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Commons Chamber

Volume 12: debated on Monday 9 November 1981

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House Of Commons

Monday 9 November 1981

The House met at half-past Two o'clock


[Mr SPEAKER in the Chair]

Oral Answers To Questions




asked the Secretary of State for Industry whether he is satisfied that British manufacturers of motor car components will not be disadvantaged by arrangements with Nissan, relating to the United Kingdom content of cars built by Nissan in Great Britain.

Yes. I am confident that, if it goes ahead, the project will offer a valuable new outlet for United Kingdom component manufacturers if they are competitive.

Is my hon. Friend aware that the largest employer in my constituency is pernaps less satisfied than he is? The firm is concerned to know the percentage of the United Kingdom content. It also feels that it has a right to know how that percentage is to be judged—whether by weight, value or volume—and how it is to be monitored to ensure that those who make the agreement keep it. Will my hon. Friend bear in mind that those legitimate matters of public interest should not be shielded behind so-called commercial confidentiality?

My hon. Friend wrote to me on this matter. He is right to say that, whether the United Kingdom content is calculated by weight, value or volume, it is extremely important and affects the eventual result. I have explained to him that this is a matter of negotiation. Obviously, we have to take cognisance of the fact that the Nissan company has said that it wishes these negotiations to remain confidential. The House will, of course, expect not only a statement, but a demonstration that the assurances obtained by the Government are copper-bottomed.

Is the Minister able to give any further hard information to those of us who represent large numbers of unemployed workers in the regions about where and when Nissan might locate its factory in Britain? Does the Minister realise that in the town of Flint male unemployment now stands at nearly 40 per cent? Can he give my constituents any hope that Nissan might be located on the banks of the River Dee?

I cannot give the hon. Gentleman any concrete information. Clearly, this is a matter for Nissan. The whole project is still the subject of discussions between the company and the Government. I shall make sure that what the hon. Gentleman said today is taken into account.

What effect is the Labour Party's proposal to withdraw this country from the Community having on this proposal?

The Labour Party's proposals are against the project and will endanger it. I hope that the Labour Party will take account of that fact.

Will my hon. Friend look carefully at the advice that he receives in his Department about what constitutes a component? In doing so, will he bear in mind the real danger that unless satisfactory arrangements are reached, other British manufacturers may be forced to look to sources outside this country?

My hon. Friend is right. This point was also made by my hon. Friend the Member for Christchurch and Lymington (Mr. Adley). We are aware of this matter. We hope that the project will come to the United Kingdom, but we want it to do so in a way that will maximise the advantage to this country.



asked the Secretary of State for Industry if he will now restore investment area status to the Ormskirk travel-to-work area; and if he will give the reason for his decision.

The Ormskirk travel-to-work area will retain its intermediate area status until 1 August 1982. There are no plans to remove special development area status from Skelmersdale new town, which lies within the travel-to-work area.

In view of the fact that unemployment in the Ormskirk travel-to-work area has risen by 77 per cent. since the Conservative Party came to office and that it now stands at 21·8 per cent. compared with 12·8 per cent. when this disgraceful decision to remove intermediate area status was taken, will the Minister now reconsider that decision? If not, will he explain why intermediate area status was removed from the Ormskirk travel-to-work area, which has 22·8 per cent. unemployment, and yet has been retained for Kirkham, Lytham and St. Annes, where unemployment at 11·3 per cent. is still lower than it was in Ormskirk two years ago?

As I have told the hon. Gentleman, it should be borne in mind that Skelmersdale new town is also in the travel-to-work area, and a high proportion of the unemployment to which he referred is in the Skelmersdale new town.

Yes. It is nearly 5,000 of the total figures. I point out that that is a special development area.

As we have made clear on several occasions, we take into consideration the possibility of long-term structural decline, comparative to other regions of the country, in making decisions about areas in general. The hon. Gentleman wrote to my right hon. Friend the Secretary of State only last week on the subject. I shall send him a considered reply shortly.

Steel Industry


asked the Secretary of State for Industry if he will make a statement on the future of the steel industry.

I draw my hon. Friend's attention to the major speech that I made about the steel industry to the Conservative trade unionists' conference at Sheffield on Saturday, a copy of which has been placed in the Library.

Although it is splendid news that my right hon. Friend envisages a profitable steel industry after years of horrendous losses, can he assure the House that this will not be achieved by saddling British manufacturing industry with unreasonable prices or by reducing further Britain's percentage share of steel manufacturing capacity in Europe?

The chairman of the British Steel Corporation has made it clear that he wishes to stabilise steel making capacity at about 14·5 million tonnes a year. The corporate plan which he and his colleagues are preparing for presentation to me and my colleagues will be based on that as the central option.

My hon. Friend mentioned prices. He knows that it cannot be healthy for any steel industry—in Britain or elsewhere in Europe—if steel is sold at prices which do not allow a reasonable return to the manufacturers. I commend to my hon. Friend the measures which were taken through the European Coal and Steel Community last June to help to stabilise both prices and the market. That is one of the planks on which the recovery of the British Steel Corporation will be based.

Is the right hon. Gentleman aware that, rather than the prospect of a further 20,000 redundancies in the British Steel Corporation, the future and profitability of the corporation would be better guaranteed if projects, such as a gas-gathering pipeline, had been supported by the Government and if the Government ensured that the British Gas Corporation, for example, placed its orders for gas rigs for the Ruff field in British shipyards?

The figure for further reductions in manpower which the British Steel Corporation is discussing is not 20,000, but about 15,000. This is being pursued by the corporation at each plant through local negotiations and is a matter for the corporation.

As for the gas-gathering pipeline, I have no doubt that the private sector of the oil and gas industry will be able to make arrangements for the great bulk of the gas to come ashore and that this will ensure orders for steel. I am well aware of the importance that the British Steel Corporation attaches to these projects.

The last part of the hon. Gentleman's question should be addressed to my right hon. Friend the Secretary of State for Energy.

Will my right hon. Friend accept the congratulations of the House on his speech at Sheffield on Saturday? Will he take the opportunity to stress its theme to the dwindling number of my constituents who still believe that there is some money in the Treasury cupboard which can be chucked at the steel industry? Will my right hon. Friend especially remind the editor of the Scunthorpe Star that the work force of the British Steel Corporation can have a guaranteed future only if the corporation is made profitable and responds to the pressures of international competition, even though that gentleman continues to deceive himself into thinking that the old ways can still be pursued?

I am sure that my hon. Friend can deal firmly and effectively with the editor of the Scunthorpe Star. The contributions made to the debate about steel and other publicly owned industries by the Leader of the Opposition and his right hon. and hon. Friends show that the editor of the Scunthorpe Star is not alone in the delusion that there is a bottomless well in No. 11 Downing Street which can continue to pour out billions of pounds to support uneconomic projects. There is not, and it is time that everyone realised it.

Will the Secretary of State comment on the proposed Phoenix III involving the amalgamation of Johnson, Firth Brown and the British Steel Corporation works at the River Don? Will he ensure that on this occasion there is full consultation with the workers concerned, who apparently are threatened with massive redundancies if the scheme goes ahead?

Any arrangement between the British Steel Corporation and the private sector must be a matter for the corporation and the firms involved.

Loan Guarantee Scheme


asked the Secretary of State for Industry how many applications under the loan guarantee scheme have been received; and how many have been approved to date, giving the amount advanced.

I am pleased to announce that in the first five months of the scheme, to the end of October, 1,172 guarantees had been issued for loans totalling £41·1 million and a further 34 applications remained to be processed. In addition, a small number of applications have been withdrawn for various reasons and a very few have been rejected on technical grounds.

I thank my hon. Friend for that reply. Obviously, the size of the take-up shows the value of and the need for this loan guarantee scheme. Although my hon. Friend announced an increase recently, the speed of take-up is such that within four or five months he will have to come back to the House for a further increase if it is to be maintained.

Has my hon. Friend any idea of the split in loans between manufacturing and servicing industries? Obviously we want to encourage manufacturing.

Are any checks being made on the guarantee premium percentage being charged to see that it is correct? Or, it is too high—

I agree with my hon. Friend that the response so far has been extremely encouraging. I have said that I shall review the scheme constantly. It was as a result of the first review that the increase in the ceiling in this financial year from £50 million to £100 million was announced. I hope that that will be sufficient.

As for the distinction between manufacturing and servicing, I am glad to tell my hon. Friend that just over half of all loans at present have been to manufacturing industry, which again is very encouraging.

My hon. Friend asked, finally, about the premium. The premium has been set at 3 per cent. to cover bad debts. At this stage we do not know what the bad debt ratios are likely to be. I shall review this matter from time to time. However, it is too early at this stage to do it.

Can the hon. Gentleman explain why we have a much higher premium than any other country operating a similar scheme? Three per cent. is much too high. Will the Minister assure the House that he will exert pressure to get the premium reduced?

It is important to make it clear that the cost to the borrower is 2·4 per cent. It is 3 per cent. of 80 per cent. That makes a difference.

The experience to date and the high demand show that the premium is not an obstacle to people taking up the scheme. In October the demand for loans was higher than in any previous month—and at a time of comparatively high interest rates. That is an indication that the level of the premium is not a deterrent.

We intend the scheme to be self-financing. We need a little more experience of the scheme before we can look at the level of the premium.

Does my hon. Friend accept that the success of the scheme reflects great credit on the Government for introducing it and for recognising the importance of the smaller firms sector? Does it not also reflect great credit on organisations, such as the small business bureau, which have worked quite hard for it during the past few years?

Will my hon. Friend look at the possibility of increasing the maximum amount for any one loan from £75,000 to £250,000? Does he agree that if that were done it would help many medium-size firms which have a good potential for offering new jobs?

I am grateful to my hon. Friend for his kind remarks. I, too, wish to pay tribute to the small business bureau and to people, such as my hon. Friend, for their work in helping us to get the scheme off the ground.

My hon. Friend asks about the £75,000 ceiling. Again, the fact that the demand is so high has to be taken into account. My hon. Friend's point will in due course be part of a wider review which I shall undertake. However, companies and individuals can get up to £75,000 in a loan as part of a wider financial package. We are not talking simply about financial deals with a limit of £75,000.

Will the Minister consider linking the loan guarantee scheme with the facilities available for cheap money through the European Coal and Steel Community? Would not that ensure that money could be made available on a non-secured basis at as little as perhaps 13½ per cent.?

The two schemes are very different. As the hon. Gentleman will know, the ECSC cheaper interest schemes go only to specific parts of the country. There is an obvious difficulty there. However, I should make it clear that under the loan guarantee scheme personal security is not only not required, but is never asked for. That largely deals with part of the hon. Gentleman's question.

Although I warmly welcome the scheme and support my hon. Friend, who wishes to see it extended, is he aware that when many business people approach their banks about the scheme, the banks know nothing whatever about it? That is extraordinary. Will my hon. Friend ensure that the banking system—which has got money coming out of its gunwales—is made fully aware of the scheme so that small businesses, which can take advantage of the scheme and provide employment, can go to the banks in the knowledge that they will be able to help?

I regularly raise this issue with the banks. They have made strenuous efforts to get all the details of the scheme through to all their 14,000 branch managers. As I go round the country I find, by and large, that people are aware of it. If my hon. Friend has any examples where that is not happening, I shall happily take them up.

South Yorkshire


asked the Secretary of State for Industry if he will take steps further to assist industry in South Yorkshire.

I am well aware of the problems facing industry in South Yorkshire, most of which is to remain an assisted area. The Government's policies, aimed at reducing inflation and restoring competitiveness, are beginning to show success.

Does the right hon. Gentleman realise that since the Government came to power the number of jobs available in South Yorkshire has fallen lower and lower while unemployment has become greater and greater? Will he bear in mind that the Government's policies did not stop the Manvers coking plant, from closing? What help will he render to the Wombwell foundry, which is supposed to be a viable plant, but which is in the hands of the receiver? Unless the Government do something, unemployment in Dearne Valley will be greater still.

The Government have done quite a lot to help industry in South Yorkshire. I refer the hon. Gentleman to the 20,000 sq ft factory built for Photo Trade Processing Ltd. at Goldthorpe, the Midland Bank financing of 13 advance factory nursery units, which are being put up at Barnsley, the section 7 grant offered to the Midland Bank computer centre in Barnsley, the improvement of the South Yorkshire navigation canal at a cost of £15·6 million and many other projects. As regards Wombwell, the hon. Gentleman received an excellent letter from the Minister, who made it clear that if a firm wishes to put the foundry back in production—Government help and private money will be essential in that case—we shall be ready to look at an application for help under section 7 of the Industry Act.

Does the Secretary of State realise that the area represented by my hon. Friend the Member for Dearne Valley (Mr. Wainwright) and myself, as well as by others, is the industrial heartland of Britain? Does he further realise that the Government's failure to assist our part of the country has resulted in the recent announcements to close firms such as Redfearns National Glass, Star Paper Mills at Barnsley and many others? While the right hon. Gentleman sits fiddling around and fails to give assistance where it is needed, he is destroying Britain's industrial base.

People are beginning to realise that the future of Britain's industry depends upon our ability as a nation to sell our products to the markets of the world with designs and at prices that the customer is prepared to pay. We never pretended that to get back to competitiveness and to eradicate inflation from our economy would be easy. The road has certainly been painful. Ultimately, it is by being competitive that we shall help industry and provide jobs. The hon. Gentleman is right to say that South Yorkshire is part of Britain's industrial heartland and stands to gain most from the success of that policy.

Foundry Capacity (South-East England)


asked the Secretary of State for Industry whether, in view of transport costs of heavy castings, he is satisfied with the availability of foundry capacity in South-East England.

Yes. There is substantial overcapacity in this sector in the United Kingdom generally. I understand that transport costs of heavy castings are small in relation to the delivered price.

Is the Minister aware of the stated intention of the Ford Motor Company to close the whole of the Thames foundry at Dagenham early in 1984? Is he prepared to intervene, given that that closure would mean at least 5,000 redundancies and cause grave social problems to the surrounding area?

I cannot speculate about individual cases. As regards the hon. Gentleman's general point, there are 65 ferrous and 75 non-ferrous foundries in the whole of the South-East. However, it would be wrong for me to comment on a specific foundry.

Is the Minister aware that the foundry industry faces a crisis not only in the South-East, but throughout the United Kingdom? We understand that Lazard Brothers has recently been making an assessment of the foundry industry's future capacity. Will the Minister comment on that? When are we likely to receive a report?

It is true that there is a problem of overcapacity in the foundry industry. To some extent, that problem was exacerbated by the subsidies and schemes of the previous Labour Government. Lazards is putting forward a scheme, which is primarily one for the industry to help itself. The Department of Industry is looking at it.

The right hon. Gentleman is quite unjustified in that assumption. Lazards has put forward a scheme relating to the sector and we are looking at it.

Since the foundry at Fords is an integrated part of the production of motor vehicles there, will the Department of Industry look on with equanimity if replacement castings have to come from abroad?

I cannot comment on any decision that Ford is about to take regarding its foundry.

British Independent Steel Producers Association


asked the Secretary of State for Industry when last he met representatives of the British Independent Steel Producers Association.

Is my right hon. Friend aware that, as far as I know, the Government give aid for restructuring the steel industry exclusively to the nationalised sector? When will the Government provide some of that money to private sector steel firms in their negotiations and deals with the British Steel Corporation to set up private sector, free-standing companies in overlap areas?

The association asked me to consider financial help to enable the private sector steel industry to restructure itself and to eliminate overcapacity. When I met the officers of the British Independent Steel Producers Association I undertook, without commitment, to look at the situation and to see whether there was any way in which we might usefully meet the private sector's request. The British Steel Corporation put a considerable sum of money into the Phoenix I scheme—the Allied Steel and Wire scheme—and that may have contributed to the success of getting the scheme off the ground.

Will my right hon. Friend report to the House on how subsequent Phoenix schemes are going?

As my hon. Friend knows, talks have been going on for some time in the engineering steels—the so-called Phoenix II scheme. They are commercial negotiations and are, therefore, inevitably confidential to those involved. I hope that my hon. Friend will understand if I do not comment further in public.



asked the Secretary of State for Industry if he will make a statement on the level of his current aid to industry.

The Supply Estimates for 1981–82 provide for support of approaching £2,900 million, including nearly £2,000 million for the British Steel Corporation, British Shipbuilders, BL and Rolls-Royce, and about £900 million to other industry.

Is the Minister aware of the plight of the special steel industries in Sheffield, particularly that of Aurora in Ecclesfield—the finest manufacturer of highspeed steels in Europe—which is to close with the loss of 400 jobs? In February 1981 there was a clear implication that it would receive grant-aid, but that has not been forthcoming. Is the hon. Gentleman aware that that firm cannot compete in fair, competitive trade because of the high import level of special steels from France, Germany, Austria and the Eastern bloc, via Sweden? Is he further aware that Aurora cannot match those imports even if rates, wages, rolling costs and heating costs are excluded?

My right hon. Friend has commented on the special steels industry and the representations made by BISPA. A grant of £450,000 was offered to Aurora in December 1980 under the Industry Act to assist with rationalisation and modernisation, but the offer was not taken up. I shall examine the points raised by the hon. Gentleman.

Is my hon. Friend aware that private industry, for the most part, does not expect State aid? Is he further aware that private industry looks to the Government for a reduction in burdens such as mounting rates and increasing energy costs?

I entirely agree with my hon. Friend. The burdens facing private industry in this recession are a reason why the Government should control public spending to bring interest rates down.

Has not the time come to increase investment in high technology, especially office systems, preferably through the National Enterprise Board, in view of the recently announced strategy of American companies to push into that market as far as possible? Is the Minister aware that American companies are selling hard here already? Such a vast new market should go to British companies. Will the Government look into the matter?

I shall certainly look into it, but the first priority must be to control public spending to bring down interest rates. The scientific and technological assistance programme is at £197 million this year. That is 40 per cent. up in real terms on two years ago. It cannot be said that we are neglecting the matter.

Does the Minister accept that more than £6,000 million in public subsidies has been poured into the British Steel Corporation in the last 10 years? That is just one example. Does the Minister agree that most of that money has been used simply to meet increased operational losses? May we have an assurance that aid to industry in future will not only be more selective but will be used to invest in sound capital projects and not to preserve uneconomic jobs in declining industries?

My hon. Friend makes a fair point. A huge proportion of aid to industry in Britain has gone to the loss-making public sector. That adds to the burdens of the private sector by increasing taxation and putting up interest rates. That is why we must control public spending.

My hon. Friend tells me to do something about it. He will be happy to know that the weekly losses of the British Steel Corporation are now half the level that they were last winter.

It is a pity that the Secretary of State did not answer this question. If he had, he could have perhaps defended the disgraceful statement that he made about British Leyland in Sheffield at the weekend. To make that statement when a major industrial dispute has just finished which will affect the morale of thousands of workers within—

Will the Minister give an explanation of the Secretary of State's statement because it affects British Leyland workers and taxpayers who, having invested hundreds of millions of pounds, are told that their assets will be sold off when they could be used to make a profit?

I can see why the right hon. Gentleman thinks that is a pity that the Secretary of State did not answer the question, because that would have made his carefully rehearsed impromptu more relevant.

Nothing that my right hon. Friend the Secretary of State said at the weekend should surprise the right hon. Gentleman. Indeed, what he said was in line with what was said on 26 January by my right hon. Friend the Secretary of State for Education and Science when he was Secretary of State for Industry. He said that the Government's objective was to help British Leyland to become viable and then to attract private capital into it.

National Enterprise Board And National Research Development Corporation


asked the Secretary of State for Industry whether he is satisfied with the progress towards the amalgamation of the National Enterprise Board with the National Research Development Corporation.

Yes. The NEB and the NRDC are working together as the British Technology Group through their existing statutes and their separate arrangements for accountability.

What is the strategy of this exciting new grouping? Will it always invest in small, new high technology companies, for example? Will the shareholdings, as a matter of principle, be available for sale once the companies are established commercial successes?

I see the group having its primary role, indeed almost its exclusive role, in providing new investment to support high technology industry where there might be long lead times and high risks. However, we must recognise that trade and not aid is an important requirement of these industries, as was made clear to my right hon. Friend the Prime Minister and other Ministers when we met an interesting cross-section from the high technology industry at No. 10 Downing Street last week. The British Technology Group has an important role to play in supporting high technology industries. At the moment it is suffering from the awful overhang of the strategy endorsed by our predecessors, which led to substantial losses.

Can the Secretary of State assure the House that in the newly created British Technology Group the standard of entrepreneurial energy and resourcefulness will resemble that of the former National Enterprise Board rather than that of the National Research Development Corporation, which has a rather sluggish record?

I have every confidence in Sir Freddie Wood and those who are working with him—who I met the other day—in the important work that they are doing.

Laurence Scott Ltd


asked the Secretary of State for Industry what financial support under the Industry Acts has been received by Laurence Scott Ltd. of Openshaw, Manchester.

If such an application for aid is sought, will the Minister bear in mind that my constituents find great difficulty in understanding the positive eagerness that this company has for closing down a factory that had an order book valued in excess of £2 million? Will the Minister also bear in mind that its mad escapade with helicopters has not endeared it to my constituents?

The original decision was for the company, in view of all the commercial considerations. Any request for financial assistance will be considered against the usual, standard criteria.

Can the Minister comment on the view held by many people in industry that the Government should re-think their policy towards firms engaged in asset-stripping? Is the Minister aware that the company in question has a deplorable record? Is it not time for the introduction of legislation to impose penalties on companies as well as financial benefits?

The hon. Gentleman will know that the company was engaged in a rationalisation process and that facilities were transferred to other plants within the company.

Will the Minister condemn the action of this outrageously bad employer, which has done so much damage to industrial employment in Norwich and Manchester?

The company is trying, in a difficult market, to pull itself round. I do not think that such remarks help at all.

Greater Manchester


asked the Secretary of State for Industry if, in view of the changes in the employment situation, he will review his predecessor's decision on the loss of assisted area status for Greater Manchester.

On present evidence I am satisfied that the changes in assisted area status, announced in 1979 and due to be completed by August 1982, remain justified. However, we have always made it clear that we are ready to consider new evidence of significant long-term change in an individual area's circumstances, relative to the general position.

Is the Minister aware that Greater Manchester has a higher unemployment rate than Scotland and more unemployed people than the whole of Wales? Is he aware that the position is deteriorating rapidly, despite the actions of local authorities and trade organisations? Is not the July 1979 policy completely out of date, inconsistent and inequitable? Will the Secretary of State meet representatives of the area at an early date to consider these changes?

Ministers are always ready and willing to meet representatives who wish to talk about the status and problems of their areas. The hon. Gentleman's constituency has an unemployment rate that is below the average for intermediate areas. I do not see the case for changing the decision to downgrade the status of his constituency, although I recognise that parts of the Greater Manchester area have considerable problems.

Is it not clear that the situation that prevailed in July 1979 is quite different from that which prevails today? Is the Minister aware that in Tameside in particular there has been an increase in unemployment almost unparalleled in the country as a whole and that manufacturing industry in this area is suffering greatly from the loss of assisted area status? What does he intend to do to restore the modest incentives that used to exist?

The level of unemployment has certainly risen considerably in the Greater Manchester area. The Government, however, must consider not just the current position, but the long-term trend, the effect upon the industrial structure, the state of communications in the area and the likely prospects of the area as a whole when recovery comes. With regard to the right hon. Gentleman's constituency, I repeat what I said to his hon. Friend the Member for Manchester, Gorton (Mr. Marks). In the travel-to-work area in which the right hon. Gentleman's constituency is situated unemployment is below the average for intermediate areas.

Does the Minister acknowledge that this is not just a temporary phenomenon, but that much of the problem is structural unemployment, which cannot be cured in a short period? Will he accept the genuine point made by my hon. Friends, that since 1979 the relative unemployment rates of many regions have totally changed in relation to one another? Do not the figures that my hon. Friends have given show that the examination upon which the Government based their conclusions in 1979 must now be fundamentally revised?

What the hon. Gentleman has said is true of some areas but not of others. The position remains, as we have said, that the Government are always prepared to consider new evidence of significant long-term change, but we must be satisfied that it is indeed long-term change.

Technology Assessment


asked the Secretary of State for Industry if he will establish a public office of technology assessment.

Is there not a strong case for a permanent scientific and technical secretariat to give an early warning assessment of major technological innovations such as computer-based information systems and microprocessor applications? Does the Minister agree that, however well the work of ACARD and CPRS is done, given the limited resources, that work needs to be built on by a far more systematic, on-going and profound analysis if this country is to make the adjustments that are needed?

I think that the hon. Gentleman understates the very important role played by CPRS and ACARD in these matters. As the hon. Gentleman follows these matters carefully, he will have read the admirable series of a dozen or so reports that ACARD has produced and the Government have published in the last year or two dealing with major areas of new technology. This work is supplemented by the five requirements boards in my Department that oversee research amd development and provide strategic advice on the development of science and technology and the need for research and development. I think, therefore, that we are fairly well served in this area. What we need to do is to turn this work into cash in the bank. To my mind, that is our most important task. I do not think that the kind of technology assessment body suggested by the hon. Gentleman would make very much contribution to that.

Can my right hon. Friend assure the House that before answering that question he did not have to look up what the Conservative Party conference said about it, as the hon. Member for Nuneaton (Mr. Huckfield) would expect a Socialist Minister to do?

I pay great attention to what is said at party conferences, but we have a rather different approach to them from that of the Labour Party.

If the Secretary of State is so satisfied, why has his Department done so little in response to the ACARD report on biotechnology?

I believe that the hon. Gentleman is meeting my right hon. Friend the Lord President shortly. I have offered to be present at the meeting, if that would be welcome. I can assure him that we are giving a great deal of thought to the advance of biotechnology. There is an industrial group advising on biotechnology and there are a number of centres of advice within the Government. I fully share the hon. Gentleman's concern that this is an extremely important area of modern technology. I wish to see what further needs to be done to yield the industrial progress that I am sure is there to be won.

Assisted Areas (Regional Aid)


asked the Secretary of State for Industry whether he will include within his general review of regional aids those assisted areas due to lose such status in August 1982.

The Government stand by their assurance that they will review those areas that are due to lose assisted area status on 1 August 1982 after having been downgraded by more than one step. In addition, we have always made it clear that we are ready to consider new evidence of significant long-term change in an individual area's circumstances relative to the general position. Beyond this, the Government's policy continues to be to concentrate regional aid on the areas of greatest need.

Is the Minister aware that that is a most unsatisfactory reply, as the Government continue to refuse to undertake a general review of assisted areas that are losing their status in August this year? Will he admit what is as plain as a pikestaff—that unemployment throughout the country is now far worse than any Minister envisaged when the policy of withdrawing assisted area status was adopted more than two and a half years ago? Does he accept that it would be an outrage if towns such as Blackburn, Accrington and Nelson and Colne, where unemployment has increased between two and a half and three times, lost their assisted area status while Conservative seaside resorts such as Blackpool retained it?

I am not clear why the hon. Gentleman finds my answer so unsatisfactory, as I made it absolutely clear—as did my hon. Friend the Under-Secretary of State when he saw the hon. Gentleman not long ago at a meeting to discuss the subject—that we shall of course consider new evidence of long-term change in the circumstances of an individual area. That has always been the position. I acknowledge that unemployment has risen sharply in the hon. Gentleman's constituency and there are clearly considerable problems.

With regard to the rise in unemployment generally, that is a problem for the whole country. It does not follow, however, that the solution is to increase the number of assisted areas. It is far from clear that that would assist the overall unemployment problem or create any net new jobs. Indeed, the evidence is that more jobs were created in the assisted areas when regional policy was tighter and more sharply and narrowly aimed than it was when we came to office.

In considering new evidence, will my hon. Friend examine the report of the Public Accounts Committee on this subject, in which the evidence from independent research sources, backed up by his own Department, reaffirms that the beneficial effect of regional aid is at best minimal and that the money could be better spent identifying particular areas of need in industry?

I note my hon. Friend's remarks. I shall, of course, look at the evidence to which he refers. It is also important to bear in mind the effect of these incentives on inward investment.

Will the Minister bear in mind that in the past year unemployment in Halifax has risen by 136 per cent.—one of the steepest rates of decline in the country—yet Halifax is to lose assisted area status next year? What help can the Minister offer to all the firms that are throwing people out of work as a result of Government policies? Is he aware that these include manufacturing firms across the whole range of industry, not just textiles, many with national and international reputations for high quality and high exports?

Clearly, I shall consider the hon. Lady's constituency and the points that she has made today. Like other hon. Members, however, she must also consider to what extent the rise in unemployment is a national phenomenon and to what extent it is peculiar to the area. I shall certainly consider what the hon. Lady has said, although her constituency, like others, will clearly benefit from a general upturn in the economy.

Community Enterprise Trusts (Small Businesses)


asked the Secretary of State for Industry if he has any information on the number of community enterprise trusts to assist small businesses that have been formed in the United Kingdom.

As these organisations spring entirely from the community, we have no means of knowing the precise number. But there are at least 50 already in being or in the process of being set up in the country, many of them of very recent origin. I greatly welcome these developments, because I am confident that they are very helpful to small businesses.

I thank my hon. Friend for that helpful reply. Am I right in believing that the Government would welcome the formation of many more of these community trusts? Can my hon. Friend be a little more specific about what the Government are doing to encourage them?

I am grateful to my hon. Friend and I pay tribute to the work that he has done in his own constituency in spearheading and being very much responsible for the setting up of an enterprise trust there. I have visited many of these, and I have taken part in conferences on the subject. My hon. Friend will also know that the organisation Business in the Community has been set up to encourage more of them to be established around the country. Beyond the general welcome that the Government give and the general assistance that, for example, our own small firms service can give to them, I think that there is a limit, because these are essentially examples of local initiative and local self-help. They will wish to remain that way and their benefits stem from that. However, I shall certainly be happy to do anything that I can to assist them in general.

What impression has the formation of these trusts had on the amazingly high rate of bankruptcies among small businesses that have been caused by the Government's policies?

To use the hon. Gentleman's expression, which I do not think is particularly appropriate, it is worth noting that an amazingly high number of new small businesses are being set up at this moment, certainly a great deal more than the number of bankruptcies. That is well worth bearing in mind. The enterprise trusts are helping them to be set up and are assisting those that are growing.


Public Order Act 1936 (Prosecutions)


asked the Attorney-General how many prosecutions have been brought, since May 1979, under the incitement to racial hatred provision of the Public Order Act 1936.

During the period 5 May 1979 to date I have consented to the prosecution of 11 persons for offences contrary to section 5A and two persons for conspiring to contravene the section. The two conspirators have been found guilty, and five persons have been found guilty under section 5A. Proceedings under section 5A against the other six are still outstanding.

Is the Attorney-General aware that many people are puzzled at the small number of prosecutions that have been brought, given the rather nasty racist material that is in circulation? Is that small number of prosecutions due to an inability to identify the publisher and distributor, because the material comes from abroad, or for some other reason?

As I said when this matter was previously raised, there are, and have been, serious evidential difficulties, but the House may be interested to know that the number of prosecutions to which I have consented has greatly increased over the past few months.

I sympathise with the difficulties involved in bringing proceedings under the existing section. However, does the right hon. and learned Gentleman agree that years of patient work in community relations can be destroyed in an hour by a busload of mischief makers brought in from another area, or a busload of material brought in from London, which sometimes uses language that is not necessarily threatening, abusive or insulting? Will he invite his right hon. Friend the Home Secretary to consider whether in this respect the limits of free speech are still too widely drawn?

The right hon. and learned Gentleman is no doubt right when he says that a great deal of patient work can be destroyed almost in a matter of moments either by a busload of people or material, some of which, unfortunately, is printed outside our jurisdiction. However, we are now engaged in a much greater drive against it, so far with considerable success. I should like to see how that continues with the cases that are outstanding before I say any more.

I thank the Attorney-General for his reply to my right hon. and learned Friend the Member for Warley, West (Mr. Archer). Does he agree that the existing law, particularly in its emphasis on the word "hatred", makes it too difficult to prosecute the pernicious material that is circularised and which no doubt floods into his Department as it used to do in my time? Will he therefore take urgent steps to urge his right hon. Friend the Home Secretary to tighten the law so that in future one can be sure that prosecutions will be successful?

The Director of Public Prosecutions is keeping a close eye on this. One must always maintain the balance that has existed for centuries between those statements and speeches that are racist in their intent and the maintenance of a measure of freedom of speech.

Bill Of Indictment Procedure


asked the Attorney-General if he will review the use by the Director of Public Prosecutions of the Bill of Indictment procedure.

I am satisfied with the Director's use of the present procedure and do not intend to review it.

Before I call the hon. Member for Oldham, West (Mr. Meacher) to ask a supplementary question, I ask him to do his utmost to avoid referring to the two cases that are sub judice.

I hope, Mr. Speaker, that I can abide by your ruling. Does the Attorney-General accept that, while it was right to use the Bill of Indictment procedure in one case where it appears the magistrate got the law wrong, it is quite another matter to use it—

Order. I think that the hon. Gentleman is referring to a well-known case, where people's rights and liberties are still at stake. It is a long-established custom in this place that we never seek to influence the courts when people's reputations and names are at stake.

I am in no way seeking to interfere in that way, Mr. Speaker. I am merely asking about the use of particular procedures by the Director of Public Prosecutions that have caused public concern. I believe that it is right that this issue should be raised in this place—

Order. Let me make it quite clear. The hon. Gentleman must not refer to any case that is currently before the courts, as that would be highly irresponsible.

Will the Attorney-General say whether he thinks it right for the Bill of Indictment procedure to be used in a way that steps in before the due process of law has been completed and prevents the defendant from testing the prosecution's argument that there is a prima facie case against him? Is that not unjust?

I shall, Mr. Speaker, be careful in my answer. The use of a voluntary Bill in circumstances in which the court is satisfied that the defendants are deliberately delaying the committal proceedings has operated on a number of occasions over the last few years.

Commercial Confidentiality


asked the Attorney-General whether he will implement the recommendations of the Law Commission's report on breaches of commercial confidentiality.

The Law Commission's report deals with breach of confidence generally and is not limited, as the question implies, to commercial confidences. It was published on 29 October last, and the Government will have to take into consideration the comments and criticisms of the public before announcing their decision.

Will the Attorney-General give an assurance that in making that examination the Government will bear in mind the immense damage done to inventive and innovative firms by breaches of confidence that continue to take place?

That is one of the serious consequences of a breach of confidence, and that will be considered along with all the other recommendations in the report.

Mr Leo Long


asked the Attorney-General if he will prosecute Mr. Leo Long for treason.

The Attorney-General will be aware that the Prime Minister has today issued a long and comprehensive written answer on this issue to my hon. Friend the Member for West Stirlingshire (Mr. Canavan), which confirms what he said on this matter. Does not the history of the Blunt revelations, and now the Long revelations, together with the Prime Minister's refusal to name any further names, mean that there should be greater supervision over the operation of the security services than we have had so far? Will the right hon. and learned Gentleman raise with the Prime Minister the possibility mentioned by my right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) during the Blunt debate, namely, that a committee of Members of Parliament could well oversee the security services to ensure that this sort of thing does not happen again?

We must look at the present position. As my right hon. Friend the Prime Minister said in her wrtten answer, the present procedures of the security service do not permit a person suspected of an espionage offence to be interviewed on the basis that he need not fear prosecution unless the case has first been referred to me and permission given for the interview to be conducted on that basis. That, and the other safeguards set out by the Prime Minister in her speech on 21 November 1979, now make the situation quite safe.

Am I not right in my recollection that the Attorney-General said in his statement on the Blunt affair that there were a few cases where inducements had been given to particular individuals, which would have made subsequent prosecution inappropriate?

In answer to a question from the hon. Member for Bolsover (Mr. Skinner) on 20 November 1979 I maintained that in only on case had immunity been granted. I told the House—it appears to have been forgotten by the press and in other comment over the last 10 days:

"I understand that in a few cases in interviews with other persons inducements were offered which might have rendered any statements made as a result of the inducements inadmissible in any subsequent criminal proceedings."—[Official Report, 20 November 1979; Vol. 974, c. 99.]
The interview with Mr. Long was one of those to which I was referring.

I am grateful to the Attorney-General, because I wanted to remind him of his statement that there was only one case. Is he making it clear that Mr. Long's case was the only one, or were there others where inducements were offered? If so, how many? How far was the Attorney-General briefed on the matter when he took office, because he told the House on 21 November 1979 that when he was briefed, within a month of entering office, he was told of all the matters about which the security service felt he should know? Is that position not unlike Mr. Macmillan's famous complaint that nobody told him anything?

It is not the case that I was told nothing. I was told everything of importance relating to the existing and future position in May 1979. In the few cases where inducements were offered, there was no question of the Attorney-General of the day either being told or giving his consent.

Questions To Ministers

I draw the attention of the House to the fact that one question occurs six times in identical language on the Order Paper today, and it is one of my responsibilities to do my best to guard the Order Paper. If that custom were to continue, there would be nothing to stop hon. Members from putting down 50 similar questions on the Order Paper. As, in my mind, the open question has seriously affected Prime Minister's Question Time, I look with disfavour at the same question being repeated.

On a point of order, Mr. Speaker. I seek your guidance on the practice of transferring questions to other Ministers, with particular reference to the transfer of a question that I tabled to the Attorney-General to the Secretary of State for Social Services, and which is now numbered 54.

On 8 December 1980, the Lord Chancellor announced a feasibility study to consider making available microfilms of registers of births, deaths and marriages in the custody of the Registrar-General for research purposes. The Solicitor-General answered written questions that I tabled on the subject on 26 and 30 January. The Attorney-General answered an oral question from me on the same issue on 6 April. My question today on the same matter was transferred to the Secretary of State for Social Services. I understand that the registers in question are not, legally speaking, public records and therefore come under the Secretary of State for Social Services. However, if the question of their transfer is being considered by a feasibility study that has been set up by the Lord Chancellor, for whom the Attorney-General answers in this House, should there not be a practice whereby one Minister takes responsibility for the matter here and should not we stand by it? Would that not make sense and also be for the convenience of hon. Members who wish to table questions, not only on this matter but on all others?

I am sure that what the hon. Gentleman said will be borne in mind by those who have heard it. However, he must realise it is not a matter on which I can rule.

Bill Presented

Social Security And Housing Benefits

Mr. Secretary Fowler, supported by Mr. Secretary Prior, Mr. Secretary Heseltine, Mr. Secretary Younger, Mr. Secretary Edwards, Mr. Secretary Jerkin, Mr. Secretary Tebbit, Mr. Leon Brittan, Mr. Hugh Rossi, Mr. Barney Hayhoe and Mrs. Lynda Chalker, presented a Bill to make provision for the payment of statutory sick pay by employers; to make new provision with respect to the grant of, and the payment of subsidies in respect of, rate rebates, rent rebates and rent allowances; to amend the law relating to social security and war pensions; to amend section 44 of the National Assistance Act 1948; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 6].

Statutory Instruments, &C

By leave of the House, I shall put together the Questions on the six motions relating to statutory instruments.


That the draft Weights and Measures Act 1963 (Coffee and Coffee Mixtures) Order 1981 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Weights and Measures Act 1963 (Dried Fruits and Vegetables) (Amendment) Order 1981 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Weights and Measures Act 1963 (Grain and Farinaceous Products) Order 1981 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Grants by Local Authorities (Appropriate Percentage and Exchequer Contributions) (Amendment) Order 1981 be referred to a Standing Committee on Statutory Instruments, &c.
That the Motor Vehicles (Variation of Speed Limits and Speed Limits on Motorways) (Metrication) Regulation 1981 (S.I., 1981, No. 1372) be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Scottish Seed Potato Development Council Order 1981 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Pym.]

European Community Documents


That European Community Document No. 6498/81 concerning claims made in the labelling, presentation and advertising of foodstuffs for sale to the ultimate consumer, be referred to a Standing Committee on European Community Documents. —[Mr. Pym.]

Orders Of The Day

Debate On The Address


Order read for resuming adjourned debate on Question [4 November]

That an humble Address be presented to Her Majesty, as follows:
Most Gracious Sovereign,
We, Your Majesty's most dutiful and loyal subjects. the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.—[Mr. Michael Shaw.]

Question again proposed.

Employment And Industrial Relations

3.35 pm

It is, of course, entirely proper that during the debate on the motion we should discuss not only the problems of unemployment but those of training and industrial relations. However, to avoid any possible disappointment, I say at once that I shall not be able to convey to the House today my proposals that wilt be embodied in a Bill later in the Session. I hope that it will not be long before I am able to do so.

I deal first with the matter that is perhaps the dominant question of the day—unemployment. I believe that it would help in all our discussions, and perhaps in finding solutions to the problems, if at least the Opposition could admit that high unemployment is not a uniquely British phenomenon. World recession has meant that other industrialised nations are suffering, too. Unemployment in Germany rose by 100,000 last month. In France, the total recently passed 2 million. The rates of increase in those and many other countries exceed ours. Although the trend of unemployment is still rising in this country, at least it is now doing so far less rapidly than it was last winter.

Other aspects give us cause for some small hope. The trend of vacancies that had been uncertain for some months now seems to have hardened into an increasing trend. The number of declared redundancies is substantially down from last winter—from about 50,000 a month to about 35,000 a month—and there is some comfort to be drawn from the fact that industrial production is up. Short-time working has fallen sharply and more overtime is being worked.

There is no point in raising false hopes, and although the number of people without work fell for the first time in many months in October—we welcome that—we recognise that there is still no room for complacency and that there is a long way to go before any of us can be happy about the trends in unemployment. We shall not see a sustained fall in unemployment until economic recovery is firmly established, until we are winning back customers that we have lost to other countries. That is why the fight to conquer inflation and get the economy right must continue for the sake of the unemployed as well as those still in work, retired people and those who are not yet at work. As I have said, unemployment is still rising, but people are finding jobs as well as losing them. There is a constant dynamic turnover of jobs.

The hon. Member for West Stirlingshire (Mr. Canavan) purports to find something comical in that. I think that at times he would prefer it is people were not finding jobs because it would fall in with his view of the economy.

Every week well over 100,000 people find new jobs. Of course, we all agree that far too many have been unemployed for too long, but the market can recover and it can generate new jobs if we give it the chance and the right conditions for growth.

The key to the right conditions for growth is to restore our competitiveness, and there are signs that we are having some success. After the massive loss of competitiveness in the decade from 1970 to 1980, when—I repeat the figures because Opposition Members do not seem to have understood them—money incomes rose by 335 per cent. while output rose by 16 per cent., labour costs have now stabilised.They remained virtually unchanged since the beginning of the year. That, together with the fact that we are now in the middle of the inflation league table, offers hope that we can make real progress towards our aim of a sound and stable economy. The settlement at British Leyland and the agreement in other firms to freeze or even to cut pay have shown that there is a growing understanding of the facts of economic life — no customers, no cash and no cash, no jobs. There can be no argument about those economic facts of life.

Even so, we have a long way to go. The dramatic figures on productivity, using similar equipment to produce similar products, provided by Ford illustrate the point. Can anyone doubt that, while it takes 40 man-hours to build a Ford Escort at Dagenham but only 21 at Saarlouis using identical equipment, unemployment will be lower and wages higher in Germany than in Britain? Can any hon. Member dispute that? From the lack of response, I think that the House has found common ground. I hope that we can build on that and that Opposition Members will praise those who are trying to reduce the gap.

There is little doubt that in some industries—[Interruption.] Does the hon. Member for Feltham and Heston (Mr. Kerr) wish to ask a question?

I was suggesting that the Minister should get rid of the Chancellor of the Exchequer.

I only half heard the hon. Gentleman's sedentary remark. I thought he said "I will tell you how …". No such luck. The hon. Gentleman does not have an idea in his head, and that is his problem.

There is little doubt that in some industries—for example, the motor industry—even if we reclaim the market share new technologies may mean a loss of jobs in the short run. However, new opportunities are constantly arising elsewhere as new technologies are applied. We cannot afford to ignore the opportunities that they provide to modernise our industry and expand our markets. Our competitors will not wait for us. They are moving now, and are accelerating faster than us.

Of course, there are fears about the effect on jobs of introducing new technology, especially among those who think that their skills will be less and less in demand, or even those who think that the numbers of members in their unions will fall. That is nothing new, and new jobs inevitably emerge to replace the old. The railways destroyed the jobs of ostlers and stagecoach builders, but a new industry was created and both trade and industry were stimulated into new growth in wealth and jobs.

The opposition to new technology is not openly Luddite. It is a reasoned Luddism—an attempt to hide behind a cloak of apparent reasonableness. The argument is "Oh yes, we will accept the railways provided all the ostlers and stagecoach builders continue in their old jobs and that the profits of the railways are used to dig canals to subsidise horse-drawn traffic." That is the farcical argument taking place in British industry today, while British jobs—not British goods—are exported.

The Minister appears to be saying that only old industries are disappearing. In many constituencies new factories producing brand new products with high technology have fallen because of the Government's policies. Will the right hon. Gentleman address himself to those factories, and not to the mythical old industries that he believes dominate our constituencies?

The hon. Gentleman should ask himself why companies which he intimated are successful are not beating their competitors overseas and winning markets. Both interest rates and energy prices make a minute contribution to total overall costs compared with wages. In recent months energy costs in Britain have been falling relative to those of our competitors overseas. I hope that the hon. Gentleman will greet that fact with good cheer and will admit that the problem is less serious now than it was a year ago.

The Minister said that energy costs were a small proportion of overall costs. That depends on the industry. For example, the paper and board industry, which is attempting to keep going in my constituency, is finding that energy costs are rising more than labour costs. Firms have suffered high energy costs while their competitors have received subsidies. The Minister is talking nonsense.

I am grateful for the hon. Lady's support. I shall do a deal with her. If she can persuade the National Union of Mineworkers to dig coal rather more cheaply, it may be possible to reduce the price of electricity because its price is determined primarily by the price of coal. I shall go a step further. I shall do even more to persuade my colleagues to find ways to reduce the price of energy to the mills in the hon. Lady's constituency if she can satisfy me that their unit labour costs are lower than those of their overseas competitors. The hon. Lady should suggest to the unions that they govern their costs first before we do more in other areas.

The right hon. Member for Heywood and Royton (Mr. Barnett) is right; I can never resist giving way to him.

Does the Minister agree that it is Government policy to increase energy prices to reduce the borrowing requirement?

It is Government policy to ensure that energy producers make a sensible rate of return on the public investment in them.

If the British labour force is to respond to changes, we need a better training system. For years we have struggled with inadequate arrangements, far inferior to those of our competitors. We have perpetuated systems that have encouraged rather than helped to reduce rigidities and barriers in the labour market—[Interruption.] I am being goaded too far today.

I shall not give way to the hon. Gentleman again because he would have even less to say this time than he said just now.

Entry to certain occupations has been limited to those who have served their time in traditional apprenticeships, and, despite skill shortages, little or no use has been made of adult trainees. Better arrangements for skill training at all levels is the first objective of the new training initiative. My hon. Friend the Under-Secretary will deal with training questions in greater detail if he catches your eye, Mr. Speaker, at about 9.30 pm.

I shall confine myself to reminding the House that the consultative period for that document has ended. There has been broad agreement on the need for better arrangements for skill training and also on the other two objectives of improving the vocational education and training of all youngsters and the creation of more opportunities for adults to train. We attach the greatest importance to all three objectives. As my right hon. Friend the Prime Minister has indicated, I hope by the turn of the year to bring forward proposals for achieving these objectives, in particular through a comprehensive training system for the young unemployed. At present many young people have no opportunity to acquire the foundation of everyday working skills upon which specialist skills can be built. It is our intention to ensure that in future they all have that opportunity.

When my right hon. Friend reviews this very important subject, will he try to ensure that the rates of pay received, for example, by engineering apprentices are not so much less than they could get under the youth opportunities programme that economic incentive channels them out of the apprenticeships that this country desperately needs and will need?

I was about to refer to that point.

We are all agreed that we have very much to learn from other countries' systems of vocational training—in particular, that of Germany. I hope that that agreement will include following the example of Germany in the pay of young trainees relative to adult workers. That would in general help to ease the problem which my hon. Friend has raised and, indeed, would ease the problem which is common in industry—that young apprentices are so expensive to take on that employers find that they simply cannot afford to do so. It can be very expensive to employ a young man in his first year as an apprentice, bearing in mind the amount of productive work and the amount of help that he can give.

The House will recall that last November my predecessor, the present Secretary of State for Northern Ireland, stated the Government's aim to move towards greater reliance on voluntary arrangements for training and asked the Manpower Services Commission to conduct a review of training arrangements in each sector. The commission submitted to my right hon. Friend and published the outcome of that review, entitled "Framework for the Future", at the end of July.

Since then there has been a further period of consultation, and this has nearly been completed. My right hon. Friend said last July that he hoped to be in a position to announce decisions early in the new Session so as to put an end to the uncertainty. That is very much my own view, and I expect to be able to make a statement soon. I shall listen carefully to what is said in the debate today, as I will to what the TUC representatives say to me when I meet them later this afternoon. If the House will excuse me, I shall be absent from the debate for an hour or so in order to attend that meeting.

As I have said many times, I welcome such meetings with the TUC on matters of common interest. As observed in a speech to Conservative trade unionists on Saturday, I believe that unions would speak with greater credibility if the procedures for electing officers and for ascertaining members' views clung more closely to the principle of one man, one secret vote than is the practice in some cases.

I repeat that I am not anxious to rewrite completely union rule books, but I beg unions to understand that their standing and authority has not been enhanced or assured by the scenes in the casting of votes in the election for the deputy leader of the Labour Party; nor has their standing been enhanced by the way in which some trade unions have handled some industrial disputes of late.

There is pressure from the public—and the trade unionists in many cases—for reform. I stand ready to assist and to offer the assistance of my Department if they wish to have that assistance in reforming those affairs. [Interruption.] If they do not wish it, I make no threat, but I believe that there is a general feeling that the unions ought to be given back to their members, not held in the hands of militant minorities, and the only democratic way of doing that is by having free and fair elections.

In discussing the affairs of trade unions, it is perhaps natural that we should turn to the strike record. That is something about which we used to hear a great deal, particularly as Labour Members have always been ready to claim that they are the only people who understand trade unions, and to pose as the party of industrial peace and harmony. Their memories are not only selective; they are short. They cannot remember the winter of discontent. I remind them that the record of strikes and days lost from strikes shows the true picture.

The total number of stoppages due to industrial disputes in 1980 was the lowest for 39 years, and it was less than half the annual average for the previous 10 years. [Interruption.] I hope that Labour Members are not suggesting that the only way to reduce the number of strikes is to increase unemployment. If that is their conclusion, they are treading on very dangerous ground. During the last six months of 1980 the number of days lost was the lowest since 1966, and by any comparison our recent strike record in British industry has been outstanding.

I accept that this improvement does not necessarily mean that there has been a great change of heart or that the underlying causes of industrial conflict have disappeared, but I believe that it shows that there are now the beginnings of a much greater realism in pay negotiations and a much greater awareness that increases in pay have to be earned and that any improvement in real earnings can come only from a improvement in productivity, leading to an improvement in profitability. I hope that that is common ground among hon. Members. I am glad that there seems to be consent to that proposition, so we are indeed making progress. [Interruption.] Does the right hon. Member for Ebbw Vale (Mr. Foot) want to say something? I am always ready to extend the utmost courtesy to him and I hope that he will always do the same to me. I hope it can also be agreed that strikes destroy jobs, and that the reckless pursuit of inflationary wage demands destroys jobs. The tragedy is that it has taken so long for those truths to be learnt, and even now there are powerful voices which still deny them—and some weekly voices, too.

The priority now must be to make sure that these lessons are not forgotten. If recovery is to be real and lasting, the new spirit of realism has to carry through to the stage when people are less afraid of losing their jobs through the immediate closure of the firms which employ them. It has to be based on a better understanding of these basic economic facts of life.

We need a concerted, long-term effort by management to persuade its employees, and by trade unions to persuade their members, that the lessons we have learnt in the period of world recession will be every bit as vital in the period of recovery. We must hold on to the very real gains that have been made in productivity and not allow them to be lost as the pressures ease. We must preserve the spirit of realism in pay negotiations and ensure that our strike record does not again destroy our ability to compete in international markets. That is the task not only of Government but of management and of trade union leaders.

Would it not be useful to bear in mind, especially when the right hon. Gentleman sees the TUC leaders later today, that much of what he is now saying was said 10 years ago during the passage of the Industrial Relations Bill? Did not the facts then show that that measure would not work? Does he not appreciate that in the end no anti-union legislation will work? Why does not the right hon. Gentleman drop the prejudice which undoubtedly he and his colleagues have against the trade unions and seek their co-operation instead?

The legislation which I shall propose will not be anti-union legislation. It will be legislation to restore to people the rights which they had before some of them were removed by other trade union legislation.

I should like to say how much I admire the courage and the judgment of some leading trade unionists who have not been afraid to lead in the true interests not just of hard core militant, politically motivated activists but of their ordinary members and, indeed, of the nation. At a time when unions come under a great deal of criticism, it gave me considerable pleasure to read in The Guardian this morning of the measures that had been taken to save some British Airways routes in Scotland and the words of Mr. Colin Varndell, a member of the Transport and General Workers Union and chairman of the British Airways Trades Union Council, who said:
"We've done it and we intend to make it work. We must not forget that we are a nationalised industry, set up for the benefit of the people."
Mr. Varndell had proposed savings of staff and more efficient ways of working in order that the airline should survive. That is the business of a trade union leader. Would that more people followed Mr. Varndell's example.

The task of such people would be made easier if the Opposition could bring themselves to give some public support and to welcome the improvement in our strike record and to acknowledge the importance of improving productivity and of moderation in wage demands. That would help greatly moderates in the trade unions who are looking after their members' true interests. The hon. Member for Walsall, North (Mr. Winnick) is worried again—

Of course. The House will not expect me to anticipate the announcement of our proposals for further legislation. I shall, however, say this today. Our proposals will fall into two main categories—those concerned with improving the operation of the labour market, and those concerned with personal liberty, particularly the closed shop.

I know that opposition Members think that my right hon. Friend the Secretary of State for Northern Ireland went too far in protecting the victims of the closed shop. They always did. The other day I came across a copy of a leader in The Times dated 2 December 1975 which for some reason I had decided to keep. The leader had the heading "Is Mr. Foot a Fascist?" It concerned the case of the Ferrybridge Six. It will do no harm to remind ourselves of the circumstances of that case. I shall give them briefly.

Six men were dismissed by the Central Electricity Generating Board for refusing to join one of the four trade unions that had concluded a closed shop agreement with the board. The six were members of a union, the Electricity Supply Union, which was not recognised by the board. They complained to a tribunal that they had been unfairly dismissed. The tribunal upheld the complaint on the grounds that the CEGB had not required all its employees to belong to one of the four unions and so, under the definition in the 1974 Act—the right hon. Gentleman's Act—there was no union membership agreement in force. But sacked they remained. What was the response of the then Secretary of State for Employment, now the Leader—yes, the Leader—of the Opposition? It was to introduce legislation which swept away the safeguards that had been inserted against his will in the 1974 Act.

Thereafter there was no hope of a remedy for anyone sacked for refusing to join a union except on the very narrow grounds of religious conviction, conceded in the 1976 Act. As everyone knows, the subsequent dismissal of three British Rail men under that legislation—now happily repealed—was found to be in violation of the European Convention on Human Rights. Perhaps later in the debate the Opposition will break their silence on that judgment and will give us the benefit of their reflections on it.

Recent events at Sandwell and Walsall have shown the same intolerance, the same mean-minded pursuit of regimentation and conformity. That is why we believe that further legislation on the closed shop is necessary.

No. I must get on with my speech. I know that what I say will be opposed by the corporatists and the authoritarians of the old Labour Party—perhaps, by the look of things recently, it should be the senile Labour Party. But what about the members of the new Labour Party, the SDP. They voted in 1976——

I shall not give way. They voted to sweep away the safeguards for individuals victimised by the closed shop. Do they stand by their votes now or do they support the measures in the 1980 Act?

Order. I must make it clear that the Minister is not giving way and must therefore be allowed to continue.

I normally give way, but I do not wish unduly to extend my speech.

I hope that the SDP Members will make plain their intentions today. [HON. MEMBERS: "Where are they?"] The size of their attendance shows the extent of their interest. What about the SDP candidate for Crosby? She was prepared to join the picket line at Grunwick and to lend her name to a campaign that sought to drive a company out of business by preventing its employees from going to work. All hon. Members remember the disgraceful scenes of violence and disorder in which that campaign culminated.

As a result of the 1980 Act, the Act of my right hon. Friend, it is no longer lawful for someone, not even a politician, to picket employees at a place of work which is not his own to persuade people to strike. I hope that the SDP candidate at Crosby will make plain whether she is content to leave the law as it is or whether she would seek to change it so that she could get back to the picket line without fear of being prosecuted. That is perhaps sufficient controversy for a while.

I shall make it easy, Mr. Speaker, but interventions only extend my speech.

I am grateful to the Secretary of State. He has referred at length to the 15 people he can record since 1975 who have lost their jobs under closed shop provisions. Undoubtedly he proposes in his new legislation to increase substantially the compensation that they will receive. Will he in the same Bill increase substantially the compensation for many thousands of workers who have lost their jobs in the same period through unfair dismissal practices by their employers?

I suggest that the hon. Gentleman waits until the Bill is published.

I return to the common ground. We are all agreed that the level of unemployment and its cost in every sense are appallingly high. I hope that even if stated briefly it will not be thought that it comes less from the heart when I say that if I believed there was a better or quicker way to end or lessen the hardship, the indignity and the pain of those who want to work and who are denied the opportunity to do so, I would take it.

Many people do just that; or they walk, or take a bus. They seek work as they did in my father's generation. Each week 100,000 or more of them find work.

All over the country.

I do not believe that any hon. Member would fail to follow it if there was a better way. Our difference lies not in what we want; we all agree about that. Our difference is one of judgment on how to achieve it. We are also agreed on the need for measures to ease the pain of those afflicted by unemployment. This is not the time to list the programme of special measures. It is sufficient to say that its cost of £1 billion this year and over £1·5 billion in 1982–83 will help 700,000 people a year, and, with the introduction of my vocational training scheme, even more in later years.

We have had to decide our priorities in the programme. Our first priority is centred on the young where the problem is at its worst. It is generally accepted that the worst unemployment is among the young, particularly the unskilled and poorly qualified young. Unemployment rates have also been rising faster among ethnic minorities than for the labour force generally. Clearly the worst affected are those in whom all the disadvantages are concentrated. If one is a young school leaver with poor academic qualifications, no vocational qualifications and living in an area of high unemployment, then being black and perhaps having a poor command of English are the last extra attributes one needs to find a job. Just as these groups are disproportionately affected, so the Government's special employment measures are helping such groups disproportionately. That is not discriminatory; it is a response to need.

It might be wise to question why unemployment rates among the ethnic minorites are disproportionately high. I have no intention of entering the debate on what part of the disadvantages of ethnic minority groups arises from unchangeable heredity and what part from changeable environment. I know not whether it is inevitable that the Jewish minority will continue to provide more than its statistical share of musicians, scientists and other talented people. I am just glad that we enjoy the advantage of their presence. I know not whether it is a matter of heredity that causes Asian shopkeepers to open their shops earlier and to close them later than many others. I am glad that there are more shops open for longer hours than there used to be, and I hope that no one suggests that the Asian community should be re-educated out of their habits. Nor do I know whether it is heredity or environment that produces more black fast bowlers than white ones.

What I know is that ethnic minorities suffer disadvantages in finding employment. Some of those disadvantages stem from the problems of communication and cultural unfamiliarity which beset any immigrant communities and worsen their chances of employment. But if that were all the problem, time would help to overcome it.

Apart from any basic cultural or other differences which will simply not go away, there is another aspect. I have no doubt that there is an element, though hard to quantify, of discrimination, not on fair and proper grounds of talent, suitability and qualification but on the unfair ground of mere prejudice. In Britain we have no need to torture ourselves in the belief that ours is a uniquely discriminatory society. We of European stock have no need to torture ourselves with guilt in the belief that it is only white people who are prejudiced or who discriminate on grounds of race, whichever way one likes to put it. [Interruption.] The hon. Member for Workington (Mr. Campbell-Savours) has a problem. This matter concerns the problems of high unemployment amongst ethnic minorities. I know that he wants to take advantage of the troubles that spring from it, but I want to do something to help to avoid such problems.

Our society is not free from prejudice and discrimination, but there are very few others with any right to criticise us for our ways without dealing with their own failures first. But our failings show up in employment, as in other aspects of society. We must ensure that there are no bars to the development of the talents of all citizens and that we discriminate only in favour of merit, ability, hard work and skill. I suspect that employers may find it helpful to have some broad guidance on what is expected of them to become what the Americans call "equal opportunity" employers, but I am certain that it would not help to adopt a bossy, bureaucratic system in an attempt to induce a sense of guilt unless some quota or norm of black, brown, white or yellow faces can be counted in the firm. That could all too easily do more harm than good. It could do nothing more, perhaps, than highlight and intensify resentments and create a backlash rather than to relieve them, and deepen divisions rather than bridge them. The aim must be to encourage not racial consciousness but colour blindness in employment.

No. I hope that the hon. Gentleman will excuse me.

I return to the main thrust of our debate today and those that have gone before. The debate on the recent censure motion and the earlier stages of the debate on the Gracious Speech have given ample opportunity to the official Opposition—and, to be fair, they have taken it—to demonstrate that they have learnt nothing from their time in office, nothing from the winter of discontent, and nothing from their defeat, and that they have nothing new to say and no credible alternative to the Government's strategy.

Perhaps that is not quite fair. The Leader of the Opposition, when in Government, favoured the modernisation of Polaris, but he is now a unilateral disarmer again. But that is about all that he has learnt. That, and prejudiced hostility, apart, all that he and his colleagues have had to say has amounted to backsliding from what needs to be done to match and beat our competitors in winning customers, customers who are the only true sources of jobs. The Opposition, like everyone else, know that we have been losing ground against our competitors for years.

That has been so whilst we have been in office, as well as whilst office has been held by another party. The Opposition know that both inflation and unemployment have been on a rising trend for years. They know that our industrial relations law and practice needed fundamental reform. They knew it when they destroyed Barbara Castle's proposals in "In Place of Strife", and they paid for that in the strife of the winter of discontent.

If the Opposition want to destroy their party in continued unreasoning and unreasoned opposition to the reform of the law, that is their affair; but I see no reason why they should destroy the prospects of economic recovery as they do so.

The right hon. Member for Chesterfield (Mr. Varley) has today his chance to offer constructive suggestions and to tell us how he would hold back wages to what the economy can afford. He had better not exhume poor old Solomon Binding again. The right hon. Gentleman has the chance to say how he would create new jobs before reducing our labour costs relative to those of our competitors. He has the chance to offer something more than the mere windbaggery of non-inflationary expenditure that can be incurred without taxation or borrowing that can be accomplished without paying interest. If his only message is the same old Walt Disney refrain that we have heard before—"wishing will make it so"—he will have established yet again that there is no credible alternative to the Government's policies.

4.15 pm

The new Secretary of State for Employment has managed effortlessly to give the same pleasing impression to the House today that he has given for the last 11 years. Having been given one of the most important responsibilities of the present Government—the assignment of dealing with probably the most difficult and intractable problem facing the British nation—he seems to be capable only of behaving, as we expected, like a street corner thug. His appointment is an insult to the unemployed. It is like appointing Dracula to treat a patient suffering from acute anaemia.

The right hon. Gentleman spoke for about 35 minutes, during which time we heard nothing of what he will do to help the unemployed. His only positive suggestion seems to be the one that he made in that notorious speech at Blackpool, when he started the tour of Britain cycle race. The debate on this Queen's Speech should be an occasion when he of all people and Tories in general ought to be at their most self-conscious about unemployment and the record of unemployment which has been created under the present Government.

Just before the Queen's Speech Of May 1979, the country was littered with hypocritical posters showing queues of young Conservatives pretending to be unemployed. The right hon. Gentleman and his right hon. and hon. Friends gave the impression, before the May 1979 general election, that unemployment under the Labour Government was intolerable and that the Conservatives would put it right. I agree that unemployment when the Labour Government were in power was at an unacceptable level, even though in May 1979 the figure was the lowest for three years. During the 12 months before May 1979, unemployment fell in every month. At the time of the first Queen's Speech under this Government, unemployment stood at 1,299,000 or 5·4 per cent. By the time of the second Queen's Speech, in November last year, unemployment had risen by nearly 900,000 to 2,163,000, or 8·9 per cent. The latest figure, for October this year, of 2,989,000—12·4 per cent—represents an increase of 826,000 over the figure at the time of last year's Queen's Speech, and nearly 1,600,000 more than when the present Government came into office.

We all know that last month's figure would have gone over the 3 million mark but for the record number of people who joined the youth opportunities programme—the programme that the Prime Minister, when in Opposition, used to talk about in such disparaging terms when she said that the jobs were not proper jobs.

Parallel with the rise in unemployment has been the fall in total employment. When the Labour Party left office in May 1979, the number of unemployed was unacceptable. Even so, more people were in work than when we took office five years earlier.

A rise in unemployment is not necessarily accompanied by a fall in the number of those employed, although under the Conservative Government it is. In Britain employment has fallen by 1·7 million in the two years to June 1981. In the first half of 1981 the fall has been 583,000. In manufacturing industry, which has borne the brunt of unemployment, employment has fallen by nearly 1,200,000 in the two years to June 1981. That is a catastrophic reduction of 16·5 per cent. In the textile industry the fall has been 23 per cent., and in the metal industry, 29 per cent.

Although all parts of Britain have suffered, the unique achievement of the Government is that the worst blows have been inflicted on the region that used to be the most prosperous—the West Midlands. In the first two years of this Government, employment in that region fell by 10·5 per cent.

The starting date of June 1979 is no accident. That was the date of the Government's first blundering Budget, which forced interest rates up to the then record level of 17 per cent. —a figure that the Government tried to disguise by abolishing the minimum lending rate. That seems to be the approach today. If they cannot solve the problem, they fiddle the statistics or abolish the indicators. The intolerable increase in unemployment and the devastating reduction in employment are the human manifestations of the Government's uniquely unsuccessful economic and industrial policies.

The Secretary of State mentioned British Leyland. Of course, if British Leyland had gone under, many more jobs would have been lost in the West Midlands, as well as in many other parts of hard-hit Britain. The Prime Minister recognised that fact when she opened the debate last Wednesday. She referred with satisfaction to the fact that British Leyland was back at work. She commented on what she called the solid progress that had been made at BL in recent years and pointed out that 200,000 jobs were at stake in BL and connected companies.

If the Secretary of State had his way, that solid progress would not have been made, because those jobs would have disappeared long ago. When the previous Government asked the House in 1975 for authority for financial assistance to save British Leyland, the right hon. Gentleman was one of a number of Conservative Back Benchers who defied his Whips and voted against assistance. He also made a characteristically unpleasant intervention in the debate when he argued that his constituents' money should not be put into British Leyland. If he had had his way, there would be no BL now for the Prime Minister to praise.

As the Labour Government appointed Mr. Edwardes, as he then was, do the Opposition support him in the views that he expressed recently?

Mr. Michael Edwardes, as he then was, was appointed—to the delight of the Government and Government services—by my right hon. Friend the Member for Bristol, South-East (Mr. Benn) to the National Enterprise Board.

I am coming to it, if the hon. Gentleman will be patient.

Mr. Michael Edwardes was a member of the National Enterprise Board, and he was appointed by the board as chairman of BL. He had the complete support of the board, and my right hon. Friend the then Prime Minister and I gladly endorsed the appointment. I am delighted at the progress that has been made. But the hon. Gentleman should bear in mind that there would be no BL to praise if the Secretary of State had had his way.

If the right hon. Gentleman were a little more open about the matter, he would admit that the objection was not to aiding BL. The objection was that the plan that the Government were attempting to implement was incapable of saving BL. The current plan is capable of saving BL.

While the right hon. Gentleman is speaking about the motor industry, perhaps he would tell us, just for luck, whether he believes that overmanning—it requires twice as many men to make a car in Britain as it does in Germany—has anything to do with unemployment in Britain.

The Secretary of State is wriggling his way out of the question. If he had had his way, there would be no indigenous motor car company today. He would have abolished it. No lame explanation from the Dispatch Box can hide that fact.

When my right hon. Friend the Leader of the Opposition suggested that we should deal with unemployment by increasing investment and output, he was criticised for allegedly being unrealistic, yet the sums that we suggested to help to solve the problem are as nothing compared with the financial loss caused by the Government's policies.

The loss of output in 1981 is equivalent to £25,000 million, which is no less than 10 per cent. of the national income. That is what the inflexibility of the Government has cost Britain this year alone. It is wealth that can never be retrieved, but it would have made the nation rich, even if we did not possess a drop of North Sea oil. Output in manufacturing has fallen by 17·5 per cent. since 1979. The Government, who promised to cut expenditure and taxation, are instead increasing expenditure and taxation to pay for mass unemployment, which is the direct outcome of their policies.

It is encouraging to hear a figure from the Opposition. The right hon. Gentleman quoted £25 billion as output lost. Where would that output be sold? Does he accept that we must buy our way into jobs and that it is no good producing £25 billion worth of goods if we cannot find people to buy them?

If we trace the history of the Government, we find that nearly every economic and industrial decision that they have taken since May 1979 has been an attack on jobs, markets and investment. All the figures now point to that fact. The dole queues, the fall in output, the rise in taxation and central Government expenditure, the attack on living standards and the increasing squalor of our social services are the sacrifices heaped on the altar of what the Government insist is the principal and paramount objective—the fight against inflation. However, two and a half years after the Government came to office, inflation is still higher than it was when the right hon. Lady walked into Downing Street.

I am sorry that the Prime Minister is not here today. I wished to ask her when inflation will come down to the figure that she inherited on 4 May 1979. If the right hon. Gentleman wishes to answer that question, I shall give way to him now. It will be a long time before that happens.

It is no good blaming inflation on pay rises, as the right hon. Gentleman did. No one bears a greater responsibility than hon. Members on the Government Benches for sabotaging the attempt of the previous Labour Government to achieve a rational approach to pay. The pay arrangements across the economy have never been more diverse or chaotic.

The Government have three pay policies. First, in private manufacturing some managements believe that they have the upper hand. In the main, if workers have had to choose between pay increases and losing their jobs, they have so far voted to work. Secondly, in the public service sector the Government have set an arbitrary percentage norm and they are prepared to face considerable disruption in their day-to-day administrative functions and tax-gathering arrangements and to politicise the Civil Service. The third policy is in the public trading sector-electricity supply, water, coal and gas. There the Government adopt the cynical stance of paying what is necessary to avoid trouble. Their pay policy consists of fear, diktat and cynicism-and mass unemployment. That is not a sensible pay policy. It is no way to run pay negotiations or to manage our complex economy.

The Financial Weekly, owned by Trafalgar House, broadly supports the Government. In an article the other day headed "The Thatcher disaster" it stated:
"Mrs. Thatcher was not elected to create prosperity (if it comes) … through the whip of unemployment … She and her Chancellor have miserably failed. And to blame that failure on the world recession is a cruel untruth … What a price we have paid. An industrial machine slowly rusting away."
The Secretary of State has not told us how he is tackling the problems that the nation faces, but he is to launch an irrelevant diversion against the trade unions. The Government believe that, because of record unemployment, they can disregard the views of the trade union movement. If the Secretary of State hopes to achieve the tiniest success, he should know one thing. The day will come when he will need the co-operation of the organised trade union movement, just as much as any previous Government, Conservative or Labour. He will look for it in vain if he insists on kicking the trade unions in the teeth.

How did the right hon. Gentleman achieve that co-operation in the winter of 1978–79 when he needed it?

Although the right hon. Gentleman did not like it and tried to undermine it, for most of the time there was co-operation. At the end of the period of cooperation with the trade union movement, inflation was in single figures, productivity and investment were rising and we had growth in the economy. Nothing like that will happen under this Government. The right hon. Gentleman, who is abrasive and wishes to kick the trade unions in the teeth, would do better to listen to the right hon. and learned Member for Hexham (Mr. Rippon) who stated:

"Any Prime Minister who seeks to act as the leader of the nation rather than of a party must always try to seek the widest possible consensus of opinion. That was why Sir Winston Churchill in 1951–1955 had a great final period of office. He always sought to win the support of trade union leaders on the broad issues of national importance."—[Official Report, 4 November 1981; Vol. 12, c. 43.]
The legislation on which Parliament will be asked to spend so much time will not create one extra job, although it may provide extra work for the lawyers. As I said during the passage of the legislation in the previous Session, when a Conservative Government introduce industrial relations legislation, whoever else loses out, the lawyers always win. From the leaks that we have had from the Department, it appears that the legislation will not solve one industrial dispute. Not one dispute in the past few years would have been made easier by the proposals.

Before the right hon. Gentleman commits himself to the legislation, he should study the results of the Tory Industrial Relations Act 1971. Far from improving industrial relations, it made them worse. It provoked strikes. Its only achievement was to bring overnight celebrity to that obscure functionary, the Official Solicitor. The architect of that folly, the then Solicitor-General, is now Chancellor of the Exchequer. There is no future in the right hon. Gentleman visiting the scene of his right hon. and learned Friend's crime. The futility of the legislation already carried by the Government was shown in the BL dispute last week. The picketing provisions were a complete failure.

By provoking the trade unions with the proposed legislation, the Secretary of State will drive them on to the streets when he should invite them into the conference room—not just when they request it, as this afternoon, but again and again—to talk about the problem of unemployment.

Does the right hon. Gentleman believe that there should be no change in the law regarding trade unions? As the picketing legislation was not a success last week and flying pickets were present from the Socialist Workers Party, should we not reconsider the law on picketing? The shop stewards voted massively to stop BL returning to work, but the men showed next day that they wanted to go back to work. Is that not also a basis to reconsider the law?

I do not know what practical experience the hon. Gentleman has of picket lines. My message is that if the Secretary of State wishes to introduce Draconian anti-trade union legislation, with their majority, the Government can do so, but it will break in the right hon. Gentleman's hand, just as the previous legislation did. Dockers were gaoled and then released. The right hon. Gentleman should instead invite the trade unions into the conference room.

That is not only our view, although the right hon. Gentleman suggests that our caution is unique. The CBI expressed concern at its conference. Mr. Roland Long, industrial relations manager for International Harvester and a regional CBI council member in the North stated on the radio last week that there should not be further legislation on the closed shop. He said:
"In the vast majority of companies where the closed shop does exist, it exists without the slightest bit of aggravation. And certainly most companies have built into closed shop agreements, very adequate safeguards for those who have reservations about trade union membership".
That is not what the Opposition say. Those are the words of a very experienced industrial relations director of a large company.

However, it is not only trade union reform or anti-trade union legislation on which the Secretary of State should be inviting the trade union's views. He should also be inviting the trade unions into the conference room to discuss the catastrophic decline in the level and quality of industrial training.

On Wednesday, the Prime Minister said:
"we see British industry slowly but inexorably improving".—[Official Report, 4 November 1981; Vol. 12, c. 22.]
I wish that were so, in view of the statistics that I have given.

Two main factors will contribute to a permanent improvement in Britain's industrial competitiveness—first, an increase in manufacturing investment, the quality of that investment and what is obtained from it, and secondly, having a highly trained and skilled work force. On both those counts the Government have lamentably failed. Investment in United Kingdom manufacturing industry has dropped by an astonishing 18½ per cent. since the end of 1979 after a steady increase in the three previous years. We now have the most terrifying evidence that the number of apprenticeships is beginning to decline.

In the engineering industry, where we have experienced the most severe skills shortages at the end of every other recession—none of which has been as bad or as deep as the present slump—craft and technical recruits are at the lowest level ever recorded. Companies have recruited fewer than 12,000 apprentices. Although an additional 4,000 places have been funded by the Engineering Industry Training Board, it is estimated that there should have been at least 20,000 new apprentices this year to meet the engineering industry's future manpower needs. It is the same sorry story in other key sectors of the economy.

The number of apprentices recruited in road transport in 1980–81 was 60,359—only half the 1979–80 total. The road transport industry has estimated that the decline will go even further next year. I have a letter, which was sent to my hon. Friend the Member for West Lothian (Mr. Dalyell) by the staff at the Road Transport Industry Training Board in Livingston. That letter refers to low morale, pleads that experience and equipment in Livingston should not be abandoned and dispersed and says that everybody should pay tribute to what the training boards are doing. I do not know what the Secretary of State for Employment intends to do about that. I do not think that he can afford to abolish training organisations such as that in my hon. Friend's constituency.

The decline is apparent not only in engineering and road transport, but in the construction and printing industries. I have received the most pitiful letters from constituents whose children cannot get apprenticeship training. I expect that many hon. Members have received similar letters.

The Prime Minister made a great deal about the recent increase in the number of young people who have joined the youth opportunities programme. I shall continue to support that scheme, because there is at present no alternative.

Are the Prime Minister and the Secretary of Slate for Employment aware of the deep disillusionment now felt by young people about the youth opportunities scheme? First, the allowance has been frozen at £23·50 since the scheme's inception. An increase to restore the scheme to its original purchasing power is urgent. Secondly, when the programme was first introduced by a Labour Government, 70 per cent. of the participants obtained permanent jobs. However, the figure is now about 30 per cent. That figure and the placings will deteriorate further.

It is well to remember that a quarter of a million school leavers are without jobs, youth opportunities or work experience places and that they are still in the dole queue.

It is against that background of a falling number of apprentices, future skills shortages and the demoralisation of the young that the Government have plunged the industrial training boards into great uncertainty.

I shall not give way. I apologise to the hon. and learned Gentleman.

In the last Session, the Government took powers which caused great confusion and chaos in our training arrangements. The Secretary of State for Employment can now unilaterally abolish the industrial training hoards, override any recommendations of the Manpower Services Commission, change the rules governing the boards and place more power in employer's hands. That has been done in the name of voluntarism, and it could not have been done at a worse time in our history. It means returning to a largely voluntary arrangement—a system which, incidentally, failed for 20 years after the war until training was put on a statutory basis by a Tory Government.

There are enormous manpower implications if we are to accomplish the economic reconstruction that the nation requires and to harness technical change. Our nation and the structure of our training arrangements are being put at risk by Tory dogma.

The industrial training boards have represented an assurance of sound training for millions of workers. The threat hanging over such boards has caused skilled instructors to leave schemes and confidence to ebb away. The Opposition's views on industrial training boards have always been consistent. We believe in a strong and adequately financed statutory training system. If the boards do not match up to the changes in industrial techniques or practices, then certainly we should restructure them; but to abolish them and to leave everything to volunteers is crazy and flies in the face of all the international evidence.

We condemn the Government on all those issues. Every economic commentator predicts that unemployment will continue to rise to 3 or 4 million. In other words, 3 or 4 million of our fellow citizens will continue to suffer the indignity, misery and degradation of being without proper jobs.

The Government's proposed anti-trade union laws will damage industrial relations and undermine the authority of sensible trade union leaders. At a time of unparalleled technological change, our training provisions have been plunged into doubt and despair.

The Secretary of State for Employment has been given a great opportunity. It is for him to decide what mark he wishes to leave on his Department. Will he continue, as he began, with that repulsive speech at Blackpool, when he insulted 3 million unemployed? Will he behave like a bovver boy, determined to go down the blind alley and impose irrelevant and provocative legislation on trade unions? Is his symbol of office to be the knuckle duster of the political mugger? The Opposition expect nothing more from him. He will not surprise us if he does that.

However, the Secretary of State holds the high office which was previously occupied by Tory conciliators such as Sir Walter Monckton and lain Macleod. By seeking to bring conciliation and consensus to industrial relations and by devoting time to providing work for the unemployed and training for those who need it—especially school leavers who are in desperate despair—the right hon. Gentleman would be fulfilling our needs. He will be judged not only by the House, but by the country.

4.48 pm

The right hon. Member for Chesterfield (Mr. Varley) has given a display of indignation, no doubt genuine, which would have been a good deal more telling if his own Labour Government had been more successful in the field either of unemployment or of trade union legislation.

It is nice to have the hon. Member for Erith and Crayford (Mr. Wellbeloved) with us. However, it is surely a matter of some surprise that when we are debating what my right hon. Friend the Secretary of State rightly called the "dominant question of politics today" he should be the only representative of the Social Democratic Party and that the Liberal Party should be entirely absent.

The entire House deplores the present level of unemployment and, therefore, I will take that as read. I take the admirable remark of my right hon. Friend the Prime Minister in the censure debate a fortnight ago as the basis of what I have to say. The Prime Minister said that she thought that the Government were right to be flexible within the limits of prudence. We can all welcome that. But we would all agree that it is important to be flexible and prudent out of a conscious choice and deliberate strategy. However, for policy objectives to be brushed aside by the force of events and then to label the difference between what was meant to happen and what actually did happen as "flexibility" might be politically astute but it is not economically prudent.

The results of the Government's policy so far are not in dispute. We know that unemployment has reached 2¾ million. Recently the rate of increase has shown some signs of increased acceleration. Output has fallen more than at any time since the 1930s, the number of bankruptcies and closures is unprecedentedly high, and price inflation is still higher than at the time of the general election.

In view of those dire results and everybody's revulsion from unemployment, the prudent and flexible thing to do, unless there are overwhelming arguments to the contrary, would be to make the present policy less contractionary in order to help employment and other things too.

What are the arguments against a less contractionary or more expansionary policy? There are four and I should like to examine each in turn. If they are valid, prudence dictates that the present policies should continue. If not, prudence demands that they should be changed.

The first argument was deployed by my right hon. Friend the Secretary of State when he pointed out that unemployment and the recession are not confined to this country. Of course that is true. It is happening all over the world, but that does not explain or justify why the recession here is so much worse than it is in most places abroad. The fact that we are self-sufficient in oil ought to make our position relatively better, not worse.

The second argument is the claim that there is no deficiency of aggregate demand. It is pointed out that national income in money terms rose by 15 per cent. In the Government's first year of office and has probably risen by about 10 per cent. a year since then. In what sense therefore, it is asked, can fiscal policy be said to be disinflationary? The answer is simple. The rise in prices has been substantially faster than the rise in money national income. Therefore, in real terms, income and output have fallen.

The private sector is not responsible for that. It is clear that the Government's fiscal and monetary policies have themselves helped prices to rise so fast. In the year ending May 1981 the retail price index rose by 11¾ per cent. Prices charged by the private sector rose by less than 8 per cent., prices charged by nationalised industries rose by 22 per cent., rates rose by 41 per cent. and rents by no less than 43 per cent.

It is the Government who, in their desperate attempt to keep down public sector borrowing, have caused prices to rise so much faster than incomes. In doing so, they have caused real expenditure and output to fall and, far from causing inflation to diminish, they have persistently counteracted the reductions in inflation that have been painfully bought from the private sector. In other words, the benefits of lower wage settlements have been partly offset by the Government's allegedly counter-inflationary strategy.

The third argument against a change in the present policies is against reflation in general. Any mention of reflation is met in some quarters with the Orwellian incantation "Harsh policies good, reflation bad." Reflation is held to mean a burst of inflation.

That needs a little examination. To begin with, as I have shown, the present policies have not been notably successful in dealing with inflation. Despite that, any proposal for expansion or a measure of reflation is still met with the contention that is has all been tried before, it has never worked, and all previous policies were disastrous.

That response involves a rewriting of history on a positively Stalinist scale. The myths about the full employment era are legion and I do not have time to refute them today, but it is worth remembering that by most criteria the performance of the British economy in the past two years has been either much worse or not much better than in the rest of the post-war period. Even on the Government's overriding objective—the control of inflation—the performance has hardly been better than it was during that much-derided decade of 1969 to 1979.

In any case, to treat any form of expansion or reflation by Government action as inherently wrong and inflationary is surely unreasonable. Certainly the confetti programme of public spending put forward by the Leader of the Opposition would lead to an explosion of inflation and it is hard to believe that he really takes it seriously. But he must not be allowed to discredit all sensible programmes for reflation, merely because he offers us one which is grotesque.

We must try to distinguish. What matters crucially is what sort of reflation is proposed, how much, its effect on costs and on the supply side of the economy, whether it would come up against bottlenecks and so on. A blanket opposition to the use of fiscal policy and public spending to promote selective and moderate expansion does not make sense.

After all, the present level of deflation is not exactly god-given—far from it. It is Treasury-given and some of it, I suspect, given by mistake. We have been landed with it because of the Treasury's fixation with textbook intermediate targets such as the PSBR and M3. We should have been concentrating on the real objectives of economic policy, the things that matter to the people of this country—jobs, growth and prices.

To opt for continued deflation rather than reflation will not help to secure any of those proper economic objectives. It will merely make it more difficult to help the real economy.

I am interested to know how we can get continuing growth unless we produce goods that can be sold in the world market at world prices.

Everybody agrees with that. We are all in favour of it, but my hon. Friend will be aware that British exporters have faced certain difficulties in world markets in the past year or so.

The final argument deployed against a change of policy is that everything will come right under the present policy. At least, I think that that is the Government's argument. I am not sure. If the Treasury knows how real recovery is to be achieved it has kept very quiet about it. Indeed, to judge by the interesting speech of my right hon. Friend the Secretary of State, the Treasury has not told him.

Therefore, I agree strongly with my right hon. Friend the Member for Worthing (Mr. Higgins) who stressed in the recent censure debate that it was extremely important that my right hon. and learned Friend the Chancellor of the Exchequer should give us a clear explanation of why the Government believe that economic recovery will take place and when it will occur.

Any claim that existing policies are superior to alternatives must be based on the belief that things will get substantially better. It would be extremely helpful if the Chancellor would let us know by what agency, at what time and on what scale the recovery is supposed to occur.

Regrettably, there is no comfort to be gained from surveys of business opinion, whether by the Financial Times or the CBI. As the right hon. Member for Chesterfield said, nearly all the professional forecasters have also been full of gloom. It is simply not good enough for the Government just to ignore all that or to assert that the process of forecasting is inherently wrong-headed. Since there must be a rationale behind what the Government are doing, they must believe that some things, rather than others, will happen.

Some Ministers have been forecasting for almost a year that recovery is just round the corner. We all hope that they are right now, even though they were not right before, but until we are told just what that optimism was, and is, based on we are bound to remain a little sceptical. Indeed, I can find no reason to suppose that more of the same policies will not produce more of the same results, although I am happy to accept that the rate of decline characteristic of the first stage of recessions will not be repeated.

I appreciate that my right hon. Friend, like myself, is a practical man, with great experience of being close to the place where what actually affects the economy is carried on, and not just in these rarefied areas. I appreciate, too, that we can differ about whether a budget which spends £10 billion more than it takes in tax is inflationary or deflationary. These are subtle matters. However, I wonder whether he can tell me what makes him believe that a further expansion of demand at a time when, for example, a Ford car costs 15 per cent. more to produce here than in Germany, would do more good for British workers than for German workers.

If my right hon. Friend thinks that the only way we can run the economy is with 3 million unemployed—and rising—all I can say is that I do not agree. That seems to be what he is saying. Of course, we all want to improve productivity. We all agree, too, that productivity is deplorably low in many parts of British industry, but it is surely to approach the matter with a very blunt instrument, to wipe out large parts of industry and have 3 million unemployed.

It seems clear to me that, far from the arguments against a change of course being overwhelming, none of them stands up. Prudence, therefore, dictates that the present policies should be modified.

In a speech that I made in Blackpool I outlined a moderate programme to aid employment and industry without worsening inflation. Since then, I have obtained the results of a simulation on the Treasury model, which approximately quantify the consequences of such a package.

Briefly, my proposed package was the abolition of the national insurance surcharge in two stages, now and in the next Budget. The second proposal was the adoption of the special measures suggested by Professor Layard for reducing unemployment. These are that employers should receive a £70 a week subsidy for employing anyone who has been unemployed for more than six months and that any worker who has been unemployed for more that that time should have the right to be employed on a publicly supported project at a wage 20 per cent. higher than his benefit entitlement. That is estimated to produce about 500,000 jobs at a cost of about £1 billion. The third proposal relates to capital spending of at least £500 million. The fourth is the reduction of interest rates, and the fifth is joining the EMS. The gross cost of this package would be just over £5 billion, or about 2 per cent of the GDP.

For various technical reasons, it is not possible to simulate Professor Layard's proposals on the Treasury model, but it is possible to incorporate the consequences.

I am glad to say that the result proved extremely encouraging. Unemployment is reduced progressively by up to 650,000, output is raised, and retail prices are, if anything, lower not higher than they would otherwise be. The fact that the PSBR is slightly increased serves only to show what an irrelevant totem pole it is.

Incidentally, it is worthy of note that a much larger package than the one that I put forward, namely to take another £5 billion off industrial costs by reducing the employers' national insurance contributions by that amount has also been put through the Treasury model, and that has even more beneficial results on employment growth, investment and prices.

No doubt the Government will say that they do not believe the Treasury model. Indeed, they have no alternative to saying that if they want to stick to present policies. However, that will not be convincing unless we are told what the Treasury's own forecasting machinery is saying about the results of its own policies.

Thus, to my mind the evidence for the need to change course is massive and compelling. To alter policies in the way that I suggest would be prudent, and it would not be throwing away all that has been achieved. It would not mean that the heavy sacrifices of the past two years would have been made to no purpose.

There have been two important achievements. Wage settlements have been substantially reduced, as has overmanning. However, the benefits to be derived from that are still potential. The fall in wage inflation has not yet brought down price inflation, for the reasons that I gave earlier. The reduction in overmanning has not produced any exceptional rise in productivity. The rise in output per man-hour since 1979 is remarkable for a period of such severe recession, but it is not remarkable by historical standards. For instance, it has not exceeded the average rate of increase between 1970 and 1979.

The potential benefit, the rewards for the sacrifices made by the British people, can only become actual if the economy begins to expand. The policies that I propose—no doubt many hon. Members and many people outside the House can think of better packages, but something of the sort that I am proposing—are a way of cashing in on those hard-won achievements, not of throwing them away. Again, and finally, that is the path of prudence and flexibility, and I commend it to the Government.

5.7 pm

In some ways this debate is the precursor of Wednesday's debate. The central question that the right hon. Member for Chesham and Amersham (Sir I. Gilmour) has just put, and probably the most important question that he put, is one that must be conveyed to the Chancellor of the Exchequer because it represents the main division between us in the House, and not necessarily between the two sides: how and when is the recovery to take place? That is what the right hon. Gentleman asks, and that is the question that the people in the country are asking. The right hon. Gentleman is not alone. In Wednesday's debate, the Chancellor of the Exchequer, if he is to rally his own forces as well as giving hope to the country, should attempt an answer to the question which has been put by the right hon. Gentleman and which was formerly put by the right hon. Member for Worthing (Mr. Higgins).

I succeeded in catching your eye today, Mr. Speaker, because I believe that in some ways this debate is more important than Wednesday's debate in that today we are discussing employment. It is about the ends, what society is for. Wednesday's debate will be about the means.

Today we are facing a national emergency. I remind the House that it was only a little over a year ago that the Chancellor of the Exchequer forecast that unemployment for 1981 would be 1·8 Everyone knows that it is now touching 3 million. It was a mistake, a forecast error, of almost indescribable proportions.

I cannot understand the complacency with which the Secretary of State addressed us this afternoon. The Manpower Services Commission forecasts that next year 220,000 young people who leave school will go on the dole, that only one in three school leavers will find jobs. That is the estimate of the Manpower Services Commission. Is it true? [Interruption.] It is not my forecast, but that of the Manpower Services Commission. I want to ask the Secretary of State a perfectly fair question: is this the Government's estimate of what the situation is likely to be for school leavers during the next 12 months?

Can the right hon. Gentleman explain why the Opposition express so much surprise at the level of unemployment when, at the time that he was Prime Minister, a Labour Party committee forecast that by 1980 there would be 2½ million people unemployed? That was a very accurate forecast.

The basic underlying assumption of that forecast was that there would be no changes in policy. I do not intend to make a party political speech. I am not merely trying to score debating points. The situation is too serious for that.

It is said that by the end of 1983 over 1 million men and women will have been out of work for over 12 months. We never used to get these estimates when these matters were under the control of the Ministry of Labour. Now the Manpower Services Commission gives the figures. The Government must have a view about them. If policies are to continue unchanged, is it likely that the commission is correct in saying that in 1983 more than 1 million men and women in this country will have been out of work for over 12 months? If so, it is a national disgrace, and I tell the right hon. Member for Chesham and Amersham that that is what divides us. Many factors separate me from the right hon. Gentleman, but what unites us is our belief that it is intolerable to try to run the economy with 3 million unemployed and that the Government must make every effort to change it.

From the Secretary of State we heard a contemptible speech. It was the speech of a man who seemed more concerned to prevent Shirley Williams from winning Crosby than about how to reduce the level of unemployment.