I beg to move,
That this House, believing that the maintenance of a high level of employment and the creation of new jobs depend upon a thriving private sector, calls on the Government to give greater encouragement to enterprise instead of relying on measures which take no account of the root cause of the problem.
Despite a welcome fall in the level of seasonally adjusted unemployment, this country still has the highest rate of unemployment among the larger countries in the Organisation for Economic Cooperation and Development, with the single exception of Canada. On a strictly comparable basis, we have a higher rate of unemployment than the United States, France, Germany or Italy. This is after four years in which Ministers have produced a constant series of misjudgments, outrage, false optimism and false promises. I hope that they will give us better evidence today of understanding why we have higher unemployment than other countries and what should be done to bring the unemployment down. Judging from the amendment on the Order Paper, we shall have the same mixture as before—excuses, evasions and failed panaceas.
The position behind unemployment is, I believe, a failure by the Government to understand that jobs in the trading sector depend upon serving the customer at home and abroad, and that jobs in the public services depend on success in the trading sector. Profitable competitiveness in the trading sector is the base on which a country can afford a good supply of public services. The two are linked. Profitable competitiveness in trading is the base on which we can have good public services and good social services.
That truth does not emerge at all from Ministers' speeches or from the evidence of Labour Party thinking that we have in such manifestations as the recent Labour Party political broadcast. In that broadcast there was sheer class war as the basis for the explanation of unemployment. At a time when it is the nationalised industries which dominate the headlines in closing works and reducing jobs, rightly, for the good of the country, and to the credit of the Government even to the extent that it is permitted, the Labour Party's political broadcast explains all unemployment on the basis of industrialists cruelly throwing out labour in order to maximise profits.
If that is the level of economic understanding that the Labour Party offers to the country, the prospect for employment is dismal. Where are the aspirations to full employment which used to be the basis of the Labour Party's appeal to the country? Gone. Where is even the understanding of how to recover any hope of approaching full employment? Gone. All we have is a whole series of failed panaceas.
Could the right hon. Gentleman tell us how he defines full employment and, given the policies that the Conservative Party espouses, when he believes that such full employment could be achieved?
I spoke of an approach towards full employment. We certainly hope that this country can do better than is being done under the present Government and will do under the policies of the present Government if they are continued.
While talking of aspirations, will the right hon. Gentleman confirm that the suggestion by the right hon. and learned Member for Surrey, East (Sir G. Howe) that we should have blue light districts in which Tory crooks could operate in deprived areas is not Conservative Party policy but, indeed, that his party's policy is to apply that concept across the country as a whole?
The House may be interested to know that some Labour-controlled areas have shown great interest in my right hon. and learned Friend's proposals because they have discovered for themselves the absolute failure of standard Labour Party panaceas of more public spending and higher taxes. My right hon. and learned Friend carefully avoided any suggestion that in what he called "demonstration areas" there should be any difference in taxes. We do not want to suggest that there should be a "Passport to Pimlico" situation. What he suggested was entirely sensible. Indeed, I was associated with the thinking behind his speech. It is that we have an excess of controls and regulations and taxes, and that we should try at least to reduce the excess of controls and regulations even if we only move nationally on taxes.
I hope that at least today the House will be spared a repetition of the sort of speech that the Secretary of State for Employment has given us in the past—that is, a catalogue of public spending coupled with figures for the jobs which it is expected will be created by that spending, without any reference to the number of jobs which will be destroyed by it. I hope, too, that we shall not have too much emphasis on the virtues of the industrial strategy. There was an excellent debate in another place yesterday on one of the banes of this country—overmanning and low productivity—and I commend hon. Members to a reading of a number of speeches in that debate from both sides.
We welcomed the recognition, when the industrial strategy was launched or re-launched by the Prime Minister at Chequers, by Ministers at that time of the indispensability both of profits and of competitiveness. We had hopes that, despite the rather facile title given to the concept—industrial strategy—it would lead to sensible behaviour. But, under the cloak of being a policy of supporting winners, it has been, under political pressure, an almost uninterrupted diet of spending taxpayers' money on losers.
We do not think that winners need the help of the Government. We do not think that it is even easy to identify what are winners. We are sure that the Government are no better equipped than the rest of the population to identify winners. Consequently, we hope that the Secretary of State will not lean too heavily on the industrial strategy or on the flood of subsidies and grants that is the substance of the Government's industrial policy.
In aggregate, we believe that these subsidies and grants do more harm than good. They will not make us more competitive, and it is by being more competitive that we shall have more jobs and a higher standard of living and be able to afford more spending on public services where that is justified.
We believe that subsidies and grants and, indeed, the industrial strategy distract management and workers from the key task of putting their own house in order by co-operation between themselves. We believe that a new breed of businessmen and professionals is growing up—consultants in how to get grants and subsidies, and directors whose skill is in hunting the grant or hunting the subsidy instead of hunting the customer and hunting profit.
We believe that the impact for harm via higher taxes and higher interest rates of all these subsidies and grants is greater than the impact for good. We understand entirely the impulse behind the Government's desire to preserve jobs. We understand it in human terms, and we understand it in political terms. But we beg the Government to realise that the way they are going about it is not the way to increase the number of jobs and to increase the prosperity and the social services of the country. It is only by putting profitable competitiveness at the head of our objectives that we shall do what the country deserves and provide a framework in which jobs and prosperity and decent social services can be provided.
Anyway, these grants and subsidies may rescue some jobs but only at the cost of other jobs. I shall not take time today in trying to persuade the Secretary of State of that. I think that it is common ground between the two sides of the House that, even if the loss of jobs is not one job lost for every so-called job saved, at least the loss of jobs is probably equivalent to about half the number saved. If that is true, at least there is some measure of valuable common understanding between the two sides of the House. We must welcome every evidence of common understanding, because there is nothing that the country needs more than common understanding and stable approaches to economic policy if they can be achieved on a sensible basis between the two sides of the House.
We have welcomed the Government's recognition of the importance of money and the importance of establishing monetary targets for the country. In fact, their policy today could well be summed up in three words—monetarism and subsidies. But we have constantly argued that monetarism is not enough. It is indispensable, but it is not enough. It has to be accompanied by a much lower level of Government spending than this Government embark upon; it has to be accompanied by incentives; it has to be accompanied by a lower level of controls and regulations and legislation than this Government believe necessary; and it has to be accompanied by a recognition of the crucial importance of decent profit levels as the source of confidence, expansion and investment.
On all these counts the Government are failing to accompany their monetary policies by the right other policies. We say that high spending, high taxing and high borrowing must lead to high unemployment, and we are witnessing the proof of that year after year as the Government vainly try to cure unemployment by more and more high spending.
We thought that the Prime Minister, in that notable speech at the 1976 Labour Party conference—a speech that could have been drafted by Milton Friedman—had finally established in the Labour Party's understanding a recognition that no country can spend its way out of unemployment, that more and more public spending leads to higher inflation, and that, in the memorable words of the right hon. Member for Huyton (Sir H. Wilson), inflation is the father and mother of unemployment.
We applauded the Prime Minister's speech at Blackpool. We recognised that it might be a change of trend. But now, coming near an election, we find the same old poison spreading—more public spending. The savings that were established under the pressure from the IMF, after the Opposition had been demanding them and justifying them for a year or more, the savings that were painfully and at last carried out by the Labour Party—painfully so far as the Cabinet was concerned; not so painfully for the country—are now being reversed, and public spending is rising again. With public spending rising, we see that inflation is certain to rise also, and interest rates are rising, too.
We argue that jobs and higher employment depend upon enterprise and competitiveness. A policy of overspending, overborrowing and overtaxing, the policy that the present Government are carrying out, weakens both enterprise and competitiveness. We believe that if the Government want to have more jobs, they must encourage and not discourage enterprise and competitiveness. To do this they must cut wasteful Government spending. They will, as a result, be able to cut income tax at all levels, prune controls and regulations and look again at some of their legislation, such as the Employment Protection Act.
I hope that the Secretary of State will not quote, in defence of every detail of the Employment Protection Act, a recent piece of research which, with brilliant skill, avoided studying those firms where the impact of that Act is greatest—namely, firms employing fewer than 50 people. That research is, on that account, worthless. It is worthless on that account. I do not refer to any other part of it.
We are trying to learn the whole while from the past. Hon. Members laugh. We welcome any occasion when the Government show, as they showed in the Prime Minister's speech at Blackpool, that they, too, are learning from the past. No party should be able to justify from the unique occasion of Rolls-Royce the panoply of grants, subsidies and rescues that have been going on.
We argue for the encouragement of enterprise. We argue that enterprise is being discouraged not only by high taxation but by the great weight of Government spending which, with all its consequences, is crowding out or stifling the impulse to expand or to take risks.
High spending forces the Government to go in for high borrowing. The high borrowing is associated with a high deficit. The high borrowing and the high deficit lead to high interest rates. The high interest rates discourage investment and expansion. It is not only the financial crowding out in a direct sense; it is also that, time and again, public agencies outbid the private sector in the pay, the opportunities and the perquisites they give, without any profit and loss account and without any accountability, to people who might otherwise find more productive employment in the private sector.
We believe that the high spending, with all the risks that that involves in the state of sterling, leads to an unnecessarily sharp switch back in business conditions, which again discourages enterprise and expansion. We believe that the present climate of high taxes, high Government spending and massive controls and regulations, and the lack of comprehension of the importance of profit, discourages the very people—
On a point of order, Mr. Deputy Speaker. Certain hon. Gentlemen and hon. Ladies below the Gangway on the Government Benches have been barracking from a seated position for the last five minutes. It is very difficult to hear my right hon. Friend's excellent speech. Would you be able to maintain a certain degree of order? The best form of argument is delivered from one's feet and not from one's bottom.
The hon. Members who have been speaking from a sedentary position have had their policies largely in force during the past few years—and look at the trend in unemployment that has followed.
I was referring to the discouragement by the present policies of the Government of the very people who have the most scope for providing extra jobs, the people whom we call, for lack of a word in English, entrepreneurs. There are entrepreneurs who operate in all sizes of business—self-employed persons, the small business, the medium business and the large business and where there is scope, difficult though it may be, even in nationalised industries. We believe that the conditions which I have described discourage the risk taking that is at the heart of the entrepreneurial function, the heart of the function that bring the creation of new and additional jobs.
We are not arguing that money is the only motive of the entrepreneur. Many entrepreneurs function almost regardless of money. [HON. MEMBERS: "Oh."] Yes, that is true. Many entrepreneurs get such satisfaction and such fulfilment from their work that they would go on even under the present discouraging tax climate. But there are other entrepreneurs and potential entrepreneurs to whom money matters to a greater extent, and they either opt out or they emigrate, or they do not take the risk because it is not worth while. The Government totally ignore the motives of those who have the most scope for creating jobs.
Not only is the motive of the entrepreneur and potential entrepreneur crucial for job creation, but a lower tax take is crucial to provide the risk money which is the start-up capital for the potential entrepreneur. Unless there are individuals, who, out of income, can save money which they can invest in the hope of profits in situations with risk, rather than in gilt-edged, the entrepreneurs will not have the capital with which to start.
The encouragement of risk taking is crucial also in big firms. After all, the managers and decision makers in big firms often have a choice between a higher or a lower risk option. If they are not going to gain, in terms of their personal income, from successfully taking the high risk option, why should they take the high risk? If the high risk fails, their career may be blighted. If it succeeds, they are no better off. Once again we see that a high level of personal taxation is desperately damaging to the enterprise and the competitiveness that is indispensable for greater employment.
It is not only the entrepreneurs and it is not only the decision makers at the top of businesses, of whatever size, who are affected by the tax level and the climate I have been describing. It is also the whole range of managers. Managers have suffered such a constant series of blows to their real standard of living in recent years, by the combined effect of inflation. salary ceilings and vicious tax levels—part a result of pay control, part a result of high Government spending—that they are, in many cases, demoralised. It is a miracle that industry and commerce are running so relatively well, despite the discouraging climate that has been created.
It may be that the Secretary of State will not agree with anything that I have said, or with very little of it. It may well be so, and I do not doubt his sincerity, but I hope that I can persuade him of the truth of what I am saying, perhaps by looking at another aspect of the effects of high taxation.
There is a paradox before the House and the country. It is that, at a time when there is registered unemployment of 1⅓ million, there is a very large number of vacancies. Against registered unemployment of 1⅓ million, there are over 600,000 vacant jobs. Admittedly, more of these vacancies are in the South than in the North. Admittedly, more of them are for skilled than for unskilled work. I do not want to distort the picture. There are some towns in which there are over 100 applications for one vacant job. In other parts of the country there are vacant jobs available month after month, despite apparent high unemployment in the locality, and constant apologies for curtailment of services because of a short-age of labour.
How does the Secretary of State explain this paradox of high unemployment accompanied by a high level of unfilled vacancies in the same town or areas? I believe that we are wrong to look at the unemployed as if they are all of one kind. The vast majority of them are intensely anxious to find work, but there is a minority that is only changing a job, and knows that it has a choice of job to go to. There is another minority, which, in the words of the Department, is somewhat unenthusiastic in its attitude to work. There is yet another minority—quite a substantial one—which has read the signs right and adopts an "Is it worth while?" attitude.
For many people the net reward from being unemployed is about the same as, or nearly the same as—or even in some cases a bit better than—the net reward after the high tax take of being at work. That is not cheating. That is not scrounging. It is just the result of the system of high taxation that the Government have been forced by its high spending to levy on people just above the supplementary benefit level. In this country today a man scarcely has to lift his head above the supplementary benefit level and he is hit with a tax rate of 40p in the pound. When to this small differential between the net rewards for working and not working is added the net benefit of moonighting, one understands why in parts of the country there are so many vacant jobs at the same time as there are so many unemployed.
All this will perhaps convince the Minister that taxes are too high and are destroying employment and jobs. Moreover, as a result of pay controls and high taxation, and to some extent as a result of insecurity, some people have left skilled jobs to take unskilled work. We all know examples of such shifts. We know that pay control, with the compression of differentials, has discouraged some people from carrying on in skilled trades. We know the example of the building industry where, despite an apparently high level of skilled building unemployment, there are many builders in many parts of the country constantly advertising vacancies. They cannot get people to take them because these people are better off moonlighting and drawing unemployment benefits.
These vacancies are not in the £15,000-plus bracket. The example given by the right hon. Gentleman was of those who find it just as well to be unemployed. If that is the problem, why did he support and vote for a proposal to give big tax concessions to the very rich, instead of giving the benefit to the people at the margin?
Taxes are too high at all levels of income. Unless the people who have the particular skill of serving the customer, the particular skill of being enterpreneurs, by creating and expanding new firms and existing firms, are encouraged, we shall have a smaller crop of expanding firms than we would otherwise. There are people of all levels of income who have the skill to create jobs, and who are being discouraged from doing so. We have far fewer small and medium-sized companies in our economy than our rivals have. Under this Government, the birth rate of new businesses has plummeted and the death rate of small businesses has rocketed. The number of new businesses is far lower than it would be if the tax climate were more encouraging.
It is not only income taxation that is the problem but capital taxation and we welcome the belated change in capital transfer tax that the Chancellor of the Exchequer introduced in his Budget. We want a changed climate, and we believe that the result will be more jobs in the trading sector, and that a more profitable trading sector will provide more scope for public service jobs.
The private enterprise sector of the economy can achieve the increase in jobs of which I am speaking. Indeed, it has done so. On four occasions in the past 15 years, the private sector has enormously increased the number of jobs. When I speak of an increase, I mean net extra jobs over and above the replacement of jobs which have been brought to an end by changing conditions. In 1952–56, in a period of 48 months, the private sector added 1 million additional jobs in manufacturing, commercial services and agriculture. In 1959–62, the private sector added in 36 months 830,000 more jobs. That was 22,000 net additional jobs a month. In 1962–66, over a period of 40 months, 600,000 net additional jobs were created—15,000 a month. In 1971–74, in a period of 36 months, 780,000 net additional jobs were created in the private sector—22,000 a month.
I believe that that is evidence that, given a less discouraging climate than now, the private sector will create more jobs. The Government do not understand this. By creating and maintaining the present discouraging climate they are stifling the chance of new jobs, smothering the entrepreneur and stopping the creation of new jobs.
Why is this? Why on earth are Ministers, who must be aware of this option, discarding it? Could it be that because the private enterprise option will lead to some individuals becoming wealthy, it is discouraged? Could it be that Ministers hate the creation of individual wealth more than they hate the growth of unemployment? It is a moral question which they should face up to. We on the Conservative Benches would, I hope, face up to the evidence if we found that what we believe to be true was untrue. I hope that we would. I hope that Ministers will have the moral courage also to face the truth if they find that their methods do not work, whereas the methods we recommend have worked and would work again.
It is some comfort to the country that the Government have had the generosity to recommend Freddie Laker, the arch-entrepreneur, for a knighthood. We welcome the knighthood for Freddie Laker but there are hundreds or thousands of potential Freddie Lakers on a more modest scale, who are being discouraged by the present climate.
We believe that the leverage of tax cuts—I am not referring to the champion of tax cuts on the Labour Front Bench, the Chancellor of the Duchy of Lancaster—has to be understood. Just as Oxfam used to tell us, and still tells us, that to give a hungry person a meal only tides him or her over for a few hours, whereas to give him a spade and some skill can feed him for life, we believe that tax cuts at all levels of income, justified by cuts in wasteful Government spending, will provide an ever-renewed source of new jobs and an ever-renewed source of that profitable competitiveness which alone can create anything near full employment in this country.
We believe that the more our industries are threatened—and many of them are—by overseas competition, the more we need to encourage enterprising competitiveness by a more encouraging climate than we have now. We believe that the more we are aware of the transformation that the micro-processor may introduce into our manufacturing and commercial sectors, the more case there is for encouraging private enterprise by changing the climate which exists now. The more seriously we regard over-manning and low productivity—they are our bane—the more case there is for encouraging enterprise, because in that way there will be more jobs. Firms need to be able to reduce over-manning and to become more profitable and more competitive, so that they can win new markets for their goods, thereby creating more scope for jobs and more capacity to pay the taxes on which the public services rest. There would be a much greater chance for them to reduce over-manning if a constant crop of new jobs were being created by encouraged enterprise.
We on the Conservative Benches are not saying that tax cuts are the only need. I hope that the Secretary of State will not answer me by saying that our total tax take is no more than it is in some rival countries across the Channel. Taxes in this country are too high in general, even if they are no higher than those in some other countries. It is the particular skill with which our tax system has evolved to discourage enterprise and effort which needs to be attacked and tackled by the Government.
Marginal rates of personal taxation are too high at every level of income. To keep the present levels of personal taxation is to ignore the mainspring of the economy. After all, the people to whom we are looking for the creation of jobs are human beings. They respond to the link between their contribution and the net reward. We hope that the Government will work with the grain, and take seriously the lessons of the past and the possibility of what private enterprise can do.
The amendment ignores all these truths, as I believe them to be. It rests on tired, failed panaceas and ignores human nature and human motives. A tax system which successfully motivates inventors, investors, entrepreneurs and workers will do more for jobs, our standard of living and our social services than all Government industrial strategies and subsidies put together. I ask my right hon. and hon. Friends to vote for the motion and to reject the amendment.
I beg to move, to leave out from "House" to the end of the Question and to acid instead thereof:
', recognising that this country's economy cannot be divorced from the effects of a major world-wide recession, supports the Government's special employment and training measures and
its other measures to help small firms, and believes that these supplement the Industrial Strategy which is a necessary base for the regeneration of British industry and the achievement of full and stable employment in the long term'.
The right hon. Member for Leeds, North-East (Sir K. Joseph) has made quite clear to the House what he hopes I shall not say. He made it quite clear that he hopes I shall not repeat a speech which I have made before. When I came into the Chamber today, I was not quite so optimistic as to expect that the right hon. Gentleman would not repeat a speech which he has made before, but then I also regard consistency as something of a virtue.
I should like to start at one of the few limited points on which the Government agree with the motion. The motion
calls upon the Government to give greater encouragement to enterprise".
We are constantly seeking ways of giving greater encouragement to enterprise. In fact, we are giving encouragement to enterprise on a massive scale. It is most noticeable that many highly successful practising managers of industry do not share the views of those who have framed the motion. They do not take the narrow view that the only way in which one can encourage enterprise is by the reduction of taxation. They happen to think that enterprise can be encouraged by the Government giving support to intelligent investment projects which produce more jobs in this country.
In fact, under legislation passed by both the last Conservative Government and this Government, managers in over 4,000 firms have come forward with applications for assistance and investment in projects which have created jobs in this country. They realise that it makes sense to work with the Government if the Government are seeking to enable them to create more wealth in this country. That is why we want to see industry grow. Of course, the creation of wealth is essential to the development of the means of achieving a lot of our social aims, even in circumstances where the creation of that wealth will not of itself create jobs in the wealth-creating sector. That is obviously true in areas of high capital intensity.
However, when recently we introduced new schemes to encourage enterprise there was a strange silence on the part of Opposition Members, particularly Conservative Members. I exempt the Liberals, because they gave a great welcome to the small firms employment subsidy. What is the small firms employment subsidy if it is not an encouragement to enterprise? What is that subsidy doing by its present expansion, at the request of many hon. Members of the House who have seen the opportunities of small firms to grow through that sort of encouragement, if it is not an encouragement to enterprise to small business men?
Only a few days ago, on 1st July, we expanded the scheme to cover all firms with up to 200 employees in assisted areas and to firms in the partnership areas. Already, even with the operation of the scheme at a lower level, it is evident that small business men see a way of giving effect to their aspirations to grow in partnership with Government. They see the sense of accepting assistance from the British taxpayer, in order to grow, because by growing they are providing a service to the community as a whole. They are expanding their activity and employment.
One can take a number of examples. A small firm in Wales in the clothing business has increased its labour force from five to 32 in a year with the help of the small firms employment subsidy. An even smaller firm in Merseyside, engaged in general engineering, started in March 1977 and by June of this year had grown to an employment level of 10 with the help of the small firms employment subsidy. A firm manufacturing bedding in the northern region has grown from 48 employees to 96 with the help of the small firms employment subsidy. It now informs us that it has prospects of manning a new factory. This is growth which takes place. This is support and encouragement being given to enterprise. But the right hon. Member for Leeds, North-East has that doctrinaire blindfold which will not allow him to see support for enterprise which comes in any form other than taxation reductions.
Will not the right hon. Gentleman simply accept that if the money is available companies will take it up? On the other hand, will he not consider the alternative that this money is pre-empting resources which could be used elsewhere? Will not he address his mind to the problems of creating a climate and the right taxation which would allow those companies to do it for themselves?
I shall come to that point, because I have never contended that one can spend the same money twice. One cannot spend taxpayers' money in aiding a small firm to grow and spend exactly the same money in doing something else—for example, improving hospital or education services. I shall return to this point because it is an important part of this argument.
The point I am seeking to make at the moment is that there is not a difference between the motion and the amendment in terms of giving encouragement to enterprise. The difference, which is a serious and important one—even a fundamental one—is how that enterprise should be supported. I believe that the support must be not only for individual enterprise but for collective enterprise. The Government must be prepared to learn, and to listen to, the combined views of management and trade unions in British industry, which at the sharp end is facing the problems of seeking to maintain its ability to create wealth in a slump.
If for no other reason, the industrial strategy was valuable because of the advice which the Government have received from the sector working parties, from people working and practising in industry, about where the areas lie in which it is possible for British industry to expand its markets and about what sort of investment programme is needed to achieve that expansion.
In fact, it has enabled the British Government to back the judgment of people who have practical experience of the real problems of wealth creation. The backing of the Thames Board Mills project was a straightforward example of this. By giving a grant of about £10½ million towards a £99 million project, it was possible for Thames Board Mills to expand the carton-board works at Workington in a way which will reduce this country's dependence on imports to the tune of about £30 million a year. It created 300 permanent jobs in an area of high unemployment and made available another 300 jobs in the wood supplying industries. This is a case where the judgment of people in the field is that it makes sense to have their enterprises encouraged and to work in co-operation, recognising that there is an interdependence in the community between the taxpayer, the Government and those who work in industry on both sides.
Early in the Government's industrial strategy they made a great fuss about planning agreements. How many actual planning agreements have been agreed between the Government and firms?
I think there has been one agreement between Government and a firm. But, in fact, there is an element of the planning agreement in every one of the examples that I have cited. Of course, the conditions agreed for the provision of the help are an element of the planning agreement. It would make nonsense of the planning agreement concept to make this money available without any conditions as to its effect on employment, imports and wealth creation.
Another example of a firm which decided that it made a lot of sense to carry through enterprise with the support of a Government scheme, is Platts Forgings. That firm carried through a £1·7 million project with £186,000 assistance in taxpayers' money, not only to increase the production of drop forgings but to achieve higher exports and to bring about 45 new jobs in Staffordshire.
The Secretary of State was talking about sector working parties. As he will know, there is a sector working party for the electronics industry. Why did the Government give the go-ahead to the NEB to set up a factory with £15 million for micro-processors with no consultation whatever with that sector working party? Is not this ludicrous?
The Government's responsibility is to back the sector working party's report when we are convinced of the merits of the report's proposals. There is nothing in the decision to which the hon. Member refers which is in any way at variance with the conclusions of the sector working party in electronics. In fact, I would argue that it makes a lot of sense in the light of the findings of that sector working party.
The motion before us asserts that
the maintenance of a high level of employment and the creation of new jobs depend on a thriving private sector".
This shows again the very narrow dogmatic and blinkered, if not blindfolded, approach that Conservatives have to this problem. My making no reference at all to the public sector, it seems that those who framed the motion believe that we need enterprise in only one part of our economy. It is my belief that we need it in all parts of the economy. We need improvements in efficiency and productivity and better utilisation of capital in both the private and the public sectors.
The nationalised industries are of crucial importance in providing employment in a great many parts of the country. In 1976 the public sector accounted for about 30 per cent. of jobs in this country—about 7 million, of which 2 million were in the public corporations, including the nationalised industries. Our economy depends upon the efficiency and productivity of the nationalised industries, as well as the efficiency of the private sector. I am referring particularly to industries such as coal, electricity and transport. The productivity of a number of these nationalised industries has increased enormously. Productivity at the coal face has reached 9·5 per cent. above that of last year. Productivity in the electrical generation sector has also increased.
My concern about the nationalised industries goes wider than productivity. It goes to the area of their operations, which point to a continued reduction of manpower requirements as a result of the improvements in productivity.
The Opposition motion implies that the Government are relying on measures that take no account of the root causes of the problem. What are the root causes? I cannot accept that the root cause of unemployment in this country is merely our level of taxation. There are other countries with similar levels of taxation. Surely, if one is to analyse on the basis of taking account of the root cause of the problem, one must have some recognition of the major world slump, the enormous technological changes that have taken place and the rapid increase in the work force.
Does the right hon. Gentleman remember that his right hon. Friend the Leader of the House made a statement on 17th February 1977 to the effect that if there was a great increase in unemployment it would come about only through incompetence or through the definite intention of increasing it?
I do not recall the precise phrase that my right hon. Friend used, but I accept that in speaking at that time he might have expressed that view. This afternoon I am dealing with what is referred to in the motion as a failure to take account of the root cause of the problem. I believe that any proper analysis of the problem recognises that it is a complex one. It is not something for which there is a simple panacea. The right hon. Member for Leeds, North-East is suggesting that there is a simple panacea in the reduction of taxation and public expenditure on a massive scale. I do not believe that that approach will create jobs. It will reduce them, and it will reduce the services that are available in this country.
What about the evidence of those periods of three and four years in the recent past when, under less discouraging total economic conditions created by the Government, the number of new jobs grew so fast?
I dispute the right hon. Gentleman's figures. Employment in the private sector, taken from the summary tables of the Treasury analysis of public expenditure—table 1.10—in 1970 was 18,254,000. By 1974 this figure had fallen to 18,148,000. In 1976 it was 17,399,000. I suspect that the right hon. Gentleman has taken employment as embracing certain parts of manufacturing in the private sector. While he was disclosing the figures, I was looking at the actual graph of employment movements in the manufacturing sectors. Certainly there have been up and down movements, but the general movement in manufacturing over a decade has been downwards, although there were up and downs.
Yes, exactly. In the period to which the right hon. Gentleman was referring there was an increase in commerce at the same time as there was a decline in manufacturing industry. One offset the other to a certain extent. But that was part of the general picture over a decade in which we lost about 1 million jobs in manufacturing in this country and gained 1 million in services. I am referring to public and private services. There has been a change in the position, and I shall come to it.
Let us try to consider the proposition that reductions in public expenditure make a considerable contribution to the creation of more jobs and the suggestion that that of itself encourages people to take steps to that end. The Conservative defence spokesman argues that the cuts in defence expenditure proposed by the Labour Government will cost us 200,000 jobs. The Conservatives cannot have it both ways. They cannot on the one hand argue that if one cuts public expenditure in defence one loses jobs and on the other hand that if one cuts public expenditure in other areas one creates jobs. That points to the far more complex approach that is required to the problem.
If we are considering what it costs to sustain employment—this is a serious argument which was raised in an intervention—and whether that cost could be used to create employment in other areas, I ask the House to consider what happens in practice. Let us consider what happens in the payment of the temporary employment subsidy. Many Opposition Members have approached me about the payment of TES in their constituencies. They know full well that by a payment of £20 per week to a proportion of a firm's labour force for a period it is possible to sustain full-time employment to reorganise a firm in a way that will enable it not only to maintain employment but in many cases to grow.
What I said was that Opposition Members have approached me concerning the payment of TES to firms in their constituencies, advocating that as a desirable object. None has come to me to pay such subsidy back, but I am prepared to set up a special session in my Department to listen privately to every Opposition Member who wishes us to withdraw TES where it is being paid in his or her constituency.
The serious point is that if by a payment of £20 per week one can be confident that one is avoiding the payment of redundancy pay, wage-related unemployment benefit, flat-rate unemployment benefit and supplementary benefit, of course that is a better way to spend public money. It is a way that not only sustains a person in employment but sustains a demand or goods and services.
May I quote a figure which I have been given? The cost of supporting a married man with two children would be £4,000 per annum in transfer costs and loss of revenue. If that figure is correct, surely the additional payment of temporary employment subsidy to keep that roan in employment and therefore create some productive capacity to be used is relatively minor.
On a quick mental calculation, I believe that the figure of £4,000 produced by the Treasury is an initial cost. I believe that the average cost of sustaining a man in unemployment is lower than that—namely, about £50 to £60 a week.
There is not time this afternoon to debate this issue in itself, although I should love to have an opportunity to do so. However, does the right hon. Gentleman agree that the duration of unemployment is about five months on average and that the duration of temporary employment subsidy is over a year on average? Before one can judge the impact on public spending, one has to take into account the duration of these payments. I ask the Secretary of State to accept that the fact that I do not constantly intervene in his speech does not mean that I agree with his analysis.
I readily accept what the right hon. Gentleman says. I do not expect in the course of one speech fully to convert the right hon. Gentleman to my point of view. I readily agree that, of course, one has to look at the period of payment and the length of unemployment. But one of the worrying features in the development of unemployment is that an increasing number of adults have been unemployed for a fairly long period. The Manpower Services Commission is now analysing some of the causes and is trying to throw more light on this factor.
My broad contention is that what we have been doing by way of TES, the way in which we have refined it and the fact that we have required firms which have been paid the subsidy for more than six months to produce a proposal showing that they are restructuring and, therefore, will not need the subsidy beyond a certain period means that we have taken serious account of this possible objection. The average length of unemployment requires further analysis, because I agree that there are worrying features.
The temporary employment subsidy in one instance after another has enabled firms to change in a way that reflects the requirements of employment and wealth creation. For example, a large clothing firm in South Wales, having been paid TES against 60 members of the work force who would have been made redundant, changed its product into the manufacture of raincoats and is now successful in that line of production. I visited a firm in Manchester, Lonsdale and Bartholomew, which specialises in wallpaper pattern books. That company faced heavy losses as a result of the decline in the British market. As a result of the payment of TES and with the co-operation of staff and management, it turned that business round, went into exports and is now making a profit. Furthermore, it is now seeking to expand into additional premises and has taken on additional workers. Therefore, TES can be used to back enterprise and the analysis of people with practical experience.
I wish to point out—I hope not unfairly—that a total of 11,156 jobs has been saved by TES in Leeds. I appreciate that those jobs must be in North-West Leeds, South-East Leeds or South-West Leeds, because I know that people who share the views of the right hon. Member for Leeds, North-East would not use TES on such a scale. My general contention is that a massive reduction of taxation would have to be accompanied by cuts in public services. It might lead to an increase in imports if people, as a result of having more money to spend following tax reductions, suddenly increased demand. It might have adverse effects on our balance of payments.
Thanks to the measures we have been pursuing and to the practical and realistic response to many of these measures, employment in this country has been improving, and considerably so. Of course we are concerned, and rightly so, about the numbers of unemployed, but this tends to make us fail to look at the numbers of people who are in employment. That, too, is an important factor.
Perhaps I should inform the right hon. Member for Leeds, North-East that the fact that I did not intervene in his speech did not mean that I agreed with all his comments. I certainly did not agree with the comparative OECD figures that he quoted. I do not accept the basis of comparison which he advanced as giving anything like a fair reflection of the relative employment rates of different countries, particularly the United States. However, as a result of many of these measures we in the United Kingdom have 44 per cent. of people employed, temporarily or full-time, in civilian employment. This is higher than the figure in any of our other major competitors, with the exception of Japan. In France the figure is 39 per cent., in West Germany 40 per cent., in Italy 34 per cent. and in the United States 41 per cent. against the figure of 44 per cent. employed in this country. Looked at in another way, it can be seen that there are more than half a million more people in employment in 1977 than was the case in 1972. The number of people employed in this country has increased, after a period in 1975 in which there was a serious rise in unemployment.
Conservative spokesmen preach the importance of business confidence though they practise the undermining of it. They take that line when they say, for example, that the Employment Protection Act militates against the taking of people into employment. If that myth gains sufficient currency, it might have the effect which they predict. It will become a self-fulfilling prophecy.
While he is talking about undermining, would the right hon. Gentleman like to give his views on the Labour Party's party political
broadcast on 15th June, in which it was said:
The real blame lies with the industrialists who in their drive for profits have cynically closed firms and thrown millions on the dole. The Labour Party's aim is the common ownership of the means of production so that control of these firms can be taken out of the hands of a few profiteers and tycoons".
If that does not undermine the confidence of British management, what does?
I did not hear or see that broadcast, but, in so far as it refers to the Labour Party's aim of the common ownership of the means of production, distribution and exchange, it is a pretty fair reflection of the party's constitution. I have my membership card in my pocket, and our constitution has been in existence for a very long time and has not brought to an end the activities of entrepreneurs or business managers in this country.
I believe that by building this myth, against all the objective evidence, the Opposition are undermining confidence, just as the reiteration by Opposition spokesmen on a number of occasions that unemployment must increase and inflation must go up tends to undermine confidence. There is a danger that if these prophecies are accepted, they may become self-fulfilling.
There is one area in which I hope that it will not be contended that we can rely on market forces. I refer to training. It is crucially important to realise that, even with our present levels of unemployment, we are still suffering from the fall in training that took place in this country between 1972 and 1974, particularly in the engineering industry, where the number of craft trainees and technicians fell below 17,000 a year. Thanks to measures carried through with the help of the MSC and the individual training boards, we have raised that total to about 25,000 a year over each of the last three years.
Clearly, we cannot solve overnight the problem of skill shortage. We must ensure that industrial training boards make as sensible an assessment as possible, in the light of their experience, of the skill requirements of the 1980s. The training decisions made now will determine the numbers of skilled people available in the 1980s.
I commend to the many hon. Members who are interested in the development of training the interesting proposals on which the Engineering Industry Training Board is having consultations. It has proposed a new craft training system which provides much greater flexibility, including incentives linked to the achievement of certain standards and not simply to length of service, as is the case in many existing training schemes. I urge all employers and unions to study the proposals carefully and to give them a positive and constructice response. I believe that they may be in the vanguard of all the thinking that is taking place in response to our request to all industrial training boards to submit proposals.
The proposition that I have put to the boards on behalf of the Government, I hope with the support of the House, is that, if collective funding is to continue and if we are to continue to use taxpayers' money to back training, we should do so only on the basis that the boards' proposals contain a reasonable assessment of how many skilled people we shall need in the various industries and ways of meeting those needs.
I am sure that it is absolutely admirable that the numbers are going up in this way, but it is a fat lot of good if those who acquire the skills are so taxed that in the 1980s they are earning their living not here but elsewhere in the world.
Whether they are earning their living here or elsewhere will depend upon people's judgments on whether Britain is a good place in which to expand industry. I believe that it is. That is not just the judgment of a chauvinistic British Minister. It is the judgment of many foreign managers who have examined Britain and decided that this is where they would want to invest. They include managers such as those of Sony who set up a plant in Bridgend, expanded the number of jobs from 300 to 700 and are now exporting many of their products. They include the managers of Thyssen (Great Britain), which is making mineshaft equipment in Llanelli, and the managers of Atlas Hydraulic Loaders Limited, which is making cranes in Lanarkshire.
In all these cases, managing directors of international firms acknowledge publicly the very high quality and hard work of British workmen. They believe that this is a good place in which to expand, and the profit record justifies that belief. I do not believe for a moment that Ford's decided to make new investment in South Wales because it wanted to provide 2,500 jobs in an area of high unemployment. The company believed that that was the best place to carry out that production.
My answer to the hon. Member for Chelsea (Mr. Scott) is that there is a question mark but that the answer depends upon the judgment of people who have to live in the market place, fight for orders and justify employment by the wealth they can create.
The right hon. Member for Leeds, North-East seems to believe that wealth creation somehow automatically creates employment. Up to 1950, there was considerable evidence that high rates of productivity growth were associated with increased employment, but in the following 20 years that ceased to be the case in an increasing number of industries where employment fell and higher productivity did not necessarily bring an increase in overall employment. We are facing a future in which rapid technological development holds out the prospect that we shall be creating more material wealth with many fewer people. We must use this wealth in a socially responsible way to create other job opportunities in services and in manufacturing.
We need to provide better public services and socially desirable alternatives to unemployment, such as earlier retirement, a shorter working week and wider educational opportunities. These are all technologically possible if we can create the necessary wealth, but there is no automatic process or natural law that says that when we create more wealth we automatically create more jobs.
The Government and the Conservatives are agreed only in saying that more wealth must be created. We disagree on how that can be done. It seems to me that the Conservative view is that the ability of an individual to profit is a precondition and that social progress is a secondary by-product of that. This view ignores the cost of the casualties along the road if we attempted to put that policy into effect in modern conditions. Of course, among the casualties would be the unemployed.
The Labour Party's view is that there is an interdependence of wealth creation and social cost and that the Government must help industry, both public and private, to create the wealth that can finance the employment of a growing number of people in services as manufacturing requires a smaller proportion of our working population. The development of these services also sustains manufacturing since the wages paid in the service sector are essential to maintain the demand for the output of the manufacturing sector.
The rejection of this interdependence threatens prospects for employment and social standards in this country. In its acceptance lies scope for the prospect of raising employment and social services simultaneously. I therefore commend the amendment to the House.
I promise to be as brief as I can, but I am bound to admit that the speech of the Secretary of State will slightly lengthen my remarks. I cannot let such arrant nonsense pass without comment.
I take a few points at random. The right hon. Gentleman spoke about the small firms investment subsidy and the amount of help being given for investment to larger firms. He called them incentives, but such subsidies are not incentives to invest; they are methods of helping to finance investment. They are methods that would not be needed if the firms concerned were allowed to retain more profits which they would reinvest.
Now I must declare my interest as a chairman of an unquoted company. The record of profitability and of reinvestment of profits of smaller firms and unquoted companies is far better than that of large firms, and compared with the nationalised industries it is almost miraculous. The subsidies to which the right hon. Gentleman referred are giving help in financing, which would not be needed if the firms concerned could borrow at a reasonable rate. Interest rates have been forced up to prohibitive levels as a result of the high rate of interest that is required by the Government to induce people to lend to them. Why should people invest in risk capital when they can get a better return by buying Government stock?
The right hon. Gentleman's argument was that we must keep up interest rates and taxation so that the taxpayer may give subsidies to firms large and small instead of encouraging investors to invest and instead of enabling firms to invest their own profits both in providing extra working capital, which is especially needed during a period of inflation, and in making new investment.
The right hon. Gentleman quoted the temporary employment subsidy. The effect of the subsidy is, to say the least, uncertain. On 29th June I received an answer to a Written Question. The answer told me that on 21st June there were 170,500 people currently covered by the temporary employment subsidy.
On 28th June, the day before, I received an answer telling me that within three months 100,000 people would be unemployed were it not for the subsidy. That is a difference of about 70 per cent. In reply to the same two Questions about the youth opportunities programme the answer was 33,000. Apparently there is precise knowledge of the effect of the youth opportunities programme and only very imprecise knowledge of the effect of the temporary employment subsidy.
I agree with the right hon. Gentleman and with my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) about the importance of the training and mobility of labour. There is a serious problem and I do not altogether put the blame on the Government. The problem has arisen for historical reasons. Skilled people have been unemployed in certain parts of the country while there has been a great shortage of skilled labour in other parts. This is still so.
However, it is no good the right hon. Gentleman saying that lack of training is the fault of the last Tory Government. It was this Tory Government that set up the arrangements for training five long years ago. If the new arrangements we made then for the training of skilled labour have not yet produced any results that is the fault of the right hon. Gentleman's Government, who have been responsible for not operating them properly for the past four years.
My right hon. Friend the Member for Leeds, North-East referred to the pattern of unemployment. There are about 300,000 people who have now been unemployed for more than 12 months. The average duration of unemployment has increased from about seven weeks in 1973 to about 15 weeks now. The solution advanced by the right hon. Gentleman is a steady move towards the corporate State, totally ignoring the fact that 40 per cent. of our gross domestic product comes from firms employing 500 people or fewer.
I make a few limited suggestions. I hope that the House will not think that I am putting forward a comprehensive plan. I cannot do so, because of the shortage of time. However, I shall make a few positive suggestions.
My first suggestion concerns smaller businesses and unquoted companies, whether they are in manufacturing, distribution or in service industries. It includes companies that are engaged in selling services both here and abroad, in distribution both here and abroad and in manufacturing for sale here and abroad. Our present employment protection legislation is a strong disincentive for very small companies. There is no doubt about that. I am not saying that it is a difficulty for larger companies; I am merely saying that it creates in its minutiae a difficulty for smaller companies, especially the provision of 26 weeks before unfair dismissal and the lack of flexibility for notification of redundancies.
This is something that no Government should lay down but in which changes could be negotiated to get full union support in view of the extra jobs that would result. Smaller firms cannot afford to take on labour that they feel may be temporary because of the difficulties with which they may be faced when the period during which they can use that labour economically expires. This is an area in which any Government should be willing to take the initiative.
My second suggestion relates to the low level of profits. Smaller firms are not uncompetitive. They lack profit, which is needed not just for reinvestment but to maintain the consistent rising working capital, which is required by an increase in money turnover, even if they are not increasing their real turnover spectacularly. Because of the longer credit that has to be given, smaller firms have a worse financial problem the more they export. The more that a small firm increases its exports the greater the problem it has with its working capital and the more it needs profit to finance it and so to maintain employment.
Thirdly, a suggestion about tax incentives. I am not suggesting only that the average rate of tax is too high for any given level of income. What is particularly wrong in Britain—it has been wrong for many years but matters have become worse over the past four years—is the gap between the average rate of tax and the marginal rate of tax at every level, but especially for both the very low earlier and the very high earner. The gap is too great. It is the gap between the average rate and the marginal rate that makes for disincentive.
Any schemes that increase employment must make it worth while in money for people to work rather than to go on not working. They must make it worth while to learn a skill and to be rewarded for it—in other words, better differentials and differentials that are not eroded by the appallingly high level of marginal taxation at every level of income.
Another tax factor is the need to take measures to help turn earners into owners. We should have some sort of stock option scheme to enable clever, forceful and ambitious managers to save enough to start up in a small way on their own, if they want to, halfway through their career. We should have a tax structure that enables people to save to invest directly in industry.
The right hon. Gentleman says that he wants to continue to nationalise more and more of the means of production, distribution and exchange. Does that include the land that is held by pension funds? Does it include the shares owned by investment trust companies and unit trusts on behalf of small shareholders? Does it include the land and funds of the union pension schemes? If it does, the right hon. Gentleman will make many enemies. Not all of them will be on the Conservative Benches by any means.
I should like to see people owning more directly as well as indirectly. Over half the total wealth of Britain is owned by pension funds. About 47 per cent. of the shares of quoted companies are owned by institutions on behalf of other people. I wish that we could find a way, through the tax system, to encourage a wider distribution of share ownership—at least a way that would give some of a firm's capital growth to the employees as well as to the shareholders.
Finally, I suggest that we must take a new look at what is meant by productivity. There is overmanning, a high level of absenteeism—between 10 per cent. and 17 per cent.—and 5 million people work overtime. That is a curious way of arranging our affairs.
If we are to remain competitive in the world we must reduce the unit labour cost of our products. We must forget a few myths in so doing. We do not only need more investment, nor do we need harder and longer work. In spite of what the Secretary of State said, it is a myth that higher productivity necessarily means fewer jobs. The evidence is that the rate of productivity growth in some industries is related to the rate of growth in employment in that industry.
Even if the Secretary of State is right, we must have a more sensible arrangement to keep the machines working flat out. I believe that it is possible to negotiate shift work, associated with a shorter working year and a rearrangement of work periods to provide leisure at better times and for longer periods on end. There is little point in cutting the working day. There is not much point in reducing the working week in such a way that people are given marginally more time off at the weekend. That is particularly so for people who live in the conurbations.
People need more time off in periods which can be better used. I would go as far as to consolidate bank holidays, which, at the moment, simply put as many people as possible into traffic jams at the same time. These extra days off, with any shortening of working time being taken as extra days, rather than hours off, could be arranged to help our factories run more efficiently. All this should be part of collective bargaining and of the consultative processes in industry.
Provided that output is not interrupted by unnecessary and frivolous industrial disputes, provided that we can encourage the growth of real wealth by incentives to investors, entrepreneurs, managers and workers and not spend taxpayers' money rashly, it should be possible to turn this country into one in which real earnings increase, employment increases, and both working hours and overmanning are reduced. If that happened Britain would be a better place in which to live.
I must admit that I do not see much hope of any such changes starting under this Government. But I am pretty certain that they will after the next General Election, under a Tory Government.
It is right that we should be discussing unemployment. The possession of a job defines a man and woman, whereas the lack of a job makes it hard to keep one's self respect. It is right that we should be concerned when the level of unemployment, despite the welcome improvements in the last nine months, is still running at well over 5 per cent. and when in areas such as the northern region and Merseyside it is at a much higher level. The difficulty is that there is no agreed diagnosis nor solution in the House, in the country, or in the world as a whole.
I was not impressed by the speech of the right hon. Member for Leeds, North-East (Sir K. Joseph). He said that we must cut industrial subsidies, when we all know that that would lead to higher unemployment. He said that we should cut public spending, when we all know that that would lead to higher unemployment. He said that we should return to a free market economy, when we all know that that world died 100 years ago.
The Labour Government has a more realistic and relevant approach. They have spent money on labour market policies. I hope that they spend more. They have spent public money on industrial support for old and new industries. I hope that they spend more. They have spent money on regional policies. I hope that they spend more. They have spent money on vital public services. I hope that they continue to do that. Indeed, without such expenditure the level of unemployment would be catastrophic.
The right hon. Member for Leeds, North-East believes in a single cause of and a single solution to unemployment. I do not believe that there is a single cause or a single solution. I shall examine some of the causes of unemployment.
Clearly, this country faces the longstanding problem of competitiveness and industrial performance. Many of the jobs that have been lost in the 1970s have been lost because we have failed to compete in some of our main markets.
In the last two or three years our share of world trade has improved marginally, yet our unemployment level remains high. It is significant that other countries—even strong countries such as West Germany—have high levels of unemployment. That was not mentioned by the right hon. Member for Leeds, North-East. I do not know where he has been for the last four years. It is difficult to know the exact levels of unemployment in other countries but it is clear that they are at an abnormally high level. That shows there are other influences at work.
A number of commentators have mentioned the increasing capital-intensive nature of manufacturing industry. There is something in that, particularly in the long term, and, in the short term, we cannot expect to create many new jobs in the manufacturing sector.
But one must admit that over the past four years the levels of investment in most countries have been lower than they have been in the past. That means that we have not become much more capital-intensive. We are well below the average of the last decade, so I do not believe that this is yet a significant factor.
Some people point to the impact of countries such as Japan, South Korea, Iran, India and Taiwan which have the capacity to produce low cost goods such as ships and cars. In the present conditions these countries present the older industrial countries with a formidable challenge to which, as the Secretary of State for Trade told the House last week, we are beginning to respond slowly. But we cannot claim that this situation is yet the major cause of unemployment.
It is fashionable, particularly in West Germany, to talk about the saturation of demand. But in a world in which two-thirds of the people live in extreme poverty we cannot talk about a saturation of demand. I believe that a major cause of unemployment, not only in Britain but in all the industrial countries, is a lack of purchasing power on an international scale. The major industrial countries have failed to respond not only to the OPEC surpluses but to the amassing of surpluses by strong industrial countries such as Japan and Western Germany.
One of the assumptions of the postwar world and of the Bretton Woods Agreement was that both deficit and surplus countries should respond and adjust themselves to their circumstances. That was the idea behind the international system. Thanks to the way in which the Americans behaved after the war, thanks to the Marshall aid plan and thanks to the fact that the United States allowed our goods and those of European countries into their market, we were able to adjust and expand. Today we are simply playing the game of "shift the deficit", a game which has disastrous consequences for the world economy and for world unemployment.
Deflation obviously hits the weaker industrial countries and the developing countries worst, but inevitably it will also hit countries such as Japan and Western Germany, which depend so heavily upon their exports and therefore upon the level of demand in foreign markets. That is why the Prime Minister is right to attach such importance to the world summit economic conference which is opening this week. I wish that the Conservatives would attach a little more importance to it.
If that conference can help to create a more stable economic order and economic growth, it will make it far easier to tackle the problem of unemployment. If it fails, we are likely to slip further and further into protectionism. Even those who, like myself, have previously believed that free trade is, on the whole, to Britain's advantage will be forced to reconsider. If there is no move forward, protectionism may be the only alternative left to us.
As a northern region MP, I want to say a few words about regional policy. It is extremely difficult to run regional policy during a major international recession, although most fair-minded Opposition Members would accept that but for regional policy unemployment in regions such as mine would be far higher. We have to take another look at regional policy, but I do not advocate the sort of rethink proposed by the right hon. Member for Leeds, North-East. His rethink would mean a reduction or removal of regional incentives. That is not my approach. Regional policy now needs a new ingredient. There is a strong case for a regional development agency such as Scotland and Wales now have to enable the English regions to take more of their own industrial decisions. Ultimately, alongside it we should have to have regional assemblies to exercise democratic control over the agencies. So I hope that the Government will take another look at regional policy.
In conclusion, although Ministers have not solved the problem of unemployment, and although much needs to be done in regional policy, in manpower planning, in industrial policy, in the next round of incomes policy and in economic policy, at least the Government have the necessary imagination to comprehend the nature of the difficulties. Unlike the Conservatives, they are not hampered by the blinkers of a totally outdated and irrelevant economic ideology.
In moving the Government amendment to the motion, the Secretary of State told us nothing about the number of jobs that he thought would be needed in trying to achieve
full and stable employment in the long term".
It was remarkable that he sought to defend his policy without giving any of the figures and projections which he, the Treasury, or the Manpower Services Commission have about the size of the task that must be completed if we are to stand any chance of achieving whatever he or anyone else might mean by
full and stable employment in the long term".
As the Secretary of State must know, dire forecasts are being made that unemployment could top 2 million or 2·5 million in the early 1980s. If one adds the number of registered unemployed who are being kept out of the unemployment figures by the various Government schemes, one can see that we have practically reached the 2 million mark already.
I must tell the hon. Member for Chester-le-Street (Mr. Radice) that it is not sufficient for us to consider our position entirely in the light of what is happening in other countries. We should be concerned to find remedies within our own context, not forgetting that there is a wider problem in western Europe.
The problem cannot be said to be solely one of world trade. There must be considerable scope, even at a time of depressed world trade, for British manufacturers to go for more import substitution and for higher exports. It would be pleasant to believe that one could hope for an early solution to the problem by an upturn in growth here and in the rest of the world. A decent level of growth would take the sting out of the present level of unemployment, but that would depend on so many conditions. We should have to wait many years before those who want jobs could get them if we rely only on a quickening of the pace of economic growth.
In Britain we must recognise that reducing unemployment depends not only on factors outside our control. We must consider those within our control. It is in that direction that a charge can fairly be made against the Government that it is they, perhaps, who are wearing the "doctrinaire blindfold" to which the Secretary of State referred, since they keep rejecting the points made from the Opposition Benches about blockages to employment opportunities.
Small businesses must play an important part in the development of the economy. It is likely that they are more labour-intensive than many of the medium-size and large companies. It is extraordinary that so much has been done by the Government which has been directly harmful to small businesses.
The inquiry by the Secretary of State into the effects of the Employment Protection Act, excluding from its results as it does so far companies with fewer than 50 employees, shows that the Government do not understand where the real constraints on job growth exist.
It is not easy to build up a national picture from a series of conversations with individual business men, but I have been given many examples by business people in my constituency where they have to decide whether to buy a machine to do work that perhaps two or three people might have done. If employers are being persuaded, rightly or wrongly, that it is to their disadvantage to take on extra people, that is a situation that the Government should face squarely and decide whether their cherished legislation is not having a harmful effect on job creation.
Britain should not become a poor neighbour in terms of social and employment policy but the Government should consider whether we need a particular standard of legislation when there is also serious unemployment. If by driving up standards in this respect we ensure that the number of possible economic jobs is minimised, that seems the reverse of good sense.
Would the hon. Gentleman not agree that the labour legislation of most European countries is better than that of Britain? How can he argue, therefore, that jobs are affected as he suggests?
If the hon. Member will bear with me, he will see that I am not opposed to trying to ensure better protection for employees. However, if that reduces job opportunities, that consequence should be weighed carefully against the desired objectives. One should have some regard, therefore, to the timing of the legislation which the hon. Gentleman believes necessary if it has a deleterious effect on the number of jobs.
Labour Members may say that employers are being unfair, wrong or muddleheaded in their reaction to legislation such as the Employment Protection Act, but they should consider the facts rather than the motivation. If those things are disincentives, they should recognise the fact and try to deal with it.
We all want to maximise job opportunities, and we should consider all the ways in which they are being minimised.
I think that my hon. Friends and I are listening with great attention to the hon. Member's argument, but I hope that he will realise that, although we understand his assertion and might be alarmed if we knew that this was happening, he has not yet proved it. Perhaps he will now do so.
There are examples in my constituency—and probably in many others—of employers facing practical problems like those that I have described. So far, the Secretary of State has not completed an inquiry into the effects of the Employment Protection Act on businesses employing fewer than 50 people. When we have that evidence, it will be interesting to see whether the examples we know about are borne out.
There are other disincentives. One is this Government's taxation policy. Along with other members of the all-party committee on the chemical industry, I recently visited a number of chemical establishments on Teesside. We found direct examples of the extent to which the training of instrument fitters has been going on in various factories—not just the one which has been in the news—and that they have been losing 60 per cent. of them to the Middle East because of the disincentive effect of taxation. They cannot expect to continue in business, they say, if they go on losing trained people at that rate.
There are also problems of mobility, often caused by workers' inability to move to another area for fear of not getting a similar position on the housing list. There is also the question of making further improvements in skill training. Clearly, some blockages have not yet been removed by the Government. The number of forms of aid which the Government have produced, many in a great hurry, are now so numerous that they themselves confuse people about the opportunities to train for existing vacancies.
Even if all these constraints are remedied—it is hoping a great deal to expect this Government to look at them all as dispassionately as they might—we shall have a considerable numbers problem into the 1980s. Like my right hon. Friend the Member for Farnham (Mr. Macmillan), I believe that some structural change in employment is needed to match the numbers who will be involved.
Early retirement is not a practical panacea. Apart from the public expenditure involved, many people in their early sixties are not so desirous of quitting all employment. They would like to work. Nor should the shorter working week be accepted too joyfully as a solution to unemployment. I fear that the pressure of collective bargaining will mean at least as much money being paid for no increase—and probably a loss—of production, if we too quickly adopt, for example, a 35-hour week. That could create unemployment. If production is reduced in some sectors, manufacturers will reduce their orders to suppliers.
The key to the numbers question lies in a more comprehensive and systematised scheme for training young people. It is acknowledged that we do far too little training compared with many of our principal industrial competitors. We could use the time of many young people much more purposively in giving them better training not only in skills but in a knowledge of the world of work and of how to compete within it. That is the right, logical and constructive way of considering the present problem and it goes beyond removing the undoubted restraints on employment which this Government have done so little to remove.
If we do not tackle the problem in that constructive way, I fear that the alternative is a society dominated by the concept of the cash economy, in which regular work as a way of life is rejected—and I do not think that people favour that at the moment—and a society of great social division with many people unable to work regularly at all. Unless we face this challenge, our future problems will be immense. I fear that this Government are incapable of facing the challenge.
I will start by putting two facts on the record. First, I am a sponsored member of the Amalgamated Union of Engineering Workers, engineering section, which has a tremendous interest in the general question of unemployment. Secondly, unlike the majority of hon. Members—certainly on the Tory side—I have known considerable spells of unemployment. Anyone who worked as a fitter in the shipyards and the ship repairing industry of Tyneside will know what unemployment means from first-hand experience.
I congratulate the hon. Member for Saffron Walden (Mr. Haselhurst) on a speech that was much better and more constructive than that of his right hon. Friend the Member for Leeds, North-East (Sir K. Joseph). I do not know whether that will do him any good with his leader. I hope that she will take note of his comments and possibly switch the hon. Member round so that he occupies the position of his right hon. Friend.
I voted against the Ten-Minute Bill today which sought to televise our proceedings. I fear that I have made a grave mistake, which I shall not repeat. I should have liked to see the television cameras in here when the right hon. Member for Leeds, North-East made that incredible speech. I hope that it is well reported in the media, because it was worth a substantial number of votes to the Labour Party.
I do not know whether trade union leaders will shudder at the thought of the right hon. Member becoming one of the economic leaders of this country if, by some mischance at the next election, the Conservatives are returned to power. I do not even know whether the people of this country will fear the consequences. I am quite sure that the right hon. Member for Lowestoft (Mr. Prior) must have nightmares at the thought of becoming Secretary of State for Employment if the right hon. Member for Leeds, North-East is in charge of the economy. Undoubtedly the job of Secretary of State for Employment will not be a bed of nails, as it has so often been described; it will become a bed of red-hot coals.
The right hon. Member for Lowestoft knows as well as I do that the trade union movement and the organised working classes will not tolerate any or many of the suggestions made by the right hon. Member for Leeds, North-East, which he said he will impose if he becomes responsible for our economy. The House appreciates that the right hon. Member for Lowestoft gets on well with the TUC. I am sure that the TUC has a high regard for him as an individual and would be quite prepared to work with him as an individual.
The right hon. Member for Lowestoft knows full well that it would not be his voice which would be the dominant voice in a Tory Cabinet discussing the economy; it would be the voice of the right hon. Member for Leeds, North-East and some of the other hard-line Right wingers who would dominate and dictate policy. It is beyond dispute that many of them are still longing for another go at the unions. They feel that the only mistake they made in the period 1970–74 was in not finishing off the trade unions. Let me tell them that there is no danger that the trade union movement will lie down and allow people such as the right hon. Member for Leeds, North-East to walk all over them.
The right hon. Member for Leeds, North-East is potentially the economic overlord of this country. We have to remember the appalling mess that he made of the reorganisation of the Health Service. In view of that, one would assume that the Tory Party would have found him a whelk stall in Leeds, North-East rather than promote him from his position as Secretary of State for Social Services—when he was undoubtedly responsible for a disaster—to that of potential overlord of the economy.
One thing which always causes me grave concern during these unemployment debates is the sheer nonsense which so many Tory Members talk. On the one hand they blame the Government and suggest that it is Labour policies which have created so much unemployment. They say that they will put that right because they will scrap the various measures and schemes which the Labour Government have introduced. On the other hand—we had a little hint of this from the right hon. Member for Leeds, North-East—there is the suspicion or suggestion that half the unemployed are simply layabouts living off the State, people who will not work, who are moonlighting and doing a wide variety of other things.
If the hon. Gentleman had been listening to my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) he would have been perfectly well aware that he said nothing at all about half the unemployed being in the state the hon. Member has described. Will the hon. Member stick to the accurate report of what was said by my right hon. Friend?
I do not know whether the hon. Gentleman was present but I listened to his right hon. Friend's speech. I said that we had heard a hint, once again, from the Tory Party spokesman, that half the unemployed are layabouts and are doing various other things because they simply will not work.
As a very young apprentice living in Jarrow I heard prominent Tories suggest that during the 1930s half the unemployed of Jarrow did not want work, that they were layabouts, that work was available for them. The fact is that there was no such thing as employment in the north-east at that time.
We listened to Tory Party spokesmen continually talking about slashing public expenditure. I wonder what level of public expenditure they are aiming for. I have read suggestions by certain commentators that the Conservative Party is looking for a further £4 billion cut in public expenditure. I would be grateful if Tory spokesmen could give us some idea of the level of further cuts for which they are looking. The right hon. Member for Lowestoft knows full well that a cut of that nature would increase unemployment substantially, probably taking it to around the 2½ million mark.
I should like to know whether there is any intention on the part of the Tory Party, if it is returned to power, to impose cuts on social security payments—on pensions, unemployment benefits and other such things. It would seem that if the Tories are to achieve the public expenditure cuts for which they are searching they will have to turn to this area. I would appreciate it if the right hon. Member for Lowestoft would give the House some undertakings in this respect and confirm that the Tory Party, if returned to power, would carry on with the Labour Government's policy of uprating annually the various social security payments and benefits on which a lot of people, unfortunately, have to rely for their incomes.
The truth is that Britain alone is not responsible for unemployment. With a world economic slump of the magnitude that we have had over the past three or four sears there is little that can be done to reduce the level of unemployment. I suspect that the Tory Party knows that full well, although it suggests that there are easy answers to difficult and complex problems. If the Tories intend to abolish the various schemes that the Labour Government have introduced, such as the youth employment schemes and the employment subsidy, if they intend to abandon subsidies to industry, particularly in development areas, if they intend to smash the National Enterprise Board, and if they go ahead with their proposals to denationalise large sections of publicly owned industries, they know that they will substantially increase unemployment. I hope that we shall be given some assurances on these matters.
Even cutting the sums of money available to the NEB would have little effect upon public expenditure. I am sure that my right hon. Friend the Secretary of State knows that many Labour Members would like to see a substantial increase in the funds available to the NEB. All the evidence suggests that it is only through vehicles such as the National Enterprise Board and the Scottish and Welsh Development Agencies that we can achieve any form of industrial progress.
The right hon. Member for Leeds, North-East referred to the number of job vacancies and accepted that the position in the southern part of the country is different from that in the northern part. That is absolutely correct. This is why it is dangerous to talk about averages. The average period of unemployment for many people in the north-east and north-west of England, and in Scotland and Wales, is much longer than it is in the south. If we are to do away with the various vehicles that the Labour Government have introduced to help maintain employment, we shall be in an even worse position than we are now.
I know that some Tory Members believe that there is nothing to stop the skilled worker on Merseyside and Tyneside, in Scotland or in Wales, packing his bags and transporting his family to the south-east. I wonder whether it ever occurs to them that the skilled, or unskilled, worker in those areas does not want to leave that part of the world. He does not want to uproot his children and leave his friends and family. He wants to remain in that part of the world and he asks that employment should be brought to those parts, not that he be transported.
One of our problems in the past decade arises from overcrowding and undue reliance on public expenditure for the provision of schools, housing, hospitals, roads, and so on, in the south-east of England. We have suffered deprivation in the north of England in those spheres. In Merseyside and throughout parts of the north of England there are still many Victorian schools which should have been removed years ago. Children are still being taught in them. That is only one aspect of the problem of removing one's family and onself from the area in which one has lived all one's life to another part of the country.
I want also to touch on the question of youth unemployment. There is no doubt that there is a serious crisis here. Conservative Members have made many points about the difficulties of small firms. They seem to say that the Employment Protection Act is a good Act provided it applies only to big companies and that it is a bad Act when it is applied to small companies. They seem to be saying that if only small companies had the right to sack their employees unfairly everything would be all right. That is the one constant theme that comes across.
I have a very large constituency, with more than 100,000 electors and with many firms, small and large, nationalised and private. I have asked many of the firms to give me some answers about the effect of the Act. All I get is generalisations. I obtain no facts upon the subject. No one will give me one instance where any aspect of the Act has been detrimental to him, except to say that he feels that if he wanted to take on workers he would not do so because he would not be able to dismiss them. That is nonsense, because the provisions of the Act do not come into operation until six months after the individual has become employed.
I hope that the right hon. Member for Lowestoft will think again about his suggestion that the Act should not apply to young people under 21. As I have pointed out, the provisions of the Act do not come into operation until six months after a person has been employed. That applies to young people as well. If an employer cannot gauge the merits or demerits of a youngster within six months, he should not be looking after young people in the first instance.
The problem that must be tackled is that of getting more young people into training. Unfortunately, the small employers' record on employment and training of apprentices is, and was in the past, abysmal. They have always been too ready to poach the skilled apprentices when they finish their apprenticeship, when they have been trained by the larger employers. That is a fact, and Conservative Members cannot deny it, because they agreed with the setting up of the industrial training boards, with their levies to share the burden of training.
Is it not time we took a much more radical view of the question of training young people? I am sure that my right hon. Friend the Secretary of State agrees that the problem will grow worse, not better. I am sure that when he looks at the numbers who will be coming on to the employment register in the next four years he must have nightmares wondering we shall get them all into employment and training schemes.
The problem is widespread throughout the Community. One of the tragedies is that despite the high hopes for the EEC it has taken no initiatives in this matter. Every conference ever held on the subject breaks down in acrimony and disagreements, yet we must get youngsters into training, because the country depends on skilled labour.
It is time we looked at the whole apprenticeship structure. There are many who, like me, left school at 14 and 15 with a view to starting an apprenticeship at 16. We had 12 to 18 months on the fringes of industry, doing various jobs, before we could look at the various crafts and trades and decide which we were best suited to. The employers also had the opportunity to look at us and assess our skills, aptitudes and abilities, and slot us into the various apprenticeships, generally with satisfaction to the apprentice and employer.
What happens now? The school leaving age has been raised to 16. Youngsters are leaving school at 16 and 17 and virtually have to obtain an apprenticeship based on their school report. Many of them are going into the wrong type of job, but there is no other way, because they have to obtain that apprenticeship immediately. If they do not, the next year's school leavers will have caught them up and their chance will have gone.
Many employers are dissatisfied with the results of the system, a system that they have done very little about, and they are complaining that the youngsters are not suited to the job. The employers wrongly blame the education system, when they themselves are taking the view that they will not take on apprentices.
In discussions with the employers and trade unions, we should look again at the apprenticeship training system, with a view to raising the apprenticeship starting age to 18 and concluding it at 21. That would again give the period which used to apply in British industry.
I believe that the vast majority of youngsters leaving school now are far better educated than I was. They have a far better schooling, education and background than I had. The difference and the tragedy is that there are no apprenticeships for them.
One of the matters that are essential to working-class people in that their son secures a skilled apprenticeship which will turn him into a craftsman at the end of his time. I do not think that many hon. Members recognise the tragedy felt by many working people when their son fails to get that apprenticeship. It is almost a social stigma if their son has failed in this respect, yet it is no fault of the youngster.
We must fact the fact that with so many youngsters unemployed there is a danger that many of them will be attracted to extremist parties putting forward extremist solutions of the Right and of the Left. We must also accept that vandalism and petty crime are among the offshoots of so much youth unemployment. We should compare the amount that we are paying through the various schemes, which are important but are only palliatives, with the amount that vandalism and petty crime are costing the country.
We should even consider the State's accepting responsibility for the training of all youngsters. We accept that for those who are moving on to academic careers. Is it not time we accepted it completely for those who want skilled employment?
Both sides of the House, industry, and the trade union movement must give further and more detailed consideration to the question of youth unemployment than we have given in the past.
The Secretary of State said that the Government were constantly trying to give encouragement to enterprise. I suggest that he goes round to industry and asks people on the shop floor what they feel. When I meet them, they continually say "We are working three days for ourselves and two days for the Government". He should ask the managers in industry. If it were not for the thought of a change of Government, they would already be leaving to obtain far better remuneration on the Continent, in the United States or in some part of the Commonwealth.
I have been to two British industrial exhibitions in Asia in the past two years. The message I have had from each is "Tell the Government to get off our backs and reduce taxation, particularly on the managerial side". Surprisingly, at the last exhibition a representative of a big machine tool firm said "If it were not for the Employment Protection Act, we should be able to get far better delivery of our machine tools. Because of the Act, the smaller firms cannot expand." The right hon. Gentleman said that the root cause of the problem was the slump in world trade. But Germany, Japan and the United States have weathered the storm much better than we have, because they have market economies which react much more quickly than a Socialist economy, a State economy. We find ourselves in our present grievous position because Socialism and a State economy do not have the flexibility of a market economy. That is why I very much agree with my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) and our motion that profitability and competitiveness in industry are vital if we are to create the wealth that this country must have to pay for all the necessary things, such as welfare and hospitals. We badly need them, particularly in my part of the country.
My right hon. Friend went on to say that high spending, high taxation and high borrowing were the cause of our problem. I would add that it is such spending, taxation and borrowing by the Government. Investment through the market is now the only real way that we can get out of the vicious spiral into which high Government borrowing has brought us and pay for the £6,691 million of debt that we owe abroad and the £14,000 million debt that the Government have borrowed from the market here at high rates of interest—4 per cent. more than at the time of the Budget. This is the difficulty that the Government have got us into, and it is only by encouraging investment in industry through the market that we shall get out of it.
But we all have a common objective. We must cure unemployment, which has gone up by 760,000 since 1974, an increase of 133 per cent. The hon. Member for Newton (Mr. Evans) is right: by far the worst figures are for youth unemployment, which stood at 456,000 for teenagers in July 1977. It is all very well to talk about the necessity for technical skills and apprenticeships, but does the Secretary of State realise that the standard of education in Asia, Japan and Korea enables those countries to find the skilled technicians that we are not able to find because of the education standards in our schools? We have to look at the education in our schools as much as at other things that are going on.
It is a ghastly thought that another man has joined the dole queue every three minutes that the Government have been in office. We are a low-wage economy compared with Japan, the continent of Europe and the United States. I am sure that we all want to see a high-wage economy with high productivity. That can be achieved only if we encourage investment, and that is now being understood—investment not by the National Enterprise Board but by the market because it is profitable to invest.
It is appalling to compare the figures. Investment per man in industry per annum in Japan is £30,000, in West Germany £23,000 and in the United Kingdom only £6,000. This is why our industrial production has gone down and why we have such appalling unemployment. The rate of return on capital was 10·6 per cent. in 1974 and 2 per cent. in 1975, and I believe that the situation has deteriorated even more in the last few years. Our level of production in manufacturing industry is 1·5 per cent. below the level it was in the three-day working week because we have not got the kind of investment that we should have.
The hon. Member for Chester-le-Street (Mr. Radice) said that our share of world trade has gone up in the past two years. In 1964 we had a 7 per cent. share of world trade. World trade has expanded threefold since then, but our share is now between 5·4 per cent. and 5·6 per cent. If we had retained our 7 per cent. share of world trade, we should now be £14,000 million-plus better off in our balance of payments even without North Sea oil. The problem is investment in industry, and we have to see that we get it.
It has been suggested in the debate that we can get the money if we reflate. But it is wishful thinking that market economies will reflate and import inflation—Socialism—from this country. That is the way we got into our difficulties. I believe that at the economic summit the market economies will look realistically at us and say "If you want to borrow, you can do so through the market and not through State loans from one country to another."
When I was in Japan and the United States recently I saw a willingness to invest here, but only if there is profitability and not through Government-to-Government loans but through the market, with individuals and companies lending to other industries. That is the way it can be done. I know that the leaders of industry, including the unions, are beginning to realise that if we wish to cure unemployment we have to look to the market, at the way in which the Germans, the Americans and the Japanese are running their economies and not at the way in which the Government have been running our economy for the last four years or so.
The lesson since 1964 has been the lesson of Socialism. Despite what some hon. Members may say, certain trade unionists are going out to take a look at what is happening in the market economies. I welcome the fact that in October Mr. Hugh Scanlon is going to take a look at what is happening in Japan, because it is only by seeing these countries for themselves that our union leaders can see how they are succeeding, with good labour relations, based on consensus, enterprise and the encouragement of production.
If that could be done here we could succeed, but we can do it only if we get investment both from our own country through profitability and from other countries because they want to use their surpluses. But these countries abroad will not invest in a Socialist State which has brought us to this position. It is only by a change of Government and by carrying out the terms of the motion that we shall succeed. I hope that we have a change of Government so that it can be done.
Over recent weeks Granada Television has been presenting a programme called "Nuts and Bolts", analysing the industrial problems of Great Britain and other countries. Among the leading thinkers taking part are the right hon. Member for Lowestoft (Mr. Prior), my right hon. Friend the Chief Secretary to the Treasury, various captains of industry, trade union leaders, and leading economists and consultants. Towards the end of one of the programmes, the chairman was moved to say that he wondered how a worker at home, worried about the future of his job, working on a machine probably 40 years old and worried about the prospects of cheap imports undermining his employment, had viewed the programme. He said that in all probability the worker had switched off 20 minutes before the end of the programme.
I share his view. But I must say that this debate so far will probably be treated to the same fate by those who begin to read it or hear some of it on the radio, because an extraordinary range of views has been expressed about what are the difficulties that we face in this country and how we are to get out of them.
From the programmes to which I have referred and from this debate, it is becoming clearer and clearer that there are no simple solutions, that there are no panaceas and that there are no recipes for instant regeneration of our industry, our economy or our lifestyle. If we start from that point, lots of other matters flow from it.
As an industrial nation, our task is to produce goods that people want, to produce them in terms of price, quality and delivery which match or beat those of our competitors, and to identify markets where we can sell those products. My great criticism of so many people, certainly in private industry, who endeavour to do these things is that they are not private, in the sense that they are becoming increasingly dependent upon public support to keep them in business, and that they do not seem to be very enterprising in identifying those products, producing the goods or finding the markets. We must all take our share of national blame for the lack of success that we have had in recent years.
The problem goes back certainly to the end of the Second World War. Some would argue that it goes back to the beginning of the century inasmuch as our manufacturing base has been diminishing year by year, whether those who produced the goods had confidence in the Government or whether there were low or high levels of taxation. The world has moved on, and we have to adjust ourselves to the changing position. That is the fact of the matter. I do not think that we can peddle out excuses or other simple solutions about how we overcome the problems which surround us.
I say to my hon. Friend the Member for Chester-le-Street (Mr. Radice) that, in terms of trading, the world has certainly moved on from Bretton Woods and the benevolent American actions of post-war years. I look more to the reality of the emerging Asian and Latin American economies looking for expansion of 10 per cent. or 15 per cent. a year over the next 10 or 15 years. I look to those countries which have low-wage economies and access to high technology and which can compete with us on product after product and industrial sector after industrial sector. There is no way that we can live with their so-called competition. We must recognise that fact and try, within a world context, to do something to alleviate the worst excesses of the competition which those countries offer to Great Britain over the coming years.
If nothing else, we ought to insist, within the GATT round of negotiations, that countries which have the benefit of low-wage economies and also have labour practices which are much worse than those that prevail here or in other industrialised countries at least pay some account to the fact of the advantages which they enjoy. I certainly think that these advantages can be seen in countries such as Korea. Again, a recent television programme showed the Koreans producing consumer goods, cars and steel with workers working 50 and 60 hours per week on meagre wages with non-existent health and safety standards and certainly no employment protection.
It is in that sort of situation that we cannot live with the competition which Korea offers, and we must insist, on a global basis, on some account being taken of the advantages which such countries enjoy.
Secondly, I think it is incontrovertible, and all the evidence points to the fact, that there will be no significant job growth in manufacturing industry, certainly in the coming 10 or 20 years. It is only in the public service area that we can foresee any significant job growth. I think that ideology must be put aside in recognising the realities of the job situation over the coming years. Both major parties must say that they recognise that fact and support it and will maintain relatively high levels of public expenditure in terms of not only improving local and national services but of offering significant job growth in the future.
It was interesting that on the "Nuts and Bolts" programme the right hon. Member for Lowestoft spoke of the wish that there would in future be more continuity of Government policies and legislation. I hope that the right hon. Gentleman will see this area as one in which there is urgent need for continuity.
Thirdly, we must do far more in terms of exciting and radical social policies to try to maximise job opportunities. I am thinking in terms of earlier retirement, a shorter working week, more job sharing and resistance to excessive overtime working. I think we must also recognise the modern realities that technology and productivity usually mean job loss. Therefore, it is very important indeed that we support measures to increase the creation of wealth through automation, technology and productivity. At the same time, however, we must be expending more of that wealth on supporting industrial, economic and social policies that will maximise employment.
In this regard, we also obviously need agencies such as the National Enterprise Board channelling investment into growth areas. There is a lot of dismissive talk about the work of the NEB and the industrial strategy in trying to identify growth areas. It has been given the shorthand term of "spotting the winners". But if we are to survive as an industrial nation we should be in the business of trying to spot winners in a very big way.
If one looks at our trade balances, one realises that there are some scandalous situations in which we have adverse trade balances in all sorts of industrial sectors. The most ludicrous which I have seen recently is the adverse trade balance that we have in Christmas decorations. In area after area there are things which we should and could be producing but we are buying them in as imports. I certainly think that far more should be done in terms of import substitution, and much of the energy we spend on exporting should be put into import substitution, defending jobs, defending our industrial base and doing something of great benefit in terms of providing jobs.
But—and this must be faced—I believe that we must introduce selective import controls, so that we can invest behind a shield which will be there for a temporary period, let me say, but one which I see lasting not much less than a decade, if we are to survive as an industrial nation. That has to be recognised. I expect that in the very near future, regardless of which party is in Government, there will be a definite shift towards selective import controls on a temporary basis if we are to survive as an industrial nation.
However, we do not need to abandon some other matters. I have been greatly distressed in this and in other debates about the glib claims which are made about the deterrent effects of employment and health and safety legislation. The hon. Member for Harwich (Mr. Ridsdale) told us something just now about the freedom which the market economies have in this respect. I do not know whether France constitutes a market economy, but I am told that in France it is impossible for anyone to be dismissed before the approval of the relevant Ministry of Labour in France has been secured. I should have thought that that was far more onerous and draconian than any of the employment legislation that prevails in this country.
My local chamber of commerce announced the results of a survey at the end of last week. It showed that nearly 30 firms were preparing to increase their recruitment over the next 12 months. Those firms were asked whether employment legislation was a deterrent. Of those 30 firms, 11 said that it was and nine said that it was not—hardly a conclusive claim one way or the other. I would certainly put much more store by the survey which the Department of Employment has recently commissioned, which showed that managers welcome that legislation because it gives them the right to manage and that workers welcome it because, for the very first time, they have clear guidelines by which to operate and which they have found of great assistance.
Did the hon. Gentleman indicate that his local chamber of commerce survey showed that over 50 per cent. of the firms which replied indicated that the employment protection legislation was a deterrent to jobs? Is that the figure he gave?
No. I am sorry if I have misled the House. I am speaking from memory, but I think that 28 firms indicated that they planned to increase recruitment, and of those 28 I believe that 11 said that they felt that the legislation had created some difficulties and nine said it had not. Presumably the others had no comment to make at all. However, as I said, I do not think that that was in any way conclusive evidence for the claim that that legislation was a deterrent to recruitment. Indeed, the recently published national survey exposes that as a complete fallacy and bears out the experience of most Labour Members.
Finally, I should like to comment on a subject which seems to have been slipped under the carpet in this debate. I hope that it will be pulled out from underneath that carpet before this debate is concluded. I refer, of course, to incomes policy and the position of low-paid workers under an incomes policy. If substantial salaries for so-called top people can be justified on the ground of equity, I think that equity commands that there should be a clear, coherent and comprehensive policy for dealing with and combating the scandal of low pay which has prevailed in this country for many years.
I suspect that if we did something radical and positive about combating low pay, it might at the same time just do something about the creation of new jobs and a thriving private sector. I believe that much of our unsatisfactory industrial performance relates very directly to the scandalous rates of pay which so many hundreds of thousands of our people receive for doing a full week's work in industry and in many other occupations throughout the country.
At the present time there are about 200,000 people in full-time employment for which they get less than supplementary benefit level. Another 5 million are at or just below the TUC low-pay target. These are scandalous figures, and it is highly necessary for us to make a positive attack on low pay. I think it would have a dynamic effect on atmosphere, morale and productivity in industry and do a great deal about transforming many other aspects of the industrial scene.
We are told that the Opposition's view of incomes policy is that it should be a policy for the public sector but that in private industry there should be a complete free-for-all. To me, that would be a recipe for industrial conflict and confrontation and for a return directly to the Selwyn Lloyd incomes policy of 1962.
I believe that we must conclude that there is no single solution and no single panacea. What we are saying in the debate is that many of our very deep-seated problems go back many years and there are no ways of remedying them completely. But I am certain that the simplistic solutions posed in the Opposition's motion, if enacted, would not result in any improvement. I am not saying that I endorse every comma and full stop of the Government's policy. They have done something to alleviate the problems, but what I wish to see are developments of policies geared to recognise and deal with the central economic and industrial problems that we have in this country. We have begun that task. I hope that in a very short while we shall be given a further mandate to continue to tackle those tasks, in the knowledge that they are modern and not easily resolved and that we are the only people equipped to deal with them.
Order. As hon. Members will have observed, a procession of hon. Members have been anxious to know—and rightly so—whether they are likely to be called during the debate. Beyond making an appeal for brevity, which I do most earnestly—it has already been made by my predecessor—there is nothing that the Chair can do. I imagine that approximately two hours remain before the winding-up speeches, and no fewer than 19 hon. Members are anxious to take part in the debate. By a simple process of arithmetic, each Member can work out how much time he ought to take if he wishes to show any interest in any other hon. Members taking part in the debate.
I hope that the hon. Member for Sowerby (Mr. Madden) will not mind that, in view of your request for brevity, Mr. Deputy Speaker, I do not propose to take up any of his points.
I welcome the fact that the debate is taking place. The last debate in the House on unemployment took place at the end of January. With unemployment at record post-war levels, it is a sorry reflection on our priorities in the House that we should have allowed six months to elapse before having this debate.
We have very serious unemployment in Britain today, with levels of unemployment higher than they have been since the 1930s. Within 16 months of the present Government coming to power, unemployment exceeded the 1 million mark and it has been there ever since. In my view, if present policies are continued it will not be very long before unemployment exceeds the 2 million mark.
The situation is therefore serious, and I wish that some people would realise just how serious it is. So far, the Government, the media and other parts of the establishment in this country have viewed the terrifying increase in unemployment with a smug complacency. I take the view that the great majority of the people wish to work and that only a very small minority of the people do not want to work. The fact that twice since the end of the war—in 1955 and again in 1965—unemployment was down to just over 1 per cent. seems to prove this to me. We have therefore to face the fact today that there is a very large number of people without jobs, probably over 1 million, who want to work. It is important that something should be done about this, and done very quickly.
Apart from the economic waste involved, unemployment is an affront to human dignity. The feeling of not being wanted or needed undoubtedly causes alienation from society. This problem is particularly alarming as it affects young people, too high a proportion of whom are out of work today, and particularly young blacks. In some areas as many as 40 per cent. of them are out of work.
Great social damage was done to this country in the 1930s as a result of the high level of unemployment then, and it will be a sorry indictment of us if, less than 50 years later, we allow the same thing to happen again. It does not say much for us if twice within a century we allow a high level of unemployment to do the sort of social damage that was done as a result of the unemployment in the 1930s.
If we are to deal with the problem of unemployment, it is very important to be clear why we have it today. The reasons are economic and political rather than technological. I believe that unemployment in Britain today is due in part to a deficiency in demand and in part to the manner in which the economy has been managed during the past four years.
I should like to look briefly at the economic reasons. The deficiency in demand arises, in my view, in part from external factors and in part from internal factors. As for the external factors, the Government can to a large extent be excused. They had no responsibility for the OPEC oil price increases, with the consequent enormous transfer of monetary resources across the exchanges. While it is true that there has been a substantial transfer of real resources to the OPEC countries, which in part compensates for this, there is still a gap, in excess of £40 billion a year, between the transfer of monetary resources and the transfer of real resources, which represents a massive deflation in demand in the west. The Government are responsible for this situation only to the extent that they have failed to work out with our friends—and particularly our friends in the EEC—a scheme to balance that deflation. However, the effects on jobs in the United Kingdom from this should not be underestimated.
If the Government have only limited responsibility for the deficiency in demand due to external factors, they have entire responsibility for the deficiency due to internal factors. The savage rise in unemployment since the February 1974 general election was the direct consequence of an attempt by the Chancellor of the Exchequer to control inflation by deflating demand rather than by an incomes policy It failed, as many of us said it would.
No one should be under any illusion. That was what the Chancellor was doing He did it quite deliberately. However much the Labour Party may deny this, a study of the speeches made by the right hon. Gentleman in Opposition, prior to March 1974, shows clearly that that was what he intended to do if he became Chancellor of the Exchequer. He intended to do it then, and he did it in office. He used unemployment as a deliberate instrument of economic policy. Indeed, my right hon. Friend the Member for Lowestoft (Mr. Prior) drew the attention of the House, in the January debate, to remarks to that effect in The Guardian by Mr. Peter Jenkin, a gentleman not very well known for his support of the Conservative Party.
Of course, the Government's policy pursued at that time failed. Inflation escalated rather than fell, and eventually the Chancellor of the Exchequer had to introduce an incomes policy, which has worked rather better. But the tragedy is that as long as inflation has remained at a high level—and it still is at a high level—with the fragile nature of confidence in this country, the Chancellor dare not abandon his high unemployment policy. The insufficiency of domestic demand and the consequent high level of unemployment are therefore entirely the responsibility of the Government and the Chancellor of the Exchequer. They were the intended results of the Government's policy, and there is no getting away from this.
The situation has been greatly worsened by certain other aspects of the economic policies of the Government. I do not want to go into this in any detail at all, but there is no doubt that the general lack of economic confidence which has marked this period of Labour Government, the constant changes in economic policy, often forced on the Government by external factors, the high rate of company taxation, the effect on the private sector of Government-induced inflation, the attack on small businesses by the application of legislation appropriate to large firms but not to small firms, the burden of direct personal taxation and, above all, the imbalance between the private and the public sectors have all accentuated our economic difficulties and worsened our unemployment problems.
Lest anyone thinks that I am being unfair to the Government and that they have not been as bad as that, it is worth while spending a second or two examining their record on unemployment. When the Tory Government left office in 1964 on a seasonally adjusted basis 340,300 people were out of work in Great Britain. Six years later, in June 1970, when Labour left office, the figure was 567,600. In February 1974, when the Tories left office, the figure was 554,300 people out of work. Last month, under Labour, the figure was 1,304,600. In other words, whereas unemployment rose by 1 per cent. of the working population under the 1964–70 Labour Government and has risen by 3·2 per cent. of the working population under Labour since 1974, unemployment fell marginally under the last Conservative Government.
It is, therefore, a fact that both the present and the last Labour Governments have presided over rising unemployment. Instead of howling slogans across this House and elsewhere, I ask the Labour Party to examine its policies in an objective manner to try to find out what has gone wrong. If it does so, I think it will find that at least some of the arguments that are from time to time advanced by the Opposition have a certain degree of validity. After all, it has gone wrong twice for the Labour Party. If I were a member of the Labour Party, I would be beginning to worry about the situation.
Perhaps I can conclude briefly by summarising a threefold strategy as I see it in order to deal with the problem of unemployment. First, there must be a restoration of economic confidence and we need a steadier hand in charge of the Exchequer than we have had these last four years from the right hon. Member for Leeds, East (Mr. Healey). Secondly, there must be a sure but steady increase in demand from both home and export markets in order to increase the number of jobs. Thirdly, there must be a substantial reduction in direct taxation which will encourage individual and corporate initiative and enterprise, redress the balance betwen the public and private sectors and leave more money in people's pockets which they can either spend, and so increase demand, or save and so provide funds for investment.
In my view, those are the keys to an expanding economy and a reduction in unemployment. I hope that we shall see those keys being turned by a new Conservative Government before this year is out.
The hon. Member for Harwich (Mr. Ridsdale) suggested that the cause of our present level of unemployment was Socialism and that the solution was industrial investment from private sources, which was impeded by Socialism. I find both elements in that analysis quite extraordinary.
In the two and a quarter years that I was Parliamentary Secretary at the Ministry of Technology, dealing with the shipbuilding industry, I toured every yard in the country. I was horrified at the antiquity of the equipment that was in use and the antiquity of the very fabric of the buildings. I saw a crane in use in a shipyard in Aberdeen with the date of its manufacture stamped on its side—1888. Was it a Socialist Government who impeded the replacement of that crane, which had already been there for 80 years? I saw equipment of similar antiquity in the textile industry.
The level of industrial investment in this country has been too low year after year, whatever the incentives provided by Governments of different political persuasions and however much money was available for investment. Today adequate money is available on the private market for a much higher level of investment. Therefore, I find the analysis that it is Socialism which has caused a low level of industrial investment and, hence, our present unemployment difficulties quite extraordinary.
I find it equally extraordinary to suggest that a high level of industrial investment will solve our problems of unemployment. It is necessary to get a much higher level of industrial investment, because we must get higher productivity and increase the amount that we produce as a nation. But we shall not necessarily thereby increase employment. We should not deceive ourselves. Certainly, without Socialism we should not reduce the total level of unemployment by higher industrial investment, because what happens in an unplanned economy with a high level of industrial investment today is that in many industries productivity rises, the level of production rises, the amount of wealth creation rises and the number of jobs sharply declines.
In the chemical industry, which is a model of that, I heard last year of the plan of one major company to invest £300 million in new plant in order to produce in the short term a quite substantial number of jobs both in construction as well as in the chemical industry. In the long term, 300 jobs would have been created at a cost of £300 million— £1 million a job. That is what happens with a capital-intensive industry, and that is exactly what we want if we want to maximise wealth creation.
But we must not deceive ourselves that that is job creation. It is not. What we sorely need in this country is not only an industrial strategy based on a much higher level of investment—for reasons which I shall demonstrate in a moment, much of that investment will have to come from the National Enterprise Board and from public sources—but side by side with it we need an employment strategy which increases employment and uses the new wealth which is created in the social sector—that is to say, in services, which may be partly in the private sector and, of course, in the social sector, which will largely be public sector jobs. One cannot have a lower level of unemployment if one has a lower evel of public expenditure overall. We ought to begin to understand that at long last.
I said a moment ago that we had had a historically low level of industrial investment in this country and that the cause was not Socialism. What are the causes? I think there are perhaps three to which one can point. Undoubtedly, one was the existence of empire over a long period. I would refer hon. Members, if I may do so in this somewhat biased House, to a work by a man called V. I. Lenin, published in the early years of this century and called "Imperialism", in which he analysed the effect of empire. The House knows that I am very far from being a Marxist, but that is a nice piece of economic analysis.
Lenin demonstrated how, in the case of this country above all, it was already more profitable in the nineteenth century to invest money overseas than it was to invest it domestically, because the rate of return was higher. Therefore, our level of domestic industrial investment fell steadily behind that of other major industrial countries which had got into the industrial game rather later than we had but had also got into the imperial game rather less successively than we had. The most notable was Germany.
Of course, from that date onwards we fell behind Germany in terms of industrial performance. It had nothing to do with the post-war period. Let us not deceive ourselves that it was merely because German industry—this is an old British myth—was destroyed in the war and was replaced free, gratis and for nothing at the end of the war and, therefore, Germany was more successful. In terms of productivity and industrial performance, Germany was more successful than we were for a very long time before the last war and, indeed, before the First World War. That was one reason.
The second reason was touched upon by my hon. Friend the Member for Sowerby (Mr. Madden). For far too long we have been a low-wage economy. What is the effect? Partly, the effect is that it produces what the hon. Member for Leek (Mr. Knox) rightly described as a deficiency in demand. It is a deficiency in demand which has nothing to do with the incomes policies of the last few years. It has been there for a very long time.
The second fact is even more important. It has always been preferable in this country for an employer to take on two or three extra work people than to invest in a machine that would do the job more efficiently and, in the long run, at lower cost. The effect of that over many years has been that it has kicked up employment levels, because we took on more people than we should have employed by virtue of using people rather than machines to do the job. Suddenly it caught up with us. The long-term effect of that policy is that we are pricing ourselves out of world markets. It also makes us so inefficient that we cannot even sell in our own market in competition with foreign companies which have for many years made the investment that we have failed to make.
The third reason is also very familiar. It relates to one of our most successful institutions—the City. For a long time it has been more profitable for people to put their money into certain financial transactions in the City—not least in recent years in property—than it has been to put it into investment in industrial plant and equipment.
That is why we have had a low level of investment in industry. It is not because of lack of incentives that have been offered by both Labour and Conservative Governments to private industry. There has been no dissent on political philosophy in that respect. There has been argument about whether it is done better by investment allowances or by investment grants, but these are arguments on the margin. The incentives are there; it is simply that they have not been taken up.
What is the answer? We must get a higher level of investment and with it we must have a social strategy. However, we must also produce a labour force that is trained and educated, and retrained and re-educated for the needs of a highly automated economy. That is what we have failed to do. It is not the fault of school education. I notice that the hon. Member for Harwich went back on an old theme and said that we must change what happens in the schools, but we cannot do it by the age of 16. It is no good looking backwards at the 11 to 16 age group in education and saying that that is where the answer lies. It does not.
We must have a continuing education and training programme after the age of 16 in order to fit young people for the demands of modern industry. Along with industrial investment, we must have investment in people. The two march hand in hand.
We must also look at the possibility of retraining and re-education throughout life. If we are to modernise our industry, it must be a continual process. This means that we must change the skills within the labour force if we are to remain efficient. That implies that we must look at the concept of paid educational leave as it is called internationally. I do not care whether it is called that or whether it is called paid training leave. It makes no difference. This is already on the statute book in France and has been so since 1971. It has been on the Swedish statute book since 1975. We have scarcely even begun to consider this. We have one research study on the subject.
We must look at the possibility of early retirement in order to take people off the labour market, particularly those who have reached an age at which they have no desire any longer to learn the skills to adapt to the requirements of changing industry. But at the moment we do not have—this is not a criticism of the present Government, because no western country has it—a strategy that draws together industrial investment policy, employment policy and social, educational and training policy. We do not have that strategy. Until we do, our problems will continue.
If we look at the youth unemployment problems we see, as the hon. Member for Harwich said, that there were 450,000 unemployed last July. Perhaps the figure will be even higher this July. Of course those numbers then rapidly decline, because that is the school leaver population.
Yes, indeed. I am sorry, the hon. Member for Harwich was referring to teenage unemployment, and the July figure includes a very high proportion of school leavers. For that reason, the figure then falls away rapidly. It still leaves a very substantial residue, however, and one of the things that worries me about the present youth opportunities programme—which I wholeheartedly support—is that it concentrates very heavily on the school leaver. I suspect that it may make the problem of the 17- and 18year-old worse than it was under the old job creation and work experience programmes when they were separate, mainly because it is geared very heavily to the problems of the school leaver.
We are far from solving the problems of youth unemployment. There are some serious problems in the youth opportunities programme because it is partly composed of what we can only call palliatives. I go along with the notion that many young people cannot get jobs because they do not have the experience and skills, and, therefore, one must give them work experience. By giving them work experience alone without continued training, however, one is not giving them a basis on which they can not only hold down a first job but adapt to technological change and learn new skills at a later date.
I hope that we can begin to evolve the sort of strategy that I have described and that we will concentrate upon those early years after the statutory school leaving age. I hope that we shall seek for all young people work experience allied to continuing education and training so that they not only acquire the skills that they need in first employment but acquire the basis upon which they can cope with a rapidly changing society and rapidly changing industry. This is needed if the industrial strategy is to be successful and if we can get the level of investment required.
The hon. Member for The Wrekin (Mr. Fowler) made an interesting speech. To be honest, if we had 10 or 15 years, his strategy might solve our problems. Much of what he said we should do would solve the problem in a decade or so, but the problem is rather more immediate and pressing than that.
We have heard today every alternative policy suggested. Some hon. Members have called for more regional development, some for less. Some have called for more Government grants, income tax and general taxes on business, some for less. The possibilities of education and its difficulties have been raised. We have heard a call for a shorter working week and less overtime, and criticisms of our low-wage economy. We have also heard the final philosophy of despair—the shutting out of imports—from the hon. Member for Sowerby (Mr. Madden).
The only thing that we have not heard about is the policy of selling more products. I was amazed that in employment debates in this House we rarely hear anyone bring up the question of selling and marketing products and servicing them after they are sold.
It is my experience in industry—I worked in industry before I was elected to this House—that there is never a problem in persuading management to invest if there is a clear, obvious and virtually insatiable demand for one of the products that the company is manufacturing. When that occurs everything else slips into gear and people get on with the job.
All too often this country makes a really miserable attempt at marketing and selling many of the goods at our disposal. I do not know whether it is traditional British reserve or difficulties over languages. Only last week I was talking to a young man who runs a business employing 10 or 12 people, which is based on supplying spare parts for Triumph motor cars. Basically his business is to recondition gear boxes, back axles and engines. He told me that at a time when all these people are unemployed and British Leyland is in difficulties, he is totally unable—despite pleading, begging and offering cash—to get the necessary spare parts from the Triumph works to build his gear boxes, and so on.
If he cannot get them it means that other people cannot get them either. There is a good range of Triumph cars, but just imagine trying to market them in Germany, being faced with the prospect of a gear box or back axle going and being unable to get the spare parts. Just try to sell that German another Triumph car in five or six years' time. We cannot, and we do not deserve to do so.
The other great panacea that is often advanced is that of investment. No doubt long-term investment will solve our problems, but I have never thought that in the short term—say, in the next six to 12 months—it can make very much of a contribution to their solution. This country must settle down and recognise that we must make the best of what we have got—and certainly that we must make more use of it than we are now doing.
Those in the media constantly harp on the effect of strikes. If people spent less time talking about strikes and more time dealing with the unbelievable number of restrictive practices and the lack of productivity in industry, I believe we could do something with what we have got. It is pathetic to visit an enterprise which has gone in for some investment and to be taken by management or unions to see brand-new machinery sitting unused in the corner of the firm. When one inquires one is told that it has been idle for 12, 15 or even 18 months because nobody has switched it on. It is hopeless to believe that anybody in his right mind would make investment in that kind of atmosphere.
We certainly must make more use of investment. I believe that Britain has a reasonable range of products to sell. One country's washing machines are no better or worse than those produced by another country. The same goes for cars and for a large number of standard products which have become part of civilisation today as we know it. I believe that on the broad front British products are competitive in sheer engineering content and capacity. But we must get out and sell them more effectively than we have done so far.
Many contributors to the debate mentioned Government investment and involvement in industry. I do not see why there is so much objection among many Opposition Members to such Government investment and involvement. Let me give an example. I am amused when I hear it said that the Employment Protection Act is making it difficult to sack people. Until a few months ago there were two mines in my constituency employing 700 people. However, those who owned the mines proceeded to close them in precisely 36 hours. There was no question of 90 days' notice. Therefore, to suggest that it is difficult to sack people in Britain is not a particularly saleable idea in my constituency.
As the local Member of Parliament concerned with the effects of mine closures, I approached the Government with considerable enthusiasm and dedication. I do not believe that anything the Government are doing in this respect is wrong; indeed, their actions so far have been totally commendable. They have been looking for somebody to become involved in those mines and to continue to operate them. The company which the Government have interested in the mines has used its geologists to investigate the strata and to analyse exactly what tin they contain. The Government also have put in geologists to undertake the same operation. When both sets of geologists have finished the investigation, the two sides will meet and decide on the possibilities. If they come up with something that suggests that within a reasonable period of time the mines will become marginal or profitable the Government have clearly indicated their willingness to make a substantial contribution to their revival.
What is wrong with action of that type? I wish that the Tories in my constituency would be honest and state clearly the fact that they believe it to be wrong that such an exercise is being undertaken in those mines. I live in a county with 14 per cent. male unemployment, and mineral extraction is the just about only way out of our difficulties. Therefore, the kind of involvement which the Government have backed does nothing but good.
I believe that the Government should be prepared to run a laundering arrangement. They should examine companies, save some, discard others, and try to do something to put other companies back together. However, I believe that the Government should then get shot of those companies and take on other firms that find themselves in difficulties rather than continue like a broody hen to protect the original firms for the next 30 or 40 years.
We do not discuss our nation's total failure to become involved in the technologies of the present decade. We often hear the traditional arguments that our shipyards are failing and that many other industries are in enormous difficulty, but they have maintained their share of the world market fairly well. I am not saying that the situation is perfect, because we are in a competitive world and have to compete with all the other countries, but taking world trade as a whole, we have done fairly well on our traditional front.
However, where we have failed pathetically—we would have failed completely if it had not been for Mr. Sinclair, of St. Ives—is that we have not become involved in the technologies of the present decade, which is an electronic decade. This activity will provide massive new employment in the next 20 or 30 years. Some people talk as though we should ban some of the new technology; they argue that the new technology and electronics industries will lead to a reduction in the number employed. That may be the case, but that technology will come into this country whether we produce it for ourselves or import it from somewhere else. Therefore, we must get involved and at least obtain our fair share of the work in world markets.
We must not try to pretend that these technologies do not exist and push them away from our borders as though they represent some new science of which the United Kingdom cannot take advantage. Anyway, I doubt whether at the end of a couple of decades new technologies will result in a great reduction in labour. It is part of a world technological revolution, and this country must be part of it.
Having dealt with a new industry, I draw the Minister's attention to the prospects for the oldest industry of all, namely, agriculture. I am told that the productivity per man in agriculture in the United Kingdom is virtually the best in the world, and indeed that is very nearly the case, but if we analyse British agriculture in terms of the amount of production per acre it is anything but good.
I meet many farmers who farm 250 or 300 acres. In conversation with those farmers one finds out that the farms are run by father and son with subcontractors being brought in for a week or a fortnight to help with the harvest. Not many years ago those same farms were offering employment for 10 times as many people. I have no wish to return to that position, but I believe that one of the more unfortunate aspects of the common agriculture policy is that Britain is reducing its percentage of Europe's agricultural output. If that is the case, there is bound to be a reduction in the number of workers involved. It is suicidal that we do not recognise the fact that agriculture is in many ways a manufacturing industry. I do not see the difference between growing turnips and manufacturing wheel nuts. I do not see why there should be such a great divide between the two activities.
My county council has recently added to the problem by deciding, in a county that revolves almost totally around milk production, not to have anything to do with the European scheme to increase milk consumption by giving it to the children. I hope that some of the county council members meet some of the farmers I talk to so that they can be told what the farmers think of that great vote of confidence in them.
It is not Tory, but in Cornwall it is difficult to tell the difference.
Regional development has not been a complete success. My part of the country is a regional development area and has been in that category for a long time. The unemployment figure in Cornwall this month is 10 per cent. Strangely enough, in Cornwall we regard a figure of 10 per cent. as a great improvement, but we are now in July, in the middle of the summer tourist season. Last Christmas the unemployment figure was 15 per cent., and I have no reason to doubt that it will rise to 15 per cent. again.
In addition, the wages in my county are 16 per cent. below the national average. I have always thought that the main justification for regional development programmes—indeed, the reason why I support them and believe that they should be stronger rather than weaker—is that the people in my part of the country and the people in the more remote parts of Scotland and Wales have as much right to share in the prosperity of this nation as have those who live in the south-east of the country and in Birmingham. That is why I support regional development policy. I do not believe that, overall, it necessarily helps the United Kingdom economy, but it is important because people in these areas have as much right to help as has anyone else.
The small firms employment subsidy has only just started and it is difficult to tell whether it will make an enormous contribution. I was extremely pleased when it was brought into operation and I look forward to its making a useful contribution to increased job opportunity in Cornwall.
Most hon. Members regularly address sixth-form colleges. Perhaps I, as a Liberal Member, am asked to address such meetings more often than others because the schools like to invite one representative of each party and there are only 13 Liberal Members for them to choose from.
One of the topics regularly discussed at these meetings is the economy. We are told that these colleges contain the best brains and the most intelligent young people in the area. Certainly the questions are penetrating and demonstrate that, whatever some people may say, our education system is not a total failure. I always ask the young people how many of them wish to make something or farm something. The simple truth is that, at that level of potential academic attainment, no one wishes to become involved in making something. The basic reason is that our manufacturing sector, for reasons that have existed for many years, is not made socially attractive to enough people.
If we consider the composition of the House, we can see what people who think that they will become a great influence in the nation choose to do before becoming hon. Members. I am one of only eight chartered engineers in the House. There are a number of other hon. Members with an engineering industry background, but for a country which relies on that section of the economy for its survival it is a pathetic representation.
Unless this country makes engineering a more attractive industry to our better brains, all the grants, the tax rebates and the rest stand no chance of relieving the basic problem or of reducing the overall level of unemployment. In Germany, Japan and Korea, the best brains go into engineering. Unless we do the same, Britain will be left behind.
I shall do my best to keep to that limit, Mr. Deputy Speaker.
The right hon. Member for Leeds, North-East (Sir K. Joseph) emphasised time and again that, in his view, the reason for the persistence of large-scale unemployment had to do with the way society treats the people he called entrepreneurs. Other Tories call them creative people or some such description.
The debate is taking place against a background of all the highly developed industrial nations of the world, even the miracle economies, experiencing a sharp increase in unemployment during the last five years. We should notice that in Britain the process has been under way for a much longer period and that this is also the case for every other highly developed country except Germany and Japan. Since the mid-1950s, all the developed economies of the world, except Germany and Japan, have experienced unemployment which, at the top and the bottom of the trade cycle, has been higher than at the previous peak and trough.
We are now in the twenty-third or twenty-fourth year of what looks very much life a long-term contraction in the employment capabilities of the highly developed economies of the world, including, now, Germany and Japan because they are also experiencing the same problems. The only reason why they have entered this wretched drama later than others is that their history in the last 30 years has been so different. They had to rebuild their economies after a tremendous amount of destruction, and the act of rebuilding, in physical terms, their means of production gave them a longer boom than was enjoyed by the other participants in the Second World War. That helps to place the matter in perspective and suggests that there is far more to the explanation for unemployment than the simplistic reasons offered by the right hon. Member for Leeds, North-East.
The right hon. Member was careful to say at the beginning of his speech that he was attempting to adduce reasons for unemployment being higher in Britain than in all the other OECD countries except Canada, but his argument was very much a rerun of the Selsdon man show that we have heard so often. It does not cut any ice with the British people.
Let me offer some specific examples. The right hon. Gentleman told us that all public expenditure is counter-productive. He said that, in net terms, public expenditure produces unemployment. He said that in more ways than one. I suggest that if the right hon. Member went to Birmingham and stood in the Bull Ring and tried to tell the people of Birmingham that the State's intervention in the affairs of British Leyland was counter-productive, the laughter would be heard all the way to Inverness.
The people of Birmingham know what the effect of State intervention—what the Tories regard as utterly reprehensible State subsidies—has been in their working lives. They know what private enterprise—the entrepreneurs that the right hon. Member talked about at such length—had done to British Leyland. They know the extent of the damage that was inflicted on the British Leyland organisation by the operation of the logic of capitalism.
It is no good Conservative Members shaking their heads and implying, I presume, that there was something peculiar about the way that British Governments behaved over the previous 20 years which damaged British Leyland but did not damage Ford and the other car companies. British Leyland had a peculiar history and, in the end, was obliged to pay out all its profits to shareholders in an attempt to convince the capital-raising market that it was a company worth putting money into. In the end, poor old Stokes had to confess and he accused British capitalism of placing a lower value on British Leyland than on one empty building in the middle of London. That is capitalists talking to one another about the way they behave towards one another. That was what happened in Birmingham, and the right hon. Member for Leeds, North-East would have one hell of a time trying to persuade the people of Birmingham that the present Government's set of State subsidies and this form of State intervention was counterproductive.
If the right hon. Member moved a few miles along the road to Solihull, he might find another reason for the British economy having performed so badly during the past 60 years. There is a factory in Solihull producing Land Rovers. It is an extraordinary place, full of antique technology. It is virtually a museum, but it makes money because the people in that factory use what they have to produce a product which is unique. The Land Rover is a world-famous product which created an entirely new market for motor vehicles just after the Second World War. It has held its place because it is still a world-famous product which people admire. It is a high quality product, but it is made with technology that is laughable.
The factory is in the same state now as when Leyland, a private enterprise organisation, came to the end of its road. We are asking the workers to compete against the best in the world with the worst possible technology, and we accuse them if they do not do very well. As it happens, the Land Rover workers at Solihull do extremely well. It is a wonder to me how they manage that. I counsel Conservative Members to visit the Solihull factory and watch the workers in action. It is truly amazing.
It is unreasonable for us to ask British workers, using antique technology, to compete with workers elsewhere in the world who use the best technology. That is another partial explanation for there being greater unemployment in the British economy than in so many of the other developed economies.
It is easy to talk about the history that has led to that result. We have seen the decline of British industrial investment since the turn of the nineteenth century and twentieth century. Shortly before the First World War, in about 1912, our coal output was the highest that it has ever been. At that time our shipbuilding industry was the largest such industry in the world. My father and his brothers started their working lives in the industry, but not one of them finished his working life in it. They all lost their vocations. They were all dedicated shipyard workers.
The family firms that Opposition Members laud failed their own industries and failed in the simplest way possible. They did not invest in new technology. They refused to do so. The families became rich and powerful, but they did not invest sufficiently. Once they started to make their fortunes, they gutted industries of their vitality by failing to invest. They had their opportunities during the First and Second World Wars and during the boom that followed the Second World War. They refused to take advantage of them. It was not taxation that stopped them. It was too easy for them to continue as before. Suddenly the competition of newly created shipbuilding industries hit them hard. They did not know what had hit them. British shipbuilding workers were rendered totally defenceless against the newly equipped shipbuilding industries in other parts of the world.
That is closer to the true reason for the British economy being so weak when compared with other economies. It is much closer to the truth that the explanation offered by the right hon. Member for Leeds, North-East.
I can think of a number of entrepreneurs who would not be influenced by the possibility of greater profit. That is because they already live with extremely large fortunes. They are not interested in money in terms of profit. The private sector is in receipt of grants or tax concessions totalling about £3,000 million. That is the sum that the taxpayers contribute every year. However, the sector still refuses to respond.
It seems that the only possible response of a responsible Government is directly to intervene in the economy. It is no good the right hon. Member for Leeds, North-East saying that there is some hypothetical world that can be created if only the trend of events of the past 40 years is reversed and we leave everybody free of regulations so that everyone makes profits, becomes prosperous and brings about full employment. There is no historical evidence to show that that is ever likely to happen.
It was notable that the right hon. Gentleman did not choose to examine any of the other possible reasons for unemployment increasing so sharply in all the highly developed countries. It may be that the explanations—there are several—are embarrassing to his case. As we know, there are other highly developed economies that run their affairs differently from ours. They, too, have mass unemployment—for example, the United States. Some of them, too, have low growth rates, such as the United States. They have different tax laws and they have conservative Government, such as Italy and France. There is nothing magical about a Tory Government that will produce full employment.
Another contribution to the differential level of unemployment in Britain might be inferred from the current statistics contained in the Department of Employment Gazette for June. The statistics are based on the length of the average working week in a number of British industries—for example, working weeks of 43 hours, 44·4, 43·5 and 43·3 hours. Also included are the current figures from Europe—for example, 41·8, 41·8, 40·9, 37·3 and 40·4 hours. In other words, the people and countries making up the Common Market work a shorter working week than workers in Great Britain but, as others have indicated, have proportionately fewer people working in their economic system. They also work a shorter working year.
The difference that might be made by a reduction in the British working week or year would not have the calamitous results that Opposition Members suggest, always assuming that we took the other action that is needed. The centre-piece should be a positive interventionist industrial strategy. I must tell my right hon. Friend the Secretary of State that I would wish to see compulsory planning agreements. The companies concerned should be held to the agreements. The agreements should be formulated jointly, not merely between State officials and high company officials but in conjunction with the workers employed in the companies.
Secondly, as my hon. Friends the Members for Sowerby (Mr. Madden) and for The Wrekin (Mr. Fowler) said, we must rethink entirely our ideas about industrial training, education and the link between the two. I emphasise the need to enforce a compulsory obligation on all employers to release young people from the age of 16 years to possibly 20 years for one day, two days, or block release. That should be enforced as an unavoidable responsibility.
Conservative Members will say that that would cost money. However, it costs us much more money not to take that approach. It is costing us a great deal in lack of skills within our labour force. That is a lack that even Conservative Members recognise, although it seems that they have great difficulty in recognising where the solution lies.
We know that British employers are singularly unwilling to train their workers. As the logical response to their unwillingness to invest is for the public to intervene, I suggest that an equally logical response to the unwillingness to train is for the public to intervene to impose an obligation on all employers to provide systematic training for all young people up to the age of 20 years.
I agree with everything that my hon. Friend the Member for The Wrekin said about providing training that will enable workers to adapt. Another of the weaknesses in traditional technologies has been that workers have been too narrowly trained and committed to only one sort of technology. Subsequently they have been found to be functionally immobile and, later in life, much more difficult to train. We should get used to the idea that training must take place throughout a working life and not merely at the beginning.
I must apologise, Mr. Deputy Speaker, for taking rather longer—
On a point of order, Mr. Deputy Speaker. I am sorry that you chastised me in that way. I was interested in what my hon. Friend the Member for Birmingham, Selly Oak (Mr. Litterick) was saying. It sounded good sense to me and I resented the remarks and barracking from the Opposition Benches. We are entitled to hear a good speech and to hear it through.
The hon. Member for Selly Oak was not present when I made my two appeals for brevity because of the number of hon. Members who are anxious to take part in the debate. It is the duty of the Chair to protect the interests of hon. Members. That is what I propose to do.
We have all been struck by the way in which unemployment has hit young people. We should be frightened by the latent possibilities in that situation. If we are not prepared to act as a responsible State in an interventionist manner, inevitably we shall consign the coming generation of young people to the politics of despair. There is already evidence of that in the back streets of our large cities. I am sure that everybody knows what I mean by "politics of despair" and the politics of desperation when people seek violent solutions to obvious problems. If we do not intervene, we shall condemn the rising generation to those politics and we shall condemn ourselves.
The hon. Member for Birmingham, Selly Oak (Mr. Litterick) ended his speech on a sombre note. It is prudent for us to pay attention to it. In the OECD countries youth unemployment is at a level of about 40 per cent. The Secretary of State today provided me with figures which showed that 592,000 young people will be leaving school this summer and will be available for employment.
In Italy, where the level of youth unemployment is about 60 per cent., there have been ugly and evil manifestations of the frustration that that situation is causing. We should not under estimate the inherent possibilities of the level of unemployment here if we do not find a way to tackle the problem.
The hon. Member for Sowerby (Mr. Madden) truthfully said that there are no easy answers to the problem. I should not have believed that when I first read the Opposition's motion arid the Government's amendment. If anything can be said about the two opening speeches, it is that they were more salvoes in an election campaign than speeches directed to the problem.
The right hon. Member for Leeds, North-East (Sir K. Joseph), in a somewhat Messianic and apocalyptic speech, said that if only the private sector could be set free everything would be all right. I
suspect the words in the Opposition's motion which read:
instead of relying on measures which take no account of the root cause of the problem.
It has not been made clear whether that means that the Conservatives would discontinue temporary employment subsidies, the small firms employment subsidies, the job release scheme and other measures. I suspect that if they did that we would be in a serious situation and that the Conservatives would be forced to resort to similar measures. I do not believe that Leeds is the place where divine inspiration often strikes, but I shall delay my judgment.
The Government's amendment is equally complacent. It refers to supplementing
the Industrial Strategy which is a necessary base for the regeneration of British industry and the achievement of full and stable employment in the long term.
I do not believe, and I do not think that the Secretary of State believes, that that proposition can be sustained. The Secretary of State admitted that the industrial strategy in the manufacturing sector will not solve the unemployment problem in the long term. I advise my right hon. and hon. Friends that we can support neither the Conservative Party's motion nor the Government's amendment. They are playing with words and politics.
The Secretary of State will not be surprised if I turn to discuss the Scottish problem. We have heard nothing about that today, and I hope that the hon. Member for Aberdeenshire, West (Mr. Fairgrieve), who has attended the debate faithfully will catch the Chair's eye later. The Secretary of State will recognise that Scotland is vulnerable. The unemployment level of 187,000, were there any other complexion of Government, would have led to riots in Scotland's streets and to a large attendance in the House.
This week we have seen how further blows can be struck at the Scottish economy, incidentally and innocently. Yesterday the Government announced the conservation measures required to protect the long-term interests of the fishing industry. I support the Government fully in that, as does everyone in the industry. But the Secretary of State will understand the consequential problems that those measures create for the industry and for the processing factories, where many thousands are employed. Several factories in my constituency are open today only because of the temporary employment subsidy. I pay tribute to the way in which officials and Ministers in the Department handled the applications.
What special measures can be considered for that industry, which is a victim of the Common Market policies? The industry is unique. We shall have a major problem until the common fisheries policy is renegotiated. I hope that the Government will be able to make an announcement soon about measures to secure the employment of people in the processing industry, who will now face a shortage of fish as a result of the establishment of conservation zones.
We are disappointed that Scottish industry has not had a larger share of the oil-related developments. An article in The Scotsman on Monday showed that the Norwegian Government have raised the Norwegian content of oil-related developments from 15 per cent. in the Ekofisk field to 20 per cent. in the Frigg gas field, and in the latest field, the Statfjord development, Norwegian domestic content is 60 per cent. We have challenged the Government about the Scottish content in the developments off our shores. We have not been given satisfactory answers. The Government have simply told us what is the British share. But that is not good enough for Scotland. We want to know the Scottish content.
Scotland has suffered a terrible blow through the Singer catastrophe. This company once employed 21,000 people and was the largest employer in Scotland. Now it has a labour force of 4,500, and it is to shrink further to 2,500 in the next two or three years. The reason which has been advanced is that of technological development.
The Government should be using oil revenues to create an oil development fund which is separate from anything else. If that fund were available to Scotland—and we have suggested that it should contain £250 million—the Government could go to the Singer management in the United States and say "You have technological developments coming in the next three to five years and we are prepared to do a deal with you to ensure that these developments come to Scotland." Scotland is vulnerable because so much of its industry is controlled by people outwith its borders who can take decisions without paying attention to the social consequences.
My hon. Friend the Member for Dundee, East (Mr. Wilson) has been greatly troubled by the decisions by National Cash Register in Dundee. Only a few years ago it employed 7,000 people. It was one of the great post-war achievements, one of the tributes to the work done to attract overseas industry. The number of people employed there now is just about 1,000, and the fall is due to technological change. Scotland is extremely vulnerable in this respect.
We are disappointed that the Scottish Development Agency has not played a much more significant role in the Scottish economy. It has invested only about £25 million in industrial development, which is about one-third of the amount which the Scottish economy has lost by the withdrawal of REP. I have never yet had a satisfactory answer from the Government of why they withdrew REP, which was one of the few effective attractions to industry in terms of a labour subsidy as opposed to a capital subsidy. In dealing with unemployment, REP has a great deal more to commend it than some of the grants given for large capital-intensive projects which employ only a few people.
One Labour Member cited the example of a company which planned to spend £100 million on a chemical development which would provide very few new jobs. He failed to add that that development would have attracted Government grant at the rate of between 20 and 22 per cent. if it was located in a special development area. By such a scheme, the taxpayer would have been paying an enormous sum for a relatively small number of jobs. I hope that the Secretary of State recognises the need for the Government to reconsider the question of development grants and incentives and to look instead to labour-related grants instead of those promoting capital developments.
Most of the investment incentives and most of the Government's emphasis are far too heavily weighted in favour of the manufacturing sector, with insufficient attention being given to the important service sector. The one scheme that seems to be working in the service industry is the service industry grants scheme, which in Scotland produced 71 jobs in 1974, 159 jobs in 1975, 343 jobs in 1976 and 15 jobs in 1977. I do not believe that the Government are taking effective steps to encourage further employment in the service sector, which, I believe, has the greatest potential for growth.
Employment in manufacturing is now less than employment in service industries in almost all industrial countries. That is certainly true of the United States, Sweden, France, Denmark, Norway, Holland and Belgium. In the United Kingdom, the proportion employed in manufacturing is now down to 30 per cent.
Does not my hon. Friend agree that in constituencies such as his and mine there is a delicate balance between manufacturing and service industries? In shipyards, for example, if more than 50 per cent. of the work consists of ship repairing no grants are available. If more than 50 per cent. of the work consists of shipbuilding, the company is eligible for grants.
My hon. Friend makes his point very well. The distinction between service and manufacturing is quite bogus in the modern world. It echoes back to the incredible taxation policy of the 1966–70 Labour Government. The selective employment tax was introduced as an attempt to convince people that service industry was somehow a disagreeable and nasty industry while manufacturing industry was a good, clean and wholesome activity.
We must move away from that hangover. The great projects of the future will not employ thousands of men in big factories in the manufacture of goods as they did in the past. The rate of mechanisation and technological change is such that the numbers employed in manufacturing in industrial societies over the long term are bound to fall.
The Government's whole strategy will fail totally unless they take much greater account of the service sector and end this artificial distinction between manufacturing and service for the purposes of awarding Government grants and inducements and providing Government facilities. I should like to feel that the Secretary of State has given that matter some consideration and that he will tell us the Government's thinking.
My hon. Friends and I can see no virtue or benefit in voting for the Government or for the Opposition tonight. Neither of them have ever solved Scotland's problems. Only the Scottish people will do that.
In the interests of brevity as requested by Mr. Deputy Speaker, I shall not take up points made by the hon. Member for Aberdeenshire, East (Mr. Henderson), and I do not propose to give way to other hon. Members. I hope to make the briefest speech of the evening.
For two to three years now, unemployment in this country has been at an unacceptably high level. At some 1·5 million unemployed, it is far too high in its own right, and it is higher than unemployment in all of our main industrial competitors. Unfortunately, there is no sign of its falling substantially in the foreseeable future, and if this Government, or an incoming Tory Government, mean to do something positive in this respect, radical changes will have to be made.
One area that my party believes will help is changes in the whole sphere of taxation and incentives, but it is not this area that I wish to discuss tonight, since that aspect has been mentioned already, in this and other debates, by many of my hon. Friends.
The cure for unemployment cannot come from Government services, the nationalised industries, or large public companies. Many people would argue that there is already overmanning in these sectors if they are to become really competitive, but let us not worry too much about that tonight in the present state of unemployment. The only remaining area that can cure unemployment is that of the small business, which accounts for just under one-third of our gross national product. If every small business in the country took on just one more person each we would have no serious unemployment situation. Why do they not do that? A survey has just been completed of over 800 small businesses to find why they will not expand. As we suspected, the answer lies in Government legislation. These companies were asked which Acts discouraged them most from taking on more people. Top of the tree at 80 per cent. was—hon. Members can guess it—the Employment Protection Act.
How often do Governments of all political parties pass legislation that has the opposite effect to that desired? Perhaps we should remember Newton's third law of motion, which states that for every action there is an equal and opposite reaction.
The survey went on to ask which parts of the Act were causing the most trouble. At the top of the tree came sections 70 to 80, which cover dismissal procedures, industrial tribunals and compensation payments. Now here comes the rub. If this genuinely humanitarianly motivated Act is causing unemployment, what are we to do about it?
I say to all hon. Members that if this point is now proved beyond all reasonable doubt we must do something. I suggest that, while leaving the Act as it stands, we should start making exemptions from parts of it for small businesses if they will take on more people. Before Labour Members start talking about going back to the bad old days, with people being summarily dismissed and chucked on to the unemployment heap in an inhuman way, let me say this. Would a person prefer to be 100 per cent. unemployed with no hope of a job, or be taken on by a firm that says "We want to expand and will take you on. We expect to take on more people, but there is the risk that, for reasons beyond our control, we may not be able to give a guarantee of permanent employment."
Again, before Labour Members start objecting, I say also that the exemptions from sections of the Act could be applied only to the extra people taken on from the exemption date, and that the exemptions would be applied only to firms employing below a certain number of people or with a turnover below a certain level, and that when a firm broke through either of these barriers the Act would apply in total.
If the Government are genuine in their desire to cure the curse of unemployment, here is one constructive suggestion that is worth serious consideration and speedy action. I hope that the Under-Secretary, in his reply, will agree to examine the idea in detail on behalf of those who go to bed tonight knowing that they will remain unemployed tomorrow.
I will keep within the limits of time which you, Mr. Deputy Speaker, have laid down as appropriate.
Those who criticise the Employment Protection Act, as the hon. Member for Aberdeenshire, West (Mr. Fairgrieve) did, are arguing from a weak standpoint. In an exchange earlier tonight, it was agreed that European labour and social legislation was of a higher standard than that in Britain. Yet the Tories conclude that the Act influences employers to take on fewer workers—in other words, that it creates major problems for employment. I doubt whether that is so. If it were, why would higher standards in European countries not have the same effect? The critics cannot have it both ways.
I am sure that the Secretary of State is fully aware how the Act has operated. Had employers behaved reasonably in this area over the years, there would probably have been no need for an Employment Protection Act, but in the small firms there is usually more exploitation and conditions are worse and wages lower than in larger industries. If the small employer says that he cannot meet these requirements, that argues against our going back to a system that encourages small businesses. Anyone who thinks that people will work in those inferior conditions is sadly mistaken. The Act was desperately needed, it is a good Act, and all those who want good conditions even in small industries should respond to it.
I want to deal with regional unemployment, which I accept cannot be seen in isolation. Some constructive arguments about causes and cures have been put forward from the Government Benches. We cannot wait another decade for some response, whether by more job creation or by its opposite, an acceptance that production and wealth creation are no longer the problem. The problem for the whole of the western world is now the distribution of that wealth. That is the blocking mechanism that the Tory Party uses against progress. The naked truth is still that the motivation of this economy and therefore of individual capitalists is the maximisation of profit. If profit does not materialise, the blocking mechanism can slow down the economy in all sorts of ways.
We went through a period when there was positive evidence of a strike of capital. It did not reach the headlines of the press, as it would have done if it were news of a strike by miners, dockers or steel workers, but it existed. The consequences have been spelt out clearly by my hon. Friends.
Lack of investment has resulted in the retention of antiquated technology and methods. Many industries in my area date from the turn of the century. En Merseyside shipyards there are still machines that were installed in 1910 or 1912. That is the sort of equipment that British ship workers and ship repair workers are asked to use in competition with Japan and other major shipbuilding countries.
These examples spell out the lesson—that it is not just a question of investment in industry. Western Shiprepairers Ltd. has been forced to close because it followed the line described by my hon. Friends. Because of lack of investment, over a year, despite Government intervention from time to time, the whole thing has gone down the drain, with all the skills involved. On the other hand, the telecommunications industry is not declining, but investment there—to develop, for example, System X—will reduce jobs further on Merseyside.
That is the massive contradiction in the causes of unemployment. Investment, of itself, will not secure the employment levels that we want. There has to be an entirely different approach to the modern economy, so that people no longer have to work as they have ever since the first Industrial Revolution.
What can the Government do? Those who talk of reducing the working week, the working year and the working life are starting a process which will eventually achieve some balance in our efforts for production in a highly technical economy, while at the same time keeping down unemployment. No Government can find the solutions in the direction that we are now taking. Unemployment on Merseyside remains unacceptably high. With the best will in the world, that will not be overcome by regional development agencies, more grants or any of the other Government instruments of the past. Nor will it be done by job creation.
When I left school in the 1930s, I went immediately to a dole queue. I see nothing different in the process today of retaining people in jobs by job creation, and so on. That merely removes them from the list of the unemployed. There is a benefit, but it is purely therapeutic. Unless people are trained for jobs that are being created, the problem will remain. At the end of the road, people who have worked for 12 months will be thrown back on the dole. Nothing is more demoralising than returning to the dole after being trained for a job that does not exist.
We must take a different approach. The tragedy of this debate is that it is largely academic. At the end of the day, nothing will change in employment policy. The Government should now turn their minds towards the long-term problem—that it is no longer necessary for people to work at the rate or for the hours that they did in the past. That means changing our attitude to work, recreation, leisure and education, and the creation of a better world for people to live in. We cannot plan that sort of system in the present situation. We cannot plan what we do not own and what we do not control.
A number of points made by the hon. Member for Liverpool, Garston (Mr. Loyden) have struck a sympathetic note on the Opposition side of the House. I believe that in the fullness of time we shall need, and happily accept, shorter working hours and all that goes with them. I believe that this will come through bargaining, through natural pressures and through all kinds of changes of that sort rather than as a result of a planned programme. I believe that that is what we shall see at the end of the century.
I disagree with the statement of the hon. Member for Garston that wealth production is no longer a problem. In using that phrase, he highlighted what has been the fundamental issue throughout this interesting debate. The debate has thrown up points of controversy even though on many matters—such as the question of the incredibly damaging effect on people's morale of being unemployed—there has been widespread agreement.
The issue is whether we believe that the problem today is fundamentally to do with a lack of jobs or a lack of wealth. I firmly believe that our fundamental problem is a lack of wealth. The Government's view tends to be the other way. What Government policy has done over the past year or two has been very much to emphasise job preservation and creation. We have seen this done through a variety of job creation programmes produced by the Manpower Services Commission and in other ways.
We have seen this policy carried out by industrial strategies which, quite frankly, have had the task of propping up jobs. In many cases such strategies have not been contributing to a more effective use of industry. They have been contributing to keeping people in work. To a great extent Government policy has been directed towards keeping the unemployment figures down. In itself, that is not a criminal thing to do. It is perfectly understandable.
I admit that some of the job creation programmes have been effective in producing short-term instant jobs. We have to question the value of some of these short-term jobs. Nevertheless, I do not blame the Government for embarking upon this policy. Beneath all this lies a considerable worry, which is whether we are not failing to recognise that our true problem is not fundamentally a lack of jobs but a lack of the wealth with which, among other things, we would be able to pay for jobs in the service sector. I do not mind whether it is in the public or in the private sector.
There are endless things that we could be doing in our society. We have only to go through the streets of this city, of Liverpool or of my own constituency to see on every side all sorts of things that could be done better. Many of these things are in the public sector. That does not seem to be something about which we should become hung up. There are many other things that people would like to do in the service realm in the private sector, but they do not have the money.
The essential point which must come out of this debate is a commitment to industrial efficiency and competitiveness. If we follow the present path we shall reinforce our already chronic competitive weakness. I shall not produce a lot of evidence about our productivity weakness. There was, as others have pointed out, a very good debate in the other place yesterday on the subject of productivity. The evidence put forward there by the Lord Privy Seal as well as by Conservative speakers, and the evidence put forward in a good article by the Chief Secretary in The Sunday Times on 25th June, shows incontrovertibly that as a country we suffer from poor productivity. I know that that is a trite saying, but it is something that we can never afford to leave out of our debates.
I shall not try to embarrass the Government by quoting exactly what has happened over the past four years except to say that the Government's own figures show that the productivity record of this period of Government has been much worse than that of any post-war Government.
I am sorry, I cannot give way.
There is a temptation to ask why we are getting so steamed up about productivity. It is said that if we raise productivity we shall, in the process, raise unemployment. It may be that that was the point which the hon. Member for Garston had in mind. We have heard a Scottish National Party Member saying this evening that he believes that the right policy in Scotland is to go for subsidising labour-intensive jobs rather than subsidising the highly efficient industry which, apparently, money is meant to be supporting.
I detect a tendency to blame world demand for our troubles. Everyone knows that we are in a recession of sorts and that it would be nice to get out of it but that the signs are not terribly good that we shall get out of it. Before we start blaming the world situation, the Germans or anyone else, we have to ask whether we are confident that we are getting our share of the existing market. The fact is that a great deal of unemployment is caused because of all of those Japanese motor cars, those television tubes, motor cycles and shoes which are constantly being referred to. We have lost all those markets through our own fault. I shall not try to allocate blame, but we have lost markets which we never should have lost. The true immediate answer to our problems is to become more efficient and regain those markets.
What should we be doing? I cannot go into this at length. We have to emphasise policies which would help to create wealth. That means incentives. We have got into an awful tangle about our wage structure. First of all, there is no doubt that we have made it just as easy for many people to be unemployed as to be at work. That is nonsense. Secondly, there are inadequate differentials between those who are at work. Labour Members say that they want a high-wage economy. That is rather paradoxical because they have been lamenting the enormous advantage which countries such as Korea have because they have a low-wage economy. That is an aside.
Labour Members say that there should be a high-wage economy. That would be very nice. What we have to say is that we must have an appropriate wage economy. That means that for highly skilled jobs, jobs which contribute greatly to our economy, high wages are appropriate. But we cannot hope to have high wages for jobs which do not contribute a great deal to our economy.
It is better to have rather moderate wages and to keep people in work than to drive them out of work by having excessively high wages. We must have some kind of hierarchy with high wages for those creating a lot of wealth, medium wages for those doing the routine jobs, and a bit below that, but at a humane level, enough money paid to those who are not working at all.
We have to look at the nature of our economy and in particular at the whole question of the unofficial economy which is growing up today. I was glad to see in The Daily Telegraph of 28th June a headline in the business section saying:
Treasury to examine cash economy".
We all know that something very odd is going on in our economy, and it may
be that the unemployment figures are misleading in this sense. It may be that a lot of people are working happily and profitably and without too much interference by the tax authorities. They do not appear in the statistics. I was impressed over the weekend to see in my constituency at one of the several gipsy sites that we have in Buckinghamshire a nice Rolls-Royce—not an old one, but one of those rather smart new models. I have a suspicion that that was an indication that there is something called a cash economy which perhaps officialdom does not know much about.
We must get to grips with this matter, because I believe that many people who are working very hard in ordinary, conventional PAYE-type employment are beginning to be very resentful of what is going on in these other areas. Up to now, the Government, social scientists and so on have rather pooh-poohed it and have said that there is a great deal of "phoney" argument. But I do not think that one can go on dismissing it. It is time that the Government and the academic world addressed themselves to it and we tried to deal with it.
This brings me to my last point, that the only way to get out of the present position is by a commitment to work harder. There is a tendency—one hears it in debates here—for people from the depressed areas to say, understandably, "Give us jobs, bring us jobs." If only we could hear them saying "We in our part of the country are determined to create the jobs which will put us on the right footing once again". It is not impossible. It happens in many parts of the world, and it is something we desperately need here.
Before I call the hon. Member for Aberdare (Mr. Evans), I inform him that during his absence from the Chamber I made two appeals for brevity because of the large number of hon. Members who have been sitting here the whole afternoon anxious to take part in the debate. I hope that the hon. Gentleman will respect that appeal.
I was prompted to take part when I heard the official Opposition spokesman, the right hon. Member for Leeds, North-East (Sir K. Joseph) speaking about unemployment and making an anaemic speech to an anaemic motion. The motion talks about "the root cause" of the problem of unemployment, but the right hon. Gentleman was speaking about the national climate in Britain as if it were the cause of the problem, without realising that the western world is going through special difficulties, that we have a problem of unemployment resulting not from a quantitative change but from a qualitative one.
I believe that the world is going through another industrial revolution. We are beginning to realise the implications of the development of automation on job prospects. But from the Opposition Benches we heard the plea that we must allow market forces to solve the problem. We were told that we should have fewer employment controls and that there should be across-the-board income tax cuts and a study of the working of the Employment Protection Act, as if that would provide the solution to our serious unemployment problem.
We must agree that we can no longer allow market forces to seek to solve the problem of unemployment. There is something fundamentally wrong with the economic system under which we live when we have bad housing and unemployed building workers; when we have waiting lists for hospitals and unemployed nurses; when we have overcrowded classes in schools and unemployed teachers.
The cry from the Conservatives is "Let's have cuts in public spending." What will a cut in public expenditure on health do to get nurses back into employment? What will a cut in public expenditure on education do to get teachers back into employment? If there is a cut-back in public spending on civil engineering, what will that do to get building workers back into employment?
Cutting public expenditure is no answer to the problem. Indeed, there will have to be an increase in it, certainly in the public services, to meet the problem.
Since taking office, this Government have introduced a series of special job-saving measures, culminating in the youth opportunities programme, which will come into full effect at the end of the year. The Government have put forward a catalogue of schemes: the temporary employment subsidy; the job creation scheme, with its subsidy for school leavers; the work experience programme; the youth employment subsidy; the job relief scheme; the small firm subsidy; the job introduction scheme for disabled people; and the expanded community industry scheme—all involving public expenditure. Which of those schemes would the Conservatives cut? There is no answer from them. The Government have put forward those schemes, but the only cry from the Conservatives is "Let's cut back on public expenditure." That parrot cry will not answer the problem.
I want particularly to refer to the youth opportunities programme, which will come into full effect at the end of the year. It will provide 234,000 jobs for the 16-year-olds to 18-year-olds, with an opportunity for training and work experience, together with jobs for 8,000 unemployed adults.
The special temporary employment programme will provide 25,000 more temporary jobs in a full year. I believe that that will go a long way towards breaking the present vicious circle, which yearly traps many thousands of young people leaving school. They cannot obtain a job because they do not have the basic skills and cannot acquire those skills unless they get a job.
My appeal today is to the unions and the employers to give absolute backing to the Government's scheme. I hope that I carry the whole House with me in that appeal. I hope that we shall not get demands for cutting public expenditure on youth employment opportunities.
There are more fundamental reasons why we must try to tackle the long-term problem of unemployment, but we have to ensure that the young people leaving school have the opportunity of employment, and I believe that the youth opportunity scheme could go a long way towards achieving that objective.
The Conservative Party talks as though unemployment were due to the machinations of the Government, yet we know that the levels of unemployment in the United States, Canada and many other countries are far higher than here. The sorts of solution offered by the Conservative Party have been applied, for example, in the United States, but they have not solved the unemployment problem. One recalls the situation in the United States in the 1930s, when Wall Street collapsed and the whole economic system got into a critical state. It was President Franklin D. Roosevelt, with his New Deal, who got the economy going again with public expenditure scheme.
I hope that the Government will resist the blandishments of the Conservative Party to make the monetarist answer to our problems. The Government must continue to support the schemes that they have already initiated and develop them to provide employment for those out of work. They have to consider, with the trade union movement, the schemes that the trade unions are bringing forward, pointing out that if we are to move forward into a new industrial revolution, in which we will need fewer people in productive industry, we must move in a Socialist way to share the work available, and that there will be more leisure time, a shorter working week, and so on. For example, we shall have to consider giving teachers and others sabbatical years in which to enjoy their lives.
The Government are working in a constructive way. Although we all deplore the present level of unemployment, no answer to the problem has come from the Conservative Party. No one in his senses believes that a Tory Government would tackle the problem of unemployment better than a Labour Government can do. I do not think that anyone believes such nonsense. In this debate the Tories have had the opportunity to put forward their proposals, but they have offered no real solution. Instead, there has been the constant repetition of old dogma—the dogma that if we leave it all to market forces everything will be all right.
There is need for greater study of the problem. The Government are doing as much as they can, but I hope that they will be able to do more. We must get back to full employment. The Government must carry the trade union movement with them. We must get greater productivity. We must see that the wealth created by the working people is shared by all the people, and that we do not return to a laissez-faire system, where market forces are allowed to operate, because when such forces are left to themselves they lead to the situation which brought about the collapse of Wall Street in the 1930s. That situation would return again to the western world if the monetarists were allowed to hold sway.
Before I call the next hon. Member to speak, perhaps I may say that I am sure all Members of the House would wish to be fair to each other. There are still a number of speakers desiring to be called. I think that five minutes each should be about sufficient, otherwise some will be disappointed.
This is a timely debate in view of the continuing recession we have and the high level of unemployment, but there are three headlines in the labour news section of today's edition of the Financial Times which encapsulate the sort of difficulties with which the Government and the country are grappling. The first headline says:
Unions push harder for 35-hour week".
The story says:
The second headline says:
Coventry and Linwood disputes halt Chrysler car assembly".
The story goes on to say that industrial disputes brought all Chrysler UK car assembly to a halt last night.
My hon. Friend the Member for Aylesbury (Mr. Raison) underline the serious situation that industry in this country is facing through loss of export markets due to difficulties in production. It is a most serious situation with Chrysler. The Government say that they are almost at the end of the road in the amount of money which they are able to give to the company. I appealed 18 months ago to the Government to have ACAS set up a special unit constantly looking into, and trying to sort out, industrial troubles in the car industry. If Chrysler is not enough, we have the difficulties in British Leyland. But that problem with Chrysler is the second one to which the Financial Times refers, and it is a huge problem for the Government today.
The third headline in the newspaper says:
Alfred Herbert to sack 700".
The story goes on to say:
Herbert is the most notable victim of weak demand for machine tools…Export markets are particularly difficult because of the prolonged international recession and emergence of new competition from third world countries.
Thus, there are three great problems—hours of work, industrial disputes, and foreign competition. Indeed, in this debate the comments that have been made on productivity came out in debate in another place yesterday, when, as reported at column 633 of Hansard my noble Friend Lord Carr pointed out that in 20 years there has been a complete change-around in productivity. Twenty years ago we were 15 per cent. better than France and Germany. Twenty years on—that is, now—their productivity is 30 per cent. higher than ours. That is a disastrous turnaround, and something which we simply must change.
I turn now to the problem of the 35-hour week. What we must do, as was said yesterday, is to make our machines work longer and give our people less work to do. That presents two colossal challenges. First, it presents a challenge to the people who maintain the machines who will need altered hours of work, with all that that entails. Secondly, it will result in a big change in leisure facilities, in the work done by local authorities, a change in local transport use and a change in shop hours, to name but four matters.
This is something that cannot be undertaken lightly. The slogan "A 35-hour week and greater use of machines" carries practical difficulties with it. It will need a long period of national adjustment if we are to do this properly. But I think that it is coming. What I hope is that we think it through on a national basis, particularly with regard to the effect that it will have at local level with the demand for more leisure facilities, different hours for people to drive buses to take people to work, and different shop opening hours.
I turn briefly to deal with two aspects of employment that I find particularly worrying in the present situation. The first is the future of skillcentres. Earlier today the Minister admitted that there was a shortage of instructors. He said that there would be a local publicity campaign. But time is very short, because by September 1978 the youth opportunities programme should be fully off the ground. I am really worried whether we shall find sufficient instructors for skill-centres. Some of the skillcentres that have been going for 30 years are not sited in the best positions. We have got to consider providing the courses that they provide on employers' premises and in other education establishments.
I make one comment regarding trade union attitudes towards people coming out of skillcentres. There is evidence that when a man has been on a skillcentre course he is not regarded by certain unions as skilled to begin with, but has to become a semi-skilled worker for a time, because the unions do not accept that a skillcentre course is the same as an apprenticeship. That attitude, in view of the investment that the Government are putting into skillcentres, is something that simply must be changed very quickly. It is serious, it is worrying and it must be overcome.
The second great change and difficulty in employment is the huge increase in the number of women who are now seeking work. Indeed, after remaining constant, as Management Today of June 1978 says in a survey by the Institute of Manpower Studies at Brighton:
the proportion of married women going out to work has risen from 20 per cent. to 50 per cent.
What is more, as the survey shows, there is every sign that those women, if they do not get a job and remain unemployed, will remain on the labour market. The increase in the number of women going
out to work is a very big sea change in this country. What jobs shall we find for them? I hope that we shall be able to find more in engineering, and jobs as instructors and teachers. But most certainly the problem will not go away as it did 15 to 20 years ago, when there was a downturn in employment and when women tended to fade away from the labour market and not bother to continue to apply for jobs. Clean contrary is the case right now. Women remain on the employment registers, and we have to grapple with the problem of finding jobs.
I have two final points to make. The first concerns the shortage of mathematics and science teachers in schools. The Government admit that people teaching maths and science in schools include a number who are inadequately qualified and a number who have never been qualified at all in these subjects. They say that by the end of this year they will let us know the latest figures.
That is desperately serious, because many of the bottlenecks of skills and all the difficulties of getting into apprenticeship courses go back to the lack of good teaching in maths and science in schools. That must be put right by increasing the number of people who are properly trained for teaching maths and science in schools. The Government admit this problem, but they do not even know the figures. They must find out quickly if we are to grapple with the problem of skills.
Finally, I accept that there is room for increased employment in service industries, and particularly in the National Health Service—but it is not an increase in unskilled jobs. The NHS is short of jobs for skilled people, which will mean more training, and improved standards in schools, and so on.
Before we embark upon an expansion of employment in the NHS and the service industries, we must get business going. We must have an expansion of wealth, as my hon. Friend the Member for Aylesbury said. We must not put the cart before the horse. The horse is to make private enterprise and business grow and provide more jobs. The cart is to do the expansion in the NHS and in the service industries. If we get that around the wrong way, this country will not get economic growth and an increase in the standard of living.
I congratulate my hon. Friend the Member for Bedfordshire, South (Mr. Madel) on packing so much into such a short space of time.
I shall be brief. I wish to address my remarks, first, to the question of employment for young people and, secondly, to employment in the coal mining industry.
The starting point for any discussion on this subject must be the creation of wealth—my hon. Friend the Member for Aylesbury (Mr. Raison) referred to that—and a reduction in direct taxation, to which my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) referred.
This is not a panacea; it is a precondition for the creation of the wealth that we want to see. That is all that it is. Some Opposition Members recognise that even if we achieve that we shall still be faced with an imbalance of jobs as compared with the size of the labour force.
A number of proposals have been made to deal with this problem. We have heard most of them during the debate. We have heard about reductions in overtime, in the working week, in the retirement age, and so on. My hon. Friend the Member for Saffron Walden (Mr. Haselhurst) and I believe that perhaps the best way in which we can achieve this balance between job opportunities, on the one hand, and the size of the labour force, on the other, would be to encourage young people to take a different view about the start of their working life, and to follow the suggestion of the hon. Member for The Wrekin (Mr. Fowler)—that apprenticeships should start at the age of, perhaps, 18, rather than 16, and that we should see most young people adopting a new attitude towards the first couple of years after school, in that they would not wish to rush straight into a job but rather to go into some kind of training scheme.
While we may well welcome the youth opportunities programme, we feel that it has been put forward in a rather piecemeal way and that what we want is a different and rather more comprehensive approach to the whole matter. We want to see a really comprehensive programme, which would involve eventually the removal of well over 1 million people from the pool of potential employees.
There are all sorts of advantages to giving this programme a training bias. That is the most important thing. In the debate we have heard a lot about the importance of training. I shall not go into that matter, but that is the bias that it should be given.
The sort of universal training opportunities scheme that we have in mind would have a number of advantages. First, I think that it would give new hope to the middle-aged. One of the most depressing things at an advice bureau is to see people of 40, 45, 50 and 55 coming in and saying that they are unable to get a job. Obviously, one cannot tell people this, but they are almost unemployable at the present time. We see this scheme as a way of overcoming that.
Secondly, with a high degree of training, there would be a better equipped and more highly motivated work force. I think that is obvious.
Thirdly, we think that it would help young people to find out a bit more about what they want to do. I can remember people who went to university because they saw it as a good way of deferring for three years their decision on what to do. There must be others who would not be qualified to go to university or higher education but who would benefit from a period of trainng, and perhaus some experience of different industries, and commerce as well, to help them to decide exactly what they want to do in life.
Finally, I think that such a scheme would encourage people to adopt a different attitude to training. They might well be encouraged to take up further training at later stages in their life.
I am left with only about a minute in which to say something about employment in the coal mining industry. One recent suggestion is that profitable coal mines should be denationalised. This suggestion was touched upon yesterday by Joe Gormley, president of the National Union of Mineworkers, at the NUM conference. I assume that the object of the suggestion is, first, to shift ownership from the public to the private sector and, secondly, to weaken the NUM by dividing up the coal industry.
I think that the author of the suggestion is badly informed. First, individual pits are not quite like individual engineering companies. I do not think that they could be sold off in quite the way that has been suggested. Their profits and losses tend to fluctuate rather wildly, and it is difficult to make sensible forecasts about future developments.
Secondly, and rather more importantly, the NUM has already changed character over the last year as a consequence of the introduction of local productivity schemes. We are likely anyway to see more regional negotiation on the part of the NUM. It is significant that the demands at this year's conference is for £110 a weke. Last year it was for £135 a week.
The prospect for industrial relations in the coal industry is very good, as is the prospect for employment. Recruitment at present is running at the highest rate that it has been for many years. The only disconcerting thing is that some of the applicants in Nottinghamshire, at any rate, have not been able to meet the minimum educational requirements that the Coal Board requires.
Although the prospects in the coal industry are good, they are not so good in many other industries. That is why I come back to the point with which I started, and say that I hope that the Government will look carefully at the proposals that I have put forward for young people.
First, I appeal to my right hon. Friend the Secretary of State, who is a member of the Cabinet. I hope that when he attends the next meeting which will be discussing assistance to industries, in places such as Merseyside in general and St. Helens in particular, he will bear in mind what I have to say about a small clothing industry in St. Helens which requires assistance with liquidity. It has had problems for quite a long time. I am sure that my right hon. Friend's Department is fully aware of the fact, as this firm has received temporary employment subsidy.
The firm is still in trouble, and I am appealing to my right hon. Friend to do all in his power to help this industry, which is planning to increase its labour force by at least 50, which would take the total labour force up to 200. Any small firm which employs or plans to employ an extra 50 people in an area of high unemployment must surely attract the attention of the Government, and in particular the Secretary of State for Employment.
I next refer to the bus and truck division of British Leyland. The staff in this small factory, dealing with buses and trucks, have for the last two or three years feared for their future. They realise that development has been taking place at Chorley, where there is a huge factory producing buses and trucks and dealing with the main maintenance and repair of this transport equipment.
For quite a long time my constituents have made efforts to find out whether the factory in St. Helens is to be kept in production. I have failed to obtain a reasonable answer from the management and directors. I have appealed to my right hon. Friend to help me, and in his reply he referred me to the trade unions. In this case the trade unions have failed to obtain a reasonable answer. Even as recently as the last few weeks my constituents in the St. Helens area have appealed for help to find out whether their jobs are to be retained.
In the main, the speech of the right hon. Member for Leeds, North-East (Sir K. Joseph) covered proposals for tax cuts and leaving the problems of industry and employment to the market forces. Let me remind the right hon. Gentleman and all Conservative Members that some of us have lived long enough to remember the days when the lowest wage earners in the country had to pay taxes under Conservative rule. That applied to even the lowest of low wages paid by the private railway companies. It is on record that the lowest wage earners, with probably only half a week's wages to draw, found that a deduction for taxation was made from their very reduced wage packets.
Many of my colleagues have referred to earlier retirement. I believe that the Government of the day have to consider this very seriously. The sooner both sides of the House, industry and trade unions get together and hammer out a sensible policy, the sooner we shall come to a system whereby the labour required in this country will be shared by those who are young and able enough to work. There are today in this country unemployed teachers, building workers, engineers—in fact, unemployment in almost every grade of work—yet in the parliamentary constituency of St. Helens people are living in houses which are unfit for human habitation and children are still being educated in buildings which were erected more than 100 years ago.
Had the right hon. Member for Leeds, North-East paid attention to the needs of our community instead of referring to the need to reduce taxation and to leave the matter to market forces, and had he concentrated on doing something about providing decent housing and on building new schools and new hospitals where they are needed, he would have come much nearer the mark. I ask hon. Members who doubt whether there is a case for reducing the working day and the working week to examine the system operated by ICI and other industries which, without compulsion or statute, are able, and have been able for many years, to retire their workers in the manual, skilled and professional grades well before the age of 65.
If my right hon. Friend will take the message back to the Cabinet, especially in relation to the bus and truck division of British Leyland and the small clothing industry in St. Helens, and do all he can to retain that labour force and increase the number of jobs, he will be doing a service not only to St. Helens but to the country as a whole.
The constructive question to ask is, who will provide the jobs and how will they come about? When one looks at the scene, it is clear that these jobs will not come from the large businesses of this country. If one talks to any man from a large business, he will point out that one can go a long way up the trade cycle of increased demand before one will have to take on more than a few skilled workers. Consider the public sector, which has absorbed some 1 million people over the past four years. It cannot absorb many more, and if it could the taxpayers could not afford to keep them.
One is driven to the conclusion that the jobs will come from more businesses and new businesses and that these will start as small businesses. Hon. Members cannot name more than half a dozen firms in this country which did not start life as small businesses. Therefore, it is in this area that we should examine how best we can create the conditions and the climate in which small firms can start and grow.
There are four things that are needed There is the motivation. Without that spark, nothing will happen. There is the market. There is the need for skilled manpower and there is a need for investment, both outside the business and retained within it.
One of the motivations of people starting up in business on their own is to be independent. These people find today that they are almost working for the Government. I do not mean solely in terms of time or cash. I mean in terms of the fact that they are not independent because all the time they are looking over their shoulders to see whether they are complying with endless numbers of Government regulations and controls.
I take as one example the Employment Protection Act, but there are many other pieces of legislation that are damaging to jobs. The Secretary of State this afternoon produced a survey from his Department which actually covered half the number of firms that the Small Business Bureau's survey covered. That survey covered the section that the Department's survey did not cover—largely the smaller business employing fewer than 50 people. With double the number of inquiries and responses that the Minister had to his survey, the Small Business Bureau has shown that 38 per cent. of small businesses thought that the Employment Protection Act was damaging to the jobs in their firms and 40·87 per cent. felt that it was a major deterrent. I am sorry that the Minister, having asked to see the SBB survey, did not produce it in the House this afternoon but produced instead a survey which supported his own point of view.
I have only two minutes left, unfortunately, to cover a massive area. But even with the Lever death-bed repentance of the present Government there has been a massive increase in the area of Government intervention which is an overwhelming problem to small businesses. This is inevitable with this Government, because Socialism believes in concentrating power, wealth and decision making in the hands of the State. That can only be at the expense of the climate and conditions which are necessary for small businesses to start and to grow.
The trouble is that the Government want employment but they dislike and distrust employers, other than themselves. They want investment to create jobs but they dislike, distrust and penalise investors. They want a dynamic economy but they have destroyed incentive. As long as those policies are pursued, the right hon. Gentleman will be in charge as Secretary of State for unemployment presiding over unacceptable levels of people out of work.
I apologise to my hon. Friend the Member for Kidderminster (Mr. Bulmer). I wish that he could have had the opportunity to participate in the debate because I know that he has sat patiently throughout, but I promised the Chair to begin my remarks at 9.5 p.m.
This has been the most extraordinary debate. If we are to judge by speeches made by Labour Members, it is hard to realise that we have been debating, towards the end of a Parliament and after four and a half years of Labour Government, the fact that there are 1,446,000 unemployed in Britain. I include school leavers, because they are as much unemployed as the others. When I think of the performance of the Labour Party on the many occasions when, in the days of a Conservative Government, we debated unemployment figures far lower than the present figures, I wonder what has happened to the Labour Party's attitude to unemployment in the past four years.
I picked up a cutting recently from a Scottish newspaper in which Mr. James Airlie, the shop steward convenor at Govan Shipbuilders who master-minded the famous UCS work-in, when commenting on the proposed cut-back involving nearly 3,000 jobs at the Singer plant on Clydebank, said:
If these jobs were being lost under a Tory Administration, all hell would be breaking loose.
We must get this matter in perspective. We have given the Labour Government the benefit of the doubt on many occasions, and we have not pushed them too hard. We have recognised their difficulties over the oil crisis, but the figure of 1·4 million unemployed has now been with us for two years. Nothing we have heard this afternoon from either the Labour Government or their Back Benchers, has given the country any idea how they expect to get us out of our difficulties. The whole attitude of Labour Members has been to defend the present position. They have given no idea of the action which the Government are to take to improve the situation.
The Secretary of State for Employment spoke in glowing terms of the small firms employment subsidy. I thought that had missed something. Therefore, I looked at the figures to see the take-up under the scheme. The figures show that for the latest available date 3,907 jobs have been provided. I do not decry that figure, but we are talking about an unemployment total of 1·4 million.
If the scheme came in on 1st July, it is remarkable that the figures for 1st June show that already 3,900 people were involved in it. I cannot believe that those figures are to be relied on.
The fact is that for years Labour Members have vented a great deal of their spleen and venom attacking Conservative Governments on unemployment figures when the Labour record in the periods 1966–70 and 1974–78 has been nothing short of shameful. I wonder whether they ever stop to think whether some of the unemployment problems have been caused by the actions of Socialist Governments and the problems caused thereby. If they stopped to think, they might also reflect on the fact that since 1945 the Labour Party and the Conservative Party have been in office for about the same amount of time—about 17 years each. During the 17 years of Conservative Government the standard of living, in real terms, rose by 60 per cent. In the 17 years of Labour rule, it has risen by only 6 per cent.
As I pointed out during Question Time today, for every one person who became unemployed under a Conservative Government in those 17 years, 11 people have become unemployed under Labour Governments in the same amount of time. That is a disgraceful record of unemployment from the Labour Party, by any standards.
What is the future for unemployment in Britain? The pessimists of the Cambridge school and Mr. Clive Jenkins believe that unemployment will rise to about 4 million or 5 million. Hon. Members have referred to overmanning, and micro-circuitry and all the problems that that might cause. Above all, there has been a narrowing of our industrial base over the past few years.
It might be of interest to take the example of France, which is not one of the great forward movers, such as Japan and others, but is a country in a position comparable with our own. The total output of cars in the United Kingdom in 1960 was 1,352,000. In France it was 1,175,000. We were well ahead. By 1977, we were producing 1,327,000 cars and the French were producing 3,092,000. Let us take crude steel. Output in the United Kingdom in 1960 was 24,695,000 tons. In 1977 it was 20,410,000 tons. We had come down by about 4 million tons. Output in France was 17 million tons in 1960 and by 1977 it had risen to 22 million tons.
It is not surprising that Lord Soames said in another place recently that General de Gaulle did not wish us to join the Common Market in 1961–62 because he feared the great economic strength of Britain. There is not much chance of the French fearing the great economic strength of Britain today. I say all this because it naturally governs a great deal of the debate that takes place in the House and demands that we should all ask ourselves what contribution we are making and what contribution we should make in government to try to stop the slide.
I did not hear the speech of my hon. Friend the Member for Aylesbury (Mr. Raison), but his views have been echoed in a number of other speeches, particularly that of my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph). As my hon. Friend the Member for Aylesbury said, unless we can create wealth and obtain extra production, we shall not be in a position to provide for our hospitals, our old people, housing and the mending of holes in the roads that the road surveyors are complaining about. None of this can be done without a great improvement in our industrial base and our industrial production.
It is the method by which we produce the goods and the attitude that we adopt to that and to the creation of new jobs that is the deciding and widening gap that separates the two sides of the House.
It is against this background that we must judge the performance of the Government and their preparedness and policies for the future. We have a worse record of unemployment than practically any other nation. We started from a lower level of unemployment and we now have a higher level than practically any other country. That is after introducing job creation activities that are unrivalled in any other country and about which the Government rather boast.
During a period when other countries were pulling in their horns and getting their economies in order, we were borrowing massive sums from other countries. In addition, we have now started to receive the major benefits of North Sea oil and gas. The increased cost of debt from 1974 to 1978 amounts to about £4 billion a year. That is what we shall have to pay out year after year from now onwards. When we consider that we are getting a balance of payments advantage of about £5 billion a year from North Sea oil and gas, the Government's performance is seen to be pretty dismal.
By any test, it is clear that we have a short-lived boom ahead. I shall examine that for a short while because it shows how pointless the Government's policies have been. As a result of the IMF's dictation in 1976, and as a result of the cut-backs in public expenditure that we had been recommending for about two years before that, the country began to get back in order in 1977. Interest rates fell, the pound became stronger and there was more confidence in the pound. Private investment started to increase and the indices started to increase.
It was felt that we were getting out of our problems, despite the fact that for two years before the Government took action on public expenditure countless Ministers and Labour Members had been saying that if the Government carried out the cut-backs in public expenditure that we said were necessary—incidentally, the cut-backs that in the end the IMF insisted were carried through—they would lead to an additional 1 million unemployed.
What happened? The cut-backs took place. It is true that unemployment went on increasing for about another year. From the time that the cut-backs took place to the time when unemployment peaked out, about another 100,000 people went on to the unemployment register. However, since that time the number of unemployed has started to ease again. It was fell that as long as there was greater confidence in private industry we could afford to expand and to maintain the investment, as long as interest rates were low enough to make investment worth while.
But what happened after that? The Government, as a result of pressures that were put upon them, started once more to increase public expenditure. They started increasing public expenditure before we had earned one extra penny to pay for it. As a result, our borrowing requirement increased. The Government have to get their money, so interest rates increase and the Government have to impose an additional national insurance surcharge. The surcharge is designed to hit industry and employment at the very moment when we are beginning to make some progress in reducing unemployment.
Government policies have failed to get on top of inflation. We now know that we are going back into double digit inflation next year. They have failed to get on top of employment, because unemployment is now likely to increase again. The same applies to investment, which will be hit by higher interest rates.
Lastly, the Government have resorted to saying that we have to have a tight wages policy again because that is the only way in which inflation can be defeated. That tight wages policy in itself is another cause of some of the unemployment and certainly a cause of some of the lack of trained and skilled people from which we suffer.
The whole range of Government policies over the past two or three years has come crumbling around the Government's ears. They do not have a clue what to do, as has been perfectly clear throughout the whole afternoon and evening. There has not been the vestige of a new idea from within the Government directed to our future. All that the Government are doing is to rely upon old Socialist measures which have failed in the last four years and will continue to fail.
The right hon. Member has said that he is sorry that information from this side of the House is not forthcoming. Perhaps he can tell the House, industry and trade unionists what role incomes policy can play in overcoming the current economic difficulties and what type of incomes policy his party supports.
I have demolished the Government's case. I turn to the question of what I believe the Government should be doing. I shall complement what my right hon. Friend the Member for Leeds, North-East said this afternoon. I shall begin with the subject of training for skills. All our training for technical skills is in a mess. We are spending a great deal of money, but nobody has any idea whether we are receiving good results from that expenditure. Are we matching the training with the need for skills? Nobody knows.
Much of the training under the training opportunities programme does not involve training for the types of skills that are needed. A number of places are vacant. That should cause the Government more anxiety than it appears to do.
The Government's approach to training is more of the shotgun variety than the rifle variety. We must direct training more narrowly to those sectors of the economy where there is a need for skilled people. The sector working parties should be telling the Government more about what is needed. We should know more about how many trained people are required in each sector, and we must train them quickly. I am worried about the training programme.
I am not mesmerised by the daunting problem and scale of unemployment, nor am I deluded into believing that there is a quick answer. I agree with the hon. Member for Sowerby (Mr. Madden) that there are no simple solutions. There is no panacea for our problem. Britain's position is too serious and too bad in many respects to think that there is a simple solution which will suddenly turn everything back. It is clear, however, that there must be a change of approach.
It is equally clear that we must get the overall economic policy right and ensure that the Government's actions and words do not make things worse. We must examine Government action to see whether it is doing more harm than good in terms of short-term jobs created and long-term prospects. We should weigh up the pros and cons of the Government's job creation measures.
We gave a fair wind to the recent Employment Subsidies Bill. We fully accept the need for assistance to tide firms and their workers over temporary difficulties. But such assistance must be temporary. The problem about the temporary employment subsidy is that in many respects it is not temporary but permanent. When a subsidy is as permanent as this, it has a considerable effect on firms which do not receive it. As a result, one drags all the firms in a particular sector into the temporary employment subsidy because they cannot manage without it. We must, therefore, make it plain that such schemes are temporary.
Our policy is not suddenly to cut off the temporary employment subsidy or the other job subsidies. We recognise that this would lead to far too many people being thrown out of work at a time when the Government have done so little to see that they have other jobs to go to or that they can learn a new trade or skill. Therefore, the temporary employment subsidy and other subsidies will need to be looked at carefully on our return to office to find out exactly what they cost in terms of jobs lost elsewhere, to discover their full effects on other firms and industries, and to examine alternative schemes where this may be necessary.
I am sorry to disappoint Labour Members. I know that they long for my party to say that we will scrap the temporary employment subsidy, but we do not believe that to be the right way to run the economy. We would not have got involved in the TES in the first place, but now that it exists it must be phased out rather than being ended suddenly. We will not do what the Labour Government did with the regional employment premium.
On the question of the special problems of youth unemployment, we welcome the Holland report's recommendations. It was largely on the basis of these that the Government set up the youth opportunities programme, which we understand will be in full operation by September. However, we see little merit in the so-called two-week induction course. It will be better for the schools to cover the ground covered by those courses. We should shift resources devoted to these induction courses to other more beneficial parts of the youth opportunities scheme.
One of the problems with Government-sponsored programmes of this kind is that the response from local authorities or private industry does not necessarily correspond with the areas of most acute need, and we should therefore seek to concentrate policies on high levels of youth unemployment. We should seek to be more selective than hitherto in the communities and localities assisted within the programmes' broad areas. We are thinking particularly of the problems of areas with a heavy concentration of immigrants, and of the problems of unemployed young girls who are perhaps suffering the most.
I come now to the Employment Protection Act. We must consider the impact of employment protection legislation on job opportunities for the young. There is no question of the next Conservative Government's repealing the Employment Protection Act. We would not introduce amendments to it without the fullest consultation with all involved. I do not follow the Government's argument when they dismiss as glibly as they do the question of young people and people working in small firms.
The Government have not carried out a survey into firms with fewer than 50 employees. Labour Members, however, must know of countless examples of small businesses in their constituencies that are complaining about the Act. If they have not heard those complaints they must be deaf.
Many major firms with personnel departments have all the necessary facilities, and are quite capable of dealing with the employment protection legislation and have taken it in their stride. That is certainly not the case with small firms. Therefore, for the Government just to dismiss the view that I have proposed on behalf of my colleagues that we should examine the effects of the Employment Protection Act on job prospects for young people and people in small firms does not seem to me to be throwing the whole scheme out or dividing the country into first- and second-class employees. We would rather have people at work in the categories that I have mentioned rather than out of a job.
If the hon. Gentleman wants specific examples, let him go round his constituency and he will find them.
If time were not getting on, I could say more about training for young people, the importance of training workshops and careers guidance, and the important part that television and broadcasting could play both in attracting people to jobs and, perhaps, helping in training. I have before made the suggestion that we should consider an "open tech" for training people, and particularly for retraining adults. That idea is worth consideration by the Manpower Services Commission. We should certainly go back to full recruiting for the Police Cadet Corps, and I am sure that all of us would like to see young soldier training battalions in the British Army. That, too, would help with the employment package.
The other side of the picture is the creation of the right conditions for industry to flourish—a climate of confidence, a sense of stability. Without that, industry simply will not be able to get on with the job and create the extra wealth and new jobs that the country so desperately needs. We should bear in mind the effect, first, of the Bullock White Paper, and now what other people have said about the Government White Paper, which has been named "Son of Bullock". As an agriculture expert, I do not find the term "Son of Bullock" very suitable, but it may describe the White Paper well.
In any event, I do not believe that the proposals in the Government White Paper will do anything to speed our economic recovery. In fact, I think that they will have precisely the opposite result.
If the hon. Gentleman does not know what we would do on involvement. I will send him copies of countless speeches that I have made in the House and outside.
I believe that the Government could do much more than they are doing if they got their taxation policy right, and their approach to pay bargaining.
We must see that the burden of taxation is shifted from taxing people on what they earn, if necessary to taxing people on what they spend.
There is no better recipe for encouraging the emigration of our skilled and talented and for discouraging effort by all our people than to take so much from the pay packet. If the hon. Member for Newton (Mr. Evans) does not know that, he should go around some of the factories in his constituency.
Nor is anything so damaging for differentials over a period than a rigid pay policy. We have resorted to this under successive Governments and the chickens are now coming home to roost. Skilled shortages are arising during a time of unemployment. We need an approach on pay which enables us to break out of the damaging and destructive cycle of a rigid pay policy combined with excessive and leap frogging settlements.
If the hon. Gentleman would give me another half an hour, I would explain it to him. In the meanwhile, I shall tell him how he can help. He can help by ceasing to bash British industry and by seeking to create a spirit of partnership and ambition. When I read in the amendment that the Government believe in "the regeneration of British industry" I want to read out to the hon. Gentleman a little passage from the last Labour Party political broadcast.
It may be for some, but considering how many hon. Members have been here during the debate, it will not do them any harm.
That broadcast said:
The real blame lies with the industrialists who in their drive for profits have cynically closed firms and thrown millions on the dole. The Labour Party's aim is the common ownership of the means of production so that control of these firms can be taken out of the hands of a few profiteers and tycoons.
Does anyone on the Labour Benches believe that?
They do not believe it. One hon. Gentleman has the courage to say that he does not believe it. What about the others? I will tell them this. That is the sort of policy which has done more damage to this country than anything else in the past 20 years. It is because of those policies, because of the constant reiteration of the old Socialist beliefs, that we now have a 1·4 million unemployed, a stagnant economy, a rising cost of living and total disintegration of much of our industrial base. That is why we shall vote against the Government tonight, and that is why we tabled our motion.
I am delighted to see you in the Chair, Mr. Speaker. You have missed some excellent speeches by my hon. Friends the Members for Chester-le-Street (Mr. Radice), Newton (Mr. Evans), Sowerby (Mr. Madden), Birmingham, Selly Oak (Mr. Litterick), Liverpool, Garston (Mr. Loyden), Aberdare (Mr. Evans) and St. Helens (Mr. Spriggs).
This debate reminds me, Mr. Speaker, of a statement that your predecessor, Mr. Selwyn Lloyd, once made to me. He said that he saw the future as one in which fewer and fewer people could create more and more wealth. He said that our problem as a nation would be to use much of the wealth we created to provide useful employment for others. I still see that as the nub of the problem. Added to that is the increasing number of people still wanting work.
Our problem—and here we do not disagree in any way with the Opposition—is that as a nation we have to become more efficient, save our jobs and create wealth. Secondly, we have to find a way in which we can use that wealth for the benefit of all. Perhaps that is the difference between the two parties. We want to create wealth for the benefit of all. Certainly we want to create wealth to provide jobs for all our people. We intend to increase the national wealth and competitiveness.
First of all we must do something which the capitalist system has failed to do—namely, provide an adequate level of investment. The business world has looked to the Government to help with investment. I make no apology to the right hon. Member for Leeds, North-East (Sir K. Joseph) for reminding him and the House that under the accelerated project scheme up to 31st March 1977 there have been 118 projects involving £7,850,000 worth of investment and 12,800 new jobs. There have been other schemes to promote investment in selected sectors of industry such as the ferrous and non-ferrous foundries, the machine tool industry, clothing, paper and board, electronic components, printing machinery, textile machinery, poultry meat processing, slaughterhouses and wool textiles. Conservative Members may laugh, but the people who work in those industries are delighted with the assistance that has been given.
In those industries there have been 589 offers of assistance involving £272 million worth of investment. A total of £407 million worth of regional development aid was paid in 1976–77. In that year there were 939 offers of regional assistance involving £90 million. Opposition Members will groan on hearing it, but these safeguarded or created 91,000 jobs.
While we must invest, while we must provide more equipment, I agree with hon. Members on both sides of the House that we must use that equipment more efficiently. That must involve training. I agree with the right hon. Member for Leeds, North-East that as a nation we are not yet treating industrial training seriously enough. That is why the Government have maintained apprentice training and why there are more engineering apprentices now than in 1972.
I was very interested to hear the right hon. Member for Farnham (Mr. Macmillan) accuse the Government of creating a skill shortage. In 1972–73 the number of engineering apprentices was under 17,000 a year. During the recession during our administration, there has been an average of 24,000. Who was Secretary of State for Employment when there was a crash in the recruitment of apprentices? Who was Secretary of State in 1972–73, when the recruitment of apprentices was at its lowest ebb? It was the right hon. Gentleman.
I do not deny what the hon. Gentleman has said. I merely said that if the Manpower Services Commission, the Training Services Agency and the whole organisation which I had the honour to help to set up have not been properly used in the past four years, it is not my fault or that of the previous Tory Government.
The answer is very simple. It is that one does not produce craftsmen overnight. The apprenticeship period is precisely of that length. It is hardly reasonable for the right hon. Gentleman to talk of the lack of skill in this country when he presided over the Department of Employment at the worst period for the recruitment of apprentices.
We understand the importance of skill training. Since 1975, over £180 million has been made available to industry to provide support to over 30,000 extra apprentices each year. We have been particularly pleased to help those on sandwich courses.
I shall not give way. I have lost five minutes of the time allotted.
We are concerned to bring about fundamental changes in our apprentice, craft and technician training. Indeed, I was disappointed that employers rejected the principle of collective funding last year, but I am pleased that the Manpower Services Commission has now secured agreement to discuss the document on vital skills, a discussion that is taking place now. I have been discussing with industrial training boards the need to be more responsive to local needs in training. Too much of our thinking has been based on national generalisations rather than meeting the local needs of employers and trade unionists.
I also agree that we need to look very carefully now at the training opportunities scheme. We are all anxious to avoid there being unfilled vacancies—I think that the figure now is 200,000—in view of the number of unemployed. Training can help us there.
Training is not the only way to create efficiency. In saying that, I must add that the right hon. Member for Leeds, North-East displayed his own class prejudice when he referred to the debate in another place yesterday as being about overmanning and productivity. Viscount Amory took a far more balanced view. He blamed management and unions alike for the low level of productivity. I have been preaching productivity bargaining to trade union members for years, and I still believe that greater efficiency is crucial if our people are to enjoy a high standard of living, if we are to improve the Welfare State and if we are to maintain employment.
I was assured by the Opposition that I could begin speaking by 9.30. I lost a lot of time because the right hon. Member for Lowestoft (Mr. Prior) went past his time.
The industrial strategy is about improving efficiency. That is why both the employers and the TUC are supporting it. As my right hon. Friend the Secretary of State made clear, firms often need Government financial help to put their own house in order. They need financial help in areas of high technology.
When I listened to the hon. Member for Leek, I was reminded of how successful has been ICL and, at a different level, the Council for Small Industries in Rural Areas. At Kidsgrove there is work for people in both our constituencies because of the intervention of the State, and in the countryside there is work for the hon. Gentleman's constituents at Leek because of COSIRA as there is work for mine at Market Drayton.
The truth is that the nineteenth century has gone, even in Leeds, North-East. Today we need a partnership of Government, employers and trade unions in order to survive and to prosper, and we need it not only to increase productivity but to solve the problems which arise. Private industry alone cannot solve those problems.
Let us look at the table from which the right hon. Member for Leeds, North-East took the figures he quoted. There is only one conclusion. Between 1966 and 1970, the number employed in the private sector did not fall below 18,200,000. In no year between 1971 and 1974 did that number exceed 18,200,000. The right hon. Gentleman chose as his best year 1971—of course he did. But in 1971 employment in private industry slumped. Need I remind the House that that was the year of the Selsdon policies?
Of course, employment increased when the last Tory Administration abandoned the "lame duck" policy, when they showed that they were prepared to save jobs by nationalising Rolls-Royce, when they decided that they were going to intervene, when they introduced legislation which we have used since to save a considerable number of jobs. I thank the right hon. Gentleman for the figures he produced because they demonstrate that the freedom he talked about as applying under a Tory Administration led to fewer jobs and not more under the last Conservative Government.
I take as a slight the suggestion that I would need a rest after about 10 minutes.
Through Government policy we shall regenerate manufacturing industry, despite the sneers of right hon. and hon. Members of the Opposition. That is precisely what we are doing now. One has only to look at the list of firms which have won the Queen's Award for Industry to know that there are very many firms in this country which are managing very well indeed without the help of the Opposition but depend on the Government for support.
Modernisation and increasing productivity create for us a major problem. I refer back to a statement made by your right hon. predecessor, Mr. Speaker—Selwyn Lloyd—who once said that increasing modernisation, increasing mechanisation and increasing efficiency would create wealth, would save jobs and would help us in new world markets but could still produce a problem of unemployment.
Hon. Members will know the concern with which the Government are treating the introduction of micro-processors. We need to develop micro-processors in this country, but we have to deal with the consequences also, and the free market simply will not do that. There is no way in which we can stand back and look at the rapid development of technology in this country and overseas and expect the free market to deal with the consequent problems of unemployment.
Any Government would be totally irresponsible if they adopted the policies enunciated by the right hon. Member for Leeds, North-East. As a Government, we have several jobs to do and we shall continue to do them. We have to pave the way for the future. We have to take the long-term view asked for by Opposition Members. We have to continue to pursue an industrial strategy which deals, problem by problem, with the bottlenecks that have occurred previously in British industry at every upturn.
I have stressed the need to continue training. We must also get firms through the international recession. It is not good enough for the right hon. Member for Lowestoft simply to say "We shall continue TES but we shall phase it out." We want to know at what point he considers support for industry should be phased out.
The Government's attitude is quite simple. It is that we regard it as most important to help firms which are in temporary difficulties to get through those difficulties without declaring people redundant. The temporary employment subsidy is—
We must continue to support firms which are at present in difficulties. But I believe that the Opposition would not readily abandon the TES; neither would they abandon the small firms employment subsidy. The figures with which the right hon. Member for Lowestoft opened his contribution were in themselves wrong. The number of jobs that were created in the special development areas alone by the small firms employment subsidy—up to the end of May, I think—was over 8,000. That was in firms of only up to 50 employees.
When my right hon. Friend intervened to say that the new scheme started only on 1st July, he was correct. Following representations from various quarters, we decided that we would extend the scheme to all the assisted areas and to firms of up to 200 people. I believe that the small firms employment subsidy will be very successful indeed. It will certainly help the rural areas.
On a personal note, perhaps I may say that I had hoped to visit Cornwall and Somerset tomorrow and the day after. But the concern of the Opposition Front Bench for youth unemployment is so great that they have decided to deny me a pair. [HON. MEMBERS: "Oh."] In the most petty way in which they behave, they have decided that they would rather keep me in this House than that I should visit Cornwall and Somerset and discuss with various responsible people the whole problem of youth unemployment and rural unemployment. That is the sort of Opposition that we face.
I hope that it is on record that the hon. Gentleman offered me a pair. I hope that my Chief Whip will snap it up. I knew that some good would come out of the debate.
I turn to one other important measure that the House has not considered in sufficient detail tonight—the question of youth unemployment. Of course we have a very severe problem of youth unemployment and a particularly severe problem of unemployment among school leavers. I was interested to hear the Opposition spokesman say that the Opposition think that there is little merit in the two-week induction course. My right hon. Friend and I have an open mind on the details of this scheme. We shall certainly be interested to know why this criticism has been made, and why it is that the Opposition want to scrap the scheme. We shall certainly consider the details of the scheme.
What we cannot accept is the observation that the youth opportunities programme should be concentrated in certain areas for certain youngsters, because the one thing that the Government added to the Holland Committee's proposals was a commitment on the part of the Manpower Services Commission that every youngster in Britain who has left school since last Easter shall have the opportunity of a place in a special programme by next Easter. I would not
|Robertson, John (Paisley)||Spearing, Nigel||Watkins, David|
|Robinson, Geoffrey||Spriggs, Leslie||Watkinson, John|
|Roderick, Caerwyn||Stallard, A. W.||Weetch, Ken|
|Rodgers, George (Chorley)||Stewart, Rt Hon M. (Fulham)||Weitzman, David|
|Rodgers, Rt Hon William (Stockton)||Stoddart, David||Wellbeloved, James|
|Rooker, J. W.||Stott, Roger||White, Frank R. (Bury)|
|Roper, John||Strang, Gavin||White, James (Pollok)|
|Rose, Paul B.||Strauss, Rt Hon G. R.||Whitehead, Phillip|
|Ross, Stephen (Isle of Wight)||Summerskill, Hon Dr Shirley||Whitlock, William|
|Ross, Rt Hon W. (Kilmarnock)||Swain, Thomas||Willey, Rt Hon Frederick|
|Rowlands, Ted||Taylor, Mrs Ann (Bolton W)||Williams, Rt Hon Alan (Swansea W)|
|Ryman, John||Thomas, Jeffrey (Abertillery)||Williams, Alan Lee (Hornch'ch)|
|Sandelson, Neville||Thomas, Mike (Newcastle E)||Williams, Rt Hon Shirley (Hertford)|
|Sedgemore, Brian||Thomas, Ron (Bristol NW)||Williams, Sir Thomas (Warrington)|
|Selby, Harry||Thorne, Stan (Preston South)||Wilson, Rt Hon Sir Harold (Huyton)|
|Sever, John||Tierney, Sydney||Wilson, William (Coventry SE)|
|Shaw, Arnold (llford South)||Tiley, John||Wise, Mrs Audrey|
|Sheldon, Rt Hon Robert||Tinn, James||Woodall, Alec|
|Shore, Rt Hon Peter||Tomlinson, John||Woof, Robert|
|Short, Mrs Renée (Wolv NE)||Torney, Tom||Wrigglesworth, Ian|
|Silkin, Rt Hon S. C. (Dulwich)||Tuck, Raphael||Young, David (Bolton E)|
|Sillars, James||Urwin, T. W.|
|Silverman, Julius||Wainwright, Edwin (Dearne V)||TELLERS FOR THE AYES:|
|Skinner, Dennis||Walker, Harold (Doncaster)||Mr. James Hamilton and|
|Smith, Rt. Hon. John (N Lanarkshire)||Walker, Terry (Kingswood)||Mr. Donald Coleman.|
|Snape, Peter||Ward, Michael|
|Adley, Robert||du Cann, Rt Hon Edward||Hodgson, Robin|
|Aitken, Jonathan||Dunlop, John||Holland, Philip|
|Alison, Michael||Durant, Tony||Hordern, Peter|
|Amery, Rt Hon Julian||Dykes, Hugh||Howe, Rt Hon Sir Geoffrey|
|Arnold, Tom||Eden, Rt Hon Sir John||Howell, David (Guildford)|
|Atkins, Rt Hon H. (Spelthorne)||Edwards, Nicholas (Pembroke)||Hunt, David (Wirral)|
|Atkinson, David (B'mouth, East)||Elliott, Sir William||Hunt, John (Ravensbourne)|
|Awdry, Daniel||Emery, Peter||Hurd, Douglas|
|Baker, Kenneth||Eyre Reginald||Hutchison, Michael Clark|
|Banks, Robert||Fairbairn, Nicholas||Irving, Charles (Cheltenham)|
|Bell, Ronald||Fairg[...]eve, Russell||James, David|
|Bendall, Vivian||Farr, John||Jenkin, Rt Hon P. (Wanst'd&W'df'd)|
|Bennett, Dr Reginald (Fareham)||Fell, Anthony||Jessel, Toby|
|Benyon, W.||Finsberg, Geoffrey||Johnson Smith, G. (E Grinstead)|
|Berry, Hon Anthony||Fisher, Sir Nigel||Jones, Arthur (Daventry)|
|Bitten, John||Fletcher, Alex (Edinburgh N)||Jopling, Michael|
|Biggs-Davison, John||Fookes, Miss Janet||Joseph Rt Hon Sir Keith|
|Blaker, Peter||Forman. Nigel||Kaberry, Sir Donald|
|Body, Richard||Fowler, Norman (Sutton C'f'd)||Kellett-Bowman, Mrs Elaine|
|Boscawen, Hon Robert||Fox, Marcus||Kilfedder, James|
|Bottomley, Peter||Fraser, Rt Hon H. (Stafford & St)||Kimball, Marcus|
|Bowden, A. (Brighton, Kemptown)||Fry, Peter||King, Evelyn (South Dorset)|
|Boyson, Dr Rhodes (Brent)||Galbraith, Hon T. G. D.||King, Tom (Bridgwater)|
|Bradford, Rev Robert||Gardiner, George (Reigate)||Kitson, Sir Timothy|
|Braine, Sir Bernard||Gardiner, Edward (S Fylde)||Knight, Mrs Jill|
|Brittan, Leon||Gilmour, Pt Hon Sir Ian (chesham)||Knox, David|
|Brocklebank-Fowler, C.||Gilmour, Sir John (East Fife)||Lamont, Norman|
|Brooke, Hon Peter||Glyn, Dr Alan||Langford-Holt, Sir John|
|Brotherton, Michael||Godber, Rt Hon Joseph||Latham, Michael (Melton)|
|Brown, Sir Edward (Bath)||Goodhart, Philip||Lawrence, Ivan|
|Bryan, Sir Paul||Goodhew, Victor||Lawson, Nigel|
|Buchanan-Smith, Alick||Goodlad, Alastair||Lester, Jim (Beeston)|
|Buck, Antony||Gorst, John||Lewis, Kenneth (Rutland)|
|Budgen, Nick||Gow, Ian (Eastbourne)||Lloyd, Ian|
|Bulmer, Esmond||Gower, Sir Raymond (Barry)||Loveridge, John|
|Burden, F. A.||Grant, Anthony (Harrow C)||Luce, Richard|
|Butler, Adam (Bosworth)||Gray, Hamish||McAdden, Sir Stephen|
|Carlisle, Mark||Griffiths, Eldon||McCrindle, Robert|
|Carson, John||Grist, Ian||McCusker, H.|
|Chalker, Mrs Lynda||Grylls, Michael||Macfarlane, Neil|
|Churchill, W. S.||Hall-Davis, A. G. F.||MacGregor, John|
|Clark, Alan (Plymouth, Sutton)||Hamilton, Archibald (Epsom & Ewell)||MacKay, Andrew (Stechford)|
|Clark, William (Croydon S)||Hamilton, Michael (Salisbury)||Macmillan, Rt Hon M. (Farnham)|
|Clarke, Kenneth (Rushcliffe)||Hampson, Dr Keith||McNair-Wilson, M. (Newbury)|
|Cockcroft, John||Hannam, John||McNair-Wilson, P. (New Forest)|
|Cooke, Robert (Bristol W)||Harrison, Col Sir Harwood (Eye)||Madel, David|
|Cope, John||Harvie Anderson, Rt Hon Miss||Marshall, Michael (Arundel)|
|Cormack, Patrick||Haselhurst, Alan||Mates, Michael|
|Costain, A. P.||Hastings, Stephen||Mather, Carol|
|Craig, Rt Hon W. (Belfast E)||Havers, Rt Hon Sir Michael||Maude, Angus|
|Crouch, David||Hawkins, Paul||Maudling, Rt Hon Reginald|
|Crowder, F. P.||Hayhoe, Barney||Mawby, Ray|
|Dean, Paul (N Somerset)||Heath, Rt Hon Edward||Maxwell-Hyslop, Robin|
|Dodsworth, Geoffrey||Heseltine, Michael||Mayhew, Patrick|
|Douglas-Hamilton, Lord James||Hicks, Robert||Meyer, Sir Anthony|
|Drayson, Burnaby||Higgins, Terence L.||Miller, Hal (Bromsgrove)|
|Mills, Peter||Pym, Rt Hon Francis||Stainton, Keith|
|Miscampbell, Norman||Raison, Timothy||Stanbrook, Ivor|
|Mitchell, David (Basingstoke)||Rathbone, Tim||Stanley, John|
|Moate, Roger||Rees, Peter (Dover & Deal)||Steen, Anthony (Wavertree)|
|Molyneaux, James||Rees-Davies, W. R.||Stewart, Ian (Hitchin)|
|Monro, Hector||Renton, Tim (Mid-Sussex)||Stokes, John|
|Montgomery, Fergus||Rhodes James, R.||Stradling Thomas, J.|
|Moore, John (Croydon C)||Ridley, Hon Nicholas||Tapsell, Peter|
|More, Jasper (Ludlow)||Ridsdale, Julian||Taylor, R. (Croydon NW)|
|Morgan, Geraint||Rifkind, Malcolm||Taylor, Teddy (Cathcart)|
|Morgan-Giles, Rear Admiral||Rippon, Rt Hon Geoffrey||Tebbit, Norman|
|Morris, Michael (Northampton S)||Roberts, Wyn (Conway)||Temple-Morris, Peter|
|Morrison, Charles (Devizes)||Ross, William (Londonderry)||Thatcher, Rt Hon Margaret|
|Morrison, Hon Peter (Chester)||Rossi, Hugh (Hornsey)||Thomas, Rt Hon P. (Hendon S)|
|Mudd, David||Rost, Peter (SE Derbyshire)||Townsend, Cyril D.|
|Neave, Airey||Royle, Sir Anthony||Trotter, Neville|
|Nelson, Anthony||Sainsbury, Tim||van Straubenzee, W. R.|
|Neubert, Michael||St. John-Stevas, Norman||Vaughan, Dr Gerard|
|Newton, Tony||Scott, Nicholas||Viggers, Peter|
|Nott, John||Shaw, Giles (Pudsey)||Wakeham, John|
|Onslow, Cranley||Shaw, Michael (Scarborough)||Walder, David (Clitheroe)|
|Oppenheim, Mrs Sally||Shelton, William (Streatham)||Walker, Rt Hon P. (Worcester)|
|Osborn, John||Shepherd, Colin||Wall, Patrick|
|Page, John (Harrow West)||Shersby, Michael||Weatherill, Bernard|
|Page, Rt Hon R. Graham (Crosby)||Silvester, Fred||Wells, John|
|Page, Richard (Workington)||Sims, Roger||Whitney, Raymond|
|Parkinson, Cecil||Sinclair, Sir George||Wiggin, Jerry|
|Pattie, Geoffrey||Skeet, T. H. H.||Winterton, Nicholas|
|Percival, Ian||Smith, Dudley (Warwick)||Wood, Rt Hon Richard|
|Peyton, Rt Hon John||Smith, Timothy John (AshfieTd7||Younger, Hon George|
|Pink, R. Bonner||Speed, Keith|
|Powell, Rt Hon J. Enoch||Spence, John||TELLERS FOR THE NOES:|
|Prentice, Rt Hon Reg||Spicer, Michael (S Worcester)||Mr. Spencer le Marchant and|
|Price, David (Eastleigh)||Sproat, Iain||Mr. Michael Roberts|
|Prior, Rt Hon James|
That this House, recognising that this country's economy cannot be divorced from the effects of a major world-wide recession, supports the Government's special employment and training measures and its other measures to help small firms, and believes that these
supplement the Industrial Strategy which is a necessary base for the regeneration of British industry and the achievement of full and stable employment in the long term.