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

I have already been speaking for some time. I want to turn to other matters. No doubt the hon. Gentleman will have the opportunity to take part in the debate.

The Prime Minister seeks to misrepresent our position on job subsidies. Labour Members are only too eager to try to find ways of taking words out of context and to use them for political propaganda in their own constituencies, especially marginal seats where job subsidies are being paid.

Of course, the Opposition are against and critical of the indiscriminate use of subsidies. But the Minister of State knows that the Employment Subsidies Bill was given a fair wind by the Opposition. It could have taken longer had we not been very reasonable in our attitude in Committee upstairs.

The scare stories about job subsidies being axed by a new Tory Government are not true. Temporary help can be useful, but it must not drift into permanence. We must recognise that there is a cost attached to it. The temporary employment subsidy helps those who are in receipt of it, but there is a displacement effect. Other people are harmed because it is being paid. The OECD Economic Surveys for this country, published earlier this year, comments: the Temporary Employment Subsidy, for which official estimates show that the 'displacement' effect may eventually approach between one-third and one-half of the jobs provided. We must recognise that these difficulties are occurring and we must make certain that the best use is being made of the money going into employment subsidies.

The problem is much wider than subsidies going into employment as such. There is the money which is paid for people to go into extra training and which is paid as unemployment benefit. In my book, we must see the whole of this money in the round, judge how it is being used and to seek to make the most effective use of it.

At present, enormous sums of money are involved. There has been a constant chopping and changing of the various subsidies which are available. Anyone who tries to follow all this soon sinks into the subsidy morass. We need a guide to steer our way round it.

I am worried about phoney jobs displacing real and necessary work. I believe that the Government must help, not hinder, the creation of new, real jobs within our economy. Surely there is something ludicrous about a Government who subsidise employment in uncompetitive industries by imposing taxes on employment in productive industries. That is just what the Government have been doing with their 2 per cent. national insurance charge of a couple of years ago and the extra 1½ per cent. this year. A straight tax on employment must have an effect upon job opportunities.

We need over 1 million new, real jobs in the course of the next three or four years—the Secretary of State and his colleagues know that I am merely quoting from their publications—in order to stand still. We need those jobs not to reduce unemployment but to keep it at roughly its present level.

It is now widely recognised that the Government and trade union leaders were wildly optimistic in the proposals that they put forward in 1976. I shall not quote from the "Trades Union Congress Economic Review for 1976", but it certainly referred to the target which it was thought the Government had of reducing unemployment to 600,000 or 700,000 by 1978. That was wildly optimistic. It was very far removed from reality.

One can understand the rather shamefaced comment made by David Basnett at the TUC conference last year when, referring to this rise in unemployment, he said: Since 1974, the first year of the Labour Government, the increase in unemployment has been spectacular—160 per cent. Since 1974, school-leavers' unemployment has risen by an incredible 270 per cent. But since 1974 the TUC has been in Trafalgar Square—to demonstrate about pensions, to demonstrate about women's rights, to demonstrate about race relations, but not to demonstrate about unemployment. How is that for a trade union leader representing people about whom he is concerned? Compare the way that Labour Members now behave in stark contrast with their behaviour in 1972 when the figures just peaked momentarily. There has been talk of dogs that do not bark in the night. But they have not been barking now for four years as the numbers have gone up.

Turning to the targets for reducing unemployment, it is necessary to recognise that the problems may be even more complicated as the micro-processor revolution starts. The national officer of ASTMS puts a very pessimistic view on the matter. Other hon. Members take a different view. We need a much wider and more informed public debate about the employment implications of the chip and of the micro-processor.

We charge the Government with complacency. In 1976, they went along with the TUC and talked of targets of 600,000 or 700,000 as possible levels of unemployment in 1978. However, they failed to recognise the seriousness of the problem. They concentrated too much upon palliatives rather than on trying to deal with the long-term solutions necessary to get job prospects moving again.

There is absolutely no doubt in my mind that we need to widen the labour market. We need to try to extend the labour market. The prerequisites are, first, a better tax climate, because we want incentives. We shall not get things moving otherwise. We need incentives not only for the entrepreneurs, the better paid and the skilled people who have been leaving this country too often in the past because they felt that they owed a duty to themselves and to their families to get the rewards which were available to them elsewhere, but for those at the lower end of the scale where the juxtaposition of social benefits and taxation means that there is a surtax on the poor often as high as—sometimes even higher than—the surtax on the highest levels of income. Therefore, we must have a reform of taxation which gives better incentives.

We need improved business confidence, more continuity in Government policies towards industry and more acknowledgement of the common ground so often referred to by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph). We must seek to create more of that common ground in dealing with industrial problems, because often the life cycle of decisions in industry is much longer than the time span of a Parliament. People making investment decisions need a better assurance of continuity.