Unemployment (Special Programmes)

Petitions – in the House of Commons at 2:12 pm on 7th December 1984.

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Motion made, and Question proposed, That this House do now adjourn—[Mr. Neubert.]

Photo of Mr Ron Leighton Mr Ron Leighton , Newham North East 2:30 pm, 7th December 1984

The biggest problem facing this country, the major cause of pain and misery, and a symptom of so much else that is wrong is unemployment. The House has not yet begun to face up to the scope, dimension or nature of current unemployment or how we are to cope with it. On 4 May 1979, in a party political broadcast, when she was the Leader of the Opposition, the Prime Minister said: I think it's terrible if a person who wants to work can't find a job. You have no self-respect, you haven't got the respect of your family if, somehow you can't earn yourself a living and them a living too. On 28 August 1980 when she was Prime Minister, the right hon. Lady said in the Daily Mirror:I do hope to goodness that the jobless total never gets to two and a half million". Later that year, in the Conservative Monthly News, she said: There is a real hope that a year from now things will be looking distinctly brighter. The following year, on 16 June, in a speech to the CBI dinner, the right hon. Lady said: We are now beginning to win through. Later that year in a speech in Glasgow she said: I think we are through the worst of the recession. Later that year, when talking at the Lord Mayor's banquet, the right hon. Lady said: I believe we can begin to see the first signs of recovery. However, the following year on 11 March, in a speech at a meeting for the Young Businessman of the Year award, she said: Unemployment is now one of the greatest unsolved mysteries of our time. It seems that unemployment has been accepted. It has almost become the answer, not the problem. The Government appear to have given up. The Chancellor is budgeting for as much unemployment next year as this year. The alleged economic upturn or recovery will not happen, or not in any way that will end or significantly diminish unemployment.

Monetarist dogma predicted a temporary rise in unemployment as inflation was brought down, and then healthy economic growth, as if by spontaneous combustion, was to provide the necessary jobs. It was an illusion. It was never likely to happen, and it has not happened. The Chancellor told us that unemployment would fall last year. The Secretary of State for Trade and Industry told us that it had reached a plateau and would fall; he now admits that he was wrong. All those ministerial hopes of unemployment flattening out and falling are exposed as wishful thinking.

Unemployment is continuing its upward trend. Within that total, the hard heart of the problem—the number of long-term unemployed—is increasing relentlessly and remorselessly. Ten years ago, one person in 250 was long-term unemployed; it is now one in 25. No one has yet come to grips with the magnitude of the problem we face. Government policies are exacerbating and deepening the problem.

The Government's simplistic and completely misguided policies since 1979 have been an attempt to cut public expenditure and, they hoped, taxes. Apparently, they did not understand that most public expenditure ends up being spent on orders for goods and services from the private sector. Recently, we had the annual report of the Property Services Agency, which shows that it spent —1·8 billion in 1983–84 and 80 per cent. of it was spent in the private sector.

As public expenditure is cut and orders diminish, private industry is squeezed and labour is laid off. It is the Exchequer which picks up the tab in unemployment pay. That is the fallacy of monetarism. The growing dole queue now costs some £17 billion per annum which is more than we spend on the National Health Service, education and the whole of the rate support grant, but it is also public expenditure, albeit useless and unproductive, which pushes up the total. As a result, public expenditure is a bigger proportion of GDP now than it was in 1979 as is, incidentally, the burden of taxation. Meanwhile British industry is being destroyed.

That leads to yet further demands for cuts in public expenditure. It is a self-defeating, vicious circle of decline, the worst peacetime disaster in our history, causing a monstrous rise in long-term unemployment—on a scale which is now a moral as well as an economic problem. The only pretence of unemployment policy now is the panacea of lower wages. That is the despairing cry of a bankrupt Government. It is also nonsense.

What are we going to do now? No conventional approach will deal with the problem. No ordinary economic upturn will cure unemployment or contain the problem. The House must face the stark, brutal truth that chronic, long-term, mass unemployment is with us for the foreseeable future and, certainly, for the Government's lifetime. The Chancellor has budgeted for as much and more next year. It is a pipe dream to imagine that it will disappear through any conventional method.

What are we to do? Can we possibly allow the wound to fester? Surely it is myopia of the most appalling and criminal kind to think that we can allow millions of our fellow countrymen and women to be pushed over an abyss without the most fearful consequences for our society. It is not just a betrayal of our people and an act of violence against them; it is economic nonsense.

How can it make sense to pay millions to do nothing? Is it not the most insane lunacy and an appalling waste of human and economic resources? Is it suggested that nothing needs doing? It must make more sense to pay people to do something than to do nothing. Are we saying that we lack the wit and intelligence to arrange things so as to match unmet needs with unused resources?

The last time we had mass unemployment was in the 1930s. We came out of it in four ways by the growth of the construction industry, by a measure of protection afforded by the imperial preference agreed at the Ottawa conference, by a competitive pound, and, fourthly, and decisively, by the war. The drive to produce tanks, guns, planes and ships converted a labour surplus into a labour shortage throughout Europe within months. We did not leave that to the workings of the market or to free enterprise. We organised and mobilised a great national effort.

The challenge is to do the same again now. We should mobilise the nation's resources, but this time to produce the prerequisites of peace and a civilised society, thereby bringing back hope and giving a lift to national morale. Again, it cannot be left to the free markets with a couple of pence of income tax to galvanise the sluggish entrepreneurs, about whom the Secretary of State for Education and Science used to speak. The nation must mobilise its intelligence and step in. It can.

The key matter to understand is that the economics of the state employing a previously unemployed person are different from a private employer doing the same. If, for example, an employer pays someone £100 a week, he pays the full amount and national insurance and so on. It is different for the state. First, unemployment and supplementary benefits are deducted, and then taxation revenues and national insurance contributions are added. As a result the marginal cost of the state employing a person is substantially less.

I advocate that we take advantage of that. We must launch a new national programme, possibly under the Manpower Services Commission, to cope with the epidemic of mass, long-term unemployment. We already have the nucleus, the prototpe, of such a scheme in the community programme. It is popular and oversubscribed. It should immediately be built upon, upgraded and vastly expanded. The Minister may know that the Select Committee recommended that in its report on last year's corporate plan of the MSC. We must be sufficiently bold and radical to take steps commensurate with the scale of the crisis.

We must transform the situation and uplift the spirit of the country. We should announce our intention to remove 1 million long-term unemployed people from the dole queue next year. That is entirely practicable, realistic and feasible. The MSC annual report for 1983–84 showed that 113,000 places on the community programme cost £400 million. Page 30 of the report states that the net costs are one third of the gross costs. At a cost of £130 million net, we have 113,000 places on the community programme. If we get some of our "own money" back from the European Community social fund, it would work out at about £100 billion for 100,000 places. That is 1 million places for £1 billion net. The costings are entirely realistic.

According to the MSC, in 1985–86 the Government propose to spend £580 million gross to secure 130,000 places on the community programme. However, according to figures in the participants survey, which is in the Library, the net cost is only about £190 million. The difference between the gross and net costs is again due to benefit savings and tax flowbacks. If account is taken of the contribution from the EC social fund, the true net cost is reduced further.

The bid for ECSF funding in 1984–85 was £55 million. Assuming that that was successful, it would be possible to buy an additional 930,000 places for £1 billion net, which gives a total of more than 1 million places.

The Chancellor of the Exchequer told the House that he had at least £1·5 billion to give away in next year's Budget. Rather than paying it out in tax handouts, which would create few new jobs, it could be used to finance an imaginative scheme such as the one which I have described. £1 billion is less than one quarter of 1 per cent. of gross domestic product. It is less than the Chancellor's overshoot this year, and less than the cost of the coal strike, not to mention the cost of the Falkland Islands.

That money would not be a net loss because a million workers would create a great deal of added value. There are a host of projects that such a programme could tackle. This would need to be done in such a way as not to compete unfairly with existing businesses or to provide cheap labour. Trade union rates would be paid and participation would be entirely voluntary. The projects would be for work that otherwise would not be done and which is not in any existing programme.

An obvious area of need is our decaying housing stock. I am glad to see my hon. Friend the Member for Newham, North-West (Mr. Banks) here. He will confirm that in our borough the already decaying housing stock is deteriorating faster than it is being renovated. There is a crying need for that work. It is labour-intensive and it uses British materials. There is a major role for such a programme there. The recent drought has shown that our water supply and reservoir system is inadequate.

In Newham and throughout the country many of our roads, especially secondary roads, are in a very bad state of repair. About a thousand towns and villages in this country have been identified as needing a bypass to relieve traffic congestion, but we are currently building only about 30 per year. The need for improvement there is obvious. Our sewers, too, are a classic case of essentials that are not provided by market forces. That, too, could be tackled by such a programme.

Looking to the technologies of the future, the whole country needs to be equipped with cable. We could be the first country to do that. Valuable fuel could be saved if buildings were insulated and draught-proofed.

The number of elderly people is increasing rapidly. It is far cheaper to care for the elderly—and, indeed, the disabled and the mentally handicapped — in the community rather than in expensive institutions, but that requires community services. Such services are labour-intensive and make good economic sense.

Large parts of our industrial landscape need to be tidied up and improved. All these things would provide real jobs, but private enterprise and the market are not providing them.

Such a programme would run in parallel with the expansion of the conventional economy and would, indeed, give it a boost and a fillip by supplying new orders to it. For a relatively modest expenditure, which could be recouped in the value of work done, the situation in Britain could be transformed. Parliament could show that it cared and hope would be offered where none now exists. The Government would have to shed arid dogma and show determination, will and imagination. I call upon them to do so. Are they capable, or shall we have to wait for others to do this?

Photo of Peter Bottomley Peter Bottomley Parliamentary Under-Secretary (Department of Employment) 2:48 pm, 7th December 1984

I congratulate the hon. Member for Newham, North-East (Mr. Leighton) on raising this subject today. I hope that he will not take it as too much of an insult to his Front Bench colleagues if I say how much more I welcome what he said today than what the economic spokesmen for the Labour party said yesterday. It is becoming difficult to understand with what voices people are speaking. I hope that my response will not be seen as too partisan.

The hon. Gentleman has spelt out, just as Conservative Members and the Government have spelt out, the fact that having so many people out of work is not just a waste of resources for the country but is often devastating for individuals and their families. As the hon. Gentleman said, the greatest and worst effect is felt by the long-term unemployed.

I welcome the hon. Gentleman's support for the community programme. Last week, I was involved in a radio broadcast on "Woman's Hour" in which a sponsor of a programmes scheme said that some of the changes in the rules had prevented the taking on of the people needed for a particular project. I responded by saying that it was often those who had been out of work for the longest period and whose needs for both income and employment were greatest—for economic, social and psychological reasons — about whom the Government were most concerned in the context of the programme.

The numer of places on the community programme has risen from 30,000 to 130,000. Given the amount of time that people spend on the programme, 200,000 people a year could benefit from it. The future size of the programme is not fixed. As year follows year, the Government consider which programmes to expand, which are most effective and which best match the needs both of those who need employment and of those who can contribute to the economy as a whole.

The hon. Gentleman will be pleased to know that there is a growth in the number of community programme places that are linked with training. He and other hon. Members will welcome the Government's moves, at the other end of the age scale, to make the youth training scheme far more effective for the young people leaving school who are seeking to join the employment market with the skills, attitudes and habits which will enable them to contribute. We are all united in wishing to give people the opportunity to contribute to the society that we all share. When, through unemployment, people feel debarred from contributing, there is a loss both to them and to the country.

The hon. Gentleman will not wish me to indulge too much in swapping quotations. At the beginning of his speech, the hon. Gentleman showed that he had done considerable research. That is what one would expect from the hon. Gentleman. I, too, have done a little research. I discovered an interesting article in the New Statesman, written by Doug Jones, who is the economic adviser to the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). Mr. Jones says: To my knowledge there is no economic evidence that there is some high, non-accelerating level of inflation that would provide a permanently high level of output and employment. Indeed, there are doubts about whether even accelerating inflation, apart from being politically unacceptable, would deliver higher output and more jobs.

This is not the time to take up the arguments about the link between pay and jobs. We can all agree that strikes do not help growth or create jobs, and that unrealistic pay settlements—not pay claims—can make the country less competitive. As the hon. Gentleman showed in his analysis of the growth of unemployment in the 1930s, protectionism does not help Britain. We are a trading country, exporting more per head than Japan. We need to work for more free trade both within the European Community and across the world, and to make sure that we are competitive. If our competitiveness continues to decline, the opportunities for both Government-assisted jobs and jobs in the private sector are diminished. I believe that that is common ground. Those who do not say that only the Government have a role in creating the conditions for economic growth and growth in employment are those who realise that their own actions can be consistent with the growth of output and productivity, and greater opportunities to share in a higher standard of living.

The hon. Gentleman referred to some of the employment and training measures. If the community programme is to work effectively, even on the present scale of places, there must be co-operation from local authorities and the unions. I recognise that some trade unions have natural fears about displacement effects. They believe that people might do under the community programme work that would otherwise be done by those in normal public or private employment. However, if possible sponsors or local authorities stand back from the community programme, many of those who might have benefited are not given the chance to do so.

I am glad that the borough of Newham is overcoming its earlier doubts and has approved an agency for 300 places, but the hon. Gentleman will not need me to remind him that one of the local trade unions is not yet co-operating. It would be useful to have the hon. Gentleman's support in trying to make sure that there is co-operation, while we try to maintain reasonable safeguards. Only with broad co-operation can the community programme deliver the goods to the many people who need them.

In regard to the recovery from the 1930s, the hon. Gentleman also talked about the role of the construction industry. He will be as aware as I am, as both of our constituencies were built up more densely during that period, that a great deal of the construction was done by the private sector. People managed, with the imagination that the hon. Gentleman asks of the Government, to build houses, employ people and pay them wages which enabled them to buy the houses. Occasional trips down memory lane on television show advertisements of the £5 down and 17s 6d a week which generated growth, employment and homes. There is no evidence to suggest that such things happen only when the public sector gets involved.

I do not fully accept the hon. Gentleman's idea that costing for publicly financed jobs should be all that different from privately financed jobs. It is not possible to disregard the tax take or just take account of the tax take, national insurance or any other return and say that we should transfer all employment from the private sector to the public sector, which would be the logical consequence of going too far. I accept, however, that the Government should continue to look for the most effective way in which to use public funds where the Government have a role as a direct employer, in financing other work and in employment and training measures. I know that the Government look forward to hearing the views of the Select Committee on Employment, which the hon. Gentleman serves well as Chairman. The views advanced might not always be identical but at least they concentrate on, and attempt to get, the most effective programmes using given resources so that more people can be relieved of the despair and lack of opportunity which unemployment often creates.

During the past two and a half years, there has been a recovery in the economy, but it has not been shared equally. We have the apparent paradox of a growing number of people in employment and, sadly because of demography and participation in the work force, a rise in the number of people out of work. We should continue to consider whether those who are out of work should be kept on the sidelines or whether it is possible, through some of the Government's schemes such as the job release scheme, to let those who want to leave the labour force to do so and have their places taken by others. It is not easy to expand such schemes without incurring a great deal of extra expense, as the hon. Gentleman knows.

The fact remains that people who are in work are getting an increased standard of living. It is perfectly fair and reasonable that they should ask for and negotiate an improved standard of living as that is the nature of free collective bargaining. That view is shared by the Government and the trade unions. However, if the results of those bargains mean that those who remain in work continue to get all the benefits of growth, we are left inexorably with a growing number of people who are out of work. Nobody seriously argues for a fixed incomes policy at the moment, but I should like there to be a sense of solidarity so that those in work take account of the interests of people who are out of work or might be out of work in the future because of decisions that people take freely and which are not within Government control. I hope that we shall build a greater common understanding about what types of decision Government take and what types of decision people outside Government take which are compatible with reduced unemployment, and growing employment and which, within people's ideologies and prejudices, are consistent with the macro and micro-economic policies that we heard about yesterday. No doubt we shall hear about them again in future major debates on economic policy.

I hope that, like the hon. Gentleman, right hon. and hon. Members will continue contributing so that the House is the focus of concern with economic policies that are consistent with rising employment and economic growth. I also hope that, when it is possible for the Government to adapt ideas and move forward, such ideas are discussed in the House. That is far better than standing back and throwing out statistics about what happened until 1979 and what has happened since. We should recognise that we have a common worry, ensure that the unemployed get as much attention as the employed and work out a better future for all of us together.

Question put and agreed to.

Adjourned accordingly at Three o'clock.