I beg to move,
That this House regards the present appalling level of unemployment as intolerable; believes that this is due to the actions of the Government; refuses to accept the view that there is no alternative to these grievously mistaken policies; and calls for an alternative economic, industrial and social policy which will restore full employment to the country.
It may be convenient both for me and the House if I speak from the Dispatch Box, although of course I am speaking as a Back Bencher on a Private Member's motion. I have often thought that it would be convenient for the hon. Member who takes the floor, as it were, on these occasions to have the extra convenience of the Front Bench. As it is only a convention, perhaps it may be continued for others in the future.
The subject of my motion is
To call attention to the present level of unemployment caused by Government policies and to the solutions to the problem".
I make no apology for choosing this subject for debate. All the polls suggest that this is the crucial issue. Indeed, 70 per cent. in one poll and 90 per cent. in a Scottish poll—that is no surprise—believe that this is the most important issue of our time. Perhaps I might add that the events of last night at Glasgow, Queen's Park show that the Scottish people endorse that view. I welcome that result, and I welcome the return of a McElhone to the House, in the person of Helen McElhone. I am sure that all of us on this side, perhaps on both sides, of the House congratulate her on her excellent victory, giving final judgment on the errors and ineptitudes of this Government.
The debate is also opportune because we have now had the new attempt which was forecast, to massage the unemployment figures and to conceal the true figures. It has been a double-edged weapon, with the irony that the old method shows perhaps a slightly smaller increase than the new method.
The Secretary of State for Employment combines the sleight of hand of a Paul Daniels with the massaging qualities of a sleazy parlour in Soho. However, he has come unstuck. We have seen more of a Tommy Cooper act than a Paul Daniels act. Even he cannot conceal the truth that the trend in unemployment—if I may use his extraordinary word—is still "remorselessly" upwards. It is characteristic of the Secretary of State that the word "remorselessly" was used by him to describe benefits being paid. He said that they were "remorselessly" continuing. What a word to use in that context!
I shall recall to the House the words that the Prime Minister used at election time, when she declared:
We can follow the course on which Britain is now set".
However, she said:
it is not safe. Soon waters grow treacherous. For carrying on as we are means carrying on into swirling currents and dangerous tides.
That she would alter. She said:
we need not go on as we are. There is nothing inevitable about continued decline.
She encapsulated that continuously with the phrase
There is no alternative".
We reject the view that there is no alternative. We are frightened when we have a Prime Minister who replaces resolution with stubbornness and foolishness.
Let us consider some of the figures in order to underline the seriousness of the situation. Let us compare not only the unemployment figures but the employment figures, because an interesting comparison emerges. Despite our comparative failure as a Labour Government to deal with unemployment successfully, during the period 1974–79, when unemployment was rising, the employment figures were rising. For example, the working population increased by over 800,000, and the number of people in employment increased during the period by 130,000.
Since 1979 we have experienced not only the horrendous unemployment figure of 3,300,000, covering a real unemployment figure of about 4 million, but the collapse of employment. The number or people in employment has fallen by 2,400,000. Unemployment has gone up by about 1,800,000, but employment has dropped by 2,400,000. That means a failure in Britain's wealth creation. That is what is so serious.
The Government came to power with only one objective—to deal with inflation. They thought that if they dealt with inflation all our problens would be solved. However, there was no theoretical, practical or experimental basis for believing that that would be so. Countries have experienced economic growth when there has been both a low inflation rate and a high inflation rate. In the 1930s in Britain there was a low—indeed, sometimes a falling—inflation rate, yet the unemployment figures were high. There has never been any suggestion, that inflation was related to economic growth.
The old slogan "Too much money chasing too few goods" was dealt with by reducing the money supply, despite the fact that nobody really knows what money is. That was a nonsensical and illiterate approach to the problem. The only effect has been to reduce the number of goods produced to the destruction of the seed-corn and production. In the process, the Government have even failed to reduce effectively the money supply. We are awash with money, but most of it has gone into useless savings or has been salted abroad.
Let us consider the economic record that has underlined the collapse in production in the past three years. Unemployment has risen by more than 1,800,000. Employment has gone down by 2,400,000. Industrial output has collapsed by 12 per cent. We are almost alone in experiencing such a decline in the Western world. It is unique in its scale, and it is almost unique as a phenomenon in itself. Even more serious is the fall in manufacturing output by 17 per cent. That is the heart of the unemployment problem.
The freedom introduced by the Government can be seen from an even more dramatic figure. Investment in industry can be paralleled by the investment that is flowing abroad. From 1979 to 1981 private investment abroad rose to an annual figure of over £10 billion. In other words, £10 billion was being lost to British investment. That is a measure of the failure. In June this year, manufacturing output fell to its lowest point since 1967. It is now running at about one fifth below the output in manufacturing industry before the Government came to power.
We are seeing not only the social horrors of the unemployment figures but a de-industrialisation of Britain. Remember, this is an oil-rich country. Some people argued in the past that the oil was a new bonus—a windfall that could not have been planned for, but which arrived. Therefore, it was argued that there should be a special oil fund to regenerate British industry. Instead, it has been frittered away and used to bolster up occasional trade surpluses. Unemployment and de-industrialisation are three times higher than they are in any other oil-sufficient country. Mexico is a good example to the Prime Minister of another country that has failed.
In 1982 Britain's trade in manufactured goods with the original six countries of the EC has now become a deficit of £5·5 billion—and that is in a country which once depended upon trade and was the heart of the manufacturing world.
The Fraser of Allander Institute published this week a recent analysis. It said:
Any hopes for a significant recovery during 1982 have now evaporated. The idea that the UK economy can suddenly switch resources from the public to the private sector without suffering major trauma has been shown to be false.
It points out that the deficit on non-oil visible trade is only offset by a surplus of £1 billion on oil trade. Therefore, between 1981 and 1982 there was an 11 per cent. drop in manufacturing investment. Money is not being invested even to develop the seed-corn for the future.
What is the effect of unemployment, in human terms? I want to spend some time on this because it is necessary that the country should understand the position and that my constituency should have its case put.
Strathclyde is part of industrial Clydeside, which has the great heavy and primary industries which helped to build up Britain's wealth in its heyday. Ten years ago there were more than 1 million people in employment. Now there are 150,000 fewer—a job loss of 150,000. In the same 10 years, unemployment increased two and a half times.
When I became a Member of Parliament in 1964, 38 per cent. of all employment on Clydeside was in manufacturing. The figure has now collapsed to 29 per cent. In 1979 there were 106,000 unemployed in Strathclyde. Today there are over 200,000. The figure has almost doubled in three years. Incidentally, almost all those people have been unemployed for over six months. There is a static army of unemployed, with the despair and hopelessness that that entails.
The position is even worse if we break the figures down and consider local areas. Of the five unemployment offices with the worst problems of the 10 in Glasgow, Springburn has an unemployment rate of 33 per cent. One man in three is unemployed. Easterhouse has an unemployment rate of 33 per cent. One man in three is unemployed. Hillington, with its industrial estate built with public money, has an unemployment rate of 31 per cent. One man in three is unemployed. In Glasgow, Central there is an unemployment rate of 30 per cent. One man in three is unemployed. That is a horrendous picture.
Comparing the unemployment in Paisley, Renfrewshire with the job availability, there is only one job for every 32 people unemployed. The town of Johnstone, which includes Linwood in its employment area, has only one job vacant for every 114 people unemployed.
That is why we get angry. It is a genuine, not a propagandist, anger that we feel when we hear the "Secretary of State for Unemployment" making cracks about taking a bike to look for a job. It is no use saying that he did not quite say that, because we know what the right hon. Gentleman meant. It is nonsense to say that when 114 people in one area are chasing one job. The area is significant, because that is where the collapse of Linwood occurred and 4,500 men found themselves out of work overnight.
Youth unemployment is the most frightening of all. According to the latest figures that I have from Strathclyde, 60 per cent. of all 16 to 17-year-olds in Strathclyde who were seeking work in April 1982 were truly unemployed. In other words, they were either registered unemployed or on temporary schemes. Only four in 10 of Strathclyde's young people had jobs. At the lower end of Renfrew is the town of Port Glasgow. There, 78 per cent. of 16 to 17-year-olds are truly unemployed. Only two in 10 young people in the whole town are employed. In Johnstone and Linwood in my constituency, two out of every three 16 to 17-year-olds do not have jobs. That horrendous situation cannot be tolerated by any civilised society.
One difficulty of dealing with figures is that we are bludgeoned by them. We do not even get any reaction from the "Secretary of State for Unemployment" when it is said that only two in every 10 young people are employed. The starkness of the position can be demonstrated by individual cases. I had a very difficult meeting with a man in my surgery, because it was hard to know what to say to him. Most of those who come to a Member's surgery have a specific tax, pension or housing problem. However, this man wanted to talk. Sometimes, Members of Parliament have to be father confessors. He said that he had been made unemployed at Talbots in Linwood and that he was a skilled man, a coppersmith. He was 47. He said that if he was 37 and the economy picked up in two or three years, he could look forward to a job. He said that if he was 57, he could think about early retirement. However, he was 47 and in a couple of years he would be 50. No one will give him a job. He asked me what he would do for the next 18 years. In other words, he realised that at 65 he would be a pensioner and would have a status. However, he envisaged it there would be a vacuum for the next 18 years and he was frightened. That is what happens.
I received a letter from a mother saying:
Dear Mr. Buchan,
I am enclosing herewith a copy of a letter received by my son in his search for work. My son is 17 years old and is a law-abiding citizen (like thousands of other youngsters). He has worked hard at school and never given us any problems; so what do we tell him to do with his life? You are a parent yourself. What advice would you give … Instead of lazing about at home he has gone back to school. If he had signed on at the labour exchange he would be receiving benefit money instead of the £5·25 family allowance.
The woman enclosed the letter that her son had received. Strathclyde regional council started an apprenticeship recruitment scheme off its own bat to stimulate apprenticeships. The boy had applied for it. There were 39 apprenticeships, yet 3,587 applications were received. The boy received a rejection and his chances were shown to have been one in 100. Russian roulette is being played with young people's hopes and lives.
How have the Government responded? Their first response is that there is no alternative which is a declaration of the Government's impotence. Secondly, they have attacked the very sections of the community that suffer most. Despite the situation, there has been a 5 per cent. cut in unemployment benefit. The Government have removed from the unemployed their earnings-related supplement and there has been a 5 per cent. abatement. A married man receiving £40·45 is losing £13 a week because of the Government cuts in benefit. He should be receiving £13 a week more. He has lost one third of the income that he would have received under the old form of benefits. A married man with two children loses a total of £17 per week as a result of Government cuts.
In the Government's apparent dislike of the unemployment that they have created, they have made the unemployed pay the penalty. The Prime Minister says that we cannot ask the working people to pay more. She demonstrates a great misunderstanding of the working people of our country. They recognise the seriousness of unemployment and are prepared to pay more. However, the Prime Minister could have refrained from introducing those give-away Budgets that gave money to the rich and she could have shifted the balance of support from the rich and towards the poor.
No matter how long a person is unemployed, he can never receive long-term supplementary benefit. The 47-year-old man who came to see me will lose his unemployment benefit after a year and go on to supplementary benefit. For the 18 years that he is so frightened about, because he will have no status, he will receive 25 per cent. less per week than the full long-term rate of supplementary benefit. That is a horrendous situation that cannot be tolerated.
The effect on the unemployed is even more serious. This morning's edition of the New Statesman quotes Marie Jahoda. Some of us know her. She is the author of "Employment and Unemployment". She said that the experience of unemployment was not replaced by anger. She pointed out that many of our people asked why there was no reaction and why there was no fight back. She said that there were five aspects to unemployment, including
the experience of time. That struck a chord with me because I had met a men who feared the next 18 years. Marie Jahoda's other four are:
The reduction of social contacts, the lack of participation in collective purposes, the absence of an acceptable status and its consequences for personal identity, and the absence of regular activity.
People are alienated and isolated. In the 1930s society was more communal. There was a street culture. People went to the local working men's institutes. There was often a common purpose. Partly as a result of the developments in a modern society, that has now ceased. The unemployed person who develops a sense of guilt and shame about his unemployment, when it is the fault of others, retreats into isolation. Even television has helped to alienate and isolate. In the long term, that may prove to be the greatest problem.
The Government have failed to fulfil their promises and have even failed with the economic measures that they believe in. Their policies have been motivated by dogma and by an irrational hostility to the public sector. The most serious consequence of their distaste and hatred for the public is the cuts in the public sector. They are under the curious illusion that if resources for the public sector are cut resources will automatically be freed for the private sector, thus ensuring that everything booms. Incidentally, in a momentary aberration in 1976, the Labour Government suffered from the same error. We have learnt our lessons. It is nonsense to suggest that the cuts in benefit, in local authority expenditure and in the public sector will release resources. On the contrary, economic recovery can be triggered only by putting the resources taken away back into the public sector. If the Government cannot see the benefit of the wealth that is created through schools, education and other activities, they should bear in mind that 80 per cent. of the money put into the public sector goes straight into the private sector. If a school is built, glass has to be bought for the windows and the glass manufacturers benefit. If a school is built, desks have to be made and carpenters and joiners in the private manufacturing sector benefit to the tune of 80 per cent. There is an effect also on the work force. Andrew Britton has asked:
How can we hope to win support for higher productivity when job security seems uppermost in everyone's mind?
The Government have affected the very work force they hope to terrify into action by their activities. The Government never blame themselves. Not a word is heard from the Prime Minister, the Secretary of State for Employment or the Chancellor of the Exchequer that any of the blame is theirs. They blame the trade unions and the world recession. The other Brittan, the Chief Secretary to the Treasury, was asked by my hon. Friend the Member for West Stirlingshire (Mr. Canavan) on 11 November what assessment he had made of the effects of Government economic policy on unemployment. The right hon. and learned Gentleman replied:
The rise in unemployment since May 1979 is a consequence of many factors, notably past high rates of inflation, excessive wage increases in 1979–80, the slowness of wage settlements to adjust to lower rates of inflation and the severely depressed state of the world economy."—[Official Report, 11 November 1982; Vol. 31, c. 241.]
It is not true to say that the world recession is the real culprit. The Government have to explain our level of unemployment and the extent of the collapse of
productivity here compared with what has happened in similar countries. Christopher Huhne in The Guardian says:
Over the last three years our slump has been caused much more by a loss of market share than by sluggish world markets themselves.
He goes on to say that
world markets grew last year by 5 per cent while our manufactured exports shrank by 4 per cent. …due to a 37 per cent. loss of competitiveness since 1978.
Andrew Britton, director of the National Institute of Economic and Social Research, has written an article under the heading
Reflation must replace this failed financial plan.
He was, of course, formerly involved in Government affairs and now recognises the error of his ways.
The paper produced by my right hon. and hon. Friends in the shadow Treasury team picked up these points. There has been criticism about the stress that they have laid on devaluation but, as Christopher Huhne argues, lack of competitiveness is the real factor. My right hon. and hon. Friends pick up the issues of reflation and possible devaluation. There has been a predictable response. At least, however, the proposals have begun to dent the argument that there is no alternative. The Government have been forced for the first time to treat the issue seriously. They are beginning to fight back. Every time a plan has been put forward, the Government's first reaction has been to resist and not to say that they will examine it to see whether they can learn anything.
There are other differences. The way is open for involving working people in planning the future for this country. I recommend to Conservative Members the joint TUC-Labour Party document setting out planning mechanisms that involve ordinary people. By no means the least merit of the alternative economic strategy for which some of us have argued is the involvement in a dynamic way of the people of this country in creating their own future.
One cannot tackle a 37 per cent. decline in competitiveness without also dealing with the exchange rate. An interesting exchange on that took place recently across the Floor between my hon. Friend the Member for Blackburn (Mr. Straw) and the Prime Minister. It is clear that the Opposition believe in intervention. I do not know whether 30 per cent. devaluation is right. However, a survey carried out by The Times recently suggested that a large number of business people and industrial leaders consider that a 15 per cent. devaluation would be valuable. My right hon. and hon. Friends have been suggesting 15 per cent. a year for two years.
Some action must be taken whatever arguments may exist about the level. It must not be prevented by the pound fetishism exhibited by the Government. They show virility over the pound to replace their impotence over taking action in industry. There must be something deep involved in all this.
More interesting is the recognition by the shadow Treasury team of the real value and nature of the public sector. They recognise that the public sector, not only on the industrial front but in relation to education, health, the roads, and so on, is part of the wealth creation of this country. I hope that this spells the end to some of the Labour Party's own aberrations in the past. Of course the public sector creates wealth. Above all, it is the main trigger for our recovery. It is the creator of future wealth. It is through the public sector that we have to trigger a return to full employment. The collapse of whole sectors of private industry cannot be remedied without such a lead.
The same is true of social security, welfare and benefits. Given an increase in pay, Conservative Members will save some of it or even invest abroad. If pensioners or those who suffered a 5 per cent. cut in unemployment benefit are given an increase, they will spend it; they need to spend it. This will create demand in the economy. We reject the view that there is no alternative. There are only three means of achieving a recovery—cash, labour and physical resources. There is plenty of cash. Too much of it has been salted away and put into wasteful savings. The labour is available. We have a 4 million pool of unemployed. The physical resources also exist. Yet the Government say that there is no alternative. They have not the wit to put these three things together.
As a member of a previous Labour Government, I recall that every time problems arose, possibly over a factory closure, and Ministers met to decide what to do, some of us argued for a trawl through the public sector to see how plant in the factory might be used. I recall a protest meeting at the time of the Talbot factory closure at Linwood. Up the road was a factory that had employed 4,500 people. The factory still contained plant and machinery. Every 10 minutes or so, our meeting was interrupted by the noise of aircraft taking off nearby. The whole town of Linwood lies alongside the flight path. The properties are not insulated because they are not within the area where grants can be obtained. The noise of aircraft cause daily disturbance.
There were men in the hall, unemployed, who would have been willing and eager to put the two things together—the physical need in terms of glass, wood and metal along with the money that they were, in any case, receiving, in part, through unemployment benefit, and the need to insulate the town against noise. The need is manifest. But the Government, for reasons of dogmatism, refuse to recognise it.
There is need to examine our situation within the EC. I want this country to come out of the EC. Those who have argued against entry have been shown to be right. We cannot allow bleeding to the extent of £5 billion a year in relation to trade in manufactured goods to continue. We cannot rest on devaluation alone. We need to adopt direct and physical import controls. There is no reason why we should not say to Germany that we cannot tolerate £3 billion worth more in manufactured goods from that country entering Britain than we send to Germany. It will still enjoy a massive trade with us. I have no fear about retaliation. The Germans will still do well.
However, we must find some means of stopping the bleeding and have a period of import controls and planned trade, accompanied by a massive programme of import substitution. If the private sector cannot be stimulated to deal with financing an import substitution programme, we must take control over elements of investment and financial institutions such as the banks and insurance companies to ensure that investment goes into the programme of import substitution.
The hon. Gentleman is calling for various forms of import protection against Germany and other countries. Other nations that have pursued a policy of import protection have found that their currency has grown stronger. Does the Labour Party want our currency to grow stronger or weaker?
We are back to the fetishism. Almost certainly we shall require an element of devaluation. I would not want to rest everything on that. There would have to be elements of import control as well.
Public ownership is involved. The Government have a curious hatred of the public sector in general and public ownership in particular. We cannot tolerate new technologies being left uncontrolled. During a visit to Rolls-Royce the other day I saw an automated machine grinding, cutting and boring on the central pillar of an aero engine. The job was done entirely by robots. There was a battery of tools. The arm came down, picked up a tool, used it and put it back. I asked "How many people used to do this job?" I was told "74".
Clearly we are moving towards the time when we can enormously expand people's leisure or create an army of unemployed. We cannot leave it to the private sector to take on the social responsibilities of creating enhanced leisure. It will not do so because of competition. Only the public sector can do so.
There is an argument that if there is demand the goods will be produced. That is not always true. When Linwood was closed we examined the nature of the machinery with people who knew it and came up with solutions for alternative production. We had the pressing shops. We could have created rolling stock for British Rail. We could have worked along with the Lucas shop stewards in developing the rail bus. We could have produced cabs for the British vehicle industry and helped to save some of the production at Bathgate.
We came up with the idea of using the machine shop and the engine room to produce one-horsepower or two-horsepower engines for the Third world so that they could be used for portage pumping, or cultivation. However, no one was there to follow up the ideas because the Government were not prepared to put the resources into them.
When I was a junior agriculture Minister in the Scottish Office I visited the Agricultural Engineering Research Institute at Bush, in Edinburgh. On the concrete floor of the workshop in the laboratory was a new six-bladed rotary plough. Everyone in the industry agreed that it was the last word in an absolutely primary implement, the plough. It had lain there for four years because we had no manufacturing sector to produce it. We had to wait until the private sector asked to produce it under licence. However, the private sector did not come for four years because it was still selling its inferior plough. It was not going to spend its money on rejigging the factory because it was still selling the inferior plough. Only when the market for that plough began to go down did it come forward to take over the plough and manufacture it under licence. Therefore, there was a four-year delay. I do not know how the engineers, designers and technologists must have felt, who had worked to produce something everyone said was the last word, when it then lay there for four years.
We should integrate research and development and have an innovative design centre. There should be a Government innovation bureau so that we know what research is going on and can pool the research. Alongside the Government engineering research laboratories there should be a manufacturing sector so that the technologists know that what they have designed and developed will be put into production. That is the way forward.
The Government's failure is a failure of imagination. What they call resolution is stupid stubbornness. It is also a failure of courage to face up to their inadequacies and say "This must end". They are creating a waste society. There is yet another alternative: they could go.
The hon. Member for Renfrewshire, West (Mr. Buchan) spoke of the reality of employment. We all agree that unemployment is a serious problem. Few of us are not seriously affected by it in our constituencies. All of us see its effects on people of all ages and on families. No hon. Member can doubt that unemployment for any long period saps morale, just as long-term inflation eats into the moral fibre of a nation.
The hon. Gentleman does no service to the House by pretending that there is a difference between the parties in their attitude to unemployment. Unemployment is wrong and bad and we must tackle it. Nor does he do a service to the House by talking glibly about an easy solution to a deep-rooted and serious problem.
We as a country and as a Parliament must first recognise—as we all do—that we have to defeat this problem. We must then rigorously examine its causes. Unless we understand and appreciate those causes, the solution will be tougher. We have to seek real and effective measures to deal with the underlying causes, but at the same time we have a duty to alleviate the hardships of unemployment as far as we can.
There are two basic causes of unemployment. We are faced by a world recession. None of us should deny that that has a serious effect on jobs. We are the world's greatest trading nation. We export one-third of everything that we make. We depend for millions of jobs on markets overseas and on people buying our products. As we see from the unemployment figures throughout the world and the decline in wealth, those markets have seriously weakened.
The second cause, which is a deeper reason for the problem, is our long-term loss of ability to compete. For more than 20 years we have fallen behind in the race to sell our goods and compete. Our costs have risen more rapidly than those overseas. Our productivity and output have increased more slowly. Our inflation has been higher than that of our competitors and our profits have been lower. We need profits if we are to invest in new techniques and factories so that we can compete worldwide.
In short, we have lived too well for 20 years and have invested too little. Our car industry demonstrates perfectly what has happened. About 15 years ago we produced about 1 million cars, as did the French. Now we produce fewer than 1 million cars and the French produce about 3 million. We import about 55 per cent. of all the cars that are sold in our market. The reality is that there is a good market for cars. Demand exists, but it is being met not by production in this country, but by imports. We can all imagine how many jobs would be created in the steel industry, in the components industry and for the suppliers to the big car manufacturers if we had more of the market and produced those 3 million cars. The unfortunate fact is that we are not doing that. We cannot compete alone against a world recession, but we have it within our power to become more competitive. the problem of unemployment and our inability to compete is being compounded by a structural change. The old industries in the north of England and in Scotland are declining, but the new high technology industries are going into the south of the country. People left East Anglia 150 years ago to go north to the new industries. The new industries are now being created in the south. We are trying to tackle that problem with regional grants. That is one reason why it was correct to reduce from about 45 to 25 per cent. the areas that receive regional grants, and to give them only where there is greatest need.
The right hon. Gentleman does not know much about Cambridge, Bury St. Edmunds, Ipswich and Felixstowe. There are many new jobs in new industries in those areas. The population is expanding rapidly to provide for those industries.
Another possible cause of unemployment is the information technology revolution. Many people say that new techniques and technology will increase the numbers of people out of work. I do not believe that that theory has been proved. In Japan, where high technology has advanced most, unemployment is low. I believe that there is the ability within information technology to create new jobs. When the railways were being built, people said that a great many people involved with transport would be out of business. In fact, jobs were created. The same could be true about the information technology revolution. The case against that contention has not been proved.
There are seldom quick solutions to deep-rooted problems, but the House is right to ask how the seriousness of the current unemployment condition position is being faced. Progress is being made. Inflation is being reduced. Men shake off the effect of inflation, but industry cannot sustain high inflation for long. It loses the confidence to invest. For the first time for many years our inflation is lower than the average in other industrialised countries. Our productivity is up. Throughout the whole swathe of British industry restrictive practices have gone and new methods have been adopted. People have shown the greatest restraint in their wage demands. There is an example of what has been achieved in the city of Lincoln. In 1980, an excellent business employed 350 people. It went through difficult times and unfortunately had to make some workers redundant. This year, with 250 employees—100 fewer than it had—it is producing more in volume than it ever did. It has studied its processes and successfully become more efficient.
The hon. Gentleman says that low inflation is a good thing. How does low inflation cause an expansion of jobs? In the 1930s there was nil inflation, but massive unemployment.
I shall deal with the 1930s. If industry wants to invest in a new machine, at a time of high inflation all the money goes to replace stock and there is no money for investment. It also creates an attitude of uncertainty and an increased demand for higher wages. It eats into the fibre of the people and destroys incentive. One should not underestimate the evils of inflation.
The fact that business is becoming more efficient and producing more with fewer people does not create more jobs, but without that process even more jobs would be lost, because we should not be able to compete overseas. We must recognise that if our major industries are more successful and efficient they provide jobs for smaller firms and people who supply them with goods and services. British Leyland is a good example. I know that people disagree with the figures, but it is estimated that British Leyland provides 100,000 or more jobs among its suppliers. That is one reason why we should desire BL's success so earnestly.
Detailed research in the United States shows that most new jobs are created by small firms. Nobody can doubt that the Conservative Government have done more than any other to create new businesses. The hon. Member for Renfrewshire, West is wrong when he says that the public sector provides the seed-corn of new jobs. Throughout history the seed-corn for new jobs has been created by small businesses, for example, GEC and ICI, which are now large organisations. People had ideas and the incentive, imagination and verve to carry them through.
The Government have produced about 80 measures to help small businesses. It is difficult to keep track of the numbers, because every month there is a change in the measures to help small businesses. One good example is the provision of small industrial units. There has been a shortage of accommodation for small firms. The various measures contained in the Budget and the planning measures have provided a number of small industrial units, which give new businesses a base. There is a range of other measures to help their growth.
I stress the importance of the enterprise allowance, which is being tested in three areas. From the surgeries in my constituency it has become clear that people who have been made redundant and want to start new businesses find it difficult to do so because they cannot cover their living expenses during the first year. I ask the Minister to speed up the evaluation of this excellent scheme and extend it to the whole country.
We want not just more efficient businesses, but new businesses. Much has been achieved in both those areas. When the recession lifts, we shall see the benefit of more jobs and greater output. I am worried about whether we shall have sufficient trained people when the upturn comes. During questions to the Secretary of State for Industry earlier this week my right hon. Friend voiced his anxiety on the subject of trained people. I believe that the problem should be analysed. Are enough apprentices going into the building or engineering industries to provide the skilled workers for when the upturn comes?
In Lincoln we have one of the new information technology centres that are training school leavers in the new technologies. Many middle-aged skilled people need retraining. The hon. Member for Renfrewshire, West made a good point when he said that someone who is 47 years old and trained in engineering often finds it difficult to get a new job. Could a unit which would train older people in the new technologies be attached to the information technology centres? There would be a demand for such training. The suggestion should be considered seriously when the centres get under way. The aim of all the measures—to increase efficiency, to encourage new businesses and to provide extra training—is to produce goods and services at the right price, on time and of sufficient quality so that they find a buyer. In the long term, satisfying the customer provides jobs. I do not believe that the hon. Member for Renfrewshire, West stressed the importance of that.
I suspect that most of us recognise that unemployment will be with us for some time. That is the reality, whichever Government are in power, and it is important to alleviate as much as possible the hardships of unemployment.
The figures for special employment measures are interesting. In the last year of the Labour Government, £330 million was spent on special employment measures. This year £1,500 million is being spent, and next year the figure will be £2,000 million, which is more than six times that provided under the Labour Government.
The hon. Gentleman is in favour of spending more on special measures. Should not the Government restore the five per cent. cut in unemployment benefit, allow the long-term unemployed the extra 25 per cent. that they should receive by getting the long-term supplementary benefit rate and restore the £15 difference for a married man with two children caused by the cumulative effect of the loss of the 5 per cent. earnings-related supplement?
The hon. Gentleman confuses two issues. The purpose of the special employment measures is to train people for new jobs and to provide work when they are unemployed.
A school leaver who cannot get a job will have a year of work experience and training. We should create a bridge to work. In Britain the movement of a school leaver into work has been notoriously difficult. In Germany, for example, school leavers move to a period of work in a factory and training in a college. I believe that the youth training scheme is here to stay. It is an extension of school, necessary training and a bridge to life outside and to work.
The community programme, which replaces the community enterprise programme, is important for the older long-term unemployed person. This group causes increasing anxiety. Many such people would like to work to help the community, which will now be possible. The programme may need to be expanded if and when resources are available. In Lincoln we shall have 400 places next autumn, which will be well used.
The Government should examine more carefully the matter of voluntary early retirement. On 14 October, 231,000 people aged 60 or more were on the unemployment register. The job release scheme is good as far as it goes, but when people retire, firms often do not wish to replace them. I took up a case recently with the East Midlands gas board, which was reorganising its office and did not need a replacement. The job release scheme does not provide sufficient scope.
Early retirement is expensive. To reduce the age to 60 for everyone is estimated to cost £2,500 million, after taking into account the unemployment benefit saved. But perhaps we could make it voluntary, which I believe will happen sooner or later. The Government should consider the move imaginatively and carefully.
The figures for the special programmes show that the Government have devoted imagination, energy and great financial support to the existing range of measures.
The biggest disincentive to early retirement is that people cannot draw supplementary benefit if they have £2,500 saved. People are refusing to take early retirement because of that.
That is a fair point, but as supplementary benefit is a safety net there must be a cut-off point. The difficulty is assessing where it should come.
A growing long-term threat to employment is the shadow of trade protectionism. My motion on trade protectionism is second on the list today, and I hesitate to produce the long speech that I have prepared, having spoken already for a long time.
The world has benefited substantially since the war from the open trading system. Growing trade has sustained our prosperity. As a trading nation we should recognise that more than most. The hon. Member for Renfrewshire, West mentioned the 1930s. Protectionism flourished then, which resulted in a decrease in world trade. It is easy to say that protectionism will help a certain factory in a certain place, but the decrease in world trade that it inevitably creates affects employment, especially in trading nations.
Times are tough and the attractions of protectionism and import controls grow. We all have special constituency interests which in the short term would benefit from protection, but it would be at the expense of the long-term public interest. We must stand out against unfair trade, and we can all point to examples of that, but that aim is confused with a drift towards general trade protectionism. A clear view of the public interest is being lost. As a trading nation we should beware the insidious drift.
Our prosperity rests ultimately on the open trading system. We carp about it and nibble at it at our peril. It is already under threat. If it fell or was substantially damaged, millions of jobs would be at risk.
The Government are tackling the fundamental long-term problems that are the root cause of unemployment. They recognise them and are attempting to deal with them—the first Government for 20 years to do so. At the same time, they have gone far with their special employment measures to alleviate the hardship that the unemployed suffer and to train them to adapt and get ready for new jobs. The policy can succeed if pursued with tenacity, and provided that we sustain the open trading system.
The hon. Member for Lincoln (Mr. Carlisle) is right to stress the underlying causes of unemployment. One difficulty is that our debates naturally fasten on immediate and acute problems, but the causes are often long term. The demand is that we produce instant solutions for the troubles of unemployment but the causes go back a long way and will take time to eradicate or to absorb.
One cause of unemployment is the world slump. Another is the rise of once poorer countries which are now effective competitors. We can hardly object to that. A third cause is the onset of new technology which makes men redundant and which in time should lead to greater leisure and to work sharing.
Another main cause of unemployment is the inefficient structure of our Government and industry. The Government may fairly be blamed for having done very little about this. If the economy picked up now, we should have high inflation and many of the old troubles would surface again.
The most important failure in the structure of industry is the friction between management and workers. The choice is not between State socialisation with large nationalised industries, which are often monopolies, and huge public companies owned by institutions, insurance companies and pension funds. There is another choice. Far more of industry, whether nationalised or independent at present, should be owned by the workers so that workers and management have a common interest in it.
Another difficulty is that a great deal of spending power—that of local authorities, quangos and institutions of all kinds, for example—is divorced from wealth creation and has quite different motives.
British industry is also made sluggish by housing difficulties, restrictive practices, resistance to new products and Government regulations. The trade unions contribute to this, the more powerful unions often forcing wages above the market level, thus decreasing employment.
All those problems require long-term remedies, but we must also deal with the extremely distressing short-term situation. Aid to industry with the purpose of creating new jobs must be of two kinds—specific schemes aimed at particular aspects of unemployment, and a general reduction in costs.
If they have not already done so, the Government should look far more closely at schemes such as those recommended by Professor Layard. Under one of these, any employer taking on new employees from among the long-term unemployed would receive a grant of £70 per week per worker. According to Professor Layard's figures last February, for the Treasury that would be equivalent to a £3 cut in the surcharge. He calculates that such a scheme would create a quarter of a million jobs at a cost of £500 million. He also suggests that a far greater subsidy is required for the under-18s and that it would be cheaper to pay £30 per week to have a young person in work than £60 per week for youth training.
Even if those schemes were introduced, however, a large pool of unemployed would remain, the most serious aspect of this being the unabsorbed long-term unemployed. The damage of long-term unemployment to both personality and society is very great. The long-term unemployed should be offered work—not at a full wage, but at a wage significantly higher than the benefit level—in projects to improve the environment, the landscape and housing. That could be done through the Manpower Services Commission, using private firms where necessary on a commission basis.
Those schemes are "targeted" at particular classes of the unemployed. I think that it is generally accepted that it is far cheaper to help employment by such methods than by general, across-the-board subsidies. Professor Layard calculates that under his schemes it would cost about £2,000 to create a job, compared with the £15,000 that the Treasury model gives for job creation through public investment. The effect on the public sector borrowing requirement would be far smaller. Moreover, only expanding and thus efficient firms would take on the new labour. Mr. Brittan has calculated that the Treasury should have £3 billion room for manoeuvre, so those schemes certainly appear to be within the compass of the Government's strategy.
On general aids to industry, an increase in demand is greatly needed, but a reduction in costs would also be most welcome. I have long been a critic of the Government's fuel policy. It is a curious feature of our economy that the immense benefits of North Sea oil and gas discoveries have scarcely reached industry at all but have gone almost entirely to assist the balance of payments. It is equally curious that, although the cost of oil is falling on world markets, the cost of petrol in this country is still rising. I should like to know in what conceivable circumstances the oil companies will ever reduce the price of petrol.
On taxation and subsidies, the British tax system is almost unintelligible and becomes worse every year. For instance, this year's pronouncements by the Chancellor about capital gains tax are torture to ordinary people and almost unintelligible even to accountants. At present, tax advantages go to capital and not to job creation, despite the huge resource of 3 million unemployed. My hon. Friend the Member for Colne Valley (Mr. Wainwright) has elicited from the Government that, quite apart from the cost of benefit itself, the cost of administering supplementary benefit has risen by 52 per cent. and the cost of administering unemployment pay by 57 per cent. to a total of £442 million, and that has been brought about by a Government ostensibly keen to contain public expenditure.
Mr. Brittan has also calculated that to provide a take-home wage of £50 for an employee the employer has to pay £82 per week in tax and contributions. The British Steel Corporation is in a parlous condition, with enormous losses. Yet its record for value added is good. I understand that it pays £585 million in take-home pay and more than £400 million in tax, and that its tax bill exceeds its total losses. There must be something wrong with the cat's cradle of taxation and subsidies in which this country is entrapped.
It is vital that taxes on industry should be cut and regulations reduced. Small businesses have certainly been helped by the Government, but they are appallingly handicapped by the regulations still in force. I am told that the enterprise zones are in danger of being less successful than they should be simply because of the amount of red tape in which they are tied up.
On investment, no doubt the City works well in manipulating currencies and dealing in international finance, but does it really help British industry? Let us consider the events of last week. Everyone had been clamouring for lower interest rates, but when interest rates fell a little there was a crisis in the city, the pound was apparently threatened and interest rates were raised again. Why was that? There had been no change in British industry except for the better. Yet it is in danger of being clobbered again because hot money is leaving London.
I cannot believe that it is beyond human ingenuity to devise a system in which British industry is not wholly at the mercy of people moving money around the exchanges of the world. It is high time that the banking system was decentralised so that people can invest in local industries through local banks, as is the case in many countries. It cannot be healthy that the amount of savings going through the insurance companies and pension funds has increased to such a high level, yet those bodies take little direct interest in industry and a great deal of that investment provides no help for small industry or new industry.
We cannot simply sit back and do nothing about unemployment. That would be to behave like the civil servants of the last century, who refused to send food to the starving Irish because it would upset the markets. Admittedly the Government have been trying to deal with the problem, but they need to do a great deal more. If they do more, of course, there is always a risk of some inflation, but one of the most prominent British diseases is that of finding a difficulty for every solution. Whenever people suggest doing anything about unemployment they are told that it can be done only on a very small scale, or not now, yet we have the appalling problem of three million unemployed. Many suggestions have been made for reducing that figure. I give the Government credit for having adopted some of them, but a great deal more needs to be done.
Most of the proposals that have been made—including those that I have made today—are feasible, and it is high time that the Government took action to prevent the problem from getting even worse that it is now.
On a point of order, Mr. Deputy Speaker. On 9 November, on 22 November, and again as recently as Wednesday of this week, Ministers promised the House a statement on the review of the steel industry. Some of us have been staggered to see headlines in The Times this morning announcing massive cutbacks in steel in our own areas. It will be outrageous if the House is not given a statement this morning by a Minister from the Department of Industry.
I understand how the hon. Gentleman feels. As far as I am aware, there has been no notice of a statement. I am afraid that there is nothing that I can do to help the hon. Gentleman.
Further to that point of order, Mr. Deputy Speaker. What can hon. Members do when they hear that a review is taking place in the steel industry and when, just before Christmas, they hear, for example, that in one area 1,500 families are to be affected by that review and cutback? Hon. Members thought that there would be an announcement in the House before Christmas. It is outrageous that hon. Members whose constituents are affected have no means of asking whether the Minister concerned knew anything about the cutbacks, whether he approved them, or whether he will make a statement.
I hope, Mr. Deputy Speaker, that you will make representations on behalf of the hon. Members concerned to ensure that statements are made when there are to be cutbacks in the industry.
Further to that point of order, Mr. Deputy Speaker. Is not the disgraceful aspect of this matter the real disdain that is being shown for the House of Commons? This is the place where statements should be made. The information should not be leaked in some way. It is wrong that statements are made outside the House and that Ministers fail to come before the House of Commons, to which they are elected and to which they have direct responsibility.
Further to that point of order, Mr. Deputy Speaker. I believe that the hon. Member for Thornaby (Mr. Wrigglesworth) was correct in raising the matter as a point of order. I expected a statement to be made in the House this morning. The European Community is also involved in the steel industry. The hon. Member mentioned the story on the front page of The Times today. It is wrong that such a situation should have been allowed to develop without a statement being made in the House.
Further to that point of order, Mr. Deputy Speaker. It would perhaps help if I were to undertake to pass on to the appropriate Minister the comments that have been made this morning about the steel industry. Obviously I am not in a position to make such a statement myself, but I should be failing in my duty if I did not at once convey to the appropriate Minister what has been said in the Chamber.
I offer no criticism of the hon. Member for Renfrewshire, West (Mr. Buchan), who has raised the problem of unemployment this morning, but if all the words said in the House had any effect on unemployment, the problem would have been solved long ago.
I do not know how many times we have debated unemployment, analysed it and looked at our own navels in trying to find a solution to the problem. When I talk to people in my constituency or to those affected by unemployment, they seem to have a much more down-to-earth and realistic understanding of the problem than many people who comment upon it.
I have not had an opportunity to read The Economist this morning, but I understand that it contains a survey showing that the majority of people, when asked to apportion blame for unemployment, do not seek to do so. They seem to understand that the economic effects on their own living standards and on their opportunities for work are much too deep-rooted, serious and complex to be solved by casting aspersions in one direction or another. Indeed, I sometimes think that the people I meet in Manchester who are affected by unemployment are, as it were, caught in the trenches while overhead the esoteric arguments from one economic bloc or another are fired.
It is not helpful to tackle the problem of unemployment from the theorectical point of view. The right hon. Member for Orkney and Shetland (Mr. Grimond) examined the nature of unemployment in his speech. Its nature is so complex and its causes differ so greatly that it is incorrect to assume that there are simple levers that we or any Government can pull to alleviate the problem. I believe that people are not attributing blame because they know perfectly well that that assumption is wrong.
I should like to examine two simple arguments that have been advanced. The hon. Member for Renfrewshire, West mentioned the Labour Party's proposals for economic recovery. I understand that it is proposed that there should be a two-stage devaluation of the pound—about 15 per cent. on each occasion. Most people understand, first, that that cannot be brought about by a Government. Secondly, they do not believe that it can be brought about, if at all, with any precision, or that it is possible to predict the results.
From the Conservative Benches the argument is sometimes advanced that allowing the pound to devalue would reduce the pressure on people to become competitive, and that to undertake such a move would be disastrous in relation to efforts to put our industry into shape.
Most people in industry understand that we cannot manipulate the exchange rate in the way that we might wish. They also understand that it is impossible to imagine a position in which, without some adjustment of the exchange rate, companies can meet the 30 per cent. loss of competitiveness which has occurred. Competitiveness is a mixture of the internal efficiency of a company and of the exchange rates against which it has to sell.
My plea is that we should not try to simplify the problem. If, as we now see, the pound has fallen, that has an advantage for us; but let us not try to kid ourselves that we can feed information into a computer and obtain forecasts of the extent to which we can reduce the exchange rate in the future and, as a result, produce a specific number of jobs.
There is an enormous weariness in industry. Many companies are simply hanging on. As my hon. Friend the Member for Lincoln (Mr. Carlisle) said, many of them have now got through the worst and are recovering. The industrial mix is very complex.
Some figures have been published during the past week which show that there are many more people in employment than there were believed to be. I am happy to accept that. Those who believe that statistics are almost always magically right are almost always wrong. I was interested to note that the jobs that we have discovered seem to be in small enterprises. There have been changes in patterns of activity, particularly among small companies. They have been to the long-term advantage of those firms and we are foolish if we ignore that. Nevertheless, the pressures on those companies are great.
The Government are spending large sums on numerous projects to produce jobs. In particular, efforts have been made recently to increase capital expenditure. So much so, that it may be difficult to carry out all the proposed capital projects. I have been agitating for more public spending on sewers in the North-West, and I understand that the programmes are now massive. That is to be applauded. We also hear frequent announcements of projects such as road schemes and bridges in Wales. Those increase capital expenditure, and I congratulate the Government on bringing them forward.
I urge the Government to search out more such projects. Companies need to pick up orders that, in the first instance, will come only from public sources, though that does not mean that they will stay with public sources. We have set our hand to that task, as can be seen from the work done in Liverpool by my right hon. Friend the Secretary of State for the Environment, but there are plenty of other opportunities throughout the country for such capital projects. I hope that the Government will take them up, because I am convinced that the Government's success in containing public current expenditure and lowering inflation gives them the room for manoeuvre that they have been seeking to stimulate capital programmes.
We tend too often to regard unemployment as a short-term problem, and I have been pleased to note that the debate has concentrated on some of the long-term effects. The size of the labour force has been increasing during this century. We had 18 million people at work in 1911, and it is expected that the work force will total 28 million by 1991. Much of the increase is attributable to the increased inclination of women to work, though studies show that there was a drop in that number in the early part of the century and we have now reached a level similar to that in the nineteenth century. We should not draw too many rash conclusions, but I understand that, taking into account the birth rate and the number of married women at work, we are likely to see a growth of about 1 million in the work force between 1980 and 1985.
There has been considerable discussion of the effects of technological change. Any rational action will have to include programmes for the reallocation of the work pattern. It is difficult to do much about that, except at the ends of the age range. In the middle we shall have to rely on retraining. We can have an effect at the ends of the age range. I congratulate the Government on introducing the youth training scheme, and I hope that they will not be too cautious about expanding it. There is much to be gained in that area, and it will have a substantial long-term benefit.
However, I ask the Government to look at the other end of the age scale. We tinker here and there with early retirement, and I think that the pessimism that has been expressed about unemployed people in their fifties is unjustified. As the recession ends, many of those people will get back to work, and it does no good to pretend that they will not.
We should take the opportunity to reduce the retirement age. We need a steady, deliberate policy to that end. I am told that it is too expensive, but it has always been too expensive, just at it has always been too expensive to raise the school leaving age and to develop better retirement projects. We now have the labour force available to make early retirement possible from an economic standpoint and the time available to begin to develop programmes that will have an effect in the next decade.
I ask the Government to give special attention to that issue. It keeps popping up, but it keeps going away. Select Committees have a go at it and Governments have a go at it, but nothing ever happens. I urge the Government to give greater priority to the introduction of early retirement.
I shall concentrate on London, my constituency and the role of the construction industry. Some of my remarks will follow on from some of the observations of the hon. Member for Manchester, Withington (Mr. Silvester).
I start by suggesting that none of us should be too disdainful of debates and arguments in the House and elsewhere in public life. The hon. Member for Withington should do us the honour of respecting our words and arguments, just as, no doubt, he respects his own arguments. I regret that I detected a rather disdainful approach at the start of the hon. Gentleman's speech.
I shall concentrate on London, because it is assumed too often that the London area is excluded from the recession and the problems of unemployment. That is largely because the percentage unemployment figures in Greater London are low compared with those in other parts of the country.
What is not put on the record often enough is the fact that, in real terms, the unemployment figures in Greater London are second in England only to those on Merseyside. Unemployment in Greater London is almost 400,000. It is important to make it clear that unemployment is a major problem in London. We are not, as is sometimes thought, a prosperous area that is protected from the problems faced by the rest of the country.
The largest proportion of London's 400,000 unemployed is to be found in particular areas of London, and generally in what we call the inner Victorian suburbs. It is to be found in particular parts of old London. Unemployment in Brent has doubled in the past two or three years. It is now running at slightly less than 15,000. The largest proportion of this unemployment is to be found in the southern part of the borough. Broadly speaking, it is in the Willesden area, which is a typical inner London area. Of greater significance is the fact that the highest level of unemployment within Brent is in the Kilburn area, where registered unemployment is about 20 per cent.
It is not without significance that the area with the highest rate of registered unemployment is one in which many building workers and their families live. The construction industry could be the greatest single trigger for recovery. It has been said by the hon. Member for Lincoln (Mr. Carlisle) and by others that public expenditure cannot be used to turn the tide. That argument was rejected by my hon. Friend the Member for Renfrewshire, West (Mr. Buchan). One has to reject the generalised rejection of an increase in public expenditure as a means of bringing about recovery.
This is not rhetoric or generalised theory but fact. About 400,000 building workers are registered as unemployed within a total of 3 million unemployed. It has been established that if the 400,000 were brought back into direct employment in the building industry, about another 200,000 would have jobs created for them. That would be the spin-off effect of directly employing the 400,000.
I shall not take up the theoretical analyses that have been carried out. I have studied them. Some of the work was done while I was the Minister responsible for housing and construction in the Labour Government, who were worried about the level of unemployment when it was much lower than it is now. Work was done to establish what the effect would be of certain forms of reinvestment. I had some of the work done while I was a Minister.
The work may sound theoretical or esoteric, but the spin-off effect would be realistic. It would have positive results for my constituents in Kilburn, for the constituents of my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) and for the constituents of all Members. That would be so if we brought only half of the building workers who are now unemployed back into direct employment over, for example, 18 months. This would have a positive effect on the building workers and their families; it would not be limited to the statistics of 400,000 and 200,000. It would have an effect also on thousands of others who are unemployed or underemployed as a result of mass unemployment. Likewise it would have an effect on their families. This is not esoteric or theoretical. If millions of pounds were invested in the construction industry, we would produce work.
It is possible for the Government to reinvest in housing and other forms of capital expenditure. That would have a direct and speedy impact on the building industry, as well as having a medium and long-term effect on the economy generally. Much depends upon the projects and programmes that are put in hand. If greater efforts were made in the rehabilitation and conversion of houses there would be results within months and thousands could be brought back into employment. That is different from undertaking schemes such as the electrification of the railways, barrage schemes and major road works, or the modernising of sewers in the North-West, which are a national disgrace. Those are much longer-term projects and they would have a longer-term effect. However, the investment in fairly short-term projects could be initiated if the Government had the will to do so.
The Government have been saying a good deal recently about their desire, after nearly four years of public expenditure and capital investment cuts, to see an upturn in capital investment by local authorities in construction, especially housing. There has been much criticism recently of local authorities for underspending. Ministers' statements have greatly misled the House and the country. The allocations of capital expenditure to local authorities for next year belie the statements that have been made from the Government Front Bench. The Brent local authority will have a reduced capital allocation next year. In the majority of cases the allocation for investment in housing will be reduced next year, despite Ministers' statements. There will be a serious reduction in the Brent allocation.
Unless action is taken by the Government now, there will not be a return to full employment and the construction industry will not be capable of expanding its work load and work force in a few years from now. This will have serious consequences for the rest of the economy.
We have entered a period of economic madness. If the Government do not act now, they will continue to spend thousands of millions of pounds a year on unemployment payments and indirectly in lost revenue. If they were to adopt a policy of massively increasing investment in the public sector they could undertake a massive reduction in public expenditure on unemployment benefit and in reducing lost revenue.
The idea that the Government have reduced public expenditure to release resources into the rest of the economy and to encourage private investment is nonsense. It sickens me to hear that nonsense being trotted out in this place day after day and week after week. Those who make such speeches, whether from the Government Front Bench or from the Back Benches, must know that they are belying the facts.
There has not been a release of investment into manufacturing industry in the private sector as a result of the Government's policies. Investment has decreased by about 11 to 12 per cent., and therefore has not even been sustained. How can the Government talk about cutting public investment in order to release resources into private investment, and keep on saying it as though it is happening? Not only has it not been sustained, but there has been a massive reduction in the level of investment in manufacturing industry.
The claim that there has been a reduction in public expenditure is again misleading. It belies the facts. Thousands of millions of pounds are being paid out.
I give one example of how the trend could be reversed. Treasury Ministers argue constantly that we cannot afford it and that if we spend £1,000 million more next year in public investment that will reduce resources which otherwise would go into the private sector. I have made it clear already that that belies the facts, because resources are not being released; their size is reducing. But then Treasury Ministers say that we cannot afford it because we have to keep down the level of public spending. They must know that if they undertook just £1,000 million more public investment in the building industry, that would turn out to be at a net cost of less than £400 million.
If we consider the calculations of what the Government release by way of unemployment benefit and what they gain in tax revenue and by other means, it is clear that the kind of expenditure that I suggest would produce a greatly reduced net expenditure within a matter of months.
It is not as though we do not need the improvements. It is estimated in Brent that 20 per cent. of the housing stock built before 1919 is in need of major repair, conversion and modernisation to create decent housing conditions. There are literally thousands of people on the waiting list. We have an inadequately used stock of housing. It needs to be converted to meet the needs of today's smaller families. The picture is repeated in every old borough of London and in every city. It is not that the work does not need to be done, because it does. There are thousands of families who need the work to be done. It is not that the investment resources are not there, because they are. Much of the money is being spent on unemployment benefit and the like when it could be going into direct investment, thereby creating jobs and wealth. It is not that the people are not there to be employed, because they are. Action could be taken now.
I am not talking about a short-term, immediate policy. I am not saying that we can resolve our unemployment problem and our economic problems overnight. But unless we start now with a policy of this kind, we shall not achieve long-term results. There is that famous tag from the Chinese:
The journey of 1,000 miles starts with the first step.
It is no use waiting 10 years to resolve long-term problems. We must start now, and in the construction industry we ought to start with massive programmes of rehabilitation and getting new housing construction under way, and then go on to road schemes, sewers, electrification, civil engineering projects and barrages—the 10-year projects—to provide a core of activity in the economy which is long overdue and which has been undertaken in other countries with great benefit to their economies and to their infrastructure.
We start with London and we go on to Brent, but we are also talking about the whole country. We are living in a time of economic madness. There is a way out. It is nonsense to keep saying that there is no alternative. Decisions are made by human beings and not by some diffuse cloud, and certainly not by the rest of the world. I do not underrate the problems of world recession, but there is no reason to keep on blaming world recession for not doing that which it lies in our power to do. We could bring down the level of unemployment by half, given the will, the effort and the right programmes, within two years. Given a five-year policy on these lines, we could really bring down unemployment to at least the level that it was four years ago. We have to stop talking as though the unemployment problem exists everywhere else and that we can do nothing about it.
We in this place have to rid the minds of the people—by ridding our own minds—of the idea that nothing can be done. That is the tenor of too many of the remarks of Government supporters. We have to stop it. We are demoralising ourselves and, if we continue, the problem will grow beyond our capacity to organise ourselves economically. It will have a social and a psychological effect from which it will take decades to recover. If the Government do not have the will to turn the tide with decisions that lie within their power, I beg them, for heaven's sake, to go.
I am pleased to be called immediately after the right hon. Member for Brent, East (Mr. Freeson) not only because I, too, represent a London constituency but also because I have some knowledge of the building industry, albeit in a rather different capacity from that of the right hon. Gentleman.
Much of what the right hon. Gentleman said about the need to rejuvenate the building industry was relevant, and it is a policy that I advocate. The building industry is an enormous employment generator, and there is no doubt that what the right hon. Gentleman suggested would be a very sound way of fulfilling the need for more employment. However, I disagree with him in one important respect, because I think that the Opposition do a grave disservice by making it clear that a Labour Government would impose further controls and restrictions upon the ownership of tenanted properties.
There are vast resources available in pension funds, insurance companies and elsewhere which could and should be invested in the provision of flats and houses for rent. However, as a result of the Opposition's threats, there is a grave reluctance to fulfil this need. I am afraid that as long as the Labour Party continues to advocate its present policy it will stifle the private investment that we need. I cannot agree with the right hon. Gentleman that the only way to resolve the problem is by pumping in substantial sums of public money. That is not the way ahead. Only after a number of Conservative Governments will investors and the owners of properties have sufficient confidence to back the cause.
The right hon. Gentleman says that there are vast sums of money which can and should be invested in the improvement of our existing housing stock. But, there again, restrictions are urged in the belief that people may make a profit from obtaining grants to improve properties which they intend to sell. There is no doubt that the greatest upsurge in housing improvement came about when it was made possible for the small builder to buy up properties in rundown areas, convert each of them into two or more units with the aid of grants, and then sell them at a profit. Those profits were subject to taxation, of course. There is no doubt that the policy had an extraordinarily good effect on improving our housing stock. I urge the Government to look carefully at that aspect in the near future.
I think that all hon. Members will agree that unemployment can be a devastating experience, especially to school leavers. However, there is no doubt that a number, either through lack of motivation or choice, are quite happy with the alternatives offered in unemployment and social security benefits. All hon. Members must know people in their constituency who find that, with a young family, they are better off out of work than in as a result of the various allowances and entitlements that are available. [Interruption.] Hon. Members should listen to the truth.
The hon. Gentleman does not wish to hear it.
For a time, I was the unpaid chairman of a co-ownership housing association, with rents equivalent today to £250 a month. One co-owner was a self-employed building worker whose business, unfortunately, went bankrupt. He came to see me in a terrible state, fearful for his future and that of his family, but after visiting the DHSS office, which agreed to pay his rent, rates, light, heat and water, on top of his unemployment benefit, he found that he could go on living a normal life. Not only did he go on a previously arranged two-week holiday in the Canaries, but he had a two-week bierfest in Germany. He helped out friends with their building and decorating jobs, and received presents of food and drink in return. Those he used to good effect, with regular parties which went on until 2 o'clock or 3 o'clock in the morning, keeping awake his neighbours who had to rise at 6 o'clock to catch the bus to work.
The hon. Gentleman is making statements which sound plausible to the general public. Will he name the individual? If not, will he stop making these slanderous remarks about unemployed people?
I happen to come from an area where thousands upon thousands of working people are unemployed. What the hon. Gentleman is saying is an absolute slander on ordinary people in this country who have been put out of work by the policies of this Government, and I for one am not prepared to listen to slander when I know that ordinary people are suffering real poverty as a result of Government policies.
Perhaps the hon. Gentleman should leave the Chamber.
Several neighbours came to see me to complain, and one wrote to the DHSS office, which carried out an investigation and found that it was underpaying the claimant. The claimant naturally felt that anyone who did a normal day's work was a mug. In the end, to everone's relief, including mine, he emigrated to the United States.
Against that background, there is no doubt that there are many who have no wish to leave the unemployment register. The difficulty is to establish the true figures.
Last weekend, we read in the press about the conscientious school careers master who spends much of his spare time helping to place pupils. Many school teachers have given the impression in the past that they did not particularly care whether their charges were likely to leave school fitted to take on a job. Fortunately, that is not universal. This master suggested that pupils should work in their holidays before leaving school, without pay if necessary, to prove their worth to prospective employers.
Undoubtedly the main hope for reducing unemployment in the future is by small businesses taking on more people. They cannot afford to invest in an unknown quantity that is likely to be more time-consuming than productive in the early weeks. Fears of employment legislation can also be intimidating to the small business man, and further concessions and more publicity on the important changes that have been made are required.
However, everything boils down to the opportunities that are available. The number of ladies now seekig to continue in employment after marriage and while raising a family is increasing, and new outlets are required to meet that extra and growing demand. Where are they to be found? How many jobs in the catering industry are filled by work permit holders? Is that because the pay is too low, or are young people educated to scorn the service of others?
I have just received a letter from a constituent complaining that he always tries to buy British but what does he find? He always purchases Goodyear tyres in the belief that they are made in Wolverhampton, but finds that they are now stamped "Made in France". For car spark plugs he uses Champion, which he thought were made in Feltham, but the latest wrapper reads "Made in Belgium". When he purchased a Kodak film, he found that it was made in France. He should, of course, have purchased Ilford films. His wife went shopping for a coat for their son, and returned with one made in Korea. No British jackets were available. His daughter wanted batteries for her portable radio, and came back with ones made in Japan. The local authority installed a new gas multi-point water heater made in France. He always purchases British-made shoes, but after calling at nearly every shop in the area for a pair of plain black leather casuals, he was offered shoes made in Hungary, Italy, Spain, East Germany, Czechoslavakia and India before finding a pair of "K" shoes made in England. On looking at his children's books, he found that seven out of 25 were printed in Italy, two in Spain, five in Holland, one in Belgium, seven in the United Kingdom, and three not known.
Why, why, why can those goods be purchased more cheaply abroad? It cannot be because our average wage rates are too high. It is because productivity is too low. What role have the trade unions played in losing us those markets? Where have business managers gone wrong? Each has played its part in forcing our reliance on North Sea oil revenue, which should be used in capital investment for the benefit of future generations. Undoubtedly, the chill winds of the recession are now biting throughout the world, but with our ingenuity, resourcefulness and the underlying determination shown so recently and dramatically in the South Atlantic, we should be leading the world out of the trough.
There is no one culprit in our current predicament, but I am convinced that the present Government policies are the only effective strategy, and if the trade unions fail to play their full part in speeding the recovery with the latest technology, they will never be forgiven by the vast number of workers who have now come to realise exactly what is necessary in industry and the services to enable us to hold our own with the rest of the world.
I am always sorry when an hon. Gentleman, even an opponent, allows his standards to sink as low as the hon. Member for Ilford, South (Mr. Thorne) has just done. He will not expect me to follow him. I found some of his comments quite despicable, and I have no intention of descending to the same level.
I sincerely congratulate my hon. Friend the Member for Renfrewshire, West (Mr. Buchan), not only on his good luck in the ballot and on his choice of subject, but on his speech this morning, which gave a wide perspective and supplied a good start to our debate.
I and my hon. Friend have been in the House for a long time, both in Government and in Opposition, and I have never yet heard him make a bad speech. This morning he made one of his best. It will repay right hon. and hon. Members on both sides to examine the wide canvas on which he painted the prospect before us. It is a gloomy prospect, but my hon. Friend made a fantastic broad sweep of the canvas during which he showed so much humanity in describing many personal problems that it can only be an enlightenment both to the House and to the country.
Like my right hon. Friend the Member for Brent, East (Mr. Freeson) I find that I must return to my home patch. The tragedy in my constituency is not so much the loss of jobs, but the fact that there are whole areas where factories have disappeared. The Prime Minister talks about an upturn and Conservative Members have talked today about the end of the recession. If there are no factories, there will be no jobs. In my constituency, jobs have disappeared alarmingly over the past three years.
The results of the Government's mad approach to economics can be seen in every Member's constituency. The solutions being applied by the Government are the same as those applied to the problems and tragedies of human despair in the 1930s. Labour Members will recall the Geddes axe, which was applied then with similar results to those that Britain is experiencing now, in 1982.
When I first entered the House the industrial area of Park Royal in my constituency had a thriving engineering industry. Now there are 2 million sq ft of empty factories for sale.
My hon. Friend the Member for Renfrewshire, West spoke of one of his constituents. Every hon. Member will have similar examples. My example is not of a 47-year-old man, but of a 52-year-old qualified electrician. He worked at Park Royal Vehicles—the firm that made London buses for 50 years—for 29 years, almost from the time that he qualified as an electrician. He has now been out of work for four years, and at 52 he faces the possibility of not returning to work.
Unemployment in my constituency has doubled in the past two years. The total registered unemployed were up 115 per cent. 12 months ago. Unemployment among the 16 to 19-year-olds increased by 140 per cent. Those unemployed for between three months and one year rose by 167 per cent.
I hope that the Department of Employment will address itself to the key problem of unemployment in inner city areas which have many people from the ethnic minorities. The proportion of the unemployed ethnic minority in Brent has increased by 41 per cent. That is significantly larger than for those who have white faces. That is one of the problems that unemployment creates.
When I look at the list of factory closures in my constituency, it is almost like reading the industry honours lists of the past 30 years. Everybody knows Hoover Ltd. It is to close, with the loss of 1,100 jobs. Oxford University Press has closed, with the loss of 400 jobs. After making red London buses for 50 years, Park Royal Engineering Company closed, with the loss of 600 jobs. Associated Automation Ltd., which made the first telephones to be used in the House, was closed, with the loss of 600 jobs.
I was half expecting my right hon. Friend the Member for Brent, East to tell the House about the way in which 180 sacked workers from Associated Automation Ltd.—a factory that moved from my constituency to his—had put their redundancy pay together to form a co-operative to continue the work on the lines that the right hon. Member for Orkney and Shetland (Mr. Grimond) will know well from the Mondragon scheme in Spain. That is happening. My right hon. Friend and I are proud of the fact that we are able to participate in obtaining orders through British Telecom to make this co-operative a viable proposition.
In the past 12 months the giants in my constituency have been heavily hit. General Motors Frigidaire has cut its 2,600 jobs to 430. Smiths Industries Ltd. is to lose between 500 and 800 jobs. Wolf Electric Tools Ltd. has lost 200 jobs and the rest of the workers are on short time. Guinness Overseas Ltd. has had 300 redundancies. H. J. Heinz Ltd. has had 400 redundancies. United Biscuits Ltd. and Racal-BCC Ltd.—the latter is one of the most successful industries in the country—are to have redundancies. Rolls-Royce has had 200 redundancies. Alcan Foils Ltd. has also had redundancies. One could cite also Rotaprint Ltd., Cadbury Schweppes Ltd.—and so the list goes on. I am sure that my hon. Friends, whether they come from Norfolk or Grimsby, can give similar examples from their constituencies.
The charge against the Government is that their policies are not just creating unemployment, but are demolishing areas, so that if there were an economic upturn, employment there would no longer be possible.
I have had a long correspondence with the Prime Minister about the Government's case on productivity, labour relations and trade unions. I have the good fortune to have in Brent, South a firm called Glacier Metals Co. Ltd. This company is a textbook example of industrial relations pioneered by Lord Brown a quarter of a century ago. Throughout the world it is noted for its productivity, export programme, and so on. I have argued with the Prime Minister that something should be done about the redundancies at Glacier Metals Co. Ltd. But the right hon. Lady's replies have shown a complete lack of understanding of what really happens in industry. If I may say so, she has not a clue on such matters.
I commend my constituency for the prodigious efforts that have been made with the palliatives that are available. My area has been able to benefit from the youth opportunities programme, work preparation courses, work experience in employers premises—which I regret is called WEEP, because I hope that it is nothing to weep about—training workshops—the one in Dollis Hill has done magnificent work—the community enterprise programme and the unified vocational preparation programme.
Wherever the Government have given us a chance to do something, we have tried to seize it. However, the big element is missing. Unless we can be given the programme authority status for which we have applied, many of those efforts will be too small to have any great effect. Will the Minister tell the House when the Department will announce its decisions?
All the inner city areas have been making applications. The last parliamentary reply that I received said that the matter was still under consideration. If the Minister wants any information he should go to his ministerial colleague, the hon. Member for Ealing, Acton (Sir G. Young), who shares Park Royal with me. I feel sure that he will be able to tell him why urban programme authority status should be accorded.
This week I had an answer from the Secretary of State for Employment which is worthy of that excellent programme "Yes, Minister". It is a textbook example of the verbosity that surrounds complete ignorance. I asked the Secretary of State for his estimate of the cost to the economy of the loss of 360 million working days in 1978–79 and the 710 million working days in 1980–81 through unemployment. I shall probably frame his reply. It said:
A realistic estimate of the cost of unemployment to the economy implies a comparison with a hypothetical alternative situation in which that unemployment had not occurred. But a wide range of such hypothetical alternatives could be envisaged, each of which would yield a different estimate. In view of these unavoidable complications it would be impossible to put forward any single estimate of the cost of unemployment which would have any meaning."—[Official Report, 29 November 1982; Vol. 33, c. 36.]
Like the Secretary of State himself that reply has no real meaning.
Many hon. Members have touched upon the problem of long-term unemployment. In my constituency, that means mainly the disabled, the sick and the ethnic minorities. The unemployment figures from my local employment bureau for May 1982 show that those with an ethnic origin in the West Indies were 1,753, those from East Africa, 977; India, Pakistan and Bangladesh 1,771; and other areas 80. That is a total of over 4,500. It is that which creates social problems in the local context.
In other areas there has been some racism, but I am proud of the fact that in my area, thanks to the integration of all our ethnic minorities, there have been no such repercussions. Indeed, members of the black community have undertaken an elaborate scheme and pioneered a co-operative, which has taken over a bus depot. It is called the Stonebridge Bus Project. Nineteen small businesses will be built under that umbrella. The initiative for it has come from the black ethnic minority.
I willingly pay great tribute to the GLC. The London borough of Brent found £1 million. The GLC found nearly £¾ million. I am grateful also to the Departments of the Environment and of Employment, because they found another £600,000. In addition, the Common Market will probably be involved. I willingly pay tribute to those who had the imagination to see that initiative should not be dampened down, but given the opportunity to grow.
It is no good shrugging off responsibility. Government policies have a part to play and that point has been made by Opposition Members, and particularly in the major speech by my hon. Friend the Member for Renfrewshire, West. Unless the Government are prepared for the country to go down on its knees so far that it will never rise again, they must change their policies. If they cannot change them, they should go and let us put in a Government who will do something.
I am sorry that the hon. Member for Renfrewshire, West (Mr. Buchan) is not in the Chamber, because I wish to thank him for having given us the opportunity to discuss unemployment. Whatever his motive for raising the subject, and however often it may be debated, it does the nation and the House a service to air it frequently.
Although I do not agree with parts of the motion, I think that we can all agree with the phrase:
That this House regards the present appalling level of unemployment as intolerable".
I shall not follow those hon. Members who have addressed themselves to the specific problems of London or who discussed—like the hon. Member for Renfrew shire, West—the problems of the United Kingdom as a whole. As I am a member of the Select Committee on Employment, I shall address myself to the wider issues.
Despite the discord that is often apparent, and has been expressed this morning, it is clear to those of us who follow this subject that there is no monopoly of wisdom when it comes to the intractable nature of the problem. I pay tribute to the Labour Members on the Select Committee. They have addressed the matter sensibly and knowledgeably. If there is any difference between us, it is that Labour Members often have more unemployed persons in their constituencies than Conservative Members have in theirs. I would not dream of questioning their sincerity, knowledge or concern. It is common to all parts of the House that the problem is distressing to individuals, disastrously weakening to any country's economy, harmful to the morale of both groups and individuals, often extremely damaging to family life and, worse still, an affront to human dignity, particularly in Northern Europe where we have the work ethic.
Therefore, I shall explore the areas of common ground. A party political dogfight tends to obscure the reality of the intractable problem. I partially part company with the right hon. Member for Orkney and Shetland (Mr. Grimond) and my hon. Friend the Member for Ilford, South (Mr. Thorne), because although the world-wide statistics show that unemployment is an international phenomenon, I do not believe that they necessarily support—either at home or abroad—the proposition that trade unions are responsible for a significant number of the unemployed. It may be possible to sustain that proposition in isolated cases, but the negotiating powers exercised by trade unions are not a significant element.
I shall outline the significant elements, which may bring me again more into line with the right hon. Member for Orkney and Shetland. No service is rendered to anyone by obscuring what is likely to happen in successive years. Instant artificial panaceas and unqualified criticisms are of no help. They can be cruelly dishonest and misleading, as well as foolish and futile. If the issue is viewed out of perspective, it tends to encourage false hopes which, in turn, tend to tempt Governments towards false solutions.
I shall examine some of the international factors, using the best figures with which the Library could supply me. I refer to an article published earlier this year. In the 1960s there were about 7·6 million people unemployed in the OECD countries. However, the figure is now 28·5 million, which means that about 8 per cent. are unemployed. In Europe, about 16·5 million people are unemployed—nearly 12 million of whom are in the EEC. According to the OECD, no single connection can necessarily be made between unemployment figures and inflation. Inflation fluctuated in 1974–75 between 7 and 13 per cent. The latest figure for Britain is 13·2 per cent. According to the survey of the Economist intelligence unit, which was published in June, more than 11 million people in Europe are likely to be still unemployed by 1987—in five years' time. That represents about 10·5 per cent. of the work force. It is not so much the numbers—to which the hon. Member for Renfrewshire, West drew attention—that are important, as the trends.
In 1980 there was 7·4 per cent. unemployment in the United Kingdom, France, West Germany, Italy, Holland and Belgium. In 1981, the figure went up to 9·2 per cent. One can see a trend throughout the European nations. Even without a concerted programme of reflation, the Economist intelligence unit points out that unemployment will continue to rise at about 2¼ per cent. a year. At best, the assumption is that reductions in unemployment will amount to about 1 million, or 1 per cent., during that period.
We need to consider the adverse factors that cause unemployment. The same survey notes at least four—rising energy prices, technological competition from the United States and Japan, Japanese competition in traditional industrial products and competition from labour-intensive industries in the most newly industrialised countries. A report by the OECD—not much separated in time from that which I have just mentioned—forecasts that particularly sharp increases in unemployment are likely to take place in the United Kingdom, Belgium, Spain, Germany, Denmark and the Netherlands.
It is also clear, based on the experience of the Select Committee, that although unemployment in Sweden and the Scandinavian countries is infinitely lower than the figures that I have quoted, unemployment in Sweden in 1982 has reached 3 per cent., which is regarded as a politically scandalous level compared with past levels. Even in Scandinavia, large percentage increases are taking place.
It is even more instructive to examine what has happened in West Germany, where unemployment has doubled in the past two years to 1·9 million. This increase is attributed to numerous factors. I echo the words of the right hon. Member for Orkney and Shetland. There are not enough new jobs to match the numbers of working age people. Much rationalisation is taking place at a time of technological change and keen international competition. There are more adults, especially women, of working age. In the post-war years there has also been a high level of immigration. To cap everything, there is the deepening recession.
In the United States last September, the unemployment rate of 10·1 per cent., representing 11·3 million out of work, was the highest unemployment figure since 1940. When the Select Committee visited Canada a few years ago unemployment was 7 per cent.;—plus. Following 14 consecutive monthly increases, the figure has risen to 12·7 per cent.—only 0·4 or 0·5 per cent. less than in this country. In Japan—the great success story of the post-war years—unemployment is at its worst level since 1978. I am not suggesting that it is a high level. However, by Japanese standards, it is unacceptably high at 2·35 per cent. Another important factor is that the Japanese economy, which had been enjoying an enviable annual growth rate of 5 per cent., has now seen that rate slashed to 3·3 per cent.
The slump in industrial productivity and growth in unemployment is world-wide. It serves no useful purpose to try to build up a case, as expressed in the motion, calling
attention to the present level of unemployment caused by Government policies and to the solutions to the problem".
If the hon. Gentleman sustains that view, will he explain why every country to which he has referred—the United States, Japan, West Germany, Canada and Sweden—has experienced growth in GDP in the two years to this spring and why the only member of the OECD to experience a reduction in that period has been this country?
I am not the economist or the financial expert that the hon. Gentleman is. One cannot ignore the fact that we had gross overmanning at certain stages which clearly no longer exists. I believe that productivity has some relevance. I am not trying to explain matters. The hon. Gentleman will no doubt put his own interpretation on the figures. I am trying to explain that the same position exists world-wide.
The Select Committee on Employment has examined a whole range of solutions. We have examined the effects of technology on employment in the United States and Japan. We have studied job creation schemes, especially in Canada and Scandinavia, and attitudes in those countries towards unacceptably high levels of youth unemployment. We have also considered training and retraining schemes.
I pay tribute to some of the suggestions made by the hon. Member for Renfrewshire, West and his Back-Bench colleagues. All merit examination, as does the experience, if it is relevant, of other countries. However, it would be a fatal mistake to apply palliatives or so-called cures if, by doing so, we mortgaged either the long term, the medium term or the immediate future. That would destroy the morale of people in this country and take us back to days from which we have at least made some progress.
The issue is far more complicated than some hon. Members are prepared to concede. Short-term palliatives can be counter-productive. We should rethink our attitudes towards full employment. This must be combined with a rethinking of our attitudes towards leisure and job sharing. Above all, we should eschew false solutions that lead to false hopes among the very people who are most affected by the problem.
The hon. Member for Hendon North (Mr. Gorst) spoke about Scandinavia. I ask him to consider Norway, a country which resembles our own, in the sense that it is an oil-rich nation self-sufficient in oil. Over the last few years Norway has maintained a regular increase in its GDP and has kept unemployment under 2 per cent. consistently. That is an important point that the hon. Gentleman should bear in mind.
I am grateful to the hon. Gentleman for mentioning Norway, because that is one of the countries that the Select Committee visited. I do not think that there is a good comparison here, because the Norwegian economy was not suffering as much as ours from obsolescence and obsolescent industries. It was able to use its oil revenues positively without having to prune anything. That factor should be put into the hon. Gentleman's equation.
I hope that we shall use our oil revenues more sensibly than we do at the moment, when we are using them to finance unemployment to the tune of £15 billion per annum.
I congratulate my hon. Friend the Member for Renfrewshire, West (Mr. Buchan) on giving us the opportunity to discuss the scourge of unemployment, which is spreading across the land like a plague, a blight and a pestilence. It is getting worse all the time.
During and after the war there was consensus among the parties that we would never go back to the days of mass unemployment. It was common ground among all those who were politically active that it would be public policy to work for full employment. However, we now have this Government and this faction in the Conservative Party who deny all responsibility for unemployment. Their attitude seems to be, "It has nothing to do with us. It is not our responsibility whether there is unemployment in this country. It is not within our control. We do not intend to do anything about it." They even blame unemployment on the unemployed.
I am appalled by the Government's attitude. It is a crime against our society, particularly against the younger generation. I look around the Chamber at our generation. We have a responsibility to the younger generation. It is the responsibility of our institutions to see that there is full employment. If our institutions cannot provide full employment, perhaps they will not survive. Perhaps they will not deserve to survive. I hope that the Government are considering that matter.
I should like the Government to pay some attention to what is happening in my borough of Newham, where unemployment is higher than in the rest of London and the rest of the country. There is a view in some parts of the country that there is unemployment in Scotland, the North and Wales, but not in prosperous London. However, the rate of unemployment and the rate of increase of unemployment in Newham is higher than in the rest of the country.
The figures for April 1982 show that male unemployment nationally was 12·8 per cent. and in London 11·9 per cent. In Newham it was 15·3 per cent. More recent figures were given to me by the Department of Employment on 23 November. In October 1980, registered unemployment in Newham was 9,216. Two years later, in October 1982, registered unemployment in Newham was 16,038. In other words, in two years unemployment in my borough has more than doubled. The Department of Employment has massaged the figures. It is now giving the figures on a different basis. However, even on the new basis, the figures are worse. Registered unemployment is 16,038, but the number of unemployed claimants is 16,397. Even on the new figures unemployment is worse.
Unfilled vacancies have halved. In April last year there were 519, but in April this year there were 222. Therefore, in my borough hundreds of workers are chasing every job. Why should they? Many of them will give up. They will not bother to look for a job. What will they then do? An unemployed subculture is growing up. There is an increase in vandalism and petty crime. An acid is eating the whole of our society. We have the emergence of a non-working class—people who have never been to work and who never expect to go to work; people with no hope of ever going to work.
I am particularly concerned with the age group from 18 to 25. At that age people are starting out on life. They are starting to plan their families and to think seriously about their careers. They are starting to lay the foundations of their lives. They cannot do that now, because they have no work. The consequences, which I see in my borough, will live on long after the present members on the Treasury Bench have disappeared. Long after they get on their bikes and cycle away, the consequences of the damage that they are doing to society will remain.
Hope would be a great healer. We saw that in the war. If people thought that an improvement was round the corner or even in sight, they would hang on. However, we know from the CBI that there is no hope. It seems that the Conservative Government have virtually thrown in the towel. They do not worry. They do not accept any responsibility. They shrug their shoulders.
What effect does the Minister think that chronic idleness and frustration and a sense of rejection are having, particularly on the energetic, imaginative and eager younger generation? If our society rejects the younger generation, it will reject society. Is that not obvious? That is what is happening.
One can reason only with reasonable people. I am afraid that the Government are completely unreasonable. The young people in my constituency think that the Government are unreasonable. It is my duty to tell the Minister that young working-class people, whom he perhaps does not meet often, are thinking people.
We have already had riots on the streets, and we shall probably have more. Martin Luther King said that "riots are the voices of the unheard." There are many frustrated young people today who have no unions to represent them. They probably think that they have no MPs representing them. They have nobody to represent them. They have no hope. How long are the young expected to put up with that? The Government are creating an out-of-work society. Since the Government took office, an average of 1,800 people have been thrown on the scrap heap and into the dole queue every day. I believe that that works out at about one a minute.
Freedom to work is as important as freedom of speech. They have equal value. The right to work for those who want to work is being destroyed daily. If one is honest, the Government do not give a damn. They shrug their shoulders and say that it is nothing to do with them. Do they understand the symptoms of family stress that I see in my surgery every week? Do they understand the disharmony, the breakdown and the increase in mental illness that result? Do the Government realise that unemployment takes away the purpose in life from whole generations? Because a person is what he does, if he does nothing he becomes nothing.
If society gives the unemployed person no respect, why should he feel respect for society? That is why there is an increase in crime and vandalism and why the country is becoming a shabbier and more unpleasant place in which to live. The Government are responsible. They should do something about it, but, they tell us that it is a world problem and nothing to do with them.
I remind the Minister of the Tory manifesto, which said, that the Labour Government's
favourite but totally false excuse is that their appalling record is all due to the oil crisis and the world-wide economic depression".
That was when there were 1·3 million unemployed and when the figure was decreasing. Now we have more than 3·3 million unemployed, and the figure is increasing. The Government say that it is nothing to do with them, but is due to the world-wide economic depression.
Which world are we talking about? We are talking about the capitalist world. Does the Minister want me to return to my constituency and say that the Marxist prophecy that capitalism will have recurring slumps, cannot exist without unemployment and causes unemployment is true and that nothing can be done about it? If the Minister can give some alternative or some hope that I can take back to my constituency, I shall listen, because at the moment all that we are doing is paying £15 billion per annum for people's souls to rot in the dole queue, when there is so much to be done.
We are paying teachers not to teach and skilled bricklayers not to build houses. We are closing rail workshops when we have clapped-out railways. Council estates in London generally and in Newham in particular are crying out for better housing. There are 1¼ million bricks stockpiled and bricklayers who are paid not to lay bricks. What sense is there in that? What answer does the Minister have that I can give to unemployed construction workers who are roting in the dole queues and who go home to unhappy and miserable families as a result?
The Minister and the Treasury Bench tell us that the only glimmer of a solution will come from what they call moderation in pay bargaining—if only the workers would accept lower wages. I have the figures from the Library. I shall not quote them unless the Minister asks, but real wages have gone down. Wages are a fixed percentage of total costs, and therefore in many industries the workers could work for nothing, but because of British industries' loss of competitiveness we should still make no progress. We have lost 30 per cent. of our competitiveness because of the regime of the Treasury Bench.
When the National Institute of Economic and Social Research and the London Business School apportion blame for the loss of competitiveness, they do not lay it against real wages. Wages have no part, because real wages have gone down. The Government's only suggestion for getting the country out of the difficulty is that wages should be cut.
We must expand demand. The labour and plant are there. We must put them to work. Whenever we have done that before, we have run into balance of payments problems. It is the duty of any Government to deal with such problems. We have the great advantage of oil. It is the Government's duty to put the country back to work, either by dealing with the exchange rate or by negotiating arrangements for reciprocity and balance in trade; otherwise I shudder to consider the fate of the country or my borough.
Unless the Government do something better, they must get out and let in people who are willing to do better.
I share many of the anxieties expressed so passionately by the hon. Member for Newham, North-East (Mr. Leighton) and others. The hon. Gentleman described the plight of his constituents in that grave situation, but he did not say precisely how a Labour Government would get to grips with the problem.
The hon. Gentleman said that British industry was not competitive, but that real wages had nothing to do with that as they had gone down. However, he did not explain the cause. Over the past 12 months real wages have fallen, but over a longer period they had risen, and that is part of the cause of the lack of competitiveness.
Whatever the debate on devaluation, the reason for the loss of competitiveness between 1979 and 1981 was the 40 per cent. appreciation in the exchange rate. Does the hon. Gentleman seriously suggest that that should have been offset by a 40 per cent. wage cut?
Of course not, but we need to look at the overall situation. We should look at the national wealth as a cake and see how it is made up. I understood that that was part of the Labour Party's national economic assessment and that it was mentioned in the plan published last week. Wages should be considered not in isolation, but in a wider context. I agree that perhaps the principal cause of the lack of competitiveness has been the appreciation of sterling.
My constituency is fortunate to have below average unemployment, but I previously represented a coal mining constituency in the East Midlands where unemployment is much higher. This time last week I visited Stockton, Chester-le-Street and Middlesbrough and other towns in the area and talked to many people about the problems. I am as conscious as anyone of the scourge of unemployment.
Was the hon. Gentleman told that one reason for the astronomic increase in unemployment in the North-East was the Government's deliberate policy of abolishing special development areas, which has discouraged manufacturing investment and caused further redundancies?
I discussed that issue, especially in Hartlepool. Hartlepool is benefiting tremendously from the enterprise zone, which will help to alleviate the 21 per cent. unemployment. Only last week 500 new jobs were announced.
The present level of unemployment is unacceptable, but I do not agree with the Labour Party that there is a right to work. However, we should create as many employment opportunities as possible and the Government should aim for full employment.
We talk in numbers but behind the statistics are individuals whose failure to find a job is demoralising for them. There are many personal tragedies. Two categories worry me particularly. The numbers of people who have been out of work for more than a year have risen rapidly in the past year and are now over 1 million. It would be understandable if such people lost the will to work or to contribute constructively to society in other ways.
I am also worried about the number of young people out of work, not only the 16 and 17-year-olds, but those between the ages of 18 and 25. I made my maiden speech on that subject just over five years ago when I stated:
Unemployment is a social evil. Its eradication should be high on the agenda of all Governments. Unemployment among the young is especially tragic because for young people it can become more than a temporary setback. Unemployment can condition their whole way of life and attitude to work."—[Official Report, 24 May 1977; Vol 932, c. 1247.]
That is even more true today with the rapid rise in unemployment. I therefore agree with the first part of the motion:
That this House regards the present appalling level of unemployment as intolerable".
We are then asked to agree, however, that
this is due to the actions of the Government".
That is self-evidently absurd, as was clear when the hon. Member for Newham, North-East quoted the Conservative manifesto. If we are honest, we must recognise that when Labour Members are in Government and unemployment rises—it doubled under the Labour Government—they say that the cause is the world recession and has nothing to do with Government policy. When the Conservatives are in Government, however, there is a reversal of roles. The Labour Party produces absurd motions of the kind before us today, seeking to attribute all the unemployment that has occurred in the past three and a half years to Government policies.
In defence of the Labour Government, from which I resigned, although unemployment increased, the work force increased by nearly 900,000, so employment actually increased. The charge against the Conservative Government is that the number of jobs has decreased by 2,400,000 in three years. That is a massive difference.
I accept that the number of people in employment has decreased in the past three and a half years, although I think that there is some doubt about the hon. Gentleman's figure. The latest information, published earlier this week, suggests that 800,000 people now in work had not previously been identified. There may be a number of reasons for that. I suspect that a number of people who had lost their jobs had become self-employed and had not been picked up by the statisticians. Nevertheless, even if one subtracts that number from the hon. Gentleman's figure, the total is still very large and the trend is recent.
I do not have the figures with me, but I believe that the size of the work force has continued to grow in the past three years. As a result of the 1960s baby bulge, the numbers leaving school in 1979–80 and 1980–81 were very high. However, I do not wish to make too much of that. My point is that the Government of the day generally seek to blame these things on factors beyond their control while the Opposition seek to blame the Government entirely. I do not believe that anyone—not even those economists who believe that the Government are to some extent responsible for the increase in unemployment—argues that the Government are entirely responsible.
Taking an objective view, one can identify at least three factors. First, as I have said, the work force has continued to grow.
Secondly, there is the world recession, which the Opposition motion ignores entirely. The United Kingdom continues to export more than 30 per cent. of its gross national product. I am not sure how many people appreciate that, in terms of exports per head, we are still the greatest trading nation in the world. The importance of international trade cannot be over-emphasised. Only world economic growth will overcome world unemployment. In my view, only growth in international trade will generate that. The world recession is thus a major factor. My hon. Friend the Member for Hendon, North (Mr. Gorst) gave a great deal of information about unemployment in other countries, showing beyond doubt that that is true.
The proper response is therefore not to say that if we cannot compete we will simply introduce protectionist policies. In the long run that would be the road to disaster. As far as possible, we should maintain free trading policies. I recognise that in some sectors of industry the consequences would be severe, so I do not make it as an unqualified statement. Nevertheless, I believe that the other road is dangerous.
I accept that Government policy can be responsible for an increase in unemployment. In certain circumstances I would argue that it probably has been, but let us suppose that over the past three or four years there had been a different approach to our economic problems. There might well have been marginally less unemployment, but it would have risen rapidly in any event.
The Labour Government recognised that unemployment would rise rapidly. Five years ago documents were published by the Manpower Services Commission showing that that would happen. Perhaps unemployment would have been 2¾ million as against 3¼ million, but inflation, increased interest rates and all the other factors would have gone through the roof in the meantime. It would probably have been necessary to call in the International Monetary Fund again to sort out our problems. Inflation would probably have been at three times its present level, with unemployment only marginally less than it is now.
Therefore, at least three factors contribute to a rise in unemployment, not one factor, as the motion suggests. To say that the current level of unemployment is entirely due to Government policy is patently absurd.
The motion asks the House to refuse to accept that there is no alternative to the Government's policy. I do not think that anyone suggests there are no alternative policies. The question is whether there are any real or credible alternative policies. The document published by the Labour Party last week recognises that, while Labour has a clear alternative policy, it has a considerable credibility problem. It knows that when it tells people that in five years' time unemployment will be reduced to 1 million, with inflation running at about the present level, people may be slightly sceptical. There may be some doubt in their minds. They may even say to themselves "If that is the case, why do not the present Government take the actions that are prescribed by the Labour Party?" If it were so simple and if the Labour Party were right, the Government would have followed that course.
It is self-evident that the exaggerated promises that the Labour Party is now making will not be believed by anyone. People have only to look across the Channel to France to see the failure that has ensued from a similar policy.
The document contains an admission that the Labour Party has a credibility problem, because it says:
we face a formidable task in convincing the electorate that our policies will work to reduce the numbers out of work, to create real jobs and, above all, that we can do this without high and rising inflation.
One might ask "Why should people not believe it?" After all, the authors of the document have fed all the assumptions and the data through the Treasury computer model of the economy, and it all comes out wonderfully. All the different factors come out in favour of the Labour Party's policy. Anyone who knows how computer programmes are designed knows that the output is only as good as the input. I suggest that the input is defective. The Labour Party's plan starts on a false premise and is based on two false assumptions.
The first paragraph of the document refers to a paper published in March:
We said that the major problem of the British economy had been a collapse in the demand for the goods and services produced by our industries: and we explained that this collapse in demand had been caused primarily not by the 'world recession' but by the monetarist policies of this Government—high interest rates, an over-valued exchange rate, rising taxes and substantial cuts in public spending.
That is the false premise. It is assumed that there is lack of demand. The facts are otherwise. Over the 12 months to the middle of this year, money demand rose by 11 per cent., real demand rose by 3 per cent., and output rose by only 1 per cent. The difference was made up by imports. There is no lack of demand in the economy.
People with large mortgages have found from the beginning of this month that their mortgage interest rate is onethird less than the level of 12 months ago. They have considerably increased spending power and when they go to the shops, perhaps to buy things to improve their homes, they do not necessarily purchase British goods. They buy those that are the most competitive.
The Government are right; our fundamental problem is the lack of competitiveness in British industry. The Labour Party is wrong; there is no lack of demand. Demand exists, but it is sucking in imports.
Two false assumptions have been fed into the Treasury computer. The first is that a Labour Government could contrive to secure a 30 per cent. devaluation over two years. I do not know where Labour Members have been living. If a Government announce that they will devalue sterling by 30 per cent. over two years, anyone with any sense will sell sterling to avoid the losses that would accrue over those two years. It is nonsense to suggest that devaluation could be contrived over two years. The experience of the past couple of weeks shows that even a Government with firm and positive policies can get into difficulties.
An even more naive assumption is that a Labour Government could secure what is euphemistically called restraint over earnings. It is suggested that that could be done through a "national economic assessment"—a national forum in which everybody would get together and discuss how the cake should be shared out. It used to be called the social contract, but it was a one-sided contract, because the unions got everything that they demanded and gave little to the Government.
I have quoted what the right hon. Member for Heywood and Royton (Mr. Barnett), the former Chief Secretary to the Treasury, says about the social contract in his book "Inside the Treasury". The right hon. Gentleman was well placed to make a judgment. I suggest that the hon. Member for Liverpool, Walton (Mr. Heffer) should read that book. It would do him a lot of good.
The second assumption in Labour's document is that there would be restraint over earnings, but the document is candid enough to tell us what would happen if there were no such restraint and this great policy failed. The answer is that over the lifetime of the Government we would arrive at an inflation rate of 18 per cent. and a balance of payments deficit of £25,000 million. There is another example of the credibility gap.
The economics editor of The Sunday Times, David Lipsey, described Labour's policy as "Not a real alternative". That is precisely the proposition that I put to the House. Mr. Lipsey said of the incomes policy proposal:
Shore's supporters retort that, of course, they accept the need for restraint on money earnings. For this reason, they propose a National Economic Assessment, 'through which Government, workforce and management would determine annually how the nationl income should be divided between profits, investment, public consumption and earnings'. The idea is that the unions (which is what the word 'workforce' in this context actually means) will see how the Shore expansion would benefit their members. They will see, too, how those plans would be wrecked if earnings soared out of control. They—and their members—will then willingly embrace the moderation of money wage settlements which the policies' workings require.
This formula would carry more conviction were it not for an important speech made recently by Michael Foot, the Labour leader in Cardiff, and disinterred … in the New Statesman last week.
That was the speech to which I referred during Prime Minister's Question Time on Tuesday.
The article continues:
In it Mr. Foot reflects on the last period in which a social-contract type policy, of the kind advocated by Shore was in operation—under the Labour Government of 1974–79. He defends with passion, as 'specially successful' for that policy, the years from 1974–6. 'Specially successful' when inflation rose briefly in 1975 to an annual rate of 35 per cent., with wages chasing prices like a kitten its tail, and Mr. Foot looking on from the side like a fond parent? 'Specially successful' when, in direct consequence, unemployment rose from 628,000 in February 1974 to 1,371,000 by the end of 1976".
"Specially successful"? I do not think so. As I asked earlier this week, if that was "specially successful", what would a less than specially successful Labour Government
achieve? The Labour Party's policy is based on two entirely false assumptions. I say that the Government have it right. The lack of competitiveness is the fundamental problem, which the Government are seeking to tackle. In next year's Budget the Government must provide further assistance for industry with its costs.
How can the hon. Gentleman expect Labour Members to accept the crocodile tears that the Government are shedding about unemployment when their policies are increasing unemployment? The Government's policies are making the lot of the unemployed much worse. Today there is a nation-wide DHSS dispute. Despite the increase in unemployment, which everybody recognises, the number of staff in DHSS offices to deal with the increased number of claimants as a result of the increase in unemployment, far from being increased, has been cut. That has led to demoralisation which has led in turn to the staff in the unemployment benefit offices going out on strike today. They are striking not for higher wages and for shorter hours, but——
Order. The hon. Lady must not make a speech in an intervention. When the hon. Member for Beaconsfield (Mr. Smith) responds to the hon. Lady's intervention, I hope that he will bear in mind the fact that many more hon. Members wish to contribute to the debate.
I must not be side-tracked into discussing the DHSS dispute. I merely say that the number of staff in DHSS offices is determined by a formula which takes into account the number of claimants.
The problem that the Government face is lack of competitiveness. The Government are right to recognise that. When the Budget statement is delivered next March, I believe that the lion's share of whatever is available by way of what was neatly described as the "implied fiscal judgment" in the autumn statement should be used to assist industry further.
At least the hon. Member for Beaconsfield (Mr. Smith) accepted, first, that the level of unemployment is unacceptably high; secondly, that the Government are partially responsible for it; and, thirdly, that the Opposition have a clear alternative proposal, even though he does not like it. That was far better than the disgraceful speech of the hon. Member for Ilford, South (Mr. Thorne), who tried to pretend that the majority of people who are forced into unemployment do not want to work. That was a monstrous allegation. I am glad that no one has repeated the words of the political dinosaur of Ilford, South.
I thank my hon. Friend the Member for Renfrewshire, West (Mr. Buchan) for his motion, which enables us to discuss this subject. Unemployment hangs like a black cloud over Tory Britain, not just in the traditional areas of high unemployment to which the Labour Government made available so much special assistance, but virtually over the length and breadth of Britain.
The hon. Member for Lincoln (Mr. Carlisle) suggested that the position was getting better in East Anglia, but figures published by the Department of Employment, even after all the massaging, show that in the last month unemployment has gone up in East Anglia and that vacancies have gone down.
Anyhow, the hon. Gentleman does not deny that the unemployment figures in East Anglia are going up steadily.
I want to refer to a specific part of East Anglia, because it tells the story. It is the city of Norwich. Recently, the Department of Employment gave me the relevant figures. They are extremely interesting. They deal not just with the period in office of this Government, but with that of the Labour Government, who have been attacked by the hon. Member for Beaconsfield.
I asked for the figures from 1977 onwards. The total number of unemployed in the Norwich district in 1977 was roughly 5,600. The figure went down in 1978 to 5,000, when inflation was also going down. It went down again in 1979 to 4,600. Then the Tories came into office. In 1980, the figure went up to more than 7,000. In 1981 it went up to more than 11,000. In 1982 it has gone up to more than 12,000, despite the massaging of the figures, which somehow disposes of 1,000 unemployed without providing one additional job.
Also extremely interesting are the figures for those who have been unemployed for more than 52 weeks. They were coming down steadily. Each month of 1977, 1978 and 1979 showed a decrease. Now the figure is up dramatically. The number of people unemployed for more than 52 weeks since this Government came into office has increased fourfold. What is more, the number of unemployed under the age of 18 has increased to a staggering six times the number before the Tories came to power.
Is it any wonder that with that massive increase in youh unemployment there has been a massive increase in crime? To those who try to pretend that there is not a link between youth unemployment and rapidly rising crime rates, I point out that in Norfolk and Norwich the crime figures are going up more rapidly than the unemployment figure, and I have shown the rate at which that is increasing. Those who pretend that there is no link are spitting in the wind.
What does the future hold? In a report presented to our city employment promotion committee, Mr. Harry Simpson said:
Unemployment in the Norwich district continues to run at roughly 15 per cent. higher than at the corresponding time last year and there has been a further rise of 1,574 over the figures published last month … The unemployment register in Great Yarmouth … has gone up by 1,164, and at … Lowestoft … almost 300. With virtually no alternative unskilled employment available locally further increases are likely during the winter months.'
What sort of hope is there for those wanting jobs, as I believe the vast majority of unemployed people do? They want to be back at work and to have the dignity that goes with being in work. No hope is offered. No hope was offered by the Chancellor of the Exchequer in his recent statement. The Government's only success has been to bring down inflation. They have brought it down to marginally less than it was in 1978. They also claim the success of bringing down the interest rate—that is, until it went up again last week.
The picture of dismay and misery facing the British public will remain as long as this Government are in power. I accept that other Governments are in a similar position. The Financial Times said:
If the ten countries of the EEC maintain their current policies they will fail to achieve almost any of their economic objectives by 1987. They will be locked into a pattern of minuscule growth, their average inflation rate will still be at current levels while the total unemployed will be even higher than it is now.
Is this devastation a prospect to which there is no alternative? The hon. Member for Manchester, Withington (Mr. Silvester) said that there was no alternative and that there was nothing that we could do. I say loud and clear that, in my opinion, it is monstrous for the Conservative Party to cart around the country the theory, first, that there is no radical, real, sensible, or sound alternative, and secondly that the British public will have to put up for ever with 3 million, 4 million or more unemployed.
Labour's alternative plan, realistic and carefully worked out, proves that there is an alternative, a way forward that will tackle the economic stagnation. Of course it will not do it quickly. The devastation that has been caused by this Government in three and a half years will take a long time to put right. Nothing can be done overnight about depressed output or low investment, or the fact that for the first time in the history of our country we have become a net importer. It will take time, and it will take a lot of guts and clear thinking.
My case against the Government is not simply that they have been responsible for the devastation of British manufacturing industry, which, as I said, has made us for the first time ever a net importer, but that they have sought to convince the people of Britain that all this is in their best interests and that the Government are being cruel to be kind. For the poor, the Government are being cruel to be cruel. What the Government are telling us is fatalistic nonsense. When we were in power, during the last fifteen months of our Government there was a steady decline in the numbers of unemployed, and at the same time there was a dramatic decrease in inflation. So the Labour Party has nothing to apologise for.
The Government have presided over a period during which we have seen a previously unknown devastation of British industry, misery and harm, not only for millions of people who are unemployed, but for their families. The Government always say that the fault is someone else's, as though there was no recession when the Labour Party was in power. We, too, had to fight a recession. The Government have to take the blame. They are the guilty men.
It may be for the convenience of the House if I intervene at this stage.
My hon. Friend the Member for Hendon, North (Mr. Gorst) stressed the common ground. We should do that more often, because unemployment at these levels is the concern of us all. My hon. Friend the Member for Ilford, South (Mr. Thorne) talked about what is called the "Why work?" syndrome. I do not imagine that that can be ignored, but I have no doubt in my mind that the vast majority of people are anxious to get back to work as soon as possible. Unemployment is an evil. It cannot be good for those who have to endure it. My hon. Friend the Member for Beaconsfield (Mr. Smith) was right when he said that the figures represent a series of personal tragedies.
I do not agree with what the right hon. Member for Norwich, North (Mr. Ennals) said, because I think that it is very daring of anyone to say that there is a relationship between employment and crime. When I became a member of the Bar there was full employment, living standards were rising and yet crime rocketed. Everybody said that that was due to the affluent society. A graph of crime since the war will show that it has soared both in times of affluence and in times of high unemployment. There is no simple analysis.
I congratulate the hon. Member for Renfrewshire, West (Mr. Buchan) on having chosen to debate today this all-important problem. He began by complaining about the new way in which the unemployment figures are compiled. I shall not waste time on that, except to emphasise that they came as no surprise to the House. The Department of Employment took the greatest pains to emphasise at the beginning of the year that a consequence of voluntary registration would be a change in the way that the figures were compiled. If Labour Members, who are so free with their criticism, were to take the trouble to read the Employment Gazette's article on that matter, they would understand the reasoning behind the change in the figures.
I am sure that the hon. and learned Gentleman will concede that not even he realised the extent to which a false drop would be produced until we had the October unemployment figures.
Nobody could judge the precise extent of the drop until the first round of figures came. People can complain until they are blue in the face about the way in which the old figures were compiled and the new figures are compiled. However, both the old and the new figures show what is required—the trend.
The hon. Member for Renfrewshire, West referred to the fact that there were fewer people working today than in 1979. Perhaps that is partly accounted for by the shift to self-employment. That is one of the facts which appeared the other day in the article about the labour force survey. He should also remember that, whatever the figures may show, Britain still has more people employed than almost any country—apart from Denmark—in the EC. I think that I am right in saying that.
The right hon. Member for Norwich, North made great play of what happened between 1974 and 1976 and also between 1976 and 1979. We all know that there is some importance in the year 1976. The right hon. Gentleman boasted about what happened after 1976. If he had been entirely frank with the House, he would have said that the Labour Government entirely changed course on the demands of the IMF. If they had not done so, we would have been in a far worse mess than we were.
The hon. Member for Renfrewshire, West talked about private investment abroad. He should bear it in mind that 30 per cent. of investment abroad is in firms which have links with British firms. One must not ignore the fact that our markets abroad are reinforced by those foreign investments.
The hon. Member talked about the collapse of Linwood. However, he did not tell us why Linwood collapsed. He did not remind us of those sensational figures that were published in 1980 which showed that it took 20 man hours to make a Ford Escort in Germany and 40 man hours to make the identical Ford Escort with the identical machinery in Halewood. That might have had a bearing on the collapse of Linwood.
Linwood had nothing whatever to do with Ford. It was Talbot. One reason for the collapse was transfer pricing in motor car companies within the EC, another was the import penetration coming, above all, from the parent company in France.
I shall say a little more about the car industry. Of course I knew that it was Talbot, not Ford. The point is that that firm collapsed because of a loss of competitiveness in car manufacturing.
That brings me to the important issue before us. It was asked why Britain had had the worst of the world recession. The answer is plain for all to see. When the world recession came, British industry was in far worse shape than the foreign industries with which it had to compete. There has also been a request for direct import controls. The House will recall that such controls were sought not against countries in which there are low wages and low production costs—there was no demand for protection against unfair competition—but against a country with similar conditions to those in Britain. I refer to Germany. What hope would there be of making industry efficient in Britain if it was insulated even from competition from Germany?
My hon. Friend the Member for Lincoln (Mr. Carlisle) was right to emphasise the dangers of protectionism when Britain is the foremost trading nation in the world, exporting a larger percentage of its manufactured products than any other country.
The debate has clearly demonstrated that the causes of unemeployment are complex and that there are no easy solutions. Those who try to pretend that there are easy solutions fool themselves and the country. The so-called "Programme for Recovery" was published recently by a group of members of the Labour Party. The idea put forward is simple. Indeed, I wonder why no one thought of it before if it is so simple. There is to be a 30 per cent. devaluation over two years, and unemployment is supposed to be reduced in five years. There is certainly no difficulty about the devaluation. If by some terrible stroke of misfortune for our country Labour Members—supported by the likes of Peter Tatchell and the other extreme candidates—were elected to power, the 30 per cent. could be achieved in a fortnight. Those who wrote the paper are being far too modest. Surely they could do better than 30 per cent. Would not a complete collapse of the currency be well within their grasp? What a prize! It always amazes me that in Opposition the Labour Party always performs as if no one abroad had the faintest idea what was going on in Britain and never read an English newspaper.
Do the Opposition never ask themselves how foreign investors are likely to react? Do they never contemplate the impact that the statement about engineered devaluation is likely to have? They do not give the matter the thought that it should be given. Labour Members should be asking themselves how they will explain to the British people—after the devaluation has been engineered—why their standard of living has collapsed in the face of escalating prices and costs. Have they asked themselves how they will explain how a policy sold as one to create jobs has instead caused runaway inflation and the destruction of employment?
Devaluation is a means of cutting living standards. That is what it is all about. Unless devaluation does so, the gains in competitiveness that it is designed to achieve are quickly eroded. If Opposition Members do not know the analysis, I had better spell it out carefully, because it has been proved by history. The idea is that it is made easier to sell British goods abroad, but in the knowledge that imports will be more expensive. However, if people are then allowed wage increases to compensate for the increase in prices because of the more expensive imports, manufactured goods will become more expensive again. The whole exercise of devaluation is then completely fruitless.
Opposition Members should look at what happened between 1972 and 1975. The effective exchange rate of sterling fell by a quarter between those years, but domestic costs, particularly wages, rose so greatly that the initial gain in competitiveness had completely disappeared by the end of 1975. That would be bound to happen again unless, if I dare mention it, there was an incomes policy. That is what it is all about.
Leaving aside the problem of devaluation, there is the modest proposal for an increase in spending amounting to about £60 billion over the five year period. I say "modest" because this would not go nearly far enough to cover the cost of the proposals in that other Labour Party document "Plan for Jobs". The authors of "Programme for Recovery" claim that they they have fed £60 billion reflation into the Treasury model. I should think that it is feeling pretty poorly by now. It had gulped and promised a massive rise of 12 per cent. in output, a massive fall of 2 million in unemployment and only a small increase in inflation.
There is, of course, a catch. Everyone knows it. It is clear from Labour's paper that, when the package was tried for the first time on the model, the answer was that, because wages would rise out of control, inflation would be 18 per cent. and there would be a £25 billion deficit in the balance of payments. The conclusion was that
such a strategy was quite unsustainable beyond the first two years.
In other words, it would not work, again if I dare mention it, without an incomes policy. The model would not come up with the right answers unless "incomes assumptions" were made.
We shall wait to see how successful are the authors of "Programme for Recovery" in convincing their colleagues that an incomes policy is on and is saleable to their paymasters, the unions. They have about as much chance of selling an incomes policy as I have of convincing the House that I was wise to volunteer to reply this debate. That is another matter.
That is not true. We have, however, made it clear to the unions that it is a democratically elected Parliament that passes the laws of this land and decides which laws should be passed and not a body that is not responsible to Parliament and not elected by the electors. There are some simple facts that cannot be stated too often. The level of unemployment in this country has risen persistently over the past 20 years. With troughs and peaks, that has been the general picture. It has increased at the same time as inflation has risen. Nearly all countries in the West are now suffering record levels of unemployment. Against that background, there is no easy escape from the problem. We cannot cut ourselves off from it by devaluing or by import controls.
The only method of dealing with the problem is to tackle its root causes. It is entirely mistaken to claim, as did the hon. Member for Newham, North-East (Mr. Leighton), that the root cause is the lack of demand for goods and services. It is not. My hon. Friend the Member for Beaconsfield was right to point to some of the figures. In the year to June 1982, demand rose by 3 per cent. and output by 1 per cent. The gap was filled by imports.
I shall come to that issue. I shall say precisely what we have to do. We have to make sure that when British industry is facing fair competition, it can compete.
The real problem is the inability of British industry to meet the demand for foreign goods at the price at which they are being offered. The shops are stuffed with foreign goods and people are buying them. That is for all to see. Past high wage settlements have fuelled inflation. That has been made worse by low productivity and chronic over manning, with the result that Britain cannot compete successfully against foreign rivals whose circumstances are no easier than ours. The only way to create new jobs is to reverse the decline in our competitiveness.
The Minister has been talking about the extent to which British industry can compete with foreign rivals. No one minds competition, provided it is fair, but the innate difficulty of British manufacturing industry—for example, the textile industry—is that the competition from abroad is unfair. There are oil subsidies in American textile industries and the Far East. Therefore, it is no use exhorting British industry to compete fairly with foreign industry if the Government are unwilling to give British industry specific help—for example, by the imposition of realistic import controls.
One of the difficulties is to identify fair and unfair competition. If the hon. Gentleman is asking me whether I should like to see measures to shut out unfair competition, I agree with him. However, it is impossible to sustain the argument that we are being beaten in our shops every day of the week because of unfair competition.
We must be efficient enough to sell our goods at home and abroad at the right price and quality. When the pound stood much higher than today, it was easy to make out a case that the value of the pound was an important element in our loss of competitiveness. Sometimes people talk as if an overvalued pound has been almost the sole cause, which is complete and utter nonsense. We cannot solve our basic problems of competitiveness by depreciation.
I shall give a few more figures to hammer home my point. Between 1975 and the end of 1981 our competitiveness fell by 54 per cent. During that same period, did the pound go up? No, it did not. It fell by 6 per cent. When the pound was falling, we were losing competitiveness to the tune of no less than 54 per cent.
There was a loss of competitiveness because of simple facts such as that between 1975 and 1980 unit labour costs in this country doubled. They rose by a quarter in Germany and not at all in Japan. Between 1970 and 1980 average earnings in this country rose by 350 per cent. Output rose by 17 per cent. As a result, in 1970 23·5 per cent. of new car registrations were of foreign cars. In 1981, 55·7 per cent. were foreign.
The conditions needed for improved competitiveness are beginning to come about. The rate of inflation is now below 7 per cent. for the first time in 10 years. Interest rates are much lower than they were a year ago. Even taking account of the recent rises as the market adjusted to the fall in sterling, the overall reduction in interest rates since last autumn has been no less than 6 per cent. Wages are moderating.
However, it is vital that those hard-won gains should not be undermined. We cannot let them be destroyed by the growth in inflation that Labour proposes. We cannot let them be eroded by unrealistic wage settlements. We must build on the economic improvements that we have already secured if we are to hold our own in world markets, let alone win back markets that have been lost because of the loss of competitiveness.
The right hon. Member for Brent, East (Mr. Freeson), who is no longer present, talked about the construction industry. Of course there is a place for capital projects in the public sector, but additional public expenditure has to be paid for in one way or another and can be a burden on wealth-creating industry. A balance must always be struck.
I apologise for embarrassing Opposition Members, but it was a Labour Prime Minister who talked about it being impossible to spend one's way out of a recession. That was said when the Labour Government seemed to think that there were certain difficulties in acting in conformity with the Beveridge definition of full employment when they found themselves presiding over a rate of unemployment double that which had appertained when they took office.
The Government are taking a wide range of measures designed to improve economic performance by removing obstacles to the efficient working of markets and strengthening incentives to enterprise. Measures taken so far range widely and include removal of price, pay and exchange controls and hire purchase restrictions, measures to improve standards and quality of United Kingdom goods to improve our competitiveness in produce markets both at home and overseas, measures to stimulate competition in nationalised industries and in the private and public sectors, measures to reform the tax structure and help reduce the burden of taxation on employers, and measures to encourage the establishment and growth of small firms. There can be no doubt about the success of those policies, particularly of the loan guarantee scheme, which is oversubscribed.
The right hon. Member for Orkney and Shetland (Mr. Grimond) was right to draw our attention to the fact that many of those people who run their own businesses feel that they are weighed down with regulations. We should always look at that problem. I know that he would not dream of being unfair and not recall the various things that we have done. We have to some extent eased the burden of the employment protection legislation on small businesses.
Last, but not least, are our reforms of industrial relations law. I did not agree with my hon. Friend the Member for Hendon, North when he seemed to discount that in his analysis. I believe that the closed shop has destroyed jobs. By reinforcing restrictive practices and overmanning, it has well nigh destroyed whole industries. It has certainly made a good shot at destroying our newspaper industry.
Irresponsible strikes, made easier because of the legal privileges afforded to trade unions, have destroyed jobs. On many occasions we have known in our hearts that British industry has been a laughing stock abroad because of industrial disputes. Union power has resulted in the conceding of wage claims which were wholly unjustified by any increase in productivity. Whole chunks of our industry have been handed to our competitors.
All the measures that I have mentioned are designed to enhance competitiveness and thus create new jobs. The hon. Member for Newham, North-East could not have been more wrong when he described the Tories' attitude as being "It is nothing to do with us". That part of his speech, if I may say so with respect, was a farrago of nonsense. If he tells his constituents that capitalism cannot provide full employment, I hope that he will also tell them that full employment is achieved in Russia by a centrally planned economy, direction of labour and the locking up of dissenters in lunatic asylums. If one takes such measures, full employment can be achieved, but I do not believe that more than a handful of people want to achieve full employment in that way.
We are well aware of the need to help unemployed people now. I entirely agree with the right hon. Member for Orkney and Shetland that, because one analysis points to the fact that the only way to increase employment in the long run is to increase competitiveness, that is no excuse for sitting back now and saying that there is nothing we can do in the meantime.
The motion calls attention to the level of unemployment. The Government are deeply concerned about the hardship that unemployment can bring and recognise the need for the special measures in the short term; but they must he consistent with or work in favour of the increased efficiency of the labour market. Within that constraint, the Government are doing far more to help than has ever been done before. Our expenditure on employment measures will amount to almost £1½ billion this financial year and almost £2 billion next year. The youth training scheme is one of our main priorities. It will be fully in operation from September 1983.
The White Paper on the new training initiative published last December referred to the importance of the last two years of compulsory education and the need for more vocationally oriented courses for those continuing full-time education past 16 years of age. We are proposing to take a further initiative. Starting next September we shall seek to establish a number of pilot projects in England and Wales in the provision of full-time integrated courses of technical and vocational education starting at 14 years of age and continuing through the four years to 18, leading to recognised technical qualifications.
The young workers scheme which started at the beginning of the year directly tackles the problem of youth unemployment by helping employers to take on young people at realistic wages to reflect their relative lack of experience and training. It is estimated that the scheme will cost £59 million this year. It is already helping 125,000 young people.
The other major group that needs help is the long-term unemployed. About a quarter of our total expenditure on special employment measures is on that group. The Government are anxious to help people who experience the demoralising effect of lengthy unemployment. Skilled workers may lose their working skills and even their basic working habits after lengthy unemployment. That is why in 1981 we introduced the community enterprise programme and are now extending it to the new community programme.
My hon. Friends the Members for Lincoln (Mr. Carlisle) and for Manchester, Withington (Mr. Silvester) spoke of the need to reduce the total number of people on the labour market by, for example, early retirement. That sounds immensely attractive, but it would also be immensely expensive. We must consider the ability of the working population to support more and more people who are no longer working, but what my hon. Friends say has been taken on board. Job release is cost effective and plays an important part in the special measures.
On 27 July the Chancellor of the Exchequer announced the introduction from 3 January 1983 of a job-splitting scheme designed to help employers split full-time jobs to open up more part-time jobs for unemployed people. We are also currently testing the effectiveness of the enterprise allowance. My hon. Friend the Member for Lincoln wishes it to be swiftly extended to other areas. We are anxious to have a proper evaluation which will be completed with all possible speed and then what he wishes may be done.
The extensive package of special measures is a constructive alternative to unemployment and reflects our determination to help the worst affected. The Opposition seem to think that more people can be helped simply by increasing all the schemes and spending more money. That is a breathtakingly naive and cynical approach. I do not think there can be anyone in the country—with the possible exception of Ministers—who could not qualify for assistance under one or other of the measures proposed in the Labour plan for jobs, but I am sure that everyone in the country would have to pay very dearly if such nonsense were introduced.
That is the alternative economic, industrial and social policy for which the Opposition motion calls, and which would claim to restore full employment. The last time those responsible for that policy were in office they more than doubled the rate of unemployment between 1974 and 1976. They were rescued from complete disaster only by their present deputy leader, the right hon. Member for Leeds, East (Mr. Healey), who introduced the spending cuts insisted on by the IMF in 1976. Those measures were beginning to have some success until he was persuaded to let go the reins again as the 1979 election approached. No doubt he has now been persuaded of the error of his ways and fully accepts his colleagues' return to the spend, spend, spend philosophy.
I see from the New Statesman recently that the Leader of the Opposition has himself already cut from round his neck the albatross hung there by his predecessor with the notable phrase that the option is no longer open for a Government to spend their way out of recession. But there is no denying the truth of those words, however much Labour Members may wish that they had never been said. The alternative strategy proposed by the Labour Party would lead to more inflation, followed by still more unemployment. It is the recipe of the failures of the past, and the House is bound to reject it.
On a point of order, Mr. Deputy Speaker. This is no criticism of you, but on an earlier occasion I sat here for eight hours and was not called, and today I have been in the Chamber since the beginning of the debate. Members on both sides have hogged the time available and have taken no note of the fact that many hon. Members wish to speak. Indeed, some have spoken several times on the same subject, while others of us have been unable to speak for our constituents who are suffering even more than theirs. That is wrong.
This is the first occasion on which I have spoken on this subject since last March, and I have a few things to say. I agree with the Minister at least to the extent that I join him in congratulating my hon. Friend the Member for Renfrewshire, West (Mr. Buchan) on choosing this topic for today's debate.
There can be no greater evil in our society today than the blight of mass unemployment. It is not simply a matter of financial hardship, although the unemployed certainly suffer financial hardship—the Government have seen to that. The hon. Member for Ilford, South (Mr. Thorne), who tried to convince us that the unemployed were living the life of Riley on the dole, greatly undervalued the extent to which the Government have made it impossible for the unemployed to achieve anything approaching the lifestyle that he described. In three years the Government have cut the earnings-related supplement, reduced the basic rate of unemployment benefit by 5 per cent., fiddled the child addition calculation to devalue its benefit to the unemployed and finally introduced legislation to tax even the benefit to which the unemployed are still entitled.
Let us consider the impact of those changes on a man with average earnings, with a wife and two children. If the system of calculating benefit that the Government inherited in 1979 had not been tampered with and that man now became unemployed, the family would receive £79·50 weekly in unemployment benefit from November. The Government's changes in the calculation of benefit mean that if the same man now had the misfortune to become unemployed the household would receive from November not £79·50 but £41·05—scarcely more than half of the benefit that it would previously have received. I am sorry that the hon. Member for Ilford, South has left the Chamber. I should have liked to ask him which travel agent in central London could book me a two-week holiday in the Canaries on the basis of a weekly income of £41·05.
The Minister's expression that the Government sympathise with the hardships experienced by the unemployed rings hollow when set against his Government's record in assaulting the living standards of the unemployed.
It is not just a question of financial hardship. There is also the question of status. We define ourselves by the job we do. It is the job we do that gives us an identity in our society. If we exclude men and women from employment, we also exclude them from the self-respect that goes with belonging and contributing to the society in which they live. It is exactly that exclusion that is currently the lot of a growing number of men and women.
We used to be concerned with the long-term unemployed—those who were unemployed for over a year. It is a scandalous indictment of the present situation that there are now 370,000 men and women who have been unemployed not for one year, but for two years, with an unbroken chain of unemployment. That figure is a matter of shame and reproach to each hon. Member. Therefore, there ought to be no greater objective of our economic policy than to tackle the problems that give rise to that kind of figure.
I am sorry to say that, rather than tackling the problems, the Government have chosen to tackle the figures. I regret the absence of the hon. Member for Manchester, Withington (Mr. Silvester), because I should have put it to him that the Opposition are worried, not by the fact that the Government have discovered more people in employment, but that they have apparently lost some people who were previously thought to be unemployed. I noted what the Minister said about it. I appreciate that it is part of the greater efficiency and part of the government by Marks and Spencer that Sir Derek Rayner has introduced.
I leave this question in the air and hon. Members may seek to answer it to the best of their honesty and candour. Had the Government discovered that the change would result in 200,000 more people being found to be unemployed, rather than 200,000 fewer, would they have made the change? The fact that the Government are now resorting to altering the figures demonstrates beyond any doubt that they have given up any search for policies that will produce a fall in the figures.
I have some sympathy with the Minister, because we know that he is not responsible for the economic policies. They are the responsibility of the Treasury Ministers. I understand that my hon. Friend the Member for Renfrewshire, West had a certain hope that we might have a reply from a Treasury Minister. I had nursed the secret hope that it might have been from the egregious Chief Secretary to the Treasury, whose perennial optimism is one of the few things that can keep us cheerful as we contemplate the ruin that he has brought to the British economy.
Last spring the Chief Secretary assured us that recovery would follow as day followed night. When we asked him how long the night would last, he told us that there were signs of recovery all around us. By last summer he was showing some doubt and anxiety. When we last debated the matter he said that ours would not be an extravagant boom. We have seen no sign of an extravagant boom in the economy over the last three or four months.
Just how inextravagant the boom will be is clearly demonstrated by the autumn forecast of the Government, which shows that next year they expect unemployment not to fall, not to reach a plateau and stay still, but to increase by 300,000. In other words,' the Government expect the national figure to increase to an extent that is roughly comparable with the number of people who are already out of work in Scotland or in London, the two regions which have been well represented in the debate. The same number again will be made unemployed throughout Britain next year.
The truth is that the Government do not have a policy on how to cut unemployment. That means that either they do not know how to do it, and, having sat through four and a half hours of debate, I have not heard a single constructive idea from Conservative Members on how to cut unemployment—we have had excuses and explanations, but not a single constructive idea——
May I put the question in this way? Would not an improvement in competitiveness lead to more jobs? Have not my hon. Friends and I spoken throughout the debate of the need to improve competitiveness?
Yes, an improvement in competitiveness would lead to more jobs. I shall come to that, but first I wish to explore the alternative explanation of why the Government do not have a policy to cut unemployment. There is an alternative explanation and my hon. Friends have already discovered it. It is that the Government do not want to cut unemployment. I incline to that explanation.
We have heard much from Conservative Members about the evils of protectionism. I believe that the Government have a policy of import control. They do not call it import control; it is unemployment. That is how they seek to moderate the rate at which imports come into this country.
The policy is not particularly successful. We understand from the autumn forecast that we shall have a balance of payments crisis next year. That is a spectacular example of economic mismanagement, because it will coincide with the first year in which oil production from the North Sea reaches its peak flow and with a major slump in our own economy.
There is another reason why I do not believe the Government wish to cut unemployment. Throughout the debate Conservative Members have poured scorn on our suggestion that there should be some form of planning for incomes. The Government have an incomes policy, but again they do not call it an incomes policy; it is mass unemployment. That is how they seek to terrorise the work force in the private sector and to drive down the bargaining power of labour in the market.
I believe that for the Government mass unemployment is not a problem. It is a solution, a tool of economic management. I have no doubt that the first plank of the motion of my hon. Friend the Member for Renfrewshire, West is well established. The Government are responsible for the current tragic level of unemployment.
I can understand that the hon. Gentleman may feel insulted by some of the comments of my hon. Friend the Member for Ilford, South (Mr. Thorne) about the position of the unemployed, but will he accept that the majority of my right hon. and hon. Friends feel similarly insulted when the hon. Gentleman implies that we have no concern for the plight of the unemployed and no sincere desire to reduce unemployment?
I spoke carefully about the Government and, having sat through every economic debate of the past three and a half years, I do not believe that the concern referred to by the hon. Gentleman is shared by Treasury Ministers. I am happy to exempt the hon. Gentleman from my strictures, because I know that on a number of occasions he has expressed reservations about Government policy. However, he cannot escape the grave responsibility of being one of the Back Benchers who have sustained that Treasury team in office.
I wish to discuss the problems and what can be done about them. The first thing that needs to be done if we are to get mass unemployment down is to shift the terms of trade back in our favour. That means doing something about the 40 per cent. loss of competitiveness that occurred between 1979 and 1981 as a result of the appreciation of the exchange rate.
I listened carefully to what the Under-Secretary and Conservative Members said about competitiveness. I concede to the Under-Secretary that there were plenty of statements about the need to do something about competitiveness, but I heard nothing about what should be done.
Indeed, if the analysis is that our industry is obsolescent, as one or two Conservative Members suggested, I cannot see how we address that aspect of competitiveness by engineering an economic policy that results in a sharp reduction in investment in manufacturing industry. If the Government want to eliminate obsolescence, surely they should increase investment, not cut it.
Is the hon. Gentleman seriously suggesting that a decline in interest rates has no relevance to competitiveness? Is he seriously suggesting that the decline in the rate of inflation has no influence on competitiveness?
In the past 18 months there has been a decline in inflation and in interest rates from the record peak to which the Government increased them in their first 18 months in office. I remember them putting 4 per cent. on the retail price index at a stroke by doubling VAT. They did not double the zero rate of VAT. It is arithmetically impossible to double zero, but if that had been possible they would have done it. They have forced up rents and the cost of fuel and fares. Public sector charges have been increased at twice the rate of private sector charges. The Government have been responsible for the increase in inflation. Interest rates have come down from the all-time record of 17 per cent., but they remain at a level which, in real terms, is higher than that of any of our competitors.
On Tuesday of this week the Prime Minister declared in answer to a question from my hon. Friend the Member for Blackburn (Mr. Straw) about interest rates increasing, which has happened because of the old-fashioned bank rate increasing, that the increase had taken place because of market forces. It is strange that when the interest rate goes up it is the market that is responsible, but when it comes down from 17 per cent. to its present level the Minister and the Prime Minister claim credit for the fall.
My hon. Friend has anticipated me. It is clear that we are working on the same lines.
What has happened as a result of the loss of competitiveness? There has been a sharp acceleration in the import penetration of the British market. Since April the United Kingdom has entered a new era. For the first time in our history since the Industrial Revolution we are importing more manufactured goods than we are exporting. The loss in employment is a direct measure of the extent to which we have lost trade competitiveness against our foreign competitors. The textile industry has lost 160,000 jobs since the Government came to office. Electrical engineering has lost 144,000 jobs, vehicle building has lost 164,000 and mechanical engineering has lost 209,000. These jobs have been lost primarily because of imports, and our foreign competitors have gained a pricing advantage of 40 per cent. as a result of the movement of foreign exchange.
In the past fortnight we have seen a modest move of the exchange rate back towards reasonable terms of trade. There has been a downward movement of 7 per cent. The event that followed has cast severe doubt on the view of the hon. Member for Withington, that the exchange rate is an elemental force over which the Government have no influence. It is clear that the Government decided to influence a slide and that they decided to halt it. They increased interest ratess to stop it. I regard that decision as part of the higher lunacy of monetarism. Industry needs lower interest rates and a lower exchange rate. The Government have chosen to give it a higher interest rate to protect a higher exchange rate.
If the Government had gone the other way and done something to increase competitiveness, as the Labour Party proposes, they would have been able to tackle the problem of demand in the domestic economy. The domestic economy is lacking effective demand. The Minister loyally repeats that on which the Prime Minister constantly lectures the House. It is the charge that there is plenty of demand and that British industry is too inefficient and too ineffectual to obtain orders.
Many of my right hon. and hon. Friends have referred to the construction industry. My right hon. Friend the Member for Brent, East (Mr. Freeson) spoke about it with feeling.
Currently, one in four construction workers in Scotland is unemployed. There are more than 45,000 construction workers in Scotland registered unemployed, and that figure represents more than one in 10 of the total number unemployed in Scotland. It costs us £200 million simply to pay those men to stand idle, when all round my constituency I see the need for buildings which their skills could provide and which are required by my constituents.
We have done enormous long-term damage to a strategic industry. Only last month, the chief executive of George Wimpey Ltd. said that in his judgment it would take the construction industry 10 years to recover from this recession. I heard the hon. Member for Ilford, South say that it would take several Conservative Governments for the construction industry to recover. If it takes 10 years for Wimpey to recover from a mere three years of Conservative Government, I hesitate to contemplate how many generations it will require to recover from a succession of Conservative Governments.
There is one significant feature of the construction industry. It is not suffering from cheap foreign imports. It is not being put out of business and its workers are not being made unemployed by shiploads of houses being brought into our docks and erected in Britain. It is suffering its crisis because the demand is not there, and the clear reason why the demand is not there is the collapse of public investment under the present Government.
The Minister said that it was sometimes difficult to find the money for additional capital expenditure. That may be so, but it does not explain why in a mere three years in office the Government have succeeded in halving the rate of capital investment by the public sector.
It is a major point. The last one was. There is no need for my hon. Friend to be sarcastic.
When my hon. Friend talks about construction workers and says that their employment is all a question of demand, he does not go far enough. Only in the last four or five weeks the Ministry of Defence has decided to allocate an order for the construction of certain houses in the Falkland Islands to a Swedish firm, which had not submitted the lowest tender and which was not competitive. There are firms in Scotland, and a specific one in the constituency of my hon. Friend the Member for Ilkeston (Mr. Fletcher), the Hallam group, which wanted to provide additional jobs for people in that locality. The Government did not accept the lowest tender. They accepted one from a Swedish firm. It is not just demand.
My hon. Friend makes a very significant point, and what rankles with me is that, as we see those houses being bought from a Swedish company to be built in the Falklands, I contemplate my own city of Edinburgh and see that in the past year not one council house was started. I understand from my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) that the same applies to Liverpool.
Were the Government to act to restore capital investment in the way that we have argued in our "Programme for Recovery", and were they to boost the construction industry, it would mean jobs. It would mean jobs not even mainly in the public sector. It would mean jobs in the private sector. It would also mean a general stimulus to the economy. I understand that Government supporters do not agree with the economic analysis that that kind of investment provides a general stimulus. They labour under a theology that if the Government spend more, far from stimulating the economy generally, it undermines it.
There was a lucid interval a couple of months ago—and again my hon. Friend the Member for Bolsover anticipated me—when it was impossible not to tune in to a news bulletin without hearing Lord Shackleton lecturing his listeners on how successful his package for the Falklands would be. He argued that the additional expenditure by the Government would result in an expansion of the economy, provide additional jobs and improve the standard of living, thereby resulting in an increase in cash receipts which would enable the Government to fund that programme.
It is precisely that programme and approach that we put forward in our "Programme for Recovery" for the British Isles. What is remarkable is that Conservative Members appear to have discovered economic laws which apply only in the southern hemisphere of the globe and which are somehow suspended if applied in Great Britain. Of course that is not so. In our "Programme for Recovery" we have shown that even their model of the economy stubbornly shows that the economy will respond to that stimulus, that there will be an increase in output and that there will be a fall in unemployment. However, it will take planning.
The part of the Minister's speech that delighted me most was his discovery of the figures which he claimed showed that without that planning we would have high inflation and high import penetration if we sought to stimulate the economy. I entirely agree. It will require planning. I invite the Minister to have another look at the table that he quoted. He will see that it is under the "Free Market" heading. When the Minister quotes figures from that table to show that recovery is not possible, he is confirming the view in our programme that the free market by itself cannot resolve our present problems and that if we are to achieve recovery it cannot be done alone by free market forces.
No. I am saying that we cannot hope to get out of the depths of the slump without a proper planning of our economy, which will involve planning for all the major elements of the economy, including, of course, personal disposable income. We do not flinch from that. However, it is false and unrealistic to expect the work force to agree to have its wages cut to resolve a problem which the Government do not plan to resolve in any other way.
The programme gives the lie to the Government's corrosive message that nothing can be done and that the path to recovery is so strewn with pitfalls that it is safer to sit still and stagnate. That is not true. If Conservative Members really believe that, if they really believe that the Government cannot do anything about economic recovery, they have no business to be in Government. They should get out and give way to those who believe that Governments can act to influence our economic destiny.
I end with a couple of events that involved me at the end of the Summer Recess. The first was a meeting with the divisional committee of the AUEW that represents my constituency and the constituencies around it. It was the most depressing meeting that I had during that recess, not simply because of the litany of plants, factories and foundries that had closed, but because of the advance notices that they had received of impending redundancies, some of which have already come to pass.
In the same week as I attended that meeting I received notice through the Financial Times that the financial futures market, which the Treasury co-operated in setting up, had run into difficulties. The financial futures market, which has since commenced operation, deals in future sales of currencies and therefore anticipates currency movements. It was a purely speculative venture. Because it was a speculative venture and no good or product was being sold, it emerged that the Gaming Board had approached the organisers, suggesting that before it came into operation it should apply to the Gaming Board for a gaming licence.
A society that turns its back on engineers and men who make the goods that our society needs, and yet provides opportunities for men to make fortunes through shoving round money in a house of cards such as the financial futures market, is a society that condemns itself. It is a society that demands an alternative. It is that alternative that we now offer the British people.
The Minister—unkindly, in my view—told one of my hon. Friends that he was suggesting a Soviet centrally planned society in which the lunatics were shut up in psychiatric asylums. I do not wish to suggest that in any way, and I wholly dissociate my hon. Friend from such a suggestion. However, the first step that the British people must take to get back on the road to recovery is to clear the lunatics out of the Treasury and give the British people the opportunity of the Labour Party's alternative programme.
Order. Twenty-five minutes of the debate remain. Several hon. Members have been waiting all day to take part. I appeal to them to bear in mind the time when they are delivering their speeches.
I wish to express the anger of my constituents in Hackney. When the Prime Minister answered questions on unemployment in the House yesterday, she alleged that the workers were both lazy and greedy, were not producing enough and wanted too high wages. The Prime Minister held them responsible for Britain's economic crisis. They, of course, include the 4 million unemployed—men, women and school leavers. She is adding insult to injury.
The Prime Minister and her Government, with their monetarist policies, are responsible for the massive destruction of Britain's industries. She has played her economic game to suit the banks and the interational companies. They have grown rich at the expense of ordinary people.
The Tory Government have not only cut wages and living standards, but savagely cut the social wage and have created even more unemployment. There have been cuts in health authorities' budgets, housing, and education.
Unemployment in my constituency of Hackney is 22 per cent. There are 1,650 school leavers chasing 24 jobs. The research unit of the Hackney trades council points out that in 1971 there were about 108,690 people working. In 1981, 10 years later, only 73,900 were working. That is a decrease in the working population of about 47 per cent. Seeking work in 1971 were 2,210 workers, and, in 1981, 12,023—an increase of 444 per cent. That unemployment was only equalled during the worst years of 1931 to 1933.
There are 15,200 registered adult males unemployed, about 22 per cent. This Christmas the one remaining company of any size in Hackney—Lesney Toy Manufacturers Ltd.—is closing down the day before Christmas. It will be a cold miserable Christmas for the hundreds of people unemployed in Hackney. In May 1979, when the Tories came to power, unemployment in London was 132,000. Today it is nearer 390,000—three times as many. One eighth of London's work force is unemployed.
If it were only admitted, the real unemployment figure would be nearer 4 million. More than one person in eight is unemployed in the United Kingdom, chasing some 100,000 vacancies—40 workers for each vacancy. In 1945 the Labour Government had a policy of full employment. In 1951, under the Tory Party, that policy became a high and stable level of unemployment. In the 1960s, Governments began to talk about an acceptable level of unemployment. From 1970 to 1980 we had an unacceptable rate of unemployment. All parties and Governments admit that Government policies are responsible for employment. Therefore, this Government must take responsibility for their employment policies.
During the economic crisis of the 1930s, I was, as a young man, an organiser of the National Unemployed Workers movement. Probably unlike most hon. Members I had three years experience of unemployment. I know what unemployment means to a working man, to his family and relatives. At that time, the unemployed believed—because they were told to believe it—that unemployment was the result of the economic climate. The same is said today. It was said that the climate was bad, but that, like the weather, it would change if people would only wait long enough. It was said that the economic climate had nothing to do with the Government. No doubt it came from outer space. It was also said—just as it is today—that the economic climate was caused by the world recession. It was as if unemployment was not the result of Government policies.
There is no doubt that the present unemployment is caused by this Government's policies. To add insult to injury, Ministers call those who are unemployed and who are on social security, scroungers. There are Ministers, such as the Secretary of State for Employment, who do not understand what employment is all about. The unemployed are told to get on their bikes to look for work.
I shall ask questions that have not so far been asked today. What has suddenly struck the capitalist world, of which the United Kingdom is a part? Why are 30 million people unemployed among the Western nations? Why are there massive food mountains and why are prices for that food so high when there is poverty and unemployment? Why are the storehouses full of manufactured goods? Why is food destroyed while people starve? Why are the majority of workers in Britain and in other countries poor? Such absurdities exist only because of the private ownership of the means of production, distribution and exchange in Britain and in other countries. Profit comes before the needs of the people.
Why are people starving when there are such massive surpluses? Would a maggot starve if the apple was too large? Obviously not. To paraphrase Shakespeare in "The Merchant of Venice", "He who controls the means whereby I live controls my very life." The working people and the unemployed of Britain know that their working lives are controlled not by them but by the Government who—as many hon. Members have said—cause them to suffer. We live in a rich, green island which has mineral. and oil wealth and which produces a lot of food.
The Central Office of Information has said that we are now making progress towards self-sufficiency in food in this country. We already produce 81 per cent. of our requirements. We have millions of skilled workers and hundreds of thousands of builders to construct all the houses, schools, hospitals and cultural centres that we need.
We could have a veritable paradise on this island. This island's wealth has not been created by the elite and by those who grab and consume most of it. The land and the waterways really belong to the people of this country. Our industry and wealth have been created by the workers over hundreds of years. It is our fault that we do not own or control them. I stress that Britain is a rich country. The people are not poor because the country is poor. The country is extremely rich and is second only to the United States of America. It is the biggest investor in the United States of America and the second biggest investor in other countries round the world. The problem is the unequal distribution of wealth.
The Labour Government set up a Royal Commission on the distribution of income and wealth. Eight reports were produced, which stated that out of 25 million people in 1973, 90 per cent. were on £3,000 per annum, or less, and the other 10 per cent. were in receipt of incomes up to £100,000 a year. This inequality in the distribution of wealth is at the base of the problem.
The Royal Commission reported that the top 10 per cent., amounting to 2·5 million people, owned 60 per cent. of the wealth of the nation, while the 90 per cent. at the bottom, representing 22·5 million people, owned 40 per cent.
The gap between rich and poor increases as a result of unemployment and poverty. Professor Townsend has referred to the poverty of 14 million people in these islands. There are 6 million people in 4 million families living below the subsistence level. Yet our gross national product is £250,000 million. That colossal wealth, if properly used, could cure unemployment and solve the problems of poverty.
The £120,000 million that the Government take in taxation and through other means could also be used to solve the problems of the unemployed. That has not happened. The Government spend £15,000 million on unemployment, £13,680 million on arms expenditure, £11,000 million interest on the national debt, £2,500 million to hold on to Northern Ireland and £600 million to keep us within the European Community. In other words, over £40,000 million is spent on non-productive activity. No goods are produced to meet that £40,000 million expenditure. That is the basis of inflation. It has nothing to do with the so-called high wages of the working people. There is too much money chasing too few goods. It is a classical expression of inflation.
We need not simply some adjustment in economic strategy, but an alternative economic society based on the principles of the party for which I stand—Socialist principles. These were thrashed out 63 years ago. They are summed up in what has become known as clause 4. We need such a Labour Government to solve the problems that I have mentioned. I believe that the people of this country have made up their minds. They have had enough of mass unemployment and the Government's excuses. They want a radical alteration as soon as possible and the opportunity at a general election to return a Labour Government.
I agree with little of what the hon. Member for Hackney, North and Stoke Newington (Mr. Roberts) has said. I am none the less pleased that he had the opportunity to speak. There will be wide appreciation of the sincerity, and to some extent the authority, with which the hon. Gentleman spoke. If the House is for nothing else, it is for the expression of all opinions, whatever they are. The Chamber is not exactly packed for this debate on unemployment. I should have been dismayed and mortified if I had been unemployed and had decided to come to the House of Commons today to discover what the legislators thought about the problem, only to see rows of empty green Benches. I should have wondered why such a major problem received such little attention. It is sad, considering the scale of the problem and the quality and originality of some of the speeches, that the attendance has not been higher.
Will the hon. Gentleman acknowledge that it is only thanks to my hon. Friend the Member for Renfrewshire, West (Mr. Buchan) that there has been a debate at all? If the Government were aware of the problem of unemployment there would be weekly debates in the House, which would enable all hon. Members to have the opportunity to speak. I doubt whether there will he time today for me to express the opinions of the Welsh people, who have seen their industry annihilated as a result of the Government's policies.
Had the hon. Gentleman been here throughout the debate he would know that most hon. Members who have spoken have expressed their gratitude to the hon. Member for Renfrewshire, West (Mr. Buchan) for his choice of subject for debate.
Debates on unemployment are not exactly scarce. Were the Government to have arrogated to themselves today for a debate on unemployment, the hon. Gentleman might have been one of the first to say that Fridays were traditionally reserved for Private Members' motions.
For me, speaking to an empty Chamber is not a unique experience. Some hon. Members have the ability to empty the Tea Room and fill the Chamber with people who want to hear what they have to say. I seem to have the reverse effect. Normally, when I speak people decide that the time has come to have a cup of tea. [HON. MEMBERS: "That is not true."] I am grateful to my hon. Friends for their solid, if somewhat thin, support.
The hon. Member for Renfrewshire, West tried to capture the frustration that must be felt by the thousands of people who have the misfortune of being unemployed. To a greater extent, and perhaps unintentionally, he captured the frustration that is felt by Labour Members about the political sterility of unemployment as an issue. If anyone had said to me three and a half years ago, "You will be elected. The Conservative Party will win the election and within three and a half years there will be over 3 million unemployed. How will your party fare in the opinion polls then?", I should have said that there would not be 3 million unemployed. I share the general surprise that it has come to that. Secondly, I should have forecast that my party would be a long way behind in the opinion polls. Labour Members also find it surprising that although unemployment is so high, their party is a long way behind in the opinion polls, for reasons which cannot be explained by the party's internal disarray.
That dilemma leads Labour Members to a number of conclusions. They say that they are not getting the message over properly and that it is the fault of the leadership. They say that if only the right hon. Member for Chesterfield (Mr. Varley) were replaced by the hon. Member for Bedwellty (Mr. Kinnock), things would be different. In all honesty, I do not think that those changes would make much difference, apart from the fact that I believe that the right hon. Member for Chesterfield is a relatively honourable Member and a fairly effective shadow spokesman on employment. What I have said might be the kiss of death for his career in the Labour Party, but if one has an elementally unpalatable dish, lashings of the gravy of public relations will not make it more appetising.
Another question needs to be considered by all hon. Members. Not only do we have the unique circumstance in which unemployment is high and the Government remain apparently the most popular party, but unemployment has dramatically replaced all other issues as the biggest political problem in people's minds. That may be the key to something that we should all remember. When unemployment is third to inflation and industrial relations in the public mind as a major issue, parties can say "Unemployment at such a level is a scandal, a human crime and a tragic waste of national resources. Vote for us and we shall do something about it."
When unemployment is the No. 1 issue, people ask what we will do about it. When they analyse the alternatives that are on offer by Labour Members, they find them somewhat lacking. I shall not say that that means that people have immediate confidence in the policies of the Conservative Party. However, an alternative view may be that all hon. Members are reaching a different conclusion about unemployment from that of the vast majority of people outside. We must face this fact. It may be that the policies advocated by Labour Members, by Government Members and by the minority parties cannot solve the problem of unemployment.
I do not mean to descend into the slough of despond, as some Labour Members have accused us of doing. However, when we are talking about unemployment we must remember that the level is no more than the difference between the number of jobs in Britain and the number of people who say that they want those jobs.
Whenever the House addresses itself to the problem of unemployment it does so on the assumption that we can increase the number of jobs in Great Britain. That assumption is open to challenge. It might be more practical to reduce unemployment by reducing the number of people available to take jobs. We hear hon. Members from both sides of the House advocating economic growth as the way out. I doubt whether economic growth can create the number of jobs necessary to satisfy the people who want them. This year 900,000 people will reach school leaving age, but only 600,000 will reach retirement age. If we were to fill all the jobs of those who retire, we should need to create an extra 300,000 jobs to keep unemployment where it is.
When I talk to people in my constituency who are investing money in machinery, they say that they are buying machinery that will produce more goods; And employ fewer people. If we add to that the productivity increases that we have achieved over the past two years and the natural sentiment that unemployment should not even be 2 million, a five-year programme to reduce unemployment from 3¼ million to 1½ million would involve a dramatic increase in production. That is the only way in which we would create the jobs. We should have to increase our gross domestic manufacturing product by about 45 per cent. If we increase it by that amount, we shall have to ask who will buy the stuff. It cannot all be consumed in the United Kingdom, whatever economic policies are followed. We shall therefore have to rely on exports. If we are to reduce unemployment by the creation of jobs and economic growth, we shall have to increase our share of world trade from 6½ to 10 per cent. That is a cheerful aim, and it would be nice if it could be achieved. However, I believe it to be beyond us. If we nail all our political colours to the mast of the assumption that that increase in our share of world trade will be achieved, both parties will be on the sticky road to nowhere.
Is the hon. Gentleman admitting that he has no confidence in the Government policy to alleviate unemployment and saying that he considers the problem so serious and overwhelming that no solution put forward by the Government can possibly deal with it?
Not quite. The Opposition have an economic policy based upon import control, withdrawal from the Common Market, substantial devaluation and a dramatic increase in public expenditure. Given the test of time, I do not believe that that will reduce unemployment.
The Government have a policy based substantially on making Great Britain more competitive in the world. I believe that that is preferable. I question whether making Great Britain more competitive when all our industrial competitors are seeking to do exactly the same can increase our share of world trade from 6½ to 10 per cent. If we do not achieve that 10 per cent. share, we shall not reduce unemployment from 3¼ million to 1½ million, a figure which now seems to have become acceptable.
Instead of trying to increase the number of jobs in Great Britain, we should look at the number of people who consider themselves available for those jobs. I do not believe that we can reduce the working week without increasing hourly costs and thereby diminishing further Britain's competitiveness. We can do something about training people and postponing the age at which they enter the working population. The Government have done a great deal in that direction by the introduction of the youth training scheme.
Early retirement can still be considered. It has been mentioned a number of times today, notably by Conservative Members, not by the Opposition. Not only should the job release scheme be substantially extended, but we should look at the general age of retirement. If 600,000 people reach retirement age this year and are taken off the job market, that will have a significant effect on the overall level of employment.
It has been a good debate, but I am disappointed that my hon. Friends who have been waiting to speak have not had the opportunity to do so.
The Government have offered no answers to the problem. All the answers have come from these Benches. Everyone agrees that unemployment is the most crucial issue facing the country and that it must be tackled. The Government alone——
On a point of order, Mr. Deputy Speaker. Wales and other areas have had their industries attacked by the Government's policies. Hon. Members have stayed behind on a Friday to speak in this important debate on behalf of those whom they represent. Can the Chair ensure in future that at least one hon. Member from each region is called to speak?
The Chair seeks to do just that. We have had a number of lengthy speeches. Had speeches been shorter it would have been possible to call more hon. Members, including perhaps the hon. Member for Ogmore (Mr. Powell), who I do not believe has been in the Chamber for a substantial part of the time that I have been in the Chair.