyn Lloyd, rightly stated was helpful to government and industry? Does the Minister agree that there is a human side to bankruptcies and unemployment and that the misery of bankrupt businessmen and their former employees should be taken into account?

Viscount Ullswater

My Lords, I was not aware that Neddy created many jobs. Its role and composition ceased to be relevant to the challenges facing industry in the 1990s and for that reason it was abandoned. I understand the anxiety of all noble Lords for the people who lose their jobs and for the effect that that has upon them and their families.

Lord Hatch of Lusby

My Lords, does the Minister agree that if the Government were seriously concerned about unemployment or bankruptcies they could easily allow local authorities to use the capital which they have accumulated as a result of the sale of council houses to build more houses? That would encourage employment in the construction industry. Does the Minister further agree that the addition of provisions for energy efficiency would greatly increase employment among the workforce which installs insulation and other means of increasing energy efficiency?

Viscount Ullswater

My Lords, the issue is one of financial prudence. Many assets will have been acquired by borrowing and it is sensible that a substantial part of the receipts from the sale of an asset should be set aside to repay debt.