Employment

HL Deb 09 February 2000 vol 609 cc704-49

5.55 p.m.

Lord Lea of Crondall

rose to call attention to changes in employment patterns in the United Kingdom; and to move for Papers.

The noble Lord said: My Lords, on 23rd and 24th March in Lisbon there will be a special summit of the European Union to be called the Special Council on Employment, Economic Reform and Social Cohesion, for a Europe of Innovation and Knowledge—not exactly a snappy title—which is strange, because the conference was largely inspired by the British Government. But it is nice to know that the art of compositing is alive and well in Downing Street.

When Harold Wilson made his famous speech about "the white heat of the technological revolution" at the Labour Party conference in Scarborough in 1963, the first Labour Party conference I attended, all the lobby correspondents there thought it was brilliant. They knew about as much about the white heat of technology as I did. But it was a great leap forward for the Labour Party and I certainly approved of it, even though for the citizens of Scarborough he might as well have been talking Greek.

Nowadays he would certainly add a couple of references to "e-commerce" and the Internet, calling the whole package "the new economy", and the story would be complete. Let me make it clear; it is a valid agenda and I support it. The analysis is correct. But how do jobs fit into it and the lives that the next generation will lead?

When we talk of employment patterns we think of farmers in mid-Wales, steel workers in Scunthorpe through to call centres in Glasgow and musicians in the Barbican. It is important that we do not generalise too much from any one industrial sector. Britain has created an extra 700,000 jobs in the past three years, many of them in distribution and business services, hotels and personal services. The public sector has stabilised but there should be no presumption that the big growth needed in social, health, transport and environmental services should not be through public agencies, albeit no doubt with some degree of hypothecation.

My thesis this afternoon will be that, both for economic and social reasons, we now need to put as much emphasis on the quality of employment as we do on the quantity of employment. How can we set out the vision which accommodates that? Some noble Lords may be surprised to learn that there are now as many managerial and professional workers—38 per cent of the workforce—as there are manual workers, also now exactly 38 per cent. We should not regret that in any way in so as that in itself is a trend in society towards improving the quality of employment. There was never much quality of life down a coal mine, but the redundant miners to this day do not have the quality of life of most people living in Wokingham. That is another issue concerning structural change. It was Walter Reuther, the leader of the Auto Worker of America who told Henry Ford, when the latter said he would not need so many workers, that he sure as hell needed some workers, some place, to buy his cars. So let us agree that we are talking about structural change, not the collapse of work.

There are unsatisfied demands in society. Over the past four decades civilian employment in the UK has increased by around 4 million, raising the size of the total workforce to 27 million. Most of us will have to get used to hearing the buzz words, "the new economy". I commend an excellent pamphlet entitled, Behind the Buzzword—The New Economy, written by John Philpott, 'Director of the Employment Policy Institute being published next week, from which I derived great benefit and on which I shall draw from time to time in my remarks.

The underlying theme is that developed economies are increasingly knowledge dependent, founded on information and communications technology, and ever more geared to the production of weightless services rather than primary and heavy manufactured goods. The idea of "weightlessness" is, apparently, attributed to Alan Greenspan, who noted that in 1996 the physical weight of US output was then little different from the 1940s, but the real value of output was three times higher. You do not need to be Einstein, or even Alan Greenspan, to work that out.

The story of economic growth is one of technological change and continuity. As one so-called "industrial revolution" succeeds the previous one, we should remember that change will be our ally as long as everyone affected can see how it can improve his or her quality of life.

Standard national statistics record that manufacturing employment is now well under 20 per cent of the total. A great deal more of the value added is now incorporated at an earlier stage in production and the computer hardware and software is itself an excellent example. But business and financial services—often serving manufacturing—now constitute a larger sector than manufacturing itself in the national statistics of employment. The jury is still out on how far the Internet is likely to lead to any step change in productivity. One is reminded of the remark of the American economist Robert Solow: I see computers everywhere, apart from in the productivity statistics. The question of how we measure the value added of Internet services was at the heart of the issue of the price agreed between Time Warner and America On-Line. There are massive industrial policy issues involved here, many of which have to be addressed in the context of Europe. I am very glad that this is one of the areas on which I understand my noble friend Lord Puttnam will focus his remarks.

In some industries Europe is more successful than America. I need only mention Nokia or Vodafone to make that point. On the question of e-commerce, through Sub-Committee B of the European Communities Committee the House has an important study under way. We look forward to hearing the contribution from that committee's chairman, my noble friend Lord Brooke of Alverthorpe.

We must engender confidence in change, while recognising that disruption in people's lives is not a good thing in itself. It was one of my responsibilities at the TUC to convene representatives of managerial and professional representatives. In recent years there has been a massive groundswell of concern among them about almost every aspect of the contract of employment—whether working time, holidays, health issues and, in some cases, new technology. It is actually a big growth area of trade unionism.

According to one survey, two-thirds of managers are subject to restructuring in any one year. Performance-related pay may be here to stay, but not everyone thinks that he is on this earth to vie with Sir Alex Ferguson as far as concerns his contract of employment. However, people do want a benchmark of quality for their contract. I have been a member of a so-called "high level" EU group on benchmarking. It is clear that adopting best practice between the countries of Europe on such questions as contracts of employment and contracts for service provision is a very useful way forward.

Women's share of employment has perhaps been the most significant structural change in recent years: 46 per cent of the labour force are now women; and about 70 per cent of all women are now gainfully employed. In the presence of my noble friend the Leader of the House (and Minister for Women), I need hardly add that women's issues have been given unprecedented prominence by this Government. They have, for example, implemented EU directives on such issues as part-time workers, fixed-term contracts and parental leave, all of which are clearly of central importance in improving the quality of women's contracts of employment and are also part of what is now called, as a new buzz word, "work/life".

Incidentally, those directives were all agreed in Brussels during the past three or four years at the instigation of the trade unions and then negotiated with employers under the Social Chapter of the Maastrict Treaty—though you would probably never know that if you relied on the press releases of the CBI or, for that matter, those from the DTI. Moreover, they are one of the most popular aspects of Europe in Scarborough and Scunthorpe, and also perhaps—I would not be surprised—among readers of the Daily Telegraph.

If we want Europe to become more popular, then any idea that these are the kind of policies we should keep out of sight is eccentric to say the least. But we must not exaggerate the number of people who are on short-term contracts at this stage. In 1999, temporary employment—that is to say, fixed-term contracts—represented 6 per cent of the labour force, if anything falling slightly. More traditional contracts continued to dominate the labour market. In 1999, they accounted for over 80 per cent of all work. Part-time work has shown a slow rise, increasing from 19 per cent in 1984 to 22 per cent in 1999.

People often talk about the seven-day 24-hour society. It may have escaped the attention of some people that three shift systems have been the norm for some industries for the past 200 years. They are now less common rather than more, even if call centres now employ two or three hundred thousand people on that basis. About 25 per cent of people say that they usually work on Saturdays; 13 per cent work on Sundays and 17 per cent work evenings. The figure for people working nights is 6 per cent and, as we established in connection with the Working Time Directive, they are basically the same people who have always worked nights; for example, those who work in emergency services, hospitals and hotels, as well as those who work as security guards and cab drivers. There is anecdotal evidence of more unpaid overtime by managerial and professional workers, and, of course, by teachers. But working from home via teleworking represents less than 1 per cent of all work.

I turn now to the question of job tenure. Whereas occupational change is quite rapid, this should not be confused—as I am afraid it often is—with the length of job tenure. Currently, 11 per cent work for the same employer for over 20 years, 20 per cent do so between 10 and 20 years and 19 per cent do so between five and 10 years. If you add up all those numbers you end up with exactly 50 per cent, which means that exactly half of working people stay in the same job for over five years. There was no change in that figure between 1985 and 1999.

There are more problems for older men. I would flag that up as part of the debate that has never really got off the ground in a satisfactory way; namely, the relationship between retirement age, pensions and flexible work. I know that my noble friend Lady Turner of Camden, who will speak later, has often addressed those issues. It is, of course, older workers who fear most being left behind in the development of information technology, but a recent poll found that around half of all the UK workforce shares that fear.

We face a range of separate issues in relation to young people. The Government have shown considerable courage in their policies for young people and the socially excluded. The New Deal is now about to meet its target of 250,000 in the year 2000. The dramatic increase in the demand for skills is best illustrated by the remarkable statistic that only 5 per cent of jobs offered are now for the unskilled. The national learning and skills council will have a very impressive budget of £6 billion and must set a target to close the gap in intermediate level qualifications as compared with France and Germany.

We are just beginning to counter the worrying increase in inequality in earnings from work. The minimum wage will start to help, as long as it is regularly uprated. The working families' tax credit is also a big step forward. America is more unequal than Britain or the rest of Europe, but does create more low productivity jobs. Our education reforms will ensure that we do not need to head any further in the American direction, with all that goes with that—hire and fire and winner takes all. Whatever else it is, it is not the "third way". There must be a limit to how far "downsizing" is the one knee-jerk test by the Stock Exchange for shareholder value.

The other major dimension is the regions. Public resources are, of course, crucial in dealing with the gap between winners and losers within the regions, as well as between the regions, as demonstrated by the opportune study by the Cabinet Office on regional and inter-regional disparities. The fact is that we have to run faster to stand still on regional as well as sub-regional disparities.

Europe is starting to get its act together on active labour market policy, with guidelines on employment policy drawn up between national governments under the four headings of, Promoting entrepreneurship, addressing issues of employability, of equal opportunity and of adaptability". Feedback from the TUC and the CBI has been positive both at the level of Whitehall and in the regions.

Northern Ireland has started to give a lead on this. I very much look forward to hearing the maiden speech of the noble Baroness, Lady Blood, who is from Belfast. I had some involvement with Jacques Delors leading up to the £200 million fund—300 million ecus—for Northern Ireland which, by all accounts, has led to a number of successful cross-community projects.

Regional disparities in prosperity are also at the heart of our macro-economic dilemma with what can be argued are inappropriate interest rates and exchange rates for one part of the country or another. Inward investment has made a huge contribution to keeping that problem under control and we must not put it at risk. Some 1,000 Japanese companies and 6,000 American companies already in Britain will soon run out of time for an answer concerning our future in Europe. Let us be clear, we are talking here about the British national economic interest.

We must find a stable, competitive and sustainable exchange rate. Many of us, of course, conclude that the zone of stability is the euro zone, after we have negotiated a soft landing. However, that is another debate for another occasion. I hope that I have raised enough issues for a useful debate. I beg to move for Papers.

6.11 p.m.

Baroness Blood

My Lords, it is with a good deal of nervousness that I rise to speak to this House for the first time, but also with a sense of wonderment that someone from my background should be afforded this privilege.

This House represents a world away from the one I normally work in, and I must confess that the thought of being part of your Lordships' House gave me some sleepless nights, but I need not have had such worries as the kindness and friendly welcome which I have received from your Lordships and from the attendants and other staff of this House since I arrived has made my task of entering this House painless and, indeed, a pleasant experience.

In Northern Ireland, as in other parts of the United Kingdom, employment has undergone profound change. In the past three decades, there have been changes in people's values and attitudes towards work—changes brought about by the speed of technological change and information technology, but change has also been brought about by the wider integration of global economies which has reduced the difference in time and distance.

Within this House, and indeed within this debate today, many will speak from a wealth of experience and expertise on the subject of changing patterns of work, and will be able to quote statistics et cetera. I do not pretend to have this expert knowledge. Therefore, I beg your Lordships' indulgence; I should like to speak, for the main part, from personal experience.

When I first started work many years ago, it was commonplace for most people to stay within one company or trade for most or all of their working lives, but with the onset of new skills, new ideas and new management practice, that idea today would be the exception to the rule. Most people now work to fixed-term contracts, which afford flexibility to the company within the global market but make for a good deal of uncertainty for the workforce. If the employee is not multi-skilled and does not have the opportunity to move between companies or jobs, he or she faces unemployment over and over again.

For the past 10 years, I have worked within the social economy, working on the peaceline in north and west Belfast. It was interesting to note that the preceding debate concerned Northern Ireland. I was told that I should be witty in my maiden speech, but I do not feel witty this week. As I say, I have worked on the peaceline in north and west Belfast, seeking to influence companies to provide employment in an area of high unemployment and poverty, and working closely with government training schemes to train local people in the skills needed to secure employment opportunities when they arise. We have also looked at other ways of generating employment and bringing in funds to help to set up local employment. The noble Lord, Lord Lea, has referred to one of those. But as I have already said, many of these opportunities are short-lived. Because of the effect of change in working practices many people who take advantage of government training schemes and are lucky to secure a job find that, at best, the job lasts only one to two years and they then find themselves unemployed again.

I give an example; I know the young man concerned quite well. A young man (who has a wife and baby to support) is pleased to secure employment in a local supermarket. He comes off benefit and looks forward to supporting his family. The pay and conditions are not the best, but he views this as an opportunity to stop being an unemployment statistic. Twelve weeks later he is told that this will be his last pay packet. This has happened to this young man three times in two years. Can we imagine the loss of confidence to the whole family when once again the young man has to "sign on" the unemployment register?

That example could be repeated over and over again, but such are the daily happenings within the changing patterns of work in today's inner-city communities within the United Kingdom. We often read and hear about the breakdown of family life and social values, but can we wonder at that when so many of the values that we took for granted as we grew up would seem today to be built on shifting sand?

It has often been suggested that Northern Ireland is particularly well placed to take advantage of the opportunity created by an extended European market, by its demographic factors and the excellent reputation of its workforce. It is also suggested that these positive factors must be matched by a perceived ability to adapt to the requirements of foreign-based companies in terms of their structures, organisation and industrial relations practices. However, we in Northern Ireland believe that this should not be an exclusive approach. There must be a continuing pressing need to develop Northern Ireland's indigenous sector as a fundamental part of our community.

Finally, the decline in traditional clerical functions within companies will impact more on women to a greater extent than on their male counterparts. In the recent past, it was women who tended to be part time or be involved in job-sharing schemes. They also tended to be mainly employed in what were regarded as non-core activities. The contracting out of these peripheral functions means that female jobs are more likely to be placed in jeopardy. As the noble Lord, Lord Lea, has already said, of course women have made progress and have established a foothold in managerial, supervisory and technical positions and within the political movement. While these gains are important as role models for other women at lower levels in organisations, unfortunately these are the kinds of jobs that are most at risk from de-layering and the present drive towards flatter organisations.

I am grateful for the opportunity to speak in your Lordships' House for the first time and I look forward to becoming a voice for the community of Northern Ireland in this House.

6.17 p.m.

Lord Howell of Guildford

My Lords, it is my great pleasure to congratulate the noble Baroness, Lady Blood, on an excellent maiden speech. She speaks with tremendously detailed knowledge, prescience and authority about a part of the United Kingdom which I know from the past. In the odd whirl of events that affect Northern Ireland, I was at one stage a Minister of commerce and of employment in Northern Ireland. Although that occurred many years ago I remember the positive qualities that the people of Northern Ireland showed, and continue to show, in adjusting to new labour market conditions. Over all the years and through all the bloodshed and difficulties I have never lost faith in the colossal ability of the people of Northern Ireland to be almost ahead of the game in adjusting to the new network age and to the new demands of global competition and of the global economy. They have done that in the past; they are doing it now; and they will do it in the future. The noble Baroness gives voice to the hopes and the immense weight of common sense which will see them through.

I turn to the broader themes of the debate. This is nothing very new. Some 25 years ago pioneer thinkers such as Charles Handy and James Robertson told a disinterested world that the whole pattern of the labour market was about to be transformed: that large blocks of employment were going to dissolve and whole categories melt away; that we were moving towards an era of portfolio jobs, of flexitime and of part-time and self-employment; and that there would be a huge rise in the participation of women in the labour market, but not in the traditional job patterns. They were telling us 25 years ago that the division in analysing the economy between manufacturing and services was already out of date. Manufacturing was shot through with services; services were intermingled with manufacturing; and the whole was permeated by the then embryonic information technology, which belonged to no category at all.

These matters were being set out in great detail by those seers, those prophets. They were telling us that the old familiar landscape of a job for 47 hours a week, 47 weeks a year and 47 years of one's life—which was the normal pattern, the one which all analysts, statisticians and policy makers tended to think about when they spoke about the labour market, employment and unemployment—was already dissolving.

Those ideas were highly uncongenial at the time, largely neglected and resisted. And they have continued to be resisted even to this day. I was reminded, reading today's newspapers, that one of the great citadels of resistance all along to the fact that the labour market has changed has been that noble institution, the Inland Revenue. Today what was supposed to be an avant-garde forecast has become the orthodoxy. Less than half the working population is employed in full-time, single jobs. That is confirmed by the Office for National Statistics and by the newspapers this morning.

But the Inland Revenue does not recognise that. It remains totally hostile to the self-employment patterns, to the portfolio working patterns, and to the new world which involves more than half of the working population. I spent 30 years of my life in another place as a Member of Parliament, year after year, on behalf of numerous constituents, trying to persuade Treasury Ministers to persuade the Inland Revenue that it should adjust the patterns of taxation and the schedules to take account of this totally new kind of labour market—broadly without success. Indeed, even now, according to today's Financial Times, the Inland Revenue is about to introduce a new series of rules in April which will make it much more difficult for this half of the working population to develop their skills and talents and to work properly. That is regrettable—I suppose it is understandable—and it should be noted by the policymakers, particularly those who are long on the rhetoric of the new flexible economy but a little short when it comes to making policy adaptations.

As Handy observed at the time—a quarter of a century ago—his ideas were met with "a complete conspiracy of silence" on the part of policymakers, politicians, sociologists and economists for the reason that they did not seem to fit any of the traditional preconceptions. They were not at all popular either.

For most people, except the most independent-minded, energetic and entrepreneurial, the prospect of working outside the safe and predictable area of full-time, regular, heavily unionised employment—with a hierarchy of management from whom to take guidance and orders, and with the proper protection of labour laws and so on—seemed thoroughly frightening; they did not want to know about it.

Unfortunately, that was not the choice. Even while people were saying, "This cannot happen; it must not happen", it was happening. Policymakers found that these unwelcome events were confronting them with entirely new dilemmas. They might not wish it to be so, but huge new forces were coming together in the economy, dissolving the old patterns completely. Out of the window went the kind of image in the Lowry paintings of people crowding in their thousands through the factory gates in the morning in response to the siren. All that old world was vanishing. Encouraged by dawning new technology, as the noble Lord, Lord Lea, reminded us—I am still talking about the past—livelier firms were moving heaven and earth to contract out, to miniaturise their work units and to bring in more flexible work times and arrangements. Thousands, indeed millions, more women were working and home life and business life were being transformed. A huge expansion was under way of the informal economy—and, incidentally, of the black economy, hence the worries no doubt of the Inland Revenue—with new occupations and knowledge-based services developing of which the policymakers had not dreamed and of which no mention whatever was to be found in economic textbooks, nor yet in the works of best-selling authors like J K Galbraith and others.

A quarter of a century ago, no one had heard of the Internet or globalisation, and privatisation was in its infancy. Looking back, we can now see that a completely new network pattern was developing—held together by work and social relationships and other sensitivities—and that this was emerging with amazing rapidity and pushing aside the familiar hierarchical structures of business, politics, labour organisations and everyday life.

It was not doing that completely; I must not overstate what has happened. Indeed, the noble Lord, Lord Lea, warned against doing that. People such as Francis Fukuyama have reminded us that despite all this global networking and the rise and empowerment of the individual and so on, people prefer to work in hierarchies. Fukuyama presents us not with "Homo Economicus", who never existed except in hermetic and abstract economic theory, but with "Homo Hierarchicus", who by nature likes the world of status and place and is far more comfortable in that kind of situation than in the milieu of risk and ill-defined networks.

So motives for wanting to stay with the hierarchy concepts obviously differ, as do people. Some people want status, want to be the boss, want to be recognised as leaders and as exerting various authorities and so on, and there are those who want the familiarity and freedom from responsibility which a proper and safe place in the hierarchy brings. "Each in their place and a place for all", to quote the Duke of Wellington.

Businesses which are trying to drive through unsettling new arrangements or change direction sharply need leaders, strategists and generals; they do not need networks or flattened management structures. Those things which are all the fashion have to come later. So that is the counterpoint to the feeling that the entire world of labour is being atomised and unravelled.

Having said that, despite all those trends, Handy's predictions have now become commonplace. All around us this is now the new pattern. The only trouble is that the intellectual framework of debate has remained almost frozen. The thinking fraternity, sociologists, economists—especially economists—and academic analysts, with their supporting army of statisticians, have been unbelievably slow in appreciating and understanding, let alone explaining, what has occurred.

This is especially so among the social scientists and groups such as the progenitors of the so-called "Third Way", of which I have made a very close study. They seem to have alighted with surprise on trends such as the evaporation of traditional work patterns, the growth of voluntarism and the merging of manufacturing and services. These are trends, obvious to the people I have mentioned and to other people for 20 years, to which the Third Way enthusiasts seem to have arrived, breathless, very recently, as though they were new insights. In fact they have been long understood, debated and resolved outside the little world of the Third Way clique.

In the current debate the picture of what information technology is supposed to do to the labour market is deeply embodied in the public mind. It is fostered by much public comment—and it is almost entirely wrong. The conventional thinking insists that new technology is bound to eliminate jobs, replace people with incomprehensibly fast and powerful machines, replace unskilled and semi-skilled workers with fewer skilled technicians and create the foundations of a jobless society. In so far as a mass of workers has a future in such a scene, it is argued, it will be in low-skilled, low-paid service jobs, creating new divisions and social polarisation.

In the real world, the pattern now evolving before our eyes is going in a diametrically opposite direction. Jobs are disappearing and appearing, as we know. There is a pattern of gains and losses and winners and losers. But the much more significant pattern overlaying it is one of a vast new variety and complexity in which the old job classifications are meaningless and in which the labour market becomes a fragmented mosaic of new skills, flexible work times and spread out locations. I would not for a moment question the issue debated in your Lordships' House yesterday; that the totally unskilled need to be vastly upgraded to acquire skills and that all efforts must be thrown into that task. But one must keep the matter in perspective. Those prepared to perform jobs which require a mixture of hard physical work, as in construction, but also a good technical knowledge, will be increasingly valued. I was fascinated that the great manual of the network society, Manuel Castells' volume, The Rise of the Network Society, points out that work in agriculture—farm work and land related work—is actually rising in the advanced societies. All the textbooks stated that it would fall, but more and more people are being drawn into that sector.

The overall message is clear. Information technology and its widespread application to all walks of life has little net impact on levels of employment. It creates a world in which ponderous giant trade unions, locked into dying categories of skills and industry, have a dwindling part to play. That explains entirely the huge decline in trade union numbers in several countries, including the United Kingdom. It creates conditions in which the building blocks of class warfare and social division have crumbled. Bosses and capitalists are no longer the identifiable enemy, ever available for demonising. With the help of wider ownership, those distinctions have begun to blur. The information age has created massive popular ownership on a huge scale far more quickly than many of us dreamt of 10 years ago. That too has created totally new conditions.

Not only academics but also policymakers, political parties and leaders have been slow to the point of paralysis in responding to the new trends. Political speeches and vocabulary continue to be couched in terms appropriate to a vanished employment age. Pretensions of economic control over events remain undiminished. Officials and departments continue to serve up categories and concepts for parliamentary and public discussion which bear no relation whatever to the real world or to the everyday events and influences shaping work, business and society. I am glad that your Lordships' House—your Lordships' transitional House—has shown that it can address those issues in today's terms instead of the terms of yesterday's pretences.

6.33 p.m.

Baroness Turner of Camden

My Lords, I welcome the opportunity to participate in the debate. I am grateful to my noble friend Lord Lea of Crondall for introducing it and for the stimulating way in which he did so. I am extremely pleased that the noble Baroness, Lady Blood, chose this debate in which to make her maiden speech, which I found interesting and, indeed, extremely moving. I hope that we shall hear a great deal more from her in the future.

There is no doubt at all that there have been changes in the pattern of employment in the past 20 years or so. Those seem largely to have been brought about by changes in technology, by the information revolution and increasing globalisation—although of course political policies have played a part. We have seen the decline in Britain of heavy industry and the growth of technology-based industries. That has meant that some former centres of manufacturing industry have become impoverished, with high levels of unemployment—particularly male unemployment. It has led also to a growth in areas devoted to newer industries—notably, but not only, in the south-east.

There is a general perception that such factors have wrought a major change in the way in which working lives are spent. A belief exists that years ago, in some golden age, the majority of the workforce were employed by a single employer for all their working lives, but now this has been replaced by a new flexible pattern of constant mobility and movement from job to job. That view is overstated. I have a copy of an interesting report prepared for the National Association of Pension Funds, The flexible labour market: implications for pension provision, which also points out that that view is overstated. Such a lack of security was almost always the fate of lower earners and of manual workers, except those in communities such as that of mining, where people tended to remain rooted in their working environment.

In recent years, some areas of white-collar employment, hitherto regarded as safe and secure, have ceased to be so. That is particularly true of financial services, where the impact of technology and ever increasing competition has resulted in mergers, which themselves have caused job losses. Unions have often protested at the way in which such mergers have been carried out, with little advance warning for the staff involved. Sometimes the first that staff have heard of a merger has been in a radio announcement, together with a statement that there would be a loss of some 5,000 jobs. Unions believe it is wrong that the interests of staff should be entirely disregarded in pursuit of greater profitability. I share that view.

Those changes have for the first time had a major impact on white-collar male staff. Many such employees, made redundant in their mid-50s, do not join the labour market again. That often represents a loss of skill and experience that could be ultimately disadvantageous. We are often told that we are all living longer. Usually, we are told that in the context of discussions about how much the NHS is likely to cost later in this century. But one of the ways of keeping healthy is to have an active involvement in the world around one, in addition to being economically productive. So there are benefits all round in keeping older people in some sort of employment. I believe that there should be legislation against age discrimination, although I understand that the Government's preference is for a code of practice. Perhaps the Minister will enlighten the House on that point.

Another major change has been the involvement of women in the workforce in a way not envisaged 40 years ago. My noble friend Lord Lea mentioned that point. There has been an increase in part-time employment. In 1998, 25 per cent of employees worked part time—the majority of them women.

It is clear from recent research that most part-time employees work part time because they prefer it. Only 11.5 per cent said they would prefer to work full time. It is mainly women with young children who find such a work pattern acceptable. However, there is a need to improve the status and conditions of some part-time work and I therefore welcome the consultation exercise which I understand is currently being undertaken by the Department of Trade and Industry.

The Government have been particularly keen to get lone mothers into employment, believing, with some justification, that work is the way out of poverty. Recent research published in the November issue of Labour Market Trends indicates that while the employment of what are called "couple" mothers—that is, mothers who are married or in some sort of relationship—has increased to 68 per cent from 61 per cent a few years earlier, that of lone mothers has remained stable at around 44 per cent, having risen more slowly.

The survey points to a widening gap between the employment of "couple" mothers and lone mothers. A number of factors have been indicated for that difference: lone mothers' relatively low involvement in the labour market before parenthood; their lesser access to childcare; their concentration in areas with poor local job opportunities; and features of the tax and benefit system that limit their financial gains from employment. There have been several pilot schemes and it is notable that the lone parents who have most profited from them and secured employment are those who already possess educational qualifications which gave them access to reasonably well paid jobs.

On the other hand, it is my view—I have said this in social security debates from time to time—that pressure should not be exerted on lone mothers of young children to work outside the home unless they really want to do so. There seems little point in paying for expensive childcare if the mother would prefer to look after her children herself while they are young and perhaps take advantage of educational opportunities available, through home study, so that she can take advantage of job opportunities when her children are older. We should have in place social policies that make such choices genuinely voluntary.

Despite the increasing involvement of women in the labour market, there are still problems, as the recent survey of the Equal Opportunities Commission indicates. Women's earnings are still substantially lower than those of men, and most of the low paid are women. The Government have made a good start on this problem through the introduction of the minimum wage and the working families' tax credit. Although I think the minimum wage has been set too low, it has still benefited about 2 million workers—most of them women. Moreover, the predicted job losses did not take place. We must all welcome the Opposition's conversion to the cause of the minimum wage. It is largely due to its introduction that the EOC can report that women's earnings are now 80 per cent of men's rather than 77 per cent, as formerly.

Nevertheless, low pay still remains a major problem. A substantial minority of the British workforce spend their entire working lives in a cycle of disadvantage, moving between tow-paid jobs, often with spells of unemployment or inactivity in between. Those who are low paid tend to be older men, some women or people with few educational qualifications, and they are likely to experience persistent low pay. Young people may be among the low paid at the beginning of their working lives, but many tend, as they change jobs or make progress within an organisation, to become established on a stable upward trajectory which peaks in their late 40s.

It will be seen, therefore, that the emphasis on education and training, which has been such a basic feature of government policies, is correct. Incidentally, partnership with the trade unions is important. Unions are keen to ensure that their members take advantage of whatever employment training opportunities are available. I commend the Government on the improvements that have been introduced as far as concerns trade union recognition and trade union legislation. Those changes have not led to unemployment, as was predicted at the time.

We are currently in an economic boom. Unfortunately, not everyone is benefiting from it. Those who are not are likely to be from disadvantaged backgrounds, with poor educational attainment. Quite obviously, economic upturns should, as far as possible, offer benefits to all. So far, they have not done so. I believe that the Government have in place policies which help and which can be built on. Yes, the employment scene is changing. The changes will favour the skilled, the educated and the entrepreneurial. But disability, age, and social disadvantage should not lead to social exclusion. The changes in employment patterns—the subject: of today's debate—should not involve the creation of an underprivileged underclass.

6.43 p.m.

Lord Dahrendorf

My Lords, this is one of our Wednesday debates. I am delighted that we can continue to have them, and continue to have them in the middle of the week. It gives me an opportunity to take up the challenge offered to us by the noble Lord, Lord Lea of Crondall, and to discuss, at least briefly, a problem without actually offering a solution, which I suppose is what we usually do on Mondays, Tuesdays and Thursdays. The earlier debate today strikes me as having also been one which presented us with a problem without having a solution. But that is another matter. In the process, perhaps I can do a little to redeem the thinking fraternity, which attracted the gentle irony of the noble Lord, Lord Howell of Guildford.

Like the noble Lord, I believe it is a mistake to use traditional language and concepts as if the world to which they apply had not fundamentally changed. That is true for work; it is also true for a concept like unemployment; and it is certainly true for a concept like full employment. The major changes that have taken place have been mentioned, so I can be brief on this point. But perhaps I may remind the House of two processes which strike me as particularly important. The first has been mentioned by almost everyone who has spoken. It is the massive growth in non-standard employment. By that I do not merely mean part-time or fixed contract employment but also a new form of self-employment. It is not strictly self-employment as the term used to be used. It ties individuals to particular employment contexts but at the same time turns them into self-employed people, whether self-employed porters at a television station or self-employed drivers for a company.

I know that this is one of the cases where the glass is both half empty and half full. I shall use figures in my comments which come largely from what I regard as the most informative empirical study on the whole area of work and life. I refer to the British Household Panel Study, conducted at the University of Essex on behalf of the Economic and Social Research Council, and in particular to the publication by Jonathan Scales entitled The Future of Work and Lifestyles, which was produced for the Debate of the Age organised by Age Concern.

In 1970, 20 per cent of people were in non-standard employment. In the early 1980s, the figure had risen to 30 per cent. By the late 1990s, the figure had reached 40 per cent. I am not suggesting—and no one would suggest—that that can be extrapolated to 100 per cent. But it is an almost undeniable fact that we now have two types of employment. We have standard employment, with some of the certainties and uncertainties which it has always had, and we have a massive incidence of non-standard employment.

The other important trend—little has been said about it so far—is the strange reduction in the proportion of the economically active population. That is true both at the young end—at any rate for men, who find it difficult to enter the labour market—and at the older end; again, primarily for men but not only for men. Here we have some of the elements of two of the major social problems facing us.

In the case of young men who find it hard to enter employment, we are quite close to some of the problems of crime which worry us. At the older end, we have very considerable problems for our benefit system. The fact is that, of 61 to 65 year-olds, only 40 per cent are still in employment. Incidentally, compared with other European countries, that is a high figure. In most European countries, the percentage is even lower. The fact that only 40 per cent are in employment tells us a story about the role of work in the lives of our fellow citizens, especially at a time when, fortunately, life expectancy has gone up.

If there were more time, I would outline a third trend which was mentioned by the noble Baroness, Lady Turner, and other speakers. I refer to the strange new inequality which has emerged from changing work patterns. There are some, perhaps a growing number, who seem to have all the disadvantages while others have all the advantages. There are people with a low level of education and income; who are subject to greater health risks; who live in worse housing; and who participate less, generally.

Let me concentrate on the other two trends. The problem that I draw from their existence is that, nowadays, even paid work fails to solve some of the problems that work solved in the past, notably paid work. I do not suggest that that is necessarily a bad thing. I do suggest, however, that it forces us to rethink a whole range of issues. I merely mention two, which are of major, and in some cases immediate, significance. The first is entitlement to benefit—in a sense, the Inland Revenue problem, the non-acceptance of changes which have consequences for the way in which redistribution is organised.

Linking benefits to jobs is all very well but, given the new working patterns, it is not good enough. We must try to achieve a greater separation of people's entitlements from their employment. That means that the entitlements must be more closely associated with the individuals, and less directly associated with the jobs that they do.

We see the beginnings of that change in the Learning and Skills Bill that is before the House. I refer to the introduction of individual learning accounts. That is precisely what I have in mind when I argue that changing patterns of work require that benefits become transportable in a more effective way than was the case when they were totally linked to jobs. That is true also in the field of pensions, although I am hesitant to enter into a serious discussion of pensions in the presence of the noble Baroness, Lady Turner, who knows so much more about the matter. It seems to me that the separation of the redistributive elements of the welfare state from jobs is an almost necessary consequence of changing work patterns.

There is another equally serious, if less tangible, point. I speak about it with some hesitation. It is the fact that work no longer provides the degree of satisfaction, meaning or content in life for many that it may have done in the past. To take up the impressive language of the noble Baroness, Lady Blood, work no longer provides the kind of content in life to which many of us have been used.

The survey to which I referred includes an interesting table relating to life satisfaction. One set of figures may be interesting in this connection; namely, a category of people who were employed one year ago and are now unemployed. According to the survey, a third say that they are more satisfied with life; a third say that they are less satisfied; and a third say that life is much the same. I do not want to over-interpret the figures, but it is probably true to say that the relationship between the work that people do and the general satisfaction that they feel in life has become more tenuous. Indeed, work no longer structures people's lives as effectively as it may have done in earlier times.

By the same token—this point is relevant to those who make the provision of work one of the main planks of social policy—work also no longer provides the degree of social control that was implied in the past. I disagree with the noble Lord, Lord Howell, in his praise for hierarchy. Where there is hierarchy, there may be social control. However, one of the changing patterns is that there is simply not the same degree of hierarchy, and social control cannot be exercised through the employment system alone. That is where a very big problem arises in terms of social cohesion.

Changes in work patterns make it extremely hard to see how societies are knit together and how they are supposed to hold together.

Many proposals might be discussed in the practical field. There is the question of basic incomes and their effect on cohesion, as well as on the transportability of benefits. I am one of those who regard the working families' tax credit as a step in the right direction. It does not get us there, but it is a step in the right direction, and that is better than staying put or going back.

There is the great issue of voluntary activity. I am pleased that, in a speech today to the National Council for Voluntary Organisations, the Chancellor of the Exchequer made an effective plea far strengthening voluntary activity and supporting it, in part, through the instrument of a modernised Inland Revenue and through other means at his disposal. There may be other things that can be done. However, my problem is that work does not do the trick. Given changes in expectation and working patterns, the view that jobs can still be used to the same end as they were often used in the past is misguided.

At present, many trends work against social cohesion. The new inequality certainly does not help. Unless we take the matter as seriously as it needs to be taken, we run the risk of creating societies that call for authoritarian leaders rather than relying on civil methods. Against that background, tackling the consequences of changes in the world of work is essential.

I conclude with, an abject apology. Owing to shifts in the timetable for this debate, for the first time since joining this House I may not be able to be present for the entire debate. However, I promise that, for me, this occasion will remain the singular exception.

6.59 p.m.

Lord Puttnam

My Lords, I, too, am grateful to the noble Lord, Lord Lea, for introducing this timely debate. It has far-reaching implications for the future of all of us. I should like to congratulate the noble Baroness, Lady Blood, on her maiden speech. It was wonderful to hear an authentic voice of experience in this House. I am delighted that the noble Baroness has joined us and look forward to hearing from her on many future occasions.

I think I detected a sense of frustration in the remarks of the noble Lord, Lord Howell. I share that frustration. It is odd that in the year 2000 we have to reiterate and anticipate facts which have been relatively common knowledge for 20 years. We all share some blame for the fact that as a nation we are not better prepared for the changes in the workplace that overtake us.

The world of work is undergoing some fundamental changes, and I believe that they will affect every aspect of our lives. "The Internet economy", "the wired world" and "the learning society" are no longer just buzz words; they increasingly define the world that we inhabit. The days when any nation such as ours could remain competitive based on large manufacturing industries, or a largely agrarian economy, are rapidly drawing to a close. There will still be a place for those industries; we still need refrigerators and food to put in them, and cars and the fuel to power them, but these industries can no longer serve as the locomotives of our particular economy if we are to have the remotest chance of remaining competitive on a global stage.

I suspect—in fact I know—that some noble Lords remain sceptical about the new e-economy. They imagine that it is simply a blip along the timeline of the ordinary working world and that somehow things will eventually settle down and return to the world lamented by John Mortimer in last Sunday's Observer where life revolves around the village post office, grocer and local craftsman. If one looks at the ordinary lives of many in the country it is true that things seem to be going on much as before. People quietly go about the same or similar jobs that they have had for the past 30 years. Every time there is a dip in the share price of Yahoo or Amazon.com it is reassuringly possible, somehow, to dismiss the Internet revolution as yet another "over-hyped, over-here" phenomenon created in the fevered imagination of some American futurologist.

I no more wish to be viewed as an alarmist than to stand here 20 years from now shaking my Zimmer frame and saying, "I told you so!", but in our anxiety about the future we are in danger of becoming almost a nation in denial. We must acknowledge and adjust to future realities, or we shall be left floundering in their wake. Growth in the western economies is now being driven by the astonishing rate of the development of the world-wide web and e-commerce generally. When President Clinton came to office there were just 50 websites in the entire world; now pages are being added at the rate of over 100,000 per hour. Another 100 million users will come online this year. But in the end it is not the technology itself but the way that it is used and regulated which will define the scale and nature of these changes.

In some respects it is reminiscent of the development of the railways in the 19th century, only much more rapid and, to some extent, profound in its implications. It is well worth remembering that, in the end, what changed rail travel into a genuinely mass form of transport was not any particular technological development but a simple piece of parliamentary legislation which required every public railway to run trains on a daily basis, and at appropriate times, to enable working men and women to travel to and from their places of work at a flat fare of a penny a mile. It was perhaps the first recognition of the benefits that can flow from what we have come to call "universal access".

The value of the railways in both social and commercial terms lay precisely in the notion of universal access. In the space of a very few years cheap travel swept away those factors which had, since time immemorial, kept the vast majority of the population at home or close to the place in which they were born. The railways made it possible for one to travel further afield for work; to read the same morning newspaper, even in rural areas; to send a letter to the other end of the country overnight; and to visit a friend or have a day out. It even made possible the development of today's Football League. The greater the access to rail travel, the more varied became its impact on society and culture; and the more varied that impact the more it became an indispensable part of the life of the whole nation.

The stock prices of the railway companies soared and tumbled just like the Internet start-ups of today, but the railways themselves were here to stay. They changed our economy and the social fabric of the nation for ever. I believe that the impact of digital communication on the information age will in many ways parallel this, albeit in a very different form, perhaps on an even more dramatic scale.

I shall try to illustrate the scale of change in another way by using the London Stock Exchange as an example. In a recent article in Science and Public Affairs, David Potter, chief executive of Psion, observed that in 1984 the 10 largest firms by value quoted on the London Stock Exchange were: BP, Shell, GEC, ICI, BAT, Glaxo, Marks & Spencer, Grand Metropolitan, BTR and Beecham. Their combined market value at that time was £40 billion and their net assets were also £40 billion. Between them they employed a little over 1 million people. Today, the 10 largest firms are: BP-Amoco, Shell, BT, Glaxo-Wellcome, HSBC, Lloyds-TSB, Smithkline-Beecham, Vodafone, Diageo and AstraZeneca. Their combined value is £340 billion and their net worth is £90 billion. They employ about 750,000 people. Six of those companies deal in intellectual property rights (IPRs) and are not valued for their capital stock; nor is any of them an "industrial" in the accepted or traditional sense of the word.

I give another more topical illustration: Vodafone's 113 billion dollar acquisition of Mannesmann last week. As Lex observed in Saturday's Financial Times, this new company will be worth 16 per cent of the entire Footsie 100. If one adds together the food, drink and tobacco sectors, throws in electricity, gas and water and then aerospace, defence, steel, engineering and construction, all of those sectors together just about equal the value of the newly-enlarged Vodafone—which was a company that did not even exist a few years ago.

One of the implications of all this is that the new economy is already with us. Regardless of the share price of Yahoo today, tomorrow or even a year from now, like the railways this is an economy that is here to stay. It is a global economy which tears down trade and cultural barriers alike. Just watch the impact that Vodafone's bid for Mannesmann will have on other long-sheltered titans of German industry. Suddenly, they are as vulnerable to predators from across the world as anyone else.

In this new "knowledge economy" value resides overwhelmingly in intellectual property rights—human knowledge—which are now termed intangible or weightless goods. The noble Lord, Lord Lea, explained exactly what that term meant and from where it came. In the new economy competitive advantage increasingly means knowledge advantage.

As I said in this Chamber only two weeks ago, all of this has an enormous impact on patterns of employment. The job for life, the nine to five working day and the single male breadwinner are very much things of the past. Whole industries are being restructured; payroll, procurement and pensions are all moving online. Gone are the days of the set, but comforting, pattern of education, work and then retirement. Increasingly, individuals must adapt to the rapidly changing demands of the job market.

I offer a couple of small but quite telling examples. Between 1979 and 1998 the number of self-employed people among the managerial and professional classes in the UK grew by 300 per cent. I was told only last week that today one person in six in Britain works for a business that did not exist five years ago.

All of this throws up enormous challenges for policy makers. How can we provide for such a varied pattern of work? What will these changes mean for the non-work aspects of our lives, including our families and leisure? How can we ensure that people have the opportunities to act flexibly to meet the new demands of the future workplace?

I listened with real interest to the noble Lords, Lord Dahrendorf and Lord Howell, and my noble friend Lady Turner, who spoke about the commercial and social impact on society. Above all, it poses a massive challenge for our educational system. We need to tie our learning institutions ever more firmly to the world of business. Many of our universities remain relatively dislocated from industry; and that is certainly not so in the United States, where business and higher education work hand in glove with industry and government. The result is an economy that plays fully to its strengths, where the academic world meshes with business and government to create a seamless web of support for America's strategic and commercial interests. I do not pretend that it is an immaculately conceived fact of life, but it is the net effect of industry, government and business working together with the academic world to ensure that they move forward as a coherent modern economy.

President Kennedy once said of his country, Our progress as a nation can be no swifter than our progress in education".

At the beginning of the 21st century that statement carries a ring of truth that he and his advisers could scarcely have imagined possible.

It is a cruel fantasy to believe that the UK can maintain a competitive economy without embracing the fact that our entire economic infrastructure is being transformed by the digital technologies. Increasingly, we as a nation will be judged by the quality of our skills and the depth and versatility of our knowledge-based workforce. That is why the quality of our education system, and of our educators, is of absolutely fundamental importance to any future prosperity of this country. Change, not just in employment patterns, but in the economy more generally is all around us. We diminish it or, worse still, ignore it at our peril.

7.11 p.m.

Lord Haskel

My Lords, I, too, congratulate my noble friend Lord Lea on introducing the debate. Employment patterns are changing. I welcome this opportunity to debate these changes which affect the working lives of us all.

It seems to me that the elements causing these changes are a commitment to enable all to work in the face of the harsh realities of the global market; and the realisation that a healthy economy and a fair society are not opposites but the same side of the coin. So how will those factors affect employment patterns in Britain? What changes will they bring about?

Some of the pieces of the jigsaw are already apparent. My noble friend Lord Lea told us about the new economy. He is right and I thank him for explaining it to us. It is crossing the Atlantic from the United States—and why not? Look what it has done for the United States over the past 10 years. Ten years ago the American economy was in decline. Today it has outpaced us all in productivity and job creation. The key to the new economy is information technology and the Internet.

I agree with my noble friend Lord Puttnam about the importance of e-commerce. That is important in the real world. However, I differ from the conclusions he draws about the stock market world. The stock market world is distorted by crazy share prices, the current fashion for high technology, and by opportunistic financial short-termism. That is why Amazon.com is 40 per cent off its peak and Yahoo is 35 per cent off its peak while, in the rest of the world, life goes on as normal. These are huge changes.

Information technology and e-commerce is only just starting here. However, its impact on employment patterns will be enormous and inevitable. Last week British Airways announced that 50 per cent of its ticket price sales will be via the Internet by 2003. The Prime Minister has undertaken that 25 per cent of government business will be transacted over the Internet by 2008. He obviously means it because he has appointed an information technology czar to ensure that the skills and technology to carry that out are firmly in place.

We no longer need computers. Our family-friendly television sets are beginning to serve just as well; so are our mobile phones. As British firms try to compete with low labour costs overseas, the pattern of jobs is changing in the manufacturing sector. The noble Lord, Lord Howell, reminded us that that has been happening for 25 years. But today the situation is different. British firms have turned to information technology and mass customisation. Indeed, the division between manufacturing and services is becoming more and more blurred. Mass customisation is itself becoming a service, while in the world of the new economy, services become experiences which have to be available seven days a week, 24 hours a day.

Therefore, I think that we can discern a more ruthless economy based on attacking the status quo and the entrenched players with new technologies and working methods that improve or replace earlier ones. That ruthlessness will certainly change the pattern of jobs, particularly in retail. It will mean many lay-offs as the old skills become obsolete and new ones are needed. The noble Baroness, Lady Blood, told us that in her excellent maiden speech. More change, more insecurity and more stress will be the pattern; perhaps all with the same employer, not because of job protection which has no place in the new economy, but because employment nowadays is continued at the same firm by continuous learning and training. Quite rightly, the Government are making that a cornerstone of their policy.

But if the new economy is to be successful, it requires not only new skills, but also a higher degree of commitment and responsibility from both employers and employees; for example, trusting people with sensitive information which has been kept previously confidential. The new economy demands new attitudes towards team working and loyalty. The new 24-hour service economy does not require the long hours that seem prevalent in this country. My noble friend Lord Lea reminded us about shift working. It requires flexibility, but not the flexibility of easy hire and fire. It requires employers to be flexible and helpful over hours, and employees to be reliable.

I expect the future pattern of work to be one of flexible hours with job-sharing instead of a long working week, especially as more women work. Social trends tell us that a quarter of women working full time work flexible hours.

I do not believe that we shall all be working at home on computers. The case for teleworking has been overstated. It may mean that some highly talented people may work at home perhaps for more than one company, but in general people need to react with people. Creativity and innovation rarely happen in isolation. Human contact cannot be replaced by information technology. Indeed, according to recent figures, the percentage of the workforce who telework has been pretty static for the past couple of years.

Neither do I see any great increases in leisure time. Ten years ago we were told that the biggest social problem today would be filling our leisure time. Instead, we are working the longest hours in Europe. What I think is inevitable is rising employment in personal services, as we all become better off—that half of the economy which is not affected by information technology. The noble Lord, Lord Dahrendorf, referred to it as the non-standard employment.

Information technology is more likely to replace financial trading before it replaces gardening, childminding or recreation. That will mean working all hours, but not necessarily for low pay.

That is how I think that the new economy will change our patterns of work. But there will he other effects. It will increase the inequality of earnings. My noble friend Lord Lea told us that 5 per cent of jobs offered are for the unskilled. Looking at social trends, it appears that self-employment is becoming the pattern for the unskilled. Sixteen per cent of men in work in the spring of 1999 were self-employed. One-quarter of these worked in construction and were mainly white. Of the remainder, by far the most were from the Indian sub-continent and worked in distribution, hotels and catering. They are victims of the ruthless economy—the socially excluded—referred to by my noble friend Lady Turner. The stress of the ruthless economy will increase pressure on personal and family life. To make it all worth while people will want a government who deliver a sound economy with low inflation, low interest rates and tough regulations from competition.

But social justice and fairness are also part of this sound economy. That too will affect the patterns of work. Indeed, the effect has already begun. My noble friend Lady Turner told us about the minimum wage, the Working Time Directive and the working families' tax credit.

All that points to an enormous amount of power in the hands of the leaders of business and industry. Perhaps these are the authoritarian leaders to whom the noble Lord, Lord Dahrendorf, referred. How can this be balanced so that employment patterns are not just a matter of their whim? Regulating employment is fine and necessary, but it is only part of the answer because after a while diminishing returns set in. Regulation has to go hand in hand with the creation of quality jobs and quality work in maintaining a healthy economy so that Britain is a good place for business. That is a far greater incentive than any kind of protection.

Employers then have every encouragement to provide training and opportunities for lifelong learning and to provide work because they need the staff and have a loyalty towards them.

But power is increasingly held in the global private sector. Decisions taken outside our borders affect employment patterns here in Britain. What can we do about that? In addition to a sound economy, perhaps the Government could look at the United Nations report on business and human rights, which was released at the end of last month. It outlines nine core principles on standards of labour, human rights and the environment. It seems to me that the economically powerful would be happy to accept these principles in return for the sound economic conditions provided by the Government. That seems sensible to me because, after all, the business of business is to serve society.

7.22 p.m.

Lord Eatwell

My Lords, I must confess that at first I was a little puzzled as to how to approach the topic of this debate, for changes in employment patterns are essentially the outcomes of the interaction of a complex range of processes. It is those processes which are the determinants. It is the patterns of employment which are simply determined.

So it seems to me that the real issues at stake in this debate are those determinants of the patterns of employment, predominantly demographic, economic, technological, and political, and the relationship between those determinants and the economic well-being of the British people. It is therefore no accident that many noble Lords who have spoken already have focused on technical, economic, political and demographic changes in describing the changes in the patterns of employment in the UK.

I do not intend to deal at length with the demographic issues, important though many of them are. The increased labour market of participation of women, the ageing of population and the high mobility and economic flexibility of the immigrant population have all had, and are having, a significant impact on the performance of the economy and on the pattern of employment. They are, if one likes, the supply side of the employment equation as, to a certain extent, is the important issue of the quality of education and training the major determinant of the flexibility of the labour force as a whole.

Instead, I wish to concentrate on what is really the fundamental economic factor which determines the pattern of employment and indeed its overall level. That fundamental factor is the demand side of the labour market. Later on, I shall turn to some of the political and policy issues.

The size and composition of the demand for labour depends, so far as the private sector is concerned, on the growth and decline of industries. But even here there is no one-to-one link between the growth of a particular industry and employment in it or indeed between the competitiveness of an industry and the pattern of employment in the economy as a whole.

For example, a vital component of the UK economy today, as indeed for many years past, is our manufacturing industry. That is because it produces a very large proportion of our tradeables—that is, the goods we sell abroad and/or the goods which compete against imports from abroad. It is also because the performance of manufacturing industry is one of the prime determinants of the overall growth of productivity and hence of the competitiveness of the economy.

The peculiar importance of tradeables is that, at high levels of domestic demand which are enough to secure something like full employment, the balance of what Britain buys and sells must be sustainable. That means that we must be able to compete. If we cannot compete, then high levels of demand will simply suck in more and more imports and we shall run up larger and larger foreign debts to pay for them. So a competitive industry producing competitive tradeables is one of the basic components of any sound employment policy.

But, while a competitive industry is the indispensable foundation of a sound employment policy, it does not matter at all how many people are actually employed in our competitive manufacturing and other industries. All that matters is that they should be competitive. For example, let us suppose that only one person were employed in all manufacturing industry perhaps to switch on in the morning and switch off in the evening. That would not matter so long as that one person were backed by sufficient capital to ensure that he or she produced the requisite exports to pay for the goods and services that we import at full employment levels of demand. Only one person would be employed in manufacturing, but the competitiveness of that individual would be the key factor that permitted the full employment of the labour force in other sectors of the economy, including the public sector with perhaps more nurses and policemen or perhaps more university teachers.

So the fundamental issue in the modern highly competitive world in which we live today is whether our economy is competitive. If it is not, then it will be increasingly difficult to sustain full employment and such employment as can be sustained will tend to be increasingly low skilled and low paid. If the economy is competitive, then not only will it be possible to sustain full employment but also the pattern of employment will tend to consist of more highly skilled, more fulfilling and more varied jobs.

It is important to notice that attaining competitiveness is not just about ensuring that existing industries invest in the people the capacity and the innovation that will place them at the forefront of international markets. It also demands that there is a framework of ownership, of corporate government and, where appropriate, of regulation within which the industries of the future can flourish. That is why our approach to the development of the electronic media is so important today. That is why the speech of my noble friend Lord Puttnam was so important.

The growth of information systems, of electronic commerce and telephony and the link between all these and the traditional media of radio, television and film, is transforming today's economy as radically as the introduction of the steam engine did in the 19th century or indeed widespread electrification in the 20th century. Those great technological innovations created entirely new industries and revolutionised the old ones.

That is what is happening again today—with one added ingredient. Today, innovation in information technology, in telephony and in broadcasting is happening in the context of a highly competitive international economy. In that international economy, location—where you physically happen to be—is becoming far less important than it has ever been in the past. If we here in Britain are to compete in the future—if, that is, we are to maintain full employment and generate a fulfilling pattern of employment opportunities for the British people—we must ensure that there is a framework of industrial policy in place that will secure for Britain a position at the forefront of innovation in industries, new and old, fashionable and unfashionable, on an international scale.

That leads me on to the issue of policy. The rapid changes to which noble Lords have referred create major difficulties for policy makers. To illustrate those difficulties, I shall concentrate my remarks on a distinctly unfashionable—indeed, old-fashioned—industry: radio. In doing so, I declare an interest as chairman of the Commercial Radio Companies' Association, but what I have to say will apply as much to commercial radio as to the BBC. I also declare an interest as a director of Anglia Television, a component of the United News and Media group, because I shall have something to say about television later.

Radio plays a large role in the lives of the people of this country. Nine in every 10 people listen to radio for an average of 24 hours a week. Compare that with the average television viewership of 27 hours a week. So, in terms of consumption, radio is roughly as important as television. Yet radio is neglected in government and by the upper echelons of broadcasting policy makers. For example, last year there was a DCMS survey of household attitudes to BBC services. There was no question at all on radio. Why not? Perhaps the Minister will explain when he sums up. In the Davis Report on the future of digital broadcasting, there was again no mention of radio. Finally, last year at the Prix Italia broadcasting awards, a world showcase for all that is best in broadcasting, the Chairman of the B BC devoted all his remarks to television at what was supposed to be a television and radio event.

Those examples are rather limited and represent a regrettable neglect. But they also represent a folly. Radio is part of the electronics revolution. Indeed, as noble Lords are probably aware, mobile telephony is referred to in the United States as "wireless".

Perhaps most important of all, like all electronic media, radio is facing the digital revolution; a revolution which embodies the potential not only of very high quality sound, transmission and reception, but also could, if there were a total switch to digital broadcasting, permit a far more intensive use of that most scarce of all commodities in both broadcasting and telephony: the radio spectrum.

Digital radio will also produce a huge increase in choice for listeners and, by making more effective use of the spectrum, a huge increase in access for broadcasters of all kinds; that is national broadcasters, community and ethnic groups and all kinds of social interests.

Digital radio will also simplify broadcasting by Internet. In a few years' time, as many people will receive their radio programmes via the Internet as via a conventional radio set. The origins of those radio broadcasts could be anywhere in the world. In just a few years, competition between British commercial radio and the BBC will be a minor side show in a world-wide competition for audiences.

In this country, we have the opportunity to succeed in that global competition. Crucially, we have the product in quality radio broadcasts across the range of music and speech produced by the BBC and by our commercial broadcasters. We have the industry skills to make this a very British success story. Only outdated legislation stands in the way.

First, successive Secretaries of State, acting under the Broadcasting Act 1990, have allocated only sufficient spectrum to digital radio for it to reach 75 per cent of the population. Do the Government simply not care about the other 25 per cent of listeners? Perhaps the Minister will tell us. Is it not clear that lack of access to digital radio will stifle investment in the industry?

Let us take another example. In order to encourage investment in digital radio, the 1996 amendments to the Broadcasting Act permits foreign—that is, non-EU—investment in the digital sector. But at the same time, highly restrictive ownership rules severely handicap domestic commercial companies from achieving the size which would generate the revenues to fund the investment that is necessary. While welcoming foreign investors with open arms, current legislation leaves the British radio industry fighting competitive battles with its hands firmly tied behind its back.

Thirdly, the sensitive and complex issue of a switch-over date from analogue to digital services is being neglected by the Government. Without consideration of a switch-over date, there is little incentive to invest, particularly in the production of reasonably priced receivers.

The radio industry is working hard to achieve digitisation. The BBC and commercial radio are working together in a public-private partnership to persuade the equipment manufacturers to commit to the scale of receiver production that will bring prices down. We are all grateful that the Secretary of State for Culture, Media and Sport has agreed to support this campaign at an event in May. But it is not just support that is needed.

The dilemmas facing the industry and the straitjacket of outdated legislation that is inhibiting its growth demand that government policy be modernised now. Throughout broadcasting, radio and television, many of today's regulatory structures have been rendered irrelevant by the new information age. We must modernise. An example of the urgency of the situation we face may be found in yesterday's referral of the planned television merger of United and Carlton to the Competition Commission. The Competition Commission will inevitably assess the merger through the lens of competition alone without referring to wider broadcasting issues. Its conclusions, however wise, can be only a partial solution.

Before the election, the Government promised a new regulatory structure to envelope all the electronic media—radio, television and telephony. That new, modern structure of regulation is required to support investment. It is needed to secure competitive success for all our media industries in the new international media environment. And it is needed now. The year 2002 will be too late: too late for industry; too late for jobs; and too late for the future of employment in the industries of the future.

7.37 p.m.

Lord Brooke of Alverthorpe

My Lords, I am grateful to the noble Lord, Lord Lea of Crondall, for introducing the debate and I extend my congratulations to the noble Baroness, Lady Blood, on a marvellous maiden speech.

I make my contribution as a simple general secretary of a couple of Civil Service trade unions. My contribution comes from great experience of dealing with the many changes which came at us from many different angles. I also speak as someone with an interest in the future of work. I was involved in the review of the future of work, sponsored by the Churches in 1997. It was chaired by our colleague, the noble Lord, Lord Sheppard, who was then Bishop of Liverpool. I refer to that this week when we in this Chamber have heard a great deal about morality, principles and religion. I regret that more noble Lords are not expressing an interest in today's topic because I believe that work, or service, is at the heart of things, leading to the physical and spiritual well-being of individuals, families and the nation as a whole. It is that which motivated the Church review when it was set up in 1996–97. It took place against a background of a good deal of trouble within the labour market. People were experiencing difficulties which had arisen as a result of following, over the preceding 15 years, the policies of our colleagues on the opposite side of the Chamber.

I shall take a political stance for a short period. It is worth remembering, when considering major changes in the pattern of employment, that the major change we are now experiencing is a shift from having great numbers of people unemployed to having much higher levels of employment. During the period of the previous government, the number of full-time jobs fell by over 1.18 million. When they left office, unemployment still stood at over 2 million. For the first time in decades, we saw over 3.25 million people living in households where no one had any employment whatever. In terms of remuneration, 50 per cent of the vacancies advertised in job centres throughout the United Kingdom were offering hourly rates of £3.50 or less. Indeed, in many cases people working from home were being offered as little as £1 an hour, in particular women employed in piecework.

In the period from 1979 when the Conservatives came to power, incomes of the bottom 10 per cent fell by 30 per cent in real terms. Against that, at the other end of the scale, we saw a phenomenal growth in the salaries, incomes, dividends, share options and so forth of people who were able to progress using the freedoms given to them under that administration. We watched that big divide develop and we are now tackling it. It is now a fact of life: people in the bottom 10 per cent of income levels are worse off in relative terms. Perhaps I may remind my colleague, the noble Lord, Lord Howell of Guildford, that during the 1980s a line was taken that stated that nothing could be done about the growth of unemployment. A phrase parroted by everyone stated that high unemployment was inevitable and that we should adjust to it accordingly. However, I am glad to say that right around the Chamber, that fatalism has been rejected. Now a good deal more optimism about what the future holds for us is evident.

Lord Howell of Guildford

My Lords, perhaps the noble Lord will allow me to defend myself. What we were saying was that, in a period of transition and restructuring that was necessary for all modern economies, there would indeed be areas in which large numbers of jobs would be lost and the entire job pattern redistributed. We went through that. It was very painful, but the net effect is that the British economy is now one of the most agile and flexible in Europe with the lowest levels of unemployment. It is not a question of rejecting or accepting levels of unemployment; it is a question of having the courage to go through a period of great difficulties and emerging in an advantageous position. Does the noble Lord dispute that Britain is now in an advantageous position? How does he think we got to this point?

Lord Brooke of Alverthorpe

My Lords, Britain is now in a more advantageous position than it was before. However, I wished to make the point that a view was held in many parts of the country—particularly on the side of the Opposition—that a high level of unemployment was inevitable. Even the Labour Party, when it came to power, was cautious about the extent to which it would make the commitment to seek the reintroduction of full employment.

Lord Haskel My Lords, I thank my noble friend for giving way. To enlarge upon what he was saying, the philosophy that prevailed at the time was that the price of a sound economy was high unemployment.

Lord Brooke of Alverthorpe

My Lords, I shall move on. While global competition and markets, along with technological change, are bringing even faster challenges, we should continue to reject the scaremongering that went on for a good many years. I believe that the future of work is a matter of choice and priorities for the Government. Unemployment is not something that is inevitable, nor do we have to endure it if we choose not to do so. I also advance the view that it is not inevitable that the current deep divisions in society should continue.

In this difficult week for the Government, I should like to congratulate them on their efforts and for the considerable progress they have made in the short time since they came to power. I repeat that the major change we have seen in working patterns has been the shift in the numbers moving from the unemployment register into work. This has been achieved through skilful economic management—and with a little legacy left by the previous government; I am happy to acknowledge that.

High employment has also been achieved through the New Deal, which, I believe, my colleagues opposite are not prepared to embrace. It has also been achieved by encouraging people to move from benefits and into work by making work pay better than benefits. This has been aided by the introduction of the minimum wage, the working families' tax credit, a gradual approach to welfare reform, and reductions in income tax and national insurance contributions for those at the bottom end of the wage scale. These should all be set against the background of the priority and attention being given to education, which has been discussed by my noble friend Lord Puttnam and others. It is likely that the benefits that will accrue from changes in education and training will not be immediately apparent. However, we can trust that if we have got it right and appropriate education and training is being provided, those benefits will flow in the longer term.

Perhaps some critical friends from within the Labour Party cannot yet see quite how all this adds up for our supporters and for the electorate. But I believe the picture is now becoming clearer and I hope that increasingly we shall have the opportunity of putting the message across to the country. At the very least, it is good to see that the forces of conservatism within the Opposition are now beginning to recognise what is happening. We all welcome the recent U-turns in the Opposition's approach to economic and employment issues. We look forward with interest to see what further changes they may make in order to move closer to what we have been advocating.

To return to changing work patterns and the supply of labour, I recall that only 20 years ago—I am speaking primarily of the public service—we still had an overwhelming majority of males in the workforce. There was little part-time or flexible work available and most employees still, in the main, stayed with one employer for most of their careers. The view was held that people had jobs for life. Self-employment was still a small-scale activity.

Many of those factors have changed over the past 20 years, as several speakers have pointed out. Self-employment has increased from around 1 million to the current 4 million, with projections that the figure will rise to over 5 million in the not-too-distant future. The distinction between gender roles and work has been and continues to be eroded. There is now an increasing number of women in paid work—either full-time, part-time or on a flexible basis. Regrettably, many of them still seek to fulfil two roles: looking after the home and being in employment. Those are issues which need to be addressed.

On the other hand, on the male front, there are more young men who are no longer entering the labour market. That point has been mentioned by other noble Lords. An increasing number of men are withdrawing from the labour market in middle age. The problem of the young unemployed and of the middle aged needs to be addressed. The noble Lord, Lord Lea, mentioned the need to examine the inter-relationship between middle-aged men being made redundant and factors linked to pensions.

In addition, a significant proportion of the population are now working longer and harder. Other noble Lords have mentioned that, and it is a topic to which we should turn our attention. I believe that latterly there has been a change in attitude to the issue of job security. Although change is occurring, people now feel more relaxed than perhaps was the case some time ago.

Of course, we are faced with big changes arising from e-commerce. I believe that that will present a big challenge for the workforce and for employers. Inadequate research has been carried out into the consequences of e-commerce on the labour market, and work needs to be done there in the near future. Those are the big drivers which we must address. Overall, I believe that we are now in a much more confident position with regard to the labour market than we were some years ago and that we can look forward with a great deal more confidence than has been the case for a number of years.

7.52 p.m.

Lord Avebury

My Lords, perhaps the noble Lord may look forward to a day when Mr Portillo endorses the New Deal. Having, as he said, made a couple of U-turns already, that would be a small step for him to take. While he is about it, perhaps he can help those of us who believe that the national minimum wage is rather too low and should be increased, at least to take into account the effects of rises in wage levels. Thus, the people who receive the national minimum wage may receive the benefits of the growth in the economy which apply to others in earnings.

I begin by saying how much I have learnt from listening to this debate, which falls outside my usual political horizons. I join with those who have already congratulated the noble Lord who initiated the debate and who, I believe, got it off to a tremendous start.

I was particularly impressed by what he said about the work of the trade unions in Brussels in trying to improve the working time directives there and in having labour practices examined more thoroughly than they would otherwise be. Like the noble Lord, I believe that that is an unsung story and perhaps it should receive a wider audience than it receives in this House. I should like to join the noble Lord in thinking of a way in which we can arrange for the achievements of the trade unions in Europe to be more widely known. I believe that noble Lords would like to hear about that, and that, not only those on the Tory Benches, but some of the residual anti-Europeans in his own party, such as the noble Lord, Lord Bruce, should pay attention to what can be done by those who represent the workers in the corridors of power in Brussels.

I also add my few words to those already expressed in admiration of the maiden speech of the noble Baroness, Lady Blood, to which I enormously enjoyed listening. I believe that we have something to learn from Northern Ireland in relation to both work and social exclusion. Last summer I was in Northern Ireland at the invitation of the noble Lord, Lord Dubs, to look at the activities of the Government there in relation to the travelling population. I saw several things which impressed me and which I believed were done much better in Northern Ireland than in this country.

In particular, in Northern Ireland travellers are regarded as being the most socially deprived of all the minority communities in the Province. However, in this country not only has the Social Exclusion Unit made no recommendations on how to tackle the social exclusion of gypsies, including their exclusion from the world of work, it has not even begun to consider making such recommendations for the future. Therefore, I hope that we shall hear a great deal more from the noble Baroness about Northern Ireland and about aspects of life in the world of work there from which we may learn something to our advantage.

I refer to the comments made by the noble Lord, Lord Howell, concerning the fallacies of information technologies. He said that a great many people still believed that those technologies would replace unskilled and semi-skilled workers, and that, generally, they would have a harmful effect on the labour market. I remember my friend Bruce Page talking about the effect of information technology on the publishing industry. His point was that in every advance in technology in publishing, more people have been employed, from the days of Caxton onwards. If one thinks of the latest developments as being, in a way, an advance in publishing, I believe that the same thing is true now.

The noble Lord, Lord Puttnam, talked about the expansion of services that can be provided by the Internet. Of course, he is absolutely right. More products will be offered on the Internet. There will be more entertainment, more goods and more information in terms of the uses that are made of it by other businesses—I include the Government in that. It is absolutely right to say that the Government are one of the chief beneficiaries of the IT revolution.

I believe that the only person who touched on that point was the last speaker, the noble Lord, Lord Brooke of Alverthorpe. As he said, the Prime Minister has undertaken that in the next four years 25 per cent of government transactions will be carried out over the Internet. That represents an enormous revolution for the people who will provide that work.

We have already seen that information technology creates upheavals. I refer, for example, to some of the unfortunate glitches in the delivery of computer systems to government departments. Almost every week, there is a Question or a comment in your Lordships' House or another place about the tragedy of the Immigration and Nationality Directorate's computer, which is way behind schedule and still has not been delivered. However, that does not diminish the importance of people who work in the Immigration and Nationality Directorate. They still have to make judgments on who is entitled to enter this country and to whom they must issue a notice of refusal. If it is ever delivered, the computer system will provide the civil servants—the immigration officers—with the equipment and information at their elbow to be able to say whether a certain person comes within the rules which have been laid down by Parliament to decide who can enter this country.

In addition, I believe that we see the beginning of a period in which the boundaries between government departments will melt away. It is common façon de parler to speak about "joined-up government". That becomes possible with information technology because there are no boundaries between the information provided for tax services, social security services or for any other purpose, except those which Parliament chooses to impose. Provided that we can overcome people's natural anxieties about the security of personal data, there is no reason whatever in future why we should not have a joined-up system of taxes and national insurance. When that time comes, it will also mean that the individual consumer will be able to access his information very easily via any office of the DSS or any tax office. It will be immaterial where he goes because all those terminals will have equal access to the same information which, of course, will have adequate protection in terms of passwords and so on. The benefits here are enormous for the consumer and I think that they are enormous for the workers in those industries as well.

If anything, the noble Lord, Lord Puttnam, underestimated the extent of this revolution when he compared it with the railways because, after all, the railways are concerned only with getting from one place to another. But this technology will enter into every single nook and cranny of a person's life. It is not just a question of being able to shop more easily; being able to get information off the Web more easily; and being able to send e-mails; because devices which can be embedded in ordinary household articles are now on the threshold of development, technology can be extended into virtually anything. Already noble Lords have spoken about the joining up of television with the Internet. That is going to be one of the major developments of the next few years.

The other development which, I think, is really going to take off is the use of a larger band width by consumers. At the moment, the chief inhibiting factor is the time you wait to get a download or even sometimes to get on the Internet. If that process becomes instantaneous, not only will you be able to log on, send an e-mail, write an order to Tesco's, or download your SETI all in five minutes, but it will be possible to do all that without any skill. When I speak of SETI, perhaps I may just put in a plug for it because I think it is so wonderful. Last May Berkeley launched a system for allowing people with personal computers to process small quantities of data from the radiotelescope at Arecibo. Now, 1.6 million people are signed up to that world-wide. You just download a piece of software on to your personal computer and you are sent chunks of data, 330Kbytes at a time. Your computer processes it and sends it back to the University of Berkeley where it is analysed. If you have found the little green men, you will be told about that six weeks later.

The wonderful thing is that instead of having to have one enormous computer centralised in Arecibo, it has managed to harness the power of all these millions of computers in people's private houses all over the world. I think—

Lord Haskel

My Lords, I thank the noble Lord for giving way. Perhaps I may comment in view of the noble Lord, Lord Eatwell, saying that most people logged on to the University of California at Berkeley on that system because they heard about it on the "Today" programme.

Lord Avebury

My Lords, that may well be so, but it has now received very wide currency in all the computer magazines. I doubt whether there is a single owner of a PC who has not heard of it by now.

I conclude by making this serious point. In Britain we have a great interest in this changing structure of employment, which has been one of the themes of today's debate, because of the shifting patterns of employment. From the jobs-for-life of the past, which have been spoken of by several of your Lordships, to the routine job changes and rise of short-term contract work, it is something which I think we have experienced more drastically than most other European countries. Many industries are shifting towards lean employment structures in which they rely on others for everything but their core operations.

One businessman to whom I was talking the other day had gone the whole way. He was engaged in providing airline catering. Initially, he brought in the food, cooked the meals, put them into the plastic packs and sent them off himself to the airlines who were his customers. Gradually, he contracted out all those operations until the only thing he had at the middle was a computer. He was writing out schedules which said that X meals had to be delivered to airline Y at such and such a time on Monday morning and other people were doing all the work. He has one individual sitting at the middle, masterminding the whole programme. We could reach a situation where we have a core of people who are very well educated and very well trained but, outside that, there will be a penumbra of people who are on short-term contracts, brought in from agencies on temporary hire, or are self-employed and contracting their services to the larger companies. That is Will Hutton's 30:30:40 world in which he says that 30 per cent of the population of working age will be in core jobs and will be highly skilled, highly trained; 30 per cent will be in contract jobs; and 40 per cent will not participate in the workforce at all for some reason, such as early retirement, motherhood or being a student.

It is the small and medium-sized firms that on the whole bear the brunt of the economic cycle, the ups and downs of the switchback. So it is going to be the 30 per cent of short-termers who bear the employment up and downs and what used to be referred to as "the lump" in the construction industry where self-employed workers have long been the norm. It is now common in the more starchy areas of banking and finance. It is, of course, rife in the information technology industry itself, as a glance at the ads pages of the computer press discloses.

I should like to make a plea to the Government not to boast too much about the flexibility we have achieved. There have been genuine gains in employment, and from these Benches we welcome and endorse the Government's emphasis on helping the long-term unemployed back into work, even if the New Deal has not been quite as successful as they have claimed (because of the strength of the pound and the endemic mismatch between the overheated south-east and other parts of the country, which are still relatively in the doldrums). That flexibility in the labour force has come largely from the shifting patterns of employment which I have described and the large numbers now working on short-term contracts. That has transferred the risk in the economy away from capital and on to the workers; indeed, often on to those workers least able to bear the effects of any downturn.

That carries potential long-term dangers. It is quite common in the UK to hear the Germans being criticised for their lack of flexibility and to point out their falling productivity. Those critics overlook two matters: first, that German productivity statistics since 1992 have incorporated the East German Länder whose productivity was always below western standards. Secondly, West German productivity in terms of added value per worker per hour has been, and remains, about 30 per cent higher than its British counterpart. One of the main reasons is that German workers are trained better and for longer than British workers. German employers invest in training because generally German workers stay longer in their jobs and, if not for life, at least long enough to pay back the cost of training.

I suggest that the changing structures of employment which we have witnessed over the past 25 years are part of a long-term and dynamic situation. We as a nation have very little control over it and we have chosen for one reason or another not to use the few controls that we have. Whether that is a wise decision, time will tell. It has resulted for the present in an imbalance in regional terms (which I have mentioned, but which has been dealt with at length by others) between the core and the periphery of the workforce—that core workforce and the penumbra of part-timers and contract workers. In both senses, flexibility has its upside and its downside. I urge the Government to recognise the downside and perhaps to be a little more humble when they preach the British solution to our partners in the rest of Europe.

8.9 p.m.

Baroness Miller of Hendon

My Lords, this has been a most interesting, stimulating and informative debate. Perhaps I should apologise to noble Lords for my grating voice. It is certainly grating inside my head.

I congratulate the noble Lord, Lord Lea of Crondall, on introducing such a good debate and one which has provoked so many interesting and informative speeches from all sides of the House. I also congratulate the noble Baroness, Lady Blood, on her fine maiden speech. I was most impressed by the fact that she said that she wanted to speak from personal experience. Noble Lords know that when they speak from experience they always speak better because they know what they are talking about. I do not suggest that in this Chamber any noble Lords do not know what they are talking about, but in other places that is perhaps the case.

Changes in employment patterns have been taking place not just in the past couple of decades as many have said, but for thousands of years. Nine thousand years ago man stopped being a hunter nomad and became a farmer. Later he developed into an artisan, working in wood and metal, devising alphabets and discovering mathematics and all forms of science, so creating the world of ideas. Everything accelerated at the time of the Industrial Revolution, which changed the whole balance of employment from agriculture and small craft work into the gigantic industrial conglomerates and the major industries that existed around the world at the beginning of World War II.

In 1901, 12 per cent of the population of the United Kingdom lived in the countryside and were engaged in agriculture. By 1991 the number of agricultural workers had fallen to 2 per cent. In contrast, the number of people working in office jobs rose from 18 per cent to 40 per cent in the same period more than double. Currently the number of couples with dependent children where both partners are in employment is three-fifths, compared with around half in 1979–80. A relevant fact is that between the spring of 1971 and the spring of 1999 the proportion of economically active women rose from 56 per cent to 72 per cent. One reason for that is that since 1901 there have been more office jobs than manufacturing jobs and the gap widened from 10 per cent to 20 per cent in the years between 1971 and 1991.

In other words, the nature of the work available has changed. More women are prepared or are physically capable of carrying out the jobs that are on offer, so more and more have paid employment. Their ambitions for themselves and their families, quite apart from their economic needs, are putting more women into the labour market. Several noble Lords, particularly the noble Lord, Lord Lea of Crondall, and the noble Baroness, Lady Turner, have mentioned that that is one of the greatest changes in employment patterns that we have seen over the past quarter of a century.

Without industries on the scale that existed in the first half of the 20th century, the unsurpassed savagery of the two global wars would simply not have been possible. After the Industrial Revolution the greatest accelerator to invention was the two world wars, which demanded new processes like mass production and incredible new inventions that today we take for granted, like radar, jet planes and Henry Kaiser's Liberty Ships, which transformed shipbuilding from rivets to welding. The list is almost endless and I shall not take up the time of the House by reciting a catalogue of them. After the war, the development of new inventions, new materials and new techniques arrived at a speed that even then was bewildering. The noble Lord, Lord Puttnam, told us about the present rate of change in relation to the digital economy and so on. Look at the difference between our old 7-inch black and white television sets and the new digital, all-singing, all-dancing interactive ones that we use today, not merely to watch a favourite soap opera, but to instruct our bank, for example, to pay the gas bill. Anyone who has bought a new computer in the past few years knows that it is virtually obsolete the minute it is taken out of its box.

What about telephones? The other day I was watching a not so old film when I was struck by the character laboriously turning the dial of the telephone and I compared that to the push button machines that we all use now. Those will soon be replaced by voice-operated telephones, which are already on the market. In 20 years' time—possibly less—I suppose the telephone kiosk will have disappeared completely in exactly the same way as the street gas lamp.

That leads to another example of changing employment patterns. When the gas lamps went, so did the jobs of the men who used to light them every night, along with the many jobs lost in the gas industry. Inventions have brought about changes in employment patterns, destroying old jobs, but at the same time creating new ones. One of my sons is a software engineer. When he was born there was no such thing as a software engineer.

Social considerations and international politics have also played a major part in the changing patterns of employment. The entire former British Empire has been decolonised and practically each new emerging country wanted to add industry to its predominantly agricultural economy. So we helped them to establish textile factories and in no time "King Cotton" was killed off by cheap imports from the developing world. In some cases, steelworks were developed and our steel industry suffered as a result.

Our steel industry was also decimaled as a result of fierce competition in the developed world and changes in manufacturing techniques in other industries. Reduction in demand caused by changing car engines from steel to aluminium and introducing plastic into car bodies is one such example.

In economics there is a new buzzword, "globalisation". International trading companies have been with us for long time. Those companies now have the opportunity to manufacture or to buy components in one country, assemble them in another and sell them in a third country.

Inability to compete with overseas industries working with cheap labour and less restrictive environmental regulations have all long played their part in virtually destroying old, traditional industries in which we were once the leaders. In four great centres we were the world leaders in shipbuilding. That industry has virtually disappeared. Overseas competition and domestic restrictive trade union practices played a major part in that I am not being judgmental because I believe that under-investment and had management were also to blame.

The fact is that the industry has gone and it has gone for ever, which brings me to geography. Why was it so hard to introduce new industries to the North East to replace shipbuilding, despite there being a ready-made skilled, versatile workforce on the spot? Another reason for this situation is the transport costs. A business that has to move its goods from Newcastle to Dover is inevitably at a disadvantage in relation to one that is based somewhere on the M2.

Even that factor is beginning to change. We have just entered a new world—indeed a new planet—"Planet.com". The other day I ordered something by mail order and found myself talking to a lady in Cornwall. I can buy books, compact discs and all sorts of things from America without speaking to anybody, and far more cheaply than I can buy them here. There is even a website operating out of Cyprus that sells cars at thousands of pounds less than in the United Kingdom.

What I call electronic work can be done anywhere. Call Directory Enquiries from London and you are likely to be answered by someone in Northern Ireland or Scotland. Data can be processed just as easily and speedily in some provincial town.

Lord Avebury

My Lords, perhaps the noble Baroness will allow me to intervene. UK Info, which costs about £25, contains every name and address in the United Kingdom and all the telephone numbers, so one never needs to ring Directory Enquiries. It is cheaper to buy UK Info.

Baroness Miller of Hendon

My Lords, I thank the noble Lord for his advice. Data can be processed just as easily and speedily in some provincial town or even in India or South America, as in one of the big cities, at less cost in wages and rent.

That is yet another change in employment patterns. How many ordinary, day-to-day financial transactions are now done long distance rather than face to face? Utility companies encourage us to pay by direct debit, giving advantage to those who can afford to compared with poorer people who do not have a bank account. Pensions are now paid directly into accounts.

It used to be regarded as a secure job for life to work in a bank. But not any more. The noble Baroness, Lady Turner of Camden, spoke of the change in businesses that were once regarded as being there for a long time. Counter clerks who aspire to become bank managers grow fewer in number. Money comes out of a hole in the wall. And a vast proportion of what people used to pay in the form of dozens of cheques each month, or by cash, is settled by one cheque to the credit card company. That is how things work these days.

The subject of the debate today is so vast that it is impossible, even with all the contributions made tonight, to cover every topic and ramification: they are endless. However, one of the great things about today's debate has been hearing of the experiences of different people who have spoken about different industries from different knowledge bases. I confess, as did the noble Lord, Lord Avebury, that I learnt an enormous amount from the noble Lord, Lord Puttnam. Apparently, my granddaughter knows far more about these matters than I do, but that is one aspect of the modern age. I have tried to show that it is clear that there has always been change. It is important therefore to have flexibility in the labour market to allow people to move from one job to another as circumstances require.

I should like to talk a little about what the future might hold—but only a little because with the enormous changes taking place one would need to be extremely brave to predict what will happen, and I certainly cannot.

The noble Lord, Lord McIntosh, would be surprised if I said that I had written a speech containing no political content; he would not expect that of me. But when I listened to the speeches around me I crossed out the political parts. I felt it was an extremely informative debate and did not want to move into the realm of politics. However, the noble Lord, Lord Brooke of Alverthorpe, tempted me to go back and read a couple of paragraphs which I had crossed out.

Despite the way that new Labour likes to turn facts on their head, this Government inherited a thriving economy, and one which continues to thrive because of the momentum which was already in place. I will not have the noble Lord, Lord Brooke, say, unanswered from this side, that it is down to what has taken place within the past two or three years. Far from it. The economy had not come to a shuddering halt by 1997.

Lord Brooke of Alverthorpe

My Lords, I know I have not been on the best of form today, but when the noble Baroness reads Hansard tomorrow she will see that there was a qualification in my remarks concerning inheritance.

Baroness Miller of Hendon

My Lords, yes, and the noble Lord made other remarks which I shall also read carefully. I felt it was a pity. Can I say more? This is not a political debate. The patterns of employment change throughout history and the problem for us all, whether we are in government or in opposition, is to do our best to try to create markets and work hard. It is essential and right that citizens of this country should be able to move from one area to another to find work. I felt that particularly when the noble Lord, Lord Puttnam, mentioned the number of people working in the Vodafone management organisation. I believe he said it was a business involving 400 million people but with 750,000 employees, as compared to the 10 at the top of the Stock Exchange which he mentioned earlier.

Lord Puttnam

My Lords, what the noble Baroness is trying to say is absolutely not accurate and I shall write to her with the precise figures.

Baroness Miller of Hendon

My Lords, that is the worry—not that the noble Lord is going to write to me; I shall be waiting for his letter with bated breath. But the problem is that the larger the organisation, the bigger the changes, the fewer people appear to be required. That will be a challenge for us all in the future.

With that little diversion I have passed over pages of my notes. But I shall let them go. I made my point with the noble Lord, Lord Brooke of Alverthorpe, and say no more in that regard. But I conclude by mentioning something that Adair Turner wrote in an article last September. He said that he felt that our labour markets were doing well, which was reflected in the impact of the profound labour market liberalisation which was introduced by the previous government—I emphasise "previous government"—in the 1980s and 90s. He said it is a liberalisation that the new Labour Government have left in place. There we have it. On both sides of the debate I have tried to be extremely fair.

8.25 p.m.

Lord McIntosh of Haringey

My Lords, this has not been a debate at all; it has been a seminar, and much better for that. We have all learnt things, thanks to the excellent choice of timing and subject of my noble friend Lord Lea and all the contributions that he attracted to his debate. I am a little disappointed that my noble friend intends to write to the noble Baroness, Lady Miller. He should send an e-mail and copy it, if he does not mind, to [e-mail].

We benefited greatly from the contributions today. In the limited time available to me, I want to say something about patterns of employment which is the subject matter of this "seminar", and something about the way the Government see them. Whether or not I go back the full 9,000 years that the noble Baroness, Lady Miller, did is doubtful. Then I want to talk about the economic aspects, particularly the macro-economic aspects, then the micro-economic and social aspects. A theme running through the debate has been, quite rightly, the quality of work as well as the quantity.

The pattern of employment in this country was described by the noble Lord, Lord Howell, as a "demented mosaic".

Lord Howell of Guildford

My Lords, "fragmented mosaic".

Lord McIntosh of Haringey

My Lords, my hearing is going. But the noble Lord is right in the sense that the employment market in this country is much more diverse, much more fragmented—to use his much improved word—than in other European countries and other parts of the world. For example, if we take the standard 40-hour week, only 10 per cent of people in this country work that 40-hour week compared with over 50 per cent in Germany and 40 per cent in France and Italy. As has been said, we have more Saturday and Sunday working, more shift working and more part-time work than anyone else in Europe.

Diversity is a good thing in the sense that it enables people to find a pattern of work that suits them. That is relevant to what the noble Baroness, Lady Blood, said in her excellent maiden speech; that is, that we have one of the highest rates of female participation in the world because the range of jobs, particularly part-time work, allows many women to combine paid work with domestic responsibilities. Whether we go from that into the more rarefied zones of treating our careers, as Charles Handy would say, as portfolios rather than as jobs is another matter.

Of course there have been changes, but we are still in the position where 87.5 per cent of those in employment are employees and only 11.5 per cent are self-employed. We have seen dramatic changes in the nature of jobs but, as the noble Baroness, Lady Miller, said, that has been true for a long time; indeed, for the past 20 years 7 million people have been changing jobs every year. It has always been the case that what appears at any particular moment in time as dramatic can be found to have been so at many points in our history.

So we do have a rather healthy pattern of employment in terms of its suitability for the wide range of uses that people want to make of employment, whether as a source of income, a source of meeting people or for what other purpose may be appropriate. We also have a very dynamic employment pattern. Again, these things have been going on for a very long time. The one clear measure of dynamism is the amount of change that is taking place within the UK labour market. In numerical terms, over 2.5 million vacancies are notified to the job centres of the Employment Service every year and perhaps twice as many more arise through newspaper advertisements, private employment agencies and the Internet. The Employment Service alone fills 1 million jobs every year.

There is a role for government in this process. It is valuable that we can contribute to oiling the wheels of the employment market. At the same time, the "flexibility"—which is a very fashionable word—in the labour market has many different meanings. Yes, flexibility is essential when you have a dynamic and diverse labour market, but it does not necessarily mean—and in most cases it should not mean—a hire and fire policy. It should mean jobs that are smart, in the smart card sense, efficient and well resourced with adequate capital behind them.

I shall not go into the history of what kind of economy the Labour Government inherited in 1997. However, this Government have a different idea not only about the quality of work and its social effects but also about what our objectives and our choices should be. It should be noted that Gordon Brown, as Chancellor of the Exchequer, is the first Chancellor not only to have talked about full employment for many years but also to mean it; and, indeed, clearly to have plans in place for achieving full employment.

There was a certain amount of party political discourse between my noble friend Lord Brooke and the noble Lord, Lord Howell. However, I am sure that the noble Lord would not deny that it was his noble friend Lord Lamont who said that a high level of unemployment was a price worth paying for the changes that were taking place in labour markets. Indeed, I think he was largely justifying that in his speech. But whatever may have been the case in the past, the point we want to make is that a high level of employment and a low level of wasted lives and talents is a proper objective of government. Governments are free to make that choice and it is one which this Government have deliberately made. I give way.

Lord Howell of Guildford

My Lords, I thank the Minister for giving way and I am sorry to delay noble Lords further. The Minister speaks so persuasively, but he still has not grasped the point. The capitalist system is evolving. We now have a brand new system of capitalism globally. This country has been through a revolution and will go through further revolutions. These things take time. During the time in question there had to be a rise in unemployment, with great regret, before the level could come down and settle in the new job pattern. It was not a question of accepting high unemployment as a permanent feature and later welcoming some new and different model: we had to go through that period to get where we are now. It was inevitable; as other countries are now finding out, it cannot be done any other way.

Lord McIntosh of Haringey

My Lords, I hoped that I had chosen not to go backwards and I trust that the noble Lord will listen to the rest of the argument, because it is about an evolving economy. As reflected in the instructions of the Chancellor of the Exchequer to the Bank of England in setting interest rates, what is important is a high and stable level of employment—indeed, to be quite precise, high and stable levels of growth and employment. This means employment opportunities for all, and that is the definition of "full employment" for which we should be looking; in other words, work for those who can work.

There has been a change in emphasis from previous definitions of full employment from levels or rates of unemployment, which is the way that the previous government always chose to look at the figures, towards rates of employment, supplemented by a fair and inclusive distribution of employment. We have done that quite deliberately to enable us not only to help the unemployed but also those who are currently economically inactive, including some of the most disadvantaged people in society, so that they can reap the benefits of work.

If we look at the figures of the breakdown of the labour market, we can see that of the working age population of 36 million something like 27 million people are in work; something like 1.7 million are unemployed (under the ILO definition which is what we use in this Government); and something like 21 per cent are economically inactive, of whom 30 per cent say they do not want a job but very many would want a job if it were possible for them to do it. The whole thrust of government policy on employment has been to make it possible, desirable and attractive for those who are not economically active to get back to work and make that work pay. That moves me from my macro-economic objectives to the social objectives.

However, before I continue on that track, I should like to say a few words about the knowledge economy, which has been a theme of so many well-informed and fascinating speeches this evening. The noble Lord, Lord Howell, was right in much of his analysis of the knowledge economy. I believe he described a pattern where many rotten jobs—boring and unskilled jobs—have disappeared, will disappear and will not come back. But the question is: how can we ensure that they are replaced by interesting, worthwhile and well-paid jobs, which will contribute to the quality of life of everyone? Before I finish agreeing with the noble Lord, I have to say how much I disagree with his "Homo Hierarchicus" model. It sounds very much to me like the rich man in his castle with the poor man at his gate. I do not think that the noble Lord would like to think of himself in that way.

I am not in any way trying to go back—certainly not 9,000 years. Indeed, I am not even going back to what my noble friend described as "John Mortimer's village" of 70 years ago, with the lonely barrister plodding homeward on his weary way. I hope that we are looking forward and that we are taking seriously the technological changes that are taking place.

My noble friend Lord Puttnam made a very good analogy with railways. The point about railways is not that the employment there in the last century was enormous but the fact that it made possible the movement of goods to and from markets; it expanded markets; and made possible the movement of people to and from work by train. The analogy ought also to be thought of as being valid for e-commerce. It is not that e-commerce itself will be a huge employer, nor should we be misled by the stock market valuations of high-tech companies. Surely the effect of e-commerce will be as a tool for all other businesses. Unless those other businesses make use of the technologies available, they will go to the wall. There will not be such a dramatic change in the pattern of employment, but simply—we hope—in the quality of the jobs that will be made available.

I found my noble friend's analogy of Vodafone to be less valid. If we take stock market valuations as a significant factor, we could be misled. But he got back on track, as always—

Lord Puttnam

My Lords, I thank my noble friend for giving way. The point I want to make—I think that it is a terribly important point—is that I am no fan of the ups and downs of the stock market. However, as the noble Lord, Lord Howell, pointed out, we live in a capitalist economy whereby the value on paper allows a company of no intrinsic value, but with a lot of future, to purchase assets on the open market. I believe that we have not fully come to terms with the fact that the new economy is able to purchase the assets of the old economy and move forward. That is not fully appreciated in this country.

Lord McIntosh of Haringey

My Lords, I do not deny the facts. I am not at all certain what the political and economic implications are. Perhaps I am just confessing a failure of analysis. I do not think that the Government take a view on these matters. As I said, I think that my noble friend was back on track when he talked about education and our educational policy. That is what we debated this week when we discussed the Learning and Skills Bill.

I ought to say a few words about the employment policies of the Government. I shall do so briefly as there was not much comment on it except from the noble Baroness, Lady Blood, who described a young man with a wife and baby who was offered work in a supermarket that turned out not to be permanent. The point which ought to reassure the noble Baroness is that, according to the statistics, those who find such work—even if their first job does not work out—often eventually obtain full-time jobs. The difficulty is to get the first job. Often people who are successful in obtaining their first job find that their subsequent work prospects improve.

As regards the comments of my noble friend Lady Turner, I point out that we have set out a legal framework of decent minimum standards through the Employment Relations Act, the national minimum wage, the Working Time Directive, the social chapter measures and provisions to protect part-time workers through giving them comparable rights to those of full-time workers. Those provisions appear to be working. People are more confident about seeking work. Those whom I have described as being inactive but who want to work are being encouraged to seek it.

That leads me to the other labour market measures that have been almost an obsession with this Government during the past three years. We have heard about the New Deal for the young unemployed. That has been extended to those aged 25 and over and, from April this year, will be extended nationally to those aged 50 and over.

My noble friend Lady Turner mentioned lone mothers. I shall not mention any further statistics but take up that point. The programme for lone mothers is voluntary. Some 90,000 people, nearly all of whom are women, have taken up the offer of an interview. Some 23,000 have found jobs and an additional 5,000 have entered education and training. If one extends those statistics to the other parts of the New Deal, one can see that the increase in employment in this country of over 700,000 in the past three years is not a matter of chance but has occurred because deliberate and effective government policies have been introduced to make that possible.

Before I leave the issue of older people, my noble friend will know that following consultation we issued a code of practice in July of last year on ageism in employment policies. We shall see how that works before we take any decisions as to whether anything further needs to be done. These considerations apply to all aspects of the labour market, particularly as regards women, which I do not have time to refer to, even in the 40 minutes that remain in which I may speak! All of these measures are not job creation measures or measures to provide an alternative to work. They help people to help themselves to get a job and avoid the problem of being stuck out of work. The measures ensure that when people go back into work that is beneficial to them in social and economic terms and is beneficial also to society. I do not have time to discuss working families' tax credits, the national minimum wage or all the other aspects of government policy which are relevant to the subject matter of this debate. I conclude by saying that it is our objective to achieve full employment in this country, not only for moral and social reasons but because that is the way for this country to thrive. We believe that we have made a good start.

8.45 p.m.

Lord Lea of Crondall

My Lords. I am glad that noble Lords have found this a rewarding debate. I understand that one does not respond at this stage to points that have been made in the debate. However, I wish to make a couple of points.

I share the view of the noble Baroness, Lady Miller, that forecasting the future is rather difficult. Some of us have heard a good number of forecasts. I refer to the forecast of my noble friend Lord Eatwell. He said that he envisaged a scenario whereby the whole of manufacturing industry was run by one man. I add that the man has a dog. I know about this as I went on a VIP visit to the place where the man is employed. At the end of the visit we were asked whether we had any questions. We asked, what the man did. We were told that the man was present to feed the dog. That was fair enough. We then asked what the dog did. We were told that the dog made sure that the man d id not touch any of the equipment.

This debate has not been political. I was particularly glad to hear the range of contributions. I was interested in the speech of the noble Lord, Lord Howell. I point out that membership of the trades unions increased by 100,000 last year. Therefore I believe that the trades unions will be around for a long while yet. I say to the noble Lord, Lord Avebury, that a request from him for information on how social partners arrange negotiations in Brussels arising from the Maastricht Treaty would be well received. They have involved the TUC and the CBI in those matters. That is an important development which few people seem to appreciate.

Finally, I echo the comments of everyone who has said that the noble Baroness, Lady Blood, made a notable maiden speech. I thank the noble Baroness for choosing this debate in which to make her maiden speech and for mentioning her personal experience and her reflections on some aspects of her work in Northern Ireland. I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.