§ 5.40 p.m.
§ Debate resumed.
§ The Earl of Longford
My Lords, we have been discussing matters of great national urgency and for myself I am glad that I was not waiting to make my maiden speech. I console myself with the line of the poet that,even the weariest riverWinds somewhere safe to sea",and I suppose that it happened on this occasion. I had the pleasure many moons ago to follow the noble Viscount, Lord Oxfuird, who in his speech recalled my earlier life in the Conservative Research Department. The arguments he was peddling, if I may put it that way, were the ones I was employed to peddle more than 60 years ago. Our favourite message came in a leading article in The Times which began:Unfortunately, wealth is like heat. It is only when it is unequally distributed that it performs what the physicists call work".That was the argument we were taught to peddle then—the unequal society. I shall come back to that in a moment.
I am not presenting myself as any kind of economist these days, although I once taught at the London School of Economics. I shall leave economics to my noble friend Lord Chandos when he comes to wind up. I shall not present myself as a banker, although I was chairman of a hank for eight years. To console any Left wing people who think that I may have been corrupted then, I was blackballed by the City Club as a socialist, so I retain my virginity so to speak. I shall leave the economic arguments and assessments to the experts, including my noble friend who initiated the debate, and we have other economic experts on our Benches. I shall deal with the social side.
The social facts are surely beyond dispute. The statistical facts are, so far as I know, accepted. Wealth was more equally distributed steadily under various governments, Conservative and Labour, until 1979. Then Mrs. Thatcher came in. She was not solely responsible for what happened but she was the leader of her party. It produced a new philosophy and from then on until now wealth has been more unequally distributed. I do not know whether the noble Viscount, Lord Oxfuird, and others who support that line would be happy with that and would say that that is what they want—more and more unequal distribution. I do not know whether they are pleased with that unequal distribution. I say it is damnable. It is the opposite of social justice.
Despite my early start in the wrong direction, I must mention that I have been a member of the Labour Party for 60 years. I have been a Labour Peer in your Lordships' House speaking from the Front Bench and 1318 the Back Benches for 50 years. So I think I can call myself old Labour—certainly old and Labour. Therefore, I am entitled to say how much I welcome the New Labour of Mr. Tony Blair. I have long since given up the idea, if I ever entertained it, that all wisdom was delivered to Keir Hardie or indeed to the Webbs. I revere the memory of Clem Attlee, the leader of the party for 20 years, the greatest Englishman I have known. I shall not make a comparison with another hero, de Valera, as he was Irish. I feel confident—it is of course a matter of opinion: it cannot be proved in this life—that Clem Attlee would be very happy with Tony Blair as leader and with New Labour.
What does New Labour amount to apart from a successful vote winning formula? I have no doubt that at 34 points ahead in the opinion polls we shall win the next election. I have no doubt that it is a winning formula, but what does new Labour amount to in terms of social justice? In this House last summer I remember saying—I have said it before now; I said it when I joined the Labour Party 60 years ago—that I am a socialist because I am a Christian. You do not hear much about socialism today. I heard Tony Blair, a member of the Christian Socialist Group, as are several other members of the Shadow Cabinet, speak very eloquently and powerfully at Brighton twice last autumn—once at a TUC meeting and once at the Labour Party Conference. But socialism, so far as I know, was not mentioned. "Socialism" is not now used as a word, yet I have not altered my opinions since last summer when I said that I am a socialist and I am a strong supporter of Mr. Blair.
As I see it now, the real quest is for social justice. It must he a passionate quest, as it always has been, and there must be a total denial of the economics of the Conservative Party which takes pride in Thatcherism and an ever greater inequality of wealth. There is a terrible conflict. Many people occupy middle positions. But between the good loyal Conservative—one or two have spoken already—and the Labour Party there can be no meeting because one wants to see more and more inequality of wealth and the other wants to see more and more equality. There is no meeting point between those two positions.
How do I see the future? How do I approach it in my own mind? I hope we are moving forward with two commitments—one to social justice and the other to the greatest possible increase of wealth. I draw my text from Luke, Chapter 14:But when thou makest a feast, call the poor, the maimed, the lame, the blind: and thou shalt be blessed".How is that to be combined with winning over the middle classes? It can be done, but it will take some doing. That is the problem and we must face it. The reverend Bishop Sheppard of Liverpool once wrote a book entitled Bias to the Poor. We must never lose sight of that.
We must somehow encourage those who give the employment to give employment; in other words, make business profitable. That means rejecting the idea that "profit" is a dirty word. I do not know whether it is used much now by our leaders. When I was a young socialist the thought of profit was anathema. I say that we must 1319 allow business to make profit but social justice must always come first. Because I believe that Tony Blair has the root of the matter in him I am very happy to think he will be our leader for years to come.
§ 5.48 p.m.
§ Lord Acton
My Lords, I should like to congratulate my noble friend Lord Sempill on his splendid maiden speech. When he goes into his new business I am convinced that, if he is as good at business as he is at speaking, he will do very well indeed.
In 1906 Winston Churchill called unemployment,that great and hideous evil of insecurity by which our industrial population are harassed".In 1996 unemployment remains an economic and social horror, and its current level in Britain is a cause for great concern.
However, the Government seem strangely complacent about unemployment. Again and again we hear from the Dispatch Box that, as the British rate of unemployment is lower than that in Germany or the still higher levels in France and Italy, Britain seems to be doing rather well.
What, then, is unemployment like in Germany? The Financial Times reported the answer on 7th March this year. The article was headed,German jobless total hits highest level since war".The German Labour Office had given an unemployment rate for February of 11.1 per cent., seasonally adjusted to 10.3 per cent. That report prompted me to consult a book called International Historical Statistics Europe 1750–1988 by B.R. Mitchell. Its table on German unemployment had no statistics from 1941 to 1947. I found that the last year which recorded unemployment in Germany as being higher than today's seasonally adjusted figure was 1935. That is 60 years ago. Bafflingly, we are now told that Britain is doing rather well because its rate of unemployment is less bad than the truly appalling performance of Germany, whose rate now approaches the level seen just two years after the end of the Weimar Republic.
We live in a global economy and it is instructive to compare Britain's performance with that of the large industrialised countries outside Europe. In a Written Answer of 26th February, the Minister kindly furnished me with the then latest unemployment figures for the United Kingdom, the United States and Japan. These comparable unemployment figures, on the International Labour Organisation definition, were published by the OECD.
The rate of unemployment in the United Kingdom was 8.6 per cent.; in the United States, 5.5 per cent.; in Japan, 3.2 per cent. These statistics emphasise just how disturbingly high British unemployment is. I suggest that only when Britain gets down to the American level of 5.5 per cent. will it be time to heave a sigh of relief. But the ultimate goal should surely be a British rate comparable to the 3.2 per cent. of Japan.
When pondering the unemployment rates in the United States and Japan, do the Government really think that we are doing rather well?
§ 5.52 p.m.
§ Lord Marlesford
My Lords, I would like to add my thanks to those of others to the noble Lord, Lord Eatwell, for giving us this debate this afternoon. I personally much enjoyed his speech: to me, it had a nostalgic charm. I was mystified at one point because he whetted my appetite greatly by referring to some academic whose name I do not remember. The noble Lord, Lord Eatwell, said that his speech owed much to that academic. I was waiting for these interesting new revelations of new thought from, I believe, the other side of the Atlantic. I was too dim to take them on board, but I shall read the noble Lord's speech carefully tomorrow. If I still fail to pick them up, perhaps he will kindly mark my copy of Hansard for me.
Things have moved on a great deal in the past few years. Perhaps one may take as a bench mark 1975, when Keith Joseph spoke to the Tory Party Conference. He described the middle ground as an object of suspicion. He said that it was a will-o'-the-wisp moving always to the left. Since that time we have something called "New Labour". That is undoubtedly a great deal more reassuring than was Old Labour because many of the aspects of the then middle ground have been discarded, apparently, by New Labour. The Labour Party is no longer divided about socialism, as far as New Labour is concerned. The Tory Party is therefore in a sense no longer united about fighting socialism. That makes matters harder. I believe that the Government will have quite a task in winning the next election because of New Labour.
But now I am not sure because, having heard the noble Lord, Lord Eatwell, we have heard from no less distinguished a place than the Front Bench opposite an example of the authentic voice of Old Labour. I only wish that we could have the noble Lord's speech made by the Shadow Chancellor of the Exchequer, Mr. Gordon Brown, or, better still, by Mr. Tony Blair. It would make the task of the Government in winning the next election a great deal easier.
In the speech of the noble Lord, Lord Eatwell, we had it all. We had all the stuff about the need for consensus; the need for a social contract; and the damage done by the supervisory levels in certain countries. He picked out those which had a low supervisory level as Japan and Germany. There is a conflict there because he went on to have a go at the Bundesbank for trying to control inflation. As regards Japan, one must admit—and I am sure the noble Lord is well aware—that Japan, with whose industry I have a certain amount of contact—is now beginning to face up to some very real problems about its industrial structure. Many leading Japanese industrialists believe that they will need to shed many jobs in traditional Japanese industries. Germany itself, as we have just heard from the noble Lord, Lord Acton, has particular problems.
As I heard about the evils of the supervisory levels, I was reminded of that wonderful invention of Old Labour, with which the noble Lord will be much more familiar than I—perhaps he was one of its backroom architects—namely the selective employment tax, which was introduced by another famous Cambridge 1321 economist, Professor Kaldor. Noble Lords will remember that that tax was all part of the attack on the candyfloss society. It was said that only those who made things were desirable and that those who performed services were not desirable and that there should be a differential tax. That went on for a few years until it was given up completely.
We had all the stuff about egalitarian societies being better and that equality is efficient. We even heard about our old friend Sweden. That country has had financial difficulties of the greatest magnitude for about a decade now. Quite frankly, I felt that the voice we were hearing was the astonishingly unreconstructed voice of Old Labour. I suppose that one should not be too surprised because the noble Lord, for whom I have great personal esteem, was adviser and economic architect to the last Leader of the Labour Party but two, Mr. Neil Kinnock. I had not realised that the noble Lord was quite such a Bourbon. I much enjoyed his speech and we are very grateful to him for it.
Perhaps I may spend a moment or two on some of the fundamentals. The noble Lord asked whether the Government have a big idea and whether there is a real objective. I believe that the real objective of government is to see that—and I underline those words—all citizens can live in security and in growing prosperity in a way which is sustainable for future generations. I believe that that is the task that government have: not to do, but to see that the conditions are right for it to happen. I do not believe that it is something government can do.
There are certain fundamentals which are very important, and they are part of that framework. I wish to refer to inflation to a much greater extent than did the noble Lord, Lord Eatwell. Inflation is a very great evil. It is only since 1979 that it has been put at the top of the agenda. Despite the fact that inflation is now so low relatively—it is under 3 per cent.—it is interesting that long-term interest rates are so high. I do not know quite what one would take as the equivalent of the 30-year bond in Britain. I believe that War Loan is a good example to take because the interest is paid gross and therefore there is no tax complication. The yield on War Loan is currently about 8.5 per cent., which is remarkably high. Normally, a very big differential between long-term rates and inflation says something about the anticipation of the market concerning future rates of inflation.
I believe that the present Government have succeeded, with one or two little difficulties along the way—
§ Lord Marlesford
Yes, they have! Inflation went up at the beginning for reasons that we know about. There was an increase some four or five years ago. However, recently inflation has been well down. I carry a table of figures in my pocket at all times which shows the retail prices index linked back to 1935. I find it fascinating and helpful in resolving disputes.
The market must he saying that it does not have much confidence that the present Government will he in power—I recognise that—and that it is concerned that 1322 Old Labour, represented by the noble Lord, Lord Eatwell, may well have a future role to play which puts our inflation gains in doubt.
Perhaps I may move on to unemployment. In my view, dealing with unemployment must remain subsidiary to dealing with inflation. That is what the Bundesbank has always tried to do, so we know that that is not something with which the noble Lord, Lord Eatwell, agrees.
As we have heard, the unemployment figures are improving greatly. I have always found the green research publication which is produced monthly by the House of Commons Library entitled Unemployment by Constituency very useful because it gives a snapshot picture of unemployment in every constituency. Therefore, instead of seeing just the general figures, one can see the unemployment position in 650 discrete parts of the country. Indeed, it makes matters even easier by ranking the 25 constituencies with the lowest unemployment and the 25 constituencies with the highest unemployment. Unemployment currently stands at under 4 per cent. in the 25 constituencies with the lowest unemployment in this country while in five constituencies the proportion is under 3 per cent., which is the old Beveridge definition of "full employment". The proportion in the 25 constituencies with the highest unemployment is over 17 per cent., but only 6 constituencies now have over 20 per cent. unemployment. The figures are continuing to decrease even now. Thirteen of the constituencies with the highest unemployment are in London, including five of the six with the worst figures. Of course, our inner cities have special problems with unemployment and while that can never be acceptable, it must be made tolerable.
What we have to do—what has been done—is to ensure that the jobs that we do have are real jobs. I believe that our economy is structurally more sound than the economies of other countries in the EU because we have faced up to the need for structural change. The country that has most obviously failed to do that is France, where people are once again talking about the changes that are needed. But I wonder whether the French Government will be able to get those changes through. Only this morning I heard, as no doubt did other noble Lords, that the unions there are planning a campaign against those necessary changes.
One of the interesting differences between France and England is that if the Government in Britain try to do something sensible but there is direct action against it on the streets, on the whole the public support the Government. However, strangely in France—I cannot give a reason but I raise the matter because it is a fascinating paradox—when there is direct action on the streets, on the whole public opinion swings behind that action irrespective of who is taking it, be it farmers, nurses, civil servants, fishermen or Air France workers.
The tax structure is crucial to enterprise. I believe that we now have a very good tax structure. I hope that we shall be able to keep that although I doubt whether a Labour government would be able to keep it as it is.
We are also free from the constraints of fixed exchange rates. One must remember that the history of this country ever since the war has been one of political 1323 constraints caused by fixed exchange rates. That has been the case ever since Bretton Woods. The first big crisis was in 1949 when the then Labour Government were forced into devaluation, causing great trauma. As we all know, we had a debacle with the ERM. Thank goodness that we are now free from the shackles of fixed exchange rates. That will be a major issue for the IGC in the future. Perhaps I may say briefly that my own solution is not that we should move towards a single currency as such, but that we should make the European currency—whatever it is called: the ecu, the Euro or whatever—legal tender in all European Union countries. People could then use it if they wanted to and we could then see whether there was any real desire for it. If it was not used, nothing would be lost. I am in favour of such a gradualist approach. That is something of a variation on Michael Butler's hard ecu, but is even more modest.
Perhaps I may now turn to what I regard as the single biggest achievement of this Government. Historically in this country the middle classes have had a better deal out of life than the working classes, but for the past 15 years or so this Government have made Britain a much more bourgeois society. It is much more individualistic. Far more people are self-employed. We now have fewer union members and so we have fewer labour disputes. The 1996 issue of Social Trends, which I read carefully before the debate, shows the days lost to strikes at their lowest level since records began.
We now have more home owners, with owner-occupation standing at 66 per cent. We have heard about negative equity, but let us bear in mind that of those 66 per cent. owner occupiers, 42 per cent. have a mortgage while 25 per cent. own their homes outright without a mortgage. The Rowntree research in Social Trends shows that over 90 per cent. of those with a mortgage do not have negative equity—that is to say, they do not owe a sum greater than the value of their home.
One of the biggest changes that is coming—I believe that whether or not they remain in power the Government will be greatly praised for this in the future—lies in the enormous resources that will be released by a new generation of people who will own a house without being encumbered by any debt. They will have resources to spend and invest. That will make a tremendous contribution to our economy and to our wealth and prosperity.
Finally, we must have the environment in mind in relation to all of our policies. We cannot sacrifice today the needs and the rights of our children and our children's children. That is a constraint upon what can be done and what can be afforded. I believe that the Government have taken good account of that. On balance, I am extremely optimistic about the future and I think that the Government deserve great credit for the foundations that they have laid.
§ 6.7 p.m.
Lord Bruce of Donington
My Lords, those of us who have been in politics for some time—I have had 1324 the honour to be a member of the Labour Party since 1935, some 61 years or so ago—
Lord Bruce of Donington
—will have noticed over the years the tendency of politicians, sometimes singly and sometimes in their corporate capacity, to self-deception. Few of us are immune from occasional bouts of it, but I have been sitting opposite the Government Benches now for 17 years and I am bound to say that I have never experienced such sustained corporate self-deception as that from which this Government appear to suffer practically all the time. I believe that Ministers are honourable men and that this is not a pose, but something that they really believe. Perhaps the first illusion from which they suffer is that if anything adverse happens to the English economy or to the country, they say that it is due to outside forces. If we have a depression or suffer any mishap, outside forces are to blame; it is nothing to do with the Government. It is only when something goes right—and that sometimes happens accidentally, as in September 1992—that the Government claim the whole of the credit for it. All of the debits go to the rest of the world and all of the credits go to the Government. I do not think that that position can be sustained.
A similar illusion seems to animate the Government from time to time when they talk about the recovery and the soundness of the recovery. Mind you, they have had two depressions—not self-induced and not in any way their responsibility—since they took office in 1979. Two depressions in 20 years is not bad going. When they talk of the soundness of recovery they assume that it is all-pervasive, that they speak for the country as a whole and that their view is shared by all members of the British economy. Everybody who lives in these islands is part of the British economy and the Government assume that they speak for the lot. Oh dear, oh dear!
We learned yesterday—we saw the press reports this morning—from the very impressive gathering organised by the Church Action on Poverty (of whom the chairwoman is Hilary Russell) that 4 million of our citizens live below the level of income support. We learned that nearly 10 million were in families which relied on income support. We know from other sources—the figures have not been controverted in any way—that the bottom tenth of the population are 17 per cent. worse off than before this Government came into office. There is not much to show as far as that section of the population is concerned. They are not singing hosannas about sound recovery or jumping for joy because of the benefits that have come from what is euphemistically called the sustained recovery. From the Government's point of view, they do not exist at all when they come to consider the economic situation.
My noble friend Lord Eatwell in his very impressive speech spoke of unemployment in this country. It is now referred to as claimant unemployment. Six weeks ago it was referred to as unemployed and claiming benefit. In 1979 they were referred to plainly as the unemployed, but things have shifted. I remember well that in 1979 when the Government took office I was sitting here 1325 minding my own business for the time being. The Government were returned to office on the basis of the philosophy described in that famous poster "Labour isn't working". Unemployment at that time was about one and a quarter million. Even on the basis of a claimant count, and after 17 years in office, the figure is double that today. Following the publication of an excellent report by the Royal Statistical Society, the real figure today is one and a half million more than that. The figure approaches between three and four million. It puts it almost in the same league as the German Government. If my memory recalls—I have a very good one—10 years ago the German economy was held up as an example that we should follow.
Who has recovered and participated in the benefits of that so-called recovery? For example, we know that the banks have benefited. Those of us who read the papers know perfectly well that bank profits are at an all-time high. The fat cats have benefited. The holders of government appointments in the hundreds of quangos have benefited. They have prosperity and a share in the recovery, but they do not speak for the country as a whole. Only yesterday we learnt that two employees of the NHS Executive had been given a total of £700,000 by way of severance pay. What the Government have done—they have been quite honest and have not endeavoured to conceal it—is to plant their own nominees in every quango that they can at very high salaries which put the incomes of ordinary persons, let alone the poorest in our community, completely in the shade.
The idea that there is a recovery which is all-pervasive throughout the country is a load of nonsense, and the Government ought to know it. If they did not know it before I rammed it down their throats, they know it now. They cannot argue about it. I shall be very interested to hear the response of the noble Lord, Lord Mackay, to the facts that I have addressed to him. In reality, there has been a growth of an insecure economy, not on a sustainable basis, which has brought an all-persuasive fear into the whole of the country.
The noble Lord, Lord Marlesford—whose contributions I always admire, because he has a sense of humour—points out that the feel-good factor is somehow absent. Now the noble Lord knows why it is absent. There is no feel-good factor, sense of optimism or hope, save that ultimately, either in the short term or long term, we get rid of this government. Even in their economic philosophy, when they deign to examine the minutiae of the written or printed word—something of which the Chancellor of the Exchequer cannot be accused—they do not understand what they read. I give your Lordships an illustration. The Government are under the illusion that the present rate of inflation—which they have driven down by the deliberate creation of fear and unemployment—is at a uniquely low level. In the 15 to 20 years that followed the period 1945 to 1948 the inflation rate was lower than it is now. That was achieved under a Labour Government, a Conservative Government and then a Labour Government. It remained low until the famous oil price crisis in the OPEC countries in the early 1970s. Low inflation is not unique.
1326 The mistake that the Government make—on the assumption that it is a mistake and it is not deliberate—is that unemployment can be cured on a sustainable basis only by seeking to drive down even further the rate of inflation. That is a load of nonsense. In a way, they know it. They face a paradox. On the one hand, they had a very large owner-occupier section of support in the United Kingdom. They encouraged home ownership. At the same time as they call for inflation to be driven down, they hope that house prices will rise. That is the level of the paradox. They advocate higher house prices but lower prices in all other spheres. That is the intellectual level to which they have debased the argument. They have no answer for it. In fact, on the housing front their record is even more disgraceful.
Only last night, if the Minister in his relaxed way was looking at the television, he would have heard the story of Mr. Fletcher, one of his leading supporters charged with the task of letting out MoD properties that had remained uninhabited for five years. The Conservative Party's 1992 manifesto made a specific promise that it would see off the MoD on that question. It was wicked that all those properties—some 13,598, because I have the figures—were left untenanted for all that time. It was going to let them to the homeless. It was a scandal that the properties remained uninhabited, and all the rest of it. So last night Mr. Fletcher announced his resignation from the Conservative Party on the grounds that the promise had been reneged upon. That is not the only time that it has happened.
The Conservative Party does not have the remotest intention of keeping any promises that it finds inconvenient to fulfil when the time for it to be done arises. It does it openly. The Prime Minister did it in the 1992 election campaign when he said that he would not raise indirect taxation, particularly VAT, because he could not see the necessity for it or the possibility of it arising. Within a few months, that was cast off.
The Government are getting tired. When they contradict themselves in those ways it is not funny any more. One can get a little humour out of it, because we sometimes take ourselves too seriously here, and a little laughter is occasionally permissible to enliven our proceedings, but it is now past a joke. Now they are committed even further in that direction, because in common with others whom I will not mention, they are now driving towards a single currency. They are bound by the Maastricht Treaty to continue the constricting and deflationary policies of holding down government deficits and debt to the level prescribed in Article 5 of the Maastricht Treaty, and they are bound by the others as well. Others are not altogether incisive in their rejection of it either, but that is another story. At least in that regard we shall have the noble Lord, Lord Marlesford, on our side.
§ 6.23 p.m.
§ Lord St. John of Bletso
My Lords, it was almost like a timewarp—I was waiting for the noble Lord, Lord Bruce of Donington, to come up with his normal rhetoric about EMU and ecu. I have airways had enormous admiration for his uncanny ability to quote facts and figures, but when he opened his speech by 1327 mentioning his background in your Lordships' House and telling us how long he has spent in politics, I am afraid that I found it difficult to agree with much of what he had to say. It was a very political speech. The noble Lord, Lord Ezra, was right when he said that he hoped the debate would not just be a political one, but would be balanced and one in which we would be able to get some constructive criticisms over to the Government for future action, whichever government we have in the future.
Unlike the noble Lord, Lord Eatwell, with his distinguished academic background as an economist, my contribution to the debate comes from my background as a meagre UK equities researcher and salesman in the City. So much of what I shall say will come from the perspective of inward investors, both domestic and international. As is customary in your Lordships' House, I wish to declare an interest as a consultant to Merrill Lynch.
Before outlining my brief contribution to the debate, I should like to join in congratulating my noble friend Lord Sempill on his excellent maiden speech. I have known him for many years—from the days when he and I lived in Cape Town. We shared many a laugh and many a long discussion on the future of the House of Lords, and, particularly, on the role of hereditary Peers in the workings and effectiveness of your Lordships' House—an issue which I am sure will become all the more of a hot potato in the run-up to the next election. I am obviously delighted that he has opened his innings, and I am sure that we all look forward to hearing many more contributions from him in the months and years to come.
I should like to approach the debate by discussing my views on the Government's economic strategy from a past, present and future perspective. The Minister will no doubt do exactly that in his wind-up speech. I shall touch briefly on the successes of the Government's economic strategy. It is important to mention more positively the successes. There is no doubt that there have been enormous successes.
One of the great successes has been inflation. Inflation, in line with the global trend, has come down from the lofty heights of 23 per cent. in 1980 to currently just under 3 per cent. That, to a large degree, has been the beneficiary of tight government fiscal policy. There is no doubt that that success in controlling inflation has been achieved to a large degree by the Government's strategy to break the stranglehold that the trade union movement had in the past over much of the economy. Union membership has fallen from 13 million to just under 9 million, for better or for worse, but, more importantly, there has, as a result, been a far more effective and flexible labour market. That has been evidenced by, and has brought enormous dividends in, the dramatic improvement in manufacturing activity per person. It has also had a major impact on promoting more international inward investment into the UK—a point made by the noble Lord, Lord Dean of Harptree.
1328 I was interested to read in yesterday's Financial Times that a recent survey of 2,500 international business leaders showed that the UK came third after the USA and Singapore in its attractiveness to business, coming ahead of Malaysia, Switzerland and Germany.
The Director-General of the CBI, in his leading article in the CBI News last month, put it aptly:we were once a country renowned for its strike record, double digit wage settlements and inflation rates. We were all too familiar with the boom and bust of the UK economy. In recovery, unemployment would fall, but prices and wages would rise at an accelerating pace. In any recession, unemployment would rise, but moderation of wage rises would come only slowly".However, even though the Government can be proud of their achievements, their policy to promote home ownership to all echelons of the British people, particularly in the 1980s, giving them, as the noble Lord, Lord Dean, said, a secure stake in society, has in many cases backfired severely, despite mortgage rates being in nominal terms at their lowest levels for decades. The figures vary, but I understand that more than 1.5 million people remain trapped by negative equity in their homes, in consequence, to a large degree, of the house price collapse in 1989, and of the banks giving loans too easily without sufficient collateral. Sadly, the pain of negative equity has been borne mostly by those in poorer areas, and they were not assisted by the reduction in mortgage interest relief.
My second point is more of a concern about the Government's economic strategy, which was highlighted by the noble Lords, Lord Eatwell and Lord Ezra. It is the low amount of government investment in industry. In the words of the noble Lord, Lord Eatwell, it is the Achilles' heel of the British economy. All too often the lack of capital assistance given to British industry has resulted in great British inventions—I include many of the biotechnology breakthroughs—being exploited in other parts of the world. Perhaps the Minister will elaborate on the assistance that the Government are giving to business to promote education and training.
I wish to touch briefly on a point raised by my noble friend Lord Acton; the issue of unemployment. Even though unemployment has fallen for the past 29 months, the reality is that in 1979 the unemployment rate was just over 1 million and today it remains at more than 2 million. However, the rise in unemployment in the 1980s cannot be blamed solely on the Government's economic policy. There has been a major rationalisation in many industries, including the profession in which I work, where Big Bang in 1985 and more recently Big Bang 2 resulted in major losses of jobs in the financial services sector. Furthermore, as a result of the loss of jobs and many corporate takeovers there is now job insecurity. It has been the issue of job insecurity which many people have given as their reluctance to become involved in buying their own homes or, for that matter, moving from their existing homes, which would help to stimulate the housing market. I do not wish to elaborate further on the unemployment issue, except to acknowledge that on a relative basis the United Kingdom has suffered a lower increase in unemployment than our European partners.
1329 In the past, poverty used to hit older people particularly hard, but that has improved a great deal. Between 1974 and 1991 the number of older people living on social security fell by 25 per cent. However, during the same period the number of children over the age of 16 who have become dependent on benefits has quadrupled. I mention that statistic because I believe that it is an important consideration in addressing the Motion tabled by the noble Lord, Lord Eatwell.
To bring the Government's economic policy into focus for the present, especially now in the run-up to the next general election, the key phrase that everyone has mentioned today is the "feelgood factor" for the British people. Many argue that the growth in the present economic upturn has gone into cutting government borrowing and raising corporate profits and that there has not been enough redistribution of profits to employees. That is a debatable issue. However, recent statistics clearly show a growing trend and more firm evidence of rising real incomes undiluted by higher taxes. Recent figures from the Halifax Building Society show that there is at long last activity in the housing market, which is rising, assisted by the current low mortgage rates. Therefore, I do not agree with the noble Lord, Lord Bruce of Donington, that there is no feelgood factor. Much of the population believes that it is limited but there is a certain amount and credit should be given for that.
In 1997 the private sector will receive almost £16 billion from building society flotations as well as billions of pounds of maturing TESSAs. That will all contribute to a substantial wealth boost, which will have an extremely positive flow-through to consumer spending growth later this year and, more particularly, next year.
In my introduction, I alluded to endeavouring to be specific in this general debate. Instead, I have veered to addressing too many issues. However, in conclusion, while the debate focuses on the effect of the Government's economic strategy on the economic and social wellbeing of the British people, it is my hope that there will not be a relaxation of economic policy simply to suit the voters ahead of the forthcoming general election. Such a relaxation could lead to excessive economic growth later this year—a point made by the noble Lord, Lord Ezra—and in 1997. That in turn could eventually generate an upturn in inflation by late 1997 and in 1998. I hope that the noble Viscount, Lord Oxfuird, is right in saying that it takes six to seven miles for a tanker to change direction. I trust that this and future Governments will not change tack on their commitment to keep inflation low.
§ 6.35 p.m.
§ Lord Haskel
My Lords, on 7th March we had an interesting insight into the thinking of the Government. A leaked letter from the Deputy Prime Minister suggested that he wanted to remove from those people working for small companies the right to seek damages for unfair dismissal. The Trade and Industry Secretary, Mr. Ian Lang, rejected that suggestion because it would he too controversial.
1330 What I found interesting about the exchange was that neither suggested that removing those rights would improve the performance of the economy. The implication seemed to be that Mr. Lang was worried that helping one sector of society to pursue its own economic ends at the expense of another would make the Government more unpopular. That unpopularity would arise from adding to the insecurity which people already feel about their work.
The attitude revealed in that exchange of correspondence speaks volumes and I am grateful to my noble friend Lord Eatwell for providing this opportunity to discuss it. As my noble friend reminded us, it is a cornerstone of the Government's economic strategy that giving people security is too expensive. We can no longer afford it. It increases costs and it makes our businesses less competitive compared with businesses in those countries where the social costs do not exist. To prove their point, the Government's finger is pointed to the current situation in Germany. The noble Viscount, Lord Oxfuird, and the noble Lord, Lord Dean, gave us the numbers. What they ignored was the strength of the German currency, the absorption of East Germany and the high productivity and efficiency of its economy.
Noble Lords opposite would like us to believe that as a result of that strategy we have become the enterprise centre of Europe but, not surprisingly, the strategy has not been successful. The Government's own Competitiveness Report states as much on page 13. It reads:Despite its recent rapid growth, GDP has grown more slowly than in most of our major competitors since 1990. Our GDP per head remains below that of other major industrial countries".That is accompanied by a chart on page 13 showing how we have slipped from 13th place to 18th in the world prosperity league.
I hope that noble Lords opposite will not accuse me of running down the country. I am quoting from a document with an introduction by the Prime Minister.
The real result of the strategy is that we as a nation have become much more divided socially and economically and at enormous cost, as the Rowntree Report pointed out. This economic division manifests itself in the fact that we have some wonderful world-class businesses which understand that unit costs are important, not the hourly wage rate. Their employment policies are entirely contrary to the Government's strategy of low wages. They are the companies which have carried out the investment about which the noble Lord, Lord Ezra, told us. They know that job insecurity threatens productivity and the quality of the people whom they can attract. The noble Viscount, Lord Oxfuird, told us that prosperity comes from productivity—and such companies know it. Thanks to their superb management, those companies need no government support, whereas companies on the other side of the divide pay poor wages knowing that they will be topped up by the Government through the benefit system. It is part of the Government strategy to encourage those practices instead of encouraging the investment. Hence the deputy Prime Minister's letter to Mr. Lang.
1331 Similarly, the social results of that economic strategy also divide the country. On the one side, there are people in secure employment who are continuously increasing their performance, skills and knowledge so that their companies can remain competitive. On the other side of the divide are the 2.3 million unemployed, the million lone parents on benefit and the 1.7 million people receiving long-term sickness and disability benefits. In 1979, one in 12 people lived in households dependent on income support. Today the figure is one in six. Does that demonstrate the success of a low pay strategy, or just its result? Is that the prosperity that the noble Lord, Lord Marlesford, said should be the objective of the Government? That is what worries my noble friend Lord Bruce.
Nor is insecurity limited to those groups of people alone. Since the last election, something like one-third of the workforce—some 8.7 million people—have experienced one or more spells of unemployment. From that insecurity comes the waste about which my noble friend Lord Eatwell spoke. A good example of that waste comes from a study carried out by your Lordships' Select Committee on Science and Technology. The committee studied the increase in scientific research staff at universities, and found that virtually all these new scientists were on short-term contracts. After a few years of that insecurity, they were leaving the profession.
Happily, to stem the flow, a proper career structure is now being put in place. The Minister will not be surprised to hear that Scotland is leading the way. Of course it may be in the narrow financial interest of the university to employ such scientists on short-term contracts, but it is not in the national interest to lose those scientists from the profession. The noble Lord, Lord Dean, told us about inward investment. However, I would remind him that a major reason for inward investment into the UK is the quality and excellence of the scientific research which goes on in our colleges and universities.
The Government's strategy is to reduce employment rights to make the labour market more flexible. The proper strategy is to ensure that people, who are no longer needed for one job, have the ability to be trained for and placed in a new job. Surely that is what makes the economy as a whole more flexible and productive. It makes sense for our economy for the Government to encourage firms to do this; and our good firms now find that it does benefit them to try to eliminate that insecurity by going beyond the training required in a particular job. Continuous training and personal development make people feel more secure in themselves. They perform better and they have more loyalty to their employers.
Another important part of the Government's economic strategy is that we can remain competitive by devaluation and financial engineering. The strategy of relying on devaluation, low labour costs and financial engineering has been ignored by our best companies. But for the others, and for the country as a whole, that strategy has led to much shorter and more violent business cycles which discourage the long-term view. 1332 As a result, if noble Lords opposite think that things are looking promising at the moment, business is wondering if this is just another short-term cycle in the boom or bust sequence. Perhaps that is the explanation to the noble Lord, Lord Marlesford, who wondered why long-term business rates are standing at 8.5 per cent.
Those economic strategies have created a divided economy with an underclass, as described by my noble friend Lord Monkswell. That underclass not only contains people who have no skills, but also, as your Lordships' Select Committee found, people trained as scientists. It is among that underclass that there is a churning of jobs which the Government welcome as a sign of a flexible labour market.
However, a seminal study by Paul Gregg and Jonathan Wadsworth showed that the expected duration of unemployment in the recent recession was certainly 25 per cent. less than in the 1980s recession, but that that was entirely due to people going from unemployment into inactivity rather than from unemployment into jobs. Perhaps that explains the report from the Royal Statistical Society to which my noble friend Lord Bruce referred.
The right economic strategy is to prepare people better at schools and colleges, to train people better so that they are more flexible and can work more intelligently and to improve management performance. That will enable us to improve the quality of our investment and make the best possible use of it. Businesses and institutions need to be encouraged to provide continuous training and personal development so that people will feel more secure in themselves and require less support from government.
All those elements.are factored into Labour's policies. Indeed, there are cross-party constructive proposals. The noble Lord, Lord Ezra, exhorted us to be more constructive. Well, I shall be more constructive and point out that there is Gordon Brown's plan for the under-25s; there is Sir Ralph Howell's right to work Bill which enables the unemployed to be paid for taking part in socially useful community projects; and there is Frank Field's benefit to work scheme. They are positive schemes which will be welcomed by both the long-term unemployed and the serial redundant. That is what is required for an economic strategy for the 1990s.
Perhaps I may conclude by telling your Lordships about a recent study from Cornell University. All the non-financial companies that went public in the USA in 1988 were studied. The research showed that companies which treated their workers as stakeholders were far more likely than other new companies still to be doing business five years later. How did I come across that research? I wish I could tell noble Lords that I got it through reading a learned journal. In fact, it was sent to me by a New York stockbroker who advised me to invest in companies with those policies, as they were likely to be more successful. Obviously Wall Street has picked up that insecurity does not work. I hope that the Government will also learn that lesson.
§ 6.47 p.m.
§ Baroness Seear
My Lords, I should like to thank the noble Lord, Lord Eatwell, for explaining to us in much more detail—and we have been waiting for an explanation—what is meant by stakeholding. It was indeed a very welcome explanation. It was particularly welcome and good hearing on these Benches, since the stakeholding organisation is something which the Liberal Democrats, and the Liberal Party beforehand, have advocated almost since the beginning of time. In his study of such matters, I dare say that the noble Lord, Lord Eatwell, has at least glanced at Britain's Industrial Future (the Liberal Yellow Book, to which such people as Keynes contributed), which was published in 1928. I sometimes think that a little recognition of such important sources would not come amiss. But repentance, however late, is always welcome. I am most grateful to the noble Lord, Lord Eatwell, for putting the policy on the map.
The noble Lord, Lord Marlesford, said that the noble Lord, Lord Eatwell, represented Old Labour. Perhaps I was not listening, but I did not hear a great deal of "Old Labour" in the noble Lord's speech. I wonder what that not inconsiderable number of members of his party who still support Old Labour—at heart at any rate, and sometimes not only at heart—would make of what the noble Lord said. The picture that he forecasts, and the speeches from New Labour tonight, are in sharp contrast with the Britain under Old Labour that some of us remember all too well—a Britain that was strike-ridden, with high inflation and gross overmanning in industry. I remember well a study in the Philips company comparing its operations in the Netherlands and this country. The evidence of overmanning here was incontrovertible; and it arose not only in the Philips company.
With regard to the exhortations to train, which I shall echo again, I have to remind New Labour that, when Old Labour came out of office in 1979, 40 per cent. of school leavers were either unemployed or went into jobs with no training. The comparable figure in France was 19 per cent. and in Germany 9 per cent. Those figures tell an important story about why this country is so far behind its competitors in continental Europe and elsewhere. We are paying the price for the failure of both parties in those years to invest in training. That 40 per cent. of youngsters who left school in 1979 are now part of the adult labour force, few of them having advanced their position from the days in 1979 when those opportunities were lost.
We welcome these confessions and the recognition of the importance of co-operative working. The noble Lord, Lord Eatwell, was a little hard about a great many managements. Of course, there are some tough, shortsighted and foolish managements. But there are and have been for a long time some wise and far-sighted managements. We talk about works councils. I was management secretary of a works council a mere 50 years ago. I rather like achieving the position where I can cite evidence from half a century ago. At that time a large number of managers were wise and farsighted. We should not forget that. Better companies have continued to act in that way.
1334 Co-operative working is necessary. Co-operation and greater consensus across political parties is also necessary, but it is not sufficient. We need a great deal more than that if we are to face the future. I endorse many of the criticisms raised about the effect of this Government's policies. I do not wish to repeat what has been said by many previous speakers. But, in referring to social consequences, I underline the Folly—less has been made of it today than I would have expected—of not allowing local authorities to spend the money that they gained from capital sales in order to build properties to house people. The worst condemnation of the Government's policy is the sight—we never used to see it in days gone by—of people sleeping rough. It should surely have been possible to allow houses to be built. Such a policy would have encouraged people off the streets and cased the housing problems of a large number of people. It would also have got the construction industry working again. The construction industry is an engine for getting many other industries working. It would have had a substantial effect on unemployment.
We have yet to see whether any other government will improve on this position. My main criticism of the Government is that they are not facing the long-term problems of this country. The noble Lord, Lord Eatwell, played down the problems of competition from the Asian rim and elsewhere. It may be that at present competition from those countries is not so serious as is sometimes represented. But those countries will become a great deal stronger in the future.
When the sleeping giant of China really wakes up, with all the ability, skill and capacity for hard work that we know exist in that country, it will present an example of great competition and great opportunities. We should surely be considering the long-term problems that we are up against and the policies that we ought to adopt to meet those long-term problems and to seize those long-term opportunities. I do not believe that the Government are thinking long term. Some of their short-term measures have been useful, some disastrous. But where is the long-term thinking that will meet those very real challenges in the two vast areas that matter most? I refer to economic growth, and economic opportunities. If those two problems can be solved, one will be well on the way to solving many of the other problems.
My noble friend Lord Ezra spoke of the failure to invest sufficiently. We still hear siren voices stating that what this country needs is a consumer-led recovery. We need a consumer-led recovery like a hole in the head. We need an investment-led recovery. The Government should be getting that message over. One may have short-term benefits before or after an election. What does it matter? In the long term they will hinder, not help, us. People may have to learn that they must live within their means; that we cannot have all the things we want; and that if one wants a decent society one has to plan, invest and pay for it. That is the doctrine that the Government should be getting across if we are to meet the problems that face us in the future and not minimise the nature of the problems, as to some extent did the noble Lord, Lord Eatwell.
1335 The noble Viscount, Lord Oxfuird, is not in his seat. But it is not good enough to suggest, as he did, that the market will adjust; the market will find a way of getting things right. We on these Benches have always believed that for all normal commercial purposes the market probably is the best way to deal with development of the economy. But one cannot develop the economy satisfactorily unless one deals with the social problems that are brought about by changes in the economy. The market does not deal with those social problems; the market does not know about social problems. It is not in the nature of the market to consider social issues, in particular as regards employment and the kind of people who will or will not be able to obtain jobs.
When we refer to unemployment and availability for employment, let us remember that there is no single labour market. There are many different labour markets in this country. Some will recover by responding to the change in the market. We are already running short of skilled labour in some parts of the country and in some industries. When one has skilled people, the operation of the market will probably get many, if not all of them, back into work.
I referred to the failure to train people in the past. In this country we have a large number of people who do not have the educational background or the skilled training to enable them to take advantage of the jobs that will evolve in a recovering economy. That is on the assumption that the economy recovers, as it is beginning to do, which I fully accept.
I hate the word "underclass" but we understand all too well what it means. We have this hideous problem of people who now feel themselves outside society because they are not in jobs; they have not had jobs. If they have little education and few skills they will not he in employment. The position will not improve under any government; it will become more and more difficult. What are we going to do about such people? That is the heart of the real social problem in this country. We need drastic changes in the tax, benefit and training systems if we are to get anywhere in dealing with the underclass. It will bedevil our society and the system will be grossly unjust to such people unless we cope with it.
Our benefit system encourages people not to take action to get out of unemployment. The department of applied economics at Cambridge came out with figures which showed that, if a man and wife with two children at school started work, they had to earn £170 in order to increase the family income by £20. No one in your Lordships' House would go to the trouble of working for £170 in order to receive £20. That is a nonsense of a benefit system.
We must also ensure that, when people obtain a job, when they have taken training and felt it worth while to apply and to get out of the black market of labour—and there is a great deal of that, as we all know—they do not wish to run into levels of tax which discourage them in their efforts. We need a drastic overhaul of the training, benefit and tax systems. When we start to pull out of the recession, as we are doing, and go on to a better future, we shall still, if we do not take the 1336 necessary steps, leave a disastrous section of our society behind. That will be appalling, not only for them but for society as a whole.
§ 7.1 p.m.
§ Viscount Chandos
My Lords, my noble friend Lord Eatwell has earned your Lordships' gratitude for both his initiation of the debate on the economy and for his usual penetrating contribution to the argument. He sets the rest of your Lordships' House a challenging standard to uphold. However, the speeches that have followed his have been stimulating and interesting, not least that by the noble Lord, Lord Sempill. Any anxiety that the noble Lord felt was entirely hidden. Like the noble Lord, Lord Acton, I hope that the maiden speaker enjoys comparable success in his entrepreneurial endeavours.
As a number of your Lordships have observed, there is always a risk in a debate on the economy that your Lordships will suffer from a surfeit of statistics, some used more for support than for illumination. Thus we leave the Chamber gorged and bloated with confusing and contradictory claims. I have no doubt that the Minister will advance his favourite selection of figures to encourage your Lordships to believe that the Government's economic strategy has been beneficial to everyone.
Re-reading the other day the diaries of Mr. Alan Clark (who wrote them while Minister of State for Defence Procurement, in response to the latest economic figures released in May 1990), I was struck by the following:Ten, eleven years of endeavour (or however we call all those deprivations to life and family) and nothing to show for it but the passage of time and the intrusion of age".Your Lordships will not recall, I suspect, that being the line taken by Mr. Clark's colleagues in this House or another place at that time. The noble Lord, Lord Ezra, remembered the noble Lord, Lord Young of Graffham, not presenting that line. Nor do I expect that the Minister will come to that conclusion today, even though the intervening six years have brought an unprecedented recession and only a painfully slow recovery from that. However, perhaps we may look forward to diaries in the future as revealing and riveting as Mr. Clark's, if not from the Minister himself, then from some of his colleagues.
I shall not burden your Lordships with any more statistics but shall comment briefly on some of the points that have been raised and offer a solution to a question which, above all else, haunts the Government.
If we take a limited period in isolation—the last two years or so—the combination of modest growth and inflation (low by historical UK standards, in statistical macroeconomic terms, ignoring the acute social stress and deprivation that still lie behind those figures) might gain a tentative beta-plus. One of my noble friends has already acknowledged that in a magazine article which Conservative Central Office has grasped, as perhaps the Minister will, like drowning men for comfort, while ignoring the long list of areas—lack of investment, the skills shortage, crises in housing, the National Health 1337 Service, public transport and the inner cities—where my noble friend identifies the Government's continuing and disastrous failures.
This short-term record could be attributed to the economic equivalent of the random walk investment theory or even the well-established principle that enough monkeys at typewriters could write the collective works of Shakespeare. After 15 or more years, after abandoning the last central plank to their economic policy, after imposing countless new taxes against their manifesto commitments, the Government may have hit, accidentally, a smooth patch of economic water.
As the noble Lord, Lord Ezra, outlined, there are already threats to that short-term stability from a loosely controlled money supply—so vividly highlighted by the eventual publication of the minutes of the meetings between the Chancellor and the Governor of the Bank of England—and the risk of overheating arising from the Government's anxious stimulation of pre-electoral growth. Those are the storm clouds gathering over the economy, to which the noble Viscount, Lord Oxfuird, referred, not the prospects of a Labour Government and the introduction of legislation that would create a fair balance between the interests of employees and employers.
However, even if the Government are cavalier about the short-term threats or blind to them, they have been wrestling with another desperate question. It is one which has been asked by the noble Lords, Lord Dean of Harptree, Lord Sempill and others: "Where is the feel-good factor?" It is clear that the concern on the Government's part relates not so much to any consideration of the country's economic prosperity and social well-being as to the crude electoral prospects of the Conservative Party. Well may they be concerned about them. So concerned are they that I read in a newspaper this week that a summit meeting of key Cabinet Ministers was being held to explore exhaustively the mystery of the missing feel-good factor. The Minister regularly admonishes your Lordships not to believe everything that we read in the newspapers. In the light of that, I do not presume to suggest that the meeting is necessarily taking place, not least because I should like to imagine it not as a pressured meeting at No. 10, Downing Street or at Smith Square, squeezed into busy diaries during the week; but a leisurely exploration of the intractable problem one weekend at Chequers.
One of the traditions of British country house weekends is the party game on Saturday night. The game might be diplomacy, Monopoly, charades or beating a fellow guest with a rolled up newspaper in "Are you there, Moriarty?" Can you imagine the dismay that would be felt as the ministerial cars arrived in Buckinghamshire for Ministers to find that on that particular weekend the game in question was: "Hunt the feel-good factor"?
However, this is a serious question, since confidence—or the lack of it—is at the heart of the immediate problem with the UK economy, as my noble friend Lord Eatwell so powerfully demonstrated. Your Lordships' House does not have to concern itself—or at 1338 least not all of us—about forlorn attempts to retrieve the Conservative Party's electoral position. But all your Lordships wish to see higher, sustainable, non-inflationary growth and improved employment prospects. The writer Edward Luttwak reinforces what my noble friend Lord Eatwell said when he writes:Structural change, with all its personal upheaval and social disruptions, is now quite rapid even when there is zero growth, becoming that much faster when economies do grow. The engine turns, grinding lives and grinding down established human relationships … [It is] the central problem of our days: the completely unprecedented personal economic insecurity of working people, from industrial workers and white-collar clerks to medium-high managers".That problem is at the heart of the Government's problem. After promoting a conflict economy for 17 painful years, that overwhelming sense of insecurity towers over every other emotion of working people—another thick, black cloud so vividly imagined by the noble Viscount, Lord Oxfuird, which is again attributable to the Government's policies, but which stands at least some chance of eventual dispersal under a future Labour Government.
I do not wish to suggest that security, the complacency that goes with that and matching financial protection, can be achieved—or at least, not for everybody, since clearly, as the noble Lord, Lord Sempill, and others strikingly highlighted, that is a privilege which only the senior directors of the privatised utilities and a few other fortunate folk can enjoy.
Of course, there is a healthy level of realism, a lack of complacency, a drive to succeed which should motivate everybody in their working life; and comparable levels of pressure should apply from chairman to trainee, from businessman to teacher. But the policies, the attitude, the culture and the words of this Government in creating a conflict economy have moved so far from that healthy level that they should not be in the least bit surprised at the stubborn continuation of the "feel cautious" factor.
That is the appalling problem that the Government face. It is one which, even with the assistance of my undoubtedly clever, but politically misguided friend (in what I would describe as a non-technical use of that word in this House), Mr. Danny Finkelstein, the Conservative Party cannot solve. And why? Because the country no longer trusts the Conservatives. We have all had one Pavlovian electric shock too many. We know the nature of the Conservative beast. We have suffered too much from the roller-coaster ride of the Conservatives' version of a market—a hypermarket—economy.
That presents an economic threat in the short term, as the noble Lord, Lord Ezra, pointed out. The less the economy responds to the Government's stimulation, the more anxious the Government will be, and the more likely they will be to over-react, desperate to encourage consumers to spend. But consumers can remember only too clearly in many cases the painful hangover that has resulted from this Government's erratic past direction of economic policy.
Therefore, I should like to extend my sympathy to the new head of the Conservative research department as he forms up to the Prime Minister, the Deputy Prime 1339 Minister, Dr. Mawhinney and the other right honourable gentlemen and tells them—as his intellectual rigour will surely drive him to conclude—that, yes, Ministers, the feel good factor can be revived—but only with a change of government.
The new government will he formed by Labour—New Labour. As a recent Member on these Benches, I believe that I am undoubtedly a member of New Labour. I value most highly the support and advice of my noble friend Lord Longford, as well as the kind words of encouragement from the noble Baroness, Lady Seear. To the noble Lord, Lord Marlesford, I say that the long and distinguished service that my noble friend Lord Eatwell has given to the Labour Party, old and new, in no way—
§ Baroness Seear
My Lords, I am sorry to interrupt the noble Lord. I was not aware that I was encouraging him.
§ Viscount Chandos
My Lords, I am sorry for misunderstanding the noble Baroness.
The long and distinguished service that my noble friend has given to the Labour Party, old and new, in no way diminishes the freshness and importance of his ideas, or my admiration for them. I am sure that the noble Lord, Lord Marlesford, after reading Hansard and perhaps an introduction to the works of Professor Gordon, will indeed appreciate the vigour that my noble friend brings to Labour's new policies.
The new Labour government will pursue the policies of a competitive market economy: competitive to prevent the abuse of market power and monopoly positions, as this Government have so regularly failed to do; competitive to support the small business sector, as my right honourable friend the Leader of the Opposition set out in a speech today.
The new Labour Government will be guided not just by the absolute level of public expenditure, which each contender to succeed the Prime Minister as Leader of the Conservative Party now bids down, but by the value and effectiveness of expenditure on the provision of services by the public sector in comparison with its provision by the private sector.
These and other measures, short- and long-term, such as those set out by my noble friend Lord Haskel, will directly strengthen the British economy and the social fabric. At the same time, the resulting restoration of confidence and trust in government and in government's competence will in time alleviate the insecurity that dampens and constrains the inherent resilience of the economy. Then, this country can enjoy a high growth, low inflation economy, with fair opportunities and fair rewards. Let us hope that, in the meantime, the actions of this Government between now and the general 1340 election, as they desperately try to stimulate the appetite of the jaded patient, do not further damage the economy that the new government will inherit.
The Viscount of Oxfuird
My Lords, will the noble Lord say when in history the Labour Government have not left office leaving the country facing bankruptcy?
§ Viscount Chandos
My Lords, I think the noble Viscount will find that in 1970 the Conservative Party inherited a strong economy and left it, in 1974, in bankruptcy and with a three-day week.
§ 7.17 p.m.
§ The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish)
My Lords, I noticed that the noble Viscount, Lord Chandos, certainly did not refer to 1979. In my recollection, it was rather a dreadful year with a dreadful winter. We saw all the splendid policies of the Labour Government at that time coming to a disastrous end in the winter of discontent. I do not think this Government need any lessons from the party opposite on how to run an economy when one remembers 1979 and what we inherited.
However, we are grateful for the opportunity to have this debate. I was certainly interested to hear the speech of the noble Lord, Lord Eatwell. Two messages were conveyed to me. One was the word "stakeholder". I stopped counting after the 12th mention that I logged at the top of my piece of paper. I think I now have that message on board. It is "New Labour" and "stakeholder". There is not much else, but those two words seem to be the flesh, bones and brains, indeed the whole body, of the Labour Party's policy at the moment.
In addition, I did get the message that the noble Lord, Lord Eatwell, was-very critical about the highly adversarial nature of British politics. He said so in a very consensual and measured speech, with no adversarial sentences in it, let alone paragraphs. I suggest to the noble Lord that if he wants to persuade us all to be less adversarial, he might attempt to introduce a less adversarial tone in his own speeches—and certainly not just when it comes to the Government; I am used to that from this Dispatch Box. When his adversarial tone went beyond the government and embraced the whole of British industry and British managers in the same adversarial attack, I think British industry and managers might read with some interest the views that the noble Lord holds. If they are an indication of the actions of a potential future Labour Government, British industry and British managers might decide to run the proverbial 1,000 miles rather than have that kind of government.
The noble Viscount, Lord Chandos, redefined "not adversarial" to "no conflict". He accused us of creating a conflict economy. Given that the days lost to labour disputes in 1994–95 are the lowest since records began in 1891, I do not think we can be accused of running an adversarial economy. At risk of harking back to 1979, I remember the sweetness and light of the economy then as the poor Prime Minister and Chancellor were closeted in Downing Street with the warring trade union leaders. 1341 But perhaps I should not go on about that because the party opposite has decided that that is Old Labour and I ought to remember the new words New Labour and stakeholders.
We have had a very interesting debate. I shall come shortly to the various points that were made. First, I want to congratulate the noble Lord, Lord Sempill, on his maiden speech. He comes to us with a very distinguished old Scottish title, created in 1489. So he follows in a long traditional line. He also follows the old Scottish tradition of taking his entrepreneurial skills overseas, in his case to South Africa, and putting them to very good effect there for the benefit of that economy. I am happy to see that he has come back to live in Edinburgh, where he works for a company that I had better not advertise—but it makes quite splendid products, which some of us at least enjoy sampling.
The noble Lord will know that the Scottish economy—he mentioned it in his speech about the UK economy—has changed out of all recognition from what we used to have; namely, an economy in which we were traditionally used to our unemployment rate being above the UK average. For the past four years, the unemployment rate in the Scottish economy has been below the UK average. That is a measure of the considerable success that this Government have had in an area which has had the difficulties of serious areas of unemployment, which the noble Lord, Lord Bruce of Donington, continues to draw to my attention. We are making progress in the Scottish economy. It is certainly the first time for a very long time that we see Scottish unemployment rates below the United Kingdom rates.
I have just one last word to say about the noble Lord, Lord Sempill, before I start to look at the whole range of the debate. I was pleased—and I am sure that all your Lordships were pleased—to hear him suggest that the mindset of the people in South Africa was very much right for the challenges which lie ahead. I am sure that we all very much hope that his analysis of the situation in South Africa is correct and that we shall see some of the enormous problems which the government there have inherited being resolved, though I feel that it would be foolish to expect them to be resolved in the short term.
The British economy—I apologise to the noble Lord, Lord Eatwell; I shall just mention a few facts—is enjoying a stronger recovery than any other major European country. Output is at record levels, with exports, investment and consumer expenditure all growing in a balanced way. Unemployment has fallen by three-quarters of a million in the past three years and remains on a downward trend. Over half a million new jobs have been created since the recovery began.
We have had the longest run of low inflation for almost 50 years. My noble friend Lord Marlesford pointed out that "inflation is a very great evil". The noble Lord, Lord St. John of Bletso, also referred to the problems that arise because of high inflation. We have inflation down at a historically low level. We have the longest running level of low inflation for 50 years. Interest rates have been reduced three times since December, taking mortgage rates down to their lowest level for a generation.
1342 Living standards are rising. A family on average earnings should be £450 better off this year than last year, after both tax and inflation; and £4,500, which is about 40 per cent., better off than in 1979.
The noble Lord, Lord Eatwell, asked: what are the objectives of the Government's economic policy? I am surprised that he asked me that question. I thought he would know. It is found on page 15 of the Red Book, in the chapter headed "The Medium Term Financial Strategy". The objective of the Government's economic policy is:to promote sustained economic growth and rising economic prosperity. This requires structural policies to improve the long-term performance of the economy and a stable macro-economic environment".The document goes on to say:This chapter describes the macroeconomic policy framework. Monetary and fiscal policies are directed at maintaining low inflation on a permanent basis and sound public finances".That is the Government's objective.
What we see is output rising, unemployment down, low inflation, declining borrowing and rising living standards. It is no wonder—the noble Viscount, Lord Chandos, will not be disappointed to hear me refer to it—that the noble Lord Desai, a former economic policy adviser to the Labour Party, had to warn his Front Bench colleagues, in an article in the New Statesman earlier this month, that the economy was looking in rattling good shape.
Part of the reason for that, as my noble friend Lord Dean of Harptree mentioned, is the success of the privatised industries, a success which is in contrast to the failure that many of those industries had when the dead hand of socialism and nationalisation enveloped them. I found it interesting that the noble Lord, Lord Eatwell, in a passing phrase, seemed to be very critical of privatisation. Yet for all the criticism of privatisation, there is not a single Labour spokesman who ever mentions the word "renationalisation" or ever suggests that they might reverse the privatisations.
Privatisation has brought huge benefit to consumers. British Telecom's main prices are down more than 35 per cent. in real terms. Domestic gas prices are down 10 per cent. in real terms in the past five years. Domestic electricity prices are down 8 per cent. in real terms in the past two years. Over 95 per cent. of British Telecom's phoneboxes, which were once the butt of every music hall joke in our country, now work; and there are 50 per cent. more of them than there were on privatisation. Gas disconnections are down '70 per cent. since 1987, and electricity disconnections are down more than 95 per cent. since 1990. I could go on about the very considerable successes of those privatised companies which now help the British economy instead of hindering it, as they often did in the past.
The noble Lord, Lord Desai, is right about the British economy. As I accepted the other day in a Question put by the noble Lord, Lord Ezra, all the major economies slowed down during the last half of last year, and Britain was no exception. But we have proved much more resilient. In the final quarter of 1995, the British economy grew faster then the United States and Canada, while output actually fell in Germany, France and Italy.
1343 First, businesses are in the process of unwinding some of the unplanned stocks that they accumulated last year. Secondly, business investment should grow strongly. Thirdly, consumer expenditure should gain momentum. I do not share the worry of the noble Lord, Lord Ezra, about consumer expenditure. So long as one is careful with inflation targets—my right honourable friend the Chancellor and the Governor of the Bank of England will certainly be that at their monthly meetings—I do not believe that we should be frightened of people coming into the market place and spending more of their own money. That generates growth and production in our own industries. That must be what we want to see.
But it is not just the Government who expect growth to pick up. That is the view of most independent forecasters. Meanwhile, in its latest inflation report, the Bank of England said that underlying inflation was:more likely than not to be somewhat below 2½ per cent. in two years' time",putting the Government on track to meet its inflation target.
Our vision of Britain is as the enterprise centre of Europe. That is rapidly becoming a reality. I think it was the noble Lord, Lord Haskel, who drew my attention to the competitive White Paper and read out from paragraph 120 of it that the GDP in this country has grown more slowly than in most of our major competitors since 1990. He did not in fact read out the next part:reflecting the timing of the economic cycle".If one looks at the last European economic cycle, from 1981 to 1993, our GDP per person grew at the same rate as Germany's and faster than in France and Italy. Since 1993, we have enjoyed a stronger recovery than any other major European country. Indeed, anyone who remembers Britain of yesteryear, with its militant unions, inefficient nationalised industries and high tax rates, will gladly confirm that.
According to the Financial Times, Britain now has the lion's share of Europe's most successful companies. We are the number one destination in Europe for inward investment. Both my noble friends Lord Dean of Harptree and Lord Oxfuird mentioned the success in inward investment that we are having as an economy. We have taken over 40 per cent. of the United States and Japanese investment in the European Union. I say to the noble Lord, Lord Bruce of Donington, that I believe that that inward investment can be of huge benefit in some of the most difficult areas of this country when it comes to unemployment problems. For example, QPL International in Newport, a microchip manufacturer, announced that 770 jobs will come on line there this year; TRW Incorporated, an American engineering company, is to create 275 new jobs at a £24 million factory development in Peterlee, County Durham, and the Chung Hwa Picture Tube Company, a Taiwanese-based company, is planning to build a factory at Mossend in Lanarkshire, Scotland, where I know considerable employment problems exist. Up to 3,300 jobs are likely to arise there.
1344 Those inward investments not only benefit the whole of the United Kingdom, but also they often benefit where—as the noble Lord, Lord Bruce of Donington, and I agree—serious problems relating to high levels of unemployment exist, largely because traditional industries have declined in those areas. Those inward investments are coming to this country. We approve of them. They come here because we have one of the lowest burdens of public spending and taxation in Europe. We have deregulated markets and low overheads. As a result, we have the lowest rate of unemployment of any major European country and a higher proportion of our people are in work. It is no wonder that the OECD praised the Government's structural reforms and that other countries are increasingly being encouraged to emulate them.
The last time I used these figures I was chided; I was told I was not using comparable figures. But I was. I was using standard ILO definitions, seasonally-adjusted unemployment rates sourced from the OECD and Eurostat. On the last day for which I have figures, the German unemployment rate, for example, in December was 8.6 per cent.; in January the UK rate was 8.4 per cent; the Italian rate was 12.6; the Canadian rate was 9.4 and the French rate was 11.8. I fully accept the point made by the noble Lord, Lord Acton, that I should look at the United States and Japan, and I do that. The rate of unemployment in the United States in January was 5.7 per cent. and in Japan 3.4 per cent. We must look to those economies as doing better than Europe has done with unemployment. But it is not something that we alone should be looking at; it is something at which our European partners should be looking also. Perhaps issues like the social chapter and the like are one of the reasons why Europe is in danger of not being competitive in the modern world.
We intend to ensure that Britain turns in a world-beating performance in future. That is why we have set inflation targets that will give us an inflation performance to match the best. That is why we intend to reduce public spending and taxation to meet the competitive challenge of the Asian tigers and the emerging economies of Eastern Europe and Latin America. I agree with the noble Baroness, Lady Seear, that the noble Lord, Lord Eatwell, far too readily dismissed those economies in the Far East as challenges. As the noble Baroness said, we must bear them in mind not only as great markets for the future, as China will undoubtedly be, as long as we are competitive, but also as rivals in world markets.
We have placed emphasis on re-skilling the workforce. We have looked at improving education and training. We shall shortly be publishing our third annual competitiveness White Paper, taking another hard-headed look at our competitive position against our trading rivals.
That combination of steady growth, low inflation and rising prosperity is no accident. It is the direct result of the Government's economic policies; of tough decisions taken on taxation, public spending and interest rates and the structural reforms we have pursued since 1979 to improve Britain's competitiveness. As I sat and listened to noble Lords opposite I wondered where they stood 1345 on public spending and taxation. For example, I wonder whether the noble Lord, Lord Monkswell, speaks for the Labour Party. I understood from him that he was in favour of considerable increases in social security payments, pensions, unemployment benefit and increased taxation. If he speaks for the Labour Party, that is the first time that it has committed itself to anything very much for a long time. The noble Lord is either going to say that he does or does not.
§ Lord Monkswell
My Lords, I thank the Minister for giving way. In fact, I suggested a policy whereby taxation for rich people should be increased and the tax burden for poorer people should be decreased. That could encompass a balancing situation where the level of overall taxation went neither up nor down.
§ Lord Mackay of Ardbrecknish
My Lords, if the noble Lord thinks that he can increase pensions and unemployment benefit, at the kind of level he indicated in his contribution, by soaking the rich, I suggest he studies how deeply he would have to tax in order to raise the money. He would need to tax the rich at 98 per cent.—I assume that is all right—but, as the Labour Party found at the last election, his party will need to tax people on average incomes to raise the kind of money he wants in order to realise the promises he was making.
The noble Lord, Lord Eatwell, went a bit further when it came to inflation. I was so surprised that I wrote down his words. He referred to the "foolish policies" of the Bundesbank. That contrasts with the usual view that people have of the Bundesbank; that is, that it has impeccable anti-inflationary credentials. I do not like to intrude on internal quarrels in the Labour Party, but one of the great arguments put forward by some of the proponents in the party opposite of going hell-for-leather into everything the European Community wants, including the single currency, is that we would then be controlled by the Bundesbank at large. Clearly, if it is now felt that its policies are foolish, we are beginning to see a change.
Perhaps I can mention that the Bundesbank is an independent central bank. Occasionally I had the impression that the party opposite was keen on an independent central bank. Perhaps that has changed and it is going off that policy as it has gone off so many policies that the Labour Party has flown in the past few years and decided to change a month or two later.
I turn to the serious question of investment raised by the noble Lord, Lord Ezra, the noble Baroness, Lady Seear, and others. First, since 1979 whole economy investment in Britain has grown faster than in any other major European country and is around double the average rate that it was in the 1970s. Indeed, I hold a paper from James Capel which contains an interesting graph. It shows—noble Lords make much of this—that investment in plant and machinery as a percentage of GDP, now standing at about 7 per cent., is down from a high of just over 8 per cent. at the beginning of the 1990s. It also shows that, for almost all the time of this Government's tenure in office since 1979, investment in plan' and machinery as a percentage of GDP has been higher than at any time in the five preceding years under the party opposite.
1346 We therefore do not need any lessons from the party opposite about investment. Indeed, investment as a proportion of output in 1994 was 10.1 per cent. in the United Kingdom. That contrasts with 5.5 per cent. in France for the first, second and third quarters of last year; 9.6 per cent. in Germany; 6.7 per cent. in Italy (those are 1993 figures; Italy must be slow in bringing its figures forward); 10 per cent. in the US and 10.4 per cent. in Canada. Again underlining a point made by the noble Lord, Lord Acton, the figure is 17 per cent. for Japan. I suspect that those figures suggest that the position is not quite as bleak as noble Lords sometimes suggest. Business investment has been higher than it was in the 1970s as a percentage of GDP.
§ Baroness Seear
My Lords, does the noble Lord agree that those figures are from a low base of what went before?
§ Lord Mackay of Ardbrecknish
My Lords, I believe I made that point. That low base came immediately before 1979. It arose under a government presided over by the party opposite and sustained in office by the party of the noble Baroness, if memory serves me right—it was a long time ago.
The figures show that investment is not so bad as it is sometimes painted. I do not say that we would not like to see it higher, but it is not so dismal a picture as many people try to paint. My noble friend Lord Lawson, when he was Chancellor, reformed the corporation tax regime in the mid-1980s to encourage business to invest efficiently and profitably according to commercial criteria and not just because they wanted to reduce their tax bills. All too often in the past investment came forward for the wrong reasons. Business ought to invest because it sees business opportunities. That is what we are determined to continue to do.
Another key aspect of investment that is often ignored but that was picked up by the noble Lords, Lord St. John of Bletso and Lord Ezra, is the question of investment in people. We have given a high priority to improving education and training. The proportion of 16 and 17 year-olds staying on in full-time education has increased dramatically. Standards have improved at all levels of education, GCSE and A-levels. Almost one in three people enters higher education and we have one of the highest graduation rates in Europe. We believe that that is important.
I was amazed by one point in the speech of the noble Lord, Lord Eatwell, and if I have got it wrong I apologise. In discussing whether or not unemployment comes from structural reasons and from uses of new technology, he said that new jobs do not have excessive skill requirements. I wrote that down, and the noble Lord confirms it. If new jobs do not have excessive skill requirements, why does his honourable friend Mr. Gordon Brown continue to say that the way to get growth in our economy is to have more training and to get people off unemployment so that they can take up new jobs? I really am puzzled. Indeed, his noble friend Lord Haskel did not seem to agree with that—he mentioned skills as an important aspect—and his noble friend Lord Chandos did not agree.
1347 He is probably not too anxious about them but I shall perhaps worry him a little when I say that I do not think the leader of his party agrees. In his article in the Daily Telegraph on 11th January 1996, Mr. Blair said:We live in a new global economy. Technological and economic change is occurring at extraordinary speed".Yet I heard the noble Lord, Lord Eatwell, say that it was not. Mr Blair went on to say:Jobs, even industries, become obsolete overnight".It is important that we react to those things. Even though the noble Lord, Lord Eatwell, does not seem to think it is important, I certainly do, and the Government do. We have to look not just at our investment in plant, machinery and so on but also at our investment in people. Perhaps I may refer again, sparing, I trust, too much embarrassment, to the noble Lord, Lord Desai, who, in another of his New Statesman articles, said in describing the position of British investment:The British get bigger bangs for the buck for their investment than the rest of the world".We have heard a good deal about job insecurity. I notice that the Labour Party is moving away from talking about unemployment—presumably because unemployment is going down by 750,000—and is now talking about job insecurity. Apparently, the Labour Party has just discovered, although in his article in the Daily Telegraph its leader seems to know, that in a modern market economy, millions of people will change jobs every year and some will experience a short spell of unemployment in between. What noble Lords forget is that most people leave the unemployment register very quickly: a quarter within a month, half within three months, and two-thirds within six months.
Clearly, the combination of modern technology and free trade are bringing about massive changes to traditional patterns of employment. No government can change that. Fewer people will have jobs for life. But there is little evidence that jobs have become less secure, despite people's perceptions. The 1994 Labour Force Survey showed that almost two-thirds of men aged 30 to 49 had held their present job for more than five years—a figure that was little changed from 10 years before. The duration of jobs has not changed markedly since the 1970s and 1980s. The proportion of the population making at least one unemployment claim in the previous five years has been fairly stable since the late 1980s.
The key to reducing job insecurity is to reduce unemployment, and that is exactly what we are doing. The real threat to job security will come from the Labour Party. Not only has it opposed almost every measure we have taken to create a more competitive and job-creating economy, but, given the chance, it would smother business with red tape and new regulations, sign up to the social chapter, and introduce a minimum wage as well.
I wish to round up by saying a few words about the speeches of the noble Earl, Lord Longford, the noble Lord, Lord Bruce of Donington, and the noble Baroness, Lady Seear. The noble Baroness dwelt a little on, as she described it herself in that not, as she said, very elegant phrase, the underclass—the problem of people who are 1348 in the bottom decile. It is a mathematical fact that we shall always have a bottom decile. The important question is whether people can move in and out of that bottom decile. A number of recent studies suggest that there is a great deal more movement than many people seem to think.
§ The Earl of Longford
My Lords, in my speech I put a question directly to the noble Lord. However, he has a lot of questions to answer and this one may have slipped his mind. Since 1979, reversing the previous trend, there has been a steady increase in inequality of income. Is the noble Lord proud of that?
§ Lord Mackay of Ardbrecknish
My Lords, it is rather late in the day to have a long debate about that. The noble Earl will know, as he has attended some of the other debates, that, with the increased amount of participation by women in the labour force, many families have two incomes, some families have one income, and, regrettably, some families have no income. That inevitably means that there will be variations of household incomes in a big way. So I think there are some factors there with which even the noble Earl, short of punitive taxation, will not be able to deal.
An interesting point—the noble Lord, Lord St. John of Bletso, mentioned this—is that pensioners' average incomes have increased by 50 per cent. since 1979. Average incomes for the unemployed and for others not in work have also risen. Independent research shows that the least well off—the bottom decile—have also shared in the country's increasing prosperity. The Institute of Fiscal Studies showed that the standard of living, measured by expenditure by the lowest decile, has increased by 14 per cent. since 1979. The lowest income decile has seen a big increase in ownership of consumer durables; for example, 90 per cent. have washing machines, up from 69 per cent. in 1979, and 75 per cent. have telephones, up from 47 per cent. in 1979.
We have given considerable extra help to vulnerable groups—more than £1 billion a year to low income families and £1.2 billion a year to poorer pensioners since 1988. In the past two years, we have introduced help with child care, announced the jobseeker's agreement and a back-to-work bonus, and a package of work incentives worth around £700 million, in order to try to tackle the problems identified by the noble Lords, Lord Acton and Lord Sempill, of unemployment and people needing to find a way back into work.
We have heard two contrasting approaches to the economy. From the party opposite, we have heard the usual interventionism dressed up by the new phrase "a stakeholder economy", but with plenty of aggravation put in the direction of those people who run British industry and who manage it. At best, the kind of policies the Labour Party advocates would retard our economic renaissance. At worst, they would take us right back to the cul-de-sac we were in in 1979.
From this side—from my noble friends and from the Cross Benches—we have heard a confident vision of a dynamic and competitive enterprise economy, generating jobs, rising prosperity and the resources for 1349 the better public services which we all want to see. Fortunately, our vision is the reality and the one that people will increasingly see as the reality.
§ 7.47 p.m.
§ Lord Eatwell
My Lords, I am enormously grateful to those noble Lords who have taken part in the debate. I have been greatly heartened that, virtually without exception—indeed the only exception was the Minister—noble Lords have addressed carefully the substantive changes in the fabric of society and in the economy that have occurred over the past 17 years. I apologise to the noble Lords, Lord Dean of Harptree and Lord Ezra, for the fact that I was called away and missed their contributions. I look forward to reading them in Hansard tomorrow.
This is not the time to answer the issues raised in the debate. However, I should like to make one or two comments. First, I congratulate the noble Lord, Lord Sempill, whose speech I anticipated. I feel I anticipated it appropriately because I enjoyed it very much. I notice that the noble Lord lists as one of his recreations watching rugby football. Now he has joined your Lordships' House perhaps he will consider joining the Commons and Lords Rugby Union Football Club and return to playing rugby football. I know that his neighbour, the noble Lord, Lord St. John of Bletso, will be happy to provide him with a membership form. Do come and join us!
I wish also to comment on the most warm remarks of the noble Baroness, Lady Seear. I have indeed studied the Liberal Yellow Book of 1928. I happen to own a copy. I also own, and would recommend to noble Lords, a copy of another Liberal pamphlet by Keynes entitled Can Lloyd George Do It? I assure noble Lords that the pamphlet is about employment policy.
As regards a couple of substantive matters in the debate, I would like to refer to the comments of the noble Lord, Lord Marlesford, who questioned the relationship between efficiency and equality. He was puzzled by the view that I advanced about the supervisory and managerial burden in British industry. The point I was making is that Professor David Gordon has shown that whereas in Germany 96 per cent. of the labour force is actually doing the job, while 4 per cent. is supervising those who do it, in the United Kingdom only 85 per cent. of the labour force does the work and 15 per cent. of the employees supervise those who do the work. This burden is the product of the adversarial relationship which characterises so much of British industry, but not all.
I made clear—and the Minister misrepresented me on this point—that several British companies do indeed follow what could be called, "a stakeholder approach". The European Works Council, as defined by the Social Chapter of the Maastricht Treaty, has been introduced by, among others, United Biscuits, which is a 1350 company well-known as a supporter of the Conservative Party; by Coats Viyella, Courtaulds, ICI, Pilkington and many others.
§ Lord Marlesford
My Lords, I am grateful to the noble Lord for making it clear that he believes that managers do not do work.
§ Lord Eatwell
My Lords, on the contrary: I was suggesting that we need only an appropriate number of them. Given the adversarial relationships in Britain which this Government have created, we have far too many. Given all those matters, I reiterate my thanks to the many noble Lords who have contributed to what I found to be an excellent debate. I am grateful to those noble Lords. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.