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Volume 888: debated on Tuesday 18 March 1975

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10.28 p.m.

This debate is about one of the greatest problems we face in Scotland today—the massive unemployment rate, which shows over 100,000 Scots without work. It is a state of affairs which cannot go without protest or demands for action by a Labour Government.

As I develop the argument, I shall explain to my hon. Friend the Minister of State, Scottish Office my full recognition that the Labour Government do not want unemployment, how they inherited an economic situation which left little room for orthodox manoeuvre and how the world situation militates against swift, easy solutions. It will not be part of my argument to suggest that there is a magic wand which can wave over the Scottish economy, linked so intimately as it is to the British economy, and cure the unemployment problem.

The problems which the Government face are unprecedented in the post-war period. There are severe inflation, heavy unemployment, a huge balance of payments deficit, exceptionally heavy foreign borrowing, a legacy of under-investment in industry, a world economy in recession, if not in actual slump, and the albatross of the Common Market round our neck.

On top of those problems is the added phenomenon that the world is undergoing a fundamental change in the balance of wealth and political power, arising out of the OPEC countries' actions and the Third World's efforts to find its political footing in the world community. The world is in a state of political and economic metamorphosis. No one can tell the final shape of things to come, but we all know that the old-established order of a United States-led Western hegemony is over.

All the factors that I have mentioned so far mean that instability and uncertainty are the order of the day. That means that a premium is placed on international agreement and international action on economic and financial affairs. That being the position, there are obvious constraints upon the ability of our Government to act against unemployment with the traditional demand-management boost to the economy.

No doubt it is this set of unusual circumstances which lies behind the explanation from my right hon. Friend the Secretary of State for Scotland that 100,000 unemployed under him arises out of a different situation from that which prevailed when we last experienced this level of unemployment under a Tory Government with a Tory Secretary of State for Scotland. My right hon. Friend is correct. No doubt that is why the Tory campaign against him fizzled out after only a few days and after a few boyish Questions from the lad who is now the Shadow Secretary of State.

Of course, it is not good enough to take refuge in the disturbing aspects of economic and political life in the world scene in 1975. No Socialist Government should be surprised that Western capitalism, after years of exploiting the rest of the world including the oil countries, is now having the account squared against it. Nor should a Socialist Government be surprised that Western capitalism manifests the inherent faults of the capitalist system. As a result of its profit motivation, ridiculous situations develop. For example, bricklayers are idle, bricks are stockpiled and people remain without homes.

Whatever critique we apply to capitalism, I am enough of a realist to know that we cannot opt out of the system with a quick side-step. When I was 17 I thought that we could do it in at least 24 hours. I have learned a wee bit since then. I know that we are locked inside the system for the foreseeable future. That is a view that is shared by many people in the Labour movement, including the TUC. The excellent economic review by the TUC suggests how we can improve the operation of the capitalist system to produce the basis for stability and growth in the long term.

That does not mean that a Labour Government, elected on the most Socialist-inclined manifesto since 1945, should accept that nothing can be done in the face of the problems we face. There is an urgent need for the Government to do something about unemployment, despite the real constraints imposed by the debilitated British capitalist economy caught in the worst world crisis since before the last war.

After all, our manifesto, even with its Socialist character, did not promise to extricate us from the sphere of Western economic influence. What was implied was that despite problems created by capitalism—indeed, because of them—a Labour Government would be best able to tackle the fundamental problems that the system poses for working people and their families. That certainly included action on unemployment. I quote from the Labour Party election manifesto for Scotland. In page 8, in the final paragraph dealing with the section headed "Jobs", it states:
"Labour will do whatever is necessary to bring full employment to Scotland. We shall not rest until everyone in Scotland has the opportunity of a decent, well paid job."
I pay tribute to the Government's chosen methods of tackling the fundamentals of our economic problems. The Industry Bill, the National Enterprise Board, the British National Oil Corporation, the planning agreements system, the creation of the Scottish Development Agency—I see that my hon. Friend the Member for West Lothian (Mr. Dalyell) is present—and the setting up of a Scottish Assembly with economic teeth represent a comprehensive strategy of recovery and future expansion. But these are middle or long-term policies. I am arguing that we also need short-term policies. Even in the face of the problems involved in managing the United Kingdom economy, there is something in the short term that the Government can do to create jobs and to put people in work.

Although this Adjournment debate is under the heading of Scottish unemployment, let me say emphatically for the benefit of some Opposition Members that the same problems exist in other parts of the United Kingdom. I hope that the Government will take early action there as well as in Scotland. Today the Scottish unemployment figure stands at 4·7 per cent. In the North of England it is 5·2 per cent. This illustrates that this is not just a Scottish problem.

I advance three main reasons for demanding Government action. The first concerns the human factor. Unemployment is destructive of self-respect in the individual. It erodes the personality of those who are on the dole for any length of time. Second, if for too long we tolerate unemployment at the 100,000 level it will become the accepted norm. People will become conditioned to believing that such a level is the best that can be achieved.

Governments will boast, when the figure dips below that magic level, that they have actually done something. They will pat themselves on the back and pretend to the people that they have worked wonders. This is not a flight of fancy on my part. With each successive crisis in the Scottish economy we have seen unemployment rise. When mini-booms took place, the figures never went back to their previous base level. Over the years we have seen the Scottish unemployment rate reach a higher and higher base point. Over the years what was unacceptable in one period became the new base point criterion in another. This is what we must combat with all our political strength and ingenuity. We must take decisive action to push the base rate down so that the words "full employment" start to have a real meaning in the corporate life of Scottish society.

The third reason why I ask for Government action is that we are faced with the lunacy of the capitalist market system, with labour which could be productive and useful being paid, through unemployment and other benefits, to be unproductive and useless. [Interruption.] I do not expect the hon. Member for Glasgow, Cathcart (Mr. Taylor) to follow the logic of that. He is one of the chief exponents of the craziest system ever known to mankind.

No one can defend such a system when people sit pat and there is important work to be done for the community lying undone. Whatever difficulties the market economy poses at present, and even though we could not guarantee the fullest of full employment, we should be able to take action that would make a serious contribution to reducing unemployment, especially among the semiskilled and unskilled people who suffer most from unemployment. It is they who become the hard core of the long-term unemployed.

Each increase in the productive potential of the economy during a period of low growth means that it is more difficult for the semi-skilled and the unskilled to get work. It is estimated that the productive potential at present in the economy is around 3½ per cent. If we get real growth in the economy of only about 2½ per cent., that will mean that unemployment problems for the semiskilled and unskilled will increase and not decrease.

Also of great concern is the large number of youngsters leaving school in 1975 —80.000 of them. About 64,000 will come on to a depressed labour market. We must be anxious about the social implications of young people, the most physically active and robust section of the community, having no work. Those who will find the greatest difficulty in gaining employment are those who would normally fit into the semi-skilled and unskilled categories. Every family in the country with a young person leaving school this year must be more than ever anxious about the number of O-levels the youngsters will get. Those leavers who for one reason or another will get very few or none at all will find that they face a grim future at a time when there are 100,000 unemployed in Scotland.

The call is for the Government to "do something". This cry is often made from within and without this House. But few ever suggest to the Government what "do something" means in practice. I suggest that we could get action by using the Manpower Services Commission as the main policy instrument, and therefore we would not need further legislation.

That idea is not new and it is not mine. The current TUC Economic Review explains in paragraph 117 on page 42 that the problem of unemployment affects those under 24 and over 55 with the greatest severity. In the next paragraph it says:
"The establishment of the Manpower Services Commission provides an opportunity for the public authorities to act much more effectively in this field."
It goes on to say:
"The MSC itself, after its first year of operations, has unanimously agreed that it should have an authoritative role in the formulation and provision of a comprehensive manpower policy and discussions to this end are taking place with the Government. Moreover, at its first meeting, in January 1974, the Commission considered that it needed to prepare plans which could be put into effect if the employment situation deteriorated in 1974 and 1975, and in consequence contingency plans have been prepared in the fields of training and job creation."
In paragraph 120, the TUC says:
"The MSC has examined a proposal by the TUC and others that a job creation scheme could help reduce unemployment. It could be directed at the hardest hit groups in the labour force and the most severely depressed regions."
It goes on to explain that the jobs would be labour-intensive and community-oriented.

The estimate is that £20 million would help to create 15,000 jobs. When we consider that unemployment benefit for 15,000 people costs up to £13½ million a year and that there is also a loss to the Exchequer because unemployed people do not pay income tax or for insurance stamps, we can see that for a little net extra expenditure the Government could make a significant contribution to the reduction of unemployment, not so much by demand management policies as by resource management policies, by putting the unemployed men and virtually the same amount of money together but for different reasons than to keep people on the dole. We should make much better use of our human and financial resources if we gave people back their self-pride.

This need for a rational use of resources is hammered home in the TUC Economic Review. It estimates that it would cost £900 million in unemployment and social security benefits if there were 1 million unemployed. Another estimate is that if unemployment rose to1¼ million the Government would need to borrow another £800 million to £850 million to meet the payments. How stupid it is, in a country crying out for things to be done and people anxious to work, to make people idle and then pay them for remaining idle.

Scotland is seriously affected by heavy unemployment yet there is so much in our communities that needs attention. I suggest to the Government, therefore, that they should use the MSC to set up a direct labour employment agency, perhaps called the Scottish Community Project Agency, into which unemployed people could go, drawing union rates of pay and with proper union coverage of health and safety and conditions.

The agency should be given the task of undertaking community projects at the direction of the Secretary of State for Scotland or at the request of the local authorities. It could have planning and management teams, a building section and a general work section and it would operate under a directive to undertake specific community projects within the local authority areas. This would provide work for a number of skilled men in management planning and the other trades. The bulk of the jobs created would go to the semi-skilled and unskilled and no doubt a number of school leavers could also be employed. This would assure young people of a useful occupation and allow them to make a valuable contribution to their own lives and to society.

I said that there is much that needs to be done in Scotland. Let me give a list of headings. There is the rehabilitation of National Coal Board houses. I have a fair number of these houses in my constituency of South Ayrshire. They represent a grave problem to the people living in them. They are very old houses which require urgent modernisation and bringing up to date to meet current living standards. That is not being done. In my opinion, it would be done and it should be done.

Then there is the urgent need to insulate and centrally heat thousands of council and SSHA houses, many of which in the winter have bedrooms so cold that it is like sleeping in an ice-box. I assure the House that I exaggerate in no way. During the severest parts of the winter in Scotland, for most of the day at least two-thirds of the average council house is uninhabitable because of the cold. Anyone who has lived in the council situation knows that to be the truth. That is an area of work which needs to be done and which could be done. Then there is the modernisation of council houses, especially in relation to electrical re-wiring.

Next there is the need to clear away remaining pit bings and slag heaps, legacies from our old industrial past. Then we have cities, towns and villages with open spaces which are eyesores and derelict buildings which give an area a depressing environment.

I appreciate that much of the environmental aspect of these headings will be covered by the Scottish Development Agency, but it will be some two or even three years before the SDA can effectively discharge that part of its task. That comment is drawn from a reading of the consultative document outlining the ô of the SDA. We need action before the SDA comes to engage in its environmental clearing-up task.

I do not exaggerate in any way what I regard as the greatest social crime in our society—that is, making and keeping people unemployed. It has never been my personal experience to be unemployed, but I came very near it at one time in my working life. It was the most demoralising experience of my whole life. I do not want to see any individual in Scottish society or in British society put through that hoop for any longer than is absolutely necessary.

Unemployment is a social outrage. It is a crime against the working people in a capitalist society. It is what my right hon. Friend the Prime Minister some years ago described as "the greatest pollution of all"—that is, pollution of the soul of the individual.

I know that there is no need to convince a Labour Government of that essential truth. I hope that the Government will at least consider acting in the way suggested. If they do, or if they act in a similar way, it will be a meaningful demonstration to the Scottish people of Socialist concern leading to decisive action on behalf of the working people whom we were elected to govern and to represent.

10.49 p.m.

My hon. Friend the Member for South Ayrshire (Mr. Sillars) covered a very wide range of points, and with his general analysis of the situation and with his feeling about the waste and human misery involved in unemployment I agree completely. I take right away his point that 100,000 unemployed in Scotland is unacceptable. We have never denied that, and it is one of our major objectives to reduce the unemployment figure as quickly as possible.

I am glad, however, that my hon. Friend pointed out that the present situation in Scotland cannot be insulated from the position in the United Kingdom as a whole, and the position in the United Kingdom as a whole is inevitably affected by the world economic situation. In fact, the level of unemployment in this country at the moment compares favourably with the levels in a number of our industrial competitors' countries in other parts of Europe. But that is no cause for complacency. It is no justification for complacency in the United Kingdom situation, and certainly it is no cause for complacency in the Scottish situation.

The answer must rest, as my hon. Friend recognised, not with direct means and action in tackling unemployment but with the whole economic policy of the Government. In that context it is extremely important that the social contract should be maintained. We must curb and reduce the rate of inflation, because the present rate is obviously a contributory factor towards unemployment and the serious economic situation that we face. I think that that has been recognised by my hon. Friend in his comments.

One of the heartening features of the situation is that, despite a worsening situation—I do not want to diminish my concern about that aspect in any way—the relative position of Scotland has improved considerably over the last 15 months. The relative proportion of unemployment in Scotland compared with unemployment in the rest of the United Kingdom is now at the lowest level since figures were collected in 1954. Unemployment in Scotland is still running at one and a third times the United Kingdom average, but that compares with the situation that we had quite recently when it was at least one and a half times the United Kingdom average. Indeed, for much of the time that I have been a Member of this House the unemployment rate in Scotland has run at more than twice the United Kingdom level. That means that in the present situation the Scottish economy is standing up better than the rest of the United Kingdom to the difficulties facing us.

One reason must be the effect of the North Sea oil situation. Last Friday, at a meeting of the Standing Conference on North Sea Oil in Dundee, I was able to produce up-to-date figures for employment in the North Sea oil industry. They were higher than we have had before. We are now identifying the jobs in a more detailed way. Our studies take us from firms which are wholly involved in the North Sea oil industry to firms which do North Sea oil and other work, the other work being traditional. We also take account of indirect employment. Therefore, we are getting more substantial figures for North Sea oil employment than we have had before.

Taking account of direct employment by firms wholly engaged on oil work, direct employment by firms partly on oil work and indirect employment, the total figure was 40,000, and many more jobs are still in prospect. Therefore, North Sea oil activity—part of the Government's policy is to see that the impetus is maintained—is an important factor in the present employment situation in Scotland.

It is, of course, also part of Government policy to maintain a strong and vigorous regional policy. That is represented by our maintenance of the regional employment premium, which the previous Government had intended to discontinue in the autumn of 1974, and we doubled the REP so that it went back to something like its original value as introduced by the Labour Government in 1967.

The maintenance of a strong regional policy is a contributory factor to the relatively better performance of the Scottish enonomy over the past year or so, but we must not rely only on traditional regional policy. That is why we are establishing the Scottish Development Agency. I shall not say anything about it this evening because we shall be able to deal with it in considerable detail when the Bill is published and debated, I hope next month. The basic idea of the agency, however, has been warmly welcomed by a wide range of opinion in Scotland. It is recognised that this new initiative, in a sector roughly analogous to the National Enterprise Board and in the environmental sector, together with the basic proposition, have been widely accepted in the Scottish situation.

There is a special problem which my hon. Friend mentioned—training. He referred to the proposals of the Man- power Services Commission. Some of them are under urgent and active consideration between the commission and the Government. I would not wish it to be felt that nothing has been done by the commission and the Training Services Agency since the agency was established. A considerable number of people in Scotland are undergoing training under the Training Opportunities Scheme of the Training Services Agency Division of the Manpower Services Commission. Of the 3,841 who were undergoing training in the skillcentres, at employers' establishments and so on at 28th February, 70 per cent. had previously been unemployed.

There is a long way to go to extend the facilities and to see that the available places are fully used. There are still 300 unused places in skillcentres. We want to see those places filled as rapidly as possible.

My hon. Friend made a proposal, which I assure him I shall examine carefully, for a Scottish community project agency. Many of the matters he mentioned as jobs for that agency can be carried out at present by existing agencies, local authorities and the rest. For example, the clearance of derelict land, slag heaps and so on, which will be a function of the Scottish Development Agency when it is established, is nevertheless open to local authorities and substantial grants continue to be given. We made it explicit in the consultative document on the Scottish Development Agency that we did not wish to see a hiatus or loss of momentum. If the SDA takes a little time to get fully involved, we shall encourage local authorities to keep up and extend their activities in this area—

The Question having been proposed after Ten o'clock, and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at two minutes to Eleven o'clock.