Orders of the Day — Unemployment

– in the House of Commons at 12:00 am on 24th January 1972.

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Photo of Mr Selwyn Lloyd Mr Selwyn Lloyd , Wirral 12:00 am, 24th January 1972

Before I call the right hon. Member the Leader of the Opposition to move his Motion, I have to inform the House that I have not selected the Amendment standing in the names of the Leader of the Liberal Party and others to leave out from 'House' to the end and to add: 'recalling that both Labour and Conservative administrations have been elected on the strength of promises to maintain full employment, noting with disgust that between January, 1966 and January, 1970 unemployment rose by 80 per cent. and from January, 1970 to January, 1972 by a further 56 per cent., censures both Labour and Conservative administrations for their disastrous economic policies which have resulted in more than a million unemployed, and has no confidence in either Party to conquer unemployment' but it will be in order for its substance to be discussed during the debate on the main Question.

4.37 p.m.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

I beg to move, That this House, recalling that the present administration was elected on the strength of a clear and specific pledge by the Prime Minister to reduce unemployment at a stroke, censures Her Majesty's Government for the fact that their doctrinaire and irresponsible policies have forced the total of registered unemployed in the United Kingdom to 1,023,583 persons. Before I come to the Motion itself, I should like to say to the right hon. Gentleman the Prime Minister how much we deplore the incident to which he was subjected over the weekend, and to express our sympathy.

On behalf of the whole House I should like to welcome the right hon. Gentleman back from his visit to Europe. Back to reality. The reality of the Government's attainment of 1,020,000 unemployed.

A national newspaper on Friday morning, headlining the right hon. Gentleman's achievement, prefaced the announcement with one word, "Shameful", and so it is. The tragedy of the situation, the censure which, in the mind of the whole nation, adheres in the Prime Minister and his Government, is this, and we have seen it in this House underlined in speech after speech, in answer after answer as the unemployment figures month after month have approached this figure, and we shall undoubtedly get it again in the right hon. Gentleman's speech today, and it is simply this, that the right hon. Gentleman feels no sense of shame.

On Thursday the right hon. Gentleman issued a characteristically petulant statement about the reception that he had at Question Time. In that statement there was not a word of regret that a million of his fellow citizens were condemned to involuntary idleness, and their families to insecurity. Not a word of admission that this is the result of his Government's policies, and no less of his own characteristic personal style of dehumanised government. I make this prediction, that in the speech he makes today there is still no shame, there is still no acceptance of Ministerial, still less Prime Ministerial, responsibility for this achievement, that we shall get the same excuses and alibis, this usual craven attribution of vicarious responsibility to every individual and institution in this land except the man who is responsible. We have heard it all so often.

The Prime Minister, who has sought, and won, the plaudits of the Alf Garnetts of his party especially in the A/B category, to say nothing of the sycophants of the Tory Press, by the cheap jibes about lame ducks, the admonitions to their fellow-citizens to stand on their own two feet, has not got the guts to stand on his own two feet, to stand his corner, after more than 19 months, for the consequences of his own policies.

In my innocence I asked him—[Interruption.]—and I shall prove this, after the right hon. Gentleman had been in office for only seven months, how much longer he had to be there before he took responsibility for his decisions. That was 12 months ago, and we shall not get that responsibility today. Let us not hear that it is the unions, or their members, or the unemployed themselves, whose craft, whose skill, whose desire for secure security for themselves and their families, are cast on the scrap heap. They have an undeniable right to continuity of employment to exercise that craft; a right far transcending the right of the right hon. Gentleman to continue to exercise his.

I wish he could have accompanied me into the employment exchanges of Kirkby and Prescot just as the January unemployed register was being counted a couple of months ago. I wish he could have seen the dole queues. I wish he could have seen the Kirkby juvenile register—351 boys and 273 girls; some of last Easter's school leavers still without a job—and could have joined me in the sense of shame that this is British civilisation, 1972.

Last Friday he left these shores, the first dole queue millionaire to cross the Channel since Neville Chamberlain. I was thinking of him as he went, and I was pleased to read that he conducted a madrigal. I wish he could have been with me meeting the shop stewards of Fisher-Bendix, attempting to avert a further 750 redundancies and the total closure of that factory, following hundreds of redundancies last year, to prevent the closure of a factory which was established with a prospective employment of thousands on the basis of lavish unstinted Government money paid out like water, with no regard to cost, not many years ago. There need be no murmurs about that. I did not see the papers although it was in my constituency. The President of the Board of Trade did not show them to me, because he was the right hon. Gentleman, now the Prime Minister. They poured out the money, and now it is closing, with no action from right hon. Gentlemen opposite to prevent it.

I wish the right hon. Gentleman could have heard the madrigal that my constituents were singing about him. I will speak for them as I have the right and the duty to do so. So have a large number of my hon. Friends, faced with similar factory situations, far more than the number who can hope to catch your eye, Mr. Speaker, in this debate. An equal duty rests on many hon. Members opposite who know the facts in their own constituencies. We shall see whether they discharge that duty in their speeches and, still more, in their votes tonight. Many of them would not be here, any more than the right hon. Gentleman would be sitting where he is, but for the meretricious pledges they gave, following the lead that he gave them, about employment—not about preventing any increase in unemployment—and, not just that, but about reducing unemployment which he was pledged to do in that famous statement two days from polling day. There sits the man who, almost on the very eve of polling, pledged himself to reduce—his word—unemployment at a stroke. Does he deny that pledge? He may say that it was not the pledge that won the election. He may say that he won the election by his appeal to housewives, based on his clear pledge directly to reduce prices.

We can all gauge the sincerity of that pledge. If hon. Members opposite cannot, the housewife voters have, and will increasingly do so when the housing legislation becomes law, when the V.A.T. takes effect, and fares and milk. He made his pledges on bread prices, fares and school meals.

Even if the right hon. Gentleman seeks to wriggle out of all that about prices, does he deny that if he had told the country the truth about employment, he would have been abjectedly consigned in the election to oblivion? Does he deny that that would have been the result if he had told them that on Conservative policies on which he had already decided, unemployment would not be reduced at a stroke or in any other way, that it would increase to 1,020,000 in 19 months, and that with normal wintry weather there would be many thousands, perhaps hundreds of thousands, more?

Does the right hon. Gentleman, who used not improperly from this box to draw a distinction between unemployment figures and the fall in employment, deny that on that test of those registered unemployed plus the numbers not registering for employment because they have no hope of employment, the real unemployment figure is well over 1¼ million and perhaps 1½ million? If we are debating a social tragedy today, let us record for many, though not all, that for those who cease to register it is a final irrevocable decision of despair, particularly if they are getting older. The right hon. Gentleman must take responsibility for this.

This is the much vaunted man of principle we heard so much about in the last election. This is the three times winner of the £38,000 prize for integrity from the Rothermere-Aitken-Hartwell-Rees-Mogg foundation. Would the right hon. Gentleman have been addressing the House from the Dispatch Box if he had honestly admitted that those policies would create a loss of jobs available for those whose votes he was canvassing, even greater than the increase in the unemployment figures themselves? When he answers this question, let him watch his back. While he was away, even the Daily Express, whose capacity for masticating and digesting his policies without apparent nausea has become a by-word, even in the Tory Press, developed an unaccustomed fastidity and dietetic discrimination in its leading article last Friday.

Does he repudiate the speeches on which he won the election? In his election party political broadcast he said, after an impassioned eulogy of freedom: You should have the freedom to be an individual and no one individual should have to be like any other. Today 1 million of those to whom he was appealing are in the dole queues. In the dole queue there is no freedom; there are no differentiations. For them the universal leveller is the denial of freedom to work.

Did he or did he not on 12th June, 1970 attack me, in one of his well-known ad hominen speeches, for the fact that there were 86,000 unemployed in Scotland? Today there are 154,000 unemployed in Scotland.

Does he deny that in Bradford, in the election week, when his main argument was that the balance of payments surplus we had achieved was "slipping away"—that is another mark of his integrity—his description of the economy was one of high employment. If he does not deny saying that, let him say today how he does view the economy. Would he like to be reminded of his speech on regional unemployment in Dundee on 9th September, 1969? I challenge him to defend that here. He said: We cannot toierate the waste of human and economic resources brought about by their uneven use in different parts of the country. We"— talking of the Conservativesrefuse to condemn large parts of the kingdom to slow decline and decay, to dereliction and to persistent unemployment in pursuit of old- fashioned 19th century doctrines of laissez-faire. That is when he was after votes. He went on to say: We shall act. We shall act to bring new life to those areas suffering from high unemployment or depopulation. We shall act to encourage a sensible spread of industry. We shall act to enable the wealth that comes with it to be enjoyed in all parts of Scotland and across all parts of Britain. Let the right hon. Gentleman tell the House whether he denies using those words and seeing that they got full publicity. That was in September 1969. In Dundee when he spoke unemployment was 2,633. Today is is 8,770. The unemployment percentage in Dundee then was 2·9 per cent. Now it is 9·8 per cent. The unemployment rate for men in Dundee today is 12·3 per cent. I challenge him to confirm or deny these figures; then to tell the House how he reconciles the failure of Tory fact, to realise the glossy Tory promises that he made before the election.

Today we want no excuses, no blaming the past for the fact that unemployment in Dundee has gone up from 2·9 per cent. to 9·8 per cent. Of course, there was the Tay Bridge disaster in 1879. But let him stand on his own feet and say what is the real cause of the situation.

It was not only the Prime Minister who said these things, though his colleagues have never challenged his record for integrity, which I have been exposing this afternoon. The right hon. Member for Mitcham (Mr. R. Carr) is to wind up the debate. I ask him to address himself to these words: This record —the unemployment figures just published— is a damning indictment of the Government's economic policy and their good faith … the present level of unemployment is a direct result of Government policy, and they cannot deny it". Those were his words at the General Election. The unemployment figure to which he was referring, published by my right hon. Friend the Member for Blackburn (Mrs. Castle), was 577,800, or 612,000 with Northern Ireland. Today his figure is 1,023,000—that is more than 400,000 up.

In the House at that time, in May, 1970, the right hon. Member for Mitcham referred to Labour charges before 1951 —let him think about this—that a Conservative Government would mean unemployment. He told the House: This did not prove to be so, nor will this happen next time".—[OFFICIAL REPORT, 6th May, 1970; Vol. 801, c. 422.] He is the Minister publishing today's figures.

A sense of compassion prevents me from quoting from the speeches of the Chancellor of the Exchequer. In those days, free of care, and equally free of truth, he was chairman of the Conservative Party, the party he has now conspired in leading into the morass of unemployment. He will forgive me for ignoring him. I assure him that it is not for want of courtesy. But, to rewrite Aneurin Bevan, why waste time on the simian when we have the organist in our sights? Before passing from the Chancellor of the Exchequer, however, I offer him one piece of gratuitous advice, that in devising his future policies he should pay less attention to the men of the Stock Exchange and more attention to the men of the Labour exchange.

I invite the Prime Minister to join in a clinical analysis of the latest unemployment figures. Let us keep them clinical, as that is all he understands. He has spent the last 12 months proving that compassion and a sense of the human tragedy that these figures represent is a monopoly of this side of the House. Cost-benefit analysis, apparently, is the limit of his understanding.

Last Thursday, in the Evening Standard —nothing could be more honest and clinical than an Evening Standard headline—above two-inch high figures proclaiming "1,023,583" was a snide headline, Shares hit 500 as jobless tops million And that after all that the right hon. Gentleman has done for Ian Smith.

The overall figure is 1,023,583. For wholly unemployed in Great Britain alone, excluding 10,000 school leavers, it is 918,595. In the past three months, the seasonally adjusted figure for wholly unemployed has rised by 59,100, against a mere 47,000 in the previous three months. Moreover, many of my hon. Friends, if they are able to catch the eye of the Chair, will produce evidence of devastating new redundancy figures announced this year which have not yet swollen the ranks of the unemployed, as I can from my own development area constituency. No doubt, the right hon. Gentleman studies the redundancy figures each day. No doubt, he will give all the prospective redundancy figures operative for the period after publication of the present figures.

There has been an increase in wholly unemployed in Great Britain alone of 211,000 since January, 1970, the last January of the Labour Government. No seasonal correction need be made. There has been a rise from 3 per cent. to 4·3 per cent.

We all remember how the late Lain Macleod, backed by the present Secretary of State, used to give the number of months in which unemployment under a Labour Government exceeded 500,000—and that at a time still of inherited balance of payments deficit when we were having to restrict desirable increases in production in order to create the surplus which was absolutely essential if we were to go forward to full employment, that surplus which we handed over to the Prime Minister but which he has neglected to use for that purpose. It was £600 million, yet he was denying it in election week. Let him laugh that off.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

I am quoting from June, 1970. Last week, the Secretary of State for Employment published figures showing that, since last March, unemployment, far from meeting the half-million test which he used to use, has not fallen below three-quarters of a million. Let him tell us tonight when, on his analysis, it will fall even to three-quarters of a million again, let alone 500,000.

I shall take the right hon. Gentleman now on a tour through the unemployment figures for the regions. He does not see much of them. [Interruption.] He certainly does not. I do not know which one he would like to me to take, but I should like to help him, because I know he is looking for a constituency, so I shall begin with the South-East.

Today, the figures are published for the South-East and Greater London together. Unemployment today in the South-East is 2·4 per cent., against 1·8 per cent. in January, 1970, just two years ago, and 1·4 per cent. for Greater London. In East Anglia, it is 3·6 per cent. today, compared with 2·4 per cent. in January, 1970—half as much again. Is that what hon. Members who gained Norfolk seats told their electors in 1970?

For the East Midlands, it was 2·4 per cent. in January, 1970; it is 3·6 per cent. today. For the South-West, it was 3·2 per cent. in January, 1970; it is 4·2 per cent. today. For Yorkshire and Humberside, it was 3 per cent. in January, 1970; it is 4·8 per cent. today—60 per cent. up.

For the North-West, it was 2·7 per cent. in January, 1970; it is 5 per cent. today—nearly double and still rising. For the West Midlands, it was 2·1 per cent. in January 1970; it is 5 per cent. today—nearly 2½ times as high. For Wales, it was 4·3 per cent. in January, 1970; it is 5·8 per cent. today. For the Northern region, it was 5·2 per cent. in January, 1970; it is 6·9 per cent. today. For Scotland it was 4·4 per cent. in January, 1970; it is 7·1 per cent. today.

Let us consider, next, male unemployment. I think that the Secretary of State for Employment will confirm that, if the figures separated the men from the boys here, they would show an even more appalling situation. For the South-East, it was 2·5 per cent. in January, 1970; and 2·1 per cent. for London. Today, the figure for the combined region is 3·4 per cent. In East Anglia, it was 3·2 per cent. two years ago; it is now 4·9 per cent. For the East Midlands, it was 3·3 per cent.; it is now 5 per cent. For Yorkshire and Humberside, it was 4·2 per cent.; it is now 6·6 per cent.

Continuing with the figures for male unemployment: for the West Midlands, it was 2·8 per cent. in January, 1970; it is 6·7 per cent. today. For the North-West, it was 3·8 per cent.; it is 6·9 per cent. today. For Wales, it was 5·3 per cent. in January, 1970; it is 7·3 per cent. today. For the Northern region it was 6·9 per cent.; it is 9·1 per cent. today. For Scotland it was 5·9 per cent.; it is 9·3 per cent. today.

Those are the male unemployment figures, and they are all on an identical seasonal basis, as one is taking the last January of the Labour Government and this January.

Regions which have not known unemployment since the war are now harder hit by Tory mismanagement than all the worst development areas in the last January of the Labour Government—areas which were then improving and growing more hopeful for the future.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

Certainly, they were. I do not understand that the Gillingham constituency was part of a development area, but it will very soon be one.

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

The right hon. Gentleman said "all".

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

I said "the worst development areas".

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

Does not the right hon. Gentleman remember that, after the debate on devaluation, he said that within the next year there would be more jobs than people capable of filling them? That was a promise, In fact, unemployment increased.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

The hon. Gentleman has entirely misquoted that speech. What happened in the 2½ years following devaluation was that unemployment barely rose by about 25,000, compared with the 300,000 it has risen under the Tory Government.

I want to give some more figures to the Prime Minister because I know that he is a willing learner when he has the figures. [Interruption.] I was talking about development area figures. I had given the development area figures, and I had said that the position there was improving in January, 1970, as my hon. Friends know very well. Scotland had 5·9 per cent. in January, 1970, and the West Midlands, the classic model, the epitome of full employment for a generation, now has 6·7 per cent., worse than Scotland was when we went out of office and worse not only than in 1939 but at any time since the Great Depression. The Northern region, which was still hardest hit in January, 1970, then had 6·9 per cent.; today, the North-West has climbed from 3·8 per cent. to the same figure as had the hardest hit development area. As I have said, all are now getting worse.

In May, 1970, speaking of regional unemployment, the Secretary of State used these words: It is about time that the Government stopped belittling this problem and started to take it seriously ".—[OFFICIAL REPORT, 6th May, 1970; Vol. 801, c. 420.] I have quoted the figures for now and compared them with what they were then.

Hon. Members know that even these disgraceful figures conceal individual areas where the male unemployment rate is now well into double figures and some which are as depressed as in the 1930s. They know, too, the human tragedy created by the inevitably soulless figures of the duration of unemployment, of six months lasting into 12 months and beyond; for men over 50, or even over 45, the feeling of hopelessness, of being unwanted by this system of society.

There are the very serious figures in parts of the country for the very youngest workers, including apprentices, and those who have just become fully skilled craftsmen and who find that no one wants their craft. What this means is that regions which have not known unemployment for 30 years are harder hit than they were two years ago. It means that hundreds of thousands of men who, if under 45, have not known the family tragedy which unemployment means—and there are many of us on this side of the House and perhaps some hon. Members opposite who know in personal and family terms what it means—who have not known even a workmate to be out of a job, now face unemployment.

The right hon. Gentleman, who has repeatedly made clear his attitude to the trade unions and their members, can now proudly claim that he has taught them a lesson, a lesson of what Tory policy really means. For them this is the "Better Tomorrow" he promised in his manifesto, with that glossy photograph of him to commend sales, the title which he chose for his manifesto which secured his election. Today they are feeling the bitter tomorrow which he has inflicted on our constituents and on his own supporters.

The figures I have given are for the wholly unemployed, excluding school leavers. Unemployed school leavers, including school leavers in the 1970–71 class, including last Easter, are 10,000 today against 4,000 in January, 1970. Is this the land of opportunity which he promised their mothers when he was soliciting the housewives' vote in 1970?

What of white collar unemployment? I do not know whether hon. Members opposite, as my hon. Friends and I still do, hold constituency services or advice surgeries; I suspect that many do. They will know, and I hope that they will tell the House today, what it means for the man who says, "It cannot happen to me", what it means for his family, his mortgage. He is a man with a proud stake in the country—we remember the great phrase—the man with his car, so important to him, perhaps it was a firm's car. What of his commitments and plans for this year's holiday, or the education of his children and his hopes for the future?

It was such votes that hon. Members opposite were soliciting in June, 1970, and not without success, for that is why they are in office. But those who were conned by them in 1970 now find themselves betrayed by those whom they trusted, and those they trusted are betrayed by the incompetence and the callous indifference of the man who leads them. That is what they have to defend in their constituencies.

No doubt in answering constituents' letters they can find sympathetic words to the effect that the Stock Exchange has passed its 500 peak and that property developers and speculators are making an unprecedented killing. We read in every daily newspaper that that is the sign of a boom, but the truth is that the Stock Exchange dealers, who in a whole lifetime have never added a penny piece to the wealth and welfare of the country, were pouring out champagne last Thursday and the "in" people, who had advance notice of a take-over bid, are flaunting their success in the two-nations' economy over which the right hon. Gentleman now so proudly presides.

I come to graduate unemployment. Is the right hon. Gentleman proud of this? In the Government of which he was a member, Lord Boyle, who must be happily relieved of the necessity of stomaching his former leader's policies at home and abroad, announced a policy for greatly increasing the numbers in the universities and other institutions of higher education, derided by the establishment of the day as unjustifiable, unnecessary and undesirable—" more means worse", thundered The Times. But the Labour Government accepted the Conservative higher education programme and greatly improved on it.

What has happened? All the authorities are agreed that the unemployment rate of last summer's graduates is around 10 per cent. Seven months from their degree examinations and the Tory society has no jobs for them! Now already we are seeing a diminishing rate of increase of new candidates for higher education and those from working-class families feel themselves alienated and unwanted in this area. The right hon. Lady the Secretary of State for Education and Science, with her losing battle against comprehensive education, is encouraging them to feel unwanted.

The Prime Minister glories in the challenge of the Common Market, and we have heard that again this week-end, while characteristically ignoring the challenge of the wider world. But even with his restricted diocese, does he not realise that the future of Britain in world trade and the future of Britain in the Market requires that in Britain's interest every boy and girl now at school must be given the fullest facilities for realising his inherent talents if we are to compete with the remorseless challenge not only of the Market, but of America, Japan and the Soviet Union? All he has to offer in face of the world scientific and technological challenge is 10 per cent. graduate unemployment, a notice saying "Not wanted". The only international challenges he recognises are Mr. Mintoff and the Indian Ocean waves lapping on the shores of South Africa.

It is perhaps vain to appeal to the right hon. Gentleman about the human implications of the figures which his right hon. Friend has announced and on which his hon. Friends waved their Order Papers last Thursday when he came into the House after them. So much for the facts. Hon. Members in all parts of the House can fill in the facts. None can deny them but hon. Members can give more details from their own constituencies. Now I come to the causes.

The first is the right hon. Gentleman. Yesterday's Sunday Times called on him to demonstrate an obsession with the unemployment problem. Personally, and I believe that other hon. Members do, I acquit him of a desire to see the unemployment figures so high. At the lowest his daily calculation of the discounted cash flow of electoral probabilities will probably preclude anything so electorally damaging. But unemployment has not been his Prime Ministerial obsession. By common consent, the danger point was last April after the demonstrated failure of the Budget strategy of the Chancellor of the Exchequer.

Was the right hon. Gentleman then obsessed by the worsening unemployment trends last spring? Not a bit—he was obsessed by Europe. If the right hon. Gentleman had served the cause of the right to work of the British people, a right of which he is custodian, with one-tenth of the energy which he has devoted to wooing the French President, we should not be having this debate today.

But even before that his obsession had done irreparable damage. Within days of taking office he was concerned with the implementation of those of his speeches in preceding years which had evoked the loudest cheers from the more ignorant of the Tory faithful—the Monday Club, the Institute of Directors, the Friedmanites, the Cobdenites, the anti-public enterprisers, the Aims of Industry, the Economic League and the rest. But hon. Gentlemen opposite will have to take responsibility for their Government and for the cause of this unemployment.

In the halcyon days of July, 1970, as his first act we saw the disappearance of the Prices and Incomes Board. We warned him that that doctrinaire decision would be fatal, not only to action to restrain prices, but fatal to prospects of any agreement on a voluntary prices and incomes policy which must be the necessary guarantee of sustained growth without demand inflation. We were committed to industrial expansion because we, for the first time, could have relied on the balance of payments strength which we had built up.

The right hon. Gentleman, although he had that to rely on, immediately goes into wrecking action. He abolished the I.R.C. just because of an ill-considered speech he had made in Scotland in 1969. There are few in the City or industry who now do not wish to see the I.R.C. restored in some form or another. The right hon. Gentleman has not told the House yet—no doubt he will announce it—that the Government are to set up an I.R.C. for Northern Ireland. It has all been agreed to and he is about to announce it. There is an undoubted case for it, but the case for an I.R.C. should not just depend upon violence. We have hard-hit regions in England and Wales and Scotland with the same enormous problems which are entitled to the same remedies.

In those early weeks we saw his utter obsession with the unions—an unnecessary dock strike to show who was master but which did not. I do not accuse the Prime Minister of seeking higher unemployment to coerce the unions; the charge against him is that because of his political obsessionism the achievement of full employment for the first time since the war has no longer been the top priority in the higher reaches and the highest reaches of Government.

In the autumn of 1970 there was the decision to end investment grants. The right hon. Gentleman could not have had anything against them except that they were introduced by his political opponents. What he did by that action was to create uncertainty and insecurity by removing the proved best incentive to capital investment. For him, with his philosophy about only the successful being rewarded there was this vague benefit of an investment tax allowance on proved profits with no thought of the small firm building itself up with perhaps a low profit achievement, or the older firm which needed to modernise by new investment at the sacrifice of profits for two or three years.

Quick profits were the test, quick profits, smart profits, slick profits, however earned, were to be the mainspring of the economy. In the right hon. Gentleman's philosophy a quick pound earned by property speculation, land speculation, merger speculation or some swift manoeuvre in the unit trust society counted just as much as a pound earned the hard way by exports, technological innovation or by sheer hard work. Above all—[Laughter.]—hon. Gentlemen can laugh at the effects of investment grants on development areas but if they go there they will find that both sides of industry will tell them that this was a death blow to employment in the development areas as well as other vulnerable regions.

Then we had the tight credit squeeze, the expenditure cuts, prescription charges, school meal charges. A Government which today in its unemployment panic is spending money like water could not find £9 million for milk for the seven-year olds. There was the peremptory instructions to public industry. In October, 1970, the Chancellor ordered them to cut their investment programmes. Now, doctrine thrown to the wind, the Government are using the investment programmes of the nationalised industries in their panic search for expansion as they did in 1962—calling in the new world of public industry, because it is plannable, to redress the balance of the old unplannable undisciplined private sector on which in the summer and autumn of 1970 the right hon. Gentleman had pinned his hopes. Even the private sector had to go through it. I warned the House in October, 1970, of the doctrine of the spectacular bankruptcy.

We wondered where it would be. British Leyland, much advertised as one possibility, fortunately survived. The Government started in a small way with the Mersey Docks and Harbour Board—widows and orphans stuff, not the really big stuff. Then they got going with Rolls-Royce, Upper Clyde and other major industries. It is unfair to say that the right hon. Gentleman had no industrial policy remembering the action in those months, which he must regret, over Mersey Docks, Rolls-Royce and Upper Clyde. Remembering that, it is clear he did have a carefully worked-out industrial policy, worked out years in advance—a policy which displayed all the selectivity, the finesse and compassion of a clog-iron. In all the glorious history of clog-iron combat there has never been a fighter like "Clogger Ted", the only clogger to obtain a million by his own personal efforts.

Meanwhile his colleagues took the line from their chief. The Secretary of State for Trade and Industry—where is he now?—fresh from the glories of his "lame duck victory" moved in on industry. Upper Clyde, in so far as it is saved, was saved by one thing, the determined militancy of its shop stewards and workers who forced him to think again. They were proclaiming what this Government refuse to proclaim—the right to work. Plessey's in Alexandria appealed to him for help; I raised Fisher-Bendix earlier today. In August I took up this business and asked for his intervention. The response to me was just the same as the response to Plessey's—the right hon. Gentleman ostentatiously washing his hands. All I got was a passed-on message from the then management. It is bad enough when, this afternoon, we had the Foreign Secretary whose highest ambition seems to be acting as a dragoman for Mr. Ian Smith. [Interruption.] We are coming nearer home now and perhaps hon. Gentlemen can understand this. I have no time for an industrial Minister who is satisfied in a case like this to be a messenger boy for Parkinson-Cowan.

In all this time the Chancellor of the Exchequer has been acting with all the pallid vigour and initiative of an altar boy. I referred to his misconceived mini-Budget of October, 1970. The House will recall his Budget last spring—

Photo of Mr Julian Critchley Mr Julian Critchley , Aldershot

What are the right hon. Gentleman's suggestions?

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

I am coming to that in a moment. Hon. Gentlemen will have to take this whether they like it or not. I referred to the Chancellor's misconceived mini-Budget of 1970. The House will recall the Budget of last spring, the euphoria on the benches opposite, the waving of Order Papers. Hon. Members may not recall my comments on that occasion immediately after, but they will get them again now. I said: My first impression is that … this Budget fails to rise to the occasion with which he was presented [Laughter.] When they have got over their Budget euphoria and looked across the two-year period and what the Chancellor has announced, hon. Members opposite will be less than enchanted by it…The Chancellor knows that in economic terms he is starting from a situation in which we are spiralling down into the deepest recession since the War… As I warned one of the right hon. Gentleman's predecessors 15 years ago—and the advice was not taken at the time—you can pull a piece of string, but you cannot push it. … It is a Budget which not only hon. Gentlemen opposite but the country as a whole will regret before many months are out."—[OFFICIAL REPORT, 30th March, 1971; Vol. 814, c. 1399–1407.] Do any of them deny that today? Nothing caused more amusement than the reference to pushing a piece of string. Now nine months, three or four mini-Budgets and £4,000 million later, the right hon. Gentleman is still pushing that piece of string.

July was the Chancellor's tour de force. Even he was inebriated by the exuberance of his Treasury draft. He promised an effect on the unemployment figures in "a couple of months". That was in July. When he spoke, registered unemployment was 829,600. Today it is over 1,020,000. A couple of months, he will have learned, is a long time in politics.

By the autumn his break-through was postponed to the spring, then to the late spring, then next autumn. Yesterday every economic commentator gloomily forecast 800,000 unemployed by this time next year—my own estimate for some months past, on the assumption of no fundamental change in the Tory Government's policy, just as last April I forecast 1 million unemployed by this month.

The House will have seen both the Financial Times independent survey of industrialists, indicating little reduction in the basic, seasonably adjusted, rate of unemployment and yesterday's lead story in the Sunday Times business section headed "1,000,000; no hope of more jobs say top firms." The Secretary of State, in his speech in Cambridge last night, repeated the same warning. So let us not have from hon. Members opposite the usual excuses—that it is all the fault of the previous Government, of the trade unions, of prices and of strikes.

We have had the excuse about strikes before. Prior to the last election the Prime Minister spoke about strikes in nearly every speech he made, and certainly if there were a by-election or a Greater London Council election the next day. I wonder whether he has worked this out: by the end of this month, man-days lost through industrial stoppages will have reached 27 million after 19 months of the present Administration. I agree that losses of output through strikes during our period of office were too high, but the man-days lost in 19 months of the right hon. Gentleman's Administration represent more than the total man-days lost under the Labour Government from October, 1964, to June, 1970.

The Prime Minister used that as his great stick for beating the Labour Government. [Interruption.] I have given my calculation to the end of this month. I know that the right hon. Gentleman is checking the figures, but they have been checked—not to worry. My hon. Friends have frequently stressed the loss of man-days caused by strikes compared with the loss of man-days caused by unemployment. I calculate that the avoidable loss of output, of man-days, caused by unemployment as a result of the present Government's first 19 months of office—unregistered unemployment to offset against the irreducible minimum, whatever that is—is not the 27 million which the Government have achieved in respect of industrial stoppages but 300 million man-days. By the end of this month that figure will have increased very markedly.

I have dealt with the alibis which we must expect to hear tonight. Perhaps I have anticipated the right hon. Gentleman's speech in full. We may also hear from him the charge which he made twice just before the Recess, that the Opposition have, or, as he kindly put it, the Leader of the Opposition has, no policy for dealing with unemployment. I do not know where he has been all these months when my right hon. Friends and I have been setting out what needs to be done. Why has not the right hon. Gentleman heard it? Perhaps we should have put it in French and then he might have got a copy.

To put the matter in English—and I intend to conclude on this matter—[HON MEMBERS: "Hear, hear."] Right hon. and hon. Members opposite do not like having these matters brought home to them, but since the Government have no policy—and that will be the whole basis of the right hon. Gentleman's speech—they might listen to ours. I propose to set out six points of principle which the right hon. Gentleman has not accepted but which I ask him to accept in his speech.

First, I ask the right hon. Gentleman to proclaim the right to work of the British trade unionist. Sixty-five years ago this party introduced a Right to Work Bill in the House. Let the right hon. Gentleman at least accept the principle. "The right to work" is a phrase which has never been on his lips. Secondly, reaffirming the right to work, I ask the right hon. Gentleman to assert the Government's duty to achieve and maintain full employment. Thirdly, I ask him to affirm the right of all the regions to the achievement of the same level of employment and prosperity as adheres in the more favoured regions. This is socially and morally right in human terms. The right hon. Gentleman is Prime Minister of the whole of the United Kingdom and not just of the favoured area nearest to the Common Market.

The right to work is economically right. The whole history of the stop-go era which we are all resolved to end is one in which, following a slump leaving the development areas and other regions still under-employed, a boom develops which, in the more prosperous areas, rapidly pushes production close against capacity. The result under successive Governments has been that capacity shortages and shortages of skilled labour develop, the export drive from those key areas languishes, imports are sucked in, and a balance of payment crisis supervenes. Then the brakes are slammed on, and again we have nationwide measures which act most harshly against areas which have not recovered from the last slump. Through over-heating in the South, measures are invoked against Western and Northern areas which have barely emerged from the last freeze.

Photo of Mr Norman Atkinson Mr Norman Atkinson , Tottenham

For the sake of the Doubting Thomases on the benches opposite, will my right hon. Friend say loudly and clearly on behalf of the British labour movement that unemployment is no longer permissible as a means of regulating the economy?

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

I have made clear, as my right hon. and hon. Friends have made clear, that we accept the full right to work and will frame our policies on that basis. [Interruption.] The right hon. Gentleman is tittering. What does he find funny?

Photo of Mr Edward Heath Mr Edward Heath , Bexley

I was wondering why the right hon. Gentleman did not provide it for 650,000 unemployed during his period of office.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

The right hon. Gentleman knows that we created the situation for full employment—[Interruption.] The right hon. Gentleman can smirk. He was the author of the £800 million debt which we had to pay.

Fourthly, the Government should realise—perhaps they have realised—that the events of this year have ruled out of court all those economists who have argued that a tolerable level, a moderately high level, of unemployment will contain inflation. The theory that 600,000, 700,000 or 800,000 unemployed would prevent miners from demanding wage increases and, even if they did, that employers could not afford to pay them has been totally exploded. We have always said that it was a bogus theory, and even with a million unemployed it does not work. There is no figure. And if any Government were to seek to raise the unemployment threshold for this purpose, every point by which it did so would be a further disincentive to increased investment, which is not only our surest safeguard against world competition, inside Or outside the Common Market, but is today the missing mainspring from the economy, the missing key to full employment.

That brings me to my fifth point. The right hon. Gentleman must now accept that the problem will not be solved by monetary or budgetary means or by an induced consumer boom. The present crisis has been caused by a total hiatus in business spending and industrial investment. Before Christmas, the Prime Minister in the House took consolation in the increased, as he put it, engineering orders, and now the figures from the Department of Trade and Industry of investment intentions have blown him right out of the water.

I do not think the right hon. Gentleman even now understands how his "lame duck' policy has hammered business investment or how his repudiation of the Rolls-Royce contract, for example, is still being used, as top industrialists have told me, by foreign buyers to query the wisdom of accepting British export bids, not knowing, as they say, whether the Government will again put in the Official Receiver. We must never again be in a position in which 100,000 British jobs depend on the vote of one maverick American senator. It came off last time; it might not come off again.

The right hon. Gentleman cannot go on pretending that the investment boom will come as a result of our joining the Common Market. We were told last October that if Parliament voted to join the E.E.C. there would be a surge forward in investment. I commend hon. Members to read the article which appeared on 14th January in the Lombard column of the Financial Times, which referred to the Non-event that gives cause for concern". In it there is an account of all the promises, pledges and forecasts that an affirmative vote on 28th October would unleash a great investment boom, and it goes on to describe what it calls the greatest non-event of the year.

I hope that the Prime Minister will tell us that he is no longer counting on that vote to get him through. He must recognise that if the Common Market does not solve the problem for him he faces a situation of dangerous stagnation in our markets. The E.E.C. Commission has reported a stagnant Six. This is very different from the Market propaganda of the great debate. President Nixon's election boom is still a shadow on the television screen.

Our Commonwealth markets are learning the lesson of the Government's neglect of their interests—

Photo of Mr Peter Fry Mr Peter Fry , Wellingborough

On a point of order. Although the speech of the Leader of the Opposition is very boring, is it in order for an hon. Member opposite to read a newspaper during the debate?

Photo of Mr Edward Mallalieu Mr Edward Mallalieu , Brigg

It is not in order for hon. Members to read newspapers during a debate.

Photo of Mr Jimmy Hamilton Mr Jimmy Hamilton , Bothwell

On a point of order. As the Member who was reading a newspaper, may I point out that I was checking my right hon. Friend's quotations. I find that yesterday's Sunday Observer is correct in every detail.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

Actually, I was quoting the Sunday Times, but what will impress many hon. Members' constituents is the utter frivolity with which right hon. and hon. Members opposite discuss the unemployment of one million people.

Before the frivolous interruption, and having warned the Prime Minister about the kind of world trade situation with which he is faced—he knows this; he does not find it funny—I said that our Commonwealth markets were learning the lesson of the Government's neglect of their interests in the negotiations. They are placing more of their orders elsewhere. E.F.T.A. is in disarray; it may be in world disarray in the next few months. Therefore, the attack on unemployment which the House is, I hope, seriously debating must proceed against a sombre background of world trade.

Let me respond to the right hon. Gentleman's challenge and tell him what he must do and what our policy would be. There is no point in listening to his repeated alibis and excuses. We want a policy. If he cannot do what is necessary, he had better make room for someone who can. Because each item has been urged on the right hon. Gentleman before, and because I want him to comment on each proposal, I will make my points very briefly.

First, we reject responsibility for the policies undertaken by the Government—the abolition of the I.R.C. and of the National Board for Prices and Incomes, and the "lame duck" policy. It must be a condition of solving the unemployment problem that either the Government join us over repudiating those policies or recognise that there can be no solution without a fresh start—and that means a fresh Government.

Secondly, for this reason, we call on the Government to re-establish the I.R.C. as an indication of a determination to forge a new partnership between Government and industry, and, since the Government have now accepted the duty which they denied a year ago, to provide public funds in appropriate industrial situations, to provide a buffer, controlled by public-spirited industrialists, which the I.R.C. was, for the economic investment of funds allocated.

Thirdly, under a strengthened I.R.C., public investment boards for all industries which require strengthening—old but potentially viable industries requiring modernisation and new technological in- dustries requiring capital—should be set up. The legislation scrapping the Shipbuilding Industry Board should be repealed and a new board under the direction of the new I.R.C. established. This should be done on the basis of an industrial partnership with a recognition that investment cannot be adequately expanded except on the basis of the assertion of public responsibility for an appropriate and expanding industrial programme.

Fourthly, as the Government are still preoccupied with the transfer to private interests of the Carlisle pubs and Cook's Tours and may not be capable of understanding the rôle of nationalised industry in increasing investment—although they are relying more and more on it—they must accept, as I am prepared to accept on behalf of my party, the nationalisation of the investment responsibility, public and private, and the need to take all necessary measures to this end. This must mean non-discrimination between the public sector and the private sector in the provision of public funds for capital investment, with no double standards in Government accounting. [An HON. MEMBER: "What does that mean?"] Hon. Members had better listen, and I will tell them in a moment. Hon. Members opposite did not want to hear it two minutes ago; now they are all anxious to know what it means.

Fifthly, through N.E.D.C., a programme for public and private investment to reverse the lagging totals shown in the Government's own estimates should be prepared, and that amount of investment, public or private, should be financed by Government enterprise and Government finance. In drawing up this programme, the Government should further consider the association of the House, by a Select Committee, with the implementation of such a programme.

Sixthly, the Government should now announce a decision to revert to investment grants, with a marked differential in favour of development areas, intermediate areas, and other areas now hit by the slump in investment. At the same time they should make an announcement rescinding their decision to abolish regional employment premium in 1974.

Seventhly, as an essential contribution to the investment programme, the Government should now substantially increase their assistance, for example, to the machine tool and similar industries, for new technological R. and D. programmes. They should establish a system of advance orders ahead of demand for standardised investment projects such as machine tools, standard container, ore and other ships, a stabilisation scheme, a buffer stock ahead of demand so that investment can be immediately increased today on the basis of those orders, and in a future boom orders can be met quickly without an intervening loss of industrial capacity.

Eighth, since the Government have decided on, if they have not announced, an I.R.C. for Northern Ireland, they should now set up development authorities for comparable areas in Great Britain—the Clyde, the Tyne, the Tees, the Mersey, Cumberland, Wales, the South-West and all other areas, be they scheduled development areas or not, where employment problems cannot be solved except by combined economic and social development.

Ninthly, in every area of heavy unemployment—[Interruption.]—I ask hon. Members to listen; this affects many of our urban areas—the Government should establish now a new local authority employment development scheme, on the lines already put before the Prime Minister, following proposals made by Labour members of the Liverpool Corporation. In the variant I suggest, the Government should calculate the average cost to the State and local authorities of maintaining an individual unemployed man, an individual householder in unemployment, taking into account unemployment and supplementary benefits, and then offer to make available to the local council concerned the equivalent for 10,000 on their unemployment register, or 5,000 or 1,000 depending on the size of the area, the virulence of its unemployment and its problems.

That would be on a guarantee that the authority concerned would provide immediate employment for those unemployed—craftsmen and unskilled men, for example, in the construction and other industries—in modernising schools and providing for additional classrooms; removing slums; improving older houses; building or improving health and welfare centres, or, by contract with the National Health Service, our ancient hospitals; improving roads and public amenities; and removing slag heaps and improving the environment generally, over and above any Government programmes or pre-existing local authority programmes. For where private spending, private investment, has failed to provide full employment, only by public spending, despite the dogma of Conservative hon. Members, can we now solve this problem of unemployment.

Tenthly, where in the future factory closures are announced or redundancies declared, whether in private or public industry, the Government should require prior notification to the Department concerned, and before action is taken the Department should prescribe a local inquiry, with representatives of the unions and management, under official—or in very special cases Ministerial—chairmanship, together with representatives of the appropriate regional development authority and planning council.

Eleventhly a special employment council—[Interruption.]—We should be glad if we had one of these suggestions carried out by the Government. We should not be debating one million unemployed. A special employment council, under the N.E.D.C. or separate, should be established under the chairmanship of the Prime Minister to receive reports from the new regional authorities, from regional economic planning councils, and reports on ad hoc closure and redundancy inquiries, and this should continue to sit and deal with the problem until the unemployment figure is reduced to tolerable levels.

Twelfthly, I do not need to say, to ensure that national economic policies are directed to full industrial expansion without inflation, the Government should initiate immediate discussions with the T.U.C. and C.B.I. to secure agreement for a national policy for prices, including rents, and for incomes, meaning all incomes. This would mean dropping the inflationary Housing Bill as a start. For this purpose, also, the Government should immediately declare their willingness to accept the T.U.C. proposals for a threshold incomes policy, with provision for automatic adjustment to cost of living increases.

Now, to the relief of Conservative hon. Members, my referee's watch shows that I am near the end. Indeed, I am now in injury time.

Photo of Mr Alexander Eadie Mr Alexander Eadie , Midlothian

It is very important that my right hon. Friend should incorporate in the package he has submitted, to the annoyance of certain hon. Members opposite, that the Prime Minister take the initiative today to see that the coalminers' strike is ended, and that the executive of the National Union of Mineworkers knows that there will he such an initiative.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

I think that that was covered in my 12 points and—[Interruption.] It would not have happened if the Government had not scrapped the National Board for Prices and Incomes. But the points were made adequately by my right hon. Friends earlier.

As I have said, I am now in injury time. I do not agree that the Government will not take seriously some of the proposals put forward this afternoon and others that will be put forward from both sides during this very grave debate.

I want Conservative hon. Members to know, especially those who will speak in the debate—[An HON. MEMBER: "When?"]—that a third of them are here only because of their Leader's promise to reduce unemployment. As more and more people in the country now realise, this is a Government conceived in deceit. They were elected on the promises and pledges of the right hon. Gentleman, pledges and promises which, unless he is motivated by an ignorance that none of us really attributes to him, he knew were fraudulent when he made them before the Election. The further action of the right hon. Gentleman, the arrogance he showed on being elected 15 months ago, the arrogance he has always shown in the House, the arrogance he showed first to the unions and then to industry, has been the basis of today's debate. They are a Government who have certainly broken their pledges—most of them, at any rate. They are a Government who have been proud to tear up even the mild prospectus on full employment of Sir Winston Churchill's coalition Government, and have destroyed the consensus by which post-war Governments have governed. But, above all, they are a Government who, by a combination of negligence, arrogance and wrongly directed policies, by an obsession with the balance sheet and not human beings, have produced a level of unemployment on which the whole coun- try had thought we had turned our backs for ever.

They have a leader with one clear duty now—to be man enough to admit the deception, admit the failure, shoulder the responsibility, and submit his policies, doctrines and, above all, that Government's miserable achievements to the judgment of the nation.

5.45 p.m.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

I am grateful to the Leader of the Opposition for the kind words he uttered at the beginning of his speech about me personally. Later he said that he did not wish to impute to me that I desired to see unemployment. I should have thought there was one thing the House could agree on, however great may be the difference between us on economic policy, that no one here wanted to see unemployment—[Interruption.]—I should have thought that it was in the traditions of the House that hon. Members did not question other people's motives.

Perhaps the right hon. Gentleman will be fair enough to acknowledge that since I have been Prime Minister, quite apart from my years in politics before, I have seen all the regions of the country, and when I go to them I meet the trade unionists and the employers and know the problems. We can agree that unemployment is, above all, a waste, a human waste as well as an economic waste, a waste of a man's skills and abilities, and hardship for his family—

Photo of Mr Ronald Lewis Mr Ronald Lewis , Carlisle

What is the right hon. Gentleman going to do about it?

Photo of Mr Edward Heath Mr Edward Heath , Bexley

If the hon. Gentleman can contain himself, I propose to deal with the whole question very fully.

When the right hon. Gentleman puts forward certain principles, with some of them no one could disagree. The desire to work is not limited to trade unions but is felt by the great mass of the people and their families. Nor is the problem only one of work for school-leavers. Many of us have known over the years that those who obtain their first job but are unable to hold it down suffer even more than the school-leavers. It is a problem that the House understands full well and wants to do its utmost to deal with.

I do not propose to follow the right hon. Gentleman in the personal sneers and jibes he found it necessary to make. They do not need any reply, for the simple reason that the great majority of hon. Members know that they are not true, and the leaders of the trade union movement and of British business know equally that they are not true.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

I have never hesitated, since I have been Prime Minister or before, to accept my responsibilities, and I shall not hesitate to do so now. I make no alpology for pursuing a policy which the right hon. Gentlemen used once to follow with enthusiasm, of trying to ensure the entry of this country into the Community of Europe, which we achieved last Saturday. For the record, perhaps I had better point out that even in my speech on Saturday I was dealing with the wider implications of the creation of the enlarged European Community, particularly for East-West relations, for the Commonwealth and for the Third World. I hope, therefore, that the right hon Gentleman's jibe that I was concerned only with a tiny, inward-looking Europe will no longer escape his lips.

Nobody doubts the seriousness of the problem of unemployment, and I agree with the right hon. Gentleman on the analysis it requires. I propose first to analyse the unemployment problem that we now have, not in the way in which the right hon. Gentleman dealt with it, by stating particular figures for particular areas, but by analysing the type of unemployment with which we are dealing, what the consequences are and how it can best be dealt with.

We have a kind of unemployment that we have not had before, either before 1939 or since 1945—the combination of a high rate of inflation, which is now lowering, with a high level of unemployment. This is unique in British experience. It has three aspects, each of which we should consider—the cyclical aspect, the regional aspect and the structural aspect.

Photo of Dennis Skinner Dennis Skinner , Bolsover

We were taught that when we were 19.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

The important factor at present is that all three aspects are existing together—[Interruption.]—I was hoping that the hon. Member for Bolsover (Mr. Skinner) might at least treat the debate seriously and listen to the argument. The plain fact with which this country and the House are faced is that we are securing today the same production—in fact, slightly more—as two years ago, using 400,000 men fewer to do it. That is the fact with which this country is confronted, and although it is an immense hardship and waste for those who are unemployed, it was the same as the right hon. Gentleman himself pointed out, both in 1966 and 1967, when he declared to the House that he, and his colleagues, too, had not anticipated the increase in unemployment which they got.

I want to deal first of all with the cyclical aspect of this situation. We have had before in Britain the experience of unemployment, in the troughs of economic movement; and periods of slow growth, which inevitably led to unused capacity and an increase in unemployment. When the right hon. Gentleman and his colleagues were in office, as they said quite plainly, the economy grew by less than 15 per cent. in six years, and in the last two years the growth was less than 2 per cent. a year. There is no argument about it and there is no argument why it happened. It happened because of the deflationary measures they then felt it necessary to take. This policy of slow growth has also had its consequences for unemployment, because looking at the graph of unemployment one can see how, in the cyclical picture, every time there has been slow growth over the past 15 years unemployment has risen from a higher level than the year before. This is not a characteristic of one Government or the other, but a characteristic of both Governments over the past 15 years. [Interruption.] It is not in the nature of the capitalist system because that has not happened in other capitalist countries.

To deal with the cyclical aspect, this Government have carried out the largest reflation of demand since the war. The right hon. Gentleman was perfectly entitled to say what he thought were the failings of the policies of this Government—though the list he gave was not particularly impressive, and I am prepared to go through it. What he did not do was to give any credit whatsoever to the reflationary action which has been carried out. In this the right hon. Gentleman differs from his right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins). This reflation in demand includes cuts in taxation since June, 1970, amounting to £1,400 million in a full year—for example, the halving of S.E.T., £245 million. It was the right hon. Gentleman's Government who put on S.E.T. in order to put people out of work in the distributive industries. Under the reflation we have made cuts of £235 million in purchase tax, and through them and S.E.T. we have acted directly on the price structure of consumer goods. If hon. Gentlemen opposite laugh at the idea of a reduction in purchase tax, why are they and the trade unionists constantly urging that upon me?

Photo of Mr Norman Atkinson Mr Norman Atkinson , Tottenham

The reason why trade unions ask this is that the Government's reflationary measures do not equate with the total amount which the Labour Government took out of the economy plus the equivalent rise in the cost of living since. Is that a position which the Prime Minister understands?

Photo of Mr Edward Heath Mr Edward Heath , Bexley

I cannot accept responsibility for what the hon. Gentleman's own Government took out of the economy. What I am pointing out is that we have reduced purchase tax substantially, and that that has acted directly on the price structure, and that we were asked to do so by the trade union movement, and in this we are in agreement with it.

Then there are a £350 million reduction in income tax, and changes in the children's allowances in the 1971 Budget amounting to £279 million. Are these policies to which the right hon. Gentleman and his colleagues object? Do they object to what we have done in this sphere? They are major policies of reflation by this Government.

Photo of Mr Jeremy Thorpe Mr Jeremy Thorpe , North Devon

The right hon. Gentleman has asked the House to recognise the importance of these reflationary measures, but we have realised that, notwithstanding them, we have the highest unemployment for 30 years. Do we take it that the right hon. Gentleman thinks that we have got value for money?

Photo of Mr Edward Heath Mr Edward Heath , Bexley

I am coming on to deal with this, because the Government have taken action. I come on to another aspect, the increases in public expenditure, amounting to £750 million, which since January, 1971, we have announced to stimulate the economy over the years 1971–72 to 1974–75. They have been designed not to produce overloading later, so that British industry can have confidence in putting in its own private investment to meet the demand which must come. [Interruption.] I am coming on to deal with this. As I have listened for one hour and six minutes to their right hon. Friend, perhaps hon. Gentlemen opposite will listen for a few moments to a case which has to be put, when they may be better able to judge.

This capital expenditure includes £164 million on infrastructure for the regions. The right hon. Gentleman has asked for special arrangements for the regions. This has been done—£53 million for house improvement grants, including a very substantial amount to help the construction industry; £80 million for naval ship building, which has gone very largely to development areas which have capacity ready; £23 million for the Nimrod aircraft; £100 million additional expenditure by the nationalised industries which has been urged upon us; since 23rd November another £33 million of capital expenditure; and, in addition, £130 million for the repayment of post-war credits. Do the right hon. Gentleman and hon. Gentlemen opposite condemn these in their all-embracing condemnation of the policies the Government are pursuing? These are policies which, it is quite clear, still have a long way to work through the economy.

Photo of Mr Peter Shore Mr Peter Shore , Stepney

This is surely the whole point. The measures which the right hon. Gentleman has taken have been too little and too late. They have been the wrong kinds of measure. Will he now tell the House what increase there has been in the G.D.P. in the 18 months since he came into office?

Photo of Mr Edward Heath Mr Edward Heath , Bexley

The point about it surely is that the right hon. Gentleman's right hon. Friend the Member for Stechford, in his judgment of my right hon. Friend's measures, of July in particular, did not say that they were measures which ought to have been taken sooner; for the very simple reason that so long as wage increases were high, inflation would be high, and industry itself would not have had confidence in the measures which the Government were taking. This is absolutely clear, and it is also important from the international point of view.

Let us look at another aspect in which the Government have taken action—in the field of social security benefits, the benefits for the over-80s, the additional benefits for the chronic sick, the attendance allowance, the family income supplement, and, last September, the biggest ever increase in pensions and social benefits. Is objection to this taken by right hon. and hon. Gentlemen opposite in their all-embracing condemnation of these policies which have been pursued by the Government? We have been able to cover a very large field which has never been covered before in helping those who are the less fortunate in society. Is exception taken to these measures?

Finally, we have reduced Bank rate twice—now down to 5 per cent.—and we have removed hire-purchase controls.

These are formidable measures which this Government have taken to reduce inflation and to deal with the cyclical aspect of the economy. If we are to get investment in private industry, it is vitally important to show that what we have done will not lead to the overloading of the economy and to a stop two or three years hence in our economic affairs.

Many people would have said—indeed, did say at the time—that we have taken more reflationary action than was prudent. The right hon. Gentleman the shadow Chancellor of the Exchequer said of the Budget measures of March, 1971, that they would prevent the unemployment problem from getting worse. He welcomed the measures of July, 1971, and he did not criticise them as insufficient. Very well, we will certainly take full responsibility for everything we have done.

These measures, although they are taking time to work through, have already produced signs of expansion, and it is right that these should be recognised. The increase in consumers' expenditure of 3½, per cent. between—

Photo of Mr Phillip Whitehead Mr Phillip Whitehead , Derby North

The Prime Minister so rarely gives way to me. Does not the Prime Minister agree that every single pronouncement made by his friends in industry about the way in which they are preparing for expansion includes the safety clause that they do not intend to take on labour? What does the Prime Minister intend to do about that?

Photo of Mr Edward Heath Mr Edward Heath , Bexley

I am coming to that point, which is concerned with the third type of unemployment with which we have to deal. The signs of expansion are the increase in consumers' expenditure of 3½ per cent. between the first and second halves of 1971; the marked increase in new car registrations over the third quarter; retail sales in October and November are well up on the third quarter; the increase in output in consumer goods industries; and in the chemical industry in October and November output was 2½ per cent. above the third quarter.

Private housing starts in October and November were 5 per cent. above the third quarter average, and new commitments to advances by building societies were 5½ per cent. higher. Investment rose by about 5 per cent. in manufacturing industry and 3 per cent. in distributive and service industries between the second and third quarters of 1971. The increase in bank lending has been of the nature of £750 million in the quarter to mid-November, compared with a £250 million increase in the previous quarter. Within this total, advances to manufacturing industry have risen by £50 million. The value of exports has increased in 1971 by 5 per cent. in volume.

So, if we were dealing only with the cyclical aspect of unemployment, these measures would already have dealt considerably with A, but there are other factors now operating against it and I wish to deal with those as well.

Having dealt with the cyclical aspect, I want to deal with the regional problems, which, in my experience, are now also of a new kind. I will give figures of the scale of the problem with which the House has to deal. Between 1960 and 1970 employment in agriculture fell by over 220,000. This was not through any lack of demand. Employment in mining fell by 360,000. Employment on locomotives, carriages and wagons fell by 90,000 and employment on shipbuilding fell by 70,000. As everyone knows, these heavy industries are concentrated mainly in the development areas. The falls are not due just to reduced demand. Developments in technology enable the same or a higher output to be achieved with, in some cases, a smaller though sometimes also a more highly skilled labour force.

All Governments since 1945 have put strenuous efforts into regional policy, but unemployment in the development areas relative to unemployment in the country as a whole has remained almost exactly the same throughout those 25 years. This is a characteristic of regional unemployment in Britain. The Director of the North-East Development Council, which everyone respects as an important body, made an interesting assessment that the North-East had lost 150,000 jobs over 10 years, but, because of the new jobs which had been created, there had been a net gain of 10,000. That is the consequence of 10 years work by Governments of both parties. The change which has now come about is that regional anxieties are not confined to the traditional areas of unemployment in the heavy industries.

Photo of Dennis Skinner Dennis Skinner , Bolsover

That is common knowledge.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

I shall deal with the problem even although the hon. Gentleman recognises it. There is concern in the Midlands conurbation and in the North-West particularly about the obsolescence of its industrial plant and industrial buildings and about the heritage of dereliction. We must also recognise that hon. Members on both sides of the House representing these regions have said both at Question Time and at other times that these regions believe that this is in part the consequence of too rigid an I.D.C. policy, and that is what is now required is greater flexibility. A feature of the present situation in these regions seems to me to be that the rationalisation which has been carried out by firms has usually been concentrated in new factories, in new plant and often in new areas where all those who work in industry find it more convenient and more pleasant to work.

These problems will not be solved solely by the reflation of the economy. We recognise that when the economy is expanding in the South-East, the West Midlands and the North-West there is a better opportunity of getting some industry into the other regions. We have recognised the problem, as I said, by the expenditure of £164 million on infrastructure, £80 million on shipbuilding orders, increases in building grants and operational grants and the improved tax incentives for capital expenditure on industry.

I believe that large areas of our country require modernisation of plant and buildings, and this is not confined to the accepted areas of the North-East, Scotland and parts of South Wales, which are the areas which have produced much of our rebuilding in the last 25 years. Europe did it with the Marshall Plan directly after the War. That was intended to be the purpose of the American and Canadian loans. We still need to do it, and it has to be done on a massive scale—

Photo of Mr Daniel Jones Mr Daniel Jones , Burnley

Specify the area.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

I want to come now to the third problem of unemployment with which we are faced and that is the structural aspect. Having dealt with the cyclical and regional problems I will now deal with the structural problem, the third factor, which has not been dealt with by the right hon. Gentleman and is sometimes thought by hon. Gentlemen opposite to be the most controversial. I do not believe that a solution can be found unless the third factor which has led to the unexpectedly high and rising level of unemployment is recognised, and that is the massive shake-out of labour which has occurred over the past year or so. It is shown by the figure which I gave at the beginning. If we can maintain our production with so many hundreds of thousands fewer employed, then this must have come about through a great shake-up in industry.

In the year to the third quarter of 1971, manufacturing output rose by less than 1 per cent. In most previous periods of relatively stagnant output the growth in productivity has also been slowed down. This had the effect of cushioning unemployment to a certain extent. In the last year productivity rose by the exceptionally large amount of 5½ per cent., with the result that employment in manufacturing fell by an unprecedented 4½ per cent. In other words, slightly more was produced using only 19 workers for every 20 who had previously been employed.—[Interruption.] Hon. Gentlemen must face the fact which they have so often refused to face in the past that there has been a massive shake-out of employment. Employment in manufacturing fell by an unprecedented 4½ per cent. This is the problem with which we are faced. What is the explanation of it?

Companies, who had already suffered from six years of stagnation, from increased taxation—the right hon. Gentleman mentioned the massive sum which was taken out of the economy by his right hon. Friend—rising import prices and price controls, had to face a runaway wage inflation. They could not set aside adequate sums for investment. That, too, is well known, and must be well known to the right hon. Gentleman who is to wind up the debate for the Opposition.

Between 1964 and 1970, company trading profits as a proportion of total incomes fell by a very large amount indeed, and companies throughout the country, big and small alike, did not have the wherewithal to invest. Therefore—[Interruption.] No, this is one of the facts of life. The right hon. Member for Grimsby (Mr. Crosland) wrote recently in Socialist Commentary: No policy which does not take account of the need for adequate profit for investment will achieve its objectives. And he is absolutely right.

Therefore, the rapid increase in wage rates finally forced the retrenchment of British industry. The result was that companies cut their investment programmes, they scrapped inefficient plant, they closed loss-making subsidiaries and they reduced their manpower. But the reason for it is undoubtedly the scale of the wage increases during the last two years.

Let me recall to hon. Gentlemen opposite the forecast of the right hon. Member for Birmingham, Stechford in his Budget Statement on 15th April, 1969: The achievement of the objectives we have set ourselves, and the avoidance of further difficulties, must depend upon restraint in the growth of incomes."—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 1003–4.] The right hon. Gentleman and his Government tried guidelines, they tried the Declaration of Intent, they had a voluntary policy and they had a compulsory policy. I recognise full well that they were challenged, criticised and opposed by hon. Members below the Gangway in their own party—[HON. MEMBERS: "And by you."] Yes, of course; that is why we have not pursued a compulsory policy.

They then abandoned all attempts at voluntary or compulsory policies. It is no use the right hon. Gentleman now saying as innocently as he can that all we have to do is reach an agreement with the T.U.C. about an incomes policy. He knows that he was never able to do it before and there is no indication that he could do it now.

They finally abandoned all attempts at an incomes policy—I do not say under pressure from their hon. Friends below the Gangway but certainly with their approval—in favour of legislation to reform industrial relations. They then jettisoned that and threw the whole lot away, and abdicated completely. Today, they have no policies for prices or incomes except, in every case in which there has been a wage claim since they have been in opposition, no matter how outrageous and unjustified, they have always supported it to the utmost.

Every Government since 1945—right hon. Gentlemen opposite can take the credit for the lead given here by Sir Stafford Cripps—have sought this increase in productivity and the reduction in overmanning. The right hon. Gentleman himself emphasised this in 1966. The difference is that this change has been brought about at a heavy price in terms of human suffering and hardship and in wastage of skill, wastage of human beings.

Even though we now get this great increase in productivity, we are not getting the benefits, because it is being wasted in useless unemployment. What, then, is the answer here? If we are to bring these unemployed back into useful production without losing the gain in productivity, we shall need to sustain a considerably higher output, which will have to be used to meet demand overseas as well as at home; we shall need much more investment to produce it and a larger stock of capital equipment.

These are the hard facts of the case. As a result of the shake-out and reduction in manpower, we still have capacity which can be used and taken up through reflation. The companies will not embark upon the investment programmes we need to renovate British industry, to bring back the unemployed into production and to exploit the challenge of Europe unless the threat of further massive wage claims, inflation—

Photo of Mr Edward Heath Mr Edward Heath , Bexley

Just let me finish this paragraph, if I may—unless these threats are removed from them and, in particular—I have found this, as many must have done, from talking to both sides of British industry—unless the threat of another stop is removed from them with the reflation, they are not prepared to bring about investment in private companies.

Photo of Mr Norman Atkinson Mr Norman Atkinson , Tottenham

Would the right hon. Gentleman not recognise that an analysis of today's unemployment—we accept that a proportion of it comes from structural changes—shows that it is a contradiction for him to claim that these changes are for structural reasons and then to accuse the trade unions of taking higher wages? There cannot be the one without the other. This is a case which the Prime Minister cannot argue. If there are structural changes, with increased productivity, then of necessity there must be higher wages. The other point is that the great majority of this unemployment comes in those very low areas of industry throughout the country, particularly areas like textiles. The right hon. Gentleman cannot back every horse in the race.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

I have no objection to higher wages with increased productivity—[HON. MEMBERS: "What about the miners?"] I said that productivity has been increased by 5½ per cent.; surely the wage claims which have been made over the last 18 months, leaving aside those under the last Government, are far higher than that increase in productivity.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

I must continue. I have given way many times, and I now wish to deal with the question—

Photo of Mr Alexander Eadie Mr Alexander Eadie , Midlothian

Will the right hon. Gentleman given way on this important point? There is a national strike on.

Photo of Mr Alexander Eadie Mr Alexander Eadie , Midlothian

I am obliged to the right hon. Gentleman. Is he aware that it is very common for Ministers of his Administration to contradict each other? Is he aware that he has now contradicted his right hon. Friend's statement, when I put a question to him about his Government interfering with the National Coal Board over the miners' request for a settlement? The Prime Minister has now confessed that his Government are interfering in the miners getting more cash.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

I have not even touched on the question. What we have said all the time that we have been in government is that the level of wage awards has been far too high to prevent inflation and that it should be brought down, both in the public and in the private sectors.

I wish now to deal with what has happened. A year ago, many wage settlements were as high as 14 or 15 per cent. Why the right hon. Gentleman the Leader of the Opposition objected to a dock settlement in July of 7 per cent. I do not understand. That seems to be another of his criticisms of the Government. Many of the settlements are today around 7 or 8 per cent.—half as high as a year ago. This applies both to the private sector and to the public sector.

Six months ago, prices were rising at an annual rate of 11 per cent. Over the last six months, the rate of price inflation has been brought down to 5¾ per cent. That is half as fast as it was a year ago. I should have thought that this was progress which could have been welcomed by both sides of the House. It is due in part to the C.B.I. initiative, and it is due in part to the direct action taken by the Government, with the Chancellor of the Exchequer's measures which acted directly on prices.

So there are signs that the policy of wage and price de-escalation is succeeding, and succeeding far more than many people in industry or overseas observers would have believed possible a year ago.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

When the right hon. Gentleman talks about price in-increases, has he seen the Financial Times monthly index this morning? Is the right hon. Gentleman aware that what he is now quoting—namely, the fall in the last six months—has happened in practically every period from June to January since figures were collected? Under the Labour Government they actually fell from June to the following January in three of the last five years. In the other two there was an increase, but it was less than the increase that took place under this Government from June, 1971, to January, 1972, making no allowance for the Housing Bill or increases in rates and rents this April.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

This is a comparison with last year, over the same period, and represents an increase of about half of what it was before. [Interruption.] I am sorry that hon. Gentlemen opposite, including the Leader of the Opposition, do not welcome it. For the country as a whole it is good news.

We have succeeded in bringing this about without using the machinery of statutory controls which the Labour Government used—[Interruption.]—statutory controls which stored up so much trouble for the future, as hon. Gentlemen opposite below the Gangway rightly said at the time. However, we have been violently and constantly opposed by the Labour Party. This has been brilliantly shown by the fact that at the same time as hon. Gentlemen opposite have been complaining that prices should be more stable, they have been urging increases in wages, including even greater wages than the National Coal Board has been offering the miners. [Interruption.] It is worth noting that the right hon. Member for Grimsby said: We"— the Labour Oppositionstill lack even a glimmer of an anti-inflationary policy.

Photo of Mr Thomas Urwin Mr Thomas Urwin , Houghton-le-Spring

On a point of order. Is it in order for two Ministers of the Crown to he sleeping while the Prime Minister is speaking?

Photo of Mr Edward Mallalieu Mr Edward Mallalieu , Brigg

That is not a point of order.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

I wish now to look to the future. There is no reason why domestic demand should not increase by 4 per cent. to 5 per cent. a year for a good number of years ahead, provided that price competitiveness in international markets is maintained. The Leader of the Opposition claims credit for a balance of payments surplus of £600 million. Very well, and we will stand on our own feet and claim credit for a surplus on our balance of payments of £1,000 million—[Interruption.]

We are, therefore, in a position to maintain growth and ahead lies opportunity—[Interruption.]—to increase growth, and we are getting growth at the moment. Ahead there are opportunities. I know that hon. Gentlemen opposite do not like this or want it—[Interruption.]—because they want to bring about disaster if they can, but they will not succeed.

Ahead lie opportunities of a European market of 250 million people. Hon. Gentlemen opposite may not wish to look at it in these terms, but if they want to see capital investment in British industry, they must show British industry where the markets will be. We shall have over half our trade with the members of the enlarged Community and its associates.

I do not agree with the Leader of the Opposition that E.F.T.A. is in a state of chaos and that the Commonwealth has turned away from us because of our entry into the E.E.C. In fact, the Commonwealth countries are now welcoming the arrangements they are getting with the enlarged Community, which they recognise as the largest trading bloc the world has seen. Every Commonwealth country recognises this and knows that with our support inside the Community, it will get the benefits—[Interruption.]—of course they do; and that is what will govern policies inside the Commonwealth.

I wish to address some remarks to British industry, to management and to the trade union side. It is essential that they should feel that they have the reassurance they need for capital investment about a large market and about the rate of growth which is oven to them, because demand is there with reflation. They can be reassured about the manpower they require.

My right hon. Friend the Secretary of State for Employment will be announcing next week a massive development in training, and this is essential if this manpower is to become adaptable, mobile and suitable to the requirements of the new developing industries. British industry also wants to be assured that there will not be another period of stop. There have been constraints on the balance of payments and these have been recognised all the time since the war. We are determined not to allow them to stand in the way of growth. This is another reason for the continuing battle against inflation which we are determined to maintain.

In this connection, we should recognise that under its Treaty the Community is obliged to take action to help each of its members if problems of this kind arise. This is the further assurance which British industry needs to go ahead with capital investment and expansion.

If one looks at the arrangements made in the Group of Ten in Washington one sees that there are new wider margins in which currencies can operate, and this, too, is an assurance to British industry to go ahead with confidence with its investment plans.

Nevertheless, there is still an obligation on the Government, who, through the Chancellor of the Exchequer, took such a major part in getting agreement in the Group of Ten, to keep up the pressure for the establishment of a new permanent system in the sphere of international currency arrangements. I believe, therefore, that there is good ground for a revival of confidence in British industry which should lead to the improvement we want in investment.

It might assist if I were to give the figures. In Japan the ratio of investment to gross national product is 35 per cent. In the Six it is 23 per cent. In the United Kingdom it is about 18 per cent. It is essential that investment should be increased in this country to at least the level of that of our European partners whom we are going to join.

I ask British industry and management to look at the time-phasing for this investment. It is not a moment too soon to carry out that investment now. Industry is aware that profits are recoving as a result of retrenchment and reviving demand. Industry is seeing that growth is already increasing. It must know that the spare capacity it has will be taken up in a comparatively short time, probably without very much greater use of manpower, but by the time that existing capacity is used, it must have new capacity ready to bring into action. If this is to be the case, then now is the time for investment to be made and for plant to be ordered and built, otherwise British industry will find the demand there, but it will not have the plant and capacity to meet it.

This is the immediate problem. It is the problem to which the Government, management and the unions must address themselves, and we are in no way doctrinaire in our approach to this issue. [Interruption.] It astonishes me that hon. Gentlemen opposite should adopt this attitude. The Leader of the Opposition mentioned the case of Rolls-Royce. Those who have read the White Paper will see exactly what burdens would have fallen on Rolls-Royce—the obligations they had undertaken and which would have continued. We said that, in that situation, we were prepared to take over, and we stepped in because of the nature of the interest to the nation. Am I to be accused of being a doctrinaire Prime Minister for taking action of that kind?

I wish to refer also to the trade unions in connection with some points made by the Leader of the Opposition. We have had many meetings with the Trades Union Congress, which knows full well that it can meet my colleagues or myself at any time, and in the past year or so the T.U.C. has put a number of proposals forward.

I particularly draw attention to the fact that the T.U.C. asked, just before the last Budget, when presenting its economic review, for increases in pensions and related benefits, increases in family allowances and a raising of the present income tax threshold. The T.U.C. got the increases in pensions and related benefits, which began in September. It got the bigger child tax allowance, which was also to help in the family allowances for which it asked, much of which would have gone in taxation. It got the removal from taxation of about 200,000 families, with 550,000 children, by raising the threshold. They were the proposals which the T.U.C. put before us and which we accepted.

Then again, when the T.U.C. came to see me and others on 1st December, it asked that local authorities should be encouraged to accelerate their slum clearance programme, and said that it would help with 130 of them if we worked it out with the T.U.C. That we have done.

The T.U.C. asked for the examination of training with the Department. That has taken place, and my right hon. Friend will make an announcement next week. It asked that the six-day rule should not be introduced, and the Government have announced the postponement of that. It asked for the immediate repayment of post-war credits, and my right hon. Friend announced shortly afterwards the redemption of post-war credits.

I must point out that in the policies put to the Government by the T.U.C. there has been a considerable measure of agreement over the past 18 months.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

I would ask the T.U.C. that it should at least give consideration to dealing with the wage problems concerned with inflation in exactly the same way as we have given full consideration and co-operation to many of the policies it put before us, including the action which, with the help and agreement of the C.B.I., we have taken on prices.

I have indicated the particular problems which now face us over unemployment, and the different kinds of action which the Government are taking to deal with it, the confidence which British industry can have in providing the additional capacity which is essential in order to employ the skills of the manpower in this country, and the additional training facilities which will be announced in order to meet the future requirements of industry. I believe that if we can seize the opportunities now presented to us we have a chance to bring about not only a reduction of unemployment—which we all deeply deplore—

Photo of Mr Edward Heath Mr Edward Heath , Bexley

—but also a soundly based prosperity which will be continuing.

I regret the attitude of the right hon. Gentleman the Leader of the Opposition in many of the things he said today. I regret above all, as the House knows, his dissociation from the opportunities now available to this country, provided that we seize them in time, in the Community which is now open to us. But what the right hon. Gentleman said today is in line with everything he has been saying since he has been sitting on the Opposition side of the House, except for his opening words in the debate on the Gracious Speech when Parliament first met, when he said that this would be a responsible Opposition. In the last 18 months what we have seen has been a continuous retreat by the right hon. Gentleman from responsibility; a retreat from responsibility in industrial relations, and over Europe; a retreat from responsibility on inflation, and now a retreat from responsibility over employment.—[Interruption.] If ever the proof of that were needed, it was the pantomime organised by himself and his Chief Whip at Question Time last Thursday. This House can condemn the right hon. Gentleman's retreat from responsibility by rejecting the Motion tonight.

Photo of Mr Norman Atkinson Mr Norman Atkinson , Tottenham

On a point of order. Is it possible, Mr. Speaker, for the usual channels to add time to the debate? I have no doubt that you have noticed that it is now twenty-five minutes to seven o'clock. It is a unique experience on a Motion of Censure by the Opposition that the back-bench participants will have so short a time, between now and nine o'clock, to answer some of the very important points made by the Prime Minister and the challenge that he has laid down for the trade unions. Could the debate be extended?

Photo of Mr Selwyn Lloyd Mr Selwyn Lloyd , Wirral

That is not a matter of order for me. Of course I regret as much as anyone else the shortness of time.

6.35 p.m.

Photo of Mr Jeremy Thorpe Mr Jeremy Thorpe , North Devon

I shall be extremely brief. Whether the House agree with them or not, I shall try to put forward one or two constructive ideas.

This is a debate on an intensely depressing subject. Frankly I have found the debate so far equally depressing and therefore, in that sense, rising to the occasion. The Prime Minister said that we had given scant attention to the list of reflationary measures introduced by the Government. He asked which particular measure would be opposed by any right hon. or hon. Gentleman on this side of the House. The point is not that some of those measures were not right. Collectively the package has not worked. That is the issue. The Prime Minister agreed that it would take a fair time for the measures to work through and he conceded, quite rightly, that they alone would not cure unemployment.

Although one would be interested to ascertain the plans regarding retraining, in which we are sadly deficient in this country as compared with Sweden, for instance, I do not see very much indication that the Government's policies will be more successful in future than they have been in the past.

I also found the speech of the Leader of the Opposition depressing. Although it is true that unemployment has accelerated since 18th June, 1970, it did not start on that date. There was high and Persistent unemployment under the Labour Government, for reasons which I shall mention and which are endemic in our economy. With one or two exceptions, the right hon. Gentleman put forward the same prescription as that which the Labour Party had prescribed during its period of office.

It would be fair to say that the level of unemployment, the rate of economic growth and the lack of investment must, to put it at its lowest, be causes of bitter disappointment to the Conservative Party. Some of us would go further and say that those three factors collectively are the greatest single failure of the present Government. Not only is it an intense human problem but it is an appalling waste of our national resources. There is no single cause. Indeed, as the Liberal Amendment indicates, no single Government have been responsible for this state of affairs since the war.

I touch on three matters and the first I mention is investment. At the moment investment is sluggish. Investment in the machine tool industry was down 40 per cent. last year. On 2nd January Keith Richardson, the Industrial Editor of The Sunday Times pointed out: In the past five years British engineers have bought less than 200,000 new machine tools, compared with the 450,000 that Germany has equipped herself with or 760,000 bought by the Japanese. Our investment has increased by only 35 per cent. since 1964, and our total output since 1964 has been less than 2½ per cent. per annum, one of the lowest rates in the industrial world. Indeed, if our rate of growth had been as fast as that of our European neighbours we would be 20 per cent. richer and have nearly £9,000 million a year to spend.

There are two aspects about investment. First, there is the investment inducement in the development areas. Second, there is the climate for investment generally. Taking the first, I have represented a development area, and before that a development district, during the 13 years I have been a Member of this House, and the rate of unemployment in part of my constituency is now 12·9 per cent.

There is no doubt that the report of the National Economic Development Office, which was revised in February, 1971, in taking into account the Government's decision to abolish investment grants and supplant them with allowances, coupled with one or two other measures of the Chancellor of the Exchequer, made the differential between going to a development and an non-development area one of the lowest in Europe.

The report took as examples Belgium, France, West Germany, Italy and the United Kingdom and it stated: The disparity between incentives in development and non-development areas, which has recently attracted a lot of Press comment because it has dwindled sharply since the Chancellor's Budget last year, is much smaller in the United Kingdom than in any of the other countries. It goes on to say: Furthermore, Mr. Barber in his measures last July reduced the differential even further by increasing the first year depreciation allowance on capital plant in non-development areas from 60 per cent. to 80 per cent. The first point is that the incentive to invest in the development areas, expressed in terms of the differential between going to development and non-development areas, has been blunted by the Government, so that among the European countries mentioned we have the lowest differential. I therefore believe that we have to go back to investment grants, and that if we are going to attract investment we have to go further and consider the idea of a regionally varied payroll tax.

Taking the problem of investment generally, it is no good the Prime Minister coming to the Dispatch Box and telling British industry that it must invest. It will not invest unless it has confidence in the economic climate, and that is what it does not have. That is why the C.B.I., which is not regarded as an automatic backer of the Labour Party and may be regarded as reasonably subjective in its support of the Conservative Party, said in one of its quarterly bulletins last year that business confidence was at a lower ebb than at any time since June, 1961.

I believe that one reason why industry has not the confidence to invest—the Government have to face this, and the Prime Minister touched on it—is that ever since the war, growth, investment, employment and capital projects have all taken a lower priority than defending the parity of the pound. This has been a sort of symbol of national virility. It has been a totem pole: protect the pound at all costs. That is why the Labour Party did not devalue in 1965. That is why we have had restrictionist Budgets and freeze and squeeze following periods of expansion.

I hope that now we may now start the limited experiment in a floating exchange rate, that we shall continue it and not listen to the Treasury and the Bank of England which want to go back to fixed parities. Nothing would have a greater restriction on investment and do more to undermine long-term confidence than to do what they want, and I hope that we shall see a European reserve currency as one of the by-products of our accession to the Community.

What is the likely pattern of employment going to be? Mr. William Allen, the United States management consultant who was largely responsible for the Esso Fawley refinery negotiations, and the radical wage payment plan at Linwood Pressed Steel works, wrote a chal- lenging article in the Sunday Times of 1st March, 1964, which was referred to again about a week or two ago in the Sunday Times Business Supplement. Mr. Allen is entitled to speak because he found, to give one example, that at Fawley the refinery was employing twice as many men as any comparable plant in the United States. After the refinery's £23 million capital expansion programme, having taken much of the advice put forward by Mr. Allen, the refinery was actually employing fewer people than before.

Mr. Allen took the view, and I can only paraphrase his argument, that, first, basic wages and salaries in this country are too low. Second, that virtually every employee is under-employed. Third, that our working week is too long. Fourth, that if we had a proper wage structure we would find that most of our overtime was economically and industrially unnecessary. Fifth, that we have not had real full employment in this country since 1946, save in a social as opposed to an economic sense. Sixth, that we have relative spare capacity in our manpower. Seventh, that we were making insufficient use of our capital equipment, but the existing capital equipment was underemployed because of the lack of managerial skills in the employment of our capital machinery.

That is why it is not surprising that in the 12 months preceding October, 1971, it was found that 454,400 jobs had vanished but we kept roughly at the same level of productivity. I think that that will continue to happen and there will probably be more people shaken out, if that is the euphemism that we have to use to describe increasing unemployment.

Mr. Secretan, the managing director of "Manpower", said that only one firm in seven would require more people in 1972 and the Sunday Times Business Supplement comes to substantially the same conclusion. Again, the findings of our American colleague indicated that whereas it required one person to produce a ton of steel in the United States, three were required in the United Kingdom, that it took three to six times as long to build a house in this country as in the United States and that ships could be constructed with 40 per cent. fewer men if we had proper systems.

Photo of Mr Ernest Fernyhough Mr Ernest Fernyhough , Jarrow

The right hon. Gentleman has paid a great tribute to American shipbuilders. Can he tell me of one nation which has bought a ship from America in the last 10 years? America cannot compete with the shipbuilding world. She cannot sell ships to anybody, though she might give them away.

Photo of Mr Jeremy Thorpe Mr Jeremy Thorpe , North Devon

It is a thriving industry and it provides employment for many people there. I cannot say whether anyone has purchased a ship from America. If the right hon. Gentleman tells me that there have been no purchases of American ships, I should say that that has very much been the pattern in this country and that the only people who have any cause for satisfaction are the Japanese.

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

A subsidy averaging 20,000 dollars for every merchant seaman afloat is paid to the American shipbuilding industry. As my right hon. Friend the Member for Jarrow (Mr. Fernyhough) has said, the industry is wholly uncompetitive. The right hon. Member for Devon, North (Mr. Thorpe) underestimates the growth of exports of the British shipbuilding industry. He will have to do better than that.

Photo of Mr Jeremy Thorpe Mr Jeremy Thorpe , North Devon

The right hon. Gentleman did not listen to what I was saying. I said that Mr. Allen's finding was that 40 per cent. less manpower could be used, if we take American manpower as the comparable study, in British yards.

Photo of Mr Jeremy Thorpe Mr Jeremy Thorpe , North Devon

I do not want to get into a long debate on shipbuilding, even with the hon. Lady the Member for Tyne-mouth (Dame Irene Ward), much as I might enjoy it. In this country we have for a long time been overmanned.

That brings me to my next point, which is that—

Photo of Mr Jeremy Thorpe Mr Jeremy Thorpe , North Devon

I am sorry, but I shall not give way. The fact remains—

Photo of Miss Irene Ward Miss Irene Ward , Tynemouth

The right hon. Gentleman made a statement—

Photo of Mr Jeremy Thorpe Mr Jeremy Thorpe , North Devon

The hon. Lady often shouts when she cannot get what she wants.

If we have had overmanning in industry, management has been partly to blame and restrictive practices have been partly to blame. Bearing in mind the figures for the shake-out, we have to recognise that this process is going to continue.

I believe that we shall reach an unemployment figure of 1½ million-plus, and the Government have to recognise that fact and start doing something about it now. The first thing they must do is to create the right climate for investment. The second thing they must do, which they have not so far done, is to undertake far more accurate forecasting of which industries are likely to contract and in which industries there is scope for expansion.

Eight years ago a unit was set up by the then Department of Employment and Productivity to do just that. None of the unit's reports has been made public and it will be interesting to know whether it has been giving close attention to these matters and has been assisting the Government. If the Secretary of State for Employment could refer later in the debate to this unit I am sure that we would all be very grateful.

Time and again the Government tell us that firms in which they have a substantial equity stake are to go bankrupt or are to stand off thousands of workers at a few days' notice. There is no adequate forecasting of likely contraction or expansion in industry, and without that forecasting we shall not get the full benefit of the expanding rate of retraining. Retraining in this country is still quite inadequate. The Swedish Government spend nearly 10 times as much per worker and Swedish companies twice as much per worker as we do here. We are told that we have only 80,000 people in Government training at any one time. I am sure that the right hon. Gentleman will be the first to agree that there is no point in having retraining courses without adequate surveys to show in what skills these people should be trained and what jobs will be available to them when they have been trained.

We must have very much greater public expenditure on roads, electrification, sewage schemes and ports and on the task of removing the scars of the Industrial Revolution, not as a long-term solution but to give people the dignity of employment. This was the whole basis of the Lloyd George "Yellow Book" which was adopted in toto by Franklin Roosevelt in his New Deal in the 'thirties as a result of which there came about the Tennessee Valley Scheme.

We may have to consider lowering the retirement age for men to 60, 61 or 62. The Government, ever since they have been in office, have told us that they have only just begun to take the bugs out of the body politic which the Labour Government left. They say that things will be all right in about three months. But they know as does everyone else, that they have had to reverse their policies—as the Secretary of State has been honest enough to admit quite frankly. They have tried reflation and have told us that it will take a very long time to have its effect, but still the unemployment figures go up and up.

I believe that they will not have success until they create the right climate for investment, which means that we must stop worshipping at the totem pole of sterling. They will not cure unemployment until they have adequate forecasting and proper retraining and until we have public works started to give employment to the unemployed to improve the infrastructure. The Government must do all these things and show a rather greater sense of urgency and intensity than I felt was shown by the Prime Minister this afternoon. [HON. MEMBERS: "Oh."] It may well have been sufficient to satisfy the party opposite but it was not sufficient to satisfy me, nor do I believe that it is enough to satisfy the country.

6.54 p.m.

Photo of Mr John Page Mr John Page , Harrow West

As there is only a short time left for back benchers I will not comment in detail on the speech of the Leader of the Liberal Party, the right hon. Member for Devon, North (Mr. Thorpe), but I thought that in large bits of that speech there was good analysis which merits looking at thoroughly. I want to address my remarks to hon. Members opposite, so few of whom have bothered to stay to listen to this debate which they have been so angrily demanding. There are present at the moment fewer than 10 Labour back benchers for a debate on an unemployment figure of 1 million.

We on this side find neither pleasure nor happiness in there being 1 million unemployed. I have never heard a single Conservative Minister, back bencher or business colleague rejoicing in such a high figure. To suggest the opposite is a myth which hon. Members opposite continue to try to perpetuate. It is just not true. All of us on this side believe that unemployment is morally unacceptable and economically wasteful. If self-interest is the only thing that hon. Members opposite will attribute to my hon. Friends and myself, I must add that it is against our political self-interest to have a high figure of unemployment.

That being so, there can be no doubt in the minds of people that Conservative back benchers must press the Government to do all in their power to take proper measures to reduce this figure. That does not mean adopting stupid measures which might for a few months bolster an uneconomic situation but leave in the end a position worse than we had to begin with. We must consider why it is that we now have this high figure and why it has come so suddenly.

My right hon. Friend the Prime Minister in his brilliant and frank analysis of the situation pointed out the Government's inheritance 18 months ago. The Government were faced with an inflationary torrent greater than had ever been known before. Members of the business community were faced with trade union wage demands of 20 per cent., 30 per cent. and even 40 per cent. They were pressurised into agreeing to wage settlements higher than they knew were economically acceptable in their respective industries. Employers found themselves with a revolt from their customers on their hands, because even if two years ago or 18 months ago they were able to get a higher price than their customers wished to pay, they knew that this was the last time. They were therefore faced with the position of being unable once more substantially to increase prices and with a continuing squeeze on company profits.

Profits are without honour in the minds of hon. Members opposite, but I was happy to hear the Leader of the Opposition, in the only bit of his "cheeky chappy" speech which I thought had any significance, say that the mainspring of economic prosperity was industrial investment. It is not always realised that three or four times as much cash for capital investment for industry comes from ploughed-back profits than from new investment.

My right hon. Friend the Prime Minister mentioned that between 1960 and 1970 gross trading profits fell, and I agree that they fell overall by almost one-third, greatly reducing the amount of money available for new investment. That was the picture overall, but certain service industries and the distributive trades were performing better than average. Where I believe new capital investment was most needed was in the old industries and the metal manufacturing industries. Net profits in the metal manufacturing industries dwindled from £201 million in 1960 to only £70 million in 1969. To have kept up the amount of investment needed, instead of £70 million the profit figures should have been around £300 million.

Photo of Mr Jimmy Hamilton Mr Jimmy Hamilton , Bothwell

When the hon. Gentleman talks about the profits which were made during that period in the metal industry, will he also tell the House that in the corresponding period there was a decrease of 60 per cent. in the labour force in that industry?

Photo of Mr John Page Mr John Page , Harrow West

I should like to check the figures. I do not believe they are as high as that.

I think hon. Members would be putting on blinkers if they were to say, against the advice of the Leader of the Opposition, that new investment and new equipment which might be labour-saving causes unemployment. I take the opposite view. The retention of obsolescent machinery is the greatest recipe for unemployment because it leads to uncompetitive, inefficient final goods, and those final goods will not be sold, with the result that employees will lose their jobs.

To get back to the cause of my argument, I believe that the exceptional unemployment which we are now experiencing stems from the very exceptional wage increases which have been granted over the last two years. Employers had no alternative but to declare savage redundancies in order to try to reduce the total wage bill. The absolute tragedy of the present situation is that had it not been for the activities of the more militant trade union leaders, backed up again and again by many hon. Members opposite, many of those who are unemployed today would still be working. But so much pressure was applied for wage demands that those trade union leaders costed their members out of their jobs.

Also, those militant trade union leaders soured the previously good relations between employers and their workpeople. Mr. Feather in a speech at the weekend said "A little gentle blackmail on employers does no harm". But this blackmail has caused a breakdown in good relations between employers and employees.

Photo of Mr Tom King Mr Tom King , Bridgwater

My hon. Friend mentioned Mr. Feather. I wonder whether he heard Mr. Feather's comments, in the "Any Questions" programme, about where the blame for the present unemployment situation lies. He was under no illusion as to the contribution of the Labour Party to the present situation.

Photo of Mr John Page Mr John Page , Harrow West

Yes. I feel, however, that the General Secretary of the T.U.C. is in a difficult position. He is being pulled so many ways by different people and by the demands of his membership that I feel that his remarks these days are not always consistent in their application.

As to the strike weapon, and the coal strike in particular, it is not as effective nowadays as hon. Members opposite would like to think. When there was a strike and there was one owner who would suffer under the strike, the pressures on that individual employer were much greater than they are on the modern professional manager. I believe that the greater disservice that could befall the coal miners as a whole today would be if in the next few weeks the Coal Board were to grant their demands in full. This would mean that they were jeopardising their jobs for the future and there would be an even more hostile reaction from those wishing to buy coal as a source of power.

It is also ironical that the Redundancy Payments Act is removing one of the restraints which used to be placed on employers in declaring redundancies. Now that it is constitutional and respectable, so many of the inhibitions which employers used to adopt in their approach to declaring redundancies have been removed.

The question now is: what should we now do? First, I urge my right hon. Friend and the Government not to change the course which they have chosen to follow. Nothing would be more unwise than to take panic measures now in order to bolster up inefficient industries, and I beg my right hon. Friend not to take those steps. I would mention five proposals which I think the Government should adopt. The first, which shows how ecumenical I am this afternoon, ties in with one of the points which the Leader of the Opposition made, and the only one which seemed to have any sense at all. I should like my right hon. Friend to find ways of encouraging modern innovative products and processes which are, so to speak, on the drawing board today and which, with Government help, might be commonplace in five or 10 years' time. I think that the purchase, on a Government basis, of new machine tools of a modern type and the encouragement of their manufacture would be a sensible step.

With regard to the development areas, I believe that we should use the £460 million which the Government have made available for construction and other work in those areas to try to encourage the expansion of locally-based smaller companies there. I am afraid that if new roads are to be built in the North-East or other development areas, the contracts may go to mobile teams of workers based in the South-East and elsewhere. I would prefer that the contracts went to indigenous firms.

Thirdly, I wonder whether an examination has taken place of the possibility of modernisation of equipment in schools and hospitals. I believe there is an opening here for new technical items, new scientific and laboratory equipment, which would be money well spent and which would turn on the tap of demand immediately, rather than taking the time which some of these other long-term proposals might take.

Next, I hope that my right hon. Friend will impress on managers of employment exchanges their absolute duty to go out into their areas and try to sell the men on their books to the companies in those areas. I am happy to say that the Harrow Employment Exchange is energetic in this situation, is keeping the Members of Parliament informed and is doing its best to go out daily trying to find openings for people on its books. I will send my right hon. Friend information about another employment exchange the activities of which have, I believe, been lamentable.

Lastly, I think there should be a total ban on all immigration from all sources for the time being while unemployment is high.

Photo of Mr John Page Mr John Page , Harrow West

No, I cannot give way now. I am just coming to my peroration.

I believe that the policy outlined by my right hon. Friend the Prime Minister, coupled with a few of my own ideas—[Laughter.]—would lead to growing confidence in our business community, and confidence is vital. Profits in industry are already beginning to improve, and this will result in an ability within industry to have more investment. If we stick to the policy of not supporting lame ducks, a policy which I fully support, we shall, I believe, have a competitive industry ready to meet the opportunities and demands of the future.

7.10 p.m.

Photo of Mr Frank Tomney Mr Frank Tomney , Hammersmith North

I am not sure how I could possibly take up any of the points made by the hon. Member for Harrow, West (Mr. John Page) in that extraordinary speech.

Coming events cast their shadow before them. The situation now confronting the nation has been a long time a-coming. I fear that it will be a long time a-going, too. I do not share the Prime Minister's optimistic outlook, the idea that the plans advanced today and the money already injected into the economy can produce a net reducticn in unemployment within any reasonably measurable time. I am inclined to believe that it will get worse before it gets better—probably very much worse.

There are many reasons for our present situation. Great Britain's percentage share of world trade has been on a downward trend since 1913. Not until this country, along with others, had to gear itself to face a war did full employment in the sense we have known it come into being. That was the impetus which released the technical and engineering forces of our people and our industry. Prior to that, we had unemployment running in some years at 1½, million or 2½ million, and for a few months of one year at 3 million.

In the changed situation of the postwar years, when goods could be sold anywhere in the world, when reconstruction on a vast scale was going ahead, when new houses, new factories and the rest were wanted in this country, we had the base for full employment. But it was a false base. It was a false base for these reasons. The first five years after the war, 1945 to 1950, were typical years of reconstruction and we had little material or technical resources at the command of either the Government or industry. The next dozen years were the vital years.

We may talk now about investment, about retooling and about new designs, about all the paraphernalia which goes with investment; but it was in those vital years after 1951 that all this was neglected. That was the time, under Mr. Macmillan as Prime Minister, when Britain was making and selling everything and anything throughout the world, the time when property building was at its highest and when, in terms of wages and benefits, Britain could stand comparison with other countries. This was the time before the E.E.C. had developed into a strong economic and manufacturing competing Community. It was the time when the United States, although technically in advance of other countries, was not yet geared to the expansion which it is able to achieve if pushed to the limit. It was the time also when our bigggest competitor, Japan, was forging ahead.

In his references to Mr. Allen, the American consultant, and his strictures upon British industry, the right hon. Gentleman the Leader of the Liberal Party did not compare like with like. With the possible exception of Japan, with a different type of labour force, a different type of managerial force and a different economic outlook, there is no country which carries the penalties which this country has. Our biggest penalty, without doubt, is that we are too heavily populated in relation to natural resources and engineering resources.

I said in this Chamber two years ago that unless, by every conceivable means, we had a huge build-up in British industry and a huge output of goods and services enabling us to have an annual growth rate of 5 per cent. in our gross national product, we should be heading for trouble which we could not control by the end of the century, because we should be over-populated by 20 million in relation to resources. Nothing that I have heard or seen since leads me to suppose that I was wrong. I believe that I am right, and our 1 million unemployed today, a problem which will not be easily solved, is evidence of the way things are going.

In 1966, when I first heard those dreadful words "a shake-out" from our Prime Minister, I shuddered. I know what "shake-out" means. I think that there are not many of my right hon. and hon. Friends now in the House with active memories of what unemployment was. I mean memories of that physical experience. The age barrier is growing now, but some of us have that memory. It is not a happy experience for the men and the families suffering it.

We must not, therefore, as we so often do in these situations, fog things up in economic and political argument until the human content is lost. We are talking about men's jobs and men's futures. Still more serious, we are talking about the dreams of those just leaving school and trying to get started. It is a major problem.

For the first time in this country now, it is not just manual workers who are unemployed. It goes over the whole spectrum, with managerial people, people in insurance, in brokers' offices and so on unemployed. At all levels now, people are being retired early, at 55 or 53, with no prospect of getting another job. This is expertise upon which money has been spent, to which education has been devoted, expertise which would still render a service to the country if the opportunity to work were there.

The lack of investment should have been remedied in those vital 13 years. Investment should have been poured in at that time. Whatever we do now will not be quick enough. The suggestions made today by my right hon. Friend the Leader of the Opposition, with some of which I agree, will take time to work, even if we have a Labour Government. The Prime Minister's plans and injections into the economy will take time to work. The National Plan, produced by Lord George-Brown when he was at the D.E.A., which never had any real power because it rested with the Treasury, was probably too grandiose, but at least it showed the way this country would have to go if it were to gear itself to meet the challenges and penalties of world competition.

The necessary changes will not come overnight. We shall have the heavy penalty of unemployment with us for some time. We have high prices and high profits, and now we have high unemployment. Whatever forecasting of future trends in British industry is done, whatever study groups, however urgent, are set us, from now on we shall have to work against a background of world trade contraction, for what is happening here is happening in every other country.

The institution of the Industrial Reorganisation Corporation was a great thing in its way for bringing about mergers, for sponsoring the formation of new companies and for making industry more efficient—all vital needs for the nation—but every time it acted the end result was that people were thrown out of work, sometimes in large numbers. The result of the A.E.I.-G.E.C.—English Electric merger by Weinstock may have been an increase in job efficiency but it also meant a loss of employment, and such situations have to be faced.

What are we to do? Are we to leave these people out of work? Where can they go? What is their future? Is enough investment forthcoming? If so, why is it not arriving now when the climate is appropriate and there is any amount of good will, despite the difficulties between unions and employers? Incidentally, I do not accept the strictures about Mr. Victor Feather. He is the man with the most difficult job in the world and he does it without any real authority. He has to judge the time to step in, the time when he can push a man a little here and another a little there. Let us not decry what he is trying to do, because without any authority he is able to get people into a situation where they can discuss their differences. I agree that he has his own way of setting about it, but by and large he succeeds.

I am reminded tonight of what the late fain Macleod said from the Opposition Benches in 1967 and 1968 when the unemployment figures were growing. As one of the most outspoken members of the Opposition on this subject, he made his charges against the Labour Government. But anyone reading his speeches will see that he was always ultra-cautious. He knew what pattern was developing. I re-read some of his speeches over the weekend and saw this again. He knew what that pattern was because he knew that the charge on our resources was too great.

When we build advance factories, and we built 240 between 1964 and 1970, even if we build more than that number and they are all in development areas there is no guarantee that they will require male or female employees in important numbers. New factories are designed for streamlined processes and while they may increase profits and those profits may be taxed, if the factories do not provide jobs they do not spell a happy future for the regions.

I listened to the Prime Minister's optimistic proposals and to those of my right hon. Friend the Leader of the Opposition. A great effort is required to get this situation right and it will take at least 10 years of industrial common agreement and investment before the industry can make the kind of change required, before it can begin to go as it must go.

I cannot offer any advice for a quick solution. A cut of 1 per cent. in Bank Rate, the restoration of investment grants as a matter of urgency, not just in the development areas, and a programme of advance factories, again not only in the development areas, would all help and at least the physical plant on the ground would be ready to be occupied and at least industrialists and investors would have the advantage of investment grants; and if they want to forecast long-term plans, the lower the Bank Rate they enjoy, the better. If that is what they are after, they may have to have it. But certainly something must move and it must move before very long.

After almost 30 years of full employment, people are not so mentally attuned to having to put up with things as they were in the days when they were brought up to depend on luck and whether they had a job was a matter of luck. Today they are different in thought and in interest and they will demand an answer to these problems in one way or another As a nation we ought tonight to set about providing that answer.

I am not concerned tonight with scoring party points, because this issue is too serious. Along with others in the 1930s, I spent two years on the dole and I know what it is to walk many miles trying to sell vacuum cleaners on the doorstep. I know the human kindess which can be met as one knocks on doors, but I also know of the difficulties—one first had to make sure that the people of the house had electricity installed before one could start to sell the product. However, I have found that people can be enormously kind. But behind door after door I found that people had the same problems, although perhaps not so acute, the problem of someone out of work. This is a waste of resources that we ought not to contemplate.

I am one of those who happen to believe that joining the E.E.C. will be good for this country. I could see our being squeezed between the U.S.A., the E.E.C. and Japan. I appreciate that international business and industry are ruthless in pursuit of their own ends. We have a highly disciplined people and, whichever party is in power, if the people are given the right lead and the right measures and some hope about the way to go, they will not be lacking in response. It is the Government's job to provide that lead and if they cannot provide it, there is only one alternative—they must give way to someone who can.

7.27 p.m.

Photo of Miss Irene Ward Miss Irene Ward , Tynemouth

I listened with pleasure to the contribution of the hon. Member for Hammersmith, North (Mr. Tomney). If all hon. Members put forward ideas as he has argued his case tonight, we should more quickly get on top of our problem of unemployment.

I am glad to have caught your eye, Mr. Deputy Speaker, because, rather like the hon. Member, I entered the House in 1931, following the terrible unemployment at that time and, apart from the short time that I was out of the House, much of my effort has been devoted to ensuring trade, high employment, pro- sperity and happiness for every region, and for me this is an emotional occasion because of the problems which may be faced in future.

I was glad that my right hon. Friend the Prime Minister so clearly outlined the different issues which make up this great problem. However, I wish that he had made it a little clearer that one of the problems which had added considerable difficulty has been that of automation. I wish that the Prime Minister had talked a little bit about automation. As I go about the country I see and hear of many people who lose their jobs as the result of automation. For example, many lifts in large establishments are no longer operated by men and women but operate automatically. There is a great deal of automation in hotels which reduces staff and results in people having to wait longer for a meal.

The general public would understand more easily the problem of growing unemployment if a little more attention was paid to the results of the shake-out about which the Leader of the Opposition was so keen when he was in power. I wonder whether it is possible for my right hon. Friends to take certain matters up with the nationalised industries. Perhaps British Rail should not dismiss porters as they do. When I arrived at Newcastle Central station yesterday to get my sleeper the ticket collector told me, "British Railways have got rid of the porters." It is a little hard in my part of the world where there is high unemployment that British Railways should do this and allow sleeping car attendants to serve drinks on the sleepers. I would prefer that we had the porters and did not have the drinks.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

Is the hon. Lady aware of how much a porter takes home for a week's work? It is £12·50p. For that it is hardly worth working.

Photo of Miss Irene Ward Miss Irene Ward , Tynemouth

It is not the porters who wish to leave their jobs, it is British Rail who are getting rid of them. I agree that there are many people who ought to be on higher wages. We ought to employ as many people as we can in the nationalised industries and I would like to see those industries given more money to use to increase wages or provide more employment.

I have complete confidence in the Prime Minister's statement and the confidence he enjoys in my part of the world is emphasised by the fact that the Secretaries of State in this Government are the best, most efficient, most humane Ministers I have met, and I have met a lot in 35 years in this House.

Mr. Haffer:

Nobody will believe you.

Photo of Miss Irene Ward Miss Irene Ward , Tynemouth

In my part of the world they returned me to Parliament, and that is good enough for me. I could not care less what hon. Gentlemen opposite think. I want to put on record what a lot of people in my part of the world think about our present Ministers. I am grateful to the Secretary of State for Employment who is always ready to receive me, not necessarily to agree with me, because I know that other Ministers do not agree with me. It is pleasant to have a Secretary of State who pays attention to what one does. I am delighted that we are to have a statement next week about increased training and, I hope, about the whole industrial training programme. The whole country is lucky to have the Secretary of State for Employment.

I want to say a word about the Secretary of State for the Environment who arrived in the North of England on Friday and asked to meet representatives from all local authorities in Northumberland and Durham. As a Member of Parliament I could not be invited to the meeting but the grapevine works quickly and I know that my right hon. Friend met with great success. He asked representatives to put ideas to him and this was very acceptable to us. We very much admire the way my right hon. Friend finds time to deal with so many detailed matters.

I would also like to add my appreciative thanks to the Minister for Local Government and Development.

Photo of Miss Irene Ward Miss Irene Ward , Tynemouth

It is a good thing to have people who do their jobs well. I do not propose to use the short time I have to argue with hon. Gentlemen opposite. If I said what I thought about the speech of the Leader of the Opposition it could not be printed in HANSARD.

The Minister for Local Government is always helpful, always willing to listen and to help those who have problems. Naturally a lot of problems arise with the Local Government Bill. In the enormous Ministry of the Secretary of State for the Environment many issues crop up, and my right hon. Friend is a very good administrator because he is always able to talk to one and to take action. He made one or two useful observations when speaking in the North of England which I want to put on the record. This is one of the reasons why I was anxious to catch your eye today, Mr. Speaker.

It is amazing what an immense amount of good is being done by the bringing forward of projects submitted by local authorities. As the Prime Minister said, it takes time for things to work through. The Prime Minister told us of all that he had given the trade unions when they requested it and I thought to myself, "My goodness, now I look forward to getting some of the things that my party and I want when the next Finance Bill comes along."

I always reckon that it takes 10 years to win a battle, but the trade unions seem to have had such an effect on the Prime Minister that they have managed to get a lot of things done and, fortunately, because we have a Conservative Government, the money is available to pay for them. I hope there will be room in the next Finance Bill for a few of the things that I want to be done for the people in the North who are living on small fixed incomes and others like them.

I have never known a Minister to come to the North and say, as my right hon. Friend the Secretary of State for the Environment said to the assembled representatives, "Tell me your problems, and I shall try to help". I agree with one point he made. He said, rightly, "We do not want a Minister for the North of England". The Secretaries of State for the Environment and Employment and the Prime Minister can argue these matters in the Cabinet.

I am a great believer in power. I know that when my right hon. and learned Friend the Lord Chancellor was responsible for the North he set in train all the work which led to the building of the new roads in the North, for which we are grateful, but it is much more important that there should be Ministers in the Cabinet who can ask for action to be taken than that we should have to go through a chain of Ministers to get things done. It is easy for Ministers to turn down proposals in Cabinet and then ordinary people like myself never hear about them. I have complete confidence in the ability of my right hon. Friend the Secretary of State for the Environment to argue the case on our behalf. I have similar confidence in my right hon. Friend the Secretary of State for Employment. I could not wish for two better Ministers in the Cabinet.

Two points have been causing great anxiety in the North for some time. The North-East Development Council has argued that when industries in an area wished to expand they should have the incentives which go to new industry. The Secretary of State for the Environment has pointed out, quite rightly, that industrialists have special difficulties in establishing industries in new areas. I accept that. I am still waiting for a decision from the Government on what action they will take concerning certain proposals. We have waited rather a long time. If it is not possible to give the same incentives to existing industries, could not a scheme on a graduated scale be introduced? Any expansion in trade and industry, particularly in our area, which is not a consumer goods area, would be helpful to us.

There has been great anxiety among industrialists and traders that the regional employment premium is to be phased out in 1974. This was the one proposal in the Conservative Party's Manifesto for the last General Election on which I had reservations. I told my constituents that I might not be able to support the Government's proposal if the employment situation did not improve—and, when asking our constituents to vote for us, we must tell them if we are not inclined to support our own Government.

I was therefore interested in the Secretary of State's answer when this point was put to him. I telephoned his Department this morning to check that the Press had reported the matter correctly, because nothing is worse for a Minister than having something reported which he had not said. I am assured that the following quotation is correct and I can therefore put it on the record: The Secretary of State gave a pledge that when the regional employment premium—an allowance for each worker employed by a manufacturing company—comes to an end in 1974 the development areas will not lose out. 'We will replace it with some form of investment for regions such as this', said my right hon. Friend. We therefore have a substantial pledge, and I am very grateful for it because industry is worried about this matter.

I turn to the question of training. Recently I met one of the instructors in an industrial training centre who had just finished a course with a large number of young men between the ages of 20 and 30 whom he had been instructing in new radio techniques and electronics. I was very pleased to learn that within a week of their finishing the course they had all obtained jobs. This happened just before Christmas, so the information is fairly up to date. This instructor was extremely enthusiastic. We have some new people in our regional set-up who are very keen about training.

I am therefore delighted that my right hon. Friend the Secretary of State for Employment is to make a major announcement next week on this matter. For quite a long time we have been encouraging, as the Labour Government encouraged, people to go in for training, but quite a lot of unsuitable people have undergone training and others have not obtained jobs on completing their courses. The matter would be dealt with much more efficiently if, as I think the Leader of the Opposition suggested, a complete analysis were made of what was required.

It is confusing for people like myself to be told that a lot of construction workers are unemployed and yet there are big housing schemes in my area for which it is difficult to obtain skilled men. I try to read all the relevant papers and to listen to the experts, but I do not know whether there is a shortage, and I have a feeling that the Department of Employment probably does not know. It is important that there should be close contact with the employers in the area so that men who have undergone training are able to obtain jobs.

Photo of Mr Robert Elliott Mr Robert Elliott , Newcastle upon Tyne North

Has my hon. Friend noticed the recent very disturbing statement made by the Northern Counties Director of the Employers' Federation who, in emphasising that there was a shortage of skilled people in the North-East in the building trade, said that not one of 34 registered unemployed people in Sunderland was prepared to travel five miles to a job? This is a terrifying situation.

Photo of Miss Irene Ward Miss Irene Ward , Tynemouth

I am grateful for my hon. Friend's intervention. I know of his interest in what goes on in our area. I have read the statement to which my hon. Friend referred. It is said that there are all sorts of openings for skilled people. However, Governments have so many national and world problems to deal with that the detail of life is sometimes overlooked. It is very important that back-bench Members should be aware of the smaller details because things cannot be done unless the detail as well as the planning is right.

I should like to say a word or two about the Leader of the Liberal Party. I always thought that he was a friend of mine, but he was jolly nasty today. I have lived longer than he has and I remember an occasion during the war when I had a very long journey to a place to which we were ferrying equipment for the Russians. I was told how quickly America was building Liberty ships, but they did not add on the hours spent in producing the prefabricated parts. I have no wish to denigrate the Americans, but simply by putting together a lot of prefabricated parts it appeared as though they were building ships more quickly than we were, which was not true. I therefore wondered whether the Leader of the Liberal Party—and I cannot remember his constituency because Liberal Members rush in to the Chamber to make a speech and then rush out and it is difficult to make out which constituencies they represent—was right in his analysis, because Great Britain builds the best ships in the world and will continue to do so.

We in the North of England have great confidence in the Government's ability to solve the unemployment problem in the long run. No Government with which I have had anything to do have had such capable, pleasant, humane and easy-to- talk-to people in the Ministries as the present Government.

7.55 p.m.

Photo of Mr Ernest Fernyhough Mr Ernest Fernyhough , Jarrow

There are many points in the speech of the hon. Member for Tynemouth (Dame Irene Ward) to which I should like to reply, but out of deference to my hon. Friends I will comment on only one. If she had been half as concerned when Palmer's shipyard was closed down by the Government as she was about the railway porters, it might be open now. She never attended a single meeting when we were pillorying the Government for the first lame duck they killed off.

Photo of Mr Ernest Fernyhough Mr Ernest Fernyhough , Jarrow

I will not be interrupted.

Photo of Miss Irene Ward Miss Irene Ward , Tynemouth

The right hon. Gentleman is not worth interrupting.

Photo of Mr Ernest Fernyhough Mr Ernest Fernyhough , Jarrow

I will not be interrupted by the hon. Gentleman on the question of Palmer's, because even he did not come to any of the meetings.

Photo of Mr Ernest Fernyhough Mr Ernest Fernyhough , Jarrow

The hon. Gentleman did not. I called all the meetings, so I know who attended them.

On the question of someone saying that 34 people turned down a job at Sunderland, I can only say that at one time in the Labour Government's history unemployment was down to 250,000. That shows that men and women will work if there is work available. So no one will tell me the old fable that there is work if only men would seek it.

Photo of Mr Ernest Fernyhough Mr Ernest Fernyhough , Jarrow

I am not giving way, because I have made a pledge that I shall be brief, and I will try to keep it.

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

Unemployment was never down to 250,000.

Photo of Mr Ernest Fernyhough Mr Ernest Fernyhough , Jarrow

What I have said is true.

If a million people in this country were being attacked tonight by some pestilence or disease, or even if the Communists were attacking a million people, the whole of the nation's resources would be brought to bear to help them and try to rescue them. Money would not count. Nothing would count. A million of our people are being attacked—by unemployment. They are being physically and mentally attacked, and every week and month that it goes on makes them worse.

We could do something about it. The House has had to listen to the Prime Minister trotting out what the Government have done. He has had to admit that they have had to use the public instrument to increase investment to provide jobs, because private investment is falling down and not providing the jobs. The Government should step up public investment still further. If we cannot get private enterprise to go to the development areas to build the factories and provide the jobs, why should not the Government do so? They are the biggest single customer of British industry, buying everything from matches and cigarettes to tanks, aeroplanes, guns and ships—you mention it, the Government buy it.

We could twist the arms of the suppliers and determine where they go. If they said, "We're not going", I hope that we should set up publicly-owned and publicly-run factories. In the end that is the only answer to the problems of the development areas. We have tried the carrot time and time again, but always the development areas are the first to be hurt.

Let us take the experience of my constituency. Since the General Election, Palmer's has gone, as have Paton and Baldwins, British Oxygen—

Photo of Mr Robert Elliott Mr Robert Elliott , Newcastle upon Tyne North

Will the right hon. Gentleman give the House the actual figures for Palmer's? How many of the men employed in Palmer's ship-repairing yard, which had no future, were re-employed almost at once? The right hon. Gentleman must know the figures.

Photo of Mr Ernest Fernyhough Mr Ernest Fernyhough , Jarrow

I cannot give them from memory. [Interruption.] All I can say is that the unemployment figure for males in Jarrow is higher now by 1,000, probably because of Palmer's. [Interruption.] I gave a promise that I should keep to a timetable. I shall not keep to it, Mr. Deputy Speaker, unless you are prepared to keep in order Conservative hon. Members who interrupt.

Photo of Mr Thomas Urwin Mr Thomas Urwin , Houghton-le-Spring

On a point of order. My right hon. Friend the Member for Jarrow (Mr. Fernyhough) is trying, under considerable difficulty, to make important points. He is being constantly interrupted by Conservative hon. Members. Because of your discussion with your colleague, which is probably of vital importance, Mr. Deputy Speaker, you have not listened to his appeal to be helped in making a short speech. May we have an orderly debate, not interrupted by hon. Members who have not been here throughout the debate?

Photo of Mr Robert Elliott Mr Robert Elliott , Newcastle upon Tyne North

On a point of order. I have been here all day. I asked a specific question because the right hon. Gentleman kept mentioning Palmer's, a question to which he obviously does not know the answer.

Photo of Wing Commander Sir Robert Grant-Ferris Wing Commander Sir Robert Grant-Ferris , Nantwich

I apologise to the House, and to the right hon. Member for Jarrow (Mr. Fernyhough) in particular. I was having a discussion about the importance of the debate. The participation of back benchers has been sadly curtailed because of other speeches. The difficulty is to fit in every hon. Member that I should like to fit in. That is what I was engaged in discussing just now. Now that my attention has been drawn to what was happening, I hope, knowing the right hon. Gentleman as I do, that we shall proceed with the utmost harmony.

Photo of Mr Ernest Fernyhough Mr Ernest Fernyhough , Jarrow

I am not easily provoked, but I have a tendency to reply when I am provoked. I did not want to do that tonight, because I did not want to take time that might be used equally well by other hon. Members.

Several North-East Members have constituents employed in Reyrolle-Parsons. The cut-back in public expenditure on which the Government won the Election resulted in the Central Electricity Generating Board having to postpone certain of its works. Why does the Government not now give the order for Sizewell, which would provide work for thousands of people who desperately need it? Nobody can tell me that if we had Sizewell we should have too much electricity. Lenin said that the power, strength and health of any community could be measured by the number of units of electricity it consumed per head. That is not a bad test. In view of the unemployment in the heavy electrical engineering industry and the likely redundancies, could not the Government now, without waiting for the Vinter Committee, make a firm decision and allow the project to go forward?

I like to feel that I am a man of my word. There are many other things I should like to say, but in view of the time I will make only one other point. Like my hon. Friend the Member for Hammersmith, North (Mr. Tomney) and my right hon. Friend the Member for Houghton-le-Spring (Mr. Urwin), I have known something of unemployment, and so have my family. I know what it does to people, even to youngsters. If anyone believes that the present young generation will quietly accept unemployment in the manner of their fathers, he is living in a very unreal world. They will not be satisfied with the right to vote if they are denied the right to work, because the right to vote without the right to work makes a mockery of democracy.

I see developing a situation which, in a comparatively short time, could be probably the most serious the country has ever faced. Either we give hope to the boys and girls now leaving school, some of them with high educational qualifications, who cannot get a job, hope to those who have never known unemployment and are therefore not prepared to put up with it, or, in the last analysis, the situation can lead to the end of our democracy, the end of this House and of the values which many of us cherish.

8.6 p.m.

Photo of Mr Robert Redmond Mr Robert Redmond , Bolton West

I am most grateful for the opportunity to follow the speech of the right hon. Member for Jarrow (Mr. Fernyhough), if only to say that I fully share his anxiety and feelings about unemployment. I do not think that anyone in the country can believe that all those feelings are confined to the Opposition side of the House. They are not.

No Government could possibly have done more than the present Government to stimulate the economy. I want to show very clearly that the measures are working. The best possible barometer of economic activity is the management consultancy executive selection industry, from which I come. In July, 1966, the date of the beginning of the credit squeeze, which began the present rundown, as at the beginning of any other credit squeeze the executive selection in- dustry experienced a dramatic cut-off in business—not a decline, but a sudden cut-off. Many of the companies in that business have gone out of existence. Mine has continued only by obtaining an ever-increasing share of an ever-decreasing market.

But November was a record in the history of the company for incoming business. If the previous record could be regarded as 100, November's was 150 and December, which for seasonal reasons is normally a very slack month in the industry, beat the November record. Over the weekend I checked the figures with my head office in Manchester to see whether the trend was continuing, and I am told that it is as strong as ever. It is not confined to my own company. Any hon. Member with doubts about that should get in touch with one of the companies in the industry.

I also checked over the weekend with a large advertising agency in Manchester, with which I have no professional connection, which deals to a large extent with classified advertising of vacancies at all levels. Whereas I was talking about management, it is dealing across the board with advertising vacancies of various sorts. It says that the upturn in business in the past three months has been fantastic. It has never known such an increase. That is a barometer of forthcoming economic activity. [Interruption.] I should not say that here if I did not have every confidence that it is a repetition of what has been seen before at the beginning of an upswing. It means that after a long, dark winter, dawn is beginning to break. [An HON. MEMBER: "Spring."] Hon. Members may laugh, but if they check with any firm of management consultants concerned with selection they will find that is true.

But I wish that what I have said about the national situation could be applied to my constituency. Bearing in mind what I have just said, when I returned home on Friday I saw Thursday's evening paper showing that Eagley Mill, owned by J. and P. Coates and employing over 600 people, is to close by June. In addition, on the same day I learned that, Littlewood's Mail Order factory was to declare redundancies of more than 300. That was virtually 1,000 redundancies in Bolton in one day, making a total notified number of redundancies of 1,390 in January, of whom 1,000 are not yet in the unemployment figures. In the whole of last year there were 3,000 fewer jobs in Bolton. Yet we have had over one-third of that number in just this one black month of January.

Two years ago Bolton had full employment in spite of having lost 15,000 jobs over 12 years due to the rundown in the textile industry, but with a holding of the fort through the energetic application of all sorts of work programmes by the industrial development officer of Bolton Corporation. We should give every credit to Bolton Corporation for the manner in which it kept jobs coming into the town against the ebbing tide of the textile industry.

All this which has happened has nothing to do with the economic situation. The Eagley Mill is to close because of the progress made with man-made fibres. Littlewood's Mail Order factory is affected because of changes in the industry brought about partly by the postal strike last year and partly by the increase in postal charges. Bolton Corporation has gone on fighting the rundown in textiles by bringing in the mail order business, and now the mail order business is on the way out.

Bolton Corporation has made a great effort, and it would spend more of the ratepayers' money to bring industry to the town, but it is hamstrung by a thing called S.E.L.N.E.C. Transport Executive, created by the last Government under the Transport Act, 1968, which has caused a 5p rate and at the same time is using money which was provided by its customers in Lancashire to buy buses abroad instead of creating employment in Lancashire. [Interruption.] No one controls that executive. It was the executive which took the decision to purchase those buses. The local authority had nothing to do with it, and it is outrageous for anybody in this House to ask who controls the executive. It controls itself once it is appointed by the nominating authority.

What I am suggesting is that the time has come when the Government should look again at the Hunt Report which, so far as Bolton is concerned, was scrapped by the last Government. It said that Bolton should have intermediate area status. I am urging the Government now to give us that intermediate area status. I support the Government in that it is hopeless to chop and change regional policies, but ours really is a special case.

I learned at a meeting at the town hall at the weekend of a firm which two years ago would have liked to have come to Bolton; it wanted to take advantage of the Bolton Institute of Technology, and it wanted the kind of people who are available in Bolton. Because of the regional policies created by the last Government and, unfortunately, continued by the present Government, the intermediate area status of Blackburn took the firm there. If that firm had come to Bolton there would now be 2,000 more jobs in the town. That is not the fault of this Government—it happened before they came into office—but we must not have any more of that.

The North-West has 5 per cent. unemployed at the moment. Two years ago we had full employment in Bolton. Now we have 6·5 per cent. unemployment due to the causes and redundancies which I have mentioned, and some of these have not yet appeared in the unemployment figures, as I have said. I must put in a very strong plea for help to Bolton through intermediate area status. The Opposition's Motion is not relevant to this issue. We have people who are the finest in the world; we have 100 acres of sites available for industry; we have 3 million sq. ft. of factory space. Nevertheless we shall not get the people to come in unless they have some incentive. I sincerely hope that this plea will not go unheard.

8.15 p.m.

Photo of Mr Jimmy Hamilton Mr Jimmy Hamilton , Bothwell

In listening to the hon. Member for Bolton, West (Mr. Redmond) we listened to one among others on the benches opposite who represent constituencies which for a long period have to a great extent had full employment. The hon. Member will now realise that those of us who represent constituencies and counties where we have always had very heavy unemployment have had good cause for our complaints, not only lately but during the period of our own Government. We have never been slow to make the necessary protests or efforts to bring industry to our parts of the country.

I realise that back benchers opposite are not responsible for the present situation. It is a matter for the Cabinet and I want to know from the Government, and my hon. Friends desire to know, what the Government are going to do about the 1¼ million unemployed in the United Kingdom. In Scotland, north, south, east and west, we hear virtually every week without fail of redundancies in some factory or another. In my own constituency, during four months four factories have notified redundancies and one of them will close never to open again.

It is not good enough for us in this House to make speeches about unemployment and at the same time attempt to make political capital out of unemployment. We all have a responsibility to the people who sent us here to put forward constructive ideas about how best to solve the unemployment problem. In Lanarkshire we have 9·8 per cent. of the insurable population signing on at the employment exchanges; in Scotland as a whole the proportion is 7·1 per cent. of the insurable population. That is virtually twice the national average. I have only to say that for it to be obvious that we have a point of view to express and one of which cognisance must be taken.

I was reading over the weekend Samuel Johnson's life by Boswell and the passage about "The great inspiration for the Scots is the road to England". That no longer applies because we now find, under the administration of the present Government, that in places such as Birmingham where many Scottish people used to travel to find work there is now unemployment, and in Birmingham 5·6 per cent. of the insurable population are unemployed. In consequence of a situation such as that, we find that Members of Parliament for places like Birminghave and Bolton, which have enjoyed full employment, are now finding themselves in a situation in which they must ask the Government to change their policies. We on this side have been asking the Government to change their policies since they came into office in 1970.

Most of us on this side have put forward very constructive ideas, and one which we have consistently put forward has been that it was a mistake to depart from investment grants. In consequence of departing from investment grants there is a lack of desire on the part of indus- trialists to go to development areas. There has been recognition of this at least by the Secretary of State for Scotland. I say that bearing in mind what he said to some of my colleagues and to me at St. Andrew's House in Edinburgh during the Summer Recess. He then said that there should be a change of policy in that direction. I sincerely hope that his voice is strong and clear at Cabinet level to get the Government to change their existing policy.

I want now to refer to existing companies in development areas. Unless the Government of the day are prepared to give some recognition to possible expansions by companies already in the development areas, industrialists will not be prepared to expand. I was urging this even in the days of my own Government. This point of view is worthy of consideration and could at least go some way towards solving our problems.

We seem to forget about the social consequences of unemployment. We all know of men of 50 years of age and over who have worked all their working lives and have never been unemployed and who are now redundant and will never work again. This is an indictment against any Government, irrespective of its colour, and it is a waste of manpower. Many of these men have become disillusioned and have come to accept that unemployment is a way of life. That is a tragedy and one of the worst social consequences of our time.

In the past year the textile industry has suffered a decrease of 50 per cent. in employment, the metal industry a decrease of 100 per cent. and the motor industry a decrease of 60 per cent. With all the technological developments which are taking place, with the new machinery which is being brought in and the contraction in all these industries, the Government must do some thinking and planning to ensure that the increased production resulting from these machines will provide jobs for the men who are being displaced.

The Government have a responsibility to declare their policy on industrial training, and I hope that a declaration will be made tonight by the Secretary of State for Employment. In his last statement about industrial training the right hon. Gentleman made no reference to industrial training in Scotland. It was said that the slack must be taken up. I assure the right hon. Gentleman and his colleagues that the slack has been taken up, as can be seen by the number who are unemployed. In Sweden 10 per cent. more is spent by the Government per head of the population than is spent in this country on industrial training, and the contribution of the employers is twice that of our employers.

We in Scotland want the Secretary of State for Scotland, not next week but as quickly as he can, tonight if possible, to give some heart to the people of Scotland. There has been an increase of 13,300 in the unemployment figures over the last month and there is a possibility of 160,000 being unemployed in February. The people of Scotland are entitled to be told where the Government stand on the Hunterston iron ore terminal project. Lord Melchett has told us that an iron ore terminal at Hunterston is an absolute necessity for the steel industry. I hope on that basis we shall be given a ray of hope that the iron ore terminus will come and will be followed by the steel complex. I hope that the Government will also suggest to the electricity board that it should now go ahead with the power stations which are so urgently required and which could give work to many of my colleagues in the steel construction industry.

It has been said by an hon. Gentleman on the Government side of the House that unemployed people are sometimes not prepared to move five miles. I assure him that many of my constituents are travelling 50 miles to do a job which is beneficial to the country as a whole.

I hope that the Minister who replies to the debate will tell us what are the Government's intentions about returning to investment grants and the expansion of existing industry and, most important, make a declaration on the Hunterston project.

8.25 p.m.

Photo of Mr John Wilkinson Mr John Wilkinson , Bradford West

The Censure Motion which we are debating this evening is crudely drafted and inappropriate to the difficulties and complexities of this heart-rending issue. The second part of the Motion reads: …censures Her Majesty's Government for the fact that their doctrinaire and irrespon- sible policies have forced the total of registered unemployed in the United Kingdom to 1,023,583 persons. As my right hon. Friend the Prime Minister pointed out, the most controversial item in the Government's legislation in the industrial field was undoubtedly the nationalisation of Rolls-Royce. That was undertaken for thoroughly undoctrinaire reasons of national interest and to maximise employment. No one can suggest that the taking over by private industry of the brewers of Carlisle or the taking over by private enterprise of Thomas Cook will have a crucial effect on employment.

The Leader of the Opposition seemed to dwell in a world of fantasy and chimera which is known only to himself, a world peopled by speculators and profiteers, a world in which the length of the dole queue varied directly with the level of the industrial share index. He also set a level of verbosity and long-windedness which unfortunately characterised many contributions to the debate and, in saying that he would not invoke history to reinforce his arguments, he produced two fallacious historical parallels.

The first was in reference to the Prime Minister's speech in Bradford on 16th June. 1970, at which I was present and in which the Prime Minister referred to an economy of high unemployment, not surprisingly in Bradford, because the Yorkshire and Humberside total of unemployment rose by three times during the period of Labour Administration. In the city of Bradford itself, the level of redundancy in wool textiles doubled, and in engineering it went up by six times in those years. The number of closures in wool textiles from 1964 to 1970 increased by three times, as it did in engineering. So it was hardly inappropriate for the Prime Minister to talk about an economy of high unemployment.

I recall also in that context a speech by the Leader of the Opposition, as he now is, in 1966, when he pledged in Bradford. in that very same hall, a rate of house building exceeding 500,000 a year—one of the most notorious of his broken promises to the country.

The right hon. Gentleman then went on to discuss unemployment in Scotland, particularly in Tayside. He referred to the fact that, in 1969, unemployment in Dundee was 2·9 per cent., and it is now over 10 per cent. In his mad haste to overlook history and not to dig up historical parallels, is he so over-anxious that he forgets that the most cataclysmic decline of the jute supply industry has taken place in that period? There has been a cyclone followed by a period of crisis in East Pakistan, followed by war, which is by no means insignificant—

Hon. Members:

Give way.

Photo of Mr John Wilkinson Mr John Wilkinson , Bradford West

No, I will not give way.

In discussing this problem, we must also bear in mind that, in the period of the previous Administration, expenditure on the development and intermediate areas rose by almost five times. At the same time, unemployment on average in the development areas rose from 2·7 per cent. to 4·3 per cent. So, although more and more public money was being spent, there was by no means a commensurate return in terms of employment.

The Leader of the Opposition produced one interesting suggestion. That was his suggestion to enrol the unemployed in specific local environmental projects to improve schools, housing and roads and so on. This is all very well. It has slight overtones of the workhouse, but I think that in the public mind it might have superficial attractions. I do not rule it out of court. But one should remember that a wool sorter or highly trained weaver who is out of work is not likely to be the best person to be employed as a craftsman in construction.

I hope that the House will forgive me for being a little parochial, a little too obsessed with my own parish pump, my own patch, but I should like to refer to the Yorkshire area and the wool textile district of the West Riding. It is relevant because it highlights that area which my right hon. Friend investigated, the area of regional unemployment.

I will not quarrel with him—I supported him wholeheartedly—in his analysis of the cyclical and structural nature of unemployment. But much more needs to be done on the regional analysis. To give them their due, the last Administration did at least try. They made analyses, they did a little study work and there was a Green Paper, giving the economic assessment to 1972, published in 1969 under the aegis of the now defunct D.E.A. It clearly forecast that the rate of unemployment in Yorkshire and Humberside would rise more sharply than in any other area. Yet they did nothing about it, for the whole of the region.

In the same year, 1969, the Hunt Report on the intermediate areas was produced, which recommended that Yorkshire and Humberside, as well as certain areas in the North-West, should receive intermediate status. For Yorkshire and Humberside, this meant that a little bit around Humberside and in the South Yorkshire coalfield got intermediate status, and not the West Riding wool textile district.

In that district, we face problems which are evident elsewhere regionally. We face a pattern in which unemployment is growing. About 7·5 per cent. of the male work force is out of work. This figure exceeds, for example, the figure in Wales, which is a development area, and other parts—

Photo of Mr John Wilkinson Mr John Wilkinson , Bradford West

This is Yorkshire, Humberside, and I am speaking specifically about Bradford.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

The hon. Member was saying how bad it was in the old Labour Government days. Is he saying that things are worse now? After all, this Government came in to cut employment at a stroke: he now tells me that things are worse.

Photo of Mr John Wilkinson Mr John Wilkinson , Bradford West

I am telling the hon. Member that we are now facing the legacy of those policies—it is as simple as that. The hon. Gentleman may not like it, but he must accept that it has led to an unemployment rate of 7·5 per cent.

If one looks at other factors in the local situation one finds that earnings are lower than in any other industrial area in the country. Indeed, they are even lower than in the development or intermediate areas. At the same time there is net emigration; people are leaving the locality to find work elsewhere. There is widespread dereliction and a pattern of industry which is increasingly capital intensive, so that the demand for labour is bound to decline.

These circumstances come together to demand imaginative regional policies. I am glad that the Secretary of State for Trade and Industry is initiating a review, but there is great urgency over this matter and the time has come for areas like Bolton and Bradford—which because of their geographical position in propinquity to development and intermediate areas, are at a disadvantage—to receive special treatment but especially for Bradford, to be made a special intermediate area.

Since we have been in Government we have already instituted special development areas. I do not believe it ridiculous to say that those areas which suffer the special disadvantages to which I have referred should be granted special intermediate area status.

I echo the words of the right hon. Member for Devon, North (Mr. Thorpe) in saying that to be effective, regional policy demands much more effective forecasting by central Government. In the past Governments have been too slow to realise the changing structure of industry.

I referred to wool textiles in Bradford. In 1969 we had the Atkins Report, a strategic plan for the long-term future of the industry. It forecast a massive reduction in the workforce while at the same time stating that the output of the industry would stay very much the same, if not improve. The plan was agreed between and supported by both sides, yet it foreshadowed a tremendous fallout in labour, and that must predicate new industry for the area.

The regional planning councils and the like seem to have been unable to help. They have merely suggested more science-based or service industries. Science-based industries depend on a skilled workforce and it is difficult to train people who are experienced in, say, textiles, to the high degree of technology that workers in science-based industries, electronics and so on require. With the greater accuracy of forecasting must come better training and a more detailed analytical function on the part of the regional economic planning councils.

To go from the general to the particular, the Government have a clear function to provide jobs, and the Conservative Party needs no instructions on that score. It was Harold Macmillan who when representing Stockton produced "The Middle Way" and the whole idea of Government intervention in industrial location and similar matters.

I urge the Government to go for the specific rather than for a general national, fiscal or monetary approach. In short, the time has come when further increases in spending power and further relaxations in taxation and bank rate would probably lead to higher imports and pressures of demand which we would be unable to sustain. I would therefore go for a regional strategy.

I therefore ask the Minister to consider siting post-war credit repayment centres—which he has already said should, where possible, be sited in development or intermediate areas—in places like Bradford and Bolton, but particularly in Bradford because in our local employment exchange area the P.A.Y.E. centre at Shipley has been abandoned. That is something specific that the Government could do.

The Government could also do something specific for the aerospace industries. They have ordered more Nimrods. Buccaneers and Bulldogs for the Royal Air Force. A replacement is required for the Varsity. This has its fall-out right across industry nationally. Also, another airliner, a Q/STOL airliner, would help.

I urge my right hon. and hon. Friends to examine very thoroughly regional policy, to bring forward their review and to consider special intermediate status for Bradford so that we would enjoy the benefits of investment incentives for housing renewal. Already Bradford has the third best record in the country for special improvement areas, after Haringey and Birmingham. If we had a 75 per cent. grant instead of a 50 per cent. grant, more could be done in this direction, which would greatly improve employment prospects.

The great hope for the future lies in the E.E.C., particularly for manufacturing centres such as the one I have the honour to represent. This fact was recognised by both sides of industry, by managements and unions, in the City of Bradford, and by the fact that three out of its four Members of Parliament for Bradford voted for Britain's accession to the E.E.C.—two of them were Socialists—because they knew full well that the best hope for jobs in the future lay in expanding markets, which only the E.E.C. could provide.

8.42 p.m.

Photo of Mr Eric Heffer Mr Eric Heffer , Liverpool, Walton

I do not intend to take up as much time as the hon. Member for Bradford, West (Mr. Wilkinson). I want to make only a few points.

The Prime Minister made an extremely interesting analysis of the development of unemployment, and he quite rightly pointed out that there were three facets to our present unemployment difficulties. He concentrated on the question of technological change, the shake-out which had developed in industry within the last few years. I think that he was endeavouring to suggest that because this shake-out had occurred it meant that the Government had no responsibility for the rise in unemployment that has taken place over the last 18 months.

But the right hon. Gentleman should remember, as I pointed out in an interjection, that technological change and shake-outs have been taking place in industry, in our type of society, ever since that society was developed. There has always been technological change, because the motive force in our type of society is profit. Therefore, if profit is the motive force, there must inevitably be constant technological change in order to cut down on the variable capital and get an increase in the constant capital, Hon. Gentlemen opposite do not know that; they have never learnt the A.B.C. of economics.

In trying to put forward that argument as an excuse for their own lack of responsibility, the Government are getting away from the fact that if one knows that this will happen—and if one does not know this, it is a fantastic situation—one obviously takes steps to create further employment once the shake-out has taken place. How does one do that? One does it on the basis of the development of new industries, by new public investment, and by the creation of industries in all sorts of areas in which there is a decline in the traditional industries and in which there will be a shake-out in new industries because of technological development.

The private enterprise system has totally failed to deal with unemployment. It cannot possibly solve the problem of unemployment on a long-term basis. The problem can be solved only by a planned economic system, by the introduction of new, publicly-owned industries according to a socialised plan of the economy.

Photo of Mr Eric Heffer Mr Eric Heffer , Liverpool, Walton

I do not want to be rude, but I shall not give way to the hon. Gentleman. I propose to make only a brief contribution to the debate as other hon. Members wish to take part in it.

I want to deal with the reality of the situation in areas like my own. In the City of Liverpool 49,000 workers are seeking employment. In the Merseyside development area 54,000 workers are unemployed. If anybody suggests to me that those workers do not want employment, my answer is to ask why, despite the hard core of unemployment in Liverpool, we got the figure down to about 12,000 in 1966 when the Labour Government were in power?

Of course these workers want employment. Of course the workers of Kirby, where the unemployment figure is 20 per cent., want employment. That is why the workers at the Fisher-Bendix factory at Kirby have decided to sit in. They are not prepared to accept unemployment and to go on to the streets seeking work which they know is not there. When I spoke to the workers at Fisher-Bendix, one man said to me, "I am now 54. If I lose my job in this area, I shall not have a cat-in-hell's chance of ever getting a job again. I shall be finished at the age of 54".

It is the Government who have allowed the present unemployment situation to develop. They cannot dodge their responsibilities. They are basically responsible for it. I do not say that the Labour Government had no responsibility at all in the matter. The hon. Member for Gillingham (Mr. Burden) knows that I expressed that view when my Government were in office. I have not heard any of the older Conservative Members say in this debate the sort of critical things about their Government's policy that we used to say about ours, because we have always been concerned about unemployment. It is not an academic question for us.

One of my hon. Friends said that he had walked the streets for two years. Since the Second World War I have walked the streets of Liverpool seeking employment. It is not an academic question for us. I know what unemployment means, and because of that I used to criticise my Government for allowing the unemployment figure to rise to 500,000 and beyond. I have never believed in unemployment. Every Government should do everything they can to bring down unemployment so that those who are out of work are only those who are unemployable in the correct sense of the word.

It is a crime to have one man unemployed. To have 1,020,000 unemployed is a greater crime than ever. The Government stand indicted for their policy on employment, and the quicker they resign and get out the better. Let us have a General Election. Let us get rid of this Government now. I was glad to hear my right hon. Friend pledge from the Front Bench today that the Labour Party would never go back to so-called levels of unemployment. There are no such levels. There is no level that is tolerable to a worker seeking employment to ensure that his family does not suffer poverty as a result of unemployment.

8.50 p.m.

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

The hon. Member for Liverpool, Walton (Mr. Heffer) and his hon. Friends are not the only people who have seen the tragedy of unemployment. I have a rather long memory of it because it was suffered by my own father in the 'thirties. The party opposite has every right to criticise the Government for the figures that now exist, but for Heaven's sake let us be spared some of the hypocrisy displayed by the opposite benches today and, in particular, by the right hon. Gentleman the Leader of the Opposition. To hear them, one would imagine—and here I exonerate the hon. Member for Walton, because I heard him criticise his own Government on several occasions—that the record of the Labour Government between 1964 and 1970 was spotless. The fact is that between 1965, the first year in which the Labour Administration's policies can be said to have taken effect, and 1970 unemployment rose from 359,700 to 639,900—an increase of about 280,000.

We have heard a great deal from right hon. and hon. Members opposite in the last few days about their sympathies with the coal miners, and the hon. Member for Walton has made it perfectly clear how difficult it is for elderly men in traditional industries who lose their jobs to find any other job. The fact is that in 1964 there were 545 coal pits working in Britain employing 502,000 miners. When the Labour Party left office, the number of working pits had been reduced to 252 and the number of miners employed had been reduced to 283,000, a drop of 218,900. I see some hon. Members opposite nodding their heads; it is just as well that we get the position in perspective.

We have heard a great deal from the right hon. Member for Bristol, South-East (Mr. Benn) about Clydeside. He has shed crocodile tears for Clydeside. On 2nd August last year in this House the right hon. Gentleman admitted that in June, 1969, he had given instructions to U.C.S. to slim its labour force by several thousand men. That, too, should be remembered.

On 6th May, 1970, the right hon. Member for Grimsby (Mr. Crosland), then Secretary of State for Local Government and Regional Planning, stated Between mid-1964 and mid-1969 … there was a loss of over 208,000 jobs in coal mining"— it was, in fact, 218,000— 134,000 in agriculture, forestry and fishing; 128,000 on the railways; 123,000 in textiles and clothing; 43,000 in metal manfacture; 21,000 in the ports and inland waterways; 20,000 in shipbuilding and marine engineering. The total drop in those traditional industries during that period amounted to … 678,000."—[OFFICIAL REPORT, 6th May, 1970; Vol. 801, c. 432.] The right hon. Gentleman then told the House that during that period the Northern Region lost 45 per cent. of its coal mining jobs and 39 per cent. of its jobs on the railways; that Scotland lost 38 per cent. of its jobs in coal mining, and Wales 40 per cent.

That was the party which cared so much about employment. It was the party from whose leader we have today heard so much humbug. This position was not unexpected by the Labour Government. It was their purpose to create just this position, and that was made abundantly clear by the then Prime Minister in a debate on 22nd November, 1967, on the economic situation.

This is what the right hon. Gentleman said: We set out in 1964 to break clear from the dilemma of more than a decade by a policy of restructuring industry, of cutting out the waste in prestige aviation projects, and in tackling at the root the problems of such base industries as shipbuilding, coal, steel and electrical engineering …"—[OFFICIAL REPORT, 22nd November, 1967; Vol. 754, c. 1338.] In addition the party opposite brought in S.E.T., and when it was introduced in this House the then Chancellor said that it was intended to shake out employment from the distributive industries and put people into manufacturing—in other words, to create unemployment. But the party opposite did nothing practical to transfer that labour and there was no corresponding increase in employment in the manufacturing industries. [Interruption.] The hon. Gentleman has just come into the Chamber.

Photo of Mr Thomas Swain Mr Thomas Swain , North East Derbyshire

I have not been in the Smoke Room; I have been here.

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

There is not one hon. Member opposite who can say that, having set out to shake out employment in those industries before it created the redundancies, the party opposite when in Government took steps to ensure that there were replacement industries available for these men to go into.

The complete failure of the Labour Government to cope with the increase in unemployment was admitted by the former Secretary of State for Economic Affairs, the right hon. Member for Stepney (Mr. Shore), on 21st November, 1967, when he said: After three years, trying to make different policy approaches, we are forced to choose between a strategy of deflation and unemployment and a strategy of devaluation."—[OFFICIAL REPORT, 21st November, 1967; Vol. 754, c. 1266.] Next day the then Prime Minister said: —it is right to tell the House that the problem which we shall be facing in a year's time is far more likely to be not inflation and unemployment, but expansion to a scale which might lead to labour shortages in many areas". —[OFFICIAL REPORT, 22nd November, 1967; Vol. 754, c. 1334.] The then Chancellor said: …we are going back now to a policy of full employment …".—[OFFICIAL REPORT, 21st November, 1967; Vol. 754, c. 1442.] The facts are that between 1967 when devaluation took place and 1970 when the Labour Government were defeated there was no question of more jobs than people, but unemployment continued to increase. In fact, there was a further increase of 40,000 in the number of persons facing unemployment.

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

I have quoted remarks by hon. Members opposite as they appeared in the OFFICIAL REPORT. What about devaluation and its effect? What did the right hon. Gentleman the Deputy-Leader of the Labour Party say about devaluation in July, 1967, in this House? He said: If there were devaluation in this country any effort on the part of the organised workers to counteract it by securing higher wages should be ruthlessly resisted."—[OFFICIAL REPORT, 24th July, 1967; Vol. 751, c. 100.] It ill becomes some hon. Members to criticise the attempts by the present Government to restrain wage demands when that was the policy followed by their own Government just before devaluation took place. The simple fact is that the Labour Government deliberately created unemployment in the traditional industries of high employment without first assuring themselves of the presence of alternative employment in new growth industries.

What is more, the Labour Government threw our aviation, electronics and dependent ancillary industries back on their heels by cancelling the TSR2. The TSR2 was the most sophisticated aircraft in the world, but they destroyed it, and arranged to purchase the American F111, which was a complete failure. If the TSR2 project had continued, there could have been full employment in British aviation, our electronics industry would have been booming and much of the unemployment now being suffered in ancillary industries would not have come about.

Not only did the Labour Government destroy the TSR2 but by their general economic policies they destroyed confidence and the will to invest in the large-scale re-equipment and expansion of British industry generally. Right hon. and hon. Members opposite must accept a great share of the blame for the continued rise in unemployment since they were removed from office. What is happening now is a repercussion of their policies. It is hypocrisy on their part to pretend that all the unemployed above the 600,000 when they were in office are suffering more individually than those 600,000 suffered when they were the Government. Let them be honest about it. The hon. Member for Walton has very properly accepted that it is just as much an individual tragedy to be one of 600,000 unemployed as it is for those numbered among the 1 million. Hon. Members opposite should dwell on that and not be so hypocritical about the situation today.

The present Government will be judged eventually by what they do to ease the position and to create more employment. It is right that they should. Hon. Members opposite who talk so much about the tragedy of unemployment should recognise that it rose considerably when they were in power, and they must take responsibility for that. If the Leader of the Opposition has all the answers to unemployment now, why did he and his right hon. Friends say, when devaluation came, that that was the last throw of the dice which they could make to deal with the economic situation and bring about full employment? That last throw failed, but even now the party opposite will not acknowledge its failure.

Whatever we may say in the House, this country's long-term prosperity depends entirely upon our ability—workers, managements and Government working together—to produce goods which will sell in competition with the products of other manufacturing countries throughout the world. Whatever Government we have in Great Britain, unless that can be achieved there will be rising unemployment and a lowering of the standard of living of our people. It is no good talking about inflating at home so that there may be a great home market to take up all the slack. We must have a large and expanding export market, and it is to this end that the Government must work.

I suggest to my right hon. Friends that a great opportunity could be taken in many respects through a relaxation of the present industrial development certificate policy to bring about an improvement in our factories throughout the country. I am convinced that if we are to improve employment prospects and increase productivity, the Government should give particular attention to the relaxation of I.D.C. policy in most of the areas where there is considerable unemployment now and provide existing factories everywhere with the opportunity to modernise and expand. In addition, they must improve the infrastructure in those areas where development is most essential. Above all, they must ensure that there is restoration and growth of confidence so that there can be greater investment than we have had hitherto.

Of one thing I am sure. The present Government are as compassionate towards the unemployed as is the Labour Party. The great difference is that we are not such humbugs.

9.5 p.m.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

I believe that I am justified in contributing briefly to the debate, for unemployment in my constituency has risen faster in the last two years than at any other period since the war. It is an area which had a high level of unemployment to start with and which felt itself secure from further rises because of that very severity.

The hon. Member for Gillingham (Mr. Burden) defended what he called the compassionate Government. I should like him to come to my constituency and explain to the thousands of redundant workers there and the thousands of men who for the second time in a working life are experiencing mass unemployment in what way the Government are compassionate or efficient, or have shown even one iota of common sense. If he believes that we do not first need a domestic reflation of the economy but that we shall produce growth simply by an expansion of overseas sales, he is ignoring the lessons of the last 20 years when British capitalism has timidly refused to make any move in overseas markets until featherbedded by an absolutely secured domestic market.

What the British business man always tells every Government when asked to expand trade is that he must first have sufficient security in a home market. It is one of the contradictions of market capitalism and it is a contradiction which will result in the Government pretending to the electorate for probably the last time that a free market and untrammelled capitalism can fill a rôle in a modern civilised society.

What is being proved, not just in this country but throughout the world, where there are rising unemployment rates in Europe and catastrophically high rates in America, while there is starvation for our products in a world of underemployed and unemployed, is that no Government in what is called the free Western capitalist democracies is capable of conquering the twin difficulties of inflated currencies and the unemployed. Only by the kind of planning mentioned by my hon. Friend the Member for Liverpool, Walton (Mr. Heffer), with a calculated assessment of what is to happen—and science has given in computers the means to measure what is to happen in future—can a Government deal with problems of this kind. Even since the day of John Maynard Keynes, any Government allowing unemployment rates to rise not even as high as this rate have been guilty if not of a criminal act, certainly of criminal negligence, and that is the charge the people make against the Tory Government.

Of the million unemployed, 56,000 are in Wales. We have a half-promise about the great tomorrow and we are to have an announcement about the expansion of training centres. That expansion is certainly necessary, for there are now 7,000 people able to satisfy the entry requirements for Government training centres and awaiting places, and so 7,000 could be absorbed immediately. But that is only scratching the surface of a million unemployed. Instead of a policy by the Prime Minister, all we have had has been a craven appeal to British businessmen to take his word for it that with a market of 250 million in Europe all their difficulties will be solved and all their problems and bewilderments about future possibilities for investment will be removed.

He knows that that is nonsense. We should not be in this mess if British business men had shown the tenacity and the sense of purpose that he hopes for if by some magic accident we get into Europe. He knows that unemployment in Europe is going up and that European products will soon be coming here. If British companies do expand, even if there are extra jobs, we have no guarantee once we are in Europe that those jobs will be created in the British Isles. I am in no sense a nationalist and I regret that tonight some of my compatriots indulged in a demonstration from the Gallery of the House and threw notices into the Chamber.

It is a measure of the kind of anger being generated, referred to by my right hon. Friend the Member for Jarrow (Mr. Fernyhough) through the Government's crass inability, failure and their neglect of the unemployment problem in the regions. The Prime Minister told the Tory Party conference: We stand on the threshold of a period of growth and prosperity unparalleled since the War. Since that time unemployment has broken the million mark. If that is the Prime Minister's idea of prosperity then God knows what is his idea of poverty. But poverty we shall see before this Government leave office.

9.11 p.m.

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

This being the first debate we have held on unemployment since the figure touched one million it has a certain special quality. Although the forecast of a rise in unemployment to this figure has been made for the last few months, the reality certainly has not been softened in any way by the expectation of the increase. Undoubtedly—and this emerged from some of the speeches today—we are faced with more than just a change in the quantities involved. There is also a qualitative change.

I have foreshortened what I wanted to say to make room for more back benchers so I will not go over the points made by various hon. Members. It would be impossible for us to consider this purely in economic terms and to leave out of account the human tragedy, the loss of pride and dignity that is involved. People outside this House, not only those now unemployed but those who fear they may join the ranks of the unemployed, will be looking to us in this debate to be constructive in what we say and to try to come forward with some positive points upon which the Government might act.

Having spent a great deal of my time as a Minister grappling with the problems of which the Prime Minister spoke in his speech, I must say in all candour that they are very difficult problems and that it would be foolish for any of us to suppose that they can be solved at the wave of a wand. Without going over all the figures that have been given, the position can be summarised in this way: the total of unemployed is up, there has been the highest monthly increase, there is a worsening trend, there is job destruction, there is a regional crisis no longer simply confined to Scotland, the North and Wales but particularly, for example, in the West Midlands. There are more unemployed workers per vacancy, unemployment is lasting longer, it is hitting older workers, especially men. School-leavers are affected and there are graduates unemployed.

Skilled men are being hit, too. In engineering for draughtsmen, for example, the ratio of unemployed to vacancies rose from 1·3 per cent. to 11·5 per cent. in a single year from September, 1970, to September, 1971. There is more short time, overtime is down and there is a real possibility that when the figures are published in February and March the position will be shown to be worse even than it is in January. It is more than likely, if we take into account some of the research work done on the sample 1966 Census, that the situation is worse than is revealed by the published figures.

The House will not make sense of this debate unless it recognises that this touches on political problems and attitudes which cannot be settled just by giving the Treasury a new set of rules upon which to operate. The plain truth is that although there was a rise in productivity over the first year following the change of Government, this was cancelled out by the fact that unemployment rose so rapidly. When we recall the figures about the loss of working days through strikes which my right hon. Friend the Leader of the Opposition gave us today, it is worth remembering that we are also losing one million working days per day as a result of unemployment.

The Government say that pay demands have been the cause of the situation. This is the central argument in the debate. It is very different from what the Government said in their manifesto, which was: Wages started chasing prices up in a desperate and understandable attempt to improve living standards". That was the explanation given for wage demands by the Conservative Party when it was in opposition. Today we are told that it is the main cause of unemployment. Yet we know—and this is evident from the figures—that it is the lower-paid workers in the lower-paid areas who are most seriously affected by unemployment, and to suggest that by reducing wages we would improve the prospects of dealing with unemployment is such a manifest nonsense as not to be worth consideration.

The plain truth is—and the T.U.C. has made this clear in its economic review—that the economy is working under capacity because the purchasing power of disposable earned incomes, plus other components of domestic demands, is too low to secure the full use of our productive resources, and the goods and services produced in 1971 were about £3,000 million below the level necessary to secure full employment. The T.U.C. said this in its advice to the Chancellor of the Exchequer before the last major Budget in the spring of last year and it included this point in its economic review.

The charge against the Chancellor is not that he has a desire to increase unemployment to the present scale, because manifestly the Cabinet is very frightened by what it has done, but the right hon. Gentleman said in the spring last year, as reported in the Financial Times: To attempt by expansionary fiscal measures to bring about a substantial reduction in unemployment in present circumstances would do irreparable harm to our long term prospects". The plain truth is—and it would be better if the Prime Minister admitted it; perhaps the Secretary of State, who is a little more candid about the magnitude of the problem facing him, will do so—that the Government gravely miscalculated in their policies on assuming office. They delayed reflation. They made tax cuts which were regressive in character and which did not find their way into demand in the market, and even lower-paid workers often thought it better, given the Government's philosophy, to save money against the possibility, which is now becoming real, that they would find themselves on the labour market.

No one denies that by the mini-Budget in July the Government created a boom in consumer durables. However, the difficulty is—and this is the nub of the problem—that this boom can be met by higher-capacity working without engaging and employing more people. There has been an increase in nationalised industry expansion, but there is no prospect in any published figures from the Department of Trade and Industry or elsewhere of an increase in capital investment or—and I put this to the Secretary of State at Question Time the other day—of a substantial fall in unemployment.

There are some examples of an increase in imports meeting the consumer boom which the Government have created. The Economist said last week: The reason why Britain's import bill did not get out of hand and why we had a large balance of payments surplus in 1971 was that imports of machinery and other capital goods were reduced". This is the magnitude of the problem, and, although Ministers and Governments can talk themselves into slumps, it is very doubtful whether they can talk themselves into a boom. In a speech to the Birmingham Chamber of Commerce a few days ago the Secretary of State for Trade and Industry tried very hard to do so. I have the Press release of his speech in which it was said that Britain was moving towards a period of economic growth which exceptionally for the United Kingdom will run for several years and in moving off into the foothills of growth we cannot see the mountains which lie beyond but what does seem certain is, whether Himalayas, Alps or Urals, they are a deep range with which we here are not particularly familiar". This language from a Secretary of State who, in another capacity, was continually rebuking the Government for exhorting industry, which is the only weapon left in his armoury—and the Prime Minister proved it again today—is in marked contrast with what his successor, Mr. Campbell Adamson, said on "The World at One", quoted in the Financial Times on 13th January: I do not personally believe unemployment will get back to the sort of level we were used to in the 1960s". He said that there was need for radical "new policies" to be adopted. The survey in the Sunday Times, which has no interest in damaging the prospects for this country's recovery, confirmed this.

The Prime Minister—and I am sorry he is not able to be here for the end of the debate—said that he did not want to be charged with personally wishing unemployment. But the Government must be judged by the degree of commitment to full employment, the extent of their engagement with the problem which the right hon. Gentleman described quite interestingly, and by the results they achieve. That is the only test by which the country and the House can judge them.

I welcomed the very long analysis given by the Prime Minister. Some people mocked it as a W.E.A. or Open University lecture, but he certainly analysed the cyclical, regional and structural changes going on. Speaking as a former Minister, I wish that he had recognised that these were the very problems with which we were dealing when we were in power. He spoke today as though he had simply discovered that these changes were taking place and presented them to the House as new information. It is no good the Government saying that this is the reason for the situation. People want to know what action the Government propose to take to reduce the level of unemployment.

He saw no contradiction between the fact that year after year in Opposition he went around the country denouncing public expenditure of all kinds and yet now says, "Of course, we have raised public expenditure to deal with it." If he wonders why the business community does not trust him—and the plain truth is that it does not believe what he or the Secretary of State are now saying—it is because there is a total contradiction between what they now claim they are doing and what they said when they were in Opposition, particularly their attack on public expenditure.

As to the consumer boom, the real problem is whether it will involve the recruitment of further labour. The right hon. Gentleman is right to say that historically, unemployment has been a regional problem, but when any measures were taken by the previous Government, of which I was one, to deal with the industries like shipbuilding which were running down so, rapidly that there was a danger of our losing our capacity in shipbuilding, the then Opposition bitterly denounced our action to preserve jobs. Now the Secretary of State puts more money into Govan Shipbuilders than would have been necessary to allow Upper Clyde Shipbuilders to go forward to recovery.

Photo of Mr John Davies Mr John Davies , Knutsford

Will the right hon. Gentleman tell the House how much money has been put into Govan Shipbuilders Ltd.?

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

All I can tell the House is that the figure in the Three Wise Men's Report—[Interruption.]—None whatever, because the right hon. Gentleman has not been able to get the thing to stand up at all. But the forecast of the Three Wise Men, which the right hon. Gentleman published, indicated a far larger investment in Govan shipbuilders than would have been necessary to allow Upper Clyde Shipbuilders to go forward.

The problem of the regions is certainty of policy. The Government sought to pride themselves on having achieved managerial efficiency and competence in their planning, but we have not yet received from the right hon. Gentleman in charge of regional policy the result of his analysis of it, although he was ready, in the absence of that analysis, to get rid of R.E.P. and investment grants and to destroy the certainty that those in the regions must have.

The Prime Minister's speech ended with pure exhortation. One of the most dangerous aspects of his speech was the extent to which the idea that Europe will solve all our problems has somehow entered into his mind. The plain truth is that when, or if, we enter Europe all the changes—the cyclical, the structural, the regional changes—that he identified as problems of the United Kingdom, far from being slowed down, will be accelerated. That is the problem to which the Government have not turned their mind at all.

The right hon. Gentleman speaks as if he discovered Europe, like a new Columbus on a trans-Channel journey. British manufacturers have been selling to Europe for many years. The problem is that the changes associated with entry into Europe are not just a reduction of the Community's tariffs against us but of ours against them. British industry recognises that it is headed for massive changes, which inevitably are bound to affect its attitude towards future investment—the food levies; the higher food prices; the fear of wage claims to compensate; the Community budget; the value-added tax; the uncertainty about regional policy; and the knowledge that firms will be negotiating not with a Secretary of State they know but with a Commission they do not know, following policies that have not yet been revealed. All those matters are causes not for greater certainty but for enormous uncertainty.

The financial and monetary union, if it ever comes about, will have enormous implications for manufacturers and producers in this country, working under a Commission whose rules and regulations which will apply to this country were published rather reluctantly only a few days ago—and the whole thing done without even the basic right to give consent granted to the Danes, Norwegians and the Irish. [Interruption.] I am addressing myself only to the Prime Minister's one trump card, that, because he has signed the treaty in Brussels, the whole of British business has a clear duty to invest and employ labour and deal with the unemployment problem, which his Cabinet has done a great deal to worsen.

One cannot make speeches—the Chancellor of the Exchequer made such a speech in the House—about the end of an era, the end of the beginning and the beginning of the end and so on and still expect businessmen to know exactly where they are with a Government that even in their 18 months in office have done a volte-face on many of the policies upon which they were elected.

The other factor, again characteristic of the Government, is that they have under-estimated the extent to which industrial workers faced with the present situation are determined to defend their own interests. My hon. Friend the Member for Liverpool, Walton (Mr. Heffer) referred to the Fisher-Bendix case, which is only one of among many, beginning with G.E.C. in Liverpool in September, 1969, followed by U.C.S., Plessey, the River Don Works, Allis-Chalmers in Mold, Churchill's machine tool factory, Westlands and so on. The work-in or sit-in is a new phenomenon among people who are not prepared to be treated like pawns in the industrial game and to be thrown on to the scrap-heap without any consultation by management and in circumstances that make them feel that the Government do not care very much what happens. It is not a great Trotskyite move. In all the cases with which I have had any contact, the people involved have behaved with a high degree of responsibility and a great degree of dignity, but they will not accept that in 1972 unemployment is to be a deliberate instrument of policy by the Government. That is the barbarity of the modern industrial system that they are rejecting.

Gradually we are moving, not with the help of this Government, to the idea of a proper social cost analysis in which one takes account of not only the profit and loss one year but the whole social cost involved. The trade union movement has played a notable part in getting that idea going.

The fact is that this debate will have totally failed unless we can get from the Secretary of State for Employment some clearer statement of Government policy than we had from the Prime Minister, with his general lecture and his final sermon, because till people feel that the maintenance of full employment has become reabsorbed as an accepted national objective, then, of course, the forces, the political and human and psychological forces which I have described, will continue to work.

My right hon. Friend the Leader of the Opposition in his speech made a number of proposals. I will not go over them again, except to draw attention to some which clearly would have immediate benefit. One is to advance public sector ordering in such a way as to get more orders into heavy capital goods industry, particularly in respect of power stations—and my hon. Friend the Member for Bothwell (Mr. James Hamilton) mentioned Hunterston—and machine tools. Secondly—there is no question about this—a firm statement that regional employment premium will be retained would do something to retain confidence in the regions, with the introduction, may be for a timed period, or the reintroduction, of cash grants for investment now, would be worth a great deal more than the right hon. Gentleman's lectures to industry on what it ought to do.

Then there was the proposal for regional employment planning councils. My hon. Friend the Member for Bedwellty (Mr. Kinnock) talked about the importance of getting local initiatives and they could well be strengthened. The T.U.C. has come forward with a plan for developing the Clydeside development authority. The use of public enterprise in the regions specifically to create jobs to deal with the structural, regional, cyclical problems which the Prime Minister mentioned would be of great value.

But, above all, it is necessary for the Government to start talking to industry in a way not simply confined to a dinner in Birmingham or a speech in the House of Commons or upon some other public occasion. Yet the fact is—and it is evident from all that has been said on the subject—that the Government have still clung through this period to the idea that they must keep separate from industry and not encourage any joint forecasting or planning with it.

It was interesting, after the recent N.E.D.C. meeting, to read that officials especially stressed that the new five-year survey would involve no forecasting, no planning, no joint exercise for these purposes with industry. The five-year time scale may be better than a three-year scale—I accept that, because three years is a rather short time to influence long-term investment; but if the Prime Minister is serious about analysing the long-term rundown in certain jobs and the need for industry to change, then for him to stay aloof from management in industry and from the trade unions is fatal. Nobody would exclude some of the longer-term ideas now attracting growing interest—a shorter working life, a shorter working week, which industrial change brings about, and which may allow people a better quality of life instead of the long, grinding hours of work which we have hitherto regarded as necessary.

The obstacle to changes of this kind is not shortage of ideas. Everybody, from the T.U.C. and the C.B.I. to the newspapers, as well as Members of this House, is pushing proposals on the Government. The obstacle is the Government's basic philosophy, that the Government and industry should remain at arm's length—that the trade unions are at best negative and at worst disruptive; that public enterprise is of itself basically undesirable; that if it loses money we should close it down, and that if it makes money we should sell it off; that competition somehow solves all our problems—although manifestly it does not; that public expenditure and subsidies, and the taxation which sustains them, are at best wasteful and undesirable, and to be brought in only as a last report; and, finally, pumping out, in an age of interdependence, the idea that every man should stand on his own feet.

If ever there were a period in history when the individualist philosophy of this Government was totally irrelevant, it is this period. If there is still a very weak confidence in the Government it is because their philosophy of disengagement and abdication from social responsibility has undermined such confidence as industry had in Government, and Europe as an alternative will not solve the problems.

I have said many times before in the House, but I feel it more strongly tonight than at any other time, that the fatal flaw of the Cabinet is its belief that somehow we can get a paper from Lord Rothschild's "Think Tank", or a document containing forecasts of profitability, and that this will see us through our difficulties. Whether one is looking at the treatment of ship workers, the miners or the Rhodesian Africans, or at the way in which the students or the scientists have been treated, there is, illuminating everything the Government do, a contempt for people which, in the end, will bring them down.

9.35 p.m.

Photo of Mr Robert Carr Mr Robert Carr , Mitcham

We have had a serious and, for most of the time, a quiet and low-key debate about the country's major problem. Many points have been made of both a general and a constituency nature. I assure all those who have made them that they will be studied, particularly those which have been made about aspects of regional policy which, as hon. Members will realise, are the responsibility of my right hon. Friend the Secretary of State for Trade and Industry.

One thing needs to be said once more, particularly in view of some of the later passages of the speech of the Leader of the Opposition, and that is that tackling unemployment is our first problem and our first care. It is no help either in solving the problem or in creating the conditions necessary for its solution to try to provoke trouble by suggesting the reverse. We have made this clear from the beginning, we said in the Queen's Speech that it was so and it is so. Unemployment is deplorable to all of us, of whatever party. It is deplorable in personal terms, in overall social terms and in economic terms. What the country would like to see Parliament do is to take constructive counsel about the problems and how to deal with them.

If the House will allow me I want to try—and it is admittedly difficult and even unusual in concluding a debate of this nature—to make a quiet, reasoned speech summing up the nature of the problems and the strategy for dealing with them, particularly those aspects of the strategy which are my concern in the field of employment policy.

There is, and there has been for some time, as was mentioned by my right hon. Friend the Prime Minister, a widespread feeling that we are dealing with a new kind of unemployment, a new sort of problem. One thing about which surely we all agree is that unemployment has not moved as either party expected it to move over the last couple of years. That was openly admitted from the Box by the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) in the debate before Christmas. Only last March he said to the country that he thought the measures of my right hon. Friend the Chancellor of the Exchequer in his last April Budget would certainly be enough to prevent the unemployment problem getting worse. He did not say that he thought it was enough to make it better. At that time he criticised my right hon. Friend for that, but he said that at least it should be enough to stop unemployment getting worse and to prevent the danger of it rocketing to the 1 million mark. That was the view of the Opposition at that time.

Subsequent to that—

Photo of Mr Peter Shore Mr Peter Shore , Stepney

My right hon. Friend is not here, I regret to say, to speak for himself, but he made it clear at the time of the last Budget that the existing level of unemployment was unacceptably high, and he was urging the Government to do something to reduce it—and it was then 700,000.

Photo of Mr Robert Carr Mr Robert Carr , Mitcham

That is a waste of time, because the right hon. Gentleman was denying a charge I never made. The case that I am making is that unemployment has moved in an unexpected way—[Laughter.] Yes, it is unexpected to both sides of the House.

The right hon. Member for Stechford said that the measures taken by my right hon. Friend last March should be sufficient at least to stop it getting worse. He said that publicly on his television broadcast following the Budget. Subsequently, the Chancellor took further massive measures in July. So, on our beliefs and on the last Chancellor's beliefs, we should not have had the developments that we have had in the last few months. Yet we still reached the million mark—

Photo of Mr Robert Carr Mr Robert Carr , Mitcham

The right hon. Gentleman had better say "Come off it" to his right hon. Friend the last Chancellor, because I am accurately reporting his view.

Therefore, what we must recognise and try to understand is what is happening and why and what we should do about it in this new situation. I told the House last November, when I was requested to set up an inquiry, that I would instead put in hand a study in my Department of the employment position and the unemployment trends. I have done that. The study is not yet complete, but certain conclusions are already clear.

First—this needs understanding, even though, to those familiar with it, it may seem obvious—there has been a steadily rising trend in male unemployment ever since 1954—

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

The right hon. Gentleman said that it was a new type of unemployment.

Photo of Mr Robert Carr Mr Robert Carr , Mitcham

If the right hon. Gentleman would be quiet for a moment—[Interruption.]

Photo of Mr Selwyn Lloyd Mr Selwyn Lloyd , Wirral

Order. The right hon. Member for Bristol, South-East (Mr. Benn) was listened to in comparative silence.

Photo of Mr Robert Carr Mr Robert Carr , Mitcham

This study also shows that increases in unemployment have been proportionately larger in the younger age groups and not in the older age groups, as is so commonly supposed. It also shows that all regions over this long period have been affected by the increase in unemployment, that their percentages have moved more or less in parallel and that, if anything, the relative difference between the regions has been growing slightly less over the 15 years.

The study also shows that industries have moved in parallel with one another and that the increase in unemployment has not been specially concentrated on the unskilled rather than the skilled or on administrative workers rather than production workers. It shows a remarkable similarity of pattern over the period, whether one analyses the period by area, by age or by occupation.

This is important to realise, because it shows that this sort of difference can be put right—perhaps more than some people have been beginning to fear—by a sustained increase in the rate of activity in the economy. What is really new is not so much the basic nature, not so much that we need fear that Keynes no longer works, but that we have had over the last few years a new scale. It is new primarily in the scale and the nature of the scale.

But first, the House should realise something else about the unemployment picture which also may be known to the few but is not known as a generality and is immensely important in working out the strategy to deal with it—namely, that the unemployment problem is far more a dynamic than a static problem. It is important to realise that year in and year out, in good times and bad, about one-quarter of a million men leave their employment every month and about another one-quarter of a million men enter new jobs every month.

This large flow on and off the register is taking place month by month—[Interruption.]—and the difference in trend upward or downward is brought about by relatively small marginal changes in the numbers coming on and going off.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

Would the right hon. Gentleman accept our thanks for telling the House something that was in a report of the Unemployment Insurance Statutory Committee in 1938? In view of all these new discoveries of his, may I ask him to say why neither he nor his leader said anything of this in May and June, 1970?

Photo of Mr Robert Carr Mr Robert Carr , Mitcham

I am sorry if I have not gone back to 1938.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

The right hon. Gentleman has.

Photo of Mr Robert Carr Mr Robert Carr , Mitcham

I believe that this picture of relatively small changes in inflow and outflow on and off the register is important to understanding what will happen, because it means that we have two processes going on at the same time. We can have the further shake-outs which people have been mentioning, but at the same time these can be more than balanced by new take-ups as expansion gets under way and it requires a relatively small marginal change to alter the whole nature of the trend.

What has happened in the last 18 months to two years has been due mainly to the scale of the shake-out, and we really cannot burke the reason for its suddenness. It has without doubt, as my right hon. Friend the Prime Minister said this afternoon, been due mainly to the fact that after a number of years of running at a low rate of growth, with reducing profits and monetary squeezes, industry was short, dangerously short, of liquid resources.

When it was in that condition industry was hit by increases in labour costs of a totally unprecedented size and the reaction was inevitable. Nobody knows that better than the Leader of the Opposition. He does not have to go back to 1938 to remember that. He need go back only to his speech to the T.U.C. in 1969. When faced with this situation, the reaction of employers was inevitable. Large cost reductions had to be made, and urgently.

Photo of Mr Robert Carr Mr Robert Carr , Mitcham

I will not give way.

The easiest way to make big savings quickly is to cut one's labour force. That happened throughout the country on a very large scale—

Photo of Mr Robert Carr Mr Robert Carr , Mitcham

—and we found British industry as a whole making far more effective use than ever before of manpower and existing machinery.

Photo of Mr Robert Carr Mr Robert Carr , Mitcham

Although this was good in itself, it happened so suddenly that the result of the wage explosion, coming on top of six years of stagnation, left us with a stubborn and difficult problem with which to deal. When we get an upturn in the expansionist cycle—[Interruption.]

Photo of Mr Selwyn Lloyd Mr Selwyn Lloyd , Wirral

Order. The hon. Member for Liverpool, Walton (Mr. Heffer) has already made a speech. Mr. Robert Carr.

Photo of Mr Eric Heffer Mr Eric Heffer , Liverpool, Walton

The Minister was not present to listen to it.

Photo of Mr Robert Carr Mr Robert Carr , Mitcham

When we get an upturn in the expansionist cycle, employment will be taken up far less than in the past by people being absorbed back into their old jobs, and we have to face and plan for a situation in which people need to be absorbed far more than hitherto in newly created jobs.

What does this mean for the strategy of Government policy? First, I believe that it means a much higher and sustained rate of growth. To that we are absolutely committed, as my right hon. Friend the Prime Minister made clear this afternoon. This surely is a need which we should welcome because it is an opportunity and not an unpleasant necessity. Second, we must plan our economy deliberately to stimulate new investment. I suggest that there are a number of conditions which we must achieve to do this.

First, there is the certainty of continuous growth, to which I have just referred and to which the Leader of the Liberal Party made particular reference. Second, if we are to stimulate new investment for new jobs, it is immensely valuable to have access to the largest possible and most rapidly growing market, and this is the importance of the European policy within this strategy. Third, if we are to get a climate for stimulating new investment, we must get industry in a situation in which it can rely on a high degree of profitability. As my right hon. Friend said, that has been made clear recently by the right hon. Member for Grimsby (Mr. Crosland).

As my hon. Friend the Member for Harrow, West (Mr. John Page) pointed out, of the money for investment about three to four times as much comes from retained profits as comes from other sources. Therefore, this high degree of profitability, with more of the profits left in the pockets of the companies—[AN HON. MEMBER: "What about the workers?"]—is an essential provision for stimulating a high investment economy. Fourth if we are to achieve this, there must be reasonable price and cost stability, because there is no doubt that a prospect of cost inflation on anything like the levels of 1969, 1970 and the first half of 1971 is about the sharpest deterrent one can have to people's investment plans. If one looks back to the war, one sees that each of the major investment booms, both of which took place under Conservative Governments, followed a period of relative price and cost stability.

Next we have to have in this strategy a much more active and effective employment policy. [Interruption.] Here comes the importance of what my right hon. Friend said earlier about training. In June, 1970, there were about 8,000 training places within the Government's vocational training schemes. Today there are about 13,000 places, and next week we shall be announcing plans for a massive expansion in this area. But, coupled with the greater training facilities, I agree very strongly with the Leader of the Liberal Party that we must also have much more effective placing services and much better knowledge of the labour market. The placing services reform is already in hand. The greater knowledge of the labour market largely comes with it.

The right hon. Gentleman referred to my Department's Manpower Research Unit. He was wrong in saying that it has not published any report. It has published about eight reports over the year, as the right hon. Lady the Member for Blackburn (Mrs. Castle) will know, and there are two or three more on the stocks. We are finding, not only in Britain but in other countries, that manpower forecasting on a national functional industry basis is proving very difficult and very unreliable.

What I believe is much more needed is greater market intelligence at the local labour market level. That is the development we are moving to and already, in advance of the development of the better placing services, I have this month put in hand two special surveys of the vacancies position in two selected areas, namely, Swansea and Peterborough. We do not know enough about the vacancies available even in the market as it is now. When I have the results of those surveys, I shall consider what next to do.

Photo of Mr Robert Carr Mr Robert Carr , Mitcham

I apologise to the hon. Gentleman for not giving way but we have shortened the length of our speeches and there are some other things that I want to say.

In addition to those points, I think there is no doubt that as we move ahead into the future, far from discouraging service industries we have to do everything we can to encourage them. Whatever may be the rights or wrongs of employment taxes, either variable regionally or non-variable regionally, the S.E.T., aimed against service industries, has been a disaster and has been a contributory cause to our present difficulties.

Fifth, in our strategy there is no doubt at all that we have both the need and the opportunity over the next years to go in for a much larger programme of public works and renewal than we have been able to afford before. We have already put in hand larger additional programmes in clearing derelict land, in renovating old houses and in other public works than has ever been embarked upon. If we follow a strategy based on those points, I am in do doubt that although the battle will be hard, and may be long, it can, and it will, be won. [HON. MEMBERS: "When?"]

The Government are determined to wage an all-out war against unemployment. We have taken a wide and massive range of measures to get the economy moving again after those six years in its rut of stagnation, and we are determined that once started that expansion will be sustained. We recognise that after such a long period of low growth it is not easy to get confidence off the ground, but at last things are starting to move.

My right hon. Friend's forecast last July about the growth in expenditure and purchasing is coming through, and this will come through in more jobs. We are determined to wage this war as our first priority and to continue it until we are winning. That is the Government's responsibility, and we accept it. We ask

both sides of industry, trade unions and employers, to join us in what is the nation's overall task.

Question put:

The House divided: Ayes 275, Noes 302.

Division No. 40.]AYES[9.59 p.m.
Abse, LeoDunnett, JackLamond, James
Albu, AustenEadie, AlexLatham, Arthur
Allaun, Frank (Salford, E.)Edelman, MauriceLawson, George
Allen, ScholefieldEdwards, Robert (Bilston)Leadbitter, Ted
Archer, Peter (Rowley Regis)Edwards, William (Merioneth)Lee, Rt. Hn. Frederick
Armstrong, ErnestEllis, TomLeonard, Dick
Ashley, JackEnglish, MichaelLestor, Miss Joan
Ashton, JoeEvans, FredLever, Rt. Hn. Harold
Atkinson, NormanEwing, HarryLewis, Arthur (W. Ham, N.)
Bagier, Gordon A. T.Fernyhough, Rt. Hn. E.Lewis, Ron (Carlisle)
Barnett, Guy (Greenwich)Fisher, Mrs. Doris (B'ham, Ladywood)Lipton, Marcus
Barnett, Joel (Heywood and Royton)Fitch, Alan (Wigan)Lomas, Kenneth
Baxter, WilliamFletcher, Ted (Darlington)Loughlin, Charles
Beaney, AlanFoot, MichaelLyons, Edward (Bradford, E.)
Benn, Rt. Hn. Anthony WedgwoodFord, BenMabon, Dr. J. Dickson
Bennett, James (Glasgow, Bridgeton)Forrester, JohnMcBride, Neil
Bidwell, SydneyFraser, John (Norwood)McCann, John
Bishop, E. S.Freeson, ReginaldMcCartney, Hugh
Blenkinsop, ArthurGalpern, Sir MyerMcElhone, Frank
Boardman, H. (Leigh)Garrett, W. E.McGuire, Michael
Booth, AlbertGilbert, Dr. JohnMackenzie, Gregor
Bottomley, Rt. Hn. ArthurGinsburg, David (Dewsbury)Mackie, John
Bradley, TomGourlay, HarryMackintosh, John P.
Broughton, Sir AlfredGrant, George (Morpeth)Maclennan, Robert
Brown, Bob (N'c'tle-upon-Tyne, W.)Grant, John D. (Islington, E.)McManus, Frank
Brown, Hugh D. (G'gow, Provan)Griffiths, Eddie (Brightside)McMillan, Tom (Glasgow, C.)
Brown, Ronald (Shoreditch & F'bury)Griffiths, Will (Exchange)McNamara, J. Kevin
Buchan, NormanGrimond, Rt. Hn. J.Mahon, Simon (Bootle)
Buchanan, Richard (G'gow, Sp'burn)Hamilton, James (Bothwell)Mallalieu, J. p. W. (Huddersfield, E.)
Butler, Mrs. Joyce (Wood Green)Hamilton, William (Fife, W.)Marks, Kenneth
Campbell, I. (Dunbartonshire, W.)Hamling, WilliamMarquand, David
Cant. R. B.Hannan, William (G'gow, Maryhill)Marsden, F.
Carmichael, NeilHardy, PeterMarshall, Dr. Edmund
Carter, Ray (Birmingh'm, Northfield)Harper, JosephMason, Rt. Hn. Roy
Carter-Jones, Lewis (Eccies)Harrison, Walter (Wakefield)Mayhew, Christopher
Castle, Rt. Hn. BarbaraHart, Rt. Hn. JudithMeacher, Michael
Clark, David (Colne Valley)Hattersley, RoyMellish, Rt. Hn. Robert
Cocks, Michael (Bristol, S.)Healey, Rt. Hn. DenisMendelson, John
Cohen, StanleyHeffer, Eric S.Mikardo, Ian
Concannon, J. D.Hilton, W. S.Millan, Bruce
Conlan, BernardHooson, EmlynMilne, Edward
Corbet, Mrs. FredaHoram, JohnMitchell, R. C. (S'hampton, Itchen)
Cox, Thomas (Wandsworth, C.)Houghton, Rt. Hn. DouglasMorgan, Elystan (Cardiganshire)
Crawshaw, RichardHowell, Denis (Small Heath)Morris, Alfred (Wythenshawe)
Cronin, JohnHuckfield, LeslieMorris, Charles R. (Openshaw)
Crosland, Rt. Hn. AnthonyHughes, Rt. Hn. Cledwyn (Anglesey)Morris, Rt. Hn. John (Aberavon)
Crossman, Rt. Hn. RichardHughes, Mark (Durham)Moyle, Roland
Cunningham, G. (Islington, S.W.)Hughes, Robert (Aberdeen, N.)Mulley, Rt. Hn. Frederick
Cunningham, Dr. J. A. (Whitehaven)Hughes, Roy (Newport)Murray, Ronald King
Dalyell, TamHunter, AdamOakes, Gordon
Davidson, ArthurIrvine, Rt. Hn. Sir Arthur (Edge Hill)Ogden, Eric
Davies, Denzil (Llanelly)Janner, GrevilleO'Halloran, Michael
Davies, G. Elfed (Rhondda, E.)Jay, Rt. Hn. DouglasO'Malley, Brian
Davies, Ifor (Gower)Jenkins, Hugh (Putney)Oram, Bert
Davies, S. O. (Merthyr Tydvil)John, BrynmorOrbach, Maurice
Davis, Clinton (Hackney, C.)Johnson, Carol (Lewisham, S.)Orme, Stanley
Davis, Terry (Bromsgrove)Johnson, James (K'ston-on-Hull, W.)Owen, Dr. David (Plymouth, Sutton)
Deakins, EricJohnson, Walter (Derby, S.)Padley, Walter
de Freitas, Rt. Hn. Sir GeoffreyJohnston, Russell (Inverness)Paget, R. T.
Delargy, HughJones, Dan (Burnley)Palmer, Arthur
Dell, Rt. Hn. EdmundJones, Rt. Hn. Sir Elwyn (W. Ham, S.)Pannell, Rt. Hn. Charles
Dempsey, JamesJones, Gwynoro (Carmarthen)Pardoe, John
Doig, PeterJones, T. Alec (Rhondda, W.)Parker, John (Dagenham)
Dormand, J. D.Judd, FrankParry, Robert (Liverpool, Exchange)
Douglas, Dick (Stirlingshire, E.)Kaufman, GeraldPavitt, Laurie
Douglas-Mann, BruceKelley, RichardPeart, Rt. Hn. Fred
Driberg, TomKerr, RussellPentland, Norman
Duffy, A. E. P.Kinnock, NeilPerry, Ernest G.
Dunn, James A.Lambie, David
Prentice, Rt. Hn. Reg.Silverman JuliusWainwright, Edwin
Prescott, JohnSkinner, DennisWalden, Brian (B'm'ham, All Saints)
Price, J. T. (Westhoughton)Small, WilliamWalker, Harold (Doncaster)
Price, William (Rugby)Smith, John (Lanarkshire, N.)Wallace, George
Probert, ArthurSpearing, NigelWatkins, David
Rankin, JohnSpriggs, LeslieWeitzman, David
Reed, D. (Sedgefield)Stallard, A. W.Wellbeloved, James
Rees, Merlyn (Leeds, S.)Steel, DavidWells, William (Walsall, N.)
Rhodes, GeoffreyStoddart, David (Swindon)White, James (Glasgow, Pollok)
Richard, IvorStonehouse, Rt. Hn. JohnWhitehead, Phillip
Roberts, Albert (Normanton)Strang, GavinWhitlock, William
Robertson, John (Paisley)Strauss, Rt. Hn. G. R.Willey, Rt. Hn. Frederick
Roderick, Caerwyn E.(Br'c'n&R'dnor)Summerskill, Hn. Dr. ShirleyWilliams, Alan (Swansea, W.)
Rodgers, William (Stockton-on-Tees)Swain, ThomasWilliams, Mrs. Shirley (Hitchin)
Roper, JohnTaverne, DickWilliams, W. T. (Warrington)
Rose, Paul B.Thomas, Rt. Hn. George (Cardiff, W.)Wilson, Alexander (Hamilton)
Ross, Rt. Hn. William (Kilmarnock)Thomas, Jeffrey (Abertillery)Wilson, Rt. Hn. Harold (Huyton)
Sandelson, NevilleThomson, Rt. Hn. G. (Dundee, E.)Wilson, William (Coventry, S.)
Sheldon, Robert (Ashton-under-Lyne)Thorpe, Rt. Hn. JeremyWoof, Robert
Shore, Rt. Hn. Peter (Stepney)Tinn, James
Short, Rt. Hn. Edward (N'c'tle-u-Tyne)Tomney, FrankTELLERS FOR THE AYES:
Short, Mrs. Renée (W'hampton, N.E.)Torney, TomMr. John Golding and Mr. Tom Pendry.
Silkin, Rt. Hn. John (Deptford)Tuck, Raphael
Silkin, Hn. S. C. (Dulwich)Urwin, T. W.
Sillars, JamesVarley, Eric G.
NOES
Adley, RobertCordle, JohnHamilton, Michael (Salisbury)
Alison, Michael (Barkston Ash)Corfield, Rt. Hn. FrederickHannam, John (Exeter)
Allason, James (Hemel Hempstead)Cormack, PatrickHarrison, Brian (Maldon)
Amery, Rt. Hn. JulianCostain, A. P.Harrison, Col. Sir Harwood (Eye)
Archer, Jeffrey (Louth)Critchley, JulianHaselhurst, Alan
Astor, JohnCrouch, DavidHastings, Stephen
Atkins, HumphreyCrowder, F. P.Havers, Michael
Awdry, DanielCurran, CharlesHawkins; Paul
Baker, Kenneth (St. Marylebone)Dalkeith, Earl ofHay, John
Balniel, LordDavies, Rt. Hn. John (Knutsford)Hayhoe, Barney
Barber, Rt. Hn. Anthonyd'Avigdor-Goldsmid, Sir HenryHeath, Rt. Hn. Edward
Batsford, Briand'Avigdor-Goldsmid, Maj.-Gen. JamesHeseltine, Michael
Beamish, Col. Sir TuftonDean, PaulHicks, Robert
Bell, RonaldDeedes, Rt. Hn. W. F.Higgins, Terence L.
Bennett, Dr. Reginald (Gosport)Digby, Simon WingfieldHiley, Joseph
Benyon, W.Dixon, PiersHill, John E. B. (Norfolk, S.)
Berry, Hn. AnthonyDouglas-Home, Rt. Hn. Sir AlecHill, James (Southampton, Test)
Biffen, JohnDrayson, G. B.Holland, Philip
Biggs-Davison, Johndu Cann, Rt. Hn. EdwardHolt, Miss Mary
Blaker, PeterDykes, HughHordern, Peter
Boardman, Tom (Leicester, S.W.)Eden, Sir JohnHornsby-Smith, Rt. Hn. Dame Patricia
Body, RichardEdwards, Nicholas (Pembroke)Howe, Hn. Sir Geoffrey (Reigate)
Boscawen, RobertElliot, Capt. Walter (Carshalton)Howell, David (Guildford)
Bossom, Sir CliveElliott, R. W. (N'c'tle-upon-Tyne, N.)Howell, Ralph (Norfolk, N.)
Bowden, AndrewFarr, JohnHunt, John
Boyd-Carpenter, Rt. Hn. JohnFell, AnthonyHutchison, Michael Clark
Braine, BernardFenner, Mrs. PeggyIremonger, T. L.
Bray, RonaldFinsberg, Geoffrey (Hampstead)Irvine, Bryant Godman (Rye)
Brewis, JohnFletcher-Cooke, CharlesJames, David
Brinton, Sir TattonFookes, Miss JanetJenkin, Patrick (Woodford)
Brocklebank-Fowler, ChristopherFortescue, TimJennings, J. C. (Burton)
Brown, Sir Edward (Bath)Foster, Sir JohnJessel, Toby
Bruce-Gardyne, J.Fowler, NormanJohnson Smith, G. (E. Grinstead)
Bryan, PaulFox, MarcusJones, Arthur (Northants, S.)
Buchanan-Smith, Alick (Angus, N&M)Fraser, Rt. Hn. Hugh (St'fford & Stone)Jopling, Michael
Buck, AntonyFry, PeterJoseph, Rt. Hn. Sir Keith
Bullus, Sir EricGalbraith, Hn. T. G.Kaberry, Sir Donald
Burden, F. A.Gardner, EdwardKellett-Bowman, Mrs. Elaine
Butler, Adam (Bosworth)Gibson-Watt, DavidKershaw, Anthony
Campbell, Rt. Hn. G.(Moray&Nairn)Gilmour, Ian (Norfolk, C.)Kilfedder, James
Carlisle, MarkGilmour, Sir John (Fife, E.)Kimball, Marcus
Carr, Rt. Hn. RobertGlyn, Dr. AlanKing, Evelyn (Dorset, S.)
Cary, Sir RobertGoodhart, PhilipKing, Tom (Bridgwater)
Channon, PaulGoodhew, VictorKinsey, J. H.
Chapman, SydneyGorst, JohnKirk, Peter
Chataway, Rt. Hn. ChristopherGower, RaymondKitson, Timothy
Chichester-Clark, R.Grant, Anthony (Harrow, C.)Knight, Mrs. Jill
Churchill, W. S.Gray, HamishKnox, David
Clark, William (Surrey, E.)Green, AlanLambton, Antony
Clarke, Kenneth (Rushcliffe)Griffiths, Eldon (Bury St. Edmunds)Lane, David
Clegg, WalterGrylls, MichaelLangford-Holt, Sir John
Cockeram, EricGummer, J. SelwynLegge-Bourke, Sir Harry
Cooke, RobertGurden, HaroldLe Marchant, Spencer
Coombs, DerekHall, Miss Joan (Keighley)Lewis, Kenneth (Rutland)
Cooper, A. E.Hall, John (Wycombe)Longden, Sir Gilbert
Hall-Davis, A. G. F.
Loveridge, JohnOsborn, JohnStanbrook, Ivor
Luce, R. N.Owen, Idris (Stockport, N.)Stewart-Smith, Geoffrey (Belper)
McAdden, Sir StephenPage, Graham (Crosby)Stodart, Anthony (Edinburgh, W.)
MacArthur, IanPage, John (Harrow, W.)Stoddart-Scott, Col. Sir M.
McCrindle, R. A.Parkinson, CecilStokes, John
McLaren, MartinPeel, JohnStuttaford, Dr. Tom
Maclean, Sir FitzroyPercival, IanSutcliffe, John
McMaster, StanleyPeyton, Rt. Hn. JohnTapsell, Peter
Macmillan, Maurice (Farnham)Pike, Miss MervynTaylor, Sir Charles (Eastbourne)
McNair-Wilson, MichaelPink, R. BonnerTaylor, Edward M.(G'gow, Cathcart)
McNair-Wilson, Patrick (New Forest)Pounder, RaftonTaylor, Frank (Moss Side)
Maddan, MartinPrice, David (Eastleigh)Taylor, Robert (Croydon, N.W.)
Madel, DavidPrior, Rt. Hn. J. M. L.Tebbit, Norman
Maginnis, John E.Proudfoot, WilfredThatcher, Rt. Hn. Mrs. Margaret
Marples, Rt. Hn. ErnestPym, Rt. Hn. FrancisThomas, John Stradling (Monmouth)
Marten, NeilQuennell, Miss J. M.Thomas, Rt. Hn. Peter (Hendon, S.)
Mather, CarolRaison, TimothyThompson, Sir Richard (Croydon, S.)
Maude, AngusRamsden, Rt. Hn. JamesTilney, John
Maudling. Rt. Hn. ReginaldRawlinson, Rt. Hn. Sir PeterTrafford, Dr. Anthony
Mawby, RayRedmond, RobertTrew, Peter
Maxwell-Hyslop, R. J.Reed, Laurance (Bolton, E.)Tugendhat, Christopher
Meyer, Sir AnthonyRees, Peter (Dover)Turton, Rt. Hn. Sir Robin
Mills, Peter (Torrington)Rees-Davies, W. R.van Straubenzee, W. R.
Mills, Stratton (Belfast, N.)Renton, Rt. Hn. Sir DavidVaughan, Dr. Gerard
Miscampbell, NormanRhys Williams, Sir BrandonVickers, Dame Joan
Mitchell, Lt. -Col. C.(Aberdeenshire, W)Ridley, Hn. NicholasWaddington, David
Mitchell, David (Basingstoke)Ridsdale, JulianWalder, David (Clitheroe)
Moate, RogerRippon, Rt. Hn. GeoffreyWalker-Smith, Rt. Hn. Sir Derek
Molyneaux, JamesRoberts, Michael (Cardiff, N.)Walters, Dennis
Money, ErnieRoberts, Wyn (Conway)Ward, Dame Irene
Monks, Mrs. ConnieRossi, Hugh (Hornsey)Warren, Kenneth
Monro, HectorRost, PeterWells, John (Maidstone)
Montgomery, FergusRoyle, AnthonyWhitelaw, Rt. Hn. William
More, JasperRussell, Sir RonaldWiggin, Jerry
Morgan-Giles, Rear-Adm.Scott, NicholasWilkinson, John
Morrison, CharlesSharples, RichardWinterton, Nicholas
Mudd, DavidShaw, Michael (Sc'b'gh & Whitby)Wolrige-Gordon, Patrick
Murton, OscarShelton, William (Clapham)Woodhouse, Hn. Christopher
Nabarro, Sir GeraldSimeons, CharlesWoodnutt, Mark
Neave, AireySinclair, Sir GeorgeWorsley, Marcus
Nicholls, Sir HarmarSkeet, T. H. H.Wylie, Rt. Hn. N. R.
Noble, Rt. Hn. MichaelSmith, Dudley (W'wick & L'mington)Younger, Hn. George
Normanton, TomSoref, HaroldTELLERS FOR THE NOES:
Nott, JohnSpeed, KeithMr. Reginald Eyre and Mr. Bernard Weatherill.
Onslow, CranleySpence, John
Oppenheim, Mrs. SallySproat, Iain
Orr, Capt. L. P. S.Stainton, Keith