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Mr. Evennett : I always come to employment debates with some optimism, hoping that there will be constructive discussion from both sides of the House, but I am always disappointed and amazed at the over-emotional reactions from the Opposition. They seem to glory in unemployment, and they always try to ignore the constructive side and go for the negative.
Mr. Janman : I heard an Opposition Member say that this was the party of unemployment. Is my hon. Friend aware that all Labour Governments since the war have left office with unemployment higher than when they came in?
Mr. Evennett : My hon. Friend makes a good point. I should have thought that in a debate on a minor Bill it would have been constructive to look to the future rather than giving a history lesson on the past-- particularly when the Opposition's record in office was so bad.
In 1979, so much was wrong with the laws governing employment and industrial relations that much reform was required. Over the past decade we have seen piecemeal reforms in the areas where they were necessary. I welcome the Government's commitment to continuing that reform and to updating our employment laws, not in a doctrinaire way but practically and pragmatically. As society changes, the law must be reformed to meet or reflect that change ; that is as true in employment as in every other service. We have an obligation to reform the law so that unnecessary and outmoded provisions are removed, enterprise is able to flourish and the maximum unhindered opportunity is given to individuals.
In this day and age it cannot be right that our employment laws allow discrimination against women. In
Column 890the last 20 years the law has rightly been changed. It requires that generally there should be equality of treatment and opportunity for the sexes, apart from specific and necessary safeguards of the kind that one would expect in a decent and civilised society. Against such a background, I fully support the provisions in the Bill which aim to extend the general principles contained in the Sex Discrimination Act 1975 so that discriminatory provisions that have no valid purpose are overridden. That must be a logical and reasonable reform. It recognises the fact that in modern society women are not helpless victims in a Victorian melodrama, as certain Opposition Members would have us believe, and in need of patronising over-protection. It recognises that they are individuals capable of making rational choices and decisions for themselves. We believe that they should be given more opportunities to make decisions for themselves.
I am a firm believer in equal opportunities. It is not often that I welcome what the EEC Commission does. We have had many late-night debates on its deliberations. However, on this occasion I believe that the Commission's equal treatment directive is right. To widen freedom of choice for the individual is an obvious way in which to promote equal opportunities. By so doing, the House will do much more for equal opportunities than merely empty gestures. The Bill is practical and effective.
I mentioned earlier that it is very easy to be over-patronising towards the young. The Opposition Front Bench and some Opposition Back Benchers have been almost unbelievably so. The young must not be treated in that way. They represent our nation's future. They want and expect both opportunities and choice. They do not want to be smothered by outdated regulations and restrictions. There is a new spirit among the young people of this country. It has been fostered and encouraged by Government action during the past few years. Young people want to take up opportunities and challenges and go forward, and we must allow them to do so.
By their education and training reforms, the Government have done a great deal to ensure that young people are better equipped to deal with life and work in the adult world. All hon. Members listened with considerable distress and concern to the description by the hon. Member for Sheffield, Brightside (Mr. Blunkett) of that tragic case six years ago. We can always cite individual tragic cases and make them into something far more important, but we cannot legislate for the future of all our young people just because of one very tragic incident.
Mr. James Wallace (Orkney and Shetland) : The hon. Gentleman says that it is just one case, but he must have heard the intervention by the hon. Member for Coventry, South-East (Mr. Nellist) who said that since that tragic case there have been reports of 50 deaths on youth training schemes. Do not such tragic deaths require our serious attention?
Mr. Evennett : The hon. Gentleman misrepresents me. Of course every tragedy of this nature deserves serious consideration, but the Bill is attempting to provide young people with more opportunities. That is what they want and that is what they need. Furthermore, that is what the Bill will provide.
Column 891looked into accident levels on youth training schemes, there is no evidence that, however bad or good those levels may be, they are any worse than the accident levels that apply to the same age group who are in full employment? It is not, therefore, something that should be thrown at the door of YTS.
The reforms must be viewed in conjunction with the Government's major education reforms and the expansion of training opportunities as a comprehensive widening of freedom of choice for the young. Legislation that restricts the working hours and conditions of young people obviously had a very big part to play when the school-leaving age was lower, when there was greater dependence on heavy manual labour and when the young were less well prepared to deal with life in the adult world than they are today. The average 16-year-old today is far more mature than his or her predecessors ever were. I grew up in the 1960s. The 16-year-old today is far more mature than 16-year-olds in the 1960s. At that time the legislation had a clear and necessary role to play in preventing exploitation, but times have changed. We have to look to the future as well as to the present. The law must be reformed in line with those changes.
Modern working conditions in most sectors are far better. Today's young people are far more capable of standing on their own feet, developing their talents and taking the opportunities that are given to them. We must allow them to do that.
Mr. Flannery : The hon. Gentleman suggested that the Opposition wanted the legislation to be based on one case. As my hon. Friend the Member for Sheffield, Brightside (Mr. Blunkett) knows, I was in from the beginning on the case of Derek Cain. As soon as that tragedy occurred and was publicised, numerous cases from all over Britain were drawn to Mr. Cain's attention. They all related to young people who had been killed. The hon. Gentleman has just said that, at the age of 16, young people can stand better on their own feet than they could a short time ago. By that he implied that working practices are safer. However, under the youth training scheme, more and more cases are coming to light of young people being killed. It is not true that young people can stand better on their own feet as a result of this Government's measures. They are in great danger from this Government.
Mr. Evennett : The hon. Gentleman is fundamentally wrong. Modern training and education means that today the 16-year-old is better equipped to deal with life than he has ever been. My hon. Friend the Member for Cambridgeshire, South-East (Mr. Paice) said only a few minutes ago that the facts do not bear out that assertion. Small businesses have an important role to play in our economy. They have proved to be the way forward in many sectors of industry and commerce. Small businesses are efficient, dynamic enterprises that can respond rapidly to market changes. It is that flexibility of operation which
Column 892has made many small businesses extremely successful and which, in turn, has done a great deal for employment opportunities. Many enterprises in my constituency are small businesses and I often hear loud complaints from them about red tape and the need to remove unnecessary administrative burdens. In addition to the shortage of skilled staff and school leavers, administrative burdens are the other major bugbear of the small business. For large industrial companies, there is an obvious need for clearly understood disciplinary procedures to be applied. By their very nature, large companies tend to be impersonal. A formal disciplinary procedure often provides the only effective machinery for resolving the problems that relate to an individual's work performance. For a small employer, the situation is completely different. The existence of such a procedure is unlikely to be of benefit either to employer or to employee. We must not forget that small businesses are exactly that--they are small. The employer is often one person who combines the role of line manager and personnel officer and who also, more importantly, knows each employee individually. Formal rules serve little purpose because problems are invariably resolved informally. For small employers, the existence of a formal disciplinary procedure adds nothing, apart from additional administrative work and possibly increased solicitors' bills. I am not for one moment suggesting that all small business men are paragons of virtue, but such employers are unlikely to change their attitudes merely because of the existence of a formal disciplinary procedure. Small business men who treat their staff badly are subject to a far more effective system of control--market forces. A bad employer soon finds that his reputation means that he cannot recruit or retain high calibre staff. In small firms with under 20 employees, the loss of a few key personnel will often have a profound effect on profitability. In such circumstances, the existence of a formal disciplinary procedure has no useful place. For the majority of small business men who operate fairly and decently, it is another bureaucratic hurdle that is placed in their way. There are other areas that we would like the Bill to cover but Conservative Members believe that this is another step towards improving employment opportunities in this country and bringing the law up to date. We should welcome and support the Bill and its modest reforms, but we also need to look towards further reforms in employment law. I hope that my hon. Friend the Minister will take note of that because we have already heard that there are several areas where Conservative Members would like to see further legislation in the next Session--for instance, on the abolition of the national dock labour scheme and the pre-entry closed shop. We should also be looking at providing a statutory framework for no-strike agreements, particularly for those employed in vital services. No doubt those are matters that my right hon. and hon. Friends will bear in mind in the next Session. The deregulatory measures in the Bill, though minor, will improve employment conditions in this country. Surely, we all want more employment, a better work force and training and more opportunities for workers to enable them to maximise their potential. Although the Bill goes a long way towards achieving that, we should look for more radical measures from the Government in the next Session.
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"this House declines to give a Second Reading to a Bill which, whilst it makes welcome provision for the ending of sexual discrimination in employment matters and seeks to remove anomalous regulations with regard to the employment of young people, nevertheless fails to provide for adequate protection for employed young people, seriously erodes the rights of individuals in employment, and contains no adequate measures designed to secure employment for the long term unemployed or the training of the workforce in the skills required by industry to meet the industrial challenges of the 1990s and beyond."
When he introduced the Bill, the Secretary of State tried to give the impression that it was part of a grand design to meet the demographic challenges of the 1990s and to embark on a course of deregulation. I confess that when I first read the Bill it reminded me of nothing more than --as Scottish Members will recognise--a Law Reform (Miscellaneous Provisions) (Scotland) Bill. It seems to be a basket of measures with no one particular theme. Some of the provisions are not too bad. Some are neutral. For example, there is no comment on the storage of celluloid film. Some are downright bad. Most of the Opposition's comments relate to the bad themes. The provisions in the Bill that are designed to end some discriminatory practices against women have proved controversial. We welcome those, not least those which assimilate redundancy rights for males and females. We also welcome those which give more equal access to certain categories of jobs.
It is strange that in this day and age the many Labour Members who have spoken have needed to conjure up the ogre of the 19th century to voice opposition to this measure. That reveals a narrow approach that does not strike a chord of sympathy with those women whose employment prospects and opportunities have to date been frustrated by legislation.
A constituent's mother wrote to me last year about her daughter who was a second-year mining engineer undergraduate at Newcastle university. She said :
"This coming summer vacation she is expected to have employment in the industry, since this work will be considered next year as part of her final examination. Needless to say she is finding it difficult to achieve this
I am sure she realised that when she decided to do mining engineering she would have to break into what was a male' stronghold. However with hard work and a fair chance she felt she would be able to achieve her ambition
The University of Newcastle has indicated its progressive attitudes by opening the department to young women. It's about time the country as a whole accepted the fact that young women are going to want to work in industries that have previously been barred to them, and whilst it will take some time to break down social barriers, there is no place in modern society for legal constraints."
She is the type of person engaged in mining engineering whom this provision is intended to help and we welcome that.
We acknowledge that there are provisions in the Bill that seek to rationalise the working hours of young people and remove some anomalies. That is not something that I criticise. I imagine that many young people would be surprised to learn about some of the anomalies that exist and I wonder how many of them are actually policed. The points that have been made about the need to maintain some protection for young people in employment are however, important.
Column 894I resented the implication of the hon. Member for Erith and Crayford (Mr. Evenett) that, in taking up this issue, the Opposition were patronising young people. The number of accidents involving young people in employment speaks for itself and to state those facts is not patronising. Mention has been made of the number of fatalities and serious accidents involving people on youth training schemes. The hon. Member for Cambridgeshire, South-East (Mr. Paice) thought that he was coming to the aid of his hon. Friend the Member for Erith and Crayford when he said that the level of accidents was just as high for young people in other forms of employment. That simply underlines the point. If there is an increased likelihood of young people being involved in accidents in employment, and if they are likely to be working longer hours--inevitably, the longer one works the less vigilant and alert one becomes--some protective provisions should be put in place. The absence of such provisions in the Bill to accompany the removal of many anomalies is a serious omission.
Mr. Batiste : Does the hon. Gentleman agree that there is a distinction between the appropriate legislative framework around which safety requirements should be established--that should be the Health and Safety at Work etc. Act 1974--and the enforcement of that legislative framework? If safety legislation is too varied, too self-contradictory and too restrictive, one defeats one's objectives.
Mr. Wallace : That is an important point. The number of inspectors does not need to be addressed by legislation but through resources. However, that has not been done. As the CBI recognised in the quotation given by the hon. Member for Oldham, West (Mr. Meacher) in a measure that opens up the possibility of exploitation by unscrupulous employers, some additional protective measures are required.
Many Conservative Members have said that the Bill is intended to support small businesses. However, the removal of the 35 per cent. rebate for redundancies by companies with fewer than 10 employees is regretted by many small businesses. It has been opposed by the National Federation of Self Employed and Small Businesses. The Government said that £9 million will be saved by that measure, and no doubt that means a cost of £9 million for the small business sector. When small businesses are thinking of closing down or are passed on when someone reaches retirement age, the removal of that rebate could hamper the efforts that are sometimes made to ensure continuity of employment rights.
I shall now deal with the clauses concerning individual employee rights. This Administration seem to dwell on myths. They act in the name of deregulation and easing the burden on small businesses, but that is often not supported by hard facts. The hon. Member for Oldham, West mentioned the Department's own document entitled "Unfair Dismissal : Law and Employment Practice in the 1980s" which says that there was
"little sign that employment protection legislation was inhibiting industrial recovery or contributing to the high level of unemployment by discouraging employers from taking on new people."
In October 1988 the British Institute of Management found, from a sample of its 70,000 members, that only 11
Column 895per cent. thought that there was too much employment protection legislation and 78 per cent. thought that the current level was about right. One strongly suspects that there are many other more important factors which determine the possibilities open to small businesses and to enable them to expand.
Clause 11 disentitles an employee from receiving a statement of reasons for dismissal if he or she has been employed for under two years. As the law stands, he or she cannot make any claim for unfair dismissal without having been employed for two years. Therefore, there is no perceived advantage in terms of labour flexibility if this measure is enacted. However, it would prejudice the rights of that individual. It may prejudice the right to claim benefit if there is no statement of the reasons why someone is without work. It may prejudice the right or ability to seek other employment if there is no reference or no apparent reason why the previous employment was ended.
A product of the Government's approach, which sees industry as a battlefield with one side gaining rights at the expense of the other, is the lack of comprehension that employment protection measures can be conducive to good industrial relations. Clause 9, which removes the requirement for particulars of disciplinary procedures to be given when there are fewer than 20 employees, is a good example of that. The British Institute of Management, in a letter which was circulated to all hon. Members, states that it is good management practice that employees should have a clear idea of where they stand, and makes the point that it is more important in small businesses where there is a close personal link between employers and employees than it is in larger businesses. It argues that, in small businesses, verbal communication does not carry the same weight as written instruction. It is important that employees know where they stand, and the Government have advanced no good reason for such a change. One of the most mean-minded provisions of the Bill relates to industrial tribunals. When the Government first proposed the £25 fee, it met blanket opposition and there was scarcely a good word to be found for it anywhere.
Mr. Wallace : But when the Bill is brought forward, the Government made it £150, as the right hon. Member for Blaenau Gwent (Mr. Foot) says. That seems to be the compromise. However, it is fair to say that it is not a compulsory levy for all; it is at the discretion of the chairman at a pre-tribunal hearing.
The Bill gives the Secretary of State power to make very wide regulations. Obviously that will have to be examined in detail in Committee. Nothing has been said in the debate to suggest that a vast number of frivolous cases are clogging up the industrial tribunal system, yet the Bill contains a threat of a fiscal barrier to justice. When many of us believe that the legal aid system should be extended to people who wish to take cases to industrial tribunals, the Bill provides a new imposition.
There is an analogy with what used to happen in Scotland in regard to criminal legal aid for summary cases. At that time, one had to apply to the sheriff who had to be satisfied that the financial qualifications of a person being prosecuted for a crime entitled him to legal aid and that it was in the interests of justice that he receive legal aid. That met widespread disapproval, particularly in smaller areas where the sheriff who was to judge the case was making a
Column 896preliminary decision as to whether it was in the interests of justice that someone should receive legal aid. To their credit, this Government removed that provision because they were aware of the anomaly that could arise. We are reintroducing that approach in a different form.
The Bill attacks individual employment rights. That is totally out of step with our European partners. We understand that it was very much to the Prime Minister's chagrin that Jacques Delors told the TUC in September that 1992 probably meant great advances for social rights and for the rights for people in employment. One cannot believe that when we seek harmonisation in employment practices our European partners will want to level down to us. We shall be looking to level up to them with greater entitlements for employees.
Mr. Janman : The hon. Gentleman has raised a very important point by taking the deregulation of our labour market in a European context. Does he not agree that the more we liberalise our labour market the more investment we shall attract from the rest of Europe, from the Pacific area and from across the Atlantic, and our partners in the European Community will realise that deregulation is the way to go and will follow our lead?
Mr. Wallace : I do not accept that that will be the pattern of events. Significant benefits are enjoyed with very constructive industrial relations in places such as West Germany, which, as the Prime Minister recognised yesterday, has a very stable, thriving economy. I do not think that they need to take lessons from us. We need to take lessons from them in social service provisions such as creches and nursery facilities.
Mr. Janman rose--
The Bill also abolishes the Training Commission. I do not wish to dwell on the history that led to that, except that it was the view of my right hon. and hon. Friends that, although the employment training scheme was not satisfactory, it was the only one we had, so it was better to try to make it work than to try to defeat its objects. The Government are now abolishing the Training Commission and intend to replace it with training and enterprise councils, going back almost 20 years by putting the burden on industry. They are taking a great gamble, because over the years industry has not been particularly conspicuous for what it has done to improve training.
The Scottish Office White Paper, "Scottish Enterprise" frankly admits :
"Efforts to date to persuade the private sector to take great interest in and responsibility for training have had disappointing results. Far too many firms take little interest in assessing and training for their own future needs, assuming that supply will always be there to meet demand."
Therefore, the Government are taking a great risk in putting the responsibility back into the private sector. One is entitled to be sceptical. So many employers are afraid to spend money on training employees in case they are poached by another firm. In a recession, training is regularly one of the first things to go. A revolution in attitude is needed and we do not have much time.
Many figures have been produced about skill shortages and the need to train people, particularly in skills requiring a relatively high level of educational attainment. Nothing in the Bill seems to foster that, or to try to amend the fact
Column 897that only 13 per cent. of young people between 16 and 18 go into full-time education in Britain, while 58 per cent. of their counterparts in France do. Only by tackling that educational aspect will we start to make some progress in filling the skill shortages that undoubtedly exist.
Finally, nothing in the Bill gives any hope to the long-term unemployed. The hon. Member for Broxtowe (Mr. Lester) made the point eloquently, and the hon. Member for Langbaurgh (Mr. Holt) in his intervention underlined the fact that many letters are not even answered. Many people try to dismiss the long-term unemployed by suggesting that they are workshy or lack motivation. Research undertaken by the Campaign for Work showed that employers discriminate against those who have been unemployed for one, two, three, four or more years, not in any wicked or malicious way but they receive applications and say, "This person has not had a job for the past two years so there must be something wrong with him." But research has shown that when they are given a chance to return to employment their motivation returns very quickly.
It would have been a much happier situation if tonight we had been debating a Bill which contained proposals to guarantee employment for those who had been unemployed for more than two years as is done in Sweden. The Government promised to find a training place on the YTS for all youngsters leaving school who had not found employment. Some of us are sceptical as to the extent to which they have achieved that but to give the Government credit, they set themselves a target and made efforts to achieve it. Something similar for the long-term unemployed would be a very welcome measure. There is nothing in the Bill to give them that hope. Therefore, my right hon. and hon. Friends cannot support the Bill tonight.
Mr. Jacques Arnold (Gravesham) : I welcome the Bill as yet another step towards developing the labour market in Britain and providing job opportunities for working people. I take issue with the hon. Member for Orkney and Shetland (Mr. Wallace) in respect of the long-term unemployed. If he were to look at recent figures, he would see that unemployment is dropping much faster in that category than it is in general. The employment training schemes that are now being introduced will only accentuate that process.
During the past few years, there has been a major expansion of employment in Britain, and there are well over 1 million new jobs in the economy. As opinion poll after opinion poll shows, unemployment is dropping as a priority for British people. Obviously it is dropping as a priority for Labour Members, as shown by their attendance this evening.
In my constituency of Gravesham, in Kent, which was an unemployment black spot, unemployment is now half what it was at the peak of unemployment and it is falling fast. The growing problem in Gravesham is not unemployment but skill and labour shortages. If we are to sustain the exceptional level of growth in our economy that we have achieved, it is vital that the people coming into the labour market should be fully trained. The Government deserve to be congratulated on the success of
Column 898the youth training scheme. In my constituency, about 80 per cent. of young people leaving the YTS are obtaining jobs. Many are now on employment training.
The Bill represents a milestone, in that it records the passing of the old Manpower Services Commission in its transitional guise as the Training Commission. I was here at the beginning of the debate and heard the hon. Member for Oldham, West (Mr. Meacher), who has been absent for most of the debate, enjoying mocking the dear departed. He failed to mention that the dear departed MSC was stabbed in the back by the Trades Union Congress.
In the hour in which the TUC could have achieved something, it betrayed the young unemployed by saying that it would not work with the employment training scheme and the YTS. Those schemes represented hope and opportunity for the young unemployed and the TUC was found lacking. That proved the growing irrelevance of the TUC to the economic life of this nation.
Those of us who are interested in education have been concerned in recent years about the problems of falling rolls. There has been a sharp drop in the number of young people in schools, which reflects the drop in the birth rate about 20 years ago. That trough in the birth rate is now working its way through the labour market and will present us with considerable problems unless certain steps are taken now. That is one reason why I welcome the measures in the Bill: it seeks to sweep away many of the restrictions on the employment of young people.
Young people--and other hon. Members--would resent the suggestion that the measures will increase the danger for young people. We have heard clearly this afternoon from my right hon. Friend the Secretary of State that safety measures are remaining in place in industry and that there are no changes in working protection for youngsters under the age of 16. An attempt to keep the limitations on young people's work is patronising in the extreme. The younger generation today is far more capable than earlier generations and resents the patronising restrictions.
I am equally encouraged by the way in which the Bill will sweep away a number of restrictions on women. I was amazed to hear the snobbery of the hon. Member for Hackney, North and Stoke Newington (Ms. Abbott) when she suggested that being a miner was to be of a lower status. It is a shame that the hon. Member for Ashfield (Mr. Haynes) is not here to put her in her place on that subject. The Bill will continue the process of freeing the labour market, but there is one glaring omission. The Bill requires a clause to bring about the abolition of the national dock labour scheme, including within it compensation for the few remaining registered dockers. The national dock labour scheme represents the last of the great restrictive practices so dear to the heart of the departed Labour party. Those of us who represent port areas are fed up with the damage that the scheme is doing to employment prospects there.
Mr. Andrew Rowe (Mid-Kent) : My hon. Friend spoke of the few remaining registered dockers. One of the more alarming features of the scheme is that a considerable number of dockers remain registered. What is even more alarming is that a growing percentage of them are under 25.
Mr. Arnold : I am concerned about the few remaining dockers. That is best exemplified by remembering that, at the end of the war, there were 73,000 registered dockers, whereas there are fewer than 10,000 today. Although a few new dockers are coming in at the bottom, the great majority of dockers are, on average, 43 years of age or more. The national dock labour scheme is withering on the vine as dockers die or retire, but so are the employment prospects in traditional dock areas, which are mainly in the best places in this country for the unloading of goods and their transport. A recent study shows that there would be 50,000 extra jobs in the registered dock areas without the hampering constraints of this scheme.
I wonder why the Government have not put a clause in the Bill on that. It is fair to say that the Government may be concerned about the possibility of a national dock strike and the damage that that would do to our economy. We can perhaps look forward with some relief to the Lord Cardigans of the Transport and General Workers Union, who are working hard at the moment, not to make the docks a success, but to bring about a national dock strike. If the union is successful and brings about a dock strike, the Government's best response would be to table a clause further to improve the labour market by getting rid of the national dock labour scheme.
I support the Bill, in particular the way in which it seeks to get rid of the restrictions on young people and women in the workplace. I hope that our traditional dock areas will equally be set free. 7.27 pm
Mr. Ron Leighton (Newham, North-East) : The Bill, in addition to dealing with training, has a hotch-potch of mean, nasty, half-baked ideas and prejudices. It seeks to strip away all protection for young people on the hours that they can work. As a result, 16-year-olds could be forced to work ten-and-a-half-hour days and more than 48 hours a week, start before 7 am or finish after 8 pm and work night shifts. But they will do all that without getting the adult wage. That is supposed to be liberating the young. This return to Victorian working conditions for a weak and vulnerable section of the work force is the new Government recipe for rescuing the economy. None of this reactionary nonsense was in the Government's election manifesto.
The Bill makes it easier for employers to dismiss workers. In small firms, employers will no longer have to give details of disciplinary procedures and in all firms workers will not be given a written statement of reasons for dismissal. That will make it more difficult for a worker to take a case to an industrial tribunal where, in any case, he or she, under the Bill, might have to pay a deposit of £150 before he or she could apply for access to industrial justice. Simultaneously, the Government have given notice that they propose further restrictions on--or the abolition of-- wages councils, which deal with the weakest, poorest, least organised and most vulnerable workers. It is only three years ago that the Government legislated on wages councils, saying that they had got the balance right. Now they are going back on their undertakings and attacking the councils again. The Secretary of State should know that, in the last Parliament, the Select Committee on Employment inquired into wages councils and recommended against their abolition.
Column 900I want to touch on three points in my remarks--unemployment, pay and training. There has been a fall in unemployment and a growth in employment, although much of it is part-time. That has happened because the Government have reflated the economy but, unfortunately, they have done it in a wrong and unsustainable way. They are now moving to choke off the expansion with high interest rates. Originally, the Chancellor of the Exchequer pumped billions of pounds into the economy through tax cuts and a huge expansion of private credit. The extra demand began to bring down unemployment--as Labour always said that it would--but it was done in the wrong way. The Budget message was, "Happy days are here again, so let the good times roll." With tax cuts officially lavished on them and a sense of well being from inflated house prices, many of the better-off went on a credit-driven spending spree.
Now the Chancellor is desperately trying to put the engines into reverse. The misjudgment was to give the tax cuts to the very rich, who spent the money on imported goods, and to encourage huge private sector borrowing, which was also spent on imports. That has led to the biggest balance of payments deficit in British history. It is revealing that some Conservative Members find that a joke. The Chancellor now seeks to squeeze billions of pounds out of the economy by punitive interest rates. That will lower living standards and threaten the fall in unemployment.
That is the point in which the Secretary of State should be interested. The Chancellor should have given the tax cuts to the less well-off, who would have spent more in the domestic economy, and allowed borrowing not so much in the private sector as for investment in industry, research and development, education and training, transport, housing, schools, hospitals, increased social provision and the environment.
Mr. Janman rose --
The actions that I have described would have boosted the domestic economy, not imports, and the result would have been more employment. Moreover, the growth would have been sustainable and it would have strengthened our competitiveness for the future. Instead, we shall all suffer pain in 1989 to pay for the mistakes of the 1988 Budget, and I fear that prospects for employment will be damaged. The Secretary of State has taken to lecturing us repetitively about pay. I thought that the official monetarist dogma held that pay had nothing to do with inflation, that, if the money supply was held steady, money spent on pay could not be spent on anything else, so things would be held in a steady state. I thought that monetarists believed that pay was a matter to be dealt with freely by consenting parties--a matter for employers and employees who know best--and that the Government should keep their nose out. I thought that Thatcherism spelt the end of incomes policies, but no--we get constant ministerial exhortation on the subject.
After four anti-trade union Acts, presumably the Secretary of State cannot blame the unions for currently rising inflation. Nor are rising costs the cause, particularly in manufacturing. The costs of fuel and materials bought in by manufacturing industry fell last year due to lower
Column 901commodity prices. The increase in unit labour costs was about 1 per cent. last year because labour productivity in manufacturing rose by 7 per cent., largely offsetting the growth in earnings. Nevertheless, manufacturers' prices rose by 5 per cent. last year. Why? One reason is the rising profits being taken as growing demand, fuelled by credit, comes up against capacity and supply restraints, which themselves are the result of previously deficient investment in plant and training.
This is a classic case of "demand-pull" inflation--wage rises being the consequence, and not the cause, of it. If the Secretary of State is worried about inflation, he should speak to his Cabinet colleagues who are pushing up public sector prices. Rail and Underground fares are increasing by more than twice the rate of inflation and there are large increases in the price of electricity, water, local authority rents and rates. He should also consider how increasing interest rates are forcing up mortgage repayments.
The nine increases in interest rates since last spring's disastrous Budget have triggered increases in mortgage rates from 9.75 per cent. to 13.5 per cent. That means that a £30,000 mortgage now costs £50 a month more and a £50,000 mortgage costs nearly £100 a month more. Millions of people thus enter 1989 with between £1,000 and £1,500 of pre-tax income wiped out at a stroke. In short, the Secretary of State should examine Government policy, not wages, for the cause of rising inflation.
Does the Secretary of State not realise that the example being set at the top is very important? Has he noticed that Britain's top bosses and executives are laughing all the way to the bank? There is no question of restraint there. What does he say about that? He will have seen the survey conducted by Hay Management Consultants, the Saatchi and Saatchi subsidiary, which reported on a bumper bonanza which gave a 30 per cent. increase to top executives. With tax cuts and perks such as cars, pensions, medical insurance and share options, a director on £87,500 a year saw his income rise by 31.5 per cent. The employee on £12,750 a year, however, got only 3.8 per cent. If the Secretary of State is in the business of giving lectures, when will he give lectures to some of the people at the top about the example that they are setting?
The Secretary of State also knows that the first thing that directors of industries which are privatised do is double their salaries. This greed at the top--the grab what you can as quickly as you can attitude--is the very essence of modern Thatcherite Britain. If we are to have more homilies from the Secretary of State, perhaps he will devote his mind to some of those matters.
The basic facts about training are well known. Britain does it abysmally, and historically always has. I suspect that the reason is that, by an accident, the industrial revolution happened here first, giving Britain an initial lead. It was not brought about by the Governments of the day. Indeed, they were probably unaware of what was happening.
Other countries, such as Germany, consciously set up training programmes with the express aim of catching up with Britain. They succeeded more than a century ago and kept on training while we did not. The National Institute of Economic and Social Research has just told us that France produces three times as many mechanical and electrical engineering craftsmen and three times as many
Column 902building craftsmen as we do. In the German furniture industry, nine out of 10 workers have a vocational qualification based on a three-year apprenticeship course with examinations. In Britain the figure is only one in 10. There is not just a skills gap--it is a yawning skills chasm.
The Government have been in office for nearly 10 years. Their policies have failed. They have made things worse. Our skills handicap in relation to other countries has got much worse, not better. In Britain, the intellectual elite get a first-class education and are a match for their international peers. What we neglect so badly are the educational needs of the mass of the population.
The White Paper talks in foolishly glowing and extravagant terms about YTS, but YTS does not close the skills gap and cannot be compared with the German dual system of apprenticeships. The Secretary of State knows that German companies in Britain are so unimpressed by YTS that last month they set up their own vocational training school in Britain. Nor can anybody pretend that the under-funded employment training programme is equal to its task when it provides only two days a week directed training for six months and reaches less than one tenth of the client group.
A couple of weeks ago, the Select Committee on Employment took evidence from Professor Charles Handy on the changing nature of skills which will be needed in the work force in the late 1990s. He told us that between 70 and 80 per cent. of all jobs will, by the end of the 1990s, be "knowledge" jobs --jobs which require more brain than muscle. Half of those--35 to 40 per cent.--will require brain skills of the order of a higher education degree such as a university or polytechnic degree or a professional qualification. The percentage for the new jobs that will emerge in the 1990s is even higher. To survive and cope in this new world, we need to more than double the percentage of our young people who go into higher education. Is there any prospect of that? The Secretary of State knows full well that under this Government, with their present policies, that will not happen. Not only are we falling behind other European Community countries: we are falling behind Taiwan and Korea. Unless that is changed--and changed drastically--we shall either be bypassed and wealth production will go elsewhere, or we shall have to import brains and witness much of our industry being taken over by our competitors.
In the United States and many other countries such as Canada, Sweden and Japan, young people who leave school before they are 18 are termed drop- outs. They do not have to worry about health and safety regulations for that age group as they are still in school. On those terms, the majority of our younger generation are dropouts. We are the only country in the world where the majority of 16 and 17-year-olds are not in full-time education or training. In a world of exploding technology, we should aim to double the number of young people who go into higher education.
We should bring married women, many of whom have qualifications, back into the labour market. That will mean a complete overhaul of child care provisions. It is crazy that the Chancellor penalises workplace creches. I appeal to the Secretary of State to use his influence in the Cabinet to see that this is altered, I hope in the next Budget. It also means that we need comprehensive skilling and reskilling of existing workers, including those aged 50 to 60, who cannot get a job at the moment.
Column 903What do the Government propose to do? They have abolished the Manpower Services Commission and its successor the Training Commission, although the former was originally set up by a Conservative Administration with all-party support. The Government did not like the MSC because it was a tripartite body, as the Secretary of State quite frankly told us. It was set up in that way so that it would be independent of Government--something that the Government do not like. First, they put Conservative nominees such as the present Lord Young in charge of it, then they gave it orders, which made it a tool of Government, and finally they swamped it with employers' representatives. They they abolished it.
To fill the void, the Bill proposes a major transfer of responsibilities. Training is to be handed over to the employers. This is the new idea, the new way to do things. The so-called training and enterprise councils which are to be set up are to be dominated by employers. One's heart sinks when one reads that this will take four years. It is all explained in the White Paper. Paragraph 6.20 says :
"Developing training through life is not primarily a Government responsibility. Employers must take the lead."
Paragraph 4.45 says :
"The system must be planned and led by employers, because it is they who are best placed to judge skill needs".
As you, Mr. Walker, above all Deputy Speakers, will know, this is a triumph of hope over experience. That policy is a major and crass mistake.
Of course we must involve employers--that is vital and essential--but to imagine, on British experience, that we can leave things to the employers is a dangerous lunacy. If employers could take the lead, why have they not done so before? What has prevented them? If they are willing to train, what has stopped them so far? The training boards were set up precisely because employers were not doing enough. If employers have not invested in training in the past, why should we suppose that they will do so in future without Government intervention?
British employers spend on average 0.15 per cent. of turnover on traning. Overseas, it is more like 2 to 3 per cent. or more--in other words, 20 times as much. British companies too often regard training as an unwelcome on-cost and many prefer to poach rather than to train. The sum total of employers' perceived needs for their individual companies does not add up to to the national need. Pious hopes, such as those in the White Paper, are not enough. It is time for effective Government action and a statutory back -up in the wider long-term interests of the economy. The market mechanism alone will not deliver the requisite training. It is necessary to involve the trade unions, but the White Paper, and the Bill, are motivated by animus and hostility to the trade unions--another crass mistake. The trade unions and the local authorities must be equal partners. Any programme that is not based on consensus and agreement with the unions and the local authorities is crippled at the outset and is doomed to failure.
ET will not be the success that the Secretary of State has wanted, because he did not use his intelligence enough and was neither able nor prepared to make a few concessions to get the support of the trade unions and the local authorities. It is essential to do that. [Interruption.] I hear animal noises from Members on the Conservative