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Defence Budget and Transformation
(12 years, 7 months ago)
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The Secretary of State for Defence (Mr Philip Hammond)
Before I make my statement, I know that the House will wish to join me in paying tribute to Corporal Brent McCarthy of the Royal Air Force and Lance Corporal Lee Davies of 1st Battalion the Welsh Guards, who were tragically killed in Lashkar Gah on Saturday. Both servicemen were performing an invaluable role in training and mentoring Afghan police, helping to ensure that Afghans will be able to take responsibility for their own security so that Afghanistan will never again be a place from which international terrorists can launch attacks on us and our allies. Their sacrifice will not be in vain. Our thoughts go out to their friends, families and colleagues.
With your permission, Mr Speaker, I would like to make a statement on progress in balancing the defence budget and establishing a sustainable equipment programme as part of the work to deliver the vision set out in the strategic defence and security review—a vision of formidable, adaptable and well-equipped armed forces backed by balanced budgets, disciplined processes and an efficient and effective Department.
The United Kingdom’s armed forces and the Ministry of Defence exist to protect our country and its interests and provide the ultimate guarantee of its security and independence. My overriding priority as Secretary of State for Defence must be achieving success on military operations, but our defence is built on the extraordinary quality and commitment of our people, and ensuring their welfare is close behind. I am clear that when we ask the brave men and women of our armed forces to put themselves in danger to ensure our national security, we owe it to them to make sure that they are properly supported with the very best equipment we can give them to do the job.
The best way I can support our armed forces as they restructure and refocus themselves for the future is to give them the assurance of stable and well-managed budgets and the confidence that the equipment programme is affordable and deliverable. That is because the only way to ensure, in the long-term, the ability to project power, to protect our national security and to ensure that our troops have the equipment they need is to have a defence budget that is in balance. A strong, diverse economy and sound public finances are a prerequisite to being able to sustain the armed forces that our national security requires, and so correcting the disastrous fiscal deficit we inherited and returning the economy to sustainable growth are themselves strategic imperatives. Defence has, rightly, contributed to that fiscal correction, as well as putting its own house in order by dealing with the chaos we inherited in an equipment programme that left a yawning black hole under our armed forces.
Tough decisions have been taken, and I want to take this opportunity to pay tribute to those who have taken them: my predecessor, my right hon. Friend the Member for North Somerset (Dr Fox), who showed the courage to tackle head on some of the worst and longest-running procurement fiascos and to make agonising choices over capabilities that Britain could not afford; the armed forces chiefs, who have grasped the challenges that the SDSR has presented and embraced the opportunity to create a sustainable foundation on which they can build for the future; and the leadership team in the MOD, who have worked tirelessly to turn this supertanker round—to tear up the old ways of doing things and to embrace a new model that will ensure that the MOD never again gets into the mess it was in by early 2010.
Thanks to all of them, and with the decision I announced to the House last week on carrier strike being the final piece of the jigsaw, I can tell the House today that, after two years’ work, the black hole in the defence budget has finally been eliminated and the budget is now in balance, with a small annual reserve built in as a prudent measure to make sure that we are not blown off course by unforeseen events: a plan endorsed by the chiefs and by the Treasury. We have achieved this by facing up to the fiscal reality and taking the tough decisions that Labour shirked: reluctantly accepting smaller armed forces and redoubling our resolve to invest in the best possible equipment for them; transforming the role of the Territorial Army as the regular army gets smaller, making it an integral part of Future Force 2020; and embarking on a major restructuring of the Department and a reduction of just over a third in the civilian work force.
Those have not been easy decisions, but they have been the right ones. This has been a difficult period for all our people in the armed forces and more widely across defence. Major change, the threat of redundancy and uncertainty about the future all present challenges to confidence and morale. Reaching a balanced budget for the MOD’s “planning round 12”, or PR12, represents a hugely important milestone in the transformation of defence. It is a symbolic break with the failed practices of the past and a solid foundation on which to build. It starts to put the destabilising uncertainty behind us as we move forward with defence transformation.
At the heart of the plan is the defence equipment programme, which by the end of the PR12 period will account for about 45% of the total defence budget. I have seen for myself over the past seven months just how complex defence procurement is. We are developing cutting-edge technology so that our armed forces have a battle-winning edge, with projects that rank alongside the biggest being undertaken in this country today.
Although there have been widely publicised failures, there have been unsung successes, most notably in Afghanistan, where the urgent operational requirements process funded by the Treasury has repeatedly allowed us to deliver the equipment that our armed forces need quickly and efficiently. Brigadier Patrick Sanders, who commanded 20th Armoured Brigade last year in Afghanistan, has described the equipment that his troops had as “second to none” and
“the best that I’ve experienced in 27 years”
in the Army. We need to build on the best elements of the UOR model to achieve that level of performance across defence as a whole. At the same time, we must learn from the failures.
Over the 10 years of PR12, we will spend almost £160 billion on new equipment and data systems, and their support, reflecting the planning assumption agreed with the Treasury of a 1% per annum real increase in the equipment and support budget from 2015. However, poor decision making and poor management have too often meant that the armed forces have not received the full benefit of all their spending.
Under the previous Government, the equipment plan became meaningless because projects were committed to it without the funding to pay for them, creating a fantasy programme. Systematic over-programming was compounded by a “conspiracy of optimism”, with officials, the armed forces and suppliers consistently planning on a best-case scenario, in the full knowledge that once a project had been committed to, they could revise up costs with little consequence. It was an overheated equipment plan, managed on a hand-to-mouth basis and driven by short-term cash, rather than long-term value. There were constant postponements and renegotiations, driving costs into projects in a self-reinforcing spiral of busted budgets and torn-up timetables. Rigid contracting meant that there was no flexibility to respond to changed threat priorities or to alternative technologies becoming available. It is our armed forces and the defence of our country that have ultimately paid the price for that mismanagement. The culture and the practice have to change.
We will move forward with a new financial discipline in the equipment plan. There will be under-programming rather than over-programming, so that we can focus on value rather than on cash management. That will give our armed forces confidence that once a project is in the programme, it is real, funded and will be delivered, so that they can plan with certainty. The core committed equipment programme, which covers investment in new equipment and data systems, and their support, amounts to just under £152 billion over 10 years, against a total planned spend of almost £160 billion. That £152 billion includes, for the first time ever, an effective centrally held contingency reserve, determined by Bernard Gray, the new Chief of Defence Matériel, of more than £4 billion to ensure the robustness of the plan.
The plan includes 14 new Chinooks, Apache life-extension and Puma upgrade; a programme of new armoured fighting vehicles worth about £4.5 billion over 10 years, including the assessment phase of Scout; and a £1 billion upgrade of the Warrior armoured fighting vehicle. It also includes the building of the two Queen Elizabeth-class aircraft carriers, the remainder of the Type 45 destroyers, the new Type 26 frigates and the Astute-class and successor nuclear submarines. It includes investment in new Wildcat helicopters, the Merlin upgrade programme and the assessment phase of Merlin marinisation; the introduction into service of the Voyager air-to-air refueller and troop transporter, the A400M air transporter and the Air Seeker surveillance aircraft; an additional C17 strategic airlifter; continued investment in Typhoon and the joint strike fighter; and £7 billion of investment in “complex weapons”—the smart missiles and torpedoes that give our Navy, Army and Air Force their fighting edge.
Balancing the budget allows me to include within that £152 billion core programme a £4 billion-plus investment in intelligence, surveillance, communications and reconnaissance assets across the Cipher, Solomon, Crowsnest, Defence Core Network Services and Falcon projects; the outright purchase of three offshore patrol vessels that are currently leased; capability enhancements to the Typhoon; and a range of simulators, basing and support equipment for the new helicopters and aircraft that we are introducing.
That programme represents the collective priorities of the armed forces, set out by the armed forces committee on which all the service chiefs sit. They confirm that the committed core equipment programme, together with the £8 billion of available unallocated headroom, will fund the capabilities that they require to deliver Future Force 2020 as set out in the strategic defence and security review. That £8 billion will be allocated to projects not yet in the committed core programme only at the point when they need to be committed in order to be delivered on time, and only in accordance with the military assessment of priority at the time. No project will be allowed to be committed without a 10-year budget line to cover not only its procurement but its support costs. Not rocket science, you might think, Mr Speaker, but quite an innovation in defence procurement none the less, and individuals and contractors can expect to be held to account for the estimates on which decisions to commit to projects are based.
The Government believe that transparency is a driver of performance. I want to be as transparent as possible about the defence budget, because greater transparency will help me to drive the change that we need to see in the Ministry of Defence. However, the House will understand that some elements of the defence budget are security-sensitive and others are commercially sensitive. It is essential that we preserve our negotiating space with defence contractors without announcing all our detailed intentions in advance. So to provide the reassurance that the House will want, while protecting the commercial and security interests of defence, I have agreed with the National Audit Office that it will review the equipment plan and confirm that it is affordable. The NAO will have access to confidential, detailed information on the equipment plan that cannot be published, but once it has completed its work, we will publish its verdict on the plan together with a summary of the plan itself.
Today’s announcement and the work that we are taking forward mean that for the first time in a generation the MOD not only has a balanced budget and an appropriate reserve but is putting in place the behaviour-changing incentives and structures that will keep it in balance. It means that the politicians and civil servants in the MOD can look the armed forces in the eye, in the knowledge that we are delivering them the stable platform that they need to build Future Force 2020. We are delivering them a budget agreed across Government, across the Department and by the service chiefs, and a firm baseline for the transformation that is under way to armed forces that may be smaller, but which will be adaptable, agile, equipped with the very best technology and supported by an MOD that is laser-focused on their needs. We are working alongside a defence industry that can invest with renewed confidence in an equipment plan that is actually deliverable. That represents the start of a new chapter in the long history of UK defence, and I commend this statement to the House.
Mr Jim Murphy (East Renfrewshire) (Lab)
I join the Secretary of State in offering my condolences to the families of Corporal Brent John McCarthy from the Royal Air Force and Lance Corporal Lee Thomas Davies from 1st Battalion Welsh Guards. They will be for ever missed by those who love them, and their sacrifice should always be honoured by our nation. I agree with the Secretary of State. We continue to support the mission in Afghanistan, and we all wish to see political progress there to match our force’s bravery.
I thank the Secretary of State for advance copy of his statement. He might lack the passion of his predecessor, but he should not mimic his assertions. His predecessor said, about the strategic defence and security review, that defence was back on a stable footing, and at the time of the three-month review, he said:
“For the first time in a generation, the MOD will have brought its plans and budget broadly into balance”.
Today we are hearing the same thing, but we will judge today’s statement not on these reheated claims but on the detail published and on whether the Defence Secretary’s plans provide the right balance between flexible force structures, strategic reach post-Afghanistan, strengthening alliances within NATO, support for our forces and their families, and budgetary stability.
The Defence Secretary has said that there will be no more cuts over and above those he has already announced. Let us not forget, however, that he has announced cuts up until 2020, with thousands of service personnel and civil servants yet to be sacked, £900 million of allowances still to be lost and veterans’ and war widows’ pensions being frozen year-on-year.
Short-term control of defence costs to support careful deficit reduction needs to be coupled with long-term reform, but the Government have been reckless where care has been essential and timid when boldness has been required—reckless because decisions on the Astute class submarines and the Trident and carrier programmes have massively increased costs, and timid because long-promised reform of Defence Equipment and Support has been stalled. Only this Government’s review into speeding up defence delivery could itself be four times postponed. Hundreds of defence workers have lost their jobs, and major projects were last year delayed by a combined 30 months and at a cost of £500 million.
Last week, the Secretary of State stumbled into three different figures on the aircraft carrier U-turn. Let us see whether he is any clearer today. In the interest of the Liberal Democrats, the Government have delayed the biggest procurement decision of them all—Trident replacement. Will he therefore tell the House how much that decision to delay will add to the total projected costs of Trident’s successor? Will he also tell the House whether any cuts have been made since the three-month review and whether any programmes have been delayed to enable today’s announcement?
The Secretary of State talks about balancing the books, but I also want to ask him about the balance of our forces. What will be the precise up-front costs in this Parliament of converting RAF bases to Army bases for those returning from Germany? There is also consternation in Scotland about his plans for historic Scottish regiments. Scotland has a proud history in UK armed forces that simply cannot be cast aside, so will he guarantee that the names, identity and cap badges of Scotland’s regiments will be preserved? Failure to do so will show yet again that the Government are totally out of touch with Scotland.
We welcome the new investment, but will the Secretary of State confirm that the full cost of major projects, including the future tanker, the carrier programme, the Typhoon and the joint strike fighter fleets, have all been factored into the figures he is publishing today, and will he publish—perhaps not today but shortly—details of each programme and their costs? Ministers have committed to publishing a 10-year equipment plan. Without that, his claims today cannot be substantiated. Will he therefore honour his commitment to publish the equipment plan with its projected cost and available resource over the same period, or do his comments today about the National Audit Office override that previous commitment?
The Secretary of State has said that there is now a departmental reserve in each year. Will he guarantee that the contingency will be ring-fenced for defence?
In conclusion, Governments take the gravest decision of all by sending our forces into harm’s way. Today’s statement is about the quantity, quality and cost of the equipment we provide them with. We will hold the Secretary of State to each and every one of his commitments today, because it is in the nation’s interests that he gets it right; and where he does, we will support him.
Mr Hammond
They still don’t get it. Still they do not understand that a balanced budget is the essential underpinning to effective defence. Still they are in denial about the £38 billion black hole they left, even though we have the internal Labour party documents admitting that the £38 billion black hole is Labour’s biggest weakness in defence. Still they appear to believe, like children in a sweetshop, that it is better to have a big programme that cannot be delivered than a smaller one that our armed forces and defence industry can rely on. Where would we be if the right hon. Gentleman was in charge? We would be right back where we were in May 2010, because he will not make the difficult decisions that support effective defence and will get the MOD back on track.
The right hon. Gentleman asked me about the process from the SDSR and the three-month exercise. It has been a long and drawn-out process, with savings made at the SDSR, further savings made in the three-month exercise to get to the position announced by my right hon. Friend the Member for North Somerset (Dr Fox)—that the defence budget was broadly in balance—and, now, the work that we have done to go the final mile, which has enabled us to say that we have a fully balanced budget.
I must correct the right hon. Gentleman on his point about pensions. Pensions are not frozen, as he very well knows, and using emotive language like that will not help him.
The right hon. Gentleman referred to the £500 million increase in the defence programme projects over the last year. What he forgot to tell the House was that in the last year of his party’s Government there was a £3.3 billion increase in the equipment programme. I can also tell him, in answer to his question, that there is no delay to the Trident programme. The timetable of the Trident programme allows us to include all the critical path items in the PR12 period, and we have done so in the figures that I have announced today.
The right hon. Gentleman asked about regimental structures in Scotland. I can say this to him: I, too, have read in a newspaper that I am determined to introduce a continental-style Army, without a regimental structure. I can say this to the House: I understand absolutely the vital role that the regimental structure plays in the British Army, and as long as I am Secretary of State for Defence, the regimental structure will remain.
The right hon. Gentleman made a fair point when he asked how, when the equipment plan in all its detail cannot be published—as it never has been published in the past—I can substantiate the statement that I have made today. I can do two things. On the one hand, I can ask the armed forces committee and the chiefs of staff to confirm that they can deliver the Future Force 2020 capability within the budget that I have announced, and they have done that. On the other hand, I can ask the National Audit Office to review the statement that I have made—the plan that we have produced—and confirm that it is deliverable within the available budgets. As I said earlier, once the National Audit Office has completed its review, we will publish the equipment plan at the same level of detail as it has been published in the past.
Finally, the right hon. Gentleman asked me whether I was confident that managing the Department’s budget prudently, with in-year unallocated provision and contingency provision in the equipment plan, would not lead to a Treasury raid, in an attempt to snatch back the headroom. May I guarantee that it will be retained for use in defence? He might have noticed that my right hon. Friend the Chief Secretary to the Treasury is sitting on the Treasury Bench. He gets it—he understands that the only way in which we will be able to manage the defence budget effectively in future is to have an open and transparent relationship between the Treasury and the MOD, where we both understand the boundaries and drive the incentives that will change behaviour in that Department.
As we have taken the painful decisions in the best interests of our armed forces and of Britain’s defence, we have required no lectures from the party that shirked them. As we have tackled the £38 billion black hole, we have asked for no advice from the Labour party, which has yet to take any action to deal with that black hole.
Dr Liam Fox (North Somerset) (Con)
First, may I thank my right hon. Friend for his kind words and extend them to the rest of the ministerial team? The junior Ministers all had their share of the hard work and the difficult decisions that had to be taken to get us out of the mess that we inherited. Will my right hon. Friend reflect on the fact that we inherited from Labour not only a £38 billion black hole but a commitment to the replacement of the Trident programme that had no funding line whatever? Will he also tell us how far he has got in introducing professional procurement skills into the Ministry of Defence to enable us to deal with contracts on an equal basis with industry and thus give taxpayers better value and ensure that the kind of disasters that we faced in the past do not happen again?
Mr Hammond
My right hon. Friend is absolutely right to draw attention to one part of Labour’s black hole—the unfunded Trident commitment. He might equally have referred to the 22 Chinook helicopters that the former Prime Minister famously announced but forgot to fund. He asks about professional skills in Defence Equipment and Support, which is a crucial part of the MOD’s operation. The new Chief of Defence Matériel is drawing up a defence matériel strategy that will involve a radical change to the structure of the Defence Equipment and Support organisation. I hope to be able to make an announcement to the House on that matter before the summer recess.
Mr Speaker
Order. There is much interest in this matter among right hon. and hon. Members. Accommodating that level of interest will require brevity in questions and answers alike.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
The Secretary of State was enormously helpful last Thursday when he told me that procuring an aircraft carrier was slightly more complicated than buying a bottle of milk or a box of eggs. I wonder whether he will be equally helpful today. He keeps referring to the £38 billion black hole. Will he tell us how much of that £38 billion he assesses as being due to contractual commitments and therefore outside the scope of his cuts, and how much of it as being outside those contractual commitments?
Mr Hammond
As the hon. Lady will know, my predecessor took some difficult decisions to cancel programmes that were contracted, which incurred some costs. One of the changes that we are now making will ensure that we do not commit contractually to projects earlier than we need to, so that if the MOD needs to restructure a programme or introduce flexibility, it will be able to do so without incurring such penalties.
Mr James Arbuthnot (North East Hampshire) (Con)
The proof of this pudding will be in the eating, but I would suggest that the House should give it a wary welcome. At least we have now moved away from the position that existed at the end of the last Government, when the then Prime Minister said that there was to be no bad news and no new money. Does my right hon. Friend feel that we are really giving enough priority to defence research? The figure of 1.2% of the defence budget seems pretty low to me.
Mr Hammond
I am grateful to my right hon. Friend for his comments. Defence research and technology provide vital support to our defence effort and, after years of decline, we have guaranteed that we will not reduce any further the percentage of 1.2% of the defence budget.
Angus Robertson (Moray) (SNP)
Taxpayers in Scotland contribute more than £3.3 billion every year towards the Ministry of Defence, but only £2 billion is spent on defence in Scotland. The Secretary of State’s predecessor said in evidence to the Scottish Affairs Select Committee that, between 2000 and 2010, the total reduction in service jobs was 11.6%, but that the reduction in Scotland was 27.9%. Given the disproportionate personnel cuts and the multibillion pound defence underspend in Scotland, will the Secretary of State take the opportunity today to rule out the prospect of any further amalgamation or disbandment of Scottish raised units?
Mr Hammond
The hon. Gentleman has clearly got the wrong end of the stick. Defence is about protecting our people. Scottish defence does not happen in Scotland: it happens under the oceans where our nuclear deterrent is on constant patrol and in Afghanistan where our servicemen are taking risks, day-in, day-out, to prevent threats from coming to our own shores. I will tell the hon. Gentleman frankly: we are going to have a smaller Army, and we cannot have a smaller Army without making some structural changes. I will make an announcement as soon as I am able about the structure of Army 2020.
Sir Menzies Campbell (North East Fife) (LD)
May I tell my right hon. Friend that this Scottish taxpayer welcomes his statement? I hope he will excuse a moment or two of scepticism on my part, however, because those of us with long memories will have heard similar statements made from the Dispatch Box in the past—under the headings, for example, of “Options for Change” and “Frontline First”. The true test of the quality of this statement will be the extent to which it is achieved. I am delighted to hear that he has embraced the concept of fiscal reality. I hope he will keep it firmly in mind when he comes to consider the future of the Royal Air Force at Leuchars in my constituency.
Mr Hammond
I congratulate my right hon. and learned Friend once again on mentioning RAF Leuchars. It is not just about balancing the budget. I entirely accept that he will have heard statements about reductions in expenditure and budgets before. It has to be about changing behaviour. We will not make this change sustainable unless we put in place the structures, the mechanisms and the incentives within the Department to change the way the various players operate. That is what we are determined to do.
Mr Denis MacShane (Rotherham) (Lab)
I warmly congratulate the Chief Secretary on obtaining the unconditional surrender of the Ministry of Defence across Whitehall. Has the Secretary of State seen today’s Le Monde, which has a whole-page article on how Britain is creating a “zizanie”—I think the English translation would be “omnishambles”—with the U-turn on the F-35s? As China flexes its muscles with the Philippines in the south Pacific sea, why will no British aircraft carrier be able to patrol at this crucial time for world history?
Mr Hammond
I am not sure whether the right hon. Gentleman was here last Thursday when I made a statement, which I hope he would regard as good news on carrier strike. I announced that the first carrier will be delivered in 2017 and that the first aircraft will fly off it in 2018. We are embarked on the process of patching up the hole that the previous Administration left us.
Nicholas Soames (Mid Sussex) (Con)
I warmly congratulate my right hon. Friend, together with his colleagues in the Ministry of Defence—civilian, political and military—on a remarkable achievement. Will he tell us whether, in the light of the decks having been cleared, it is his intention to start work now on the preparatory work for the next strategic defence review, which comes along much quicker than one thinks?
Mr Hammond
I can tell my right hon. Friend that work is in hand. A body within the Department is already sitting and considering issues that need to be brought to the fore and thought through for the next strategic defence review. The five-yearly cycle will allow us to look at the strategic changes during it, while making tactical decisions within the five-year period to manage the budget and the programme.
Jeremy Corbyn (Islington North) (Lab)
Now that the Secretary of State has finally got round to mentioning Trident, will he please say why he cannot give us some news in his statement on the expenditure of £1 billion on long-lead items for the reconstruction of the Trident system and the missiles that go with it, and why we are still contemplating spending £100 billion on a weapon of mass destruction that does not bring any security to this country, but merely a great deal of expenditure and danger?
Mr Hammond
The hon. Gentleman’s views on this subject are very well known, and I do not share them.
Mr Charles Kennedy (Ross, Skye and Lochaber) (LD)
Will the Secretary of State clarify whether the statement can offer any long-term reassurance or will have any long-term impact on the future of the underwater training ranges at Rona and around Kyle of Lochalsh in my area? There has been a long-running uncertainty there, and it would be helpful to know whether this statement settles the matter one way or t’other.
Mr Hammond
I am afraid that that is a level of detail that, between us, the Under-Secretary of State for Defence, my hon. Friend the Member for Mid Worcestershire (Peter Luff) and I are unable to answer from the Dispatch Box, but I will write to the right hon. Gentleman later this afternoon.
Nic Dakin (Scunthorpe) (Lab)
How many direct and indirect jobs will be lost as a result of this process?
Mr Hammond
We have already announced the reductions in the size of the armed forces and a reduction in the size of the MOD civilian service. As a result of what I have announced today, there will be no additional reductions in head count. The downsizing that has already been announced is the limit of the downsizing that we need in order to deliver the programme. I can tell the hon. Gentleman, however, that there are many tens of thousands of jobs in the UK defence industries, and that by introducing a sustainable equipment programme that will give industries the confidence to invest, we will protect those jobs and technologies and help those industries to build their export markets.
Bob Stewart (Beckenham) (Con)
I welcome the Secretary of State’s announcement that we are going to balance the defence budget. I am also aware that the Royal Air Force is to have Rivet Joint aircraft, which will replace the Nimrod R1. Is there any intention for us to have a maritime surveillance capability again, given that we are an island nation?
Mr Hammond
As has been said from the Dispatch Box before, maritime surveillance from conventional aircraft is not currently funded in the programme. That is one of the capability gaps that my predecessor chose to accept, and a risk that we have chosen to manage. A number of different technologies will be available to deal with it as we approach the end of the decade. That is one of the decisions that the armed forces committee will have to make when it considers the prioritisation for the head room in the planned equipment budget.
Hugh Bayley (York Central) (Lab)
Will the Secretary of State assure the House that the budget that he has announced today will still meet the NATO requirement for us to spend 2% of our gross domestic product on defence? Given that operations abroad will almost certainly involve allies from other NATO countries, can he tell me whether he has made any progress in persuading countries that spend less than 2% of their GDP on defence to increase their defence spending, to which he has referred in the House previously, and if so, which countries are involved?
Mr Hammond
I can assure the hon. Gentleman that our defence budget in the spending review period exceeds the 2% of GDP NATO guideline. What I said on the previous occasion, and have said publicly on a number of occasions, is that while in the medium term our NATO partners must increase their contribution to collective defence, in the short term, at a time when there is extreme fiscal pressure on nearly all the European NATO countries, it is not realistic to go around wagging the finger at them about the amount that they spend. I have chosen to focus my pitch to them on the need to render the budgets that they do have more effective by making their forces more deployable and more available to the alliance. That is the thrust of the message that I was trying to deliver in Germany the week before last.
Penny Mordaunt (Portsmouth North) (Con)
What impact does the Secretary of State expect the measures that he has announced to have on recruitment and retention in our armed forces, not only in respect of regulars but in respect of our challenging targets for the recruitment of reserves?
Mr Hammond
My hon. Friend is right to draw attention to that issue. Many people have asked me—and I have to say that I asked the question myself when I first entered the Ministry of Defence—why we are making service people redundant but are still recruiting. The answer, of course, is that because the armed forces are a bottom-fed organisation, we need to recruit even when we are reducing the overall size of forces. I hope that the greater confidence and clarity about the future will be an aid to recruitment, and I am sure that the greater role that the reserves will play in our overall force construction will be a great aid to recruitment in the Territorial Army and the air and naval reserves.
Nick Smith (Blaenau Gwent) (Lab)
The life extension of the Apache helicopters will help while we wait for our aircraft carriers to have planes. How much is being committed to that?
Mr Hammond
I am not willing to specify a precise budget. I must correct the hon. Gentleman on a point of detail: I think that the Apache was due to go out of service without life extension in 2025—we will have aircraft carrier capability long before that—and this programme will extend its life beyond 2025. However, I cannot give him the individual line item budget.
Dr Julian Lewis (New Forest East) (Con)
Will the balanced budget enable the previously agreed total of 25 frigates and destroyers to be maintained in the future, and will it allow the future Trident successor fleet to mount continuous at-sea deterrence, as personally favoured repeatedly by the Prime Minister in this House?
Mr Hammond
The answer to the second question is yes, the funding for the successor submarine is based on continuous at-sea deterrence. I am not sure about the 25 figure; the figure in the SDSR is 19 frigates and destroyers.
Mr Iain Wright (Hartlepool) (Lab)
The Secretary of State has mentioned long-term value and a sustainable equipment programme for our vital UK industry, but given the debacle in respect of the Royal Navy fuel tankers, for which not a single British supplier or shipyard was invited to bid for the £500 million contracts, what reassurances can he give on providing real long-term value for the UK defence industry by enhancing our British manufacturing capability as well as our military capability?
Mr Hammond
We have made it very clear that where there is a sovereign capability that needs to be retained in the UK—such as in complex warship building, aerospace technologies and submarine building—we will enter into agreements with the private companies that have that capacity in order to ensure it is sustained. The hon. Gentleman is completely wrong about the MARS—military afloat reach and sustainability—tankers, however. British companies were invited to tender and were involved in the process. In the end, none chose to submit a bid, and the only bid we received from a European company was far in excess of the winning bid, received from a South Korean company.
Mr Edward Leigh (Gainsborough) (Con)
Any objective observer would want to congratulate the Secretary of State on the rigour he has brought to his job, but does he accept that balancing the budget may not, on its own, be enough? At other times in our history, we have balanced the budget; we may have done so in the mid-1930s, but we were spending far too little on defence. Is he aware that his greatest task may lie before him: convincing the Treasury, the Cabinet and the people that we simply have to spend a greater proportion of our national wealth on defence in what is a dangerous world?
Mr Hammond
What I can say to my hon. Friend is that the chiefs of staff sitting on the armed forces committee have written to me to confirm that, with the budget we are making available, they can deliver the force construct set out in the SDSR for Future Force 2020. I agree with him on this, however: balancing the budget in itself does not solve the problem. Anybody can cut a budget. The challenge is to make sure the money that is spent is spent efficiently and effectively, getting through to the sharp end and delivering the military capability we need. That is why we need to change the behaviours and practices in the MOD, not just the budget.
Mr Wayne David (Caerphilly) (Lab)
Given the Government’s commitment to the renewal of the Trident programme, can the Secretary of State explain the point of the Liberal Democrats’ review of alternatives to Trident?
Mr Hammond
As part of the coalition agreement, we made a commitment to such a review, in parallel with committing to the long-lead items on Trident replacement, so it would not slow down the programme—to answer the question of the right hon. Member for East Renfrewshire (Mr Murphy), the shadow Secretary of State. That review of possible alternatives to a submarine-based nuclear deterrent will be completed by the end of this year and submitted to the Prime Minister and Deputy Prime Minister, and a decision will be made then.
Mark Lancaster (Milton Keynes North) (Con)
Urgent operational requirements have become a permanent fixture in the procurement process. However, while they have delivered excellent kit to our troops on the front line, they are widely regarded as offering poor value for money in the medium term and in respect of the through-life process. Can the Secretary of State assure me that while we have an effective UOR process, it will not be used as a substitute for planned procurement?
Mr Hammond
Yes, I can reassure my hon. Friend of that. There is a perception that UORs have effectively delivered equipment far more quickly, and often far closer to the original estimated budget, than conventional procurement. We have got to see what we can learn from those processes that will translate across into the main procurement programme.
Thomas Docherty (Dunfermline and West Fife) (Lab)
The Defence Secretary has today made exactly the same claims about having balanced the books as his predecessor did some 12 months ago, yet 12 months ago the ministerial team refused to give the Defence Committee a single strand of evidence. Will the Government give that evidence this time?
Mr Hammond
First, my right hon. Friend the Member for North Somerset (Dr Fox) said that he had broadly balanced the defence budget and he was correct. What we have done over the past few months is go that last mile, to be able to say that it is fully balanced over the PR12 period. As for information, I have made it clear that once the National Audit Office has completed its review, we will publish its report and a summary-level equipment plan, with the same level of detail in it as has routinely been published about the defence budget. That may not be the level of detail that the hon. Gentleman would like, but it just is not possible, for security reasons and for commercial reasons, to publish a 10-year programme in minute detail without making the situation that the MOD faces impossible.
Mr Julian Brazier (Canterbury) (Con)
I congratulate my right hon. Friend and his team on a remarkable effort, which will make a considerable difference to our armed forces over the next decade. While he has the Chief Secretary to the Treasury sitting next to him, may I urge on him two points of detail that used to exist the last time Conservatives were in office? The first is a carry-over facility within the procurement function, so that we do not have the year-end scrabble. The other is an exemption from the burdensome European procurement regulations, which the French still enjoy.
Mr Hammond
Some defence procurement is not subject to the European procurement directive. As for the carry-over, year-end flexibility on procurement, I have had very constructive discussions with my right hon. Friend the Chief Secretary and with the finance director in the MOD, and we are satisfied with the arrangements we have in place.
Mr Speaker
Order. Given the number of right hon. and hon. Members still seeking to catch my eye, and the fact that the debate to follow is very heavily subscribed, I repeat my exhortation to single, short supplementary questions and the Secretary of State’s typically pithy replies.
Sir Bob Russell (Colchester) (LD)
Britain’s national and international defence interests are not best served by having a smaller Army, a smaller Navy and a smaller Air Force. We are now told that the budget is in balance, so, looking to the home front, can the upgrade and modernisation of the family accommodation be brought forward?
Mr Hammond
Not without busting the budget again, I am afraid. There is a programme for the modernisation of accommodation, part of which is continuing. Another part of it has been put on hold until 2014-15, and I am afraid that is where it will have to stay for the moment.
Stephen Phillips (Sleaford and North Hykeham) (Con)
On behalf of the regiment in which I had the honour to serve, may I join my right hon. Friend, and indeed the shadow Secretary of State, in paying tribute to Lance Corporal Davies for his sacrifice?
No Government Member doubts the enormity of the £38 billion hole left by the previous Government or that it is, as the shadow Secretary of State has said, the principal weakness of the Labour Government. Will my right hon. Friend tell the House what effect promising much and delivering little has had on the morale of our armed forces?
Mike Crockart (Edinburgh West) (LD)
The Secretary of State has said much today about ensuring the welfare of, and building a stable platform for, our armed forces. One of the best ways of delivering that is by giving them certainty about where they will be based. Unfortunately, that is in short supply in Scotland, particularly in Edinburgh, so when will he deliver it?
Mr Hammond
My hon. Friend is absolutely right about that and I have acknowledged it many times: uncertainties about redundancy, about basing and about unit structures are all debilitating. We will close down those uncertainties as soon as we possibly can but, as I said, it will be towards the end of the year before we can make an announcement about basing.
Jessica Lee (Erewash) (Con)
Does my right hon. Friend agree that the £4 billion contingency budget for the equipment programme is particularly welcome for companies such as Chemring, in my constituency, which provides hundreds of jobs and builds fantastic, quality equipment for our armed forces? I say that because businesses require clarity in order to plan for the future, and today’s statement provides that.
Mr Hammond
I am grateful to my hon. Friend for that. The knowledge that there is a £4 billion contingency budget will be hugely reassuring for the defence industry when it looks at the overall programme and decides how to invest its own money in the technologies and skills needed to deliver it. However, I urge the company in her constituency not to think that the £4 billion is there to accommodate its cost overrun.
John Glen (Salisbury) (Con)
In warmly welcoming today’s announcement, may I ask the Secretary of State to go further and assure the House that when he reviews the options for the organisational model that the Chief of Defence Matériel believes will be best for the future of the Defence Equipment and Support organisation, he will challenge them robustly on their capacity to deliver real, radical organisational and cultural change in that organisation so that decisions are made in the right way in the future?
Mr Hammond
I can give my hon. Friend that assurance, but I do not underestimate the scale of the task. As DE&S is structured at the moment, we are seeking to employ project managers to manage some of the world’s largest and most complex projects and we are seeking to do it on civil service pay. That is challenging.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
I thank my right hon. Friend for what he has said and I hope that it will produce greater confidence in his negotiations with the Treasury, as it will understand exactly where the MOD budget is going. May I ask for an assurance that the nuclear deterrent will not be up for negotiation with any of the other political parties in this House?
Mr Hammond
Let me assure my hon. Friend that relationships with the Treasury have improved dramatically at a working level. My right hon. Friend the Chief Secretary and I have complete transparency on these matters and have worked together very closely to achieve this outcome. The Government are fully committed to the replacement of the Trident nuclear deterrent.
Duncan Hames (Chippenham) (LD)
I welcome the Defence Secretary’s decision to require an estimate of 10 years’ worth of support costs before a project is committed. It makes little sense, after all, to go to a cheaper supplier of respirators, for example, only to pay more each year in servicing them. Will that open the door to a more innovative approach from suppliers, so that we might increasingly be procuring not just kit but in-service capability?
Mr Hammond
I am glad to tell my hon. Friend that that is already happening. We are increasingly entering into availability contracts where the whole-life costs of the project are taken into account and capability is delivered in the most efficient way.
Christopher Pincher (Tamworth) (Con)
My right hon. Friend’s announcement is good news for the taxpayer and will give certainty to our armed forces personnel. Will he say a little more about how it will build certainty among the lower reaches of the procurement supply chain—the small and medium-sized enterprises—who have suffered historically from budgetary uncertainty and do not have the luxury of waiting around for Government and prime contractor decisions?
Mr Hammond
We are committed to supporting the role of SMEs in the supply chain. I visited some SMEs involved in defence equipment very recently and they are among the most innovative and flexible parts of the industry. The changes we have already announced will assist them and I have pledged to look at how we can give them greater certainty that when they invest their own money in developing technologies, we can give them the highest possible level of assurance in advance that they will be able to export those technologies and not find that they have developed a white elephant.
Sajid Javid (Bromsgrove) (Con)
I warmly welcome the statement by my right hon. Friend and congratulate him and his team on cleaning up the mess left by the Labour party. With respect to that mess, has he received an apology from that party?
Stephen Gilbert (St Austell and Newquay) (LD)
Will my right hon. Friend confirm that the £5 billion-worth of funding for the Atomic Weapons Establishment that has been announced today in a written ministerial statement is not new money and does not represent an increased financial commitment to the Trident successor programme?
Mr Hammond
I can confirm that the new contract for the Atomic Weapons Establishment, announced today, is in fact a rolling over of the existing contract at a lower price for the next period.
Andrew Selous (South West Bedfordshire) (Con)
Kuwait compensated this country for the cost of its liberation. Libya is a very wealthy country. Has any similar offer been made?
James Morris (Halesowen and Rowley Regis) (Con)
Does the Secretary of State agree that a balanced defence budget combined with sensible procurement in defence are central to protecting Britain’s national interests and allowing the country to make the difficult strategic choices we need to make in a global world?
Mr Hammond
Absolutely. Understanding the cost of what we need to procure and ensuring that what we announce we will procure can genuinely be delivered are central to giving our armed forces the certainty to plan for the future.
Harriett Baldwin (West Worcestershire) (Con)
In reaching this historic milestone—eliminating the £38 billion black hole—did the Secretary of State receive any submissions at all from the Labour party?
Mr Hammond
That is an interesting question, because the Labour party’s position is to deny that there was a £38 billion black hole. It is rather helpful to us that we have in our possession a letter from the right hon. Member for East Renfrewshire to the Leader of the Opposition, setting out his view that the £38 billion black hole was Labour’s greatest weakness and vulnerability when it came to defence.
Points of Order
Ms Harriet Harman (Camberwell and Peckham) (Lab)
On a point of order, Mr Speaker. Lord Justice Leveson is conducting a public inquiry on the media, and will call a number of hon. Members, including Ministers, to give evidence. It is an important inquiry, and we await the outcome, but will you clarify that while the Leveson inquiry proceeds with its work, it remains the case that the Secretary of State for Culture, Olympics, Media and Sport is accountable to this House? Is it in order for him to say that he will not answer questions from hon. Members in this House because he will instead tell Lord Leveson the answers, and to say that he will not place documents in the Library because he is giving them to Leveson? Will you confirm that he refuses to answer the question not because he is prevented from doing so by the Leveson inquiry, but because he does not want to? Of course the Secretary of State must give his evidence to Leveson whenever he is called to do so, but surely he cannot use that as an excuse to evade his accountability to this House.
Mr Speaker
I am grateful to the right hon. and learned Lady for giving me notice of her point of order. My response is twofold. First, as a matter of general principle, I should make it clear that the accountability of a Minister to this House is not diluted or suspended by a Minister’s engagement with inquiries or other proceedings outside this House. When parliamentary questions to Ministers are tabled, those questions should receive substantive and timely answers. Secondly, if Ministers are providing written documents to an inquiry, it would be a courtesy to the House, and help with the discharge of its scrutiny function, if such documents were also provided to the House. I hope that is clear.
Mr George Howarth (Knowsley) (Lab)
Further to that point of order and to your response, Mr Speaker. Before the House prorogued, I tabled four questions to the Secretary of State for Culture, Olympics, Media and Sport and received replies to exactly the same effect as those that my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman) described: the Secretary of State said that he would submit the information that I sought to the Leveson inquiry. In view of the ruling that you have just given, should I retable those questions, or should the Secretary of State answer them?
Mr Speaker
I have made the position very clear. I would not presume to advise the right hon. Gentleman, who is well versed in the use of the Table Office and the facilities offered by the House. He is a persistent woodpecker, and he will make his own judgment on how to proceed in the matter. I hope that is helpful.
Mr Speaker
Order. I do not want this to become a debate; I am a little concerned that it might. I will err on the side of tolerance, but I hope that it will not be abused by the hon. Member for Gainsborough (Mr Leigh).
Mr Edward Leigh (Gainsborough) (Con)
On a point of order, Mr Speaker. When we have had scandals or so-called scandals in the past, our Select Committees have constantly been fobbed off, and no information—e-mails, for instance—have been given to them. Inquiries such as Leveson are given everything. Surely the time has come to proclaim this truth: this House is supreme and sovereign, and we should get everything first.
Mr Speaker
I hope that over the last two and three-quarter years I have given some indication, not just by voice but by conduct, that I believe that this House should be pre-eminent. It should be treated by whomsoever is in government with courtesy and consideration. It should be regarded as a priority and a matter of honour to keep the House informed and to facilitate the House’s discharge of its scrutiny function, so I do not dissent from anything that the hon. Gentleman has said.
Mr Speaker
This will be the last point of order, I hope, on this or any related matter. I call Mr Chris Bryant.
Chris Bryant
Further to that point of order, Mr Speaker. Can you confirm that article 9 of the Bill of Rights makes it clear that no other body, including a court, can impeach or question a proceeding in Parliament, so the only body that can adjudicate on whether a Minister has misled the House, whether deliberately or inadvertently, is this House, and that Lord Leveson has no power to do so?
Mr Speaker
I believe the hon. Gentleman is absolutely correct in his statement and interpretation of article 9.
Debate on the Address
Business and the Economy
(12 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Business, Innovation and Skills (Vince Cable)
The measures set out in the Queen’s Speech reassert the coalition Government’s fundamental commitment to rescuing the UK economy and promoting growth. There is no easy route out of the debris of a financial collapse. I start with that point, since one of the most important pieces of legislation in the Queen’s Speech is structural reform of banking, which I have worked on closely with the Chancellor.
More broadly in relation to pursuing growth, it is clear that the economic model that produced growth in the past decade and a half was fatally flawed. It rested on the illusion that growth could be created by a bloated banking sector, a bubble in property values, ballooning household debt and an unsustainable budget deficit. In practice, what we saw was that business investment stagnated, and British manufacturing industry was left to decline as a consequence of an overvalued exchange rate that resulted from the imbalances in the economy.
The ongoing crisis in the eurozone makes the task even harder. The turmoil in Europe serves to illustrate the wisdom of creating a firewall of confidence in the UK against otherwise panicky financial markets. The low interest rates that our policies have created provide an economic platform for support of private and public investment in infrastructure and housing.
We are very conscious that the absence of growth is a major challenge and it accounts for much of the frustration of the public, who are understandably impatient to see a recovery from the financial crisis and its aftermath, which wiped out 10% of our economy, dragging down the living standards of many families.
Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab)
Can the right hon. Gentleman explain to the House why the Labour Government were responsible for the global meltdown, but the present Government are not responsible for the drop in growth and the double-dip recession?
Vince Cable
Clearly, the previous Government were not responsible for the global meltdown, but they were responsible for building up the largest and most volatile banking sector in the western world, and it was from that that the collapse followed.
To achieve a recovery, we need to build on some of the positive trends that are beginning to emerge. Despite the deep-seated problems of the economy and the slow growth, we have seen 634,000 private sector jobs created in the past two years, which is almost twice as many as have been lost in the public sector. Private sector job growth explains why our unemployment level, although distressingly high and a tragedy for many individuals, is no higher than that in the United States.
Sheila Gilmore (Edinburgh East) (Lab)
That figure of 600,000 private sector jobs has been given, on and off, for the past two years. Is it not the truth that the vast bulk of those new jobs were created in the early part of this Government’s term but were clearly related to the financial policies pursued by the previous Government, and that the number of private sector jobs created in the latter part of this Government’s term to date is extremely small?
Vince Cable
That is not correct. There has been a sustained improvement in private sector employment.
Julian Smith (Skipton and Ripon) (Con)
Will the Secretary of State list some of the international companies that have invested across Britain during the past six months?
Vince Cable
I would be here for much of the afternoon if I listed all of them, but I am sure that my hon. Friend will be familiar with some of the big and high-profile investments, including those in the car industry by companies such as Nissan, Jaguar Land Rover and others, which are important not just in themselves, but because they involve a long-term investment commitment to the UK and bring behind them a large supply chain of small companies.
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
But is it not the case that specifically in Scotland, as a consequence of the delays that are being created by the nats, inward investment is faltering?
Vince Cable
No doubt there is uncertainty in Scotland because of the political situation there. I have been in Scotland supporting new inward investment. Scotland is participating in the substantial increase in investment that is taking place.
The policies required to sustain this growth of tradeable activities, such as manufacturing and creative industries, lie in aspects of economic policy that are not part of the Queen’s Speech, but they do provide the context to explain why the enterprise and regulatory reform Bill is at the heart of the forthcoming legislative programme.
Mr David Evennett (Bexleyheath and Crayford) (Con)
Does my right hon. Friend agree that to get growth we need successful businesses? Successful businesses need less red tape, regulation and bureaucracy, but also the Government’s apprenticeship scheme, which is making more well-trained young people available to meet the needs of those businesses.
Vince Cable
Yes, and this is one of the big success stories. I understand that since the Government came in, half a million apprentices have now been trained through this process, which is 63% growth in an area where we made a major commitment, even in the context of necessarily declining public expenditure.
My hon. Friend’s first point leads on to my comment on the reform Bill, which contains a wide-ranging package of measures to overhaul the competition framework to support dynamic markets, to scrap unnecessary bureaucracy that is holding back companies, and to boost business and consumer confidence.
Mr William Cash (Stone) (Con)
We have been here before. We have heard about enterprise and regulatory reform Bills and all the like. Will the Secretary of State categorically assure us that he will arrange in the Bill for the overriding of that European legislation that imposes an impossible burden on small and medium-sized businesses? He knows it, the Government know it, promises have been made, and the Prime Minister said that he regarded it as an imperative necessity. Will the Secretary of State please get on with it?
Vince Cable
I think that I can deliver the spirit if not the letter of the hon. Gentleman’s intervention. I do not think that we can override European legislation in quite that way, but I do agree that there is a lot of unnecessary and burdensome European regulation, and I am working with what we call like-minded Ministers in other European Governments to get rid of it as much as possible.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
I have great admiration and respect for the Secretary of State because he is one of the few leaders of the coalition Government who has ever had a proper job. What does he say to the Foreign Secretary, a man who has had very little experience in the real world, whose message to business people is that they are lazy and should work harder?
Vince Cable
I do not think that the Foreign Secretary actually said that. He works extremely hard with me and my colleagues promoting British business around the world. A large part of his job is commercial diplomacy and he is doing it extremely well.
One key proposal in the enterprise and regulatory reform Bill is legislation for the UK green investment bank, which will drive the transition to a green economy. The Bill will set the bank’s purpose, ensure its independence and make funding provision. The bank will be formed as a public company under the Companies Act, with initial funding of £3 billion to March 2015. It will operate independently from Government, but will agree its strategic priorities with the Government. Until formally established, the Government are making investments, on commercial terms, in green infrastructure through a specialist team in my Department. I reported to a Standing Committee of the House two weeks ago on its progress.
Mr John Redwood (Wokingham) (Con)
I think that the Secretary of State agrees with me that the Vickers proposals for more competition among our domestic banks are very good. What further measures can the Government take urgently to get some competition in banking capacity in the high street?
Vince Cable
My right hon. Friend is right that, in addition to the structural reforms, competition is essential. He will know that the Government are endeavouring to carry through as ambitiously as possible the divestment of branches from Lloyds, and a potential solution to that is in sight. There are also some excellent new banks coming up—Handelsbanken and Metro bank are good examples—and we must ensure that the regulatory process is as efficient as possible in order to get those up and running. I thank him for his continued pressure on that important point.
Sir Peter Tapsell (Louth and Horncastle) (Con)
My right hon. Friend the Member for Wokingham (Mr Redwood) mentioned the Vickers report. I very much welcome the announcement in the Queen’s Speech that its proposals will be implemented, but in the light of the recent massive losses in the derivatives market by no less a firm than J.P. Morgan, is not it clear that Vickers does not go far enough and that we really must go back to the basic principles of the Volcker rule and the Glass-Steagall Act by having a total separation of the retail banking system and the speculative banking system, which will otherwise destroy our business in this country and throughout the world?
Vince Cable
My right hon. Friend is quite right that the J.P. Morgan experience underlines the wisdom of separating the so-called casinos from traditional banking, but we take the view that in this country—J.P. Morgan, of course, is not a British bank—the solution we have advocated achieves that result at considerably lower cost than would the more extreme measures that I think he is advocating.
As with many other important industrial transformations, the Government’s role in the green investment bank’s infancy is key. By setting up the bank, which is the first of its kind in the world, we can provide capital and funding to nurture these nascent markets and secure a global competitive advantage for the UK.
Mr Andrew Love (Edmonton) (Lab/Co-op)
May I take the right hon. Gentleman back to an earlier point? As I understand it, the Volcker rule would have outlawed the activities that led to J.P. Morgan losing $1.5 billion. Is such a proposal included in the Bill he is talking about?
Vince Cable
No, the Volcker rule as such is not in the legislation, but there is nothing stopping the hon. Gentleman bringing his proposals forward when the Bill is debated on the Floor of the House.
As several colleagues behind me have said, regulation is an issue, particularly excessive regulation for small companies, but inconsistent regulation damages businesses just as much, so the enterprise and regulatory reform Bill, as well as repealing some unnecessary requirements on business, will extend the primary authority scheme, enabling businesses that trade across local authority boundaries to deal with one authority on particular regulatory issues. If we consider that local authorities are responsible for 80% of inspection activity, covering areas such as trading standards, health and safety, and environmental health, the benefits of this approach are clear. As of last month, more than 450 businesses were members of the scheme, covering more than 50,000 premises in the UK, including many of our major high street retailers. Our reforms will make the primary authority scheme available to many more small and medium-sized enterprises and help improve the targeting of inspections, which can be so time consuming.
The Bill also contains provision for accelerating deregulation. Much is being done at present through the one-in, one-out system to prevent small companies, in particular, from being suffocated by red tape, and we are working with like-minded Governments in Europe, as I pointed out to the hon. Member for Stone (Mr Cash) a few moments ago, to roll back excessive regulation emanating from Brussels. The red tape challenge is repealing many of the 22,000 Government regulations that impose unnecessary costs on business, mostly by secondary legislation, but also, where necessary, through the Bill. The Bill will also embed sunset clauses.
Julian Smith
Will the Bill include the possible inclusion of European legislation in the quarterly statements that are now put in place for all Departments? Is that under consideration?
Vince Cable
I do not see why we should not do that, but I do not think that legislation is required to make that possible. We will certainly see whether it is feasible.
Small businesses also tell us that the fear of employment tribunals is a real disincentive to expanding and to taking on new staff. An employment tribunal is often a costly and stressful process for all concerned. I am fully persuaded that there has to be a balance between the legitimate expectations of workers that they will be protected from abusive employers and the legitimate expectation of businesses, especially small companies, that they can dismiss underperforming staff and not face costly and bureaucratic procedures. That balance is best pursued not through an adversarial system but by fostering conciliation in the workplace.
Our reforms will therefore promote the early resolution of disputes through the greater use of early conciliation and settlement agreements, so that fewer disputes end up in a tribunal. A tribunal is an admission of failure, so we want tribunals to be a last resort.
Mr Donohoe
Is the right hon. Gentleman saying, in that respect, that the trade unions have a major part to play, and that people should join them so that they are protected against the legislation?
Vince Cable
The unions certainly have a part to play, and I will continue to discuss the proposals with the TUC and affiliated unions, as well as with the employers’ groups.
One area in which good regulation strengthens a market economy is competition policy, so the Bill establishes a new competition and markets authority, bringing together the competition functions of the Office of Fair Trading and the Competition Commission. It will be the principal competition authority with a remit to tackle anti-competitive behaviour and to ensure dynamic and open markets. Competition processes will be faster, with clearer time frames bringing greater certainty and reduced burdens on business.
Jonathan Evans (Cardiff North) (Con)
It is not only the structure of the competition authorities which is important, but their budget. Over the past five years there have been a number of areas in which the OFT has not investigated because of resource constraints under the previous Government, so what will happen to the resources of the competition authorities?
Vince Cable
Bringing the two organisations together will in itself produce some efficiencies, but I cannot assure the hon. Gentleman that they will be protected from the efficiency savings that the rest of the public sector is having to undergo. We are confident, however, that with the reforms that we are undertaking, competition procedures will be faster, not slower.
The same concerns about competition underpin our decision to bring forward a separate Bill, establishing an independent groceries code adjudicator, which will protect suppliers—small firms and farmers—from unfair treatment. In doing so, we will support investment and innovation in the groceries supply chain, and support British food manufacturing and British farming. The measure has been welcomed by the Food and Drink Federation, the National Farmers Union and the Association of Convenience Stores.
The case of a highly concentrated industry buying from and selling to large numbers of suppliers and customers is a classic, economic textbook case in which intervention is needed to prevent monopoly profits. Retailers should not of course be prevented from securing the best deals and passing on the benefits to consumers, but equally retailers should be required to treat their suppliers fairly and lawfully. An independent adjudicator will ensure that the market is working in the best long-term interest of consumers. It will have the powers to intervene proactively and to name and shame offenders. In such a competitive market we consider that those powers will be an effective tool, but if it appears that they are not adequate, I, as Secretary of State, will be able to grant the adjudicator the power to impose financial penalties.
Andrew George (St Ives) (LD)
I must congratulate my right hon. Friend and the Government on bringing forward this important measure, which has all-party support. If supermarkets have nothing to hide, they have nothing to fear from the introduction of the adjudicator. Given that the OFT and the Competition Commission are due to merge, however, may I urge him to introduce the measure as quickly as possible so that the merger does not distract from the important job of getting on with the adjudication that is clearly necessary in the sector?
Vince Cable
May I first congratulate my hon. Friend, who I think was one of the prime movers behind the legislation and was very persistent in demanding it? Of course, I have no control over the parliamentary timetable, but given that the Bill is small and there is a consensus, it should go through very quickly.
Steve McCabe (Birmingham, Selly Oak) (Lab)
On that point, will the right hon. Gentleman make clear the circumstances in which there will be penalties? That seems to be the proposal’s grey area. Previously he seemed to be more interested in naming and shaming. Is he now saying that in order to protect people the adjudicator will have the power to fine and to impose sanctions?
Vince Cable
That is a reserve power. When the Bill comes before the House, we will discuss precisely how the mechanism operates. We are committed to back-up powers. Voluntary mechanisms are desirable, and ideally we should not need such powers, but we will take them if necessary.
Chris Bryant (Rhondda) (Lab)
Does the Secretary of State think that the powers will be sufficient to deal with a situation in south Wales in which Tesco has tried to prevent a smaller operator from opening a local ice cream parlour because it, too, sells ice cream? This is not only about dealing with suppliers, but about the whole product chain and ensuring that there is a level playing field for smaller operators.
Vince Cable
That is the type of case that needs to be investigated; clearly, I do not know the facts behind that particular case. I do not want to take this as an opportunity to have go at Tesco; of course, its highly competitive retailing has been of great benefit to millions of customers, and we should not lose sight of that.
This intervention is designed to promote healthy competition, but it also speaks to a wider agenda that has emerged from this crisis, which is for business to be not only confident to expand and invest, but responsible too. That is the motivating factor behind one key element in the enterprise and regulatory reform Bill: our proposals to address directors’ remuneration, where the link between performance and reward has been weakened in recent years. We have a responsibility to make sure that shareholders of UK-quoted companies have sufficient information and power to challenge boards. Under the current regime, companies can all too easily ignore shareholders, and that is why we intend to give shareholders binding votes on directors’ pay.
We published detailed proposals in January and our consultation has just come to a close. We are now considering the responses and working carefully with stakeholders on the details. When we have finalised and published them, legislative measures will be introduced by Government amendment at the Committee stage of the Bill. Shareholders have shown admirable spirit in challenging boards. The so-called shareholder spring is a positive development. They are right to challenge boards; after all, it is their money. Our measures will give them the tools to maintain this challenge and, I hope, to reverse a trend that Labour was far too relaxed about.
Nowhere was Labour more relaxed, and with such disastrous consequences, as in relation to the excesses of the banking sector. We have been persuaded that it will be possible for the banking sector to perform its proper role in channelling savings towards productive business only if there is structural reform separating the so-called casinos from real, traditional banking. The banking reform Bill will boost the resilience of the UK banking sector, making it easier and less costly to wind down banks that get into trouble and curtailing the implicit Government guarantees from which the banking sector benefits. As I said to my right hon. Friend the Member for Louth and Horncastle (Sir Peter Tapsell), we intend to achieve this by mandating the ring-fencing of essential banking services from riskier wholesale and investment activities, as recommended by the Independent Commission on Banking chaired by Sir John Vickers.
The Government have given a clear commitment to legislate by the end of this Parliament, and banks will be expected to implement a ring fence as soon as practically possible thereafter. Implementation of the banking reforms will proceed in stages, with the final, non-structural changes fully completed by the beginning of 2019. This is another historic reform, and one where we lead the world.
Mr Frank Field (Birkenhead) (Lab)
I am sure that most of our constituents are grateful for this aspect of the Queen’s Speech. Does the Secretary of State see some link between the support that the Governor of the Bank of England has given him for these reforms, the hoped-for effects of reform on the City, and the fact that certain journalists are now trying to rubbish the Governor of the Bank of England for his support?
Vince Cable
I am not here to attack journalists; I am not sure which ones the right hon. Gentleman is referring to. It is certainly true that the Governor of the Bank of England has been absolutely clear from the outset that in order to have long-term stability in banking, these reforms, or something very like them, had to be implemented, as we are now doing.
One area where business success and responsibility coincide is in relation to flexible working. The UK employment framework compares well internationally and has helped to keep unemployment relatively low, despite the extremely difficult economic conditions, but that is not to say it cannot be improved, both for workers and employers. We want a flexible labour market that supports growth and creates employment, and making sure that that happens requires acknowledgement of changes in family life.
Most women now go out to work and men shoulder more of the duties at home. As roles and responsibilities have changed, our lives have become increasingly complex. That is not just true of parents with young children. Many have to combine working with looking after an elderly parent, a sick partner or a grandchild. Extending the right to request flexible working to every employee will make that easier.
Sheila Gilmore
I am pleased to hear the Secretary of State endorse the needs of parents and carers. Will he comment on and perhaps put to bed the proposals appearing in the media over this weekend saying that we should restrict maternity leave to no more than six months? For example, The Sunday Times seemed to be full of that proposal yesterday.
Vince Cable
That proposal is not in the enterprise and regulatory reform Bill. We are committing to extending flexibility at work in a way that avoids unnecessary costs for companies and delivers real economic benefits. Research from the CBI, for example, found that 63% of firms offering flexible working reported lower staff turnover, saving on recruitment and training costs.
Julian Smith
Will the Secretary of State confirm that there is a strong argument for excluding micro-businesses—those comprising fewer than 10 employees— from these proposals and allowing them just to get on and run their businesses on their own?
Vince Cable
I recognise that there are particular problems for small companies in adapting their work practices, but of course many of the most successful small companies have flexible practices. The idea of creating a two-tier labour market in this respect has many practical difficulties, but we can debate that as the Bill goes through Parliament.
Mr Sheerman
Before the Secretary of State moves on from that point—I can see from his papers, I think, that he is coming towards the end of his speech—I would like to point out that he has not once yet said anything about innovation, he has said little about entrepreneurs and enterprise, and he has said something complacent about the levels of unemployment, which include 1 million unemployed young people. What is in the Queen’s Speech about that and what is he going to do about that?
Vince Cable
That sounds like the basis of a speech in the debate. The hon. Gentleman will know that we are pursuing forceful policies in respect of innovation, including the establishment of the catapults across the country—something entirely new and positive in the innovation sphere—without the need for legislative approval.
Mark Pawsey (Rugby) (Con)
In recognising the needs of small businesses in respect of parental leave, will the Secretary of State consider the matter of employees giving as much notice as possible to those businesses in order that they can make allowances for when staff are not going to be present?
Vince Cable
That suggestion sounds eminently sensible. I do not know the extent to which it is required to be incorporated in the law, but it seems eminently sensible to pursue it in guidance.
Tristram Hunt (Stoke-on-Trent Central) (Lab)
Further to the point made by my hon. Friend the Member for Huddersfield (Mr Sheerman), can the Secretary of State explain why there is no higher education Bill in the Queen’s Speech? If we are interested in innovation, skills and training, and future competitiveness, why on earth is there no such Bill?
Vince Cable
There were many candidates for the Queen’s Speech—a lot of productive legislation. The reforms in higher education are being pursued successfully. Many of the alarms sounded about the university reforms have not been realised. We can pursue questions about higher education in Business, Innovation and Skills questions next week. This is not about the higher education Bill.
Stella Creasy (Walthamstow) (Lab/Co-op)
On the point about what is not in the Queen’s Speech, I agree with what the Secretary of State said about concern about Governments who were intensely relaxed about excessive financial practices. In a week when we found out that Wonga intends to lend to small businesses failed by Project Merlin, does the Secretary of State regret that there is nothing in the Queen’s Speech to deal with legal loan sharking?
Vince Cable
As the hon. Lady knows, there is a lot of discussion about whether, in respect of loan sharking, we should best proceed through different forms of regulation. It is not required to be in the Queen’s Speech. In terms of small business lending, of course, we acknowledge that there is a real problem. There is a decline in net business lending, as the Bank of England has highlighted. Those who are closely engaged with small business, as I am, will tell her that the current issues are complex ones of security and the terms of loans. We need to engage again with the banking system about how to get proper flows of funds, and the structural reforms that we propose will certainly help.
Mr Ronnie Campbell (Blyth Valley) (Lab)
On Friday I had a visit from a small business association in the north-east, and it told me two things: that it wants the banks to lend, and that it wants the big companies to pay small businesses. It said that if that were to happen, small businesses would be able to take on more employees and get the economy moving.
Vince Cable
I agree with the hon. Gentleman that we want banks to lend to small businesses, and one of the sources of finance, as identified recently in the Breedon report, which my Department commissioned, is big companies at the top of supply chains financing their own suppliers. They should do more of that, and we have introduced a programme, with some Government funding, to enable that to happen on a much bigger scale.
Mr Chuka Umunna (Streatham) (Lab)
Project Merlin failed, and we were told that credit easing and the national loan guarantee scheme would resolve small businesses’ problems in accessing finance. What does it say about those schemes that, since they were introduced, Wonga has seen fit to enter the market for lending to small and medium-sized enterprises?
Vince Cable
Nobody ever argued that the credit easing scheme would solve the problem of small business lending. We argued that it would cheapen the cost, and that will happen. All the major banks are now engaged in arranging packages to enable those lower costs to be passed through. I think the hon. Gentleman will be pleasantly surprised by the take-up within a few months.
Mr Love
The right hon. Gentleman is well known for his support for co-operative and mutual organisations. In January, the Prime Minister spoke warmly about a consolidating Bill for co-operatives, but it did not appear in the Queen’s Speech. Will the right hon. Gentleman assure us that the Government have not forgotten about it?
Vince Cable
I have worked with the hon. Gentleman for many years on the promotion of mutuality. I seem to remember that there was considerable progress under the Labour Government, but almost all achieved through private Members’ legislation. Maybe he should put in a bid.
The benefits of flexibility also apply to flexible parental leave. The current system of maternity, paternity and parental leave is not fit for purpose. It is old-fashioned, inflexible and gender-biased. Indeed, research has found that a quarter of fathers change jobs, often in the two years after a child is born, so that they can spend more time with their family. That generates costs for employers, so the answer lies in a system that reflects modern parenting without placing excessive burdens on business. A period of leave will be reserved for both the mother and the father, and a period of shared flexible leave will be available to the family for them to choose how to use. Greater flexibility in how leave is taken in the first year of a child’s life will make it easier for both parents to work, keeping their attachment to the labour market. However, I recognise that we need to work closely with the small business community to ensure that those changes are introduced in ways that supports its growth rather than undermine it.
Legislation alone will not solve the economic challenges that we face or generate the economic renewal for which we are striving. However, our measures will help to create a platform for sustainable recovery. As I said at the start of my speech, we face an immense challenge, and the Government are determined to succeed in meeting it so that we rebuild the UK economy for the long term.
Mr Speaker
Order. In view of the extensive interest in this debate, numbering almost 50 Back Benchers, I have decided to impose a limit on Back-Bench speeches of six minutes each. There has been no time limit on Front-Bench speeches, as there ordinarily is not, and of course the Secretary of State wanted to take interventions, which is respected. The shadow Secretary of State may also wish to do so, but may I invite a certain self-denying ordinance in the interests of maximising the number of Back-Bench contributors?
Mr Chuka Umunna (Streatham) (Lab)
Thank you, Mr Speaker. I shall try to achieve that aim.
In responding to Her Majesty’s Gracious Speech, let us first take stock of the state of our economy and British business. Following the 2008-09 financial crash, born in the banking sector, to which the Secretary of State has already referred, the economy went into recession, like many others around the world, but thanks to the action that Labour took in office, we prevented that recession from turning into a depression and got the economy growing again. In so doing, we ensured that the pain of recovery was shared fairly, so that those with the broadest shoulders bore the heaviest burden.
When the Conservatives and Liberal Democrats took office, unemployment was falling, the economy was growing and the recovery was settling in. Consequently, borrowing in the last year of the Labour Government was £20 billion lower than forecast, because our approach was working. Today, the UK economy has not grown since the Government’s spending review, unemployment has soared beyond 2.6 million and 50 businesses are going under every single day. As a result, we are now in a double-dip recession created by this Government, and what is more, they are borrowing £150 billion more than forecast to pay for their failures. And who is bearing the burden of their policies? While taking tax credits away from families who want to stay off benefit and in work, they have given a tax break of more than £40,000 to millionaires. So they are unfair and out of touch as well as incompetent.
At the ballot box a couple of weeks ago, the public made it clear what they thought of the policies of the two governing parties. This is what the Business Secretary said about that vote of no confidence a couple of days after his party’s drubbing:
“as a party we’ve got to maintain our identity, we’re going to work in the coalition but by the time we get to the election we’ll be an independent force with our own values competing independently and I think those are the elements that will form the basis of our recovery.”
For all the murmurings of discontent from the Secretary of State, for all the attempts at differentiation and threats to press the nuclear button, the simple fact is that he, the Chief Secretary to the Treasury, sitting next to him, and their Liberal Democrat colleagues have all facilitated and voted for the things that their Government are doing but which are holding back our businesses and economy. They have waved through—more often than not, enthusiastically—all those things that the public made it clear they disliked a couple of weeks ago. For the avoidance of doubt, then, the Conservative’s out-of-touch and unfair economic policies are the Liberal Democrats’ unfair and out-of-touch economic policies; and the Prime Minister and the Chancellor’s incompetence is the Liberal Democrats’ incompetence. No amount of differentiation or smoke and mirrors will change that now or by the general election.
Michael Fallon (Sevenoaks) (Con)
I thank the shadow Secretary of State for giving way so early in his speech. Does he not recall the Governor of the Bank of England describing the Government’s economic policy as a “perfectly sensible” “textbook response”? Why is the Governor wrong and he right?
Mr Umunna
In case the hon. Gentleman has not noticed, we are in a double-dip recession. That says something about his party’s policies, given that, as I have just said, it inherited an economy that was growing, unemployment that was falling and a recovery that was setting in.
Before the Queen’s Speech, there was, of course, the Budget. Let us remember what people said about it. The general secretary of the TUC said:
“We needed a Budget that looked to the future and made jobs - particularly for young people - the national priority… Instead we have got a Budget by the rich for the rich.”
The chief executive of the Forum of Private Business said:
“what small businesses and the economy need are confident strides forward now. Largely, that has not happened in this Budget.”
People were looking in the Queen’s Speech for signs that Ministers understood what people were telling them—to change course and to put in place policies that will deliver an economy that works for working people and businesses, and the building blocks upon which a new economy can be built.
Did the Queen’s Speech deliver the change that people and businesses signalled they wanted to see? There are things that we welcome, subject to the small print being worked through. I have given the Business Secretary credit for ensuring that the Government established the Independent Commission on Banking. We are playing our part, in a cross-party spirit as far as possible, to implement its recommendations, and will look at the detail when it is published. The Government, by their own admission, said that they were bequeathed one of the best competition regimes in the world by this party. The Business Secretary will need to demonstrate that the creation of the single competition and markets authority—which he has just spoken about—will improve on that legacy, not squander it.
Our 2010 manifesto included plans to create a supermarkets ombudsman to protect farmers and food suppliers from unfair and uncompetitive practices by major retailers. The Government are taking that forward through the grocery adjudicator, which the Secretary of State has mentioned. We will work to ensure that the grocery adjudicator is given powers to ensure fair access across the supply chain. In office we set up the primary authority scheme—which he also mentioned—to help reduce the local regulatory burden on firms. The enterprise Bill will extend that to include more businesses, which is welcome. The Secretary of State also referred to the changes to parental leave. Again, we will look at the details, but on the whole, that does not sound like a bad measure.
We were told that the enterprise Bill would contain measures on executive remuneration—something the Secretary of State has just repeated. In order to build a more productive and responsible capitalism, it is important to ensure that we bring an end to rewards for failure and the excessive pay we have seen, which is bad for our economy and our businesses. On both sides of the House we agree that change and reform must be led by shareholders and investors with Government support. In office, we were the ones who introduced the advisory shareholder votes on remuneration reports, which have been causing a lot of news recently.
Mr Redwood
What approach would the shadow Minister recommend to the remuneration of senior executives and directors in banks with state shareholdings?
Mr Umunna
I would say that their pay should be linked to performance against criteria and specified objectives. Our argument in relation to RBS is that the Government are the biggest shareholder. They have lectured others about the need for greater shareholder activism, but it would be good to see it from those on the Government Front Bench.
However, despite all the things I have welcomed, in sum, it is business as usual for this Government. This Queen’s Speech signals little change in approach. For the person looking for work, this Queen’s Speech offered no hope; for individuals, families and firms faced with increasing energy and water bills, and rising transport costs, it offered no hope; and for sound and successful small businesses struggling to get by in this recession of the Government’s making, it offered no hope. However, listening to the Business Secretary, one would think that the Queen’s Speech had been positively received. I do not know who he has been listening to, but this is what our business leaders have said about his Government’s Queen’s Speech. On Friday, Justin King, the CEO of Sainsbury’s and a member of the Prime Minister’s business advisory group, which is meeting as I speak, said:
“Consistency is what gives confidence. Unfortunately, what we have seen over the past couple of years is something that could not be described as a consistent pursuit of a clear policy”.
In other words, uncertainty—created by the Business Secretary’s Department and all across Whitehall—is reducing businesses’ confidence to invest for the long term. On Saturday, the director general of the British Chambers of Commerce said:
“there is a big black hole when it comes to aiding businesses to create enterprise, generate wealth and grow”.
Business people are clear: what they want is a Government who will step up and work in partnership with them to create the conditions for private sector growth. What they have got is a Government who step aside and leave business to struggle on alone.
What was the Government’s response to those comments by business people? Step forward the Foreign Secretary. Yesterday—in what the Business Secretary described as “commercial diplomacy”—he said:
“I think they should be getting on with the task of creating more of those jobs and more of those exports, rather than complaining about it. There’s only one growth strategy: work hard”.
What on earth does the Foreign Secretary think this country’s business owners do all day? His message is clear. He is saying that the fact the economy is not growing has nothing to do with the Government’s failed economic policies. He is saying that it is not growing because the people in all our businesses out there are not working hard enough. How out of touch can the Foreign Secretary be?
Mr Evennett
Does not the shadow Minister feel guilty that, under the last Labour Government, of whom he was a big supporter, there was high taxation, a great deal of regulation and red tape and a lack of a trained work force? The Labour Government never helped small and medium-sized businesses; nor did they allow reward for success.
Mr Umunna
I say to the hon. Gentleman that I am proud to be a shadow Minister for a party that saw 1.1 million new businesses created during its time in government. I am proud to be the shadow Business Secretary for a party under whose Government Britain was rated the best place for doing business in Europe and fourth best in the world. I must also remind him that the UK has fallen from fourth to seventh place on his watch.
Nicholas Soames (Mid Sussex) (Con)
Would the hon. Gentleman accept that the Foreign Secretary was saying that we have to do better with our exports? We have done much better this year, as the Secretary of State pointed out, through our commercial diplomacy, and the hon. Gentleman is wrong to sneer at that. It is a fact that we do not export nearly enough from this country, or nearly as much as we could.
Mr Umunna
If only the Foreign Secretary’s comments had been limited to those that I have just cited. There was more, however. Asked whether they amounted to a modern-day call to our people to get on their bikes, echoing the call from the noble Lord Tebbit back in the 1980s, the Foreign Secretary said:
“Well no, it’s more than that. It’s ‘get on a plane, go and sell things overseas’…It’s much more than getting on the bike. The bike didn’t go that far. ‘Get on the jet.’”
I know that senior members of this Government have a penchant for hanging out with people who own yachts and jets, but most business people in this country do not have those things or mix in such company. Chris Romer-Lee, the director and co-founder of an award-winning architecture practice here in London, said to me yesterday that his firm is working flat out and has been doing so through these bad economic times. He said that
“to suggest we could work harder is insulting.”
That is what a business person said to me yesterday.
Julian Smith
The legislation that we are discussing today deals with deregulation. Will the shadow Business Secretary tell us about his proposals to lift the burdens on British business?
Mr Sheerman
Before my hon. Friend leaves the pronouncements of the Foreign Secretary, I want to ask him whether he heard Lord Digby Jones speaking on Radio 4 this morning of the Government’s decision to “decimate” and “cut” UK Trade & Investment—the trade and investment arm of the Foreign Office. Is not that a reflection on the Foreign Secretary, who is not working very well or very hard himself?
Mr Umunna
I think that UKTI needs to do a hell of a lot better, as my hon. Friend suggests. Actually, I think that this Government need to work a hell of a lot harder before they start lecturing others. It is not that we disagree about the need to increase our exports, but let us take a step back. The Government’s economic policy is one of expansionary fiscal contraction. Their idea is to hack off parts of the public sector and take away things that the Government do, and they expect the private sector automatically to step in and fill the gap. I do not think that telling business people that they are whingeing and not working hard enough is a way to inspire them to do what the Government expect of them.
Ian Paisley (North Antrim) (DUP)
Was the hon. Gentleman as perturbed as I was, two weeks before the Gracious Speech, to hear another Cabinet Minister suggest that he wanted to put a certain industry out of business? That industry raises £12.5 billion a year for the Exchequer in customs and excise duty payments. Will the hon. Gentleman defend the tobacco industry, which employs 6,000 people in this country and generates millions of pounds in PAYE and revenue for the Government?
Mr Umunna
We want all those sectors that have a competitive edge to have a comparative advantage for this country, providing jobs and opportunities when more than 2.6 million people are out of work. We want to see those sectors thrive.
Given the recent omnishambles, one would have thought that Ministers might stop and think before attacking those to whom they look to grow our economy. Far from it, however, as so far we have mentioned only the Foreign Secretary. The Secretary of State for Communities and Local Government also waded in to the row, in typical diplomatic fashion, saying that he agreed with what the Foreign Secretary had said, while the Defence Secretary—it is a shame that he did not stay in his place after his statement—then accused businesses of being whingers. The problem is that Ministers seem to inhabit a different planet from the rest of us. It is not that our businesses are not working hard enough; it is that there is a lack of demand and weak confidence flowing from the Government’s mismanagement of the economy, which has helped to tip us into a double-dip recession.
Joseph Johnson (Orpington) (Con)
Does the hon. Gentleman recognise that UK gilt yields are at an historic low, and that we would be taking a tremendous risk with them if we moved away from an economic policy that no less a person than the Governor of the Bank of England has described as the “textbook response” to the situation this country faces?
Mr Umunna
That quote has already been used. I would say two things to that. The hon. Gentleman, who studies these matters keenly as a writer for The Financial Times, will know that Christine Lagarde, the head of the International Monetary Fund, has said that to have a credible fiscal policy, we need growth. The problem is that there has been no growth since the comprehensive spending review. Secondly, we have had historically low interest rates on our sovereign debt and, of course, we control our own monetary policy, which has helped matters.
Mr Umunna
I am not saying that the Governor of the Bank of England was wrong. What I am saying is that we need growth for a credible fiscal policy. Many, including Government Members, would not necessarily argue that the Governor has always been right, particularly during the 2008-09 crisis.
The people have spoken, our businesses have spoken, families up and down this country have spoken, but the Government do not want to listen, so they persist with the same failed economic strategy, the same failed approach, exemplified in their Finance Bill carried through from the last Session with its granny tax, caravan tax, pasty tax and tax break for millionaires.
What of measures to put in place the building blocks for our economy in the long term? Was any change signalled in this Queen’s Speech? The Business Secretary famously wrote to the Prime Minister and the Deputy Prime Minister about industrial policy, outlining his and their failures. He quite rightly argued in his letter for Government to adopt an industrial policy. He said he sensed that there was “something important missing” from what the Government were and are doing—and that was “a compelling vision” of where the country was headed beyond deficit reduction. He rightly said, too, that
“market forces are insufficient for creating the long term industrial capacities we need”
and that
“we should be willing to identify British success stories as identified through success in trade and explicitly get behind them at the highest political level.”
That is precisely what we did in government in respect of the automotive industry—and we are now reaping the rewards from that.
The problem for the Business Secretary is that the Chancellor and the Prime Minister do not buy into active government and industrial policy. To their names we can add that of the Foreign Secretary as another roadblock to the active Government and industrial policy that those who own and work in businesses want to see. What evidence is there in the Queen’s Speech that the Business Secretary has been able to exercise any influence over these roadblocks to bring about a change of approach? None whatsoever.
The Business Secretary’s letter identified our energy and low-carbon industries as an important sector. We are told—the Business Secretary mentioned it—that the enterprise and regulatory reform Bill will include provisions to set up the green investment bank, which is an essential component of an industrial policy for a low-carbon economy. According to conventional definitions, however, a bank is an entity that borrows and lends money. Given the absence of those capacities and capabilities, we are left not with a body that can be called a bank, but with a fund. That is the only proper name that we can give to this initiative. It is not planned to become a bank until 2016, and will do so then only if public sector net debt is falling as a percentage of GDP at that point, which is by no means certain.
Often cited by the Business Secretary as evidence of an industrial policy, or industrial strategy, is the regional growth fund, and that was exposed as a complete shambles by the independent National Audit Office on Friday. The Deputy Prime Minister and the Business Secretary have been going around the country boasting that the scheme will create half a million jobs. What did the National Audit Office tell us on Friday? Only 41,000 jobs will be created, and many of them would have been created in any event. The House will remember that the Government abolished the future jobs fund on the basis that it was too expensive. It was claimed that each job created from that fund cost £6,500. How much did the NAO tell us each of these jobs has cost us? Up to £200,000.
While I am at it, let me thank the Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford (Mr Prisk)—who has been chuntering from a sedentary position—for the letter that we all received from him inviting us to encourage businesses in our constituencies to bid for RGF money last week. In that letter, he said
“my officials are ready to help”
and
“there will be plenty of opportunities for bidders to meet the appraisal team to discuss their ideas before the bidding deadline”.
There is, of course, a small snag. The NAO told us that the fund started off with 12 economists seconded from other Departments to process these matters. They all returned to their home Departments before due diligence on the first round of bids began, and the fund had no dedicated administration budget. Let us hope that there are some officials left for us to see.
Tristram Hunt
When it comes to industrial policy, is my hon. Friend as worried as I am by the lack of a strategy for intensive energy users in the Government’s plan? There is nothing in the Queen’s Speech, or in the Budget, to protect our steel and ceramics industries, which are vital to a low-carbon future.
Mr Umunna
My hon. Friend is right. I know that his constituency contains some of those industries.
The Government refuse to heed the call of businesses to get our economy going, and they refuse to adopt the active industrial strategy that we need. Instead, we have a Chancellor who is seeking to play the same old Tory tunes and watering down employee rights as a substitute for a proper growth strategy, along with a Business Secretary who is at best seemingly powerless to stop the Treasury juggernaut, and at worst going along with its nonsense on employee rights. We do not yet know what form the changes to employment law contained in the enterprise and regulatory reform Bill will take. All that we have been told to date by the Business Secretary’s Department is that the Bill will
“Overhaul the employment tribunal system, and transform the dispute resolution landscape.”
The Business Secretary alluded to that earlier. However, reforming the employment tribunal rules of procedure is one thing; making it easier for companies to hire and fire their workers, as the Government have spun it in the media, is quite another.
In March, the Business Secretary told the House that we already had the most flexible labour market in Europe, a claim that he repeated today. He also said that ours was the second most flexible labour market in the OECD. However, in an opinion piece which appeared in The Telegraph on 7 May and which was referred to by the hon. Member for Stone (Mr Cash), there was the Business Secretary parroting his Tory masters’ line.
“Britain is no longer a lone voice in the push”
for an even more “flexible labour market”, he told us. He then proceeded to round on the working time directive, which he condemned for being “'wasteful”. What has happened in the interim? Why the change of tone? I think that the Business Secretary has been got at.
Let us consider what the working time directive does through the working time regulations that give it effect in UK law. It ensures that workers have at least 11 hours’ rest in any 24-hour period. It ensures that workers have one day off in any seven days. It guarantees four weeks’ paid leave a year, and the right to a rest break of at least 20 minutes during a working day of six hours or more. I know that Ministers do not think we are all working hard enough, but I did not envisage that they would seek to tamper with those basic rights to a modicum of time off and a rest.
Vince Cable
Is the hon. Gentleman not aware that the individual opt-out of which I was speaking was defended for over a decade by the last Labour Government?
Vince Cable
If the hon. Gentleman is following this matter closely, he will know that there has been a series of judgments by the European Court of Justice that, unless repealed, will add very considerably to the burdens faced by companies, and that that was fully recognised by his party when it was in office.
Mr Umunna
So, in contrast to what seems to be in the Secretary of State’s Telegraph piece—I have a copy of it to hand—he has no problem with the working time regulations; instead, he simply has a problem with ECJ cases. [Interruption.] For the benefit of the record, the Secretary of State is saying he does not have a problem with the working time regulations. So why on earth is he publishing an article in The Telegraph saying
“the tide is turning against EU bureaucracy”
and
“Britain is no longer a lone voice in the push for deregulation”?
Who is that designed to please?
The reason we are in recession is not our employment law regime; it is this Government’s policies. [Interruption.] The Chief Secretary chunters from a sedentary position about the Labour Government. He has been in power for two years now. When he became Chief Secretary to the Treasury, he inherited a situation in which, as I said at the beginning of my speech, growth was rising, unemployment was falling and a recovery was setting in. Now, after two years at the Treasury, he is presiding over an economy that is in a double-dip recession. We will take no lectures from him.
The reason our economy has not grown is not our employment regime; it is this Government’s policies. The Secretary of State should be working to make it easier for firms to hire people—for example, by giving all micro-businesses who take on extra workers a national insurance break—not enabling firms to fire people as they want, with all the instability that that brings.
So there we have it: a Government who have tipped this country into a double-dip recession; a Government who will not listen, or take responsibility for the mess they have created; and a Government who tell our businesses and everyone else to work harder. Yet it is they who should change course and work a lot harder to provide the policies and leadership this country deserves and needs.
Mr John Redwood (Wokingham) (Con)
I remind the House that I offer business advice to a global engineering business and a small investor management business.
We meet today with the winds of danger blowing once again from the euro area. We meet to discuss measures in the Queen’s Speech to make Britain more competitive, to equip Britain better, and to produce more jobs and deliver more goods and services around the world. No one in this House would disagree with the aim. All the main parties agree that we need more economic growth. I think they all agree it is easier to get a deficit down when we are creating more jobs, getting people who are out of work into those jobs, and generating more income and activity, than when we are not. There is no disagreement across the Floor of the House about the aim.
However, when debating how we are going to get that growth and give the best possible support to the companies and individuals who create the jobs and make things happen, we must also recognise that there is a very threatening and menacing problem on our doorsteps. As we meet here today, we know that the Greek political parties may not be able to form a Government at all, or they may not be able to form a Government that can put through the necessary measures to meet the requirements of the EU and IMF loans in Greece. They may decide on new elections in some weeks’ time, creating a dangerous hiatus; and those elections may produce a Government who fully reflect the view of the Greek people, as expressed in the last election to a considerable extent, that they do not wish to co-operate any longer with the lethal mixture of policies that the euroland senior politicians have put forward.
That matters to the United Kingdom, not only because some of our exports and services are sold within euroland, but because, as members of the European Union, we will participate in some of the meetings about what kind of growth strategy Europe as a whole can develop, and we will be a party to some of the decisions that will determine the future of the euro. If the Greek tragedy unfolds such that the Greek state cannot meet the requirements, the European Union has to decide either to give in yet again and come up with another compromise, or that there has to be an early exit of Greece from the euro. It would be better for the British economy and for the future of euroland if an early exit of Greece from the euro were organised quickly, and in confidence up to the point when the necessary announcements must be made. I would not expect the British Government to confirm that that is their aim, but I hope that Ministers are working closely together, representing the greatest financial centre in western Europe and perhaps the world, with that in mind. The sooner the Greek problem is solved, the sooner we can get on with sorting out some of the wider problems in the European economy.
If it is decided to cobble together another compromise, massive headwinds against growth and prosperity in our continent will continue to blow forcefully. Will an early Greek exit be easy to handle? No, of course not. Will it be pleasant? No, of course not. But the Greek people have got to the point where they cannot take any more years of austerity, and in some way or another Greece has to be made competitive. If is it is completely impossible, as it seems to be, in a democracy to slash wages by the amount the German side of the argument seems to say the Greeks should slash wages by, other means have to be used: having a devaluation and having a new currency.
The United Kingdom has one big advantage in the crisis: we have our own currency, it is freely floating,and we are much closer to having competitive prices than Greece, Italy or Spain can possibly be within the euro. Any measures that my right hon. Friends can take to improve our competitiveness in order to create more export jobs, the better. How right Ministers are to see that there has to be a huge reorientation of British exports towards the emerging markets—to the faster-growing territories of Asia, Latin America and parts of Africa—because Europe is making such a comprehensive mess of its economy and its prospects. It is destroying hope and jobs on such a massive scale that our only hope as a country is to support and orient our businesses to where the growth is and where the opportunities are to be found.
That means taking urgent action to mend our banks and to establish more competitive banking, with more money to lend to our companies, because they are going to need working capital and investment capital. They are going to need to gear up for the 2.5 billion Indian and Chinese who want to come to the world party, many of whom, I am pleased to say, will come to the world party and will be the market that replaces the European market, which is failing so visibly.
We also need competitive energy. Surely the Secretary of State would agree, at least in private, that if we wish to lead an industrial revival in this country or anywhere else, we need cheap and competitive energy in plentiful supply. We should not be saying, “Let’s make everything in China, so it does not score against our carbon dioxide totals.” Let us make things here. If we have cheap energy, we will have more chance. Modern manufacturing creates lots of jobs in marketing, legal work and promotion. It does not create many jobs on the shop floor because it is automated, which requires access to lots of cheap energy. That is what I want this Queen’s Speech to address: cheap energy, less intensive regulations—
Mr Deputy Speaker (Mr Nigel Evans)
Order. I remind hon. Members that there is a six-minute limit on speeches.
Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab)
I have a registered interest in higher education, Mr Deputy Speaker.
That was an interesting contribution from the right hon. Member for Wokingham (Mr Redwood). I did not agree with all of it, particularly about dictating to the Greeks what they might or might not eventually do on the euro. However, one thing is clear: we should wish the new President of France, as he will be from tomorrow, every success in trying to countervail the hegemony that the Germans are forcing on the eurozone. Fiscal austerity not merely as a mantra but built into future policies would be disastrous.
Let me make two or three key points. The many comments about rebalancing the economy are interesting. I remember the last major effort to rebalance the economy, which was made in the 1980s by Lady Thatcher. It virtually wiped out manufacturing industry in my city. The sad thing about the past two years is that the first rebalancing announcement made under the auspices of the present Secretary of State, who commands a great deal of respect in this House, including from me, pushed him into refusing Sheffield Forgemasters the advantageous loan it needed to expand dramatically on world markets. Some growth fund money has been offered, but we are not entirely clear how many jobs it will deliver and where.
The regional growth fund is a muddle. It lacks a clear direction about which sectors and which areas of our economy we should be putting most of our resources into, and about how credit easing might be focused meaningfully to ensure that people get the loans at a price that is affordable not just for very small businesses, but medium-sized enterprises such as Ideal Care Homes, a company in Yorkshire that has sought loans for a very good business creating jobs in the caring sector. Growth in such jobs is critical to those in our society who seek basic qualifications to work in an area of massive expansion as our population ages.
In education, the contradictions abound. Why is the Secretary of State for Education downgrading design and technology and information and communications technology at precisely the moment we need to expand in education in those areas massively to equip our young people to take jobs in the knowledge economy? That brings me to higher education. The university of Sheffield, working with Boeing and others, has developed the advanced manufacturing research centre and advanced manufacturing park on the edge of Sheffield and Rotherham, making a positive contribution to real growth for real jobs in real areas. Its efforts to recruit people from across the world to come to the university, however, have been undermined by the actions of the Home Office. On the one hand, the Department for Education is undermining young people in preparing for their future, and on the other hand, the Home Office is undermining the ability of universities and higher education to deliver. Unfortunately, the Department for Business, Innovation and Skills has also failed to persuade the Government to give priority to the higher education Bill, which seems to have been kicked into the very long grass.
There is a total lack of focus on future skills. Now that the regional development agencies have gone, there is nobody—the local enterprise partnerships are not in a position to do this—to pull together all those who are committed to shaping a skills agenda for the future using light-touch planning for jobs that really exist, rather than pretending that simply expanding apprenticeships anywhere, at any price and in any sector, is the sole answer. I am totally committed to apprenticeships— my city was built on them—but large numbers of apprenticeships are being mopped up by the retail sector, taking Government resources to train people that that sector was already training, or had failed to train, using its own resources.
We need to prepare for the youth contract by using some of the money devoted to it to prepare young people who have been out of work for a long time to take the jobs that are on offer. Their soft skills and their social skills, as well as their ability to get up in the morning, turn up for work and be a regular, reliable employee, are undermined by the length of time they have spent unemployed. One in five young people under 25 is unemployed; that is a national scandal of the first order and that is what we should be addressing.
If we do not have room for such measures, I have a suggestion. Drop the ridiculous farce, the rotten piece of fish, that is the draft House of Lords Reform Bill and give us a chance to do something proper for the future of this country, on which all our children and grandchildren can rely.
Nicholas Soames (Mid Sussex) (Con)
I start by wholly agreeing with the right hon. Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) about House of Lords reform.
It is a great privilege to speak in this debate on the Queen’s Speech in the year of Her Majesty’s diamond jubilee, when all of us across this wonderful country will have an opportunity to celebrate the Queen’s exemplary attention to her duties over the past 60 years, when the Olympics will come to London, and when there will be vast opportunities for Britain to place itself at the centre of world interest.
I am sorry that the principal spokesman for the Opposition, the hon. Member for Streatham (Mr Umunna), has left the Chamber. What he said was really foolish and profoundly ignorant. Anyone who has had anything to do with UK Trade & Investment in the past year will know that it is functioning probably better than it has ever done. Let me tell the House a story. The other day, I went to speak at a dinner in Scotland. It was an international gathering of the whisky industry, and the chairman of probably the biggest company in that industry said to me, “I think you should know that the Government’s export efforts have never been better run, and that the attention from the diplomatic service and our embassies abroad is quite outstanding.” The Government deserve credit for that.
I pay tribute to the work of Lord Green, Lord Marland, and Lord Sassoon, who have led tremendously successful trade missions all over the world—missions that have secured contracts and goods for this country that we have never secured before. Our exports are up £50 billion on previous years. The hon. Gentleman will find that he has done himself no good by speaking as he did of UKTI.
Nicholas Soames
I hope that the hon. Gentleman will forgive me, but I have only six minutes, and I have a few points to make.
I support and endorse the Queen’s Speech. Much in it deserves and commands support at this very difficult time. The Government are right in their determination to drive the economy forward, to bring the UK’s productivity and growth up to world standard—they are not at that standard at the moment—and to focus on getting the big things right and resolving the stubborn, difficult and often politically very unappealing challenges that have long kept the UK’s economy from fulfilling its true potential. Our national problems are serious. Many of the causes of Britain’s plight cannot justly be blamed on Greece, Brussels, or even the banks. There is the dire state of too many of our schools and thus, through no fault of their own, the poor skills of too many young people; there is the decline in size of our manufacturing industry—an industry that the Germans sustain so well—and there is the plight of small businesses, which are still groaning under oppressive bureaucracy and employment law. We really need to get on and fix those problems. This country remains, on its good days, a wonderfully civilised place, but there is no contradiction in recognising that our traditional national values will not suffice to support us through this century unless they are allied to harder work, vastly improved skills, and a drastic reality check about the standard of living that we have for so long taken for granted.
I wholly endorse the views that my right hon. Friend the Foreign Secretary expressed yesterday in a really interesting, punchy interview in The Sunday Telegraph. He set out clearly the great opportunities for British trade and the great efforts being made to secure them through our outstanding commercial diplomacy. The success of our economy locally, nationally and globally will depend on how we build our economic growth around a tapestry of skills, with science, finance and sound regulation working together. In many ways, the Queen’s Speech sets out a way forward on that. It is worth remembering that growth, as a public policy, can achieve a great deal. It can create jobs and it reduces welfare dependency, but it is not an end in itself.
I am trying to develop an idea that takes advantage of the south of England’s local geography and opportunities. Starting with the south of my constituency, I want to develop an international technology hub between Burgess Hill and Brighton, and between Brighton and Southampton. The work required to deliver improvements to the A27 must happen, and I do not see why that should not be carried out by a public-private partnership of some sort. We need to get on and develop the sort of creative clusters that are essential for economic growth, making the most of the university of Sussex and the brilliant Brighton university, through to Portsmouth and Southampton—an area with ample office space and housing. The advantage of such a scheme is that it contains all the conceptual ideas that begin with the creation of jobs and extend to kick-start a knowledge-based economy. One of the points that the Gracious Speech makes—
Mr Frank Field (Birkenhead) (Lab)
I am immensely pleased to follow the right hon. Member for Mid Sussex (Nicholas Soames). I am sure he will forgive me if I do not develop the themes that he outlined, although I very much hope that his ideas for a corridor in the south will be taken up in the north-west as well.
I want to make a single contribution to the debate, if I may, by stressing the effect that the Queen’s Speech has had on me and therefore, I guess, on many other people in this country. I think we will see it as a dividing line in this Parliament. Before the Queen’s Speech, I guess that many in the House and probably even more in the country wanted to give the Government the benefit of the doubt. Now, however, we begin to see that the Government are bereft on two fronts—first, on ideas about how we achieve growth; and secondly, and equally important, they seem to have no understanding of what would normally be called the art of government. It is not merely a matter of assembling Bills and pushing them through this place. It is about understanding the reaction to them outside and what response to those measures we should expect from outside. The Queen’s Speech is a dividing line in this Parliament. The jury is ceasing to be out on whether the Government have shown that they have both the ideas and the competence for good government.
I shall concentrate on one element that I think is crucial to growth. Of course there is a discussion about how Lord Keynes’s ideas could and should be applied to the economy. There are those who emphasise the importance of reflation. I do not totally go down that route. This year the Government will be borrowing £24 for every £100 that they spend. If that is not reflation on stilts, I do not know what is. If we could conduct a séance and call Lord Keynes up now, he would not, I hope, minimise the importance of reflation, but he would draw our attention to one other aspect of what he thought was crucial at this stage of the business cycle: business confidence.
In the period after the general election, generally speaking, businesses believed that the Government knew what they were about. They did not lay off workers to the same extent as in other recessions, but hoarded them and negotiated more flexible arrangements with them. They believed that there would be a light at the end of the tunnel and it would not be an oncoming train. The key moment when business confidence began to change was the pre-Budget report. Businesses increasingly realised that the Government did not have many ideas in the cupboard about how to deal with the size of the deficit, which was important, but do that skilfully so that we managed to engender growth.
I think the Business Secretary, though he did not mention it in his speech today, hinted over the weekend at what the Government had hoped for in an investment-led boom. The Government’s failure could not be clearer than on that front. Business after business in this country is sitting on huge reserves of capital, waiting for some encouragement from the Government to use that capital to start an investment-led boom, which would lead to employment and increased prosperity for our country. The failure of the pre-Budget report, followed up in the Budget itself, convinced the business community that there was little point in spending those reserves. Quite what they do with them now is anybody’s guess. Until the Government come up with a strategy that convinces the business community that they can do two things at once—bring down the deficit but in a way that encourages business confidence in the future, and, as my right hon. Friend the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) said, confidence particularly in this country—it is difficult to envisage anything at all getting this economy off the bottom of the recession we are enduring.
A Tory-led Government, who pride themselves on understanding civil society, would never have applied VAT changes to the crucial sector of churches and historic buildings in this country. We are concerned with what goes on not only in churches, but in the surrounding area—in cathedral closes, choir schools and so on. The Government have understood nothing about how standing up at the Dispatch Box saying things can have the most deadly effect in the country on people’s hopes and expectations.
As I said when I began, it is with sadness that I rise to say that now, in the second half of the Parliament, the jury is ceasing to be out, and it believes that the Government have neither the ideas nor the expertise in the art of government to see us through the crisis.
Lorely Burt (Solihull) (LD)
I would like to respond to this section of the Queen’s Speech on behalf of my Back-Bench Liberal Democrat colleagues.
On the day before the Queen’s Speech, when the rose garden became a tractor factory in Essex, the Prime Minister set out the coalition’s aims for the coming year. We are certainly not in a rose garden now, either metaphorically or in reality. The tractor symbolised the heavy work that we have done and still need to do to get our country out of the slough of debt that we inherited. It also symbolises the change of emphasis away from the financial sector—although this is still an important part of our economy—towards something that we are very good at, although one feels that the Opposition had to some extent written it off: manufacturing.
In the past two years, the coalition Government have been doing plenty of heavy lifting. We have already put in place many policies designed to help companies to grow. Indeed, our recovery is predicated on growth. We have already established the regional growth fund, created a record number of apprenticeships, cut red tape through the red tape challenge and the one in, one out system of regulation, cut corporation tax and exempted micro-businesses from £350 million-worth of regulation. There is still much to do, though.
Steve McCabe
On the regional growth fund, how many of the successful bids in the west midlands have achieved funding to date?
Lorely Burt
I am slightly confused by the hon. Gentleman’s question. Will he repeat it?
Steve McCabe
Does the hon. Lady agree that out of 72 bids, five of which were approved, one company has received funding? Is that a measure of success?
Lorely Burt
There is a lot of due diligence to be done so that we do not waste taxpayers’ money.
Opposition Members might agree that we have to be fair to employers and to the work force. Liberal Democrats seek a balance to ensure that staff can achieve their full potential and have a home life as well as a work life. Unlike some in the Chamber, we are not in the pockets of the unions, but seek to work with the unions and with management to achieve fair outcomes and fair rewards. We will extend the right to request flexible working, and entitlement to parental leave will be shared. All parties bemoan the fact that we often lose female talent when the babies come along; now there will be no point in employers discriminating in recruitment against women of child-bearing age. Both men and women will be entitled to parental leave. That is one small step for equality.
However, Liberal Democrats would say that in some areas the pendulum has swung too far in the direction of the employee. Some employees take advantage of, and try to play, the employment tribunal system, which has become clogged up with cases waiting to be heard, costing time and money and causing stress for all. New legislation will put a greater emphasis on conciliation and give employers longer to give underperforming employees a chance, before the spectre of the unfair dismissal tribunal looms.
Clearing away unnecessary regulation is a big job, and we have already started. We will reform the competition regime by creating a powerful new body to enable the speedier prosecution of anti-competitive behaviour. We are also taking action on executive pay. If there is one thing that really bugs the British worker, it is seeing overpaid executives getting even more for even poorer performance, so we will give shareholders the power to exercise greater control over executive pay through binding votes.
Lorely Burt
I am sorry, but I cannot give way again.
I think that all hon. Members are looking forward to the Groceries Code Adjudicator Bill, which at last offers some fairness for producers at the mercy of the powerful supermarkets. Then there is the green investment bank. It has £3 billion at its disposal for investment, but Liberal Democrats would like it to have greater powers to act like a real bank, investing and borrowing as well as lending, and we are working on that.
All that will be to no avail if we cannot sort out the biggest problem still faced by business today: access to finance. Project Merlin has had some success, with £195 billion lent by banks to business, but we need more. Liberal Democrats will be doing all we can on policies to widen the range of banks and lower the almost insurmountable barriers to entry for new banks. We want to introduce more peer-to-peer lending, such as the funding circle, and would like to examine the feasibility of community banks.
Perhaps the most important piece of legislation of all is one that will stop a repetition of the banking crisis that resulted in the house of cards that the previous Government allowed the finance industry to build tumbling down. The Business Secretary foresaw it all: he warned Labour that light-touch regulation, over-optimistic ratios, complex financial instruments that few could understand, banks that were too big to fail and banks whose casino and retail arms were wedded would bring disaster, but not even he could have imagined the scale of the economic crisis that gripped the UK, America, Europe and large parts of the world and made them much worse off. The crisis is taking longer to sort out than anyone hoped.
We need only look across the continent at Greece, Spain and Italy to see what would have happened had we not gripped the situation there and then. Too far, too fast? It would have been “too little too late” if the Labour party had had its way. We would be paying treble the current interest rates, with much higher unemployment and much higher bond yields, as those countries have today. We are sorting it. The little blue and yellow tractor is taking the strain and pulling us out of the mire that the Labour party helped to create.
Stewart Hosie (Dundee East) (SNP)
The Queen’s Speech contained precisely nothing to help growth in the economy. It set out a feeble programme. The Government talk about growth but are doing precious little to achieve it. We have all noticed the change in rhetoric over the past few weeks; growth is now important. It is not enough to hope for growth or will it and then fail entirely to introduce in the Queen’s Speech the policies that would deliver it.
We are now in the absurd situation where we have gone from the Chancellor upgrading his growth forecasts in the Budget in March to the announcement of a double-dip recession in April and warnings today from Marian Bell and Howard Davies, formerly of the Bank of England, that the Government might have to slow their deficit reduction plan before they effectively squeeze the life out of the recovery entirely. Howard Davies said that even
“the markets recognise that if the economy turns out to be weaker than expected and you try to compensate for that by tightening even further, then that way madness lies.”
One could paraphrase that by saying, “Trying to stimulate economic growth by cutting consumption is very foolish,” and I would agree entirely, but that is precisely what the Government are attempting to do.
So there is nothing in the Queen’s Speech to compensate for the shrinking demand in the economy that the Government’s own policies are creating; nothing to compensate for the £73 billion of fiscal consolidation that they inherited; nothing to compensate for the £113 billion of cuts and tax rises planned for 2014-15; and precisely nothing to compensate for the £155 billion that will leave the economy every year from 2016-17. Indeed, they are exacerbating the problem with cuts to Government consumption and expenditure of between 1.3% and 2.6% a year from 2013 to 2016.
Lorely Burt
The Institute for Fiscal Studies confirmed that Labour’s plan would necessitate borrowing £201 billion more. What effect would that have on the market, on investment and on growth?
Stewart Hosie
I think that the words of Howard Davies this morning were very interesting. I shall find the quotation if the hon. Lady wants it, but it was about the credibility of the plan, not the speed of the cuts.
There is, of course, one other thing: trying to cut one’s way out of recession and to generate growth by spending less money, putting in place a series of measures that militate against the business investment growth on which the entire strategy is dependent, is not a very clever way to proceed. But that is precisely what this Government have planned.
I said that the Government have done nothing to stimulate a shrinking economy—unless one thinks that the Foreign Secretary’s berating of businesses for not working hard enough counts as an economic strategy. Of course it does not, but his intervention shows just how out of touch the Government are. I am sure that the Liberal Democrats have a little speech to say that they are not really in the same Government as the Foreign Secretary, but that will not wash either.
The Government could have taken action in the Finance Bill or through measures in the Queen’s Speech to ease the price of fuel, which members of the Forum of Private Business say is the main cost pressure on their businesses, but they did not. They could have taken action to bring forward direct capital investment, the most effective thing that any Government could do to stimulate economic growth, but they did not—and that was a particularly short-sighted piece of inaction, given that the fall back into recession, the double-dip recession, was led by a large fall in construction output. One would have thought that even the Chief Secretary to the Treasury, the Chancellor or the other Treasury Ministers had read the economic indicators.
Indeed, the Government had such a programme in their election manifestos, and they could have brought forward the legislation on high-speed rail. It would have given the signal that a large capital investment programme was coming, and it could have stimulated economic growth throughout the UK, but the political imperative of one or two shire Tories in the south seems to have overtaken the rather sensible measures that High Speed 2 would have delivered.
So what are the Government doing? They are introducing a banking reform Bill to ring-fence narrow retail banking activities. I welcome that measure, which is fine so far as it goes, but, as the Scottish Chambers of Commerce said, it
“does not go far enough in terms of providing a direct boost to business lending”
to small and medium-sized enterprises—a vital part of any recovery.
The Government are introducing an enterprise and regulatory reform Bill, and we will look very carefully at each measure that they intend to introduce, but, in general terms, if one is trying to rebuild an economy and to grow out of recession, one needs confidence. I can understand why keeping people in their jobs would help confidence, but I am at a loss to understand why the Government believe that making it easier to sack people will bring any confidence into the economy, particularly the consumer spending sector.
There are no measures on direct capital investment, which is the most effective thing that any Government could do—not even proposed legislation on HS2. There is no action on SME lending and no action to build confidence; indeed, the Government are making it worse by making it easier to sack people when keeping them in their jobs would help to rebuild confidence. That lack of action explains why we are in recession, why unemployment is high, why net debt is going up, why net borrowing is higher for 2011-12 than was forecast a year ago, and why the deficit is planned to be higher for 2011-12 than was reported in the Budget a year ago.
At their heart, this Government have a problem. They are sticking ideologically to a rigid, fixed-term deficit consolidation plan that offers no flexibility whatsoever. The one Bill that they should have had would have put in place a new fiscal responsibility plan so that instead of a rigid, ideological slashing of costs, we could have a flexible, medium-term, credible deficit consolidation plan that allowed growth in the economy.
David Rutley (Macclesfield) (Con)
Contrary to what the hon. Member for Dundee East (Stewart Hosie) said, the economy is central to the Government’s agenda. They have already taken much-needed action to ensure lower-cost Government borrowing by working to create the most cost-effective business tax system in the G7 and by pushing forward supply-side reforms that are needed to tackle the burden of bureaucracy facing British businesses, much of which was put in place by Labour when it was in power. Real progress is being made, and I support the Government in their efforts to show that Britain is open for business once again.
The Queen’s Speech sets out proposals that will build on those achievements. The enterprise and regulatory reform Bill will promote enterprise and fair markets through a new competition and markets authority, the creation of the green investment bank, and much-needed reform of employment tribunals. The Queen’s Speech also contained the Groceries Code Adjudicator Bill, which has been welcomed by farmers in Macclesfield, the National Farmers Union, and small food producers more widely. By establishing an independent adjudicator that will enforce the groceries supply code of practice, the Government will ensure that supermarkets deal more fairly with their suppliers and that we have a much more effective supply chain for the food industry.
The Queen’s Speech includes important measures on financial services. The banking reform Bill will create a ring fence around vital banking services and introduce depositor preference, in line with the recommendations of the Vickers Independent Commission on Banking. After the Northern Rock experience, with the first run on the banks in over a century, it was clear that much needed to be done to protect the pensioners, families and small businesses who rely on our banks and financial services and that the failed framework of the previous Government had to be replaced. After the general election, the Government rightly focused on putting back in place a financially stable mechanism to ensure that we had a solid foundation, and they commissioned Vickers to take forward a bold approach to financial regulation and propose the ring fence for retail banks. That must be put in place to make certain that we do not see further failures such as Northern Rock and the Royal Bank of Scotland. This highlights the importance of going beyond Basel III and the minimum capital requirements that it proposes to ensure that there is real stability for the UK financial services system. I am pleased that the recommendations of the Vickers commission are now being taken forward by the Government in the banking reform Bill.
The Financial Services Bill, which I was involved in scrutinising in Committee, was the next step in the process. It puts accountability back with the Bank of England, where it needs to be, by creating a new systemic regulator—the Financial Policy Committee. The Bill is one of the carry-over Bills that will continue its progress in this parliamentary Session, and it is vital that it does so.
It is a concern that the aims of these reforms, whether banking reform or the Financial Services Bill, might be undermined by plans being suggested by Brussels. There are worrying signs that a significant number of EU regulations in the pipeline could have a major effect on the Government’s new financial regulations and undermine our freedom to take the necessary steps to get our banking system into a safer, more secure position.
A huge amount is at stake for the UK economy, and it should not be forgotten that the financial services sector still accounts for 10% of UK gross domestic product. In 2010, the sector employed 1 million people, and it contributed £53 billion in taxes in the 2009-10 financial year alone.
The Chancellor is right to work hard to ensure that the single European rule book does not bind the UK to a maximum level of EU capital requirements, which the Vickers report believes is inadequate. Capital requirements directive IV threatens to tie the hands of the Financial Policy Committee. Given the importance of this decision to the British economy, our negotiators are right to use every tool in their arsenal to protect our ability to regulate UK financial services. The Treasury is right to push back on Brussels to ensure that the box-ticking culture that was all too prevalent under the previous system is not replaced by further box ticking from Brussels.
Domestic regulators require discretion to utilise the new judgment-led approach, which is welcomed by many, to cater for the changing needs of the financial services sector here at home. However, without the effective safeguards from EU regulations, the UK risks being tied into a system more suited to Germany’s regional Landesbank or Spain’s caja savings banks than one regulating the globally important City of London.
The Government are right to continue to press for the safeguards that the Prime Minister sought at the EU Council meeting, where he made his decisive veto. Tomorrow’s ECOFIN meeting offers Finance Ministers from across the EU the chance to address the eurozone’s crisis and I hope that they take note of what this Government are doing in their efforts to tackle the deficit and push forward constructive reforms in the financial—
Bridget Phillipson (Houghton and Sunderland South) (Lab)
I am grateful, Mr Deputy Speaker, for the opportunity to speak in today’s debate on the economy. I intend to focus my remarks on one aspect of Government policy where I feel the clock is being turned back: the role of women in the economy.
Women have been hardest hit by Government policies. In the last quarter alone, 34,000 women gave up work altogether—the fastest rise in women’s worklessness in more than a year, and it now stands at its highest point for more than two decades. More and more women are being forced out of work and back into the home, due to job losses and Government cuts. Cuts to child tax credits mean that, increasingly, work does not pay and families are better off on benefits.
Women of my generation have taken progress for granted. The women who went before us—our mothers and grandmothers—argued for change and made huge strides forward, and that progress was hard won. They fought for their right to be in the workplace, to be properly rewarded when working and for equality, both at work and at home. We imagined that each generation of women would do better than the last, but I fear that is at risk.
As more women are struggling to remain in work, they are losing not just income but independence. Ultimately, this is about independence and how government can support women to make the choices that are right for them and for their families, and not be forced to make choices that are not of their choosing.
Conservative Governments often appear to believe that state action inevitably promotes dependence, but I believe that action by government can encourage independence and gives the individual greater freedom. Economic independence liberates women.
For the individual woman forced out of the workplace, this is a massive personal blow. For the rest of society, it is a loss of talent, knowledge and expertise. In economic terms, it is absurd to lose women’s contribution at this time. Not only are higher unemployment rates increasing the benefits bill and reducing tax revenues, but higher rates of women’s employment are associated with stronger economic growth—growth that we so desperately need.
I welcome the Government’s proposals on flexible or shared parental leave. Labour led the way on this in Government, with improved maternity rights and pay and paid paternity leave for fathers, and this proposal is the logical next step. I have yet to see evidence that it will be bad for business, but it will do little in and of itself to help parents who are currently out of work, and it comes at a time when the Government are cutting child care support and taking more from children than from the banks.
I would like to devote my remaining time to one of the biggest barriers facing women who wish to return to work or remain in work, which is child care. Labour did much to tackle the problem in government. We launched the national child care strategy, which acknowledged that rather than child care being a private family matter the Government had a role in ensuring it was available. That was combined with the creation of more than 3,500 Sure Start children’s centres, many of which are now at risk of closure. We devoted particular attention to supporting single parents back into work as a route out of poverty, which was vital in my constituency.
Child care costs are rising, at a time when wages are static and Government support for child care has been cut. I am concerned that child care will become less affordable as demand drops and women are forced out of the workplace. Affordable and accessible child care is key not just to helping families but to supporting economic growth and, with it, social mobility.
There is also clear evidence that early years child care leads to improved outcomes for children, particularly those from the most deprived backgrounds. It improves access to employment and so reduces child poverty. However, parents from lower-income backgrounds are the least likely to use formal child care. Although it is of course for families to decide what is right for them, the Government need to consider that more closely. Having a child at nursery also gives parents access to a wider support network and opportunities such as training. It can reduce the isolation that many parents experience, particularly lone mothers.
I am pleased that Labour has launched a national child care commission to consider these issues, but I am conscious that it also needs to address the fact that many working parents are struggling not only with working and child care issues but with the need to care for and look after elderly parents and relatives. It must consider both issues together, because parents are often being squeezed at both ends of the scale.
We need an economy that values and recognises the talents of women. It is about not just women’s right to be in the workplace but creating a more equal and just society for everyone. I do not want to be part of a generation of women for whom the clock was turned back, but unless the Government act I fear I will be.
Jonathan Evans (Cardiff North) (Con)
I begin by congratulating the hon. Member for Houghton and Sunderland South (Bridget Phillipson) on a well-constructed contribution. May I crave her indulgence? I see that the right hon. Member for Birkenhead (Mr Field) is just leaving the Chamber, and I wish to say how much I enjoyed his contribution. I obviously did not agree with the conclusion he reached, but he gave the best critique of Government policy I have heard from the Opposition Benches. It was certainly a more constructive one than we heard from the shadow Secretary of State.
I, too, have a registered interest to put on record, as chairman of companies that are active in the life insurance sector.
My focus will be on the expectations that have been aroused by the proposal to introduce a new competition and markets authority, essentially merging the responsibilities and functions of the Office of Fair Trading and the Competition Commission. My views are informed by my experience of serving in the previous Conservative Government as the UK Minister responsible for competition and consumer policy—interestingly, a role also occupied by my right hon. Friend the Member for Wokingham (Mr Redwood), who spoke earlier.
As you will know, Mr Deputy Speaker, I later had the advantage during my 10-year sabbatical from the House of acting as the European Parliament’s rapporteur on the modernisation of EU competition policy during the time when the whole of EU law and policy in the area underwent a significant, highly transformational experience. The key individuals driving that process were Mario Monti, the Competition Commissioner, who is now the Italian Prime Minister, and the current European Commission vice-president Neelie Kroes. From Monti’s actions in blocking the GEC-Honeywell merger through to Mrs Kroes’s effective challenge to Microsoft’s abuse of its market power, they ensured that those seeking to undermine proper competition and open markets throughout Europe had a really strong adversary.
We all support open-market competition; it is the bedrock on which our economic growth depends. I have noted many of the positive responses to the Government’s plans for the new unitary markets authority. The plans are driven by a common view that the current processes are just too lengthy. The shadow Secretary of State’s extraordinary claim that everything was absolutely fine when Labour left office does not match the view in the market. The Government’s aim is to remove duplication and delay and to streamline the system and produce a more efficient and speedier quality service, but the question is: if we cannot argue with that ambition, will it be delivered by the proposal?
The first phase of current arrangements requires a detailed analysis at the OFT by teams of experts before a decision on whether there should be a reference to the Competition Commission. Unless these concerns can otherwise be addressed to the OFT’s satisfaction, the matter will pass to the commission itself, where a second and completely different set of experts looks at the same analysis all over again. This duplication is one of the factors that is supposed to drive a significant part of the delay, but it is my understanding that the Government’s proposal is to retain completely different teams between phases 1 and 2. It is difficult to see, therefore, how this streamlines anything or produces any efficiencies of the sort that the Secretary of State said, in response to me, he anticipated would create more resources to tackle market abuse.
Another area of concern relates to the Government’s plan to improve the conviction rate for individuals by creating criminal offences that no longer require that dishonesty be proven. As parliamentarians, we should always be particularly cautious about the creation of new, absolute criminal offences. A wrongful act and a guilty mind lie at the heart of our criminal justice system, and we should be weary of arguments suggesting that for cases otherwise difficult to prove we need to remove the dishonesty element.
I want the House to be in no doubt that I fully support punitive administrative financial penalties on companies that breach laws against creating cartels, price fixing or abusing market power. The Competition Commission often imposes fines of many millions of pounds on such companies and has taken sweeping investigative powers in such cases. Mario Monti always maintained to me that it was completely inappropriate for the European Commission to have that sort of absolute criminal law power. I cannot imagine the reaction of my hon. Friend the Member for Stone (Mr Cash), who is beside me, if the Commission ever proposed taking such an absolute power. We should question strongly any proposal to do the same in this country.
It is difficult to escape the conclusion that the Government are responding to the OFT’s failure in a high-profile case involving British Airways. However, the fact that to date the OFT has never succeeded in bringing any criminal prosecution to the point of being considered by a jury leads me to the view not that the criminal law in this area is wrong but that the OFT itself might not possess the necessary resources. I hope that the creation of this new markets authority improves the landscape for open markets, but I hope, too, that the Government bear in mind my concerns.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
Above all, the Queen’s Speech demonstrates that it is impossible to legislate ourselves out of a problem created by a Treasury-imposed economic fiscal policy that is demonstrably causing such damage to the economy. The economy is flatlining, the number of business insolvencies is rising, real incomes, and therefore consumption levels for British business, are being squeezed, unemployment is rising and, perhaps most frightening of all, about two thirds of the potential public sector cuts, the impact of which on consumer spending could be devastating to British business, are yet to be realised. This Queen’s Speech contains a series of measures. Some of them are not bad in themselves, but they are essentially micro-measures designed to deal with macro problems. I am afraid that, typically, they are accompanied with overblown rhetoric about their potential impact, and if experience is anything to go by, their speed of implementation will be sclerotic.
Let us take the enterprise and regulatory reform Bill. The Government have been trumpeting their one-in, one-out policy and their red tape challenge. However, the Department’s annual report for last year highlights some of the regulations that they have abolished, which include article 22 of the Distribution of German Enemy Property (No. 1) Order 1950 and regulation 24(6) of the Gas Appliances (Safety) Regulations 1995. I am sure there are perfectly sound reasons for abolishing those regulations, but the idea that doing so will cause the economy to take off requires, shall we say, a leap of faith to which I do not think even this Government could subscribe.
We have heard about the potential impact on the regional growth fund, but in the west midlands there have so far been 72 bids, only one of which has received any funding yet. I have been questioning Ministers over the last year about the number of jobs created by the regional growth fund, but I could not get an answer. My hon. Friend the Member for Streatham (Mr Umunna) has now revealed that the National Audit Office has some idea, but the answer is nothing like the number of jobs created by the previous regional development agencies, which were so quickly abolished, and the cost is proportionately much greater.
Robert Flello (Stoke-on-Trent South) (Lab)
What would my hon. Friend say about the figures that have been published suggesting that the cost per job is roughly £200,000, which contrasts with the Remploy workers, who are being put out of their jobs, and where the cost per job is far smaller?
Mr Bailey
The figures my hon. Friend quotes are quite self-evidently a demonstration of the Government’s ridiculous priorities.
Let me turn to the green investment bank, which was Labour’s idea. It has been talked about for a very long time by this Government and now, two years later, we actually have it. However, it is inadequate, and unfortunately the Government have already introduced a series of policies on feed-in tariffs that will decimate many of the companies that would potentially have benefited from the green investment bank. Again, it is difficult to see how we will lift ourselves out of recession on the back of that.
There are certain measures that are welcome, such as the Groceries Code Adjudicator Bill. However, earlier I spoke about the slowness of implementation. Both the Select Committee on Environment, Food and Rural Affairs and the Select Committee on Business, Innovation and Skills, which I chair, examined the issue before the last summer recess, and we did so quickly at the request of the Government. The Bill could have been implemented last autumn or at the beginning of this year. Indeed, the parliamentary business over the last three months was hardly so crowded that such a quick and simple Bill that had received so much pre-legislative scrutiny could not have been introduced. Why is it being introduced only now?
Andrew George
Given that the hon. Gentleman is the Chair of a Select Committee and will want to be seen to be even-handed in this matter, does he agree that it was a great disappointment that the previous Government failed to act on the recommendations of the Competition Commission, which reported on 30 April 2008, and did not implement the measure during their time of office?
Mr Bailey
May I compliment the hon. Gentleman, who I know has been an ardent campaigner on this issue for many years? All credit to him for that. The measure was in the Labour party manifesto for implementation, and I am sure that it would have been implemented far more quickly, and perhaps more profoundly, than what is currently proposed.
I want to raise two issues about the measure, the first of which is fines. I welcome the Secretary of State’s comments about that, because our Committee recommended that there should be fines, not just a name-and-shame process. It would appear that he may be moving in that direction, although we will question him more closely on it. However, something that he did not mention was the ability of third parties such as trade associations to submit complaints. If individual companies or farmers have to make a complaint, they might fear discrimination. No doubt we shall tease out these issues during the Bill’s passage through Parliament.
I am most concerned about the missing elements from the Queen’s Speech. As a Labour and Co-operative party Member of Parliament, I am particularly concerned that, despite the Prime Minister’s trumpeting of his commitment to a co-operatives Bill, such a Bill is mysteriously missing. There is a degree of cynicism in the co-operative movement over the Government’s motives. They are keen to trumpet their commitment to co-operation when it is politically expedient to do so, but the absence of the Bill that the Prime Minister promised us during this parliamentary Session is bound to create a suspicion about their true commitment and motives in this regard.
The most astonishing omission of all from the Queen’s Speech was a Bill on higher education. My Committee carried out a long inquiry into this matter, and offered a raft of recommendations to the Government last November. To date, the Committee has not even had a reply to its recommendations. On two occasions, excuses have been given. The consultation on the White Paper ended in January, and we were told that further consultation was needed. We were also told that the matter would best be dealt with as part of an announcement of the Government’s policies in the Queen’s Speech in the new Session, yet the Queen’s Speech contained absolutely nothing about it. The inevitable suspicion is that there is such profound disagreement between the coalition partners on this subject that we shall have a White Paper and a consultation but no Bill on an issue of profound importance to hundreds of thousands, if not millions, of students in this country. This is also a serious matter in that higher education is one of the biggest export earners for this country. The omission of a Bill demonstrates a complete lack of consistency and commitment to it.
Mr Robert Syms (Poole) (Con)
I support the Queen’s Speech, which I thought was very good. I have an advantage over many Members, in that I came into the House in 1997. Within a matter of hours, the then Labour Government decided to make the Bank of England independent. They also changed the regulatory regime for the whole banking system from its historic basis in which the Bank of England presided over the banks. Without consulting the Governor of the Bank of England, they created the Financial Services Authority and a whole new system. It is somewhat ironic that, a decade later, that decision played a major role in what happened during the financial collapse, because our regulatory regime was not fit for purpose.
This Government, in contrast, have produced a draft Bill that has been widely consulted on. It has been carried over and will become legislation after hours of debate. The Bill will give back much of the regulation to the Bank of England. The proposal will have maximum transparency and scrutiny. The Queen’s Speech also contains a banking reform Bill, which is to be welcomed. We are starting to put back together a decent regulatory regime for the financial sector.
In 2010, we formed a coalition for the simple reason that this country faced a real crisis and the biggest peacetime deficit in its history. It takes quite a lot to get Liberal Democrats and Conservatives to work together, but the previous Government managed to achieve that through their financial irresponsibility. We have faced difficulties ever since; the financial crisis has continued because of what has happened in the eurozone and worldwide. This is not an easy environment for the Government to thrive in, but they have set out a clear long-term plan. They have kept interest rates low and allowed the Bank of England £325 billion of quantitative easing, which is substantially more than would be possible if we were spending public money to try to push the economy. Against that background, they have created an environment in which we should be able to export more, as markets improve, and rebalance the economy. That will take time, however, and it will not be an easy role to play. Clearly, the debate for this Chamber is that if Opposition Members are right, they will win in 2015; and if we Government Members are right, the coalition parties will benefit in 2015. That, essentially, is the narrative about how things will pan out.
The Government are doing substantial and good things in the realms of education in creating apprenticeships. The Queen’s Speech also referred to legislation on enterprise and regulatory reform. We all know that that is necessary to lighten to the burden on businesses where we can, so that they can recover.
The right hon. Member for Birkenhead (Mr Field) put his finger on an important point. We have a balance-sheet recession, as banks are shrinking their balance sheets, while companies have a lot of money which they are not spending, and individuals are trying to rebalance their individual financial circumstances. The recovery will be bumpy, therefore, and confidence is very important to it. In the world of 24/7 news, when one can switch on Sky or the BBC to find out about crisis talks in the Greek cabinet or what is happening elsewhere, it is difficult to engender confidence. If we hold to our proposals and our strategy, however, I think that things will eventually sort themselves out, and we will see success with higher investment, more jobs and a more prosperous economy.
I support what the Government are doing. They are setting the environment for more growth and a more enterprising country. We should not forget that our recent Budget included a £2.5 billion tax cut for the lowest-paid workers. There is a strategy behind what the Government are doing: on the one hand, we are reforming welfare with the universal credit and a welfare cap; on the other, we are taking many of the lowest-paid workers out of the tax system. That is intended to increase incentives to work. The crucial test of us as a country is whether we can make work attractive and get more people back into it over the next few years.
I believe that the Government are on the right track. I support what they are doing in a difficult world environment in which confidence is in short supply. It is interesting that our long-term interest rates are low and that in the current crisis, sterling is now starting to rise as this country is seen as a relatively safe haven in a very turbulent world. I am sure that if the Government stick to the course, this country will get the reward it deserves and that we all want—a prosperous and more dynamic country.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
I have been a Member of the House long enough to have heard quite a few Queen’s Speeches. Some were good, some were bad and more were indifferent. I do not say that on a party political basis, as some of Labour’s Queen’s Speeches did not live up to all their glister when they were first heard. I tend to take Queen’s Speeches with a pinch of salt. With the experience of two years of this coalition Government, however, I have noticed—I might even have said this to you when you were one of my students at university, Mr Deputy Speaker, although there was no recent experience at that time—that coalitions seem to sacrifice leadership and imagination. There is not enough boldness to lead with the necessary imagination. When we look back at this period, I suspect we will find that there was not enough leadership or imagination in this Queen’s Speech.
After all, here we are in the most turbulent period economically in not just European but global history. We might all be swept away by something that is mainly outside our control in the eurozone. Nobody really knows whether something dreadful might happen in the Greek economy and then move across to Portugal, Spain and all the rest. We know that some of the scenarios are very grim indeed for our country, which is not just a little island on its own. There was nothing in the Queen’s Speech that said that we are in such a perilous situation that we need to batten down to face a turbulent and difficult future. Something like that should have been acknowledged.
In the short time available, I shall centre my remarks on what I would have expected this Government, dominated as it is by the Conservative party, to know about—manufacturing and small business. Conservative Members often say that they understand manufacturing and small business very well, but I do not think they do. I talk to small businesses all the time. I find that they feel—and I think they are right—that the people who lead this coalition Government spend a great deal of time talking to big businesses in the FTSE 100 but do not talk to the small companies in which our future lies, although all the research suggests that it is small and medium-sized enterprises that will provide the employment, give us the apprenticeships, and keep us moving and developing as a successful country.
Robert Flello
Is not the Sunday Trading (London Olympic Games and Paralympic Games) Act, which was rushed through the other day, a good example of the Government listening only to big business? It will help the big supermarkets, but harm the small businesses which normally make some money on Sundays when the supermarkets are closed.
Mr Sheerman
I believe that my hon. Friend and I voted in different Lobbies on that occasion, so I will not develop the point any further.
What are small and medium-sized enterprises in this country looking for? They are looking to the Government to promote innovation. All the research shows that we must invest in small companies, which are often in the high-tech sector. They will be the new employers; they will be the organisations carrying out the innovation. After all, our country was built on innovation and on entrepreneurs, and my town of Huddersfield was built on people who understood that. It is true that they had free energy, which, as was pointed out by the right hon. Member for Wokingham (Mr Redwood), is extremely important in a world of automation. Although we can substantially increase the number of people working in manufacturing, it will not return to the 20% or 30% level. The fact remains that it is to the small companies that we must look for the future.
There was not enough about banks in the Queen’s Speech. Here they are, with all this taxpayers’ money, and we still cannot persuade them to lend to new businesses. What on earth is going on? The banks have all that money, but they are still reluctant to invest in new ventures. The Government should have done something about that. Let us see better finance for the productive sector from the banks, and let us also expand our manufacturing exports. We hear time and again that we are not taking advantage of the markets in China, Brazil, Russia and India.
Paul Maynard (Blackpool North and Cleveleys) (Con)
I was interested to hear the hon. Gentleman mention countries such as Brazil, China and Japan, and also banking. Given that the debate is about the Queen’s Speech, what piece of legislation would he seek to introduce to achieve his very sensible goals?
Mr Sheerman
Everyone knows that we could have had legislation that strengthened the Government’s power to force banks to lend to small businesses.
It was me, in an intervention, and not the shadow Secretary of State, who drew attention to what had been said by Lord Jones this morning. He said that the trade and industry outreach of the Foreign Office had been decimated in recent months. We need to expand our manufacturing exports, and the small and medium-sized enterprises will do that as well.
If we are to rebalance the economy, we must recognise what the Queen’s Speech does not recognise: London and the south have become totally out of proportion in terms of infrastructure investment, resources and everything else that we can think of. To those who come down here from Yorkshire, the north-west or even the midlands, this part of the world is a foreign country. There is no recession here, but there has been a recession for three years in the regions of our country. The fact that the Queen’s Speech makes no reference to that is a disgrace.
Mr Sheerman
No. I will not be given extra time if I give way again.
Finally, let me say something about skills and management. I am the chair of the all-party parliamentary group on management, which recently received a report from the Chartered Management Institute showing that 43% of managers in this country are not very good and 23% are awful. Whether it involves running a hospital, running Parliament, running a school or running a business such as an SME, good, skilled management is underrated in this country.
What we needed in the Queen’s Speech was a proposal to abolish unemployment among young people for good. We should have a system like the Dutch system, under which no one under 25 is unemployed. Everyone below that age is in a job, in education or training. No one is allowed to stay at home receiving an income and doing nothing. That is the way in which to repay, for years and years, the great debt that is owed to individuals and to heal the scars that they bear, and to deal with the cost of it all to our country.
We must do something at a time when—I do not know whether anyone has seen the figures—there are 6.9 million unemployed graduates in Europe today. That means 6.9 million wasted talents, but what did the Queen’s Speech do about that? Nothing.
Mr William Cash (Stone) (Con)
The Queen’s Speech has not been universally well received in the press—we saw that yesterday—or by the electorate. However, I want to concentrate on the broader landscape, and on the question of what is at the root of the problem that we face today. It is partly the level of debt. We are not really telling the British people the truth about that, as my right hon. Friend the Member for Wokingham (Mr Redwood) and I, as well as others, said repeatedly before the general election. If we include pension funds, Network Rail and all the rest, the level of debt is probably about three trillion pounds. That debt has to be serviced, and finding the money to pay for it presents an enormous challenge.
The second point that I want to make is that this is not just a question of austerity or no austerity. Yes, we must be efficient and we must reduce public expenditure, but as I must have said a thousand times before the general election and on other occasions—and in a paper that I wrote only last year—the main issue is growth. I agree with earlier speakers who have pointed out that that growth must be demonstrably produced, and that cannot be done without a prescription. Small and medium-sized businesses must be given the oxygen that will enable them to provide employment and generate the revenues that pay for public expenditure.
Let us consider what is going on in the rest of Europe. Mr Hollande has just said that he does not want austerity and he does want growth, but the problem is that when he applies his test to austerity, he will not be able to secure growth. Let me say this to some of my friends on the other side of the Chamber. The fact is that employment regulations, the working time directive, paternity and maternity leaves and so forth have reached a point at which—in aggregate; I do not refer to any individual measure—they have strangled the small and medium-sized business environment of Europe which, in the real world, must compete with the Indias, the Chinas and the South Americas.
For practical purposes, we in this country must recognise that growth will come only from the generation of small and medium-sized businesses and a reduction in legislation. Yes, there is massive youth unemployment in other countries, but we cannot grow within a European Union which itself represents about 40% of our trade with those countries, and they cannot grow because they themselves were inhibited by the strangulation of small businesses, and also by the increase in legislation. As Chairman of the European Scrutiny Committee, I can assure the House that there is no stopping that; every week we are given pile after pile of it.
Another problem is caused by the treaties themselves, and by the whole construction of the economic governance. I ask Members on both sides of the House to try to see the broader landscape, and to recognise that this cannot go on. It is destroying not only our economy, but other economies throughout the European Union. This is not just about the amounts of bail-outs; it is about the reason for the bail-outs. This is the message: the reason for the bail-outs is the fact that there is no growth and no competitiveness. Young people are out of work because there is no means of giving them work.
We need a convention of the whole of Europe, at which the leaders of Europe sit down opposite each other and talk this through in a sensible, rational manner, admitting that what has gone wrong has to be remedied. Representatives of the national Parliaments must be present, too, and there must be a constructive dialogue about the kind of Europe we want, because at the moment it is heading for disaster.
In the meantime, we have to deal with our own immediate problem, which is that there is no growth in this country either, and there is the massive debt, and the deficit is not really being reduced at all. The Opposition’s criticisms are therefore justified in theory, but in practice they offer no remedy. I strongly believe that we should override the European legislation. I was disappointed in what the Secretary of State said in response to an intervention of mine, because it is essential that we kick-start our small and medium-sized businesses and reduce the burden of regulation.
In 2005, the current Prime Minister described it as an imperative necessity to repatriate powers. On 16 May 2006, I proposed an amendment to the Legislative and Regulatory Reform Bill that, notwithstanding the European Communities Act 1972, would have enabled us to override European legislation where necessary. Some 50 current Government Ministers—Conservative Ministers—supported my amendment. It was then “three-lined” in the House of Lords, and it was opposed by the current Deputy Prime Minister and the Lib Dems. No repatriation of powers is a suicide note for the British nation. That is the message. We have to deregulate; we have to give oxygen to the SMEs. That is in the national interest.
Rushanara Ali (Bethnal Green and Bow) (Lab)
This Government have no vision: no vision for a better future for our country; no vision to deliver economic growth; and certainly no vision to create jobs. We saw that in the Budget, and we certainly saw it in the Queen’s Speech last week. With some 3 million people unemployed, including 1 million young people, that isn’t good enough. We are wasting talent, drive and ambition simply because the Prime Minister and Chancellor cannot admit that their plans are not working. It is not good enough for the people in my constituency, who are losing their jobs left, right and centre, while at the same time the Government are giving tax breaks of over £40,000 a year to millionaires. It is not good enough for the millions of people across the country who are working so hard to make ends meet and need a Government who will stand up and work for them. Instead, they have a Government who seem happy to leave them behind and to cast aside their hopes and aspirations.
We are now officially back in recession—something many knew was coming and about which the Labour party has been warning the Government for two years. It is the double-dip recession the Government promised would not happen. Under Labour, the country had started to move out of recession, and progress was being made in creating jobs through programmes such as the future jobs fund and apprenticeships with job guarantees. Now youth unemployment alone is up 7.7% on last year, to more than 1 million. That equates to an extra 73,000 young people who want to work but cannot find the jobs they so desperately need. Also, more than 700,000 public sector jobs will be lost by 2017, with little or no sign that the private sector will be able to absorb those people.
These are tough times to be unemployed. With rising energy and food prices and the benefit changes coming this year, this Government are hurting families, young people, pensioners and public servants—to name just a few—and penalising or demonising those who cannot find work in a labour market that this Conservative-led Government are doing nothing to grow.
That is particularly apparent in places such as my constituency, which has high levels of deprivation, including one of the highest levels of child poverty in the country. The consequences of the Government’s failure on the economy are much more keenly felt in such places. Unemployment in Bethnal Green and Bow stands at almost 12%, which is well above the national average, and youth unemployment is over 9%. I frequently meet parents who are astounded that their university-educated children cannot find jobs, so I echo the point made by my hon. Friend the Member for Huddersfield (Mr Sheerman) about rising graduate unemployment. It is scandalous that even though they have such qualifications, this Government are doing nothing to support them into work.
When I speak to local business owners—the businesses that are at the heart of our local economy and employ thousands of people—they tell me how hard it is to make ends meet given the Government’s VAT rises, which have stifled their potential. In my constituency, the VAT increases are hitting sectors such as technology, the creative industries and restaurants particularly hard. The Government’s failure to do anything substantial to enable them to borrow is also hurting them hard. We need a plan to support small businesses; I echo the comments made by many Opposition Members about the need to support small businesses in order to encourage and enable the economy to grow. SMEs will be a vital part of that story.
We also need programmes to help people into work—programmes that help them develop their skills and thus enable them to compete in today’s labour market. The massive difference such programmes can make in constituencies such as mine is illustrated by the work of, for example, Job Ready hosted by Futureversity, Skillsmatch, the East London Business Alliance, the Adab Trust and City Gateway, a charity in my constituency. Such groups are working very hard, but they are suffering as a result of the impact on charities of the Budget’s tax measures. We must support organisations that develop soft skills and provide training for young people to get into work, but such organisations are being hit hard by this Government’s measures.
My constituents need this Government to step up and take action to address the very real, everyday problems they face. We need to create real jobs for young people, not enforced work programmes that do not offer any chance of employment at the end. Labour promised to introduce a tax on bank bonuses to deliver these jobs—real jobs, with real wages for our young people, who are trying so hard to find work.
This Government have no vision to create jobs and to foster economic growth. Now is the time we need a Government with the vision and aspiration to take radical and ambitious actions, yet that is precisely what is lacking. We need a Government to work for the majority of this country, not a small minority—not the 1% who will gain from tax breaks. I hope this—
Madam Deputy Speaker (Dawn Primarolo)
Order. Time is up. I call Esther McVey.
Esther McVey (Wirral West) (Con)
I shall focus on executive pay, an issue that has come to dominate news headlines and political debate. The public are asking questions about what is fair, necessary and acceptable, and how we are going to address this issue.
The High Pay Commission has revealed that over the past decade executive remuneration in the largest listed companies has increased substantially. The median total remuneration of FTSE 100 chief executive officers has risen from £1 million to £4.2 million, and the annual bonuses of directors of the FTSE 350 companies rose by 187%, while their average total earnings rose by 108%. There has been a 253.5% increase in long-term bonuses, while at the same time pre-tax profits rose by only 50.5% and share prices fell by 5.4%. That trend continued through the economic crisis. Meanwhile, the pay gap between the salaries of the senior executives of the largest UK companies doubled to over 80 times their worker’s average wage.
These pay increases are not aligned to increases in the growth of the businesses concerned, or their profits or share price. That points to a failure of the market and a failure to uphold fair standards. As Conservatives, we believe innately in fairness and the power of market forces to do good in society. It is therefore imperative that we Conservatives correct this failing system that has been allowed to grow and go unchecked—particularly since 1998, under a decade of Labour rule. It is vital that we do that, for business and for the public, and if we want growth, jobs and a conducive environment for businesses to prosper in the UK.
There is no doubt that we have reached a tipping point on executive pay and that such high pay rewards seem excessive, particularly when set against: a global downturn; a European sovereign debt crisis; a banking crisis, with a Government who failed to reform the banking system when they acted in 2008; staff lay-offs and redundancies; anti-capitalist protests; social mobility issues; and youth unemployment.
Earlier this year, I met more than 200 people to discuss executive pay, and we observed various things. It is worth noting that the random cross-section of people I interviewed wanted to draw a clear distinction between those they saw as true entrepreneurs—the likes of Richard Branson, Steve Jobs and James Dyson, who had prospered because they took risks, created products and employed people—and executives of the banking system. The people I interviewed did not even have too much of a problem with footballers and their eye-watering salaries, but they perceived that banking executives were there to look after and manage companies but had failed.
Some of the following answers therefore relate specifically to banking executives. When I asked what people’s feelings were about the pay awarded, they told me that it was “greedy” and “excessive”; they thought that the people receiving the payments were “greedy”, “removed from reality”, “distant” and “remote”. They described their emotions as “anger”, “bitterness” and “resentment”; and they felt “powerless” and that they had been “taken advantage of”.
However, I strike a cautionary note when I talk about the banking system, because although it would appear that it was showing the worst of the excesses, the industry employs 1.1 million people in the UK and delivers 11% of UK tax receipts. So we need a system that will allow one of the UK’s greatest business successes to survive and prosper, and not a form of change that will deride and wither the industry, and make it move offshore.
Interestingly, people were upset about not only the payments, but a combination of things that the banks had done. The banks had failed in a business relationship, in a stakeholder relationship and in a customer relationship. Gradually, over time, they had become remote and had moved away from the customers they were serving. They were no longer found on the high street, they were not supporting local businesses and they had become faceless entities; people were always faced with a computer decision. The banks should listen to this and alter their own business banking model without needing regulation; they should realise that they must engage, once again, with their customers.
This is now about more than just the banks’ customers, as banks need to engage with the tax paying public. So what we have seen over the past few months, with the “shareholder spring”, is a coming of age of shareholders, where they have flexed their muscles and proved their way, bringing people such as Bob Diamond to account. We have to enforce that and pursue it, and I delivered a document to business on what I agreed that the Government were doing but on how they could go further.
I shall end on the words of Doyle, who said that although competitive capitalism is the best way forward, it is “Darwinian in nature”, and to survive and have profitability it must adapt and change with the calls of the public.
Mr George Howarth (Knowsley) (Lab)
It is a pleasure to follow the hon. Member for Wirral West (Esther McVey). She will not be surprised to learn that I do not share all of her analysis of the problems, but I hope to refer to some of the points she made about the banking system.
When I was considering what I wanted to say in today’s debate, I was struck by a depressing familiarity—not about what I wanted to say, but about some of the relevant issues—as what I am about to say about youth unemployment in my constituency could have been said in the 1980s and in the first half of the 1990s. As of March, 16.3% of 18 to 24-year-olds in Knowlsey were jobseeker’s allowance claimants. To bring that into a more human focus, I should say that that amounts to 1,725 young people in that age range. Even though the figures were even worse in the 1980s, that is alarming enough. The question I wish to address in the time available to me is: what is going to happen as a result of this Queen’s Speech or the Budget that preceded it that will give those young people hope that opportunities are available to them?
In that regard, I wish to discuss a couple of possibilities, the first of which is apprenticeships. The Government make frequent broadcasts about how much they have invested in apprenticeships. Perhaps unusually for someone in this House these days, I actually was an apprentice—I served a five-year engineering apprenticeship—and the opportunities now being called “apprenticeships” are not what my generation knew as apprenticeships; they are training opportunities, but they do not have any of the characteristics of the apprenticeships of my day.
I have to say—this was as true of my Government as it is of this one—that the whole training system is in a complete muddle. I chair a local charity—the Knowsley Skills Academy—that trains young people who would struggle to find a place in the job market. Unless they are on sweet terms with such wonderful organisations as A4e, it is nigh on impossible for them to get any funding for that kind of training. The situation is not unique to this Government—my own Government got this wrong too—but it is time that we woke up to the fact that the national training systems do not work and that what we want to do is fund and support local organisations that actually can provide realistic training for young people.
Sheila Gilmore
Does my right hon. Friend agree that one of the problems with the way that things such as the Work programme are being funded is that the local organisations at the end of the supply chain are not getting the work at the moment and may go out of business altogether, along with their expertise?
Mr Howarth
Of course I agree entirely with my hon. Friend. What she says brings me on to my second point: what in the Government’s programme will be attractive to small and medium-sized enterprises? Last October, the Department for Business, Innovation and Skills carried out a survey of 500 SMEs, in which they listed the things they found to be obstacles to success. Some 45% cited the state of the economy; 12% cited obtaining finance, and I wish to discuss that in a moment; and 6%—it was there but it was mentioned by only that number—cited the issue of regulation. I want to talk about small businesses, because they could provide the work opportunity that young people in my constituency and elsewhere need.
I wish to discuss a firm in my constituency, Sterling Services. Its owner, Mr Blennerhassett, has been to see me to talk about the problem he faces. He described how he has been in business for 28 years, has always been in the black and has never had any financial problems with the banks. He told me what happened when he tried to get a loan of £70,000 from the Royal Bank of Scotland to employ two full-time adult employees and two apprentices, to pay for two vans and to make some minor adjustments to his premises. The response he got from RBS was, “We don’t have a flavour for construction at the moment.” So the possibility of him taking on two young people and giving them a real apprenticeship has been closed off by RBS.
Higher education might offer another opportunity for young people. I want to refer briefly to the so-called core and margin model mentioned by my hon. Friend the Member for West Bromwich West (Mr Bailey), which effectively means that universities charging £9,000 in fees will have a proportion of their students directed to lower fee higher education institutions. Some universities will therefore have fewer places and the Government have provided no assessment of how they think that will work in practice. It might mean that opportunities in local higher education institutions will be closed off to young people, which would be a further obstacle in the way of their finding employment.
Finally, I talked earlier about regulation. If one were to compile a list of things that are important for creating jobs and getting the economy going again, I would think that the last place one would look would be regulation. The idea that making it easier to sack people will kick-start the economy is, to say the least, foolish. It is worse than that, however. If the Government really think that the most important priority for legislation is to make it easier to sack people, they should be ashamed.
Neil Carmichael (Stroud) (Con)
It is a great pleasure to follow the right hon. Member for Knowsley (Mr Howarth). The Queen’s Speech is the continuation of the important narrative of dealing with the deficit and promoting economic growth.
The link between reducing the deficit and securing low interest rates is pivotal and is significant for investment, small and large firms, and householders. We attach a lot of importance to deficit reduction, which is being saluted by key worthies in the world of economics and finance and is clearly linked to interest rates. We must focus on that.
My second general point is that energy prices and commodity prices are causing our economy some difficulties, so I welcome the measures in the Queen’s Speech that address them, particularly those on energy. Thirdly, although quantitative easing is an important measure that the Government are rightly pursuing in a measured and modest way, we must ensure that the money ends up in the right place. QE is the flipside of monetarism—monetarism takes money out of the economy, whereas QE puts it in. Monetarism could be described as a blunt instrument and so could QE if we do not reform the banking sector to ensure that the money gets to the right place.
Mr Ronnie Campbell
Surely quantitative easing is just giving the banks money to pay off their gambling debts.
Neil Carmichael
That is neither correct nor appropriate to my line of argument. We must ensure that the banking sector gets into the right parts of the economy. It is not merely a question of planning our overdraft extensions; it is more a question of ensuring that we have sustainable investment and can generate the right kind of investment decisions by firms. The Secretary of State, in response to an intervention, saluted the Handelsbanken and the way it operates, because it is local and bothers to find out what is really happening. I have seen it in action in my constituency, I know it works and I know that the customers who use it benefit from that local approach. That is the sort of thing we want to see in the banking sector.
The real economy is where we will make the difference between growth and stagnation. We must get the economy going. First, we should bring engineering right up to the top. We must deal with it positively and holistically, because it has many aspects. We need the manufacturing sector to invest more in engineers and for engineers to be able to translate their products into saleable exports. We need to stitch together a policy on engineering, perhaps by creating a post of chief engineering adviser or something along those lines, so that we have some propulsion behind making improvements in that field.
Supply chains are an issue that is often flagged up in my constituency, partly because I have raised it several times including during my festival of engineering and manufacturing, which I ran over five days to promote those fields, and partly because it is a subject on which the Government are working hard. We must understand that our companies are part of supply chains in my constituency, in this country and in Europe. It is important that we recognise that exporting is part of that supply chain process and that we give the right encouragement to firms—usually small firms—that need opportunities to develop their markets in those chains. We should help them to ensure that their products are at the top of their technological, innovative and marketing capacity. Supply chains are critical.
It is also critical that we understand that the Government have a role in the energy sector and it is to provide the right framework for investment. Let me give the example of electricity and energy storage to make my point. We need to look towards creating a climate in which the business community thinks that it needs to invest in that and feels safe in doing so. The proposed energy Bill needs to give that comfort to firms that are thinking about not only existing technologies but new ones, and I am sure that it will. I think that those new technologies will be found in energy storage.
Much has been said about the green investment bank, which I welcome. The Environmental Audit Committee, of which I am a member, produced an interesting report on the subject. We were hoping for more capital early, but we recognise that there are constraints and that the Government will make informed decisions in due course. We must ensure that the people in the GIB know about the technologies, the environment and the industries involved in both, as is the case with the European Investment Bank, which draws its strength from its real expertise in the areas in which it will invest. I hope that the legislation paving the way for the green investment bank will bring that about.
Many Members have saluted the Groceries Code Adjudicator Bill and I do, too. It will be important in dealing with problems with food produce from farms and the position of supermarkets, which effectively form a cartel because of their buying power. I hope that the adjudicator will have the necessary power, and, as the Secretary of State suggested, will be given slightly more teeth if that becomes necessary—I hope that it will not, but there is a possibility that it might.
In summary, it is critical that we stand by our commitment to reduce the deficit. That is important for our interest rates. However, we must also recognise that there is still a lot to be done, that growth is the key, and that engineering is the method.
Nia Griffith (Llanelli) (Lab)
Let me start with a few words on the Groceries Code Adjudicator Bill, of which I am a keen supporter. I was a supporter of the private Member’s Bill introduced by my hon. Friend the Member for Ynys Môn (Albert Owen). I have been concerned about the delays in legislating, so I am pleased to see the Bill in the Queen’s Speech and hope that it will not be too long before we see it going through the legislative process.
I am concerned, however, as is the Farmers Union of Wales, that the Bill should have real powers. I want it to include the power to fine retailers for unfair practices. The Select Committee on Business, Innovation and Skills has also recommended that that power should be on the face of the Bill and should not be dependent on the Secretary of State tabling additional orders. I am also concerned that third parties, such as the National Farmers Union or the Farmers Union of Wales, should be able to report issues to the adjudicator. Those organisations are in a better position than individual farmers to see what is happening across the industry, and they are often better equipped than a hard-pressed farmer to raise an issue. There is already a new groceries supply code of practice, introduced by Labour in August 2009, but now, in the Bill, we want more powers. It would be a missed opportunity if the Bill did not include the power to fine transgressors and the power to investigate complaints made by a third party.
Turning to parental leave, Members will remember that it was the Labour Government who first introduced paternity leave, giving fathers the opportunity to share in the excitement and responsibility that a new baby brings. I welcome the proposal in the Queen’s Speech to allow a more flexible approach which lets parents decide how to divide up parental leave between them.
That measure will help families, but let us remember how hard families have been hit by this Government: there was the abolition of the health in pregnancy grant and the child trust fund, the closure of Sure Start centres, cuts in child care support, and the shockingly harsh changes to the tax credit system. It is families with children who will suffer from those changes—low-income families who are trying to do the right thing by going out to work. Now, if they cannot get extra hours, they could be better off on benefits. There are also the bungled proposals on child benefit; the Chancellor seems not to have worked out the effects on one-income and two-income families. The flexibility in parental leave is a very small step towards helping families compared with the many hits that families are taking from this Government.
Turning to the regulatory reform Bill, it is easy to shout about cutting red tape but much more difficult to do it. It came as no surprise to hear the Secretary of State say today that that would be a matter for secondary legislation. We all want to lighten the burden on business, stop unnecessary form-filling, and get rid of excessive admin and box-ticking, but we do not want any erosion of workers’ rights. When we left government in 2010, the UK was considered one of the best places to do business—the best in Europe and the fourth best in the world. Our legislation on workers’ rights was no barrier to business. There was a high turnout of Labour MPs at a recent debate on a statutory instrument on employment tribunals; they came to oppose changing the qualifying period from one to two years. We shall need to scrutinise very carefully what the Government propose in their regulatory reform Bill to make sure that they do not sneak in anything that undermines workers’ rights.
The Government must stop using rhetoric about red tape as a substitute for stimulating growth in the economy. “One in, one out” seems to have gone completely by the board. What we really need is a growth strategy. We need a clear industrial policy that creates the right conditions for companies such as Tata to continue to invest in the UK. That means much better mitigation measures for the high carbon floor price—a unilateral tax, imposed by the Government, with no equivalent in competitor European countries. The mitigation measures are too little, too late.
We need a better deal on energy prices and a coherent energy policy to secure energy for the future, action to get banks lending to businesses, and a much fairer deal on tax. Cutting tax for the most highly paid while clawing back money from low and middle-income households, who are already hit proportionately harder by rocketing prices and the VAT hike, is not just unfair and heartless; it is economic madness, because those people would spend the money immediately, putting it back into the local economy and stimulating local business. At the moment, they are not able to do that; they do not have the money. They are cutting back, so local businesses are suffering and going under. Week by week, we see more of our local businesses folding.
The Government are doing nothing to improve consumer confidence. Far from stimulating growth, they seem deliberately to be doing the opposite. We saw that with the feed-in tariffs fiasco and more recently with the caravan tax, which stifles growth, puts an extra burden on manufacturers and holiday parks, and risks job losses in coastal and rural areas, where there is very little alternative employment.
We need a strategy to get people back to work and to give our young people work. The Welsh Government have that strategy in the form of the Welsh jobs growth fund. The idea is similar to the one that was behind the future jobs fund. We have not heard similar ideas from Government Members. We have not seen a realisation that to pay back the deficit, we need to create wealth. We should do that first, because then we will be in a position to pay back. We need a hub for business in the UK. Again, we see the Welsh Government, where they can, enabling businesses, including some of our fantastically innovative new technological industries, to expand. We need a lot more help for that sort of thing from the UK Government.
In the Queen’s Speech, there are lots of little bits of legislation, but nothing that will deal with the real problems that people face in this country—nothing that will really get our economy going again.
Andrew George (St Ives) (LD)
It is a pleasure to follow the hon. Member for Llanelli (Nia Griffith). She highlighted the importance of the Groceries Code Adjudicator Bill in the Queen’s Speech, a measure for which I have campaigned for more than a decade, so its introduction is not before time.
In these debates, it is quite difficult to dig below the surface of party political point-scoring and mutual blame for the situation that the country finds itself in, but if we do, we find potential for a great deal more cross-party consensus of the sort that there has been on grocery market management—or, to put it better, fair dealing in the grocery supply chain. This is a Queen’s Speech for jobs and growth, but we cannot, simply by passing a law, decree that there shall be jobs, just as one cannot decree that the sun will shine. We need to create the conditions in which a free market is regulated appropriately—hopefully as lightly as possible—to enable that process to happen.
Regarding the groceries code adjudicator, let me set out why our current situation arose and why we need regulation. It is great that there are successful companies in this country, supermarkets foremost among them, but those who have followed what has gone on in that trade have found that, when it comes to the treatment of suppliers in the grocery supply chain, some supermarkets have moved from successfully using their market muscle to abusing it.
There were welcome reforms to the common agricultural policy in 2003, when the Labour Government helped to decouple support from production and moved to other forms of support. That meant that the agricultural industry had to be much more market- facing, but when it looked to the market, it found the supermarkets there, beating suppliers up all the time and retrospectively changing the conditions of supply after they had been agreed. In any case, on many occasions, the contract was verbal. There were problems to do with the introduction of promotional campaigns, which suppliers found themselves paying for; there was the issue of paying for shelf space; and there was late payment of bills, as well as many other overriders in supermarkets’ treatment of their suppliers. In my view, many of those problems persist.
In 1998—the debate goes back that far—my colleague, Colin Breed, then Member of Parliament for South East Cornwall, produced a report, “Checking out the Supermarkets: Competition in Retailing”. That resulted in the Competition Commission undertaking a report in 2000 that led to the first voluntary code of practice, but that code was pretty ineffective; suppliers never used it because of the climate of fear. The most recent Competition Commission report in 2008 resulted in the commission introducing, in 2010, the groceries supply code of practice—I have to correct the hon. Member for Llanelli; it was not the previous Government but the Competition Commission that did that. We want to make sure that contracts, and the relationship between producers and supermarkets, can succeed.
I chair the Grocery Market Action Group, which has members from the National Farmers Union, NFU Scotland, ActionAid, Friends of the Earth, and many other bodies such as the British Independent Fruit Growers Association, so I should declare an interest, though it is not a pecuniary one. It is simply part of my campaigning role to achieve the outcomes that we all want—the Bill has cross-party support.
The GSCOP is all very well, but it is like having the rules of rugby and no referee. That is why the adjudicator is required. The message I want to get across to the supermarkets is that if they have nothing to hide, they have nothing to fear from the proposed measure, and I urge them to embrace it. In fact, they could use it as a marketing tool that enables them to reassure their customers, who benefit from a good, healthy relationship between suppliers and retailers, that they engage in ethical, fair trading with all their suppliers.
One of the great benefits of the grocery code adjudicator proposed by the Government is that it will help customers. The proposal to allow third-party complaints is right and the reserve powers on fining are appropriate. I urge the Government to bring in the measure as quickly as possible.
Ms Margaret Ritchie (South Down) (SDLP)
This is a minimalist programme for government from a Front-Bench team that has delivered little more than a double-dip recession and a spiralling cost of living, with people facing record fuel and energy prices. This is a Government who give tax cuts to the rich while punishing hard-working families. This legislative programme follows on directly from the Budget, in which the priorities of the millionaires were again put above the interests of the millions.
We cannot underestimate the corrosive effect for a society in which the richest 1,000 individuals’ wealth amounts to £414 billion or, put another way, to more than a third of the UK’s gross domestic product. These people seem to be immune from the hardships faced in the wake of the economic crash. Indeed, their wealth has increased by £155 billion since 2008, yet this Government seem intent on delivering more handouts. We have always stood against social inequality and we stand up against the economic inequality that is accelerating under this Government. The dislocation and associated social problems brought about by such disparity are perhaps the most pressing problems that we face, and they are felt throughout our society.
Although I commend the moves to implement the Vickers report by ring-fencing investment banks from retail banking as a step in the right direction, there is nothing here that will deal with the problem of spiralling top-level pay that the Prime Minister was apparently so adamantly opposed to only weeks ago. This is not about restricting entrepreneurialism or penalising successful business people, but about creating a fair economy that works for all in society.
Looking at what is not included in this legislative agenda is as instructive as considering what is included. As hard-working families across Northern Ireland face up to record fuel prices and home heating costs, they may well ask where this Government’s priorities lie. One might ask where was the legislation to lower fuel prices, to restrict excessive executive pay, to promote growth and to tackle the youth unemployment that blights our society. There was nothing in the Queen’s Speech that suggested any remedy for these problems. The Government are simply sitting on their hands at a time when nearly one in five of our young people in Northern Ireland cannot find work.
As fuel prices in Northern Ireland reach 144p for unleaded petrol and 148p for diesel, people are asking what the Government are doing to mitigate this. These are highest prices in Europe, with a standard bill of more than £70 for refilling a 50 litre tank leaving many people paying more for their fuel than for their rent or mortgage. This impacts on everyone, but it must be acknowledged that the effects are most debilitating in rural areas, with young people cut off from jobs and elderly people cut off from friends and family.
I accept that while we are tethered to a volatile, imported commodity such as oil, we will always be susceptible to external events, but the Government could certainly do more to protect the consumer from the worst effects. The recent Centre for Economics and Business Research report showed clearly, using the Treasury’s own figures, that lowering fuel duty would create jobs, grow the economy and, most importantly, be revenue-neutral. But we do not see a Government prepared to protect the consumer, the family, the worker or the jobseeker. Instead, we hear of a Government preparing to increase the burden of public sector workers’ pension contributions and introducing measures that will make it easier for firms to fire people.
Although I have been critical thus far, there are certain aspects to be cautiously welcomed in the programme for government, such as the establishment of a green investment bank and the introduction of a supermarket adjudicator, but it is crucial that we scrutinise the details of these proposals to ensure that they are not merely token gestures. The green investment bank must be properly funded and accessible to firms in Northern Ireland, rather than just in the south of England. Likewise, the supermarket adjudicator must have teeth and must deliver for our local suppliers and producers to rebalance their relationship with the large supermarkets, on which they rely so heavily.
If the Government continue down the path they have taken thus far, they will lead us to recession, not recovery. People being asked to make sacrifices and facing increasingly tough living conditions are left with the question: what is the sacrifice achieving? The pattern is clear. This is a Government who care more about what is happening on Fleet street and Threadneedle street than about what is happening on the high street in Northern Ireland.
Mr David Evennett (Bexleyheath and Crayford) (Con)
I am pleased to be able to speak today in support of the Queen’s Speech, which continues this Government’s progress in their endeavours to deal with the real problems facing our country. We meet today to discuss a wide range of issues in difficult and dangerous economic times. I commend my right hon. Friend the Secretary of State for Business, Innovation and Skills for his approach, and I am pleased to follow the logic of my right hon. Friend the Member for Wokingham (Mr Redwood) and my hon. Friend the Member for Poole (Mr Syms). The right hon. Member for Birkenhead (Mr Field) made a powerful speech, but I believe he got it wrong.
We on the Government Benches have a strategy and proposals to deal with our economic situation. Of course we need dynamism, businesses and more jobs, and we need to get involved in markets across the world. However, I welcome the fact that this Queen’s Speech is not inundated with new Bills. Under the unlamented Labour Government, there was too much legislation, and mere legislation is not the answer. This programme has targeted legislation dealing with the real issues—for example, the enterprise Bill and the banking reform Bill, both of which are vital and helpful.
The Queen’s Speech must be viewed as a continuation from the Speech two years ago and the recent Budget. The previous speaker, the hon. Member for South Down (Ms Ritchie), was wrong. The Budget increased the income tax personal allowance to £8,105 from this April, benefiting 25 million people by up to £126 a year. That is a real achievement. Last month’s increase in the personal allowance will take 260,000 people, the lowest earners, out of income tax altogether, so the hon. Lady was quite wrong when she said that the Government were not doing anything for the majority in this country: they are.
In particular, at the heart of the Government’s approach is the determination to get our economy back on track, growing and creating new businesses, new jobs and new opportunities. As stated in the Speech, Ministers’ first priority is to reduce the deficit, restore economic stability and focus on economic growth. That is fundamental to any Government, and this Government are committed to doing so. The legislative programme is helpful in reducing burdens on business by repealing unnecessary legislation and limiting state inspection of business. These are welcome steps.
In addition, there are proposals to reform competition law and to promote enterprise and fair markets. I welcome the introduction of an independent adjudicator to ensure that supermarkets deal fairly and lawfully with suppliers. I strongly support measures to make parental leave more flexible so that both parents can share parenting responsibilities and balance the work and family commitment in today’s complex, challenging and demanding society. This must be a positive and welcome addition. Of course, growth, jobs, businesses, especially small businesses, are vital, but so is the families and children Bill, which will reform adoption procedures, improve and overhaul special education and give flexible parental leave, which I have already highlighted.
I strongly support the measures for small businesses. Without doubt, the economy is the main problem facing our country, and it has consequences for all of us. We are fortunate that we did not join the euro; otherwise, things would have been far worse.
Bob Stewart (Beckenham) (Con)
I have a small business in my constituency that is very profitable and has been so for 28 years. It requires some help from the bank but that is not forthcoming. The bank will not loan it any money and as a consequence it has had to sell one of its buildings. We must get that right. We must ensure that banks release equity so that our companies can get moving. I hope my hon. Friend agrees.
Mr Evennett
My hon. Friend is absolutely right. That is one of the key factors. We must ensure that businesses are lent money by the banks to ensure that they continue to flourish and be profitable. We must never forget that small businesses are the backbone of our economy; the backbone of our country. There are 4.5 million small and medium-sized firms, making up 99.9% of all enterprise in the UK. I welcome the comments of the hon. Member for Huddersfield (Mr Sheerman)—who, regrettably, is not in his place now—who was passionate about small businesses and their importance for the future. They are a vital element. Businesses create the wealth that allows the Government to fund all our vital public services. Therefore, we are all, on whichever side of the House, keen to encourage, enthuse and improve small businesses so that they can be profitable for the benefit of society as a whole. The most competitive nations have clear strategies to support business. They have lighter regulation, less interference, competitive tax regimes, banks that support them, or should support them, and employment laws that make it easy to hire people. Businesses need help from the Government, not hindrance or neglect. Opposition Members did not give a lot of help to small businesses when they were in power, and I will take no lectures from them on this today.
In two years, the Government have made real progress. Corporation tax has been cut and there have been more apprenticeships and financial assistance to support work-based learning. I am a huge supporter of apprenticeships and commend the work of the Minister for Further Education, Skills and Lifelong Learning, my hon. Friend the Member for South Holland and The Deepings (Mr Hayes). His enthusiasm and success are infectious, and we now have more apprentices than we have ever had in the recent past, and that is to be commended.
A red tape challenge campaign was launched by the Government to listen to businesses’ concerns about regulation. A national loan guarantee scheme has been introduced, so hopefully businesses can get access to the credit that they need to survive and grow. Business is important to this Government and to our society. Under the last Government, businesses were taxed more and regulated more, and they did not get the support that they needed. This Government are going forward positively to ensure that that they do.
The Queen’s Speech is essential. It is essential to get the economy growing and to take the right approach, tenor and leadership, and this Queen’s Speech will achieve that. The economy and business are fundamental to our society and the Queen’s Speech has at its centre the economic future of our country.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Like a number of other Members, I doubt very much that this is a Queen’s Speech for our times. I do not think that my hon. Friend the Member for Stoke-on-Trent Central (Tristram Hunt) will be writing about its radicalism and imagination in the years to come.
On procurement, Adam Marshall of the British Chamber of Commerce said that the Government need to realise that they are a major consumer, a maker of markets and guardian of the country’s infrastructure and skills policies. Yet this is a Queen’s Speech with nothing to offer on those issues. There is no Bill to demand that those who win large Government contracts should have to provide apprenticeship places. The Under-Secretary of State for Defence, the hon. Member for Mid Worcestershire (Peter Luff), is happy that tankers will be built in South Korea, employment, industrial and economic factors will be dropped from the MOD’s value-for-money assessments, and no action will be taken to prevent a repeat of the Thameslink fiasco.
There are no measures for jobs for young people, no actions to force energy companies to put the elderly on the lowest tariff rather than trying to bamboozle them with an array of complex charges, and no measures to tackle rip-off Britain—the hidden charges of the banks, the private landlords, the insurance industry and the airlines. They are what matter to real people—the people I listen to in my constituency of Selly Oak.
We have heard about the regional growth fund. Almost everything that the Government have achieved to date has resulted in unemployment rising and job prospects falling, and youth unemployment being returned to that depressing picture of the ’80s, which wrecked the health and hopes of a generation. Given what the National Audit Office has told us about the regional growth fund, I strongly caution the Deputy Prime Minister to be careful about what he seeks to trumpet around the country.
The Secretary of State managed to glide over plans to make it easier to fire rather than hire, but I remind him that it was the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for North Norfolk (Norman Lamb), who said that it would be madness to throw away employment protection in the way that is proposed, and it could be very damaging to consumer confidence.
On banks, the Secretary of State omitted to mention that on the key issue of restructuring it will be seven years before we see the proposals fully implemented—so much for urgency. Having already sold off Northern Rock for a song, is it true that we are about to see a massive loss to taxpayers on Royal Bank of Scotland shares?
On the groceries Bill, the Secretary of State will take reserve powers. We already have a voluntary code; we do not need more window dressing. I hope that he makes a better job of the green investment bank than the Government made of the solar energy industry, where reckless decisions wiped out 6,000 jobs and wasted the investments of many small business men, including a large number in Selly Oak.
The Government have ducked the key social issue of long-term care for the elderly, despite promising legislation, and on parents and children I am keen to know exactly what they hope to achieve. What red tape will they scrap in relation to childminders? Will it be Criminal Records Bureau checks, restrictions on the number of children, or floor space requirements per child? That is going back, not forwards.
I am interested in plans for parental leave. We must now be assessed as individuals for tax purposes, as families for child benefit eligibility, and we can have transferable allowances for leave. How much red tape and how many inconsistencies does this involve?
I would like to hear more about the personal budget that the Government plan to give parents of children with special education needs. How will parents qualify, what will the budget replace, and how can we be sure it is not another gimmick to make people compete for fast-disappearing services?
On adoption, no one wants to see children languishing in care, but I am for the child. I want a charter for children. There are plenty of older children, disabled children, children with learning difficulties, and children with severe emotional problems languishing in our care system. We need to concentrate on them as much as focus on making adoption easier for couples.
What on earth will Boots parenting vouchers deliver? What will they cost, who will make a profit, and who will use them? It would also be helpful if the Government, given the succession of local difficulties with friendships and contracts, just came clean on the relationship of Octavius Black to the Prime Minister and other Ministers.
This is a Queen’s Speech that confirms what the electorate know: it is a coalition that does not listen, does not care and does not have a clue.
Paul Maynard (Blackpool North and Cleveleys) (Con)
It is a pleasure to speak in this Queen’s Speech debate, although I fear that I might have stumbled into a constitutional innovation: a state of the nation debate. Of course, we do not have a state of the nation speech in this country; we have a Queen’s Speech in which Her Majesty lays out legislation for the coming year. Yet having listened to Opposition Members, I think that the debate has really been a discussion not of what was in the Queen’s Speech, but of what was left out.
I am a proud believer in limited government. I remember Queen’s Speeches under the previous Government groaning under the weight of unnecessary legislation. Barely a year went by without a criminal justice Act being added to the statute book. Did they ever look at whether those Acts had the desired impact? Of course not. They just kept on legislating because, in the end, that is what politicians on the left need to do; they need to pass laws, because otherwise, heaven forfend, people might not think they needed to exist, and we cannot have that, can we?
When I speak with local businesses in my constituency, they do not beg me for legislation. Actually, I tell a lie. It would remiss of me as a Blackpool MP not to mention one measure that was missing from the Queen’s Speech. I am sorry that the Chief Secretary to the Treasury is no longer in his place, as otherwise I would congratulate him on the massive benefits he has brought to the ski lifts of Aviemore. Having accepted the principle that there should be a level playing field between different European nations, he lowered the VAT rate for ski lifts and did well by the people of Aviemore, but the hoteliers of Blackpool would like him to make a similar contribution by lowering the VAT rate on the provision of goods and services related to tourism. Many other European countries have a lower rate of VAT on such services, which means that the UK is suffering through competition. Having accepted that principle, I hope that the Government will now look at how it can be expanded to other sectors of the economy.
Lorely Burt
Many laws were passed under the previous Government—more than one for every single day they were in government—but what did that achieve? Unless we enact them and then ensure that people adhere to them, they are not worth the paper they are written on.
Paul Maynard
I thank the hon. Lady for that intervention. My only surprise is that so far no Labour Member has proposed a law stating that two plus two should equal five, because that is the only way they could get their sums to add up for the policies they would introduce. What local firms in my constituency are asking for is better implementation of existing legislation. The Economist stated only last week that we are the most radical Government in the west. We have introduced fundamental reforms in welfare and education, and they need time to bed in. Good governance is different from good legislation. Public administration is about implementing what is passed, not moving on to the next big item just for the sake of giving oneself something to do. That is not how to run a country properly.
One local firm I visited only the other week is AGC Chemicals in Thornton, which makes a wonderful product called Fluon, which I had never heard of before. It is apparently very similar to Teflon. Those Members who are familiar with the Allianz arena in Munich or the Water Cube where the swimming events took place at the Beijing Olympics will be interested to know that the fancy cladding surrounding the stadiums is made of Fluon, which I am very proud is manufactured in my constituency. The company told me that what it needs is our existing legislation to bear fruit. It is delighted by the education reforms we are putting in place, because it needs better skilled employees and cannot find them in the local area, which is a tragedy for not only the firm, but for the local people on the Fylde coast who need jobs and need to acquire those skills. That is why it is vital that we welcome what the Government are doing on apprenticeships, for example. Also, the firm should not have to look two or three hours away to get the highly skilled specialists it needs, because those people will have lengthy commutes, which puts stresses and strains on our infrastructure. That cannot be the right way to go. There must be a more local approach to skills, and that is what the Government are seeking to ensure, but that does not need a Bill or legislation; it just needs us to allow the Government to get on with the business of good governance. It is that simple.
Let me give another example. We already have local enterprise partnerships and enterprise zones. I welcome the enterprise zone that the Government have introduced near my constituency in Warton, where BAE Systems is based, but once again that is an evolving situation. The local enterprise partnerships are barely a year old, and certainly the one in Lancashire had something of a traumatic birth—something to which other Lancashire Members in the Chamber can no doubt bear testament. Once again, local firms in my constituency are saying that they want to be certain that the local enterprise partnership is not being hobbled or constrained and that the periphery—the Fylde coast is, after all, always a periphery because it is the coast—is not neglected when decisions are made.
In my view it is fundamentally important that as we move forward we remember the first line of the Queen’s Speech, which is that deficit reduction is at the heart of what the Government are doing. I can accept that Opposition Members might not agree with every element of the Queen’s Speech or like the general approach that the Government are taking, but I ask them to bear witness to what is happening in Athens and in France. I ask them to bear in mind the fact that we cannot make two plus two equal five, as much as they might wish us to, because two plus two will always equal four, and that has to be the basis of any sound, intellectual economic policy. We cannot keep channelling our inner Venezuelans and hoping that if we nationalise everything somehow all will be well. I realise that it is a seductive message for politicians to offer, that somehow they can offer all the gain with none of the pain, particularly when they are desperate to win elections, but the more the Labour Members go on in that manner, the more they will show that they are yet to understand fully why they lost the last election. I am quite happy for them to continue in their ignorance, for they need to look within themselves that little bit more to understand fully why they were thrown out in 2010. I was there; I remember.
Mr Ronnie Campbell (Blyth Valley) (Lab)
I think that the Queen should have just carried on in her carriage and gone past Parliament and on to Windsor castle. She would have been better off, because she spent only 15 minutes here.
I want to raise the question of the green investment bank and the enterprise zones within it. In my constituency we asked a few months ago, at the time of the autumn statement, whether we could have an enterprise zone, because we have a big energy sector and are doing a lot of work on wind turbines and at the port of Tyne. I am a bit worried about the green investment bank, because I do not think that it has enough. There is £1 trillion of money in the green industry. I might add that our competitors are well ahead of us; Sweden, Denmark and Germany are far in advance of us on green energy, especially wind turbines. Green investment is a road to our recovery, and I am sure that we will eventually manage it, but unfortunately, because of what we have in the Bill, it will not happen.
Lorely Burt
I agree with the hon. Gentleman that we should give the green investment bank more powers, and those are coming. However, the Government have made £3 billion available to the bank. How much would his party contribute to a green investment bank, because it has not been forthcoming on that so far?
Mr Campbell
I will not know that until we get into power in 2015, so I will ask the Government then how much they will give. I do not have the answer now, because I do not have that foresight.
One of the other things I want to mention, if the Minister is listening carefully, is that at the Tyne and the port of Blyth, where these industries are up and coming, companies are coming in, having a look around and saying, “Great. We like the two ports of Tyne and Blyth.” But unfortunately for us they go up to Scotland, because they can get more money, grants, investment and incentives there. That is the problem, because Scotland is only 100 miles up the coast. Why would a company invest in the port of Blyth or the Tyne when it could go up to Scotland and get more money? That is a big problem. I would like the Government to have a very careful look at that and to find out about Scotland. Obviously, the Scottish Government are pushing money there, because Scotland is flying away with that industry, and unfortunately we cannot compete. We have had some successes, but unfortunately we know companies that have been to our area, left and gone to Scotland because there is more money in it for them there.
We have a lack of demand in the economy; that goes without saying. We can talk to any economist, but they will all say the same. We have householders who are not spending, banks that are not lending and companies that are not investing, and on top of that we have a crazy decision by the Chancellor to cut capital spending. Some 3% of the construction industry has been cut by this Chancellor. How on earth are we going to get growth when he is doing all those things?
The other week, I saw the Prime Minister and the Deputy Prime Minister, and I was not sure if it was a Punch and Judy show, a Morecambe and Wise show or the Chuckle Brothers, but when I saw them at that tractor factory my mind started to boggle. I thought, “What are they doing?” and then I started to imagine. There was the Prime Minister taking his coat off, and he turned around to the Deputy Prime Minister—the Liberal Deputy Prime Minister—and said, “I beg your pardon, I didn’t promise you a rose garden,” and the Deputy Prime Minister, straight back to him, said, “Two wheels on my tractor, I’m still rolling along.” That just summed it up, because all those workers were at the back of them, with all their smiling faces. They did not tell them that they were going to sack them, cut their wages or halve their pensions if they could get away with it. That amazes me, and I do not know how those lads felt, but I have not seen a smiling face yet.
Then there is efficiency, as I said before. I jumped ahead of myself there, but on efficiency I saw the ex-Defence Minister, the right hon. Member for North Somerset (Dr Fox), on the telly the other day, and he wants to cut our wages and pensions and make us work longer. I would like to see the Register of Members’ Financial Interests, because I never thought about getting the register to see how much he is making on the side. When the ex-Defence Minister says that he would like to cut the wages of working people, I would like to see what he has in his locker, in the register, and how much he is making on the side. Those are the people we should be getting at—those who have two or three jobs, especially on the Government Benches. There are one or two on the Opposition Benches, but there are more on the Government side.
We should be spending money, not cutting it like this Chancellor has because he is into austerity. I begin to wonder sometimes about austerity. I begin to wonder about democracy, too, because when I hear Government Members I wonder, “What is democracy?” Those in Greece are not having austerity, and neither are those in France—and they have all been to the ballot boxes. In Germany, after the weekend results in the local elections, the German Chancellor got toast. She got toast—[Laughter.] They even turned her down. Those countries in Europe do not want austerity. Are we not listening—never mind laughing, as this is not a laughing matter—to the people?
The Tories are hell-bent on destroying this country over the next couple of years, instead of going for growth, building houses, schools, roads, bridges and anything we want to get our hands on. Let the capital programme begin again, instead of cutting it. The argument over the cuts is not about economists or economics. It is about real people, and it is real people who we should be defending in this Chamber tonight.
John Glen (Salisbury) (Con)
I rise to speak in the debate this evening with the words of the recent public discussion between business leaders and my right hon. Friends on the Government Front Bench ringing in my ears.
The essence of that debate seemed from the business leaders’ side to be, “The Queen’s Speech did not do enough for business,” and from Government Front Benchers, “It is business, not Governments, that create jobs. Governments can create only the conditions for growth.” Frankly, both sides of the debate share a common aim: to see business prosper, more jobs created, more tax revenues and growth in our economy.
When we step beyond the headlines, which inevitably, as ever, over-simplify and polarise statements, we see that the issue before the country, as expressed by the Institute of Directors and other business organisations, is the pace and scope of reforms. Businesses want to see an extension of the sunset clauses for regulation and for the one-in, one-out regime. They might also like to see more moves towards no-fault dismissal and flexible structures, so that the decision to take on a permanent employee does not require so much deliberation. The CBI said:
“We hear a lot about regulatory reform, but the big prize for businesses would be to major on the new power for ‘sunset clauses’ on regulation and regulators. Every new bit of regulation should be time-limited and then reviewed.”
Mr George Howarth
Has the hon. Gentleman seen the Business Department’s own survey of small and medium-sized enterprises? The priorities that they cited were what was happening in the economy and what was happening in the banks, and only 6% responded by saying that regulation was an issue.
John Glen
I have seen plenty of businesses in my constituency which have argued consistently over the past two years that their real challenge is dealing with unnecessary regulation, and I agree. The Prime Minister, although in favour of no-fault dismissal, could not unfortunately persuade our coalition partners to agree, so it did not go forward.
Some primary legislation will be helpful and desirable, but I do not believe that in a Queen’s Speech the Government can legislate to create jobs, so I am somewhat confused by the logic of Justin King, who has questioned the consistency in Government policy. From the very first Budget, the Government have been consistent on the need to reduce corporation tax, but in 24 months there is only so much consistency that they can demonstrate.
Mr King says that he wants to know where the “big bets” will be placed, but he might like not only to reflect on the state of the public finances and on the limited room for such investments, but to grasp the fact that on High Speed 2, on health care and on schools the budgetary certainties were put in place a long time ago, and the announcements were made in the first few months of this Government. The reforms to planning, especially the radical simplification of planning regimes, should enable big employers such as Sainsbury’s to get on with their primary role of creating jobs.
Let us turn to small businesses, which constitute such a high proportion of the jobs in my constituency and throughout the UK economy. For them, the Queen’s Speech offers a great deal. The groceries code adjudicator should rebalance the relationship between small businesses and large supermarkets; perhaps a fear about that led Mr King to make his remarks last week. I am concerned, however, about how flexible maternity and paternity leave will work out in practice for small businesses.
Small businesses and small business people know how to look after their employees through good times and bad and life-changing events, and an employee has a reciprocal responsibility to work hard, providing dependability, a willingness to demonstrate responsibility and a responsiveness to economic conditions so that rewards are brought to him and his employer.
I hope that the Government consider the implications of the masses of paperwork that will be introduced if the measure is not considered and adopted carefully. As the Forum of Private Business said:
“The UK already has one of the most generous parental leave systems in the world”,
and small firms must not be
“stung financially at a time they can ill afford any more business costs being foisted on them.”
What happens when managers find themselves having to arbitrate on competing requests for flexible leave? Could not this time be better spent establishing new markets and growth opportunities?
A debate on business and the economy at the current time would not be complete without reference to the eurozone crisis. There can be no doubt that the uncertainty in European economies, centred around the state of the euro, is causing many in this country to put off vital investment decisions. Fear of a slide in equity values, anxiety over the dependency on hidden “toxic debts” in European banks, and frustration at the gap between the political will and the economic reality are draining our economy of a great deal of optimism. I always resist the simplistic call that the solution is, “Pull out of Europe and all will be well,” but I do feel that the Government, and politicians in all parts of this House, need to begin to explore what the world will be like when Greece defaults and leaves the euro. What will happen when the Hollande rhetoric cannot fix chronic indebtedness? We are not insulated from the euro; our economies are interdependent given that 48% of our trade is with the EU 27.
We should look to the future with some trepidation. The future will primarily be in the hands of business leaders, but the conditions for investment decisions need as much certainty as possible. All good business strategies have contingencies and reserves. The emerging challenge for the leaders of our Government is to demonstrate a contingency for the scenarios that are evolving in the eurozone.
Sammy Wilson (East Antrim) (DUP)
It is a great joy to take part in this debate.
Back home in Northern Ireland, there has been a lot of criticism of the fact that Northern Ireland was not specifically mentioned in the Queen’s Speech. Newspapers, commentators and politicians have suggested that that is a vast gap in the Queen’s Speech that needs to be filled. I do not share that view, for two reasons. First, I do not believe that more and more legislation piled on to an economy is necessarily a good thing. Secondly, many of the problems that we face in Northern Ireland are UK-wide problems that require UK-wide solutions, and therefore much of what the Queen’s Speech does in dealing with the economy of the UK as a whole should benefit Northern Ireland.
I was heartened when the very first words of the Queen’s Speech talked about “economic growth” and the need to “restore economic stability”. However, as many people have said during this debate and others, once we get down to the detail, the reality is that there is no clear path as to how these proposals will get us back to economic growth. Indeed, there are many diversions—a result, I suppose, of the faddishness that has been introduced into Government decisions by the Liberal Democrats. The proposals on House of Lords reform are equalled only by some of the other proposals that the public have already rejected. At a time when millions of families were most concerned about student fees, the Liberal Democrats thought that a referendum on the alternative vote method should be the Government’s priority. The Government have been led astray by those who say that they are driving the tractor to pull us out of the mire rather than driving the digger to dig us deeper into the mire, as appears to be the case.
I am concerned about three main issues. First, it will be interesting to see what proposals the Government bring forward on stability within the euro area. Much has been said here today about the need to stimulate the economy. We have heard many Government Members say that we cannot keep on borrowing and spending, yet there seems to be no lack of that when it comes to propping up a failed currency, for which the Government keep finding money. Within the past three weeks, another £10 billion went to the International Monetary Fund to help to prop up a currency that looks increasingly shaky. That is throwing good money after bad. That £10 billion could have had a much greater impact had it been spent on infrastructure development here in the United Kingdom to boost people’s confidence that the Government believe that we will have growth eventually and need the infrastructure to deliver it.
The second issue is bank reform. In Northern Ireland especially, businesses are held back by the lack of finance from a dysfunctional banking system. The banking system in England, Scotland and Wales may be dysfunctional, but in Northern Ireland most of the main banks are not operating and we are dependent on bankrupt banks from the Irish Republic, which account for nearly half the market, and Ulster bank, which is controlled by RBS. Bank lending is not happening for businesses. Although a very ambitious target, which many firms are trying to meet, of exporting to areas outside the euro area has been set, many firms are finding opportunities but cannot get the money to finance their organisations and provide them with working capital. I hope that when the bank reforms go through, there will be greater emphasis on what impact Government policy is having on places such as Northern Ireland, where we do not even get figures published for Project Merlin and do not know whether the policies are working through the banking system in Northern Ireland.
Thirdly, there is the issue of energy prices. The Queen’s Speech says that the Government will deliver
“secure, clean and affordable electricity”.
That is a euphemism for expensive electricity. I think we all know that the pursuit of renewable electricity has added considerably to energy bills in the United Kingdom and put us at a competitive disadvantage. Whatever we call it, clean energy, green energy or wind power costs three and a half times more than coal or gas-fired power. If the Government are going to keep going down that route, they will suck growth back out of the economy in the pursuit of helping the renewables industry.
There are many areas where we need to get oxygen back into the system, including banking, cheap energy, finance and infrastructure development, and I trust that we will see that in future.
Mark Pawsey (Rugby) (Con)
I was pleased to see that the very first sentence of the Queen’s Speech referred explicitly to economic growth, the second sentence referred to the need to reduce the deficit, and the third sentence referred to the need to reduce the burden on business caused by regulation. All those things together show clearly that the Government’s No. 1 priority is to get our economy growing once again, and right now nothing is more important. I recognise that the Government have been in power for two years, and I understand the concern of people out in the country that the economic position remains difficult. However, it is important to remember the magnitude of the task that was faced by this Government when they took office in 2010 and the situation that the previous Government left us with. They had taken Britain to the brink of bankruptcy, with a structural deficit seven years before the recession began—the largest deficit in the developed world. [Interruption.] I know that we have heard all this before, but it is very important that people understand that the severe state of the public finances meant that it was not possible to sort out these problems overnight.
Looking further back, the decade starting in 1999 saw growth coming from the public sector. The public sector alone grew under the previous Government. The downside was that that led to an imbalance in the economy between the public and private sectors, creating a problem. The CBI says that the growth in the public sector in that period led to a crowding out of the private sector as the public sector accounted for a larger share of economic activity and resources. In order to rebalance our economy, it is important to look to the private sector, particularly the manufacturing sector.
As a Member of Parliament based in the west midlands, where there is a tradition of manufacturing, I say that we must recognise just how crucial the manufacturing sector is to our economy. It is worth £120 billion a year to our economy; 55% of the UK’s exports are in manufacturing; and in that sector there are more than 2.5 million jobs. But over a number of years there has been a steady decline in manufacturing.
Manufacturing as a proportion of the economy has almost halved, from 22% in 1997 to 12% in 2011. A key priority of this Government must be to redress that balance. How will we do that through the private sector? First, we must reduce levels of taxation, because doing so provides incentives, as people and businesses work harder to regain a greater proportion of their earnings. The UK will have the lowest rate of corporation tax in the G7 and the fourth lowest in the G20. On personal taxation, my view before the Budget was that now was not the right time to reduce the top rates of tax, and I retain that view, but it is clear that reducing the top rate of tax provides an incentive to high earners to base themselves and their businesses in the UK.
The second method of achieving growth through the private sector is getting rid of red tape. Unnecessary bureaucracy stifles our businesses and distracts business owners from the key tasks in hand: looking after customers, finding better ways of doing things and supporting their employees to do a good job. As someone who ran a business for 25 years before arriving here, I am pleased that the Queen’s Speech will reduce the regulatory burden.
It is true that the Government cannot create growth themselves, but they can create an environment in which businesses can thrive. A key part of the Government’s role will therefore be creating confidence. There is evidence that many companies, both large and small, have on their balance sheets the funds to expand, but are not doing so because right now they do not see a return.
In addition to maintaining consistently low interest rates, the Government can support business in respect of exports. In my business, if we were struggling in one area geographically and we found a market sector that was not doing so well, we looked elsewhere. If the UK economy and businesses are not going to grow because the UK market is flat or our partners in the eurozone are having difficulty, we need to address other markets and look to those that are growing, where often there is great respect for Britain as a brand. The Government can make it easier to export by helping to reduce the risks that companies, particularly small ones, face when trading in overseas markets. In my small business, when I was trading, we would not have given a thought to exporting. We need to change that mindset. There is some evidence that that is already happening; I have heard about that when talking to small businesses in my constituency.
UK Trade & Investment has done some great work. It supported an event on documentation run by the chamber of commerce in my constituency, bringing together advisers, bankers, linguists and others.
I have one concern, which my hon. Friend the hon. Member for Salisbury (John Glen) mentioned, about a measure that may hold back growth: the Bill to give flexibility to parents with newborn children. That is welcome for families, but such provisions can be a real headache for small business owners, because when an employee is absent, the job still needs to be done. Temporary staff are expensive, often lack knowledge about the way that a company works and may not have the right skills. I do not want to give the impression that I am against the rights of mums and dads to take much-needed time off with their newborn children, but we must have some regard to the disruption caused to small businesses.
In conclusion, the importance of the private sector, including the manufacturing sector, must not be downplayed. We need to reward success and create confidence, so that the businesses in our country can drive our economy forward.
Sir Stuart Bell (Middlesbrough) (Lab)
I am grateful, Madam Deputy Speaker, to be able to speak on the Gracious Speech and to follow the hon. Member for Rugby (Mark Pawsey), who made great play about private sector workers, as opposed to public sector workers. The public sector worker, of course, contributes to our society as a consumer and facilitates the private sector. I have never understood why Government Members make a distinction between those who work in the public and private sectors.
Mark Pawsey
I was not referring to workers. I was talking about the sectors in the economy as a whole and the need to rebalance the public and private sectors. I made no comment about public sector workers.
Sir Stuart Bell
I am grateful to the hon. Gentleman. It would be a fine thing if someone working in the public sector was able to move out of it into the private sector. Unfortunately, under the Government’s policies towards the public sector, 500,000 people will be made unemployed and put on the dole.
The right hon. Member for Mid Sussex (Nicholas Soames) wished to see an intellectual technology hub in the south-east. My right hon. Friend the Member for Birkenhead (Mr Field) wanted the same in the north-west. Middlesbrough has a leading business driver, DigitalCity Tees Valley, in the heart of the town. It has a games company, a web design company and a digital education company. Young people have embarked on such digital careers enthusiastically. Many of those young people are from far away places such as Canada and France, but some were home educated at Teesside university. That is a great credit to our university. Those people are creating one of the United Kingdom’s most vibrant digital hubs, which includes digital media, digital technology and creative businesses. I, along with others, will do all that I can to encourage and facilitate DigitalCity Business to ensure that it remains a success.
The hon. Member for Stroud (Neil Carmichael) referred to the business community. Middlesbrough is working to create a business improvement district in the heart of the town, following another 126 other towns and cities that have opted for such a district. We need the votes of the business community. If those votes come, they will provide the town with a stronger retail centre, and with a more vibrant and exciting centre that will attract people from outside the area.
Two weeks ago, the £35-million radiotherapy unit at the James Cook university hospital was opened by Princess Alexandra. The hospital is now described as one of the finest in Europe and is among Europe’s premier cancer treatment institutions.
I am glad to see the hon. Member for Redcar (Ian Swales) in his place because, as he will know, the first vessel has now been loaded up with steel from SSI UK’s Redcar plant for shipment to Thailand, a month after the blast furnace was reopened. The first shipment from Teesside consisted of 48,000 tonnes of steel slabs with a value of £18.5 million.
I am also glad to see my hon. Friend the Member for Hartlepool (Mr Wright) in his place, because Tata Steel has been awarded a major contract worth more than £100 million for its 42-inch mill, to provide gas pipelines for the gulf of Mexico. The pipelines will be manufactured and delivered in the second half of the year. Tata Steel employs more than 700 people in Hartlepool and across Teesside it has about 1,500 employees. My hon. Friend the Member for Llanelli (Nia Griffith) referred to what Tata is doing in her constituency. The company has invested £13 million in its Teesside site this year.
I will move on to the points in the Gracious Speech that relate to the European Union and the eurozone. The right hon. Member for Wokingham (Mr Redwood) made an eloquent and passionate speech on the future of the European Union, the eurozone and the euro, which seems like it was a long time ago. I was reminded of a phrase in the play “Julius Caesar”:
“men may construe things after their fashion,
Clean from the purpose of the things themselves.”
With all the dire talk today about the European Union, the eurozone and Greece, we will have to see what happens. The right hon. Gentleman put forward the novel view that a Minister—in this case the Secretary of State for Business, Innovation and Skills—can say something privately that he will not say publicly. I doubt whether that is the case with the Secretary of State or with any Minister.
The hon. Members for Solihull (Lorely Burt), for Stone (Mr Cash), and for Stroud and my hon. Friend the Member for Blyth Valley (Mr Campbell), who is no longer in his place, but who entertained the House and will entertain in tomorrow’s Hansard with his language from the north-east, talked about the European Union. The challenge for the European Union is how it can reduce deficits, create growth, and carry democracy with it. Those three elements are extraordinarily difficult.
I raised with the Prime Minister the other day the fact that on 23 May there will be a conference of all the European Union leaders. On the table at that informal conference will be a growth compact to go alongside the fiscal compact. It will be interesting to see whether the Prime Minister signs up to the growth compact, having not signed up to the fiscal compact.
The new President of France, who will be put into his new job tomorrow, talks of job creation and won his election on a programme of growth rather than austerity. It is an interesting thesis, and we will see how it develops in our own country. The EU is based on the stability and growth pact, and there will be a growth compact to go along with the fiscal compact. My prediction is that the EU and the eurozone will survive. The Greeks must make up their own minds—the sphinx must solve its own riddle, and so must the Greeks.
Martin Vickers (Cleethorpes) (Con)
It is a pleasure to take part in this Queen’s Speech debate. I am particularly pleased that the Queen’s Speech produces a framework that will allow Government Members to give a narrative to the Government’s aims and objectives, from which we have been somewhat derailed in recent weeks. My experience campaigning in local elections in north-east Lincolnshire highlighted the fact that between the Budget and polling day, we had lost the debate about what the Government were trying to achieve with their economic policies. We lost the argument, for example, that we were taking millions of people out of income tax, because of the Opposition’s effective campaign on the 50p tax rate.
I not only campaigned in the Cleethorpes area of north-east Lincolnshire but went into the Scartho ward in Grimsby, which I represented until last year. It epitomised the need for a new narrative from Government Members. It was classed as the safest Conservative ward in Grimsby, although anyone who knows Grimsby will know that it was the only Conservative ward, so that it is perhaps not a great achievement. Over the 30 years when I lived in the ward, it was represented by all three major parties at some time or other, and in the mid-1990s I had an enforced rest from my council experience thanks to new Labour, as it was then, sweeping all before it. The seat that was up for election a couple of weeks ago went to the UK Independence party, and that is an important message to all our parties. There is strong anti-EU sentiment in the Grimsby and Cleethorpes area, mainly for historical reasons to do with fishing, but the message should go to all parties that there was something of an anti-political feeling.
Before I move to praising the Government—I assure Ministers that I intend to do so—I take this opportunity to say that static caravans are a big part of the Cleethorpes economy. Indeed, the Lincolnshire coast is the largest centre for static caravans in the UK. The consultation period on the imposition of VAT on static caravans concludes at the end of this week. I appeal to the Government to take careful note of the damaging impact that the measure could have on my area. Static caravans are used as second homes and holiday homes, and because they are occupied for nine or 10 months, they effectively extend the season and boost the local economy.
I was particularly pleased that the emphasis of the Queen’s Speech, right from line one, was on
“economic growth, justice and constitutional reform.”
As an aside on constitutional reform, I hope that we move ahead with an elected House of Lords as quickly as possible. I would prefer a 100% elected House, but let us at least get an elected element into the upper House as soon as possible. It is a scandal that the only way of getting into one of our Houses of Parliament is by an appointment that my constituents would regard as very lucrative.
Duncan Hames (Chippenham) (LD)
I generally support the hon. Gentleman’s observations on House of Lords reform, but does he agree that one lesson of constitutional reform is that we should not allow the best to be the enemy of the good, and that we should not take an all-or-nothing attitude?
Madam Deputy Speaker (Dawn Primarolo)
Order. May I remind Members that they are not supposed to face the back of the Chamber? They are supposed to address the Chamber, and particularly the Chair.
Martin Vickers
I take note of what my hon. Friend the Member for Chippenham (Duncan Hames) says and agree with much of it.
As I said, the Queen’s Speech provides an essential framework for the narrative that the Government must put forward. I spoke on Friday to the regeneration director of North East Lincolnshire council, who said that he was reasonably optimistic about the future. I think that is partly due to the fact that the Government have shown confidence in the area by creating enterprise zones, reducing tolls on the Humber bridge, which will bring £150 million into the area, and only last week giving the go-ahead to pre-construction work on the A160 into Immingham docks. That is vital if we are to develop the area for the green economy and the offshore energy industry. The director made the interesting point that the area is not looking for Government grants, but it does need some Government investment in vital infrastructure projects such as those.
I add a caveat about regional pay, which I know my neighbour, my hon. Friend the Member for Brigg and Goole (Andrew Percy), spoke about in his contribution to the debate a few days ago. By coincidence, I was visiting the manager of a Jobcentre Plus on Friday morning at just the moment when my telephone rang, and it was a journalist wanting a comment about regional pay. I have reservations about it, and as the jobcentre manager pointed out to me, organisations in both the public and private sector have to pay premium salaries to attract specialists to the low-pay economy of northern Lincolnshire. I have had experience of that as a councillor.
I conclude by commending the report published today by the all-party group on small business. It highlights the desperate need to create enthusiasm for entrepreneurship among our young people. We go a long way towards that in the Gracious Speech, which I commend to the House.
Roberta Blackman-Woods (City of Durham) (Lab)
It is a pleasure to follow the interesting speech of the hon. Member for Cleethorpes (Martin Vickers). I am not sure whether he was saying that his constituency was better off under the Labour Government, but I think he should have done.
Roberta Blackman-Woods
I am sorry, I will not, because we are really short of time.
Despite a few reasonable measures, the overriding sense is that the Gracious Speech delivers priorities that are out of sync with those of my constituents and the rest of the country. It was more notable for what was left out than for what was included. The first line promised that the legislative programme would focus on
“economic growth, justice and constitutional reform”,
but in fact there was a complete lack of legislation to boost the economy in the north-east or anywhere else, or to address the concerns of people in my constituency and the region as a whole.
We need a plan for jobs and growth. The north-east has the highest unemployment rate in the country, with 11.6% of people of working age being without a job. Particularly worrying is the number of unemployed 16 to 24-year-olds. In County Durham, 8.6% of people in that age group are claiming benefits, and in my constituency long-term youth unemployment is up by a massive 129% on this time last year. Without strong Government action, we risk creating a generation of young people who will never experience stable employment and an economy that will take a worryingly long time to recover. It is no wonder then that business has slammed the content of the Queen’s Speech. This March, an Experian report showed that County Durham was in the top 20 areas for export potential and that businesses in the north-east, the north-west and Yorkshire and the Humber—the areas most likely to be hit by this new made-in-Downing-street recession—are doing the most to drive export growth.
Improving our infrastructure and links between the north and south is vital not only for the regions but for the British economy as a whole. Areas such as Durham are key to our international competitiveness and long-term economic success. It is therefore essential that I ask why so little Government attention has been paid to improving infrastructure in the north-east. The Government talk a lot about supporting manufacturing but where are the policies to back it up? The only thing that this coalition has manufactured is the double-dip recession. The recent welcome investment programmes in the north-east by Hitachi and Nissan were actually started under the previous Labour Government.
We saw last week that the regional growth fund is expected to deliver only 41,000 jobs—well below the 500,000 claimed by the Deputy Prime Minister, the right hon. Member for Sheffield, Hallam (Mr Clegg). What is more, those jobs cost an average of £33,000 each to create, compared with the £6,500 average under Labour’s future jobs fund. The shambles is partly due to the Government’s decision to do away with regional development agencies, which promoted and defended the interests of the regions, as One North East did so well. In particular, they should not have got rid of the RDAs without putting in place a viable alternative.
The loss of One North East has been keenly felt across the region. For instance, the announcement recently that more than 300 jobs will move to Ireland following the closure of the Kerry foods factory in my constituency is a disaster for many of my constituents, but it is only one of several closures of food processing factories in the north-east this year alone. There is no regional body to pick up this issue, to think about what can be done to improve the competitiveness of the food processing sector and, critically, to maintain and grow these jobs in the north-east, so we are seeing the loss of private sector jobs in addition to the huge loss of public sector jobs
There is no strategy either for innovation. One North East put universities at the heart of its plan for growing the north-east economy, and we needed that innovation, but it is now extremely difficult for universities to engage with economic development because of the fragmentation: we have two local enterprise partnerships, two enterprise zones, 12 local authorities, the regional growth fund, “BIS local” and further bids in several constituencies. As a result, there is no clear way for universities to engage. The Government would say that they created LEPs to take on that role, but in practice local government is bearing the brunt of the austerity measures, which means that it simply does not have the resources to create the much-needed jobs in my area and elsewhere.
Anne Marie Morris (Newton Abbot) (Con)
I join colleagues in welcoming the Queen’s Speech, much of which sets a good legislative reform agenda to help businesses, particularly small ones.
I shall focus on the enterprise and regulatory reform Bill and the banking reform Bill, because they are probably the proposals that will make the most difference. If we speak to any business, particularly a small business, the key points we hear are that they are over-regulated—that includes employment regulation—and that they struggle to access finance. When considering regulation, the Government need to understand what is meant by “enterprise”. That term encompasses not just large enterprises—Sainsbury’s, Tesco and the like—but the very smallest. Businesses with fewer than five employees represent 90% of businesses in this country, so when considering how to make the regulatory burden lighter, it is critical to bear in mind the size of the business trying to cope with this problem. On finance, I am delighted that we are considering a banking reform Bill and dividing retail and investment banking, but in time I would like the Government also to address access to non-banking finance, because inevitably there will always be a limit to what the banks can do.
To focus on regulation, the Government have specified—or rather the Queen did, in her speech—that the review of employment legislation will look at when things go wrong. It will also consider how to ease dispute resolution, no-fault compensation and how to ease the tribunal process. For that complex and adversarial process to be delayed for two years would be a good thing. However, I urge the Government also to review the damages that can be awarded by a tribunal. At the moment, tribunals are not constrained by the ability of the defaulting employer to pay, and in some cases the damages awarded take the business out. I also urge the Government to consider the complexity of the legislation on taking on, paying and training employees, because that is additionally burdensome. They could also look into the problems of the self-employed, many of whom do not benefit from schemes of the sort that are available to help those in employment.
In their initiatives to deal with unnecessary legislation and the red tape challenge, the Government have done a good job. They have identified 600 rules and regulations that they will remove or reform, and are looking at 11 sectors and six themes. I welcome that. If there was one thing they could do better, however, it would be to make it easier for small businesses to contribute to the process. If someone goes on to the website to make a contribution to the red tape challenge, they have to identify the regulation causing the problem, but many small businesses do not know the name of the legislation or regulation; they just know what its consequence is. If we can reform how the Government collect such information, it might make more contributions more successful.
The Government have done good work, but I advise them to add another theme to their red tape challenge: the challenges facing small businesses from cradle to grave—from set-up through taking on that first employer to importing and exporting. There is currently no prospect of that dimension being reviewed. There is a review of company regulation, but, importantly, not all businesses incorporate.
There has been mention of the very smallest—the micro—businesses. I welcome what the Government have done to exclude micros from new regulation, but we really need a root-and-branch review of regulation already impacting on the micros. In future, I urge the Government to consider not simply delaying the introduction of the application of new regulation, but exempting the micros. The argument is that if we start to exempt the micros, we will have two classes of business, but I do not agree. There is always a way to bridge the gap and incentivise businesses to grow. I urge the Government to look at that.
In sum, this is a good Queen’s Speech. It offers a lot for business, but the Government must be mindful of the very smallest of businesses in assessing the impact of what they are doing.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
It is a pleasure to follow the hon. Member for Newton Abbot (Anne Marie Morris), who made a thoughtful and considered speech. However, I must say that I disagreed with pretty much all of it.
The disappointment following Her Majesty’s Gracious Speech was tangible and widespread—“Is that it?” crossed most people’s minds. We are in a double-dip recession—the deepest since the 1930s—our living standards are declining with every day that passes, and there is little hope of growth and no confidence that things will get better any time soon, and the Government’s solution is to make it easier to sack people. It is quite astonishing, even from this Government. There was also a claim that the Government would
“strive to improve the lives of children and families.”
I consider that to be a worthy but dubious commitment, when we consider how out of touch this Government seem to be with the impact that their economic policies are having on households, and particularly on women and children up and down the country.
Let us put the Government’s proposals in context. There has been zero economic growth over the last year, and the economy is now smaller than it was in 2010. Living standards are being squeezed to breaking point. Families are being forced to choose between petrol and new school shoes, or between a pack of ham for their children’s sandwiches and making do, for another week, with cheese spread—and those are the fortunate ones. Mums—and, I appreciate, some dads, but let us be honest: it is mostly mums—who were just managing to juggle work and child care, with the help of much- needed child tax credits, are now having to give up work, as they are unable to secure an additional eight hours a week, at a time when most employers simply are not recruiting. Consumer spending is inevitably held back, with families deciding to forgo their summer holiday or make their child do with last year’s raincoat—no one will notice the three-quarter-length sleeves. All this is compounding the downward economic spiral. Young people reaching school leaving age are choosing not to go on to university, and that goes even for those with straight As. They see a lifetime of debt and a very uncertain job market. That is what some of the brightest young people in my constituency have been saying to me. We are facing an historic loss of confidence in Britain’s economic future, and young people are not living in a bubble. They fear for the future as much as we do.
Where are the solutions? I do not agree that making it easier to sack people will get our economy growing. Before being elected to this House I practised as an employment lawyer. I advised claimants and employers, individuals and businesses, and I assisted in the running of a small business with my husband. I am therefore in a better position than many to comment on the trials and tribulations of employment legislation. Yes, it can be complicated; and, yes, it is sometimes tricky to navigate. However, it is there to ensure fairness and protect against exploitation. I was horrified by the Government’s recent decision to increase the qualifying period for claiming unfair dismissal from 12 months to two years. Why would a Government support—or worse, encourage—employers to sack people unfairly? The clue is in the title. It is not difficult to terminate a person’s employment where the reason falls into one of the categories for a fair dismissal. Why should employers be encouraged to circumvent the basic principles of fairness? It is simply an excuse for poor management. Before the banking crisis we had one of the lowest rates of unemployment in decades. The 12-month qualifying period proved no obstacle to major economic growth in the last 13 years. How can it be used as an excuse for failing growth figures now?
I accept that managing a work force is one of the biggest challenges that any employer will face. I also know that the majority of businesses want to get it right and do the right thing. The success of any business is only as secure as the people employed in it. Economic growth cannot be built on greater uncertainty in the work force. Making it easier to sack people and harder to seek redress for unfair treatment will only make people feel more insecure. The answer has to be ensuring that businesses get the support they need to manage their work forces fairly and well. Employment legislation is focused on just that: ensuring that businesses and employees use procedures that are fair. Instead of focusing on making it easier to sack people, this Government should focus on enabling businesses to get the help, support and advice they need. Yet all we see are business advice support services disappearing from view.
There is, in any event, no economic justification for the assertion that employment protection rights form any barrier to growth. According to the World Bank’s “Doing business” ratings, the UK ranks seventh in the world for ease of operating out of 183 countries. The OECD’s employment protection index provides a measure of the procedures and costs involved in dismissing and hiring employees. On this index the UK ranks third out of the 21 major economies, behind only Canada and the US. To claim that our inability to sack people on a whim is holding our economy back is a poor excuse for this Government’s economic failure and an even poorer solution. Creating uncertainty and fear among an already financially stretched and insecure work force will only compound our economic problems by exacerbating the lack of consumer confidence.
Businesses are crying out for funding and investment. The Federation of Small Businesses cites the lack of consumer demand as the biggest barrier to growth, with access to finance just behind it. No business is going to say, “No thank you,” to an offer to make it easier to sack people, but it is not the priority that businesses are looking for. “Work hard and stop complaining,” the Government say. I say, “Start listening.”
Julian Smith (Skipton and Ripon) (Con)
It will come as no surprise that I, in turn, disagree with most of what the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) said. This Government have done a lot of excellent work for British business. We have an increasingly competitive tax rate—now at 24%, but lowering by one percentage point a year until the end of this Parliament—and a 20% rate for small businesses. There is a wide range of schemes for investment, business support and business lending. The Chancellor has set the country on the right course to attract global business, and we have seen many businesses investing in Britain over the last 12 months.
From the Prime Minister’s trade missions, to Lord Green’s remodelling of UKTI, there have been great strides on exports. When they reported back to Parliament last week, British ambassadors were sizzling with ideas for British exporters. There was a £50 billion increase in exports in 2011. Exports to India were up by 37%, with 28% more sold to Thailand and 44% more sold to Indonesia. I hope that, with a rethink on runways in the south-east, British business will soon be able to maximise those opportunities further. The Government are doing a great deal for our businesses, from credit to exports, and from support to mentoring. The only frustration is that it does not always get through to every business in the land. I hope that the Minister will allow BIS to utilise all HMRC’s regular mailings, which would be a good route to get its message across.
One of the biggest issues, which a number of Members have raised, is the burdens on business from regulation. Although unsexy, the work of the Minister of State, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), to reduce regulation has been significant. We can now see, Department by Department, who has done what, and, with the one-in, one-out policy, which regulations have been introduced and which removed. As my hon. Friend the Member for Newton Abbot (Anne Marie Morris) described, the red tape challenge will see hundreds of regulations removed.
There has also been some dull, heavy lifting at the European level. Ministers have reduced the cost and the burden of the pregnant workers directive by about £2 billion. In health and safety, the Young and Löfstedt reviews will see positive and radical action in the months ahead. As my hon. Friend also described, in the area of employment law there is a big focus reform on mediation. The two years to trial employees is a great improvement and will allow more employers to take a risk. However, companies continue to complain about the burden of employment legislation. The reason this is important—Opposition Members seem not to get this point—is not to do with some ideological issue on our side, but because we want companies to take people on and take the risk. Indeed, a MORI poll has shown that more than 50% of small businesses say that the thing putting them off taking on new staff is our employment legislation.
Unfortunately, some of the developments on this front are clogged up in coalition politics. One side believes that we should take the risk on employment rights, in return for getting more people into work; the other side believes that we should simply explain things better. We need to meet halfway and find a compromise, whether through the use of sunsetting or reviews, to achieve a change in our employment legislation. There is currently a call for evidence on simplifying the dismissal process and the introduction of compensated no-fault dismissal. Those measures should be introduced as soon as possible. They could be voluntary or incentivised, but they would give a clear route for employers to terminate employment situations.
It is not only a radical approach to regulation from the Government that is required. Quangos need to get their act together, too. I have spent the past two years trying to sort out issues relating to brown signs that have been removed from the A1 around Masham with no explanation from the Highways Agency. This has been detrimental to the hundreds of small businesses in the town, which has had no directional signs on the upgraded A1(M) for the past two years. The fact that it has taken tens of meetings with the community, its MP and councillors to fix the issue shows that our Government agencies are not responding to the needs of business. The Bill should contain a duty of engagement with business for every public quango.
On Europe, the Prime Minister, along with 11 other countries, wrote a very good letter last February to the EU Commission advocating a more radical approach to growth. When I went to Brussels about four weeks ago with the all-party parliamentary group on European reform, we raised questions about what the Commission was doing to remove regulatory burdens. One of the directors general openly admitted that the regulatory reform agenda had stalled, and another felt that our questions about removing rules meant that we did not want any rules at all. We need a British-driven agenda at the heart of Europe to look at which rules and regulations can actually be removed and how we can institutionalise deregulation at Commission level.
Greater radicalism in employment law; starting to include EU legislation in our regulatory statements; a hard-line approach to deregulation in Europe and a statutory duty on every public body to get—
Tristram Hunt (Stoke-on-Trent Central) (Lab)
It is a pleasure to follow the hon. Member for Skipton and Ripon (Julian Smith), although I do not think that Opposition Members believe that the fundamental problem facing the British economy is an inflexible labour market. We believe the problem to be the double-dip recession that has been delivered by this Government.
In the year of her diamond jubilee, I believe that Her Majesty wanted to deliver a Queen’s Speech that focused on jobs and growth. This one, combined with the Budget that preceded it, manifestly fails to deliver that, however. The Government are failing all the tests that they have set themselves, from paying down the deficit to promoting economic growth and tackling youth unemployment. We needed a plan to stimulate demand and activity in our economy, but we have failed to receive one.
As some of my hon. Friends have said, there were multiple omissions from the Queen’s Speech. Here, I should declare an interest, as set out in the Register of Members’ Financial Interests, relating to my employment in a university. It was profoundly disappointing that there was no higher education Bill in the Queen’s Speech. Higher education is a highly successful industry that is vital to our future competitiveness. Instead, we are seeing exactly the wrong way to make Government policy. They began by introducing a system of fees that had absolutely no rationale behind it and made our fees structure among the most expensive in the world. They also slashed public expenditure on our universities, which only Romania is doing elsewhere in the European area.
There has been a lack of investment in our higher education structure, and a lack of strategy. The Secretary of State suggested that these were all scare stories, but since the Government introduced the new fees structure we have seen a collapse in demand for humanities and modern language courses. The areas in which the UK has a global competitive advantage are being undermined by Government policy. We need a strategy for higher education, for innovation, for spin-outs, for intellectual property, and for the kind of university-industry collaboration that we all want to see. We have none of that in the Queen’s Speech.
Instead, we have the enterprise and regulatory reform Bill, which contains some decent measures. We would like to see faster progress on the green investment bank, and further strengthening of shareholder power, but it was disappointing not to have more on the mutual and co-operative sector. It is interesting to note that, since 2008, co-operatives have increased their turnover by more than 21%. These are successful models in a new system of political economy that we should be thinking about today, but the Queen’s Speech fails to deliver that. In particular, it would have been nice to have a system that allowed entrepreneurs to sell their companies to employees, in order to embed that system of co-operatives and mutuals in our political economy.
We also need to do more on banking reform. Many hon. Members have pointed out that the access to funds is still appalling. Industrialists in the ceramic industry and elsewhere in my constituency continually complain about the poor access to funds. Last week, we were honoured to host Lord Digby Jones and Lord Green in Stoke-on-Trent. We talked about UK Trade & Investment, and the failure of our industries to break into new markets. We need to focus on UKTI, but we also need to look at procurement. The Government are not thinking smartly enough about their own procurement strategy, and about how it can drive industry and manufacturing.
The truth is that, for the past 10 years, the British economy has been unbalanced. There has been an overdependence on financial services and on the south-east. Our tax base was too narrow and, when the crisis came, it hit our public finances. We all need to own up to that. We need to work out how to shift that balance in order to rebalance the economy. That could involve capital allowances for manufacturing so that it can invest in energy-efficient technology, and moves to promote combined heat and power technology and to promote gas storage. All those elements would form an industrial strategy, but such a strategy is signally lacking in this Government.
Late last year, we heard plans for the energy intensive sector. We heard talk of £250 million to allow the sector to become more competitive, but that simply has not been followed up. Instead, we still have terrible regional disparities in economic growth, which are augmented by problems with lending. The truth is that the regional growth fund is not delivering the growth that we need. We in Stoke-on-Trent are grateful for those investments that have been made, but the money is not flowing through. We have seen the figures from the west midlands, which show an absence of money pouring in.
Finally, I want to make a small constituency plea to the Chief Secretary to the Treasury. A company called Body Temple in Stoke-on-Trent sells nutritional drinks. The Government are “simplifying” VAT on such products, but I do not think that they have thought that through. They do not understand that £3 billion market, and the role that the UK can play in it. I urge the Minister to think carefully about the consultation process on that measure, essentially on business competitiveness grounds.
Stephen Mosley (City of Chester) (Con)
It is a pleasure to follow the hon. Member for Stoke-on-Trent Central (Tristram Hunt). At one point, I thought that he might actually admit that the problems in our economy had been generated over the past 10 years rather than at the time of the general election. He almost did that, but not quite.
Most people appreciate that if we run up a massive credit card bill, the longer it is ignored, the worse the debt gets, and the more it costs to repay. The disastrous condition of the British economy and the public finances that we inherited just two years ago cannot be underestimated, yet Labour fails to accept responsibility for the damage that it inflicted and also refuses to agree on any sensible measure to help to clear up its mess.
The decisions that this Government are taking to rebalance our economy and build for a sustainable future might not be entirely popular in the short term, but they are the right long-term decisions to take. If we compare our current economic situation with those of countries to which we were most closely linked when the coalition took office—countries such as Greece, Spain, Portugal and Italy were also borrowing massively more than they could afford—we can see the different paths that have been taken over the past two years. We need only to watch the news, read the newspapers or look at interest rates to see that whereas the UK can borrow today at less than 2% interest, Italy pays 5.4%, Spain over 6% and Greece over 22%. It is plain for all to see the dire straits from which we have been rescued by the Government.
Reducing the deficit must be and is the No. 1 priority of the Government. Their plan is supported by the International Monetary Fund, the OECD, the Governor of the Bank of England and the major credit rating agencies. Indeed, both the IMF and the OECD have said that without reducing the budget deficit there can be no sustained growth.
Yes, it is fair to say that growth has not been as we had hoped over the last two years. The international situation and the continuing problems in the eurozone have proved to be a drag on the UK economy, but the reality is that the tough decisions we have taken to clear up Labour’s mess have laid the foundations for long-term growth and prosperity. Consequently, the IMF now forecasts the UK to grow at twice the rate of Germany over the next year and three times faster than France. The coalition Government have set our country’s economy in the right direction, and the measures outlined in the Queen’s Speech will help to ensure that we continue with that underlying mission.
On the specific measures in the Queen’s Speech, I welcome the announcement of an enterprise and employment Bill. As the Chancellor has set out on numerous occasions, the Government have four overarching ambitions for the British economy: first, to create the most competitive tax system in the G20; secondly, to make the UK the best place in the world to start and grow a business; thirdly, to encourage inward investment and exports; and, fourthly, to create a more educated and flexible work force.
On tax, we have reduced the headline rate of corporation tax, meaning that it will fall to 22% by April 2014, with the small business rate falling to just 20%. We have scrapped Labour’s jobs tax; we have doubled entrepreneurs’ relief; and we have announced numerous measures to address the complexity of the tax system. To help businesses take off and grow, we have improved the Government’s Business Link service and we have introduced a new business mentoring programme. We have launched a national loan guarantee scheme, providing up to £200 billion-worth of guarantees, allowing banks to offer lower-cost lending to small and medium-sized enterprises.
On exports, the Government have set out major new initiatives to help more SMEs to export and to help larger companies seeking to win major overseas contracts. On skills, we have vastly expanded the availability of apprenticeships through funding incentives and the slashing of red tape. The introduction of the enterprise and employment Bill will build on the work already achieved and help to make Britain one of the most business-friendly countries in the world.
I welcome, too, the introduction of a banking reform Bill. Labour’s failure to fix the roof while the sun was shining played an enormous part in our economic downturn, and the culture of unrestrained risk practised by the banks, at the expense of hard-working savers, certainly made a bad situation worse. Again, building on the action taken in the first Session of this Parliament, the banking reform Bill will help to protect us from the prospect of a similar banking crash occurring in the future. The recommendations of the Vickers report are to be welcomed. It is right that banks should not be able recklessly to gamble with people’s hard-earned savings. We need proper regulation, and I look forward to the Bill being put before the House.
I warmly welcome pretty much all the Government’s programme as outlined in the Queen’s Speech. Rome was not built in a day, and our economy cannot be rebuilt in just a couple of years, but the last two years have put the foundation stones in place for a prosperous and a sustainable future. We achieved a great deal in the first Session of this Parliament, but there is still a great deal more to be done. Last week’s Queen’s Speech is an excellent step in the right direction.
Chris Evans (Islwyn) (Lab/Co-op)
If there were a parliamentary award for the most bizarre speech of the day, I am sure that the hon. Member for City of Chester (Stephen Mosley) would earn it. We have heard that the happy days are around the corner. We have double-dip recession, but it is okay, because it was all Labour’s fault, even though the economy was growing when Labour left power. Apparently, 1 million young people unemployed is good news. Wonderful! That is not the only thing we have heard; we have also been told that stripping people of their employment rights is the way forward. Is it not funny that when they have blamed everything else, they start blaming employment rights for our problems?
I say that the major aim of a Government of any colour should be to make this country the best place to start and grow a business. Yes, I agree that a cut in corporation tax is a good way forward. I believe that cutting red tape is a good idea, too, and I look forward to seeing more concrete proposals over this Parliament. When red tape is tackled, I hope that the Government will start to talk about tax reform. When I speak to anybody who is hoping to set up their own business, they tell me that the main barrier they face is the fear of the complex tax system that they will have to tackle. It seems strange, but the more complicated the tax system, the more there is only one winner. It is not the small business man; it is the accountant. It seems odd that small businesses have to spend time form filling when they could be chasing orders. We need to realise that, however good the Government believe they are, it is ultimately people who make businesses successful.
Talking of people, and young people in particular, we are now operating in a globalised economy. Young people in Wales will not be competing with young people from the north-east, the south-west, Scotland or Ireland; they will be competing with the Chinese, Indians and Brazilians. That is why our competitive edge is all about creating a highly skilled and highly motivated work force.
I have two friends—[Interruption.] Yes, I have only two friends; I would only have to borrow 20p and I could phone them both. The two friends in question work in the training industry. One works in further education; the other works for a training company. Both come from the old school, where it was said that an apprenticeship lasted four years. What they tell me worries me. My friend in FE says that some FE colleges are subcontracting training contracts to training companies, offering so-called apprenticeships that are supposed to last for three years, but saying that people can become a qualified electrician in a year. Courses that should take three years are being done in three months. All the while, people are driving around in their high-performance Mercedes and Aston Martins—no doubt bought out of the money that they should be investing in young people. This scandal is already going on, as we saw in a BBC “Panorama” programme. It should be seriously investigated, because this seems to me to be a misuse of the word “apprenticeship”.
The word “apprentice” conjures up images of the ’60s and ’70s and of young people between the age of 16 and 21 doing full-time apprenticeships and coming out as draftsmen, toolmakers or even, for the lucky few who aspired to it, with a footballing career. The problem is that people are being called apprentices nowadays when they are nothing of the sort. Why is it that of all the apprentices in this country, one in 10 is based in the supermarket Morrisons? Are they apprentices when they are working in retail? What skills are they getting? What trade are they developing?
Julian Smith
I am shocked that the hon. Gentleman does not feel that the sort of training people get in a supermarket like Morrisons would provide a very good basis for a whole range of jobs.
Chris Evans
What I would say is that that is not an apprenticeship in the traditional sense. I believe that the word “apprentice” is being misused. All that is happening is that apprenticeships are taking the place of the youth training schemes that failed in the 1980s.
This is the main point that I want to make. We must formalise the process that apprentices undergo. In the 1960s a UK training industry board formalised the apprentice system, producing training manuals and setting the standard for what apprenticeships should be. Now the definition is so muddled that we do not know what apprenticeships actually are, and that is why we must take serious action now. Recently I went to Pensord, in my constituency, where Pensord Press has launched a major apprenticeship scheme. I fear that good schemes like that will be mixed up in the scandal of our not knowing what “apprenticeships” means.
When I speak to people who take on apprentices, they tell me that they meet young people who do not have the necessary skills. They do not turn up on time, they play with their mobile phones during interviews, or they do not know how to speak to people; sometimes they swear in ordinary conversation. That worries me. I could talk for a long time about it. We need to hold a serious debate in this country about how business and education can work together.
I visited Cwmcarn high school when I worked for my predecessor, and it was launching what was described as a basic skills passport. All the children in the school would be assessed for literacy, numeracy, performance and public speaking, so that when they were interviewed by employers, they would be able to say “These are my skills: this is what I have achieved during my time at school.” It is a good scheme, and it should be rolled out throughout the country.
Last Friday I went for a chat with people at the University of Wales, Newport, who talked of universities’ becoming hothouses for businesses. I have always said that we have massive academic resources in research, and that we should open up the universities for that purpose. Those people talked to me about the concept of an entrepreneurial university, drawing a parallel with teaching hospitals where the practitioners are lecturers and students must undergo internships as part of their qualifications. That could be applied to skills in areas such as computing, engineering and business. I do not know whether anyone has watched the documentary about Ayrton Senna, but that was made by a student at the university, or the BBC programme “Rhod Gilbert’s Work Experience”, produced by a company called Zipline Creative— another company formed by some of its graduates. We need to have that debate about business and education.
I prepared a longer speech, but I have only 30 seconds left, so let me say just one more thing. We must be very careful when we talk about employment rights. I was a trade union official, and I do not think that we should clamp down on people who go to tribunals with trade union representatives. It is hard enough already for someone, even with a strong case, to undergo the grievance procedure. If we take the vital right to union representation away from people we will cause trouble, and we will do nothing for competitiveness in this country.
Lilian Greenwood (Nottingham South) (Lab)
I want to speak about my constituents’ priorities, which are unfortunately not addressed in the Queen’s Speech.
Nottingham city council and NHS Nottingham City jointly commission the Nottingham citizens survey, an annual survey of city residents which gathers views on a variety of subjects including the things that make people believe that Nottingham is a good place in which to live—such as its excellent public transport system and NHS services—and the improvements that are most needed, which include more crime-cutting, the provision of more activities for teenagers, and better job prospects for residents.
It is interesting to note that job creation made it into the top five items only this year, but it is hardly surprising. Thanks to the Government’s failed economic strategy, the UK is now experiencing a double-dip recession. More than 2.6 million people are out of work, 3,500 of my constituents are stuck on out-of-work benefits, and long-term youth unemployment in my constituency has risen by 133% in the last 12 months. Sadly, the Government will not address those priorities over the coming year.
At a time when my constituents want to feel safer in their homes and on the streets, the Government are continuing to cut funding for our police force. Last week, like many other Members, I met police officers who had come to protest about the Government’s plans. All those officers—from neighbourhood policing teams, from our city centre response team, and from intelligence and surveillance units—had front-line roles, and they had a simple message to deliver. They described the cuts as catastrophic, and told me that they no longer had the resources with which to do their job properly. How can our police forces continue to cut crime if they do not have the resources that they need?
Opportunities for young people are also a cause for concern among my constituents. That is not surprising, given cuts in youth services, the loss of work experience opportunities and careers guidance, the scrapping of the education maintenance allowance, the tripling of tuition fees, the undermining of vocational qualifications, and the sharp rise in youth unemployment. What hope does the Queen’s Speech offer young people in my constituency? None.
I recently attended a round table at Nottingham Forest football club with business leaders and representatives of the voluntary sector and local councils to discuss skills and opportunities for young people. While there was a real collective will to work together in our city to give young people a hand up, there was also frustration about the Government’s failure to provide the support that would enable them to get on, help them to gain the skills that they needed, and create the economic conditions that would provide jobs for them to do.
As for the need to boost business and create jobs, what does the Queen’s Speech offer? Nothing. When the Government talk of reforming employment rights, they mean making it easier to sack people. At a time when families are already facing a cost-of-living crisis and consumer confidence is at its lowest level for a generation, creating further insecurity is exactly the wrong thing to do. It was not the UK’s system of employment law that sent our economy into recession; it was the Government’s decision to cut public spending too far and too fast. It is this Government’s choices that have landed hundreds of people in my constituency on the dole; it has been this Government’s choice to freeze wages, and now to threaten cuts to real incomes in the public sector by hiking up pension contributions and introducing regional pay; and it is this Government who have raised VAT to 20%, allowed train companies to hike up rail fares and cut support for the bus industry, leading to fare rises, all taking money out of my constituents’ pockets and undermining the retail sector, which is so important to Nottingham’s local economy.
So what have the Government done? Well, Nottingham has an enterprise zone, but it has still to deliver a single new job. We have yet to receive a penny from the regional growth fund, and the Government have scrapped our successful regional development agency. No wonder businesses have slammed the Queen’s Speech for failing to offer an industrial strategy or real measures to boost growth, and we are still waiting for the Government’s previous measures to make the slightest bit of difference.
So here are some questions that people in Nottingham would like the Minister to answer. How will the Government’s programmes support our city’s economic growth plan? How will they ensure that young people in Nottingham have real opportunities to obtain skills and jobs? How will the Government help boost investment in our city’s vital retail sector? How will they ensure our enterprise zone actually delivers new jobs? How will they support the growth sectors in our city’s economy—health and life sciences, digital content and low carbon—to help us attract high-skill jobs in the future? Will the Minister’s Government support investment in the midland main line for both line speed improvements and electrification? Will he ensure that Nottingham benefits from the improved connectivity offered by high-speed rail? Will he support the development of high-speed broadband, which is needed to boost our digital media sector? Finally, will he listen to the views of Nottingham citizens, and prioritise the needs of the many people I represent who are suffering the effects of a recession made in Downing street and this Government’s other disastrous policy choices?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. There are not many Members waiting to speak, and we have had quite a few withdrawals, so I will extend the time limit to eight minutes. I am sure that that will be welcomed by Barry Gardiner.
Barry Gardiner (Brent North) (Lab)
Thank you, Mr Deputy Speaker. Having spent the afternoon cutting my speech, I shall now have to cross out all the omissions—but, seriously, I am delighted by your ruling.
If asked to identify what is most surprising about the Queen’s Speech, I would have to say it is finding that this Government consider it a priority to remove the rights of ordinary working people and to make it easier to fire people—and not just to fire people, but to fire them unfairly. We have 2.7 million people unemployed, we have a double-dip recession—the first in 37 years—and we see this Government putting through legislation to make people more insecure. How does that build confidence in our economy? How does that serve to increase productivity? It does not.
That is just one part of the injustice that lies at the heart of this Queen’s Speech—which explains why so many Opposition Members have spoken about it. It is not just an unforeseen consequence, and it is not proposed merely in the mistaken belief that it will get the economy going. We recognise this for what it is: a deliberate political philosophy. It is a deliberate attack on the rights of working people, and I have to say that while one would expect that from the Conservatives, the fact that the Liberal Democrats have colluded in it in quite the way that they have is to their eternal disgrace. I hope working people will punish them accordingly.
The director general of the CBI identified a different test by which to judge this Queen’s Speech: whether it will help business to grow. He mentioned the energy Bill and the regulatory reform Bill. While he said he did not have much confidence in the regulatory reform Bill, he said he thought there was a chance that the energy Bill might help in this regard. I wish that were the case, but I fear Mr Cridland has let his optimism get the better of his customary forensic analysis. We have been promised sight of a draft Bill for pre-legislative scrutiny on 22 May —or, to be more precise, we were promised it for 20 minutes on the Department of Energy and Climate Change website on the afternoon of the Queen’s Speech, but then the commitment to the 22 May was taken down. Will the Minister responding to the debate tell the House whether, and when, that Bill will be published in draft form?
The Government’s draft Bill to reform the electricity market to deliver “secure, clean and affordable” energy will need to go a great deal further than the current four pillars set out by the Department. The Government are not prepared to introduce real competition into the electricity markets, because they do not dare break up the vertical integration of the wholesale and retail elements of the big six electricity companies as they fear losing the investment they so desperately need to replace the 25% of existing energy generation that will go off stream by 2020. Some £200 billion of investment is required in the energy sector and the price of that investment, in the Government’s mind, is a quiescent Government, cowering in the face of the big six and unwilling to regulate to open up the market to the competition and the free market forces that they say they believe in. The effect will be higher costs for small and medium-sized businesses and, of course, for domestic consumers.
The energy crisis facing this country will do more to undermine prosperity than anything else in the next 10 years, except perhaps the impact of the death throes of the eurozone. I am not a traditional fan of the speeches of the right hon. Member for Wokingham (Mr Redwood) and the hon. Member for Stone (Mr Cash), but today they rightly pointed out the effect on the UK of the shrinking of the European economy. It is worth reflecting on the fact that although the total amount of Greek debt owned by UK banks and the UK Government together is an eye-watering €14.2 billion, the French Government alone hold €15 billion of this debt and French banks hold a catastrophic €42 billion, giving France a €57 billion exposure. We now have a French President calling for a growth package to go alongside the financial stability and austerity measures agreed by the 25. France needs Germany and the European Central Bank to fund an ever-expanding Greek bail-out to stop the implosion of French banks. Simultaneously, France needs Germany and the ECB to provide liquidity to stimulate the growth that the new President has made his political priority. Does any Government Member seriously believe that EDF, a company owned by the French Government, will not be under Gallic pressure to invest in its home market in preference to the UK and that that will not have a dramatic impact on the investment capacity and potential in the UK over the next five years?
Only two out of the big six—Centrica and Scottish and Southern—have the UK as their primary investment focus, and what all of them look for is a clarity of purpose and a stability of regulatory regime that creates the right investment climate for long-term energy investments to achieve their expected return. This Government, in just two years, have spectacularly undermined business investors’ confidence. With the carbon reduction commitment, the Government retrospectively snatched £1 billion from business. With the North sea tax regime changes, they sent shock waves throughout not just the big oil companies, but the whole investor market. Of course, with the solar photovoltaic feed-in tariff, the Government became a laughing stock for investors. But the laughter will stop as the desperate truth sinks in that business no longer regards the UK as a stable investment regime, and the UK courts have compounded that by ruling against the Government on these issues.
That is what is going to undermine the possibility of growth in this economy: the lack of business investment in the energy markets and the way in which generation capacity will go off stream after 2017, with businesses then not just paying more for their power, but not being able to get it. That will be because this Government are failing the absolute cast-iron test of putting through real structural reform in the energy market. That is what business has called for, that is what business knows it is not getting and that is why business has condemned this Government for a weak and feeble Queen’s Speech.
Julie Hilling (Bolton West) (Lab)
I am pleased to speak in the debate, because I want to dispel the myths that are so often spoken by Government Members. If there was any doubt before the Budget and the Queen’s Speech, the Government have now made it obvious to everyone that they are totally out of touch with the real everyday concerns of ordinary people. Their only growth strategy is to take away people’s rights at work.
The economy is not in recession because of the UK’s employment rights but because the Government are cutting spending too far and too fast, hitting business confidence and choking off growth. They do not seem to understand that removing the rights of workers will only increase job insecurity, harm work force morale and productivity and lower consumer confidence. It will make things worse not better. Just like taxes on pasties, caravans and hairdressers, their proposals will hit the poorest hardest, but, funnily enough, the rich get a tax cut. Only 6% of small and medium-sized enterprises think excess regulation—all regulation, not just that on employment rights—is a barrier to growth, but there is consensus that the real problems are a depressed economy and difficulty with bank lending.
The Government are very keen on international comparisons and, according to the OECD, out of the 36 richest countries the UK has one of the lowest levels of worker protection, beaten only by America and Canada. I do not think that that is a record of which to be proud. The Prime Minister said his proposals will make it easier to hire people, but we are not all that stupid and we know that what he is really saying is that they will make it easier to fire people. He thinks that with 2.7 million unemployed and more than 1 million young people without work, making it easier to sack people will increase growth. With reasoning like that, it is no wonder we are in a double-dip recession.
Government Members seem to hold the view that it is difficult to sack people, but as a former trade union official who frequently had to tell members that they had no case with the mantra, “The law is as it is, not as we’d like it to be,” I can tell them that it is already shamefully easy to dismiss workers. The Government’s change to the qualifying period for unfair dismissal claims to two years means that almost 60% of all employees under the age of 24 are now not protected, 1.4 million part-time women workers are not protected and 32% of all black and minority ethnic employees are not covered.
If someone manages to win a case at tribunal, the average award is £4,500—hardly a fortune. The average cost of defending a tribunal, however, is £8,500 plus about £5,000 to pay off the employee. It seems obvious to me that employers should therefore obey the law, just as they would in any walk of life. If they pay their employee what they are due, treat them properly and do not discriminate, they will not end up in a tribunal.
The Business Secretary said earlier that an employer should be able to get rid of an underperforming employee, and of course they can with no changes to the current law as long as they follow simple, fair procedures. Having attempted to protect the jobs of such employees, I can attest to how easy it is to sack them. We have to ask what those businesses are doing, as surely they cannot reach the end of two years of employment and then say that the employee is underperforming. What is happening with their recruitment policy and with their management of that employee? If, after two years, that person is underperforming, the company should ask itself what is wrong with its business, with how it is managing those people and with the work it is asking its employees to do.
I welcome the notion of early conciliation, but I hope that there are no devils hidden in the detail. Proposals to charge workers to bring a case at tribunal, however, are fraught with problems and are yet another barrier to justice, hitting ordinary people at some of the most difficult times of their lives, just like the other measures that the Government have brought in to remove access to justice for so many ordinary people.
Government Members have made various other suggestions about weakening employment protection, including removing small firms from legislation. As about 44% of private sector employment is in SMEs, that would create a second-class citizen at work and make it harder for small firms to recruit good staff.
There have been rumblings about equality legislation, but as the Fawcett Society stated:
“Cutting red tape can all too easily mean scaling back on equality. Many of the regulations being revised—such as protections from unfair dismissal—have been vital in shoring up women’s security in the workplace.
Considered against a 25 year high in women’s unemployment, watering down these kinds of regulations poses a very real threat to women’s ability to get and keep work. A healthy labour market cannot exist if women are not enabled to take their rightful part in it.”
How true.
There are also worrying things said about health and safety legislation. We have one of the lowest incidences in Europe of fatal injuries at work, but we should not be complacent, as the figures do not include those killed in road traffic accidents, members of the public killed by work activities, suicides attributed to work-related stress, or those no longer in work who die from mesothelioma or other work-related illnesses. Many people killed at work worked in small and medium-sized enterprises. Of course, there are many thousands who suffer as a result of non-fatal but often life-changing incidents. Fewer inspections and less enforcement will lead to more deaths, injuries and ill health at work. Reductions in health and safety should not be considered by any Government in a civilised society.
The Government are turning the clock back to a time when people had to choose between heating and eating, were dependent on food banks, and had to beg from their neighbours for food to feed their children, and when workers had fewer rights. It clearly is not working. They need to change course now.
Jack Dromey (Birmingham, Erdington) (Lab)
Not one brick will be laid, not one home will be built, and not one unemployed building worker will be put back to work, because there was not one reference in the Queen’s Speech to housing, despite the grim reality that we all see in our constituencies. In our surgeries, there are ever-lengthening queues of people desperate for a decent home at a price that they can afford. They are people such as the mother from the Lyndhurst estate who came to see me to get out of an overcrowded flat where, because of the damp, her baby was for ever ill. They are people such as the unemployed building worker from Marsh lane with two young kids—a good family—who was desperate to get back to work, having been made redundant from the building industry twice in six months. They are businesses such as the small building firm in central Erdington that is on the brink of bankruptcy because it can no longer get contracts to build homes. One in four young people in my constituency is out of work. Some of the young people I met on the Castle Vale estate are keen on getting an apprenticeship in the building industry, but all of them believe that they have no hope.
Birmingham and Britain are suffering from a combination of problems. We have the biggest housing crisis in a generation. There is rising unemployment, with more than a million young people on the dole. We have a double-dip recession, made in Downing street—the first in 37 years—not least because of the 4.8% collapse in construction over the past three months. Benefit bills and borrowing are booming—the costs of failure. This is an out-of-touch Government with a miserable track record of causing misery on a grand scale. They are making the housing crisis worse by the day, but fail to recognise that the best way to build Britain out of recession is to invest in badly needed house building.
Let us look at the Government’s track record. House building is down. The Minister for Housing and Local Government said:
“Building more homes is the gold standard upon which we shall be judged”,
yet house building has fallen by 11%. Under Labour, there were 2 million new homes built; under this Government, in the past three months alone, public house building has gone down by nearly 11%. Homelessness is up. The same Minister said:
“Homelessness was what brought me into politics”,
yet there has been an increase of 14% in the number of families reporting themselves homeless, and an increase of 23% in rough sleeping. Under Labour, homelessness fell by 70%.
We have a mortgage market from which people cannot get mortgages. The Secretary of State says:
“I well remember buying my first home. The sense of ownership, pride and independence. I want more young families to be able to experience that”,
yet home ownership, under that Secretary of State, is down by 75,000. The prediction is that an unassisted first-time buyer will now be 44 before they can get a mortgage.
The private rented sector is rapidly growing in size and is about to overtake the social sector. There are many reputable landlords but too many rogues, characterised by ever-increasing rents, yet the Prime Minister stood at the Dispatch Box and said that we have seen rent levels go down, despite the fact that the Government’s own figures show that rents have risen by 3% in the private sector in all nine English regions and in 89% of local authorities.
What we are seeing is a combination of monumental mistakes of economic management on the one hand, and grotesque unfairness on the other—monumental mistakes such as that made by the Chancellor back in October 2010, when he cut £4 billion overnight from housing investment. That led to a 99% collapse in affordable home building. As for grotesque unfairness, the 2011 figures for the new homes bonus showed that an area of high need and high unemployment such as Knowsley would get 37p per head, but the City of London would get £28 per head.
The country desperately needs homes, jobs and growth. That is exactly what a Labour Government did at a time of economic crisis—the bankers crisis back in 2008. Because we knew that we had to grow the economy and meet housing need, our kick-start programme saw 110,000 homes built and the creation of 70,000 jobs and 3,000 apprenticeships. The industry has said to me time and again that it was that kick-start programme which sustained it against what would otherwise have been collapse. That is why we propose, rightly, a repeat of the bankers’ bonus tax which could see 25,000 homes quickly built and jobs created for 100,000 young people. We also propose a temporary cut in VAT on home improvements, which would result in better homes, people employed in improving those homes, and jobs and wealth being created along the building industry supply chain.
In conclusion, there is a dramatic contrast between the politics of hope and the politics of despair. Labour represents the politics of hope. That is why the newly elected Labour council in Birmingham has committed itself to building 70,000 homes—an ambitious objective, but it is determined to meet housing need and to help build Birmingham out of recession. Stories of despair, on the other hand, are numerous, but let me tell one. A young woman who appeared recently on the Today programme wishes to remain anonymous, but I know who she is and I have spoken to her in some detail.
As a consequence of the collapse in affordable house building in London, soaring rents in the private rented sector and the Government’s benefit changes, this young woman was suffering the unimaginable. She had been married to a banker. Their marriage had broken up but they had remained close. Tragically, he died. She then lost her home. Her daughter was distraught. The mother needed her own mother to look after the granddaughter through a desperately difficult period for that family, but having been made homeless and ending up in temporary accommodation, she got a phone call on a Tuesday—she lives in Waltham Forest—saying, “We need you to go to Walsall tomorrow, Wednesday.” She was in despair over what was happening to her. She could not believe it. She said, “Me and my husband, all along we thought that the Government would stand by us at our time of need,” and they abjectly failed to do that.
The Government were warned against the consequences of their action from within Government. They chose to go down this path. Any Government who inflict pain on a citizen of this country in that way ought to be ashamed of themselves.
Sheila Gilmore (Edinburgh East) (Lab)
I start by repeating something that I raised in an intervention with the Secretary of State at the outset. He repeated the oft-made claim about the number of private sector jobs that are being created in order to prove that the Government’s policy is working. In about January 2011, after just over six months in government, the Prime Minister told us that 500,000 new private sector jobs had been created by his Government. After another few months, he said that in the first year of his Government they had created 500,000 jobs. Now the Secretary of State tells us that in two years they have created 600,000 jobs. Presumably, if the 500,000 figure was correct in the first place, only 100,000 have been created in the last 18 months. At that rate of job creation, we will expect the next 18 months to give us about another 20,000 jobs. They cannot keep repeating the same jobs. The key fact here is that that 500,000, the Prime Minister’s original boast, was largely the result of the economic stimuli applied by the outgoing Labour Government. In other words, this Government have done virtually nothing to create private sector jobs, despite all their claims—claims that were repeated again today—that the public sector was crowding out the private sector and that was the problem.
I am not, on the whole, the kind of person who goes in for the Armageddon-like language that one sometimes hears on the left. In fact, I am usually irritated by it; language such as, “We are all going to hell in a handbasket” and “People will be walking in the streets without shoes.” Actually, I am beginning to wonder. At my surgery on Friday, two people came who had both been recently sanctioned as a result of disputed issues about non-attendance at the Work programme. Neither qualified for hardship payments because they do not have dependants. The only thing their local citizens advice bureau could tell them to do in the short term was to go to a food bank.
I did some research on food banks. The Trussell Trust, which many talk about as being a wonderful charity, on its website says that in 2011-12 food banks fed 128,687 people nationwide—100% more than in the previous year. It has more than 200 food banks nationally and it hopes to have one in every town. I do not think I am overly naive, but in my lifetime I thought that this sort of thing was history. I represented an area as a councillor for 16 years, which included a district that ticked all the deprivation indices boxes, and I do not recall a constituent telling me that they had had to resort to a food bank. The only food provision that I was aware of in Edinburgh then was some vans for the street homeless, but not for people who had simply found themselves unemployed.
It must give us food for thought that one of the most rapidly growing charities in our country is one providing food banks. That is not a criticism of the charity or those who volunteer for it; I am sure that they are doing an important job, which is obviously necessary. But what should make us angry is that there is a need for that.
John Hemming (Birmingham, Yardley) (LD)
Will the hon. Lady accept that the Trussell Trust was set up with food banks in the first Blair Government?
Sheila Gilmore
I am not saying it was not set up then. I am giving its own information that in the year 2011-12, it increased the number of people it was helping by 100%.
One of those constituents has been sanctioned for six months. Unless she succeeds in an appeal shortly, she will not get jobseeker’s allowance until November this year. She has very little family support for circumstances in her life. Do any of us sitting here have any concept of what it is like to feel that they will have no income for that length of time? I do not think that we have any concept of what that must feel like. I have also to ask, as she does seem to have certain health and personal problems, what has happened to all the boasts about the Work programme. The Work programme was going to be so personalised. Edinburgh MPs were taken in by one of the providers and told that they would have health professionals and counsellors who would help people with complex needs. I am afraid that it does not appear to have helped that particular constituent. Someone like that is collateral damage from a Government who frequently talk as though the problem that faces this country is that there are too many people on out-of-work benefits, as if their obduracy or the fact that benefits are somehow too high is causing the economy to flatline.
Only this weekend a Scots business man, Tom Hunter, was widely quoted as saying that Scots were addicted to welfare. He had just returned from China, where the economy is booming, and explained that the biggest worry there is that people in China might suddenly decide that they wanted high levels of welfare. I find that fairly incredible. I cannot really picture the situation—Tom Hunter and, presumably, a Chinese business man discussing how the biggest threat to China’s economy is welfare—but that is what he tells us.
Apparently, it is not just workers who are not working hard enough; now their employers are not working hard enough either. We know that some of those employers are sitting on capital, but why do they not want to invest it? For those running businesses, surely the major reason why they do not want to invest their capital and earn more money is that there is no demand for their products or services. If there is no demand, we have a big problem. Simon Jenkins, writing in The Guardian on 9 May, stated:
“Europe’s collective response to the 2008 credit crunch ranks with the treaty of Versailles and German reparations among the great follies of history… Those who warned at the time that the coalition risked double-dip recession by over-suppressing demand have been proved right.”
What is the solution? Simon Jenkins, like the Opposition, thinks that the British economy needs three things: demand, demand and demand. It needs cash in pockets and cash in tills. It needs the old Keynesian salve: money in circulation. That is what our plan is about: cutting VAT, removing the cuts to tax credits in order to put money back in people’s pockets, reducing the rate of VAT on home improvements, and all those housing proposals that my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) explained so eloquently. If we put that investment into housing, we would not only give badly needed homes to the people who need them, but create the jobs that would boost demand in local economies. That is what we need to do, and there is no excuse for not doing it. In Edinburgh we have the land and the planning consents; we just need the funding.
Ian Lavery (Wansbeck) (Lab)
Thank you, Mr Deputy Speaker. It is always a privilege to speak in a debate when you are fiftieth out of 50 Members, having rewritten your speech four times, for three minutes, five minutes, eight minutes and then 10 minutes, which is absolutely fabulous, and having listened to the discussions and heard everything you wanted to say and every punchline in your speech used by other people. I think that is called parliamentary democracy.
The country was desperate for a Queen’s Speech last week that included a boost for jobs and a boost for growth. It was interesting to see the Government come forward with a plan B at the weekend, subsection (1) of which tells businesses and hard-working people to stop whingeing and get on with it, and subsection (2) explains to them that if they do not do so the Government will change workers’ protections at work and sack them. That is the change of direction we got from the Government.
The coalition Government’s proposals outlined in the Queen’s Speech do nothing to help my constituents, particularly those looking for work, the ordinary families who are already suffering and having their living standards squeezed, and the huge number of mainly small and medium-sized enterprises and businesses that are struggling even to survive, never mind expand.
In my constituency, which was already experiencing extremely high levels of joblessness and deprivation, we have recently experienced another hammer blow, with the forthcoming closure of Rio Tinto Alcan, the largest private sector employer in Northumberland. That has been followed by announcements involving a number of small and medium-sized enterprises, including Remploy.
Remploy factories were set up after the second world war to look after disabled people and to ensure that they could work in a particular environment and do meaningful work, but now we are looking at the closure of 54 such factories throughout the country. It is an absolute outrage that in 2012 we are about to put more than 2,500 disabled people on the dole. If anybody dares to suggest that it is the best thing for them, they had better have asked the individuals involved. I meet them regularly, and believe me, they have no future in terms of employment in this country.
The closure of Rio Tinto will have a massive and devastating impact on south-east Northumberland and what can only be described as an already fragile economy. Some 3,250 jobs will probably be lost, including 650 direct high-quality jobs and 2,600 in the supply chain. As I have said before, those are highly paid private sector jobs in an area that has already been hammered by the Government’s public sector job cuts. There will be a loss to the economy of £120 million on 2007 prices, including £60 million in the immediate vicinity of the plant. There will be an extra cost to the state of £10 million per annum in terms of state benefits and the loss of business rates.
Mr Deputy Speaker, you and many in the Chamber will have heard the saying, “It’s the economics of the madhouse,” and here we see it once again. The loss of the largest private sector company in Northumberland will be felt sharply by coalfield areas in my constituency. Of working-age adults in my constituency, 28%—one in five—are in receipt of out-of-work benefits; that is almost three times the national average. One in three children aged four or under is living in poverty. This is 2012. Those figures are absolutely damning of any Government. Let me tell you, Mr Deputy Speaker, I am ashamed to be a politician when one in three children under the age of four do not have enough even to feed their bellies to go to school. It is an absolute outrage.
Julie Hilling
What was my hon. Friend’s view when he heard the Prime Minister say:
“You call it austerity, I call it efficiency”?
Ian Lavery
If I was not in the palace of varieties and the great hall of democracy, I would answer that exactly as I would like to.
I have mentioned public sector jobs—500,000 of them. Those jobs have not been lost. They have been torn from the economy; they have been stolen from ordinary people; they have disappeared because of the actions of this Government. Those jobs have been lost because of nothing other than the ideology of an incoming Government. We are desperate for growth, jobs and investment, but what do we have? We have a double-dip recession.
There is good news in my area, with Bernicia and Akzo Nobel having decided to locate there. That is absolutely fantastic, and I hope that it will continue, but there are problems with the regional growth fund and with not distributing money fast enough. Statistics announced at the weekend suggest that each job costs some £33,000, but that is not what it was like under the old regional development agency system. We had a shining light—a beacon—in One North East, which was providing brilliant results for the region. Sadly, though, it was abolished within weeks of the Government being elected.
If new companies are to be encouraged into our region, they need to be incentivised. Enterprise zones are fine, but if an area is not part of one and is surrounded by them, it will have huge problems, as we do in Wansbeck. The enterprise zone needs to be extended up through the Alcan site and around the town of Ashington, but the capital allowances must come with that extension. It is no good extending enterprise zones without capital allowances; it may as well not happen. I appeal to Ministers to consider extending the enterprise zone in south-east Northumberland around the Alcan site and to bring with that what capital allowances can be afforded.
We need to protect deprived areas from the effects of the discussions that are taking place in Europe about EU state aid. I urge the Government to give serious consideration to ensuring that small and medium-sized enterprises will still be able to get EU state aid after 2013. That is essential because otherwise we will have a double whammy. We also need infrastructure in south-east Northumberland in the form of the Ashington, Blyth and Tyne rail line, so that we can get to and from other areas.
The Queen’s Speech offered little to my constituents. We have done everything we can to try to get them on to an even keel. I simply ask: do this Government care?
Stella Creasy (Walthamstow) (Lab/Co-op)
I was very challenged earlier when I heard the hon. Member for Blackpool North and Cleveleys (Paul Maynard)—I am sad that he is not here—demeaning the contributions of Labour Members by saying that we thought that this was a “state of the nation” debate rather than a debate on the Queen’s Speech. That struck me as a powerful example of the strong differences between Labour Members and Government Members when looking at our country. While Government Members believe that we are just bystanders to the crises that are unfolding across kitchen tables, in businesses and in our economies at local and national level, Labour Members believe in action. That is why we hear this Queen’s Speech and ask, “What is it doing to act on the central crisis that we now face in our economy?”
We are in a double-dip recession for the first time since 1975. Our economy, which was recovering, has slumped backwards—not by accident, but by design. What is more, there is no end in sight—no happiness to come for our constituents, who are struggling in these difficult economic times. The most optimistic pundits say that we might get growth of about 0.4 %, but the majority are gloomy, with some even saying that the economy will continue to contract. In 2010, this Government inherited an economy that was growing, thanks to an active Government who were seeking consciously and purposefully to intervene to make sure that this country pulled through the economic times we were living in—a Government who invested in our infrastructure and, yes, used temporary tax cuts and looked at how they could grow the economy. What a contrast!
That is the context in which we judge this Queen’s Speech, because two years on, things are getting worse, not better, for our constituents and for our country. A range of factors have been blamed for that situation, whether it be snow or the royal wedding; this afternoon I even heard that television was the problem. It is as though the Government cannot see what is staring them in the face—the fact that the impact of the decisions that they have made and the way in which they are dealing with the deficit has exacerbated the situation.
Whether it is about the future jobs fund, which they have had to reinstate because it is bad value for money to have nearly 1 million young people out of work, or the fact that only 30% of the cuts have taken place so far, which means that the problems are going to continue, they simply do not get “it”. “It” is a very simple issue—the crippling lack of confidence that consumers and businesses are now experiencing. I have spoken at length in this House about consumer confidence and my concerns about how consumers are behaving in the present economic situation. That is why tonight I want to talk about businesses, which cite the lack of consumer demand as the biggest barrier to growth.
Many hon. Members have talked tonight about the problems in our economy as a result of firms sitting on £750 billion worth of cash and deposits. They are not investing because they have no confidence in this Government and how they are managing the economy. All the prophecies about austerity have become real, because everybody is shutting up shop, such is the uncertainty. Businesses themselves say, “We will continue to be on the critical list until companies get their chequebooks out.” That is the problem that Britain faces and this Queen’s Speech should be addressing it.
As all hon. Members have mentioned, John Cridland, the director of the CBI, said that he wanted a Queen’s Speech to help businesses grow and create the jobs that we all want. Even the Secretary of State himself admitted that we needed a compelling vision, for our economy and for the future, that we could all fight for, but there has to be more to drive economic growth in this country than hope that the Olympics or the jubilee might do it. It is striking that the contrast between a bystander Government and an active Government is shown in the concept of growth. The previous Government had Ministers dedicated to a plan for growth, but it has taken this Government two years to get round to a growth plan, and what do we see? It is small beer and not the kind of thing that will challenge the £750 billion sitting there waiting, not being used. That is why businesses have been so disappointed.
Let me mention just one example. The hon. Member for South Down (Ms Ritchie) spoke passionately about our green economy—a massive growth industry that in 2009-10 was worth £116 billion. We were sixth in the global economy in this regard, but where are we now? What has happened to our green economy? What does the green investment bank really offer? It offers little to change the situation, let alone solve the problems caused by cutting off the solar panels tariff.
Yes, there are good things in the Queen’s Speech, including measures on parental leave and shareholders’ rights, but they are not the drivers of growth that we need. We need something stronger. Many hon. Members from all parties have made many serious points about things that we could do to drive growth, so let me offer some ideas that have not yet been talked about.
First, this Government need to learn from America and Germany and create a state investment bank that could lead to businesses having the cash they so desperately need. This would not be one of my speeches if I did not talk about credit and the problems caused by a lack of credit or by expensive credit. Those problems are now affecting businesses, too. There is no more damning indictment of this Government’s failure to manage our economy and support businesses than the fact that the legal loan sharks have stepped into the breach. Ministers should be ashamed that Wonga sees a business opportunity in the failure of Project Merlin. This Government could have used the Queen’s Speech to correct that. They could have intervened and set up a state investment bank—22% of small businesses say that access to finance is also causing them problems—but they did not do so.
Julian Smith
Does the hon. Lady welcome the Government’s national loan guarantee scheme, which will reduce the cost of loans to those small businesses that apply through it?
Stella Creasy
The hon. Gentleman does not understand the scale or the severity of the problems that businesses are facing in getting hold of credit, whether that is because the loan system is not working or because there has been a contraction in the amount of money in our economy in the past year. In part, that is because people are paying off loans and the banks are not lending to people—indeed, one of the banks in whose operations we have the most say, Royal Bank of Scotland, has failed substantially to do so. Whether for consumers or businesses, credit at an affordable rate just is not there to allow them to grow and give them the confidence to invest in the plant and materials that they need to help get our economy going again.
In addition, I want the Government to take seriously the role that small businesses could play in our economic revival. All hon. Members have mentioned that this evening. We know that two thirds of new jobs in economies such as ours come from small businesses—those employing fewer than 50 people. We needed a Queen’s Speech for small businesses, announcing an arsenal of measures to help them and a tough look at what could be done in the tax and regulatory regimes to help start-ups and small and medium-sized enterprises—perhaps even a start-up business Bill. Where was that? Where was the recognition of the different needs of small businesses, as opposed to big businesses?
We could even have gone further and used sunset clauses to give tax breaks in this financial year alone to help unlock that £750 billion—money we need to be out there, being invested in our companies and our communities. However, it is not going to be out there, because this Queen’s Speech will not deliver the kick-start that our economy so desperately needs, as shown in the picture painted by my hon. Friends the Members for Birmingham, Erdington (Jack Dromey) and for Edinburgh East (Sheila Gilmore) of the human cost of doing nothing and of being bystanders as our economy continues to deteriorate. There are consequences for our communities and our country.
This Queen’s Speech could have been a brilliant masterclass in thinking creatively and strategically about the role of Government in investing in our communities and in getting our economy to grow, but it was not. I believe the country will view the economy and the Queen’s Speech as people do when they see a toddler holding a hammer—with a deep sense of foreboding about the damage that it will do to anyone within its radius and no sense of how to stop it. I really hope that the Government will think again about both how they deal with people’s need to access credit in our communities and how they need to support small businesses. I fear that the Queen’s Speech does not meet the test that the country so desperately needs it to meet.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
There has been a lot of doom and gloom today, I must say. I was sure that someone on the Government Benches would mention the fact that retail sales bounced back by 1.8% in March 2012. The House of Commons research paper, “Economic Indicators, May 2012”, states on page 20 that that was down to the fact that:
“Unusually high automotive fuel sales were a major contributor to retail sales growth in March.”
I think everyone in the Chamber knows why that was.
So many chief executives have been sacked in recent weeks for failing to deliver the performance promised by their high salaries that we might think the brief reference to directors’ pay in the Gracious Speech was unnecessary, or more appropriate to current Ministers. Apart from that, there was little in the Gracious Speech about business, investment, employment or growth. In fact, since the speech last week, the Government’s lack of vision for business has degenerated into an attack on entrepreneurs.
Aviva, Trinity Mirror and AstraZeneca shareholders have recently indicated that they have had enough of their chief executive officers. Why now? It is obvious that those shareholders sensed that they were beginning to lose control of the companies that they owned. The parallels between business and the Government are only negative in that respect. More importantly, is that situation just about executive pay, or is it a further indicator of corporate financial hoarding? Shareholders are savers who want great returns, of course, but what are the Government doing to get shareholders to increase their intention to part with their profits for further business investment? The real economic impasse is in getting companies to part with their hoarded billions of pounds, and that was not addressed in the Gracious Speech.
BT recently paid off a considerable deficit in its pension scheme. It paid £3 billion by the end of March and will make nine annual payments of £325 million. BAE Systems had a £2.1 billion cash pile, yet in the past two years it has cut 22,000 jobs, 3,000 of them in the UK, while returning £2.2 billion to shareholders. The story is similar at the oil services company AMEC, which ended 2011 with £521 million of cash and unveiled a £400 million share buy-back programme. Last year, shareholders’ dividends paid by listed companies jumped by 19% to a record £67.8 billion, according to Capita Registrars, and they are expected to hit a new high of £75 billion this year. Jonathan Bye, chairman of the Food and Drink Federation’s SME forum, says:
“Companies like Nichols have plenty of cash…the irony is that the big manufacturers are sitting on cash because they just don’t know how to use it.”
After this Gracious Speech, they still will not.
The Government’s ideological strategy is to focus on an enterprise and regulatory reform Bill that is supposed to reduce burdens on businesses by repealing unnecessary legislation and limiting state inspections. The argument is the same as ever—shrink the state, deregulate and get out of the way of the private sector. They say that it worked perfectly in the years following the 1990s recession and the early 1930s depression. It is expansionary fiscal contraction, the antithesis of Keynesian stimulus spending.
We have had two years of this already. Despite the evidence provided by the double-dip recession, of which Opposition Members forewarned, the resounding message of the Gracious Speech is “more of the same”.
Sheila Gilmore
It is interesting that my hon. Friend mentions the parallel with the 1930s. One parallel that worries me is that, as in the 1930s, there is a huge difference between different parts of the country. Does that perhaps explain why so many members of the Government are apparently unaware of the effects of the recession—they represent parts of the country that are not suffering as badly as others?
Tom Blenkinsop
My hon. Friend makes an excellent point. Before the general election, the now Prime Minister stated that the north-east economy needed serious rebalancing. Actually, the north-east is the lead region for exports, with more than £13 billion a year. If the Labour Government got everything so economically wrong, why, despite the overarching burden of the public sector, has the north-east managed to beat every other region in the country? I am bemused, foiled and perplexed by that one. The Prime Minister might want to come to the Dispatch Box on Wednesday and explain it to the workers of Alcan and other industrial workers in the north-east let down by the current economic policy.
Business investment is actually shrinking, and in the final three months of 2011 fell by a whopping 5.6%. It is the single biggest drag on economic growth, with a negative gravitational pull of 0.5%. Business investment is still more than 15% below its pre-recession peak in 2008. Unlike in the 1990s recovery, when private sector hiring employed four people for every one public sector job cut, business recruitment is extraordinarily weak. For evidence of that, we only have to look at the private sector last year. Admittedly, it took on 226,000 staff in full-time but mostly part-time positions, yet figures from the Office for National Statistics show that 270,000 public workers were laid off. The Government’s official forecaster, the Office for Budget Responsibility, said that 2012 should be the year of the business renaissance. Of the weak 0.7% growth the OBR expects the UK to eke out over the next 12 months, 0.6% is scheduled to come from business investment—the single largest contributor.
We have been here before. Last year, the OBR forecast that business investment would deliver 6.7% growth, but it did not. Instead, it shrank by 2%. According to the Bank of England, 2012 is not looking very encouraging either, despite the OBR’s optimism. Its recent agents survey for February found that
“investment intentions continued to weaken, suggesting little growth in spending on capital over the next 12 months”.
That is mirrored by Barclays Capital’s Simon Hayes, who said that the OBR’s projections required a level of spending not seen in 30 years.
Essentially, my point is that the Queen’s Speech does not introduce any policy or legislation to enable this Parliament to get hold of the £750 billion of cash under the corporate mattress to invest in Britain and ensure we have a genuine rebalancing of our national economy.
Rachel Reeves (Leeds West) (Lab)
This has been a valuable debate on Her Majesty’s Gracious Speech, with 44 speeches from the Back Benches, which reflects the concerns raised in all our constituencies about jobs, business and growth. We heard 26 speeches from the Opposition and 18 from Government Members. My hon. Friend the Member for Wansbeck (Ian Lavery) said about 20 minutes ago that at this stage in the evening it is difficult to say anything new, given that so many people have made the points already. We have heard several thoughtful and provoking interventions. We even had a song from my hon. Friend the Member for Blyth Valley (Mr Campbell), which livened up our afternoon.
Rachel Reeves
I am happy to take an intervention if my hon. Friend wants.
The Chief Secretary to the Treasury and the Government have serious questions to answer after this debate, because there remains concern about the stewardship of the economy. As my hon. Friends said, particularly my hon. Friends the Members for Bethnal Green and Bow (Rushanara Ali) and for Huddersfield (Mr Sheerman), my right hon. Friend the Member for Birkenhead (Mr Field) and my hon. Friend the Member for City of Durham (Roberta Blackman-Woods), there is a lack of vision, leadership and imagination in the Queen’s Speech on the economy and business. The hon. Member for Cleethorpes (Martin Vickers), too, said that the Government needed a new narrative.
The facts are undisputed. Our economy is in recession—the first double-dip in four decades—with unemployment rates too high and business investment too low, although to listen to some speeches from Government Members we would think that the economy was booming, with businesses spoilt for choice over whether to invest. In contrast, we have heard excellent speeches from Members on both sides of the House about the concerns raised by our constituents. We heard particularly powerful contributions from my hon. Friends the Members for Llanelli (Nia Griffith), for Houghton and Sunderland South (Bridget Phillipson), for Newcastle upon Tyne North (Catherine McKinnell) and for Edinburgh East (Sheila Gilmore)—on the human stories behind the raw statistics, sound and successful businesses shutting up shop because no one is buying, families facing rising bills, rents and mortgage payments while wages are not keeping pace, school leavers and university graduates losing hope as months on the dole turn into years.
However, the Government’s legislative programme seems utterly disconnected from those realities. There was no mention of the new jobs that we need, and nothing to turn round the crisis of more than 1 million young people being out of work. The modest measures that the Government have claimed will help struggling families and businesses are turning out, under examination, to be woefully inadequate to the task with which we are confronted. Perhaps it is because, as the Foreign Secretary said yesterday, the Government think that it is just not their responsibility and that the reasons for the recession are to be found not in their own failure, but in the fact that the rest of the country is just not working hard enough. That is a view backed up by the Business Secretary, who referred to the Foreign Secretary’s remarks as “commercial diplomacy”, and by the hon. Member for Salisbury (John Glen), who criticised businesses for their ill-advised criticism of Government policy. I am not surprised that the Foreign Secretary’s comments have been met with incredulity by small business owners, who are working every hour of the day to keep their books in balance.
Julian Smith
Does the shadow Minister welcome the £50 billion increase in exports in 2011 from the UK to international destinations?
Rachel Reeves
I am sure that businesses welcome the fact that sterling has depreciated, which has made it easier to export, but that is because of the Bank of England’s decision to cut interest rates, under the last Government, and quantitative easing, also under the last Government.
We have seen another example of how out of touch Government Members seem to be with the reality facing businesses, families and young people. School leavers and graduates are filling out dozens of job applications week after week—should they be working harder? Millions of people who would work extra hours if the work was available; families feeling more squeezed by the month, worried sick about how to make ends meet—is it their fault that we are back in recession? Should they be working harder?
Let us remind ourselves—for the Government seem to be in denial—that the backdrop to this debate is the first double-dip recession that the UK has experienced in 37 years, an outcome that the Government assured us would not happen. However, less than two years after boasting that the British economy was
“out of the danger zone”—[Official Report, 15 December 2010; Vol. 520, c. 901]
and was now a “safe haven” from the storms raging through the global economy, the Government have succeeded in steering us into a recession of their own making. They have tried to blame the instability of the eurozone, but I point them to the European Commission’s spring forecast, which says of the UK economy:
“The main cause of weakness in 2011 was household consumption, which contracted for four consecutive quarters…Investment, which had been expected to contribute positively to growth, actually fell by 0.6% in the final quarter of 2011 and by 1.2% over the year.”
Indeed, contrary to Government claims that storm winds from the continent blew their plan off course, the European Commission confirms that for the UK:
“Net exports were the main source of growth in 2011, contributing 1% to GDP growth.”
We should therefore be in no doubt and under no illusion: this is a recession made in Downing street.
With the eurozone now teetering on the brink of another downward spiral, the real worry is that we have yet to feel the full effect on the UK of the economic turbulence on the continent. The Business Secretary is right to warn that the worst may be yet to come, which makes it all the more serious a failure to have put the UK economy in such a weak position to withstand further deteriorations in financial market confidence and export demand. As my right hon. Friend the shadow Chancellor warned over a year ago, when a hurricane is brewing, we do not rip out the foundations of the house, but that is exactly what the Government have done, and the hurricane is now gathering force.
Let us look at what this recession means for jobs and business in our country. The latest jobs figures show that unemployment remains at a 17-year high. Youth unemployment is at more than 1 million—an issue raised in today’s debate by my hon. Friends the Members for Birmingham, Selly Oak (Steve McCabe) and for Birmingham, Erdington (Jack Dromey) and by my right hon. Friend the Member for Knowsley (Mr Howarth). The number of 18 to 24-year-olds claiming dole for more than six months has gone up by 115% over the past year. The number of those claiming for more than 12 months is up by 213%. In the Prime Minister’s latest desperate dissimulation, the austerity he is inflicting on the country is now called simple efficiency. However, I do not see anything efficient about presiding over rising youth unemployment, as my hon. Friend the Member for Walthamstow (Stella Creasy) also pointed out.
There is surely no greater waste than the waste of youth unemployment. It is a waste of talent and of life chances that will cost our economy and our Exchequer for decades to come, as the commission headed by my right hon. Friend the Member for South Shields (David Miliband) set out so lucidly in its report. There is no more egregious an example of Government mis-spending than the billions that they are spending on benefits—the cost of their own economic failure. They are now borrowing £150 billion more to cover rising benefit bills and the loss of tax revenues as businesses go out of business.
Rachel Reeves
I have already given way to the hon. Gentleman once this evening.
Meanwhile, caught between the pincers of a squeeze on lending and horrendous trading conditions, more and more businesses are going under. The Government cannot create jobs, but, as hon. Members on both sides of the House have said, they can and should do more to create the right environment for job creation. That is what has been so lacking in the Budget and in the Queen’s Speech.
Figures released by the Bank of England last month show that, in February, bank lending to companies fell by £4 billion—the sharpest drop for more than two years. Meanwhile, the Nationwide consumer confidence index fell by nine points last month. The inevitable result is that insolvencies are rising and rising. In the last three months, we saw 4,303 insolvencies in England and Wales alone—an increase of 4.3% on the same period a year ago, and the highest figure since 2009. The lack of policies for growth were highlighted today in thoughtful contributions from my right hon. Friend the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) and my hon. Friends the Members for Blyth Valley and for Wansbeck.
The businesses that are staying afloat are doing so by battening down the hatches. The latest industrial production numbers show a further decline, and we now know that construction output fell by 4.8% in the first quarter of this year, suggesting that the initial estimates of first quarter GDP, if anything, understated the extent of the economy’s contraction. But the truth is that, whether they are revised up a decimal point or two, or down, the statistics only confirm what we should already know from talking to families, businesses and young people in our constituencies.
Families and businesses desperately need the Government to get a grip and get us out of the deep hole that they have dug us into. Instead, we have a programme of Bills that lack any sense of urgency or, indeed, relevance to the reality of life for most people in this country right now. The Prime Minister and his Cabinet seem to be living in a parallel universe. Indeed, the only person whose employment prospects the Prime Minister seemed to care about was the head of News International. I can tell him that the million people who have lost their jobs since he came to power do not need a text message telling them to keep their heads up. They need a real plan for jobs and growth, and a Government working night and day to find ways to help them to get by and to get on in life.
This Government give the impression that there is nothing they can do, and that we should just resign ourselves to years of hardship while waiting for something to turn up, but the reality is that a Government who really cared could do so much more to make a difference to the lives of our constituents. Labour Members have made proposals that could help to turn our economy around, and that could help businesses struggling to break even and families struggling to make ends meet. Why will the Government not implement a national insurance holiday for small firms taking on extra workers, to help businesses struggling to survive and young people desperate to get into work? Why will they not bring forward investment in vital infrastructure projects, so that we could create new jobs in the construction sector at the same time as securing our future economic strength?
Why will the Government not reverse their damaging VAT rise? That would boost business and consumer confidence, and kick-start the growth that we need to get the deficit down. Why have they refused to repeat the tax on bank bonuses, so that money squandered on bonuses by banks that are not doing their bit to get our economy growing could be clawed back and put to better use, funding 100,000 jobs for young unemployed people and the construction of 25,000 new and affordable homes?
Why have the Government not taken the opportunity of this Queen’s Speech to announce legislation that could protect and improve the living standards of families feeling the squeeze—for example, by creating a more competitive energy market, with guaranteed low tariffs for 4 million people over the age of 75, by stopping train operators clobbering commuters with high fares, and by empowering consumers with new rights against rip-off surcharges by banks, airlines and pension providers? As my hon. Friends the Members for West Bromwich West (Mr Bailey) and for Stoke-on-Trent Central (Tristram Hunt) have said, why was there no Bill in the Queen’s Speech on higher education or on co-operatives? What do we get from this Government? Just the hope that something will turn up—a hope that their own inaction and inadequacy will spur the British people to greater efforts.
This is a legislative programme that falls well short of what is needed. We need investment flowing into energy-efficient infrastructure and green technologies. Instead, we get a green investment bank that has nothing to invest. We need action to bring responsibility and restraint to the boardroom, ending unjustifiable pay packages that reward failure, but the Government’s proposals fall far short of what is needed. While this Government state that the priorities of the Queen’s Speech are economic growth, deficit reduction and help for businesses, there is nothing to boost bank lending to small businesses, nothing to help hard-pressed families and nothing to turn around the tragic rise in youth unemployment.
In conclusion, we heard great claims for this legislative programme—a Queen’s Speech that was supposed to mark the re-launch of this coalition, a plan of action that the Prime Minster said was about supporting growth and business, and giving a helping hand to families and those he called the “strivers”. The reality is, however, that people are striving to find anything in this programme that lives up to the rhetoric. This is a Government whose idea of a growth strategy is giving a tax break to millionaires, while cutting tax credits for those working for modest wages.
Having choked off the recovery and taken our economy back into recession, the Government who first blamed the snow, then the royal wedding and the eurozone now seem to be blame everyone but themselves for not working harder. The truth is that it is this Government who need to work harder. It is time the Prime Minister started taking responsibility for the recession he has created. It is time the Prime Minister started taking responsibility for turning our economy around. Yet there is precious little in this legislative programme to suggest that the lessons have been learned, and precious little to stop the economy from sinking further into recession. There is no sign that the Government understand the scale of the task before them, and nothing to reassure the businesses and working people of this country that we have a Government who are up to the job that now confronts us.
The Chief Secretary to the Treasury (Danny Alexander)
This has been a good debate, with many contributions from all parts of the House. I would particularly single out the contributions of my hon. Friends the Members for Solihull (Lorely Burt) and for Skipton and Ripon (Julian Smith), and of the right hon. Member for Birkenhead (Mr Field), who I see in his place.
Towards the end of the debate, the hon. Member for Wansbeck (Ian Lavery) said how difficult it was to prepare his speech in the light of the fluctuating lengths of speeches allowed for Back Benchers. It is perhaps a bit like dealing with a fluctuating economic forecast. Nevertheless, the hon. Gentleman made some important points, and I would like to respond to a couple of them. In particular, he spoke about the need for enterprise zones in Northumberland. As his hon. Friend the Member for Blyth Valley (Mr Campbell), who is sitting next to him, already knows, if a strong case can be made to include a particular area such as the land around the port of Blyth in the north-east local enterprise partnership, as it was at the time of last year’s autumn statement—it should be noted that some enhanced capital allowances might also be available—it should be made, and we will listen very carefully to it. The hon. Member for Wansbeck was right to say that these enterprise zones can play a role in helping to support economic development in places affected by the sort of job losses that he described in his constituency. I urge him to work with the LEP to make that case.
Mr Ronnie Campbell
I am led to believe that a scheme from the port of Blyth has been put forward to the Minister. I hope he now has it on his desk.
Danny Alexander
Not only has a scheme from the port of Blyth been put forward, but the inclusion of several areas of land around the port in the enterprise zone was referred to at the time of the autumn statement. I gather that a discussion is going on within the north-east local enterprise partnership about the sites on which it would like to see the enhanced capital allowances deployed. I think the hon. Member for Wansbeck had a view about an additional site that he would like to be included in the enterprise zone. I encourage him to work with the LEP to make that case, as I said. I hope he will take the opportunity to present that argument to the Government in due course.
The hon. Member for Blyth Valley also expressed support for the green investment bank, whose establishment is one of the key measures in the Queen’s Speech that could play a part in boosting the economy. I do not know whether he did so in song, because I was not present for his speech. Given the potential importance of the renewables sector to his part of the world, I hope he agrees that the bank could contribute to the investment that it needs, and that the substantial £3 billion capitalisation that we provided for it in the spending review will enable it to invest in precisely the sectors that he mentioned. Those sectors were also mentioned by many Government Members who recognised that the green investment bank was an important initiative, as, indeed, is the regional growth fund.
Listening to the shadow Business Secretary talk about the regional growth fund, I concluded that he had picked up the wrong end of the stick, although I must add in fairness that his tone was not reflected in speeches on the subject from other Members on both sides of the House. The National Audit Office report made it clear that the fund had created or protected some 328,000 jobs, which is a good use of public funds. What is more, as the hon. Gentleman will see from the evidence that has been provided, for every pound that we are spending on the regional growth fund, some £6 of private investment is being unlocked. In many cases in which public money has not yet started to flow, private investment is already taking place because businesses know that they have access to the fund. I think that that is a great success story about support for investments throughout the country. Certainly we on the Government Benches are very proud of what the fund is achieving, which is why we chose to give it additional resources last year.
Catherine McKinnell
I thank the Chief Secretary for giving way, and also for his generosity in addressing some of the concerns expressed by Members representing constituencies in the north-east. The regional growth fund would also be useful in providing access to European regional development funding. Has the Chief Secretary an update for north-eastern Members on the £120 million that is yet to be drawn down?
Danny Alexander
The hon. Lady has made an important point about the use of European regional development funding, which we have been considering in connection with the regional growth fund. I am afraid that I cannot give her an update on funds for the north-east, but I will ensure that the Minister responsible for such matters writes to her with one.
Mr Umunna
The facts that I gave earlier about the regional growth fund came straight out of the National Audit Office report. Am I right in saying that the Chief Secretary has denied that the report said that only about 41,000 jobs could be created under the scheme? Was I also wrong in stating that the report was very clear about the fact that, in some cases, the cost of each job would be up to £200,000?
Danny Alexander
If the hon. Gentleman will stop heckling from a sedentary position and listen to the answer for once, I will do my best to deal with his question.
In the individual case in which the £200,000 figure was given, it was given before the due diligence phase, as a Member whom I could not identify has just pointed out from a sedentary position. If the project reaches its final stages, it will involve a cost per job much closer to the average. The 41,000 figure was a mechanical estimate for which a model was used, whereas the 328,000 figure that I gave is based precisely on information provided by successful applicants on the number of jobs that will be created and safeguarded by the regional growth fund. I think that, rather than sneering at the fund, the hon. Gentleman should recognise the important contribution that it is making, and the important contribution to economic recovery that is being made by the private sector businesses that it is supporting.
Danny Alexander
I will give way once more, but then I must make some progress.
Danny Alexander
I do not have that information to hand. However, the point I made earlier, which he ignores, is that in many cases where the regional growth fund has been awarded, the private investment takes place well in advance of the public funds being needed. The measure he seeks to use of who has received public funds is therefore not necessarily the best measure of the investment that has taken place, quickly stimulated by the award of regional growth funds. If he looks around the country, he will see many examples of private sector businesses that have been awarded moneys from the regional growth fund and have started their investments well in advance of public funding arriving, because that is how their projects have been planned. If he were doing his job properly, he would understand that that is the way in which many businesses operate.
We have also heard a number of comments about the banking Bill. Indeed, strong support for that Bill was expressed on both sides of the House, and there was support, too, for the strong recommendations of the Independent Commission on Banking.
Mr Redwood
Has the Chief Secretary noticed the latest forecast, which says total City bonuses are likely to be only £2.3 billion this year, as opposed to £11.5 billion at the peak, under the Labour Government? Will he consider representations in favour of a bankers’ bonus tax in the light of how little revenue it will raise compared with the original forecast?
Danny Alexander
I was about to come on to the mess that the Labour party made of our economy, but the right hon. Gentleman’s question causes me to bring those remarks forward. One of the most calamitous failures of the last Labour Government was the complete failure to regulate the financial sector and to control the excesses that built up in the banking system, and the figures he gave are just one example of that. The banking Bill will implement the reforms that are necessary to deal with some of the excesses and, more importantly, to protect the taxpayer and the British economy from the sorts of problems that previously arose. It was very striking that in neither Labour Front-Bench speech did we hear any apology for the previous Government’s failure to regulate the banks properly, just as we heard no apology for the mess they made of our public finances and the many other mistakes they made, too.
Danny Alexander
No. I have given way to the hon. Lady’s Front-Bench colleague three times, and I am now going to press on. I have only two minutes left, and she used up plenty of time.
There were a number of speeches about the groceries code adjudicator, including by the hon. Member for Macclesfield (David Rutley) and my hon. Friend the Member for St Ives (Andrew George), who played an important role in promoting the idea of the GCA and rightly welcomed the fact that the Government will take that forward. A number of comments were made, especially by Opposition Members but also from the Government Benches, on the enterprise and regulatory reform Bill. By and large, its measures on directors’ pay were welcomed, although concerns were expressed, particularly by Labour Members, about the proposals on employment law. The hon. Member for Bolton West (Julie Hilling) made that a key point in her speech, although I noticed that she welcomed the substance of the measures in the Bill, which are to do with providing more options before a tribunal is reached to enable complainants to resolve their case without the need to go through what she rightly describes as an often painful and expensive process. It is important that those measures are carried forward, and they will make a difference for many small businesses.
The economic context was an important theme in this debate, and Members on the Government Benches are fully aware that addressing the key issues is no easy task in the current economic climate, not least because of the crippling legacy the last Government left to us: a decade of unbalanced growth that left the UK one of the most indebted countries in the world; a decade that resulted in our having the most highly leveraged financial system of any major economy; and a decade that meant the UK entered the economic crisis with the highest structural deficit in the G7. All that meant that the UK was one of the hardest hit countries in the world when the crisis came.
Our recession was among the deepest and our deficit among the largest, which means that our challenge to deliver a sustainable recovery is among the greatest. Let me remind the House that when this Government came into office we inherited the largest peacetime Budget deficit this country has ever faced and the largest forecast deficit in the G20—larger than those of many of the countries mired in the sovereign debt storm in the euro area. It is only because of the decisive and immediate action we took that we have sheltered the UK from the worst of that debt storm.
The measures in the Queen’s Speech represent part of a bold and wide-ranging programme of economic reform: a strategy to rid the economy of the debt burden left by the previous Government; a strategy to secure our stability at a time of global instability; and a strategy that puts private sector enterprise, ambition and innovation at the heart of our recovery. It is the right recipe to clean up the mess that the Labour party left us and to bring this country back to sustainable prosperity.
Riot (Damages) Act
(12 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr David Lammy (Tottenham) (Lab)
I am very grateful to have the opportunity today to debate this issue, which is very important to my constituents and, I suspect, to many others in London. All of us in this House tonight, and others beyond, have insurance. We value our homes, our possessions and all the things we have worked hard to accumulate, and it is natural that we seek to protect them. Insurance exists to cover unforeseen events. Some events are more unforeseen than others. Although burglaries, house fires and floods are unfortunate in the extreme, they are all possibilities that insurance is intended to cover and they are, to some extent, foreseeable.
Living in a stable democracy such as ours, it is often easy to take the rule of law for granted. Last August, we saw that rule break down, with rioters destroying the homes and businesses of their neighbours, robbing them of not only their property, but their livelihood. In that context, it is the role of the police to maintain order, so it is to the police that we look when that has failed and we have paid the price for failure. Were the police and the state not to foot the bill, the costs would be passed to individuals and traders. That would result in rising premiums and entire communities losing out. It was not the fault of those who saw the riots, so it is right that the state helps to bring them back to a position where they can get on with their lives.
This evening, I wish to discuss four issues, the first of which is the overly bureaucratic and unprofessional manner in which the Riot (Damages) Act 1886 has been administered. The second is the hypocrisy of Ministers, the Mayor of London and even the Prime Minister himself in promising to support Tottenham’s riot damages—
Mr Speaker
Order. May I say to the right hon. Gentleman that he should not refer to identified Ministers using the word “hypocrisy”? He is a versatile individual and he has an extensive vocabulary. I am sure that he can find another way to make his point, and I trust that he will now do so.
Mr Lammy
I am grateful for that, Mr Speaker. May I therefore refer to the extreme inconsistency between the statements made to this House and the promises made to victims shortly after the riots by those I referred to, and what we actually see taking place?
The third issue I wish to discuss is that, under the coalition that champions the big society, philanthropic donations are now counted against riot compensation claims. Finally, I wish to draw attention to the differential treatment afforded to the Metropolitan police compared with that offered to police authorities in Merseyside, Manchester and Salford.
Although this debate draws on the experiences of riot victims in my constituency, I know for a fact that Members in other riot areas have been affected, and many are in the House as I speak. This is not the first time that compensation for riot victims has been discussed in the Commons. Some nine months ago, the Prime Minister made two promises, neither of which he has honoured. To the victims of the riots he proclaimed,
“we will help you repair the damage, get your businesses back up and running and support your communities.”
In the same debate, the Prime Minister promised that the Government would
“ensure the police have the funds they need to meet the cost of any legitimate claims”.—[Official Report, 11 August 2011; Vol. 531, c. 1053.]
Seven months later, the Leader of the Opposition pressed the Prime Minister, demanding that he provide proper, clear information about the processing of claims. I, for one, have heard nothing about that. The Prime Minister promised to put the process details in the House of Commons Library after that discussion with the Leader of the Opposition. I therefore ask the Minister when the Prime Minister intends to provide the House of Commons Library with that information.
Between 6 and 10 August 2011, more than 5,000 crimes were committed including five fatalities, 1,860 incidents of arson and criminal damage and 1,649 burglaries, 141 incidents of disorder and 366 incidents of violence against the person. In London alone, more than 171 residential and 100 commercial buildings were affected by fire at a cost of millions. The disturbances last August saw thousands of shops damaged and there were more than 3,800 claims under the Riot (Damages) Act in London alone, with liabilities estimated to be between £200 million and £300 million.
Some shop owners had insurance, of course, but others did not. In that regard the Act represents an important means of financial support. Sevill Hassan, who owns a hair salon on Tottenham High road, was away on holiday when the riots broke out in August. She returned to find her shop front damaged and equipment stolen and looted. She was between insurers at the time of the riots and had not yet sent off her cheque to her new insurer. Sevill did manage eventually to secure a £3,000 payment under the Act, but 18 months later she is still struggling to keep her business afloat.
Despite being labelled by many as arcane and out of date, the Riot (Damages) Act can and in many cases has helped victims of riots, particularly individuals and small businesses without a property insurance policy thanks to a clause added to the Act following the Brixton and Toxteth riots of 1981. Indeed, the Act was used as recently as 2001, following the Bradford riots, and so although the original Act might date back to 1886, there is no excuse for the Home Office’s failure to administer it in a clear and efficient way.
When one speaks to individuals and businesses who have submitted claims through the Act, its limitations become apparent. A number of the limitations relate to the manner in which it is administered and the majority could have been avoided or minimised had the insurance industry processed its own claims. Why have the Home Office and the Metropolitan police been unable to process their claims as successfully? Perhaps that is why, when representatives of the insurance industry went to the Home Office on 18 August, after the riots, they offered to do the job for the Met. Why was that offer from the Association of British Insurers and the industry rejected out of hand? The industry processes claims every day of the week, but the Department said, “Oh no, we can do it.” Nine months later, that has not happened.
Loss adjusters were appointed by the Home Office to manage claims. On making their claims, a number of individuals were treated insensitively by insurers and loss adjusters, many of whom failed to appreciate the devastating impact of the damage caused during the riots. Victims of the riots tell me that they were asked to provide receipts, and ask how they can do so when their business has burnt to the ground. That was the insensitivity shown to them. I have heard from traders in Tottenham who claim to have been treated like criminals, rather than victims of crime.
People with insurance were able to claim directly through their insurers, but in a constituency such as mine many people found themselves having to submit through the Act—if they were underinsured, for example. That is why this is so important. The Home Office did well to extend the period in which to make a claim from 30 to 42 days, following lobbying from the ABI. However, it took a long time to update the claim form from the 1800s. Many constituents were unable to understand the archaic language and the requirements, or did not know whether to use the form at all. As of 9 May, the Metropolitan police had received a total of 3,427 claims. Just over a quarter of those claims—912 of them—have been settled to date, and a total of just over £6 million has been paid out to victims. That works out at an average of just £7,000 per claim. There are 707 ongoing claims. I can only assume that the remaining 1,800 claims —52% of claims received—were rejected. I would be interested to know whether the Minister can reconcile the figures and say what has happened to the claims that have not been dealt with.
Lilian Greenwood (Nottingham South) (Lab)
My right hon. Friend is making a powerful speech on behalf of his constituents. Does he share my concern that some people, including my constituents Sue Murphy and Peter Turnbull, whose car was smashed up by the group who attacked Nottingham’s Canning Circus police station, are being offered nothing more than warm words by the Government, because vehicles are not covered by the Act? Should the Government not have done more?
Mr Lammy
Yes, and my hon. Friend will recall the burned-out cars on Tottenham’s High road. Many of my constituents have raised the same point. That is why we need an updated Act. I hope that the Government will not recoil from having an Act at all, because it is important that in such circumstances, victims are compensated by the state.
My hon. Friend will also recall that on 27 February, Boris Johnson said:
“All uninsured claims submitted under the Riot Damages Act have been processed through a bureau set up by the Home Office.”
He said that Met
“officers have been instructed to treat these applications as a matter of priority and they guarantee that once a completed and documented claim is received, an offer (Discharge Form) will be sent within five working days.”
For more than 707 people in London, that has not happened, so why was that claim made in February? Bad bureaucracy and poor administration is more than inefficiency; it prevents business owners, many of whom have dedicated their working lives to running a business, from picking up the pieces and moving on. For many riot victims—I stress that they are victims, not simply clients—an unprocessed claim form means a loss of income, sleepless nights and the brutal reality of losing a business or shutting up shop.
The Minister knows my constituency well. I have had constituents who have ended up having heart attacks as a result of their business going under with no compensation. That is how serious this is for small businesses, which are finding things hard because of the double-dip recession.
In response to questions on 13 March, the Home Office Minister, Lord Henley, told peers that 90% of businesses and individuals who had insurance had “received full or part” compensation. By the same date, just over half of uninsured victims had received money under the Riot (Damages) Act. Why the discrepancy between those who had insurance and had their claims processed by private insurers on the one hand, and those who were reliant on the state on the other? Their experience was completely different. It is often the most deprived, and those with the most marginal businesses, who are still waiting to receive money. That includes, of course, home owners who are relying on the Act. Given that both insured and uninsured businesses were victims, how does the Home Office justify the discrepancy in their treatment? If private insurers were able to process claims more efficiently, why did the Home Office decline the offer from the ABI?
Does the Prime Minister agree that nearly eight months after the riots, it is unacceptable that only half of the uninsured claims in London have been paid out? Nine months on, there is a significant lack of information in the public domain regarding processing and payment of the claims. Unfortunately, no statistics on claims made in Tottenham have been released. Many aspects of the Act are still shrouded in mystery. There is a significant grey area surrounding the relationship between philanthropic donations and compensation received under the Act. According to the Act, all philanthropic donations should be deducted from the eventual compensation settlement.
I want to pay tribute to the work of people such as Sir Bill Castell and the Prince of Wales, both of whom rang me up within hours of the riots, offering their help. Sir Bill set up a big high street fund, working with big business to help small business, only to find that that money has now been offset against the Riot (Damages) Act. Either we believe in the big society or we do not. What is the answer? What kind of society are we living in, when many victims of the riots who have had barely a few hundred pounds from that grant are still waiting for payment to get their businesses back on track?
People say to me that when we see a tsunami or an earthquake in a developing country, we are able to act and get the funds there. Why is it any different in a major democracy and a major developed country such as ours? It must be totally unacceptable that nine months later people are expected to wait. Of course they are not waiting. They are seeing their businesses destroyed and the high road lose its vibrancy. They are feeling abandoned. I remind the Minister that the cry that we heard after the riots right across the country was, “Where are the police? Where are they?” Now we are hearing a similar cry, and I hope the media will remain true to those people and continue to press their case. They want to know where the state is, or have we rolled the state back so far that for true victims it no longer exists?
Can the Minister assure me that measures will be taken to ensure that individuals and organisations are not put off making philanthropic donations to businesses affected by the riots, given the situation that we are in? Can the Prime Minister assure the House that information on payments made under the Riot (Damages) Act, as he said to the Leader of the Opposition, will be put in the House of Commons Library or, as he said, that he will return to the House to make a statement as swiftly as possible? I want to allow the Minister ample time to come back to me on these points, but I end by reminding her of the case of Niche Mufwankolo, who is the landlord of the Pride of Tottenham pub.
On the night of the riots, Niche fled through an upstairs window, while downstairs rioters smashed windows, looted televisions, broke and stole his sound system and set fire to furniture. He escaped from the roof of his pub at knifepoint, and the Metropolitan Police Authority responded to him by offering just £22,000 of compensation, some £70,000 less than the claim that Niche had submitted. It should be noted that VAT was excluded from claims relating to building damage, loss and damage of contents and loss of stock, just one of the reasons given for Niche’s payout being dramatically less than anticipated. To add insult to injury, the Met lost the original invoices submitted by Niche, preventing him from making further claims.
There is a huge disincentive to appeal against any offer of compensation, as people have been waiting for months to get back on their feet, and small businesses do not have the time to be caught up in such bureaucracy.
Many of us will have had different views about those involved in the riots, but I hope that all of us support the victims. That is why I have brought the debate to the House this evening. I look forward to hearing what the Minister has to say.
The Parliamentary Under-Secretary of State for the Home Department (Lynne Featherstone)
I thank the right hon. Member for Tottenham (Mr Lammy) for raising this subject. I am mindful that this is the first debate secured specifically on riot damage compensation, and I apologise on behalf of the Minister for Policing and Criminal Justice, who is unable to attend.
The right hon. Gentleman’s constituency, like my own, was one of the areas severely affected by the riots last August, and I sympathise with individuals and businesses in his area and others across the country that experienced losses. He has been extremely proactive in aiding his constituents in the aftermath of the riots and helping those who were adversely affected by the events last August.
The Government have come under considerable criticism, both during the recovery period and this evening, for the length of time that it has taken victims to receive compensation through the Riot (Damages) Act and for the perceived bureaucracy around processing claims, which has been singled out as the problem. Typically, this has been portrayed as a problem caused by the Home Office, with Opposition MPs for the most part helping to promulgate the myth. Most notably, as the right hon. Gentleman mentioned, it was referenced by the Leader of the Opposition in Prime Minister’s questions on 21 March.
It may help to inform the debate if I present a true and current picture of the progress that has been made, but first, in case I run short of time, I want to respond to several of the points raised by the right hon. Gentleman. He asked why the Government did not take up the insurance industry’s offer to process the Act’s claims. As the right hon. Gentleman knows, under the Act, liability for claims rests with police authorities, and passing on the handling of decision making on all claims would have required a change to primary legislation. We did not want to wait for primary legislation, and the simpler option, which took less time to put in place, was to draft in expertise from leading loss adjusters to the Home Office bureau. That did help in resolving and processing the claims.
The right hon. Gentleman asked why loss adjusters insist on continually asking for outstanding documents or evidence. I had a case myself where a constituent came to me about documents that were required for a building that had been burnt down. Documentation is important to ensure that losses are substantiated as far as possible. It is not a new issue for the insurance industry and for loss adjusters who have been employed by the police authorities and the Home Office bureau, and I can confirm that reasonable loss of documentation is taken into account in the reports produced by the loss adjusters. They are aware of the issue. That is not to say that they have not asked for documentation on occasion, but if the reply is that it has been lost or burnt, they make a reasonable adjustment.
On the question of the Prime Minister placing in the Library a document on the processes involved in processing claims, we will check whether it is in there; if it is not, it will be by the end of the week. I would be grateful if the right hon. Gentleman wrote to me with some details on the philanthropic questions that he raised, because this is not a matter that has come to my attention to date. I will be happy to look into that.
Mr Speaker
Order. I am afraid that we cannot have interventions from the Front Bench in a half-hour Adjournment debate.
Lynne Featherstone
There are two types of victim, the uninsured and the insured, although, as I will explain in more detail shortly, some overlap has been created by insurance companies repudiating claims, which can lead to further uninsured claims subsequently being submitted.
For the uninsured cases—those people who never had insurance—most of the claims originally made went to the Home Office bureau, which the Government set up in the wake of the riots in order to facilitate the process for individuals who were struggling to come to terms with the damage caused to their property and loss of possessions. The Home Office bureau received 1,261 cases. As of last week it had 68 cases left—about 5% of the original total. Of those cases, 39 have been classed as inactive. Despite repeated attempts to contact claimants or their representatives, no response has been received for a substantial period. The other 29 cases are largely waiting for documents to be submitted, which the bureau chases up regularly.
The bureau has rejected 837 cases and sent 356 to the police authorities to make decisions on payments. Typically, the reason the claims were rejected is that they were not within the scope of the Act, which covers business interruption losses, personal injury, and vehicle damage, as mentioned by the hon. Member for Nottingham South (Lilian Greenwood). In some cases, the claims were rejected because individuals already had insurance cover.
Given that the number of cases with the bureau is now relatively small, the Policing Minister has agreed that the bureau will shortly cease operations. The small number of remaining cases will be passed to local police authorities, where a more co-ordinated approach will be taken to get them resolved in the local area. The police authorities originally received 480 claims, including the 356 sent to them by the Home Office bureau. I am pleased to announce that only 26 claims are left—that is 26 too many, but nevertheless that is down to 5%. Police authorities have rejected 159 claims and settled 295 cases.
That is not the complete picture of uninsured claims, because a number of cases were subsequently received, predominantly in the Metropolitan Police Service, where insurance companies had repudiated claims or refused to pay out because their assessed value of the claim was below the policy excess; a claim under the Act was then made directly to police authorities. A specific example of that is the case, raised by the Leader for the Opposition at Prime Minister’s questions, in which an uninsured claim was not received in the police authority until December 2011. A further delay then occurred as a result of documents not being sent to the police authority until late March, after which the claim was settled in a matter of days. Unfortunately, that case is not untypical, so the delay is not always on the part of the Home Office, the Home Office bureau or the police authority.
To return to the “new” uninsured claims, I can also report that good progress has been made in resolving those cases. The Metropolitan Police Service received 642 such cases and has 133 left. Around half those cases have been delayed due to documentation that has been requested by police authorities from claimants or their representatives not being submitted. Claims made to other police authorities are negligible. The category in which the greatest amount of payments remains outstanding relates to insurance companies. The Act provides for insurance companies to seek recompense from police authorities for the compensation they pay out to policyholders.
Lynne Featherstone
I am running out of time and really want to get some of these figures on the record for the right hon. Gentleman, so the hon. Gentleman must forgive me.
Police authorities have received 3,883 insured cases, of which 1,063 remain. The police authorities have rejected 1,967 of these cases and 853, worth a total of £4.3 million, have been settled. A number of the outstanding claims, although not many, are of the higher value because they are the more complex claims. Claims for recompense from insurers do not affect the vast majority of individuals and businesses who held insurance at the time of the riots. The most up-to-date information from the Association of British Insurers indicates that more than 95% of individuals have had their claims settled in full or received an interim payment, and 92% of small and medium-sized businesses have either received an interim payment or had their claims settled in full.
Specific reference has been made in the media—I mention this because the right hon. Gentleman did—to the fact that 700 cases in London remain outstanding. Although that headline figure is correct, it is important to provide some context. Of the 707 cases outstanding in the Metropolitan Police Service, 571 are claims from insurance companies for reimbursement of payments that they have made or will make to their customers, not claims outstanding to an individual or company. Those cases do not affect the majority of individuals and businesses who made the original insurance claim, as they will already have received interim or full settlement. Of those 136 claims—707 minus 571—only three of the original claims remain; the others are new.
The Government are committed to reviewing the Riot (Damages) Act. The right hon. Gentleman is right that it is an old Act and we need to ensure that the legislation is fair and reflects a modern policing world. We are considering holding a public consultation, which will provide an opportunity for all interested parties to give their views on the current system and potential options for handling riot claims in future. He makes a powerful case and the Government want to settle all claims and ensure, as many have said, that victims are compensated as soon as humanly possible.