Orders of the Day — Employment Subsidies Bill

– in the House of Commons at 12:00 am on 20th February 1978.

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Order for Second Reading read.

7.29 p.m.

Photo of Mr Albert Booth Mr Albert Booth , Barrow-in-Furness

I beg to move, That the Bill be now read a Second time.

When the House debated the employment situation two weeks ago, I said that while the Government were looking for faster and more sustained growth and more jobs, we were neverthless pressing ahead with the development of our special employment measures so as to make the maximum impact on the level of unemployment in the short term. I undertook shortly to introduce a Bill which would provide the Government with powers to cover alternative employment schemes and the planned extension of the small firms employment subsidy.

The Employment Subsidies Bill, which we are debating today, would establish a power to set up schemes to enable employers to retrain or recruit employees, and generally to maintain or enlarge their labour force. We are now running a number of measures which among them are providing assistance for some 320,000 workers who would otherwise be unemployed.

It has been necessary on two previous occasions to come to the House for additional powers to those contained in the Employment and Training Act 1973 so that we could introduce new schemes. The prime purpose of the Bill is to provide a power to run existing schemes and to introduce new ones needed in the future. There can be no doubt that we shall need the employment measures for some time yet. If we are to operate a programme of manpower measures we shall need the statutory backing for it.

Specifically, at the moment we need cover for the small firms' employment subsidy, which we have been financing for the last few months under the Appropriation Act 1977. I have already announced our intention of enlarging the scope of the scheme and running it for a further year.

There is also the fact that the EEC Commission has objected that the temporary employment subsidy, in its present form, conflicts with our legal obligations under the Treaty of Rome, and the Commission has called for modifications of the scheme. We do not accept the Commission's case and we are engaged in discussions with it. We would like the temporary employment subsidy to stay as it is, but we may have to modify the scheme to meet our Community obligations. I have already told the House that we would do that only when we were in a position to introduce a new scheme which would provide equivalent support for employment. It is, therefore, a further purpose of the Bill to give us the necessary power to introduce, if need be, a new scheme to supplement the temporary employment subsidy.

The Bill, like the powers which it supplants, is an enabling measure which gives us the necessary flexibility to introduce measures to meet particular needs as they arise. At the same time, it incorporates provisions to secure oversight by this House of the exercise of powers by myself and other Ministers in the Department of Employment. Moreover, it would be my intention to provide hon. Members with full details of all schemes and the rules under which they operate, as they are introduced.

I turn now to the detailed provisions of the Bill. The Bill provides for the repeal of Section 5(1)(b) and (c) of the Employment and Training Act 1973. These were the provisions dealing with schemes to postpone or avoid redundancy, and schemes which encourage the recruitment by employers of groups of workers particularly hard hit by rising unemployment. It is under these powers that the temporary employment subsidy and the youth employment subsidy are at present operated.

Section 5 of the 1973 Act will, if the Bill is passed, be returned very much to its original form. It will become again a power to operate job creation schemes. The intention is that Section 5 of the Employment and Training Act 1973 should be used to cover particular schemes under which jobs are specially created to help the unemployed, that is to say, jobs outside the normal run of commercial and industrial employment.

The Bill is intended to cover all the schemes which assist in one way or another normal employment. It not only increases the range of powers which we have in a very necessary way. It makes the legislation tidier and more readily understood. The Bill has no bearing whatsoever on powers under which the Manpower Services Commission will run the new youth opportunities programme and its training programmes. These powers are still provided under Section (2) of the 1973 Act, and that section is not affected by the Bill.

Clause 1(1) of the Bill effectively substitutes for the narrowly drawn provisions of the 1973 Act a broader power to permit the setting up of schemes for making payment to employers which will enable them to retain persons in their employment who would, or might otherwise, become unemployed, to take on new employees, and generally to maintain or enlarge their labour force. This is a wide power, and deliberately so. We are looking for flexibility.

The Bill will allow us to go on running the schemes we are already running under the 1973 Act and will cover the small firms employment subsidy, which will, as a result of the Bill, acquire statutory backing for the first time. But its powers go beyond these schemes. The power to set up schemes to enable employers generally to maintain or enlarge their labour forces is an entirely new power. The Bill will enable us to bring in a short-time working scheme of the kind which, as I told the House last month, we are now considering as a means of offsetting any changes that may have to be made in the temporary employment subsidy.

It might be helpful at this point if I say that there is nothing sinister in the fact that the Bill talks about payments to employers rather than to employees. The purpose of the schemes under the Bill, as the Long Title makes very clear, is to alleviate unemployment. The payment of subsidies to employers immediately improves their cash flow position and makes it easier for them to maintain or expand jobs, which, after all, is the object of the exercise. The employers have an established mechanism for channelling money to employees, and it is easy and efficient to make use of that mechanism.

The Bill will give us very wide powers. Therefore I think it is important that a very full explanation should be given to the House as to the necessary degree of constraint on their use and the need for a very proper degree of accountability in this respect. There are provisions for that accountability within the Bill. There is a provision for Treasury approval of schemes set up under the Bill.

There is also the question of parliamentary approval of the use of the powers. The powers in the Bill can be used only in specific circumstances. Schemes under it can be set up only if unemployment continues at a high level. What constitutes a high level of unemployment must be a matter of judgment. The House will recognise the difficulty of specifying a particular level in the Bill. Hon. Members will have an opportunity to consider whether the powers should continue to be used. They will run only until the end of 1979. After that they will lapse, unless renewed by statutory order.

The Bill provides that any statutory order renewing the powers is subject to the affirmative resolution of the House. If the Government seek to continue to use the powers, Parliament will have the opportunity to discuss them and decide whether they should be continued. Renewals may be for periods of up to 18 months at a time. That is, I think, a reasonable interval in which to ask the House to reassess the need for them. In saying that, I take into account the experience we have had of running a number of schemes.

I know that an argument can be made for a lesser or longer period, but I think that after 18 months we should have sufficient experience of running a scheme and should have been able to make any early modifications to it to meet any defects which it has shown. We should be able to come to the House with a recommendation based on that experience and to account to the House either for a continuation of the scheme or the abandonment of it in favour of another scheme.

Photo of Mr John Evans Mr John Evans , Newton

My right hon. Friend has taken some pains to explain to the House that we shall have ample opportunities to examine the scheme and that there will be various safeguards which will protect the interests of the House of Commons. That is correct and we all accept it. But will he inform the House whether the EEC Commission has looked at the scheme and whether it approves of the scheme and agrees with it? In the context of the temporary employment subsidy, in which all of us are very interested, the EEC Commission, particularly its competition division, has overruled the wishes of the House of Commons. Has the Commission a prior right to the House of Commons in deciding whether this is a viable and acceptable scheme?

Photo of Mr Albert Booth Mr Albert Booth , Barrow-in-Furness

The Bill is an enabling measure, and it is possible that many of the schemes which one might propose under it would be such that one would have to refer them to the Commission for approval; but I assure my hon. Friend, who has a special interest in this matter and has played a significant part in the EEC in arguing the case for maintaining the temporary employment subsidy, that we should initially seek to design schemes which would not run into difficulties with the Commission. That would be particularly necessary, of course, if they were to act as a supplement against any modification of the TES.

Photo of Mr Ivan Lawrence Mr Ivan Lawrence , Burton

Will the right hon. Gentleman assist the House in assessing the necessary limits of the Bill by giving his forecast as to the likely level of unemployment until the end of 1979 when the Bill's powers come to an end?

Photo of Mr Albert Booth Mr Albert Booth , Barrow-in-Furness

I cannot give the House a precise forecast, since that will depend to a considerable extent on how effective schemes introduced under the Bill are. However, I can say that the number of people coming forward to seek jobs between now and the end of 1979 will increase by about 170,000 a year, so the scope for the schemes is quite considerable, since I cannot believe that we shall be able so to expand employment in industry and commerce as to get rid of 1½ million unemployed and also cope with a 170,000 addition to the labour force each year.

I was saying that I believe 18 months to be a reasonable period for reassessment, provided that we give all right hon. and hon. Members who are interested an opportunity to study precise details of the schemes and the rules under which they will operate from the moment of their introduction. One of the advent- ages of having this more flexible power is that one can modify schemes in the light of any faults which hon. Members may find in the operation of them.

Photo of Mr Fred Silvester Mr Fred Silvester , Manchester, Withington

For clarification on the question of flexibility, will the Secretary of State tell us whether the Bill gives power to make different arrangements in different regions, or whether they have to apply nationally?

Photo of Mr Albert Booth Mr Albert Booth , Barrow-in-Furness

The Bill gives power to operate different provisions for schemes in different regions.

In spite of what I have said, there might be some criticism of the time limit for operation of the powers in the light of difficulties which might be created for employers. Employers might be unable to plan ahead beyond 18 months with any confidence that schemes would continue in operation for another year or two.

I should be the first to accept that criticism. But we have a genuine problem here. We have to strike a balance between, on the one hand, the need to let the public know where they stand and what they can expect of our schemes and, on the other, the need to provide an acceptable degree of parliamentary control over these flexible and sweeping powers.

We have put into the Bill two transitional provisions which should be of considerable assistance in individual cases. First, the Bill provides in Clause 2(1) for the continuation of schemes previously set up under those parts of the 1973 legislation which are to be repealed. This is a necessary provision to ensure the continued smooth operation of schemes, such as TES, already in existence under the old powers. Without it, we should have to cut these schemes off abruptly the day the Bill gained Royal Assent. Of course, we could immediately re-establish them, but that would involve an unnecessary administrative burden on both employers and the Government, so the Bill allows for a smooth transition for existing schemes.

Second, the Bill makes provision in Clause 2(5) for the continued payment of allowances in individual cases where an application has been approved and a commitent made to pay subsidy for a fixed period while the powers still stand but where the Bill's powers lapse before the fixed period of payment has ended. Under this clause, individual payments may continue for up to 18 months after the powers have lapsed, so that any commitments entered into may still be honoured, even if no further applications under the schemes can be accepted. This will enable us to ensure that all applicants can receive the same treatment.

The House will note that the Bill extends to Northern Ireland as well as to Great Britain. The Government accepted some time ago the principle of applying Great Britain Bills to Northern Ireland. The Northern Ireland provisions are similar to those for Great Britain; the same powers are established, subject to similar restraints. The repeals of existing Northern Ireland legislation correspond with the repeals for Great Britain. The Northern Ireland provisions have been framed in such a way as to allow their exercise not only during the present period of direct rule but also by any future devolved system of Government in Northern Ireland. The Bill is neutral on the question of devolution. It makes provision for the powers to run whether there is devolved Government or whether direct rule is retained.

This is a short Bill, but I know that the House will recognise its importance in providing fresh powers to deal with one of the major economic and social problems which we face. I do not claim that it offers a quick and easy remedy. What I do claim is that it is designed to help the Government not only to preserve jobs through temporary periods of slack business demand but to mount schemes which will encourage the expansion of employment.

We know that schemes of both kinds can be highly effective. The TES has preserved some 389,000 jobs since 1975. The small firms employment subsidy, our first and necessarily small-scale venture into the field of encouraging the creation of new jobs through employer subsidies, has already resulted in the creation of over 5,700 extra jobs in the special development areas. The success of the small firms employment subsidy is extremely encouraging, and the Bill will enable us to develop it further. It will allow us to move rapidly and effectively to introduce alternative schemes if the EEC Commission insists on modifications to the TES.

For all those reasons, I regard the Bill as essential, and I am pleased to commend it to the House.

7.49 p.m.

Photo of Mr Barney Hayhoe Mr Barney Hayhoe , Hounslow Brentford and Isleworth

The Opposition will give the Bill a fair wind, although we are concerned at the wide powers which it gives to the Secretary of State. These may well be matters better dealt with in Committee, but the Secretary of State fairly indicated that these are extremely wide powers and, although the House has to authorise a continuation of the powers after the end of next year, as far as I can judge that is the only way in which the House becomes directly involved under this legislation.

Although we welcome what the right hon. Gentleman said about giving Members of Parliament all the necessary details of any schemes introduced under the Bill, he did not say that it would normally be a matter for debate in the House before such schemes were implemented or, at least, concurrently with their implementation. I hope that he will think about that, since hon. Members on both sides, I believe, will want an opportunity to debate any major new scheme which is brought in under the Bill. I hope that some indication will he given of the Government's thinking before the end of the debate. If not, this must be dealt with in Committee.

The Bill in some ways is a legislative monument to the Labour Government's failure to deal with unemployment. The Secretary of State has now been at the Department of Employment—first as a Minister of State and then as Secretary of State—during a period when there has been a more sustained rise in unemployment than at any time in history, apart from another period of Labour Government in 1929–31. It is a remarkable achievement that this Government should have presided over such a high rise. I hope that tomorrow's unemployment figures will show a fall. If one reads the smoke signals put out by the Chancellor of the Exchequer in his weekend speech, the indications are that the figures will come down. I shall welcome that.

Photo of Mr Albert Booth Mr Albert Booth , Barrow-in-Furness

Will the hon. Member acknowledge that I have been in office during a period of remarkable achievement—a period when we have seen an increase in the number of people in employment in this country? This has been at a higher level than that sustained by the Conservative Government in 1970–74, and it has been sustained in the teeth of one of the toughest recessions that the world has seen.

Photo of Mr Barney Hayhoe Mr Barney Hayhoe , Hounslow Brentford and Isleworth

Yes, indeed. But in international terms we do not stand up all that well. It is small comfort for someone out of a job to know that someone else down the road has a job. It is also small comfort to know that when one takes acceptable figures for international comparison we are in one of the worst positions of any country in the industrialised world.

The Secretary of State referred to our earlier debate on unemployment and in that debate he referred to the 1977 OECD Economic Outlook. In arguing that in international terms our position was not too bad he said: They are not my Department's statistics. They are OECD statistics. They examine the comparative position of unemployment on a far wider basis. According to those figures, Britain is seventh in the league of those with high unemployment."—[Official Report, 30th January 1978; Vol. 943, c. 68.] On page 28 of the OECD document there are two tables. The Secretary of State quoted from the table at the top of the page which is headed Unemployment Rates in Selected OECD Countries. On that table we are seventh in the international league. The Secretary of State said that these were not his Department's statistics, but OECD statistics which examined the comparative position of unemployment on a far wider basis. But at the bottom of the table from which he quoted it is said: These rates are not comparable between countries. He quoted from a table where the rates were not comparable between countries and he denied the evidence of the table at the bottom of the same page giving the adjusted unemployment rates in selected OECD countries. The figures in the second table have been adjusted to international definition by the OECD in accordance with schemes worked out over the years to give the best possible way of getting an international comparison. On these figures the position of the United Kingdom is one of the worst—in fact it is worse than any other OECD country save Canada.

I have debated many matters with the Secretary of State over the years, and I have always respected the way in which he has dealt with the House and with Committees, but he demeans himself by quoting from a table which has a footnote saying that these figures are not comparable between countries.

Photo of Mr John Evans Mr John Evans , Newton

Will the hon. Member accept that there are lies, damned lies and statistics? Those of us with experience of working in European institutions have come up against the problem of lack of common statistics, particularly in unemployment. The figures put out by the Community differ somewhat from those that the hon. Member has quoted. If this scheme is a monument to the Labour Government, all the employment protection schemes in the Community are a monument to its inability to solve unemployment problems.

Photo of Mr Barney Hayhoe Mr Barney Hayhoe , Hounslow Brentford and Isleworth

That intervention in no way excuses the Secretary of State for quoting from a table in the OECD Journal in which there is a specific footnote that the figures are not comparable. He has also refused to quote and has denied the factual basis of the other OECD table. I accept that these statistics are not perfect, but surely the hon. Member for Newton (Mr. Evans) is not suggesting that the Secretary of State is going about it the right way by quoting figures to suit his argument, even though they are quite clearly not comparable. I hope that on reflection the Secretary of State will say that he acknowledges that these figures were not the best to quote for international comparison, and I hope that he will not repeat the error.

Unemployment in this country is extremely serious and is likely to remain so for a considerable time. The measures we are discussing tonight are second best. Surely it is acknowledged on both sides of the House that the preferred solution and the only genuine answer to unemployment is the development of real jobs. Real jobs will come only with economic revival, and the prospects for this look somewhat dimmer today than they did a few weeks ago.

Real jobs are created by profit, incentive and productivity and all these have been clobbered by this Government over the past four years. Small businesses particularly have suffered. The price in lost jobs as a result of Government measures over four years must be very great. Having said that small businesses have been clobbered, I welcome particularly the provision for the small firms employment subsidy. This will help repair some of the damage. Although it is very modest indeed compared with temporary employment subsidy, nevertheless, it is a helpful measure which I hope will be used more in the future so that a greater number of job opportunities will result from it.

We facilitated the introduction of TES. An amendment was made to the Employment Protection Act at a very late stage. We thought that TES was to be temporary, but now it seems that it is fast becoming permanent. In particular industries, the importance of TES is very great indeed and in later contributions to the debate that point will no doubt be underlined.

Some industries, and indeed some towns, are now dependent on the maintenance of the temporary employment subsidy, or at least on a provision that will have a similar effect. In regard to the Secretary of State's reference to the possibility of the TES being ruled out because of a failure to fall in with the competition policy of the EEC, he said that other policies and schemes would be brought forward. We shall examine them in reasonable fashion when they come forward. We have all seen in the Press references to methods by which workers can have their lower earnings, as a result of short-time working, made up to near normal levels, and there are many such schemes in Germany, Holland and Belgium, I believe. They are designed to have a somewhat similar effect to the TES, and in the judgment of some experts they might have fewer damaging side effects.

I am not arguing that the temporary employment subsidy should be suddenly turned off—except in the circumstances we have indicated where the subsidy might be replaced by some other measures. Of course, that must be so. In view of the unemployment implications, the subsidy cannot just be switched off. But that does not mean that the TES or schemes to replace it should not be kept under critical review. Furthermore, the criticisms levelled at job subsidies should be answered.

I am thinking particularly of the criticisms that were made in an article in National Westminster Bank Quarterly Review in February last year. John Burton produced a strong argument both for and against employment subsidy. Let me quote that article: Taken on its own, the case for employment subsidies seems impressive. Employment subsidies appear as a major innovation in economic policy which have the wondrous ability to reduce unemployment, the social costs of recession, the budget deficit, and the rate of inflation, all at the same time.It is apparent, however, that these arguments are specious. Their supposed benefits are largely illusory. Employment subsidies are likely to increase rather than decrease the PSBR, and thereby also to increase rather than reduce the rate of inflation. The jobs that they are claimed to save or create will be at the cost of labour under-utilization or unemployment elsewhere in the economy. He makes out a sustained case of criticism of job subsidy measures of the TES kind. I hope that the Minister, in replying to the debate, will answer some of those arguments in detail—or perhaps they can be dealt with in Committee or in some other way.

Photo of Mr David Penhaligon Mr David Penhaligon , Truro

Will the hon. Gentleman say whether he supports that argument and, if so, what action he would take in the present circumstances?

Photo of Mr Barney Hayhoe Mr Barney Hayhoe , Hounslow Brentford and Isleworth

I have already told the, House. I said that schemes should be kept under critical review. I am not totally convinced by the arguments adduced by Mr. Burton, but there are points of detail in that article which I believe should be answered.

We seek to examine these problems—and this is true across the whole of the EEC spectrum and in the OECD countries—comparing one country with another. The approach contained in the TES is one of the most important elements in the present Government's approach, yet it has not been followed by many other Governments.

This raises an important question mark. I am calling for a critical review to be made of the scheme and of replacement schemes. We need to know more about displacement effects. One Department of Employment official was reported in the Press as giving evidence on this matter at the end of last week. That official said—and I quote from The Times of 16th February 1976. Although there was no exact information, a survey by the department among the companies concerned suggested that in about 30 per cent. of the cases the subsidy had saved jobs at the expense of making other workers redundant elsewhere. There is some evidence from the Department that 30 per cent. of the 389,000 jobs saved have been at the cost of jobs elsewhere. Therefore, there is a displacement effect and we must have more information. I hope that the Manpower Services Commission or some other body will be asked to examine the matter carefully.

We need also to examine the substitution effect. Sometimes an employer will take on somebody and attract subsidy when he fully intended to take on an additional employee in any case. Recruitment subsidies have a substitution effect, which is not helpful in assisting overall job possibilities.

I believe that we should also examine other research evidence. I refer to a piece of research carried out by PEP written by Mr. Daniel and Elizabeth Stilgoe. It makes an important contribution to our knowledge on this matter. I only wish that the survey had been carried out more recently because some distortions have entered into the matter as the original survey was conducted at a time when unemployment was much lower. However, that report contains some important information and a case is made out for seeking to direct the subsidies towards giving preferential treatment to those disadvantaged groups in society.

We all know that many problems beset young people who are unemployed, but there are also considerable problems for older people and their families. We sometimes give insufficient attention to the specific needs and hardship that hit families where the breadwinner is in the late forties or early fifties. If such a man loses his job, the situation for him and his family can be extremely difficult. The plight of such a family is much more severe than that which faces the younger person.

I believe that we should examine in the critical review to which I have referred those who are particularly put at a disadvantage in our society. My right hon. Friend the Member for Worcester (Mr. Walker) has drawn attention to the problems of young blacks in the big cities among whom unemployment is very much higher compared with their white contemporaries.

I hope that the Secretary of State will pay attention to the disadvantaged groups when he is examining areas in which schemes can be brought forward. This approach is followed for the scheme aimed at giving help to disabled people.

It is important in referring to the position of individuals to examine financial incentive. The present interaction of our wage, tax and social security systems is such that there is sometimes no incentive for people to work at all or the incentive is very small. My hon. Friend the Member for Norfolk, North (Mr. Howell) has drawn attention to this in a series of Questions, but I shall not quote him. Instead, I want to quote Professor Donnison who, as Chairman of the Supplementary Benefits Commission, has claims to be heard on this matter. In an important article in The Observer this Sunday he refers to a particular case. He writes: Take a real case—an assistant herdsman with four children who earned £60 a week until he lost his job last year. He might now get a lower-grade job for £55 a week, or go hedging and ditching for the council for £38.50. If he pays his taxes and insurance contributions and draws the means-tested benefits now available to the low-paid family (family income supplement, rent and rates rebates, and free school meals and milk) he would be better off in any of these jobs than he is now on supplementary benefit. But here is the catch, because the professor gives the figures of how much better off. For the hedging and ditching job at £38·50, he will be £3·13 better off. If he goes to the job at £55 a week, he will be £3·69 better off. If he goes back to his old job at £60 a week, he will be £3·85 better off. So over a range of an increase in income of £21·50 a week, going from £38·50 to £60 a week, the only end result to him is that he retains in his pocket an additional 72p. There is something mad and crazy about an economic system which has that sort of penalty, that sort of surtax, upon low incomes.

I believe that it is vital for us to find ways of restoring the incentive to work and to earn more. I must not trespass on our debate tomorrow on taxation, but obviously there is an overlap into that area.

However, it is not just the incentive to work in financial terms which is important. There is also a need for more training. As a nation, we have to compete in world markets with countries which have a growing industrialised base such as South Korea, Taiwan, Mexico, Brazil, Singapore and Hong Kong. That competition will grow. In order to compete effectively, we must upgrade our work force. We must also improve productivity. If we leave our work force with low skills and if we keep productivity low, in world markets we shall suffer and many more people will be out of work as a result. So training is vital.

I wonder whether more can be done to persuade small firms to help in the training programme. The Secretary of State knows that I was a toolroom apprentice in a small firm which acted as the toolroom for a number of engineering firms in the locality. It was a training environment which I found agreeable and instructive. It may be that more opportunities could be found for training young people in small firms, and I hope that consideration will be given to this.

I also hope that there will be a careful look at what my right hon. Friend the Member for Lowestoft (Mr. Prior) suggested in a speech at Harrogate the weekend before last when he talked about the possibilities of an open "tech" of the air. Referring to what has already been done with the Open University and what has flowed from it, he suggested that we could begin to upgrade the skills and knowledge of our work force through such a scheme.

One is plainly concerned about the increasing use of job subsidies if they harm new capital investment, as they can, and if they keep down productivity. It is vital for the future that we get capital investment flowing again in this country. It comes in phases. In the first phase it provides more jobs and it helps the development of new technology, whether it be in electronics, computers or anything else.

But, as we are beginning to see in some of our big industries, what happens in the second phase of capital investment is that more is produced by fewer people and there is then a job loss. Unless that capital investment is allowed to bring higher productivity which in turn increases competitiveness and allows for greater earnings which create more wealth which can then be used to meet the growing demand for services of all kinds, we are doomed to slide down a path towards more and more lost job possibilities.

We are grateful to the Secretary of State for his explanation of the Bill. The powers are very wide, and I hope that we shall be able to examine them in Committee. I hope also that we shall be able to find ways in which hon. Members can become more involved in looking critically at the various schemes which will be brought forward once the Bill becomes law. The Bill gives the Secretary of State wide discretionary powers and leaves the choice of what is done to him. We believe that these powers should be used very flexibly to support schemes which protect jobs at short-term risk.

If there is a peak in redundancies, and it is possible to cut off that peak by the use of a subsidy, fine. But if difficulties go on at a high level for a very long time, I do not think that the job subsidy approach is appropriate. Certainly it is not a mechanism to provide permanent help for industries which are in decay and decline. The schemes must be tailored to encourage the creation of new jobs and to have a training content for the people involved as much as possible, and I believe that there must be special emphasis on small and medium-sized businesses.

We want the substitution and displacement effects of these schemes to be monitored carefully and, if they are found to be damaging, to have the schemes phased out in such a way as not to damage abruptly the prospects of the people involved but so as to try to find other ways of helping which will not have those worrying displacement or substitution effects.

The Opposition will be very reasonable in looking at any replacement scheme which is brought forward if the European Commission and the Government decide that the temporary employment subsidy has to be changed. Massive sums of taxpayers' money anyway are being used to pay people who are out of work. I want to see a growing proportion of such money being used for more constructive purposes than for paid enforced idleness. Even if this Bill helps to do that, as it should, nevertheless it is a second best measure and, if the powers are misused, it could even destroy the extra job opportunities which we all desire.

8.19 p.m.

Photo of Mr Daniel Jones Mr Daniel Jones , Burnley

Unfortunately, I am as well qualified as anyone in this House to speak about unemployment. I was myself unemployed for a considerable period in the 1930s, so I know about it at first hand. What is more, unfortunately I represent a constituency which has been plagued both by unemployment and by a drift of population for all too many years.

The hon. Member for Brentford and Isleworth (Mr. Hayhoe) attempted to chide my right hon. Friend the Secretary of State about today's unemployment level. He may be interested to know that in the 1930s, when the Tories were in power, I was one of 3 million unemployed. However, I do not want to go back to that period. I want to get on with the Bill as it has been explained by my right hon. Friend. Unfortunately, it is true—I say this with a contrite heart—that Hitler did more to remedy unemployment in the 1930s than the Tories did at that time when in power. Having said that, I go on briefly to speak about the Bill.

My right hon. Friend has said that it is a short Bill. It might be short, but it is extremely important. I support my right hon. Friend to the full in bringing the Bill forward. In so doing, I hope that he will give full attention to North-East Lancashire. I hope that I carry the Opposition with me. I do not think that there is another area that could use money more providentially than North-East Lancashire. The argument of the hon. Member for Brentford and Isleworth would not apply. There is no doubt that in North-East Lancashire there is remarkable industrial stability. There is a remarkable ability to work. For those reasons the moneys would not be wasted.

I probably know more about industrial economy than the hon. Member for Brent-ford and Isleworth. I, too, worked in the tool room. I learned a good deal as a result of consultation with the management. I hope that my right hon. Friend will consider North-East Lancashire with the sympathy that the area deserves. The money that should be spent there would not be a subsidy but a genuine investment. That is extremely important, as the hon. Gentleman said.

When I went to Burnley some 19 years ago the first thing that I did was to study the background of the place. I was interested to find that it was the birthplace of the textile industry. What has happened? Both the Conservative Party and the Labour Party have probably spent millions of pounds of the country's money installing new plants in other parts of the country and denuding the place that gave textiles to this country and probably to the world.

The record will show that in the early post-war years Labour Ministers backed the textile industry. They said "Please hold faith with textiles". They coined the corny crack that the nation's bread hung on Lancashire's thread. That was the phrase that was used. Since then the industry has lost about 200,000 jobs.

I do not accept that the jobs have been killed entirely by cheap imports. It cannot be disputed that they have made a contribution to the loss of jobs, but but at the same time it must be realised that we have paid large concerns millions of pounds to build new factories in other parts of the country. In so doing, they have denuded the area that really and truly played the game with the post-war Government. That was at a time that I remember so well, when we were living substantially off Marshall Aid.

I do not wish to be too partisan. In so far as I am able, I shall speak the truth. I believe that the truth is as I have stated it.

In Burnley there are, in particular, three firms in trouble. Two firms are in the textile industry and one is engaged in engineering tool room activity. I shall make little or no reference to the tool room company because as a result of my work with certain Ministers I am now given to understand that Manchester is interested in the company. I think that it would be better if I were not to mention the tool room in detail but were to deal with the textile firms, taking that course in the hope that Manchester regional office will provide a solution for the tool room.

My hon. Friend the Under-Secretary of State for Employment will know that since October 1977 I have been seeking assistance for a small firm that picked itself up when it was virtually on the floor. It used its own money to develop. However, it has been hit again by a series of snags. I am sorry that the firm has not been assisted before now. In the meantime, I have been to three or four Ministers to seek assistance. I refer to the firm of John Booth. It is a good firm and its employees were desperately sorry to leave. Their sorrow was not merely because they were leaving to join the unemployed but because they were leaving a firm for whom they had a good deal of genuine respect. I hope that even now, and as a result of the Bill now before us, the firm will be industrially revitalised and put into full production once more.

The other firm is called Staflex. An hour before the debate began the local leaders of the Transport and General Workers Union contacted me to say that they still hoped that the firm would continue to operate. It came from London only recently, with all the assistance that the Government have beneficially provided for it, but it is within a short time about to be shut down again, or if not shut down, used as a distribution centre while production will be centred abroad. I hope that the Government will inquire deeply into the condition of Staflex. I am told by Transport and General Workers Union representatives that there could be a misuse of public money.

I do not want to continue for very much longer. I have mentioned two firms and what they mean to my area. There can be no doubt that a pattern of industrial morality is practised in North-East Lancashire that is second to none throughout the country. I hope that the hon. Member for Brentford and Isleworth is listening. The hon. Gentleman seemed to suggest that there should be an even distribution of money throughout the country. I am not entirely in agreement. I believe that where money is spent it should be utilised in an economic manner. Evenness must go by the board in preference to that one important factor.

I hope that when all things are considered I have said enough fully to justify the Bill and to make my right hon. Friend accept that certain areas should be given preference. I wish the Bill well and I shall be happy, if it is so desired, to serve on the Committee that considers the Bill. Of course I shall. Committee work is the hardest job in this place, and it is the ruddy job that most people evade. Let me say to those who laugh that I have been here for nearly 19 years. I have served on Committees for almost all those years and I am prepared to serve in Committee on this Bill. I wish the Bill well, and I shall do all that I can to help its progress.

8.28 p.m.

Photo of Mr David Penhaligon Mr David Penhaligon , Truro

In common with everyone else who has spoken in the debate, I welcome the Bill. I especially welcome the indication that the small firms employment subsidy will be extended. That is the direct honouring of a promise that the Government made some time ago. I am pleased to learn that the necessary legislation is now being introduced.

My reasons for supporting the Bill are obvious and common to those advanced in most parts of the House. We have an unemployment problem that can be described only as tragic. We have the mass waste of manpower and woman-power that no sensible nation can afford. Although I believe that the Government are fooling themselves with their statements of precisely how many jobs the subsidies have saved, they have no doubt saved a substantial number. That being so, I believe that a continuation of the subsidies is called for.

I am keen on the extension of the small firms employment subsidy in part because of my personal experience in Cornwall. At the moment Cornwall has a male unemployment rate of 14·2 per cent.—far more, virtually, than any other area in the country. On a county-by-county basis, Cornwall now vies with the Western Isles, which are hardly a county, for the dubious honour of being the county with the highest level of unemployment in the country.

The small firms employment subsidy could make a genuine and dynamic contribution to Cornwall, because it has a small firm economy. One reason why Cornwall has not attracted the great attention of some of our industrial areas regarding unemployment is that, to put not too fine a point on it, Cornwall has not had what I should describe as glorious bankruptcies—in other words, very large companies closing down. The reason is obvious. Cornwall does not have many large firms. However, it has now reached the stage of 14 per cent. male unemployment. I do not apologise for repeating that figure.

The scheme enshrined in the Bill is almost unique in that it encourages new jobs, industry and ideas to come to fruition and offers long-term stable employment. We must look for long-term stable self-financing employment. Such employment does not look to any Government of whatever colour for subsidy. It is the kind of employment on which Governments live and on which the nation survives. Without such employment, there is little hope of an economic revival.

Again, I ask the basic question: why do not such schemes as this apply to agriculture and tourism? I have never appreciated why there should be an enormous difference between the totally honourable professions of making parts for motor cars and growing turnips. I do not see why the House continually differentiates between the two activities. They are both import-saving and value-added type jobs. Surely they should be treated in a similar fashion. Much the same kinds of argument apply to tourism.

It is not clear to which areas the small firms employment subsidy will apply. I am sure that it will apply to Cornwall, but other areas of substantial unemployment do not fall within the categories of intermediate development, development or special development areas. For example, my hon. Friend the Member for the Isle of Wight (Mr. Ross) has 9 per cent. unemployment in his constituency. By Cornwall's standards, he is lucky to have only 9 per cent. unemployment. But 9 per cent., for all that, is substantial unemployment. Therefore, I ask whether it is possible to consider this kind of subsidy on a local unemployed percentage basis as opposed to whether an area is or is not a development area. Certain areas with unemployment rates nowhere near the level about which we are talking often, for historical reasons, qualify for subsidies because they come within development or special development area status.

The temporary employment subsidy has served a useful purpose. I understand and appreciate the difficulties within the EEC on this matter, but no doubt some sensible scheme will be worked out. I reiterate to a certain extent what was said by the hon. Member for Brentford and Isleworth (Mr. Hayhoe) who expressed what to me is the nearly acceptable voice of Conservatism. I noticed that he did not quote those of his right hon. and hon. Friends who are now in control of the Conservative Party. However, the hon. Gentleman made a constructive and useful speech. There was a lot in what he said which will repay consideration.

Like the last three speakers, I was an engineering apprentice. That is a remarkable coincidence.

Photo of Mr John Evans Mr John Evans , Newton

With respect, five.

Photo of Mr David Penhaligon Mr David Penhaligon , Truro

It is now 16 years since I went to a company near my constituency and signed indentures as a fitter and turner apprentice. I am extremely worried about what is happening to apprentice training schemes. I was one of 85 apprentices taken on in one year. That same company is this year taking on only 19 apprentices.

There are exceptions. The China Clay Group is training apprentices. The management has confessed that to a certain extent it does not know precisely what it will give these young lads and girls to do when they finish their training. However, the management regards it as part of its responsibility to society to take a full and active part in training a skilled workforce. Therefore, it is continuing to train apprentices. I only wish that a larger section of industry took the same responsible attitude. It is not good enough for industry to keep telling individual hon. Members that there are not enough skilled workers when that same industry is reducing substantially the number of apprenticeships that it offers.

Photo of Mr Max Madden Mr Max Madden , Sowerby

I am not entirely in agreement with the argument. Is there not an urgent need to insist that where public finance is given, whether under this scheme or under the Industry Act, a proportion of it should go to those employers who are prepared to offer training?

Photo of Mr David Penhaligon Mr David Penhaligon , Truro

That is an interesting idea but it is not one to which I should be prepared to agree off the cuff.

The Government could be more vigorous in pointing out to the private sector how it is failing in this respect. I say that as a vigorous supporter of the private enterprise economy. The Government cannot take on responsibility for everything. Some industries believe that training is the Government's responsibility. Certainly it is the Government's responsibility to ensure that the fabric of training exists, but it cannot possibly be the total responsibility of Government. Companies that provide their own schemes of training are more likely to provide the skills that are needed because they have the knowledge of what is required. The Government, who are trying to do their best, cannot have the day-to-day intimate knowledge of what is required.

If we are to get out of this treadmill of unemployment, we must get the economy right. In the 12 months that my party has had real influence over the Government there has been a substantial improvement but not a solution. We must maintain our fight against inflation. Inflation is the root cause of much of the present unemployment. British industry cannot compete overseas. It cannot provide the jobs that we require to keep people sensibly employed if it has to operate within 20 per cent. or 30 per cent. inflation.

I suspect the euphoria of the last few days. I welcome a figure below 10 per cent. but I hope that this is not regarded as a solution to the unemployment problem. A rate of 10 per cent. is bad enough. To take on a young man of 16 is a long-term investment in training. Inflation rates of this sort make such investment very difficult.

I welcome the Bill. It is genuine attempt by the Government to alleviate the problems of the unemployed. It will make a useful contribution, but it is not in itself the answer. The answer is to get the British economy alive. The Bill will save several hundred thousand jobs and I therefore welcome it.

8.40 p.m.

Photo of Mr Michael Noble Mr Michael Noble , Rossendale

We have heard some interesting speeches this evening, particularly that by the hon. Member for Brentford and Isleworth (Mr. Hayhoe), who raised a number of interesting points and launched into a totally unwarranted attack on my right hon. Friend the Secretary of State. It is true, as my hon. Friend the Member for Newton (Mr. Evans) pointed out, that there are lies, damned lies and statistics. I am sure that each of us in this Chamber could go into the Library to look for statistics on unemployment and that we could each come out with a different answer. The hon. Member for Brentford and Isleworth would have done better to consider the causes of unemployment, particularly in those industries which are being threatened by the EEC's attitude to the temporary employment subsidy.

The three industries mainly concerned—textiles, clothing and footwear—are victims of the kind of competition that the Conservatives and their friends favour. It surprises me that in the speeches we have heard so far there has been no word of criticism of the EEC in this whole business. Well, that will end now. It is significant that a substantial number of my hon. Friends are attending this debate and that all of them represent North-West constituencies. They are all hoping to catch your eye, Mr. Deputy Speaker, with the exception of my hon. Friend the Member for Bolton, West (Mrs. Taylor), who is unable to do so because of her position. My right hon. Friend the Secretary of State also represents a North-West constituency and he faces the same great difficulties that we face.

What are the main reasons for introducing this enabling Bill, as my right hon. Friend called it? Of course there are new schemes to be brought in, but the crisis we face has been caused by the attitude of the EEC Commission to TES paid to the three crisis-torn industries of textiles, clothing and footwear.

This Bill and the measures which will follow it come about not because TES is a failure. TES has succeeded through a world recession in protecting the jobs of 390,000 people in this country. Alternatives will not be introduced because the Government wish to end TES, nor because TES is too expensive. In terms of net cost, TES is probably one of the cheapest measures for preserving employment. To a considerable extent, the alternatives to TES will be introduced because the EEC is demanding the end of the TES as those of us who represent textile, footwear and clothing constituencies understand it. We know that the effect of that will be.

Let us consider what immediate alternatives there are, other than a general reflation of the economy, in order to create additional demand. There will have to be further protective measures to tighten up on the Multi-Fibre Arrangement, in spite of the success of the initial phase of that agreement. We shall also have to tighten up on the massive flood of footwear imports from low-cost sources produced by slave labour, or virtual slave labour. The footwear industry is suffering a level of import penetration far above that faced by many sectors of the textile industry.

Until we can deal with these problems I do not believe any of the ameliorative schemes put forward can be a successful alternative to TES. The immediate effect of ending TES would be to create additional unemployment in the textile industry. For almost four years we have argued the case for giving a measure of protection to this industry in the face of the world recession. I recall the words of the hon. Member for Brentford and Isleworth, who said that we must increase productitivity. I should like him to visit some of the mills in the North-East, as many of my hon. Friends have.

I believe that there has even been an educational tour of some of the mills for Opposition Members. What did they see there? They saw highly capital-intensive industries employing a relatively small labour force of highly skilled people. But, despite their levels of technology, investment and skill, those industries cannot compete against nations where the wage costs may be as low as 18p an hour. That is the difficulty.

That is what TES has helped to overcome. If it is withdrawn, we shall see a closure of firms and industries where confidence has already been shattered, and the creation of regional and sub-regional industrial slums.

My constituency employs about 60 per cent. of the total labour force in textiles, clothing and footwear. A substantial number of the workers in those industries have been maintained in employment only because of TES.

Although they may have been misled during the referendum campaign about jobs for the boys, about prosperity over the Channel being dragged into this country, about a queue of investors waiting at Calais at leap on the first ferry after the referendum, I am making sure that the workers are not misled about where the guilt for the ending of TES lies. It lies with the European Commission and nowhere else.

Why does the Commission want to end TES? It says that it distorts competition. I am surprised to see that M. Vouel, the Comissioner in question, is a former general-secretary of the Luxembourg Socialist Party. He has said: In the textile, clothing and footwear industries, the subsidy at present represents between 20 per cent. and 40 per cent. of the wages, and this is seriously distorting competition. In the Adjournment debate that I was fortunate enough to initiate on this subject, I said that as a Socialist I was in business, where competition led to unemployment and the creation of regions and sub-regions with no alternative sources of employment, to distort competition. I believe that that is a common strand on the Labour Benches.

We had a three-year fight with the European Economic Community—and initially we had a big enough fight with our own party—to persuade it that something must be done about the distortion of competition caused by low-cost imports. We have had a substantial victory for some sectors of the textile industry but only a partial victory for the industry as a whole. We still have to deal with the problem of low-cost competition distorting our industrial structure in footwear.

Therefore, I ask "Where are the brave words of the pro-Marketeers tonight?" The hon. Member for Brentford and Isleworth, who I assume supported his party in the Lobbies and in the country in the referendum campaign, did not once mention that it was the EEC that was bringing an end to TES. When the hon. Gentleman criticised my right hon. Friend the Secretary of State over the level of unemployment, he did not mention that unemployment is a common feature of the whole EEC and that in many EEC countries it is getting worse. He did not mention that the end of TES is simply another example of increasing bureaucratic interference in this country's affairs.

We recall what the hon. Gentleman and all the other pro-Marketeers had to say during the referendum campaign about the sovereignty of this House. My hon. Friend the Member for Newton asked my right hon. Friend a very important question: "Will you be able to bring forward schemes that you do not have to present to the European Commission?" We know my right hon. Friend's views about the Common Market, and we applaud them. My right hon. Friend had to admit that before any scheme to preserve employment can be introduced in this country, it will not only have to meet the approval of this House but be approved by the bureaucrats in Brussels.

I do not recollect any of the pro-Marketeers going around my constituency during the referendum campaign saying that any measures that we in this country take to preserve employment would have to be subject to the approval of Brussels, to the approval of non-elected Commissioners in Brussels. This is the nub of the argument. It is significant that, while we are being hammered, there are many employment schemes in other parts of the Community. One must ask why our scheme has been selected as the scheme to be hammered.

In an article on 2nd February, New Society said: with over 6 million people jobless in Western Europe, the Commission has yet to come up with a programme of action to tackle the crisis, but it finds the time to threaten a member State with the law for helping to save some people from losing their jobs. In fact, every member State now uses employment subsidies as a matter of course to deal with the jobless. Most are no more than cosmetic, but so far none has raised a squeak from Brussels. Perhaps it is because they are no more than cosmetic that accounts for the fact that they have not been as yet hammered by the Commission.

The important question to ask is how many of these other schemes are strictly in accord with the Treaty of Rome. Are the schemes in Belgium, Denmark, Italy, Holland, West Germany and France strictly in accordance with the Treaty of Rome? Is it not time that instead of fiddling about with the harmonisation of mayonnaise and some of the other chunks of pseudo-legislation that appear from the Commission in Brussels the Commission looked to the real issues that affect workers in the Community, including the question of unemployment? If the Commission could not accept this scheme operating in one country, why could it not decide that it could be a suitable scheme to introduce throughout the Community?

Therefore, we say to my right hon. Friend that he must stand firm in the face of this bureaucratic pressure. In the light of what was said in the referendum campaign by the pro-Marketeers, the people of this country will not understand that the Government can be pushed about. We must stand firm. We are encouraged in that stance by the attitude of the TUC, as indicated in the letter last week from the general secretary of the TUC, Mr. Murray, to the Prime Minister. My right hon. Friend can rest assured that the workers in British industry will support him in a firm stand, but they will not understand if the Government back away.

There are two other points that I wish to make. I suggest that this attitude to TES may be a signal that there is something more sinister afoot in the EEC. After all, three industries have been selected for treatment. Textiles and clothing can virtually be counted as one industry. Footwear is another. My right hon. Friend will be aware that some considerable time ago the Government produced a scheme for making the footwear industry more efficient and more able to meet the competition that it currently faces from abroad. What has happened to that scheme? Is it somewhere in a civil servant's desk in Whitehall? No, it is in a pigeonhole in a bureaucrat's desk in Brussels. That is where the problem is. That is where that scheme is being held up. It was intended simply to help the industry to become more efficient.

However, I come to something even more sinister. I have in my possession a letter from a senior official of the Common Market. Last week I sent my right hon. Friend a copy of this letter. The official says: I understand … that you have inquired recently about the Commission's 'liste noire'." Before anyone leaps to his feet when I translate "liste noire" as "black list", let me say that it is not the black list that everyone has been getting excited about recently. It is the Commission's list noire for the textile and clothing sector. The letter continues Enclosed please find a brief note setting out the current position. I should emphasise that the refinement of the black list is an ongoing operation and that this document does not provide a definitive guide. What does it say? It should be noted that this is a Commission document, not a document from the Council of Ministers. It states: Where available guidelines are concerned, the Commission directs its departments to keep to the general assessment set out below for the textile products listed:(a) synthetic fibres and yarns …… any financial intervention by the Community or the States which would merely tend to increase present capacity should be avoided. It says with regard to women's pantihose that any financial intervention by the Community or the States whose effect would be to increase production capacity should be avoided. It is the same for men's shirts. With regard to men's trousers it states that any financial intervention should be limited to investment concerning articles at the top of the range and with a high added value. It is the same for men's briefs. It states in relation to cotton fabrics that all financial intervention in favour of mass product manufacturer (unbleached and standard printed) to be avoided: terry towelling and crepe fabrics to be taken into consideration. This is a document which has been with the Commission in Brussels since December 1976. But I can tell my right hon. Friend that it has been working, because when the Textile Industry Training Board made application for training grants for people in these sectors of the industry it was told that these parts of the grants discriminated and would not be allowed. But the Commission refers to all financial intervention, not simply to training grants.

I should like to know how far the Commission thinks that it can push its luck on issues of this kind, because these are serious constitutional issues. It is not simply a question of an industry; it is a question of an unelected body in Europe interfering in the affairs of this country without the issue coming before the House of Commons.

I should like to make one other observation. What if the Government finally have to give way in the struggle to maintain temporary employment subsidy as we know it now? What will be the result? In my view, as has already been stated, it will inevitably mean, although I hope not, an increase in unemployment in these industries which are already crisis-ridden.

The hon. Member for Brentford and Isleworth mentioned that we should perhaps think of retraining. I can assure the hon. Gentleman that if we retrain someone from the footwear industry in my constituency to go into the textile industry, we shall find someone going from the textile industry into the footwear industry, because there is nothing else. That is the economic base of my constituency. I know that many of my hon. Friends in the North-West are in the same situation.

If it is pointless spending subsidies to maintain jobs, it is far more pointless to train people at the age of 15 or 50 for jobs that do not exist. What situation will that create for the older workers in the textile industry and the indigenous labour force? What about the large number of immigrant workers in the industry? The problems of retraining are enormous.

As I have mentioned, there is a lack of opportunity. Where will the EEC find the jobs? What will its piddling little Regional Fund do to create new employment in these areas of the North-West? I suggest to my right hon. Friend that if we are unsuccessful in the battle for temporary employment subsidy, he should stand firm in the face of the Commission and demand a redundancy payments system at least equivalent to that being introduced for shipbuilding workers.

My hon. Friend the Member for Burnley (Mr. Jones) described it as industrial morality. People in the textile industry put on their clogs in the morning, "go down to mill" and do a hard day's work. We have an industrial record second to none. In fact, my view is that had the workers been a little more militant, they would not have been shoved around so much and would not be in their present position.

I do not begrude the employees in shipbuilding—nor do the textile workers—any additional redundancy payments that they receive, but if the Commission proposes to take away the livelihood of my constituents it must create other alternative work, or the means whereby the workers can be sustained in unemployment.

I ask my right hon. Friend not to give way on this matter. He said in a letter to me that he would accept an alternative only if it was at least the equivalent of TES. We applaud him for that. But will he tell us what he means by "equivalent"? Who has it to be acceptable to—the workers and employers in the industry, or the Commission? Will he ensure that the equivalent is at least as successful in defending jobs as the TES has proved to be should we be forced to drop the TES?

9.0 p.m.

Photo of Mr Fred Silvester Mr Fred Silvester , Manchester, Withington

The hon. Member for Rossendale (Mr. Noble) has rightly drawn the attention of the House to the fact that many of those taking part in the debate are from the North-West or from textiles. It is not surprising that he should have devoted most of his speech to the problems of textiles and footwear. He will acknowledge, I am sure, that, to some extent at any rate he has had a good deal of support from hon. Members on both sides of the House, in particular in his earlier battles with the Commission about textiles. But he may find that company parting from him over some of the things he says.

I fully understand why the hon. Gentleman should take the view he takes when 60 per cent. of his constituents are employed in these industries. Who would not in that position? But it is a wider matter than he suggests. I do not think that it will help the House on this Bill if we confuse the problems of textiles and footwear with the powers of the EEC. Of course those powers come into it, but I wonder whether the hon. Gentleman would take the same view, if, for example, the footwear industry in France were suddenly to receive a subsidy which had a major effect upon the price of footwear within the Community. Of course he would take a different view.

The Commission merely expresses a view, and the Government have to take a position with regard to negotiations with the Commission. They will have to express that position to the House, and we shall no doubt have an opportunity to discuss it if the Government follow the words they have uttered before about bringing Community decisions before the House.

It should be borne in mind that some of the problems discussed by the hon. Gentleman arise not from within the Community but from the relationship of the Community with other countries. To get those two factors confused, though it is understandable in the case of these three industries, will lead to difficulty in discussing the Bill.

The temporary employment subsidy is not merely used for these three industries. They have greatly benefited, but 15,000 or 16,000 jobs in the engineering industry have drawn on the subsidy, while in the distribution industry 4,000 or 5,000 jobs have been affected. The subsidy is widely spread throughout industry, and of the number of jobs saved, about one-third are in the North-West.

It is important to get the situation of these three industries into proportion. It is right that the hon. Gentleman should raise their situation at every conceivable opportunity, and to the extent to which I agree with him I will support him. But let us for tonight turn attention to the slightly wider matter, because it is not to be decided solely on the problems of Rossendale and the textile industry.

We are being faced with what is becoming a permanent temporary employment subsidy. The hon. Member for Truro (Mr. Penhaligon) said that he was very pleased about the small firms employment subsidy. So am I. One of the interesting things about it is that it is designed to create new jobs rather than to hold on to old jobs. Perhaps I may take the argument of the hon. Member for Rossendale a little further. He asked what the Community's piddling little Regional Fund would do to get new jobs into Rossendale. That is the real question at issue.

The question is not whether we can continue to prop up declining jobs year after year but whether we can get new jobs to come in and provide a shelter for the period of time in which we need to bring in those jobs. The temporary employment subsidy is a shelter. If we keep the shelter year after year it becomes a fortress, and the difficulty is to maintain the distinction between the two.

The Secretary of State has introduced a Bill which, as I understand, will prolong these schemes for roughly 18 months, and in lumps of 18 months thereafter. The temporary employment subsidy was introduced in October 1976 and is now to be prolonged until 1979, so that we are already involved in a three-year stint.

We are certainly faced with a situation in which a large number of young people are coming on to the labour market. I think the figure given was 170,000 a year. That is a distinct problem. It is another matter to keep people in jobs that are basically unsound. The usefulness of the Bill may be judged by the extent to which it is able to divert the subsidies for which the Secretary of State is seeking permission to those jobs which, as the Bill says, will enlarge the labour force by taking on new employees.

It is very important for us to assess the effectiveness of the measure. There was a certain amount of ribaldry about the comment that we must assess these things. A number of attempts have been made to look at the relative cost. According to one of the papers in the Library, the temporary employment subsidy seems to be working out at about £1,000 a job. An Answer to a parliamentary Question on 31st January indicated that the estimated total on an accumulative basis at December 1977 was £384 million. I think that the Minister quoted the figure for the people who benefited at 399,000; therefore it is about £1,000 a job.

Photo of Mr John Golding Mr John Golding , Newcastle-under-Lyme

I think that what we have to take into account is the difference between the net cost and the gross cost of the scheme. We would certainly not say that the net cost of the temporary employment subsidy was £1,000 per job.

Photo of Mr Fred Silvester Mr Fred Silvester , Manchester, Withington

I shall come to the net and gross cost in a minute, but I am talking at the moment about the gross cost. The job creation scheme seems to have worked out at about £1,500 gross per job.

Photo of Mr Michael Noble Mr Michael Noble , Rossendale

Does not the hon. Gentleman agree that it is not simply a question of comparing the gross and net costs of the schemes but, as he mentioned a moment ago, the cost of bringing in alternative employment? Presumably alternative employment would have to be in modern capital-intensive industry. Would not the cost, therefore, to create a new job be far greater than to give temporary protection, albeit at £1,000 a job, to an existing job?

Photo of Mr Fred Silvester Mr Fred Silvester , Manchester, Withington

I think it would be better if I were allowed to continue with my speech. They are all related. It may simplify matters if I do not go through the whole list, but the gross cost of the various schemes varies from about £200 to about £1,500 a job. Therefore it is important to make an assessment. I understand that a Select Committee of the House is now looking at this matter and going into that point. It is of great importance, therefore, that we take the opportunity provided by the Bill and by the debate to look at the relative importance and efficiency of these different categories.

I turn to the point made by the hon. Member for Rossendale in an intervention, using figures from the Secretary of State's speech in the recent employment debate. It seems that selective regional assistance from March 1974 to 1977 had cost £307 million for 204,000 jobs. That is about £1,500 a job. That is the capital-intensive situation.

Photo of Mr Michael Noble Mr Michael Noble , Rossendale

The hon. Gentleman has misunderstood. That is purely the State's contribution. To replace a job that has disappeared would need an investment contribution. There are examples of £500,000 being spent to provide a job. Courtaulds at Belmont spent £12 million to produce a handful of jobs. One cannot say that the cost is to the Exchequer alone.

Photo of Mr Fred Silvester Mr Fred Silvester , Manchester, Withington

I am not saying that. Perhaps it would be better if the hon. Gentleman would not keep interrupting me. I recognise that this is the State's contribution. I recognise, too, as we all have over many debates, interventions and Questions, that one can quote examples of things being done on a grand scale. In some cases the cost per job is astronomical. In one case in Scotland the cost was far greater than that paid by ICI.

The difference is that with regional assistance we are talking about jobs created in new growth industries. They are coupled with private investment, which at least provides a prima facie case that somebody else also thinks it is a worthwhile investment. It is important to make that distinction. We are talking about large sums of public money, and the problem with the Bill, with the exception of some of the schemes which I hope will develop such as the small firms employment subsidy is that we are talking about subsidies used to hold on to jobs which are perhaps on a slippery slope, compared with money put into jobs which we hope will be in growth industries.

Let me quote what the Secretary of State said on 30th January. He will no doubt recall this: We have had a survey of trends in 82 manufacturing industries and this has revealed that the 10 industries with the largest growth rates of productivity increased their total employment by 165,000 during the period when total employment in the 82 industries fell by more than 600,000."— The right hon. Gentleman went on to suggest that the great competitiveness caused by productivity growth may be a larger stimulant to employment than the direct short-term contractionary effects of productivity growth on employment."—[Official Report. 30th January 1978; Vol. 943, c. 60–1.] The right hon. Gentleman accepts that, we accept it and most people accept it. I think that we are therefore faced with the situation where we are seeking, as far as is humanly possible to use those sums of public money that are available for the assistance of industry to go into those industries that show most potential for growth and are most likely to provide a long-term base for future employment, not only for those who may have to be retrained, not only for those who are coming on to the market, but for those who are a long way down the pipeline and will have to depend on those growth industries for the future.

One of the most important features of the debate and the way in which the Bill will be used is the balance that the Government achieve between money devoted to the temporary expedient compared with money devoted to long-term growth. That is the test by which we should judge this policy. It is not that we should judge the policy by the document apparently put out every month, for which I thank the Minister, which shows the list of people who would otherwise be unemployed. It is the balance between the amount of money that is spent and produces long-term jobs compared with the amount of money that is to be devoted to the short term.

Let me now consider the point made by the Minister about net and gross costs. It is true that one can offset some of the costs involved in this kind of expenditure by saying that one gains taxes when people are at work, that one saves having to pay unemployment benefit, social security, and so on, and that in addition goods are produced. I accept that and it is a reasonable conclusion.

There is a problem about that. I do not quite know how to describe it without my hands, but it is a kind of divergence, because that argument is particularly true during the early stages of unemployment. The Manpower Services Commission published an analysis of the cost of unemployment. It made the point that in the first six months the cost of unemployment might exceed the cost of temporary employment. That is less true as time goes on. Conversely, it is true that the more one has a chap at work in an industry which is growing, the more goods he will produce. The effect is cumulative.

Therefore, although putting money into the temporary employment sector for immediate purposes looks quite good value, the value grows progressively worse in relation to money which goes into a private concern or a public industry which makes a profit. That is the problem which we face.

Perhaps I am going on rather too long, but I wish to establish the point that, in assessing the value of the Bill, it is easy to say that sums of money now put into temporary employment subsidy keep people off the streets, cutting down the vandalism and doing all the things which we agree are better than having people on the dole, but it is a short-term expedient because the divergence between that gain and future loss increases as time goes on.

My hon. Friend the Member for Brent-ford and Isleworth (Mr. Hayhoe) made the point—we have made it several times from these Opposition Benches—that eventually these sums are paid out of the taxes and wages of other productive industries. Although, as far as I know, there is no direct analysis showing the number of compensating jobs lost against jobs "saved"—I put the word in inverted commas—there is no doubt in my mind and in the minds of many that there is a loss and a weight upon other industry, although one cannot quantify it.

It is important that that weight should not lie there too long and that its specific purpose should be borne in mind. We lose sight of that purpose the moment we tip over into accepting it, as the hon. Member for Rossendale would wish to do, I think, for a different purpose, to prop up different social or industrial structures apart from the problems which we currently face. These are that there is a recession and a sudden influx of new people coming on to the labour market, the two happening to coincide. We must not lose sight of what should be the true aim. I agree that it is reasonable to seek to cushion the effect of the present problems, but if we seek to go beyond that point and perpetuate the system, we run into danger.

In my view, the Bill presents that danger of going on 18 months after 18 months after 18 months, and herein lies a developing problem for our country's resources.

9.17 p.m.

Photo of Mr Doug Hoyle Mr Doug Hoyle , Nelson and Colne

I have never heard a better prescription for the death of both the textile and the footwear industries than the proposals just made by the hon. Member for Manchester, Withington (Mr. Silvester). If it had not been for the temporary employment subsidy, both would have been in far more difficulty than they are now.

I should not see the point of helping those industries with the MFA and the temporary employment subsidy, since we all know that they are suffering not just from low cost imports but from a world recession and a depressed market in this country, if we did not at the same time recognise that the moment the market begins to recover and we can see our economy start to take off again we shall want those industries here. We shall want a base on which to build. We are, therefore, providing that base or platform below which those industries should not fall so that we can take off again, recognising that both industries are essential to our country. If they were both destroyed tomorrow, we should have to recreate our footwear and textile industries.

The hon. Gentleman completely missed the point in what he said. It was difficult at times to follow what he was getting at, but he plainly missed the point that it is essential that we help these industries. Indeed, I congratulate the Government on the measures which they have taken, and this is one reason why I am glad to endorse what my hon. Friend the Member for Rossendale (Mr. Noble) said about the temporary employment subsidy.

The TES has worked extremely well. Moreover, the fact that there has to be agreement for both employers and trade unions to make a joint submission has been another merit of the scheme.

What is more, over 50 per cent. of the jobs preserved by the TES are in the footwear and textile sectors. In addition, it has been effective in preserving the jobs of females not only in these industries but in industry generally. I think that 48 per cent. of those who are benefiting from the temporary employment subsidy at present are women in industry, and we cannot afford to lose their skills.

What concerns me is that the Secretary of State is looking again at the temporary employment subsidy, and he tells us that we may have to modify the scheme. I am forced to the conclusion, as was my hon. Friend the Member for Rossendale, that we should not have been looking at it again if we were not under pressure from the Common Market Commission, which, as I understand it, has drawn attention to Article 93(1) of the Treaty of Rome, saying that we must give warning in advance of any proposal to continue the scheme after 31st March. It also says that the scheme has distorted competition within the EEC.

These are matters about which the people of this country have a right to know. They should be told the amount of pressure that is being exerted on the Government by the Commission. Should we just sit down and accept the proposals and modifications put forward by the Commission, which would cost 182,000 jobs at a time of high unemployment? The public has a right to know the pressure being exerted by the faceless bureaucrats behind the desks at Brussels.

Are they demanding the right to vet each application for TES? No hon. Member who supported the Common Market argued at the time of the referendum that this was a situation in which we would find ourselves. Nobody suggested that we would not have the right to put forward our own employment schemes. I am sure that many people who voted "Yes" in the referendum would not have done so had they known that this could happen.

If we carry on this scheme after 31st March without the permission of the Commission, do we run the risk of being taken to court by the Commission? If we persist with our policy, might I be visiting my right hon. Friend the Secretary of State, along with leading civil servants, in a prison cell? I hope that that is not the state of affairs we are facing, but I believe that it is a possibility because of the degree of pressure being put on us by the Commission. It is intolerable. This may be General Election year, and I am sure that the electors would be very interested to hear this bizarre state of affairs. I believe that we are being treated as the poor relations of Europe on the question of job preservation.

I have examined the measures that are being taken in other EEC countries. Belgium has given grants and loans to her clothing and textile industries. Why has there not been an objection there? Ireland also has an employment incentive scheme by which a £20 a week premium is paid for each extra adult worker taken on and £10 for each extra school leaver. There is also a tax incentive scheme whereby firms pay 25 per cent. instead of the 40 per cent. rate of corporation tax. Are these schemes not distorting the market? In Denmark there is a young people's recruitment subsidy by which local authorities pay 90p an hour for up to six months to employers. West Germany also has recruitment subsidies. Why are these countries allowed to continue with their schemes? Why are we being picked on to be punished in this way? Why does not the Commission turn its attention to other member States?

No one can say that TES has not been worth while. It has been most beneficial, particularly in areas such as North-East Lancashire, where it has helped the clothing and footwear industries. Without the scheme we would have been in great difficulties. The unemployment rates in textiles and clothing would have been far higher and the situation far more serious. Failing their obtaining employment in their own industry, what would have happened to such workers. There are no other jobs available in the immediate area, and they cannot move to other areas because unemployment exists in those areas, too. We also know that there is unemployment in the EEC countries.

The hon. Member for Brentford and Isleworth (Mr. Hayhoe) challenged my right hon. Friend the Secretary of State and spoke of the record in other countries in Western Europe. However, he did not mention the fact that West Germany, which is the country with the lowest rate of inflation in Europe, has solved its problems by sending home on short time over 1 million workers. Is that how the Opposition propose to solve this country's problems? Before this debate ends, the Opposition should come clean and say whether they are in favour of the temporary employment subsidy. I believe that the workers in the clothing and textile industry have a right to know the answer.

Despite the help that has been given to the textile industry in the form of the MFA and other assistance, which we very much welcome, the industry is by no means out of the wood. That argument applies to both textiles and footwear. There is one mill in my constituency which finds itself in difficulty, and unless something drastic is done it will close in March and there will be another 320 people out of work. However, if the position is held for a few months and if, as is expected, we shall have a good Budget, we shall require to employ those workers who may shortly be out of work. It is nothing short of criminal to remove the crutch of TES from the industry. Therefore, we hope that the Opposition will give their clear view on this matter.

Despite EEC pressure on the United Kingdom Government, I believe that we cannot afford to lose the TES in its present form. We cannot afford to see an increase in the numbers of unemployed. We must do all we can to preserve jobs in the textile and footwear industries. There is a general feeling that the country has now turned the corner, but it would be wrong at this critical time to cause more unemployment in these two basic industries.

My message to the Government is that they should stand firm against the bureaucrats in Brussels who are answerable to nobody. I hope that my right hon. Friend the Prime Minister will be prepared to stand firm and will not allow unemployment to grow in our basic industries. We must tell the EEC that it is that body that must think again rather than us. We must make clear that we believe that the TES has served our nation very well. When we are considering a scheme, we must consider whether we can give benefit to those concerned that have already had the advantage of TES because there is still a need to give help.

I hope that we shall do all we can to ensure that there is a future for the footwear and textile industries. They have modernised themselves and we must play our part in ensuring that there is a future for them. To this end we shall not tolerate any interference from the bureaucrats in Brussels.

9.30 p.m.

Photo of Mr Ivan Lawrence Mr Ivan Lawrence , Burton

There is an atmosphere of depression over the Chamber which I hope I may lift a little. It comes about because we are debating yet another measure of first aid when we know perfectly well that first aid never cures the underlying sickness.

Just as Government supporters believe that it is a good idea to continue these subsidies—and the Opposition agree with them—we agree only because we know that it is cheaper in financial terms as well as moral terms to have these subsidies than not to subsidise the jobless in this way. On the other hand, we all know that taking away vast sums of money to deal with first-aid measures, in the long run makes worse the underlying problem.

We know that massive unemployment is here to stay unless extraordinary measures are taken. It is no longer a matter of the old trade cycle. The Secretary of State would not answer me when I asked him to forecast how much unemployment there was likely to be up until the end of 1979. I do not blame him for not giving the answer. The reason is that the answer is too depressing. Our level of unemployment will go on rising. It is not just a matter of our being unable to solve some of the present problems. It is also a matter of the 1 per cent. increase every year added to the employment register, whatever the Government do.

One of the most worrying aspects is the demoralising effect that it has upon young people. Today, there are six times the number of people under 20 years of age who are unemployed that there was four years ago. What is more, there are 28 times as many school leavers unemployed. We are nearing a situation where we are making work recidivists—people who have never learned what it is like to leave school and go into a job.

Photo of Mr Daniel Jones Mr Daniel Jones , Burnley

Can I persuade the hon. Member to realise that ever since the war years to this very day there has been a shortage of skilled people? Is not he prepared to agree and to offer to the Secretary of State the idea that we train these young people as apprentices so that their future can be consolidated and thus make employment feasible?

Photo of Mr Ivan Lawrence Mr Ivan Lawrence , Burton

I agree with the hon. Gentleman and perhaps later in my speech I shall be able to come a little closer to taking up some of his remarks. However, I was making the point that our young people are becoming work recidivists. The Sub-Committee of which I am a member has been touring parts of Britain, and we have discovered that some of the regional problems of unemployment are horrific. We have heard representations from the North-West, but I might also mention parts of Wales.

It is not just the regions which are affected in this way. It is also certain sectors of industry, including clothing, textiles and footwear. In any event, I want to turn the discussion away from the North-West—the North-West can look after itself—because the point was made and is always made by the Secretary of State that this is part of a general malaise throughout the world.

The fact is that we as a country were doing better than other countries and that now we are doing worse. Even if there are differences about the methods of calculation, there are also similarities. For example, in all the countries more people register as unemployed than are actually unemployed. But the general position is that we are doing worse now, and we should ask ourselves why, not just to make party points but to see what the Government have done wrong. That might help us to see what the Government ought to do and whether what they are doing now should be extended and improved. I am referring to the temporary unemployment measures, especially the temporary employment subsidy.

I do not accept that which is always being said by some Labour Members in respect of North-Western textiles, that the fault lies with the Common Market. It is true that the Commission is trying to stop the temporary employment subsidy, and it may well succeed. It is feared by the EEC that the subsidy will be used to export our unemployment into the other member countries. That fear can be understood. I am not sure how much it is an argument about unemployment and how far it is an argument about fisheries. When dealing with the Common Market one never knows what the real argument is about.

I have no doubt that the Government have waiting an alternative scheme that will be acceptable to the Common Market when the temporary employment subsidy is phased out, which will, I am sure, fulfil the wishes of Labour Members.

Photo of Mr Max Madden Mr Max Madden , Sowerby

As we currently have a trade deficit with the Common Market of about £2 billion and a cumulative deficit since we joined of about £10 billion, does the hon. Gentleman agree that it is a somewhat bogus argument about exporting unemployment to the Common Market through any measures that we may take?

Photo of Mr Ivan Lawrence Mr Ivan Lawrence , Burton

Some of our industries that are flourishing are in competition with industries in member States, but that is not the real problem. It is not the Common Market countries that are draining the textile resources but those in the Far East. The Common Market countries are not draining footwear resources. That is being done by the Communist bloc, Portugal or other countries outside the EEC.

Labour Members must appreciate that the Common Market Commission is trying to make everything fair among member States within the system. It is trying to do so within the wall of the Common Market. Therefore, it is to some extent irrelevant to continue to rehearse the anti-Common Market argument where issues arise outside the wall, although I understand Labour Members taking that position in their concern with the rejection of the temporary employment subsidy. However, they need not be preoccupied with that. It is a problem that is separate from the root cause of that which is troubling the country.

I turn to some of the things that I believe the Government have been doing wrong. First, instead of keeping money in industry and in business hands with incentives for investment, they have taken money from those who would invest it and from where it might generate new and more employment. Instead, they have given it to industries to stop unemployment.

Photo of Mr Ivan Lawrence Mr Ivan Lawrence , Burton

I am off the Brussels argument. The hon. Gentleman keeps on getting up and down like a jack-in-the-box. I ask that I might have the opportunity to develop my argument.

If we take money out of industry's hands, from which it might be invested to generate new and more employment, and we give it to industry only to stop unemployment, we are wasting it. In that way it is going down the drain. It is taken from the creation of new jobs to maintain dying jobs and we are sacrificing the longer term for the shorter term.

Photo of Mr John Evans Mr John Evans , Newton

Does the hon. Gentleman recall that during the lifetime of the previous Conservative Government, who took steps to do just what he is arguing, private industry invested largely in property and office blocks, and that a great deal of that investment was not even in this country?

Photo of Mr Ivan Lawrence Mr Ivan Lawrence , Burton

The hon. Gentleman is wrong from the standpoint of his own industry. During the period of the previous Conservative Government the amount of capital invested in the textile industry was extremely high. Under the last years of the Conservative Government the non-use of investment by industry had a great deal to do with a low level of productivity.

Photo of Mr Ivan Lawrence Mr Ivan Lawrence , Burton

No, not in textiles. I have made a difference between textiles and other sectors. However, the criticism of the hon. Member for Newton (Mr. Evans) does not apply as textiles was an area of high investment.

We are talking of putting money into the hands of industry which it will invest, provided there is increased productivity. That proviso is important. A 1½ per cent. return on capital is pitiful. It is proportional to the low level of productivity. Since that is a fault—that is, the taking away of money from the hands of industry—the Government should put their mind to it. I believe that they are putting their mind to that problem, because they have given some hope for thinking that there will be further tax reductions. That would be a good. The Government—any Government—will stimulate employment if they do something about the incredible burden of taxation.

Secondly, there is the question of the destruction of small businesses. The numbers of liquidations and bankruptcies have doubled since 1974. The figure was between 6,000 and 7,000 in 1976. That was due partly to high taxation and to high interest rates. We do not know how many jobs have been lost through the collapse of small businesses, but a substantial number have been lost. Another reason has been pay restraint. There has been a shift from the employment of people in small engineering firms in my constituency to the National Coal Board just up the road which has been able to offer higher incomes to the same people if they leave their jobs. That depresses small engineering firms because they cannot find skilled workers. It also reduces productivity and eventually the employment potential of such firms.

To the extent that the Government are proposing to take special measures, are repenting and being converted to an understanding of the importance of small businesses in the employment sector, the introduction of the small firms employ- ment subsidy is good and is to be encouraged. The Government are beginning to take steps to restore the position. The destruction of small companies has meant a large decrease in the numbers in employment.

The third problem is the crippling effect of legislation and non-legislative sanctions—for example, the threat of the Government black list and the arbitrary procedure that we have debated ad nauseam in the House in the past week. Such action leads to a lack of confidence and eventually to a loss of jobs. The Employment Protection Act has stopped many employers taking on workers at the margin because they feel that they may not be able to hold them in their jobs, yet they will have to pay out large sums of money at the end. Therefore, the Government must stop that kind of nonsense. Industry must be allowed to get on with its job without impediments such as those parts of the Employment Protection Act which are so objectionable.

We have recently debated the devaluation of the green pound. Labour Members who represent industrial areas do not always appear to appreciate that there is a fair amount of employment in agriculture. If by refusing to devalue the green pound the pig industry, for example, should collapse, that would mean more unemployment. I am pleased that the Government are proposing to take action over that matter.

Fourthly—this is not so much a criticism of the Government this year, but it may be next year as it has been in the past—there is the Left-wing threat of nationalisation. Hon. Members may laugh. I understand why. The Government's approach is disastrous. When they threaten nationalisation, employers say "Because of the likelihood of nationalisation, we shall not expand our productive industry." That means fewer jobs. The unemployment figures speak for themselves. A figure of 1½ million is disastrous. Would hon. Members below the Gangway have been so silent if the Tories had been in power when there was an unemployment figure of anything approaching that?

At least the Government are beginning to reverse some of their disastrous policies in accord with Tory demand. Only a complete reversal of their economic policies will result in lower unemployment. For that we shall have to await a Conservative Government.

Photo of Mr David Penhaligon Mr David Penhaligon , Truro

The hon. Member for Burton (Mr. Lawrence) referred to the relative quietness of Labour Members on the subject of unemployment. Can he comment on his own party? Three Conservative Members out of 280 are in the Chamber. Is that an indication of Conservative interest in unemployment?

Photo of Mr Ivan Lawrence Mr Ivan Lawrence , Burton

It is not for the hon. Member for Truro (Mr. Penhaligon) to complain about lack of representation. In debate after debate the Liberals remain absent. But when one of them is good enough to attend, the hon. Member has the nerve to complain that not many hon. Members are here. There is support from both sides of the House for the Bill.

Photo of Mr Doug Hoyle Mr Doug Hoyle , Nelson and Colne

The hon. Member for Burton (Mr. Lawrence) is trying to castigate the Government for the unemployment figures. What is the Conservative plan for curing unemployment?

Photo of Mr Ivan Lawrence Mr Ivan Lawrence , Burton

I have been outlining some of the disastrous parts of this Government's policy that would not have been pursued by a Conservative Government. The Conservatives would never have got themselves into this state in the first place. When we left office, although there was a world recession, we were doing better in the unemployment table than most of our European competitors. Now we are doing worse.

Under a Tory Government, perhaps with my right hon. Friend the Member for Sidcup (Mr. Heath) urging matters from within a Conservative Cabinet—the recycling of OPEC cash flow and the investment of North Sea oil revenues in British industry together with a massive retraining programme—a contribution might yet be made towards solving the underlying unemployment problem.

In setting up the temporary schemes the Government have misjudged the situation. They were thought to be temporary unemployment schemes but they have become permanent schemes. Had the information that their policies would result in more permanent unemployment penetrated at the beginning, perhaps better schemes would have been devised.

It is all very well to say that 790,000 people have been helped by the various schemes at a cost of £900 million, but many of those who have been helped are not really unemployed. For example, most of the people in the skill centres, which the Select Committee has been visiting, are not from the ranks of the unemployed but are people who had other jobs. There seems to be a question mark over the TOPS scheme where money has gone to the wives of professional or business people, recipients who would be perfectly happy to learn a job without being paid for doing so, provided it did not cost them a substantial amount of money. Good work is being done in the skillcentres, but we should not forget that they are no substitute for genuine apprenticeships and that there are too few genuine apprenticeships in British industry.

The job release scheme is a good thing, but a lot of the money that could be spent on it is being paid out in unecessary redundancy payments. I know of a garage which went bankrupt. The employees received substantial redundancy payments one day, but were reemployed the next by the oil company that took over the garage. They were paid the same wages, and their redundany pay was therefore a complete waste of money. Something must be done to prevent that sort of thing.

The youth employment subsidy is no doubt a good idea, but I am not satisfied that it would not be better for some of that money to be used to stop the education system from churning out illiterates.

Take the professional and executive employment register. It does not command the support of nationalised industries, local government or the Civil Service, for reasons I know. Those sectors find it suitable to advertise in the newspapers, and one wonders, therefore, what use that register is. The Manpower Services Commission operates a number of other schemes which are of some benefit, but I wonder whether it is necessary for it to spend a substantial sum—a figure of £15 million has been denied—on setting up a new bureaucratic centre in Sheffield.

The Government are seeking to do a number of things which have the support of my right hon. and hon. Friends. I think particularly of this Bill and the schemes to which it gives effect. But we should not be blinded to the fact, because the Government are taking measures such as this, that the problem of unemployment goes far deeper, that it is both cyclical and structural, and that the reduction of unemployment depends upon tar-getting the remedies accordingly.

The main problem is the overall inertness of the economy, and the prime target should be training for skills. I see that my hon. Friends are indicating that I should not go on for too long, and I therefore conclude by saying that we need more urgent and extensive action than this Bill provides, and that the Government and its successor Conservative Government should make a more determined effirt to cure the real sickness caused by the underlying problems. They must ensure that they do not go on for ever returning to the House and applying for first aid.

9.54 p.m.

Photo of Mr Max Madden Mr Max Madden , Sowerby

The hon. Member for Burton (Mr. Lawrence) clearly cut short his speech, but he did nothing to lift the depression that has pervaded this debate, nor was I impressed by the remedies he proposed to deal with the enormous toll of unemployment which overshadows the debate.

The hon. Member for Brentford and Isleworth (Mr. Hayhoe), speaking for the official Opposition at the beginning of the debate, made a carping arid speech, which did nothing to impress the hon. Member for Truro (Mr. Penhaligon)—

Photo of Mr David Penhaligon Mr David Penhaligon , Truro

Is the hon. Gentleman trying to cause trouble?

Photo of Mr Max Madden Mr Max Madden , Sowerby

I never cause trouble. The hon. Member for Truro made an interesting and worthwhile contribution which was the exception to the contributions from the Opposition Benches.

We need to be very clear that there is no complacency about unemployment, certainly on the Labour Benches or within the Labour movement; nor is there any acceptance of the present appalling rate of unemployment. We regard it as a scandalous waste of human and economic resources. It always has been and always will be. Therefore, we on the Labour Benches are pledged to try to ensure a return to full employment.

Tonight we have heard something of the difficulties in achieving full employment. The only part of the speech by the hon. Member for Burton with which I had any agreement was the statement in his concluding remarks that this country faced deep-seated industrial employment problems, that they were structural, endemic and very long term. We must all recognise that, and that recognition must remove from the debate the cheap partisan points made by some hon. Members tonight.

We have heard a great deal from the Conservatives, in no great detail but in generalisations, about the future the Conservatives believe we could secure if only we entered into the incentive society that they have been talking about. Evidence recently produced by the working parties reporting on the 40 sectors of British industry is as depressing as this debate has been. Only four of the working parties believe that their industries can increase output and at the same time offer an increase in employment. The others talk about increases in production given optimistic forecasts as to their economic and industrial prospects. But they all forecast a reduction in employment requirements.

That is the latest evidence, produced by working parties made up of Government, management and trade unionists—an objective, clear analysis of the industrial forecasts and prospects. It must be readily appreciated by all who take part in debates about employment.

The prospects are extremely bleak and serious. I am certain that, whatever the attitudes of the present Government Front Bench, the seriousness of the problems will lead Government into adopting extremely radical solutions. It is time for the Government to indicate their determination and courage to adopt and implement some of those radical solutions.

For example, the Government should be spearheading a major national campaign to bring about an early reduction in the official retirement age. That would be welcomed by many working men and women as an important social advance. At the same time, it would offer important economic and employment gains.

We should also be seeking, with the co-operation of the trade union movement, the achievement of shorter hours. The 35-hour week is now a major demand and objective of the trade union movement in this country and internationally.

The subject of training and retraining has been mentioned. This Government have made an important contribution to that, but far more still needs to be done. In this regard I refer particularly to the needs of the long-term unemployed. We have traditionally thought of them as older men and women in their late 50s, who have often found difficulty in securing employment. That is no longer the position. Four out of 10 of the long-term unemployed are now men who have reached the age of 40, with dependent children. The humiliation, desperation and futility of their lives is apparent to all of us. To help them, I believe that we should be undertaking—

It being Ten o'clock, the debate stood adjourned.

Ordered,That the Employment Subsidies Bill may be proceeded with at this day's sitting, though opposed, until any hour.—[Mr. Coleman.]

Question again proposed, That the Bill be now read a Second time.

Photo of Mr Max Madden Mr Max Madden , Sowerby

I was saying that we should be undertaking a massive effort in increasing the training and retraining opportunities available, particularly for those workers who find themselves in long-term unemployment. I remind the House that that is unemployment in excess of 12 months.

We should also be thinking of further education opportunities for younger people, those between the ages of 16 and 19, so that these people have the opportunity to undertake further training and to acquire skills better than those with which they left school at the age of 16. Again, it would be taking them out of the employment pool and offering them useful alternatives to employment.

We should also be looking at other innovations. Why is it that sabbaticals are fashionable only in the newspaper industry, for newspaper columnists to refresh themselves every 10 years or so? This could be a very useful way of encouraging new leisure opportunities and bringing some excitement into the lives of working men and women in industry, and at the same time it would also help with employment.

Therefore, I believe that we need a new drive and effort in economic, industrial and social policies which are useful in themselves but, at the same time, offer employment gains. I particularly asso- ciate myself with the remarks made by my hon. Friend the Member for Rossendale (Mr. Noble) about the temporary employment subsidy. It is clear that this is the latest example of Common Market intervention in the affairs of the British Government. We have seen the Common Market's effort concerning the green pound, and driving hours, the tachograph, and even the price of whisky. But I believe that the Common Market's intervention to stop TES being paid in Britain, so long as the British Government believe it to be an effective way of combating unemployment, is quite disgraceful.

We should certainly tell the Government tonight that for our constituents and the hard-pressed industries in our constituencies the TEC is an extremely useful weapon against unemployment and, counter to some of the arguments that have been proffered from the Opposition Benches, it is also offering an extremely useful breathing space to a number of firms throughout the country in which to innovate, to bring in new technology and to bring themselves back to a situation of viability, in which they can increase employment rather than be on the brink of redundancies.

Secondly, I believe that the Government should be looking with more zeal at all sorts of alternatives that are being worked on by workers themselves. We are surrounded tonight in the debate with engineers. I am extremely glad about that. Engineers in this place will know that engineers in industry are bubbling over with ideas. They are not depressed. They are not downhearted about the prospects for their skills. They are falling over themselves trying to bring forward new ideas, new technology and new ways of providing employment.

I strongly urge Ministers to look seriously at the sort of work being done by Lucas Aerospace shop stewards, Vickers shop stewards and others, who are not merely talking but are working on ways of bringing about new energy sources and new ways of providing medical equipment, and many other exciting ideas that are useful socially in themselves and, at the same time, offer job opportunities. I believe that they merit far more serious attention, consideration and money than they are receiving at present.

It is a scandal that this important work is being founded by minimal amounts of private money from national charities and that the Government are not officially involved in funding these projects which, I believe, offer important and interesting opportunities for increasing employment, particularly in those defence industries where—whether or not we spend more—there is clearly the opportunity for redundancy in the near future.

I have found this debate depressing because of the way in which the Conservative Opposition have sought to leave the impression that unemployment is a problem solely within the United Kingdom. It is not. It is an international problem. It is a problem which grips the industrialised Western world.

We in this House are buried in paper from the Common Market. I read it eagerly. The latest communique from the European Economic Commission, dated 17th February, is headlined "The Week in Europe". That usually makes most depressing reading as well. It states under the heading "Unemployment": The Commission approved a working document setting up new guidelines for work sharing in the Community in order to struggle against prolonged underemployment. This document will be tabled at the next meeting of the Permanent Committee on Employment which will take place during March. The vice-president of the Commission responsible for employment policy, Mr. Frank Vredeling, pointed out that it would be necessary before 1985 to create 9 million extra jobs. This was partly because of prolonged recession and partly because of a growth in the population entering the labour market and a diminishing of the number of people retiring from the market. He hoped that work sharing would be made the object of close co-operation among employers, workers and governments, Co-operation which ought to lead to solidarity on both sides of industry. That then is the situation in Europe. The hon. Member for Brentford and Isle-worth made great play about unemployment statistics. I believe that some of my hon. Friends have demolished much of his argument. It was interesting that the hon. Gentleman did not refer to the two countries with the best unemployment statistics. They are Sweden and Norway, with unemployment of less than 1 per cent. The characteristics of those countries are that they both had Social Democratic Governments for very long periods and both happen to be outside the Com- mon Market. I think the lessons from that could usefully be deployed in this debate.

I should like to ask some detailed questions of the Government Front Bench. I hope that when winding up my hon. Friend the Under-Secretary of State will be able to deal with them. First, the disabled have been mentioned by some hon. Members. I am sure that my hon. Friend would agree that progress in providing reasonable employment opportunities for disabled people is far from satisfactory. Some recently produced figures have been very disappointing. I should like to know what the present position is and what extra efforts are being made to provide proper job opportunities for disabled people.

Secondly, I should like to know about the future of the job release scheme. I understand that it is being extended for a year. I should like to know whether the flexibility which the Secretary of State stressed in his opening remarks extends to this scheme. It has attractions to many men and women who would like to retire early, but it would be even more attractive if the upper age limit were reduced below 64. What prospects are there under this Bill of the age limit in this scheme being steadily reduced, because I believe it will become an attractive and useful scheme for the reasons that I stressed previously

There have been some critical remarks about public ownership. I believe that they are ill-advised. Anyone who looks fairly at the record of the National Enterprise Board—employing as it does about 250,000 workers not only in British Leyland, but in the subsidiaries of the NEB—would come to the view that it has played an important role.

More resources are necessary for the National Enterprise Board to be able to continue to play its role, particularly in backing winners and high risk technology where conventional sources of finance and investment are most reluctant to go. That could be very important indeed, not only in providing employment but also in channelling investment into those regions of the country where conventional investment is most unwilling to go.

It is all very well for hon. Members opposite to talk about problems created by the temporary employment subsidy. It is all very well for them to talk about "real jobs" and to say that money going into this scheme creates problems elsewhere. But the clear fact is that, in the post-war years, investment has been most reluctant to go into the regions, the depressed areas. It has been happy to go into the South-East or into the golden triangle of the Common Market or anywhere else overseas, but, by and large, British investment has been most reluctant to go into our regions.

It is not enough to say glibly that if these jobs go, other jobs will flourish and bloom as a consequence. If these jobs go in the textile, clothing and footwear industries, they go for ever. The firms will never reopen, and it is difficult to secure investment to bring new employment into the regions. Such glib remarks by Conservative Members will be noted by our constituents, who do not see in the reality of their own localities the dynamic, thrusting private enterprise investment that the Conservatives talk about so much.

I found the opening remarks of the hon. Member for Brentford and Isle-worth extremely depressing. The hon. Member for Truro asked what alternative the Conservatives were offering. His question met with a barren response. We merely had the visionary remark that the hon. Member for Brentford and Isleworth was looking for "real jobs". He talked at some length about productivity agreements, again neatly overlooking the fact that the consequence of most such agreements is declining employment requirement.

The hon. Member called for a revival of the economy. We all want that. But it is taking a hell of a time to come, and we must recognise that we live in an international recession which may be far more deep and serious than many people now conceive—including many people in this country, although some are beginning to recognise that the problem may be much vaster than they originally conceived.

Today I had the privilege of attending a unique occasion. It was organised by the Transport and General Workers Union, my own union, to honour Jack Jones on his retirement. It also marked the 2-million-plus membership of the union and gave welcome to the general secretary-elect. The union produced a brochure for the occasion which I found extremely interesting. It contained an election address by Jack Jones when he was candidate in a Liverpool council election in the 1930s.

In that address, Jack Jones highlighted the remarks of the Tory candidate, a Miss Whittingham-Jones, who apparently was describing unemployed people as professional scroungers. She had said: One remedy would be to require all public assistance recipients to sign a register twice daily. That was the view of Tories in the 1930s. They might not all be called "Miss Whittingham-Jones", but the solutions and the remedies proposed today by Conservative Members sounded very much like those of Miss Whittingham-Jones. They spoke about incentives to work but in fact were making veiled suggestions that they might reduce unemployment benefit, thus providing incentive to work in that way.

Surely the true indictment in tonight's debate are the very low wages on which millions of working men and women are expected to survive and to bring up their families. We know that between 4 million and 5 million workers earn less than £35 a week for a 40-hour week. That is where the indictment lies, and not in the level of benefit paid to men and women who have the misfortune of not being in employment.

The debate has cast some light on present thinking. I think that we have all found it most depressing. But in tackling the problem we must come back to the conclusions that we come to in each of these debates—that the solution lies only in interventionist policies. Left alone, private enterprise is incapable of doing and unwilling to do the very complex and complicated tasks which are necessary if we are to return to full employment.

We live now in a different age. The traditional economic relationships between this country and the rest of the world, and between the powerful countries in the world and the poorer and developing countries, are changing. The conventional relationships are no longer what they were. It is hard any longer to say what will happen, and it is extremely difficult to demand predictions or forecasts from management.

In my view, only this Government are capable of dealing with the complexities that we face. In the knowledge that the problems are extremely deep-seated and serious, we shall give the Bill a fair wind, knowing that it is just one small way of tackling them. The major task lies in the broader sweep of policies, which in my view have to be radicalised and changed and fashioned to deal with the immense problems that we face.

I thank my right hon. Friend the Secretary of State for the way in which he considers these matters. I hope that he will be urging on his Cabinet colleagues the radical policies which we have been suggesting and urging on him for many months. I believe that they become more relevant with every day.

10.17 p.m

Photo of Mr John Evans Mr John Evans , Newton

I am privileged to follow my hon. Friend the Member for Sowerby (Mr. Madden), who has made a tremendously powerful speech tonight. He has put forward some of the points that I intended to make, saving me the necessity of going down that path. I simply ask my right hon. Friend the Secretary of State to take note that I think that the solutions that my hon. Friend was putting forward are the true answers to some of the employment problems that we face today.

I am bound to point out to my hon. Friend that the Conservative Benches were hardly angered or annoyed by the powerful indictment he made of them. Indeed, apart from the two hon. Members on the Opposition Front Bench, there is no one else present for the Opposition. They have all gone. But we expect that whenever we discuss unemployment in this House.

I understand the necessity for the Bill and I understand the Secretary of State's reasons for putting it forward, but I do not welcome it. The Opposition have been in a very difficult position. On the one hand, they wanted to beat the Government over the head about unemployment. On the other hand, most of them are such fanatics for the Common Market that it has been very difficult for them to deal with the real issue, which is the opposition of Commissioner Vouel and the competition department of the EEC, and Article 93.

We have been given to understand that the reason for this opposition is that the United Kingdom is said to be exporting unemployment to other member countries of the EEC. I do not think that there is a great deal of truth in that. Indeed, there is very little truth in it. The impact of the temporary employment subsidy has meant that we have been able to shelter certain industries during a recognisably difficult period. But when we examine the position of Commissioner Vouel and the competition department, we are struck by many anomalies in the Commission's position.

In regard to the clothing and textile industries, the strange thing with which we have to come to terms is that for about 18 months to two years many Members of this House and of other national Parliaments were arguing strongly for protection of the textile and clothing industries. I am sure that my hon. Friend the Member for Rossendale (Mr. Noble) appreciates that it is not only the United Kingdom textile and clothing industries which have been threatened but also the Community industries. But at the very moment when we hoped finally to persuade the Commission to adopt measures which will give some protection to those two industries, Commissioner Vouel says that we cannot carry on with the temporary employment subsidy in relation to them. In other words, when we have won the game Commissioner Vouel wants to take the cup from us. That is illogical.

There is no logic in Commissioner Vouel's stance in relation to the stance taken by other Commissioners. In his inaugural address to the European Assembly on his appointment last year, President Roy Jenkins dealt mainly with unemployment within the EEC. That was the central theme of his speech, and this year he returned to that theme when, on Tuesday last, he introduced the Commission's general report for 1977 and the programme of the Commission for 1978.

Mr. Jenkins said: The present reality is of 6½ million unemployed. The future, reality, between now and 1985, is of a further 9 million young people added to the Community labour force and looking for jobs. He went on: This is not merely an economic problem: it is tragic for individuals and it could threaten the foundations of our society and its institutions. Those were the words of President Jenkins last Tuesday in the European Assembly.

Again, the speeches of the last three incoming presidents of the Council of Ministers made to the European Assembly have had as their central theme the same problem and all their argument has been about the tragic unemployment within the EEC.

Thus, it is not just a matter of unemployment in Britain. One can bandy figures about in relation to Great Britain, with ½ per cent. here or 1 per cent. there but no one can escape the fact that the frightening level of unemployment is today endemic in the whole Community.

Every member of the Community subsidises employment in one way or another. We recognise that we subsidise 200,000 jobs through the temporary employment subsidy, and it is not only the textile, clothing and footwear industries which benefit. Nor is it only the North-West of England which benefits from temporary employment subsidy, though one would hardly realise that from the speeches made in this debate. The temporary employment subsidy is available on a national basis, and it is available for far more industries than textiles, clothing and footwear.

The truth is that it is a remarkably cheap subsidy. Again, I have no wish to bandy figures about, but to give a subsidy of £20 a week so as to keep a man in employment is a remarkably cheap way of protecting that man, who would otherwise be able to claim £30 or £40 if uneemployed, with wage-related benefits, as well as social security payments, free school meals and a host of other benefits. I submit, therefore, that the TES represents a net gain to the Government rather than the net loss which the hon. Member for Manchester, Withington (Mr. Silvester) suggested.

It is important that we look at one or two aspects of what other Community countries do, because one could be forgiven for believing, after listening to so many speeches from the Opposition, that the United Kingdom was the only country which used employment subsidies. As the House knows, we have three subsidies—TES, the youth employment subsidy and the small firms employment subsidy.

What is done in the EEC? In Belgium there is the small firms recruitment subsidy and the temporary reduction of employers' social security contributions. There are compulsory employment and training schemes. There are subsidies to help special groups which are, in effect, an employment and training subsidy. There is a subsidy to maintain employment, and there are grants and loans to the clothing and textile industries.

One wonders why the Commission has not taken notice of what is done in Belgium, where in 1977 the Government agreed to make an interest-free loan of £117 per employee to firms in the clothing industry. That was a fairly substantial subsidy.

In the Netherlands, there are subsidies to help special groups. There is a subsidy for the employment of long-term unemployed as well as a subsidy for the employment of young people in part-time education. There is a subsidy to promote the training of school leavers and a subsidy to provide jobs for unemployed apprentices. There is a 30 per cent. wage subsidy scheme for employers engaging hard-core unemployed workers, that is, those difficult to place because of their age or prolonged unemployment. There is a subsidy for handicapped people, and other schemes to help minority groups in Holland. There are also subsidies to maintain employment—temporary financial support of vocational training for young workers in the clothing industry. There is also a subsidy for workers lacking skills or those facing redundancy because their skills are outdated.

In Ireland there is a subsidy for an employment incentive scheme which is exactly the same as TES. There is a tax incentive scheme which is flagrantly in defiance of EEC rules and competition.

In France there are a number of schemes too numerous to mention. Even in Luxembourg, where the rate of unemployment has been reduced to a level of 7 per cent., there is a scheme whereby the first eight hours of short time in a month are paid by the employer and the rest by the State, at the rate of 80 per cent of gross hourly earnings.

In Germany there are recruitment subsidies and in Italy subsidies to recruit young people, as well as employment and training subsidies for young people. There are emergency and short-term working schemes. In Denmark there are subsidies for the recruitment of young people and incentives to small firms.

In other words every Community country has a wide-ranging list of schemes to protect and promote employment. I do not argue with any of those schemes. I recognise that, given the level of unemployment within the EEC, it is right that Government should take steps to protect jobs.

Surely in these circumstances it is not for the Community at this juncture, with so many unemployed, to consider putting another 200,000 people out of work in Britain. It is time that the Commission examined every single scheme within the Community—and some may be better than others—and came forward with proposals based on the best of the schemes available in each country. This is the best approach in the short term which we have such heavy unemployment.

Is there any suggestion that Commissioner Vouel has had any discussions with Commissioner Vredeling, who is dealing with employment within the Community? One of the considerations that I would support is the reduction of the working week to 35 hours or four days. Has there been any discussion on this? Has Commissioner Vouel had any discussions with Commissioner Giolitti, who is in charge of the overall employment policy in the regions? As far as we know there is no evidence of any such discussion.

The pitiful Social and Regional Funds cannot solve any of the Community's problems. We have to recognise how essential it is that any measures that the Community takes do not threaten us with further unemployment. We have the case of one Commissioner introducing a scheme out of the blue that threatens further unemployment.

I understand that TES was introduced in 1976 and has been extended five or six times. Each further extension was agreed by the Commission. Even now it does not object to TES as long as it does not apply to the footwear, clothing and textile industries. In other words, they are saying not that TES is wrong but that it must not apply to those sectors and therefore it must be stopped. I suggest that that can only be described as the logic of the mad house.

I put it to the Commissioner last Thursday, and I put it to the House tonight, that if an examination were made of all the schemes that are in operation, TES would figure high on the list as a worthwhile scheme to be adopted throughout the Community. The Commission always claims to be a corporate body. There is a lot that it can do to take decisions based upon discussions among the 13 Commissoners. My view, and the evidence that I have, is that there has been no Commission debate in this context. It is Commissioner Vouel who has taken this action unto himself.

I recognise that employment subsidy schemes are no solution to the longer term problems of unemployment. What we need is a reflation of the world economy. For that we need Germany and Japan to start reflating their economies so that we can solve some of the problems in the Western world.

I endorse the comments of my hon. Friend the Member for Sowerby about some of the schemes. I suggest that firms that do not accept planning agreements should be blacklisted, because after four years of argument in favour of planning agreement we are no further forward than we were at the last General Election. If we are to plan our economy on the basis of full employment, it can be done only on the basis that firms put schemes to the Government showing their future projections.

Firms are never shy about coming forward with the begging bowl for substantial subsidies from the Government. It is strange how major firms always seem to tell two stories. They tell one to the public about Government interference, but we hear little about the other story, which is of their back-door approach with the begging bowl for financial support from the Government.

This Bill and this debate are about problems related to TES. I hope that the Minister will be prepared to go back to the Commission and argue the case for a Community-wide study of all the employment subsidies in existence in the Community and to say to the Commission—I am sure that he will receive the support of the House if he does so—that we shall not alter any scheme until such time as the Commission comes forward with proposals that meet the wishes of the majority of the Community countries.

10.34 p.m.

Photo of Mr Michael McGuire Mr Michael McGuire , Ince

I have heard the speeches of most of my colleagues, but I did not hear that of the hon. Member for Burton (Mr. Lawrence). My hon. Friends welcomed the Bill, and I am sure that the hon. Gentleman did, too.

This is a short Bill in terms of the number of clauses in it—one clause is really only a sentence—but it is an important measure. I hope that it will allow my right hon. Friend to have a flexible and refined instrument at his disposal to help pockets of unemployment. Clause 1 says: The Secretary of State may, if in his opinion unemployment in Great Britain continues at a high level. do certain things. I cannot see any sense in taking the national level of unemployment as the barometer. Account must be taken of local situations. The unemployment figure for Great Britain as a whole may be down to 3 per cent. or 4 per cent., which would be an improvement on the present 6 per cent., but there could still be a high percentage of unemployment in areas with substantial populations. No doubt we shall take up these matters in Committee, but that must be the sense. I think that it will require a flexible approach and that my right hon. Friend will need to have this more refined instrument at his disposal.

I wish now to take one or two constituency points. The Common Market argument has been somewhat flogged to death. Some of my hon. Friends have criticised the attitude of the EEC Commissioners, and my hon. Friend the Member for Newton (Mr. Evans) mentioned a host of schemes adopted by various countries to alleviate unemployment and to encourage and create further employment. There is obviously no lack of ingenuity in putting forward schemes on the lines of our temporary employment subsidy. It is merely a matter of adjusting the system to fit in with the pattern that applies throughout the Community.

I shall rely on the common sense of my governmental colleagues to sort out these matters when eventually they get round the table with their EEC colleagues. Therefore, I am sure that some scheme—if it is not TES it will be called something else—will be found and that it will be just as effective.

The argument that it is only since we have joined the EEC that our sovereignty has been challenged is poppycock. When we were in EFTA there was a scheme to introduce an aluminium smelter, and the people in that organisation were soon telling us what we could and could not do. Similarly, we had to modify our proposals for import controls in 1964. Therefore, it is nonsense to say that it is only since we joined the EEC that such intervention has occurred.

I am sure that when our Ministers get round the negotiating table, they will do their best to try to achieve the purpose we all want to see.

Photo of Mr Michael Noble Mr Michael Noble , Rossendale

My hon. Friend referred to schemes designed to reduce imports or to bring about import substitution. Can he give an example in which a foreign Government have intervened to stop us taking action before we joined the EEC?

Photo of Mr Michael McGuire Mr Michael McGuire , Ince

When we tried to prevent imports, we were subjected to severe criticism. I do not know whether my hon. Friend wants to intervene again on that matter?

Photo of Mr Myer Galpern Mr Myer Galpern , Glasgow Shettleston

Order. We cannot have a dialogue between two Members.

Photo of Mr Michael McGuire Mr Michael McGuire , Ince

My hon. Friend was making sotto voce comments. I thought he wanted to intervene. I could not hear what he said and I wanted, if possible, to answer him.

The point I was making was that this interference did not begin when we joined the EEC. I was suggesting that we were subject to investigation and criticism even on import surcharge, and that in many cases we have had to modify our proposals. At the same time I believe that we shall have some scheme to protect employment. The refined instrument which my right hon. Friend has at his disposal will help my constituency cope with its high rate of unemployment. In Skelmersdale New Town we have a figure of male unemployment of 17 per cent.

Whatever duties the Government owe to towns which have high unemployment rates, they owe a special duty to new towns. After all, it was Government advertising which lured people away from bad housing and poor employment prospects to new towns and promised them a new Jerusalem, and many of those promises have turned to ashes. This Government have said "We have done all that we could to help you", but I do not believe that they have, and I suggest that they owe a duty and debt to the people of Skelmersdale to reduce substantially that 17 per cent. unemployment rate.

We have heard today that engineers are brimful of ideas, and I have no doubt that they are. Members of the business association in Skelmersdale, worried about how they could help to reduce unemployment there, gave me a list of suggestions and ideas, which I discussed with them. We met a Minister at the Department of Trade and left with him some of those ideas, which I thought were very practical since they came from the managers of factories. They have not been acted upon, but I hope that they have filtered through to my right hon. Friend the Secretary of State for Employment and that he will be able to implement them. Some of them involve getting more help to take on unemployed youngsters and train them into skilled workers. We are always being told from both Dispatch Boxes that we shall face, as we have in the past, a lack of skilled labour when we get out of this dreadful international recession.

I am glad that that has been mentioned. I know that Opposition speakers have to pad things out a bit, although there is nothing substantial in this Bill which they can criticise. But they will do their whack in Committee. However, one Opposition Member gave the impression that this was a problem that we had in Great Britain. It is an international problem, and one which has come about since the oil crisis of 1973. No Western democracy has found a way to deal with it. They are all suffering comparable rates of unemployment, and it was wrong of the hon. Member to suggest that it was happening solely in Britain.

But, to return to what I was saying, we are always told that when we get out of the present recession we shall face a lack of skilled manpower. As I say, we have 17 per cent. male unemployment in Skelmersdale and the prospect facing youngsters is years on the dole, even after these job creation schemes which, after all, are only cosmetic. I agree with them, because they provide job experience, but they are no substitute for a proper career. If we are likely to face a lack of skilled manpower, the Government are in duty bound to encourage companies, especially in towns such as Skelmersdale, to take on these young lads. The managers there have put forward ideas, and I hope that they have filtered through to my right hon. Friend.

The other part of my constituency is in Wigan. I do not know how this refined instrument will help us in Wigan. Wigan seems to get the dirty end of the stick on every Government measure. We have had the inner urban renewal aid programme. Wigan missed out on that. We have the rate support grant. Wigan missed out on that. One of the consequences is that the rate increase in Wigan is terrifying. It is one of 10 towns in Greater Manchester which do not get any help. It has the highest rate of industrial dereliction, and now it has one of the highest rates of human dereliction, with a 10 per cent. unemployment rate. The rate support grant, from which Wigan did not benefit, means that the rates will go up by between 20 per cent. and 25 per cent. That will mean higher rates on factories and premises where people are employed. It will mean one hell of a job competing with other areas that already receive development area status or special development area status. In that way the problem will worsen.

I do not know precisely how my right hon. Friend can help in that direction. However, Wigan has an unemployment rate of about 10 per cent. and it does not enjoy any of the benefits enjoyed by its competitors. I hope that my right hon. Friend will find an opportunity and a means of helping towns such as Wigan with the refined instrument that he will have at his disposal. Wigan certainly needs that help.

I give the Bill my approval. There is no doubt that it will be on the statute book fairly quickly. I have no doubt that in Committee, if I am a member of the Committee, we shall be able to probe more deeply the powers that my right hon. Friend will have at his disposal. I am bound to say, as one who represents a constituency suffering probably more than any other from the cruel lash of unemployment, with male unemployment in Skelmersdale of 17 per cent. and 10 per cent. in Wigan, that I shall be looking for help in a special way. That is because the constituency is a special case. I shall be looking for substantial benefit. On those grounds I wish the Bill well.

10.47 p.m.

Photo of Mr Esmond Bulmer Mr Esmond Bulmer , Kidderminster

Most of the contributors to this debate have drawn attention to the depressing nature of the unemployment figures. We have the highest January figures since 1940. We have 1½ million unemployed and 25 per cent. of them have been out of work for a year or more. The figures published by the Manpower Services Commission offer little comfort. It would require 1,140,000 new jobs to reduce unemployment to 1 million by 1981, and 1·6 million new jobs to reduce unemployment to the level that obtained when the Conservatives left office.

The hon. Member for Sowerby (Mr. Madden) referred to the sector working parties. Those who have examined them have found little from which we can draw comfort when measured against the scale of the figures that I have quoted.

We can agree on both sides of the House that there is a problem that will not go away. The Opposition may not be able to persuade everyone on the Government Front Bench of the wisdom of everything that we propose, but we take a certain satisfaction from the fact that the Government appear now to recognise that it is the control of inflation that is the first step to reducing unemployment, and that inflation is the great destroyer of jobs. We also derive satisfaction from the Secretary of State's acceptance of the need for industry to be competitive.

The Opposition are prepared to consider proposals from the Government, the CBI, the TUC and the universities, or from any informed source. We are prepared to consider any methods they suggest to reduce the level of unemployment or mitigate its consequences.

Tonight we have three measures to consider. First, I turn to the temporary employment subsidy. The Lord President, when Secretary of State, introduced a discussion on 5th August 1975. He described it as a short-term subsidy to be offered to firms which are prepared to defer planned redundancies".—[Official Report, 5th August 1975; Vol. 897, c. 386.] Since then the scheme has been expanded and extended, but at that time reservations were expressed from both sides of the House that the measure would be cosmetic. I do not believe that it is cosmetic. In my constituency I have seen an example of where the subsidy was wholly justified. I pay tribute to the courteous response that I have had from the Under-Secretry of State when making representations and the speed with which his officers have acted. I refer to a family business that has been operating for about 50 years. It has had good management and excellent labour relations. It has modern plant and a range of products that people will buy. The temporary employment subsidy allows it to carry stocks until demand picks up. It also prevents the suicidal discounting policy into which such a firm might be tempted. At present, in the carpet industry, the retail end is stronger than manufacturing. Therefore, for that company, it is a proper use of the scheme.

The second criticism is the lack of consultation. That is still valid. Employers feel that there has not been adequate consultation. They accept that the scheme has certain advantages—the low cost in terms of the public sector borrowing requirement and the help that it provides—and they wish it to continue. But they have worries in the longer term to which I hope the Government will address themselves. Although the scheme was described as temporary or short term, we are visualising it operating for at least four years. Employers' fears centre round the effect on productivity, competition, industrial relations and employment. They fear that in labour-intensive industries productivity will fall, that efficient firms will be denied their proper market share, that wage bargaining will take place in an increasingly artificial climate and that short-term considerations will lead to an increase in unemployment in the longer term. There is also the fear that the longer the arrangements run, the more difficult will be the transitional arrangements to end the scheme.

I hope that the Government will extend their consultations with employers because, if the scheme is not temporary there will be a whole host of further questions to be asked. I think that there would be concern whether officials were competent to assess the accuracy of cash flows and to determine whether the long term interests of particular industries lay in one firm staying afloat or not.

We feel that there is a danger inherent in subsidising companies, except in the most exceptional circumstances. The concentration must be on improving the competitiveness of British industry and encouraging high productivity and high wages from which the creation of a whole range of new service jobs can develop. We should like special help to be concentrated on people, on skilled training, on areas of particular deprivation and even the new towns, to which the hon. Member for Ince (Mr. McGuire) referred.

I turn now to the question of the job release scheme. This is a small step towards structural change. I think that there would be agreement on both sides of the House that structural change must be developed. Of course, it is extremely expensive. We feel that it would be developed best within the context of EEC solutions. Fewer hours, a shorter working week and longer holidays affect the competitive edge of companies. If there can be agreement on a European scale, it is more likely that we can make progress without losing more jobs.

Many Labour Members take every opportunity to attack the EEC. I shall not develop a whole lot of arguments in its defence. Suffice to say that I believe there are two important contributions that it can make in the context of the debate. The first is that the protection for which hon. Members on the Government Benches are looking can, I think, be developed in a European, not a United Kingdom context. The second is that the recycling of the OPEC moneys is again much more easily handled within the context of the Community than the United Kingdom.

We recognise the need for special measures to boost small businesses in the inner cities. Not all are in special development areas. I am sure that in Committee we shall wish to explore that matter further. Subsidies of this kind, in effect, can back potential winners, whereas the temporary employment subsidy may preserve jobs for which there is no future. To that extent, perhaps such schemes are more attractive.

I think that there is now increasing awareness among Government supporters of the need to encourage small businesses. But it is difficult, unless one has run a small business, to understand the difficulties which have been experienced in recent years and how hard it will be to restore confidence. It is indeed difficult to believe that they are fully understood by the Chancellor of the Duchy of Lancaster. His virtues and benevolent image are paraded around the political football ground whenever small business is mentioned. I do not believe that small businesses are understood by the Tribune Group, the members of which have been kept from the first team pitch in recent months, except on Fridays, when they have been particularly active and have enjoyed the backing of the Government Supporters' Club. If the Government were to recover a majority in the House their attitude to small businesses would change.

Has the Minister analysed the reasons for the application by firms for TES? He would find such an analysis productive. He would be surprised how many have been brought to their knees by Government action. He would find businesses which have not been able to stand the wage norms set by the Government and which have had no alternative but to pay up or face a strike that would bring bankruptcy in its wake. He would find companies crucified by the inflation unleashed by the Government's policies to win the October 1974 General Election because they were taxed on paper profits that took no account of that inflation and were deprived of the reserves on which their survival depended.

The Minister would find companies that could not compete with the Government for money in the market, or for which interest rates at 17 per cent. or 20 per cent. were the last straw. He would find companies for which 25 per cent. VAT started the rot which could not be reversed. He would even find small cider companies for whom the increase by the Chancellor of 28 per cent. on their wholesale prices destroyed the balance of their businesses. I declare an interest not in a small cider company but in a large one. It is not surprising that since this Government took office bankruptcies have been at an all-time record. For many companies TES is a belated compensation for damage done to them by Government.

There are indications that the Government have learned some of the lessons. I accept that the scheme has a useful role but I urge the Government to encourage research into the impact and consequences of subsidies, and also to consult employers. Employers have a right to be consulted. The £1 billion-plus that the Government have placed on the employers' stamp represents a larger sum than has been spent by the Government in the measures that they have introduced to reduce unemployment. We shall consider every scheme on its merits. We shall not deny Ministers their Bill tonight.

11.58 p.m.

Photo of Mr John Golding Mr John Golding , Newcastle-under-Lyme

We have had some excellent contributions from my hon. Friends the Members for Burnley (Mr. Jones), Rossendale (Mr. Noble), Nelson and Colne (Mr. Hoyle), Sowerby (Mr. Madden) and Ince (Mr. McGuire).

To my hon. Friend the Member for Sowerby I say that we intend to extend the job release scheme and we are prepared to listen to the views of all hon. Members.

For the disabled, a job introduction scheme has been introduced involving a £30 grant for six weeks. To date, only six applications have been made. The money has been made available but industry has not responded. We have also introduced capital grants for the adaptation of equipment and premises. Again, response from industry has been inadequate.

Other interesting contributions have been made by Opposition Members. I noted with particular pleasure the welcome afforded to the Bill by the hon. Member for Truro (Mr. Penhaligon). I do not think that it will be possible for us to deal with the problem of the Isle of Wight in the way that he asked, but we shall certainly look at it. It would be difficult for us to deal with very small geographical areas in this way and to compare one with another.

Let me now turn to the contribution by the hon. Member for Brentford and Isleworth (Mr. Hayhoe), who promised the Bill a fair wind but said that, because it provided such wide powers it would be given close scrutiny in Committee. The Bill is important for us to continue the small firms employment subsidy which is paid at present through the Appropriation Act. The Bill is not, therefore, simply to deal with the problem created by the intervention of the EEC. If we are to continue the small firms employment subsidy, we must have the Bill.

I must point out to the Opposition that we already have very wide powers. We operate the TES under their Employment and Training Act 1973. The same goes for the youth opportunities programme and, following an amendment, the special temporary employment programme. I thank the Conservatives for having given us those wide powers. No doubt I shall deploy in Committee the arguments that they advanced at one time in favour of taking such powers. No doubt, too, they will be putting forward the arguments that on that occasion we used against them.

The problem is that all these schemes have to be fitted into existing legislation, or new legislation, such as that concerning the job release scheme, has to be introduced. It is easier to provide temporary employment than regular employment at present. The hon. Member for Truro was right to emphasise the need to turn our attention to providing regular lobs wherever we can. We need the Bill for that purpose.

The hon. Member for Brentford and Isleworth challenged job subsidies, although he did it in someone else's words. He put a question mark over them. I believe that they are better than paying unemployment benefit. I noticed that he did not attack the small firms subsidy. He questioned the validity of the subsidies and then, in almost the same breath, asked for help for small firms. We prefer not to be paying subsidies, but we prefer paying subsidies to seeing unemployment rise, and more bankruptcies. We believe that job subsidies have prevented both. They have been beneficial to employers and trade unionists, and it is interesting that approaches for subsidies have been made jointly by the two. Trade unionists and employers have often come to us, accompanied by their respective Member of Parliament—often a Conservative—to ask for the subsidy. The job subsidies should be supported, because they have done a good job.

There is some displacement with TES. If a factory is kept open in one town, it is bound to compete with factories in other towns. There are difficulties, and the problem of displacement is one that we must face with many of our schemes. But if more jobs are saved than are displaced, the scheme is worth while in employment terms.

Why have employers and trade unions given support to the temporary employment subsidy? It is because it has given the companies a valuable breathing space, because it has saved firms. They have been able to keep skilled workers when the slightest threat of redundancy would have dispersed groups of key skilled workers. One thing that I have learnt in the past two years is that the jobs of semi-skilled workers depend upon there being skilled workers in our factories, which is why I think that hon. Members are right to keep stressing the need for skill training.

I have also learnt over the past year or so that TES has improved the cash flow of many firms. It has enabled many firms to seek new orders. More important, it has given firms the chance to sort themselves out in consultation with the trade unions. The hon. Member for Kidderminster (Mr. Bulmer) himself replied very strongly in answer to the question mark put above TES by his hon. Friend the Member for Brentford and Isleworth.

Of course, all schemes should be kept under review, and they are. I say in the presence of my right hon. Friend the Secretary of State that that is what Treasury Ministers are for. We must keep the payment of taxpayers' money under constant review, and that we do.

We do precisely what the hon. Member for Brentford and Isleworth asked: we pay attention to the problems of the disadvantaged. I have already referred to the subsidies for the disabled and industry's failure to respond so far.

I could also talk about the special temporary employment programme and the special provision for the long-term unemployed, of the outreach posts for the young blacks—and young non-blacks, because they, too, are hard hit in the inner city areas—and of the special provision that we are making here. But there is a contradiction on both sides of the Chamber in this matter. One cannot say that there must be concentration on skill training and at the same time that we must concentrate heavily on those in the disadvantaged groups. To be blunt, the skilled craftsmen will not be drawn from those disadvantaged groups in general. We must make separate provision for them.

I shall not deal with the poverty trap, although it is an important question, but I remind all hon. Members that our pre-occupation still is not with having more vacant jobs than we have unemployed but having more people wanting work at any wage than we have jobs to give them. That is the problem.

The hon. Member for Brentford and Isleworth raised the question of persuading small firms to be more involved in training. I agree that there should be more involvement, but I wonder whether he supports the Government's payment of subsidies to support apprentice training in all firms. We have given massive support to maintain apprentice training in the form of apprentice subsidies which we intend to continue, because we believe them to be very important.

These are matters for the usual channels, but I cannot visualise a major debate before each scheme is introduced. Information, yes; my hon. Friend and I have done our best to ensure that Parliament has had the details. But full debate, perhaps, no. Two things are usually in short supply to Governments—cash and parliamentary time. To have to jump one hurdle to introduce a new scheme is difficult enough. To have to jump two would make our job much more difficult. We can promise full information, but I cannot promise anything else.

I have been advised that the figure for job introduction that I gave was wrong. Perhaps I can give the correct figure before I conclude.

I turn to the remarks of my hon. Friend the Member for Burnley. I am aware of the problems of North-East Lancashire. I have visited that area on several occasions in recent months. We shall certainly continue to pay a great deal of attention to those problems, and particularly to the firms in trouble, because we are all concerned with the growing level of unemployment in that area and particularly the transfer that has occurred between industrial employment and service employment.

I have already referred to the contribution made by the hon. Member for Truro. As I have said, we shall look at the question of the extension of the small firms employment subsidy and at the question of using local unemployment figures, though I am not hopeful about that. I emphasise again that I take the hon. Member's point that we need to encourage training in small firms. One of the problems has stemmed from the Employment and Training Act 1973. I see day by day that one of the reasons why there is not at present sufficient training in small firms is that they are exempted from the payment of levy. They are exempted because it is often too difficult to cope with a small firm through the industrial training board. This is one area that we must look at very carefully indeed.

I shall not reply in detail to the points made by my hon. Friends about the position of the EEC.

Photo of Mr John Golding Mr John Golding , Newcastle-under-Lyme

Because I think that I would be repeating much of what my hon. Friends had to say. That is, that we would have continued TES in this country had it not been for EEC intervention. However, I repeat the assurance given by my right hon. Friend the Secretary of State that he will negotiate as hard as he can in order to minimise any damage that would otherwise be caused to industry as a result not of the ending of TES, because that is not at issue, but of any modification to the textile, clothing and footwear sector.

The most interesting part of the speech of the hon. Member for Burton (Mr. Lawrence) was the part during which the Opposition Whip was trying to get the hon. Member to conclude. One thing that the hon. Member said that is incorrect was that we were making work recidivists—youngsters who will never learn to do a job. The important development in the last year has been the introduction of the youth opportunities programme, under which there will be a certainty of an offer of a chance to every youngster who is leaving school from this April, before Easter 1979.

I agree with my hon. Friend the Member for Sowerby that there should be no complacency. We appreciate the problem of the long-term unemployed. We share with my hon. Friend an appreciation of the need to concentrate on those who are finding it most difficult to get jobs.

I should like now to correct the number that I gave earlier for job introduction. I said that only six applications had been received. I should have said that 218 had been received for Great Britain as a whole. The six applications relate to Northern Ireland, with which I am also dealing tonight. Even so, the response so far has been disappointing. This is the general point that I make now. We in Government can make available facilities and money, but I spend much of my time going around the country trying to persuade local authorities, trade unionists and employers in the localities to pick up the cash that the Government have put on the table to deal with the problem of unemployment.

I hope that this debate and the subsequent Committee stage will give the public a much greater awareness of the schemes that the Government are running at present.

I want to make one further point about the temporary employment subsidy. For each firm it is temporary. There is no way in which a firm can continue to shelter under the subsidy. Its extensions have been in time and geographical, but for each company it is still a temporary subsidy.

One of the unfairnesses of ending TES is that firms will be hit which would have been eligible for help had they experienced financial difficulties earlier. That point needs to be drummed home.

We realise the problems existing in Skelmersdale and Wigan. We are determined to come to grips with the problems that redundancies in those areas have created.

We have not analysed in detail why firms have asked for TES, but in talking to deputations I have discovered that the reasons are legion. One cannot say that the reason is this, that or the other. Each company seems to face separate problems. Of course, the virtue of TES has been to give a firm a breathing space to deal with its problems.

I am sure that we shall be speaking on this subject at length in Committee. I do not want to detain the House any longer tonight. I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).