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House of Lords

Wednesday, 16th July 1997.

The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers--Read by the Lord Bishop of Southwark.

Lord Windlesham--Took the Oath.

The Earl of Cromartie--Took the Oath.

The Windfall Tax and Unemployment

Lord Lucas of Chilworth asked Her Majesty's Government:

    What impact, if any, the proposed windfall tax will have on the level of unemployment.

Lord McIntosh of Haringey: My Lords, the money raised by the windfall levy will be used to finance welfare to work and the new deal: £3.5 billion will be spent on improving the skills and ability to compete in the labour market of the young and long-term unemployed. A further £1.3 billion will be spent on equipping schools in order to improve the employability of school-leavers.

Lord Lucas of Chilworth: My Lords, I thank the noble Lord for that optimistic response, but does he agree that a better way might be to encourage a return to the craft apprenticeship scheme of yesteryear, with perhaps a training period of, say, 30 months? That would enable any subsidy paid to an employer to be reduced during the term of the apprenticeship, at the end of which one would have skilled craftsmen or technicians. The scheme would also provide a link between the employer and the employee.

Lord McIntosh of Haringey: My Lords, I have much sympathy with what the noble Lord suggests, but that is not the specific objective of the welfare-to-work programme which is designed generally for up to six months. We cannot promise that that programme will accommodate craft apprenticeships such as the noble Lord has in mind. However, we agree that one of the aims of the programme is to help young people to gain a long-lasting commitment from their employers to avoid the "revolving door". There will be an exit strategy with measures to help people to maintain employment when the subsidised period ends. I am sure that the noble Lord will agree that it is important to have an individualised approach to help people to choose the best option for their own needs.

Lord Tebbit: My Lords, does the noble Lord recollect that he recently gave me a half-answer to a Question that I had tabled on the matter of the windfall tax in which he ignored three of the points of the Question and did not answer them at all? On the question of whether the windfall tax would make any

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difference to the number of people employed by the companies to which the tax was applied, the noble Lord, in a curious grammatical construction, added at the end of his reply that it would not in his view make any difference to employment. Does that mean employment in the companies concerned or employment in the economy overall?

Lord McIntosh of Haringey: My Lords, I was trying to follow the noble Lord's Question which I understood to be about employment in the companies concerned. I think that he will find that I answered two questions, which is all that I am supposed to answer when more than two questions are posed. There is no justification for any reduction in employment in those companies affected by the windfall tax. The tax is a one-off and if the companies are claiming that they need to reduce employment in order to pay it, there must be something inefficient about the way in which they are operating.

Lord Evans of Parkside: My Lords, is my noble friend aware that as a time-served craftsman who served his apprenticeship in a shipyard in Tyneside I would welcome wholeheartedly a return to the old craft apprenticeship scheme? However, is my noble friend further aware that if we were to be in a position to return to that scheme, the first thing that we would have to do would be to reopen the shipyards, factories and steelworks that were closed under the last Tory Government?

Lord McIntosh of Haringey: My Lords, I have sympathy with my noble friend's point of view, but I must point out that the welfare-to-work programme which will be financed from the windfall tax will not be the only training programme undertaken by the Government. It is an additional programme, designed to re-establish contact with the labour market among those who have lost it and to update their skills. That should make the labour market more efficient.

Lord Mackay of Ardbrecknish: My Lords, does the noble Lord agree that the impact on unemployment of the windfall tax is likely to be pretty small? Would it not be far better to continue the last government's policy of having a stable and healthy economy, which has meant that today we have once again seen the monthly unemployment figures fall by about 36,500? Does the noble Lord agree that that may not last as interest rates increase and the pound goes over three deutschmarks in value?

Lord McIntosh of Haringey: My Lords, as is proper, I shall answer the noble Lord's first two questions. His first question involves the same degree of imprecision as that of the noble Lord, Lord Tebbit. I agree that the windfall tax will have little or no impact on employment in those companies affected by the tax, but for the reasons that I have given I believe that the programme on which the windfall money is to be spent should improve employment by making the labour markets more flexible. As to the noble Lord's second question, I welcome the further drop in unemployment levels both

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on the standard procedure and on the ILO figures this year. I acknowledge that those drops have continued for a considerable time under more than one government.

Viscount Ullswater: My Lords, the Government have announced a review of how the unemployment figures should be calculated. When in opposition they accused the then Government of fudging the figures. Can the noble Lord inform the House whether those who take part in make-work schemes like the environment task force will still be included in the unemployment figures or will they be fudged into the employment figures?

Lord McIntosh of Haringey: My Lords, pending the review by the Office of National Statistics, to which I have already referred, no changes have taken place. However, the noble Viscount will have observed that the British figures announced this morning show a reduction to 1.6 million and the ILO figures produced from the Labour Force Survey show a reduction to 2 million.

Lord Pearson of Rannoch: My Lords, further to the third supplementary question of my noble friend Lord Mackay of Ardbrecknish, does the noble Lord agree that were the Government to rule out monetary union for ever, the billions of deutschmarks that have poured into pounds might return to their natural home and the pound might find an altogether more convenient level?

Lord McIntosh of Haringey: My Lords, I thought that the noble Lord had found a quite legitimate device for dividing supplementary questions among different members of the Opposition. However, he has asked quite a different question, to which the answer is no.

Lord Barnett: My Lords, in order to try to elucidate the comments of the noble Lord, Lord Mackay of Ardbrecknish, about interest rates, will my noble friend ask the noble Lord--I am sure that he can do that--by how much the Opposition would have increased personal taxation to prevent interest rates rising?

Lord McIntosh of Haringey: My Lords, I would love to oblige my noble friend but I do not believe that the House would permit it.

Lord Swinfen: My Lords, over the past 18 years the party opposite has stressed the importance of manufacturing industries. What will the Government do to improve the position of apprentices and ensure that there are more of them so that the manufacturing industries of this country are far more efficient?

Lord McIntosh of Haringey: My Lords, I have already spoken about apprenticeships. I do not accept that the welfare-to-work proposals which will be financed from the windfall tax will fail to benefit manufacturing industry. Young people and the long-term unemployed are as free to seek help from

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welfare to work in manufacturing industries as in any other industries. I hope that it will be a positive benefit to manufacturing industries.

Lord Tebbit: My Lords--

The Lord Privy Seal (Lord Richard): My Lords, with great respect to the noble Lord, he has already had one go and another go not by default but by representation, if I may put it in that way. I believe that we should move on.

Northern Ireland: Inward Investment

2.47 p.m.

Lord Skelmersdale asked Her Majesty's Government:

    What support is given to firms intending to invest in Northern Ireland.

The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Dubs): My Lords, the Department of Economic Development, through the Industrial Development Board, provides selective financial assistance towards manufacturing and internationally tradeable service projects which offer new employment opportunities and are likely to enhance economic development. Additional support available includes training grants and R&D assistance.

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