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Lord McIntosh of Haringey: My Lords, I take the opportunity to apologise to the noble Lord.

Lord Mackay of Ardbrecknish: My Lords, when my attention was drawn to it, I even thought that I might read a little about it. The report attempts to address the poor employment record of the EU and measures to improve economic growth and competitiveness. I am not sure that I always find myself agreeing with M. Delors, but I certainly do agree as far as that is concerned.

I believe that a flexible labour market is an inclusive one. It is a market which maximises employment and therefore maximises involvement. An individual is more likely to enjoy long-term success in the labour market if that individual is actively involved in the labour market, rather than being outside it and unemployed. That is why the Government place such emphasis on removing unnecessary barriers and restrictions from the labour market and reducing costs on employers.

The noble Lord, Lord Roll, said that we should not find pleasure in the problems that some of our European friends are currently having. Certainly, I do not, for the very reason that he stated: these are our major markets. If they are in some trouble then they may be unable to buy our goods and services in the way that we would like. But while we should not find pleasure, as my noble friend Lord Beloff pointed out, we should learn lessons and look carefully at their experiences. The noble Lord, Lord Roll, gave Austria and Germany as examples of countries that were attempting to address these problems--I am not entirely sure that Germany has as yet done enough to address them--but I noticed that he missed out Italy and France. In both, unemployment is leading to considerable government turmoil. Addressing these problems is not proving easy for them. It is certainly not easy for them to keep their societies cohesive.

Perhaps I may turn to the question of employment. I agree that employment, or the lack of it, is the base of the problem of people who feel themselves excluded. We have debated that on a fair number of occasions. I do not want to repeat a lot of the arguments about income-rich families, job-rich families and job-poor families; about the simple fact that there appears to be a relationship between one of the spouses not being in work while the other is, and the other finding it easier to get work than when both are out of work; and about all the undoubted problems that have been identified. We are trying to tackle them.

I shall not point out particular noble Lords. I wrote down a Scottish expression--"dismal Jimmy"--while I listened to one or two speakers. One of your Lordships looked rather gloomily at the United Kingdom and rather optimistically, I believe, over the fence at other countries. I know that the noble Lord, Lord Desai, had to go. He pointed out that the structural adjustments which have caused us pain--and we went through that pain in the 1980s--are now beginning to show

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themselves in countries as strong as we thought Germany was. There, a mighty company like Daimler Benz is having to face some of the difficulties and pains that a number of our mighty companies have been through.

It is well worth saying that our unemployment rate in the United Kingdom is almost 2.5 percentage points below the European Union average. It is three points below that of France, four points below that of Italy and the same as that of Germany. Unlike Germany, we are moving downwards while they are moving upwards. The United Kingdom has the lowest rate of female unemployment in the European Union.

Youth unemployment is a particularly difficult problem and perhaps one to which we could devote a whole debate. While I would not stand at this Dispatch Box and say that I am entirely satisfied with how we are doing, I certainly would not look across the Channel for examples as to how to do better with regard to youth unemployment. The rate in the United Kingdom is a whole five percentage points below the EU average. In France, youth unemployment is 28 per cent., in Italy, 37 per cent., and in Spain, 38 per cent.

The right reverend Prelate the Bishop of Chester drew our attention to one of the problems of unemployment. He pointed out that it can occur in very large pockets. One of the interesting factors that we are seeing in this country compared with, say, 10 years ago is a narrowing in the range of unemployment between one region and another. I fully accept that the right reverend Prelate was talking about very small areas. I accept that there are areas where there is very severe unemployment. However, looked at from the point of view of the regions of the United Kingdom and Scotland, the unemployment divergence has come together over the past few years. Before anyone jumps up and says that is because the unemployment rate in the better areas has gone up, it is because the unemployment rate in what were the worst areas has come down.

Lord McIntosh of Haringey: My Lords, if the noble Lord is going to speak at such length about unemployment, perhaps I may say that his own Government recognise that we measure claimant unemployment. Comparisons between our unemployment levels and those of other European countries are bound, on that definition, to appear to favour us.

Lord Mackay of Ardbrecknish: My Lords, while the figures do not exactly match, the trends and patterns are still there when one looks at factors such as the figures collected by the ILO. Its figures are collected under a system which it prefers. I believe that unemployment is the key to the social exclusion problem. If I am accused of speaking about unemployment at too great length, I am sorry.

A noble Lord mentioned long-term unemployment. In the United Kingdom our long-term unemployment is below the EU average and has fallen by 266,000 since January 1994. Long-term unemployment in the last

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recession peaked at 250,000 below its peak in the mid-1980s. I am not saying that we have resolved the problem, but the position is certainly improving.

We have to beware of Luddism when looking at the question of employment. As my noble friend Lord Skidelsky pointed out, new technologies have always been historically associated with increases in wealth and employment and not the converse, which people always believe when we enter them. They believe that new technologies will create unemployment. They change the nature of employment, but they certainly create more wealth and more employment.

In order to stimulate the labour market and support the reforms to it, we have to look at training and education. We set up the Training and Enterprise Councils in the early 1990s. We substituted private sector involvement for government direction. The programmes are more effective as a result. Some 40 per cent. of Training for Work leavers now find a job. Our new scheme of modern apprenticeships for the young will help to fill the gap in qualifications at technical level. By the end of the century, 70,000 young people a year should be achieving NVQ Level 3 through modern apprenticeships.

Nearly one in three people now go to university in Britain compared with only one in eight in 1979. Interestingly enough, a higher proportion of young people here complete their first university degree than in any other major European country. Twenty per cent. of the relevant age group graduate in the United Kingdom compared with 13 per cent. in Germany and 15 per cent. in France. Although other countries put more people through university, we have more graduates at the end. That is a record about which we can be very pleased indeed.

I said that I would return to the maiden speech of my noble friend Lord Pilkington. He made a very good point, which I can sum up. I believe that the figures-- I can give others--suggest that we are not making a bad fist at educating the top end of the ability scale. As my noble friend rightly pointed out, I do not believe that we are making nearly so good a fist at educating the bottom end. There are very many worrying statistics to highlight that point.

My noble friend suggested that we should look at the situation in France and Germany, where they accept quite early on in a child's life that the reality is that some are potentially capable of going on to further and higher education and others are not and will therefore have to be educated in a way that will give them the opportunity not only to get jobs but also to gain satisfaction with their education and find it stimulating.

I try to avoid education because of my background in it. But I have never been in any doubt that the non-selective process in secondary schools has condemned many decent children at the tail end to an education suited to a brain surgeon rather than to a plumber, as my noble friend has said. I very much hope that a consensus is beginning to emerge between us as the party opposite recognises that the totally non-selective comprehensive system has not in fact served that tail at all well. I do not believe that one need

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necessarily go so far as having different schools but one certainly needs to look at a much more rigorous selection of pupils and courses within the schools themselves. That is terribly important because, as my noble friend Lord Skidelsky rightly said, the number of unskilled jobs is falling faster than the amount of unskilled labour and if we do not do something to make sure that the next generation of potentially unskilled labour is skilled labour, we shall not begin to address that very difficult problem.

Perhaps I may advise my noble friend Lord Pilkington that I hope that the merger of the Department for Education with the Department of Employment will begin to take us down a better road in relation to the problem that he identified.

Looking at UK plc as a whole, I listened with interest to the noble Lord, Lord Ezra, who always seems to manage to be extremely pessimistic about these matters. Being a Scotsman, perhaps I may look at the half full bottle of whisky--

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