Scotland (Government Policies)

Part of the debate – in the House of Commons at 4:47 pm on 15th December 1980.

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Photo of Gavin Strang Gavin Strang , Edinburgh East 4:47 pm, 15th December 1980

I beg to move, That this House deplores the fact that over a quarter of a million people are now registered as unemployed in Scotland; and calls for the implementation of policies which will secure an end to the hardship and misery caused by this tragic waste of human resources.

I hope that there is no disagreement in the House about the seriousness of the current unemployment situation in Scotland. More than one in eight of all males in Scotland are at present unemployed. Indeed, unemployment in Scotland is now higher than at any time since the depths of the depression in the 1930s.

There is no consolation in the unemployment figures. I say that because at Scottish Question. Time the day after the previous unemployment figures were announced at least one Conservative Member sought to extract some consolation from the fact that unemployment in Scotland, expressed as a percentage of that in the United Kingdom, had moved favourably rather than in the other direction. In the early 1970s, unemployment in Scotland, as a proportion of total United Kingdom unemployed, fell. To an extent that was encouraging, because it reflected the creation of new jobs in Scotland, particularly oil-related employment. No consolation can be derived from the fact that during the past month unemployment in Scotland has moved in that direction. It reflects the fact that unemployment has been rising even more sharply in some parts of England. Nothing can be gained from that appraisal of the statistics.

Unemployment in Scotland is something of a disaster. We have come to accept too high a level of unemployment. That is borne out by the figures. For example, in November 1980—the most recent month for which figures are available—there were 254,000 unemployed in Scotland. Ten years ago there were just over 96,000 unemployed in Scotland. Twenty years ago over 69,000 people were unemployed and 30 years ago 60,000 were unemployed. There has been an inexorable rise in the general level of unemployment in Scotland. We can no longer accept that state of affairs.

There must be a complete change in our attitudes towards the level of unemployment that is acceptable. As far as an individual is concerned, he is 100 per cent. unemployed. In order to clear the air, I should add that, during the period of the Labour Government, unemployment was unacceptably high. I accept my full share of responsibility for that as a member of that Administration.

As a result of the worldwide recession and of the deal that the Labour Government did with the IMF, unemployment in Scotland rose. One difference between this Government and the previous Government is that, despite the IMF deal and the recession, the Labour Government strived to increase employment in Scotland, whereas this Government's policies will make the position much worse.

The present level of unemployment in Scotland is the result not only of the Government's policies but of the international recession. My prime contention is that, notwithstanding such factors, the Government's economic policies in Scotland have made the position immeasurably worse and will continue to do so until they are reversed. I refer first to the Government's basic financial policy and to their obsesson with monetarism, which has led to high interest rates and a strong pound. The Government's policy has done immense damage to the industrial fabric of Scotland. When major proposals have been announced—whether concerning ICI, British Petroleum, British Leyland or any other major British company that operates in Scotland—the closure of productive capacity has been blamed on the over-valued pound and to some extent on high interest rates.

This weekend, the press contained reports of announcements about the steel industry. No doubt those of my hon. Friends who represent steel constituencies will speak on this issue. Many years after we first anticipated a new modern integrated steel complex at Hunterston and after the loss of many jobs in the steel industry in Scotland, is it not a reflection of how far our hopes have fallen that the Glasgow Herald and The Scotsman should talk of there being relief in Scotland because, perhaps, only 600 to 1,000 jobs will be axed in the near future? I do not criticise those newspapers. In a sense, there is relief. However, is it not a measure of the enormity of the economic crisis in Scotland that such announcements should be met with relief? There will be a further serious cut in employment.

The Government's tight money policy has done a great deal of damage to Scotland and to the rest of the United Kingdom. As a result of the Government's policy on public expenditure, Scotland has suffered severely. Whether the Government like it or not, employment, industrial investment and the Scottish economy as a whole are heavily dependent on public expenditure and public investment. The cuts have done enormous damage to the level of employment in Scotland and to the prospects of our young people.

The Minister has admitted at last that cuts are being made in Scotland's Health Service. As a result, hundreds of valuable jobs, such as those of nurses and technicians, will be destroyed. On Wednesday, the Secretary of State is expected to make a major announcement on the level of the rate support grant for the coming year. That announcement will have a significant impact on employment in Scotland. Does the Treasury have any estimate of how many jobs will be lost in Scotland for every million pounds that is lopped off the rate support grant?

The nationalised industries are very important to Scotland. In the November mini-Budget, we were told that £¼ billion would be knocked off the borrowing requirements of the nationalised industries. As yet, we do not know how real those cuts will prove. Whether we like it or not, the Scottish economy is heavily dependent on investment by the nationalised industries for the creation of productive capacity, the provision of employment and the generation of demand for goods and services from private industry. The cuts in public expenditure and public investment have made a significant contribution towards increasing unemployment in Scotland. They are harming the Scottish economy.

I turn to my constituency and to the surrounding areas. I can best make my point by drawing the Minister's attention to a headline which appeared on Thursday in the Edinburgh Evening News. The Minister may have seen it. In large black and white letters, it states: Lost—4,000 jobs in the Lothians The article continues: Nearly 4,000 jobs have been lost in Lothian over the last 12 months—and another 5,000 people would have joined the dole queue if firms had not introduced short-time working. I recognise that unemployment in the Lothian region is lower than that found in some other regions in Scotland. It is certainly significantly lower than that in South Clyde. The Scottish economy will gain nothing if the Government cut back on regional policy—as they have done—as regards Edinburgh and the surrounding area.

Last August, I initiated a debate on this issue. The Under-Secretary of State for industry justified the fact that Edinburgh had been downgraded from development area status to non-assisted area status on the ground that other areas had bigger problems. We shall not solve the rest of Scotland's problems by depriving the Edinburgh area of opportunities for industrial expansion and investment. The Edinburgh area has the potential to create employment. Many industries would expand if they received the support—which they have had in the past—not only of development area grants but also of selective assistance.

I appeal to the Minister, as one who represents an Edinburgh constituency, to reconsider the Government's decision to downgrade Edinburgh to a non-assisted area. In my constituency on the east side of the city, we have had massive job losses over the years. The previous Labour Government brought hope. Through the Scottish Development Agency we have a new industrial estate in Craigmillar, where unemployment is much higher than the Scottish average. A new industrial estate is also being developed in Musselburgh. However, our hopes of attracting industry to the factories on these new industrial estates has been dealt a body blow by the Government's decision to downgrade Edinburgh from development area status. I hope that the hon. Gentleman and the Scottish Office will take on board the point that cuts in regional policy cannot be sustained with rising unemployment. The Government should reverse their decision on Edinburgh.

The Minister will doubtless refer to the special employment measures, which were first introduced by a Labour Government because of the high levels of unemployment. This Government initially cut the programme of investment in special employment measures substantially. The Secretary of State for Employment more than reversed that policy in his statement shortly after the Summer Recess. I welcome the improvements and the extension to the youth opportunities programme, which will help to alleviate the demoralisation of many of our young people who cannot obtain a job on leaving school.

However, we should keep the programme in perspective. It is no substitute for proper jobs, the regeneration of the Scottish economy and the provision of long-term employment.

In many ways, the man in his 40s or 50s suffers most from unemployment. There is much real poverty, and real hardship will increase through the Government's decision to cut benefits. Many such people find it increasingly difficult to secure alternative employment. The Secretary of State's community enterprise programme makes a totally insignificant contribution to alleviating the problem.

The best way to illustrate that is simply to look at the figures. Eventually, in 1982, 25,000 places will be provided. Scotland is unlikely to get even 4,000. If the places are allocated on a proportional basis, the number is likely to be even less. However, on the most generous interpretation, let us suppose that we get 4,000 places for unemployed people over 18. About 67,000 people would be eligible—those between 18 and 24 unemployed for over six months and those over 25 unemployed for over 12 months. At present, over 219,000 people over 18 are unemployed, including those who have been unemployed for only a few weeks. Only two out of every 100 unemployed people over 18 are likely when the scheme is fully operational to obtain temporary benefit from a place in the community enterprise programme. The modest improvements announced by the Government are only a drop in the ocean for Scotland.

What can be done to reverse the inexorable rise in unemployment? The Government must reverse their policies. We need lower interest rates. I accept that we do not dictate the value of the pound sterling, but if interest rates were cut sharply and the Government pursued a different and more flexible policy we should probably see a reduction in its value. Even a modest reduction would bring immense benefit to industry in Scotland.

The Government must also adopt a different approach to public expenditure in Scotland. They are spending hundreds of millions of pounds of public money to maintain the vast army of the unemployed. We are asking the Government not to increase public expenditure but to divert it to new investment. They could allow the Health Service and nationalised industries to spend that money to create investment and new jobs, which would be a preferable use of our oil revenues. The Government must relax their tight grip on local government expenditure in Scotland. We must have more expenditure on the social services, which are labour intensive. Above all, we need more public expenditure in the investment programmes of the nationalised industries to increase our productive capacity and create a new demand for goods and services in the Scottish economy.

The Government must reverse their approach to energy prices. The CBI has produced a document showing how the cost of energy to industry in this country is much higher not only than in the United States, as was mentioned earlier in relation to textiles, but even than in other EEC countries. The Under-Secretary of State for Scotland, the hon. Member for Aberdeenshire, West (Mr. Fairgrieve), knows that the main reason given by the management for the most recent paper mill closure in his constituency was the excessively high cost of energy. Energy accounts for about 30 per cent. of production costs in the paper and board industry. The Government can act quickly, as the CBI says, to alter their policy over gas prices and to enable electricity boards to enter into long-term supply contracts for industry at lower prices. The Government can take immediate action here and bring some relief to industry.

The Scottish Development Agency was set up by the Labour Government to spearhead the regeneration of industry in Scotland. It has a good record. I have mentioned its successes in my constituency. However, this Government have shackled it. The new guidelines hve not helped. If the Government wanted to give to the problems of Scottish industry and unemployment the priority that they deserve, they should give the SDA its head. They should not apply the rigorous guidelines that are criticised by the Public Accounts Committee for their effect on the viability and likely success of the Stonefield vehicles company. We have a crisis in Scotland. We do not have time for ideological dogma. The Scottish Development Agency can make a positive contribution to new investment in Scotland and to providing employment for the future if it is given the necessary resources and given its head.

There is no alternative to a reversal of the Government's policies. Their economic policy has failed not only in our terms but in their own terms. The leading apostle of monetarism and Government policies in the British press is Samuel Brittan. His column in the Financial Times today makes interesting reading. It states: Anyone who has tried to explain what has happened to the British economy in the last few months has been confronted with a puzzle. The money supply has raced ahead wildly—at about double the official target of 7 to 11 per cent. One can play about with different definitions or adjust for distortions, but it is still difficult to escape the evidence of a monetary explosion. I could not give a damn about money supply figures, and nor could the unemployed in Scotland. However, the central objectives of the Government's economic strategy—the great magic cure-all—has been the control of money supply. On that basis, they have failed. That is one reason why they should be prepared to admit that they are wrong and to change their policies. The most important reason is the effect of these policies on the Scottish economy and on the level of employment in Scotland. There is a social and economic disaster in Scotland. Unemployment is not only at record levels but is rising sharply.

In a series of answers to questions which I tabled last week, we saw that the rate of loss of employment in Scotland had reached a staggering level. Between December 1979 and June 1980, 27,000 jobs were lost. In the previous six-month period, the number of jobs lost increased by 10,000, and during the period before that the number increased by 10,000. That rate of job loss is terrifying and shows no signs of a reversal. Thus, we appeal to the Government to change their policies.

It has not been the burden of my case to argue that the problems of the Scottish economy are all the fault of the present Government. However, in so far as both parties agree that we would like full employment, new investment and more productive capacity in Scotland, these policies have failed. We have no hope of tackling these real problems and improving the Scottish economy until the Government reverse their present economic policies.