House of Commons Hansard Debates for 3 Jul 1991

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The dock labour scheme has gone, and good riddance to it. The port of Tilbury is now competitive and in the latest financial year made a profit of £3 million. It is attracting new business and even surprises itself by continually breaking productivity records. Once the ports legislation being considered by the other place is given Royal Assent it will become a plc and more real jobs will be created.

Lakeside shopping centre, which attracted a third of a billion pounds of private sector investment, has been completed and is the largest retail shopping centre in Europe. Once it is up and running--it takes four or five years for turnover to reach its peak in such enterprises--it will provide about 5,000 jobs.

I say that it will provide 5,000 jobs, but that will depend who is governing the country. If a socialist Government enact phase two of their minimum wage proposals, whereby the minimum wage will be 66 per cent. of average wages, I suspect that considerably fewer than 5,000 jobs will be created. Many industrial sectors, particularly the retail sector, will employ fewer people because of the minimum wage. I see the hon. Member for Fife, Central (Mr. McLeish) squirming, so I will return to that subject later.

The Government set only the overall environment for employment, but local authorities can make a difference to employment. Grays, which is the biggest town in my constituency, is only 23 miles from London and three miles from the M25. Sadly, unlike many other south-east councils, the local council has been in the grip of socialist control for much of the past 20 years. It has not had the imagination and vision to attract the private sector office development that many other south-east towns have been able to attract. Employment is affected not only by what is going on nationally but by what is going on locally.

Only recently, the local council, in its wisdom, turned down planning permission for a Hilton hotel, which would have created 150 jobs. I am supporting the appeal against that decision to the Secretary of State for the Environment in order to secure those jobs.

What will happen if the national environment changes? Every Labour Government since the mid-1920s have increased unemployment. I see no evidence to convince me, the House or the public that the track record of a future Labour Government would do any better than their predecessors. Why should a future Labour Government be different, especially as in its policy documents the Labour party of 1991 has proposed a minimum wage, which was wisely discarded in 1969 by the former Labour Secretary of State, Barbara Castle? She described a report of an inter-departmental working party on the national minimum wage as essential reading. Page 43 of the report concluded : "The greater cost to the national minimum, the greater the consequent adjustment in the level of employment is likely to be. Any consequential unemployment would tend to affect development areas in particular."

The Labour party's proposals for a minimum wage are madness ; it is an economic cloud cuckoo land. I have some sympathy with the suggestion of the hon. Member for Orkney and Shetland that an increase in unemployment of 2 million is an exaggeration, but it is not clear that it is definitely an exaggeration. The consequences of phase two of the Labour party's proposals, which would impose a national minimum wage not at 50 per cent. but at two thirds of the median wage, are clear. It is clear from the

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comments of the TUC's general economic committee and of trade unionists such as Gavin Laird, Eric Hammond and Bill Jordan--I do not have time to give the many quotes to support what I am saying, but we all accept that it is true--that, all other things being equal and constant, phase two of its proposals and the full restoration of differentials would lead to a large increase in unemployment. One million jobs, 2 million jobs or more may be lost, but whatever the figure, a heck of a lot of jobs will be lost and a heck of a lot of lives will be affected and inconvenienced by the dogmatic and ideological policies of the Labour party.

The trends for unemployment and employment in the next 12 to 18 months are already set. We have seen the unfortunate incursion of inflation into our economy, but the Government are successfully squeezing it out. We hope that that process will be over as soon as possible and that it will be as effective as possible so that we can get our economy back on an even keel and can begin to achieve the growth that we enjoyed in the mid-1980s. I believe that once the economy is stabilised, the increase in unemployment will reach a plateau and will then decrease. It is important that we have zero inflation and that unit labour costs can compete with those of our competitors. If we can achieve that--as I believe that the Government will after they are re-elected--we shall have a fine future. The alternative is the same as that which the electorate dismissed at the previous three general elections--a party whose polices are wholly contradictory and which involve high taxation, high public spending, high borrowing, or all three. It is a party that cannot resist the temptation to intervene, to meddle in industry and to cause resources to be wasted. It is a party that cannot resist giving in to and being governed by its paymasters, the trade unions. Its policies are a recipe for very high unemployment for a very long time.

8.50 pm

Mr. Ray Powell (Ogmore) : I have sat in the Chamber on many occasions to listen to debates about employment and employment training. I listened to the hon. Member for Thurrock (Mr. Janman) who is a member of a party which since 1979 has created the highest recorded level of unemployment. I wonder whether we should be allowed--in parliamentary terms --to call members of that party the names that we should like to call them instead of having to talk to the press as happened a week or so ago when the right hon. Member for Old Bexley and Sidcup (Mr. Heath) called the right hon. Member for Finchley (Mrs. Thatcher) a liar. We are not allowed to say such things in the Chamber without being challenged, but we can say them outside. The people to whom I refer are strangers to the truth and they throw around their statistics in their replies to questions and in their arguments. Perhaps those people should sit back and listen for a little while and I shall tell them what has happened in my constituency.

The facts are impressed on my mind because they affect my constituents who have been thrown out of work. If one reads the book by Nye Bevan called "In Place of Fear"--and I recommend that Conservative Members read it--one learns that he was blacklisted by employers in his constituency of Ebbw Vale because of his stammering and

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because of his actions as a mineworkers' leader. He had to roam the mountains because he could not get a job. One of Nye's ideas was that if as politicians we do only one thing, it should be to ensure that everyone has a job.

Before you call me to order, Madam Deputy Speaker, I shall refer to the supply estimates and the Department of Employment. I thought that I had better check some of the Department's figures to see whether their suggestions given in replies to questions are correct. However, page 1 of the document entitled "Supply Estimates 1991-92" states blatantly that the Government will reduce the amount of funding by more than £400 million. Therefore, when talking about employment it is no good their arguing that they will try to get us out of the present grim situation-- they have no intention of doing so, as their own figures show.

I said that I would mention my constituency and what has happened to it since 1979 because that is relevant to the debate. In 1979, my constituency had an unemployment rate of 3.7 per cent. When that figure was analysed, the Department of Employment informed me that 2 per cent. of those registered were unemployable because they were silicotic or pneumoconiotic. At that time, my constituency contained seven collieries and there were 6,500 miners. It also had 12,000 steelworkers, but within two years the Government had decided to de-man the steelworks on the ground that they were not making a profit. However, only last week we found that they are not making a profit now, despite all the cuts that the Government have made. Because of the 12,000 redundant and unemployed steelworkers and the 6,500 unemployed miners, the unemployment rate in my constituency increased within those two years to 35 per cent. Therefore, in an electorate of about 83,000, 30 per cent. became unemployed. As a result, some members of the Trades Union Congress in Mid Glamorgan and officers of my constituency party decided to accept the Government's proposals for unemployment training or, as it was at that time, the community programme, and to introduce an employment training scheme. We did so and it was very successful. During its 10 years, it trained 4,000 people. In fact, it not only trained them but got them jobs. However, overnight the Government decided that they would revoke employment training and introduce the training and enterprise councils. That was the biggest disaster that has ever happened in Mid Glamorgan and especially in my constituency. I mention that for the benefit of my hon. Friends on the Front Bench who will deal with employment when we have the next Labour Government--that will probably be in November if the Prime Minister so decides, or perhaps in June. However, the next Labour Government will in all probability also have to deal with the contentious issue of how to get people back to work. I am sure that their efforts will be sincere and that they will be directed towards getting the people who are currently out of work back into employment.

We have listened to ex-Ministers telling people to get on their bikes. If my constituents had done so in 1981 and if they had come to the east coast, they might have found a job. They could now get on their bikes or their roller skates or start to walk--I doubt whether they would be able to afford roller skates because of the cuts in unemployment benefit. If they came on their roller skates or by foot to the east coast, there would be no chance of their finding a job.

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I have made an effort as the chairman of an organisation called Cato--community activities and training in Ogmore. Despite the arguments used by my colleagues in the Labour party and in the trade unions, we decided to set up an organisation to train people. We not only trained people, but combined with that training a programme of community enterprise in Ogmore to ensure that we were doing something of benefit for the area. We provided training in catering and at the same time provided meals on wheels, which had been axed because of Government cuts in funding to local government. We provided a service and trained people at the same time. That went on for 10 years. However, overnight we found out that the TEC in Mid Glamorgan had decided to cut our programme, and told us that our contract would not be renewed in March. That meant immediate unemployment for 45 qualified and experienced trainers who had given 10 years of service to an organisation whose aim was to train people desperate for a job. In addition, 210 trainees were immediately put out of a training programme. They were promised that they would have a programme and a job, but 12 months after the TEC's decision to close down Cato, those trainees are still looking for a place in Ogmore in which to be trained.

Two hours and 22 minutes is not a lot of time for the House to debate the contentious issue of unemployment. I do not want continually to bandy statistics with Conservative Members. However, I am sure that people who may be listening or who may read the report of this unemployment debate are not especially interested in statistics if they are unemployed. If one tells anyone in my constituency that more than 2 million people are unemployed, he is not especially concerned or interested--people are interested in the fact that they are unemployed and that there is no chance of a job for them. There is no mine for them to go to now. People only went down the mine in desperation, and not through choice.

My father was a miner. The last thing he said to me was, "Whatever you do, don't go down the mine." If there were no jobs or if a person was not qualified, there was no alternative but to go down the mine. As the seven mines in my constituency have been closed, there is now no chance of a mining job. If the Government had decided to provide factories or to help the existing factories in my constituency, that might have been a help, but they did not. A number of us had to persuade foreign companies to come to the Ogmore constituency. Sony provided us with 3,000 jobs and we persuaded the Ford engine plant in Bridgend to expand its programme so that more people could be employed.

In my constituency, and in Mid Glamorgan in general, there has been a considerable reduction in employment. With the advent of unemployment in my constituency, I decided to introduce a ten-minute Bill about the TEC in Mid Glamorgan. Having read the document that was sent to all TEC chairmen on 12 December 1990 about the first internal audit of training and enterprise councils, and as we are dealing with billions of pounds of public money, it may be of interest again to put this important matter on the record. The permanent secretary at the Department of Employment--Sir Geoffrey Holland KCB--sent a letter to all chairmen of the TECs asking them to ensure that they had an internal audit. One of the paragraphs of that letter explained :

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"I do so because of the weaknesses in financial management they reveal, and the disquieting overall picture .

The Public Accounts Committee would not regard such a situation as satisfactory. I write primarily because I am anxious that you should be able to defend yourself before the Public Accounts Committee should they call you at any time."

Sir Geoffrey continued on the subject of the weaknesses discovered by the audit in some TECs at that time :

"(a) Claims made by the council which could not be supported by adequate documetary evidence.

(b) Claims overstated by the inclusion of expenditure which was outside the terms of the contract.

(d) Financial appraisal and monitoring of providers not being carried out, and

(e) Excessive working capital loans and substantial cash balances being held.

It is very probable that these same issues are occurring at other operational councils which have not yet received a visit from my internal auditors."

Needless to say, my first action was to ask for an internal audit of the Mid Glamorgan TECs. I am still waiting for a reply from the Secretary of State for Wales on when he will have an internal audit conducted.

I have here the Secretary of State's answers to the numerous parliamentary questions that I have tabled. There is plenty of documentary evidence, but I have been told not to speak for too long. Some Conservative Members may wish to speak, so I shall not refer to all the documents that I have, but I would have liked to have the opportunity to support my case even more thoroughly. In his replies to my questions about how many places have been cut in Mid Glamorgan, the Secretary of State says that the information is not available. When I ask why, I am given to understand that it is because the Mid Glamorgan TEC is now a public limited company and we cannot get the information direct. It is high time that that was changed. When we table questions we should be able to find out the information that we require.

I have a lot to say, but I shall conclude by referring to the TEC operating agreement--a document of great importance to my constituents and myself in explaining to 45 trainers, some 200 trainees and some 350 people on a youth scheme why the TEC decided not to continue our agreement.

Our agreement was concluded in a single month. The Government say that training organisations have to accept a contract with such terms before they can be registered and operate as trainers. However, the operating agreement between the Secretary of State for Employment and a training and enterprise council affords a TEC the opportunity of affecting the agreement. If the Government wish to withdraw from an agreement with a TEC six months notice must be given, yet they compel training organisations to sign contracts specifying only one month's notice.

I have been told by the Whip that it is time to finish my speech. I am a Whip myself, so I shall do so, but I should like to have been given the opportunity to continue for some time, because I have been trying to explain to the House how the country is being deluded into accepting some of the statistics that the Government portray as representing the level of unemployment. They should have a look at the real world. They should come down to my surgery on a Saturday and speak to people who have no chance of a job and who are trying to exist on their meagre

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unemployment benefits. They find that their houses are to be repossessed because they cannot make their mortgage payments, that they cannot continue payments on their car and that they cannot furnish their tables as they furnished them when they were in full employment. Yet we are told that the Government are making every effort to ensure that people are back in work. All I can say is that that is not happening in Ogwr, in Mid Glamorgan or in Wales generally. I do not know what is happening elsewhere, but in any case it is high time that the Government were thrown out of office to enable a Labour Government to take control and try to remedy the situation. Such a remedy is long overdue.

9.11 pm

Mr. Chris Butler (Warrington) : People come to my surgeries, too. One of them, Mrs. Lynne Fleming, came along to say that, although she was happy with her status as a self-employed secretary, as were her clients and the Inland Revenue, the Department of Social Security had intervened to classify her as employed on the basis that she did not carry her heavy word processing equipment around from job to job. As a result, she lost her clients because they were not prepared to pay the costs of her full-time employment, and she had to close her business.

Further investigation revealed that both the Inland Revenue and the Department of Social Security were reclassifying as employed whole groups of people previously classified as self-employed on the basis of absurd and biased tests to determine their relative status. I have written evidence from many accountants that numerous people have lost their jobs as a result. One accountant writes :

"I have countless examples in my files of the Revenue using dubious requirements to force people out of business."

When their businesses close, we as taxpayers face a hefty bill for their state benefits--all for the sake of identifying amounts of back tax and advancing the careers of some income tax inspectors. I accept that, under this Government, self-employment has grown by 65 per cent., but I contend that the figure would be higher still, and that unemployment would be lower, if we revised these absurd tests, perhaps moving to some kind of self-certification system for the self-employed. That really would be the mark of a radical, free-enterprise Government.

In the arcane jargon of the Civil Service, employment budgets are based not on forecasts of unemployment but on Treasury "assumptions" of unemployment. In the autumn statement, £305 million was cut from the employment training budget. That cut was based on the Treasury's assumption that unemployment would be at 1.75 million throughout this year--a flat figure to apply right through the year. Flatly, that was wrong.

Unemployment began rising in April 1990 and the trend in our economy and in unemployment should have been clear by the time of the autumn statement. We entered the exchange rate mechanism in October 1990 and, as hon. Members have shown, it must have been known by then that entry would have a significant upward effect on unemployment. The response from the Department of Employment--in February 1991--was to put £120 million back into the employment training budget. In March 1991, the

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Department put £38 million back in to expanding job clubs, and in June 1991 it put a further £35 million into employment training. It appears that unrealistic assumptions were made about unemployment, and that there was an apparent disregard for the effect of our membership of the ERM. I am arguing for the process of reaction to trends in unemployment to be telescoped so that we can avoid the nonsense of increasing expenditure on unemployment when it is falling and decreasing expenditure when it is rising.

In the 1980s, it gradually became accepted among the chattering classes and the major political parties that we should join the exchange rate mechanism "when the time was right". That last phrase, which was consensual and diplomatic, even managed to keep some of the doubters on board on the basis that perhaps the time never would be right. However, no one publicised in advance the likely effects on unemployment of joining the ERM.

The Confederation of British Industry and the TUC were great enthusiasts of the idea, but they sheepishly had to admit to us that they had made no calculations. If the major political parties knew the cost, they were not saying. It is possible that, somewhere in the bowels of the Treasury, some Gollum-like civil servant egested some gloomy predictions, but he and his figures, in advance of our joining the ERM, were not allowed to see the light of day.

It is strange that the major organisations representing the employers and the employees could be all atwitter about the particular policies without considering the fundamental consequences. The Secretary of State for Employment made no prediction about the effect on unemployment of our joining the ERM. However, it is clear from the National Institute Economic Review that unemployment rose by 700,000 in France and by 1 million in Italy as a result of their joining the ERM.

The hon. Member for Newham, North-East (Mr. Leighton) has already referred to the evidence of the chief economic adviser to the CBI, which was published rather late in the day in March 1991. That showed that Britain would probably suffer an extra 500,000 unemployed as a result of the ERM membership--if it works.

I am not necessarily attacking the ERM. I voted for it as an experiment. However, at least we now know the price tag involved. In addition, some people would argue that, with the monetary indicators as they are and with unemployment as it is, we would have been able to reduce interest rates rather more quickly and more easily than we have done in the ERM. That may be the other part of the price tag. What is scandalous, and what beggars belief, is that the Government, the Opposition and the so-called social partners could all be gung-ho about a particular policy without telling the public about its likely effects. If we embark on other European adventures, I trust that we will have the common sense to look at the downside as well as the upside of those policies, and that we will have the guts to be open about them.

Although I may be wrong, it appears to me that there has been a conspiracy of silence enrobing us as we have drifted gently towards the holy grail of ever closer European monetary union. But now I think at least one person may jerk us back to reality, much as that may annoy the nodding boatmen.

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9.17 pm

Mr. Ron Brown (Edinburgh, Leith) : Let us be clear about unemployment. It is not an act of God. It does not just happen ; it is made to happen. In fact, it is a direct result of the so-called market economy-- in other words, of the capitalist system.I am not talking about Adam Smith's capitalism ; I am talking about monopoly capitalism and the capitalism of big business represented by the Conservative party. The Government must accept responsibility for the present situation. They must accept the blame for the fact that so many people have lost out in this country.

Of course, the Government will no doubt protest their innocence and say, "Judge us on our overall record." I suppose that that is fair enough. Let us consider what has happened in our constituencies as plants have closed down. In my constituency, we have lost Robbs shipyard, Raimes Clark manufacturing chemists, Motherwell Bridge, the Victoria Rubber Company and, more recently, Caledonia Flour Mills and SAI. SAI was closed down deliberately because the Government were opposed to its takeover by Kemira. Why? Because Kemira is a Finnish state-owned organisation. The Government speak about market forces, yet they allowed blind party dogma to interfere with those forces. There are also problems at other plants in the Leith area. Although Ferranti and NEI are still producing goods, their work forces have been much reduced. People have been paid off thanks to the so- called "recession" which the Government claim is now about to be resolved and will quickly disappear. I doubt that. Too often, people in Britain have been told to get on their bikes and to look for another job. I suppose that that explains what one sees in various parts of London. There are many Scots around Victoria. Indeed, many people from my constituency are living in cardboard city because they have nowhere else to go. They came here believing that they would get a job in this great city of London, but they could not. This country has economic refugees. They are the people who have lost because of the Government. In the past, Scotland had the highland clearances ; today we have the lowland clearances, as my hon. Friends could testify.

Unemployment is not unique to Britain, but it is rising fast here. By next year, it is estimated that 3 million people or more will be unemployed. However, that is only part of the story, because many other people will be on short time. It is estimated that 5 million people will be working part- time. In the past, the excuse always used to be, "It is the unions' fault." That was the message given out by the Conservatives. However, that is a bogus argument, because there have been very few disputes in recent years, and, sadly, union membership has declined.

The other reason the Tories gave for things going wrong was that wage rates were too high. They do not say that to Sir Ian MacLaurin of Tesco, who gets £1.5 million a year, or to the other bigwigs, such as the judges, the generals, the police chiefs and the bosses. But that is what they say to the young lasses and laddies who work for Tesco and who receive only £5,000 per year instead of the huge sums of money that their bosses get from the exploitation of both young and older workers.

The Tories always argued in the past that one could price oneself into or out of a job. The Tories are strong on the law, but they have ignored the wages councils. There have been repeated cases of both young and older workers

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being underpaid simply because the number of wages council inspectors has been reduced. In 1978, there were 171 inspectors, but today there are only 71 inspectors to check on the Scrooge employers. That explains why, although the Low Pay Unit has made it clear that one third of the firms checked underpaid their employees--that is just the tip of the iceberg--there have been very few prosecutions. In 1988, only 10 firms were prosecuted, but more than 5,000 were breaking the law. That explains a lot about the Government. It explains that they are a Government of low wages and cheap labour. Their youth training scheme conscripted young workers to do menial tasks for little money. Training schemes indeed!

If the Government could justify low wages by proving that the economy would take off, they might be acceptable, but India has not become a booming economy on the basis of low wages. Low wages are not a panacea. Unemployemnt is rising because Britain has not invested in new equipment, ideas or technology. Part of the cause is the exchange rate mechanism and the overvalued pound. Anyone who looks back to the 1920s when Britain was on the gold standard will understand the lessons of that period. We must invest in new machines, people, training, skills and education, and we can afford to do so. Despite the Government's mismanagement of the economy, we have many resources, including the talents of the people and oil. It is simply a question of using our talents and wealth to good effect. That is why we speak of a citizens' charter.

We also need a workers' charter which will guarantee real jobs--jobs with a future, jobs that will sort out the economic mess, and jobs that will provide homes, hospitals and roads and rebuild and regenerate the economy. We need a statutory minimum wage, a 35-hour week and equal pay for equal work. However, we shall not get those unless we have a Labour Government. We need socialist policies, which will extend democracy and give power to the people who produce our wealth. The sooner we have a general election the better, because the people back home are desperate for one.

9.27 pm

Mr. Henry McLeish (Fife, Central) : I am not sure whether I can rise to the expectations of my hon. Friend the Member for Edinburgh, Leith (Mr. Brown) but I shall try to deal with the key issues that have emerged this evening. I congratulate the Chairman of the Select Committee on Employment on the report that his Committee has prepared. Although its conclusions may not have led us to a definitive debate, the issues are important and have formed the backdrop to our debate.

It is important to appreciate that we are debating this issue against the background of some sombre forecasts which have been made in Europe and this country. The report of the Organisation for Economic Co-operation and Development suggests that our investment possibilities in the next year are extremely gloomy. We have the worst forecast for business investment next year compared with the United States at 6.4 per cent., Japan at 4.4 per cent., Germany at 4.8 per cent.--the United Kingdom rate is forecast at only 0.6 per cent. No other EC country is likely to do so badly. That is important to the long-term aspirations of the next Labour Government and it is extremely depressing that the present Government will leave such a legacy to us.

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The City and academic institutions have forecast the levels of unemployment that lie ahead in 1992. It is clear from those forecasts that the much hoped for reduction in unemployment will simply not emerge next year. The forecasts are extremely gloomy and range from more than 3 million to 2.3 million. The Select Committee report states in paragraph 4 that the CBI

"expected the turning point in unemployment to arise between six and 12 months after the turning point in economic activity." It is salutary to remember that unemployment in that last Conservative recession started to rise in November 1979 and did not stop rising until July 1986--it rose for nearly seven years. It would be complacent to think that a short-term consumer boom such as the one being devised by the Government will have any immediate impact on rising unemployment.

This debate is essentially about the Government's economic record--about 12 years of wasted opportunity for millions of people. It is about the Government's failure to deal with the deep-seated structural problems that were with us in 1979 and are still with us in 1991. It is also about the Government's failure to deal with unemployment as a serious economic issue. In Britain there are 2.2 million unemployed but they also have 1.8 million dependants, so unemployment is blighting the lives of almost 4 million men, women and children. That is a sad reflection on a Government who are supposed to have engineered economic miracles.

The statistics of Government failure are stark and worth repeating. A further 10,000 people have been added to the dole queue every month since 1979--and the Government talk about economic success and lecture the Labour party about policies designed to bring down unemployment. Great claims are made about jobs. The most serious claim made by Ministers is that 1.3 million more people are in work now than in 1979. That is just not true ; 460,000 of them are people with extra jobs, not more people in jobs ; 411,000 training places are described as jobs. So after 12 years of Conservative Government 165,000 full-time jobs have been created--the worst employment record in Europe. That is the reality behind the rhetoric.

Conservative Members representing the north-west must ask the Secretary of State for Employment why fewer people there and in the north are in jobs in 1991 than in June 1979. For them, the economic miracle does not stand up to objective scrutiny.

Vacancies are also a key indicator. In January 1980, when statistics were first compiled, 193,400 vacancies were recorded at job centres, a number that slumped to 106,000 in May this year. Skills are another key labour market indicator. Every objective criterion shows that the skills crisis is deepening and that the skills gap between Britain and its major competitors is widening. If we want evidence about unemployment we need look no further than the Government's record. They have failed on the four key labour market indicators. I challenge the Minister to wish away this doubling of unemployment, this almost complete failure to create jobs, this skills crisis and this slump in vacancies.

The labour market is singularly ill equipped to deal with the problems that lie ahead, partly because of de-skilling,

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partly because of massive de-regulation and partly because of the destabilisation caused by so many people looking for a job. Jobs are still the fulcrum of our culture, but people are denied the chance to have one.

I charge the Government with three accusations. First, they are the party of mass unemployment and have been instrumental in its creation by using it as a weapon of economic management. They have been indifferent to its effects and they have been instinctively unable to take unemployment seriously or to provide the positive action that the unemployed and the nation require.

Secondly, the Tories are exacting a high price from individuals, the economy and, in particular, from taxpayers for the high level of unemployment. The Chancellor said that it was a price well worth paying. That is certainly true if the Government want to waste taxpayers' money and lives, and remove skills and capacity from an economy that badly needs them.

Thirdly, it is quite clear that the Government knew that unemployment would rise sharply, and I shall provide evidence about that. Even though the Government were aware of that, they failed to take positive action.

Mr. Timothy Wood (Stevenage) : Nonsense.

Mr. McLeish : The hon. Gentleman says nonsense, but the only action was a statement a few weeks ago by the Secretary of State for Employment in which he introduced more job clubs and some employment action. I shall deal with that later.

I shall start unfolding this shabby tale by looking at a key minute which has been raised in the House before but which is worth mentioning again. It is a memorandum dated 15 May of a meeting between the G10 chairman and Sir Geoffrey Holland. For the first time there is documented evidence of a Government prediction about employment in the following year. It states :

"In both London and Sheffield the forecast for the period October 90 to October 91 was for a 50 per cent. rise in the levels of unemployment. Any arguments that the Treasury therefore had for a reduction in funding were now completely eroded and in fact there was a demonstrable justification for further funds."

Was that a minute of what the permanent secretary in the Department said at the meeting or was it the G10 chairman making a forecast that had emanated from Sheffield and London? It is clear that the Government were able to forecast in October 1990 that employment would rise by 50 per cent.--an increase of 860,000 in 12 months. Why was there no action in January, February, March, April or May? In June, the Secretary of State for Employment made a statement in which he unfolded some new initiatives to tackle a problem that was evident in March last year when unemployment started to rise and which was crystal clear by October when forecasts were made. Do 2.2 million people have to be unemployed before the Government find it sensible and prudent to act?

History has a habit of repeating itself. I shall quote from a press notice dated 3 February 1983 issued by the then Secretary of State for Employment, the right hon. Member for Chingford (Mr. Tebbit). Dealing with rising unemployment, the press notice stated : "In the meantime the Government is already helping about 650,000 people avoid unemployment through a range of special measures costing about £1,500,000".

That shows that unemployment is not a new issue for the Government. They must be masters at dealing with it,

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although the outcome of their actions does not confirm that judgment. It is interesting to compare that press notice with the statement by the Secretary of State for Employment on 19 June this year. He said :

"The Government is already providing a wide range of employment and training programmes helping 650,000 unemployed people this year". In both 1983 and 1991, 650,000 people were being helped and unemployment was over 2 million. If the country had done so well, why have the unemployed done so badly? Why is it that, after nearly a decade of booms and busts, we are back to the position that existed in 1983?

Mr. Janman : Given that a future Labour Government would not take us out of the exchange rate mechanism, and that the Shadow Chancellor has said that the only public spending priorities of a future Labour Government would be child benefit and pensions because that would not create a false boom, what difference would a Labour Government make, and what would they do to change the situation?

Mr. McLeish : I wish that I had more time to address the serious issues that the hon. Gentleman has raised. The Government do not want to give us more time to discuss unemployment because of the difficulties that they are in, but it is an important subject. If the Government persist in creating another consumer boom that is not investment led, we shall end up with the same problems that we have endured for the past 12 years. The Government have not addressed the important agenda of regional policy, industrial strategy and the supply side initiative. However, a Labour Government will address it, with resulting benefits.

In their statement on 19 June, the Government said that they wanted to address a particular problem. It is instructive to look briefly at their response after unemployment hit 2.2 million. First, we shall have an unemployment action programme to create 30,000 jobs this year and 30,000 next year, so that by the end of next year 60,000 will have been created. The problem is that this will serve in this financial year only 30,000 people so it is a pity that the 960,000 people who have been unemployed for more than six months will not benefit. Some would describe that as a drop in the ocean, but I shall not be so uncharitable. That means that 50 people in each constituency may be helped by this dramatic new measure to tackle rising unemployment.

Secondly, the Secretary of State now wants to give 15,000 places back to the employment training programme. It is unfortunate that he took away 80,000 places. We have heard hon. Members talk about the cuts of £360 million earlier this year. Some £120 million has been reinstated, and now those 15,000 jobs will be reinstated at a cost of £34.9 million. However, we are not back to the level of funding that we had before the cuts were instigated.

Thirdly, we now have the greatest innovation in the Department of Employment since Lord Young of Graffham introduced Restart--executive job clubs. The Government have realised that it is not just Scotland, the north and the north-west which suffer from unemployment, and that the executive masses in the south-east are also suffering. I do not know what an executive job club will be, but I hope that it is more successful than job clubs have so far proved.

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If there were one single issue that should excite those on the Government Benches, it is the cost of unemployment. The public know full well that the Government are not interested in unemployment as a social or regional issue, nor in its dramatic impact on the individual. This is supposed to be the Government of economic competence and sound money. If that is the case, why are they willing to spend £16.5 billion supporting unemployment? There is no dispute about the fact that £7 billion is paid out in benefits because we know it from the Government's sources and £9.5 billion is the cost of lost national insurance, income tax and indirect taxes. Are the Government seriously telling the country that they are willing to sustain 2.2 million people out of work at a cost of £16.5 billion? If they are, then they are obviously willing to play havoc with the public sector borrowing requirement as well.

The other tragedy is that in one year the Government added £4.7 billion to the cost of keeping people out of work. And that is the party of sound money--the economically competent party which threatens Britain by saying that if a Labour Government came in jobs would be lost, unemployment would be rife and employment growth would be affected. It is stunning hypocrisy that the Government can make such comments against their own record of abject failure on every key economic issue.

I want to give the Minister, whom I see smiling at me across the Dispatch Box, his allotted 15 minutes, so I will finish on this point. There is a yawning gap between the scale of the unemployment crisis facing Britain and the Government's pathetic response to it. When we win the next general election, we shall act ; until then, it is time that the Government took unemployment seriously. If they did that, they would get more support in the country and some support in the House.

9.44 pm

The Parliamentary Under-Secretary of State for Employment (Mr. Robert Jackson) : I join the hon. Member for Fife, Central (Mr. McLeish) in the congratulations that he offered to the hon. Member for Newham, North- East (Mr. Leighton), the Chairman of the Select Committee, on the way in which he introduced the report. It is always a pleasure to respond to the hon. Gentleman. He is always well informed and constructive, even when he is in a critical vein, as he was tonight.

I particularly agree with the hon. Gentleman and my hon. Friend the Member for Mid-Kent (Mr. Rowe) about the importance of training in the formation of skills. That is why the Government have increased spending on training and enterprise councils threefold in real terms during the past 10 years. We believe in training and we have been putting our money where our mouth is with our commitment. On behalf of the Select Committee the hon. Member for Newham, North-East challenged the Government on the question of training targets, one of the three principal recommendations of the report. The Government believe in targets. It would be fair to say that we were responsible for the introduction of targets as an important managerial tool within Government. It is important to quantify the objectives of the organisations which work for the Government and within the Government.

But we do not believe in targets simply as a matter of gesture politics, to feel good by saying the right thing. We

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take targets seriously. We believe that they must reflect a real commitment and responsibility, that they should be capable of being attained, and that the people for whom the targets are being set can attain them and will have the commitment to deliver them. That means that the targets must be set by those who have a responsibility for fulfilling them. That causes a problem for the Government when it comes to setting targets for training. As the hon. Gentleman will know, most of the training done in Britain is not done by the Government, as is true in other countries. Employers are, generally speaking, the main sponsors of training. Therefore, it is employers rather than the Government who must take the responsibility for fulfilling training targets.

The Government welcome the fact that the CBI has taken that point. It has been looking at the question of targets and is making an effort to set realistic, attainable but stretching targets on behalf of employers which employers will be able to take responsibility for meeting. We await what the CBI has to say and what targets it sets, but the Government are pleased that, on behalf of employers, the CBI has responded to that challenge. The debate is not yet concluded, so I say to the hon. Gentleman--watch this space.

The hon. Gentleman talked about the report's second recommendation on the exchange rate mechanism. He was pessimistic about the implications of the ERM for unemployment and he was joined in that by my hon. Friends the Members for Thurrock (Mr. Janman) and for Warrington, South (Mr. Butler). As the hon. Member for Newham, North-East noted--in passing, it must be said--there is agreement between all the parties about the desirability of our membership of the ERM. It is supported by the trade unions and by business. That support includes the parity--if we are to understand accurately what has been said by the shadow Chancellor--of £1 to DM2.95.

Nevertheless, the hon. Gentleman and my hon. Friends are perfectly entitled to reflect on the possible consequences of the policy for unemployment. It may enjoy a sustainable consensus, but it may still have consequences to which my right hon. Friends are right to refer and to be concerned about. This is a large subject, so let me simply offer a few thoughts about the experience of France, to which the hon. Member for Newham, North-East particularly referred. I do not necessarily agree with the basis of the hon. Gentleman's pessimism--the idea that Britain's experience of the exchange rate mechanism will parallel that of France. When we joined the ERM, inflation was lower, both in absolute terms and relative to that in the rest of Europe, than it was in France when that country joined in the early 1980s. Besides, our supply-side reforms and the labour market legislation that we have introduced have made our economy a great deal more flexible than France's economy was then.

Moreover, in the early 1980s France had devalued its currency several times to maintain competitiveness ; or, at least, that was its intention. When it committed itself to the ERM, no one believed that devaluation had been ruled out, which increased the cost of getting inflation down.

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There is a moral in that. We must maintain the credibility of our commitment to the ERM, with the parity that we have chosen. In that regard, I strongly agree with the hon. Member for Orkney and Shetland (Mr. Wallace).

I also agree with my hon. Friend the Member for Mid-Kent about the importance of training. He described very well the growing recognition that a sea change has taken place in that important part of our national life. One of the signs is the success of the training and enterprise councils. A huge voluntary commitment has been made by thousands of business people all over the country.

Over the decade, the Government have substantially increased the resources devoted to training ; even more important, so have employers. As I have said, they are very much in the lead in that regard. The Government should also take credit for clarifying the system of qualifications, through the National Council for Vocational Qualifications.

As my hon. Friend the Member for Mid-Kent pointed out, a large amount of bumf seems to be inseparable from each of our education and training reforms. I shall refer what he said to the National Council for Vocational Qualifications. I think that the House will agree, however, that there has been an important breakthrough, and that we now have a coherent vocational framework--not before time. There have also been substantial policy innovations. I was pleased to hear what my hon. Friend said about training credits, an important development for which, again, the Government should take credit. My hon. Friend asked us to commit ourselves to spreading the system more widely across the country. I remind him that, in the White Paper that we published only a few weeks ago, we committed ourselves to the principle of a national extension of training credits from April 1993, and to completing the process during the next Parliament. We must, of course, learn from pilot schemes, but we consider that principle sound. In our view, it has already proved itself.

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