asked the Secretary of State for Employment whether he is satisfied that the Government's measures for relieving unemployment are proving effective in the North Wales area.

I am satisfied that the various Government measures to alleviate the worst effects of unemployment have been of considerable benefit to North Wales. These measures were not, of course, designed to solve the problem of unemployment, which I recognise is still a matter of serious concern.

I am not at all satisfied with that answer. Is the hon. Gentleman aware that male unemployment in the Rhyl area has now reached 18·9 per cent. and that the Government's much publicised job creation programme, including the construction of advance factories, many of which now stand empty, is having no effect other than to impose additional tax burdens on private industry? Is he further aware that the result is that for every job created or saved by the Government, two or three jobs are lost in the private sector? Is not the whole programme a cruel hoax on the unemployed?

I agree about the seriousness of the figures. Throughout North Wales as a whole, unemployment was 11·4 per cent. last month. However, I do not agree that the measures have not had some effect. Job creation in North Wales has provided 210 jobs, the recruitment subsidy has provided 237 jobs and the temporary employment subsidy has saved 150 jobs. A total of 23 advance factories have been approved. Help under the Industry Act 1972 in Wales as a whole has saved or created 31,000 jobs. I do not believe that these are wasted measures. They are worth while and welcome.

Is my hon. Friend aware that whatever happens in North Wales badly affects Merseyside, where unemployment has just risen from 74,477 to 82,280—an increase of 7,803, representing an increase from 9·9 per cent. to 10·9 per cent. in one month? Is it not clear that the Government's measures are not adequate to deal with unemployment? May I draw to the attention of my right hon. Friend the Secretary of State for Employment the fact that it is no use just talking about the situation being deplorable; we know it is deplorable. Is my hon. Friend aware that we need some positive action by the Government to bring down unemployment, otherwise the Labour movement in this country will not stand for it much longer?

There is a later Question on unemployment on Merseyside. In my reply I did not pretend that the Government's measures had removed the fundamental underlying problems of unemployment, but the measures are unprecedented in their size and make a useful contribution to dealing with some of the worst effects, particularly among young people.

Is the hon. Gentleman aware that in the whole of Wales, the number of unemployed has increased by 13,208 in one month, to the scandalous total of 86,796, and that Wales still has the highest percentage unemployment of ail the regions and countries of this island, despite the heavy emigration from Wales? Is the hon. Gentleman not aware that these figures provide 86,796 good reasons why Wales must have an Assembly with economic and industrial powers of legislation?

It would be as well if I were not drawn into a devolution debate—a subject that has occupied the House during the past week. The figures in Wales are unacceptably high, but the result of regional policies has been that unemployment in Wales and other hard-pressed regions of the country has increased rather less than in the more prosperous regions, though I am not complacent about that.

asked the Secretary of State for Employment what effects on employment prospects he expects will flow from the establishment of the Scottish and Welsh Development Agencies and the National Enterprise Board.

asked the Secretary of State for Employment what effects on employment prospects he expects will flow from the establishment of the Scottish and Welsh Development Agencies and the National Enterprise Board.

The Scottish and Welsh Development Agencies and the National Enterprise Board are all charged with the provision, maintenance and safeguarding of employment in their respective spheres. I and my right hon. Friends are confident that their activities will make a significant contribution to strengthening the economy of the United Kingdom, with consequential improvements in employment prospects. The further extremely serious rise of 42,000 announced today in the seasonally adjusted level of unemployment, to a total, for the United Kingdom, of 1,205,000, makes this contribution the more urgent.

Does the right hon. Gentleman agree that these organisations will bring benefit, at best, in the long term and offer no comfort to the number of unemployed he has just announced—in particular, to the 162,000 unemployed in Scotland? Does he realise that as far as the House is concerned the stronger and stronger adjectives he uses each month, as the figures increase, are no substitute for a policy? As the Secretary of State for Scotland told us some time ago that he would resign if the figures reached 100,000, what new figure has to be reached before the right hon. Gentleman and the Secretary of State for Scotland both resign?

What is required to deal with the problem is a long-term policy, a short- to medium-term policy and an immediate policy. The long-term policy and, perhaps, the medium-term policy, can be greatly assisted by provisions under the National Enterprise Board. The short-term measures announced by the Government in September and prior to Christmas can have immediate effects that are of advantage. I fully appreciate the deep anxiety expressed by my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) and others on the earlier Question, but I believe that in the medium term what is required is a general expansion in the economy as soon as we are able to effect it. The sooner we can reach that stage the better.

Is the Secretary of State aware that he will be judged not by the kindness of the words he utters in the House but by results? The figure of 162,000 unemployed in Scotland is totally unacceptable to the people of Scotland. Does the right hon. Gentleman realise that it will be seen in Scotland that all the words we have heard in the last few days about the advantages of remaining in the United Kingdom, under centralised control of the economy, are totally irrelevant to Scotland's needs?

Of course, the figure for Scotland is a terrible one, but the same problem applies in many other parts of the United Kingdom, so it is not a solely Scottish problem. What we need are policies which are effective all over the United Kingdom, and not solely in one part.

Is my right hon. Friend aware that Socialists in Scotland are as appalled by the 1·4 million as they are by the 162,000? Will he confess that the Labour Cabinet is using unemployment as one method of managing a capitalist economy? Will he tell us how we can honour the Labour Party's pledge to shift the balance of wealth and power in favour of the working people when we are heading for a figure of 1·5 million unemployed?

I repudiate the statement by my hon. Friend that the Government are using unemployment as an instrument for controlling the economy. We wish to see effective measures taken to deal with unemployment. The direct measures that the Government have taken and the measures for dealing with inflation are designed to help deal with that problem.

Is the Secretary of State aware that no one in the House can any longer have confidence in the words he utters from the Dispatch Box? Time and again, when the monthly unemployment figures are announced, he expresses sorrow, but is he aware that his Government and his policy are totally responsible for what has happened? Does he realise that the public are now reaping the whirlwind of the Government's policy of allowing inflation to rip so as to win a General Election.

Unemployment on the appalling scale indicated by these figures applies not only in this country but in most of the Western world. Indeed, the disease in most of the other countries is even more virulent that it is here. It is nonsense for the right hon. Gentleman to say that the Labour Government are responsible for it. We are seeking to cure it.

Does my right hon. Friend accept that, whether it be in England, Northern Ireland, Scotland, or Wales, more and more people are becoming unemployed, and that if the buying power of the working people is reduced they cannot buy the commodities they used to buy, and so the people who pro-due those commodities are put out of work? That is why the accusation is made about using unemployment to restore the balance. Does my right hon. Friend realise that the answer is to begin to reflate the economy and impose properly organised import controls, and not to continue with the Conservative policy that is now being carried out by the Labour Government?

I do not accept what my hon. Friend said in the first part of his supplementary question. If we had not taken steps to control the rate of inflation a few months ago the danger of unemployment would be even worse that it is at present and the chance of reaching the moment when we would be able to reflate successfully would be further postponed. No one in the House is more eager than I am to reach the point when we shall be able to reflate successfully and so deal with the fundamental problem.

asked the Secretary of State for Employment by what percentage the training board exemption limits for small businesses have been raised, on average in the last 12 months in those cases where exemption is defined by reference to the annual wages etc. paid.

I am informed by the Manpower Services Commission that comparison of the levy orders of industrial training boards that have operated an exemption scheme related to the emoluments of small firms for the past two years shows that the limit was raised by an average of l7·3 per cent. between the 1974 levy orders and the 1975 levy orders.

I think the Minister will agree that the figure he has given is considerably lower than the average increase in earnings over that period. That must mean that many small businesses have been driven by inflation into paying the levy on account of inflation and not on account of being able to benefit from the work of the training boards. In fixing future levy rates, will the hon. Gentleman ensure that exemptions for small businesses are adequate to take account of inflation?

I understand that the exemption policy of the individual industrial training boards is aimed at keeping the number of exempted firms the same, so that the scope of the board is stabilised. The level of earnings is only one factor that has to be taken into account in setting the exemption level to achieve that objective.

asked the Secretary of State for Employment how many industries in the public sector operate, or are planning to operate, closed shop agreements for new entrants.

My Department does not require employers to notify information about the terms of any collective agreements they may reach on union membership. However, I am aware of five industries in the public sector where it has been agreed, or where there are firm proposals for an agreement, that it should be a condition of employment for new recruits to some grades to join a union within a specific period.

Will the Secretary of State tell the House what are those five industries? With his long and honourable record as a libertarian, will he take this opportunity of acknowledging that it is a serious erosion of individual freedom to make it a pre-condition of employment that a person should join a trade union?

The five public sector industries in which it is known that closed shop agreements have been or are about to be introduced are mining—including the new agreement with clerical staff—British Rail, affecting staff below management grades, including professional, technical and research staff; British Gas, affecting manual workers; the electricity supply industry, affecting manual workers; and the Post Office, in which an agreement has yet to be concluded.

asked the Secretary of State for Employment whether he will now make a further statement on the current level of unemployment in the construction industry and on his Department's training and retraining programme for that industry.

In December there was a total of nearly 198,000 registered unemployed male construction workers, including the unskilled.

Does the Minister agree that there is an absolutely disgraceful level of unemployment among construction workers? In the light of the extremely serious figures from the Economic Development Committee for Building, showing a further fall in output for 1977, is it not the clear duty of the Minister's Department to insist that any further cuts in public expenditure should be on transfer payments, such as food subsidies, rather than on the construction programme?

Certainly I should not want to say anything that in any way minimised the seriousness of these figures. However, I am bound to say that it lies ill in the mouth of the hon. Gentleman to lecture the Government about the effects of possible public expenditure cuts when such cuts have been the consistent theme song of the Opposition and could only worsen the situation.

Does my hon. Friend recall that there have been constant calls from the Opposition for public expenditure cuts that would particularly hit the already disastrously high levels of unemployment in the construction industry? Moreover, does he recognise that projects such as hospitals in the North-West of England are being postponed or cancelled altogether because of proposed public expenditure cuts? In the interests of the unemployed in the construction industry, will my hon. Friend resist as much as he can any proposed public expenditure cuts, whether they be proposed by the Opposition or, indeed, from within the Cabinet?

I agree with my hon. Friend that constraints on public expenditure must be considered in the light of their effects on unemployment generally, and especially on unemployment in the construction industry.

asked the Secretary of State for Employment when he expects to present proposals for changing the obligations imposed on employers to employ disabled people.

asked the Secretary of State for Employment when he expects to announce his decision on whether to place a statutory obligation on employers to make available publicly information on the extent to which they are meeting their quota obligations concerning disabled workers.

I have nothing to add at this stage to the statement I made to the House on 10th December.—[Vol. 902, c. 459–68.]

Given that the quota system is to be retained for the time being, will my hon. Friend say which statutory provisions constitute an obstacle to more rigorous enforcement? What steps is he taking to remove such obstacles?

If my hon. Friend will look at the terms of the 1944 Act he will see that, for a start, there is no obligation on employers to provide the relevant information to my Department. The only way in which we can obtain the information that would inform us about an employer's compliance with the statutory quota is for our inspectors to make a physical visit. In view of the limited number of inspectors and the enormous number of establishments that would need to be visited, the idea of a constant and effective monitoring system just is not on.

Does my hon. Friend agree that there is some merit in the idea of making firms publicise their performance in respect of the quota system as the legal system seems to have failed to enforce the quota? Perhaps we can shame some firms, through publicity, into meeting their obligations. Will my hon. Friend consider placing an obligation on firms to publish their quota position in any job advertisement that they insert in the newspapers? Will he ask his right hon. and hon. Friends to set an example in this respect by ensuring that Government Departments and the nationalised industries publish their performance on a regular basis?

Dealing with my hon. Friend's specific suggestion about a possible obligation in respect of advertisements, clearly this would require legislation. Here again, I must refer to what I said to my hon. Friend the Member for Southampton, Test (Mr. Gould). Perhaps we should wait to see what is the experience of the Manpower Services Commission.

Could there not be a type of negative obligation, whereby a firm that did not employ its quota was obliged to inform the Minister, but one that did was not obliged to do so?

I must point out to the hon. Gentleman that, unfortunately, what he suggests would require a change in the legislation. The only way in which the information can be required from a company at present is by a physical visit. There is no obligation on a company to take the positive step of providing the information to us, and there would need to be a legislative change to require it to do so. However, there may be something in the hon. Gentleman's point. I shall certainly consider it.

asked the Secretary of State for Employment if he will pay an official visit to Immingham Docks.

I have, at present, no plans to do so.

Will the right hon. Gentleman reconsider his reply, in view of the fact that at present a serious dock strike is taking place in Immingham and Grimsby? If he cannot go there himself, will he send his friend, Mr. Jack Jones, to tell the pampered dockers that even they cannot have more than the £6 a week increase—that they cannot have that increase as well as an increase in the fallback arrangement?

I understand that unofficial strike action has been taken by some dockers concerning the pay dispute. However, I also understand that the independent Arbitration, Conciliation and Advisory Service is in touch with the situation. I am sure that it will do everything it can to try to get a satisfactory result.

If my right hon. Friend goes to Immingham Docks, will he take the opportunity to visit Goole Docks, which are further up the same estuary, where there is an excellent record of good industrial relations? Moreover, Goole has the added advantage of being close to the motorway network, and being the most inland port in the whole country.

That is the most agreeable invitation that I have received for some time.

Will the right hon. Gentleman tell us when we can expect the Second Reading of the Dock Work Regulation Bill? Will he also take into account that one of the causes of in- creased unemployment in Britain is lack of confidence caused by the introduction of measures like the Dock Work Regulation Bill, which everyone in industry regards as complete and utter nonsense, in terms of trying to solve a very difficult problem? Does he accept that the Opposition would co-operate if he would drop that Bill and introduce measures which would have a genuine effect in helping dockers without dislocating the rest of the country?

I entirely repudiate the suggestion that the operation of the Dock Labour Scheme has been responsible for any of the difficulties at Grimsby that have been raised in the right hon. Gentleman's question. However, I am glad to see that he is looking forward to the introduction of the Bill. We certainly have no intention whatever of dropping it. It will be brought before the House—HON. MEMBERS: "When?"] Very soon. Indeed, I am sure that hon. Gentlemen will be eager to discuss it. We must get it into operation soon, because I believe it will make a real contribution to industrial peace.

asked the Secretary of State for Employment what further measures he is taking to alleviate unemployment in Scotland.

Scotland is already benefiting from the measures announced on 24th September and 17th December 1975, which were designed to mitigate the worst effects of unemployment throughout Great Britain by helping up to 120,000 people obtain jobs which, otherwise, they would not have had. In addition, the whole of Scotland has development area or special development area status.

Is the Minister not aware that, in the light of today's unemployment figures, the Scottish people regard the Government's measures as a black farce? Regional development has been an almost total failure in Scotland. Does the Minister agree that the only way to bring Scottish unemployment levels down to the 1 per cent. and 2 per cent. of Norway, Sweden, Austria and Switzerland is to give the Scottish Assembly total control over trade and industry in Scotland and the Scottish Development Agency? Does he agree that the Scottish people, on their own, could do no worse in running their own affairs and economy than this House and London are doing for them?

I do not agree with the hon. Gentleman that by a wave of the wand the situation in Scotland could be immediately transformed to the situation in Norway and Switzerland. If he believes that, he is fooling himself. If he does not believe it, he is fooling the Scottish people whom he purports to represent. Regional policy has meant that unemployment in Scotland has risen less than in the United Kingdom. That measure has had a real and substantial effect on alleviating some of the worst aspects of unemployment.

Does my hon. Friend accept that others in Scotland, who are seriously concerned about unemployment, as opposed to those who are concerned with making cheap propaganda points, recognise that the problem that we have in Scotland is even worse in the North of England and the same as the North-West of England, and that it would be worsened were we to proceed with the mad policies of the Scottish National Party?

I agree that unemployment in Scotland is rather less than in the contiguous area of the North of England. That is why it is nonsense to suggest that because of some greater degree of devolution the economies would diverge in a much sharper way.

Will the hon. Gentleman bring the figure of 162,000 unemployed to the attention of the Secretary of State for Scotland, who, in Opposition, said that if the figure reached 100,000 the honourable course for a Secretary of State for Scotland to adopt would be to resign?

I hope that the hon. Gentleman will tell the House the degree of increased public expenditure in Scotland that he is prepared to support. To get the matter in perspective, the unemployment figures for this month are unacceptably high. However, I should point out that the rise in Scotland, on a seasonally adjusted basis, has been not 1·4 per cent., but 0·2 per cent. A large part of the rise is accounted for by those leaving school at the beginning of the Christmas holidays and students who registered as unemployed for the purpose of obtaining social security.

asked the Secretary of State for Employment if he will repeal the Agriculture (Lifting of Heavy Weights) Regulations 1959.

Following the transfer of responsibility for farm safety on 1st March next, these and all other related Regulations will come within the scope of the Health Safety Commission's systematic review of legislation provided for in Section 1(2) of the Health and Safety at Work etc. Act 1974.

Does my hon. Friend accept that the systematic review of the Health and Safety Commission tends to be somewhat dilatory? Does he also accept that these Regulations, which place an upper limit of 180 lb on the load that a manual worker may lift, are outdated and should be swept to one side? Does my hon. Friend agree that when such workers are injured when lifting these heavy weights the Regulations make the obtaining of compensation extremely difficult? Lastly, will he urge the Health and Safety Commission to get cracking on its review of the Regulations and bring them up to date in the light of current medical knowledge?

I reject my hon. Friend's suggestion that the Health and Safety Commission has been dilatory. On the contrary, in its short existence it has done a remarkable amount of very good work. I agree with my hon. Friend's criticism of the 180 lb maximum provided in the Regulations. I hope that the Health and Safety Commission will give early attention to the eventual amendment of those Regulations when the responsibility is transferred on 1st March. The responsibility has not yet been transferred. When it is, I hope that the Commission will look carefully at what my hon. Friend and I have said with a view to including this matter in its review at an early date.

Important though safety matters are, does the Minister agree that it is not so much the weight of sacks that should be worrying agricultural workers whose jobs are being lost every week as the burden of this Government's taxation upon the backs of their employers and themselves?

I think that the House appreciates and reflects how irrelevant and ill-judged that question is. I am sure that the whole House will deplore the fact that the hon. and learned Gentleman should make use of a serious Question, about a very serious issue affecting farm workers, as a peg on which to hang a cheap jibe.

asked the Secretary of State for Employment what is the present level of unemployment; how he anticipates the situation will develop; and what measures he proposes to replace the present pay policy in the light of this situation.

At January 1976 the seasonally adjusted rate of unemployment in Great Britain was 5·1 per cent. There is likely to be some further rise in the next few months, whatever developments may affect the situation and whatever measures are taken. No decisions have yet been taken about pay policy for the period after 31st July 1976. This is something that the Government will be discussing fully with the TUC and the CBI and others concerned in the coming months.

Is the Secretary of State aware that there is great concern on both sides of the House about unemployment? Is he also aware that there is concern about disagreements between Ministers about what should be done about pay from July onwards? Does he agree with the Chancellor of the Exchequer that pay increases should be fixed below the £6 limit from July onwards?

I acknowledge that there is grave concern in all parts of the House and the country about the scale of unemployment. Anyone who could not appreciate that fact would be a complete fool.

Is the Secretary of State aware that this is the third time that the Chancellor of the Exchequer's predictions on unemployment figures have been proved wrong? As unemployment in the West Midlands has now more than trebled, is almost the same as in Scotland, and is more than in the North-East and in Wales, will he at last take action to stop discrimination against the West Midlands?

I do not accept the right hon. Gentleman's figures. I do not accept that the Chancellor's predictions were necessarily incorrect. Having been to the West Midlands a week or two ago, I certainly acknowledge the seriousness of the unemployment problem there. There has been a comparative increase in relation to other parts of the country, compared with previous occasions. Trade unionists and others in the West Midlands made urgent representations to me about the situation, and I am in the course of discussing them with my right hon. Friend the Secretary of State for Industry. We shall be replying to those representations at an early date.

Does my right hon. Friend accept that he will not secure the agreement of workers on an extension of the pay limit or anything else unless there is a dramatic reduction in unemployment? Does he further accept that he will secure a dramatic reduction in unemployment in the short and medium term only if he introduces wide-ranging and effective import controls—an argument that is winning more influential supporters every day of the week?

I agree with the first part of my hon. Friend's proposition, namely, that if the Government are to secure a general understanding about pay policy, it is clear that unemployment and employment policies must be central features of it. That is what TUC representatives have told us in discussions, and I think they are absolutely correct.

Does the Secretary of State accept that when the present wages policy ceases on 31st July the Government will have to follow it with another kind of wages policy? Do they therefore accept the principle that there has to be a second stage of the wages policy? Whilst accepting that the Government have not yet arrived at a conclusion on what that policy should be, may I ask whether the right hon. Gentleman is able to give any indication of the Government's thinking on this matter? For example, do they accept that a percentage as opposed to a flat rate increase might be allowable?

All these different possibilities must be considered, but what we did on the previous occasion—I think that it was the right way to secure a pay policy—was not to make decisions in advance and say that that was what we demanded the TUC should accept. If we had done that, we should have had no agreement with the TUC. It is far better for us to have discussions with the TUC and the employers and others to see what is the best way of proceeding, and to reach agreement that way. The difference is that we did reach a voluntary agreement on this subject, and the way that we secured it is the best way to secure a further voluntary agreement.

Does my right hon. Friend agree that the present level of unemployment is a result of capitalist failures rather than Socialist failures, and that we need a little bit of Socialism among Labour Treasury Ministers at the moment? Does he further agree that it is no good saying that we want to reflate as soon as we can but that import controls cannot be introduced now to control the inflow of imports that would result from a reflation?

I agree with my hon. Friend that the crisis afflicting this country, along with other countries of the Western world, is a crisis of capitalism. It is a crisis of the dominant economic system that prevails in all those countries. In order to overcome the crisis we can take some short-term measures ourselves. We cannot ourselves take all the measures that we would like, because we are also governed by the constraints of our situation. We are governed by our balance of payments and by the price of oil. We are governed by all the legacies of right hon. and hon. Members opposite. Those factors have to be taken into account as well. Certainly, however, we wish to take, in this country, the maximum number of measures that we can to overcome the problem. Some of them are measures that we can take on our own; others we must take in co-operation with other countries.

What different language we are hearing from the Secretary of State today—[HON. MEMBERS: "Question."] Is it not a different language that the right hon. Gentleman talks now, compared to what he was saying before the last General Election? How can he equate his argument today, about wage restraint helping to deal with unemployment, with the policy, 18 months ago, of letting wages rip and contributing to the existing high levels of unemployment? Is the right hon. Gentleman not aware that with unemployment having more than doubled since he took office and with the unadjusted figures now topping the 1 million mark for the seventh month in succession, he has a worse record than any responsible Minister since Miss Margaret Bondfield, in the 1929–31 Government? That is sex equality; he has equalled her bad record.

If the hon. Member wishes to make a constructive contribution to the discussion, I suggest that he considers the position in other countries as well as here. He will then see the relevance of what I have said on previous occasions. What the Government have done, what I believe is absolutely essential for overcoming the worst economic crisis that the Western world has had to face since 1945, what we certainly have to secure, and what we promised in our manifestos, is to carry out our policies in concert with the trade union movement. [Interruption.] The yelling from Tory Members shows that they are jealous because they could never get the same kind of co-operation.

asked the Secretary of State for Employment if he is satisfied that the various measures introduced by the Government to alleviate unemployment are sufficiently flexible in their application to meet the requirements of rural areas.

Yes, Sir. Rural areas are making good use of the assistance on offer.

When will Department of Employment Ministers use their influence with the Chancellor to lift some of the taxation burdens placed on smaller businesses, which, after all, are the key units in rural areas? Why is it necessary for a company to have a minimum of 25 employees to be eligible to apply for the temporary employment subsidy?

We lowered the temporary employment subsidy figure from 50 to 25 on account of representations that we had received from rural areas—not least from Cornwall. The figure of 25 has been chosen as one that can be dealt with without overstraining administration. Of course, we shall keep the matter under review. The other points in the hon. Members prepared question are matters for the Chancellor.

asked the Prime Minister if he will place in the Library a copy of his public speech, made in London on 10th December, concerning the need to put industrial and economic growth before expenditure on the social services.

I did so, Sir, on 11th December.

Does the right hon. Gentleman remember that in that speech he waxed lyrical about priority being given to enable everyone to have "a full share in society"? What is the full share that he has given, under his Socialist Government, to the extra 800,000 people who have been put out of work since he became Prime Minister?

I understand that my right hon. and hon. Friends have been answering questions on this matter for the last 45 minutes. Apart, of course, from factors like the 127,000 students, the whole House will regard the figures, as I do, as extremely grave and serious. They will recognise, as the whole world does, that this is happening in every advanced industrial country—as was said in the conference that I attended yesterday with my right hon. Friend. They will know that the steps that we are taking are the right ones to deal with this problem and that what is now happening began under the previous Government, before we came into office.

Does my right hon. Friend not understand that there is a feeling of deep sadness, much misgiving and a great deal of disillusionment, certainly on the Government side of the House, after hearing these very serious unemployment figures, since many of us believe that the Socialist case is going by default and that the arguments used in the Cabinet support those in the IMF, the finance houses and the Common Market who are denying this Government the opportunity of not only rebuilding our capital equipment but making resources available for restocking—which would go a long way to providing the necessary jobs that we are now talking about? Will he give an assurance that the Cabinet will give serious thought to the whole of the Socialist case for reflating the economy while doing nothing to damage the Government's policy for reducing inflation?

My hon. Friend's question does not arise, any more than did the previous one, from the speech referred to.

My question does.

That speech dealt with what this Government have done in the way of tremendous increases in the social services and the priorities that must be followed. I agree with my hon. Friend's reference to the sadness and determination that must be the reaction of all of us to figures that are hitting this country and every other advanced industrial country. I had the figures from the Chancellor of Germany and others yesterday. I do not agree with all that my hon. Friend said about his solution. It is the priority of this Government to increase investment and to resist pressure from the Tory Party for ill-considered expenditure cuts at this time, since they would greatly increase unemployment.

Is the Prime Minister aware that we agree that today's unemployment figures are staggeringly and unexpectedly high? Is he further aware that those figures are due to the failure of his Government to handle the nation's economic affairs and, particularly, to tackle the problem of inflation early enough? Judged by performance, which is the only test by which to judge any Government, the Labour Party has now become the natural party of unemployment.

I totally reject what the right hon. Lady has said. Inflation has been a world-wide phenomenon and its consequence has caused the biggest world-wide recession in the memory of most of us. It has hit every country in the world. If I had listened for one minute to the right hon. Lady's prescription about slashing cuts in the social services there would have been half a million more unemployed.

Is the Prime Minister aware that there are no alibis now? He is the head of a Government whose policies have resulted in the highest un- employment figures since the war. If he is not responsible, will he please sack whoever is?

I did, in the General Election of March 1974—with the help of a few million votes. The right hon. Lady, who dissociates only after she leaves a Government, knows that the expansion caused by the previous Conservative Government's vast inflation and printing of money had already come to an end in the spring of 1973—before oil price increases—and that we were already heading into slump when they went out of office, before the effect of those increases began to be felt.

asked the Prime Minister if he will elevate the Chief Secretary to the Treasury to Cabinet rank.

I refer the hon. Member to the reply that I gave to the hon. Member for Norfolk, South (Mr. MacGregor) on 15th January, Sir.

In view of today's unemployment figures, will the Prime Minister consider arranging a swap between the Chief Secretary and the Chancellor of the Exchequer and so clear out of his Cabinet those Ministers who are responsible for this deplorable situation? When he considers the unemployment figures that have been published today, will he arrange to be briefed by the Chief Secretary, who has repeatedly stressed that £1 spent on subsidies is £1 less for industrial investment and viable jobs?

I confess that I am in some difficulty, because last Thursday the hon. Gentleman, together with six of his hon. Friends, wanted the Chief Secretary sacked. Now he wants him promoted. I believe that the half-way state between the two is just about right.

Has my right hon. Friend the Prime Minister noticed the increased grounds for optimism about the performance of our economy in 1976—to which nearly every economic forecaster now subscribes—and notably about our prospects of achieving a single-figure rate of inflation by the end of the year, or even, as some believe, before the end of the year?

Yes. By this time we had hoped to receive some comments from the Opposition about the success of the Government's policy and the acceptance by the whole population of our proposals on inflation, which the Opposition did not dare vote against or for. We had hoped that we would receive some compliments from them about the fact that the balance of payments last year showed a deficit of less than half what it was the previous year, and very much less than it was in the Opposition's last year of office, before the rise in oil prices began to hit Britain.

Is it not time that the Prime Minister abandoned his arid argument of loose falsities and told the House what he intends to do about it? The right hon. Gentleman says that he wants to encourage investment in industry. How does he propose to do it? Does he intend to reduce taxation and to have more Government investment, or does he intend to go along with unemployment until the end of the decade and then blame someone else for it?

I am not in the slightest degree interested in placing responsibility on members of the Opposition, but occasionally when I am attacked I defend myself, which I am entitled to do, in my position. The hon. and learned Gentleman usually adopts a position of amiable neutrality on these matters, but it is quite clear that he missed all the economic debates, the statement of the Chancellor of the Exchequer about investment, the steps that he has already taken and—one of the most significant points—the considerable resources that he has placed at the disposal of particular industries for regeneration—a measure approved by the whole House—as well as the creation of the National Enterprise Board.

Will my right hon. Friend ask his right hon. Friend the Chief Secretary to consider the question of industrial perks to upper management, especially as they include such provisions as housing, entertainment, free insurance and interest-free loans? In particular, will he ask the Chief Secretary to look at apparent negligence by the Treasury, which was disclosed in two Parliamentary Answers to me in December? In reply to a Question from me, one Minister said that those perks were taxable, but another Minister said that the total number of people receiving these perks was not known. Is that not an unsatisfactory situation?

My hon. Friend will be aware that under successive Governments there has been a tightening up of tax laws in respect of income that is provided in different ways. A great deal of evidence has been adduced to show that this does not go far enough. These matters are continually considered by my right hon. Friend the Chancellor of the Exchequer, but I cannot at this stage anticipate my right hon. Friend's Budget Statement.

asked the Prime Minister when he proposes next to meet Heads of Government in the EEC.

I met some of my EEC colleagues at the meeting of European Social Democratic Parties that ended in Copenhagen yesterday, Sir. The next meeting of the European Council will probably take place in late February or early March. In the meantime, I shall be seeing the Federal German Chancellor on 7th February and the Netherlands Prime Minister on 16th February, on their visits to London.

When my right hon. Friend sees the German Chancellor will he discuss with him the possibility of reflating the European economies? This has been a keynote of Government policy over the past few months. Does he see any hopeful signs, and will he encourage our Continental neighbours to expand and reflate their economies?

When I opened the debate on this mater in Copenhagen yesterday I dealt with these questions in relation not only to Europe but to the United States, Japan, and so on, as was done at Rambouillet. The statement that we made has been issued to the Press and placed in the Library, and if my hon. Friend has any points to raise arising out of it perhaps he will table them to me as Questions.

Will the Prime Minister explain how it is that the country of which he is Prime Minister has, apart from the Irish Republic, the highest level of unemployment among the countries of the EEC? Is this not a cruel deception on the people whom he sought to persuade to vote for his party in February 1974 with the slogan

"Back to work with Labour"?

At the time of that General Election well over 2 million people were unemployed as a result of the then Conservative Government's confrontation. [Interruption.] There are not 4 million unemployed today. We discussed these matters in the EEC and again yesterday. This problem also hits advanced countries in the world. It hits this country particularly hard, because of the fact that for very long periods previously we have had totally inadequate industrial investment.

When next the Prime Minister meets the Heads of EEC Governments, will he undertake to raise with them the question of the common fisheries policy, in view of M. Lardinois' statement that it is not being renegotiated at present, which contradicts ministerial assurances given to the House?

Yes, Sir. The hon. Gentleman will be aware of the fact that my right hon. Friend the Minister of Agriculture, Fisheries and Food has been pressing this matter very hard in Europe. There is much progress still to be made. The hon. Gentleman will be aware that even though Iceland is not a member of the EEC, there is a particularly urgent problem affecting fisheries, on which there will be a statement later this afternoon.

When my right hon. Friend meets the Heads of Government of the EEC, will he discuss with them the great contribution that they are making to our very serious balance of payments problem? Is he aware that from the time when we entered the Common Market our balance of trade deficit with the rest of the EEC has grown year by year, until this year the deficit with the EEC is greater than the overall deficit? Will he discuss with the Heads of Government how they might take more of our goods and thus provide more employment for our people, as we are buying from them commodities at prices that are higher than those that we could obtain from other countries were we not in the Common Market?

My right hon. Friend, who always looks on the bright side of things, will have noticed from what I earlier that our overall balance of payments deficit last year was less than half what it was in the previous year. I think that that is a remarkable achievement. [Interruption.] Our balance of payments deficit last year was half of what is was the previous year, and less than it was when the Conservative Party was responsible, even though oil price rises had not then hit us. We have now a surplus on normal trade and we are covering part of the oil deficit. I am sure that my right hon. Friend will be delighted about that, and that he could not contemplate what the deficit would have been if the Conservative Party had been in power.

When the right hon. Gentleman discusses matters of employment with the Heads of Government of the EEC, how will he reconcile the statement that he made on 9th October 1974—that unemployment was falling—with the remarks that he made this afternoon, and presumably to EEC leaders, about the problems of unemployment and inflation being with us long before October 1974? Was it that he tells the truth now and told us something rather different during the General Election campaign?

What I said was that our vulnerability was greater than that of other countries because of what we had been left with by the Conservative Party. That is certainly true. During the period when our exports were improving, unemployment was holding fairly steady, but once the world depression arising from oil price rises hit the whole world, we were very vulnerable to it as a result of what we inherited.

Does my right hon. Friend recall the posters that were put up during the referendum campaign by the Common Market supporters— posters that said "Jobs for the boys"? Does that not look somewhat sick at this moment, when unemployment is growing at a much more rapid pace than we have known for a long time? Does my right hon. Friend agree that trying to seek solutions in the Common Market, or hiding behind the fact that the capitalist system in Western Europe is collapsing, is not the answer for a Socialist Government, who ought to begin to put into effect Socialist policies to deal with rapidly rising unemployment, beginning with import controls and the control of the export of capital abroad, and a general reflation to ensure that our people obtain employment?

My hon. Friend sometimes underrates the importance of this country as an exporter. He certainly underrates the achievements of this country in exports over the last year or two, when, for the first time, we have stopped the rot, in terms of the decline in world trade which our exports represent. I am not responsible for any posters that were put up during the referendum campaign. I did not put up a single poster. I made a number of speeches, and I stand by them. My hon. Friend suggests that the rise in unemployment coincided with the referendum result and the months afterwards, but he must sometimes ask himself—indeed, he used to do so at one time—what would have been the consequent unemployment if the referendum result had gone the other way.

What about these figures now?

In my view—[Interruption.] Sweden? When I discussed this with the Prime Minister of Sweden yesterday, he was able to point out—[Interruption.] I was asked about Sweden. The Swedish Prime Minister was able to point out that there is a very large—

Save the steel jobs.

thriving, high-priced market for Sweden's principal products—forestry products—timber, pulp and paper.

rose—

Order. I have a short statement to make to the House.