Orders of the Day — Unemployment

Part of the debate – in the House of Commons at 12:00 am on 24 July 1978.

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Photo of Mr Barney Hayhoe Mr Barney Hayhoe , Hounslow Brentford and Isleworth 12:00, 24 July 1978

As sometimes happens with the hon. Gentleman, he is standing the argument on its head. Let us consider these matters in more detail. We saw a rapid rise in unemployment during the early years of the Government's administration. High levels of unemployment were reached during 1975 and 1976. The public expenditure cuts were announced at the end of 1976. Obviously they could not take effect until later. Since the cuts the steep rise in unemployment and the steep change in our relative position has altered somewhat for the better. For the past nine or 10 months we have seen a slight drop in unemployment. The seasonally adjusted figure for July is about 27,000 below the figure for July 1977.

That which produced that improvement is nothing less than the reversal of the Government's earlier policies. The reduction in the sharp rise in unemployment followed the Government's expenditure cuts that were announced at the end of 1976. More than that, it followed the shortfall in public sector spending that was considerable in the previous tinanja1 year. We now know that there was a shortfall running at £3 billion or £4 billion.

Although the Chancellor and others forecast that the reduced public sector borrowing requirement would lead to an extra 1 million unemployed, the rise in unemployment has probably been about 100,000. Indeed, there has been a recent decline. I accept that there is controversy about the figures. There has been a lively correspondence in The Times on the meaning of the statistics. I know of hardly any economic proposition which would not or could not be the subject of a lively controversy in The Times between economists.

It is clear from recent experience that Labour's present cries about Tory policy on public expenditure cutting jobs are an absurdity. I do not contend that cuts in public expenditure will not sometimes cause a loss of jobs. For example, how many jobs have been destroyed by the Government's cuts on defence spending? However, proper overall control of public expenditure need not have the job loss consequence so eagerly and often predicted by Labour Members. The experience of the past two or three years demonstrates that beyond peradventure.