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 Geoffrey Rippon Mr Geoffrey Rippon , Hexham 12:00, 24 July 1978

With respect, I feel that what the Minister said today is not adequate to the situation. He adopted a rather narrow statistical approach and he skated entirely over the great issues which are so fundamental to the good economic health of the country and so to employment.

The one thing that is certain concerning jobs, is that we have gone a long way downhill since the Chancellor of the Exchequer asserted at the last General Election that any party which contemplated unemployment at a level of 1½ million was a party unfit to govern.

However one defines the statistics, the fact is that since the present Government took office, unemployment has doubled. An extra person has joined the dole queue every three minutes. Even more disastrously, youth unemployment has risen by more than eight times over the level that it was three years ago.

We have been told, albeit extraordinarily reluctantly, of a Treasury forecast of 1,750,000 unemployed—not in the autumn but next year. The Prime Minister has said that that has now been revised downwards, and that has been confirmed by the Minister today. One thing is absolutely certain. That is that if the forecast had been, let us say, for 750,000, it would have been trumpeted to the ends of the earth. We would not have heard the Minister talking about the difficulties of forecasting.

But what experience we have shows that the Government's downward revisions are usually inaccurate. The Chancellor of the Exchequer said that Britain would have 1 million unemployed in 1975. In act the figure reached over 1 million—1,100,000. He then said that there would be a continuous fall in 1976. In fact, the figure reached 1,400,000. So he then said in 1976 that the Government aimed to reduce the jobless figure to 700,000 in 1979. Now we hear that it could be 1 million more. The Minister may well say that some of this forecasting proves to be very difficult and inaccurate.

These basic facts of high unemployment in the nation as a whole are reflected in the regional figures. The unemployed in the northern region, my own region, are up from a monthly average of 62,000 in 1973 to over 115,000 this year.

In his television broadcast last week, the Prime Minister implied—and the Minister has done the same thing today—that this is in large measure due to the general world recession. As my non. Friend the Member for Brentford and Isleworth (Mr. Hayhoe) said, there is some truth in that. I shall turn to the international aspect later in my speech. But it is quite wrong to believe that some of the remedies are not in our own hands.

In the television broadcast the Prime Minister referred rather complacently to his hopes that with the pound growing stronger the economic position would improve. What is this about the pound growing stronger? It is a totally misleading statement, because the pound is growing stronger only because the dollar is falling. It is not growing stronger against the deutschemark or the Swiss franc or currencies in a similar position. Indeed, the effective exchange rate of the pound has fallen by about 5 per cent. since the beginning of the current year. That was the figure given to us last week by the Chief Secretary to the Treasury.

That, coupled with rising interest rates, is discouraging private investment and lending credence rather than otherwise to the gloomy Treasury forecast. The truth is that Socialist budgetary, taxation and economic policies are all fundamentally unsound. The need for real productivity and real growth can be met only by a fundamental shift in the thrust of those policies—for example, in the basis of taxation, in particular from direct to indirect taxation, with a greater emphasis on incentives.

What is most relevant about public expenditure is not so much the total—although that is admittedly too high—but the balance between productive and nonproductive expenditure, between annual and capital expenditure and between public consumption and public investment. In the short term, there may be much to commend a job-creation and job-saving scheme, which may help approximately the numbers to which the Minister referred. But we must bear in mind that it is short term and is costing gross this year £530 million.

At the best, such schemes are only palliatives. They may be necessary in the short term, but they certainly do not get to the root of the problem. Not to have the defence cuts might well be one way in which to create more jobs. That would be more effective and certainly more in the national interest than almost any other restoration of public expenditure.

What I have said about the short term applies equally to unemployment benefit, which I suppose is costing well over £1,000 million a year more than at the time of the last Conservative Government. It is paid to people who ought to be working, either because they want to work or because they ought to. It is unproductive expenditure. It would be better to spend a good proportion of that money on public capital expenditure in so far as that creates a real national asset and contributes to a real increase in productivity and wealth. For example, it would be proper to spend a little more on building an airport. The Government might start by improving the Newcastle airport at Woolsington. What is more, if the Department of Trade were not so slothful and unhelpful in the matter, we could get sonic money from the Community to help.

One of the main reasons why unemployment has doubled in the northern region is that by their policies and objectives the Government have demoralised the construction industries, which they now foolishly threaten with nationalisation. I was particularly concerned to see the figures for unemployed craftsmen in the northern region, which are nearly 20 per cent. up on the same period last year. It is no wonder that the northern counties region of the National Federation of Building Trades Employers has expressed "keen disappointment" that nothing was done in the Budget to improve existing capital allowances for industrial building or to introduce capital allowances for other commercial buildings. The Minister says that the Government are making some progress in this direction. That is the right thrust of public expenditure.

Rather than spend vast sums of public money on subsidies, grants and unem- ployment benefit, the Government might well do better to increase investment, particularly in new building. In so far as I have some experience in these matters, I have found that the construction industry is a very good indicator of the economy but a very bad regulator.

The housing programme has declined under a Government who in February 1974 pledged themselves, if elected: to reverse the serious fall in the housing programme under the Government"— the Tory Government. In fact, the housing statistics show that housing starts were down by 60,000 in 1977 compared with 1973, and over the whole period the average starts are down by about 40,000 a year.

Too little is being spent on new building work, whether housing, hospitals or schools. For example, the Department of Education and Science has confirmed that no increase in the school building programme will result from the extra £40 million which has been made available this year for education. In other words, the public expenditure is going on extra administration rather than extra construction, productivity and employment. Therefore, by their mismanagement of domestic policies the Government have gravely aggravated the problem of widespread and growing unemployment.

There remains the valid argument on which the Minister relied heavily this afternoon, that only international cooperation on a broad basis can cure the current world depression, which undoubtedly affects us all. Here the Prime Minister has recently been expressing the pious hope that the recent meetings of Heads of State and Government in Bremen and Bonn will have a favourable influence. The Minister said today that world trade expansion was the Government's aim. He also referred to the summit conferences. There are two features of the Bremen communiqué in particular which we can certainly take to heart. I am sure that some Labour Members will note them particularly.

First, there was the denunciation of protectionist policies. I am sure that in the context of curing unemployment the Prime Minister was right to declare it as a benefit of the summit meetings—though he called it "a negative benefit"—that we had not gone further down the road to protection. Secondly, we should welcome the conclusion of the Bremen conference that preserving and improving the competitiveness of industry and increasing its innovativeness are important requirements for a higher level of economic growth and the creation of new jobs. There is no other way in which to deal with the economic and employment problems of this country.