Orders of the Day — Unemployment

Part of the debate – in the House of Commons at 12:00 am on 3rd February 1970.

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Photo of Mr Edmund Dell Mr Edmund Dell , Birkenhead 12:00 am, 3rd February 1970

My hon. Friend, as usual, foresees the matters that I am going to come to, although he will no doubt appreciate also that I have not come to the Box this afternoon to make a Budget speech.

I can quite understand that my hon. Friends may think that the improvement is not fast enough but in a sense it can never be fast enough, and I, representing a development area, am very sensitive to the speed of improvement in this field. But it needs to be remembered that the investment grant system was introduced only in 1966 and therefore the differential in favour of the development areas also was only introduced in 1966 and the regional employment premium was only introduced in 1967. It has only been since this Government has been in power that the conduct of the industrial development certificate policy has been made really determined.

I am afraid one cannot change major structural deformations that have been with us for at least 40 years in the lifetime of a single Parliament, especially if the problems are compounded by the rapid run-down in employment in traditional industries. But we have made considerable progress and I am certain that it will not help to abolish the Measures which we have introduced and which are succeeding in assisting with the problems of the development areas.

The improvement in the relative position of the development areas will enable the economy to be run on a higher average level of demand with less waste of people and resources. We have been watching with some interest—and I had hoped the right hon. Gentleman might have told us something about it this afternoon—what really was decided at Selsdon Park about policies for the development areas. We are told that the Conservatives will abolish our measures even though evidently they accept that our measures have had the effect of influencing the location of investment in this country. They will phase out the regional employment premium, though they do not say exactly what that will mean. Does it mean that they are going to phase it out before the seven years to which we are committed? What are they going to do to assist the development areas? In particular, what are they going to do to counterbalance the capital-intensive nature of the investment allowance they intend to restore by a system paying some regard to employment? All this, which we might have expected to hear from the right hon. Gentleman this afternoon in a debate devoted to unemployment, we have not heard. I hoped this would be part of the constructive policies which might have been developed before us, but he has not given us any insight into them.

Of course—here I come to the point which my hon. Friend has just raised—the short way with unemployment would be to raise the level of demand in the economy; but this, done too fast, could be the short way to unemployment through a balance of payments crisis. We must consolidate our balance of payments position, therefore, we must have priority for exports and investment as methods of raising demand and hence reducing unemployment. I am certain that investment particularly will flourish best against the background of a secure balance of payments and the prospect of steady growth. I am certain also that the prospects for investment could be damaged by suggestions of fundamental changes in or even the abolition of investment incentives such as we have heard recently from right hon. Gentlemen opposite.

I come to my final point. The rate of unemployment in this country has been pretty stable since 1967, though, I agree, too high, particularly in the development areas. It is widely accepted, however, that the figures no longer have their former significance as to the level of demand for labour and that it has been sensible to control home demand while transferring resources to exports. Why, then, this censure debate now, after three years during which home demand has been kept under strict control to facilitate the switch in resources to the balance of payments? Why now when we have mastered the balance of payments problem, when we have created a basis for expansion, when the success of our economic policies has become apparent? Perhaps because right hon. Gentlemen opposite have suddenly become concerned about the level of unemployment in what they think to he an election year.

During the past two years, contrary to previous cycles, we have had growth and a remarkable improvement in the balance of payments. This is the basis on which to build, keeping both objectives—growth and the balance of payments—well in hand. A major aim of the Government on both economic and social grounds is to cut unemployment and maintain full employment on a secure and lasting basis. The policies of the Government are those best designed to achieve this, and I ask the House to support the Government.